Il Villaggio [2006] QBCCMCmr 373 (12 July 2006)

Number of Scheme:	28518
Name of Scheme:	Il Villaggio
Address of Scheme:	24 Radan Street SUNNYBANK HILLS QLD 4109

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Christopher John West, the owner of lot 9; Meta Mathilda Walden, the owner of lot 13; Geoffrey William Ivett and Valda Joy Ivett, the co-owners of lot 24 and Toni Leigh, the owner of lot 31

I hereby order that the application for an order that motion 2 (Acceptance of Offer of Settlement from Dibbs Abbott Stillman) listed on the agenda of the extraordinary general meeting scheduled for 14 July 2006 was at all times void, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0484-2006

"Il Villaggio" CTS 28518

ORDER SOUGHT

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

An order that motion 2 in the voting papers for the extraordinary general meeting to be held on 14 July 2006 was void.

The applicants have also sought an interim order of an adjudicator under the Act as follows:

An interim order that the body corporate not proceed with motion 2 at the extraordinary general meeting to be held on 14 July 2006 pending a final determination to invalidate motion 2.

JURISDICTION

The Dispute Resolution Application dated 25 June 2006, which was received in the Commissioner’s Office on 28 June 2006, evidences a dispute between owners of lots included in a community titles scheme and the body corporate for the scheme (Act, s227(1)(b)).

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 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

Il Villagio is a community titles scheme comprising 40 lots and common property. The scheme was established upon registration of the building format plan on 31 August 2000, and is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

BACKGROUND

The material reveals that there is an outstanding issue for the body corporate in relation to unpaid legal fees. The facts surrounding that issue are well known to all parties and it is not necessary for me to detail them here.

The applicants contend that motion 2 on the agenda of the extraordinary general meeting scheduled for 14 July 2006 should be invalidated because it does not allow owners the opportunity to vote separately on the two proposals put forward by the motion. The motion states:

That the body corporate resolves to accept the offer of settlement from Dibbs Abbott Stillman Lawyers in full and final settlement of all claims for legal fees incurred by the body corporate AND THAT a special administrative fund levy be raised to cover the settlement amount with a due date of 16 August 2006.

The applicants claim that they wish to vote in favour of accepting the offer of settlement, but they do not believe that it is necessary to raise a special levy to cover the cost of paying the settlement, because the body corporate’s budget, approved at the annual general meeting held in February 2006, has already made provision for legal fees, which have not been fully expended.

On this basis they claim that their voting rights have been compromised, because motion 2 only allows for a vote wholly for or wholly against the two proposals together, rather than being able to split them.

The body corporate committee was invited to respond to the application. The body corporate committee opposed the application, pointing out that although $40,000 had been budgeted for legal fees, the motion by which $25,000 of that sum was to be raised by special levy was defeated at the annual general meeting held on 2 February 2006.

The body corporate committee concluded its submission as follows:

"We see no reason why an order of any kind should be made to declare Motion 2 of the upcoming EGM to be void. The motion is clear and a full explanation of the reasoning behind the motion is given in the explanatory note. The motion is presented in the only format available to the body corporate, as without a special levy the body corporate is unable to make settlement of the DAS claim."

DETERMINATION

I am satisfied that it is necessary to make an interim order as sought, particularly as the costs issue has been outstanding for some time, and further costs and interest are accruing whilst ever the matter remains unresolved. I do not consider it to be in the interests of any party to allow for any further delay.

The explanatory note in relation to motion 2 provides a detailed statement concerning the settlement offer; the committee’s reasoning for recommending its acceptance and the need to raise a special levy to pay for it.

The applicants contend that "if more levies are required the committee should present a separate motion for owners’ consideration and accompanying explanatory information".

In my view the committee has done precisely that by proposing motion 2 for owners’ consideration at the forthcoming extraordinary general meeting. I accept the committee’s submission that motion 2 could not be proposed as a motion with alternatives, because the raising of a special levy must of necessity follow if payment of the settlement offer is accepted by owners.

It is evident from the material that the projected amount of $27,500 to cover the costs liability to Dibbs Abbott Stillman was not approved at the annual general meeting as a result of motion 9 being defeated. Therefore it is incorrect for the applicants to contend that the settlement offer should be paid from monies "already budgeted" because the actual amount did not ever materialise.

It is also evident that a potentially more favourable outcome for the body corporate will be achieved if the body corporate accepts the committee’s recommendation to settle the costs issue with a payment of $12,500, and each party paying its own costs.

Whichever way it goes, it would appear that the body corporate has a liability to pay some costs to Dibbs Abbott Stillman and adequate provision has not been made for the payment of those costs.

Section 93(2) of the Accommodation Module provides:

(3) ...

I am satisfied that the body corporate has discharged its obligation to put the proposed offer to settle the outstanding costs issue to owners for their consideration, and that motion 2, if passed at the meeting to be held on 14 July 2006, will achieve the objective of properly authorising the acceptance of the offer and the means by which to pay it.

I have therefore dismissed the application. No further order is necessary.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Il Villaggio [2006] QBCCMCmr 373 (12 July 2006)