7 Oaks North [2005] QBCCMCmr 86 (15 February 2005)

Last Updated: 5 July 2005

REFERENCE: 0369-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10907
Name of Scheme:	7 Oaks North
Address of Scheme:	9 Freyburg Street Sorrento, Queensland

TAKE NOTICE that pursuant to an application made under the abovementioned Act by David Stewart-Sandeman (a Co-owner of Lot 25 and committee member):

I hereby order that the purported resolutions of the Body Corporate concerning motions 6 and 7 as considered and carried at an extraordinary general meeting held on 7 June 2004 were at all times void.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0369-2004

"7 Oaks North" CTS 10907

1.	The application

Mr David Stewart-Sandeman (the Applicant) has made a dispute resolution application to the Commissioner for Body Corporate and Community Management under the Body Corporate and Community Management Act 1997 (the Act). The Applicant states that he is seeking the following final outcomes, quote:

1.	That the motions 6 and 7 purported to be carried at the EGM 07th June 2004 be declared out of order and not relied upon.
2.	That Mr B Victorsen and Mr L Bourke to be reinstated as members of the committee to which they were legally elected at the Annual General meeting on the 31st March 2004.
3.	Give a ruling on the legality of proxy votes being used at the EGM 07 June to overturn the Chairman’s Ruling. When the committee has asked that all motions be declared by secret ballot.

The Applicant also sought an interim order clarifying membership of the committee pending a final determination of the application for final orders.

2.	The "7 Oaks North" community titles scheme

Department of Natural Resources and Mines records show that the "7 Oaks North" community titles scheme was originally created under a building units plan of subdivision (now known as a building format plan) registered on 11 August 1981. The scheme land consists of 30 lots and common property and is primarily used for residential purposes.

A new community management statement was recorded for "7 Oaks North" on 3 June 2003. The community management statement shows that the Act’s Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) applies to the scheme.

3.	Administration of the application

The Commissioner received this dispute resolution application on 11 June 2004. Initially, the Commissioner sought further information about the application from the Applicant, and then invited the Committee, Mr B Victorsen, Mr L Bourke, Mr N Craig and Ms J Hocking to make submissions about the application.

The Commissioner subsequently referred the application to me to decide whether an interim order was necessary because of the nature or urgency of the circumstances of the application (section 247 of the Act). On 23 June 2004, I issued the following interim orders for the application:

"I hereby order that pending a final determination of this application:

1.	Motions 6 and 7 purportedly carried at an extraordinary general meeting of the Body Corporate held on 7 June 2004 (the EGM) shall not be implemented or otherwise put into effect; and
2.	The purported appointment of Neville Craig and Janiene Hocking to the Committee as resolved by the Body Corporate at the EGM shall not be implemented or otherwise put into effect".

The Commissioner subsequently invited the Body Corporate Manager (BCA Community Management Pty Ltd), and all owners of a lot included in the scheme to make written submissions prior to the final determination of the application.

I have before me submissions from the Body Corporate Manager, as well as a number of owners, and committee members. A number of submissions support the outcomes sought by the Applicant, while a number oppose the application in its entirety. To date, the Applicant has not exercised his right to obtain copies of the submissions or to make a written reply to submissions.

On 3 August 2004, the Commissioner made a dispute resolution recommendation (section 248 of the Act) that the application should be the subject of departmental adjudication. The Commissioner has referred the application to me for consideration.

4.	Background to the application

This application concerns two motions (motions 6 and 7), considered and purportedly carried by the "7 Oaks North" Body Corporate at an extraordinary general meeting held on 7 June 2004 (the EGM). Both motions concern membership of the Body Corporate Committee.

The Applicant has provided a copy of part of the notice of meeting material for the EGM. It is apparent that the notice of the EGM, which is dated 11 May 2004, was distributed to owners by the Body Corporate Manager for "7 Oaks North". The agenda for the EGM (as included with the notice of the meeting) includes the substance of five motions. The agenda indicates that four of the motions were submitted by the Committee. The first of the Committee’s motions proposes that the Body Corporate confirm the minutes of the last general meeting. The other three of the Committee’s motions concern the administrative fund budget, and contributions to the administrative fund. The final motion included on the agenda was presented by the Owner of Lot 30 (who is also the Body Corporate Secretary) and concerns secret voting for motions to be decided at future general meetings of the Body Corporate.

