25 Queens Road [2008] QBCCMCmr 255 (28 July 2008)

Number of Scheme:	21874
Name of Scheme:	25 Queens Road
Address of Scheme:	23 Queens Road Scarness QLD 4655

TAKE NOTICE that pursuant to an application made under the abovementioned Act by
H J Khursandi Pty Ltd, Owner of Lot 2; Frovolo Pty Ltd, Owner of Lot 3; Kakadu Australia Pty Ltd, Owner of Lot 4 and 6; and Future Inspirations Pty Ltd, Owner of Lot 5

I hereby order that the application for an order

That the decision made by the body corporate under motion 2 at the meeting of the body corporate held 22 January 2008 be overturned and the motion be declared as passed.

is dismissed.

25 Queens Road community titles scheme 21874 (25 Queens Road) consists of six lots and common property. The community management statement (CMS) for 25 Queens Road indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Group Titles Plan 623.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by H J Khursandi Pty Ltd, Owner of Lot 2, Frovolo Pty Ltd, Owner of Lot 3, Kakadu Australia Pty Ltd, Owner of Lot 4 and 6, and Future Inspirations Pty Ltd, Owner of Lot 5 (applicants) on 4 April 2008. These owners are five of the six lots in the scheme.

The applicants sought orders against the Body Corporate for 25 Queens Road (respondent) in the following terms:

That the decision made by the body corporate under motion 2 at the meeting of the body corporate held 22 January 2008 be overturned and the motion be declared as passed.

Under section 243 of the Act, a copy of the application was provided to the Body Corporate, with an invitation to the Committee and owners excluding the applicants to respond to the matters raised by the application. In effect, the only owner who is not an applicant is the Owner of Lot 1, J.A.S.T Pty Ltd (JAST). Submissions were made on behalf of JAST. The applicants inspected the submissions received but did not avail themselves of the opportunity to respond to the submissions.[1] I specifically provided the applicants with an additional opportunity to respond to JAST’s submission and, after a second follow-up, the applicants did provide a response to the submission from JAST.

Submissions were initially lodged by three other owners in the scheme. As these owners are in fact applicants they were not invited to make submissions in addition to their application, however it seems some confusion arose in regard to the process. Each of these owners were invited to withdraw their submission or submit it as part of the application, in which case it would be provided to the respondent (in effective, to JAST) for comment. Subsequently these submissions were withdrawn and so they have not been considered in the determination of this dispute.

A dispute resolution recommendation was made referring the dispute to departmental adjudication.

The application relates to a Body Corporate’s decision not to pass a resolution relating to the defence of a proceeding brought by JAST against the Body Corporate in the Commercial and Consumer Tribunal (CCT) regarding the adjustment of the contribution lot entitlement schedule for the scheme. The circumstances of the dispute, as outlined in the application and submissions, can be summarised as follows.

Each of the six lots in this scheme have varied contribution lot entitlements, with JAST holding 400 lot entitlements and the remaining five owners having a combined total of 400 lot entitlements. On 5 September 2007 JAST initiated proceedings in the CCT[2] seeking an adjustment of the lot entitlements, such that the respective contribution schedule lot entitlements be equal. JAST claims that this application arose following several unsuccessful approaches to the Body Corporate.

The respondent to the CCT application is the Body Corporate. On or about 1 November 2007 the Body Corporate filed a defence against the CCT proceedings, prepared by Milburn Gutteridge Lawyers (MGL), opposing JAST’s claim.

On 22 January 2008 the Body Corporate held an Extraordinary General Meeting (EGM) to consider motions regarding the CCT application. Four motions were listed for consideration at the meeting:

On 25 January 2008 the CCT issued directions following a hearing at which the Body Corporate was represented by MGL. The order noted that the applicant had used its voting power to defeat a motion for the Body Corporate to defend the application using its current legal representatives. The order allowed the Body Corporate’s request to adjourn the hearing to ascertain the legal position of the vote, and adjourned the matter for a further hearing on 29 January 2008 and a hearing on 5 February 2008. The order also noted that five owners in the scheme, other than the applicant, had interests which would be affected by the application and that those owners may apply for inclusion as parties in the proceeding.

