Sentosa Golf Estate [2009] QBCCMCmr 10 (12 January 2009)

Last Updated: 19 February 2009

REFERENCE: 0849-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	31985
Name of Scheme:	Sentosa Golf Estate
Address of Scheme:	115 Peregian Springs Drive PEREGIAN SPRINGS QLD 4573

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Sean Taylor, a co-owner of Lot 30

I hereby order that the Extraordinary General Meeting of the body corporate for Sentosa Golf Estate community titles scheme 31985 dated 10 September 2008 is void.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0849-2008

“Sentosa Golf Estate” CTS 31985

The scheme
“Sentosa Golf Estate” community titles scheme 31985 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).

Application
This application dated 8 October 2008 is by Sean Taylor, a co-owner of Lot 30 (Applicant) against the Body Corporate seeking outcomes that the Extraordinary General Meeting dated 10 September 2008 (EGM) be invalidated and that Motion 2 at the EGM be invalidated. The Applicant has named Jeff and Sharon Stevens (Service Caretaker) as affected persons.

Interim order
The Applicant sought an interim order to prevent the Body Corporate or the committee from signing any agreement to vary the contract of the caretaker/service contractor until the matters in dispute are resolved.

On 14 October 2008, I made an interim order: “that the body corporate for Sentosa Golf Estate community titles scheme 31985 shall not sign, execute or otherwise enter into any written agreement between the Body Corporate and Sentosa Management Pty Ltd as a consequence of the resolution passed on Motion 2 at the Extraordinary General Meeting dated 10 September 2008 to vary the Caretaking Agreement dated 28 June 2006 by increasing the annual remuneration payable under the First Schedule of the Agreement”.

Submissions to the Commissioner
On 15 October 2008, the Commissioner provided a copy of the application to the affected persons and to Teys Strata (Sunshine Coast) Pty Ltd (Body Corporate Manager) for distribution to the owner of each lot (excluding the Applicant and the affected persons) and the committee, with an invitation to respond to the matters raised in the application (s 243, Act).

Submissions were made on behalf of the committee, by the affected persons and by 20 lot owners. The Applicant made a written reply to submissions.

Adjudication
On 3 December 2008, the Commissioner made a dispute resolution recommendation under section 248 of the Act referring the dispute to departmental adjudication.

Jurisdiction
The application was made within 3 months of the EGM satisfying the time limit for an application of this nature (s 242, Act).

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 (s 276(1), Act). An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s 276(2), Act).

An adjudicator’s investigative powers are stated in section 271 of the Act. In accordance with the investigative powers of an adjudicator stated in section 271(5) of the Act, on 6 January 2009 I asked the Body Corporate Manager to provide a copy of the notice of the EGM. The Manager provided a partial copy of the notice on 7 January 2009 stating the accompanying letters and explanatory notes have been provided by the Applicant.

Background

The committee, at its meeting dated 1 July 2008 resolved under General Business: “The Resident Unit Managers have approached the Body Corporate seeking a review of the contract remuneration in accordance with a report tabled from Building Management Consulting Services ... The Committee will review the report and consult with the Resident Managers before making a recommendation to the Body Corporate in a general meeting”. The committee also resolved the next scheduled meeting is to be held on 7 October.

The notice of the EGM was dated 19 August 2008 and relevantly included a covering letter of the same date signed by the Body Corporate Manager, an agenda, a voting paper, an explanatory schedule on motions and a letter dated 29 July 2008 to all owners signed by the chairman and the treasurer.

The covering letter relevantly stated: “We refer to ... the Minutes of a Committee meeting held on 1 July 2008 and advise the Committee has conducted a review of the proposal presented by the Resident Managers for a salary increase in line with an expert report provided to them by Building Management Consulting Services (BMCS). The outcomes of the review and subsequent negotiation with Jeff and Sharon Stevens are detailed in a letter to Owners that is enclosed and forms part of the enclosed explanatory notes...”

The agenda included two motions: Confirmation of Minutes and Variation to Caretaking Agreement – Increase in Remuneration. The voting paper states the motions but does not identify the submitter of Motion 2 which proposed: “That in accordance with Section 85 of the Body Corporate and Community Management Accommodation Module Regulation 1997, the Body Corporate consents to a Variation in the Caretaking Agreement between the Body Corporate and Sentosa Management Pty Ltd dated 28 June 2008, by increasing the annual remuneration payable under the First Schedule from $74,438.00 to $82,438.00 with the increase to be implemented in two stages with the first adjustment of $4,000.00 per annum payable from 1 August 2008 and the remaining $4,000.00 per annum payable for 1 February 2009”.

