Peppercorn Place [2006] QBCCMCmr 439 (9 August 2006)

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

I hereby order that the application for the following orders:

1. That the body corporate (including the Body Corporate Manager) be restrained and/ or prevented from making or causing payment of any sum of money from the body corporate’s sinking fund until such time as the body corporate authorises that expenditure or by order of the tribunal;

2. That the proposed committee meeting for 17 May 2006 be stopped and/ or prevented from proceeding; or in the alternative,

3. Any resolution carried or resolved at the meeting not be enacted upon or carried out pending final determination of this dispute.

1.1 An order declaring that the purported flying committee meeting of the committee members allegedly held on or about 10 March 2006, and subsequently ratified on 28 March 2006, regarding an alleged emergency, is invalid, or was at all times void for irregularity and non-compliance with the regulations; and

1.2 That the body corporate direct those members of the committee involved in the alleged meeting to provide full and accurate minutes of the meeting (including documents allegedly tabled) together with a full and accurate record of the motion voted upon, being the carrying out works on Lot 39 and the adjoining common property, to the Secretary in order for the Secretary to be able to comply with section 36(4)(a)(i) of the Regulations: and

1.3 That the body corporate direct the lot owner of lot 39, being an ordinary voting committee member, to disclose and provide an explanation to all lot owners regarding the non-disclosure of a direct and vested interest in the outcome of an issue allegedly being considered by the committee at the meeting and then voting in favour of that issue when that member was not entitled to vote contrary to section 34 of the regulations; and

1.4 If any payment has been made without proper authorisation, that the body corporate take appropriate action to recover such sum;

2. An order pursuant to section 25(2)(d) of the Regulations, that the position of voting committee members, Mrs Dell Mallcott, Ms Leonne Fry, Ms Sonya Dennis, Ms Karen Ferris, be declared vacant as a result of their failure to attend two (2) consecutive committee meetings without the committee’s leave;

3. An order declaring that the Notice of Committee Meeting dated 5 May 2006 (and any meeting held in consequence of the Notice) invalid, void and of no effect due to irregularity and non-compliance with section 27 of the Regulations;

4. An order that an administrator be appointed and authorising the administrator to perform:-

(a) obligations of the body corporate, its committee, or a member of the committee under the Act or the Community Management Statement; or

(b) obligations of the Body Corporate under another Act;

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0264-2006

"Peppercorn Place" CTS 20700

SCHEME DETAILS

Peppercorn Place is a community titles scheme registered under a group titles plan (now described as a standard format plan) on 12 April 1990. The scheme comprises 38 lots and common property and is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

ORDER SOUGHT

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

Dispute resolution Application 264-2006 seeking the Interim and Final Orders outlined above, was lodged with this office on 13 April 2006.

The applicant states that in January 2006, the owner of lot 39, who is also a committee member, advised other committee members that a storm water drain and pipe servicing her lot required attention. The applicant inspected the site and, it would appear, had some doubt as to whether the cost of repairs was the responsibility of the body corporate or the lot owner. Although the applicant advised the committee member of his concerns, a quotation was obtained from a plumbing firm by the body corporate manager. The quote was for approximately $2,500 and on 10 March 2006, the Treasurer authorised the Body Corporate Manager to approve the plumbing/ drainage work.

In the applicant’s view, several other water pipes and drains require repairs and such repairs are probably the responsibility of individual lot owners rather than the body corporate. Hence the applicant sought an interim order preventing the committee from making any payment from the body corporate sinking fund until this matter has been determined by way of a final order.

The applicant also made the following submissions in support of the application:

• He has issued 3 notices of committee meetings to confirm the agenda for an AGM in accordance with the regulations and the Adjudicator’s order dated 3 April 2006;

• Four committee members failed to attend meetings scheduled for 17 April, 27 April and 9 May 2006 and due to their failure to attend , no quorum could be formed and in accordance with section 25(1)(d) of the regulations, those positions are now vacant and a quorum cannot be formed;

In the Statement of Reasons attached to my Order dated 25 May 2006, I made the following observations regarding the application for Interim Orders:

On the face of the information provided by the applicant, there appears to be some substance to these claims, although I would hasten to add that I do not propose to make any order finally determining the matters in issue without first giving other lot owners an opportunity to make submissions.

The other issue raised by the applicant is his concern that the committee has improperly approved expenditure on a storm water pipe which services one particular lot which is owned by a committee member. Again, on the face of the information provided by the applicant, there may be some substance to this claim.

