No. 9 Port Douglas Road [2007] QBCCMCmr 514 (27 August 2007)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Maxwell Stainlay, the Owner of Lot 17

I hereby order that the application for orders:

1. Order declaring that resolutions purportedly (in correspondence) passed (since last AGM) at meetings of the committee resulting in motions for consideration in notices of EGM for the 11th May 2007, for the body corporate were at all times void.
2. Order body corporate manager to comply with terms of engagement / authorisation and code of conduct (Act), in relation to unlawful calling of an EGM containing unlawful motions and then cancellation without any official notification.
3. Confirm and Enforce Body Corporate resolution contained in Motion 3 of the EGM 15th September 2006 "Roof Repairs" (Attach 1) Also; ; Air conditioner repairs, Western roof, (motion 7. 15/9/06, Into Constructions), Attach 5
4. An order invalidating the Secretary's appointment or declaring the resolution (9) appointing the Body Corporate Secretary (because of nomination irregularities) at the AGM of the 23rd February 2007, was at all times void.
5. Appoint an Administrator to perform the function of the Body Corporate Committee and Body Corporate until its obligations for proper finalization of all necessary building repair / improvements are completed.

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0389-2007

"No. 9 Port Douglas Road" CTS 24368

No. 9 Port Douglas Road community titles scheme (No. 9 Port Douglas Road) consists of 18 lots and common property. The community management statement (CMS) for No. 9 Port Douglas Road indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme registered as Building Units Plan 106455.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Maxwell Stainlay, Owner of Lot 17 (applicant) on 8 May 2007 under the Body Corporate and Community Management Act 1997 (Act). The applicant sought final orders against the Body Corporate No. 9 Port Douglas Road (respondent) in the following terms:

Calling of any general meetings purportedly called by committee, where committee resolution and minutes of meetings are not evident or properly recorded and proper notice of committee meeting has not been distributed as per Regulations.

The putting forward of any motion to invalidate the engagement of Kenmac Constructions as per motion 3 of the EGM 15th September 2006, pending outcome of this dispute.

On 31 May 2007 I made an order dismissing the application for interim orders.

Prior to issuing the interim order, the application was forwarded to the Body Corporate and a limited time given to the Committee to respond to the interim application. Three Committee members made submissions. Following the interim order, the Committee and all owners were invited to make submissions pursuant to section 243 of the Act. Submissions were made by one owner and the Body Corporate Manager (BCM). The applicant declined to reply to submissions.^[1]

MATTERS IN DISPUTE

As outlined in the statement of reasons for my interim application, this application raises a range of issues about the conduct of the Committee and BCM, and the progress of works to repair and improve the building. Based on the material provided, the issues can be summarised as follows.

No. 9 Port Douglas Road was apparently a warehouse/office/residence which was converted to residential units. There is a significant history of dispute in this scheme, and this application is the 30^th matter lodged in this Office regarding the Body Corporate (although only 14 of those have proceeded to final orders). Many of the recent disputes have related to the administration of the scheme and maintenance and improvement works in the scheme, particularly the defective roof.

On 15 September 2006 the Body Corporate held an Extraordinary General Meeting (2006 EGM) which passed Motion 3 to, in part, engage Kenmac Constructions Pty Ltd (Kenmac) to undertake roof works. The applicant claims the Body Corporate is jeopardizing this resolution and/or the work by seeking to change the selected builder and quote without authorisation. He claims this has delayed the work while further damage is being sustained. He claims Kenmac has "...cancelled any material orders after, being stood down by the secretary, and the sponsorship of another builder to replace him by the purported secretary."

The applicant goes on to claim that the Committee have acted ‘fraudulently’ by submitting motions for an EGM that was to be held on 11 May 2007, but later cancelled (the cancelled EGM), without notification or minutes of any Committee meeting to formulate the motions. He says there have been no Committee meeting since the Annual General Meeting (AGM) of 23 February 2007.