On 29 January 2008 the CCT issued further directions. The respondent was required to advise the registry whether it intended to seek adjudication from the Commissioner’s Office regarding the EGM resolution. The hearing scheduled for 5 February was vacated and is to be re-listed at a date to be advised, but not before the outcome of any adjudication application.

The applicants’ reply to this submission notes that JAST listed the Body Corporate as the respondent to the CCT litigation and used its 50% lot entitlement to defeat the motion which was supported by all other owners who voted. They say that JAST acknowledges that the only interest it is serving is its own. In regard to the issue of conflict of interest, they say that JAST has an interest in the CCT litigation being its own favour and have an interest in preventing the Body Corporate from responding to that litigation. They seek adjudication on the actions of JAST to prevent the CCT from defending the CCT litigation for its own benefit.

Section 269(1) of the Act requires an adjudicator to investigate an application to determine whether it would be appropriate to make an order. An adjudicator’s investigative powers are provided for in section 271 of Act. Accordingly I have considered what investigation of this application is possible and warranted.

The Supreme Court[3] has found that an adjudicator is not required to undertake investigations beyond consideration of the written submissions made by the parties[4] and that they are not required to make use of any more of the powers provided for in section 271 than they consider necessary in order to carry out an effective investigation[5]. Similarly, District Court Justice Robin[6] has noted that:

“...it is for the adjudicator to determine what ought to be done by way of investigations and there is no error of law by an adjudicator who determines that the evidence available is insufficient to justify a necessary conclusion and does not actively seek further evidence to support the application.”

Notwithstanding the investigative powers of an adjudicator, an applicant bears the responsibility of presenting arguments and evidence sufficient to make out their case. In this matter, the applicants provide very limited arguments in support of their application. Having considered the written material presented by each party, I am of the view that there is no avenue for further investigation of the arguments presented by the applicants. Rather, any possible further investigation could only involve presenting additional potential arguments to the applicants and inviting them to find evidence to support those arguments. I do not consider that it would be appropriate to attempt to make an applicant’s case out of them in that regard.

I have considered the written material from the parties, actively sought a reply to submissions, and clarified the composition of the Body Corporate Committee. In the absence of additional information or arguments in the applicants’ reply to submissions, I do not consider that further investigation is necessary or even possible to determine whether an order is warranted.

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:

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or

(i) the engagement of a person as a body corporate manager or service contractor; or

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[7] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[8]

JAST has raised several issues regarding the jurisdiction of an adjudicator to consider this dispute. I will address these in turn.

JAST refers to section 227(1) of the Act which defines a dispute with reference to the combination of parties to a dispute. JAST notes that the Body Corporate is listed as the respondent to the dispute and argues that:

The CCT proceedings are between JAST and the Body Corporate, as required by section 48(2) of the Act, and the substance of those proceedings relate to the disagreement between JAST and the other owners. However this dispute is not about the adjustment of lot entitlements. It is about the validity and reasonableness of the decision at the EGM not to pass Motion 2. Although JAST’s vote was the reason the motion did not pass, the effect is that it was a decision of the Body Corporate not to pass the motion. The Body Corporate is the proper respondent to any dispute seeking to challenge a resolution or the failure to pass a motion.

Technically it would have been appropriate to name JAST in section 5(c) of the application form as a party affected by the outcome sought by the application. However the main purpose of that section is to ensure that all affected persons are given an opportunity to make submissions in regard to the application. As JAST clearly has been given notice of the application and made submissions, nothing turns on whether JAST were specifically named in section 5(c) or not. Pursuant to section 49 of the Act Interpretation Act 1954, substantial compliance with a prescribed form is sufficient and the application should not fail simply because JAST was not so named.

I will comment on the interest of the Body Corporate in the CCT proceedings in my determination.

The second jurisdictional issue raised by JAST is that there is no order under section 276 of the Act which an adjudicator could make and no relevant order under Schedule 5 of the Act. Again, I do not accept these submissions.

It is clear that Schedule 5 of the Act simply provides examples of orders which may be made by an adjudicator. It illustrates the breadth of orders which an adjudicator could contemplate. Section 276(3) shows that the orders which an adjudicator may make are not limited by the orders listed in Schedule 5. The overriding obligation of an adjudicator under section 276 is to make an order that is just and equitable in the circumstances in the dispute.

