Acacia Lodge Hostel [2008] QBCCMCmr 315 (4 September 2008)

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

I hereby order as follows –
1. that the body corporate immediately instructs Simon Taylor, solicitor, of Ramsden Bow Lawyers to take no or no further action in respect of his purported engagement pursuant to a vote on a motion outside a committee meeting taken by the committee on 15th August 2008 pending final order;
2. that if the body corporate committee voted in favour of any motions at a vote taken outside a committee meeting on 3rd September 2008, notice of which was given to the Applicant Rita Commisso on 1st September 2008, then such motions as were carried shall not be acted upon or put into effect until after a committee meeting has been held at which the Applicant Rita Commisso might be heard in respect of those motions;
3. that the body corporate shall within seven days of the date of this order send notices to lot owners of contributions payable on notice of 14 days to raise by way of special contribution the sum of $2204 in order to meet the August account of Rita Commisso Enterprises Pty Ltd, a creditor of the scheme;

that the application in respect only of interim outcomes sought in all other respects is dismissed.

I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

This is an application dated 25th August 2008 and amended on 26th August 2008 by Rita Commisso (the Applicant) the owner of lots 1,4 and 5 in the scheme against the body corporate for the scheme (the Body Corporate) for an order as follows –

“Acacia Lodge Hostel” CTS 25755 is a community title scheme governed by the Body Corporate and Community Management Act 2008 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module). There are six lots in the scheme, three being owned by Dominic Surace and three by the Applicant.

The current Accommodation Module commenced on 30 August 2008, replacing the previous Accommodation Module that operated from July 1997 (Previous Module). A number of provisions of the Accommodation Module are the same, or substantially the same as provisions in the Previous Module despite the provisions having different section numbers. These provisions are generally to be dealt with as replacements of the similar provisions of the repealed legislation and anything done under the Previous Module will not generally be affected by the commencement of the present Accommodation Module (Accommodation Module sections 207-2146, section 20 Acts Interpretation Act.). Where relevant, references will be made to the Previous Model in parentheses after the current module reference.

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

(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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore sought submissions from Dominic Surace (Mr Surace), the chairperson, treasurer and secretary for the scheme, and solicitor Simon Taylor of Ramsden Bow Lawyers whom I considered to be a person who might be affected by the interim order sought.

Mr Surace, through lawyers Stacks Gray, was unable to provide submissions in the time period given, and sought an extension of time of 24 hours in which to make submissions. In the meantime, on 1st September 2008, Mr Surace gave notice to the Applicant that as the executive membership of the committee, he would be voting on three motions outside a committee meeting at 12 noon on 3rd September 2008. The Applicant was reminded by Mr Surace that neither she, nor her trading entity Rita Commisso Enterprises Pty Ltd (the company) were entitled to vote, but Mr Surace invited a response to the proposed motions at 9am on 2nd September 2008.

Mr Surace also gave notice on 1st September 2008 of a committee meeting to be held on 11th September 2008. Included on the agenda is the confirmation of the resolutions made outside a committee meeting on 15th August 2008 and 3rd September 2008, as well as consideration of the accounts, settling the budgets and convening the annual general meeting.

As the matter was escalating, I refused the Respondent any further time to make submissions, and called a teleconference of the parties’ respective solicitors at 10.30am on 3rd September 2008. The Respondent’s submissions had been received in part by the time of the teleconference but not perused in any detail by me. There was no submission made by Ramsden Bow lawyers.

The Applicant is the sole director of the company which acts under two contracts assigned to it in about 2002 to provide services as the caretaking service contractor, inclusive of letting rights. The company receives a monthly salary from the body corporate for caretaking services and following an audit of body corporate records in June 2008, it transpired that the company had never charged GST for its services.

On 7th July 2008, the body corporate manager Sergeant Strata wrote an email to Mr Surace in his role as the executive membership of the Respondent committee, saying that the auditor had advised that GST should have been charged. It relevantly stated –

“The Management salary will therefore increase by around $3000 and the possibility of back pay is another consideration....”