Following distribution of the notice of EGM, a supplementary voting paper for the EGM was distributed to owners by the Secretary. This supplementary voting paper is dated 14 May 2004, and proposes a further two motions. Those motions are described on the supplementary voting paper in the following terms:

Motion 6.

Removal of Laurie Bourke from the Committee

Proposed by the owners of Lots 2, 9, 17, 20

That Laurie Bourke be removed from the committee with immediate effect and his committee position be declared vacant.

Motion 7.

Removal of Bruce Victorsen from the Committee

Proposed by the owners of Lots 2, 9, 17, 20

That Bruce Victorsen be removed from the committee with immediate effect and his committee position be declared vacant.

I also note that a letter (dated 19 May 2004 and apparently signed by the four owners proposing motions 6 and 7) was distributed to owners. This letter explains the supplementary voting paper and argues the merits of the motions.

The Applicant has also provided a copy of the minutes of the EGM with the application. The minutes show that while the Chairperson ruled motions 6 and 7 out of order at the meeting, his decision was overruled by the persons present at the meeting and the Body Corporate proceeded to vote on the two motions.

The minutes show that motions 6 and 7 were both carried at the meeting. Motion 6 was carried with 15 votes in favour of the motion and 6 votes against the motion. Motion 7 was carried with 14 votes in favour of the motion and 7 votes against the motion.

The minutes also show that as both motions were successful, the Body Corporate resolved to appoint Mr Neville Craig and Ms Janiene Hocking to the newly vacated positions.
The Applicant considers that the Body Corporate’s purported resolutions regarding motions 6 and 7 (and subsequent decision to appoint Mr Craig and Ms Hocking to the Committee) are void. The Applicant claims, among other things, that:

•	Motions 6 and 7 were not properly included as part of the agenda for the meeting as distributed with the notice of meeting material for the EGM;
•	The Committee did not authorise the inclusion of Motions 6 and 7 on the agenda for the EGM;
•	It was not practicably possible to include motions 6 and 7 on the agenda for the EGM as they were submitted to the Body Corporate Manager after the meeting material had been finalised;
•	When submitted to the Body Corporate Manager, the motions in dispute were defective in that they did not include the names of the persons proposing the motions;
•	When distributed to owners, motions 6 and 7 were not accompanied by material (such as a secret voting envelope) to enable owners to exercise a secret vote on the motions and further, the supplementary secret voting paper did not include the names of the persons proposing the motions;
•	The terms of motions 6 and 7 that were distributed to owners were different to the terms of the motions as originally submitted to the Body Corporate Manager; and
•	Some owners disregarded the supplementary material including motions 6 and 7 as it did not form part of the official meeting material.

The Applicant also considers that because motions were to be decided by secret ballot, votes by proxy should not have been used to overturn his decision (as the person chairing the meeting) to rule Motions 6 and 7 out of order.

The submissions opposing the application include arguments that:

•	Motions 6 and 7 were provided to the Body Corporate Manager in ample time for inclusion on the agenda for the EGM and prior to the time that the Body Corporate Manager had previously indicated would be the last date for submission of motions;
•	Defects (if any) in the terms and form of the motions were minor and should be overlooked in favour of the Body Corporate’s decision on the substance of the motions;
•	Subsequent amendments to the terms of the motions as originally presented to the Body Corporate Manager were not material;
•	The Secretary is entitled to prepare voting papers for the meeting without reference to the Committee, and the supplementary voting papers including motions 6 and 7 formed a valid amendment to the agenda for the meeting;
•	All owners were able to exercise their votes on the motions and no owner was disenfranchised in regards to voting on the matters before the meeting;
•	Owners were invited to contact the Secretary if they were unsure of any aspect of the supplementary voting paper.

In terms of the Applicant’s concerns about the use of proxies, submissions opposing the application argue that proxies may be exercised on procedural motions at a meeting even if the Body Corporate has previously resolved to decide motions by secret ballot.

A number of submissions (both endorsing and opposing the application) also include arguments supporting particular candidates for committee membership over others.

