Byron Court [2008] QBCCMCmr 62 (22 February 2008)

Last Updated: 17 April 2008

REFERENCE: 0123-2008

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	21267
Name of Scheme:	Byron Court
Address of Scheme:	25 Parkview Crescent CORNUBIA QLD 4130

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

Mark Grant, the Owner of lot 27

I hereby order that within 14 days of the date of this order, the body corporate is to provide the applicant with minutes of the EGM held on 16 December 2007. I further order that the application for the following interim orders: That in the event that Motion 2 on the agenda for the extraordinary general meeting (EGM) scheduled to be held on 24 February 2008 is resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion. that in the event that motion 5 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion. that in the event that motion 6 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion. that in the event that motion 7 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion. An interim order that the body corporate not take any further action in the appeal against the applicant’s development application until either a final determination has been made in respect of the motion entitled “Development Application – lot 27 appeal” or the body corporate in the meantime, properly resolves to take further action in the appeal. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0123-2008

“Byron Court” CTS 21267

THE SCHEME

Byron Court is a community titles scheme consisting of 26 lots and is governed by the Body Corporate and Community Management Act 1997 (Act) and the Standard Module Regulation (Standard Module).

APPLICATION

The applicant is the owner of lot 27 and is seeking the following Interim Orders:

1. That in the event that Motion 2 on the agenda for the extraordinary general meeting (EGM) scheduled to be held on 24 February 2008 is resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
2. that in the event that motion 5 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
3. that in the event that motion 6 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
4. that in the event that motion 7 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
5. An interim order that the body corporate not take any further action in the appeal against the applicant’s development application until either a final determination has been made in respect of the motion entitled “Development Application – lot 27 appeal” or the body corporate in the meantime, properly resolves to take further action in the appeal.
6. That the body corporate provide the applicant with minutes of the EGM held on 16 December 2007.
   

The applicant also seeks the following final outcomes:

1. That motion 2 on the agenda for the EGM scheduled to be held on 24 February 2008 is invalid.
2. That motion 5 on the agenda for the EGM held on 16 December 2007 is invalid.
3. That motion 6 on the agenda for the EGM held on 16 December 2007 is invalid.
4. That motion 7 on the agenda for the EGM held on 16 December 2007 is invalid.
5. That the motion entitled “Development Application – lot 27 appeal” on the agenda for the AGM held on 31 July 2007 is invalid.
6. That the body corporate provide the applicant with minutes of the EGM held on 16 December 2007.
   

BACKGROUND

The applicant states that the scheme was originally created by way of a Group Title Plan in 1984 and in 1987, lots 27 and 28 were created by a realignment of the boundary between the previous lots 20 and 21 in the scheme. Despite the numbering referred to above, the scheme consists of 26 lots in total.

The applicant purchased lot 27 in 2005 and it would appear, sought permission to subdivide lot 27.
However on 2 June 2005 the body corporate resolved not to “approve in principle” the applicant’s development application to subdivide lot 27.

On 5 April 2006 the applicant lodged a development application with the Logan City Council in respect of the proposed subdivision of the lot. On 29 June 2007 QBM lawyers filed a notice of appeal in the Planning and Environment Court on behalf of the body corporate, allegedly without any prior authority of the body corporate.

At the AGM held on 31 July 2007 the body corporate resolved as follows:

That by special resolution the body corporate’s decision to engage the services of QBM Lawyers to lodge an appeal with the Logan City Council in relation to the Development Application RL/37/2006 be ratified.

However, it is claimed that owners were not provided with any details or information in respect of the action to be taken by the body corporate and were not provided with a copy of the proposed retainer agreement between the body corporate and QBM lawyers, and were not given any indication as to the cost to the body corporate of commencing such proceedings against the applicant.

The minutes of that AGM (31 July 2007) include the following statement:
The owners will be notified of the results of the appeal and no further action will be taken without the body corporate’s approval.

At an EGM held on 16 December 2007, the following motions were proposed:

• Motion 5 – Proposed by the body corporate committee

Subdivision Appeal – Special resolution

That the body corporate authorise the committee to proceed with the appeal of the subdivision in the Magistrates court in order to have a ruling.