Mr Surace’s solicitors replied on 24th July 2008 inter alia, that Mr Surace required a committee meeting to be held to call for the appointment of a lawyer for the purpose of assessing the building manager’s remuneration. On 15th August 2008, Mr Surace gave the Applicant one hour’s notice through her solicitors, that he would be voting on a motion outside a committee meeting. The motion was that Simon Taylor of Ramsden Bow lawyers be “urgently and immediately” retained by the body corporate to act on its behalf in relation to the payment of GST to the company. Mr Surace stated that the Applicant was not entitled to vote on this motion as she had a conflict of interest. The Applicant replied by return that she could see no basis for the urgency of the matter, and reminded Mr Surace that the committee spending level was $750. She strongly objected to the voting on the motion outside a committee meeting and considered that if there was a conflict of interest on the GST issue, then both Mr Surace and she were affected by it, as lot owners, and that any third party who advised on the issue should be agreed upon.

Despite the Applicant’s protest, the resolution was purportedly passed by Mr Surace at the time given in the notice. Mr Surace advised that he was aware of the committee spending limit and would call an extraordinary general meeting to ratify the retainment of Mr Taylor. His solicitors stated that Mr Surace had no conflict of interest; that the matter was urgent; and that the Applicant was no longer permitted to correspond with the body corporate manager “in relation to the matter pertaining to the GST” but should make enquiries through Mr Taylor.

The Applicant says that the GST issue was not urgent or an emergency and that there was no need to vote on the motion outside a committee meeting and without any discussion or input from her. It is her view that the she was only given one hour’s notice about the motion so that the Respondent committee could “ deliberately avoid discussion on the matter.” She says that just over one hour’s notice is in contravention of the intention of the legislation. She further says that she had no opportunity to disclose a conflict of interest to the committee, if such a conflict existed.

The body corporate manager has advised the Applicant that there is only $859.98 in the scheme bank account, which means that there are insufficient funds to pay the company for its monthly salary in August 2008. The Applicant submits that expenditure on legal fees is ill advised.

The Applicant also says that Mr Surace, and the Respondent body corporate has failed to agree or attend to the annual budgets, and the budgets for the period 1st June 2008 to 31st May 2009 have not been determined or agreed. A draft budget was prepared by the body corporate manager and sent to Mr Surace in June 2008, advising that a special levy appeared necessary. On 14th August 2008 Mr Surace’s solicitors advised the body corporate manager that “ we are currently attending to a full review of the Budgets.” It reminded the body corporate manager that it was not authorised to pay any GST to the company.

The Applicant submits that if an interim order is not granted stopping Mr Taylor of Ramsden Bow from taking any or further action, and if a special levy of $10,000 is not raised, the body corporate will soon be in debt to suppliers, the company, the body corporate manager and possibly Mr Taylor. She is also concerned about the tenants who are elderly persons requiring certain basic health care, and the impact on them of a body corporate with no funds. She submits that there can be no hardship to the Respondent or Mr Surace that cannot be restored by a final order.

The appointment of an administrator has become necessary because of the increasingly intractable stance taken by Mr Surace. She cites the issues concerning the lack of notice to her about motions being voted on outside committee meetings; the refusal to allow her to vote either on the ground that she is a non-voting member of the committee or that she has a conflict of interest; the failure to respond meaningfully on the proposed budgets in the face of a lack of funds in the account; a previous dispute about her exclusive use of common property which was determined by a specialist adjudicator last year; and an issue about a council notice concerning the requirement for a compliant grease-trap which the Applicant has costed at up to approximately $14,000 and the Respondent has refused to acknowledge liability for payment of the grease trap.

During the teleconference Mr Suraces’s solicitor confirmed that the Applicant was a member of the committee, and held jointly with Mr Surace, the executive positions of chairperson, secretary and treasurer, pursuant to section 14(5) (previously 12(4)) Accommodation Module which provides for a situation where there are more than three lots and only two owners. However, Mr Surace is of the view that the Applicant is not able to vote on the committee because she is an associate of the caretaking service contractor, an entity which is automatically a non-voting member of the committee and ineligible to hold a voting position on the committee. Both parties agreed that this was a most unusual situation.

