No. 9 Port Douglas Road [2006] QBCCMCmr 92 (17 February 2006)

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

I hereby order that the body corporate is authorised to hold its annual general meeting outside the legislated time frame provided that the meeting is held by 30 April 2006. This authorisation is subject to the body corporate following the procedures for calling an annual general meeting under the Accommodation Module as far as practicable, including sending out a notice requesting committee nominations and motions for consideration at the meeting and allowing owners a period of at least three weeks to submit those nominations and motions.

I further order that the body corporate is authorised to engage Midwood Body Corporate Solutions to give administrative assistance with the meeting as passed by resolution outside committee meeting by notice dated 3 February 2006. This authorisation is limited to the committee spending a maximum of $2,250 on this assistance, being the relevant limit for committee expenditure.

I further order that, pending a final determination of this dispute and except as otherwise provided by order of an adjudicator, the body corporate for No. 9 Port Douglas Road must not act on resolutions 1, 4 and 7 passed by resolution outside committee meeting by notice dated 3 February 2006.

I further order that the body corporate must distribute a copy of this order and reasons for decision to all owners at the same time that the body corporate sends out a notice requesting committee nominations and motions for consideration at the annual general meeting.

This is an interim order and will remain in effect for a period of not longer than six months. It is the responsibility of the applicants to apply to extend this order if no final determination has been made within that period. This order will automatically lapse upon a final order being made or this application being withdrawn.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0087-2006

"No. 9 Port Douglas Road" CTS 24368

No. 9 Port Douglas Road Community Titles Scheme (PDR) is an 18 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). The scheme is described as a warehouse/office/residence converted to an 18 unit complex. Lot boundaries are designated under a building units plan (now known as a building format plan).

This order is to resolve the disputes in two related applications and these reasons for decision apply to both these applications. One application is by Michael McEvoy, owner of lots 9 and 16 seeking to invalidate certain committee resolutions.^[1] The other application is by the body corporate on the instigation of the committee seeking authority to call the annual general meeting late, with the assistance of Midwood Body Corporate Solutions.^[2]

There have been a number of applications concerning this scheme. One very significant issue is the leakage of water through rooftop areas and balconies during periods of heavy rain and the likelihood that the body corporate will need to spend substantial amounts of money to resolve the issue. Other more general issues relate to the management of the administrative affairs of the body corporate. In particular, the failure of the committee to call an annual general meeting within the legislative time limit, the issue of whether the body corporate should seek administrative assistance from a professional body corporate manager, and whether the committee is proposing to spend body corporate funds on projects that will exceed the limit for committee spending.

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

In this case, the committee has failed to call the annual general meeting in good time notwithstanding the obviously serious issues requiring consideration by owners in general meeting. I am satisfied that it is appropriate to make an interim order authorising a meeting outside the legislative timeframes. However, due to the delays, I consider it necessary for the body corporate to re-seek committee nominations and motions that owners want to be considered at the meeting. I will therefore provide the authorisation for the annual general meeting to be called late subject to a condition that these nominations and motions be sought again.

I note that some owners may have made plans to be in Port Douglas on 10 March 2006 to discuss matters relating to the proposed repairs. Owners can in fact vote on a motion without attending the meeting by submitting a written voting paper. However, owners can only vote on the motions that have been submitted and included on the notice of meeting. If owners want to make any new suggestions and discuss those proposals then owners need to meet to do that prior to the annual general meeting and then submit a motion incorporating the details of that suggestion.

Therefore, any owners who are intending to be in Port Douglas on 10 March 2006 may wish to meet together to prepare a motion for the annual general meeting. It would be sensible to first obtain copies of the material already submitted as motions and then obtain any additional quotations or other material for the purpose of submitting an alternative motion. An appropriate motion might outline the proposed repair, attach drawings, attach two quotations, attach details of an engineers’ advice or guarantee of the work, and attach legal advice on the legal recourse the body corporate may have if the repairs are a failure.

Normally a decision to appoint a body corporate manager to provide administrative assistance to the committee is a decision that is made by owners in general meeting. However, given the significance of issues facing owners and the importance of owners being given a timely and proper opportunity to vote on repairs to the roof, I conclude that it is appropriate to authorise the committee to obtain some administrative assistance from a professional body corporate manager.

The committee have passed a resolution indicating they wish to appoint Midwood Body Corporate Solutions with likely costs of around $1,500 plus airfares. This resolution leaves open the possibility that the committee will spend above the committee limit if airfares are expensive and the committee does not have authority itself to appoint a body corporate manager. However, I am willing to authorise this appointment subject to a requirement that the total costs, including airfares, does not exceed the committee spending limit of $2,250. If costs are likely to exceed that amount then the committee should bring another application giving grounds showing the need for any additional expenditure.

