Eastern Heights Park [2007] QBCCMCmr 198 (10 April 2007)

Last Updated: 24 April 2007

REFERENCE: 0995-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	2358
Name of Scheme:	Eastern Heights Park
Address of Scheme:	112B Robertson Road Eastern Heights Qld 4305

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

Cooper & Mayer Associates Pty Ltd, the Owner of Lot 1

I hereby order that the application for an order: To have the EGM convened and conducted by Teys on 30 November 2006 (yesterday) "Ruled Out of Order" is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0995-2006

"Eastern Heights Park" CTS 2358

The Eastern Heights Park community titles scheme (Eastern Heights Park) consists of 19 lots and common property. The community management statement for Eastern Heights Park indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme is registered as Building Units Plan 13303.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was lodged by Cooper and Mayer Associates Pty Ltd, owner of Lot 1 (applicant) on 1 December 2006. The applicant sought final orders against the Body Corporate for Eastern Heights Park (respondent) in the following terms:

To have the EGM convened and conducted by Teys on 30 November 2006 (yesterday) "Ruled Out of Order"

The application also sought an interim order. On 18 December 2006 I dismissed the interim application to have motions 2, 3, 4, 5, 6 and 7 at the Extraordinary General Meeting (EGM) of 30 November 2006 temporarily stopped.

PROCEDURAL MATTERS

Prior to making the interim order, a brief period was provided for the Committee and the Body Corporate Manager, TEYS Strata (Brisbane) Pty Ltd (TEYS), to make submissions in respect of the application. Submissions were received from the Committee Chairperson, on behalf of the Committee and pursuant to a Committee resolution of 14 December 2006, and from TEYS.

Following the interim order, copy of the application was provided to the Body Corporate under section 243 of the Act, with an invitation to the Committee and all owners to respond to the matters raised in the application. Submissions were made by the Chairperson on behalf of the Committee and by five owners. The applicant inspected the submissions received and made a written reply.^[1]

A dispute resolution recommendation was made referring the dispute to departmental adjudication.

MATTERS IN DISPUTE

This application relates to a disputed Extraordinary General Meeting (EGM) conducted on 30 November 2006. The EGM, purportedly requested by owners, comprised seven motions, summarised as follows:

1.	Confirmation of the previous minutes
2.	Removal of R Mayer-Frisch from the Committee
3.	Authorisation for the BCM to action collection of outstanding debts relating to Lot 1.
4.	Reinstatement of the penalty interest of 1.5% per month for overdue levies.
5.	Authorisation for the BCM to conduct the AGM.
6.	Appointment of a new advisory ‘inspection’ engineer to replace R Mayer-Frisch.
7.	The exclusion of R Mayer-Frisch from conducting audits for the Body Corporate.

At the time the applicant’s principal, Dr Rainer Mayer-Frisch, was the Secretary, Treasurer and honorary Building Consultant for the scheme. He claims he has been instrumental in improving the cost effectiveness and quality of maintenance and audits for Body Corporate.
Initially the application merely stated that TEYS was out of order and in contravention of the legislation, that he was being unreasonably victimised and denied natural justice, and that TEYS was acting in their own interests and not in the interests of the Body Corporate. Upon a request for clarification of the basis of the application, the applicant submitted that:

	TEYS convened the EGM on 6 November 2006 without reference to the Committee.
	Section 61(1)(a) of the Standard Module requires that an EGM must be called if requested in writing by 25% of owners (here, 5 owners). The Committee was not given a copy of the notice requesting the EGM and the applicant has not been able to search the records. The applicant believes the notice may not include the requisite number of signatures.
	Section 45 of the Standard Module requires the Committee to prepare and agenda for each general meeting and specifies what must be included in the agenda.
	He has been informed that Stephanie Peech of TEYS acted as Returning Officer for the meeting. He understands it is mandatory that an independent returning officer be appointed for each general meeting and she is not independent.

The submissions from TEYS and the Chairperson include the following comments and information:

	As the applicant’s account was in arrears since before the last AGM, and the applicant made no mention of this in his meeting minutes, TEYS felt compelled to advise the Chairperson.
	Many owners contacted TEYS regarding the applicant’s performance of his duties as Secretary/Treasurer, including minutes being unprofessional and sometimes months late.
	The applicant made it clear to TEYS that they were not welcome at body corporate meetings.
	On 25 October 2006 the Committee agreed to call an EGM to discuss issues relating to the applicant’s levy account. The applicant said he would prepare an agenda, but TEYS later advised the Chairperson verbally that this would represent a conflict of interest.
	The applicant then agreed to pay some outstanding amounts and called an ‘urgent’ committee meeting to cancel the EGM. The Chairperson and another member were not notified.
	The EGM was convened by the Chairperson in response to a request signed by six owners. TEYS did not convene the meeting.
	The Chairperson asked TEYS to prepare the meeting documentation and to take minutes.
	While an agenda had been distributed the applicant apparently then sought to convene a committee meeting (apparently on 21 November 2006) to prepare an agenda for the EGM.
	On 22 November 2006 the applicant distributed an "amended" notice of meeting, purportedly changing the date for the meeting to 12 December 2006 and proposing a different venue.
	The amended agenda included 16 motions of which motions 2 to 10 were listed as ‘recommended by the committee’ and appear to respond to the issues raised in the requested motions. Motions 11 to 16 include the requested motions, accompanied by comments purportedly from the Committee and that the Committee recommended voting no to the motion.
	A Notice of Opposition was signed by 11 owners sought to overturn the decision to hold general meetings at the Brothers Leagues Club rather than Bethany Lutheran Hall (the location for the scheduled 30 November 2006 EGM) and expressed the expectation that the original EGM would proceed as scheduled. However this notice was not distributed.
	The six requested motions were passed unanimously at the EGM (13 in favour and nil against).
	The EGM minutes were distributed the next day and no other owner has objected to the result.
	The meeting results show the motions were in the interests of the majority of owners, and the orders sought would benefit no owners other than the applicant.
	There was no returning officer for the EGM.

Four other owner submissions oppose the application. They say owners, not TEYS, initiated the EGM, the majority of owners agreed to the motions and the meeting was called and held correctly. They express concern that the applicant has not acted in the interests of all owners, and raise issues such as delays in the provision of minutes and other information, inaccuracies in minutes, the applicant’s use of privacy laws to avoid disclosing financial details, the applicant’s practice of auditing his own books, and decisions about expenditure on the underpinning of Lot 1 and 2. In particular there is concern that the applicant had nominated for and held the positions of Secretary and Treasurer for some time while being unfinancial. Some of the submissions express confidence in the current Chairperson and TEYS.

One owner expresses disgust at the way the applicant has been treated by TEYS, the Chairperson and other owners, and my interim order. This owner says the applicant has made a significant contribution to the Body Corporate and claims serious inaccuracies in the TEYS and Chairperson submissions. She says there were discrepancies in the applicant’s account which TEYS refused to reconcile, it was the Committee rather than the applicant who directed that TEYS could not attend Committee meetings, and that she personally delivered notice of the Committee meeting called to cancel the EGM which the Chairperson claims two Committee members did not receive.

The applicant’s reply to submissions does not address the substantive issues in the application. He expresses umbrage at comments made in the submissions and provides references attesting to his integrity and to his previous actions to save money for the Body Corporate. He also claims:

-	The agreement of Lot 1 and 2 to split the costs of the underpinning of Lot 1 and 2 with the Body Corporate was limited to the amount anticipated in the original quote but the resulting costs increased due to delays by the Body Corporate.
-	In January 2006 he contacted TEYS to discuss inaccuracies which he believed were contained in his Notice of Contributions received in December 2005. He says he advised TEYS that he would not pay the account until it was corrected and TEYS have refused to correct the account. The account still contains a disputed amount of $415.79 and there is a further amount owing in respect of the ‘voluntary contributions’ for the repairs to Lot 1.
-	His account was paid up at every AGM, except the 2006 AGM for the reasons outlined above.
-	Under section 10(3) of the Standard Module someone who is unfinancial is only restricted from voting and can still undertake all other duties associated with the position.
-	TEYS pursuit of his unpaid contributions through Collection Success debt collectors is illegal because TEYS has not disclosed its relationship with Collection Success as required.

JURISDICTION

I am satisfied that this is a matter which falls within the dispute resolution provisions of the legislation (see sections 227, 228, 276 and Schedule 5 of the Act).

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

The key issue in this dispute is whether the Requested EGM was validly convened and, if not, whether it is just and equitable in the circumstances to invalidate the meeting on that basis.

Capacity of the Body Corporate to decide the disputed motions

Regardless of whether the applicant was financial or not at any relevant time, and whether or not he had performed well or not in his various roles, the Body Corporate retains the right to pass a resolution removing him from the Committee. This right is specified in section 25(2)(f) of the Standard Module which says that a committee position becomes vacant when a committee member is removed from office by an ordinary resolution of the body corporate.
The applicant has not provided any cogent argument to suggest that the Body Corporate is not entitled to pass this or the other motions considered at the EGM. While he has commented that he has been ‘victimised’ and denied natural justice he has provided no explanation or evidence of this claim. He has also not substantiated his claim that the motions are not in the interests of the Body Corporate. I can find no basis to determine that the motions passed at the EGM are not motions that a body corporate is entitled to consider and approve.

