Vardon Point Apartments [2006] QBCCMCmr 554 (30 October 2006)

Last Updated: 19 December 2006

REFERENCE: 0807-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	29516
Name of Scheme:	Vardon Point Apartments
Address of Scheme:	1 Millennium Circuit PELICAN WATERS QLD 4551

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

N Noon & Others, the Owners of lots 16, 14, 11, 9, 6, & 2.

I hereby order that the application for the following Interim Order: To prevent the amendment to the authorisation of the letting agent to conduct a letting agent business until the outcome sought is resolved. Is dimissed.

.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0807-2006

"Vardon Point Apartments" CTS 29516

APPLICATION

This application is by Mr & Mrs Noon and various others, the owners of lots 16,11,14,9,2 and 6. (the applicants) against the body corporate (the respondent). The applicants are seeking the following outcome:

To have motion 15 and its resolution of the apartments 2006 AGM declared to be

(1) In contravention of the Act and Regulations; and
(2) To be not binding on members.

The applicants also seek the following Interim Order:
To prevent the amendment to the authorisation of the letting agent to conduct a letting agent business until the outcome sought is resolved.

The applicants’ main submissions were to the effect that:

• In a contract dated 14 January 2002 the apartments gave authorisation to Village Management Corporation Pty. Ltd. ACN 063 097 138 (VMC) to conduct a Letting Agent business for the scheme and the Letting Agent agreed to accept engagement upon the terms set out in the contract;
• The contract was signed under the common seal of the body corporate by authority of the body corporate committee, and the body corporate manager;
• On 29 August 2006 the body corporate committee submitted motion no.15 to the AGM, to be decided by ordinary resolution without proxies, to amend the authorisation given to VMC in January 2002.
• At the AGM on 22 September 2006, motion 15 was carried with 17 votes in favour, 13 votes against and 3 abstentions.
• The applicants believe that resolution 15 contravenes section 82(2)(b)(i) as the explanatory notes did not include the date that the agreement was to begin and the date that the agreement was to end.

• It is also claimed that section 33(3) has been contravened because

As at the date of this dispute resolution notice, which is over 5 weeks since the agenda was received by members, members have not received notice of any motion and resolution by the committee, for a meeting conducted outside a committee meeting, authorising the committee to place motion 15 on the agenda for the AGM.
• The explanatory notes forwarded to members contain the following misleading information:
"This clause was originally included by the developer"
It is submitted that these words imply that the letting agent had no input into the inclusion of this clause;
It is also submitted that the body corporate, letting agent and guarantors signed the contract and not the developer;
• The reference to the Ramada providing short term accommodation in the area is of no relevance to the body corporate;
• Members of the body corporate should not be expected to accept a lesser service under the terms of the Letting Agent Agreement as a result of a downturn in short term holiday rentals;
• The words "at the expense of attending to other caretaking responsibilities " has no relevance to the letting agreement and confirms that not all caretaking obligations are being performed.

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 applicants) and to the affected person. Submission were made on behalf of the committee and received from 3 lot owners.

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

• The application evidences a misunderstanding of section 85(2) of the Accommodation Module. An amendment requires an ordinary resolution and requires a secret ballot only in the circumstances described in subsection 85(2)(b). none of those circumstances arose in this case;
• Subsection 85(2)(b)(iii) does not apply because the amendment which is the subject of the motion was not an amendment "to include a right or option of extension or renewal".
Subsection 85(2)(b)(iii) only applies to require a secret ballot where there is an amendment to include 1. a right of extension or renewal; or 2. an option of extension or renewal.
• Subsection 85(2)(c)(i) does not apply because the subject motion was not "for the engagement or authorisation";
• Subsection 85(2)(c)(ii) does not apply because the subject motion was not "for an amendment relating to a "right or option of extension or renewal";
• Subsection 85(2)(c)(iii) does apply and was complied with as the terms of the amendment were clearly included as part of the motion. The existing wording of clause 2.1 of the Letting Agent Agreement was included as part as part of the motion as well as explanatory notes. The effect of the amendment is that the letting agent must be summonable i.e. to appear when called upon rather than keeping the office manned and opened.
• Section 33(3) provides that a resolution on a motion before a committee is a valid resolution of the committee if the things prescribed in subsections 33(1)(a) and (b) occur.
• Notice of the motion was given to all 7 committee members;
• Of the 7 committee members notified, 6 responded and voted in favour of including the motion on the AGM agenda. The seventh committee member was absent overseas at the time;
• compliance with section 33(1) has the effect that the resolution on the motion is valid irrespective of whether section 33(3) is complied with;
• in any event the committee resolution was merely to put an item on the agenda to be voted upon at a general meeting;
• the explanatory information was clear and sets out the reason why the amendment is being considered. The mention of the original developer’s role was additional information which is of little consequence to how votes were cast;
• this is another unnecessary application causing considerable expense to the body corporate.

