Focus [2007] QBCCMCmr 700 (20 December 2007)

Last Updated: 21 February 2008

REFERENCE: 1008-2007

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12996
Name of Scheme:	Focus
Address of Scheme:	114 The Esplanade SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Laurie Doorey, a co-owner of Lot 78

I further order that pending final determination of this application, the body corporate for Focus community titles scheme 12996 shall not proceed with, implement or otherwise act upon any resolution passed on Motion 11 included on the agenda and stated in a voting paper of the Annual General Meeting dated 21 December 2007. This interim order has effect until 12 months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is the earlier).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1008-2007

"Focus" CTS 12996

Application
Laurie Doorey, a co-owner of Lot 78 (Applicant) has sought an interim order against the body corporate for Focus community titles scheme 12996 (Body Corporate) that Motion 11 included on the agenda of the Annual General Meeting to be held on 21 December 2007 (AGM) either not be voted on or any vote on the Motion not be acted upon until final determination.

The Applicant seeks a final outcome that Motion 11 is invalid.

The Applicant provided a copy of the notice of the AGM including a secret voting paper stating (in part):

11. CONTRACT FOR THE PROVISION OF MAINTENANCE, CLEANING AND GARDENING SERVICES

Submitted by Committee-Refer to Explanatory Schedule No.1 which has been separately mailed to you.

THAT the Body Corporate enter into a contractual arrangement with Silvercare Australia Pty Ltd, ACN 103208279 (Trading as Sigiri) and Nimal Anthony De Silva Ratnesekera, and Noeline Romany De Silva Ratnesekera, and Alana De Silva Ratnesekera and Krystle Sutcliffe for a term of 3 years at a cost of $150,000.00 plus GST, in the first year for the provision of building maintenance, pool cleaning, cleaning and gardening duties, as per the terms and conditions of the Agreement attached to the Notice of this meeting.

The Explanatory Schedule No 1 – Committee Explanatory Material states in relation to Motion 11:

This Motion follows the Motion at the EGM held on 10/08/07 to enter into this form of agreement ... Following the strong vote, Sigiri was voted as the successful tenderer ... Your Committee recommends that the Body Corporate enter into the agreement and therefore supports a yes vote.

Jurisdiction
"Focus" community titles scheme 12996 is scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me even though affected persons have not been given notice of the application, or afforded an opportunity to make submissions about the application. Section 279(1) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, than an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

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 claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the 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).

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act on 19 December 2007 I invited submissions from the committee regarding the interim order application, and a copy of the application was provided to Strata Jem Pty Ltd (the body corporate manager) to distribute to committee members. Steven Stojanovic made submissions as the secretary of the committee.

Submissions
The Applicant

•	Given the expenditure proposed in Motion 11, section 102 of the Accommodation Module applies (the relevant limit for major spending is $31,250). The Motion is not stated as an alternative and only one quotation for the work is included. No exceptional circumstances exist to permit only one quotation for the work. The Motion contravenes section 102.
•	There are no alternative service providers and no other motions in relation to a contract for the provision of maintenance cleaning and gardening services.
•	The Motion and the explanatory material indicate the committee believe the resolution made on Motion 3 at the Extraordinary General Meeting dated 10 August 2007 (EGM) is a mandate to enter into an agreement with Sigiri and that the only matter to be determined at the AGM is the form of the contract to be entered into. On 7 December 2007, an interim order was made preventing the Body Corporate from relying on the resolution made on Motion 11 (Application 0753-2007).
•	If the interim order sought is not granted, the Body Corporate would be bound to a service agreement for at least 3 years at a cost of at least $150,000 per annum. If the order is granted, the services being provided would continue until determination of the matters.

The secretary

•	The Applicant is a director of Focus Owners Limited (FOL) which is a party to a "management agreement" with the Body Corporate. The "agreement" allows FOL to conduct a letting business and provide some services to the Body Corporate. Hynes Lawyers act on behalf of FOL and the Applicant. There is no jurisdiction to determine the application.
•	The notice of the AGM was issued before the interim order was made on Application 0753-2007. The Body Corporate has noted the terms of this order.
•	The Applicant’s assertion that Motion 11 is the only motion in relation to a service contract is wrong as there is a further motion, numbered 34.
•	Owners have been provided with sufficient information. For Motion 11, a copy of the proposed contract was provided in the notice. For Motion 34, the terms are included in the notice. The voting paper satisfies the requirements of section 102. There may be an argument section 102(7) has not been strictly complied with.
•	If the interim order is granted, it is accepted that the services provided by Silvacare would continue until final determination.
•	If a further general meeting is required, the costs to the Body Corporate would be in the order of $5,000-$6,000.

Determination
Jurisdiction
The secretary raised the question of jurisdiction. The Applicant is a co-owner of Lot 78. The outcome sought relates to a motion submitted for Body Corporate consideration in general meeting. A voter for a general meeting includes an individual whose name is entered on the body corporate roll as the owner of a lot (s47(1), Accommodation Module).

An owner can make a dispute resolution application against the Body Corporate (s227, Act). In making an application, the applicant must be a party to and directly concerned with the dispute (s238, Act). The Body Corporate has not disputed the Applicant’s capacity to participate at the AGM. The Applicant may make an application seeking the outcome sought under the dispute resolution provisions of the Act.

The interim order application
Given section 279(1) of the Act, it is necessary to determine at the outset 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 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 which might be the subject of an interim order is not capable of definition, the Applicant does need to establish the circumstances of the application warrant the making of an interim order.

