Willahra Tower [2006] QBCCMCmr 55 (9 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0604-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30990
Name of Scheme:	Willahra Tower
Address of Scheme:	540 Queen Street, BRISBANE QLD 4000

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Wesley and Doreen Grimshaw, the co-owners of Lot 101

I hereby order that the application for an order by Wesley and Doreen Grimshaw, the co-owners of Lot 101 seeking an outcome, quote: That both co-owners of Lots 84, 86 and 100 (Mr Ralph Donnet and wife Mrs Patti Donnet) cannot be on the committee at the same time, in accordance with regulations s.11(4) as there were additional nominations for all positions at our 31 March 2005 AGM is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0604-2005

"Willahra Tower" CTS 30990

APPLICATION

This application is by Wesley and Doreen Grimshaw, the co-owners of Lot 101 (applicants) against the body corporate (respondent). The applicants named Richard Nitze, a co-owner of Lot 22 and all lot owners as persons who would be affected by the outcome sought. The applicants are seeking an outcome that, quote:

That both co-owners of Lots 84, 86 and 100 (Mr Ralph Donnet and wife Mrs Patti Donnet) cannot be on the committee at the same time, in accordance with regulations s.11(4) as there were additional nominations for all positions at our 31 March 2005 AGM.

JURISDICTION

"Willahra Tower" Community Titles Scheme 30990 is a scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

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

(c)	a claimed or anticipated contractual matter about:
(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)).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to Richard Nitze and to the body corporate manager for distribution to the owner of each lot (excluding the applicants and Mr Nitze) and the committee. A submission was received from the committee and a number of lot owners. The applicants made a written reply to submissions under section 244 of the Act.

DETERMINATION

Ralph Donnet and Patti Donnet are the co-owners of Lots 84, 86 and 100 included the "Willahra Tower" community titles scheme. The Minutes of the Annual General Meeting dated 31 March 2005 (AGM) indicate that Patti Donnet was elected as secretary of the body corporate and that Ralph Donnet was elected as treasurer of the body corporate. Given the submissions made to the application, by letter dated 13 December 2005 I requested the applicants provide a copy of the Minutes of the Extraordinary General Meeting dated 10 November 2005 (EGM).

The copy of the Minutes of the EGM provided by the applicants indicate that the body corporate resolved to remove all members of the committee from office pursuant to section 23(2)(f) of the Accommodation Module, and that Patti Donnet was subsequently elected as secretary of the body corporate and Ralph Donnet was elected as treasurer of the body corporate

The applicants claim that Patti and Ralph Donnet cannot be on the committee at the same time given the provisions of section 11(4) of the Accommodation Module.

Section 11(4) of the Accommodation Module provides that "Unless otherwise permitted under this regulation,5 only 1 co-owner of a lot can be a voting member of the committee, on the basis of ownership of the lot, at a time". This is one of a number of provisions of the Accommodation Module restricting membership of a body corporate committee:

• Section 11(1) limits the persons who are eligible for committee membership.
• Section 11(2) prevents a body corporate manager, a service contractor or a letting agent, or an associate of any of these persons from being elected as a voting member of the committee.
• Section 11(3) affects a person’s eligibility for committee membership in the circumstance where the person owes a body corporate debt.
• Section 14(2) provides that a lot owner may in response to an invitation for nominations for election to the committee, nominate one individual.
• Section 21(5), section 22C(2) and section 23E(7) make provision for 1 other co-owner of a lot being appointed as an ordinary member of the committee in the circumstance where it is necessary to achieve the minimum requirements of the composition of the committee.

