Surfers Chateau [2007] QBCCMCmr 25 (17 January 2007)

Last Updated: 9 February 2007

REFERENCE: 1065-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14328
Name of Scheme:	Surfers Chateau
Address of Scheme:	44-52 The Esplanade SURFERS PARADISE QLD 4212

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

Cheryl and Paul Anastasi, as Trustees and Owners of Lot 38 and 53, and Others

I hereby order that the committee for the scheme may delay execution of new caretaking and letting agreements with Chateau Beachside Management Pty Ltd pending a further or final order in this application. I further order that pending final order, or further interim order, unless this dispute resolution application is finally determined or discontinued at an earlier time, the body corporate may not sign, execute or otherwise enter into caretaking or letting agreements with any other entity, and that Chateau Beachside Management Pty Ltd shall remain engaged on the terms and conditions of its existing or last contracts, save for the condition as to term of years and options to renew, if any. I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1065-2006

"Surfers Chateau" CTS 14328

APPLICATION

This is an application dated 19^th December 2006 by lot owners Cheryl and Paul Anastasi, owners of Lot 38 and 53; Niall and Paula Reid, owners of Lots 49, 55, 64 and 102; Barry and Jill Prichard, owners of Lots 56 and 104; Des Caulfield, owner of Lots 9 and 58; Malcolm and Pamela Catchpole, owners of Lot 17, and Pamela Catchpole as sole owner of Lots 39 and 105; and David and Elspeth Chester as owners of Lot 54, (the Applicants). Applicants Niall Reid, Cheryl Anastasi, Barry Prichard, Des Caulfield and Malcolm Catchpole are members of the committee for the scheme.

The Applicants seek a declaration that "resolution number 9" of the Annual General Meeting held on 11^th November 2006 that the body corporate enter into a 20 year caretaking and letting agreement with Chateau Beachside Management Pty Ltd (Chateau Beachside) is invalid on the basis that the resolution was unreasonable and contrary to the interest of lot owners.

They also seek an order against the body corporate for the scheme (the body corporate) that the body corporate be required to call an extraordinary general meeting to reconsider and vote on the motions dealing with the entry into new caretaking and letting agreements.

In addition, the Applicants seek an interim order that the committee may delay execution of the new caretaking and letting agreements with Chateau Beachside. This order deals only with the application for an interim order.


JURISDICTION

"Surfers Chateau" Community Titles Scheme 14328 is a community title scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management ( Accommodation Module) Regulation 1997 (Accommodation Module). There are 108 lots in the scheme created under a Building Unit Plan of subdivision.

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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute.
It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is to simply maintain the "status quo" of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application "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". Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order.

I therefore sought submissions from the interested party John Gardner, (Mr Gardner) director of Chateau Beachside by 12^th January 2007. Mr Gardner contacted his solicitors Short Punch and Greatorix to make submissions on behalf of Chateau Beachside.


SUBMISSIONS

The Applicants say that at the annual general meeting on 11^th November 2006, (the AGM) there was a motion in the alternative about a new caretaking agreement with Chateau Beachside.

Motion 9 proposed that the body corporate enter into a new caretaking agreement and letting authorisation with Chateau Beachside. The motions in the alternative were listed as " attachments B and C." Attachment B was proposed by the committee and contained an explanatory note from the committee that the agreement was to expire in 2013, with the same remuneration as the then current agreement. It explained that Chateau Beachside’s proposal was for a 20 year agreement and an increase in remuneration. It ended with the sentence " The Committee recommend that you vote : Yes" to this motion.

Attachment C contained an explanatory note from Chateau Beachside. It details the ownership of Chateau Beachside in that "Scott and Kerrie currently own 15% " of the company. It further states that Scott and Kerrie seek an end to uncertainty and through their incentive program they will own between 50% and 60% when they retire.

The Applicants do not provide a copy of the minutes of the AGM, but in submissions by Chateau Beachside, minutes are provided and the vote is given as 79 in favour of entering into a new agreement, with 38 being in favour of Attachment B ( the committee’s 7 year agreement) and 41 being in favour of Attachment C ( Chateau Beachside’s 20 year agreement.)

The Applicants say that the documents provided to lot owners prior to the meeting "were misleading and presented out of context" and that there was a "real possibility" that lot owners were influenced by the misleading information. They also claim that correspondence from Chateau Beachside was sent to lot owners but not the committee. They refer to detailed negotiations with Chateau Beachside prior to the AGM.

Chateau Beachside says that a 20 year contract is not contrary to the interests of lot owners and that the Applicants have shown no reason why this may be so. The decision was made by a majority vote and the Applicants, who make up a large proportion of the committee, should respect the majority vote. It denies that there are inaccuracies in the statement of interests of "Scott and Kerrie", and that allegations of misleading material are made without foundation.
It says that the Applicants are merely trying to " make a commercial decision on behalf of all other members on how they can actively deal with their lots," and that the application is frivolous and vexatious, since the claims are unjustifiable. It seeks that both the interim application and final order application be dismissed.


DETERMINATION

In this matter there are complex issues and allegations made which cannot be explored at interim stage.

The Applicants allege that a resolution made at an annual general meeting was made mistakenly, and/or unreasonably in that it is contrary to the interest of lot owners.

I note that the new agreements were drafted to commence on 6^th December 2006. I also note that Chateau Beachside in its submissions has made no claim that it is prejudiced or disadvantaged in any way by the failure of the committee to enter into the new contract, or either of them.

Since the root of the motion that the body corporate enter into caretaking and letting agreements with Chateau Beachside does not appear to be in dispute in itself, but the terms of those agreements are disputed as to the alternatives proposed to the AGM, in order to maintain the status quo, I order that the body corporate may delay the execution of any caretaking and letting agreements with Chateau Beachside until further or final order is made.

In the meantime, the body corporate may not enter into caretaking and/or letting agreements with any other entity, and the terms on which Chateau Beachside remain as caretaking service contractors and letting agents are to be those of their existing or last contract, save for the term of those contracts and any options to renew, and the remuneration is to be as currently paid under the existing or last contract.

Submissions will now be invited from all lot owners on this matter, in the usual way.