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Focus [2009] QBCCMCmr 104 (12 March 2009)

Last Updated: 29 April 2009

REFERENCE: 1050-2008


ORDER OF AN ADJUDICATOR


MADE UNDER PART 9 OF CHAPTER 6


BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997


Number of Scheme:
12996
Name of Scheme:
Focus
Address of Scheme:
114 The Esplanade SURFERS PARADISE QLD 4217

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

Scott & Bronwyn Strain, the owners of lot 90


I hereby order that the purported election of the chairperson, treasurer and ordinary members of the committee at the Annual General Meeting dated 26 November 2008 is void and that the following individuals are deemed to be, in addition to Steven Stojanovic as secretary, the elected members of the committee (subject to section 33 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008) until the close of the general meeting called and held in accordance with this order or until the end of a period of six weeks from the date of this order (whichever is the earlier):
Chairperson – Lex Bell
Treasurer – Dean Anderson
Ordinary Members – Colin Strain, Gary Hendrick, Marie Valerie Vlaskalic, Michael Ashendon

I further order that within six weeks of the date of this order, the Body Corporate for Focus Community Titles Scheme 12996 must call and hold a general meeting for the purpose of electing a committee.

I further order that for the purposes of electing a body corporate committee, nominations made prior to the Annual General Meeting on 26 November 2008 shall remain effective.

I further order that with the exception of the requirements for the choosing of the committee specified in this order, the election of the committee must otherwise be in accordance with the requirements of the Body Corporate and Community Management Act 1997 and the Accommodation Module.

I further order that the body corporate must appoint a returning officer for the general meeting required to be held by this order, to perform the following functions:
  • Decide questions about eligibility to vote and voting entitlements;
  • Receive secret ballot papers;
  • Count the votes cast for each committee candidate; and
  • Decide whether a vote is valid.
I further order that the agenda for the general meeting must include any motion properly submitted to the body corporate in accordance with section 67 of the Accommodation Module.

I further order that a copy of this order and accompanying reasons, be sent with the Notice of Meeting for the general meeting required to be held by this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1050-2008


“Focus” CTS 12996

BACKGROUND

The Focus scheme has been the subject of many applications to this office. During the period since June 1997 to the present, no less than 29 applications have been lodged, including 14 in the last two years alone. The scheme is also currently the subject of litigation in the Commercial and Consumer Tribunal (CCT) (application number KC005-08).

FOL is an Australian public company limited by guarantee, which company is the licensee for providing certain services to the scheme pursuant to an agreement dated 12 October 1979 (the agreement). Prior to this time, FOL states that the management rights were owned by a party independent of the body corporate. The performance of their duties is stated to have been regarded as so unsatisfactory that the lot owners decided to purchase the management rights for themselves. The lot owners at the time formed the Focus Owners Unit Trust (“the Trust”) and FOL, the trustee of the trust. A unit in the trust may be purchased by any lot owner who wants to be part of FOL. It is understood that some 68 of the 125 lot owners own a unit in the Trust and are entitled to vote at general meetings of FOL.

Much of the disputation in the scheme’s recent past is related to differences between two distinct factions within the body corporate, those owners who are part of FOL and those who are not. It appears that, for the last couple of years, the committee has comprised a majority of owners who are not part of FOL.

Previous adjudicators’ decisions have established the following:


It is relevant to note the composition of the committee prior to the AGM of 26 November 2008 and subsequent to it, as the subject of this particular dispute is the election of committee members at the AGM of 26 November 2008, in particular the positions of treasurer and ordinary committee members. Prior to the 2008 AGM, the composition of the committee was as follows:

Table One - Committee Composition prior to AGM of 26 November 2008


Position
Appointee
Chairperson
Lex Bell
Secretary
Steven Stojanovic
Treasurer
Dean Anderson
Ordinary Member
Colin Strain
Ordinary Member
Gary Hendrick
Ordinary Member
Marie Valerie Vlaskalic
Ordinary Member
Michael Anderson

Since the AGM of 26 November 2008, the committee has comprised:

