Paradise Sands, Port Douglas [2008] QBCCMCmr 42 (6 February 2008)

Last Updated: 1 March 2008

REFERENCE: 1001-2007

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	17434
Name of Scheme:	Paradise Sands, Port Douglas
Address of Scheme:	Corner Mahogany and Port Douglas Road PORT DOUGLAS QLD 4877

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

Allan Hall, Robert Griffin & Sheridan Schweitzer, the Owners of lots 7,11 & 18.

I hereby order that the Secretary is to organise a vote outside of a committee meeting for the purpose of electing a committee member to occupy the position of Chairperson until the date of the next annual general meeting. I further order that within 7 days of the date of receipt of this order, the Secretary must invite committee members to submit motions including nominations for election of a Chairperson. I further order that after the expiration of the period of 7 days from the date when members are invited to submit motions, the Secretary must give all committee members written notice of all motions submitted and invite voting members of the committee to vote upon the motions within a further 7 day period. I further order that unless otherwise provided for in this order, the vote outside a committee meeting shall be governed by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1001-2007

“Paradise Sands, Port Douglas” CTS 17434

THE SCHEME

Paradise Sands, Port Douglas is a Community Titles scheme regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module). It consists of 53 lots registered on a Building Unit Plan of subdivision.

APPLICATION

At this point in time I am considering the Applicants’ request for the following interim orders:
To stop Andrew Johnson acting as interim Chairperson until conciliation is held;
To appoint the Secretary as interim Chairman/ Secretary until conciliation can be held.
BACKGROUND

The applicants state that over the last 12 months, committee members have been involved in a number of disputes between themselves causing the body corporate manager to remind committee members of their obligations under the code of conduct.

The majority of committee members reside in Melbourne and have close ties with the previous chairperson who they asked to assist with some body corporate matters (caretakers duties/ remuneration) after his resignation as chairperson. The applicants believe that the previous chairperson is trying to control the body corporate committee notwithstanding that he sold his lot in October 2007.

Following the resignation of the chairperson, it was suggested that the Secretary take on the role of Chairperson/ secretary until the next AGM and a flying committee minute was prepared in order to effect the appointment. Owing to a lack of response from Victorian committee members, the body corporate manager suggested that a meeting be called. A meeting was scheduled for 26 November and a notice of meeting was issued. However, a new Chairperson was appointed at the “informal meeting” held in Melbourne on 20 November.

On that date, the 4 Victorian committee members met with each other and also the previous Chairperson. It is claimed that although they told the Queensland committee members that the purpose of the meeting was to discuss the caretakers duties/ remuneration matters, it has come to light that those present decided to resolve other committee matters. The applicants have raised the following concerns:

• The Secretary did not call a formal meeting to discuss the other items;
• No notices of meeting were issued;
• There was no agenda for the meeting;
• The meeting was held more than 15kms from the scheme and the Queensland based committee members did not have an opportunity to object to the location;
• There was no opportunity for other lot owners to attend the meeting;
• Minutes of the meeting were not recorded.
  

While the Victorian members argue that appointment of a new Chairperson was an emergency within the meaning of section 33 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997, this is disputed by the applicants who point out that they were previously provided with 2 opportunities to vote on this matter but failed to do so.

The applicants state that the Victorian members are abusing their majority position on the committee, should be required to adhere to the code of conduct and act in a democratic manner.
Concerns have also been raised regarding the “poor relationship” between the resident manager/ caretaker and the appointee, Mr Johnson

SUBMISSIONS

Pursuant to section 243 of the Act, submissions were sought from the body corporate committee and the body corporate manager.