The Applicant questions the validity of Motion 11 which proposes the engagement of a person as a service contractor for a period of 3 years. Given the meeting is to be held on 21 December 2007, urgent circumstances exist to warrant consideration of the interim order application.

Applicable law
To assist me in determining whether it is just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I consider it relevant to briefly consider whether the application raises any serious legal question that will need to be determined. If the application raises a serious legal question then it may be appropriate to make an interim order to attempt to preserve the integrity of the matters in dispute pending final determination.

Section 150(2)(h) of the Act provides the applicable regulation module may provide for spending limitations applying to the body corporate and to the committee. Sections 101 to 103 of the Accommodation Module relate to the control of spending. Sections 101 and 103 relate to committee spending. Section 102 deals with ‘major spending’ to be decided by the body corporate. Relevantly, the section applies to a motion to be moved at a general meeting proposing the engagement of a service contractor and the cost of the proposal is more than the relevant limit for major spending for the scheme. The limit for this scheme is $31,250 which is worked out by multiplying the 125 lots included in the scheme by $250 (Dictionary, Accommodation Module). Owners must be given copies of at least 2 quotations unless there are exceptional reasons (s102(2) and (6)). If the motion is proposed by the committee, the committee must obtain the quotations (s102(3)). If the motion is not proposed by the committee, the person proposing the motion must obtain the quotations (s102(4)). Unless subsection (6) applies, the motion must be stated as a motion with alternatives in the agenda and the voting paper (s102(7)).

Section 40B of the Accommodation Module states the procedural requirements for a motion with alternatives. Subsections (2) and (5) state:

(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.

(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.

Decision
Motion 3 at the EGM
The minutes indicate the Body Corporate resolved to enter into a maintenance agreement with Sigiri (one of three alternatives) for the provision of maintenance, gardening, cleaning and security services (Motion 3). The Applicant has made a dispute resolution application questioning the validity of the Motion (Ref. No. 0753-2007). On 7 December 2007, an interim order was made that, pending a final determination, the body corporate for Focus must not rely upon resolution 3 adopted at the extraordinary general meeting of 10 August 2007 as authorising entry into a maintenance agreement for a term of one year or more. To date, this dispute has not been finally determined.

It would seem the notice of the AGM was given to owners before the interim order was made. The committee explanatory material would seem to make reference to the Motion. The secretary submits the interim order has been noted. Other than the explanatory material, there is no indication Motion 11 was submitted to the AGM on the basis of the resolution made on Motion 3.

I do not consider any connection between the resolution passed on Motion 3 and the proposed Motion 11 is relevant to the determination of the interim order application.

Motion 11 at the AGM
The Motion proposes the Body Corporate entering into a contractual arrangement for the provision of building maintenance, pool cleaning, cleaning and gardening duties for 3 years. Given the proposed duties and period, the person with whom the Body Corporate proposes contracting is a service contractor (s15, Act). The Body Corporate may engage a person as a service contractor in accordance with section 85 of the Accommodation Module. The procedural requirements for engaging a person as a service contractor do not appear to be in dispute.

The proposed cost of the engagement is more than the relevant limit for major spending for the scheme of $31,250.

Interim order
In this circumstance, section 102 applies necessitating the presentation of at least two quotations unless the exception stated in subsection (6) is applicable. No exceptional reasons are claimed to exist. The secretary submits two quotations have been presented. The second quotation is not included in Motion 11, but is claimed to be that submitted by Richard Mercer, the company nominee of the owner of Lot 65 and included on the agenda of the AGM as Motion 34. This Motion is headed ‘Maintenance & Security’. Despite the inclusion of Motion 34, it would seem the committee did not comply with its obligation under section 102(3) of the Accommodation Module. Similarly, Mr Mercer did not comply with section 102(4). The secretary claims Motions 11 and 34 constitute compliance with section 102(2). It may well be this is the case. While I do not propose to examine the merits of this claim for the purposes of making an interim order, it is noted the Explanatory Schedule No 1 – Committee Explanatory Material about Motions 11 to 14, 17, 28, 29, 31 and 34 states (in part) about Motion 34 No doubt owners will have difficulty in understanding what this Motion is all about. Because the Motion is so convoluted and impossible to know what it means, it is probably an invalid Motion.

The secretary acknowledges section 102(7) has not been complied with. Despite this defect, the secretary states the Motions were on the same secret voting paper and refers to the following comments expressed by His Honour Judge Boulton DCJ in Chen v Body Corporate for Wishart Village CTS 19482^[1]:

The very detailed provisions [of the module] ... make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide."

Even if the argument the Motions propose alternative ways of dealing with the same issue is capable of being sustained, the Motions clearly have not been presented in the manner required by section 40B of the Accommodation Module. The Motions have not been treated equally which is the basis of the section 40B provisions and the extent of non-compliance with section 40B could be viewed as being of a substantial nature.

For these reasons, I am of the view the Applicant has raised a serious question to be determined about Motion 11. If I do not make an interim order the Motion may be passed to engage the person as a service contractor for the scheme. If this occurs, the Body Corporate may well be subject to a contract involving a substantial liability for a significant period of time. In my view, the likely inconvenience should the interim order sought not be granted outweighs any inconvenience likely to result from this interim order being made. I have also noted that it is not disputed services will continue to be provided.

However, I consider the Motion should be able to be transacted at the AGM. If the motion is voted on and passed, the interim order prevents the implementation of the resolution. This application will now be administered in accordance with the Act and the normal processes of this Office. The application will be finally determined in due course.

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^[1] Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.