Table Two - Committee Composition following AGM of 26 November 2008


Position
Appointee
Chairperson
Lex Bell
Secretary
Steven Stojanovic
Treasurer
Lorraine Bryant
Ordinary Member
G Curcic
Ordinary Member
Dragan Mitic
Ordinary Member
Marie Valerie Vlaskalic
Ordinary Member
R Glading

APPLICATION

This is an application made on 5 December 2008 by Scott and Bronwyn Strain (the applicants), the owners of lot 90 against the body corporate of Focus CTS 12996 (the body corporate) for one of the following orders:


(a) Fresh elections be ordered for the positions of treasurer and ordinary committee members of Focus CTS 12996 in substitution for the poll for those positions taken at the AGM on 26 November 2008; or
(b) All positions on the committee of Focus CTS 12996 be declared vacant and a fresh election be held to fill those positions; or
(c) The secret ballot voting papers of committee positions submitted to the AGM of Focus CTS 12996 on 26 November 2008 by the applicants (and held by the body corporate manager) be opened in the presence of witnesses and be counted, followed by any appropriate changes in the persons elected to committee positions at the AGM.

The grounds to the application are to the following effect:


JURISDICTION

“Focus” CTS 12996 is a community title scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module). There are 125 lots in the scheme created under a Building Unit Plan of subdivision.

The current Accommodation Module commenced on 30th August 2008, replacing the previous Accommodation Module that operated from July 1997 (Previous Module). A number of provisions of the Accommodation Module are the same, or substantially the same as provisions in the Previous Module despite the provisions having different section numbers. These provisions are generally to be dealt with as replacements of the similar provisions of the repealed legislation and anything done under the Previous Module will not generally be affected by the commencement of the present Accommodation Module (sections 207 -214, section 20 Acts Interpretation Act.). Where relevant, references will be made to the Previous Module in parentheses after the current module reference.

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

  1. 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 authorization of a person as a letting agent for a community titles scheme.

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

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

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to Strata-Jem Pty Ltd, the body corporate manager (BCM), with an invitation to all owners (excluding the applicant) and the committee to respond to the matters raised in the application. A total of five submissions were received from individual lot owners.

The owner of lot 8 made a brief submission proposing that the composition of the committee remain as is until the outcomes of pre-existing disputes are determined.

The owner of lot 70 made a brief submission querying the validity of the AGM on the basis that it was scheduled to commence at 11am, but did not in fact commence until 11:28am and during that time four or five people were allowed to change their voting papers.

A co-owner of lot 26 made submission to the following effect:


A co-owner of lot 97 made a submission to the following effect:


Hynes Lawyers made submission on behalf of FOL, the owner of lot 2 to the following effect:


Applicants’ Reply to Submissions

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


Investigation

By letter dated 3 February 2009, the following information was requested from the body corporate, through Strata-Jem Pty Ltd:


On 20 February 2009 the requested information was received. I noted that the voting tally sheet for the AGM of 26 November 2008 did not include the information prescribed to be included by section 28(4) (22(4)) of the Accommodation Module. The voting tally sheet did not include a list of votes rejected from the count, nor did it disclose any reason for any rejection. It merely disclosed the total number of votes cast for each candidate and included in the count. I note that for the election of ordinary members, the “electronic tally” differs from the “manual recount”. It appears as though the results of the “manual recount” were used for the purposes of electing ordinary members, as these are the results listed in the Statement by the Chairman of the Body Corporate of Focus CTS 12996.

Accompanying the information received on 20 February 2009 was an unsigned and undated document headed “Ballots Rejected – Reason” and “Ballots Incorrectly Included”. On 26 February 2009, the body corporate manager was requested to advise who authored this document and the date on which it was prepared. Further, I noted the claim attributed to the body corporate manager that the applicants’ signatures on the particulars envelope in respect of the committee election held on 26 November 2008 differed from their signatures on earlier documents held by the body corporate. In this regard, I requested copies of earlier documents held by the body corporate that contained the applicants’ signatures. Janice McCarthy responded by letter dated 6 March 2009 advising that the document I referred to was completed by her, sometime after the meeting took place. She further advised that there is documentation in the blue folder with samples of signatures and that the particulars envelope was given to Mr Strain by the chairperson, and she did not see it returned, so the examples used on the day are no longer available. Ms McCarthy attached some earlier voting papers which contain the applicants’ signatures.

