Acacia Grove [2008] QBCCMCmr 108 (1 April 2008)

Last Updated: 30 April 2008

REFERENCE: 0870-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	22685
Name of Scheme:	Acacia Grove
Address of Scheme:	28 - 30 Ancona Street Carrara Qld 4211

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

Fernando Lorenzo, the Owner of lot 82

I hereby order that both the purported annual general meeting held on 25 October 2007 and the purported annual general meeting held on 7 November 2007 are void for irregularity. I further order that all resolutions purportedly passed at the meetings held on 25 October 2007 and 7 November 2007 are void. I further order that until such time as another body corporate committee is elected, the body corporate committee elected on 25 October 2007 shall be the body corporate committee for the scheme. I further order that within 3 months of the date of this order, the body corporate committee is to call and hold a general meeting of the Acacia Grove Body Corporate in accordance with this order and for the purpose of considering the motions included on the agenda of the meeting and deciding committee member positions. I further order that prior to calling the meeting a notice is to be forwarded to members of the body corporate inviting nominations for committee member positions and also inviting members to submit motions for inclusion on the agenda for the meeting within 30 days of receipt of the notice. I further order that the body corporate is to issue a notice of the meeting in accordance with sections 40(1), (2) and (3) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module) and except as provided in this order, the meeting must be called and held in accordance with the Act and the Accommodation Module. I further order that for the purposes of the Body Corporate and Community Management Act 1997 (the Act), the meeting shall be deemed to be the 2007 annual general meeting of the body corporate. I further order that pending the outcome of the AGM, the body corporate committee is authorised to temporarily engage Body Corporate Administration of Capri Commercial Centre, Isle of Capri in the role of body corporate manager on a month to month basis. I further order that Body Corporate Administration shall be entitled to be paid fees for services provided, and the amount of such fees shall be determined by reference to the draft agreement presented to the meeting held on 25 October 2007.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0870-2007

“Acacia Grove” CTS 22685

Application

By application received on 2 November 2007, the applicant Mr. Fernando Lorenzo, the Owner of lot 82, sought both interim and final orders of an adjudicator under the Body Corporate and Community Management Act 1997.

The interim order sought was as follows:

An urgent interim order to prevent any action on the decisions made during the illegal / adjourned AGM – 25 October 2007 (which was chaired by an appointee who wasn’t even a member of the committee).

On 30 November 2007 I made the following interim orders:

• that the body corporate for Acacia Grove community titles scheme shall not proceed with, implement, otherwise act upon or allow to be acted upon any resolution passed on motion 20 regarding appointment of a body corporate manager;
• that the body corporate for Acacia Grove community titles scheme shall not proceed with, implement, otherwise act upon or allow to be acted upon, any resolution passed on motion 31 regarding amendment of the Caretaking Management Agreement and Letting Agreement; and
• that the interim order is to have effect until either 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
  

On 20 December 2007, I made certain supplementary orders to enable the body corporate to continue operation until finalisation of this dispute resolution application. These orders included the following:

• that pending the final determination of the current dispute resolution application, the body corporate committee elected at the Annual General Meeting for the scheme on 25 October 2007, is the body corporate committee for the scheme;
  
• that pending the final determination of the application, the body corporate committee is authorised to temporarily engage Body Corporate Administration of Capri Commercial Centre, Isle of Capri in the role of body corporate manager on a month to month basis;
  
• that Body Corporate Administration shall be entitled to be paid fees for services provided, and the amount of such fees shall be determined by reference to the draft agreement presented to the meeting held on 25 October 2007.
  

The final outcomes sought by the applicant are :

That the results of the authorised AGM – 7 November 2007 stand as the correct result;

Or alternatively

That you call a fresh AGM that complies with the decision made by the 2006-2007 committee per the flying minute.

The Scheme

Acacia Grove CTS 22685 is a 98 lot scheme designed for residential purposes and regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

Background

The applicant states that this application relates to an annual General Meeting for the scheme that was scheduled for 25 October. At that meeting lot owners were to consider the usual statutory motions considered at an AGM as well as the following motions:

• appointment of a body corporate manager (motion 20);
• that the Caretaking and Letting Agreements be amended by insertion of a further period of 5 years from 1 November 2021 to 31 October 2026, so that the agreements would be for an unexpired term of not longer than 25 years (motion 31).
  

The scheme consists of 98 lots and 22 of the lots are owner-occupied. The applicant further states that as at 16 October 2007, most resident owners had not received notice of the AGM scheduled for 25 October and therefore the committee decided to issue new voting papers to all owners and postponed the AGM to 7 November so as to afford all lot owners 21 days notice and the opportunity to vote. He states that he assisted committee members in sending out a new set of AGM papers 21 days before the second meeting on 7 November. He believes that although the papers were delivered to both the body corporate manager and returning officer appointed by the body corporate manager, the body corporate manager went ahead with the AGM on 25 October. The applicant further states that on 31 October 2007, he learned that the body corporate manager had held the AGM on 25 October even though the Chairperson/ Secretary had advised that the AGM was rescheduled to 7 November 2007.

