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Glades Easthill North [2008] QBCCMCmr 298 (25 August 2008)

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Glades Easthill North [2008] QBCCMCmr 298 (25 August 2008)

Last Updated: 19 September 2008

REFERENCE: 0444-2008


ORDER OF AN ADJUDICATOR


MADE UNDER PART 9 OF CHAPTER 6


BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997


Number of Scheme:
32506
Name of Scheme:
Glades Easthill North
Address of Scheme:
Easthill Drive ROBINA QLD 4226

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

Karl Eliasson, a co-owner of lot 5


I hereby order that the body corporate for Glades Easthill North Community Titles Scheme 32506 is deemed to have authorised Karl Eliasson, a co-owner of lot 5, to erect the existing shade sails on the common property for the scheme at the rear of lot 5, for the benefit of lot 5, under section 113 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 and the owners of lot 5 must maintain the shade sails and the associated infrastructure in good condition.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0444-2008


“Glades Easthill North” CTS 32506


Application


This application is by Karl Eric Robert Eliasson, a co-owner of lot 5 (applicant), against the body corporate, seeking final orders in the following terms:


  1. That the result of motion 29 at the 2008 AGM be dismissed.
  2. That the shade sails at lot 5 be approved as erected.

On 12 June 2008 I issued the following interim order in respect of this matter:


I hereby order that, pending a final determination of this application, the body corporate for Glades Easthill North community titles scheme 32506 (including its committee or any member of its committee) must not take any action to remove the shade sails in respect of lot 5.


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the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is the earlier).


Motion 29 was recorded as follows in the minutes of the AGM of 8 May 2008:


MOTION NO. 29
LOT 5 SHADE SAILS – ATTACHMENT F

Options A and B, reading as follows, were put to the meeting and were declared Lost by Special Resolution:

Option A Approve the Shade Sails


That the shade sails as erected at Lot 5 (as approved by last two years annual general meetings), be approved by special resolution.”


AND


Option B Require the Removal of the Shade Sails


That the Body Corporate requires the owners of Lot 5 to remove within 30 days of the date of this meeting all portions of the shade sail structure in the exclusive use area of Common Property assigned to Lot 5.


That the shade sails as erected at Lot 5 (as approved by last two years annual general meetings) be approved by special resolution.”


VOTE: A: 30 B: 16 ABSTAIN: 4

POLL VOTE A: 2258 B: 1145 ABSTAIN: 288


Background


The applicant provided the following information by way of background:


The applicant’s grounds are to the following effect:


Jurisdiction


“Glades Easthill North” is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module). The scheme was registered as a building format plan of subdivision on 28 April 2004.


This is a dispute between an owner and the body corporate that falls within the dispute resolutions provisions of the Act (see ss.226, 227 & 228).


Procedural matters


On 30 June 2008, a copy of the application was provided to the body corporate care of Mr Attillio Danieletto of Challenge Strata Management (the Body Corporate Manager) for distribution to the owner/s of each lot (excluding the applicant) and the committee, with an invitation to respond to the matters raised in the application.


A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.


Submissions


A total of 37 submissions were received in response to the application for final orders. Of these 37 submissions, 33 were supportive of the applicant and the making of the orders sought. Several of these owners made specific comment to the following effect:


Lot 6

Lot 10

Lot 38

Lot 35

Lot 60

Lot 25

Secretary and owner of lot 74

Two of the 37 submissions made were against the applicant and the orders sought being made. They made specific submission to the following effect:


Lot 45

Lots 28 & 48 (Huddy & Butlin)


The applicant claims that he was prejudiced by an earlier ruling of the Commission


The applicant claims “... a vote of 31 in favour with 16 against which in effect gave me a 2/3 majority but an overall loss.”


The applicant claims that a typing error in the motion could have misled those who voted and caused them to vote against his motion.


The applicant claims that the explanatory text to their AGM motion contains an “intentional error” in that they claimed the applicant had erected the shade sails without first seeking approval.


The applicant claims that the case of an awning at lot 21 provides him with a precedent.


They state that the balance of the application contains a series of intemperate defamatory statements that attempt to impugn their characters and are irrelevant to the real issue, which is that the applicant has failed to obtain either prior or retrospective approval for his shade sails, even after he has been given opportunities to put it to the vote at two successive AGMs, as ordered by two adjudicators (0312A-2006 and 0512-2007).


