Paringa Lodge [2007] QBCCMCmr 43 (25 January 2007)

Last Updated: 9 February 2007

REFERENCE: 0911-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14940
Name of Scheme:	Paringa Lodge
Address of Scheme:	146 Macquarie Street ST LUCIA QLD 4067

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

John Argus, the owner of lot 11

I hereby order that the application for an order that Motion 1(a) and 1(c) of the committee meeting of 17 October 2006 be declared void, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0911-2006

"Paringa Lodge" CTS 14940

Scheme

"Paringa Lodge" community titles scheme was registered as a building units (now known as building format) plan of subdivision on 20 December 1966 comprising 12 lots and common property. It is regulated by the Act’s Standard Module.

Application

This application was lodged by the owner of lot 11, John Argus (the applicant) against the body corporate, seeking an order that motions 1(a) and 1(c) of the committee meeting of 17 October 2006 be declared void.

In his grounds to the application, the applicant states that at the AGM held on 20 June 2006, a committee comprising the following persons was elected:

Chairperson Elfi Massey
Ordinary Member Jim Elliott
Ordinary Member John Massey

Jim Elliott resigned from his position and a resolution was passed outside a committee meeting on 17 October 2006, accepting John Massey’s offer to fill the vacancy created by the resignation of Jim Elliott. There were then fewer than 3 voting members of the committee, which the applicant believes was invalid.

The then body corporate managers, Body Corporate Services, terminated their services to the body corporate, effective on 10 November 2006. A copy of a "Notice to be Voted on Outside Committee Meeting" was circulated to all owners on 12 October 2006, containing a motion to appoint a body corporate manager in a "caretaking" role on a month to month basis to assist the committee with the administrative matters of the body corporate and to offer guidance where required.

A resolution was passed on 17 October 2006 outside a committee meeting by the committee comprised only of Mr and Mrs Massey to appoint Strata3 Group Pty Ltd in a "caretaking" role on a month to month basis as body corporate manager.

The applicant is concerned that the committee composition (only two voting members) is invalid and also whether a body corporate manager can be appointed in a "caretaking" role on a month to month basis.

Submissions

Submissions in response to the application were sought from all owners (excluding the applicant) and the committee. Only one submission was received, from the chairperson, Elfi Massey. In her submission, she states that she feels that events have now largely overtaken the temporary position which, even if it was arrived at improperly, was done with the best intentions for the body corporate and all owners in mind. She further states that with notice received from Body Corporate Services that they intended to manage the scheme no longer and faced with the situation of practically no owners wanting to serve on the committee (including the applicant), it was a very stressful time.

The chairperson states that the positions of secretary and treasurer were not filled at the 2006 AGM. In the absence of any nominations for the positions, Mr Massey agreed to act as secretary and treasurer until a future EGM. All required committee positions were therefore filled.

Upon the resignation of Mr Jim Elliot and the termination of body corporate management services by Body Corporate Services, the remaining two committee members approached Strata3 Group Pty Ltd and interviewed them with a view to them taking over management of the scheme. The Strata3 Group agreed to collect the body corporate records from Body Corporate Services and manage the body corporate on a month-to-month basis and arrange to take the body corporate to an EGM to have a body corporate manager formally appointed.

The Strata3 Group discovered, upon reading the minutes of the most recent AGM, that the committee had not been properly elected and advised the two remaining committee members of their obligation to call an EGM as soon as possible. With the permission of the two remaining committee members, Strata3 proceeded to prepare the EGM documentation, including committee nomination forms, in order to fill the vacancies.

The EGM, held on 30 November 2006, was properly called, with 21 days notice given. The motion to appoint Strata3 was passed and the vacancies of secretary and treasurer were filled. The ordinary committee member position vacated by Jim Elliott remains vacant.

Jurisdiction

This is a dispute between an owner and the body corporate and comes within the dispute resolution provisions of the Act.^[1]

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)).

Decision

I consider that to be successful in an application for an order that a meeting of a body corporate be declared invalid (or specific resolutions passed therein), the applicant must demonstrate that significant procedural irregularities, or breaches of the legislation occurred in relation to the calling of the meeting, or the voting on motions. Alternatively the applicant must demonstrate that the substance of the motions is unlawful, or unreasonable and should not be carried out. In meetings of all kinds, including body corporate meetings, minor procedural irregularities often occur both in the calling and conduct of the meeting. It has been the practice of the courts not to void meetings on the grounds of minor irregularities in procedure, provided that persons entitled to participate in the meeting have not been disadvantaged in properly exercising their right to vote on the matters brought before the meeting. The very detailed provisions of the Standard Module 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 bone fide.^[2]

I will now consider each of the alleged irregularities the applicant details in his grounds.

