Dornoch Towers [2006] QBCCMCmr 432 (7 August 2006)

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

I hereby order that resolution 4 "Chairman’s Report" purportedly carried at the EGM held on 16 November 2005 is void and of no effect.

I further order that the secretary of the body corporate (or another member of the committee authorised by the committee) shall call and hold a general meeting within two months of the date of this order.

I further order that the meeting so called shall be deemed to be the annual general meeting of the body corporate required under the provisions of section 60 of the Body Corporate and Community
Management (Standard Module) Regulation 1997 to have been held between 1 July and 30 September 2006.

I further order that the secretary (or other authorised committee member) must give at least fourteen (14) days written notice inviting owners to submit motions for inclusion on the agenda of the meeting and nominations for committee membership.
I further order that a copy of this order and the accompanying statement of reasons for decision shall be forwarded to all owners with the notice inviting motions and nominations for committee membership.

I further order that lot owners shall have the right to submit to the secretary (or other authorised committee member), motions for inclusion on the agenda for the meeting; and

• if the lot owner is an individual - to nominate the lot owner or another
individual (or individuals) for election as a member of the committee; and
• if the lot owner is not an individual - to nominate an individual (or
individuals) for election as a member of the committee;

Provided that:

• the motions and/or nominations are received by the secretary within 14
days from the date of the secretary giving all lot owners the opportunity
to submit motions and nominations for the committee; and
• the motions and / or nominations are otherwise in accordance with the
requirements of the Standard Module;

then the secretary (or other authorised committee member) shall include the motions on the agenda of the meeting, or nominations on the ballot for election as members of the committee.
I further order that

• at least 21 days notice of the meeting must be given to lot owners
• the notice of the meeting is to be given in accordance with section 42 of the Standard Module;
• the agenda of the meeting must include the items set out in section 45(2)
of the Standard Module; and
• the meeting may determine any other motion validly before it;
• except as provided for in this order, the meeting and all related
matters must be conducted in accordance with the Standard Module.

I further order that in all other respects, this application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0106-2006

"Dornoch Towers" CTS 13477

Scheme

"Dornoch Towers" was registered as a building units plan (now known as building format plan) of subdivision on 13 December 1974 comprising 45 lots and common property. It is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

Application

This application is brought by the owner of lot 16, Patricia Kathlene Phillips, against the body corporate, seeking the following order:

"That the Extraordinary General Meeting of Dornoch Towers Body Corporate held on 16 November 2005 be declared invalid and that the motions put and the Committee elected at this meeting be included in the invalidation."

In support of her application, the applicant identifies a number of irregularities with the meeting and goes on to specifically identify some of the alleged inaccuracies, omissions and additions. The applicant raises additional matters that are not directly relevant to the outcome sought. I have confined my consideration of the material submitted to those things that relate to the order sought.

Submissions in response to the application were sought from all owners (excluding the applicant) and the committee.

Twelve submissions were received, including one from the committee. Of the submissions received, five were in support of the order sought, five were against it and two were equivocal but desirous of the involvement of this office in any event.

Jurisdiction
This is a matter which falls within the dispute resolution provisions of the Act.^[1] This application was lodged on 15 February 2006 and seeks to invalidate a general meeting held on 16 November 2005. The time limit specified in section 242 of the Act has therefore been complied with. It is noted that the applicant alleges that the minutes of the meeting in question were not made available until February.

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)).

Determination

I consider that to be successful in an application for an order that a general meeting of a body corporate be declared invalid, the applicant must demonstrate that significant procedural irregularities, or breaches of the legislation occurred in relation to the calling of the meeting, or the voting on motions. Alternatively the applicant must demonstrate that the substance of the motions is unlawful, or unreasonable and should not be carried out. In meetings of all kinds, including body corporate meetings, minor procedural irregularities often occur both in the calling and conduct of the meeting. It has been the practice of the courts not to void meetings on the grounds of minor irregularities in procedure, provided that persons entitled to participate in the meeting have not been disadvantaged in properly exercising their right to vote on the matters brought before the meeting. The very detailed provisions of the Standard Module make it almost inevitable that form time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bone fide.^[2]

I will now consider each of the alleged irregularities the applicant details in her grounds.

