Liberty [2008] QBCCMCmr 5 (11 January 2008)

Last Updated: 22 February 2008

REFERENCE: 0666-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27241
Name of Scheme:	Liberty
Address of Scheme:	1 Lennie Avenue MAIN BEACH QLD 4217

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

Ian Mackinnon Salmon, a co-owner of lot 2041

I hereby order that Resolution 2 (Deed of Variation), purportedly passed at the Extraordinary General Meeting of the Body Corporate on 23 August 2007, is invalid and of no effect; I further order that, within fourteen days, the body corporate must distribute a copy of this order and the accompanying Reasons for Decision to the owner of each lot included in the scheme and if not given personally, must be sent to the owner at the owner’s address for service.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0666-2007

"Liberty" CTS 27241

Application
This application is by Ian Mackinnon Salmon, a co-owner of lot 2041 (applicant) against the body corporate seeking the following amended final orders:

1.	(A) That resolution number two purportedly passed at an extraordinary general meeting (EGM) of the body corporate on 23 August 2007 be declared void.

Alternatively,

(B)	That the EGM referred to in (A) be declared void for irregularity.
2.	That unless withdrawn, or previously submitted, the two motions for general meeting lodged by Ian Salmon on 16 April 2007, as amended on 17 August 2007, (the Salmon motions) be submitted to the general meeting of the body corporate next following the date of this order.
3.	That no motion that would or might negate action under the Salmon motions be considered in general meeting or by the committee prior to them being considered in general meeting and, if passed, implemented according to their terms.
4.	That if the Salmon motions are passed the committee and the caretaking service contractor, Batwing Resorts Pty Ltd, and its directors and employees and agents, refrain from any action tending to defeat or impede their implementation.

On 20 August 2007, I made the following interim order in respect of the matter:

I hereby order that pending a final determination of this application, the body corporate for Liberty community titles scheme 27241 shall not proceed with, implement or otherwise act upon any resolution purportedly made at the Extraordinary General Meeting to be held on 23 August 2007.

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 2 of the EGM of 23 August 2007 purported to vary the on-site Management Agreement between the body corporate and Batwing Resorts Pty Ltd ACN 108682597 (Batwing) and was passed by 57 votes for and 55 against, with six of the 118 votes cast in relation to the motion being rejected from the count.

Grounds

The applicant’s grounds are to the following effect:

• Resolution 2 should be declared void because the voting on it may be perceived to be unreliable through the effect of several events, namely:

•

The committee failed to provide full and accurate minutes of its preceding meetings as required by section 34 of the Accommodation Module. Failure to give owners full explanations of significant issues (change in regulation module, availability of a second option for the manager, manager-committee proposal of an additional management term or third option) left them unfairly uninformed at the time of the EGM.

•

The committee allowed untested and inappropriate material from the building manager to be part of the Notice of Meeting. Motion 2 came to the owners tainted by undue influence and unfair procedure.

• The EGM should be declared void for irregularity because:

•	The committee resolution of 13 June 2007 was to consider approval for the Building Manager exercising the five (5) year option under the existing agreements. This resolution could only refer to an existing option, identifiable as the second option under the 1999 agreement (as amended). Motion 2 of the EGM of 23 August 2007 was to grant a third option.
•	It is not a legitimate function of the committee to call a special general meeting to consider a motion whose substantial intent is to confer a singular benefit on a single person or entity, be it either an owner or caretaking service contractor, unless the owners are fully informed of the reasons for, and merits or otherwise of the proposal and the possibility of alternatives.
•	The plea of inadvertence in the exclusion of the Salmon motions from the EGM does not change the irregularity of the meeting from which they were excluded.

Jurisdiction

"Liberty" is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). The scheme comprises some 190 lots and common property. I note that a new community management statement identifying the Standard Module as the applicable regulation module was lodged for registration on 16 August 2007 but not recorded until 8 October 2007. Because the Accommodation Module was the applicable regulation module at the time the EGM the subject of this dispute was held, I have based this decision upon the provisions of the Accommodation Module.

This is a dispute between an owner and the body corporate concerning alleged contraventions of the legislation and comes within the dispute resolution provisions of the Act (see sections 226, 227 & 228).

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)).