In regard to section 276(1), I am satisfied that this is a dispute about a claimed contravention of the legislation or the exercise of rights or powers, or the performance of duties, under the legislation. The capacity of the Body Corporate to make decisions, and the procedures which the Body Corporate must follow in making decisions, is provided for in the Act and Standard Module. It follows that a dispute about the validity and reasonableness of such a decision, of the failure to make such a decision, falls within the jurisdiction of an adjudicator. In particular I note that section 94(2) of the Act provides that a body corporate must act reasonably in anything it does in respect to its general functions, including making or not making a decision. The Supreme Court has confirmed the capacity to make an order of this nature, in a case where an Adjudicator overturned an owner’s exercise of a majority vote for lack of good reason, saying:

“I agree with the Adjudicator that the act of voting at the Annual General Meeting ("AGM") is an exercise of a right under the Act by a lot owner, and it was intended by the Parliament that an Adjudicator be able to review votes cast by owners on an application to overturn a negative vote on a resolution.”[9]

Accordingly, I am satisfied that this matter falls within the legislative dispute resolution provisions.[10]

The key issues for consideration in this matter are whether the failure of the Body Corporate to pass Motion 2 at the January EGM was a valid and reasonable decision, and whether the Body Corporate has a right or responsibility to defend the CCT proceedings.

This application is not a dispute about the lot entitlements applying to this scheme. Clearly I have no jurisdiction to determine adjustments to lot entitlements. Moreover I have no capacity to intervene in the jurisdiction of the CCT to determine lot entitlement disputes, or the CCT’s decisions or processes, and I have not been asked to do so. Arguments for or against any adjustment to lot entitlements are not relevant to my deliberations.

However, I will note some general information about lot entitlements disputes for the information of parties. Section 48 of the Act provides mechanisms for the adjustment of lot entitlements where owners cannot reach agreement themselves. Section 48(5) and (6) of the Act provide that the order of the CCT or specialist adjudicator with regard to the contribution schedule must be consistent with the principle that: “...the respective lot entitlements must be equal, except to the extent that it is just and equitable in the circumstances for them not to be equal.” Section 49 outlines some of the considerations in determining just and equitable circumstances.

Only an owner may apply to the CCT or a specialist adjudicator for the adjustment of a lot entitlement schedule. The respondent to any such application must be the body corporate. If an owner applies for an order of a specialist adjudicator (who, pursuant to section 264 of the Act, must be agreed to and paid for by the parties) any other owner in the scheme can elect to be joined as a respondent. However, no such election is provided for in a dispute before the CCT. In the CCT owners would not be entitled to comment on the application to the CCT unless they are joined as a party to the dispute[11], regardless of the fact that they will undoubtedly be affected by any adjustment of lot entitlements. The explanatory notes for this section in 2007 state that:

However, the BCCM Act provisions relating to a lot owner joining a lot entitlement dispute and the responsibility for costs will not apply to an application made to the CCT as the CCT Act makes provision for the inclusion of parties and costs. [12]

While the current applicants were not named as respondents in the CCT proceedings, the CCT has clearly given these owners leave to apply for inclusion as parties to the dispute. Accordingly, even if the Body Corporate itself were not represented in the CCT proceedings, it seems that in this instance all owners will still have an opportunity to have their interests represented.

Pursuant to section 312 of the Act, a body corporate generally requires a special resolution to start proceedings[13]. However this does not apply to the defence of proceedings which have been started by another party. Section 312(2)(b) specifies that no special resolution will be required to bring a counterclaim, third party proceeding or other proceeding in a proceeding to which the body corporate is already a party. Section 26(1)(e) of the Standard Module specifically provides that the decision to start a counterclaim, third party proceeding or other proceeding in a proceeding to which the body corporate is already a party is not a restricted issue for the Committee. It follows then that a decision to defend the CCT proceedings could have been made by the Committee.[14]

While the Committee may have the capacity to decide to defend the CCT proceedings, expenditure on legal representation of more than the Committee spending limit of $750 would require an ordinary resolution of the Body Corporate.[15] Moreover, because the proposed expenditure on MGL was well over the schemes major spending limit of $1,500[16] there would normally need to be two quotes for the proposed expenditure presented to owners with the notice of meeting. If exceptional reasons exist whereby it was not practicable to obtain two quotes, the provision of a single quotation would be sufficient.

