Capricorn One [2008] QBCCMCmr 60 (21 February 2008)

Last Updated: 17 April 2008

REFERENCE: 0127-2008

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9871
Name of Scheme:	Capricorn One
Address of Scheme:	198 Ferny Avenue SURFERS PARADISE QLD 4217

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

Martin Simon Paul Wiltshire and Others, the owners of lots 10, 13, 46, 40, 41 and 42

I hereby order that the application for orders to either prevent the Extraordinary General Meeting scheduled for 3:30pm on Thursday, 21 February 2008 from proceeding, or to prevent Motions 2 (Approval of Quote for Lift Modernisation) and 3 (Approval of Special Sinking Fund Levy) from being considered at that meeting, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0127-2008

“Capricorn One” CTS 9871

Application

This application is brought by the owners of lots 10, 13, 46, 40, 41 and 42 against the body corporate, seeking the following interim order:

(1) CANCELLATION OF EXTRAORDINARY GENERAL MEETING – That the Extraordinary General Meeting of the Body Corporate for Capricorn One CTS 9871 not proceed on Thursday 21 February 2008. The Extraordinary General Meeting should not proceed until a Committee Meeting is held to consider the following:

1. The proposals put forward by Audit and Risk Management Solutions, regarding the quote for lift modernisation; and
2. The imposition of the special sinking fund levy (proposed at $588,597.00), including the amount and timing of payments.
   

OR

(2) WITHDRAWAL OF MOTIONS – In the alternative, that the Extraordinary General Meeting proceed on Thursday 21 February 2008, but motions 2 and 3 be withdrawn from the agenda.

OR

(3) IN THE ALTERNATIVE – The Chairperson be ordered to rule Motions 2 and 3 out of order.

Motion 2 on the agenda for the Extraordinary General Meeting (EGM) concerns approval of a quote for lift modernisation and motion 3 concerns approval of a special levy to raise the funds required for motion 2.

The grounds to the application are to the following effect:

• The repair and maintenance of the lifts is a contentious issue. The expense incurred to date, and expected to have to be incurred in the future, is substantial. Previous special levies have been a debilitating financial burden on some owners because of the lack of time in which to pay and the substantial instalments required.
• Previous works that have been approved by the body corporate have not substantially commenced – they have been stopped for some time.
• Previous levies collected for this purpose have not yet been expended.
• The process to date has been mismanaged. The committee and the body corporate have not followed the requirements for validly calling the upcoming EGM which includes motions 2 and 3.
• Minutes of a committee meeting on 6 December 2007 show that there was discussion of an EGM being called in February 2008, with the committee to set a date. The purpose of the EGM was to be, according to the applicant, to consider quotes for lift modernisation, storm water pipe and changes to by-laws.
• The EGM called for 21 February 2008 proposes that 4 motions be considered. All motions are stated to have been submitted by the committee. No committee meeting was held (and therefore no resolution has been passed) to consider submission of these motions and they have therefore not been validly submitted.
• Mr Wiltshire (the secretary) was not afforded any opportunity to attend a committee meeting, discuss the lift modernisation proposal or the special sinking fund levy. Likewise, no owners had the opportunity to attend a committee meeting to be informed of the proposals and the sinking fund levy.
• The EGM has not been called in accordance with the Accommodation Module. Section 38 provides that a general meeting may be called by the secretary (or another member of the committee) if authorised by the committee or a person can be authorised to call a general meeting by an adjudicator.
• The last committee meeting was held on 20 December 2007. This meeting was for the purpose of considering the assignment of the caretaking and letting agreements. No business arose in relation to any lift modernisation proposal, special sinking fund levy or quote for relining of the internal storm water pipe.
• It appears that the committee has not considered the terms of the lift modernisation motion, or the terms of the special sinking fund levy. The committee has also not resolved to include such motions on the agenda for the upcoming EGM. It is assumed that someone on the committee has instructed the Body Corporate Manager (BCM) to issue the Notice of Meeting for the EGM. Otherwise, the BCM has acted without authority in this regard.
• The reason alternative orders are sought is that the applicants are conscious of the cost of holding the EGM to the body corporate and would prefer not to see those costs wasted. Therefore, it would be reasonable to allow the EGM to proceed and consider only motions 1 and 4. Further, motion 4 relates to a storm water pipe which is in urgent need of repair.
  

Jurisdiction

“Capricorn One” is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module). It comprises 46 lots and common property. The scheme was registered on 5 November 1982.

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order being issued. Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act. An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s276(2), Act).

Procedural matters

In accordance with the Act, submissions were called and a copy of the application was provided to each committee member and the BCM, with an invitation to make submissions regarding the interim order application. Short Punch & Greatorix made submission on behalf of the body corporate.