The ‘Explanatory Schedule on Motions’ states for Motion 2: “This Motion is explained in detail by the enclosed letter from the Committee”. The letter dated 29 July 2008 to all owners signed by the chairperson and the treasurer relevantly states: “The committee has been approached by the caretakers/managers ... regarding their current remuneration ... As a committee we recognise there is justification in awarding the manager an increase in remuneration ... After careful and detailed consideration we have decided to recommend an amount of $82,438 per annum be paid”.

The minutes of the EGM indicate Motion 2 was carried by 21 votes to 12.

Submissions
The Applicant states that the EGM was not called in accordance with the regulation. He submits the last committee meeting held before the EGM was dated 1 July 2008. The Applicant argues the EGM was not properly called and the extent of the legislative non-compliance denied owners the right to make an informed decision on Motion 2. The Applicant believes the short time frame between calling and holding the EGM inhibited some owners from voting. He states owners could not make reasonable enquiries as to the merits of the Motion and the Service Contractor failed to provide the report on an unrestricted basis. The Applicant is also concerned the committee did not discharge its duties and obligations to owners in the review.

Baden Greig submitted on behalf of the committee that 6 of the 7 committee members present at the 1 July 2008 meeting had copies of the BMCS report for their perusal prior to the next “informal” meeting on 4 July 2008, and that on 4 July it was agreed by 5 members (not including the Applicant) that the committee would recommend to owners an increase in salary of $8,000 per annum, half of which would commence on 1 August 2008 and the other half would commence on 1 February 2009. He submits that the recommendation was then discussed with the affected persons. Mr Greig states that as a consequence of the “informal” meeting and the discussion with the affected persons, the letter to owners included in the notice of the EGM was distributed to committee members for feedback and that this action confirms the letter had the knowledge and general support of the committee. He states these actions show the committee complied with the decision of the 1 July 2008 meeting.

The affected persons submit a committee meeting was held after 1 July, and that the purpose of this meeting was to discuss the request for remuneration review and that the Applicant attended this meeting. They state the outcome of this meeting was discussed with them and conveyed to owners in the 29 July 2008 letter. The affected persons submit that while there are no minutes of the meeting, it doesn’t mean the meeting never took place.

The owners of Lots 2, 14, 18, 20, 22, 23, 24, 32, 39, 40, 41, 50, 52 and 54 opposed the application stating a formal resolution may not have been recorded to call the EGM, however there was no doubt as to the intention or the reason for the meeting. The owner of Lot 20 also questioned claims owners had concerns about viewing a copy of the BMCS report. The owner of Lot 26 supported the resolution passed on Motion 2.

The owner of Lot 13 believes the EGM was called so as not to allow owners to properly consider the facts of the Motion. The owner refers to the minutes of the 1 July 2008 meeting stating the inference to be drawn is that the committee would, at the 7 October meeting, report the findings and make a recommendation for a general meeting called by the committee. The owner says they have not received minutes of a committee meeting authorising the calling of the general meeting. The owner considers the time and place of the EGM denied owners the opportunity to consider and discuss the issue. The owner of Lot 25 expressed concern they were asked to vote on this issue without sufficient information saying they had no knowledge of the information the affected persons gave to BMCS and of the recommendations made, and there was no explanation of how the committee arrived at the amount added to the affected persons’ remuneration. The owner also questions the place of the EGM. The owner of Lot 29 supported the application saying they did not have a copy of the report and questioning the place of the meeting. The owner of Lot 36 is concerned about the haste in calling and holding the EGM. The owner of Lot 37 supported the application.

Written reply to submissions

The Applicant states the submissions fail to identify any evidence that a committee meeting was called and conducted as prescribed by the regulation, or that the committee called the EGM in accordance with the legislation. He submits the minutes of the 1 July 2008 meeting cannot be regarded as a resolution authorising the committee to call the EGM. He says that after the close of the 1 July meeting, the chairperson decided the committee should discuss the request from the affected persons on 4 July 2008 and that it is not possible to regard the discussions on 4 July to be a committee meeting pursuant to the legislation. With respect to the submissions that no minutes were taken, he says no minutes or other records exist which raises the question as to whether a committee meeting took place at all. The Applicant says that no submissions have referred to the existence of any correspondence or records pertaining to 4 July.

