No. 9 Port Douglas Road [2007] QBCCMCmr 515 (27 August 2007)

Last Updated: 18 October 2007

REFERENCE: 0303-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20860
Name of Scheme:	Isle of Palms Resort
Address of Scheme:	2 Coolgardie Street ELANORA QLD 4221

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Carol Matthews, the owner of Lot 145 on behalf of the owners of Lots 18, 23, 65, 67, 71, 72, 80, 81, 82, 92, 95, 97, 101, 103, 104, 108, 109, 116, 117, 126, 129, 132, 136, 138, 143, 147, 166, and 178.

I hereby declare that votes by proxy for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99 and 115 were exercised for voting on Motions 8 and 13 at the Annual General Meeting dated 16 February 2007. I hereby order that the exercise of votes by proxy for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99 and 115 on: 1. Motion 8 was contrary to section 72(3)(f) and section 87(2)(a) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 as the Motion dealt with the engagement of a person as body corporate manager for Isle of Palms Resort community titles scheme 20860. 2. Motion 13 was contrary to section 72(3) (d) (ii) of the Accommodation Module as the Motion dealt with consenting to the recording of a new community management statement that identifies a different regulation module to apply to the scheme. I further order that the votes by proxy for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99, and 115 on Motions 8 and 13 be omitted from the declared result of voting on the Motions and that the result of voting for: 1. Motion 8 is: a. That the body corporate engage a body corporate manager for the supply of administrative services - Yes: 93; No: 5; Abstain: 3. b. That Strata Solutions be engaged (Alternative A) - 43 votes. c. That Queensland Strata Administration be engaged (Alternative B) - 46 votes. 2. Motion 13 is – Yes: 53; No: 46; Abstain 2. I further order that as Queensland Strata Administration received the most votes, the body corporate has decided to engage Queensland Strata Administration as the body corporate manager for the scheme.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0303-2007

"Isle of Palms Resort" CTS 20860

Application
This application is by the owners of various lots included in the scheme (applicants) against the body corporate seeking final outcomes that the proxy votes used for Motions 8 and 13 at the Annual General Meeting dated 16 February 2007 (AGM) be eliminated and the results of voting amended; that Alternative B of Motion 8 to appoint a body corporate manager be carried; and that the special resolution on Motion 13 be recorded correctly.

Interim application
The applicants had also sought an interim order that the contract of appointment with Strata Solutions Pty Ltd not be signed until a final determination is made on Motion 8. On 18 July 2007, I made an interim order that the body corporate shall not execute any written agreement between it and Strata Solutions Pty Ltd as a consequence of the resolution passed on Motion 8 at the Annual General Meeting held on 16 February 2007 to engage Strata Solutions Pty Ltd as the body corporate manager for the scheme.

Jurisdiction
"Isle of Palms Resort"is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

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 claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s276(1), Act). An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s276 (2), Act). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (s284 (1), Act).

Other dispute resolution applications
Noel Wilson, a co-owner of Lot 122 made an application against the body corporate seeking an outcome that the resolutions made on Motions 8 and 13 at the AGM be overturned (Application Ref. No. 0071-2007).

On 10 April 2007, Terence Gale (body corporate secretary) made an application against the committee seeking an outcome that Motion 8 be declared void and that an extraordinary general meeting be called to vote on the appointment of a body corporate manager (Application Ref. No. 297-2007).

As the outcomes in 0303-2007 are similar to the outcomes being sought in both 0071-2007 and 0297-2007, I have determined the three Applications simultaneously.

Procedural matters
On 20 July 2007, a copy of the application was provided to the body corporate secretary for distribution to the owner of each lot (excluding the applicants) and the committee, with an invitation to respond to the matters raised in the application (s243, Act). Submissions were made by Mr Wilson.

On 20 August 2007, Ms Goddin (on behalf of the applicants) informed the Commissioner that she had seen a copy of Mr Wilson’s submissions and did not wish to be given a copy of the submissions or to make a written reply (s244, Act).

A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Further Information
On 21 August 2007, I requested Strata Solutions provide a copy of the voting tally-sheet for the AGM and the voting papers from Lots 4, 10, 13, 14, 16, 19, 25, 26, 33, 35, 39, 44, 45, 55, 60, 70, 76, 80, 89, 99, 103, 115, 117, 127, 174, 176, 179 and 180.

On 22 August 2007, Strata Solutions provided the AGM’s Attendance and Voting Register, Votes Recorded Prior To Meeting tally-sheet and Votes Submitted At The Meeting tally-sheet. The requested voting papers were provided with the exception of the voting papers for Lots 10, 16, 19, 35, 39, 45, 70, 99, 103 and 115 which Sarah Wilton of Strata Solutions states in her email dated 22 August 2007 "We do not have on file".

