The Citysider [2009] QBCCMCmr 29 (3 February 2009)

Last Updated: 9 March 2009

REFERENCE: 0073-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	177
Name of Scheme:	The Citysider
Address of Scheme:	17A Upward Street CAIRNS QLD 4870

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

Walter & Therese Hartmann, the Owners of lot 1

I hereby order that owing to the possibility that a resolution on motion 9, considered at the AGM held on 6 November 2008, could be invalid, the Body Corporate is to refrain from carrying out any resolution upon that motion, including entry into a contract with a painting contractor, until a final order is made in respect of this dispute resolution application.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0073-2009

“The Citysider” CTS 177

Application

The applicants, Walter & Therese Hartmann are the owners of lot 1 in the scheme, have sought an Interim Order in the following terms:

We seek to stop and prevent any further action on motion 9 by the committee. Motion 9 entails painting of the complex for more than $102,000. we believe the inconsistencies we raised in the application could change the voting result and therefore the final outcome on this motion. We are not aware that the committee has entered into any agreements as yet but the timing is outside our control. We know that the painter for the for the second option is very keen to start. In fact very shortly after the AGM he was wandering around the complex. Our application can only have merit when the painting of the complex (motion 9) is on hold until the final order is made.

The final outcomes sought by the applicant are:

1. the body corporate recounts the votes of its recent AGM and discounts all invalid proxy votes and discounts incomplete votes on the voting papers- in particular on motion 9.
2. the body corporate informs all lot owners of the revised voting results.
3. the body corporate acts on the revised voting results.
   

The Scheme

The Citysider Community Titles Scheme (the Scheme) is a 41 lot scheme under the Body Corporate and Community Management Act (Act) and the Accommodation Module Regulation (Accommodation Module).

Background

The applicants state that they inspected the records of the body corporate including the minutes of the last AGM, held on 6 November 2008 and believe that the minutes of that meeting do not reflect the actual outcome of that meeting. In particular, they believe that:

1. A proxy was given to the owner of lot 38, Mr. S Habjan, by the owner of lot 8. However the owner of lot 38 did not attend the meeting and instead “assigned” the proxy to the Chairperson, Mr Kennedy, which the applicants believe, is therefore invalid.
2. The owners of lots 2, 17, 18, 33, 34 and 38 gave six proxies to their son (who is not a lot owner). Although the minutes only record that 5 proxies were given, this is still more than 10% of the 41 lots in the complex. The applicants therefore believe that that these proxy votes are invalid.
3. The owner of lots 25, 29 and 36 provided voting papers but the votes are not recorded in the minutes.
4. The owner of lots 31 and 35 cast votes by way of voting paper but the minutes of the AGM record that another owner, Mr Salvador, was given two proxies to vote on his behalf.
5. Voting papers were counted incorrectly regarding motion 9, a motion with alternatives. While the minutes record that there were 26 “yes” votes, the applicants believe that voting papers for lots 25, 29, 36, 31, 35, 26, 39 and 41 were incorrectly recorded as “yes” votes and therefore, only 18 “yes” votes should have been recorded.
6. As “no vote on the primary part of the motion invalidates the vote on any alternative option”, the applicants believe that the minutes do not correctly record the results of voting upon motion 9.
   
7. They believe that the results for the above votes should have been recorded as follows:

7 votes for option1;
4 votes for option 2; and
1 vote for option 4.

8. Votes cast at the meeting “could not be followed” because the handwritten tally sheet which was used to record the proceedings at the meeting is no longer available.

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 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)).

DETERMINATION

At this point in time I am considering the application for the following interim order:

to stop and prevent any further action on motion 9 by the committee. Motion 9 entails painting of the complex for more than $102,000. we believe the inconsistencies we raised in the application could change the voting result and therefore the final outcome on this motion. We are not aware that the committee has entered into any agreements as yet but the timing is outside our control. We know that the painter for the for the second option is very keen to start. In fact very shortly after the AGM he was wandering around the complex. Our application can only have merit when the painting of the complex (motion 9) is on hold until the final order is made.

While it is not possible to exhaustively define what matters might be the subject of an interim order, an applicant does need 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.

Sub-sections 279(1) & (2) provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.

(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; (c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...

Further, section 247 of the Act provides as follows

(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.

While I am permitted to make Interim orders on an ex parte basis, 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[1] and any order granted must be just and equitable in the circumstances.[2]

The circumstances of this case indicate to me that this may be an appropriate occasion for the making of an interim order to prevent the body corporate entering into a contract which involves expenditure in excess of $100,000. While I appreciate that the body corporate has not yet had an opportunity to make submissions regarding the matters raised by the applicants, serious concerns have been raised regarding the validity of the resolution upon motion 9.

I would hasten to point out that this is a temporary order to remain in effect until such time as the body corporate committee has had an opportunity to make submissions regarding the applicants’ claims. Upon consideration of submissions from the committee a decision will be made as to whether the subject resolution is a valid resolution or whether further consideration by the body corporate is required. I understand that the body corporate is desirous of having the complex painted as soon as possible and will seek to expedite this matter.

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[1] Section 279 of the Act
[2] Section 276 of the Act