He did not receive voting papers until 23 October, two days before the AGM was held, notwithstanding calls to the body corporate manager expressing his concern regarding the non-arrival of the first and second set of AGM papers. Further, he similar bulky envelopes in other lot owners’ letter boxes at the same time.

Meanwhile, the committee engaged a Mr. Colin Lamont as returning officer to receive the voting papers for the proposed 7 November meeting and according to the applicant, this returning officer received a substantial number of votes.

Prior to making an interim order I invited submissions from all lot owners and also from the body corporate manager.

Submissions in support of the application for interim orders included the following:

• many resident owners did not receive notice of the AGM until 23 October and therefore had only 2 days notice of the AGM;
• The AGM should not have proceeded on 25 October as no executive members of the committee were present and the committee had rescheduled the meeting to 7 November;
• The body corporate manager failed to act upon instructions given by a committee member to adjourn the AGM from 25 October 2007 to 7 November 2007;
• It is not equitable to dismiss the votes of persons who believed that they had until 7 November to vote;
• It was suspicious that the votes submitted by non-occupying owners were identical;
• there may have been a deliberate attempt to prevent resident owners from voting;
• decisions made at the 25 October meeting held on should not be implemented.
  

Two lot owners opposed the application including the caretaking service contractor who made the following submissions:

• Most owners got their voting papers before the AGM and although the owner occupiers may have received only 2 days notice they could have turned up to the meeting if they were interested;
• When Ms Schuba, the former Chairperson/ Secretary, sent out the letter informing owners of the “second AGM” most owners had already voted;
• When Ms Schuba sent out the notice advising lot owners of the second meeting she only included a voting paper in respect of motion 20;
• In previous years only one or two lot owners had turned up to the AGM;
• She is concerned that a committee member appointed Mr. Lamont as Returning Officer for the purported annual general meeting on 7 November when the purpose of appointing a Returning Officer is to ensure that an independent person is responsible for counting votes;
• She does not consider Mr. Lamont as being independent as he has previously advised Ms Schuba, the former Chairperson/ Secretary, as to how the body corporate could terminate the caretaking service contract or otherwise facilitate the appointment of a new caretaking service contractor (letter to Ms. Schuba dated 7/3/07).
  

Another lot owner advised that they thought the first meeting had been invalidated and therefore voted a second time.

Owing to illness of a key staff member, the body corporate manager sought an extension of time for making a submission which was received by me on 30 November 2007, and included the following:

• The applicant purchased his lot in July 2007 and is therefore probably unaware that most lot owners in this scheme have little interest in the internal affairs of the scheme;
• at the last four AGM’s, there has been a failure to achieve a quorum of lot owners i.e. in 2003, 21 lot owners were represented; in 2004, 12 lot owners were represented; in 2005, 6 lot owners were represented; in 2006, 16 lot owners were represented;
• On Tuesday 2 October 2007 the body corporate manager delivered 98 envelopes to the Isle of Capri post office which can be verified by the owners of the post office. However it would appear that certain envelopes addressed to owner / occupiers, and which passed through the Nerang Mail Exchange were delayed for reasons which remain unknown, but may relate to the size of the envelopes which contained some 73 pages and problems involved in pacing a parcel of that size in individual letter boxes;
• When advised of non-arrival of notices by the on-site manager on or about 5 October, the body corporate manager made arrangements for fresh copies of the notices to be issued, and although these arrived late, lot owners nevertheless had the opportunity to deliver the voting papers to the meeting;
• The meeting was conducted in accordance with the provisions of the Act and should therefore be declared a valid meeting of the body corporate;
• The returning officer engaged by the body corporate manager, Mr. Irwin, is a well known and independent body corporate consultant;
• the body corporate manager is a corporate entity and therefore there has been no change in the identity of the body corporate manager notwithstanding a change of shareholding;
• the instructions given by the Chairperson / Secretary with the notice of the 7/11 meeting contain a number of inaccuracies including a statement that owners cannot vote for more than 5 ordinary members;
• the minutes of the 7/11 meeting do not record the Secretary calling for a copy of levy arrears so as to ascertain who was eligible to vote;
• it is also unclear whether persons had already voted or indeed whether there was a quorum;
• there are discrepancies regarding the recorded attendance at the meeting of 7/11/07;
• The former Chairperson/ Secretary, Ms Schuba, appointed Mr Colin Lamont as Returning Officer for the meeting of 7/11/07;
• The body corporate manager does not regard Mr. Lamont as being independent as he was the author of a letter to Ms. Schuba which “was uninformed and very derogatory to the Resident Building Manager” (letter to Ms. Schuba dated 7/3/07).
  