The Applicant states the affected persons have provided false or misleading information to the commissioner pursuant to sections 297 and 298 of the Act in making submissions that “All committee members if asked to swear under oath would confirm the meeting took place” when referring to a “meeting” subsequent to the 1 July 2008 committee meeting. The Applicant makes a formal complaint.

The Applicant states that the determination I made in the interim order in relation to Motion 2 is accepted.

Regulation module
At the time notice of the EGM was given to owners, the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Previous Regulation) applied to the scheme. Even though the Accommodation Module had commenced when the EGM was held, the Previous Regulation continued to apply (s 215 and s 216, Accommodation Module).

Decision
A body corporate must conduct meetings in the way prescribed under the regulation module (s 104(1)(b)(i), Act). All meetings of the body corporate are general meetings and a general meeting includes an extraordinary general meeting (s 37, Previous Regulation). Section 38 of the Previous Regulation prescribes who may call general meetings and states:

“(1) A general meeting may be called by —

(a) either of the following persons authorised by the committee to call the meeting—

(i) the secretary;

(ii) another member of the committee; or

(b) a person authorised or required to call a general meeting by an order of an adjudicator acting under the dispute resolution provisions.

(2) This section does not apply to a requested extraordinary general meeting”.

It is not being claimed by the parties that section 38(1)(b) or (2) applies to the calling of the EGM. In this case, the EGM could only be called by either of the persons mentioned in section 38(1)(a) under an authorisation by the committee.

The procedures and powers of the committee are stated in the regulation module (s 101(1), Act). A committee can make a decision at a committee meeting called by a person stated in section 25 of the Previous Regulation, with notice being given in accordance with sections 26 and 28. The regulation provides for such matters such as attendance at a meeting and voting at a meeting (s 30A to 32). Provision is made for voting outside a committee meeting (s 33). Section 34 makes provision for producing a record of a committee meeting or of a motion voted on other than at a meeting, and for giving a copy of that record to owners.

The regulation states the ways the committee makes a decision. In my view, an authorisation of the nature stated in section 38(1)(a) can only be given by resolution at a committee meeting or by voting outside a committee meeting. Any uncertainty about the intent of the provision is clarified by the explanatory note to the amendment made to section 38 in 2003: “The intention of the existing section 38(a) was that a secretary would call a general meeting of the body corporate after being authorised by the committee. It is acknowledged that some body corporate secretaries have called general meetings without the knowledge of the body corporate committee. The secretary should not have a right to determine unilaterally when a general meeting is held. This amendment rectifies this situation by requiring that the secretary may only call a general meeting if so authorised by the committee. In this way, the committee maintains control over the calling of general meetings” [Body Corporate and Community Management Legislation Amendment Regulation (No.1) 2003, Explanatory Notes for SL 2003 No. 263, page 39].

It is not being argued that the 1 July 2008 was not a committee meeting. There is a question as to whether the decision made under general business constituted authorisation to call the EGM. In my view, the resolution effectively is a strategy to deal with a request from the affected persons to review remuneration. It requires the committee to review the report, to consult with the resident managers and to make a recommendation. There is nothing in the resolution to suggest subsequent committee consideration and decision was not necessary. A determination about any of the stages of the agreed strategy stated in the resolution could only be made by the committee, and in a way prescribed by the regulation. It is also apparent that the resolution did not authorise a person mentioned in section 38(1)(a) to call the EGM. In my view, the resolution at the 1 July 2008 meeting cannot be relied on as authority to call the EGM.