These provisions formed part of the amendments to the Accommodation Module commencing on 1 December 2003 and the purpose of amendments of this nature is stated in the explanatory notes^[1], quote:

• Amendment of s 11 (Eligibility for committee membership) Clause 10--This clause amends section 11 to specify which persons are eligible to be a member of a committee. This amendment deals with concerns raised by stakeholders of committees being stacked. The effect of the amendment is that a committee will be more representative of the lot owners as it will consist only of persons who are lot owners or persons with a connection to lot owners such as a family member (eg mother, father, brother or sister), a director or secretary of a corporate owner or a person appointed under a power of attorney to act for a lot owner. These amendments place significant restrictions on the persons that can be committee members (pages 21 and 22).
• Replacement of s 14 (Nominations to committee) Clause 13--This clause provides in section 14(2) that a lot owner may, in response to a notice inviting nominations for election of the committee, nominate only one individual. If the nominating owner is an individual, the individual nominated could be the owner themselves, another lot owner, or a member of the owner’s family or a person acting under a power of attorney given by the owner....This amendment, and the amendment in clause 10, limits the possibility of a committee being stacked by owners nominating multiple other people for election to the committee. The amendment does not restrict an owner from nominating the individual for more than one committee position (page 23).
• Amendment of s 21 (Conduct of ballot--deciding ordinary member positions)...A new provision has been included in subsection (5)5 to allow, in limited circumstances, 2 or more co-owners to be members of the committee at the one time. Section 11(5)6 as it is currently drafted, provides that only one co-owner can be a member of the committee, on the basis of ownership, at a time. This is considered to be unjustifiably restrictive where insufficient nominations are received to meet the minimum number of persons able to comprise a committee for a scheme. The amendment has limited application, as such a nominee can be elected only to make the minimum number of committee members. For example, in a scheme of 10 lots, if 1person is chosen as chairperson and 1 person (a co-owner of Lot 5) is chosen as secretary and treasurer and no other nominations are received, another co-owner of Lot 5 may be chosen as an ordinary member of the committee. However, if the total number of elected executive committee members and ordinary member nominees, including those from the floor, was 4, the co-owner’s nomination would have to be refused as there were sufficient nominations to take the committee membership beyond the minimum number (page 26).

In my view, the abovementioned provisions of the Accommodation Module demonstrate an intention to strictly regulate and limit representation on a body corporate committee and limit any suggestion or perception of a stacked body corporate committee. These amendments removed provisions of the Module which for example, did not prevent a lot owner from nominating any number of eligible persons for election to the committee and which contained minimal restriction as to the persons who were eligible to be nominated for election to the committee.

Ralph Donnet and Patti Donnet are the co-owners of Lots 84, 86 and 100 and are both members of the committee for Willahra Tower. Both persons were elected to the committee at the AGM, and have been subsequently appointed after decisions of the body corporate at the EGM.

The first issue is whether Ralph Donnet and Patti Donnet can nominate more than one person for election to the committee given that they are the owner of more than one lot in the scheme. It is evident that in response to an invitation from the body corporate under section 14 of the Accommodation Module in December 2004:

• Patti Donnet was nominated for election to the committee as secretary or as an ordinary committee member at the AGM by Ralph and Patti Donnet, the owner of Lot 86; and
• Ralph Donnet was nominated for election to the committee as treasurer or as an ordinary committee member at the AGM by Ralph and Patti Donnet, the owner of Lot 84.

This issue has been subject of a number of applications to resolve disputes^[2]. The submissions from the applicants and from Ralph Donnet and Patti Donnet make reference to an adjudication made by Mr CG Young on application Ref. No. 0613-2004. Despite this order being appealed to the District Court, the following comments in the Statement of Adjudicator’s Reasons for Decision by Mr Young have been applied in the two subsequent adjudications, quote:

That is, Resort is a lot owner and like any lot owner can only nominate one person for one position, or one position and alternative positions. The fact that it owns 4 lots does not allow it to nominate more than 1 person.

The reason for limiting the nominating power of multiple lot owners is explained in the explanatory notes at page 83 -

Clause 131--This clause provides in section 13(2) that a lot owner may, in response to a notice inviting nominations for election of the committee, nominate only one individual. If the nominating owner is an individual, the individual nominated could be the owner themselves, another lot owner, or a member of the owner’s family or a person acting under a power of attorney given by the owner. If the owner is a corporation, the owner may nominate one individual who is a director, secretary or other nominee of the corporation. If the lot owner is a body corporate for a subsidiary scheme in a layered arrangement of community titles schemes, the owner may nominate a representative of the subsidiary scheme. This amendment, and the amendment in clause 128, limits the possibility of a committee being stacked by owners nominating multiple other people for election to the committee. The amendment does not restrict an owner from nominating the individual for more than one committee position.