The Applicant’s solicitor is of the view that it is inequitable that the Applicant cannot vote on the committee and that the legislation could not have intended this bizarre result.

The voting outside a committee meeting on 15th August 2008
During the teleconference it emerged that Mr Surace was of the view that the engaging of lawyers to look into the GST issue was of the utmost urgency. His solicitor hinted that there was a concern about the body corporate manager and/or the Applicant removing records from the body corporate. There were tax implications about the non-payment of GST and the body corporate manager had withheld the audit between 23rd June 2008 and 7th August 2008 from Mr Surace and his advisers. This action had caused concern. Mr Surace’s solicitor did not wish to reveal his client’s case and objected to providing any information about his client’s suspicions or any evidence within his client’s knowledge, claiming legal professional privilege.

Mr Surace’s solicitor objected to the Applicant discussing the GST issue with the body corporate manager since the body corporate has engaged Mr Taylor to look into the matter.

The Applicant’s solicitor found such allegations extraordinary and unacceptable, saying that this vague argument was objectionable as it enabled Mr Surace to provide an excuse for the committee’s unreasonable action. The Applicant is of the view that the committee did not validly approve the engagement of Ramsden Bow lawyers.

Mr Surace’s solicitor says that Mr Taylor is an independent lawyer who will assess the GST issue. The Applicant’s solicitor says that an independent lawyer to look at the issue would be a good idea, but it is not in the nature of an emergency requiring a vote outside a committee meeting, and that Mr Taylor cannot be seen to be independent when the Applicant had no say in his engagement.

Mr Surace’s solicitor said that any inference that Mr Taylor was biased or prejudiced was objectionable.

The special levy of $10,000
At the teleconference it was agreed by both parties that the body corporate funds are low, and that funds will have to be raised. Mr Surace had given notice that on 3rd September 2008 at 12 noon he would be voting on 3 motions outside a committee meeting. These three motions, in brief, are as follows –

The Applicant’s solicitor said that the special levy sought by the Applicant of $10,000 is not intended as an interim levy to be set off against contributions.

He is also concerned about the period of the levy as the budgets for the financial year, which ends on 31st May and which should have been set by 31st August, have not yet been agreed. The main objection was again to the process adopted by Mr Surace – that of giving the Applicant very short notice of an intention to vote on motions outside a committee meeting, which were motions which could be considered at a properly convened committee meeting at which the Applicant should have power to vote. The Applicant disputes that these motions, like the motion to appoint Ramsden Bow on 15th August 2008, were of an urgent nature which required being voted on outside a committee meeting. The Applicant said that the committee was not acting reasonably in this regard.

Appointment of Sergeant Strata as an administrator until final order is made
Mr Surace’s solicitor said that the current engagement of Sergeant Strata as the body corporate manager terminates on 11th September 2008. Mr Surace has objections to Sergeant Strata being appointed as an administrator because of concerns about that company’s previous actions concerning the audit, and other matters that Mr Surace’s solicitor did not wish to reveal. He did not find Sergeant Strata to be independent.

Carolyn Sargeant of Sergeant Strata has said that she would be willing to act as Administrator for the scheme. The Applicant has not provided in her application information about the costs of administration.

As I indicated to the parties’ respective solicitors at the teleconference, there are issues in the application, and which may be raised in further submissions, which are of a complex nature and which cannot be given proper consideration at this interim order stage. An interim order is in the nature of an injunction or holding order, and is not meant to be a final resolution of a dispute. Further interim orders may be made before a final order is made.

Because I noted a reference in the application to the Applicant’s voting, I asked the Applicant’s solicitor at the teleconference to advise if the Applicant had ever voted at a committee meeting. A fax received after the teleconference states that the Applicant “has always had a vote on the committee throughout her six years at the premises.” The vote was exercised by telephone when the body corporate manager would ring each owner and discuss an issue and reach a decision “on what both owners said.” The Applicant believes that she has the same voting rights as Mr Surace and/or his predecessors.

