The Ridge-Noosa Springs [2006] QBCCMCmr 479 (29 August 2006)

Last Updated: 19 December 2006

REFERENCE: 0616-2006

ORDER OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Number of Scheme:	GTP 107048
Name of Scheme:	The Ridge - Noosa Springs
Address of Scheme:	Noosa Springs Drive, Noosa Heads, QLD 4567

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Stewart Fraser, the co-owner of lot 32

I hereby order that pursuant to the application by Stewart Fraser, the co-owner of lot 32, motions 8 and 10 notified as included on the agenda of the AGM of owners of The Ridge – Noosa Springs notified to be held on Monday 11 September 2006, and relevantly headed: 8. ELECTION OF BODY COPRORATE COMMITTEE ORDINARY RESOLUTION Submitted by Mr E & Mrs U Von Honeyer – lot No. 501 10. ELIGIBILITY TO HOLD OFFICE ORDINARY RESOLUTION Submitted by Mr A Robertson – Lot No. 539 are invalid for the reason that these two motions, if considered and carried at the AGM, would conflict with the Act, and thereby be invalid and unenforceable. I further order that: 1. All owners shall disregard these motions as included on the agenda for the AGM; 2. Any vote cast on a voting paper for either or both motions should be disregarded by the body corporate; 3. The minutes of meeting should record that the two motions were ruled out of order by the Referee pursuant to section 77(1) of the Building Units and Group Titles Act 1980 on the basis of their conflict with the Mixed Use Development Act 1993 (s.185(7)) prior to the meeting, and no vote was taken at the meeting on the motions. I further order that this order is final in its determination of the issues the subject of the application and no further order will be forthcoming.

STATEMENT OF REFEREE’S REASONS FOR DECISION - REF 0616-2006

"The Ridge-Noosa Springs"

The applicant, Stewart Fraser, the co-owner of lot 32, has sought the following interim and final order of a Referee under the Building Units and Group Titles Act 1980 (the Act), quote –

That "The Ridge" Body Corporate is prevented from considering and voting upon motions 8 and 10 attached, at the forthcoming AGM to be held on 11 September 2006, and further that if the body corporate votes that the decisions be declared void.

Noosa Springs is a scheme developed under the provisions of the Mixed Use Development Act 1993 (the MUD Act). Section 214A of that Act provides

214A Dealing with disputes
Unless otherwise provided in this Act, a dispute about the operation of this Act or the rights and obligations of persons under this Act may be dealt with under the Building Units and Group Titles Act 1980, part 5.

Consequently, the relevant dispute resolution provisions are those under the Building Units and Group Titles Act 1980 and not the Body Corporate and Community Management Act 1997, which is the generic legislation now applying to the vast majority of community title schemes operating in Queensland. Relevantly, sections 77 and 78 of the Building Units and Group Titles Act 1980 provide as follows -

77 General powers of referee to make orders
(1) A referee may, pursuant to an application of a body corporate, a body corporate manager, a proprietor, a person having an estate or interest in a lot or an occupier of a lot in respect of a parcel, make an order on any person entitled to make an application under this subsection or on the chairperson, secretary or treasurer of the body corporate for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise
or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.
(2) Where a body corporate has a discretion as to whether or not it exercises or performs a power, authority, duty or function conferred or imposed on it by this Act, it shall be deemed to have refused or failed to exercise or perform that power, authority, duty or function only if it has decided not to exercise or perform that power, authority, duty or function.
(3) Nothing in this part authorises the referee to make an order of the kind that may be made by the Court under section 25 or 26.
(4) Nothing in this part affects the generality of subsection (1), but an order in respect of any matter dealt with in any other section of this part shall not be made under this section.

At the AGM of the body corporate notified to be held on Monday 11 September 2006, the following two motions, amongst others, have been proposed.

8. ELECTION OF BODY COPRORATE COMMITTEE ORDINARY RESOLUTION
Submitted by Mr E & Mrs U Von Honeyer – lot No. 501
Moved Non resident and resident / not resident owners in default of the covenants are not electable to the Body Corporate Committee.

10. ELIGIBILITY TO HOLD OFFICE ORDINARY RESOLUTION
Submitted by Mr A Robertson – Lot No. 539
Moved Eligibility to hold office for the 2006/7 year be restricted to those proprietors who have competed house construction on their respective lot(s) or have commenced house construction on their respective lot(s) as at the date of the forthcoming 2006 Annual General Meeting.

