Peninsula [2006] QBCCMCmr 399 (25 July 2006)

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

I hereby order that the application for the following Interim Orders:

1. That Motion 2 be declared carried pursuant to section 56 of the regulation.
2. That there is no legal basis for any recount to be required after a meeting has been declared closed by the chairman purely on the basis of a close result. Further any recount should have been done at the meeting before it was formally closed by the chairman so owners can scrutinise the integrity of any recount.
3. The integrity of the recount of the votes is tainted by the particular circumstances in this case and also by the length of time it has taken for any alleged mistakes to be brought to the attention of the committee and owners and as a consequence such alleged recount is neither valid nor legally binding on the body corporate.
4. The committee’s motion dated 14 June 2006 purporting to reverse motion 2 of an owner’s decision carried on 3 June 2006 is invalid and unenforceable at law pursuant to section 58 of the regulations.
5. The amounts required to be paid by lot owners unde5r notice of contribution dated 22 May 2006 is invalid and unenforceable as it includes a substantial amount in the sinking fund levies which has been rescinding by the 3 June EGM.
6. The committee’s motion carried on 3 June 2006 as per page 8 of the committee minutes is still valid and an urgent order be made that the committee issue to owners forthwith replacement contributions notices with the correct lesser amounts in relation to the sinking fund. No order is required in relation to the administration fund as there is no dispute as to the amount.
7. That any owner who has already paid in full the amounts in contribution dated 22 May 2006 be given a credit or refund for any overpayment and conversely that any owner that has not paid the full amount not be charged any penalty or interest.
8. Any further orders the adjudicator thinks is just and equitable.

Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0470-2006

"Peninsula" CTS 9865

"Peninsula" is a Community Titles Scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) consisting of 246 lots on Building Format Plan,
(previously known as a Building Unit Plan).

APPLICATION

This application is by Mr Peter Taradilis (the Applicant) a co-owner of Lot 226 against the body corporate seeking the outcomes set out below:

The Applicant states that the relevant motion no.2 was placed on the June EGM agenda following a request by numerous lot owners. This motion sought to rescind resolution no.6 which had been carried at the earlier AGM. The motion was originally declared to have been carried by one vote i.e. 49 yes votes and 48 no votes with 2 abstentions.

However, at a committee meeting held on 14 June the committee unanimously accepted an independent recount and purportedly declare motion 6 lost because there were 47 votes in favour and 47 votes against the motion. On 15 June 2006 the body corporate manager wrote to all lot owners announcing that a recount had been conducted and that motion 6 was lost.

The applicant believes that under section 56, once the chairperson has declared the result of a particular motion, that result is final and can only be overturned by an adjudicator’s order or a resolution of a subsequent general meeting.

The Body Corporate Committee has made the following submissions on the request for Interim Orders:

Attached to the committee’s submission was a statement from the Chairman of the committee and a statement from the body corporate manager regarding the recount of the votes and the true and correct result of the voting.

JURISDICTION

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; (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:
the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or
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)).

DETERMINATION

This dispute resolution application was made on 22 June 2006 and has been referred to me pursuant to section 267 of the Act for consideration as to whether interim orders should be made. At this point in time, I am primarily concerned with the threshold issue of whether an interim order is warranted. In any consideration of an application that seeks the making of an interim order, it is necessary to determine whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.

The examples included in the Act under section 279 are suggestive of the usual circumstances
where an interim order might be made and both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

Section 279(1) & (2) provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances. However, given that an interim order may be made ex parte (that is, without reference to, or submission from, the respondent named in the matter), where the circumstances or matters in dispute include matters or allegations not capable of expeditious, and objective consideration,
then the request for an interim order may be refused. It is a matter for an adjudicator to determine in respect of each application.

Subject matter of the application

The applicant is seeking an order that pursuant to the provisions of section 56 of the standard regulations, Motion 2 was carried at the EGM held on 3 June 2006 by one vote. The applicant also argues that motion 2 being an owner’s motion, can only be amended or revoked by a subsequent owner’s motion as set out in section 58, and cannot be overturned by a committee resolution.

I will firstly deal with the question of how section 58 of the Standard Module applies to the situation at hand.