Mr Huddy and Butlin go on to state that they are seriously concerned that many parts of the application contain statements that are false and misleading. They itemise each account and provide their version of events, supported in each case by relevant documentation. They point out that:


They conclude by seeking an order that the illegal shade sails be removed and note that since the original small sail sizes and positions were deemed approved by the adjudicator in 312A-2006, the applicant would have the option of utilising that approval and erecting sails which accord with the original specified sizes and positions.


I regarded two of the submissions received as neutral.


Committee
A facsimile was received from the body corporate manager notifying me of a resolution of a committee meeting on 16 July 2008 that “Because members of the committee are divided on whether to support or oppose the application, the committee will not lodge a formal submission in response to the application but will leave it to individual members to make their own submissions.”


Lot 44

The applicant did not exercise his right to inspect the submissions or reply to them.


Determination


It has previously been determined that the shade sails the subject of this application required the approval of the body corporate in general meeting by special resolution[1]. The applicant attempted to gain that approval at the AGM held on 8 May 2008, after a motion passed at the 2007 AGM which purported to grant approval was declared void and it was suggested that the matter be considered again at the next general meeting. The relevant motion considered at the 2008 AGM was motion 29, recorded in the minutes of the meeting as detailed above. It is apparent from the results of voting on motion 29, that 30 owners voted to approve the shade sails as currently erected. I am not convinced that the 16 votes recorded for option B, to remove the shade sails, is as robust, as I concur with the applicant that the inclusion of the extra text could have confused owners and led owners who in fact agreed that the shade sails should be approved, to vote for their removal instead. Having said this, I acknowledge that none of the owners making submissions claims to have been misled, and that the results of voting on the same issue at the 2007 AGM were very similar (30 votes for, 15 against and 3 abstentions for Motion 14 which sought to approve the shade sails; 16 votes for, 29 against and 3 abstentions for Motion 18 which sought to have the owners of lot 5 remove the shade sails), although both motions considered at the 2007 AGM were subsequently ruled invalid.


In any event, the applicant appears to concede that the motion which most recently sought approval for the shade sails as erected failed, because, despite his claims to the contrary, one of the prerequisites for the passing of a motion by special resolution was not met, although only by a narrow margin.


Section 106 of the Act specifies the prerequisites for the passing of a motion by special resolution as follows:


106 Counting of votes for special resolution

(1) This section applies if a motion is to be decided by special resolution at a general meeting of the body corporate for a community titles scheme.

(2) One vote only may be exercised for each lot included in the scheme, whether personally, by proxy or in writing.

(3) The motion is passed by special resolution only if—

(a) for a meeting notice of which is given—

(i) before the commencement of subparagraph (ii) — the votes counted for the motion are more than the votes counted against the motion; or

(ii) after the commencement of this subparagraph—at least two-thirds of the votes cast are in favour of the motion; and

(b) the number of votes counted against the motion are not more than 25% of the number of lots included in the scheme; and

(c) the total of the contribution schedule lot entitlements for the lots for which votes are counted against the motion is not more than 25% of the total of the contribution schedule lot entitlements for all lots included in the scheme.


In this scheme there are 80 lots and contribution schedule lot entitlements of 5,851. In this case there are three tests as to whether a motion has passed by special resolution. Firstly, two-thirds of the votes cast (which excludes abstentions[2]) must be in favour of the motion. It is this first limb of the test that failed to be satisfied, with 65.21% of the votes being in favour of the motion, rather than 66.66%. The applicant in fact needed another two votes for Option A in order to successfully gain approval by special resolution.


The second test is that the votes against the motion are not more than 20 lots (that is 25% of the total number of lots). This requirement was met, with 16 votes against the motion (for Option B). The third test is that the votes against the motion not represent more than 1,464 contribution lot entitlements (that is 25% of all entitlements). The lot entitlements for the 16 minuted votes against the motion totals 1,145, satisfying the third test.


In these circumstances, the applicant appears to challenge the failure of the body corporate to approve the improvements. The body corporate has a statutory obligation to act reasonably in administering the common property and body corporate assets for the benefit of owners and enforcing the community management statement (including any by-laws).[3] The applicant, in effect, argues that the opposition to motion 29, Option A, was unreasonable. In accordance with Schedule 5 of the Act an Adjudicator may agree to a proposal by the owner of a lot to make improvements on or changes to common property, if satisfied that the body corporate’s decision about the proposal is unreasonable.


The sole issue for determination in this dispute then becomes whether the 16 dissenting voters (those who voted for Option B) unreasonably voted “no” to the motion put forward by the applicant.


