No. 9 Port Douglas Road [2006] QBCCMCmr 174 (5 April 2006)

Last Updated: 19 December 2006

REFERENCE: 0213-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24368
Name of Scheme:	No. 9 Port Douglas Road
Address of Scheme:	9 Port Douglas Road PORT DOUGLAS QLD 4871

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

M McEvoy, the Owner(s) of lots 9 and 16

I hereby declare that, pending a final determination, the resolution of the body corporate relied upon as authority to commence specialist adjudication application 0167-2006 (the specialist application), being a resolution purportedly passed outside a committee meeting on 30 November 2005, is deemed to be invalid and must not be relied upon as authority to prosecute that application. I further order that the body corporate is not to take any steps in furtherance of the specialist application unless the body corporate first passes an additional resolution authorising the application and specifically authorising any costs of the specialist adjudicator and other expenditure likely to be involved. This is an interim order and will remain in effect for a period of not longer than six months. It is the responsibility of the applicants to apply to extend this order if no final determination has been made within that period. This order will automatically lapse upon a final order being made or this application being withdrawn.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0087-2006

"No. 9 Port Douglas Road" CTS 24368

Interim Application

No. 9 Port Douglas Road Community Titles Scheme (PDR) is an 18 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). The scheme is described as a warehouse/office/residence converted to an 18 unit complex. Lot boundaries are designated under a building units plan (now known as a building format plan).

This is an application by Michael McEvoy, owner of lots 9 and 16 seeking to prevent the body corporate proceeding with a specialist adjudication application^[1] (the specialist application).

Submissions

The applicant has provided submissions to the effect that:

• The body corporate has not meet to discuss the appointment of a specialist adjudicator or spend what is likely to be a minimum of $6,600 of legal fees for the appointment;
• Some committee members were not given proper notice of the committee resolution purporting to authorise the application; and
• There is nothing urgent about the specialist adjudication application that cannot be discussed by owners at the upcoming annual general meeting.

Submissions on behalf of the body corporate are to the effect that:

• The dispute application is incorrect and should be rejected as the wrong box is ticked on the form;
• The applicant has a vested interest in stopping the specialist adjudication application from proceeding; and
• The adjudicator should order that a specialist adjudicator be appointed to sort out the ongoing disputes about the validity of the caretaking contracts and duties and responsibilities.

Decision

Urgent interim relief

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

Jurisdiction

Submissions on behalf of the body corporate are to the effect that one of the boxes on the application form was incorrectly ticked and the application should be dismissed for that reason. Specifically, the applicant has ticked a box claiming the dispute is of the nature of a dispute between two owners when the applicant should have ticked a box claiming the dispute is between the body corporate and an owner.

On reading the dispute resolution application as a whole, the application is clearly between an owner and the body corporate. The applicant is named in section 1 of the form and described as an owner. The body corporate is named in section 4 of the form as the person against whom the outcome is sought. The ticking of an incorrect box in section 2 of the form is of little consequence given the above. The application is clearly within the jurisdiction of this office (Act, 227). I will therefore proceed to make a determination.

Authority to commence the specialist application

The specialist application was commenced by authority of a resolution passed outside a committee meeting dated 30 November 2005 but minuted and dated 3 March 2006 under the name of the secretary, Denise Hurst. The minutes state that the notice of resolution outside committee meeting was distributed to committee members by email on 30 November 2005 but minutes were not prepared at the time by the then body corporate manager.

The minutes record that four committee members voted for the motions and that three committee members abstained. The relevant motion proposes that a committee submission be lodged as an application for dispute resolution. No reference is made to authorising body corporate expenditure in this respect.

The application raises serious questions about the validity of this purported resolution. In particular, the legislation requires that, except in an emergency, each committee member must be given notice of the proposed motion (Accommodation Module, 33). Questions are raised regarding whether each committee member received proper notice and whether the members who are recorded as abstaining from voting did actually abstain or merely failed to be given notice.

Another serious question raised is the submission that likely costs of the adjudication are at least $6,600. The legislation provides that the applicant to specialist adjudication is responsible for the costs of the adjudication unless the adjudication otherwise orders (Act, 280). Questions are raised about whether the committee has any authority to commence an application where estimated liability may exceed the committee spending limit.

In the circumstances, the applicant has raised serious questions about the validity of the resolution authorising the specialist application. A particular concern is that the committee may incur significant costs to the body corporate in the pursuance of the specialist application without owners having an opportunity to consider the benefits and merits of the application and authorising this potential liability.

Order

The applicant has raised concerns about potential liability of the body corporate to significant costs. On the other hand, representations on behalf of the body corporate do not satisfy me that some additional delay will cause any significant prejudice given the initial resolution was in November 2005 and the application was not lodged until March 2006.

No specialist adjudicator has been appointed yet and it does not seem there will be any significant disadvantage if the present resolution is deemed not to be valid pending a final determination. I therefore propose to prevent the body corporate from taking any steps in furtherance of its specialist application unless the body corporate first passes an additional resolution authorising the application and specifically authorising the likely expenditure involved including the costs of the specialist adjudicator and any likely legal costs. If necessary, the body corporate may wish to seek an adjournment of the specialist application pending an opportunity to pass the necessary resolution.

For these reasons, I make the interim order above. The application will be allowed to proceed to submissions and a final determination in the normal course.

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^[1] Application 0167-2006, No. 9 Port Douglas Road.