The meeting was not duly convened; nominations and motions invited in May 2005 for an AGM to be held before the end of June 2005, were used in an EGM that was held in November 2005; The election of officers was supposed to be a secret ballot, and was not properly declared by counting votes for each nominee

The applicant states in her grounds that a notice from the committee dated May 2005 inviting nominations and motions was sent to lot owners by the secretary. It advised that notice would be given for the date of the AGM, and this would be advised at a future date, the meeting to be held before 30 June 2005. No notification of the meeting was given, nor was the meeting held, prior to 30 June 2005. A crisis within the committee about this time resulted in the resignation of the secretary and two ordinary committee members. The treasurer also resigned and left without finalising the 2004-2005 financial report. Notice of an EGM for 16 November 2005 was received and the nominations and motions invited back in May 2005 were to be used at the meeting. No new nominations for chairperson or motions from owners were allowed even though five months had passed since then. Nominations for secretary and treasurer were to be called from the floor.

The secretary must serve a notice on each lot owner inviting them to submit nominations for committee membership and motions for inclusion on the agenda of the AGM at least 3 weeks before, but not earlier than 6 weeks before, the end of the body corporate’s financial year.^[3] An annual general meeting must be called and held within 3 months after the end of each of the scheme’s financial years.^[4] The chairperson advised an administrative officer by telephone on 31 July 2006, pursuant to my request, that the body corporate’s end of financial year date is 30 June 2006. It therefore appears that while the notice inviting nominations for committee membership and motions for inclusion on the agenda of the AGM was sent within the statutory time frame, the AGM was not so held. Instead, an EGM was held on 16 November 2005, some six or so weeks after the time required by the legislation.

The explanation for the delay in holding the AGM is given by the applicant herself. She states that the secretary, treasurer and two ordinary committee members resigned from their positions during the period of time within which the annual general meeting should have been held. She further states that the treasurer resigned without finalising the accounts for 2004-2005. In its submission, the committee elaborates further and states that the previous treasurer was an accountant and chose to use his software which was incompatible with the version on the body corporate computer. The chairperson undertook to rectify the problems with the accounts as the incoming treasurer felt the problems were beyond her. The chairperson also undertook to prepare all the pre EGM requirements, arrange to have the accounts brought up to date, investigate OPTUS correspondence pertaining to a lease of the rooftop and type all committee and EGM minutes. It became obvious that the AGM would not be able to be held for some time because of the delay in finalising the accounts. Hence, it was decided to change the AGM to an EGM, primarily to elect a new committee.

I do not consider that the delay in the holding of the AGM is alone sufficient reason to invalidate the meeting. Even if the AGM had been held within the legislative time frame, it appears as though a further general meeting would have been necessary in order to determine several motions (including the setting of budgets and levies) that couldn’t be determined at the AGM as the accounts were not finalised at that time. There was some suggestion that the 21 day period of notice required to be given for a general meeting was not complied with. While a memorandum advising the date of the meeting from the chairperson was sent on 21 October 2005, the official notice of EGM was dated and distributed on 28 October 2005, giving some 19 days notice. I do not consider that owners were sufficiently disadvantaged by the giving of two days less notice to warrant the invalidation of the meeting on this basis alone. I note that those owners who raised the issue of insufficient notice were all present themselves or otherwise represented at the meeting.

The applicant’s main concern appears to be with the election of committee members. In particular, she suggests that new nominations should have been called for prior to the EGM, since a period of some five months had elapsed from the time the nominations were sought to the time of the EGM on 16 November 2005. It appears that the applicant would have nominated an alternative to Mr Wilson for the position of chairperson.

The current chairperson was the only person nominated pursuant to the committee’s request for nominations sent out in May 2005. He was therefore elected unopposed. This is in accordance with section 21(1) Standard Module.

Nominations for all positions on the committee, bar that of chairperson, were called for from the floor of the EGM held on 16 November 2005, presumably because none were received pursuant to the initial request for nominations sent out in May 2005. Five people nominated from the floor of the meeting for ordinary positions and were also declared elected. No election was necessary as the number of nominations did not exceed the required number of members for the committee.^[5]

While I agree with the applicant that it would have been preferable had fresh nominations for committee membership and invitations for motions been sought, I don’t consider that the failure to do this warrants me declaring the committee that was elected invalid. My reasons are as follows.

