Palm Springs Retirement Village [2006] QBCCMCmr 720 (14 September 2006)

Last Updated: 29 March 2007

REFERENCE: 0186-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30852
Name of Scheme:	Palm Springs Retirement Village
Address of Scheme:	15 Carmichael Court WYNNUM WEST QLD 4178

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

Gould & Mellersh, the Owner(s) of lots 33, 34, 81 and 82

I hereby order that Motion 10 considered at the Annual General Meeting held on 22 February 2006, is declared to have been carried by resolution without dissent.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0186-2006

"Palm Springs Retirement Village" CTS 30852

Application

By application received by this Office 14 March 2006, the applicants have sought the following orders:

1. We seek an order to be made by an Adjudicator deeming Motion 10 "Adoption of a new community management statement", a resolution without dissent, as passed by the body corporate at the 2006 annual general meeting held on the 22nd February 2006.

2. That the reason given by the dissenting voters to be irrelevant and did not reasonably relate to the substance of the motion, i.e. amalgamation of lots 33 & 34 and 81 & 82.

3. That the motion only directly affected the owners of lots 33 & 34 and 81 & 82 by way of amalgamation of their respective lots.

4. That the amalgamation of lots 33 & 34 and 81 & 82 would not adversely affect any other owner's rights and entitlements.

5. That the loss of motion 10 to be deemed unreasonable and inequitable given that other amalgamated lots enjoyed the benefits from amalgamation now denied to the owners of lots 33 & 34 and 81 & 82 respectively.

Jurisdiction

"Palm Springs Retirement Village" is a subdivision of 82 lots on a standard format plan. The regulation module applying to the scheme is the Body Corporate and Community Management

(Accommodation Module) Regulation.

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)).

Background

I understand that this scheme was originally established as a retirement village in the late 1980’s with the marketing of leasehold interests by the original developer when the village was subject to a mortgage. The village was subsequently operated by a receiver for a considerable period of time before it was purchased by Jodaway Pty Ltd.


I understand that until 2002, the village was subdivided by leases over the various units. Palm Springs Retirement Village, Community Titles Scheme 30852 was registered on 2 December 2002 and from 2 December 2002 until 1 April 2003, Jodaway Pty Ltd was the owner of all lots.

Jodaway has now sold the majority of its holdings, though it remains the owner of 23 units.

Over the years a number of lots have been authorised to amalgamate. All the amalgamations on the following table were approved at an annual general meeting on 30 January 2004. The following is a table of the lots joined, the new designated lot number and the plan where the amalgamation was registered:

Lots	Designated lot number	Registered Plan number for amalgamation
2 & 3	2	SP165124
6 & 7	7	SP165124
10 & 11	10	SP165124
26 & 27	26	SP165124
37 & 38[1]	37	SP165124
41 & 42	41	SP165124

Jodaway does not currently own any of the units that have been amalgamated or extended. Mrs Gould’s interest in her lots was registered on 27 October 2004 and Mrs Mellersh’s on 10 December 2004.

On 22 February 2006 a motion in the following terms went to the annual general meeting as a motion without dissent:

That the Body Corporate adopts a new community management statement (CMS) in terms which:

1. Lots 33 and 34 are combined; and
2. Lots 81 and 82 are combined as indicated in the attached survey plan (marked b1, B2, B3, B4 and B5);
3. The total unit entitlements remain unchanged as set out in the attached Schedule of Entitlements (marked D1 and D2);
4. The By-laws existing at the time be adopted;
5. The Accommodation Module of Regulations is retained;
6. And further that the Body Corporate be authorised to sign arrange for the lodgement of a CMS duly amended in accordance with the above and that the secretary be authorised to sign all necessary documents to give effect to the above and to affix the seal of the Body Corporate upon such documents as is necessary time to time provided that all costs relating to any new CMS will be at the expense of Jodaway Pty Ltd seeking the amendments at the behest of the owners of Lots 33 & 34 and Lots 81 & 82 respectively.

The motion was lost 63 yes, 2 no and 1 abstaining.

I note that the plan attached to the annual general meeting of 22 February 2006 also includes an extension to lot 31, which is not specifically addressed in either the 2004 or 2006 annual general meeting minutes.

Grounds

The applicants’ grounds are as follows:

1.	The reasons given by the dissenting voters at the AGM did not reasonably relate to the substance of the motion; that is the amalgamation of lots;

2.	The reasons given by the dissenting voters were irrelevant and/or irrational as the motion clearly stated the bylaws were to remain unchanged; that is, not affected by this motion therefore the reason for the objection given by the owner of lot 30 was "incredulous".

3.	Lots 2, 6, 10, 26, 37 and 41 have been amalgamated previously. The owners of the lots now enjoy the benefit of reduced rates and charges as sought by the applicants.

4.	The result of Motion 10 being lost denies the applicants the same benefits as enjoyed by other owners, therefore the result is unjust and inequitable causing severe financial hardship to the applicants.

5.