Submissions

Submissions in response to the amended request for final orders were sought from all owners (excluding the applicant) and the committee. A total of 46 submissions were received. Of those 46, 34 (representing the owners of 36 lots) were pro forma submissions supporting the applicant, stating that leaving the Salmon motions off the AGM agenda was unfair, and not in the interests of owners. 8 individual submissions from owners were made in support of the application as follows:

The owners of lot 2184 made submission to the following effect:

• The information provided by Batwing with the voting papers for the EGM was not all truthful. Specifically, in the Question and Answer Document, they answered question 3 by stating that they were not asking for a longer term than the original contract, only a top up of the 5 years on the existing contract option, which will take the term to 12 years. The original contract with option takes the term to 2014, the top up proposed by motion 2 takes the term to 2019, exceeding the 10 year maximum term allowed under the Standard Module.

• Question & Answer 11 referred to Gadens Lawyers advice regarding the validity of Batwing’s request to top up their contract being enclosed. The advice was not enclosed and when the owners of lot 2184 requested it from the Secretary, they were refused on the grounds that they did everything required of them under the Act. At the EGM several owners asked the chairperson for the legal advice, but he refused to provide it saying that he didn’t have to.

The owner of lot 2172 also commented on the repeatedly refused request for the legal advice from Gaden’s Lawyers made at the EGM. She further states that, in lieu, owners were quoted an opinion from another lawyer who had been retained by the incumbent company owning the management rights, which stated the proposal was within the law. All the chairperson and Howard Stewart (body corporate manager (BCM)) of Stewart, Silver, King & Burns (Gold Coast) Pty Ltd, would concede, she states, was that the Gaden’s lawyer’s opinion "differed", but that they would not enlarge, saying simply, it is not relevant. They then stated, she says, that they would not allow any further discussion on the matter. The owner of lot 2172 feels that, as the Gaden’s legal opinion was the official one sought for owners by the body corporate committee (and therefore paid for by owners), they should have been given their view. She makes further submission to the effect that leaving the Salmon motions off the agenda for the EGM denied her the opportunity to be presented with, and duly consider, valid alternatives to extending the management rights term for another 5 years from 2014 to 2019. Had such information been made available to all owners, she states, there may have been a different voting outcome. She believes the action by the committee was grossly in error and not in the best interests of all owners.

The owners of lot 1014 also make mention of the omission of the Gadens advice.

The owner of lot 2151 makes submission to the following effect:

• It was totally unfair of the committee and the BCMs not to incorporate the information provided by Salmon with the voting papers to all owners, prior to the EGM on the issue of extending the management period of Batwing Resorts to 2019.

• Many owners are still unaware of the financial burden that will be placed on them if Batwing’s contract is extended on the same terms and conditions that exist at the moment. Because the developer, Mirvac, wanted to maximise its profit, it offered 5% annual increases in management fees and, what started as $426,889 in July 2001 is now $572, 072. By the end of the current agreement it will be $766,631. If that agreement is extended a further 5 years, owners will be required to pay $987,437 per annum. If Mirvac had used CPI as the basis for adjustment, owners would now be paying $509, 727 and at the end of Batwing’s contract the figure would have been $608,641 – a huge discrepancy. If the contract continues until 2019, the total difference between 5% and CPI would total $2,014,040, approximately $10,000 per owner.

The owners of lot 1171 make submission to the following effect:

• The matter of the most suitable management model has been of concern to unit owners for some time. Originally the developer provided a 5 + 5 year contract, then a further option of 5 years was added, probably to maximise the return on a sale. The current contract is due to expire in 2014 at which time the unit owners could review other management options.

• Last year, when the scheme was operating under the Accommodation Module, the current contractor presented the committee with a new contract for a 25 year term. The committee convened a workshop to review same and decided that due to the complexity of the matter, it would not be in the interest of the unit owners to expend time and costs. Also, at the 2006 AGM, the body corporate resolved to adopt the Standard Module.

• It appears that the outcome the current contractor is trying to achieve is a 25 year contract by stealth. The subject meeting was for an additional 5 years on the existing (15 year) contract and no doubt, a further meeting will be called in the future to approve another 5 years.

• They are uncertain as to why the committee have been so keen to accommodate the commercial interests of the current contractor and not the unit owners. There has been a considerable lack of transparency and communication, if not outright contempt. Furthermore, they are uncertain who is providing professional advice for the benefit of the unit owners, as it appears Hynes Solicitors are acting for the Caretaking Service Contractor, their Financiers and for the Body Corporate. The advice is certainly not independent.