(1) This section applies if a resolution of 1 of the following types is required to decide a matter

(a) a resolution without dissent;
(b) a special resolution;
(c) a majority resolution;
(d) an ordinary resolution.

(2) Once it has been passed, the resolution may be amended or revoked only by a resolution of the same type.

I believe that the purpose and intent of section 58 is clear. The section refers to the various types of resolutions i.e. special resolution, majority resolution etc. and goes on to state that once a resolution has been passed, the resolution may be amended or revoked only by a resolution of the same type. This means for example, a special resolution can only be amended or revoked by a special resolution.

The next matter for consideration is the applicant’s contention that pursuant to the provisions of section 56 of the Standard Module, Motion 2 was carried by one vote at the EGM held on 3 June 2006.

In this regard I note that Section 56, set out below, does not contain specific provision for the re-counting of votes when it becomes apparent that an error has occurred.

(1) The person chairing a general meeting must declare the result of voting on motions at the meeting.

(2) When declaring the result of voting, the person chairing the meeting must state--

(3) The numbers mentioned in subsection (2) must be recorded in the minutes of the general meeting.

(iii) for each lot for which a vote was cast, or for which there was an abstention from voting--the lot number and whether there was a vote for the motion, a vote against the motion, or an abstention from voting on the motion;

(iv) the number of votes cast for and against the motion, and the number of abstentions from voting on the motion; and

(b) for each motion decided by secret ballot at the meeting, each of the following--

(iii) the number of votes cast for and against the motion, and the number of abstentions from voting on the motion.

(5) The voting tally-sheet may be inspected at the meeting by any of the following persons--

(b) the returning officer, if any, appointed by the body corporate for the meeting;

On the other hand, the Committee submits that where a subsequent investigation of the voting discloses that an owner whose vote was counted was in fact disqualified from voting, it would be inequitable if the error could not be corrected and the will of the majority implemented. It is submitted that this is the reason why voting papers and tally sheets are kept and why the Act empowers an adjudicator to make an order declaring a resolution to be void.

In this regard I note that the range of possible Adjudicators’ Orders listed in Schedule 5 to the Act includes the following:

An order declaring that a resolution purportedly passed at a meeting of the committee for the body corporate, or a general meeting of the body corporate was, at all times void; or

An order declaring that a resolution purportedly passed at a meeting of the committee for the body corporate, or a general meeting of the body corporate was, at all times void.

This is not the first instance where this Office has been required to adjudicate upon the results of a vote conducted in a general meeting. There have been instances where a resolution has been declared void while in other instances an adjudicator has made an order that a general meeting be reconvened for the sole purpose of recounting of all valid ballot papers submitted.

In the circumstances, I intend to dismiss the application for an interim orders. I do not consider that the applicant has demonstrated any urgency relating to the application for example, the possibility of some detriment occurring to the affairs of the body corporate if this matter is not
immediately dealt with. While I note that a penalty may be applicable for late payment of levies, the applicant has the option of paying the levy and subsequently gaining a credit or refund in the event that the application is successful. In any event, an adjudicator is able to make orders regarding persons who have reasonable grounds for not paying contributions by the due date.
Secondly, I consider that an effective resolution of this application requires further investigation. For the purposes of expediency at the interim stage, a submission was sought from the body corporate committee only. However, before this matter is finally determined I believe that all lot owners should be given the opportunity to make submissions.
For these reasons, I intend to dismiss the application for interim orders although the application for final orders remains outstanding. This application will now be administered in accordance
with the Act, and the normal procedures of this Office. The application will be determined in due course.

Number of Scheme:	9865
Name of Scheme:	Peninsula
Address of Scheme:	Clifford Street SURFERS PARADISE QLD 4217

