181 The Esplanade [2007] QBCCMCmr 64 (7 February 2007)

Last Updated: 20 February 2007

REFERENCE: 0867-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	518
Name of Scheme:	181 The Esplanade
Address of Scheme:	Cairns QLD

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

Alexander Eveleigh Blair, the owner of lot 8

I hereby order that the transfer fee purportedly required to be paid to the body corporate by Breeden Investments Pty Ltd in relation to the transfer of the caretaking agreement and the letting agreement dated 31 August 2004 to Josephine Rita McConaghy as a result of motion 3 having been passed at the extraordinary general meeting held on 4 September 2006 is hereby waived. I further order that the body corporate shall within 7 days of the date of this order refund the said transfer fee to Breedon Investments Pty Ltd.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0867-2006

"181 The Esplanade" CTS 518

ORDER SOUGHT

The applicant has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

That the transfer fee approved at the extraordinary general meeting held on 4 September 2006 be waived.

JURISDICTION

The application discloses a dispute between an owner of a lot included in a community titles scheme and the body corporate for the scheme (Act s227(1)(b)).

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)).

SCHEME DETAILS

181 The Esplanade is a community titles scheme comprising 37 residential lots and common property. The scheme was established upon registration of the building units plan (now described as building format plan) on 19 December 1990, and is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

BACKGROUND

The applicant stated that the body corporate entered into a caretaking and letting agreement on 13 March 2001. That agreement was assigned on 12 February 2004 and a transfer fee of 1% was applied at that time. The agreement was assigned again on 31 August 2004, and no transfer fee was applied.

The applicant further stated that an extraordinary general meeting was held on 4 September 2006. The agenda of the meeting included two motions relating to a further assignment of the caretaking and letting agreement. The applicant explained that the subject matter of the two motions was the same except that the first motion included a provision that a transfer fee be imposed, and the second motion did not. Voting was by secret ballot.

The applicant noted that the first motion was passed with 5 votes in favour, 2 against, and 2 abstentions, and that the returning officer recorded the votes on the second motion as being 7 votes in favour and 2 against. The minutes of the meeting, however, showed that the first motion was passed, and the second motion lapsed.
The applicant expressed the view that the body corporate manager had erred in preparing the notice of meeting by failing to list the motions as alternatives, under section 42B of the Standard Module. The applicant pointed out that the resultant outcome was contrary to the wishes of the majority of owners.

Submissions were sought from all owners and from the body corporate committee. Seven submissions were received. Only one submission was opposed to the outcome sought by the applicant.

DETERMINATION

Section 85(2) of the Standard Module provides that the body corporate may require, as a condition of approving the transfer of an engagement as a service contractor and authorisation as a letting agent, that the transferor under the transfer pay the body corporate an amount, being the relevant percentage of the amount representing fair market value for the transfer (s85(4)).

In this instance, the body corporate committee, which itself has the authority to make such a determination, obviously considered that the question of whether or not to impose such a condition on the transferor should be decided by owners in general meeting.

Section 42B of the Standard Module provides:

42B Motion with alternatives

(1) This section applies if 2 or more motions (the original

motions) proposing alternative ways of dealing with the same

issue are submitted, under section 41, as motions for

consideration at a general meeting of the body corporate.

Example for subsection (1)--

The secretary of the body corporate receives motions from 3 lot owners

proposing the engagement of a person as a body corporate manager.

Each motion proposes a different person.

(2) A voting paper for the general meeting must--

(a) list as alternatives under 1 motion submitted by the

committee (a motion with alternatives), the substance

of each of the original motions; and

(b) show, after the motion and each alternative listed under

it, a blank space for voting purposes.

(3) A person who is a voter for the general meeting may vote

either--

(a) for the motion, by voting for the motion and for 1 of the

alternatives listed under the motion; or

(b) against the motion.

(4) If the required resolution is passed for the motion--

(a) the alternative with the most votes is the body

corporate’s decision; or

(b) if 2 or more alternatives (the qualifying alternatives)

receive an equal highest number of votes--the

qualifying alternative that is the body corporate’s

decision must be decided by chance in the way the

meeting decides.

(5) If more than 1 motion about the same issue is listed on the

agenda, or stated in a voting paper, for the meeting, all

motions about the issue are void

It is clear that the two motions (motion 3 and motion 4) proposed alternative ways of dealing with the same issue, namely the transfer of the agreements, the termination of the transferred agreements and the entering into of a new agreement.

Had the correct procedure been followed, the motion would have been listed as the transfer/termination/new agreement, and the alternatives would have been with or without a transfer fee.

As the vote was by secret ballot, the votes cast for both motions have been recorded in the body corporate tally schedule. However, because the motions were listed successively on the agenda, then the minutes recorded that motion 3 was passed and motion 4 lapsed.

As I see it, I have two courses of action available to me.

The first option would be to make an order that motions 3 and 4 are void, which would necessitate the calling of a further meeting to enable the matter to be reconsidered in accordance with the requirements of the Standard Module. This would delay the ultimate resolution of the matter, and also incur further costs for the body corporate. It would also be in strict compliance with section 42B(5) above.

The second option would be to treat motions 3 and 4 as if they had been listed as a motion with alternatives, and then make a finding on the basis of the recorded votes. This would resolve the matter and incur no further costs.

I am satisfied that to make an order which is "just and equitable in the circumstances" the second option should be taken. I have been assisted in reaching this conclusion by the views expressed in the majority of owners’ submissions. Furthermore, these submissions revealed that three owners who had not voted at the meeting were in favour of no transfer fee being imposed. Given that seven owners voted in favour of no transfer fee being imposed, the total number of owners in favour of no transfer fee was markedly higher than those in favour of imposing a transfer fee.

I have therefore made an order waiving the transfer fee purportedly imposed by the body corporate on 4 September 2006 and a further order that the body corporate refund the transfer fee to the transferor within 7 days.

Having determined that the body corporate was not in favour of imposing a transfer fee, it has not been necessary for me to go on and consider the appropriate "contract date" under section 85(3) of the Standard Module. Had it been necessary for me to do so, I would have chosen not to determine any aspect of the application at this stage, as an earlier decision made by me in relation to that issue on another application has been appealed to the District Court. Although the appeal was heard late last year the outcome of the appeal is not yet known.