Imperial Surf [2006] QBCCMCmr 346 (28 June 2006)

Last Updated: 19 December 2006

REFERENCE: 0436-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9742
Name of Scheme:	Imperial Surf
Address of Scheme:	72 - 80 Esplanade SURFERS PARADISE QLD 4217

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

Roger Keith Dearing, the owner of lot 77

I hereby order that motion 16 purportedly passed by the body corporate at its annual general meeting held on 28 April 2006 was at all times void.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0436-2006

"Imperial Surf" CTS 9742

ORDER SOUGHT

The applicant has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

That motion 16 of the Imperial Surf AGM held on 28^th April 2006 be null and void and be recalled on behalf of the body corporate.

The applicant has also sought an interim order of an adjudicator under the Act as follows:

That the caretaking agreement as tabled at the annual general meeting of the 28^th of April 2006 under Motion 16 be not signed and sealed and entered into with the body corporate until it is verified that the motion was in breach of regulation 104 of the BCCMA rendering the engagement void.

JURISDICTION

The application evidences a dispute between the owner of a lot included in a community titles scheme and the body corporate for the scheme (section 227(1)(b) of the Act).

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

(c) a claimed or anticipated contractual matter about-

(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 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

SCHEME DETAILS

Imperial Surf is a community titles scheme comprising 165 lots, registered under a building units plan (now described as a building format plan). The scheme was established upon registration of the plan in 1983, and is now regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

BACKGROUND

The applicant referred to section 104 of the Standard Module and contended that motion 16 (Appointment of Caretaking Contractor) considered by the body corporate at the annual general meeting held on 28 April 2006 was at all times void because it breached that section.

The applicant stated that the breach occurred because the cost of the caretaking contract exceeded the major spending limit for the scheme (165 lots X $250 per lot - $41,250.00), and the proposer of the motion, Beachbourne Pty Ltd (Beachbourne) did not provide a second quotation for the provision of caretaking services.

The body corporate committee and Beachbourne were invited to respond to the application.

The body corporate committee submitted a legal opinion which it had obtained after the meeting in question, and stated in its submission that, based on the legal opinion, it supported the application.

A submission was received from Beachbourne’s solicitors. It was submitted that:

• the interim order only dealt with the execution and sealing of the caretaking agreement,
• the agreement has been executed on or about 8 June 2006
• the employees of the body corporate who had previously performed the caretaking tasks had been given notice of termination, effective 30 June 2006

and therefore there was no basis for granting the interim order.

Beachbourne’s submission did not address the ramifications of section 104 of the Standard Module in relation to the caretaking agreement.

DETERMINATION

Section 104 of the Standard Module provides as follows:

104 Quotes for major spending

(1) This section applies if--

(a) a motion to be moved at a general meeting of the body

corporate proposes the carrying out of work or the

acquisition of personal property or services, including

the engagement of a body corporate manager or service

contractor, but not including the engagement of a

service contractor who also is, or is to be, a letting

agent; and

(b) the cost of carrying the proposal into effect is more than

the relevant limit for major spending for the scheme.

(2) The lot owners must be given copies of at least 2 quotations

for carrying out the work or supplying the personal property

or services.

(3) If the motion is proposed by the committee, the committee

must obtain the quotations.

(4) If the motion is not proposed by the committee, the person

proposing the motion must obtain the quotations and give

them to the secretary.

(5) Copies of the quotations or, if voluminous, summaries of the

quotations and advice about where the complete documents

may be inspected, must accompany the notice of the meeting

at which the motion is to be considered.

(6) If, for exceptional reasons, it is not practicable to obtain 2

quotations, a single quotation must be obtained and must

accompany the notice of meeting.

Example--

If goods to be acquired by the body corporate are obtainable from only 1

source, a quotation for supplying the goods must be obtained from the

source and circulated with the notice of meeting. The fact that goods

with the necessary characteristics are only obtainable from a single

source would be an exceptional reason for not obtaining 2 quotations for

the supply of the goods.

(7) Unless subsection (6) applies, the motion must be stated as a

motion with alternatives in the agenda and on a voting paper

for the meeting.

(8) Each quotation obtained under this section must be retained as

an attachment to the minutes of the meeting at which the

quotation is considered.

(9) For this section--

(a) the cost of engaging a body corporate manager or a

service contractor includes any payment for the body

corporate manager’s or the service contractor’s services,

provided for under the engagement, for the term of any

right or option of extension or renewal of the

engagement; and

(b) if a series of proposals forms a single project, the cost of

carrying out any 1 of the proposals is taken to be more

than the relevant limit for major spending for the

scheme if the cost of the project, as a whole, is more

than the relevant limit.

The relevant limit for major spending is defined in the Dictionary Schedule of the Standard Module as an amount worked out by multiplying the number of lots included in the scheme by $250.00. The limit for this scheme is, therefore, $41,250.00.

The caretaking agreement between the body corporate and Wellington Capital Limited, purportedly approved at the annual general meeting by the passing of motion 16, provided in Schedule A for remuneration in the first year of $197,000.00. Clearly this amount exceeds the relevant limit for major spending.

The proposer of motion 16, Beachbourne, has made no claim that it was not practicable to obtain two quotations for the provision of caretaking services for the scheme (section 104(6) of the Standard Module). Beachbourne was therefore required to obtain at least two quotations for the provision of caretaking services (section 104(4) of the Standard Module), and propose the motion as a motion with alternatives (section 42B of the Standard Module).

The failure to comply with the requirements of section 104 renders the purported engagement of the caretaking manager void. I have so ordered. It is immaterial that the agreement may have been executed by the body corporate. The breach is not cured by this action.

Although the order has been made on the interim application, it finally disposes of the application, and no further order will be made.