I will therefore authorise the committee to arrange for the calling of the meeting and engage administrative assistance on the conditions set out in the order.

The relevant limit for committee spending represents an amount of $125 per lot, being a total of $2,250 for a scheme with 18 lots (Accommodation Module, 101). The total spending for any given project must be calculated and the decision must be left to owners in general meeting if the total spending for the project will exceed this limit.

The committee spending limit can be increased to up to $450 per lot, being a total amount of $8,100. However, this would require a special resolution to be passed by owners. The committee has decided to put a motion before owners to this effect. I note that the motion proposes the limit be $8,100 plus GST. The legislative limit would in fact be $8,100 and there is no provision for this to be increased to include GST. I also note a comment to the effect that an adjudicator has recommended this committee spending limit be increased to $8,100. For the purposes of clarity, it is possible for the committee to propose that owners vote to increase this limit to an amount up to $8,100 but this is a decision for owners to consider on its merits.

Resolution number four made by the committee was a decision to appoint Ove ARUP Pty Ltd to oversee all building repairs at a rate of $140 plus GST per hour. To ensure the committee is acting within its spending limit the committee should obtain an estimate for the entire project before agreeing to any appointment at an hourly rate. In this instance there seems a reasonable likelihood that the costs of this appointment could exceed the committee spending limit. I am therefore prepared to make an interim order that the body corporate must not act to implement this resolution. Of course, if the committee does get a quotation that is within the limit the committee can pass a new resolution that specifically states the maximum expenditure authorised by the resolution. Although, if the appointment is to be for a period of one year or more then it would amount to the appointment of a service contractor and additional requirements will apply (Accommodation Module 76, 85).

Similarly, resolution number seven proposes appointment of lawyers for advice on a Notice of Financed Contract provided by the caretaker’s financier. No estimate of costs of obtaining this advice is given and I will provide an interim order preventing the body corporate from putting this resolution into effect on the basis that legal costs could be likely to exceed the committee limit. If the committee wishes to obtain legal advice then a further resolution can be put forward that includes an estimate of the legal expenses and authorises expenditure on behalf of the body corporate up to a maximum amount within the committee limit. Alternatively, it may be sufficient for the committee to simply obtain information on the body corporate’s obligations to a financier from the information service offered by this office. These obligations are primarily in the form of the body corporate being required to give a financier written notice of changes to a financed contract and at least 21 days’ written notice of a proposal to terminate a financed contract (Act 125, 126). Certain agreements between the body corporate and the financier are also prohibited (Act, 127).

Another issue raised was a vote by the committee on which body corporate managers they should put forward for owners to consider. I do not consider any interim order is required in this respect as any individual owner who wants a different body corporate manager can put forward a motion for the annual general meeting themselves. The individual owner should liaise with the proposed body corporate manager to ensure the motion is submitted correctly and the legislative requirements are complied with in terms of the form of engagement and material to be sent to owners (Accommodation Module 76, 85).

The committee has also held a voted on a motion which stated "consider and vote on repair options to the roof so that we may then be able to appoint a company to draw up a specification to request quotations from builders...the adjudicator...expects the committee, as a duly elected committee of all unit owners to make a decision prior to the AGM to expedite building repairs". For the purposes of clarification, I understand that there are three alternative proposals to fix the roof. If discussions between committee members and owners showed that one of these options was favoured then the committee might wish to consider spending up to the committee limit to have specifications drawn up immediately. This would allow the committee to obtain competitive quotations from builders prior to the annual general meeting and owners could then have the option to accept one of those quotations at the annual general meeting.

The present resolution does not authorise committee spending for any purpose. It simply records that two committee members would prefer to build a new roof over the scheme and four committee members would prefer to attempt to repair the existing membranes. If the committee was to spend body corporate funds to obtain specifications for either or both of these options then a further committee resolution would be necessary to authorise that expenditure.

I have made interim orders preventing the body corporate from implementing two committee resolutions where serious questions have been raised about whether the associated spending would be within the committee limit.

However, I have also made interim orders to facilitate the calling of the annual general meeting. I encourage all owners to consider what decisions they would like the body corporate to make at the upcoming annual general meeting and take whatever steps are necessary to ensure that they submit a motion proposing that particular step is taken.

As discussed above, information relevant for attachment to any motion proposing repair of the roof might include drawings, quotations, details of an engineers’ advice or guarantee of the work, and legal advice on any legal recourse the body corporate may have if the repairs are a failure.

^[1] Application 0087-2006, No. 9 Port Douglas Road.
^[2] Application 0101-2006, No. 9 Port Douglas Road.

Number of Scheme:	24368
Name of Scheme:	No. 9 Port Douglas Road
Address of Scheme:	9 Port Douglas Road PORT DOUGLAS QLD 4871

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

No. 9 Port Douglas Road [2006] QBCCMCmr 92 (17 February 2006)