San Miguel [2006] QBCCMCmr 525 (16 October 2006)

Last Updated: 19 December 2006

REFERENCE: 0275-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12076
Name of Scheme:	San Miguel
Address of Scheme:	3 Mari Street ALEXANDRA HEADLAND QLD 4572

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Nelson Mandela Constructions Pty Ltd, the owner of Lot 4

I hereby order that the application for an order by Nelson Mandela Constructions Pty Ltd, the owner of Lot 4 seeking an outcome that the Extraordinary General Meeting dated 18 January 2006 be made invalid and that the levy payment for the rectification work due on 1 May 2006 be stopped, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0275-2006

"San Miguel" CTS 12076

APPLICATION

This application is by Nelson Mandela Constructions Pty Ltd, the owner of Lot 4 (applicant) against the body corporate. The applicant is seeking an outcome that the Extraordinary General Meeting dated 18 January 2006 (the EGM) be made invalid and that the levy payment for the rectification work due on 1 May 2006 be stopped.

The applicant’s main submissions have been prepared by Butler McDermott & Egan, Solicitors and are dated 29 May 2006. The submissions make reference to the reports from JTC Consulting Engineers dated 29 July 2005 and 9 November 2005; the quotation from TA Taylor (Aust) Pty Ltd dated 8 December 2005 and the quotation from Hans Heystraten dated on or about 10 January 2006. The applicant’s main submissions are that:

•	Less than 2 days notice was given of the EGM, and that the notice dated 16 January 2006 was not received until very shortly before the meeting.
•	At the time the notice was issued, the body corporate knew that the director of the applicant was in hospital. There was prejudice as there was not an opportunity to speak against the motion at the EGM.
•	It was not reasonable to shorten the notice period given the time which had elapsed between the identification of the problem (29 July 2005) and the EGM date, and given the proposed costs of repair.

JURISDICTION

"San Miguel" Community Titles Scheme 12076 is a scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Small Schemes Module) Regulation 1997 (the Small Schemes Module).

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 claimed or anticipated contravention of the Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under the Act or the community management statement (section 276(1), Act).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot (excluding the applicant), the committee and to Jack Ireland (the affected person listed in 4B of the application). After notification that the person mentioned in the application as the body corporate manager was no longer engaged as the body corporate manager for the scheme, submissions were again called. Given that the commissioner was advised that the body corporate records were held at the Alexandra Beach Surf Club (the owner of Lots 2, 5 and 6), a copy of the application was provided to Jill Curtis of Alexandra Beach Surf Club requiring the body corporate to distribute the notice to the owner of each lot (excluding the applicant), the committee and Jack Ireland. By letter dated 31 August 2006, the commissioner was informed by Watson & Quinn Lawyers (acting on behalf of the body corporate) that the notice was not distributed to owners. On 4 September 2006, the commissioner gave notice of the application and an invitation to make submissions directly to the owner of each lot (excluding the applicant).

A submission was received from the committee and Jack Ireland. The applicant made a written reply to submissions under section 244 of the Act.

The body corporate committee’s main submissions were to the effect that:

• Urgent repairs were required given the condition of the building, the damage to the structure and that portions of the building were falling onto public footpaths.
• The body corporate insurer had, by letter dated 15 November 2005 declined to meet the cost of recent damage recommending that the body corporate ensure that the work stated in the report from JTC Consulting Engineers dated 29 July 2005 be conducted as soon as possible.
• The notice of the EGM was given on 16 January 2006. This was fair and reasonable given the condition of the building, the statements of the insurer, and the impending storm season.
• It was resolved at the EGM to accept the quotation from Hans Heystraten. The owners who voted in favour the relevant motion would have in all probability voted in the same manner even if 21 days notice had been given of the meeting.
• Hans Heystraten commenced work on 6 February 2006 and completed the work around 24 March 2006.
• The body corporate resolved at the EGM to fix a special levy of $16,500.00 per contribution schedule lot entitlement of each lot to meet the cost of the work, the engagement of a supervising engineer and for any additional costs that may be incurred (Motions 4, 5, 6 and 7).