The motions on the cancelled EGM sought approval for modified specifications for the roof repairs, to prepare a building contract on the basis of those specifications, and then to approve one of two quotes (from Kenmac and Ted Granville) for works based on the modified specifications. The applicant alleges that no new plans were supplied, there was insufficient analysis of the effects of the modifications and the motion to select a quote was not a proper motion with alternatives. He also queries the specifics of the proposed modifications and the validity of and basis of the quotes.

The applicant also claims the BCM has failed to comply with the Code of conduct for body corporate managers and caretaking service contractors^[2] (the Code) and the terms of their engagement by calling the cancelled EGM despite knowing that there had been no Committee resolution and by not giving official notification of the meeting’s cancellation.

In addition, the application queries the eligibility of Richard Sheers to be elected as Secretary at the AGM. Sheers was nominated by Lot 15 whose registered owner is Sheridan Schweitzer. Sheers apparently indicated he is the part owner of Lot, by way of trust holdings, and the legal representative of Lot 15. The applicant claims Sheers is the de facto partner of Schweitzer and that a de facto is not a spouse under section 11(5)(a) of the Accommodation Module.

Finally, the applicant asserts that the Committee’s fraudulent and misleading behaviour means they are unfit for the role but, as they hold a voting majority, internal processes are unlikely to have any effect. As such he seeks the appointment of an administrator to fulfil this function ‘impartially’.

Submissions

The interim submission from the Secretary (who claimed to also represent the absent Chairperson) rejects the application as a delaying tactic and also notes:

Another interim submission says that, while they thought the papers for the cancelled EGM were a genuine mistake, and believe everyone wants to progress the work, they are concerned that the Secretary is too close to the process. That owner would like detailed specifications provided to be both builders, confirmation of their quotes, and independent advice that the modifications are in the best interests of the scheme. They consider an administrator would ensure transparency.

The caretakers made an interim submission confirming that while do not know of any Committee meetings since the AGM, they have participated in several discussions with Committee members about potential variations to the building works. They say the changes aim to achieve better rainwater management, help prevent leaks and save more than $50,000. They contacted all owners to solicit their views and all, with the exception of the applicant, apparently indicated that they would support the variations if they were put to an EGM, subject to receiving more detailed information. This outcome was communicated to two Committee members who said they would canvass calling an EGM with the Committee. The caretakers were surprised to receive notice of the cancelled EGM as the papers had not been circulated to the Committee for consideration. They note the operation of the Body Corporate is improving but errors appear to have been made by some Committee members. They believe the interests of owners will be best served by calling an EGM as soon as possible to amend the building plans, with quotes from Kenmac and another party put as a motion with alternatives, and the works to proceed before the next wet season. However they also note an independent administrator might be appropriate given the "...perpetual and mostly petty arguing..." which is causing delays in progressing the repairs.

A final order submission from an owner notes that:

The submission from the BCM merely notes that she agrees with the interim order that matters between her and the Body Corporate are a contractual matter.

In the absence of a submission from the Committee I specifically requested that the Committee provide advice on the current status of the matter. Very little was provided by way of response other that, following a request from the applicant, a new EGM was being called. They said that, because of the delays arising from the applications to this Office, the building works were yet to commence but that both the applicant and Committee were submitting alternatives to the previously approved works to the new EGM.

Additional material

I requested a copy of the notice of meeting, circulated on 14 August 2007, for the new EGM which is scheduled for 4 September 2007. It includes motions from the applicant to accept a quote from Into Constructions Pty Ltd for repairs and maintenance in the scheme, and to revoke Resolutions 3, 4, 6 and 7 from the 2006 EGM. In addition, the Committee submitted a motion to amend the scope of works and appointment of contractor for the roof work, giving three alternative contractors.

On 30 and 31 July and on 13, 17 and 19 August 2007 the Commissioner’s Office received emailed correspondence from the applicant seeking to provide amendments and additional information to the application. The applicant was given an opportunity to respond to the brief comments sought from the Body Corporate regarding the status of the matter, but in all other respects the material was unsolicited and in many respects includes new information. The emails include a large volume of material, and the need to review this material has delayed my determination of this application. I have briefly perused the correspondence and identified that they outline the circumstances surrounding the request for and alleged delays in calling the new EGM and alleged deficiencies in the notice of meeting and the authorisation for Committee motions.

