Isle of Palms Resort [2006] QBCCMCmr 91 (14 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0071-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20860
Name of Scheme:	Isle of Palms Resort
Address of Scheme:	21 Coolgardie Street ELANORA QLD 4221

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

Various Owners of lots in the scheme

I hereby order that the application for the following interim orders: 1. The AGM scheduled for 16 February 2006 be stopped and re-scheduled to a later date; 2. That if the meeting does go ahead, any resolutions passed be declared invalid. Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0071-2006

"Isle of Palms Resort" CTS 20860

APPLICATION

Isle of Palms Resort Community Titles Scheme (Isle of Palms) is a 174 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module).

This is an application by the owners of some 24 lot owners seeking the following interim orders against the body corporate for Isle of Palms (respondent).

1. The AGM scheduled for 16 February 2006 be stopped and re-scheduled to a later date;
2. That if the meeting does go ahead, any resolutions passed be declared invalid.

The final Outcomes sought are as follows:

1. That attached to the AGM (notice?) should be an audited report on the financial records as per special resolution passed at the previous AGM, 21 March, 2005 for the year ending 30 November 2005.

2. That all motions should be by secret ballot as per resolution passed by committee on 20 August 2004.

3. That a special levy imposed on all owners at November 2005 EGM be exempted from disallowing owners to vote at the AGM.
4. That the committee attend to correspondence as per agenda meeting 13 January 2006.

BACKGROUND

The applicants submit that the envelopes containing the notice of AGM scheduled for 16 February 2006 are post-marked 27 January 2006 and therefore lot owners would not have received 21 days notice of the meeting.

Secondly, it is claimed that at the AGM convened on 21 March 2005, it was effectively resolved by special resolution that the accounts for the financial year 30 November 2005 should be audited.

Thirdly, it is submitted that on 20 August 2004 the committee resolved that all motions at general meetings are to be resolved by secret ballot.

Given the short period of time available between the date of the application and the date of the meeting, I was only able to seek submissions from the Body Corporate Committee and the caretaking service contractor.

SUBMISSIONS

The committee referred to previous determinations by this Office regarding disputes concerning procedural irregularities in the calling and holding of a general meeting where adjudicators have followed the views expressed by His Honour Judge Boulton DCJ in Chen v Body Corporate for Wishart Village CTS 19482. :

"The very detailed provisions of the standard module regulation to which I have referred above 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."

It was submitted that in this case as in cases such as Crystal Bay Resort (2005) QBCCM and Focus (2004) QBCCM adjudicators have relied upon Judge Boulton’s comments as authority for the proposition that a general meeting of a body corporate should not be declared void on the basis of minor irregularities that do not significantly impact on the ability of members to participate in the decision making process or on the management and administration of the body corporate.

In Focus (2004) QBCCM the adjudicator made the following comments:

Section 41 of the Accommodation Module provides that a general meeting of a body corporate "must be held at least 21 days after notice of the meeting is given to lot owners".
I do not agree that the Body Corporate bears an onus to prove that adequate notice of the meeting was provided to each and every owner. It is the Applicants that have alleged the breach of section 41, therefore I consider that it is the Applicants that bear the onus of proving (on the balance of probabilities) that the required notice of the meeting was not provided to owners. I am not satisfied that the Applicants have demonstrated that a breach of section 41 occurred in this instance.
A number of previous adjudicators have taken the view that the intention of the legislation is that the 21 days stipulated by section 41 (and its equivalents in other regulation modules of the Act) is intended by the legislature to include postage time. More specifically, those adjudicators considered that that notice is "given" on the date on which the notice is posted to the owners. The reasoning for this position is the fact that the time for notice of meetings is significantly longer under the current legislation than its predecessor, the Building Units and Group Titles Act 1980. The extension of time from 7 days to 21 days appears to have been included to avoid the difficulties in ensuring that each owner, regardless of where they resided, received a specified number of clear days notice of a proposed meeting. If this interpretation is correct, then clearly the Body Corporate has complied with section 41 in respect of the EGM in question.

However, if this view is incorrect, it seems reasonable to have regard to the provisions of the Acts Interpretation Act 1954 (the AIA) to establish the meaning of the time requirement of section 41. Firstly, it seems to me that notwithstanding the use of the word "given" in section 41, the Accommodation Module allows a notice of meeting to be served by post ( section 39(1)(a)(ii) and (2) of the AIA). Secondly, I note section 39A(1) of the AIA, which provides that if an Act permits a document to be served by post, service "is taken to have been effected at the time at which the letter would be delivered in the ordinary course of post, unless the contrary is proved".
Assuming that the provisions of the AIA apply to section 41 of the Accommodation Module, and allowing a generous amount of postage time, it is difficult to see that the Applicants can demonstrate a failure of the Body Corporate to comply with section 41 of the Accommodation Module by any more than a day or two.

The Committee submitted that

• The AGM notices were posted on 25 January 2006;
• the applicant bears the onus of proving that the required 21 days notice of meeting was not given;
• where documents are served by post service is taken to be effected at the time at which the letter would be delivered in the ordinary course of post unless the contrary is proved; and
• In any event a notice of meeting is not void because of minor irregularities.

Secondly it is acknowledged that while the audit certificate should accompany the notice of AGM, copies of the certificate were not available when the notices were posted and were therefore posted separately a few days later.

Thirdly, the committee advise that on 13 January 2006 the committee resolved that all motions are to be considered by open vote, thus making the earlier resolution of 20 August 2004 redundant.

Finally, the committee advise that the special levy was approved by ordinary resolution of the body corporate on Wednesday 16 November 2005. Given that the levy was validly imposed, a lot owner who fails to pay the levy at the date of the meeting owes a "body corporate debt" and is therefore not eligible to vote.

JURISDICTION

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

Section 279(1) 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. In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief.

While I note the concerns by the applicants that the required period of notice was not given, I am not persuaded that the alleged failure to give the full 21 days notice of meeting is sufficient grounds for me to declare the notice invalid and order that the meeting not proceed. In this regard I believe that the observations of His Honour Judge Boulton DCJ in Chen v Body Corporate for Wishart Village are apposite. A general meeting of a body corporate should not be declared void on the basis of minor irregularities that do not significantly impact on the ability of members to participate in the decision making process or on the management and administration of the body corporate.

I also note that the audit report for the last financial year was eventually provided to lot owners and I also believe that the failure to provide the audit certificate to lot owners 21 days before the AGM is a minor procedural irregularity.

For these reasons, I have dismissed the request for interim orders.

I note that the applicants also seek certain final orders. I will now refer this application back to the Commissioner to be administered in accordance with the Act and the normal processes of this Office. The matter will be finally determined in due course and affected parties will have an opportunity to make further written submissions about the application.