L'Colonial Court [2007] QBCCMCmr 665 (29 November 2007)

Last Updated: 4 January 2008

REFERENCE: 0463-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9169
Name of Scheme:	L’Colonial Court
Address of Scheme:	4 Murlong Crescent PALM BEACH QLD 4221

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

Ms Linda Phelps, a co-owner of lot 6 and committee member

I hereby order that the application for the following orders: 1. That appointment of Alan Graham as a committee proxy for Michael Ives is invalid. 2. That the appointment of Robert Anker as a committee proxy for Cindy Barker is invalid. 3. That Alan Graham forward all cheques being the property of the body corporate to the treasurer, Linda Phelps. 4. Procedure under Act to be adopted when the Committee is unable to be convened, through lack of a quorum. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0463-2007

"L’Colonial Court" CTS 9169

ORDER SOUGHT

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

1. That appointment of Alan Graham as a committee proxy for Michael Ives is invalid.

2. That the appointment of Robert Anker as a committee proxy for Cindy Barker is invalid.

3. That Alan Graham forward all cheques being the property of the body corporate to the treasurer, Linda Phelps.

4. Procedure under Act to be adopted when the Committee is unable to be convened, through lack of a quorum.

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-

(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)).

The application is stated to be between the applicant in her capacity as an owner and committee member, against the body corporate for the scheme (section 227(1)(b) of the Act).

While I am satisfied that the parties to this application fall within the jurisdiction of this office, I am not satisfied that any "dispute" exists. I have discussed this in more detail in my determination, under the heading "Existence of Dispute".

SCHEME DETAILS

L’Colonial registered as a building units plan (now described as a building format plan) on 5 March 1984. It comprises 9 lots and common property, and is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

SUPPORTING GROUNDS

The applicant advised that the owner of lot 5, Michael Ives, is a member of the committee and a joint signatory to the body corporate bank account. The applicant further advised that when Mr Ives was planning to be overseas in May/June of this year he contacted the applicant prior to his departure to arrange for several body corporate blank cheques to be signed to cover any expenses which might arise during his absence.

The applicant stated that she forwarded six cheques to Mr Ives, who subsequently advised her that he had signed the cheques and left them with Mr Alan Graham, from whom the cheques could be obtained when a payment was required to be made. The applicant noted that Mr Graham does not own a lot in the scheme, but resides in lot 2 with the owner of that lot. The applicant objected to the cheques being left with Mr Graham, on the basis that they should properly have been returned to her, as treasurer.

The applicant also noted that Mr Ives, by letter to her dated 2 May 2007, stated that he had given a proxy to a third party to act on his behalf, in the event that a committee meeting was held during his absence. The applicant later discovered, after making inquiry with Mr Graham, that Mr Ives appointed Mr Graham as his proxy and that Mrs Barker (the owner of lot 2 and an ordinary committee member) had appointed Mr Robert Anker as her proxy.

The applicant objects to the appointment of both Mr Graham and Mr Anker as proxies as it is her belief that, under section 67 of the Standard Module, a proxy must be another voting member of the committee. Neither Mr Graham nor Mr Anker are committee members, nor are they owners of any lot in the scheme. Mr Graham resides with Mrs Barker in lot 2, but the applicant is unaware of who Mr Anker is.

The applicant states that she needs to call a committee meeting for general business and to set the agenda for the AGM, but with Mr Ives away until 16 June and Mrs Barker away for 3 months, there is only herself and Mrs Shaw to attend a meeting, which would not form a quorum.

The applicant concludes by questioning how one overcomes committee meetings not being able to be held and asks whether general meetings should be held in lieu.

SUBMISSIONS

Submissions in response to the application were sought from all owners (excluding the applicant) and the committee. Two submissions were received.

Mrs Barker, owner of lot 2 made submission to the following effect:

• It would not be wise to leave blank cheques, signed by Mr Ives, with the applicant as, in the past, she had used cheques to pay herself for things not approved by the committee. As there were no other committee members available to handle the cheques, it was felt safer to leave them with Mr Graham. The arrangement was that when Mr Graham was asked by the applicant for a cheque, he would contact Mr Ives by email and comply with Mr Ives instruction.

• It is agreed that Mr Graham and Mr Anker are not committee members, but it was felt that they could present their voting instructions at the committee meeting for them, regarding the agenda for the AGM.

• Other matters that I did not consider to be relevant were also raised.

Mr Ives makes submission to the following effect:

• He agrees that the proxy from himself to Mr Graham would have been invalid under section 67 of the Standard Module. However, the proxy was never tested as no committee meeting has been called to enable it to be presented. The applicant has not seen his proxy and did not ask him who he had given his proxy to, but relied on a third party for the information.

• If the applicant thought his proxy was invalid but genuinely wished to call a committee meeting, she could have contacted him via email, and given him the opportunity to amend his proxy. At the end of the day, he would have had the right to withdraw or amend any proxy he may have given until the need to present it at a properly called committee meeting.

• Mr Ives has now returned from overseas and control of the cheques is again with him.

• The decision to have a third party accept custody of the cheques was based on there being a second control on the payment of accounts. The process he put in place was that Mr Graham contact him via email when there was a request for payment of accounts by the applicant and he would confirm that the payee be inserted and the cheque be forwarded to the applicant, again by email. This method at least validated the two signature nature of the account and proved assurance for other owners that payment of accounts was at the discretion of more than one person. This was very relevant as in the past some payments were made from body corporate funds which should not have been made. Whilst there may have been better ways, the one taken was considered by him to offer the best assurance to all owners.