The legislation provides a mechanism for owners to remove a person from their position on the committee.^[6] The applicant could therefore have sought to requisition an EGM^[7], with the support of at least 25% of owners, in order to remove the chairperson from his position, and appoint someone else. Further, there was an EGM held on 13 July 2006 at which a similar motion could have been considered. Given that the applicant has not taken either of these courses of action, I am not prepared to order now, that a committee that was elected over eight months ago, be declared invalid. The body corporate is due to hold its 2005 – 2006 AGM by the end of September 2006. A new committee will be elected then.

The voting was by show of hands only; The voting was not accurately counted or recorded; No voting abstentions were recorded; The people that moved and seconded motions were not identified

A voter for a general meeting may cast a vote (other than a motion to be decided by secret ballot) personally, by proxy or by casting a written vote.^[8] Section 52(2) Standard Module provides that "voting by persons present at a general meeting must be by show of hands, or by giving completed voting papers to the secretary or, if the secretary is not present, the person chairing the meeting not later than the start of the meeting, unless a ballot is required". In relation to the declaration of voting results, section 56 of the Standard Module provides as follows:

Section 42A(5) requires the voting paper to name the submitter of each motion listed.

A perusal of the minutes of the EGM of 16 November 2005 indicates to me that the body corporate has fallen far short of the legislative requirements detailed above. In its submission, the committee concedes its failings and undertakes to remedy the situation in the future. It states that despite the failings, the intention of the membership was accurately recorded via the "for" and "against" totals. The applicant has not alleged that the results of voting on motions would have been different had the errors she points out not occurred. For this reason, despite the non-compliance with the legislation, I decline to order in the terms sought by the applicant. I note that for the EGM held on 13 July 2006, there appears to have been some improvement in these areas.

The Chairman’s Annual Report 2005 could reasonably be considered libellous and defamatory towards more than one owner; The Chairman’s Annual Report 2005 contains motions, contrary to accepted procedure and the relevant act. By accepting the report, the meeting appears to accept the motions contained in the report;

I do not consider that this is an appropriate jurisdiction to determine whether material is libellous or defamatory and I therefore decline to make any orders in this regard. If the applicant wishes to pursue a claim for defamation or libel, she will need to initiate action in a court of competent jurisdiction.

In its submission, the committee states that the motions mentioned in the chairman’s report were forwarded as separate motions in the agenda to the EGM. After my perusal of the agenda and minutes of the EGM, I disagree. The chairman’s report listed ten separate motions. In the agenda and minutes of the EGM I can find no record of motions 1 (amendment to by-laws), 4 (removal of legal liability), 7 (approval for an office/meeting room on level B1), or 10 (landscaping and proposed renovations to main foyer) listed in the chairman’s report. The applicant has not alleged that the matters I’ve referred to have been implemented.

Section 52(5) Standard Module provides as follows:

There is no legislative requirement for a chairperson to issue a "Chairperson’s Report". However, the legislation does make very specific provision for explanatory material to be included in a separate schedule accompanying the voting paper for the meeting.^[9] The body corporate has
an obligation to properly present motions and accompanying explanatory material to owners. I consider that the body corporate has failed to fulfil this obligation. The "Chairperson’s Report" purported to include motions that were not included elsewhere in the agenda for the meeting. I am particularly concerned that owners would be confused by the vote taken to "adopt" the chairperson’s report. In these circumstances, I intend to order that resolution 4, purportedly passed at the EGM of 16 November 2005 is invalid and of no effect.

Copies of the minutes of the EGM were not given to each lot owner within 21 days of the meeting;
One undated copy of the minutes of the EGM was put on a table in the foyer of Dornoch Towers sometime within the week of 9 – 11 February 2006, almost three months after the meeting;
The undated minutes of the EGM are not a true and accurate record of the meeting

Section 59 of the Standard Module provides as follows:

In its attempt to justify the delay with the distribution of the minutes, the committee submits as follows:

The delayed EGM was held at a most inconvenient time for a number of committee members. With the end of the school year and the end of year and Christmas rush period and prior commitments of many committee members, there was little time to properly attend to the timely completion of the EGM administration requirements. To add to this, there was an ongoing dialogue with OPTUS and seemingly endless disputes with people like Mr and Mrs Phillips. A number of committee members also had plans to go on holidays over the Christmas break. It is considered that the delay in producing and distributing the minutes was unavoidable under the circumstances. As there is no claim of disadvantage to any member of the body corporate it is felt that the delay should be accepted as undesirable but unavoidable.

