Gold Coast Summer Waters Resort [2007] QBCCMCmr 159 (16 March 2007)

Last Updated: 21 March 2007

REFERENCE: 0877-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	25761
Name of Scheme:	Gold Coast Summer Waters Resort
Address of Scheme:	43 Myola Court, COOMBABAH QLD 4216

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

Jeffery and Brenda Boyce, Colin and Sue Whitaker, Julius and Miriam Nagy, the Owners of lots 33, 35 and 39

I hereby order that the application for orders that motions 10 and 23, carried at the last AGM on 4 April 2006, be reversed is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0877-2006

"Gold Coast Summer Waters Resort" CTS 25761

THE SCHEME

Gold Coast Summer Waters Resort is a 42 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

APPLICATION

This dispute resolution application has been lodged by the owners of lots 33, 35 and 39 seeking orders that motions 10 and 23, carried at the last AGM on 4 April 2006, be reversed.

Motion 10 read as follows:
That the body corporate seek reimbursement from the caretaker of amounts claimed by and paid to the caretaker and external contractors for work which is included as part of the caretakers duties in accordance with the advice of Small Myers Hughes Lawyers. (lost)

Motion 23 read as follows:
That the body corporate approve the reimbursement of $820 and $560 for the periods ending March 2006 be paid to the building manager as per the budget. (carried)

BACKGROUND

The applicants main submissions were to the effect that:

• On becoming a committee member the owner of lot 33 investigated payments made to the Caretaking Service Contractor and concluded that he was being wrongly paid for general garden maintenance;
• The body corporate manager also reviewed these calculations;
• An offer to settle the alleged debt for $9,256.66 in lieu of $11,398.12 (which included interest of $2,141.46 ) was put to the Caretaking Service Contractor but refused;
• After the AGM on 4/4/2006 the body corporate manager sought a report from the body corporate’s solicitors, Small Myers Hughes;
• The report lists items for which the caretaker is responsible and states that there are grounds for reimbursement of money paid to the caretaker for this work;
• At the committee meeting held on 16 August 2006 it was resolved to submit a motion to the next AGM to recover certain monies;
• It is claimed that the body corporate manager and committee deliberately stalled the recovery action – no action was taken to stop continued payment of amounts being claimed for work of the same nature to that listed in the schedule to the caretaking agreement;
• It is claimed that despite knowledge of the caretakers contractual responsibilities the body corporate manager failed to advise the caretaker and treasurer that payments of this nature should not be made;
• The committee also failed to act and the Treasurer continued to accept and submit invoices;
• an example was that the Caretaking Service Contractor sought reimbursement of $820 and $560 for the periods ending March 2006. it is understood that these amounts related to invoices rejected by the owner of lot 33 when he was a member of the committee. It is claimed that these payments were made in breach of the Caretaking Agreement with the knowledge of the Caretaking Service Contractor who exercised 4 proxies. It is claimed that this demonstrates the level of apathy and neglect by the body corporate manager and committee;
• It is claimed that all second quotes organised by the Caretaking Service Contractor showed that the second quotes were issued by the same companies or individuals that provided the first quote but under a different company name or ABN. Alternative quotes obtained independently were substantially lower;
• At the AGM there were 17 voting papers and the caretaking service contractor exercised 4 proxies giving a total of 21 votes yet the minutes state that 27 votes were recorded;
• the Caretaking Service Contractor is not being called upon to account to the committee for issues previously raised regarding his work.

SUBMISSIONS

In accordance with the Act, submissions were sought from the committee and each lot owner excluding the applicants.