On 30 November 2007 I made the following interim orders:

• that the body corporate for Acacia Grove community titles scheme shall not proceed with, implement or otherwise act upon any resolution passed on motion 20 regarding appointment of a body corporate manager;
• that the body corporate for Acacia Grove community titles scheme shall not proceed with, implement, otherwise act upon or allow to be acted upon, any resolution passed on motion 31 regarding amendment of the Caretaking Management Agreement and Letting Agreement.
  

On 20 December 2007, I made certain supplementary orders to enable the body corporate to continue operation until finalisation of this dispute resolution application. These orders included the following:

• that pending the final determination of the current dispute resolution application, the body corporate committee elected at the Annual General Meeting for the scheme on 25 October 2007, is the body corporate committee for the scheme;
• that pending the final determination of the application, the body corporate committee is authorised to temporarily engage Body Corporate Administration of Capri Commercial Centre, Isle of Capri in the role of body corporate manager on a month to month basis;
• that Body Corporate Administration shall be entitled to be paid fees for services provided, and the amount of such fees shall be determined by reference to the draft agreement presented to the meeting held on 25 October 2007.
  

Final submissions:

Following the issue of the interim order, submissions were again sought from all lot owners as well as the body corporate committee. A further 4 submissions were received including 3 further submissions from lot owners and a submission from the original returning officer.

One lot owner made the following submissions

• resident owners received notice of the meeting before 25 October;
• the body corporate manager sent out notices on time but were delayed in the post and therefore a second lot of papers were sent out;
• certain committee members purported to reschedule the meeting to 7 November without a valid committee resolution;
• voting papers were only sent out in respect of motion 20;
• voting papers were not issued to all lot owners for the 7 November meeting;
• the votes from both meetings could be added together and the aggregate results used to determine the outcome of voting.
  

The owners of another lot made the following submissions:

• it would appear that the voting papers were delayed in the mail system;
• one option would be to count the total of all votes submitted at both meetings to determine which motions were carried;
• alternatively the meetings could be invalidated, another AGM called and all parties given adequate time to send in their vote.
  

The returning officer appointed by the body corporate manager in early October, Mr. Irwin, advised as follows:

• on or about 23 October he became aware that an email communication had been received by the body corporate manager from a Ms. Schuba stating that the AGM scheduled for 25 October 2007 was either cancelled or adjourned but there was no copy of a resolution or flying minute of the committee to confirm this;
• the body corporate manager decided that without such confirmation the meeting should proceed as a large number of owners had already submitted voting papers;
• he did not receive the Express post envelope from Ms. Schuba (post-marked 24 October) containing papers relating to the proposed 7 November meeting, until Friday 26th October;
• he promptly returned the Express post envelope to Ms Schuba;
• he believes that the meeting was conducted strictly in accordance with the Act.
  

The applicant made the following submissions in reply:

• he believes that certain comments regarding apathy of lot owners at previous AGM’s and the committee-appointed returning officer have little relevance to the matters in issue in this dispute;
• the November 7 meeting was held in his living room and was attended by committee members as well as the committee-appointed returning officer;
• the Chairperson and returning officer checked the voting papers against a printout of lot owners which included details of any outstanding levies;
• he does not believe that the body corporate manager was authorised to appoint a returning officer;
• two days notice of an AGM was inadequate for most of the resident owners who are engaged in full time employment and would not have been able to organise time off at such short notice.
  

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)).

Determination

The final outcomes sought by the applicant are :

That the results of the authorised AGM – 7 November 2007 stand as the correct result;
Or alternatively
That you call a fresh AGM that complies with the decision made by the 2006-2007 committee per the flying minute.

The applicant has disputed the validity of the AGM held on 25 October on the grounds that insufficient notice of the meeting was given to a significant percentage of the lot owners and the then Chairperson/ Secretary had earlier advised lot owners that the meeting was postponed to 7 November. Material provided by the applicant and other lot owners indicates that in numerous instances, owners received as little as two days notice of the meeting.