The applicant seeks that the body corporate be prevented from considering or voting on these two motions. In his grounds, the applicant states:

I believe the motions put forward ... conflict with the Act, are unenforceable by the body corporate and therefore should be ruled out of order by the chairperson as they conflict with the Act. ... The Act sets out the eligibility criteria for committee members and the body corporate does not have the right to change that criteria and place further restrictions upon it.

... With respect to motion 8, I believe any lot owner can nominate for the committee whether or not they are in breach / default of the deed of covenant with ... the developer of the scheme. ...

With respect to motion number 10, I further believe that any owner can nominate for the committee whether or not they have completed house constructions on their lot as at the date of the AGM on 11 September 2006. ...

... the body corporate does not have the right to change the eligibility criteria for the committee and place further restrictions upon it.

The applicant then refers to section 42(6) of the BUGT Act. In respect of motions 8 and 10, he states both should be ruled out of order as they conflict with the Act and are unenforceable by the body corporate.

In order to ensure procedural fairness to all parties, this office sought submissions in respect of the interim order application from the committee, and the two lot owners who submitted the relevant motions, before considering this application for interim and final orders. Submissions were received from the owner who submitted motion 10, Mr Robertson, and from Jan Beckett as chairperson of the committee.

Mr Robertson, in his submission states:

I do not believe motion 10 conflicts with the Act as the Applicant contends. The Act is silent in regard to the rights of conditional proprietors who are in breach of contractual purchase obligations and whose blocks can not be brought back by the vendor. (Mr Robertson previously explained the basis of the " conditional proprietors" scenario).

After explaining that the scheme is "an incomplete development site", Mr Robertson states:

The issues affecting The Ridge are community issues faced by residents, fundamentally an elongated house construction process of which the applicant has done absolutely nothing to hasten finality. It is entirely appropriate for a body corporate AGM to determine whether or not only owners who have built or who have commenced building on their respective lots and therefore are not in breach of purchase obligations should be eligible to be office bearers in the forthcoming financial year.

... The application for motion 10 to be ruled out of order should therefore be declined by the Referee on the grounds that it is impractical and indeed inappropriate to have members of a body corporate policing by-laws affecting residents when they are in breach of their purchase obligations to even become residents, ie build a house within contractual time frames. Motion 10 should rightly be left for the body corporate to vote upon.

The submission from the chairperson states:

It is now apparent that The Ridge is a divided committee and isn’t in a position to make a cohesive submission to you regarding Motions 8 and 10. (The Chair then gives some details of the position of various members before concluding) This situation would not have arisen if there had not been a conflict of interests. Builders are reluctant to comply with the Noosa Springs Development Control By-laws and where people are holding land and not building, would be anticipating a substantial increase in the value of their land.

Whilst dispute resolution is dealt with under the Building Units and Group Titles Act 1980, the relevant legislative provisions are those of the Mixed Use Development Act 1993. However, I will add that the MUD Act is not exhaustive in its provisions, and the MUD Act specifically incorporates certain provisions of the BUGT Act by reference, namely:

Section 172 (9) Part 2 of schedule 2 to the Building Units and Group Titles Act 1980 applies to other meetings of a body corporate and voting at the meetings.

I have reviewed Part 2 of schedule 2 of BUGT Act and find not additional reference to eligibility for committee election. This is logical as the issue is dealt with in section 42(6) of the BUGT Act proper. Clause 4 of Part 2 of schedule 2 of BUGT Act does however contain the following provision dealing with the right of a chairperson to rule motions out of order:

4 Motions out of order
At a general meeting of a body corporate the chairperson may rule that a motion submitted at the meeting is out of order if--
(a) the chairperson considers that the motion, if carried, would conflict with this Act or the by-laws or would otherwise be unlawful or unenforceable; or
(b) except in respect of a motion to amend a motion--section 1(7) has not been complied with in
respect to the motion; or
(c) in respect of a motion to amend a motion--there is any vote cast in writing, as referred to in section 5(b), in respect of the motion sought to be amended.

