Contessa Condominiums [2006] QBCCMCmr 14 (6 January 2006)

Last Updated: 19 July 2006

REFERENCE: 0637-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	6203
Name of Scheme:	Contessa Condominiums
Address of Scheme:	1 - 7 Serisier Avenue MAIN BEACH QLD 4217

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

Cameron McCall, Helen Murray, Hugh Trevethan & Ray Edgerton, Owner(s) of lots 79, 17, 59 and 9, respectively

I hereby order that the application for orders, including orders to the effect that the general meeting of 9 September 2005 be invalidated, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0637-2005

"Contessa Condominiums" CTS 6203

Application

Contessa Condominiums Community Titles Scheme (Contessa) is a 124 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module).

This application is by Cameron McCall, Helen Murray, Hugh Trevethan and Ray Edgerton, owners in the scheme (applicants) against the body corporate for Contessa (respondent). The applicants are seeking orders to the effect that a general meeting held on 9 September 2005 be invalidated because proper procedures were not followed by the committee in deciding to call the meeting. The applicants also say that a proposed change to the by-laws is contrary to the legislation and that one of the applicants should have been given an opportunity to comment on a motion proposing to revoke a resolution that was originally proposed by her.

Submissions

The applicants’ main submissions were to the effect that:

• The committee made the decision to call the general meeting and put forward the relevant motions by flying minute rather than by a committee meeting. This was not an emergency so notice of the proposed motion would have needed to be given to all committee members and all lot owners for the decision by flying minute to be valid;
• The notice incorporating the motions to be decided by flying minute was not given to all committee members at the relevant time;
• Advice of the motions was not given to all owners at the relevant time;
• The motion proposing a change of the by-laws to prohibit pets is contrary to a provision of the legislation that provides a by-law can not exclude or restrict a right of a person to be accompanied by a guide dog; and
• The motion proposing to revoke an earlier decision relating to the manner of installing air conditioning is unreasonable as the proposer of the motion for the earlier decision should have first been given an opportunity to amend their motion.

Submissions from other owners and on behalf of the body corporate include submissions to the effect that:

• All committee members did in fact vote on the decision to call the general meeting and place the motions before owners. Six of the seven committee members voted in favour of the decision;
• Advice of the resolution by flying minute was given to lot owners on or about the 17 August 2005 (following the sending of the flying minute on 8 August 2005 and the making of the resolution dated 15 August 2005). This is all that is required by the legislation;
• Even if the adjudicator considers that notice of the flying minute should have been given to all lot owners, the fact remains that lot owners could have sent a notice of opposition to the committee resolution if sufficient owners disapproved of the decision;
• The motion to amend the by-law to prohibit animals was passed by 44 votes to 9. It does not contravene the legislation as it is clear that no by-law can override the right of a person to be accompanied by a guide dog;
• The motion to revoke an earlier resolution providing for the manner in which air conditioners should be installed was carried with 51 votes in favour and only 6 votes against. The proposer of the original motion is no longer an owner and has disconnected her air conditioner.

One of the applicants has responded to the above submissions with submissions to the effect that:

• One of the committee members was not provided with notice of the flying minute until after the time required for a response;
• Lot owners were not given notice of the flying minute until notice that the motion was passed was sent to all owners on 18 August 2005 with the notice calling the general meeting;
• The explanatory material was altered after the committee voted to call the meeting. The amended committee explanatory material was never resubmitted to the committee to vote on at all; and
• There was therefore no valid committee resolution to call the general meeting and, on a point of law, the general meeting and its motions are void.

Decision

Applicable law

The legislation includes provisions to the effect that:

• The committee can pass a resolution without a committee meeting (commonly known as resolution by "flying minute") if notice of the motion is given to all committee members and a majority of committee members agree to the motion (Standard Module, 35(1));
• Advice of the motion must be given to each lot owner at the time notice of the motion is given (Standard Module, 35(3));
• A motion voted on under this section must be confirmed at the next meeting of the committee held after the motion is voted on (Standard Module, 35(6)); and
• In an emergency, it is sufficient for notice of the motion to be given to as many committee members as it is practicable and provide advice of the motion to all lot owners as soon as reasonably practicable after notice of the motion is given (Standard Module 35(1), 35(3)).