The body corporate manager made the following submissions:

• In October 2007 the then chairperson advised that his unit was to be sold on 26 October. The body corporate manager explained to the secretary that the committee would need to appoint an interim chairperson within 1 month or otherwise an EGM would need to be called;
• On 15 October, Mr Hall, a committee member, provided her with a motion for appointment of Mr Griffin, the Secretary, as Chairperson by way of a resolution outside a committee meeting. The agenda was circulated and a vote taken with a result of 2 votes for and 2 votes against, with the result that the motion was lost;
• On 19 November Mr Hall provided her with another motion for appointment of Mr Griffin as Chairperson by way of a resolution outside a committee meeting, and voting papers were distributed to committee members on the same day, to be voted upon by 26 November;
• On 21 November she received an email from Mr Marino, the Treasurer, advising that the committee had appointed Mr Andrew Johnson as interim Chairperson until the date of the next AGM;
• On 23 November she advised committee members of her concerns regarding the validity of the above appointment due to non-compliance with statutory requirements including a failure to notify 2 voting committee members and a failure to notify 2 non-voting committee members;
• On 6 December a motion outside of committee meeting for the appointment of Mr Griffin as Chairperson was again lost with 1 vote for and 1 vote against;
• In spite of advice to the contrary, the Melbourne members insisted that Mr Johnson was properly appointed as Chairperson, and insisted that their decision be acted upon. She has therefore been dealing with Mr Johnson in the capacity of Chairperson since that time.
  

Secondly, Mr Johnson made the following submissions:

• The previous Chairperson, Mr Friend, sold his unit and resigned in October 2007 and therefore an interim Chairperson need to be appointed;
• He believes that out of all the committee members, only Mr Hall supported Mr Griffin’s appointment as Chairperson;
• Mr Griffin had his unit on the market, and a new Chairperson would need to be appointed in the event that his unit was sold;
• He believes he was validly appointed because his appointment occurred within 30 days of Mr Friend’s resignation and 4 committee members were present at the meeting on 20 November i.e. a quorum was present;
• the 4 Queensland members were also invited to join in this meeting;
• He has certain concerns regarding the performance of the on-site managers/ caretakers and believes that tenants of units let through external letting agents are being unfairly targeted by them;
• A conciliation would be desirable as there a number of items of unfinished business including – owners being declared “unfinancial” and therefore ineligible to vote on matters such as painting, occupation of the café area by the letting agent , the caretakers/ letting agents’ intention to build an additional storey on the building and the current remuneration review involving a suggested increase of approximately $30,000per annum. He does not believe that the caretakers/ letting agents’ are entitled to a review of their remuneration at this point in time.
• He has instructed the body corporate manager not to proceed with payment of the increased remuneration until the matter can be discussed at the next AGM scheduled for 18 April 2008.
  

Further information provided by the applicants included the following:

• The current caretaking agreement was entered into in May 2005 and under the terms of the agreement, a salary review was to be undertaken after a two year period i.e. the review was due to be undertaken in May 2007;
• Due to differences between the parties the review was to be undertaken by an independent consultant, Mr Barry Turner, and the body corporate manager has been advised of the additional remuneration payable. However, Mr Johnson has refused to pay any additional funds to the caretaker causing a large debt to accumulate;
• Mr Johnson stated that he only found out at the meeting that he had been nominated as Chairperson, and therefore did not give his consent in writing to taking on the role;
• It is irrelevant that their units are on the market, particularly when the units have been on the market for a long period of time;
• The result of voting would not necessarily have been the same if all committee members had been invited. Rather the outcome may have been different if members of the committee had been able to raise their concerns in an open meeting that was not subjected to the influence of the ex-Chairperson.
  

Additional information provided by another applicant, the resident manager/ caretaker, included the following:

• Mr Johnson has sought to prevent the body corporate from complying with the contractual arrangements entered into with the on-site managers/ caretakers;
• Mr Johnson has continually questioned the expertise of Mr Barry Turner even though both the on-site managers/ caretakers and body corporate committee agreed to his appointment as an independent consultant despite his proven expertise in the field;
• Had a proper committee meeting been convened, they believe that a different person would have been appointed as interim Chairperson;
• The Caretaking Agreement was validly entered into with the Body Corporate in May 2005 and includes clause 4.3 which provides for a market remuneration review and the body corporate did not raise any objection within the 30 day period specified in clause 4.3.2.;
• There is no need for the additional remuneration to be approved by an ordinary resolution before it becomes binding on the body corporate as the amount is payable pursuant to a binding agreement entered into by the body corporate;
• While the additional remuneration would need to be included in the budget which requires body corporate approval, failure to include this item in the budget would result in a breach of the body corporate’s contractual obligations.
  

