Banksia Lodge [2005] QBCCMCmr 709 (14 December 2005)

Number of Scheme:	13566
Name of Scheme:	Banksia Lodge
Address of Scheme:	29 Cornelius Street, CLONTARF QLD 4019

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

I hereby order that the implementation of resolution 10d to paint roofs passed at the annual general meeting of 30^th November 2005 be suspended until such time as this dispute is determined by final order of an adjudicator, or prior withdrawal.

II further order that the application for final orders remains outstanding.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0852-2005

"Banksia Lodge" CTS 13566

APPLICATION

This is an application dated 30^th November 2005 and amended on 1^st December 2005, by Janice Hoffman, owner of Lot 1 (the applicant) for an order against the body corporate (the body corporate) that motion 10d of the annual general meeting of 30^th November 2005 (AGM) be invalidated, and to rescind motion 8 of the AGM by which the body corporate resolved to impose a special sinking fund levy; and for Motion 9 of that AGM to be reconsidered.

As an interim application, the applicant seeks that work authorised by the passing of motion 10d be stopped. The reason given by the applicant is that motion 10d should have been "itemised as a special resolution."

JURISDICTION

"Banksia Lodge" Community Titles Scheme 13566 is a scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Small Schemes) Regulation 1997 (the Small Schemes Module). There are six lots in the scheme created under a building unit plan of subdivision.

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the "status quo" of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application "if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates." Read together with section 247(3), section 279(1) allows an adjudicator to issue an interim order without any reference to other parties to the dispute.

The Commissioner has referred the application to me under section 247 of the Act to consider whether an interim order is warranted due to the nature or urgency of the circumstances of the application.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore sought submissions from the body corporate committee and the body corporate manager closing on 8^th December 2005.

SUBMISSIONS

Submissions have been received from the Redcliffe Body Corporate Management (body corporate manager) and from, Terence and Moreyne Patterson , co-owners of unit 4 and 6, but as representing the committee for the body corporate, with a letter from Ken Clare, architect. Kath Hansen, trustee of the F.S. Hansen Trust which owns unit 5 and Christine Hansen, Secretary/Treasurer of the body corporate, and owner of Unit 2, also made submissions.

The body corporate manager states it has no opinion as to what would be the best method of treatment for prolonging the life of the roof. The committee does not support the application, and says that treating and painting of the galvanised iron roof needs to be done to prevent further rusting.

Since submissions were not invited from all owners but from the committee and the body corporate manager, members of the body corporate qua lot owners have not yet been heard. The applicant states "This application is supported by Mr and Mrs S Hadzijusufovic of Unit No.3".

DETERMINATION

In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. They are –

- preventing a general meeting from taking place until an issue has been investigated.

Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. It is a matter for an adjudicator to determine in respect of each application.

The applicant wants work on the roof to stop although I am not advised if work has actually commenced. I believe that the applicant is seeking to prevent the implementation of the resolution of the AGM.

The applicant’s argument is that since the roofs have never been painted, the decision to paint them is not ‘maintenance’ but ‘an improvement’, for which the body corporate requires a special resolution if the cost is more than $250 times the number of lots. (Section 74 Small Schemes Module). Motion 10d was not listed on the agenda for the AGM as a ‘ special resolution.’

The applicant further argues that the chosen tradesman is not appropriate in comparison with other tradespeople and quotations received by the body corporate. She says that the roof painting "appears to be an unnecessary use of sinking fund funds", from which I conclude that she finds the body corporate’s action in deciding to appoint Paint 2000 Property Services, unreasonable. Further she says that it is contrary to the advice given in a professional sinking fund forecast obtained by the body corporate in September 2004.

The AGM motions offered a choice to carry out roof repairs with a maintenance check every two years, or to paint the roofs. If the decision was to paint the roofs, the motion was put in the alternative with a choice of four tradespeople willing to carry out the painting. Quotations from each were given.

Motion 10d was voted on by all 6 lot owners, and passed 4 – 2. To pass a motion as a special resolution, the Act requires that two thirds of those casting a vote are in favour of the motion and not more than 25% of the lots in the scheme are against the motion. (Section 106 Act) Where 6 persons are voting, a vote of 4 persons for the motion will suffice if not more than 25% of lot owners are against. In the circumstances, the two votes against would prevent the passing of the motion by way of special resolution, as 2/6 is greater than 25%.

The fact that a motion was not ‘described’ as requiring a special resolution would not in my view invalidate the result, if the result was that the required number of votes for a special resolution was achieved.

However, whether the work proposed to be done on the roof amounts to "maintenance" ( which it is the body corporate’s duty to do by virtue of section 70 Small Schemes Module), or amounts to "an improvement" to common property, is a question which needs objective consideration and further investigation. As one of the principal objectives of the interim order is to retain the status quo, the application for an interim order is granted until final determination of this matter.

Lot owners will now be invited to make submissions, or further submissions if they wish, and the applicant has a right of reply.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Banksia Lodge [2005] QBCCMCmr 709 (14 December 2005)