Submissions were also received from 3 lot owners who supported the application and expressed the view that the motion should be ruled out of order because the committee failed to:

• alert all members in a timely manner of its intention to put forward a motion amending the letting agreement at the AGM;
• record any discussion of the motion in the minutes of the committee meeting;
• "forward lot owners frank explanations of the possible outcomes"
• ensure that lot owners in the letting pool were protected by secret ballot.

JURISDICTION

"Vardon Point Apartments" is a 70 lot scheme regulated by 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)).

DETERMINATION

This dispute revolves around a decision of the body corporate at an annual general meeting to amend a clause of the Letting Agent Agreement with the effect that the letting agent is no longer required to be present in the office from Monday to Friday during the hours 9.00am – 5.00pm but must be summonable (i.e. to appear when called upon) during those hours.

As this scheme previously provided a considerable amount of short term holiday accommodation, the letting agreement originally required that the office be manned from Monday to Friday during the hours 9.00am – 5.00pm. However, I understand that owing to changes in the local market for short term holiday accommodation, including opening of the nearby Ramada hotel, the demand for such accommodation in this complex has dramatically decreased.

Firstly, the applicants have made certain allegations regarding the validity of the resolution by the committee to place this motion on the agenda at the general meeting. It is claimed that the Chairman did not have authority to give the notice of motion to committee members outside a committee meeting and that the majority of committee members had not approved the inclusion of the agenda item until after the agenda was mailed to lot owners.

Secondly, the applicants have sought to invalidate the resolution of the general meeting by alleging certain irregularities in the way that the motion was put to the AGM including allegations of non-compliance with the requirements of section 85 of the Accommodation Module Regulation.

The relevant motion read as follows:

Ordinary Resolution – Variation of Letting Agreement
Submitted by the committee
Voting by proxy Not permitted

That the wording of the Letting Agent agreement – Vardon Point apartments – dated 14 January 2002 between the Body Corporate for Vardon Point Apartments Community Titles Scheme 29516 and Village Management Corporation Pty. Ltd. be amended as follows:

Clause 2.1(f) currently reads:

2. Letting of Units

2.1 The Letting Agent shall;

(f) fit out and maintain an office and reception area and must keep such office manned and open, at the minimum, during the following hours:

Monday – Friday 9.00am – 5.00pm

DELETE "must keep such office manned and open’
INSERT "must be summonable to such office"

The relevant Explanatory Schedule read as follows:

15. Variation of Letting Agreement

1. Staffing the Reception is only a requirement under the Letting Agreement.
2. This change will in no way reduce the caretaker’s obligations under the Caretaking Agreement.
3. This clause was originally included by the developer as it was foreseen that Vardon Point would focus on providing short term holiday rentals. The trend over the past 10 months is that Ramada provides the area’s short term accommodation needs. It seems impractical to waste human resources manning an office at the expense of attending to other caretaking responsibilities around the scheme.

Section 279 of the Act provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. The examples included in the Act under section 279 are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made in circumstances where the urgency relates to the applicant’s desire to resolve or expedite the matter in dispute, where the matter is not capable of being dealt with in the context of an interim order. On the other hand, an Interim Order presents an opportunity for an adjudicator to give an indication of what final orders may be made.

At this point in time I am not persuaded that an Interim Order is warranted.

The applicants have alleged two technical irregularities regarding the manner that the committee decided to have the matter placed on the agenda for the AGM i.e:

1. The Chairman did not have authority to give the notice of motion to committee members outside a committee meeting; and
2. the majority of committee members had not approved the inclusion of the agenda item until after the agenda was mailed to lot owners.

I do not believe the timing of the committee votes if of great significance in the circumstances as the result was the same as that anticipated in the agenda and in any event I believe it is possible for the committee to ratify the actions of certain members. Further, it is noted that the action of the committee was merely to put an item on the agenda for the Annual General Meeting and the substance of the motions was considered and voted upon by members of the body corporate in general meeting. Clearly this motion could have been placed on the agenda by any member of the body corporate.

The courts have consistently held that minor errors, omissions or other irregularities in calling of meetings and meeting procedures, the meeting and the decisions made at the meeting should nevertheless be preserved, unless it can be shown that there has been some fundamental disadvantage to an individual.

For example, His Honour Judge Boulton made the following statement in dismissing a District Court appeal of a previous adjudicators order (Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080/2000, 29 May 2001):

"The very detailed provisions of the standard module regulation ... 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."

Secondly, I am unable to agree with the allegations by the applicants that the motion put to the AGM did not comply with the requirements of section 85 of the Accommodation Module Regulation. In my view it is clear that under section 85(2)(b), a secret ballot is only necessary where the motion relates to an authorisation of a letting agent or an amendment of the authorisation which could have the effect of extending the term of the engagement (i.e. to include a right or option to extend or renew the engagement).

Further, I believe that the material required to be forwarded to lot owners is that prescribed by section 85(2)(iii) i.e. an explanatory note explaining the terms and effect of the amendment.

For these reasons, I intend to dismiss the application for interim orders although the application for final orders remains outstanding. This application will now be administered in accordance
with the Act, and the normal procedures of this Office, including giving all lot owners the opportunity to make further submissions on the request for final orders.