Glades Easthill North [2007] QBCCMCmr 557 (18 September 2007)

Last Updated: 26 September 2007

REFERENCE: 0512-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	32506
Name of Scheme:	Glades Easthill North
Address of Scheme:	Easthill Drive ROBINA QLD 4226

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

David Huddy, a Co-owner of Lot 28, and Andrew Butlin, a Co-owner of Lot 48

I hereby declare that Motions 14 and 18 listed on the agenda for the annual general meeting of the Body Corporate for Glades Easthill North on 17 May 2007 were at all times void. I further order that the Body Corporate for Glades Easthill North shall provide a copy of this order and the statement of reasons to all owners within fourteen (14) days of the date of this order. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0512-2007

"Glades Easthill North" CTS 32506

Glades Hill North community titles scheme (Glades Hill North) consists of 80 lots and common property. The community management statement (CMS) for Glades Hill North indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Survey Plan 158879, 158880, 158882 and158883.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by David Huddy, a Co-owner of Lot 28, and Andrew Butlin, a Co-owner of Lot 48 (applicants) on 13 June 2007. The applicants sought orders against the Body Corporate for Glades Hill North (respondent) in the following terms:

1) That the minutes of the Annual General Meeting of Glades Easthill North, held on 17 May 2007, as distributed, be set aside, re-written and redistributed to reflect the outcome of voting as it was declared at the meeting.

2) That Motion 14, a Special Resolution, be declared lost.

PROCEDURAL MATTERS

Under section 243 of the Act, a copy of the application was provided to the Body Corporate, with an invitation to the Committee and all owners to respond to the matters raised by the application. Submissions were made by six owners and by the Body Corporate Manager (BCM), Russell Barrett of Strataworld Pty Ltd, on behalf of the Body Corporate Committee. The applicants 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

The application relates to the counting of votes at the Body Corporate’s Annual General Meeting (AGM) held on 17 May 2007, and the outcome of alleged inaccuracies in the recorded votes on the passing of resolutions. The facts of the dispute, as outlined in the application, submissions and reply to submissions, can be summarised as follows.

The applicants say the BCM took the minutes and recorded the votes at the AGM, and that after each motion the BCM announced the voting tally and declared the motion carried or lost. They have provided a list of the votes and outcomes they allege were declared at the meeting, along with the minutes subsequently issued. There are significant differences in the votes allegedly declared and those minuted for each of the 17 motions voted on at the AGM, with differences of up to 13 votes in one case.

The applicants say that for most motions the inaccuracies made no difference to the outcome. However, they dispute the outcome of Motion 14 which required a special resolution. They claim that at the meeting the motion was declared lost with 30 votes in favour, 17 against and 3 abstentions. The minutes record the motion passed with 30 votes in favour, 15 against and 3 abstentions, with a poll vote of 2247 in favour, 1079 against and 216 abstentions. The applicants allege that the result was queried from the floor and it was confirmed that the motion was lost.

The applicants also refer to other anomalies in the minutes:

	Lot 63 is listed as submitting a voting paper but also an invalid proxy form;
	Motion 19 was to be voted on by secret ballot but the secret voting paper refers to Motion 11;
	Motion 19 was not voted on by order of a Specialist Adjudicator, but no mention of the fate of the motion was made in the minutes;
	Motion 8 was minuted as passed but the votes in the minutes show that it was lost; and
	Poll vote counts were minuted for Motions 5, 12, 13 and 14 although these figures were not declared at the meeting and had no effect on the outcome of the motions concerned.