No proper notice of motion given

The decision by the committee to call the general meeting did not amount to an emergency. Therefore, notice of the motion should have been given to all committee members and advice of the proposed motion should have been given to all lot owners at the time notice of the motion was given.

The evidence suggests that notice of the proposed motion was given to the committee members (or most of the committee members) around 8 August but advice of the motion was not given to owners generally at this time as required by the legislation. In fact, the only notice of the motion given to owners appears to have been a notice given on 18 August 2005 after the resolution was passed and the process for calling the general meeting had already started.

I therefore conclude that the procedural requirements for voting by flying minute without the holding of a committee meeting were not properly followed.

Consequences of flying minute procedures not being followed correctly

The procedures for the committee passing a resolution by flying minute were not properly followed. However, an adjudicator is required to make an order that is just and equitable to resolve a dispute (Act, 276). In all the circumstances, I do not consider it just and equitable to make any orders invalidating the meetings for failure to comply with the procedural requirements.

The courts have recognised that the very detailed provisions of the regulations make it almost inevitable that from time to time there will be non-compliance with the legislation. Non-compliance of an insubstantial nature should not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken in good faith.^[1]

Further, meetings are not automatically void merely because of a procedural defect in the calling of the meeting. Rather, the scheme of the legislation specifies a time limit for making of an application seeking to declare void a meeting of the body corporate (Act, 242).
It seems proper to assume that a meeting will not be void for procedural defect unless or until an adjudicator makes and order declaring the meeting void.

In this instance, a possible late notice of the motion to one committee member does not appear to have caused any substantive injustice, particularly when six other committee members voted in favour of the motion.

Further, I have some concerns about lot owners not being given advice of the motion being put before the committee at the time notice of the motion was given to committee members. Lot owners could then have discussed any concerns with committee members and sought amendment of the motion. Also, lot owners could have put forward their own motions and explanatory material in time for consideration at the general meeting. This would have allowed for more efficient conduct of the body corporate’s affairs. However, the results of owners voting at the general meeting was clear and I am not satisfied any substantive injustice was caused as a result of the procedural defects.

This is not to say that the failures to correctly follow the procedures for voting by flying minute should be taken lightly. If committees use flying minutes rather than committee meetings to make decisions then this deprives owners of the opportunity to attend the meetings, hear discussion on the motions being considered, and submit any alternative or amended motions they wish to have considered at the time. It is therefore important that that owners are given prompt notice of motions to be considered on a flying minute so that owners can consider those motions, talk to committee members about the motions, and submit any alternative motions the owner wants to have considered. If the committee continues to make decisions by flying minute without following the correct procedures then that continued failure to follow the correct procedures may be evidence of a lack of good faith that could result in a procedural defect being sufficient to invalidate the entire meeting.

Motions passed at general meeting

The applicants also argue a motion that proposes a change to by-law 16 from "No animals or birds shall be kept in any lot without the consent of the committee, which consent may at anytime be withdrawn" to "No animals or birds shall be kept in any lot" should be ruled out of order. The submissions put forward are to the effect that the proposed change would be contrary to a provision of the Act that says a by-law cannot restrict a right of a person to keep a guide dog (Act, 181). I see little weight in this argument as the right to keep a guide dog is a separate right that would be unrestricted by the by-law but would not itself render the proposed by-law invalid.

The applicants further argue that a motion proposing to revoke an earlier resolution for installation of drainpipes for balcony air conditioners be ruled out of order. This is on the basis it is unreasonable for the committee to put forward this motion without allowing the proposer of the original resolution to comment or obtain a new quotation. Again, I see little weight in this argument, particularly as any owner is entitled to put forward a replacement motion and a new quotation.

The applicants are obviously discontented with the approach of the committee and also make some allegations that the explanatory material provided by the committee is misleading. However, the applicants have not satisfied me that any material is so misleading that owners could not make up their own minds about how to vote or that it can be said that owners are acting unreasonably if they take the explanatory material into account. Rather, it seems a matter that if sufficient owners are dissatisfied with the approach of the committee then those owners should require the calling of a general meeting at which motions proposing the removal of committee members and appointment of alternative committee members can be considered (Standard Module 25(2), 25B).

Order

For these reasons, I make the order above.

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^[1] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.