• Motion 6 – Proposed by the body corporate committee

Special Levy – Ordinary resolution

That the body corporate approve a special levy to fund the appeal hearing. The maximum amount being $500 per lot paid in 2 levy instalments of $250.

• Motion 7 – recovery of Costs

That the body corporate approve the recovery of costs, for any expenses relating to the appeal against the subdivision, from the owner of lots 29 and 30.

• special levy to fund the appeal hearing. The maximum amount being $500 per lot paid in 2 levy instalments of $250.
  

The applicant has heard rumours that the committee withdrew motions 5,6 & 7 from the floor of the meeting when it appeared that the motions were not likely to be carried and is not aware of the outcome of the above motions as it has not received minutes of the EGM held on 16 December 2007, despite requests to be provided with the minutes.

The body corporate has now called an EGM to be held on 24 February 2008 at which the following motion has been submitted by the committee:

• Motion 2 – Proposed by the body corporate committee

That the body corporate approve a special levy in the amount of $27,000 for costs incurred as a result of the appeal lodged in the planning and environment court. The levy to be $350 per lot over the next 3 levy periods.

Explanatory Note

The aim is to continue to proceed and negotiate with Robert Milne Legal in the hope of reaching an acceptable compromise. However, that will not delay retaining of experts or the court directions which must be complied with.

The consequence of not complying with the court order are:

- the body corporate may be found to be in contempt of court

- the appeal may be dismissed with the body corporate being ordered to pay the other party’s costs of the application and appeal.

It is claimed that this motion (Motion 2) does not comply with section 95(2) of the Standard Module because:

• It does not state that the motion must be passed by ordinary resolution;
• It is unclear as to whether $350 per lot is the total levy to be paid in 3 instalments or whether each instalment is to be $350. In any event, neither result reconciles with the total levy of $27,000.
• There is no date on or before which payment is required;
  

It is further claimed that this motion (Motion 2) does not comply with section 95(5) of the Standard Module because:

• The contributions levied on each owner are not proportionate to the contribution schedule lot entitlements of each lot;
• Section 104 of the standard Module requires 2 quotes to be obtained where a motion proposes the carrying out of work or services, the total cost of which exceeds the limit for major spending.
  

It is submitted that requested interim orders should be granted on the following grounds:

• The effect of the interim orders is to seek injunctive relief to anticipated serious contraventions of the Standard Module and to maintain the status quo;
• If the first requested interim order is not made, all owners may be disadvantaged if the final order determines that motion 2 was invalid;
• If the second requested interim order is not made, the committee will be empowered to proceed with an appeal, the details of which, including the costs, are unknown to owners;
• If the third requested interim order is not made, lot owners will be disadvantaged and inconvenienced if it is subsequently found that motion 6 was invalid and it will be difficult to calculate and implement reimbursement of the contributions;
• If the fourth requested interim order is not made, the committee will be empowered to recover costs to which it is not entitled and “from the owner of lots that do not exist”;
• The fifth requested interim order should be made because there was never any basis for the body corporate to commence proceedings in the Planning and Environment Court and these proceedings should be put on hold until the body corporate has properly authorised the proceedings and associated major spending;
• The body corporate should be required to supply the applicant with minutes of the EGM held on 16 December 2007.
  

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)).

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. The examples included in the Act under section 279 are suggestive of the
circumstances where an interim order might be made i.e. an interim order is generally of a temporary nature to maintain the status quo.

SUBMISSIONS

The application for interim orders was received on 14 February and affected persons were given until 21 February to lodge submissions. Unfortunately it would appear that there was some delay in the distribution of the invitations to make submissions, and on 21 February I was advised that there was insufficient time available for the committee to lodge formal submissions. However, one committee member, Mr. Tony Lavin was able to provide some information by telephone as well as faxing a copy of the minutes of the EGM held on 16 December 2007.

The minutes of the meeting held on 16 December show that the following motions were ruled out of order:

• Motion 5 – Proposed by the body corporate committee

Subdivision Appeal – Special resolution

That the body corporate authorise the committee to proceed with the appeal of the subdivision in the Magistrates court in order to have a ruling.

• Motion 6 – Proposed by the body corporate committee

Special Levy – Ordinary resolution

That the body corporate approve a special levy to fund the appeal hearing. The maximum amount being $500 per lot paid in 2 levy instalments of $250.