In addition, the applicant seeks to amend the outcomes sought to apply order 1 to the new EGM, to extend order 2 to include issues relating to financial transaction, to withdraw order 3 because the builder involved has withdrawn his quotes, and an interim order regarding the new EGM. The applicant says the amendment is required because of the length of time elapsed, the changed circumstances, changes to the legislation, and the alleged late notice for the new EGM.

I do not propose to accept amendments to the outcomes sought. Section 245 of the Act provides that the Commissioner may permit an applicant to change the application at any time before she makes an initial dispute resolution recommendation. On 13 July 2007 the parties were advised that a dispute resolution recommendation had been made referring the application to departmental adjudication. It is contrary to the Act and to the principles of natural justice to allow the applicant to seek to amend the outcomes sought by the application after submissions have been sought and the application has been referred to adjudication. If, in light of recent events, the applicant seeks new outcomes the onus is on him to lodge a new application. Any future application should clearly and concisely outline the circumstances and legal basis for outcomes sought.

Furthermore, I propose to disregard the other information provided by the applicant. In the interests of natural justice it would not be appropriate to consider this new information without providing it to the Committee at the very least to given them the opportunity to make a written response. This would significantly delay the determination of the dispute. I do not consider that the delay would be warranted because I do not consider that the information is sufficiently relevant to the outcomes sought by the original application.

In addition, on 17 and 22 August 2007 the Commissioner’s Office received correspondence from lot owner Tecelec (Qld) Pty Ltd seeking to provide further information and amendment to the application. One of the letters claims they are an applicant but this is not reflected in the application form. These letters dispute the validity of the motions submitted by the Committee to the new EGM, the handing of Body Corporate funds, the conduct of the BCM, the nature of the roofing works as an improvement, and the conflict of interest of one of the Committee members. The time provided for owners to make submissions expired on 25 June 2007 and Tecelec (Qld) Pty Ltd made a written submission at that time.

I propose to disregard the information provided by the Tecelec (Qld) Pty Ltd. I do not consider that the information is sufficiently relevant to the outcomes sought by the original application to warrant the delay that would be required to provide the late submission to the applicant for comment. It seems that the information substantially relates to new issues and if Tecelec (Qld) Pty Ltd wishes to pursue concerns on those matters they are entitled to lodge an 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:

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(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)).

In general this is a matter which falls within the legislative dispute resolution provisions.^[3] However, as pointed out in my interim order, I have no jurisdiction to make any orders about the BCM’s compliance with the Code or the terms of their engagement, because:

DETERMINATION

The applicant has sought five final orders in relation to the administration of this scheme. I have addressed each in turn. My consideration of the application has been hindered by the disjointed and often unsubstantiated nature of the applicant’s statement of grounds.

Validity of resolutions purportedly passed by the Committee

The applicant gives little details of purported resolutions that he believes occurred after the AGM, particularly in relation to the cancelled EGM. It does appear that no formal Committee meetings were held since the AGM. As such, there is some basis to suggest that the Committee did not validly call the cancelled EGM. However, as the EGM was ultimately cancelled, it does not appear that any substantial disadvantage has been suffered by any owner or that there would be any material benefit to owners from an order declaring that any purported decisions were invalid.

I remind the applicant that the purpose of the dispute resolution service is to resolve disputes and that, pursuant to section 276(1) of the Act, an adjudicator may make an order to ‘resolve a dispute’. I see no basis to determine that the first outcome sought by the applicant, even if warranted, would resolve anything in this scheme.

While it is not necessary to determine the issue to determine this application, it does appear that there were defects in the cancelled EGM. The wording of the motions and incorrect attachments, combined with the apparent failure of the meeting and its agenda to be authorised by the Committee, would certainly have put the validity of the meeting in doubt had it proceeded. Accordingly, it seems entirely appropriate to cancel the meeting.