JURISDICTION

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

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

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

This jurisdiction resolves disputes that arise in the context of a community title scheme and largely concern: contraventions of the Act and body corporate by-laws; the exercise of rights and powers and the performance of duties under the Act; and matters relating to the engagement of service contractors (see sections 228 and 276 of the Act).

DECISION

At this point in time the applicants are seeking the following Interim orders:

To stop Andrew Johnson acting as interim Chairperson until conciliation is held;
To appoint the Secretary as interim Chairman/ Secretary until conciliation can be held.

The applicants have raised the following various concerns with the manner in which an interim chairperson was appointed to replace the previous Chairperson, Mr Friend, who resigned in October following the sale of his lot in the scheme.

In circumstances where a committee position becomes vacant, section 23C of the Accommodation Module regulation provides as follows:

23C Committee must appoint new member or call general
meeting of body corporate [SM, s 25C]
(1) Within 1 month after the position of the member of the committee becomes vacant, the committee must—
(a) if the number of its members has not fallen below the number required for a quorum—
(i) appoint a person who is eligible to be a member of the committee to fill the vacancy; or
(ii) call a general meeting of the body corporate to choose a person to fill the vacancy; or
(b) if the number of its members has fallen below the number required for a quorum—call a general meeting
of the body corporate to choose a person to fill the vacancy.
(2) However, subsection (1) does not apply to a position that becomes vacant because the body corporate removes the member from office by ordinary resolution if the body corporate fills the vacancy under section 23B.

From the evidence at hand I note that an EGM was not called but rather on 15 October, a committee member, Mr Hall, provided the body corporate manager with a motion for appointment of Mr Griffin, the Secretary, as Chairperson by way of a resolution outside a committee meeting. The relevant papers were distributed to committee members and a vote taken. The result of the voting 2 votes for and 2 votes against the appointment of Mr. Griffin and therefore the motion was lost. On 19 November Mr Hall again provided the body corporate manager with a motion for appointment of Mr Griffin as Chairperson by way of a resolution outside a committee meeting. Voting papers were distributed to committee members on the same day, to be voted upon by 26 November.

However, on 20 November 2007, 4 committee members held a meeting in Melbourne, at which it was resolved that a new Chairperson, Mr Johnson, would be appointed. The question that arises at this juncture is the validity of that appointment. This involves a consideration of whether the relevant committee meeting was properly convened or alternatively, whether there was a valid resolution of the committee outside of a committee meeting.

Administrative arrangements for calling committee meetings are set out in Part 3, Division 7 of the Accommodation Module regulation including sections 25 to 30.

Section 25 provides as follows:

25 Who may call committee meetings [SM, s 27]
(1) A meeting of the committee may be called by—
(a) the secretary or, in the secretary’s absence, the chairperson; or
(b) in the absence of both the secretary and the chairperson—another member of the committee acting with the agreement of enough members to form a quorum at a meeting of the committee.
(2) The secretary or, in the secretary’s absence, the chairperson, must call a meeting if asked, in writing, to call the meeting by enough members of the committee to form a quorum at a meeting of the committee.
(3) The meeting must be held within 21 days after the secretary or chairperson receives the request to call it.
(4) If the meeting is not held within the 21 days, the meeting may be called by another member of the committee acting with the agreement of enough members to form a quorum at a meeting of the committee.
(5) The secretary and chairperson may both be presumed to be absent if the request for the meeting, addressed to the secretary and chairperson, is given at the address for service of the body corporate, and no reply is received within 7 days.

Secondly, sections 26 and 27 provide as follows:
.
26 Notice of committee meetings [SM, s 28]
(1) A meeting of the committee is called by giving written notice to all other committee members stating when and where the meeting is to be held.
(2) The notice must be given—
(a) at least 7 days before the meeting; or
(b) at least 2 days before the meeting, if all voting members of the committee—
(i) vote, at the last meeting of the committee held before the proposed meeting, in favour of the reduced notice period for the proposed meeting; or
(ii) agree in writing to the reduced notice period for the proposed meeting.
(3) Also, advice of the proposed meeting—
(a) if the body corporate maintains a notice board—must be placed on the notice board; and
(b) must be given to each lot owner individually, other than a lot owner who—
(i) has instructed the secretary that the lot owner does not wish to be given advice of committee meetings; and
(ii) has not withdrawn the instruction.
(4) The advice mentioned in subsection (3)—
(a) must state when and where the meeting is to be held; and
(b) must be accompanied by the agenda for the meeting; and
(c) must be placed on the notice board and delivered to the residential or business address of a lot owner when notice of the meeting is given to committee members.