Contrary to the arguments of JAST, I consider that the Body Corporate unequivocally has an interest in the CCT proceedings which is distinct from the individual owners who oppose the adjustment of lot entitlements. The Body Corporate is clearly named as the respondent in the CCT proceedings. The fact that the legislature required that the Body Corporate be the respondent, in section 48(2) of the Act, demonstrates the intrinsic interest that the Body Corporate has. When this requirement was included in 2003, the explanatory notes for the section stated as follows:

The amendment makes the body corporate the respondent for the purposes of the section. It is considered that as the body corporate as a whole would be directly affected by changes to the lot entitlement schedules, the body corporate is the most appropriate respondent. The intention is also to simplify the number of respondents to the action, to remove the prospect of the costs incurred in responding to an application being borne by one person and to give an owner the right to be not directly involved in the legal process. Notwithstanding the making of the body corporate as the primary respondent, an owner may still elect to be directly involved in the determination process by requesting to be made a respondent.[17]

The Body Corporate would also be responsible for implementing any adjustment to lot entitlements, including preparing and registering a new CMS and adjusting the collection of levies

I accept that there is no requirement for the Body Corporate to defend the CCT proceeding. Clearly the CCT can proceed to determine the dispute without opposition. However, as a general principle, a body corporate should be entitled to defend any proceeding in which it is named as a respondent. Moreover, I consider that, again as a general principle, a body corporate should be entitled to the benefit of legal representation in defending its legal rights, particularly when the matter is complex or has a significant impact on the body corporate and its owners.

The difficulty in the unusual circumstances in this dispute is the question of the position that this Body Corporate would to defend in the CCT. Legal action between a body corporate and an individual owner is not uncommon. In such actions a body corporate can obviously not represent the interests of all owners and so should normally act in the interests of the majority. In this case while over 83% of owners oppose the CCT proceedings, 50% of the voting entitlements support the proceedings. Therefore, if the Body Corporate were to defend the CCT proceedings, what position would it take to the proceedings and who would be entitled to brief legal representation?

I agree with JAST that there was no conflict of interest in JAST casting its vote and requesting a poll at the EGM. A ‘conflict of interest’ arises when there is a conflict between a person’s personal interests and their required duties. The provisions of section 34 of the Standard Module regarding conflict of interest refer only to a committee member’s role in a committee meeting, and not in a general meeting. Owners, whether a committee member or otherwise, are not restricted in their voting at a general meeting because of their personal interest in a matter. I do not consider that owners voting at a general meeting owe a ‘duty’ to the Body Corporate. They are entitled to vote in accordance with their own interests and are not required to put the interests of other owners or the Body Corporate as a whole before their own interests when the vote.

In different circumstances the District Court held, in an appeal of the order of an adjudicator, that:

“...there is nothing in the Act or modules that prevent a lot owner from voting at a general meeting in favour of the appointment of themselves as a service contractor, even though they might derive a direct or indirect benefit”[18] and that,

“...The legislation plainly contemplates and permits a majority (determined by reference to voting rights granted by the Act) to assert its will by the legitimate exercise of that voting power.”[19]

It follows, therefore, that nothing intrinsically prevents an owner exercising their vote rights (including majority voting rights) in a way that otherwise may directly or indirectly benefit them.

However, while the parties have not raised the issue, I have contemplated whether JAST’s exercise of its voting power to defeat the motion could amount to a ‘fraud on a power’. This equitable doctrine has been established as providing that "a person having a power, must exercise it bone fide for the end designed, otherwise it is corrupt and void"[20]. The doctrine "authorises intervention where the power is exercised in bad faith or for purposes foreign to the power"[21]. I note that the courts have found that fraud on the power does not necessary require conduct within the common law meaning of fraud, but “...merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power"[22]. The fact that JAST complied with the legislative requirements in exercising its vote, and that there was no technical invalidity, does not prevent the potential for fraud on the power[23].