Determination
Motion 8
Motion 8 dealt with the appointment of a body corporate manager and was presented to the AGM as a motion with alternatives as two quotations were submitted. The minutes of the AGM indicate that: the Motion was passed by 103 votes to 5 with 3 abstentions; that Alternative A proposing Strata Solutions received 53 votes; that Alternative B proposing Queensland Strata Administration received 46 votes; and that as "Strata Solutions received the highest number of votes they will be the engaged Body Corporate Manager".

The applicants state that 111 votes were counted for Motion 8; that of the yes votes for the Motion, 99 were counted for choosing an alternative as 4 votes were invalid; the minutes confirm that 11 proxy votes were included in the 111 votes received; that included in the voting papers received were the proxy votes clearly indicating that these votes were used in the counting on Motion 8; and that the tally sheet obtained from Strata Solutions shows the votes received at the AGM which includes the proxy votes. The applicants contend that the use of proxies was contrary to the legislation.

Section 122(1) (a) of the Act provides that the regulation module applying to the scheme may prescribe the requirements with which the engagement of a person as a body corporate manager must comply. Section 87(2) (a) of the Accommodation Module provides that the engagement is made if the body corporate passes an ordinary resolution and for the passing of the resolution, no votes are exercised by proxy. Section 72 of the Accommodation Module relates to the use of proxies. Specifically, section 72(3) (f) (i) provides that a vote by proxy must not be exercised at a general meeting on a motion approving the engagement of a person as a body corporate manager.

It is being claimed that Simon Lill improperly used proxies for voting on Motion 8. The minutes recognise that Mr Lill was appointed as proxy for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99, and 115. The minutes also indicate that voting papers were received for these lots. If this was the case, the written vote would prevail over the proxy (s72 (3) (b), Accommodation Module).

Strata Solutions have informed me that the voting papers for Lots 10, 16, 19, 35, 39, 45, 70, 99 and 115 are not on file (a voting paper for Lot 33 was not provided by Strata Solutions). Despite the fact that the Commissioner has invited submissions from owners on three occasions (for Applications 0071-2007, 0297-2007 and 0303-2007), there have not been submissions from any lot owners to the effect that there had been voting papers submitted and recorded for these lots. The absence of any material relating to the lodgement and use of written votes for these lots raises the question as to whether the respective owners submitted a voting paper in addition to appointing a proxy as recorded in the minutes of the AGM.

My examination of the voting documentation provided by Strata Solutions indicates:

• The votes recorded in the Attendance and Voting Register reconciles with the Votes Recorded Prior To Meeting tally-sheet with the exception of the votes for Lots 4, 13, 14, 25, 26, 44, 55, 60, 76, 80, 89, 103, 117, 127, 174, 176, 179 and 180. Strata Solutions have provided a copy of the voting papers for these Lots with the exception of Lot 103 (I do not consider the absence of this voting paper to be significant). I requested the voting papers from these Lots given that: they seem to have been recorded prior to the AGM yet the votes were not recognised on the Attendance and Voting Register; the names of the respective lot owners were not recorded; and the votes were listed under the name Gale as the person voting. The voting papers provided by Strata Solutions indicate that Gale did not vote for each of the Lots. Therefore, I do not consider a question exists with respect to these votes.

• Of the lots noted in the minutes as having voted by voting paper: Lots 10, 16, 19, 30, 33, 35, 39, 41, 45, 68, 70, 73, 86, 93, 98, 99, 100, 101, 115, 118, 123, 142, 146, 150, 153, 158, 160, 170 and 176 are not recorded in the Attendance and Voting Register nor in the Votes Recorded Prior To Meeting tally-sheet. Of these lots, the voting papers for Lots 68, 101, 118, 150 and 170 are recorded as being submitted at the AGM. The vote from Lot 30 is also recorded with these lots, but there is no mode of voting recorded (the correctness of this vote is not significant in the circumstances). The votes from Lots 41, 73, 86, 93, 98, 100, 123, 142, 146, 153, 158 and 160 are recorded as being submitted at the AGM, but there is not a record of the name of the person voting or the mode of voting. I do not consider these votes requires any further investigation as there has not been any other mode of voting recorded for these lots, there have not been any submissions questioning these votes and of the 12 votes: 2 did not record a preference for either Alternative; 4 votes were recorded for Alternative A; and 6 votes were recorded for Alternative B.

• The residual votes are those submitted for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99 and 115. The votes for these lots are recorded on the Votes Submitted At The Meeting tally-sheet beside and under S.Lill as the person voting; the mode of voting for Lot 115 (recorded beside the name of S.Lill) is from the floor; the mode of voting for the following 9 lots is blank; a ‘yes’ vote was recorded for each of the 10 lots for Motion 8; and each of the 10 lots voted in favour of Alternative A. It is also noted that identical votes were recorded for each of the 10 lots on each of the 15 motions determined at the AGM.