The submissions indicate different versions of the AGM events. The submission from the BCM on behalf of the Committee says that:

	They do not dispute that the votes declared at the meeting differed from the minutes but they disagree with the applicants’ notes of the votes declared at the meeting;
	Ten lots voted in person, two voted by proxy and 36 voting papers were received;
	Two votes were inadvertently counted that should not have been, including one lot that voted from the floor and by voting paper, and another who did not give a company nominee form;
	There was a typographical error in the minutes and Motion 8 should have been recorded as lost. This will be corrected in the minutes circulated for the next AGM;
	The meeting was advised of the situation regarding Motion 19;
	There were 30 votes for Motion 14 (Lots 1, 5, 6, 7, 10, 12, 13, 14, 15, 17, 18, 19, 20, 21, 25, 29, 34, 38, 39, 40, 45, 46, 54, 56, 57, 58, 59, 60, 69 and 72); 15 votes against (Lots 11, 28, 32, 35, 36, 43, 44, 48, 52, 53, 55, 63, 70, 73 and 77; and three abstentions (30, 33 and 79);
	Motion 14 passed because the votes for the motion were more than those against, because two-thirds of the votes cast (excluding abstentions) were in favour, and the number of votes and their lot entitlements were not more than 25% of the number of lots for the scheme;
	Documentation for the AGM is available; and
	While the error in declaring the votes for Motion 14 was unfortunate, the Committee believes that the actual voting intentions are more important than the votes declared.

Two submissions from owners disagree with the application:

	One says that her handwritten notes of the votes did not agree with the minutes. But she notes that the BCM said that some of the motions would require a poll vote and, to save time, asked that the meeting agree to the poll being counted after the meeting. She says the meeting verbally agreed and so the votes declared verbally were not necessarily final.
	The submission from the owners of Lot 5, who proposed Motion 14, says the BCM said the vote for Motion 14 was close and he wanted to properly tally them up. Someone else said why bother if the motion was obviously lost, so the BCM said he would tally the votes later.

Four submissions from owners support the applicants:

	One submission says the counting and recording of votes was disorganised and unprofessional, and the minuted votes were often different to what they had remembered. They say that for Motion 14 the BCM wanted to defer the result but, when one person questioned the count, the BCM agreed that the motion was lost.
	Another says the BCM definitely declared Motion 14 lost. He remembers that the Owner of Lot 5 was very vocal and upset about the result. He found the claimed error suspect as the proponent of Motion 5 was a former Committee member and a neighbour of the Chairman.
	One also believed it was clear at the time that Motion 14 was lost. He agrees with the applicants’ version of events, but did not note the actual votes. He says no-one asked for a recount or a poll vote.
	Another supports the application, refers to the error with Motion 8, and says another motion in the initial voting papers about a water tank was excluded without reason.

In their reply to submissions the applicants say that:

	Section 54 of the Accommodation Module was not observed in that the votes declared at the meeting are not those included in the minutes and the minutes give no comment or advice to owners that the change has occurred;
	The purpose of this section is to ensure an open and transparent voting process and the legislation does not allow votes to be tallied in secret after the event;
	The BCM admits that he changed the declared votes after the meeting. They believe this is a breach of the Code of conduct for body corporate managers and caretaking service contractors in Schedule 2 of the Act; and
	In regard to comments about a poll vote, the BCM announced that the vote was close and so it would be referred for a count of lot entitlements. However when it was pointed out that the vote had failed to achieve the 2/3rds majority and a lot entitlements count was not required, the BCM agreed and declared the motion lost.

JURISDICTION

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.^[2]

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about:

(a) a claimed or anticipated contravention of the Act or the CMS; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; 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 main issue for consideration in this matter is what the voting was for Motion 14 at the AGM and whether the resolution was validly passed by special resolution or not.

Requirements for a special resolution

By virtue of a previous order of an adjudicator^[3] it is clear that Motion 14 required a special resolution. Section 106 of the Act determines the requirement for the vote:

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.

Both the applicants and the minutes agree that Motion 14 received 30 votes in favour and 3 abstentions. However the applicants claim that 17 votes were declared against the motion, while the minutes record 15 votes against (excluding the two allegedly invalid votes). In this scheme there are 80 lots and contribution schedule lot entitlements of 5,851.

In this case there are three tests as to whether a motion has passed by special resolution. Firstly, two-thirds of the votes cast (which excludes abstentions^[4]) must be in favour of the motion. If the minutes were correct then there were 45 votes cast and so the thirty votes in favour of the motion represented just two-thirds. However if the voting as allegedly declared is correct then there were 47 votes cast and a two-thirds majority was not achieved.