The New South Wales Court of Appeal has recognised that the doctrine of fraud on a power as being of general application and, specifically, as applicable to bodies corporate under the New South Wales Strata Titles Act 1973 and to the powers of owners exercised at general meetings.[24] However an Adjudicator has previously queried the ability of adjudicators under the Act to make a determination pursuant to this equitable doctrine, although suggesting that the principles might be considered in determining whether any decision was unreasonable:

“While the Body Corporate and Community Management Act 1997 does not expressly confer equitable jurisdiction on an adjudicator, an adjudicator is expected to make an order that is "just and equitable" to resolve a dispute and adjudicators have jurisdiction to declare a resolution void if unreasonable or to declare a motion passed if the opposition to it is unreasonable (Act, 276).”[25]

The possible improper exercise of power in this case could be whether it was contrary to the intention of voting rights to enable an owner to frustrate a body corporate in taking action to defend legal action brought by that same owner. However I do not intend to determine whether an adjudicator can make a determination applying the doctrine of fraud on a power, or whether the actions of JAST in this case could in fact amount to a fraud on a power. Accordingly I do not consider it is necessary to seek the parties submissions on this issue.

I consider the question is moot because the applicant’s have provided no evidence justifying a conclusion that JAST’s motive was improper. Inferences have apparently been drawn by the applicants as to JAST’s motives, and this may well be a logical assumption. However, in the absence of any evidence, I have no substantive basis to justify a conclusion that JAST’s opposition to Motion 2 was designed to frustrate any defence against their bid to adjust the lot entitlements, rather than some other conceivable motive, for example that the applicants defend the matter rather than the Body Corporate (as indicated in JAST’s submission) or a desire to avoid paying half the of the cost of any Body Corporate defence.

The applicants have not explained their claim that allowing Motion 2 to be lost would constitute a denial of natural justice. It is unclear whether they allege failure of natural justice in the decision of the Body Corporate not to pass Motion 2, or that the inability of the Body Corporate to oppose the CCT proceedings would amount to a denial of natural justice.

The concept of natural justice relates to the “...minimum standard of fairness to be applied in the adjudication of a dispute...”, although it applies in administrative decisions as well as judicial proceedings.[26] The requirement to apply natural justice includes the requirement for affected partied to be heard in respect of a decision, and the absence of bias.

The concept of natural justice is not normally considered in the context of a body corporate decision. I do not consider it is necessary in this context to conclusively determine whether a body corporate is bound by the principles of natural justice in making a decision under the legislation. However, to the extent that natural justice is required, the legislative requirements for body corporate decisions provide natural justice. The legislative procedures ensure all owners are given notice of a meeting, given the opportunity to vote, and that decisions represent the votes cast. No argument has been raised here that any owner was disenfranchised from the voting process or that the meeting process was flawed. Therefore there is no indication of a denial of natural justice in regard to the Body Corporate decision itself.

Alternatively, it may be that the applicants are suggesting that preventing the Body Corporate from opposing the CCT proceedings would deny the Body Corporate natural justice. The responsibility for ensuring that natural justice is afforded to affected parties in the CCT, including that affected parties have the opportunity to be heard, rests with the CCT. It would not be appropriate for me to intervene in the CCT processes in that regard.

However, I will proceed to consider whether it was reasonable for the Body Corporate to make a decision (or fail to make a decision) which would have the effect of denying the Body Corporate the opportunity to be represented in its own right in the CCT.

Although I have found no basis to determine that JAST was not entitled to vote as they did, the next question is whether the result was a reasonable decision for the Body Corporate as a whole. I consider that if I found that the failure of the Body Corporate to approve the motion was unreasonable in the circumstances, it would be open to me to deem the motion past. In this regard I note that Justice Keane has commented that:

“The statutory conferral of power upon the adjudicator to make an order which is "just and equitable in the circumstances" necessarily contemplates a decision by the adjudicator which may be "just and equitable in the circumstances" even though it overrides the exercise of voting rights by a scheme member.”[27]

Section 94(2) of the Act requires that the Body Corporate must act reasonably in performing its obligations, including in making or not making decisions. One of the secondary objects of the Act is to “balance the rights of individuals with the responsibility for self management as an inherent aspect of community titles schemes.” In light of this objective, it seems that a body corporate decision should only be overturned if it is unreasonable or unlawful. To do otherwise would seem to be an “unwarranted interference in the ability of the body corporate to make its own decisions, and to independently manage its affairs as contemplated in the secondary objects of the Act.”[28]

The question of whether the conduct in failing to pass the motion was reasonable is one of fact. It is not necessary to determine that the refusal to pass the motion was right or justifiable if the conclusions which led to the refusal might have been reached by a reasonable person. In a previous dispute[29] regarding refusal for consent to the transfer of management rights, the Specialist Adjudicator outlined the approach to reviewing the reasonableness of a body corporate:

Since there is little point in attempting to reduce those principles to some simple working proposition, I will bear them all in mind in making my adjudication.”