As no other owner’s rights and entitlements would have been affected there is no sound reason for another owner to reasonably object by casting a dissenting vote. Given that the dissenting voters had the option to abstain and were asked by the chairperson to consider this, it tends to suggest the reasons given were pursuant to another agenda.

6.	There was no support from the other owners to the actions of the dissenting voters.

In their supporting statements, the applicants state their understanding of the dissenting voters’ reasons. They summarise one objection raised as follows:

"... stated that she opposed the motion on the grounds that it changed the by-laws. She further stated that her solicitor has advised her that by-laws after number 12 were illegal and of no effect therefore she could not agree to be seen supporting the by-laws in the community management statement."

They state that the reasoning of the other dissenting vote raised at the annual general meeting was along the lines that as she had not been "allowed" to have a double, then no-one else should.

Submissions

A total of 20 submissions were received. One was from the mother of one of the dissenting voters, stating that she should not be the object of retaliation for exercising a dissenting vote. Another pleaded that we make a speedy decision.

Twelve of the submissions expressed unqualified support of amalgamation of the applicants’ lots.

Five of the submissions raised a common theme, saying that they had no objection to the amalgamation of the lots, but that the other items spelled out in the motion were more properly put to the vote separately. The theme includes a level of distrust directed at Mr Issakidis, a director of Jodaway Pty Ltd. One of these submissions (the "lead submission") includes allegations of committee stacking, illegal appointment as chairperson and "investigations" by this office. They suggest that there were really 6 different motions:

1. amalgamation of lots 33 and 34;
2. amalgamation of lots 81 and 82;
3. lot entitlements remaining unchanged;
4. by-laws to remain unchanged;
5. accommodation module to be retained;
6. authorisation to effect change at the Titles Office.

The lead submission also states that at the meeting it was suggested that the motion should be separated as suggested, with 3, 4 and 5 to be submitted as motions with alternatives. The lead submission also refers to Motion 13 which submits a move to the Standard Module and to Motion 14 which proposes that contribution schedule lot entitlements should be made equal, with interest schedule entitlements to remain unchanged. Both these motions were ruled out of order on the base of needing legal advice in relation to the care taking agreement and lack of costings.

The lead submission states that the by-laws were the subject of a dispute in the Commercial and Consumer Tribunal. It states it was resolved in favour of the applicant, though no details in relation to this are provided. On a perusal of the by-laws it is difficult to determine what the issue may have been.

There is one clear submission against the motion, but this too appears to revolve around a grievance with Mr Issakides. The relevant arguments are pieced together by the following segments of her submission:

"I will not agree to transfer to her freehold land owned by the Body Corporate that is an undivided share of certain land owned by the Body Corporate........ without compensation to the Body Corporate.........she purchased 2 studio units which were joined by structural alterations. A bedroom.. was built on Body Corporate common land and which was to be transferred from the Body Corporate into her freehold ownership....... I believe that where no arrangement has been made with the owner of the land, the Body Corporate, the ownership of the building goes with the ownership of the land on which they are built".

She goes onto allege that as Mr Issakides was the builder of the extension bedrooms, he is making at least $10,000 per extension and no payments have been made to the Body Corporate.

The maker of the "against" submission advises she bought her unit in 2003 and I note this transfer was registered on 1 December 2003. She advises that all purchasers were required to give a one year power of attorney to Mr Issakides upon settlement. She advises that these powers of attorney, and Mr Issakides company ownership of other lots, were used to give owners permission to build extra bedrooms on Body Corporate land. She says this power of attorney was misused at the annual general meetings of 2004, 2005 and 2006. While I do not have the 2005 minutes, it is apparent that Mr Issakides did use powers of attorney over all the lots he did not own at the annual general meeting of February 2004. There is no evidence he used this for all lots not in his ownership in at the 2006 annual general meeting. By my count, the owners of at least 26 lots attended without a power of attorney operating.

She states she cannot find any Body Corporate records where there has been any discussion of sale of common property.

Determination

As stated earlier, unfortunately I am not aware of the proceedings in the CCT relating to the by-laws. On my perusal, there is nothing obviously offensive in the by-laws.

My initial concern was to investigate the allegations that common property was being transferred through the motion of 22 February 2006. Under Section 271 of the Act an adjudicator has investigatory powers.

The original plans for the scheme were registered on 2 December 2002, by plan SP150828. I note that, in line with the allegation that common property was being assigned, the plans attached to the annual general meeting of 22 February 2006 included extensions to lots 20, 21, 22, 23, 27, 28, 29, 30, 31, 32, 34, 35, 40, 44, 45, 50, 51, 55, 56, 62, 63, 64, 65, 66, 67, 68, 69, 79 and 80. This amounts to extensions to 29 lots.

Under my investigatory powers, I was able to establish that the extensions to lots 22, 23, 27, 28, 29, 30, 40, 44, 45, 50, 51, 55, 56, 62, 63, 64, 65, 79 and 80 had been legitimately registered under SP165124. Along with this, the mergers of lots 2 and 3, 6 and 7, 10 and 11, 26 and 27, 37 and 38, 41 and 42 were also registered. I note that on the document lodging SP165124, I can identify the signatures of 3 of the submitters forming part of the group objecting to the grouping of the motion. I also note that the document is signed by Jodaway as attorney for the "against" submitter. All 4 of these people received the benefit of either merged lots or extensions under this plan.