All decisions of the Committee (including to authorise the calling of a general meeting and to prepare an agenda) must be made by a resolution in a committee meeting (pursuant to section 31 of the Accommodation Module) or in accordance with the processes for voting outside committee meetings (under section 33). My interim order highlighted other key provisions of the Accommodation Module in regard to Committee meetings and calling general meetings. The Committee is on notice that the validity of any meeting that does not comply with these processes is put in doubt. I would also encourage the Committee to utilise the services of the Information Service in the Commissioner’s Office^[5] to ensure they are aware of their responsibilities.

Conduct of the BCM

The applicant has sought an order that the BCM be required to comply with the Code or the terms of their engagement in relation to the calling and cancellation of the cancelled EGM. For the reasons outlined above, I have no jurisdiction in this matter to make any orders against the BCM. However I will make the following observations for the information of parties.

The applicant has provided no evidence that the BCM acted unilaterally in calling or cancelling the EGM in question. Such evidence would seem to be necessary to substantiate any claim against the BCM. The BCM can only act under the direction of the Committee. If the Committee directs the BCM to convene or cancel a meeting the BCM must act in accordance with that direction. While the BCM should certain make every effort to alert the Committee to potential defects in documentation and processes, they should not countermand a direction from the Committee.

Implementation of 15 September 2006 motions

The applicant says the Committee failed to implement Motion 3, engaging Kenmac to undertake roof works, and other resolutions passed at the 2006 EGM, and seeks an order that the motions be confirmed and enforced. The applicant has recently indicated that he wishes to withdraw this order. Pursuant to section 245(3) of the Act an applicant may withdraw and application at any time before it is disposed of. Accordingly I consider that the applicant may withdraw part of the application. Notwithstanding that I will make the following comments for the information of parties.

It is somewhat unclear from the material provided what has happened in regard to the proposed works since September 2006. However, I note that the applicant was one of several parties to a dispute resolution application (finalised by order on 18 December 2006) to invalidate Motion 3 and other motions at that meeting. While the applicant was certainly entitled to pursue his concerns regarding those motions he should acknowledge that the uncertainty created by the dispute may well have contributed to the delays in implementation. The reasons for the delays that have occurred since then are less clear.

There is nothing to prevent a body corporate from amending or revoking a motion passed by it.^[6] This is a matter for owners themselves to decide if any such motion is put before them. The Committee has now submitted a motion to modify the building work specifications and approve revised quotes. As I noted in my interim order, while I appreciate the genuine concerns of all owners regarding the ongoing delay in this matter, I do not consider it unreasonable for the Committee to submit an alternative option to owners when they become aware of it.

It seems the majority of owners may have given ‘in principle’ support for this approach. Moreover, it would arguably be unreasonable of the Committee to simply proceed with the approved proposal without informing owners when they became aware of a potentially better and/or cheaper alternative or giving the owners the option to choose between the original or modified proposal. It is for owners to decide in a general meeting whether they agree to the new proposal and quotes.

If the applicant has concerns regarding the modified proposal, or any concerns regarding the calling and conduct of the new EGM, the onus is on him to lodge a specific application on that issue. He has not provided sufficient evidence at this stage that the proposal is so manifestly unreasonable that owners should not be entitled to vote on it.

Appointment of the secretary

The applicant queries the eligibility of Richard Sheers to be elected as Secretary. Sheers was nominated by Lot 15 whose registered owner is Sheridan Schweitzer. The applicant claims that Sheers said he was the part owner of Lot, by way of trust holdings, and the legal representative of Lot 15. The applicant claims Sheers is the de facto partner of Schweitzer and that a de facto is not a spouse under section 11(5)(a) of the Accommodation Module.

Sheers does not suggest that he is a part owner of Lot 15. He says that he was nominated as the representative of Lot 15 by a power of attorney approved at the time of nomination and not because of any family relationship. As the applicant has not disputed this assertion, I do not consider it necessary to investigate the validity of the power of attorney.