In this case the reasons for the Body Corporate’s refusal to pass the motion are one and the same as JAST’s reasons for opposing the motion. Ultimately, in the absence of any proper argument from the applicants as to why they assert the decision is unreasonable, I am not prepared to determine that it is inherently unreasonable for a body corporate to decide not to defend a legal proceeding. Objectively, I consider that it is open to a body corporate to decide not to defend legal proceedings and it is an inherent right of a body corporate to do so. Arguably it is a reasonable outcome for divided owners to represent their own interests in proceedings.

The applicants clearly have been granted the right to be joined as parties in the CCT proceedings and so their interests will be represented in the dispute. While I have no evidence either way, it may be that a factor in the application is the desire to reduce the applicants’ contribution to legal costs. If the applicants are represented in their own right in the CCT they will initially be responsible for all their own legal costs, subject to any orders in respect of costs if they are successful. Depending on the outcome, they may also be held responsible for some of JAST’s costs. However if the Body Corporate actively defends the case and engages legal representation, the Body Corporate will be responsible for its costs of which JAST will need to pay 50% (based on their lot entitlements). Moreover, if any costs are awarded in JAST’s favour, there would be no personal responsibility for the applicants if they are not joined as parties and JAST could be responsible for 50% of the costs awarded against the Body Corporate. If this were a factor, and I have no basis to determine that it is or is not, I am not convinced that the financial implications for the applicants are sufficient to warrant interference with the Body Corporate’s decision, even if that decision was motivated by the financial interests of JAST. Moreover, the CCT may have the capacity to take into consideration the contributions of the parties when making any costs order.

I note that only seven days notice of the EGM was given. Section 43 of the Standard Module requires at least 21 days notice of a meeting. There is no general capacity in the Standard Module for owners to ‘opt out’ of legislative requirements. Notwithstanding that, I acknowledge that there were significant time constraints, the meeting specifically agreed to the shortened notice (Motion 1), all owners were represented at the meeting, and there is no evidence that any disadvantage was suffered by the short notice period. The courts have recognised that the very detailed provisions of the regulations make it almost inevitable that from time to time there will be non-compliance with the legislation. In particular the courts have commented that non-compliance of an insubstantial nature should not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken in good faith.[30] Although there has been a substantial shortening of the notice period, the action was in good faith, has not been disputed and has apparently not disadvantaged any owner.

I agree with JAST that simply passing Motion 2, which (although the wording is confusing) seems to just allow for the CCT proceedings to be defended, is of limited assistance to the applicants on its own. Unless the Body Corporate were to authorise expenditure pursuant to Motion 3 and 4, the Body Corporate would be unable to expend funds on a defence, although it could of course be able to partially fulfil Motion 2 by representing itself in the CCT proceedings.

No vote has been taken on Motions 3 and 4, although JAST has made it clear that they would exercise their vote in the same way to defeat these motions. Therefore, the order sought by the applicants would be largely meaningless without some further order deeming Motion 3 and 4 to have also been passed or some other consequential order facilitating the engagement of legal representation. The applicants have not addressed this issue at all in its application or reply. Accordingly I could not contemplate an order in regarding legal representation without seeking further submissions on the question from the parties.

Moreover, I am not convinced that the apparent time constraints amount to ‘exceptional’ reasons to avoid obtaining two quotes for legal representation under section 104 of the Standard Module. Where a body corporate has been represented on a particular matter for some time, it would certainly be arguable that it is not appropriate to contemplate a change of legal adviser. However the fact that a solicitor has represented a body corporate on previous unrelated matters, and has given some preliminary advice on a new matter, does not necessarily mean it would be impractical to obtain alternative quotes. In addition, given that the Body Corporate knew of this matter in September 2007, and as it would be unlikely that any legal representation for the defence of the action could be achieved for less than the major spending limit of $1,500, it is not clear why there was insufficient time to obtain alternative quotes. While it may be that in fact there are sufficient reasons for only one quote being provided, the parties have not addressed this issue.