This is a matter about which no doubt Mr Surace’s solicitors will wish to make submissions, and I am not at this stage going to make an order about the Applicant’s capacity to vote on the committee, or how if she does not have a vote on the committee, that situation might be remedied. It seems to me however that this inequality is the basis of the dispute between the parties, and the reason that the Applicant is seeking administration for this scheme. An administrator would act as the committee and perform all functions of the committee.

I am of the view that appointing an administrator is not generally a suitable order for an interim application, and said this at the teleconference. The nature of the appointment is a final solution for a scheme which has no functioning committee, and the appointment requires the administrator to perform specific tasks, against quoted fees for services. I will therefore not make an interim order than an administrator is appointed.

In respect of the outcome sought that pending the resolution of this Application, Ramsden Bow lawyers take no further action based on the purported resolution of the Committee passed on 15th August 2008, I agree with Mr Surace’s solicitor that I cannot make any enforceable order against Ramsden Bow lawyers, who are not a party to the application.

The Applicant’s argument is that section 54 (previously section 33) Accommodation Module whereby a committee might vote on a motion outside a committee meeting, relates only to emergency applications, and that there was no urgency or emergency in the appointment of an independent lawyer to look into the question of GST payments claimed by the company. The Respondent says that the matter was urgent and stated on the record : “notice unnecessary due to urgency.” The minute also states that the Applicant and the company are non-voting committee members. On 15th August 2008 when the one hour’s notice of the motion was given to the Applicant’s solicitors, Mr Surace told the Applicant she was not entitled to vote because she had a conflict of interest.

It is not disputed that the Applicant is the joint chairman, secretary and treasurer of the committee. The fact that she cannot vote in such capacity, if this is found to be the case, does not mean that she should not have input into important matters to be considered by the committee.

Since the practice of this scheme seems to have been to conduct committee business on the telephone, Mr Surace could easily have telephoned the Applicant about his concerns and the proposed motion. One hour’s notice of a motion, even where the recipient of the notice does not have the capacity to vote, is not reasonable in a situation where there is no danger to persons or property.

It is not clear to me at present what the emergency is that required a lawyer “immediately and urgently” to be engaged to investigate a dispute about GST. Since the spending limit of the committee was at 15th August 2008, only $750, and the nature of the investigation is likely to require some painstaking research on the part of the lawyer engaged, the matter is not likely to be disposed of in a hurry, or fixed “as an emergency.”

I am also of the view, for what it’s worth where the Applicant is unable to vote, that in a dispute about the caretaking service contractor’s retrospective claim for GST, that all lot owners would have an interest in the outcome.

Section 94 Act requires that the body corporate (which in particular means the committee of the body corporate)[1] must act reasonably in anything it does in the administration of the common property and to enforce the community management statement.

The Applicant has persuaded me that there is prima face a cause for concern about the way in which Ramsden Bow lawyers were engaged without consultation with her; without specification as to the remit of their engagement; and at a speed and in a manner in which in my view deliberately prevented her from taking part as an executive member of the committee. The Respondent body corporate must tell Simon Taylor of Ramsden Bow lawyers that he is not to undertake any or any further work pursuant to his engagement in reliance on this resolution of the committee. The instruction should come from Mr Surace.

In respect of the outcome that $10,000 is to be raised as a special levy, I am not satisfied that the Applicant has demonstrated that this sum is required to meet specific payments or debts. The body corporate is empowered by virtue of section 139(2) (previously section 93(2)) Accommodation Module to raise levies if a liability arises for which no provision has been made in the budget. There is no provision for keeping a lump sum in the kitty which is not allocated to particular expenses.[2] The administrative fund budget must contain estimates for the financial year for necessary and reasonable expenditure (Section 137 previously section 92(2) Accommodation Module) and a special levy is to raise funds for items of expenditure unforeseen in the budget.