The following submissions were made on behalf of the body corporate in a letter dated 5 January 2007:

• motions 10 and 23 were carried at the AGM on 18 September and are valid resolutions of the body corporate;
• the applicants do not contest the validity of the meeting or the motions;
• in relation to voting on motion 10, the body corporate manager had to confirm the caretaker’s position as there was much discussion the motion and it was obvious that he was confused as to which motion he was voting on as he had previously made it clear that he did not intend refunding the money in question;
• Votes counted on motion 10 were as follows – 18 voting papers & 9 votes from the floor giving a total of 27 votes. There were 9 votes in favour, 15 votes against and 3 abstentions;
• in relation to voting on motion 23, the body corporate is unable to ascertain the basis upon which the applicants are seeking to have the resolution reversed;
• the result of the voting on motion 23 was 15 in favour, 9 against and 3 abstentions;
• the Chairperson did not rule the motion out of order as the grounds upon which the owner of lot 33 requested to motion be ruled out of order did not meet the requirements of section 45 of the Body Corporate and Community Management (Accommodation Module) Regulations;
• there is nothing in the Act or regulation Modules to prevent the caretaker from exercising a vote for 4 proxies held in his name;
• while the applicants may be of the opinion that the caretaker has charged for items contained within his contract, the body corporate has voted in Motion 10 of the AGM not to pursue reimbursement;
• other allegations are baseless and defamatory.

In addition, submissions were made by some 12 lot owners who state that they support the committee which disagrees with the application to overturn motions 10 & 23 as the motions were carried by a legitimate vote of the body corporate in general meeting.

The Caretaking Service Contractor stated that he opposed the application as the resolutions were carried by way of a democratic vote. He pointed out that the applicants were members of the previous committee which was voted out and that there have been previous incidents causing friction between him and the applicants.


Four individual submissions were made in support of the application. Each of the submissions raised concerns regarding the standard of maintenance in the scheme. On submission suggested that the contract with the Caretaking Service Contractor lacked clarity. Another submission suggested that the Minutes of the last AGM were incorrect as there were only 17 (not 18) votes by way of voting paper in addition to the 5 votes from the floor and the four proxies.

In reply the applicants made the following submissions:

•	they contest the validity of the whole meeting as the minutes of meeting refer to receipt of 17 voting papers but continue to insist that 18 papers were received;
•	they note that motion 24 (relating to caretaking duties) was ruled out of order by the Chairperson but not motion 23;
•	they believe that because there were no explanatory notes to the agenda item and therefore it should have been ruled out of order under section 45 of the Act which provides that a motion should be ruled out of order if the substance of the motion is not included on the agenda;
•	not all committee members were consulted before the submission was made on behalf of the committee;
•	a number of lot owners were lobbied to make a negative submission to the application.

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

I have read all documentation submitted in support of the application and also all submissions made in response to the application. In particular I note the following advice provided by the body corporate solicitors:

The caretakers duties, for which he is renumerated, include, inter alia, the following:

• an obligation to maintain and repair the property so as to ensure it is kept in first class order and repair;
• an obligation to regularly water, fertilise, weed mow and maintain the lawns and maintain the gardens and shrubs;
• an obligation to clean the common property (including the swimming pool and spa) and any other assets of the body corporate in the care and control of the caretaker;
• an obligation at the caretaker’s cost to have all equipment, machinery and tools necessary to carry out his duties in a proper and workmanlike manner.;

There are a number of itemisations in the invoices which appear to be work required of the caretaker under the Caretaker Agreement. These include the following itemisations:

• "common areas and nature strip mowing", "weed spraying", "garden maintenance" and the like which would be covered by clause 4.1(14)(a);
• "clean barbeque area", "pool window clean" which would fall within the duties required under clause 4.1(14)(b);
• "maintenance whipper snipper", "maintenance wheel barrow" would fall within clause 4.5.

Other items contained within the invoices may be deemed to be duties that would require a skilled tradesman. These include the following itemisations: "lawn grub spraying", "cut down tree", "clear wasp nest".

However clause 4.2(2) requires the caretaker to obtain the body corporate’s prior approval to the appointment of a skilled tradesman and if there is a dispute with the caretaker as to whether a skilled tradesperson is required, such dispute is to be determined in accordance with clause 4.2(3).

The appointment of a skilled tradesman is at the body corporate’s cost. So provided a skilled tradesperson is required to perform the duties, and the body corporate has approved the appointment of the tradesman then the body corporate is obligated to pay the costs incidental to the appointment of the tradesman....