• They are aware that the current contractor is advising fellow unit owners that they, and others are "trying to get rid of him". This is certainly not the case, they simply want the opportunity to review management options in 2014.

The owner of lot 1022 makes submission to the following effect:

• The Salmon motions should have been put to a general meeting either prior to, or at, the EGM of 23 August 2007.

• With respect to the EGM, the committee failed to adequately explain the important issues involved.

• The explanatory notes provided by Batwing Resorts were misleading. They implied that Batwing were asking for an existing option to be exercised, when in fact the motion was for a new 5 year term on the existing contract. The tone of the notes and lack of a balanced argument was such as to make the matter seem to be of little consequence and merely a forgone conclusion.

The owner of lot 2152 makes submission to the following effect:

• At the May 2007 committee meeting, the applicant was asked to withdraw his motions. The motions were to do with open market pricing of the management of the property and, since they were submitted before the motion to "renew" the "new" building management agreement, they carried a strong implication in regard to the success or failure of that agreement.

• The EGM was entirely devoted to procuring a vested interest for the present caretaker. There is no reason why the issue couldn’t have been considered at the AGM. Owners footed the bill for the EGM.

• The legal advice to the committee was not disseminated with the voting papers to owners.

• The caretaker was improperly allowed to submit, with the voting papers, a personal and unsubstantiated number of claims in regard to his contract application. As well as that, the information he supplied about financing difficulties was irrelevant and of dubious worth. His document seemed intended to manipulate.

• On the other hand, the committee did not include any counterbalancing document that would inform owners of their rights and consequences of rejecting the building management application.

The owner of lot 2192 makes submission to the following effect:

• The EGM of 23 August 2007 should not have gone ahead nor any motions passed due to the following discrepancies:

•	Failure to include in the agenda the Salmon motions which were directly relevant to the motions put to the EGM;
•	The body corporate has acted inconsistently and shown poor decision making capability.

 At the committee meeting of 21 May 2007, the committee resolved to correspond with Salmon to suggest he withdrawn his motions proposing investigating other building management options on the basis of cost to the body corporate and relevancy on the basis that the "current building agreement is in place for at least the next 7.5 years" (Correspondence, Item 7(ii)).

 Later, the body corporate discussed "the new building management agreement" and resolved that "the building manager amend the agreement as discussed" and "it be forwarded to Hickey Lawyers for independent advice" (Other Matters, Item 8(i) and 8(ii)).

•	The EGM papers sent to owners failed to include the independent advice from Hickey Lawyers and failed to present any counter view to the building manager’s papers.
•	The motion was sent with a large amount of poorly presented material from the building manager including a covering letter, his questions and answers and the Deed of Variation which contained the motion. The material could easily mislead owners.

 The covering letter wrongly states "Please ... consider my application to exercise my option to extend my current ... agreement for a further 5 years." Her understanding is that the motion was not about exercising an option but a new variation to the agreement.

 In her view the lay out of the Deed of Variation does not make for easy reading with the critical "variation" pushed to the bottom of the page and extending onto the next page.

•

The committee may have confused owners about the purpose of the EGM, in the minutes of its meeting of 13 June 2007 where they resolved to call an EGM to "consider approval of the Building Manager exercising the five (5) year option under the existing agreement." Her understanding is that the motion was not about exercising an option but a new variation to the agreement.

Four submissions opposing the application were received. Hynes Lawyers make submission on behalf of Batwing to the following effect:

• The agreement with Batwing is still governed by the Accommodation Module as this was the module governing the scheme when Batwing entered into the agreement with the body corporate, as per section 128 of the Act;

• The only reason for the lodgement of the applicant’s application was that his motions were not included in the notice of EGM issued by the BCM. He did not argue that the meeting was called invalidly, or that motions included in the notice were invalid.

• The motion Batwing submitted to the committee was a valid motion under the requirements of the Accommodation Module. The EGM was called in accordance with the requirements of the module. The meeting was chaired appropriately and the motions considered correctly.

• The applicant is a vocal and prolific supporter of removing the management rights attached to the scheme and bringing the scheme under self-management. He has no real interest in his motions being left off the EGM agenda (stated reason for lodging application), but more that Batwing should not get the extension to its term.

• The majority of the body corporate voted to extend the management rights option for Batwing.