However, I note that the Applicant has submitted to the body corporate the company monthly account for August in the sum of $2204.00 and will not be paid unless the body corporate is put in funds. I therefore order that the sum of $2204.00 is raised to meet this account. I note that the account for $2204 is not the monthly $2390 which the Applicant states that she is paid by the body corporate. I have no information as to the reason for the difference.

The legislation requires that 30 days notice is given for a contribution. (Section 140 Accommodation Module, previously section 94) Since the sum required is to meet the Applicant’s salary, I am making an order that the notice period is reduced to 14 days, and that the body corporate sends out the contribution notices within the next seven days of the date of this order. It is suggested that the body corporate manager sends out the contribution notices and assesses each lot’s contribution schedule lot entitlement in order to raise that sum.

Yesterday, the Respondent committee proposed to vote on a motion which raised an interim levy of $199.47 per contribution lot entitlement to cover a period of three months, off set against the budget. I note that contrarily, the sum is stated to be proposed for a period of two months, and that there is some query on the part of the Applicant as to whether such a levy may be made twice in one year. The Respondent claims it can raise two interim levies in a financial year if necessary.

I understand that the Applicant’s objection to this motion is that it will not raise enough for the body corporate funds, and again, she was not consulted about the motion, and given only two days notice of the motion.

I canvassed with Mr Surace’s solicitor at the teleconference that I had the power to order that any motions carried by his client on the afternoon of 3rd September might be deemed invalid or ordered not be put into effect until further order. There is no objection from the Applicant for Mr Surace to attend committee meetings by telephone. I also note that a committee meeting is to be held on 11th September 2008, co-incidentally the same date on which the body corporate manager’s contract expires.

Since that date is only one week away, and the Applicant has raised some question as to the validity of the period and the amount of the interim levy on which she is entitled to be heard, in addition to the interim order sought, I order that if any of the motions proposed were carried by the Respondent on 3rd September 2008 that they not be put into effect prior to discussion with the Applicant at the committee meeting. I am not invalidating the vote outside a committee meeting. The Respondent gave two days notice and invited discussion on the three motions with the Applicant, albeit in an arbitrary fashion. It is also clear that the body corporate needs to raise funds, and there is in principle no objection to funds being raised. The Applicant may of course bring further financial motions, and any other motions to the committee meeting for the reasonable consideration of the committee.

I advise that on any motion for the engagement of a professional assessor to look into the GST issue, it would be reasonable for the two lot owners in the scheme to seek to agree upon the person so engaged, and what his or her services should include and to what end. The fees or hourly rate of such a person should also be known at the time agreement is sought.

The situation of the parties in this scheme is most unusual, and because of that, the committee should demonstrate a high level of transparency and diligence to pass the test of “reasonability” required by section 94 Act.

I note that the annual general meeting may not be held for several weeks. If necessary for the financial operation of the body corporate, further interim orders may be sought for the raising of levies in order to pay specific invoices. It is hoped that the parties will be able to agree a budget at the annual general meeting. I also note that the annual general meeting will be held out of time. The parties might seek in respect of further submissions made that any final order includes permission to hold an annual general meeting out of time.

This matter will now be referred back to the Commissioner under section 279(4)Act.

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

This is an application dated 19th September 2008 and amended on 23rd September 2008 by Rita Commisso (the Applicant) the owner of lots 1, 4 and 5 in the scheme against the body corporate for the scheme (the Body Corporate) for a further interim order and a further final order in the matter of an application lodged in this Office on 25th August 2008 and amended on 26th August 2008. The Applicant sought orders as follows -

By this application, the Applicant seeks a further final order as follows –
3. that the applicant be declared a valid voting member of the committee, and entitled to vote on motions to be decided by the committee

The further interim order sought by the Applicant is that pending the resolution of this application that the Applicant be declared a valid voting member of the committee, and be entitled to vote on motions to be decided by the committee.

(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

(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.

Applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.
Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates”.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore sought submissions on the further interim order sought, from the committee of the body corporate, and from Mr Surace.