27 Place of committee meetings [SM, s 29]
(1) The first meeting of the committee after the committee is formed must be held where the person calling the meeting decides.
(2) Subject to subsection (1), a committee meeting must be held where the committee decides.
(3) Despite subsections (1) and (2), a committee meeting must not be held more than 15km (measured in a straight line on a horizontal plane) from scheme land if members making up at least half of the number of committee members needed for a
quorum object by written notice given to the secretary.

The applicants submit that the above provisions have not been complied with for the following reasons:

• The Secretary did not call a formal meeting to discuss the other items;
• No notices of meeting were issued;
• There was no agenda for the meeting;
• The meeting was held more than 15kms from the scheme and the Queensland based committee members did not have an opportunity to object to the location;
• There was no opportunity for other lot owners to attend the meeting;
• Minutes of the meeting were not recorded.
  

I believe that as a result the failure to comply with he above provisions, the meeting held in Melbourne on 20 November 2007 was not a valid meeting of the body corporate committee. However the question arises as to whether the resolution to appoint Mr. Johnson could nevertheless be regarded as a valid resolution of the committee.

Mr. Johnson has expressed the view that he was validly appointed because his appointment occurred within 30 days of Mr Friend’s resignation and was supported by the 4 committee members present at the relevant meeting. He further states that the 4 Queensland members were also invited to join in this meeting.

Under section 33 of the Accommodation Module, a resolution may be valid even though the motion is not passed at a meeting of the committee, provided certain conditions are met. More specifically, section 33 provides as follows:

33 Voting outside committee meetings [SM, s 35]
(1) A resolution on a motion before the committee is a valid resolution of the committee, even though the motion is not passed at a meeting of the committee called and conducted under division 7, if—
(a) notice of the motion is given to all committee members or, in an emergency, as many members as it is practicable to contact; and
(b) a majority of all voting members of the committee agrees to the motion.
(2) The notice must be given in writing, and the members’ agreement to the motion must be given in writing but, in an emergency, the notice may be given, and the member’s agreement expressed, orally or by another appropriate form of communication.
(3) Advice of the motion must be given, at the time notice of the motion is given or, in an emergency, as soon as reasonably practicable, to each lot owner, other than a lot owner who—
(a) has instructed the secretary that the lot owner does not wish to be given advice of committee meetings; and
(b) has not withdrawn the instruction.
(4) The notice and advice of the motion may be given by—
(a) the secretary; or
(b) another member of the committee who is authorised by a majority of voting members of the committee to give the notice and advice.
(5) For the operation of sections 34(1) and (2), 36(2) to (4) and 37, the committee, in dealing with a resolution under this section, is taken to deal with the resolution at a meeting of the committee.
(6) A motion voted on under this section must be confirmed at the next meeting of the committee held after the motion is voted on.

In an emergency situation, notice of a motion need not be given in writing, and it is sufficient that such notice is given to as many members as it is practicable to contact.

However it is difficult to come to the conclusion that the circumstances of this case involved an “emergency” as contemplated by the section 33. In non-emergent circumstances section 33 contemplates that written notice of a motion will be given to all committee members. I am therefore of the view that the resolution of the committee purportedly carried on 20 November 2007 is invalid.

While it is proposed that the AGM will be held in the near future, I believe it is appropriate that the committee appoint a Chairperson during the interim period.

I therefore propose to make the following orders:

• that the Secretary is to organise a vote outside of a committee meeting for the purpose of electing a committee member to occupy the position of Chairperson until the date of the next annual general meeting;
• that within 7 days of the date of receipt of this order, the Secretary must invite committee members to submit motions including nominations for election of a Chairperson;
• after the expiration of the period of 7 days from the date when members are invited to submit motions, the Secretary must give all committee members written notice of all motions submitted and invite voting members of the committee to vote upon the motions within a further 7 day period; and
• that unless otherwise provided for in this order, the vote outside a committee meeting shall be governed by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).