In the reply to submissions, the applicant stated:

• The body corporate was aware of the immediacy of the problem in July 2005 and thereafter on 15 November 2005 when advised by the insurer. There is no proper explanation as to why a further two months passed before the EGM.
• If proper notice was given of the EGM, the applicant could have been able to source an alternative quotation for the body corporate’s consideration. The applicant provided a quotation from Meekan Building and Maintenance dated 28 July 2006 for the amount of $44,413.00 which was given on the basis of an inspection of the roof and the extent of the work detailed in the quotation from Hans Heystraten.
• The special levy should have been fixed based on the Meekan Building and Maintenance quotation.

DETERMINATION

The EGM
It is not disputed that the notice of the EGM was given to lot owners on 16 January 2006. The minutes of the EGM provided by the applicants indicate that the owners of all lots included in the scheme voted on the motions on the meeting’s agenda. The minutes indicate that with the exception of Motions 1 and 8, all motions were passed by 4 votes to 2. While a basis of the application is the giving of the notice of the EGM, it would seem that the applicant participated in the EGM by voting in writing.

The owner of Lot 1 also voted in writing. This owner also questioned the validity of the EGM by making a dispute resolution application (Ref. No. 0281-2006).

Application 0281-2006
Application 0281-2006 was made by Albert and Janice Wilcox, the owner of Lot 1 on 19 April 2006 seeking an outcome "To have the extraordinary general meeting held on 18^th January 2006 made invalid". The grounds on which this outcome was sought included grounds prepared by Butler McDermott & Egan, Solicitors dated 21 July 2006.

On 13 September 2006, R Miskinis made the following order on 0281-2006:

I hereby order that the application for an order declaring invalid the extraordinary general meeting held on 18 January 2006 and any resolutions carried at the meeting is dismissed.

In making the decision, the adjudicator stated:

At the Extraordinary General Meeting of the body corporate held on 18 January 2006 it was resolved to undertake urgent repairs to the common property of the scheme. In support of the application the applicants state that they did not receive notice of the meeting until the day of the meeting. They contacted the body corporate manager, a Mr. Wham by phone and were advised that they could fax their proxy to him to take to the meeting. Unfortunately the applicants were dealing wit a family emergency at the time state that they would not have agreed to the meeting in normal circumstances.

By report dated 29July 2005, JTC Consulting Engineers advised the body corporate that the existing timber façade and soffit sheeting required immediate attention as follows:

•	The existing façade and supporting timber frames should be removed from the building;
•	The soffit sheeting should be removed and replaced as required;

• The existing roof sheet has deteriorated to the point where rectification of problem areas would not be viable and should therefore be replaced with a suitable sheet metal roof;
• The roof framing members should be inspected to confirm their condition and identify replacement if necessary;
• The base of the timber posts supporting the timber deck should be monitored for termite activity and fungal rot;
• In a further report dated 9 November 2005 from the same Engineers, it was noted that a large section of asbestos cement sheet soffit over the "Skate Biz" store had dislodged and fallen to the ground and it was recommended that the roof structure and attached elements were not structurally stable and presented a risk of injury should further detachment occur;
• On 8 December 2005, the body corporate received a quotation from TA Taylor (Aust) Pty. Ltd. for remedial works;
• On about 10 January 2006 the body corporate also received a quotation from a Mr. Hans Heystraten for the subject works;
• On 16 January 2006 the body corporate purported to issue a Notice of extraordinary General Meeting of the Body Corporate to be held on 18 January 2006. Despite purporting to forward a copy thereof to the applicant company, the same was not received until very shortly prior to the meeting;
• The notice was less than 2 days and the applicants believe that therefore, the body corporate failed to comply with the provisions of the Body Corporate and Community Management (Small Schemes Module) Regulation 1997;
• The applicants believe It was unlawful and unreasonable for the body corporate to proceed with the EGM in view of the short notice period;
• The applicant seeks an order declaring invalid the EGM dated 3 May 2006 and any resolutions carried at the meeting;
• It is claimed that the applicant has been prejudiced by the meeting proceeding in the applicant’s absence as they did not have an opportunity to speak against the motion and is now required to contribute $20,625 by way of a special sinking fund levy.

.....