Submissions

• From the construction of Capricorn One until recent times, the body corporate has not addressed the glazed wall to the lift wells nor the lift operating systems.
• The glazed wall to the lift wells is presently the subject of repair as a result of decisions by the body corporate taken in 2007. Whilst it was intended that the glazed walls of the lift wells be remediated commencing in May 2007, as a consequence of debate between owners the commencement date of that project was delayed until early September 2007 and has been further delayed as a result of inclement weather.
• The glazed lift well remediation is now well underway and will now permit the body corporate to address the lift operating systems, which is the subject of the EGM to be held today.
• The remediation of the glazed lift wells and the lift operating systems have been a live issue, known to owners of lots in the scheme for a considerable period.
• The body corporate held general meetings in or about April and May 2007 at which these very issues were canvassed.
• Further, and in addition, the issue of, particularly the lift operating systems has been the subject of consideration of the committee of the body corporate on various occasions, as documented in its minutes of meetings of 9 August 2007, 25 October 2007, 6 December 2007.
• Copies of the above minutes were circulated to owners as required by law. Mr Wiltshire was present at each of the aforesaid committee meetings.
• Upon Mr Wiltshire failing to liaise with A&RMS, as resolved at the 9 August 2007 committee meeting, the further progressing of the project was taken over by the chairperson.
• On 5 October 2007, Audit & Risk Management Solutions Pty Ltd (A&RMS) submitted a fee proposal and scope of works which was sent by the BCM to the committee, including the applicant, on 11 October 2007.
• On 6 December 2007 A&RMS prepared a report for the body corporate, a copy of which was circulated to the committee members, including the applicant, shortly after 6 December 2007.
• Subsequent to the committee meeting of 6 December 2007, there has been a substantial exchange of electronic letters between various members of the committee of the body corporate, including the applicant, as to the selection of the date for the EGM and the motions to be put to owners, copies of which were included with the submission.
• On 13 February 2007, the BCM responded to the letter of 11 February 2008 from Hickey Lawyers on behalf of Mr Wiltshire and Mr McLennan.
  

The body corporate states that the application proceeds on the basis that the EGM was not authorised by the committee. In response, it states:

• The committee meeting of 6 December 2007 authorised the calling of the EGM;
• The communications between committee members, subsequent to the committee meeting of 6 December 2007, resolved:
  • That the EGM would be held 21 February 2008;
  • The motions to be put to owners.
• In any event, should there be any technical defects in relation to the calling of the EGM, nevertheless the EGM should be permitted to proceed so that owners can vote on the motions put to owners.
• Should owners disagree with Motions 2 and 3 then owners can vote accordingly.
• The documentation included with the submission demonstrates that there has been proper consultation between committee members, but in any event, the decision on the matter is properly in the hands of owners and not the committee.
• The applicants state that owners cannot vote on an informed basis but provide no particulars for that submission.
• It would be unfair and inappropriate to cancel the EGM at the last minute particularly as owners may have travelled some distance to attend and the matters the subject for discussion are important and should be resolved as soon as possible.
• In the event that the EGM not be permitted to proceed, or that Motions 2 and 3 be cancelled or ruled out of order then the tenders the subject of the meeting will expire and it will be necessary to recommence the process which will take many months.
• Apart from the applicants, the body corporate has not received any opposition or criticism from owners in relation to the calling of the EGM.
  

Determination

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application. In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.

The applicants seek to prevent an EGM set to be held at 3:30pm today from proceeding (or, alternatively, that motions 2 and 3 not be considered) on the basis of alleged deficiencies in the calling of the meeting, including lack of authority to call it, lack of authority for the submission of motions listed on it and insufficient notice. The body corporate acknowledges that, as a result of a clerical oversight, there were some omissions from the attachments to the EGM Notice. It states that this has since been rectified by an Explanatory Memorandum from the chairperson sent on 11 February 2008. The body corporate believes the EGM, including motions listed for consideration, was properly authorised and called and should proceed.

In these circumstances, it is appropriate to briefly consider whether the applicant raises any serious legal questions that will need to be determined. If the application raises such a question then it may be appropriate to make an interim order to attempt to preserve the integrity of the matters in dispute until the application is dealt with.

It seems to me that the applicants’ grounds are very technical in nature and are disputed by the body corporate. Even if made out (I make no findings in this regard at this stage), the alleged deficiencies, to my mind, are not of such substance as would warrant any of the outcomes the applicants seek. The EGM appears to me, to have been called, at the very least, in substantial compliance with the legislation. It has been held that the very detailed provisions of the regulations make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bone fide[1]. The applicants themselves specifically ask that motions 1 and 4 be voted on, as motion 4 concerns an urgent matter. The alleged deficiencies raised by the applicants apply equally to motions 1 and 4. In my view, they cannot object to the legality of the entire meeting and then request that the alleged deficiencies be overlooked such that two of four motions listed for consideration be allowed to proceed. If the applicants are happy for motions 1 and 4 to be considered, then I do not believe their grounds for not wanting motions 2 and 3 considered are valid. If owners do feel that they do not have enough information before them upon which to make an informed decision in relation to motions 2 and 3 (I make no finding in this regard) they can vote “no” to those motions.

If I make an order in the terms sought by the applicants, the expense already incurred by the body corporate in convening the meeting will be wasted and owners who have made plans to attend will be inconvenienced. Further, the applicants themselves acknowledge that motion 4 concerns an urgent matter that requires immediate consideration. The body corporate have persuaded me that motions 2 and 3 are of similar importance and if not considered today, the quotes under consideration will expire before another EGM could be held. In my view, the likely inconvenience should an interim order be granted in the terms sought outweighs any inconvenience likely to result from no interim order being made.

For these reasons, I have declined to make the order sought by the applicants. It would simply not be just and equitable to do so. The EGM scheduled for 3:30pm today shall proceed, with all four motions being considered.

This application will now be administered in accordance with the Act. I note that the final orders sought are in similar terms to the interim orders sought. Pending the outcome of the EGM, the applicants may wish to give consideration to either withdrawing their application for final orders or amending the final orders requested, before submissions in response to the final orders are sought.

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[1] Wei-Xin Chen v Body corporate for Wishart Village [2001] District Court (Brisbane) 4080 of 2000