The second test is that the votes against the motion are not more than 20 lots (that is 25% of the total number of lots). Either way, this requirement was met. The third test is that the votes against the motion not represent more than 1,464 contribution lot entitlements (that is 25% of all entitlements). The lot entitlements for the 15 minuted votes against the motion totals 1,078 and the two excluded votes brings the total to 1,226. So, again that test is satisfied regardless.

Voting at general meetings

Assuming that the Body Corporate for Glades Easthill North has not passed a special resolution establishing alternative voting procedures,^[5] the voting at general meetings must be conducted in accordance with the processes outlined in section 47 to 54 of the Accommodation Module. Of particular relevance is section 54, which provides as follows:

54 Declaration of voting results on motions [SM, s 56]

(1) The person chairing a general meeting must declare the result of voting on motions at the meeting.

(2) When declaring the result of voting, the person chairing the meeting must state--

(a) the number of votes cast for the motion; and

(b) the number of votes cast against the motion; and

(c) the number of abstentions from voting on the motion.

(3) The numbers mentioned in subsection (2) must be recorded in the minutes of the general meeting.

(4) A voting tally-sheet must be kept that includes--

(a) for each open motion decided at the meeting, each of the following--

(i) a list of the votes, identified by lot number, rejected from the count;

(ii) for each vote rejected--the reason for the rejection;

(iii) for each lot for which a vote was cast, or for which there was an abstention from voting--the lot number and whether there was a vote for the motion, a vote against the motion, or an abstention from voting on the motion;

(iv) the number of votes cast for and against the motion, and the number of abstentions from voting on the motion; and

(b) for each motion decided by secret ballot at the meeting, each of the following--

(i) a list of the votes rejected from the count;

(ii) for each vote rejected--the reason for the rejection;

(iii) the number of votes cast for and against the motion, and the number of abstentions from voting on the motion.

(5) The voting tally-sheet may be inspected at the meeting by any of the following persons--

(a) a voter, or a person holding a proxy from a voter;

(b) the returning officer, if any, appointed by the body corporate for the meeting;

(c) the person chairing the meeting.

Section 57 of the Accommodation Module also provides that the Body Corporate must ensure that full and accurate minutes are taken of each general meeting.

From the submissions and material provided I have concerns regarding the conduct of this meeting. While the BCM has given an explanation from the two vote discrepancy in the declared votes versus the minuted votes for Motion 14, no explanation has been given for the numerous other apparent discrepancies in the voting. All that is provided is a vague acknowledgement that there were discrepancies but with an implication that the Committee does not agree with the scale or number of discrepancies alleged by the applicants.

In my view the legislation requires all votes to be tallied and checked during the meeting in front of all present and before a result is declared. Any suggestion that a count or recount be deferred until after the meeting is entirely inappropriate. Those chairing the meeting and counting votes should ensure the process is not hurried and, if they are at all uncertain about the result, should check the votes at the time, regardless of how long it takes. In light of my findings below it is not necessary for me to view the voting papers and voting tally sheet for the meeting. However, it certainly seems that insufficient attention was paid to accurately tallying and clearly declaring the votes at the AGM. I urge the Committee and the BCM to take greater care in this regard in future.

Section 54(3) requires that the votes minuted should be those declared at the meeting under section 54(2). I agree that the purpose of the voting provisions is to ensure that the process of counting and recording votes is done openly and before the entire meeting. Notwithstanding this, I also agree that ultimately it is more important to give effect to the voting intentions of owners rather than to perpetuate an error made in a meeting. If a Committee realises after a meeting has ended that a voting error has occurred, steps should be taken to rectify the issue. But, the question is whether the Committee or the BCM themselves had the power to correct an alleged error.

Correction of voting errors

Although the submission is not explicit, the Committee does not appear to dispute that Motion 14 was declared as lost at the meeting and then the result altered later. The conduct of a general meeting can be a complex task, with numerous rules about the counting of votes, and it is inevitable that errors will occur from time to time. Minor procedural errors that have no impact on the outcome of the meeting will not necessarily be fatal to a result.^[6] However, where a substantive error has been made, formal steps are arguably required to correct the situation.