Even if no power of attorney existed, it is likely that Sheers would be eligible for nomination by virtue of his de facto relationship with the owner of Lot 15. Section 11(1)(b)(i)(A) of the Accommodation Module provides that a person is eligible to be a committee voting member if nominated by an individual owner and they are a member of that individual’s family. Section 11(5)(a) includes ‘spouse’ in the definition of family. Section 32DA of Acts Interpretation Act 1954 provides that in any Act enacted before the commencement of section 32DA in 2003^[7], a reference to a spouse includes a reference to a de facto partner (as defined in that section) unless the Act expressly provides to the contrary.

Appointment of an administrator

Notwithstanding that the applicant has not in fact nominated a particular person for appointment as administrator for the scheme, I have considered his request for an administrator to perform the functions of the Committee and Body Corporate until the works are completed.

The decision to appoint an administrator to take over the running of a scheme is a significant step which adjudicators do not take lightly. Such an action would not only deprive the right of owners to elect its own committee to administer the scheme on a day-to-day basis, it could have a significant cost impact. To the extent that a body corporate has entered into a legally valid and binding contract of engagement with a BCM, that contract could not be terminated by the body corporate simply because an adjudicator has appointed an administrator. Therefore, a body corporate could potentially be faced with the expense of the administrator in addition to the existing BCM. Accordingly, such an action would normally only be taken when there is a significant breakdown in the functioning of a body corporate or substantial failure of a committee to fulfil its responsibilities.

Fundamentally, the applicant has not presented sufficient grounds to satisfy me that it is appropriate to appoint an administrator at this time. While I accept that some owners believe that an administrator will provide independence and transparency, this is not sufficient basis to warrant the appointment of an administrator.

Compliance with the provisions regarding the functioning of the Committee (including issuing notices of Committee meetings and minutes) should of itself to ensure transparency of the Committee’s actions. If owners do not believe these provisions are being complied with they should raise their concerns internally and, if not addressed, pursue the matter in the Commissioner’s Office. While bearing in mind that no Committee member can act unilaterally, if owners believe that a Committee member is not fulfilling their role appropriately, they can also put a motion to a general meeting for the removal of that Committee member from office^[8] or vote against those persons at the next committee elections.

It seems that some owners believe an administrator would be better placed to oversee the rectification works. While Committee members may well not have any particular knowledge in regard to overseeing complex building works, and should not be expected to, an administrator would not necessarily have any greater expertise in this regard. An administrator appointed to undertake the functions of the Committee would commonly be a person with body corporate management qualifications. They would normally be expected to have sound knowledge of the body corporate legislation because the principal role is one of administration under the legislation. Knowledge of building codes and so on would not be required, or reasonably expected, in this role.

If the Body Corporate considers that the progress of works would benefit from a project manager or building works supervisor, there is nothing to prevent them passing a motion to contract a builder, architect, quantity surveyor or other appropriately qualified professional to provide that service to the Body Corporate. While this would of course have a cost, owners may decide that assistance in ensuring the work is done in a professional and timely manner would justify the expense. Any owner could submit quotes for such an appointment to a general meeting.

Conclusion

I am concerned that almost a year after important maintenance and improvement work was approved at the 2006 EGM, the work is still being considered and has not yet commenced. I am concerned that the Committee has provided little explanation for the delays that have occurred since the May EGM was scheduled. I particularly concerned that the Committee may not have been taking appropriate steps to ensure all Committee actions are authorised by decisions made in meetings that have been properly called and minuted.

Notwithstanding these concerns, I am not satisfied that the applicant has substantiated any specific breach of the legislation. Moreover, I do not consider that the outcomes sought by the applicant in this application present the best means for all owners to have the work progressed in a timely and professional manner. For these reasons I have dismissed the application.

On the material before me I consider that the most appropriate course of action for owners is to make a decision on whether to proceed with the alternative means of pursuing the work at the next EGM. I make no comment on the validity of the new EGM and its motions. Any owner is entitled to lodge a dispute resolution application if they have concerns about that meeting that they are not able to address by self-resolution. However I would encourage all owners and the Committee to make every effort to work together to achieve the best outcome for all owners, rather than pursuing personal agendas and seeking to settle old scores.