The meeting stated to be on 4 July 2008 has been referred to as an “informal” committee meeting (4 July meeting). In the statement of reasons for making the interim order, I relevantly stated [at page 5] “...While the Manager’s submissions suggest there were subsequent discussions, no material has been presented to demonstrate that the committee passed a resolution in accordance with the Accommodation Module in relation to agreeing to an increase the remuneration of the Caretaker or about calling a general meeting for the purpose of considering a specific proposal to increase remuneration ...” The Body Corporate is aware of my concerns about the absence of substantiating material. While submissions suggest the committee did make decisions subsequent to the 1 July 2008 meeting at the 4 July meeting, no material has been provided demonstrating this meeting was called and conducted as required by the regulation. A gathering of persons who may be committee members does not automatically constitute a meeting of the committee. Any outcomes from the 4 July meeting should have been formalised by the committee in a way stated in the regulation. No material has been submitted to demonstrate that notice was given to members and to owners in accordance with section 26, that the meeting was conducted in the way stated in sections 29 to 32, or that minutes have been maintained recording for example, the decisions made. In addition, it is clear that a resolution was not made pursuant to section 33 of the Previous Regulation. In these circumstances, I do not consider any outcome from the 4 July meeting was a committee resolution as prescribed by the regulation.

Mr Greig submitted the 4 July meeting, the subsequent discussion with the affected persons and the 29 July 2008 letter show the committee complied with the decision of the 1 July 2008 meeting. The processes may have accorded with the resolution at this meeting. However, it is not apparent that the committee complied with the resolution in the way required by the legislation or that the committee reached a decision that could be relied on in the absence of compliance with the legislation.

With respect to the 29 July letter, in the statement of reasons for making the interim order, I stated [at pages 3 and 5] “... The 29 July 2008 letter refers to the committee, yet there is no evidence the committee made any decision on this issue or that for example, the committee had authorised the chairperson and the treasurer to do something which respect to this issue. There is a question not only about the references to the committee in the letter, but also about the authority of the chairperson and treasurer to write this letter to owners, seemingly on behalf of the committee ... The chairperson and treasurer do not represent a majority of committee members, and there is no material showing that either person had the authority to speak on behalf of the committee”. No material has been presented to dispel any of these concerns.

In my view, it is clear that the committee did not properly authorise the calling of the EGM. The absence of authority under section 38 to call a general meeting is a ground to void a general meeting. I do not agree this is a minor irregularity. Committee members did not have proper opportunity to consider the remuneration review and to make a decision on this issue. If, as it would seem, Motion 2 was submitted by the committee, it is clear committee members did not properly approve submitting the motion. There is no evidence that the committee properly approved the statements made to owners purportedly on behalf of the committee. Owners supporting the application outlined a number of concerns. In the circumstances, I consider these are valid concerns. Owners had notice of the resolution of the 1 July 2008 meeting and were entitled to rely on the advice that the committee would next meet in early October. In the absence of contrary subsequent advice, it would be reasonable for owners to expect further advice on this issue at this time.

Proper authority to call a general meeting and to submit a motion to a general meeting is fundamental to the validity of the meeting. The fact that the two motions on the agenda were capable of determination by the Body Corporate is not relevant. The meeting should not have proceeded on the basis of the absence of proper authority. It is also irrelevant that the Applicant may have been aware of the discussions that took place prior to the EGM. I do not agree that emails between members constitute authority. In my view, proper authority was required in either of the ways stated in the regulation. For these reasons, I have voided the EGM.

In these circumstances, there is no reason to consider the question raised by the Applicant with respect to the resolution passed for Motion 2.

In the reply to submissions, the Applicant stated the affected persons have provided false or misleading information to the commissioner pursuant to sections 297 and 298 of the Act.
Section 297 of the Act states:

297 False or misleading information

(1) A person must not state anything to the commissioner or an adjudicator the person knows is false or misleading in a material particular.

Maximum penalty—60 penalty units.

(2) It is enough for a complaint under the Justices Act 1886 against a person for an offence against subsection (1) to state that the statement made was false or misleading to the person’s knowledge.

Section 298 of the Act states:

298 False or misleading documents

(1) A person must not give the commissioner or an adjudicator (each the receiver) a document containing information the person knows is false or misleading.
Maximum penalty—60 penalty units.
(2) Subsection (1) does not apply to a person who, when giving the document—

(a) informs the receiver, to the best of the person’s ability, how it is false or misleading; and

(b) if the person has, or can reasonably obtain, the correct information—gives the correct information to the receiver.

(3) It is enough for a complaint under the Justices Act 1886 against a person for an offence against subsection (1) to state that the document was false or misleading to the person’s knowledge.

The claimed false and misleading information or documents mentioned by the Applicant were not relevant or of substance to my consideration of the issues. I do not intend to undertake any investigation or make any findings about the claims made by the Applicant.