• Motion 7 – recovery of Costs

That the body corporate approve the recovery of costs, for any expenses relating to the appeal against the subdivision, from the owner of lots 29 and 30.

Mr. Lavin was also able to provide the following background information:

• The applicant is Mr Grant who owns lot 27 and has applied to the body corporate for permission to sub-divide his land;
• This request was denied by the body corporate;
• This request was denied but the applicant nevertheless applied to Logan city council for permission to sub-divide the land despite objections by the body corporate;
• An appeal has been filed in the Planning and Environment Court in August/ September 2007.
  

JURISDICTION

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.

Further section 247 of the Act provides as follows:

247 Referral of application for interim order
(1) This section applies if the commissioner reasonably considers that an application for an interim order should be referred to a conciliator or an adjudicator because of the nature or urgency
of the circumstances to which the application relates.
(2) The commissioner may refer the application to—
(a) a department conciliator for department conciliation; or
(b) an adjudicator for adjudication under this chapter.
(3) The referral may be made even though—
(a) notice of the application has not been given under section 243; or
(b) all persons entitled, under that section, to make submissions about the application have not had an opportunity to make submissions.

DECISION

The Interim Orders sought by the applicant are as follows:

1. in the event that Motion 2 on the agenda for the extraordinary general meeting (EGM) scheduled to be held on 24 February 2008 is resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
2. in the event that motion 5 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
3. in the event that motion 6 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
4. in the event that motion 7 on the agenda for the EGM that was held on 16 December 2007 was resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion.
5. An interim order that the body corporate not take any further action in the appeal against the applicant’s development application until either a final determination has been made in respect of the motion entitled “Development Application – lot 27 appeal” or the body corporate in the meantime, properly resolves to take further action in the appeal.
6. That the body corporate provide the applicant with minutes of the EGM held on 16 December 2007.
   

I note that the applicant does not have a copy of the minutes of the EGM held on 16 December 2007, and accordingly, is unaware of the outcome of the various motions that appeared on the agenda for that meeting. I propose to order that the body corporate provide the applicant with a copy of the minutes of the EGM held on 16 December 2007 within 14 days of the date of this order.

The minutes of the meeting held on 16 December show that the following motions were ruled out of order:

• Motion 5 – Proposed by the body corporate committee

Subdivision Appeal – Special resolution

That the body corporate authorise the committee to proceed with the appeal of the subdivision in the Magistrates court in order to have a ruling.

• Motion 6 – Proposed by the body corporate committee

Special Levy – Ordinary resolution

That the body corporate approve a special levy to fund the appeal hearing. The maximum amount being $500 per lot paid in 2 levy instalments of $250.

• Motion 7 – recovery of Costs

That the body corporate approve the recovery of costs, for any expenses relating to the appeal against the subdivision, from the owner of lots 29 and 30.

Accordingly, there is no need for me to make the requested interim orders regarding these motions.

I am therefore now concerned with the applicant’s request for the following interim orders:

• In the event that Motion 2 on the agenda for the extraordinary general meeting (EGM) scheduled to be held on 24 February 2008 is resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion;
  
• An interim order that the body corporate not take any further action in the appeal against the applicant’s development application until either a final determination has been made in respect of the motion entitled “Development Application – lot 27 appeal” or the body corporate in the meantime, properly resolves to take further action in the appeal.
  

Motion 2 , referred to above, reads as follows:

Proposed by the body corporate committee
That the body corporate approve a special levy in the amount of $27,000 for costs incurred as a result of the appeal lodged in the planning and environment court. The levy to be $350 per lot over the next 3 levy periods.

Explanatory Note

The aim is to continue to proceed and negotiate with Robert Milne Legal in the hope of reaching an acceptable compromise. However, that will not delay retaining of experts or the court directions which must be complied with.
The consequence of not complying with the court order are:
- the body corporate may be found to be in contempt of court
- the appeal may be dismissed with the body corporate being ordered to pay the other party’s costs of the application and appeal.

The applicant is seeking orders of an injunctive nature designed to prevent something from happening prior to the final determination of the dispute. For it to be just and equitable to grant injunctive relief pending a final determination, I would need to be satisfied that the application raises serious questions to be determined. I would also need to be satisfied that the balance of convenience between the parties justifies the grant of injunctive relief. That is, I would need to balance the inconvenience of granting relief now if final orders are ultimately refused against the inconvenience of refusing relief now if final orders are ultimately granted.