I do not propose to enter into the debate over the truth of the allegations made by both sides or to investigate claims relating the applicant’s financial status, his conduct in his role as Secretary and Treasurer, or the responsibility for the underpinning works. These matters are immaterial to a determination of the validity of the motions, as questioned by the application.

However I disagree with the applicant’s claim that being unfinancial only prevents him from voting but not from undertaking the other aspects of the committee member role. Section 10(3)(a) of the Standard Module provides that an owner is not eligible to be a "voting member" of the committee if they owe a debt when the committee members are chosen. This section clearly refers to the type of committee membership and not the role of the committee member. The Dictionary Schedule to the Standard Module defines a "voting member" as a member of the committee other than a non-voting member. Non-voting members are specifically defined as the body corporate manager and caretaking service contractors.^[2] Accordingly, all executive and ordinary committee members are "voting members" and an unfinancial owner cannot be elected as a non-voting member.

Requirement for a requested extraordinary general meeting

In regard to the owner’s request for the EGM, section 61 provides as follows:

61 Requirement for requested extraordinary general meeting

(1) An extraordinary general meeting (a requested extraordinary general meeting) of the body corporate must be called if a notice asking for an extraordinary general meeting to consider and decide motions proposed in the notice is--

(a) signed by or for the owners of at least 25% of all the lots included in the scheme; and

(b) given to the secretary or, in the secretary’s absence, the chairperson or, if the committee has not yet been chosen, given to the original owner.

(2) The secretary may be presumed to be absent if a notice is given to the secretary at the address for service of the body corporate, and no reply is received within 7 days.
(3) A requested extraordinary general meeting--

(a) must be called, within 14 days after the notice is given under subsection (1), by the person to whom the notice is given; and

(b) must be held within 6 weeks after the notice is given.

(4) A requested extraordinary general meeting of the body corporate may be called even though the body corporate’s first annual general meeting has not yet been held.

The applicant’s main complaint with validity of the EGM is that he believed insufficient owners may have signed the notice requesting the meeting. In this scheme, a minimum of five owners would be required to comprise the 25% who must sign a request. I have been provided with a copy of the notice which is signed by six owners. The applicant has not challenged the validity of this notice in his reply to submissions and the notice appears compliant.

To strictly comply with section 61(1)(b), the notice should have been given to the applicant as Secretary. It appears that on 1 November 2006 the notice was given to the Chairperson who understood the applicant would be hospitalised from 3 November 2006 for approximately three weeks and so unable to undertake the task. Her submission says she waited until 7 November 2006 to see if he had distributed the notices and, when he did not, she proceeded to do so. This implies the notice was then given to the Secretary at some point between 1 and 7 November but this is not clear. The applicant does not challenge the Chairperson’s comments on this issue.
In the circumstances, it was reasonable for the notice to be given to the Chairperson. It appears the Secretary was known to be unable to action the notice and did not respond to it when it was apparently provided to him. Even if the Secretary did not receive any or all of the 7 days provided in the section to action the EGM request, I can see no detriment that has arisen from this very minor procedural transgression. I consider the purpose of these subsections is to ensure that the notice is progressed promptly through appropriate channels, which did occur, rather than any inherent right of the Secretary to know about the notice.

Capacity to call a meeting

The applicant claims TEYS called the EGM. He provides no evidence of this claim and all other parties confirm the Chairperson directed TEYS to prepare the meeting documentation in response to the notice requesting the EGM. In this regard, section 40 of the Standard Module provides:

40 Who may call general meetings

(1) A general meeting may be called by--

(a) either of the following persons authorised by the committee to call the meeting--

(i) the secretary;

(ii) another member of the committee; or

(b) a person authorised or required to call a general meeting by an order of an adjudicator acting under the dispute resolution provisions.

(2) This section does not apply to a requested extraordinary general meeting.

Under section 40(2) there is no requirement for a committee to authorise the calling of a requested EGM. Rather, section 61(3)(a) specifies that the person receiving the notice requesting the EGM (either the secretary or chairperson, and in this case the Chairperson) must convene the meeting.

Capacity to prepare an agenda

The applicant complains that the Committee did not prepare and authorise the agenda for the EGM. Sections 45(1) and (2) provide:

45 Agenda for general meeting

(1) The committee must prepare an agenda for each general meeting.