Submissions were subsequently received from various affected parties in which the applicant’s version of events was disputed. In particular, it was stated that the applicant had called committee meetings when it was obvious that other committee members would be unable to attend, sometimes with only 24 hours notice. Further, it has been submitted that the reason for calling meetings at such times was to cause committee members’ positions to be vacated for non-attendance.

On 27 June 2006 I issued a Supplementary Interim Order, amending my earlier Interim Order dated 25 May 2006, on the basis of submissions disputing the applicant’s version of events, the applicant’s claims that certain committee members’ positions have been vacated for non-attendance and the importance of a number of important resolutions were carried at the committee meeting on 17 May. The supplementary orders were as follows:

The Commissioner issued the Body Corporate with formal notice of the application in
accordance with section 243 (1) of the Act. In accordance with section 243(2) of the Act, the Commissioner also invited the Body Corporate Committee, the body corporate manager and all lot owners to make written submissions about the application.

Submissions were received from the Body Corporate Committee, the Body Corporate Manager and from a number of lot owners.

The Body Corporate Committee made the following submissions:

The first submission from one of the lot owners raised concerns regarding the behaviour of the applicant including non-compliance with by-laws, rudeness and calling of committee meetings when other committee members were unable to attend.

The second submission cast doubts upon whether the applicant was qualified to make statements regarding the nature of plumbing work that was required within the scheme and whether this work was of an urgent nature. Further, it is submitted that

The body corporate manager went on to outline other communications that they had with various parties concerning this matter.

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; 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

The Final Outcomes sought can be summarised as follows:

I will deal with the above matters one at a time.

1. Validity of Committee Decisions

The applicant states that notices of committee meetings were issued on 12 April, 18 April and 27 April 2006 for committee meetings scheduled for 17 April, 27 April and 9 May 2006, and that due to their failure to attend, no quorum could be formed in order to hold a committee meeting on 28 March 2006.

I have some difficulty in agreeing with this conclusion as it would appear to me that in purporting to call committee meetings scheduled for 17 April, 27 April and 9 May 2006, the requirements of section 28 of the Standard Module have not been complied with.

28 Notice of committee meetings
(1) A meeting of the committee is called by giving written notice to all other committee members stating when and where the meeting is to be held.
(2) The notice must be given--
(a) at least 7 days before the meeting; or
(b) at least 2 days before the meeting, if all voting members of the committee--
(i) vote, at the last meeting of the committee held before the proposed meeting, in favour of the
reduced notice period for the proposed meeting; or
(ii) agree in writing to the reduced notice period for the proposed meeting.
(3) Also, advice of the proposed meeting--
(a) if the body corporate maintains a notice board--must be placed on the notice board; and
(b) must be given to each lot owner individually, other than a lot owner who--
(i) has instructed the secretary that the lot owner does not wish to be given advice of committee
meetings; and
(ii) has not withdrawn the instruction.
(4) The advice mentioned in subsection (3)--
(a) must state when and where the meeting is to be held; and
(b) must be accompanied by the agenda for the meeting; and
(c) must be placed on the notice board and delivered to the residential or business address of a lot owner when notice of the meeting is given to committee members.

In particular, I am not satisfied that at least 7 days notice of the meetings was given to committee members or that all voting members of the committee agreed to a reduced notice period.

2. Record of the Motion to carry out works on Lot 39 and the adjoining common property

A flying committee meeting was held by AD Body Corporate (ADBC) in response to concerns raised by the owner of lot 39 regarding the state of storm water pipes, and I have been provided with a copy of the minutes from this flying committee meeting which are held by the body corporate manager.

In particular I note that the following motion was put to the meeting:
"That the stormwater pipe repaired by Conrad Martens Plumbing Service on Thursday 16 March 2006 be ratified by the Committee" and was carried with 4 votes in favour and 1 vote against.

As the meeting and its outcome have been minuted and are held by the body corporate manager, I can see no point in making an order that a copy of the minutes from this flying committee meeting be produced to the applicant.

3. Conflict of Interest – Section 34

The applicant contends that in voting upon the above motion the owner of lot 39 had a "conflict of interest" within the meaning of section 34 of the Standard Module which provides as follows:

34 Conflict of interest
(1) A member of the committee must disclose to a meeting of the committee the member’s direct or indirect interest in an issue being considered, or about to be considered, by the committee
if the interest could conflict with the appropriate performance of the member’s duties about the consideration of the issue.
(2) If a member required under subsection (1) to disclose an issue is a voting member, the member is not entitled to vote on the issue.
(3) A person who holds the proxy of a member of the committee must disclose to a meeting of the committee the proxy holder’s direct or indirect interest in an issue being considered, or about to be considered, by the committee if the interest could conflict with the appropriate performance of the
proxy holder’s duties about the consideration of the issue.