The Applicant is the sole director of Rita Commisso Enterprises Pty Ltd, a company which acts under two contracts assigned to it in about 2002 to provide services to the scheme as the caretaking service contractor, inclusive of letting rights. Since she and Mr Surace are the only two lot owners in the scheme, the Applicant shares the executive positions on the committee of chairperson, treasurer and secretary with Mr Surace, by virtue of section 14(5) Accommodation Module.

However, it is Mr Surace’s view, confirmed in writing by his solicitors on 10th September 2008, that because the Applicant is “an associate” of a service contractor and letting agent, she is unable to hold a voting position on the committee as set out at section 11(2)(b) Accommodation Module. They say that the Applicant “has always been aware that she is not entitled to be a voting member of the committee and has not been a voting member of the committee since entering into the service contract with the scheme.” Mr Surace is of the view that the Applicant is a non-voting member of the committee.

The Applicant says that section 14(5) Accommodation Module and section 11(2)(b) Accommodation Module are at odds, and she claims a right to vote pursuant to her role as an executive member of the committee by virtue of section 14(5).

Further, the Applicant says that she has “always had an equal say on committee issues with the other owner of lots.” In support, she provides a letter from Sargeant Strata, the body corporate manager for the scheme. Carolyn Sargeant of that firm says that in her knowledge both the Applicant and Mr Surace have voted at general meetings since purchasing their lots, the Applicant in 2003 and Mr Surace in 2004. However, there have been no formal committee meetings since 2004. If a committee meeting was convened and Mr Surace was not in attendance, but the Applicant was present, then “less formal measures were introduced to the satisfaction of both owners.” Up until the resolution on voting outside a committee meeting proposed on 15th August 2008, purporting to be resolved by the vote of only one owner, no other opportunities have arisen for committee voting.

On 11th September 2008, both owners and their respective lawyers attended a committee meeting by telephone but there were no contentious issues and “there was no need to determine whether or not the Applicant was entitled to vote.”

The Applicant says that “strict reliance on section 11.....creates a situation that is unfair, unreasonable and unjust” for her. The Applicant quotes as legal authority for the view that she should be able to vote at committee meetings, section 15AA Acts Interpretation Act 1901, which points to the preference for construing legislation to promote the purpose or object underlying an act; and the primary and secondary objects of the Act where flexibility and informality can be seen to be the cornerstones of the legislation allowing lot-owners to be responsible for managing a scheme.
The Applicant adds that section 14(5) Accommodation Module exits in order “to safeguard against a situation where one lot owner in a scheme of only two owners, is able to control the voting of the committee.” She invites an order made in just and equitable terms under section 276 Act.

The Applicant says that until the teleconference held in this matter, she was unaware that Mr Surace considered her to be a non-voting member of the committee because she has always exercised her vote on the committee. Her vote at a general meeting can be over-ridden by a poll vote called by Mr Surace, since he has a greater contribution schedule lot entitlement than she does, and it is therefore imperative that she has a vote at committee level being the owner of one half the lots in the scheme.

In respect of the argument about conflict of interest in voting as a committee member, she says that she is not “so conflicted” by being the caretaking service contractor for the scheme that she is unable to vote in the manner which is best for the body corporate, and that Mr Surace, as the only other member of the body corporate, has an equal conflict of interest in committee matters.

She says: “It is likely that there will be a committee meeting/s prior to the making of the final order” and that if the interim order is not granted, she will be prevented from exercising a vote at any committee meeting.

Mr Surace made a submission on the further interim application on 7th October 2008 through his lawyers Stacks Gray.

The lawyers address the legal arguments and point out that “just and equitable” has been held to mean “according to law”, and that there is no room for an adjudicator to find some just and equitable resolution to a dispute which is outside the legislation. Further they say that an “executive member” is not defined in the legislation in terms of the voting rights of such members, whilst a caretaking service contractor is stated to be automatically, a non-voting member of the committee.

Section 11 Accommodation Module states that a letting agent, resident manager, or an associate is not able to be a voting member of the committee. Section 14 Accommodation Module has not taken the step of stating that where two owners hold the executive committee positions that they must also be able to vote. Further, section 52(5) “clarifies by implication that an executive members position is separate from a voting entitlement.”