• The only party to be significantly disadvantaged in this application is Batwing:

•	If motion 2 is declared invalid, Batwing will be penalised for an error committed by the committee and the BCM;
•	The Commissioner did not extend an invitation for Batwing to be heard on the application prior to making the interim order. Batwing is an effected party as per section 243(1) of the Act, and has been denied natural justice by not being heard prior to the interim order being made;
•	Batwing expended the time, cost and effort to have its motion correctly submitted to the body corporate for consideration. The body corporate duly considered and approved the motion.
•	Batwing is an innocent party in the application. It should not be forced to suffer the financial penalty of having a valid body corporate resolution overturned. The term of the option will cause significant financial hardship in terms of the capital value attached to the management rights.

• The applicant’s motions can be considered at another EGM, or can be considered at the AGM, without detriment.

• Reference is made to Wei-Xin Chen v. Body corporate for Wishart Village^[1], stating that the situation put forward by the applicant is a good example of another situation where procedural irregularities should not be put ahead of the wishes of the body corporate, clearly evidenced by the majority vote on Batwing’s motion.

In addition, owners of three lots, two of whom are committee members, made submissions opposing the application as follows:

• The owner of lot 2114 made submission to the effect that Liberty has a stable management who operates under an agreed and fully negotiated contract. To her mind, matters of concern were addressed correctly and expediently at the AGM, with decisions and the committee voted on and accepted by the majority of owners. The time for making any changes and decisions comes at the AGM – not throughout the whole year.

• The owner of lot 1191 made submission to the effect that the committee’s motion was straightforward – the motion was to exercise an option contained within the management rights contract, based on the approval of the body corporate. It is a fundamental contractual issue. The matter has been voted on and the majority of the body corporate approved the motion and subsequently, to extend the management rights intact. Notes that Salmon was offered an EGM to consider his motions, or that they be put on the AGM agenda – he hasn’t responded to either offer.

• The owner of lot 1021 made submission to similar effect to the owner of lot 1191, also suggesting that Salmon is simply using this application as a soapbox for airing his opinion on the performance of the committee and the unjustness of management rights, rather than his motion being left off the EGM notice.

The applicant inspected the submissions made and replied to the following effect:

• In response to the submission by the BCM, the interim order has not been generally circulated. The note made of it under "Quorum" of the EGM Minutes would mean little to many/most owners.

• In response to the submission by the committee (dated 20 August 2007), the BCM raised no questions about the validity of his motions until its letter of 14 August 2007, four months after lodgement and three months after their consideration at the May committee meeting. Nor did the letter of 14 August show any intent to make good the injustice to owners of omitting the Salmon motions. He had never admitted to the invalidity of his motions and denies that they could not have been voted upon. He states that he responded to the offer to call an EGM to consider his motions by letter dated 29 August 2007, and includes a copy.

• In response to the submissions by the owners of lots 1191 and 1021 he states that the statement that he has "changed the wording of his motions 4 times" is simply untrue and unsupported by evidence. He denies that there is an ulterior motive behind his application.

• In response to the submission by Hynes Lawyers on behalf of Batwing, doubts the "innocence" of Batwing as protested by Hynes, by stating that Batwing was at all times aware of his motions and was content for them to be overlooked. For Batwing not to have become aware that its Question & Answer document was unauthorised material could only have resulted from its recklessness in not making business-like inquiry. He questions the relevance of reference to the Chen decision, stating that the irregularities here are substantial and the effect of them serious. Also, any thin veneer of bona fides of the committee is pierced by the May minutes of the committee meeting and then again by the committee’s reaction to the letter of 6 August 2007.

• In response to the submission by the owner of lot 2114, he states that it implies that documents from him are sent regularly. This is simply not so.

Applicable Law

• The body corporate may agree to an amendment of a service contractor’s engagement only if (Section 85 Accommodation Module):

o An ordinary resolution approving the amendment is passed and, for the passing of the resolution, no votes are exercised by proxy; and

o The motion approving the amendment is decided by secret ballot; and

o The material forwarded to members of the body corporate for the general meeting that considers the motion to approve the amendment includes an explanatory note in the approved form explaining the nature of the amendment.

• The body corporate must administer the common property and body corporate assets for the benefit of owners and carry out other functions given to it under the Act and the CMS. The body corporate must act reasonably in anything it does in this regard, including making, or not making, a decision (Section 94, Act)

• A decision of the committee (unless on a restricted issue) is a decision of the body corporate (Section 100(1), Act).

• The committee must act reasonably in making a decision (Section 100(5), Act).