5.	Jurisdiction

Section 227(1) of the Act limits the disputes that may be resolved under the Act’s dispute resolution provisions to those between particular combinations of parties involved in community titles schemes. This application describes a dispute between the "7 Oaks North" Body Corporate and a Co-owner of Lot 25 (who was also the Body Corporate Chairperson at all relevant times). As a result, the application falls into the categories of disputes contemplated by sections 227(1)(b) and (g).

Section 276(1) of the Act allows adjudicators to make just and equitable orders to resolve disputes in community titles schemes about a wide range of matters, including claimed or anticipated contraventions of the Act or a scheme’s community management statement. The basis of this application is that two purported resolutions of the Body Corporate contravene the legislation.

Schedule 5 of the Act sets out a number of examples of orders adjudicators may issue to resolve disputes in community titles schemes. These examples include a declaration that a resolution purportedly passed at a general meeting of a body corporate was at all times void (paragraph 8). For all of these reasons, this application is within the jurisdiction of an adjudicator.

6.	Determination

Generally, a body corporate chooses its committee at each annual general meeting (section 11(1) of the Standard Module). The term of office of a committee member continues until another person is chosen for the position (section 25(1) of the Standard Module), except that section 25(2) of the Standard Module sets out a number of circumstances where a committee member’s position becomes vacant. Of relevance in this case, is section 25(2)(f) which provides that a member’s position becomes vacant if the member "is removed from office by ordinary resolution of the body corporate".

This application requires an assessment of whether Mr Bourke and Mr Victorsen were effectively removed from office by the Body Corporate’s resolutions regarding motions 6 and 7 as purportedly carried at the EGM. The application raises several procedural issues about the presentation of the motions, and their consideration at the meeting. It is not necessary, or in my view appropriate, for me to make an assessment of which particular people would be preferable as committee members. The composition of the committee is a matter for the Body Corporate to decide. My consideration of this application is limited to assessing whether the Body Corporate complied with procedural aspects of the legislation in respect of Motions 6 and 7.


6.1 Validity of Motions 6 and 7

The Body Corporate and Community Management legislation is relatively prescriptive in its approach to meetings of body corporate committees and general meetings of body corporate members. However in meetings of all kinds, including body corporate meetings, minor irregularities in procedure occur both in the calling of the meeting and in the conduct of the meeting itself.

In considering this application, I am mindful of the views expressed by His Honour Judge Boulton DCJ in Chen v Body Corporate for Wishart Village CTS 194821^[1]. In his decision, Judge Boulton considered provisions of the Standard Module and commented that:

"The very detailed provisions of the standard module regulation to which I have referred above make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide".

Therefore, provided that members of the meeting group have not been disadvantaged in properly exercising their right to vote on matters before a meeting, minor irregularities in the calling and conduct of the meeting may be overlooked. However, while taking His Honour’s observations into account, in this instance and after considering all of the material before me, I have concluded that the Body Corporate’s resolutions regarding Motions 6 and 7 should be declared void due to substantial irregularities in procedure. I have a number of reasons for this view, which I will outline below.

It is not disputed that Motions 6 and 7 were not included on the agenda for the EGM as originally distributed to owners. Putting aside arguments about whether or not the motions should have been included on the agenda for the moment, there are a number of provisions of the legislation to consider.

Section 52 of the Standard Module provides for voting at general meetings of bodies corporate. Of particular relevance in this case is section 52(5) which provides that:

(5) A general meeting may pass a resolution on a motion only if the
motion is--

(a) a motion--

(i) included as an item of business on the general meeting’s

agenda; and

(ii) stated in a voting paper accompanying the notice of the

meeting; or

(b) 1 or more of the following--

(i) a procedural motion for the conduct of the meeting;

(ii) a motion to amend a motion;

(iii) a motion to correct minutes.

(my emphasis)

The fundamental importance of including all items of business to be considered at a meeting on the agenda for the meeting is further evidenced by section 47(1)(b) of the Standard Module which requires the person chairing a general meeting of a body corporate to rule a motion out of order if "except for a procedural motion for the conduct of the meeting, or a motion to correct minutes - the substance of the motion was not included in the agenda for the meeting" (my emphasis).

The agenda is one of the most important parts of the formal notice of general meeting which is distributed to owners prior to the meeting. Of course, the above provisions are designed to ensure that everyone that is entitled to attend and participate in the meeting is given prior notice of the matters to be determined at the meeting.