Arguably the body corporate has a valid claim for reimbursement of some of the payments detailed in the invoice list. The body corporate’s claim is weakened by the fact that the payments have already been remitted by the body corporate. The payment of those invoices may be deemed an implied admission that the payment were in order. However the body corporate would be entitled to the recovery of the monies paid if it can be shown that the monies were paid under a mistake.

The body corporate should refuse payment of invoices submitted by the caretaker that relate to the duties the caretaker is required to perform or costs that are the responsibility of the caretaker.

The body corporate may also wish to demand reimbursement for payments already made to the caretaker. If the caretaker refuses to reimburse the body corporate for these items a claim of restitution may be available for the body corporate.

The above advice is cause for concern on the part of lot owners as the Caretaking Service Contractor would be receiving a reasonable level of remuneration for performance of his contractual obligations under the Caretaking Agreement. In most instances the remuneration will be payable in respect of personal exertion by the caretaker although in some circumstances where particular skill is required, it would be contemplated that the caretaker’s role would be to oversee the work of independent contractors. It is important that committee members and the Caretaking Service Contractor reach a firm mutual understanding as to what tasks are duties of the caretaker for which he is remunerated and what tasks fall outside the scope of the contract.

Where over-servicing can be established, the remedies available to the body corporate include recovery action in court, or termination of the Caretaking Service Contractor. The previous committee sought to recover the amount allegedly overpaid by submitting the following motion

That the body corporate seek reimbursement from the caretaker of amounts claimed by and paid to the caretaker and external contractors for work which is included as part of the caretakers duties in accordance with the advice of Small Myers Hughes Lawyers.

Not surprisingly, the applicants also opposed the following motion:
That the body corporate approve the reimbursement of $820 and $560 for the periods ending March 2006 be paid to the building manager as per the budget.


The applicants have raised the question of whether the motions should have been ruled out of order by the chairperson at the AGM. The powers of a person chairing a general meeting of the body corporate are contained in section 45 of the Accommodation Module which provides as follows:

Power of person chairing meeting to rule motion out of order
(1) The person chairing general meeting of the body corporate must rule a motion out of order if--

(a) the motion, if carried, would--

(i) conflict with the Act, this regulation or the by-laws, or a motion already voted on at the

meeting; or

(ii) be unlawful or unenforceable for another reason; or

(b) except for a procedural motion for the conduct of the meeting, or a motion to correct minutes--the substance of the motion was not included in the agenda for the meeting.
(2) The person chairing the meeting must, when ruling a motion out of order--

(a) give reasons for the ruling; and

(b) for a ruling given under subsection (1)(a)--state how the ruling may be reversed by the persons present and entitled to vote on the issue.

(3) The persons present and entitled to vote may reverse a ruling given under subsection (1)(a) by passing an ordinary resolution disagreeing with the ruling.

(4) The reasons given by the person chairing the meeting for ruling a motion out of order must be recorded in the minutes of the meeting.

In the circumstances, I believe that the substance of each motion was included in the agenda for the meeting and I do not believe that I am empowered to overturn the Chairperson’s ruling.

The next matter for consideration is whether the body corporate in general meeting was entitled to pass a resolution authorising the above payments to the Caretaking Service Contractor. Assuming that the expenditure approved at the general meeting related to tasks that the Caretaking Service Contractor was already obliged to perform pursuant to the caretaking agreement, the disputed resolutions were nevertheless voted upon by a majority of lot owners present and voting at the general meeting. While the applicants would obviously question the wisdom of the vote, I believe that a majority of lot owners present at the general meeting were entitled to ratify such expenditure.

In the recent appeal case of Dindas & Anor v Body Corporate for One Park Road Ors [2006] QDC 302 the District Court held that the power of an adjudicator to make a just and equitable order to resolve a dispute under section 276 does not entitle an adjudicator to override other rights which lie behind, and form the basis of, voting rights. The legislation plainly contemplates and permits a majority (determined by reference to voting rights granted by the Act) to assert its will by the legitimate exercise of that voting power.


Accordingly I do not believe I am entitled to make the orders sought by the applicants.