The relevant provisions of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 are sections 40 and 41 which provide as follows:

40 Notice of general meeting
(1) Written notice of a general meeting must be given to the owner of each lot included in the scheme, and if not given personally, must be sent to the owner at the owner’s address
for service.
(2) The notice must state the time and place of the proposed general meeting.
(3) The notice of a proposed general meeting must—
(a) contain an agenda for the meeting; and
(b) be accompanied by—
(i) a proxy form; and
(ii) if the notice is given to the corporate owner of a lot—a form under which the lot owner may advise the body corporate of the corporate owner nominee; and
(c) be accompanied by a voting paper for all open motions to be decided at the meeting; and
(d) for a motion to be decided at the meeting by secret ballot—be accompanied by each of the following—
(i) a secret voting paper as required under section 40A;
(ii) an envelope marked ‘secret voting paper’;
(iii) either a separate particulars envelope or a particulars tab forming part of the secret voting
paper envelope that a person may detach without unsealing or otherwise opening the envelope; (e) be accompanied by explanatory material required under section 40C; and
(f) contain or be accompanied by any other document as required under the Act or this regulation. (4) If all the lots have identical ownership, no notice of a general meeting need be given.

Section 41 provides as follows:

Time of general meetings
A general meeting must be held at least 21 days after notice of the meeting is given to lot owners.

The body corporate manager advises that on Tuesday 2 October 2007 it delivered 98 envelopes to the Isle of Capri Post Office but certain envelopes addressed to owner / occupiers, which passed through the Nerang Mail Exchange, were delayed for reasons unknown. The body corporate manager further states that when advised of non-arrival of notices on or about 5 October, it made arrangements for fresh copies of the notices to be issued and although these arrived late, lot owners nevertheless had the opportunity to deliver the voting papers to the meeting. Further, the body corporate manager believes that the meeting was conducted in accordance with the provisions of the Act and should therefore be declared a valid meeting of the body corporate.

The circumstances of this case indicate that the AGM documents addressed to units located in the building at 28 Ancona Street Carrara, were most probably delayed at some point in the postal delivery system. Whatever the reason for the delay, it is not disputed that proper notice of the meeting scheduled for 25 October was not given to the owners of 22 of the 98 lots. While there is authority to the effect that non-compliance of an insubstantial nature will not imperil the actions of bodies corporate or their committees where actions are taken bone fide[1], in my view this case does not involve non-compliance of an insubstantial nature. The bundle of papers eventually delivered to lot owners was substantial (i.e. some 73 pages) and clearly, two days would be insufficient time for many people to read and understand the material as well as ensuring that completed voting papers were returned to the returning officer by the due date. As the applicant points out, resident owners who are engaged in full time employment would have difficulty changing their schedules and arranging to take time off work at such short notice so as to enable them to attend the meeting and vote in person.

The evidence indicates that notice of the meeting and voting papers for the 25 October meeting were received by the other 76 lot owners at least 21 days before the meeting of 25 October, and as a consequence 36 lots were represented in person or by voting paper at that meeting.

From the minutes of meeting held on 7 November 2007, I note that

• 14 voting papers were received in respect of motions 1 to 19 and 21 to 30;
• 18 secret ballot papers were received in respect of motion 31; and
• 34 secret ballot papers were received in respect of motion 20;
• There were only sufficient votes to make a quorum in respect of motion 20.
  

Having regard to the submissions and evidence submitted I do not believe either the meeting of 25 October 2007 or the meeting of 7 November 2007 can be regarded as a legitimate Annual General Meeting. As outlined above, I believe that insufficient notice of the 25 October meeting was given to some 22 lot owners. I am also concerned by submissions to the effect that a complete set of voting papers was not issued to all lot owners prior to the meeting on 7 November. A further matter of concern to me is the probability that a number of lot owners voted on more than one occasion on the matters determined by secret ballot. Accordingly, I believe that both the purported annual general meeting held on 25 October 2007 and the purported annual general meeting held on 7 November 2007 are void for irregularity.

As foreshadowed in my interim order, I believe that the most appropriate orders for me to make in these circumstances are that:

• both the purported annual general meeting held on 25 October 2007 and the purported annual general meeting held on 7 November 2007 are void for irregularity;
• the resolutions purportedly passed at the meetings were at all times void;
• the election of committee members is invalid;
• within 3 months, the body corporate is to call and hold a general meeting for the purpose of considering the motions included on the agenda of the meeting and deciding committee member positions;
• a notice is to be forwarded to members of the body corporate inviting nominations for committee member positions and also inviting members to submit motions for inclusion on the agenda for the meeting;
• that the body corporate is to issue a notice of the meeting in accordance with sections 40(1), (2) and (3) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997;
• that until such time as another body corporate committee is elected, the body corporate committee purportedly elected on 25 October 2007 shall be deemed to be the body corporate committee for the scheme;
• for the purposes of the Body Corporate and Community Management Act 1997 (the Act), the meeting shall be deemed to be the 2007 annual general meeting of the body corporate;
• pending the final determination of the application, the body corporate committee is authorised to temporarily engage Body Corporate Administration of Capri Commercial Centre, Isle of Capri, in the role of body corporate manager on a month to month basis.
  

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[1] See for example Wei-Xin Chen v Body corporate for Wishart Village [2001] District Court 4080/ 2000