There is no legislative provision for a recount to be undertaken after a meeting. Section 58 of the Act provides that a resolution once passed may be amended or revoked only by a resolution of the same type. Therefore a special resolution, for example, can only be amended or revoked by a special resolution. This section does not strictly apply here because Motion 14 was declared lost at the meeting and so it was arguably not a resolution as such. However it does add weight to the suggestion that the Committee alone can not change the voting result agreed at the meeting.

I have no reason to believe that the Committee or the BCM were not acting in good faith in seeking to correct the apparent error. However, it would seem that the appropriate course of action was to either call another general meeting to reconsider the motions in doubt or lodge a dispute resolution application with the Commissioner.^[7] I am also concerned that the Committee or BCM simply changed the votes recorded in the minutes without any written explanation to owners prior to or accompanying the minutes and, apparently, without any minuted Committee meeting having discussed how to deal with the issue.

Excluded votes

The difference between the minuted votes and the votes apparently declared at the meeting is two ‘no’ votes. The applicants have not queried the exclusion of those votes other than to say that the declared vote should stand. However, in regard to the vote for Lot 38 questions arise.

The Committee’s submission indicates that a vote from the floor for Lot 38 was excluded because Lot 38 had already voted by way of voting paper. The submission lists the included Lot 38 vote as being in favour of Motion 14 and it is implicit from the Committee’s submission that the excluded Lot 38 vote was against the motion. The submission gives no indication why the no vote was excluded and the yes vote was accepted.

Owners are entitled to vote personally, by proxy, in writing or (if the body corporate allows) electronically. However section 49(4) of the Accommodation Module provides that a written or electronic vote may be withdrawn by a voter (other than by a proxy) at any time before the result of the motion is declared.^[8] This means that a voter may put in a voting paper, attend the meeting and then decide to vote in person. The personal vote will automatically withdraw their written vote on that motion. In this case it seems the written vote from Lot 38 should have been excluded and the personal vote should have been accepted. This would have the effect of giving 29 votes in favour of Motion 14 and 16 against, which would not have passed as a special resolution.

Alternatively, it may be that the voting paper for Lot 38 was submitted by one of the co-owners of Lot 38 and the other co-owner voted personally at the meeting. The minutes record both as ‘present’ at the meeting but do not indicate whether they were present personally or by voting paper. If both co-owners purported to vote and voted differently, both votes should have been excluded. Section 50(4) of the Accommodation Module requires that no vote be counted if there is a conflict between the votes of the co-owners of a lot. This would have resulted in 29 votes for Motion 14 and 15 votes against, which again would not have passed as a special resolution.

Motions with alternatives

A further issue arises regarding Motion 14. This motion sought "That the shade sails erected at Lot 5 (as approved at the last Annual General Meeting), be approved". However, one of the submissions has referred me to Motion 18 "That the Body Corporate requires the owners of Lot 5 to remove within 30 days of the date of this meeting all portions of the shade sail structure in the Exclusive Use Area assigned to Lot 5 that exceed the dimensions and positioning for which Body Corporate approval was granted in July 2004." Motion 18 was lost with 16 votes in favour, 29 against and 3 abstentions.

Section 40B of the Accommodation Module provides that if two or more motions that propose alternative ways of dealing with the same issue are submitted, they must be treated as a motion with alternatives. The voting paper must list the submitted motions as alternatives under one motion submitted by the Committee. Pursuant to section 40B(5), if more than one motion on the same issue is listed on the agenda or voting paper, all motions on the issue are void. The Explanatory Notes^[9] indicate that Parliament intended this section to address an "...unfair practice ... where, to defeat a motion, alternative or competing motions are placed on the agenda with the favoured motion first and the alternative or competing motions placed subsequently or many motions further down the agenda."

I am of the view that both Motion 14 and 18 sought a decision on whether the shade sails in Lot 5’s exclusive use area should be approved or removed. On that basis, regardless of the outcome of the voting on each motion, section 40B(5) requires that both motions were void.