Determination

I consider that the issue for determination in this application is whether the body corporate went about the passing of Resolution 2 of the EGM of 23 August 2007 in a proper way. If it did not do so, is the consequence of its failure to do so such as to render the resolution invalid? I believe the following are relevant considerations in this regard.

Motion 2 Voting Results

Motion 2 was purportedly passed by 57 votes for and 55 against. Of the 118 voting papers received in respect of Motion 2, six were rejected from the count, two for being unfinancial, two for having no company nominee appointed and two for not completing the particulars tab on the secret voting paper envelope. Because of the close result, at the outset I considered it necessary, as part of my investigation, to inspect the voting papers, particulars tabs and voting register in respect of motion 2. Initially, I was concerned that the report showing ownership details and financial status for each lot, used by the Returning Officer, was dated 24 July 2007, almost one month prior to the date of the EGM. It took some days for the BCM to confirm for me, consequent to my specific request, that any changes in ownership details and financial status between the two dates, were either accounted for by the Returning Officer, or not relevant as the owner concerned did not vote. My conclusion is that, so far as it appeared to me, the counting in relation to motion 2 was accurate. Of the 118 votes cast for the motion, 57 were in favour of it, 55 were against it and six votes were properly excluded from the count, as is recorded in the minutes of the meeting.

Calling of the EGM of 23 August 2007

I note that the EGM of 23 August 2007 was called to consider only two motions. The first (to confirm minutes of the 2006 AGM) was a statutory motion of no significance that would have been required to be considered at the 2007 AGM if it had not been considered at the EGM. The only motion of substance on the agenda was Motion 2, which proposed, in effect, to grant Batwing an option to extend its existing caretaking service agreement and letting authorisation by an additional five years. Motion 2 is stated to have been submitted by the committee, not Batwing. Given that the AGM for 2007 was held on 28 November 2007, only three months later, I am curious as to why Motion 2 of the EGM of 23 August 2007 could not have been considered at the AGM.

It appears to me that the only party that could benefit from the EGM was Batwing. I do not consider that the body corporate could be said to have derived any benefit from Batwing securing the option to have an additional five year term from 2014, some seven years from now, only three months earlier than it otherwise could have. On the other hand, Hynes Lawyers have made it clear that Batwing stands to gain significant financial benefit from the passing of Motion 2 by only having to pay interest repayments rather than principal and interest repayments on the loan it took to fund the purchase of the management rights some three years ago.

Katie Todd (BCM) of Stewart, Silver, King & Burns, advises me, in response to my specific question by letter dated 22 November 2007, that the total cost of convening the EGM was $3,754.68. She further states that this cost was charged to the body corporate in the first instance as per company policy and has since been on-charged to Batwing. Information I requested from Ms Todd indicates that the body corporate was invoiced for the cost of the EGM on 20 September 2007. Batwing, however, was not "on-charged" until 11 December 2007, almost three months later and after my inquiry of 22 November 2007 as to who funded the EGM.

I mention all this because I, like numerous owners making submission in support of the applicant, find it difficult to reconcile the actions of this committee in regard to calling the EGM at the expense of the body corporate, which has only recently been on-charged to Batwing, with those of a committee genuinely performing its duties reasonably and for the benefit of owners. Rather, it seems as though the committee, in convening the EGM, was acting solely in the interests of Batwing. Arguably, this in itself, is enough to warrant the EGM being declared void, amounting to a breach of sections 94 and 100(5) of the Act. However, as will be seen, this is not the sole basis for my decision.

Material Circulated with Notice of Meeting

Section 40(3)(e) of the Accommodation Module requires notice of a general meeting to be accompanied by explanatory material required under section 40C. Section 40C(1)(e) requires, by virtue of section 85(2)(c)(ii), that a proposal to amend an engagement of a service contractor and/or authorisation of a letting agent, be accompanied by an explanatory note in the approved form (BCCM Form 20). The terms of the engagement or authorisation being amended are also required to be included, by virtue of section 85(2)(c)(i).

My perusal of the Notice of Meeting for the EGM on 23 August 2007 indicates that a completed BCCM Form 20 was included, followed by the seven page Deed of Variation. Although there was submission made to the effect that the Deed of Variation "did not make for easy reading, with the critical "variation" pushed to the bottom of the page and extending onto the next page", and that a complete copy of the agreement proposed to be varied should also have been included, I am of the view that the inclusion of the BCCM Form 20 and the Deed of Variation was sufficient to satisfy the requirements of section 85(2)(c)(i) and (ii) of the Accommodation Module.