The applicant’s material does indicate that there is a serious question to be determined. This is primarily in the allegations that the body corporate has engaged lawyers to lodge an appeal without proper authorisation from its members.

Firstly, it is argued that pursuant to section 312 of the Act, a body corporate may only start proceedings if the proceedings are authorised by a special resolution and that the committee commenced the proceedings before receiving any authorisation to do so.

Secondly, the Act sets out specific requirements for control of body corporate spending. Spending limits for a body corporate will vary depending on the regulation module that applies and on the number of lots in the scheme. Byron Court is a 26 lot scheme registered under the standard module. Its relevant limit for committee spending is therefore $3,250 (Standard Module, Schedule). Its major spending limit is $6,500 (Standard Module, Schedule). Based on this, a proposal or project involving spending of under $3,250 can be authorised by the committee. A proposal involving spending of $3,250 up to $6,500 would normally require approval by ordinary resolution of the body corporate. Proposals involving spending of $6,500 and above will normally require the body corporate to pass a motion approving one of at least two quotations for the spending. Alternate quotations are normally put forward as alternative motions on the agenda, the quotes must accompany the notice of meeting, and the quotes must be retained as an attachment to the minutes of meeting at which they were considered (Standard Module 103, 104).

The applicant’s material seems to suggest that the body corporate has spent substantially more than its relevant limits for spending without any appropriate authorisation. Authorisation for payment of legal fees can prove difficult for a body corporate to manage, primarily because legal fees are normally charged on a time spent basis rather than on the basis of a fixed quote. However, it is important for the person engaging lawyers on behalf of the body corporate to obtain estimates of fees (and any revised estimates as appropriate) in order to ensure the engagement of the lawyers can be properly authorised.

On the other hand however, I note that at the AGM held on 31 July 2007, the body corporate resolved as follows:

That by special resolution the body corporate’s decision to engage the services of QBM Lawyers to lodge an appeal with the Logan City Council in relation to the Development Application RL/37/2006 be ratified.

As the applicant recognises, that section 242(2) of the act may be applicable to the circumstances of this case because well over 3 months have elapsed since the motion was resolved.

Section 242 of the Act provides as follows:

242 Time limit on certain adjudication applications
(1) This section applies to an adjudication application for an order declaring void—
(a) a meeting of the committee for the body corporate, or a general meeting of the body corporate; or
(b) a resolution of the committee or body corporate; or
(c) the election of an executive or other member of the committee.
(2) The adjudication application must be made within 3 months after—
(a) if subsection (1)(a) applies—the meeting; or
(b) if subsection (1)(b) applies—the meeting at which the resolution was passed or purported to be passed; or
(c) if subsection (1)(c) applies—the meeting at which the executive or other member was elected.
(3) A person is taken to have complied with subsection (2) for a dispute if the person made a conciliation application for the same dispute within the time mentioned in the subsection for
the dispute.
(4) However, if the making of the adjudication application does not comply with subsection (2)—
(a) the commissioner must deal with the application (including making a dispute resolution recommendation for the application) as if the making of the application complied with subsection (2); and
(b) an adjudicator to whom the application is referred for specialist or department adjudication may, for good reason, waive the non-compliance.

At this point in time I am not convinced that there is good reason to waive the applicant’s non-compliance with section 242 of the Act .

For the reasons outlined above, I do not consider that the balance of convenience favours granting the following orders at this point in time:

• In the event that Motion 2 on the agenda for the extraordinary general meeting (EGM) scheduled to be held on 24 February 2008 is resolved in favour, the body corporate not proceed with the resolution until a final determination has been made in respect of the validity of that motion;
  
• An interim order that the body corporate not take any further action in the appeal against the applicant’s development application until either a final determination has been made in respect of the motion entitled “Development Application – lot 27 appeal” or the body corporate in the meantime, properly resolves to take further action in the appeal.
  

I believe that any remedy can be adequately provided after submissions from both parties and a final determination will be made in due course.

I do however propose to make the following interim order at this point in time:

That the body corporate provide the applicant with minutes of the EGM held on 16 December 2007.