^[2] Schedule 2 of the Act
^[3] See sections 227, 228, 276 and Schedule 5 of the Act

^[4] Following amendments to the Act which came into effect on 1 July 2007, section 149B of the Act provides disputes about contractual matters (as defined in the Dictionary in Schedule 6 of the Act) must generally be pursued in the Commercial and Consumer Tribunal. Parties may alternatively pursue an application in the Commissioner’s Office for an order of a specialist adjudicator but under section 264 of the Act the parties must agree to the nominated specialist adjudicator and the adjudicator’s fees must be paid by the parties.
^[5] www.bccm.qld.gov.au and freecall 1800 060 119

^[6] Section 56 of the Accommodation Module allows this to occur providing that the resolution to amend or revoke is of the same time (ordinary, majority, special or without dissent) as the original motion.

^[7] Pursuant to section 4 of the Discrimination Law Amendment Act 2002 No. 74 which was given assent on 13 December 2002 and commenced on 1 April 2003 (2003 SL No. 51)

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

-	An EGM was called but then errors in the plans and motion wording were discovered.
-	Owners were notified of the need to cancel the meeting in a memo from the Chairman and Secretary on 2 May 2007, which was included in the application material.
-	He was nominated as the representative of Lot 15 by a power of attorney approved at the time of nomination and not because of any family relationship.
-	The modified specifications suggested by Ted Granville were mirrored by Kenmac, as was detailed to all owners on 2 May 2007, and represent cost savings and a better result.
-	The four Committee members who met Granville invited him to submit a quote.
-	The Committee was advised that the nature of the alterations to the plans were sufficient to require the matter to go back to owners for approval.
-	The Committee needed to seek advice from a consulting engineer on the hydraulic components of the new plans which has now been received.
-	As soon as the Body Corporate’s solicitors have finalised building contracts, the Committee will be in a position to go back to owners to seek revised approval.

	Errors were by the Committee in relation to the cancelled EGM, in regard to the authorisation of the EGM agenda and the content of the motions and supporting documentation;
	Significant contributions have been levied for rectification works with little to show for it and no indication of how this money has been handled;
	Owners deserve to have the rectification works done quickly and professionally;
	An administrator is needed to oversee the day-to-day running of the Body Corporate and to ensure complete and factual information is provided to owners – they do not consider that any Committee member can be entrusted with this as they do not have sufficient knowledge to ensure the project is carried out to necessary building codes; and
	They support the appointment of an administrator and building works supervisor to ensure the transparency of the Committee and the successful completion of the work.

1.	Order declaring that resolutions purportedly (in correspondence) passed (since last AGM) at meetings of the committee resulting in motions for consideration in notices of EGM for the 11th May 2007, for the body corporate were at all times void.
2.	Order body corporate manager to comply with terms of engagement / authorisation and code of conduct (Act), in relation to unlawful calling of an EGM containing unlawful motions and then cancellation without any official notification.
3.	Confirm and Enforce Body Corporate resolution contained in Motion 3 of the EGM 15th September 2006 "Roof Repairs" (Attach 1) Also; ; Air conditioner repairs, Western roof, (motion 7. 15/9/06, Into Constructions), Attach 5
4.	An order invalidating the Secretary's appointment or declaring the resolution (9) appointing the Body Corporate Secretary (because of nomination irregularities) at the AGM of the 23rd February 2007, was at all times void.
5.	Appoint an Administrator to perform the function of the Body Corporate Committee and Body Corporate until its obligations for proper finalization of all necessary building repair / improvements are completed.

1.	There is no jurisdiction under section 227(1) of the Act for an owner to make an application against a BCM.
2.	While the applicant has not (following amendments to the application) named the BCM as a respondent, he has purported to seek orders against the BCM. It would generally be contrary to the principles of natural justice to make an order against a party who has not been named as a respondent to a dispute and been able to respond to the dispute as such.
3.	A dispute on these matters (for example between a body corporate and a BCM), would raise contractual issues and so would need to be determined by the Commercial and Consumer Tribunal or by specialist adjudication.^[4]

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

No. 9 Port Douglas Road [2007] QBCCMCmr 514 (27 August 2007)