As the motion was carried with a majority of 4 votes to 1, I believe that the applicant’s argument is largely academic. In any event however, I do not believe that the owner of lot 39 had a "conflict of interest" within the meaning of section 34 of the Standard Module.

The term "conflict of interest" is not specifically defined in the Act but is generally used in the context of a person voting upon a motion to obtain a material benefit that they would not otherwise be entitled to- for example, a commission or an interest in a service contract. The purpose of the above provision is to prevent a voting member from voting on an issue if the member’s personal interest in an issue could conflict with the appropriate performance of the member’s duties to consider the issue in the interests of the body corporate.

For reasons outlined below, I believe that the expense involved in repairing the subject stormwater piping was properly characterised as a body corporate expense and accordingly, I do not think that the motion involved the conferral of any particular benefit on the owner of lot 39.

4. "Improper Payment"

I believe that the expense involved in repairing the subject stormwater piping was properly characterised as a body corporate expense. The stormwater pipe traverses common property and carries water emanating from the downpipe servicing both lots 38 and 39.

Under section 109 of the Standard Module, the body corporate is responsible for maintaining common property in good condition. Section 109 provides as follows:

(1) The body corporate must maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition.
(2) To the extent that lots included in the scheme are created under a building format plan of subdivision, the body corporate must--
(a) maintain in good condition--
(i) railings, parapets and balustrades on (whether precisely, or for all practical purposes) the
boundary of a lot and common property; and (ii) doors, windows and associated fittings situated in a boundary wall separating a lot from common property; and
(iii) roofing membranes that are not common property but that provide protection for lots or common property; and
(b) maintain the following elements of scheme land that are not common property in a structurally sound condition--
(i) foundation structures;
(ii) roofing structures providing protection;
(iii) essential supporting framework, including load-bearing walls.
(3) Despite anything in subsections (1) and (2)--
(a) the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier’s own benefit; and
(b) the owner of the lot is responsible for maintaining utility infrastructure, including utility infrastructure situated on common property, in good order and condition, to the
extent that the utility infrastructure--
(i) relates only to supplying utility services to a particular lot; and
(ii) is 1 of the following types--
• hot-water systems
• washing machines
• clothes dryers
• another device providing a utility service to a lot; and
Examples for subsection (3)(b)--
1 An airconditioning plant is installed on the common property, but relates only to supplying utility services to a particular lot. The owner of the lot would be responsible for maintaining the airconditioning equipment.
2 A hot-water system is installed on the common property, but supplies water only to a particular lot. The owner of the lot would be responsible for maintaining the hot-water system, associated pipes and wiring.
(c) the owner of the lot is responsible for maintaining the tray of a shower that services the lot, whether or not the tray forms part of the lot.

Section 20 of the Act extends the definition of "common property" to include utility infrastructure, which, unless falling within the exceptions detailed in section 20(1)(a), (b) and (c), is also required to be maintained by the body corporate.

Section 20 provides as follows:

Utility infrastructure as common property
(1) Common property for a community titles scheme includes all utility infrastructure forming part of scheme land, except utility infrastructure--
(a) solely related to supplying utility services to a lot; and
(b) within the boundaries of the lot (according to the way the boundaries of the lot are defined in the plan of subdivision under which the lot is created); and
(c) located other than within a boundary structure for the lot.

In this instance, I note that the relevant downpipe services lots 38 & 39, and that the blocked stormwater pipe into which it flowed, traverses common property. Accordingly, I believed that the cost of replacing the pipe was properly characterised as a body corporate expense.

5. Failure to Attend Committee Meetings

For the reasons outlined under the heading "Validity of Committee Decisions" above, I am not satisfied that at least 7 days notice of the meetings was given to committee members or that all voting members of the committee agreed to a reduced notice period. Further, it is my understanding that a number of committee meetings were not held due to the fact that there were insufficient attendees to form a quorum.

6. Notice of Committee Meeting dated 5 May 2006

The applicant submits that the notice of committee meeting dated 5 May 2006 regarding a meeting scheduled for 17 May, was issued in contravention of sections 27(1) & (2) as the applicant was not requested by a majority of the committee to call a meeting on that date.