In my view, it can only be concluded that S.Lill exercised a vote by proxy for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99 and 115 for voting on Motion 8 and Alternative A. If these votes were not accepted at the AGM, the result of voting on the Motion to appoint a body corporate manager would not have changed. However, the outcome of voting on the alternative body corporate managers would be different and Queensland Strata Administration would have received the most votes, not Strata Solutions.

The improper use of proxies for voting on this Motion was a fundamental error which clearly changed the outcome of voting on the Motion. It is also significant that: there have not been any submissions on any of the 3 dispute resolution applications questioning votes exercised for other lots included in the scheme (other than the vote for Lot 30). Further, even though the AGM was held in February 2007 the body corporate has not (to my knowledge) executed a written agreement with Strata Solutions. In these circumstances, there is no just and equitable basis for allowing the declared result of voting on Motion 8 to stand.

I have noted Mr Wilson’s concern in Application 0071-2007 about the non-acceptance of the vote from Lot 122. While there is a question about when the voting paper for this Lot was discovered, the recognition of this vote is not important in the determination of this dispute. It should be noted however that there is no legislative requirement to accept a voting paper for motions for which the results have been declared before the voting paper is discovered. It is suggested that the voting paper for Lot 122 was placed inside an election ballot envelope not opened until the elections took place. If this was the case and the envelope was not opened until the elections occurred, there would be grounds to disregard the voting paper as the elections are the last item of business at an annual general meeting.

Given that the proxies should not have been exercised for voting on Motion 8, any questions about the validity of some of the proxies are not relevant to this determination.

For these reasons, I have ordered that the outcome of voting on Motion 8 and the alternatives be amended omitting the votes recorded for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99, and 115.

Motion 13
Motion 13 proposed adopting the Body Corporate and Community Management (Standard Module) Regulation 1997 as the regulation module applying to the scheme. The applicable regulation module is identified in the community management statement for the scheme (s66 (1) (b), Act). Section 62(3) (b) of the Act provides that the form of body corporate consent for identifying a different regulation module to apply to the scheme is a special resolution.

Votes are counted on a motion requiring a special resolution in the manner prescribed in section 106 of the Act:

106 Counting of votes for special resolution

(1) This section applies if a motion is to be decided by special resolution at a general meeting of the body corporate for a community titles scheme.

(2) One vote only may be exercised for each lot included in the scheme, whether personally, by proxy or in writing.

(3) The motion is passed by special resolution only if--

(a) for a meeting notice of which is given--

(i) before the commencement of subparagraph (ii)--the votes counted for the motion are more than the votes counted against the motion; or

(ii) after the commencement of this subparagraph--at least two-thirds of the votes cast are in favour of the motion; and

(b) the number of votes counted against the motion are not more than 25% of the number of lots included in the scheme; and

(c) the total of the contribution schedule lot entitlements for the lots for which votes are counted against the motion is not more than 25% of the total of the contribution schedule lot entitlements for all lots included in the scheme.

The minutes of the AGM indicate that Motion 13 was defeated with 53 yes votes, 56 no votes and 2 abstentions being recorded. The applicants submit that the use of 11 proxies for voting on the Motion was against the Act. The lots mentioned by the applicants are Lots 10, 16, 19, 30, 33, 39, 45, 70, 99 and 115. The voting documentation provided by Strata Solutions indicates that the recorded vote for each of the above lots (with the exception of Lot 30) was against Motion 13.

Section 72(3) (d)(ii) of the Accommodation Module provides that a vote by proxy must not be exercised at a general meeting for voting for a special resolution consenting to the recording of a new community management statement that identifies a different regulation module to apply to the scheme. Obviously, a proxy vote is prohibited form being exercised for voting on a motion dealing with the regulation module applying to the scheme, and any such vote should be disregarded.

For the reasons stated above with respect to voting on Motion 8, I am satisfied that a proxy vote was exercised for Lots 10, 16, 19, 33, 35, 39, 45, 70, 99 and 115 for voting on Motion 13. The Votes Submitted At The Meeting tally-sheet indicates that the recorded vote for each of these lots as against the proposal to change the regulation module applying to the scheme. As the proxies were exercised contrary to section 72(3) (d) (ii), I have ordered that the result of the voting be amended.

However, I do not consider the improper use of proxies has altered the outcome of Motion 13 (the outcome would not have changed if the vote from Lot 122 was allowed). Motion 13 required a special resolution. Section 106 of the Act specifies the requirements for passing a motion by special resolution. Section 106(3) (a) (ii), (b) and (c) apply. Each requirement must be met for a motion to be passed by special resolution. If the count stated in the minutes is recognised it is evident that the Motion was not passed as at least two-thirds of the votes cast were not in favour of the Motion (further, the number of votes counted against the Motion was more than 25% of the number of lots included in the scheme). If the count relied on by the applicants is applied: there still is not enough votes in favour of the Motion to satisfy section 106(3)(d)(ii); and the votes opposed to the Motion still constitute more than 25% of the number of lots included in the scheme. Consequently, the Motion still is not passed.