(2) The agenda must include--

(a) the substance of the following motions--

(i) motions submitted by the committee for consideration at the meeting, including, for a motion with alternatives, the substance of each alternative;

(ii) if the general meeting is a requested extraordinary general meeting--the motions proposed in the notice asking for the meeting;

(iii) a motion submitted under section 41 by a member of the body corporate and required to be included in the agenda, other than a motion stated in the agenda as an alternative under a motion with alternatives;

(iv) if an adjudicator makes an order under the dispute resolution provisions authorising or requiring the calling of the general meeting to consider motions stated in the order--the motions stated in the order;

(v) if there has been a previous general meeting--a motion to confirm the minutes of the last meeting;

(vi) any other motion required under this regulation to be included in the agenda for the meeting;21 and

Section 45(2)(ii) requires that the agenda for a requested meeting must include those motions proposed on the notice requesting the EGM. However the notice requesting the EGM did not specify specific motions, but rather just referred very generally to the subject matter of the motions. It is unclear who drafted the actual motions – the Chairperson, or the persons signing the notice, or both in consultation. Technically, the Committee should have convened to prepare the agenda, and could then have considered any additional motions for the meeting.
The courts have consistently held that despite 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. In Chen v Body Corporate for Wishart Village CTS194822^[3], His Honour Judge Boulton DCJ considered provisions of the Standard Module and made the following comments:

"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."

I am satisfied that any non-compliance here was of an entirely insubstantial nature. I can see no disadvantage suffered by the applicant by the Committee not formally meeting to prepare the agenda, and the applicant has not specified how he has been disadvantaged.

Returning officer

The applicant says that he has been informed that Stephanie Peech of TEYS acted as Returning Officer for the meeting. He asserts that it is mandatory that an independent returning officer appointed for each general meeting and she is not independent. The Chairperson says no returning officer was appointed and there is no mention of a returning officer in the minutes. The applicant has not challenged this claim in his reply to submissions or provided any evidence that a returning officer was appointed. Moreover, the legislation does not require a returning officer to be appointed for every general meeting. A returning officer is only mandatory if a motion is to be decided by secret ballot, which was not the case here.^[4]

Privacy issues

I note that one submission makes reference to the use of ‘privacy laws’ to prevent the disclosure of information about the financial status of owners. This is a common misconception.

It is not the role of this Office to administer the Commonwealth Privacy Act 1988 and any queries regarding this legislation should be directed to the Office of the Federal Privacy Commissioner. But I note section 3 of the Privacy Act 1988 provides that "It is the intention of the Parliament that this Act is not to affect the operation of a law of a State or of a Territory that makes provision with respect to the collection, holding, use, correction, disclosure, or transfer of personal information (including such a law relating to credit reporting or the use of information held in connection with credit reporting) and is capable of operating concurrently with this Act." Information Privacy Principle 2.1(g) of the National Privacy Principles also provides that an organisation must not use or disclose personal information about an individual for a purpose other than the primary purpose of collection "unless the use or disclosure is required or authorised by or under law".

The disclosure of all body corporate records to owners is clearly authorised by law – specifically section 205 of the Act. Accordingly, the disclosure of body corporate records including financial information is inconsistent with the provisions of the Commonwealth privacy legislation.^[5] In addition, section 55 of the Standard Module requires that the secretary have certain information, including a list of all persons who have the right to vote at the general meeting (meaning those unfinancial will be identified by exclusion), available for inspection at every general meeting.

Conclusion

I am not satisfied that the applicant has provided any substantive grounds that the EGM of 30 November 2006 was invalid or that the motions considered were inherently unreasonable. While it may be that the preparation of the agenda for the meeting did not strictly comply with the legislative requirements, any such non-compliance was very minor. The applicant has not demonstrated any detriment suffered by them. Fundamentally, I can find no basis to determine that the outcome of the meeting, which had to be held by virtue of the notice requesting the meeting, would have been any different had the procedures been more strictly adhered to.

The disputed motions were passed unanimously by 13 owners and I understand that similar motions were passed unanimously by 14 owners at the Annual General Meeting on 13 March 2007. I consider that owners were entitled to make these decisions and have done so unequivocally. Accordingly I have dismissed the application.

If the applicant believes that the Body Corporate has incorrectly calculated his contributions he bears the onus of challenging the contribution notice. If he is unable to resolve the matter directly with the body corporate manager or the Committee, he should lodge a dispute resolution application in this Office clearly substantiating his claim with appropriate evidence. If he does not wish to take appropriate action to pursue his dispute he should pay the disputed amount. While the contributions are unpaid and not overturned by a Committee, the Body Corporate or an adjudicator, the applicant loses his voting and committee nomination entitlements, and the Body Corporate is entitled to impose approved financial penalties and pursue debt recovery action.

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^[1] See sections 246 and 244 of the Act respectively

^[2] See section 9A of the Standard Module
^[3] Appeal 4080 of 2000, District Court Brisbane, 29 May 2001
^[4] Section 54 of the Standard Module

^[5] Numerous previous adjudications have reached the same conclusion, including for example Jadon Place (0216-2003), 6 June 2003