Of much greater concern to me and owners making individual submissions supporting the application, was the inclusion of additional material, namely a one page covering letter from Shane Batros (of Batwing) and a four page document titled "Questions & Answers" (by Shane and Trisha Batros of Batwing) that were included with the Notice of Meeting, before the Form 20 and Deed of Variation.

Sections 40C(6) to (8) are directly relevant here and provide as follows:

(6) To remove any doubt, it is declared that an explanatory

schedule for a motion must not contain explanatory material,

other than an explanatory note mentioned in subsections (3) to

(5) or required under another provision of this regulation,

written by a person other than the submitter of the motion.

(7) A notice of a proposed general meeting may be accompanied

by explanatory material given by the committee, other than an

explanatory note mentioned in subsections (2) to (5), if the

material is contained in a schedule of the committee’s

explanatory material that is separate from the explanatory

schedule.

Example for subsection (7)--

The schedule of committee’s explanatory material might contain general

explanatory material that does not relate to a particular motion stated in

the voting paper, or information relating to a motion.

(8) Explanatory material may accompany a voting paper or a

notice of a proposed general meeting only if required or

permitted under this regulation.

I am of the view that there is nothing in section 40C that permits the inclusion of either the covering letter, or Question & Answer Document with the Notice of Meeting; motion 2 having been submitted by the committee and the additional material having been authored by Batwing. In fact, I consider that sections 40C(6) and (8) prohibit their inclusion. Section 40C(7) would have enabled the committee only to include general explanatory material, not Batwing. However, the committee included no further explanatory material to balance that submitted by Batwing.

By including the additional material from Batwing, I believe the committee contravened the prohibition in sections 40C(6) & (8), which appear to have been inserted by the legislature to ensure the fair presentation of issues that owners are being asked to vote upon. This contravention, in my view, directly impacts upon the validity of the resolution purportedly passed on 23 August 2007.

In addition to that, owners were seriously misled by the information presented to them. Owners claim that the additional material authored by Batwing was misleading in several respects (as detailed in their submissions) and implied that Batwing were asking for an existing option to be exercised, when in fact the motion was for a new 5 year term on the existing contract. Two of the submissions made opposing the application, appear to me to in fact support the applicant’s assertion that motion 2 was misinterpreted. Two committee members state in their submissions, when referring to motion 2, that "The motion is to exercise an option contained within the management rights contract, based on the approval of the body corporate." After my perusal of the additional material submitted by Batwing, I too am of the view that it is misleading. In some respects, it is incorrect (for example, specifically stating that a longer term than the original contract is not being requested and stating that legal advice was attached when it was not). In my view, the notice of meeting did not set out a balanced assessment of the situation; it was biased towards Batwing. In the absence of any other material, it is very persuasive in favour of an affirmative vote. This is a serious defect going far beyond the mere "procedural irregularities" referred to by Hynes Lawyers when they make reference to Wei-Xin Chen v. Body corporate for Wishart Village^[2].

As an aside, after perusing the legal advice obtained by the body corporate from Gadens Lawyers dated 5 July 2007, I am perplexed as to why owners who specifically requested it were not provided with it. It appears to me to support the contention that the change in regulation module from Accommodation to Standard does not affect the engagement of Batwing as service contractor and letting agent, specifically as to the term of the engagement allowed. In response to the submission questioning the independence of the body corporate’s lawyers, the BCM states that Hynes lawyers act for Batwing and the body corporate did not receive any advice from them. Further, the BCM states that the body corporate did not receive any information from Hickey lawyers in relation to this matter.

Omission of the Salmon Motions from the EGM Agenda

Whether or not the Salmon motions were omitted deliberately or not is irrelevant. Motions submitted by owners, subject to two exceptions not here relevant, must be included on the next general meeting agenda on which it is practicable to include the motion (s39(2), Accommodation Module). The committee acknowledges error in this regard. The fact is that the subject matter of these motions was directly relevant to any proposal to extend Batwing’s existing agreement. Owners wanting to vote for the Salmon motions would presumably have voted against Motion 2 of the EGM of 23 August 2007. Had the Salmon motions appeared on the same agenda, I believe the voting in relation to Motion 2 may well have been different. For this reason, the Salmon motions being considered at a subsequent general meeting does not rectify the error of their omission from the EGM agenda. The fact that the Salmon motions were passed by a significant margin at the AGM held on 28 November 2007, is, in my view, telling.