I do not accept the committee’s excuses for their failure to distribute the minutes of the meeting within the legislative time frame. While I acknowledge that the secretary had resigned prior to the EGM and the position remained unfilled at the EGM, I consider that a period of 21 days is ample time to prepare and distribute the minutes of the meeting. Considering the fact that this particular general meeting was controversial in several respects, I believe the committee was even more obligated to ensure the minutes were distributed within the required time. However, I accept that there has not been any allegation of disadvantage to any member of the body corporate and therefore will not invalidate the meeting on this basis alone. Having said this, I expect that in future, all minutes of general meetings will be distributed within 21 days of the meeting. It appears as though the minutes of the EGM of 13 July 2006 have been prepared within the legislative time frame.

The applicant also claims that the minutes, as distributed, are not a true and accurate record of the meeting. I do not consider that adjudication is an effective way to resolve this type of claim. I was not at the meeting and am not in a position to judge what did and did not occur. It appears that the minutes of the EGM of 16 November were confirmed as a true and correct record of the meeting at a subsequent EGM held on 13 July 2006 by 22 votes for and 11 votes against. It is obvious that the EGM of 16 November was contentious. This is reflected in the minutes of the meeting and the vote taken to confirm them some eight months later. Because I am not in a position to determine the accuracy or otherwise of the minutes, I don’t intend to invalidate the meeting on that basis alone.

Conclusion

While I have declined to invalidate the EGM of 16 November 2005 in its entirety, the applicant has raised a number of valid concerns and I am concerned about the on-going administration of this body corporate.

While I acknowledge that the committee meets monthly and the body corporate is functioning, in particular, I am concerned that owners have (as at 31 July 2006) still not been asked to submit nominations for committee membership or motions for inclusion on the agenda of the 2005-2006 AGM, despite the legislation requiring that this be done at least three weeks, but not more than six weeks before the end of the body corporate’s financial year. I am also concerned that the body corporate has had yet another EGM (13 July 2006) when its AGM is due to be held by 30 September 2006.

It is clear that the body corporate committee must improve its procedures and compliance with the
legislation, especially in relation to the calling and holding of AGMs to a significant extent. How the body corporate achieves this level of compliance is a matter for it to determine. However, to ensure that an AGM is held within a reasonable period of time and that owners are given a proper opportunity to nominate for committee membership and submit motions for inclusion on the agenda of the AGM, I have made the above orders.

I note that the committee states that it has investigated using a professional body corporate manager and has obtained quotes which would require up to an additional $250 per unit per annum added to the body corporate fees. The committee states that it "felt that the majority of the body corporate would object to an increase in fees to permanently rectify the situation". I suggest that owners should be given the opportunity to make this decision themselves and I urge the committee to submit the quotes they’ve obtained to the upcoming AGM. Of course, owners are free to submit any quotations they’ve obtained as well.

In addition, in the interests of the operation of this Body Corporate, I suggest to all parties that a more conciliatory approach be taken in regards to body corporate issues. I also suggest that correspondence remain as professional and objective as possible. I urge the committee to make use of the Information Service provided by this office (www.bccm.qld.gov.au Ph 1800 060 119) to ensure the AGM is called and held in accordance with the legislation.

^[1] See sections 227, 228 and Schedule 5
^[2] Wei-Xin Chen v. Body Corporate for Wishart Village [2001] District Court (Brisbane) 4080 of 2000.
^[3] See sections 13 and 41(5) Standard Module
^[4] Section 60 Standard Module
^[5] See section 22(3) Standard Module
^[6] See section 25(2)(f) Standard Module
^[7] In accordance with section 61 Standard Module
^[8] Section 51(1) Standard Module
^[9] See section 42C Standard Module

Number of Scheme:	13477
Name of Scheme:	Dornoch Towers
Address of Scheme:	QUEENSLAND

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Dornoch Towers [2006] QBCCMCmr 432 (7 August 2006)