Genesis [2008] QBCCMCmr 417 (6 November 2008)

Number of Scheme:	10149
Name of Scheme:	Genesis
Address of Scheme:	26 Markwell Avenue SURFERS PARADISE QLD 4217

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

I hereby order that the body corporate shall not act upon or put into effect Motion 14 on the agenda of the annual general meeting to be held on 7th November 2008, if the substantive motion is carried.

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 5th November 2008 by Leslie Chapman, (the Applicant) co-owner of Lot 18, against the body corporate for Genesis (the body corporate) for an order that Motion 14 to be put to the annual general meeting of the scheme on 7th November 2008 should be “ruled invalid and the votes discounted.”

The Applicant also seeks an interim order that the body corporate should not take any action or implement Motion 14 pending determination of the dispute.

“Genesis” CTS 10149 is a community title scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module). There are 51 lots in the scheme created under a Building Unit Plan of subdivision.

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.

In this matter, the Applicant filed details of his grounds by fax at 12.29pm on 6th November 2008. The body corporate, through the office of the body corporate manager Complete Body Corporate Services’ and its representative Kim Elliott, (Ms Elliott) as detailed on the application, could not be contacted by telephone by this Office. A copy of the application including the grounds was faxed to the chairperson for the scheme, Charlie Pisasale, (Mr Pisasale) at 1.16pm on 6th November 2008, as a courtesy. No submission was sought from the committee owing to the urgency of the situation, although the committee was free to respond to the application, if it could do so in any meaningful way.

The Applicant says that he is currently secretary of the scheme. He is concerned that Motion 14, which is a motion for the engagement of a body corporate manager for the scheme, and a motion with alternatives, offering the choice of three body corporate managers, sets out the alternatives in a way which is biased in favour of the current body corporate manager Complete Body Corporate Services, and lacks a comparable platform on which lot owners can judge the three alternatives.

He says the alternatives as presented are “not equitable.” Alternative A (for Complete Body Corporate Services) shows no “estimated additional fees” whereas Alternatives B and C, for SSKB and Archers Body Corporate (Archers) respectively, have “estimated additional fees at totally unreasonable figures.” He says that the bias towards alternative A precludes any fair outcome.

The Applicant provides a copy of email correspondence dated 3rd November 2008 between himself and Peter Accornero (Mr Accornero) and dated 22nd October 2008 between Mr Accornero and Archers, voicing concerns about the lay-out of the motion and the accuracy of the tender comparisons provided in the motion. It appears from material in the application that the comparison of figures was calculated by Ms Elliott. The Applicant points out in an email sent on 1st October 2008 to Mr Pisasale, Mr Accornero, Jeannette Magifesta, Robert Zocaro, Doug Hull and “ staigers@bigpond.com” ( whom I take to be committee members) that –

“it was not approved for Kim to do any comparison on figures from the other firms and in doing so states CBCS as $5,760 not $6,400 as in the copy of contract sent out.”
He says he received no reply to this email.

Alternative A (Complete Body Corporate Services) shows a “ base professional fee” of $5,760 and “estimated disbursements” of $4,967, totalling $10,727 per annum as an estimate. Alternative B (SSKB) is shown as “base professional fee” of $6,120, “disbursements flat rate” at $3,519” and “estimated additional fees” of $10,486 giving an estimated total cost per annum of $20,125. Alternative C (Archers) is shown as “base professional fee” of $5,865, “disbursements at fixed amount” at $3,570 and “estimated additional fees” at $5,960 making an estimated total of $15,395.

The Applicant says that he believes that all three tenders should have been submitted “on the same grounds.” In addition he says he was not given a copy of the AGM agenda before it was distributed, and the motions as set out were not approved by the committee. He also points out an error in the CTS number in relation to the voting papers for committee members.

Motion 14 proposes that a body corporate manager is engaged for one year. It appears that a copy of each firm’s respective proposed agreement was attached to the notice of meeting, since each alternative refers to the “agreement attached”, or the “agreement circulated to all members with the notice of this meeting.”

Section 114 Standard Module requires that when a body corporate is engaging a body corporate manager, material is forwarded to lot owners showing “the terms of the engagement” including when the term is to start and end; and any right or option to renew or extend the agreement. The agreement itself must state the basis for working out payment for the services to be provided. (section 116(20(c) Standard Module).

It might be said that intelligent lot owners can decide on looking at the draft agreements how much they are likely to have to pay for the services of a body corporate manager. It might also be said that lot owners will vote on the performance of the body corporate manager and what they expect to get for their money, and that the lowest cost might not be indicative of the best service. Further, lot owners will be able to see that the three alternatives are not presented on the same footing. Perhaps Complete Body Corporate Services do not have “additional fees.”

The questions raised by the Applicant might be satisfactorily answered at the meeting by representatives of the managers proposed. This would not assist owners who are not attending the AGM however.

Whilst I am critical of the way in which the Applicant has left his application to the eleventh hour, when clearly he had concerns at the latest by 1st October 2008, he has demonstrated that there is a marked difference in the setting out of the remuneration for the three proposed managers, such as could influence a vote; and that the current body corporate manager has drafted the motion which shows a distinct cost advantage offered by her company. This is a reasonable ground for an interim order to be made.

The committee is entitled to try to persuade lot owners to vote for the committee’s preferred body corporate manager, but such canvassing must be fair and transparent. However, it is not necessarily the case that inaccurate, misleading or even unfair material will result in the motion being invalidated. That is a matter which depends on the submissions of the body corporate committee and lot owners.

In order to preserve the status quo, I order that if Motion 14 is carried as to the substantive motion, whatever the result of the alternative vote, it should not be put into effect until such time as this application is determined or withdrawn. In the event that this leaves the body corporate without a body corporate manager, this matter may be expedited in respect of the time periods given for submissions and reply.

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

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Genesis [2008] QBCCMCmr 417 (6 November 2008)