The Cannery [2009] QBCCMCmr 28 (2 February 2009)

Number of Scheme:	26311
Name of Scheme:	The Cannery
Address of Scheme:	139 Commercial Road TENERIFFE QLD 4006

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Olivia Du Blet, Owner of Lot 19, Carmela Serratore, Owner of Lot 36, Colleen Risson, Co-owner of Lot 128, and Antony Turner, Owner of Lot 198

I hereby order that the application for the following interim order:

The applicants request an interim order to postpone The Cannery AGM of 3 February 2009 until after the Adjudicator has had sufficient time to make a determination in the matter of adjudication application for 15 MIS ref: 0783-2008.

is dismissed.

The Cannery community titles scheme 26311 (The Cannery) consists of 207 lots and common property. The Community Management Statement (CMS) for The Cannery indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 2008[1] (Accommodation Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme is registered as Survey Plans 101390, 110605, 121025, 127070 and 137188.

This is an application for interim orders lodged by Olivia Du Blet, Owner of Lot 19 (represented by Roger Du Blet), Carmela Serratore, Owner of Lot 36, Colleen Risson, Co-owner of Lot 128, and Antony Turner, Owner of Lot 198 (applicants) on 29 January 2009 under the Body Corporate and Community Management Act 1997 (Act). The applicants sought interim orders against the Body Corporate for The Cannery (respondent) in the following terms:

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. The Commissioner has referred the application notwithstanding that affected persons have not been given notice of the application or afforded an opportunity to make submissions about the application[2].

After the application was received on 29 January 2009, the Commissioner’s Office sought clarification on several issues, including jurisdictional issues. Amendments relating to those issues were received on 2 February 2009 and the matter was then referred to me by the Commissioner.

An adjudicator is clearly empowered to make an interim order even if all affected parties have not been given notice of the application or invited to make submissions. I am very reluctant to consider an interim order before a respondent has at least had a brief opportunity to provide comment on the application. However, in this case there is simply insufficient time before the meeting in question (on 3 February 2009) to provide any meaningful opportunity for comment.

This application relates to an earlier application lodged by the applicants (reference 0783-2008) and the Annual General Meeting (AGM) for the scheme scheduled for 3 February 2009. Based on the material provided by the applicants, the circumstances of the dispute are as follows:

The applicants were members of the Committee until the last AGM on 8 April 2008. On 11 September 2008 the applicants lodged a dispute resolution application with the Commissioner seeking numerous orders primarily relating to decisions and actions of the current Committee, including in regard to the performance of Dynaball Pty Ltd, who are the Caretaking Service Contractor for the scheme. That application has proceeded through the normal process of seeking submissions from affected persons. Following the submissions process, the application was referred to departmental adjudication in early January 2009. The application is currently awaiting adjudication and has not yet been allocated to an adjudicator.

On 8 January 2009 the Body Corporate gave notice of an AGM to be held at 6pm on 3 February 2009. The applicants seek to have the AGM postponed until the determination of application 0783-2008. They argue that this is necessary to “prevent serious or irreparable harm”.

To the extent that time constraints have permitted, I have also reviewed the voluminous material contained in the application and submissions provided in respect of application 0783-2008.

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[3]

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 claimed or anticipated contravention of the Act or the CMS; or the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or the authorisation of a person as a letting agent.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[4] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[5] Section 279(1) of the Act specifically 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.

At this time, I am concerned with the application for an interim order and the threshold issue of whether interim orders are warranted. An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates.[6] Any order granted must be just and equitable in the circumstances.[7] The examples in section 279 of the Act indicate the usual circumstances where an interim order might be made and are in the nature of injunctive relief. While it is not possible to define the range of matters that might be the subject of an interim order, an applicant needs to establish that the circumstances warrant an interim order. An interim order will not be made if the only urgency relates to an applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order.

It is not appropriate to consider the substantive issues in the application in detail at this time. But to determine whether it is just and equitable to grant interim relief, it is relevant to briefly consider the issues in the application. As an interim order can be considered on an ex parte basis, an adjudicator must be satisfied that the application raises serious legal questions and that the balance of convenience between the parties justifies injunctive relief. That is, an adjudicator must 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. Of particular relevance is evidence that an interim order is necessary to prevent serious or irreparable harm.