The provisions relating to nominations by multiple lot owners is analogous to the provisions relating to a quorum in that a multiple lot owner is still only counted as 1 person for the purposes of determining whether a quorum exists or not.

While Mr Young has referred to provisions of the Standard Module, equivalent provisions are in the Accommodation Module. I consider that these comments apply equally to an individual lot owner and a corporate lot owner. While I note that this order has been appealed to the District Court, at the date of making this order, I am not aware that the appeal has been determined. Until such time as the appeal is determined, I do not have the benefit of the learned District Court Judge’s view in relation to whether a multiple lot owner can nominate more than one person for committee membership. For the present, I agree with the above interpretation of the requirements of the legislation. I do not consider that Ralph Donnet and Patti Donnet are in any better position given that they are the co-owners of three lots in the scheme. In my view, Ralph Donnet and Patti Donnet are treated as one owner for the purpose of making a nomination for election.

However, I do not consider that section 11(4) of the Accommodation Module necessarily restricts both Ralph Donnet and Patti Donnet, as co-owners of Lots 84, 86 and 100 from being on the committee at the same time. Section 11(4) restricts committee membership "on the basis of ownership of the lot" which in my view relates to co-ownership of a specific lot in the scheme and not to all lots that the same persons may co-own in the scheme. For example, Ralph and Patti Donnet may nominate Patti Donnet for election to the committee on the basis of ownership of Lot 84. If Patti Donnet is elected to the committee, section 11(4) does not prevent Ralph Donnet from also being elected to the committee provided he was properly nominated by another person on the basis of his ownership of Lot 86 or Lot 100.

Given the events which transpired at the EGM, I do not consider that any further consideration is necessary regarding the basis of this dispute, namely the election of the committee at the AGM. Section 242(2)(c) of the Act provides that an application to void the election of a member of the committee must be brought within 3 months of the meeting. However, section 242(3)(b) allows the time limit to be waived by an adjudicator where the applicants can show "good reason". By letter to the applicants dated 13 December 2005, I requested the applicants provide good reason to waive the time limit. By letter dated 30 December 2005, the applicants submitted that they are not seeking to void the election, but an order in favour of the outcome sought will result in one on the Donnet’s standing aside. In my view, the effect of the outcome sought is to void the election of either Ralph Donnet or Patti Donnet at the AGM. As the application was made approximately 5 months after the AGM, the application is subject to the section 242 time limit, and it would have been necessary to examine the reasons for the delay had the EGM resolutions not superseded the election of the committee at the AGM. Any such examination would involve consideration of the statement made by Judge Dodds in the appeal of Weeks v. Commissioner for Body Corporate (Maroochydore District Court Appeal 13/99), at pages 4 and 5 of the judgment, "... the objects of the Act, for instance section 5(a) and (h) militate against too strict or legalistic a view about good reason for waiving non- compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the adjudicator that the time limit should be waived in all the circumstances."

In my view, the time lapsed before the application was made; the fact that the outcome sought has been affected by the resolutions at the EGM; the fact that the decisions made at the EGM have not been disputed under the dispute resolution provisions of the Act; and the fact that the body corporate will soon be convening its next annual general meeting are significant in the determination of this dispute. I consider that, given these factors, the likely inconvenience to the body corporate should the order be granted outweighs any inconvenience to the body corporate likely to result from the order not being made. Consequently, I have dismissed the application.

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^[1] Explanatory Notes for SL 2003 No.263, Body Corporate and Community Management Legislation Amendment Regulation (No.1) 2003.
^[2] Fletcher CTS 13178 Ref. 0613-2004, L’Colonial Court CTS 9169 Ref. 0367-2005, Maria Creek Estate CTS 25253 Ref. 0534-2005