DETERMINATION

Applicable Law

Sections 14 to 28 of the Accommodation Module prescribe the law relating to the choosing of the committee at an AGM.

Should the Applicants’ Secret Ballot Voting Paper Have Been Counted?

This application concerns the exclusion of the applicants’ secret ballot voting paper from the tally of votes concerning the election of the committee, in particular, whether their ballot paper was correctly or incorrectly excluded from the count.

The legislation is not very prescriptive in terms of when votes should be rejected from a count. Section 82(2) of the Accommodation Module would justify the rejection of a vote from an owner who owed a body corporate debt at the time of the meeting. Section 28 of the Accommodation Module gives the chairperson the responsibility of declaring the results of an election. Section 28(4) of the Accommodation Module provides that the voting tally sheet kept for the meeting must include, for each ballot conducted, a list of votes rejected from the count; for each vote rejected – the reason for the rejection and the total number of votes counted for each candidate. The voting tally sheet supplied by the body corporate did not include the information required by section 28(4). In particular, it did not list the votes rejected from the count, nor the reason for rejection. In these circumstances, it seems reasonable to me to rely on the applicants’ account of why their vote was excluded, as expressed in their grounds. I note that this had not been refuted by the body corporate or any other person making a submission. The applicants allege that at the AGM, when ballot papers for committee positions were about to be counted, the body corporate manager raised an issue of whether the applicants’ ballot papers should be opened and counted, stating that their signatures on the envelopes containing the ballot papers did not appear to be identical with the applicants’ signatures on earlier documents held by her. The applicants have submitted that they duly completed their ballot papers for committee positions in proper form, and returned the completed ballot papers in the envelope provided, by mail to the BCM well prior to the AGM. In particular, both applicants personally signed in the proper place the envelope containing the completed ballot papers, prior to returning the material to the BCM.

The body corporate has not provided me with any material to substantiate the claim that the signatures of the applicants on the particulars envelope differed from the applicants’ signatures on earlier documents held by the body corporate. Contrary to Ms McCarthy’s advice in her letter of 6 March 2009 that “The particulars envelope was given to Mr Strain by the Chairperson, and I did not see it returned. So the examples used on the day are no longer available.” the particulars envelope was in fact, supplied by her in the blue folder she refers to. I have closely examined the particulars envelope for lot 90. It appears to me to have been completed correctly and is date stamped as having been received by the BCM on 24 November 2008. There are hand written notes on the envelope stating “NOT COUNTED” “POA not accepted” “Doubt on signatures”. I specifically examined the signatures on the particulars envelope and the signatures on earlier documents submitted by the BCM in relation to lot 90 (including voting papers for the 2006 and 2007 AGMs and an Appointment of Proxy for the 2008 AGM), and I do not regard them as sufficiently dissimilar to have justified a decision to exclude the applicants’ vote in relation to the committee election of 26 November 2008. In any event, the applicants have stated that the signatures that appear on the particulars envelope are in fact their signatures. In my view, this is sufficient for me to make a finding that their vote was incorrectly excluded from the count.

How to Remedy the Error?

The question then arises as to how to remedy this error. I would have been minded to order in the terms sought by the applicants, that their ballot papers be opened and counted, followed by any appropriate changes in the persons elected to committee positions at the AGM but for the fact that the submissions received in response to this application have revealed that further errors may have occurred in the election process. These errors can be summarised as follows:


We advise that your secret ballot envelope was received by this office, but on the day, for some unknown reason, the ballot was not included in the tally which was conducted at the back of the meeting room. The ballot envelope was later discovered (after the close of the meeting) on the main front of room table. It is an unfortunate situation, and we can only apologise for any oversight that might of (sic) occurred on our part. Submission was made that the failure to count Denwag’s ballot papers evidences that there are numerous flaws with the election process and administration and that the temporary loss of the Denwag ballot papers must give rise to questions concerning the integrity of the election result.


Lot 97 – Name on the Ballot Particulars Envelope incorrectly spelt, Chairman disallowed voting paper, and Power of Attorney (Nimal De Silva) voted on behalf of his daughter. Scrutineers and Strata-Jem staff overlooked withdrawing the ballot envelope and asking for it to be replaced.