Adjudicators are generally reluctant to cancel or postpone general meetings, particularly close to the time of the meeting. This is because, unless there is unequivocal evidence of a fundamental error in the meeting as a whole, it is not desirable to cause a body corporate to forgo the cost of calling a meeting if ultimately the validity of some or all of the meeting might be upheld. Similarly, significant inconvenience might be caused to owners who have made arrangements to travel to a meeting. In this case I note that it would be very difficult to notify 207 owners (or their proxies) within a day of the cancellation of the meeting. Where there are serious concerns with a meeting, or motions submitted to a meeting or a committee election process to be conducted at the meeting, it is more common for an adjudicator to allow a meeting to proceed but to consider whether the outcomes of the motions or an election should be put on hold pending the final determination of the application. I will consider these options in relation to the issues raised.

The application raises numerous concerns with the functioning of the Body Corporate and the 2008 Committee but the application largely fails to draw the link between those concerns and the need to postpone the 2009 AGM or to put individual motions on hold. Although the application refers to “serious or irreparable harm”, the nature or likelihood of the alleged harm is not explained.

A key concern appears to be that any Committee elected at the 2009 AGM will be misinformed until a determination is made by an adjudicator on application reference 0783-2008. When a decision is made in respect of application 0783-2008 all owners, including the applicants and the new Committee, will receive ‘guidance’ in respect of the issues in that dispute. If the 2008 Committee has made invalid or unreasonable decisions, or otherwise failed to comply with the legislation, those matters can be addressed in application 0783-2008, to the extent that the issues are raised and properly argued in that application. However unless and until that dispute is resolved the applicants have not demonstrated why the Body Corporate should not be entitled to continue its normal administration.

I have some difficulty with the proposition that a Committee, the composition of which cannot be known until the election has occurred, can be presumed to be misinformed. It appears the primary concern regarding ‘misinformation’ is that the Committee will not informed by the applicants as former Committee members. Although the transfer of ‘corporate knowledge’ between outgoing and incoming committee members may well be desirable, there is no legislative requirement for or reasonable obligation on committee members to meet with former committee members or to have any more regard for their views than of any other lot owner’s views. Moreover, there is nothing inherently improper about a committee having regard to information from a caretaker[8], provided the committee acts reasonably, in the interests of owners, and in compliance with the legislation.

Although some current members may continue on the new Committee, doubts over the decisions of the current Committee do not automatically imperil the decision-making of the new Committee. As with all owners, the new Committee will have the benefit of the range of information resources provided by the Commissioner’s Office[9]. If any owner is concerned that the new Committee has made an invalid or unreasonable decision, that specific decision can be challenged. The legislation also provides avenues for the removal of committee members if appropriate.

I note that some current members may be elected unopposed at the AGM. The fact that other owners, including the applicants, have chosen not to nominate for committee positions is not a proper basis to prevent a Committee election proceeding.

If the AGM or the Committee election was postponed, the result would either be that there would be no Committee for the scheme or the current Committee would continue. It would be undesirable and contrary to the interests of owners to leave the Body Corporate without a functioning committee, even if only for a short period. In regard to the alternative of retaining the current Committee, I have difficulty understanding why the applicants would want the Committee to continue in its current form. Further, there seem to be no grounds to prevent owners having the opportunity to select a new Committee and, if appropriate, to express their support for or their opposition to current Committee members.

In regard to the need to disclose alleged conflicts of interest to owners, the applicants do not detail the nature of the alleged objections in their grounds for this application. However, to the extent that the issues are outlined in application 0783-2008, it would seem that owners have been put on notice of the concerns through the process of inviting submissions on that application.

It may be the case that the documents apparently included in the 2009 AGM notice in respect to inspections and maintenance were insufficient to comply with the requirements of Resolutions 17 and 18 at the 2008 AGM. If, after investigation, that was found to be the case, an order could potentially be made requiring a more accurate or complete document to be provided to owners.

