Raffles on Capri [2007] QBCCMCmr 604 (24 October 2007)

Last Updated: 12 November 2007

REFERENCE: 0802-2007

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28124
Name of Scheme:	Raffles on Capri
Address of Scheme:	103 Salerno Street, Isle of Capri QLD 4217

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

5 Ordinary Members of the Committee.

I hereby order that the application for the following Interim Orders: To stop the EGM called for 25 October 2007 as per the outcome sought Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0802-2007

"Raffles on Capri" CTS 28124

The scheme

Raffles on Capri is a subdivision of 51 lots registered as a Building Format Plan. The Regulation Module applying to the scheme is the Accommodation Module.

Application

By application received by this Office on 12 October 2007 and subsequently amended on 15 October 2007 Beake, Van Roy, Lucas, Barlow and Moore, have sought the following interim order:

To stop the EGM called for 25 October 2007 as per the outcome sought

The outcome sought was as follows:

That the EGM called for 25 October 2007 be declared invalid as the elected committee of the body corporate had no (in)put into the matters placed on the agenda and at no time authorised the Chairman/ Secretary/ Treasurer, Mr. Don Robertson to complete the Notice and Agenda of the meeting. Further, the Committee Meeting called for 25/10/07 be utilised to discuss and resolve all matters prior to calling an EGM.

Background

The applicants state that at the AGM held on 30 August 2007, Motion 4 to set the administration levy for the financial year ending 31 May 2008 be set at the rate of $157 (including GST) per lot entitlement per annum, was defeated.

At the same AGM, Motion 10 regarding appointment of Complete Body Corporate services Pty. Ltd. as body corporate manager for a term of 2 years at $6,550, was ruled out of order as the proposed expenditure exceeded $250 per lot and therefore 2 quotes were required.

Thirdly, Motion 11 to reimburse travelling costs to committee members travelling from interstate was withdrawn after it was pointed out that the motion was discriminatory because persons travelling from within the State e.g. from Cairns, would not be so compensated.

The applicants now state that Motion 2 for consideration at the EGM scheduled for 1 PM on 25 October 2007, to set the administration levy for the financial year ending 31 May 2008 at the rate of $157 (including GST) per lot entitlement per annum, is almost identical to the motion submitted to the AGM and the only difference is that an error regarding the amount of the levy to be imposed in the first quarter of next year, has been has been corrected.

It is also claimed that the circular sent by the Chairman to all owners in September 2007 is misleading because it states that "the motion was defeated because of a perception that it was a 37% increase" is incorrect. It is claimed that there were a number of queries regarding the accounts which were not satisfactorily answered. It is claimed that some items under the heading "Grounds and Maintenance" need to be considered by the committee and that certain pool heating costs should have been characterised as a sinking fund item.

It is also claimed that the sinking Fund Analysis Report dated 4/7/2003 requires updating and believes that a reference to anticipated replacement of foyer furniture in 2012 at a cost of $155,133 is incorrect. Further, it is submitted, the sinking fund budget needs to be considered by the committee to address a large deficiency in the sinking fund relative to anticipated expenditure i.e. the current balance of the sinking fund is $34,869 whereas $121,400 should have been accumulated to date.

They have also raised concerns regarding the quantum of fees paid to Complete Body Corporate Services in recent years.

Submissions

Pursuant to section 243 of the Act, submissions were sought from the Body Corporate Manager and from Mr. Don Robertson regarding the application for Interim Orders. Originally submissions were required to be submitted by Monday 22 October but an extension until 5 pm, 23 October, was subsequently granted to the body corporate manager.

Submissions from the body corporate manager and Mr. Robertson included the following:

• At the AGM held on 30 August 2007 Mr. Don Robertson was elected Chairman, Secretary and Treasurer as he was the only nominee for those positions;

• A number of owners also agreed to become ordinary members of the committee;

• Motion 3 relating to adoption of Administration Fund Budget was resolved in the affirmative by the owners although motion 4 – setting of administration fund levies, was defeated by one vote.

• Motion 10 relating to engagement of Complete Body Corporate services was ruled out of order because a second quotation had not been submitted, although obtained by the Chairman;

• The position of a body corporate being unable to strike a levy or engage a body corporate manager was considered at a subsequent body corporate committee meeting. It was pointed out that the body corporate would be unable to pay its bills and that the current body corporate manager had a good knowledge of the scheme;

• The other applicants are recent arrivals, having purchased their properties in 2007 and are unaware of the history of the scheme;

• Mr Moore the spokesperson for the applicants, has had a run-in with the resident manager regarding enforcement of the scheme by-laws and is disaffected by the support given to the resident manager by the committee and body corporate committee;

• Errors in the Sinking Fund analysis report do not require the EGM to be cancelled. Rather such matters can be considered at the next committee meeting.

• Allegations of "unprofessionalism" on the part of the body corporate manager are refuted;

• There is no prohibition on persons such as Mr. Robertson canvassing support by way of a newsletter circulated to members;

• The minutes of the committee meeting held on 30 August 2007 record the following :

It was acknowledged that an EGM is required for the following issues to be finalised:

- Setting of Administration Fund levies. The Chairman advised that although the administration fund budget was approved, no levies were approved, resulting in the body corporate not having any income stream which will result in the body corporate struggling to meet its financial obligations until such time as the matter is resolved;

- The Chairman advised that he had previously sought various tenders for body corporate management and considered the Kim Elliot and Complete Body Corporate services has to be invaluable noting that their fee was in accord with the other tenders. However, he undertook to obtain additional tenders for consideration.

- Travelling costs – The Chairman advised a revised motion for reimbursement of travelling costs for committee members will be proposed to the EGM for consideration.

EGM to be called when all motions have been finalised.

It is submitted that the committee therefore gave its authorisation to the Secretary to call the EGM.

• The Administration fund budget was approved by a majority at the AGM;

• The sinking fund budget and quantum of sinking fund levies we also carried at the AGM with very strong support;

• Mr. Moore is acting in a divisive manner in order to further his own agendas.

Jurisdiction

Section 227(1)(b) of the Body Corporate and Community Management Act 1997 provides that a dispute between an owner or occupier of a lot and the body corporate, is a dispute which may be resolved under the dispute resolution provisions of the Act.

Further Section 227(1)(g)of the Body Corporate and Community Management Act 1997 provides that a dispute between a committee member and the body corporate, is a dispute which may be resolved under the dispute resolution provisions of the Act.

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 279(1) & (2) provide that -
(1) The adjudicator may make an interim order 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.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...

Determination

This dispute resolution application was referred to me pursuant to section 267 of the Act for consideration as to whether an interim order should be granted and at this time, I am primarily concerned with the issue of whether an interim order is warranted. In any consideration of an application that seeks an interim order, it is necessary to determine whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279 are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

In the present circumstances I am reluctant to order that the scheduled Extraordinary General Meeting not go ahead. Convening an EGM is a labour intensive and costly exercise and cancellation of such a meeting is not a decision that should be made lightly.

On the evidence at hand I believe that the EGM was authorised by the meeting of the Committee on 30 August 2007 and as the applicants would be aware, the body corporate cannot function unless it is able to raise levies, and as most owners do not reside in the complex, they rely heavily on the services of a body corporate manager to ensure compliance with relevant legislation.

Given that there is ample opportunity to review the Sinking Fund Analysis and other financial matters at a future meeting of the committee or if necessary, a future general meeting, I see no compelling reason why tomorrow’s EGM should be cancelled.

For these reasons, I have dismissed the request for interim orders.

I note that the applicants also seek certain final outcomes. I will now refer this application back to the Commissioner for consideration as to what action is appropriate.