In this case, while it is accepted that Motions 6 and 7 were not included on the original agenda for the meeting, a number of owners have argued that the supplementary voting paper distributed to owners after the original notice of meeting is sufficient to form an amendment to the agenda for the meeting.

I am not entirely convinced that an agenda for a general meeting can be amended in this way. At best, I consider that it is a hazardous approach with an inherent potential to confuse owners and to result in owners not exercising their full rights to participate in the decision making processes of their body corporate. In my view, it is easy to contemplate owners either overlooking documents that are sent separately from the notice of meeting material or misunderstanding that those matters are proposed for consideration at the meeting of which they have previously been given notice. It is far preferable for owners to have one comprehensive set of meeting materials with a single, consolidated agenda which sets out (in totality) the substance of the business to be decided at the meeting.

However even if I accepted that it was possible for an agenda for a general meeting to be amended by a later notice to owners, there is a further complication in this case. Motions 6 and 7 were authorised for inclusion at the meeting and distributed by the Secretary. Some submissions rightly point out that in accordance with section 42A of the Standard Module, the secretary for a body corporate has the primary responsibility for preparing voting papers for general meetings. The submissions argue that the Secretary in this instance was entitled to distribute further voting papers to owners, without reference to the Committee.

However, the submissions appear to overlook section 45(1) of the Standard Module which provides that "the committee must prepare an agenda for each general meeting". It seems to me that the preparation of voting papers is a secondary, albeit essential step to the preparation of the agenda for the meeting. In this case there is no suggestion in the material that the Committee authorised the inclusion of Motions 6 and 7 on the agenda for the EGM.

There are some matters that must be included on the agenda for general meetings, including motions submitted by owners. However, the responsibility for preparing the agenda for a general meeting falls on the committee as a whole. While I have no doubt that the Secretary genuinely believed that Motions 6 and 7 should have been included on the agenda for the EGM, in my view, section 45(1) prevented the Secretary from attempting to include those motions on the agenda without reference to the Committee.

For these reasons, I have made a declaration that the Body Corporate’s resolutions concerning Motions 6 and 7 were at all times void.

I have not investigated in depth the question of whether Motions 6 and 7 could have practicably been included on the original agenda for the EGM as distributed by the Body Corporate Manager. Even if I made a finding that the Body Corporate Manager could have practicably included the motions (which I have not), such a finding would not overcome the fact that the purported amendment of the agenda for the meeting contravened section 45(1) of the Standard Module.

As it is not necessary to do so, I have not considered the other matters raised in the application and submissions such as the form of Motions 6 and 7 as presented to the Body Corporate Manager and on the supplementary voting paper.


6.2 Proxy votes on procedural motions

Briefly, I do not agree with the Applicant’s argument that proxy votes cannot be used for voting on procedural motions at a general meeting on the basis that the Body Corporate has previously resolved to decide motions by secret ballot.

It is true that votes by proxy cannot be exercised on a motion to be decided by secret ballot (section 74(3)(g) of the Standard Module). However, I have some difficulty imagining how a body corporate would conduct secret ballots for procedural motions. By their nature, procedural motions (such as a motion to overturn a decision of the chairperson to rule a motion out of order) arise at the relevant meeting itself and may not be foreseen such that necessary materials for a secret vote can be prepared and sent to owners as required by section 53(2) of the Standard Module. Generally, procedural motions for the conduct of a meeting can be immediately decided at the meeting by the persons present and entitled to vote at the meeting.

For the above reasons, I consider that a generally worded resolution of a body corporate to decide future motions by secret ballot would not necessarily include procedural motions arising in the course of future meetings. As such, I can see no reason why a proxy cannot be exercised for voting on a procedural motion (unless the body corporate has previously restricted the use of proxies in accordance with section 72(2) of the Standard Module).

7.	Conclusion

To avoid uncertainty, I wish to point out that this order only relates to the validity of Motions 6 and 7 as considered at the extraordinary general meeting of 7 June 2004. Neither my interim order, nor this order, impacts on resolutions of the Body Corporate about committee membership made outside of the EGM of 7 June 2004.

I understand that the Body Corporate will shortly hold its annual general meeting. This meeting will be an opportunity for the Body Corporate to democratically choose committee members for the coming year.

^[1] District Court Brisbane, 29 May 2001