Section 185 of the MUD Act provides:

185 Constitution of executive committee
(1) After the first annual general meeting of a body corporate, there is to be an executive committee consisting of--
(a) the chairperson, secretary and treasurer; and
(b) any other members elected or appointed under this section.
(2) If there is only 1 member of the body corporate--
(a) the member may make any decision that a properly convened executive committee is required or authorised to make under this Act; and
(b) a decision of the member is taken to be a decision of the executive committee.
(3) If there are not more than 3 members of the body corporate, the executive committee consists of--
(a) each member who is an individual or the member’s nominee; and
(b) the nominee of each member that is a corporation.
(4) If there are more than 3 members of the body corporate, the executive committee consists of--
(a) the chairperson, secretary and treasurer; and
(b) the number of other members (not more than 4) determined by the body corporate.
(5) If the number of members of a body corporate is less than the number of members of the executive committee (including the chairperson, secretary and treasurer), the members of the
executive committee are to be elected--
(a) at each annual general meeting of the body corporate; or
(b) if the number of members of the executive committee changes because of a determination under subsection (4) at a time more than 4 months from the anniversary of its first annual general meeting--at an extraordinary general meeting convened for the purpose.
(6) A person may be elected to more than 1 of the offices mentioned in subsection (1)(a).
(7) A person is eligible for election as chairperson, secretary or treasurer or other member of the executive committee only if the person is--
(a) an individual who is a member of the body corporate; or
(b) a nominee of a corporation that is a member of the body corporate; or
(c) an individual who is not a member of the body corporate but who is nominated for election by a member (my highlighting for emphasis). ...
(8) Despite subsections (1) and (4), the body corporate may determine that the secretary or treasurer is not to be a member of the executive committee.
(9) If the body corporate makes a determination under subsection (8), a person elected as secretary or treasurer holds the office in relation to the body corporate and the executive committee, but is not a member of the executive committee.
...
(15) The following provisions apply to the election of a person at the extraordinary general meeting
(a) subsections (6), (8) and (9);
(b) part 1 of schedule 2 to the Building Units and Group Titles Act 1980 (as applied by section 172) that relate to the election of the person.
(16) If there is no executive committee of a body corporate, the body corporate is to exercise the powers, and perform the functions, of the executive committee.

Comparing sections 185(7) of the MUD Act with section 42(6) of BUGT Act is interesting in that the sections are written in a different manner, but appear to have the same effect in operation. Based on section 185(7) eligibility for the committee is that if the person is:
(a) an individual who is a member of the body corporate; or
(b) a nominee of a corporation that is a member of the body corporate; or
(c) an individual who is not a member of the body corporate but who is nominated for election by a member,
then they are eligible to be nominated for, and to become, members of the committee.

The body corporate is a reference to the body corporate created on registration of the relevant building unit or group title plan, so "member of the body corporate" includes all owners of a lot in the relevant scheme. It is clear from this provision that eligibility for membership of the committee is open to all owners of a lot in the scheme, nominees of a corporation which is the owner of a lot in the scheme, and finally to an individual who is not a member of the body corporate but who is nominated for election by a member. The relevance of this final category is that essentially any individual person in the entire world is eligible for committee membership, provided they are first nominated for election by an owner.

In light of this provision, the restriction sought to be imposed by Mr Robertson via his motion appears completely inconsistent with the legislation. He states that owners who are "conditional purchasers" and allegedly in breach of their obligations "have no standing nor should they ...". I note that at least these persons are owners of a lot in the scheme, and clearly have a financial interest, in circumstances where in contrast, the legislation allows an individual with no interest whatsoever to be nominated and serve on the committee, provided they are nominated by a member.

It should be noted that the legislation now governing most community title schemes in Queensland, namely the Body Corporate and Community Management Act 1997 and associated regulation modules, provides a far more restrictive regime in respect of eligibility for committee membership, but even those provisions allow all owners to be committee members.

It is clear that motions 8 and 10 propose restrictions on the eligibility of persons for election to the committee. These restrictions are inconsistent with the committee eligibility criteria set out in section 185(7) of the MUD Act, and given that they are inconsistent with the Act, would be in conflict with the Act if they were to be carried at the forthcoming AGM. Given this, the motions should be ruled out of order by the Chairperson at the AGM.

However, to avoid any doubt, I intend to invalidate the motions by way of this order, and to prevent their consideration at the AGM. If voting papers have been received which casts a vote for either or both motions, the body corporate should simply disregard the votes cast. The minutes of meeting should record that the two motions were ruled out of order on the basis of their conflict with the Act prior to the meeting, and no vote was taken at the meeting on the motions. I have ordered accordingly.

Though an interim order, this order is intended as a final determination of the issues the subject of the application. If any person is aggrieved by the terms of this order, they should consider their rights of appeal in regard to this order and not await any "final" determination of the issues.