Given that changes to lots 20, 21, 31, 32, 34, 35, 66, 67, 68 and 69 were not registered under this plan, I sought copies of the resolutions of the Body Corporate where these changes were approved. I have been provided with the minute of the annual general meeting of 30 January 2004 which reads as follows:

"That the Body Corporate adopts from time to time new Community Management Statement in terms which:

1. Lots 2 and 3 are combined.
2. Lots 6 and 7 are combined.
3. Lots 10 and 11 are combined.
4. Lots 26 and 27 are combined.
5. Lots 2 and 3 are combined (sic)^[2]
6. Lots 41 and 42 are combined.
7. The title to lots 22, 23, 27, 28, 29, 30, 40, 44, 45, 50, 51, 55, 56, 62, 63, 64, 65, 79 and 80 are extended as indicated in the attached survey plan.
8. The title to lots 14, 15, 20, 21, 32, 33^[3], 34, 35, 57, 58, 66, 67, 68, 69, 77 and 78 are extended as indicated in the attached survey plan provided the owners of these lots erect a structure at their expense on the existing exclusive use are and the additional exclusive use area granted pursuant to the motions passed by the Body Corporate in general meeting.^[4]
9. The total unit entitlements remain unchanged as is set out in the attached schedule of entitlements.
10. The by-laws existing at the time are adopted.
11. The Accommodation Module of regulations is retained.
12. And further that the Body Corporate be authorised to arrange for the lodgement of a CMS duly amended in accordance with the above and that the secretary be authorised to sign all necessary documents to give effect to the above and to affix the seal of the Body Corporate upon such documents as is necessary provided that all costs relating to any new community management statement that will be amended from time to time will be at the expense of the owner or owners seeking the amendment."

It is significant in my view that the provisions contained in points 9, 10, 11 and 12 of the 2004 motion mirror those contained in points 3, 4, 5 and 6 of the 2006 motion.

Given this, I am unpersuaded by the argument that the motion was formed in order to defeat motions 13 (in relation to the regulation module for the scheme) or motion 14 (in relation to lot entitlements). I also agree with the view that motion 13 in particular required that legal advice be taken as to the implications for the caretaking agreement. The cost of any changes to the community management statement is also a factor that should be available for consideration in the proposing of a motion.
Further, it is apparent to the adjudicator that the extension of the lots in question (except lot 31 – refer footnote) was actually approved at the annual general meeting of 30 January 2004. Therefore the intent of avoiding the reallocation of common property by voting "no" to the motion (regarding the mergers of lots 33 and 34 and 81 and 82) was misplaced. In fact, approving the motion would not have approved the transfer of common property, as that common property transfer had been approved 2 years before.

The only remaining arguments against approving the motion to join the lots are:

•	Misuse of power of attorney;
•	Unspecified illegalities in the by-laws; and
•	The alleged argument by one owner that they had no been able to do the same thing.

Clearly, the argument that one owner has not had an extension to their lot needs to be balanced against the fact that 29 lots have been authorised for extension. Further, it has not been made out to me that this owner has ever made application for, and been refused, extension of their lot. I do not it as a valid reason to oppose the motion.

As stated earlier, I do not have the benefit of the ruling that states the by-laws are invalid. If this issue is of concern to any resident, it is open to them to submit motions specifically addressing the change to the by-law that they propose. In any event, I see no evidence that there is any motion within the most recent minutes for alternate by-laws. Therefore the reality is that without any motions proposing the changes, the by-laws would have remained unchanged even without the inclusion of point 4 in the motion.

Those who feel unsettled by the prospect that some of the by-laws may be illegal, should take comfort that an illegal by-law will be unenforceable to the extent of the illegality (Section 180 Act).

The argument that Mr Issakides has misused the powers of attorney given to Jodaway to reallocate the lots is lost on me, when in fact 4 of the persons objecting to the motion have been beneficiaries of his use of that power. Three of the objectors’ signatures are actually appended to the plan where the allocation of 19 extensions into common property was registered. Within that, a further 4 amalgamations were registered.

It appears to me that those objecting have failed to identify the similarity of their own circumstances to that of the applicants. In those circumstances, I regard the opposition to the motion unreasonable. I will order that the motion is passed and therefore amalgamation of the lots may proceed.

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^[1] The minutes I have received refer to the merger of lots 2 and 3 twice, however the registered plan shows that 37 and 38 were actually merged.
^[2] I believe point 5 should read lots 26 and 27. This merger is registered in any eventl.
^[3] Regretfully, it appears a typographical error alluded to in motion 8 has been duplicated in this motion (10) but not identified. It is likely that lots 32 and 33 should read 31 and 32.
^[4] I note that the exclusive use areas were addressed and passed under motions 8 and 9 of the same meeting.