Committee Composition

The required number of members for a committee, in the case of Paringa Lodge, is at least 3 and not more than 7 voting members. From the date of Mr Elliott’s resignation from the committee, and the EGM held on 30 November 2006, the number of voting members of the committee fell to two, with Mr Massey purporting to fill the vacancy created by Mr Elliott.

Section 25(2)(c) of the Standard Module provides that a committee member’s position becomes vacant if the member resigns by written notice given to the chairperson or secretary. Section 25C of the Standard Module details the procedure to be followed in the event of a vacancy on the committee arising. It provides as follows:

25C Committee must appoint new member or call general
meeting of body corporate
(1) Within 1 month after the position of the member of the
committee becomes vacant, the committee must--
(a) if the number of its members has not fallen below the
number required for a quorum--
(i) appoint a person who is eligible to be a member of
the committee to fill the vacancy; or
(ii) call a general meeting of the body corporate to
choose a person to fill the vacancy; or
(b) if the number of its members has fallen below the
number required for a quorum--call a general meeting
of the body corporate to choose a person to fill the
vacancy.
(2) However, subsection (1) does not apply to a position that
becomes vacant because the body corporate removes the
member from office by ordinary resolution if the body
corporate fills the vacancy under section 25B.

Although the exact date of Mr Elliott’s resignation is not specified, it appears as though there may have been a delay in excess of one month before a general meeting was called in order to fill the vacancy. However, an EGM was held on 30 November 2006. The Notice of the EGM stated that there were three positions on the committee to be filled – that created by Mr Elliot’s resignation as an ordinary member of the committee, and the positions of secretary and treasurer that were not filled at the AGM held on 20 June 2006 (although Mr Massey had agreed to act in those positions until an EGM was held to fill them). At the EGM, Jayne Wadley was elected to the position of secretary and Warren Wadley to the position of treasurer. The vacancy created by Mr Elliot’s resignation as ordinary member remains, there having been no nominations received to fill it. There are now four voting members of the committee.

In my view, the committee has substantially complied with the legislation in terms of what it requires in the situation where a vacancy on the committee arises. I accept that there was some period of delay, but regard this as insignificant. In circumstances where neither the applicant nor any other owner has complained of any detriment suffered by the composition of the committee and where the applicant himself neither attended, nor voted at the EGM called for the purpose of rectifying the situation, I do not see any point in invalidating committee resolution 1(a) of 17 October 2006.

Owners should be aware that a vacancy exists on the committee. The committee is able to appoint someone to fill the vacancy, should any owner subsequently express an interest in it.

Engagement of Body Corporate Manager

Section 87 of the Standard Module provides, in effect, that the body corporate may engage a body corporate manager only if the body corporate passes an ordinary resolution approving the engagement. The committee resolution of 17 October 2006 is insufficient. However, at the EGM held on 30 November 2006, I note that Strata3 Group Pty Ltd were appointed as body corporate managers, by the passing of an ordinary resolution (6 votes to nil). The term of the appointment is for twelve months, from 1 November 2006 to 31 October 2007.

In my view, the committee was acting in the best interests of the body corporate in seeking to obtain some assistance from a professional body corporate manager for the purpose of convening an EGM in order to rectify deficiencies in the committee composition and also administer the body corporate. Strata3 Group Pty Ltd were validly appointed as body corporate managers at the EGM on 30 November 2006. I note that neither the applicant, nor any other owner, has demonstrated any detriment suffered by the engagement of Strata3 Group Pty Ltd by the committee on 17 October 2006. In these circumstances, I do not see any purpose in invalidating committee resolution 1(c) of 17 October 2006.

I believe that the EGM of 30 November 2006 should have remedied the concerns the applicant initially had with committee composition and the engagement of new body corporate managers pursuant to the committee resolutions of 17 October 2006.

I have dismissed the application.

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^[1] See ss.226, 227 & 228
^[2] Wei-Xin Chen v. Body Corporate for Wishart Village [2001] District Court (Brisbane) 4080 of 2000.