Previous Committee Meetings

Submission has been made to the effect that the committee may have confused owners about the purpose of the EGM, in the minutes of its meeting of 13 June 2007 where it resolved to call an EGM to "consider approval of the Building Manager exercising the five (5) year option under the existing agreement." I tend to agree that a prior perusal of the minutes of the committee meeting of 13 June 2007 before voting on motion 2 of the EGM of 23 August 2007, as it was presented by the committee, could have contributed to owners assuming that they were voting on Batwing exercising an existing option, rather than voting on granting them an option to extend their agreement by a further five years.

Submissions

After considering all submissions made in response to this application, I am of the view that they are overwhelmingly in support of the applicant. Further, I consider that the submissions made by at least two individual committee members opposing the applicant actually lend support to the applicant’s arguments in so far as he suggests that owners were misled by the information in the Notice of Meeting for the EGM. Of the other opposing submissions, I make the following comments:

I have given very little weight to the submission made by the owner of lot 2114, as it appears to have been made in ignorance that an EGM was held at all.

In response to specific submission by Hynes lawyers on behalf of Batwing, I agree that the agreement with Batwing is still governed by the Accommodation Module as this was the module governing the scheme when Batwing entered into the agreement with the body corporate, as per section 128 of the Act. However, I do not consider this to be relevant to this dispute. I disagree with their hypothesis as to the applicant’s motives in lodging the application. In any event, the applicant amended his application, in accordance with section 245 of the Act to include the seeking of an order that Resolution 2, or the entire EGM, be declared void for irregularity, prior to final submissions being sought. Batwing, being an owner, was invited to make submission in response to the amended application. The majority of the body corporate did not vote to extend Batwing’s agreement. 57 owners out of some 190, cast a vote to extend Batwing’s agreement, based on the information presented in the Notice of Meeting, which I have determined to be misleading and in contravention of section 40C of the Accommodation Module. I do not agree that Batwing were denied natural justice prior to the interim order being made by not being invited to make submission in relation to the request for the interim order. The Commissioner may refer an application for an interim order to an Adjudicator even though notice of the application has not been given under section 243 of the Act (section 247, Act). I refute their claim that, if motion 2 is declared invalid, Batwing will be penalised for an error committed by the committee and the BCM and will be the only party to be disadvantaged. While it may be that Batwing would be the only party to benefit from this application being dismissed, the converse is not necessarily true. In my view, Batwing cannot be said to have lost something it never gained in the first place. Further, the body corporate has expended considerable time and expense in responding to this application which would not have eventuated had the EGM which I consider was held for Batwing’s sole benefit, not been held. Finally, for the reasons stated above, I do not consider that motion 2 was a valid motion in terms of the requirements of the Accommodation Module.

Just and Equitable Order

In all the circumstances, I consider the only just and equitable order I can make is to rule Resolution 2 of the EGM of 23 August 2007 invalid. Resolution 2 was purportedly passed by 57 votes for and 55 against, with six votes cast being ruled invalid by the Returning Officer, Logan Irwin. In circumstances where 42 of 46 submissions made in response to this application were supportive of the applicant (and where two of the four opposing submissions arguably actually supported the applicant, in at least one respect), it is conceivable that the voting on Resolution 2 could well have been different had the committee been acting reasonably and for the benefit of owners, had the explanatory material accompanying the Notice of Meeting complied with the provisions of the Accommodation Module and had the Salmon motions been included on the same agenda. While noting that the body corporate is obliged to implement the Salmon motions, passed at the AGM on 28 November 2007, this does not prevent Motion 2 of the EGM of 23 August 2007 from being considered again in the future. However, the explanatory material accompanying the Notice of Meeting in relation to Motion 2 would have to comply with the legislation. In addition, I have not ruled Resolution 1 (Confirmation of Minutes of Previous Meeting) invalid as no argument was submitted that the deficiencies with the EGM should render this resolution invalid, and, as a statutory motion that was passed by 46 votes to 3, I see no reason for doing so. I have also ordered the body corporate to distribute a copy of this order, and the accompanying reasons for decision, to each lot owner so that all owners are equally informed in relation to this matter.

---

^[1] [2001] District Court (Brisbane) 4080 of 2000
^[2] [2001] District Court (Brisbane) 4080 of 2000