In general terms I do have a concern with moves to frustrate the attempts of a body corporate to defend itself in legal proceedings. However, conversely, I do not consider it is necessarily unreasonable of a body corporate to decide not to defend proceedings. In this case a fundamental difficulty arises in the division in the opinion of owners and determining how the interests of the Body Corporate (as opposed to the interest of the owners themselves) can best be represented. Accordingly, and given the very limited arguments presented by the applicants, I am simply not satisfied that there are sufficient grounds to grant the order sought. In particular, I am not satisfied that there is sufficient evidence to find that the refusal of the Body Corporate to pass Motion 2 at its EGM on 22 January 2008 was unreasonable.

In determining what is just and equitable in the circumstances, a consideration in my decision has been the knowledge that the applicants will retain the right, regardless of the failure of Motion 2, to have their interests represented in the CCT proceedings. The applicants can combine to engage their own legal representation and to obtain expert advice (such as a quantity surveyor’s report) to substantiate their apparent argument that lot entitlements in the scheme should not be equal.

[1] See sections 246 and 244 of the Act respectively
[2] Application number KL004-07
[3] Hablethwaite & Anor v Andrijevic & Ors [2005] QCA 336
[4] Jerrard JA at para 19
[5] Keane JA at para 31
[6] K.G. Tully & Anor v The Proprietors The Nelson Body Corporate [2000] QDC 031, para 11
[7] Section 276(2) of the Act
[8] Section 284(1) of the Act
[9] Jerrrard JA in Hablethwaite cited above at para 5
[10] See sections 227, 228, 276 and Schedule 5 of the Act

[11] Section 53 of the of the Commercial and Consumer Tribunal Act 2003 allows the CCT, of its own initiative or on application from a party, to include a person as a party to the proceeding for various reasons including that their interests are affected by the proceedings.

[12] Explanatory Notes for the Body Corporate and Community Management and Other Legislation Amendment Bill 2006, page 8

[13] ‘Proceeding’ is not defined, but is generally accepted to include legal action in a court or tribunal.

[14] The Body Corporate Manager has advised that the Committee, which was elected at the AGM on 8 November 2007, comprises the representatives of two owners (Desley Fraser and Gary Cockerill). Pursuant to section 9 and the definition of ‘required number’ of committee members in the Standard Module, a scheme with more than two lots must have a committee comprising at least three members. Accordingly, there could be questions over decisions of the current committee in this regard.

[15] Section 103 of the Standard Module; the relevant limit for committee spending is defined as $125 x 6 lots.
[16] Section 104 of the Standard Module; the relevant limit for major spending is defined as $250 x 6 lots

[17] Explanatory Notes for the Body Corporate and Community Management and Other Legislation Amendment Bill 2002, page 19

[18] DCJ Wilson in Dindas and Anor v Body Corporate for One Park Road CTS 2114 and Ors [2006] QDC 302, para 47
[19] DCJ Wilson in Dindas [2006] cited above, at para 39

[21] LGSS Pty Ltd v Egan [2002] NSWSC 1171, cited by Toohey D in One Park Road [2005] above

[22] Lord Parker in Vatcher v Paull [1915] AC 372 at 378, as cited in Houghton and Anor v Immer (No. 155) Pty Ltd Matter No Ca 40764/96 [1997] NSWSC 608 (4 Dec 1997)
[23] Handley JA in Houghton [1997] cited above.

[24] Handley JA in Houghton [1997] cited above. See also Young v Owners – Strata Plan No 3529 (2001) 54 NSWRL 60. It is noted that these cases have related to minority rights to use common property.
[25] Toohey D in One Park Road [2005] cited above
[26] CCH Macquarie Concise Dictionary of Modern Law, CCH Australia Limited, 1988
[27] In Hablethwaite cited above at para 33
[28] K Ryan in Massey Lodge [2004] QBCCMCmr 356 (15 July 2004)
[29] K Dorney QC in Sirocco Resort [2006] QBCCMCmr 426, paras 60 to 73

[30] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001 (Unreported).

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

25 Queens Road [2008] QBCCMCmr 255 (28 July 2008)