I have perused the minutes of the Extraordinary General Meeting held on 18 January 2006 and made the following observations:

• Pursuant to section 25 of the Small Schemes Module it was resolved by 4 votes to 2 that the body corporate approve the conduct of an EGM on less than 21 days notice to decide on essential repairs to common property;
• By 4 votes to 2 it was resolved that the body corporate accept the quotation from Mr Heystraten in the sum of $70,167.90 to complete the repairs in accordance with the quotation dated 10/01/2006.
• It was resolved that to raise funds to meet expenses referred to at the EGM, including the $70,167.90, a special levy of $16,000 per contribution lot entitlement would be imposed.

This community titles scheme is registered on a building unit plan, now described as a building format plan, and as such, the exterior walls of the building and the roof are deemed to be common property. I am of the view that under section 70 of the Small Schemes Module, the body corporate is obliged to ensure that the roof is in good condition, waterproof and structurally sound. As the body corporate engaged a professional Engineer to assess the extent of required repairs and obtained two quotations from experienced contractors, I do not believe there was any real alternative other than to undertake the necessary repairs. Given the location of the building and the potential danger to the public, I believe that the body corporate acted reasonably in attending to the repairs sooner rather than later.

Indeed, the body corporate committee could have elected not to call an EGM, but rather, could have sought an order of an adjudicator to approve the expenditure pursuant to section 64(1) of the Small Schemes Module. Having regard to the serious public danger presented by the building, I believe that such an application would have been successful.

The next matter for consideration is whether notice of the EGM was given in accordance with the Body Corporate and Community Management (Small Schemes Module) Regulation 1997. In this regard section 25 of the Small Schemes Module provides as follows:

25 Time of general meetings

(1) Unless the body corporate otherwise decides, a general meeting must be held at least 21 days after notice of the meeting is given to lot owners.

(2) A decision made by the body corporate under subsection (1) must be fair and reasonable in the circumstances of the scheme.

The applicants’ solicitors contend that in view of the time elapsed between the time of obtaining the Engineer’s report dated 29 July 2005, and the quantum of the repair cost, reasonable grounds to shorten the notice period did not exist. However I note that after that date, part of the building collapsed on a public footpath and a further Engineers report was obtained on 9 November 2005.

While I am concerned that a very short period of notice was given, I note that other lot owners subsequently resolved to approve the conduct of an EGM on less than 21 days notice. I also note that the decision to call the meeting was motivated by concerns that the roof presented a public safety risk and the possibility that a storm could cause the whole roof to become detached. Having regard to these circumstances, and the potential liability of the body corporate for any loss, injury or death caused by a disintegrating building, I believe that it was fair and reasonable for the body corporate to call the Extraordinary General Meeting for the purpose of approving essential repairs, by giving less than 21 days notice.

Application 0275-2006
The first outcome being sought by this application is the same as the outcome which was sought on Application 0281-2006. The second outcome being sought relating to the special contribution is directly related to the first outcome (even though the applicant has questioned the amount of the contribution). The grounds on which the outcome is sought for this application are essentially the same as the grounds prepared by Butler McDermott & Egan for 0281-2006 (the only discernible difference in the grounds is the statement for 0275-2006 that at time the notice was issued, the body corporate knew that the director of the applicant was in hospital – included as (g) on page 2 of the grounds prepared by Butler McDermott & Egan).

Application 0281-2006 was determined by the adjudicator’s order dated 13 September 2006 which had the effect of resolving the dispute concerning the validity of the EGM. In making the order, the adjudicator fulfilled the functions under the dispute resolution provisions of the Act. Given that an order on 0275-2006 would essentially revisit the substance of the application 0281-2006, such an order would infringe the principle functus officio.
An adjudicator has exercised powers under the Act to resolve the dispute concerning the validity of the EGM and there is no further role in this jurisdiction with respect to the dispute, unless for example there is a direction by a court of competent jurisdiction. In my view, the order made on Application Ref. No. 0281-2006 is a final determination on the validity of the EGM under the dispute resolution provisions of the Act. Therefore, this application is dismissed.

The applicant has, in the reply to submissions, referred to a quotation from Meekan Building and Maintenance dated 28 July 2006. In my view, this quotation does not provide any basis for an alternative decision, and in the circumstances, the body corporate is entitled to rely on the resolution passed on Motion 7 with respect to the payment of the special contribution.