If satisfied the body corporate’s decision about a proposal by the owner of a lot to make improvements on common property is an unreasonable decision, an adjudicator does have power to ratify the proposal on stated terms.[4] However, such a discretionary power is not exercised lightly.[5]


The question for me to determine is whether the 16 votes that prevented Option A of Motion 29 from passing constituted an "unreasonable" decision of the body corporate.


The appropriate test is to determine whether it is just and equitable to override the opposition because the opposition was unreasonable when viewed objectively. I do not consider there is any particular formula or test for reasonableness and note that the High Court has supported a view that a paraphrase can place an unwarranted gloss on relatively plain words applying a test of reasonableness.[6] The preferred approach is to determine objectively whether the votes against Option A constitute opposition that in the circumstances is unreasonable.


In determining whether votes against a motion constitute opposition that in the circumstances is unreasonable it is necessary to consider all the material facts. What is material will vary from case to case but typically the requirement for an adjudicator to make a just and equitable decision involves some balancing of the interests of the majority and minority and raises questions of fairness.[7] It is relevant to consider if any minority opposing the proposal will suffer any real prejudice if their objection is overruled.


While 16 votes were recorded against the relevant motion, only two submissions were received in opposition to this application, representing three lot owners. All owners have been given an opportunity to make a submission in respect of this application. The body corporate manager confirmed on 3 July 2008 that copies of relevant material had been distributed to owners. I have no hesitation in overruling opposition on the basis it is unreasonable where no submission has been provided to justify the opposition.


Even if the opposition of the three owners who made submission opposing the applicant is regarded as reasonable, it constitutes insufficient opposition in light of the 33 submissions received in support of the applicant. Based on the submissions received in response to this application, 33 owners approve of the shade sails and only 3, possibly 4, disapprove.


I have carefully read and considered the competing submissions received in respect of this dispute. In light of those submissions and the information provided and being mindful of the fact that decisions made in general meetings ought not to be lightly set aside, I consider that the opposition to the shade sails as erected was unreasonable and I order accordingly.


In my view, the dissenting voters, in order to demonstrate that their dissent was reasonable, would have to, firstly, make submission in response to this application and secondly, show that the shade sails in some way interfered with their use of their lots or the common property. Only two submissions, possibly three at most, (if you regard the submission by the owner of lot 44 as opposing the applicant), are against the shade sails being approved. Further, of the reasons put forward as reasons for their dissent, none evidence any interference with their use of their lot or the common property, except perhaps that of the owner of lot 44, who was willing to compromise in any event. I further note that had all owners who made submissions in support of the applicant voted as such at the 2008 AGM, Motion 29 would have been passed by special resolution. I note further that, based on the results of voting on Motion 29 at the 2008 AGM, there is not sufficient support amongst owners to have the sails removed.


Given the submissions made in response to this application, the fact that this issue has been considered at two previous AGM’s without a definitive result, and that owners are most desirous of having the issue resolved once and for all, I think it just and equitable to make an order deeming the shade sails erected on the common property at the rear of lot 5 to have been approved by the body corporate as if they had been approved by special resolution of the body corporate


The applicant should be aware of the requirements of section 130 of the Accommodation Module in relation to giving the body corporate notification of the nature and value of the improvements if the premium for reinstatement insurance required to be taken out is likely to increase. (Appropriate enquiries with the body corporate’s insurer should be made in this regard.) In the event that the premium does, in fact, increase because of the existence of the improvements, the body corporate may recover the increase in premium from the applicant[8]. In addition, details of the improvements must be recorded in the Register of Authorisations Affecting the Common Property in accordance with section 145(3) and (4) of the Accommodation Module. The applicant will be responsible for maintaining the improvements in good condition.



[1] Glades Easthill North [2006] QBCCMCmr 469 (28 August 2006)
[2] See Windsor Shores at Seaforth [2007] QBCCMCmr 451 (30 July 2007) for an explanation of this issue.
[3] See sections 94 & 152, Act
[4] See clause 17 of schedule 5 to the Act
[5] 19th Avenue [2004] QBCCMCmr 529 (3 November 2004), p4
[6] McKinnon v Treasury [2006] HCA 45 per Hayne J at paragraph 61. Waters v Public Transport Corporation (1991) 173 CLR 349.
[7] Points North  [2004] QBCCMCmr 423 (2 September 2004), CJ Carrigan, at paragraph 44. Ocean Plaza Apartments  [2004] QBCCMCmr 452 (23 September 2004), CJ Carrigan, at paragraph 26.
[8] See s 129 Accommodation Module


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