•	The committee did not act unfairly by issuing levy notices before the AGM scheduled for 3 June 2006 nor did it try to predetermine the outcome of Motion 2 by issuing levy notices. Rather, the levy notices were sent out after advice from the body corporate manager that moneys were needed to ensure that the body corporate had funds required to meet day to day operations and financial obligations;
•	The levy notices were calculated on the basis of the budget resolutions passed at the AGM on 25 February 2006 and specified that payment was required by 1 July 2006 if owners wished to receive the 20% discount;
•	The committee was aware of the motion seeking to rescind the earlier resolution carried at the AGM, but have statutory obligations to maintain cash flow and give owners ample notice prior to the specified date for payment;
•	The body corporate manager was advised that in the event that motion 2 at the EGM was carried, then an amount would be credited to the accounts of individual owners;
•	Levy notices were dated 22 May 2006 and would have been received by the applicant on or about 23 May 2006. The applicant therefore had a considerable period of time in which to seek an urgent interim order;
•	In declaring the result of the vote on motion 2 on 3 June 2006, the chairman relied upon figures provided by the body corporate manager. However after the day of the EGM it transpired that the voting numbers provided to the chairman were incorrect and one vote counted in the affirmative was made on behalf of an owner who was not entitled to vote as they owed a body corporate debt;
•	As the true and correct result of motion 2 at the EGM was 47 affirmative votes and 47 negative votes, the motion was defeated under section 108(3) of the Act;
•	It would be an absurdity if a purported result arrived at by error (or fraud) and was subsequently found to be factually incorrect and was immune from correction or that a purported result declared by the chairman could not be reversed if an error (or fraud) was subsequently discovered;
•	If a subsequent investigation of the voting discloses that there has been misconduct or an owner whose vote was counted was in fact disqualified from voting, it would be inequitable if the error could not be corrected and the will of the majority implemented and legislation such as section 108(3) complied with. This is the reason why voting papers and tally sheets are kept and why the Act empowers an adjudicator to make an order declaring a resolution to be void;
•	Accordingly, the applicant’s request that motion 2 be declared "carried" should not be made;
•	In relation to the second interim order sought, the committee submits that the recount was carried out by the body corporate manager of its own initiative and not at the instigation of the committee and is normal procedure where voting has been very close. As a result of the recount the fact is that there were 47 affirmative and 47 negative votes so that pursuant to s.108(3) of the Act, the motion was defeated;
•	In relation to the third interim order sought, the committee submits that the applicant does not appear to be seeking an order as such but rather is asserting an argument;
•	It is impossible for the committee to properly respond to the applicant’s assertion that the "integrity of the recount of the votes is tainted" as there is no basis for this assertion;
•	The fourth interim order sought by the applicant is regarded as an assertion rather than a request for an order but in any case is regarded as fundamentally flawed and would only have merit if motion 2 had been validly carried;
•	The fifth interim order sought by the applicant is regarded as an assertion rather than a request for an order but is rejected as motion 2 was not validly passed at the EGM. In any case the validity of motion 2 itself is questioned to the extent that it sought to overturn motion 6 regarding the "future component" of the sinking fund, carried at the AGM on 25 February 2006;
•	In relation to the sixth interim order sought by the applicant, the committee submits that the resolution purportedly carried at the committee meeting held on 3 June 2006, after conclusion of the EGM, was at all times null and void, given that motion 2 at the EGM on 3 June was in fact defeated;
•	In relation to the seventh interim order sought by the applicant, the committee submits that the levy notices are valid true and correct. The contribution notices were issued on 22 May 2006 and were dispatched on or about that date. Further, it is submitted that all owners were notified that motion 2 had been defeated and payment of levies remained due by 1 July 2006. However the committee will abide with any order or direction of the adjudicator regarding persons who have reasonable grounds for not paying contributions by the due date;
•	It is neither just nor equitable to make the interim orders sought by the applicant; and
•	Nor is it appropriate on the balance of convenience to make the urgent interim orders sought.

•	That the resolution purportedly carried at the EGM on 3 June 2006 "that motions 6 & 7 carried at the 2006 AGM on 25 February 2006 be rescinded" was at all times void;
•	That the resolution purportedly passed at the committee meeting on 3 June 2006 in respect of the issue of replacement contribution notices in relation to the sinking fund was at all times void;
•	An order declaring that the resolution passed by flying minute of the committee on 14 June 2006, accepting the result of the independent recount of the votes cast on motion 2 at the EGM on 3 June 2006, whereby the votes in favour tallied 47 and the votes against tallied 47, and that motion 2 was therefore invalid, is valid;
•	Further, and/ or alternatively to the above, that motion 2 on the agenda.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Peninsula [2006] QBCCMCmr 399 (25 July 2006)