The Palladian [2009] QBCCMCmr 294 (13 August 2009)

Last Updated: 17 September 2009

REFERENCE: 0501-2009

ORDER OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Plan:	The Palladian
Number of Building or Parcel:	GTP 106768
Address of Parcel:	The Palladian Drive HOPE ISLAND QLD 4212

TAKE NOTICE that pursuant to an application made under sections 76 and 77(1) of the Building Units and Group Titles Act 1980 by P. Hilliker-Mitchell, the Owner of lot 50 and various other owners.

I hereby order that the application for the following orders: ““That the meeting be adjourned or deemed to be void and declared adjourned as put” “That no action be taken in respect to any voting passed the point of the requested adjournment” is dismissed.

STATEMENT OF REFEREE’S REASONS FOR DECISION - 0501-2009

“The Palladian” CTS 0

The Palladian is a 103 lot residential body corporate within the Hope island resort complex which was developed under the Integrated Resort Development Act and is therefore regulated by the Building Units and Group Titles Act 1980.

APPLICATION

The applicants are the owner of lot 50 and the owners of another 6 lots in The Palladian who submitted a dispute resolution application under the Building Units and Group Titles Act 1980 with this office on 27 May 2009. The application relates to an Extraordinary General Meeting for the scheme held on 14 May 2009.

The orders sought are:

“That the meeting be adjourned or deemed to be void and declared adjourned as put”

“That no action be taken in respect to any voting passed the point of the requested adjournment”

BACKGROUND

The applicants state that the body corporate manager, Cambridge Management Services (CMS) convened an extraordinary general meeting of the body corporate and that this meeting was convened without the consent, authority or approval of the Palladian Body Corporate Committee .

It is claimed that the sole purpose of the meeting was to seek approval for two new ten year contracts with the existing body corporate manager “and the passage of these contracts would be for the immense financial profit to the body corporate manager. The applicant further states that copies of the proposed contracts were provided to lot owners some 21 days before the EGM although it has been stated that negotiations regarding the contracts have been ongoing for some 3 years.

The meeting began at approximately 12:06 PM and the Chairman, Mr. Nash, opened the meeting with 13 residents in attendance. The owner of lot 50 asked that scrutineers be appointed in respect of votes cast but was informed by an employee of CMS that they had decided not to appoint scrutineers and that he could call CMS and make an appointment after 24 hours and view the voting papers which would be kept in a sealed envelope.

The Chairman then proceeded to refer to the second motion relating to termination of the existing management agreement. A question from the floor asked if there was going to be any discussion regarding the new contract. It is alleged that the Chairman said “No” and continued to read the motion.

The owner of lot 50 then stood up and moved a procedural motion that the meeting be adjourned for 30 days to allow residents further time to study legal advice. The motion was seconded and the applicant believes that the majority of residents at he meeting indicated agreement overwhelmingly, by saying “yes” to the motion. The body corporate manager and Chairman stated that they were not going to accept that procedural motion and would continue with the motion regarding the new contract.

The owner of lot 50 states that he then asked the Chairman if he had been in touch with the 8 persons who had appointed him as their proxy. It is alleged he replied that he had consulted with all 8 owners and was voting as instructed, including by Mrs. Porter whose husband had died. However the owner of lot 50 states that Mr Porter is in fact alive and requested the applicant to cancel the proxy and to vote on his behalf.

The owner of lot 50 further states that other bodies corporate within the resort have held EGM’s regarding the same subject matter and at those meetings, scrutineers were appointed and in three cases motions to postpone or adjourn were accepted.

Prior to considering this application, submissions were sought from the body corporate committee and all other lot owners.

The body corporate Chairman advised as follows:

• The applicant is not a member of the committee;
• The EGM was convened under the authority of a committee resolution;
• He undertook consultation with lot owners as required by Schedule 2 Part 2 of the Act;
• The new agreement will involve a large reduction of administration and management charges;
• The notice of EGM was mailed out on 14 April 2009 in respect of the meeting held on 14 May 2009;
• The body corporate did not seek additional legal advice but relied instead upon two existing opinions provided by the principal body corporate;
• After the first motion was dealt with the applicant rose without notice asking that scrutineers be appointed;
• The body corporate manager advised him that this was at his discretion under BUGTA Schedule 2, Part 2, section 8;
• As less than 40 votes had been submitted he decided it was not necessary to appoint scrutineers and the applicant could conduct a search of the meeting records at a later time;
• The secretary proceeded to read through the motions, and recorded a majority of “yes” votes for motions 2 & 3 which is supported by the tally sheet;
• Before motion 4 was read out, the applicant produced a piece of paper bearing the Australian Coat of Arms and stated that he was holding new federal legislation affecting new standard form contracts and it was necessary to adjourn the meeting because the legislation was coming into effect the following day;
• However the Chairman and others then inspected the document and deemed it to be a “fraudulent document”, and having regard to BUGTA Schedule 2 (1), (9) & (10), called the meeting to order and declared the meeting would continue although the applicant was successful in getting owners voting from the floor to change their votes to No for motions 4 & 6;
• The applicant then sought to question the Chairman regarding the proxies which he held and asked about a proxy which he allegedly held for a Mrs & Mrs Porter even though he held no such proxy;
• the tally sheet shows that owner of lot 50 voted on behalf of Mr & Mrs Porter as their proxy.
  

A number of lot owners made submissions which included the following:

• They do not support 10 year contracts without first going to tender;
• Owners felt pressured to approve the contract with CMS;
• They do not believe that body corporate fees will be reduced under the new contract;
• It was suspicious that the Chairman refused to allow the appointment of scrutineers;
• The majority of owners live overseas or interstate and have little interest in body corporate affairs and therefore most votes are cast by proxy.
  

The owner of lot 50 further advised as follows:

• He believes the EGM was convened by CMS;
• He believes that CMS prepares the minutes of meetings;
• The draft contracts were first seen by lot owners approximately 3 weeks before the EGM;
• He believes an adjournment should have been allowed because proposed State and Federal legislation could impact on the new agreement; and denies that he said the legislation would come into effect on the following day.
• The document that he presented was not fraudulent but rather referred to the proposed Federal Legislation which he believes could apply to management agreements entered into be residential bodies corporate;
• There was no need for the approval to be dealt with urgently;
• “Horsley’s rules for meetings” states that a procedural motion once moved and seconded must be accepted by the chair and dealt with.
  

DETERMINATION

The orders being sought by the applicants are:

“That the meeting be adjourned or deemed to be void and declared adjourned as put”

“That no action be taken in respect to any voting passed the point of the requested adjournment”

The Building Units and Group titles Act 1980 (the Act) applies to this scheme. Part 5 of that Act concerns disputes and division 3 of Part 5 makes provision for orders by a referee. Within division 3, section 77 provides for the power of a referee to make orders.

Relevantly, section 77(1) provides that a referee may on application of a body corporate or a proprietor in respect of a parcel, make an order for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.

In this case the applicant states that he moved a procedural motion to the effect that the meeting should be adjourned for 30 days to allow residents further time to study legal advice. The motion was seconded and the applicant believes that “the majority of residence at he meeting indicated agreement overwhelmingly, by saying “yes” to the motion. However, the body corporate manager and Chairman stated that they were not going to accept that procedural motion and would continue with the motion regarding the new contract. The applicant submits that this is contrary law applicable to meetings as outlined in 13.18 of “Horsley’s Meetings: Procedure Law and Practice”.

It should be noted that the “Law and Procedure of Meetings” referred to in Horsley is the body of Anglo-Australian case law or common law which has developed over the centuries. It should also be noted that where there is legislation pertaining to the convening and conduct of meetings, the statutory provisions will take precedence over the common law. [1]

In this instance the Building Units and Group titles Act 1980 contains very specific provisions regarding the conduct of Body Corporate Meetings. In particular, in Schedule 2, clause 2 (9) provides as follows:

The chairperson of a general meeting may with the consent of the meeting adjourn any general meeting from time to time and from place to place but no business shall be transacted at

an adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

In my view the legislation provides the Chairperson with a discretion as to whether he or she should adjourn a meeting, and a specific statutory provision such as 2(9) overrides any applicable rule of common law to the extent of any inconsistency between the two.

Similarly, I do not believe that the Chairperson was bound to appoint scrutineers to supervise the counting of votes as the legislation provides that the appointment of scrutineers is at the discretion of the Chairperson. In this regard clause 8 of Schedule 2 provides as follows:

At a general meeting, the chairperson may appoint persons as scrutineers who shall be entitled to inspect all voting papers and ballot papers furnished to the secretary of the body corporate under section 5(b) and relating to business at that meeting.

For the above reasons the application is dismissed.

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[1] See Horsley at paragraph 1.8