27 Who may call committee meetings
(1) A meeting of the committee may be called by--
(a) the secretary or, in the secretary’s absence, the chairperson; or
(b) in the absence of both the secretary and the chairperson--another member of the committee acting with the agreement of enough members to form a quorum at a meeting of the committee.
(2) The secretary or, in the secretary’s absence, the chairperson, must call a meeting if asked, in writing, to call the meeting by enough members of the committee to form a quorum at a meeting of the committee.
(3) The meeting must be held within 21 days after the secretary or chairperson receives the request to call it.
(4) If the meeting is not held within the 21 days, the meeting maybe called by another member of the committee acting with the agreement of enough members to form a quorum at a meeting
of the committee.
(5) The secretary and chairperson may both be presumed to be absent if the request for the meeting, addressed to the secretary and chairperson, is given at the address for service
of the body corporate, and no reply is received within 7 days.

It would appear to me that apart from the formalities of reviewing previous minutes and correspondence, and reviewing the agenda for the next AGM, the only other significant issues considered by the meeting were:

It would appear to me that the requirements of section 28 have been complied with, or at least, substantially complied with, which leads to a consideration of the requirements of section 27 (supra).

The committee has made the following submission:

"As committee members we have made repeated requests to hold meetings and have always been willing to attend meetings at appropriate times.....After advice from the Commissioners Office and AD Body Corporate, we took the initiative and called a committee meeting where we set the agenda, provided minutes, booked a venue and organised a date for the AGM."

Section 27 states that a meeting of the committee may be called by the secretary or, in the secretary’s absence, the chairperson; or in the absence of both the secretary and the chairperson--another member of the committee acting with the agreement of enough members to form a quorum at a meeting of the committee. I believe there is ample evidence at hand to support the conclusion that communications between the applicant and other committee members have broken down and while it may be arguable that all the technical requirements of section 27 have not been met, I am also mindful of the interpretation of this legislation in various District court decisions including the views expressed by His Honour Judge Boulton
DCJ in the case of Chen v Body Corporate for Wishart Village CTS 19482.
In that decision, Judge Boulton considered provisions of the Act’s Body Corporate and
Community Management (Standard Module) Regulation 1997 and made the
following comments:

"The very detailed provisions of the standard module regulation to which I have referred above make it almost inevitable that from 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 bona fide."

As stated above, 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 a community titles scheme. In the circumstances, I can see little point in making an order invalidating that committee meeting.

7. Appointment of an Administrator

While sections 276 and 278 and also Schedule 5 of the Act make provision for appointment of an Administrator to a scheme, I am of the view that the best form of management is self –management, and at this stage I am hopeful that the members of the body corporate can put aside their personal differences to work together in the interests of the body corporate.

Of course a further application could be made as a last resort, in the event that intractable
differences of opinion, or personality conflicts make the body corporate unworkable.

Accordingly, I propose to dismiss this application. Further, as previously foreshadowed, interim orders which I have made regarding this application cease to have effect upon the making of this final order.

Number of Scheme:	20700
Name of Scheme:	Peppercorn Place
Address of Scheme:	20 Hellawell Road SUNNYBANK HILLS QLD 4109

•	The applicant has therefore sought quotes from two Body Corporate Managers who have consented to act as administrators for the purpose of confirming the agenda, calling and holding the AGM on or before 2 June 2006;
•	A notice of committee meeting scheduled for 17 May, and dated 5 May 2006, was issued in contravention of sections 27(1) & (2) as the applicant was not requested by a majority of the committee to call a meeting on that date.
•	A committee meeting was convened on Wednesday 17 May for the purposes of :

•	that the body corporate may carry into effect any resolution carried at a meeting of the committee for the body corporate convened on 17 May 2006; and
•	that the body corporate is not to make any payments from the body corporate sinking fund for the purposes of repairing or maintaining storm water pipes servicing individual lots until a final order is made regarding this matter.

•	the meeting was attended by 7 lot owners including 4 of the 6 committee members;
•	correspondence was read out;
•	financial reports were produced;
•	building maintenance was discussed;
•	An Email to be sent to ADBC by the Treasurer regarding the calling of committee meetings at inappropriate times;
•	Proposed date for the AGM;
•	ADBC was reappointed as body corporate manager;
•	Quotes for gardening services were to be obtained and put to the AGM.

•	A motion that the AGM be held on 16 June 20006, carried by all 4 committee members;
•	A motion that the contract with ADBC be renewed.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Peppercorn Place [2006] QBCCMCmr 439 (9 August 2006)