The only basis that the applicants appear to put forward as to why this issue justifies postponing the AGM is that the proposed Administration Fund budget is not accurately framed as a result of the alleged deficiencies. However the applicants provide no details in this regard, such as any specific required expenditure that has been omitted from the budget, and merely indicate that “possible” additional costs “may” be incurred. Moreover, even if an inadequate budget is approved at the AGM there is nothing preventing the Body Corporate later approving a special levy[10] if additional liabilities arise for which inadequate provision has been made in the budget. Furthermore, it would be undesirable if the Body Corporate were unable to continue to manage its financial affairs and raise levies while the current applications were under consideration. As such, I find no basis to prevent these motions being considered or acted upon.

It may be that there is a valid issue to be investigated regarding whether the 2008 AGM minutes were properly distributed to all owners and whether the contents of the minutes are correct. However the applicants fail to explain any urgency in that matter or how it could be a justification to postpone the AGM. Moreover, it may be that this could be clarified at the meeting itself, if owners declined to approve the motion. Conversely, if the majority of owners expressed, through their voting on Motion 1, satisfaction with the minutes they have received (if in fact distributed) as an accurate reflection of the conduct of the 2008 AGM, that would be a consideration in investigating the accuracy of the minutes.

In a recent case[11] the District Court considered the validity of a motion, in light of claims that material circulated by the committee was misleading. His Honour Justice McGill (at para 50) said:

If there is a failure to give proper notice of the meeting, which may occur if the notice of the proposed resolution is misleading as to what is really proposed, or its effect and implications, then that may well impact on the validity of the resolution, because in such circumstances there was either no valid notice of the meeting or no valid notice of the proposed resolution.

After a discussion of case law relevant to the fiduciary duty of committees to make full and fair disclosure, His Honour noted (at para 70):

There is nothing in the cases which suggest any obligation to be “balanced” about an issue put forward; if the committee is proposing a course of action, it is entitled to support it vigorously, so long as the fiduciary obligation is not breached.

A question could arise as to whether the comments circulated by the Committee on these motions were misleading, and this can be investigated in due course. However I am not satisfied that the applicants have demonstrated that this question justifies the postponement of the meeting or the individual motions. I note that the explanatory note has already been distributed to all owners and even if a new notice of meeting was issued without that information, owners have already been put on notice of the Committee’s views. Further, the question is a moot point if the motions are in fact passed by a majority of owners. It would only be if either motion fails to pass at the 2009 AGM that the issues of whether the explanatory notes were misleading and whether they in fact misled any voters could be properly investigated. There are no grounds to put the result of the motions on hold because the applicants’ concerns only arise if the motions fail, in which case they would not be acted on in any event.

It may be the case that the document apparently included in the 2009 AGM notice in respect to legal expenditure is inaccurate or insufficient to comply with the requirements of Resolution 12 at the 2008 AGM. If, after proper investigation, that was found to be the case, an order could potentially be made requiring a more accurate or complete document to be provided to owners. However the applicants fail to explain any urgency in that matter or how it could possibly be a justification to postpone the AGM. It is not apparent that the document relates to a specific motion and so there is no basis to put any specific motion on hold pending investigation of this issue.

I am not satisfied that the applicants have presented sufficient grounds to warrant the AGM scheduled for 2 February 2009 to be postponed or for the results of any of the motions or Committee elections to be considered at that meeting to be put on hold pending determination of application reference 0738-2008. Accordingly I have dismissed the interim order application.

The application for final orders will proceed in accordance with the normal processes of this Office, including calling of submissions from all affected parties. A final order will be made in due course, in all likelihood after the determination of application reference 0738-2008.

[1] As of 30 August 2008 the new Accommodation Module came into force, replacing the Body Corporate and Community Management (Accommodation Module) Regulation 1997 which applied until that date.
[2] Section 247(3) of the Act
[3] See sections 227, 228, 276 and Schedule 5 of the Act
[4] Section 276(2) of the Act
[5] Section 284(1) of the Act
[6] Section 279 of the Act
[7] Section 276 of the Act

[8] Section 13(1)(b) of the Accommodation Module requires the caretaker to be a non-voting member of the Committee, indicating that it is entirely appropriate for a committee to obtain input from a caretaker.
[9] See www.bccm.qld.gov.au
[10] Pursuant to section 139(2) of the Accommodation Module
[11] Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

The Cannery [2009] QBCCMCmr 28 (2 February 2009)