Conclusion

Given the history of dispute regarding the shade sails it might have been expected that those running the AGM would have taken particular care with regard to Motion 14. Unfortunately this does not appear to have occurred.

There are certainly indications of numerous discrepancies between the votes declared at the AGM and those listed in the minutes. Greater care should have been taken to ensure that those results declared at the meeting reflected the actual votes cast. However, if an error in counting occurred, I do not consider the BCM or the Committee had the power to change the declared results in the minutes. The correction of any error required an open process, either with the motions being reconsidered at a further general meeting or by seeking the order of an adjudicator.

That said, however, I do not consider it is necessary to investigate the voting on every motion and determine what the minutes should have recorded or what should be the final voting outcome. It may be difficult to ascertain the truth of what was declared at the meeting. Neither party has disputed that the discrepancies have not affected the outcome on all but Motion 14. I accept that the error with regard to Motion 8 was a typographical error only and that it will be corrected in the minutes sent for the next meeting. Accordingly I do not consider that anything will be achieved by requiring the minutes to be amended and redistributed. However, to ensure all owners are aware of the issues, I have ordered that a copy of my decision be distributed to all owners.

Clearly, however, there are issues with Motion 14 that warrant an order. The minutes should have recorded this motion as lost in accordance with the result declared at the meeting. If the Committee felt there was an error in this result they could have pursued it through the avenues identified above, although it does seem that the correct counting of the votes cast would have resulted in Motion 14 having been lost. However in reality the voting on Motion 14 is irrelevant. Motions 14 and 18 were automatically void because they were not correctly listed on the agenda as a motion with alternatives. I have made an order to that effect.

Effect on Order 312-2006

The previous order made in respect of the shade sails gave the Owners of Lot 5 provisional Body Corporate approval for existing shade sail and supporting structure to the extent that it was located on common property. However that authorisation continued only until a general meeting considered a special resolution on the issue.

Because Motion 14 and 18 are void, I am of the view that the Body Corporate has not yet considered the shade sail and supporting structure as contemplated by the previous order. Accordingly, it would seem that the provisional authorisation granted in that order continues until the next general meeting at which it is practicable to include an appropriate motion on the agenda.

For the same reasons as given in that previous order^[10] I do not intend to require the Body Corporate to immediately convene another general meeting so soon after its AGM to properly consider the shade sails. If the Body Corporate chooses to hold an extraordinary general meeting during the financial year the motion can be considered at that time, but otherwise it should be listed on the 2008 AGM. As it was the Committee who incorrectly listed the two shade sails motions when they prepared the agenda, the Committee should take the responsibility for ensuring the motions are included on the next general meeting agenda. It would be advisable for the Committee to consult with the Owners of Lot 5 and the owner who submitted Motion 18 to ascertain whether they wish to amend or withdraw the respective motions.

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

^[2] See sections 227, 228, 276 and Schedule 5 of the Act
^[3] Glades Easthill North [2006] QBCCMCmr 469 (28 August 2006)
^[4] See Windsor Shores at Seaforth [2007] QBCCMCmr 451 (30 July 2007) for an explanation of this issue.
^[5] As provided for in section 50(1) of the Accommodation Module

^[6] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001 (Unreported)

^[7] A similar conclusion was reached in Peninsula [2006] QBCCMCmr 760 (27 September 2006). In that case a motion was been declared passed at a general meeting but the Committee passed a unanimous resolution that the motion was lost following a recount that ascertained that one voter had voted in person and by voting paper and another voter was unfinancial. Owners were informed of the recount in writing the next day. However the adjudicator required the body corporate to hold another meeting to consider whether the motion as passed should be rescinded.

^[8] In addition, section 72(3)(a) and (b) of the Accommodation Module outlines a lot owner’s capacity to vote personally or by written or electronic vote notwithstanding the appointment of a proxy

^[9] Explanatory Notes for SL 2003 No. 263 Body Corporate and Community Management Legislation Amendment Regulation (No. 1) 2003, p 42

^[10] PD Dowling in Glades Easthill North [2006] QBCCMCmr 469 (28 August 2006) at p5