• There are now sufficient parties to form a quorum for both committee and general meetings.

The applicant inspected the submissions made and made a detailed reply to the following effect:

• Neither herself as treasurer, nor the majority owner of lots, Mrs Phelps, was contacted in the decision making process to leave cheques with Mr Graham, who is neither an officer of the body corporate nor an owner.

• She does not believe that the course of conduct proposed by Mr Ives was ever adopted. She states that she asked for two cheques whilst Mr Ives was absent.

• Mrs Barker admits that neither Mr Graham nor Mr Anker were committee members.

• If a committee meeting had been held and she had accepted the proxies on face value, without checking the law, the meeting would have been illegal and its decisions void, causing unnecessary expense for the body corporate.

• Mr Ives also admits that his proxy was invalid, but justifies his position upon the basis that it was never tested.

• The only person constantly available on the committee is herself and she cannot act alone. The reality is that for most of the year, the committee cannot function due to lack of a quorum, with Barker and Ives overseas and Shaw too ill.

• The only way that a quorum can be achieved is by conducting body corporate business through general meetings. This does not involve any additional cost to the body corporate as the members of the committee represent all lots within the scheme.

• Other matters, extraneous to the application, were also commented upon.

DETERMINATION

Applicable Law

• A person may make an application if the person is a party to, or is directly concerned with, a dispute to which Chapter 6 applies (section 238(1) Act).

• A person appointed a proxy of a committee member must be another voting member of the committee (section 67(1) Standard Module).

• The appointment of a proxy is effective only if the member or the holder of the proxy gives a properly completed proxy form to the secretary (section 66(4) Standard Module).

• The body corporate bank account must be operated by persons who are authorised by the body corporate, eg, at least two members of the committee (section 151 Act).

• The legislation is silent in regard to custody of any cheque book the body corporate may have. It is therefore a decision for the committee or body corporate to make.

Existence of "Dispute"

Section 227(1) of the Act prescribes the meaning of ‘dispute’ as being between particular parties including the owner of a lot, or a committee member, and the body corporate. Section 238(1) provides that a person ... may make an application if the person is a party to, or is directly concerned with, a dispute to which Chapter 6 applies. Section 276(1) of the Act provides that an adjudicator may make an order to resolve a dispute.

The issue of the existence of a "dispute" under the Act has been considered by the District Court (the then appellant jurisdiction against an order made by a department adjudicator under the Act). In K.G. Tully & Anor. v The Proprietors The Nelson Body Corporate [2000] QDC 031, Judge Robin QC held that there must be "dispute" before an adjudicator has jurisdiction. The existence of a relevant "dispute" is fundamental to an adjudicator having jurisdiction. Further, in Dindas & Anor v Body Corporate for One Park Road CTS 2114 & Ors [2006] QDC 302, Judge Wilson SC removed an adjudicator’s order stating that the dispute resolution provisions do not empower an adjudicator to make orders about how a lot owner may vote in relation to a future matter, and limited the adjudicator’s powers to circumstances where a power has been exercised contrary to the legislation.

In this case, the applicant has made the application against the body corporate, yet I am not satisfied that she has demonstrated that a dispute exists with the body corporate which requires the intervention of an adjudicator. In relation to the first two orders sought, although the applicant has submitted correspondence from Mr Ives (letter of 2 May 2007) and Mr Graham (email of 21 May 2007) evidencing an intention to appoint proxies to non committee members in the event that a committee meeting was held during Mr Ives or Ms Barker’s absence, no proxy form was ever submitted to the applicant in her capacity as secretary (or otherwise) and none has been provided to me. The appointment of a proxy is only effective is a properly completed proxy form is given to the secretary (section 66(4) Standard Module). The applicant further states that no committee meetings were held during Mr Ives and Ms Barker’s absence. Through the submission process, both Mr Ives and Ms Barker acknowledge that the proxies would have been invalid. In these circumstances, I do not consider that there is a dispute with the body corporate about potentially invalid proxies being used at committee meetings. In relation to the third order sought, the applicant did not show that the body corporate (or the committee) had decided to grant custody of the cheque book to her in the first place, or that it had refused to return the cheque book to her, or even that she had requested that it be returned to her. In any event, the applicant has sought this order against Mr Graham, who is not a party to this dispute. The applicant has named the body corporate as the other party to the dispute. In any event, the applicant has stated that the body corporate cheque book has been returned to her. In relation to the fourth order sought, it appears to be seeking information or advice. Information can be obtained from the Information Service provided by this office. If advice is required, independent legal advice should be sought. It is not appropriate to lodge an application for dispute resolution to merely seek information, or legal advice. A ‘dispute’ must exist before an application is lodged.

If a proxy form is actually put to the body corporate (via the secretary) proposing to appoint someone other than a voting member of the committee as a proxy for a committee meeting, and/or a meeting is held where that proxy is used, then a relevant dispute about the validity of the proxy would arise and any application could then be dealt with on its merits. Similarly, if the body corporate (or the committee) makes a determination as to who should have custody of the body corporate cheque book, and that determination is not complied with, then a relevant dispute about non-compliance with a decision of the body corporate would arise and any application could be dealt with on its merits. However, at the present time there is no dispute and I do not consider, on just and equitable grounds, that the intervention of an adjudicator is warranted.

ORDER

For these reasons, I make the order above.