They say that this view is consistent with the explanatory notes for the Accommodation Module, and that looking at the general objects of the Act does not point to any conflict or ambiguity between section 11 and section 14.

On the matter of conflict of interest, they say that committee members must act in the best interests of the scheme and that the Applicant’s contracts will place her “in the majority of times” in a position of conflict, although whether a conflict will arise will depend on “the individual legal and factual issues” at the time.

In this matter the Applicant seeks a declaration that pending the resolution of her application lodged at this Office on 25th August 2008, that she be declared to be a valid voting member of the committee, and be entitled to vote on motions to be decided by the committee.

I have read and considered the submissions and legal arguments put by both owners in this scheme.

However, the Applicant has not demonstrated to me that this is a matter that requires an urgent holding order or that there is a current dispute between the Applicant and the body corporate. Whilst I understand that there is a dispute between the Applicant and Mr Surace as to the voting status of the Applicant and the interpretation of the legislation, there is no indication that another committee meeting has been convened, or that she has been disadvantaged. The Applicant says that “it is likely” that there will be a committee meeting or meetings prior to the making of the final order.

If there is such a committee meeting, then the committee must act reasonably. Section 94 Act requires the body corporate to carry out its functions and to administer the common property and body corporate assets for the benefit of the owners of lots, and to act reasonably in anything it does in the performance of those functions and the administration of the property.

It seems to me that it is not disputed that the committee consists of both the Applicant and Mr Surace who hold all three executive positions between them. I emphasise this point since in Mr Surace’s submission, which is made on his own behalf and not on behalf of the body corporate, at p.3 under the heading of “Conflict of Interest”, he says: “ ... If the applicant was also a committee member the applicant would be able to pledge the credit of the body corporate with arguable immunity.” However, the rest of his submission, and documents provided by the Applicant, particularly the letter from Stacks Gray dated 10th September 2008 to Hynes Lawyers, clearly demonstrates that he is aware that the Applicant is a committee member.

The Applicant, as co-chairperson, secretary, and treasurer is able to convene committee meetings if she wishes.

As I stated in the interim order, the level of transparency and accountability required to demonstrate that the committee has acted reasonably may be higher in this scheme where the circumstances are admittedly unusual. The Applicant’s remedy if the committee does not act reasonably, is to make an application to this Office.

In the circumstances where the committee fails to act reasonably, or there is a pattern of unreasonable behaviour or behaviour that breaches the code of conduct for committee voting members (Schedule 1A Act), then an adjudicator may find that the appointment of an administrator is warranted to manage the scheme for a given period of time, often a period of 12 months, which can be extended by further order.[3] An administrator might be given all the powers of the committee and would be paid from body corporate funds.

Whilst both submissions refer to the higher contribution schedule lot entitlements of Mr Surace, and that he can carry a motion by seeking a poll vote at a general meeting, that is not a dispute which the Applicant has with the body corporate, and an adjudicator has no power to disturb the contribution schedule lot entitlements of owners. However, if the vote is exercised unreasonably, or unfairly, then that would be a legitimate ground for dispute.

The third final outcome sought, that the Applicant be declared a valid voting member of the committee, and entitled to vote on motions to be decided by the committee will be considered in the final orders to be made in this application.

[1] Dindas & Anor –v- Body Corporate for One Park Road CTS 2114 & Ors [2006] QDC para 35
[2] St Tropez [2007] QBCCMCmr 445

[3] Surfers Palms North - [2008] QBCCMCmr 65 (13 March 2008) Specialist Adjudication Number: 0343A-2007

Number of Scheme:	25755
Name of Scheme:	Acacia Lodge Hostel
Address of Scheme:	40 - 42 Imperial Parade LABRADOR QLD 4215

Number of Scheme:	25755
Name of Scheme:	Acacia Lodge Hostel
Address of Scheme:	40 - 42 Imperial Parade LABRADOR QLD 4215

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Acacia Lodge Hostel [2008] QBCCMCmr 315 (4 September 2008)