.

In addition to these alleged errors, Ms McCarthy claims in her unsigned and undated document referred to above, that the secret ballot voting paper of lot 63 was incorrectly included in the count. She notes the following in the document referred to above:
Lot 63 – Ballot Particulars Envelope signed by Mrs Scully as Power of Attorney, when none on file. Both Mrs Scully and Mrs Varga were present at the meeting, voting paper was withdrawn and Mrs Varga voted from the floor. However, Scrutineers and Strata-Jem staff overlooked withdrawing the ballot and asking for it to be replaced.

It appears to me, on the basis of the information presented to me, that at least two ballot papers (those of lot 28 and lot 90) were incorrectly excluded from the count in the election of committee members at the AGM of 26 November 2008. It also appears to me that there may be a possibility that two ballot papers (those of lot 97 and lot 63) may have been incorrectly included in the count. However, I am not prepared to make any findings in this regard, on the basis of the information presented to me.

On the basis of the above, I am satisfied that the number of votes actually cast for each candidate for the position of chairperson, treasurer and ordinary committee member could differ from the declared results to such an extent that the results declared at the meeting may be incorrect. Without opening the ballot papers of lots 28 and 90 and, in so doing, destroying the secrecy of the secret ballot, there is no way to determine the specific impact of the errors established by this application on the election results. Further, I have no way of determining the impact of the other possible errors which have been suggested by the owner of lot 97 and Ms McCarthy, even if it were to be found that further errors had in fact occurred. In such circumstances, it seems to me to be just and equitable to void the election of all committee members purportedly elected at the AGM of 26 November 2008, with the exception of the secretary, who was elected unopposed.

Requirement for Further General Meeting

I have made an order recognising that the election was flawed and requiring the body corporate to convene a general meeting for the purpose of properly determining the committee positions other than secretary. I am cognisant of the fact that there is a high level of disputation within the scheme and that the committee positions (other than that of secretary) are closely contested. I am concerned by the errors identified in this application and the failure of the body corporate at the AGM of 26 November 2008 to comply with the legislation in terms of the conduct of a secret ballot, particularly in relation to the recording of required information in the voting tally sheet, although practically, this was largely the responsibility of the BCM. For these reasons, I consider it essential for the body corporate to appoint an independent returning officer for the general meeting to decide questions about eligibility to vote and voting entitlements, receive secret ballot papers, count the votes cast for each candidate and decide whether a vote is valid. The body corporate should note section 89(4) (52(4)) of the Accommodation Module which specifies persons who are not eligible for appointment as a returning officer for a body corporate, including a lot owner in the scheme or a body corporate manager or associate of a body corporate manager.

As none of the nominations made for committee membership have been contested, I have ordered that for the purposes of electing a body corporate committee, nominations made prior to the Annual General Meeting on 26 November 2008 shall remain effective.

To ensure that the administration of the body corporate is not interrupted in the period
of convening the general meeting, I have ordered that the persons who were elected to the committee at the 2007 AGM (as identified above in Table 1 - Committee Composition prior to AGM of 26 November 2008 ) will hold those positions until the close of the general meeting or until the end of a period of six weeks from the date of the order, whichever is the earlier. With the exception of the specific provisions in the order, the election of the committee must
otherwise be in accordance with the Act and the Accommodation Module. I have also ordered that the meeting may consider any motion properly before it.

So that owners are aware of the reasons for the further general meeting and further voting in relation to election of committee members, I have also ordered that a copy of this order and accompanying reasons, be sent with the Notice of Meeting for the general meeting required to be held by this order.

I have made this order as I consider that there was significant non-compliance with the legislation in determining the committee at the AGM, there is a high level of disputation within the scheme and the committee positions (other than that of secretary) are closely contested. It is important that the committee is properly chosen and that each lot owner who is entitled to vote and does vote, has their vote counted.


[1] Focus [2005] QBCCMCmr 569 (13 October 2005). It was unnecessary to determine whether FOL was also a “letting agent”, although the adjudicator commented that, prima facie, it appeared to be.
[2] Focus [2005] QBCCMCmr 569 (13 October 2005)
[3] Focus [2005] QBCCMCmr 552 (6 October 2005)


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