Wynyard Estate [2009] QBCCMCmr 316 (25 August 2009)

Last Updated: 28 September 2009

REFERENCE: 0777-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	34055
Name of Scheme:	Wynyard Estate
Address of Scheme:	90 Webster Road DECEPTION BAY QLD 4508

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

Zinaida Grebeneva (Wood) and Peter Wood, owner and occupier respectively of Lot 17

I hereby order that the annual general meeting as convened for 26th August 2009 is invalidly convened and of no effect, and that any voting papers received for that meeting are invalid.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0777-2009

“Wynyard Estate” CTS 34055

APPLICATION

This is an application dated 16th August 2009 by Zinaida Grebeneva (Wood) and Peter Wood, (the Applicants) owner and occupier respectively of Lot 17, against the body corporate for Wynyard Estate CTS 35055 (the body corporate) for orders as follows –

1. to cancel the Annual General Meeting proposed to be held on 26th August 2009 ; or in the alternative -

to declare the Annual General Meeting, Circular to owners re Annual General Meeting (dated 4.08.09) and any decisions made on the AGM to be void;

2. to appoint Capitol Body Corporate Administration as an administrator for the scheme for the purpose of calling and conducting an AGM in accordance with the legislation;
3. to order the body corporate to consider issuing a notice of breach of the Code of Conduct for Committee on “Mr Ratcliffe” the chairperson/secretary/treasurer.
   

In addition the Applicants seek an interim order to put the proposed annual general meeting “on hold” pending the final determination of this dispute.

JURISDICTION

“Wynyard Estate” CTS 34055 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 66 lots in the scheme.

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 authorisation 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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “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”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore sought submissions from the body corporate and the body corporate manager, Body Corporate Services, by close of business on 24th August 2009.

SUBMISSIONS

In respect of the forthcoming annual general meeting (AGM) to be held on 26th August 2009, the Applicants say that the official notice inviting nominations for committee membership should have been given within a three week period three weeks before the end of the financial year which was 31st May. There was nothing received “before or after.” The Applicant Ms Wood nominated herself as chairperson on her own initiative on 20th June 2009, as well as submitting a motion for a body corporate manager.

Notice of the AGM dated 4th August 2009 was received on 7th August 2009. The Applicants wrote to the body corporate manager, with copy to the committee on 8th August pointing out the failure to conform to the legislation, and that as a result there were no motions submitted by lot owners.

The motion about the appointment of a body corporate manager was not included, but was submitted as a committee motion instead. None of Ms Wood’s requests which she had previously “raised” with the committee were on the agenda eg –

• to issue a “Breach of the Code” Notice on Mr Ratcliffe the Chairperson/Secretary/Treasurer as set out in a letter dated 25th July 2009;
• to issue a contravention notice for breach of by-laws and a remedial action notice for breaching the Code of Conduct for Caretaking and Letting Agreements to the on-site manager despite her sending a BCCM Form 1 on 20th June 2009, and letters dated 20th May 2009 and 16th June 2009;
• to consider terminating the caretaking and letting agreement in accordance with her letter dated 16th June 2009;
• to improve all lots by the installation of security screens to be paid for from the sinking fund “(instead of voting on motion submitted by Mr Ratcliffe: Installation of security screens – Lot 14)” in accordance with her letter dated 15th June 2009.
  

There is a motion to reappoint Body Corporate Services although the Applicants have complained that this company has failed to comply with the Code of Conduct for body corporate managers.

The meeting is proposed to be held at the offices of the body corporate manager which are in Toowong, 32km away from scheme land. The Applicants wrote to the body corporate manager, with a copy to committee members on 8th August 2009 complaining that to hold a meting 32 km from scheme land was a breach of section 73 Accommodation Module, and also contrary to the code of conduct for committee in that it was unfair, not in the body corporate’s best interests. They said it also breached the code of conduct for body corporate managers, in that it was misleading and unconscionable conduct, unfair, unprofessional and not in the body corporate’s best interests. They asked for the meeting to be held within 15 km of scheme land. Edward and Gwenneth Worsley, owners of Lot 18, also signed the letter.

The Applicants say that the convening of the AGM is another example of the poor management by the committee and the body corporate manager, who continually breach their respective codes of conduct. There are few lot owners living in the scheme, and the committee does what it likes.

She says that Body Corporate Services “were appointed by the committee as body corporate manager for another year but presented on the Agenda as already voted for.” She refers to Motion 7 about insurance where it is noted that “Body Corporate Services be authorised to renew the insurances.....”

I sought submissions from the body corporate, but submissions were received from Paul Ratcliffe (Mr Ratcliffe), who holds all the executive positions on the committee, and from Ivan Draganic, (Mr Draganic) who is an ordinary member of the committee. Neither of them addressed the interim outcome sought about the failure of procedure to convene the AGM.

Mr Ratcliffe says that in July 2008 he was nominated for all three executive positions on the resignation of the previous combined chairperson, treasurer and secretary. He says that the committee is supportive and that when owners send emails or have concerns, the committee speaks to the relevant person. The committee has monitored the visitors’ car park use of which is a concern of the Applicants. The committee decided to ask the resident manager to speak to those parking and remind them if they are breaching by-laws. The committee has received no complaints other than from the Applicants. It has full confidence in both the on-site manager and the body corporate manager.

Mr Draganic says that there are only three resident owners in the complex, and he has previously asked Ms Wood to join the committee. The Applicants have had concerns about the visitors car park for some time but he has told then that he is powerless to do anything about it, and cannot “police and annoy the tenants.” He told them to contact the body corporate manager and the property manager. The Applicants are annoyed by lights and exhaust fumes from the car park. A few days after discussing the car park, he received an email from the Applicants saying that the committee was “useless and incompetent.” The Applicants have recorded the car number plates of tenants parking in the visitors’ car park and passed them to the property manager.

The body corporate manager Kaye Christensen of Body Corporate Services, analysed the grounds of the outcomes sought as follows –

• that invitations to nominate for committee positions and to submit motions to the annual general meeting were not sought from owners;
• that there are irregularities in the financial accounts of the body corporate;
• that the body corporate manager is not taking steps to enforce the by-laws;
• that the body corporate manager’s agreement has ended.
  

Body Corporate Services (BCS) use a mail-out agency for sending notices, and says that invitations to nominate for committee and to submit motions was sent to the agency on 20th May 2009, and the agency confirmed “lodgement of Noms” on 22nd April. The invitation was to nominate by end of May. However, despite the agency’s confirmation, other owners have said that they did not receive nomination forms, and BCS now believes that there may have been some breakdown in the service and that invitations were not made. BCS offers at its expense to convene an extraordinary general meeting to allow owners to nominate for committee and to submit motions.

It says it was not aware of the failure until the matter was raised by the Applicants. Since that time, it has invited the current committee and the Applicants to nominate and to submit motions. The Applicant’s motion has since been placed on the agenda.

BCS says that the financial accounts were audited and copies sent to all owners. In respect of by-law enforcement it says that it is the role of the committee to instruct the body corporate manager, and not the other way round . It agrees that the body corporate manager’s agreement has expired but that BCS is continuing on a month by month basis until the AGM is held.

It says that if the AGM goes ahead, owners can vote on the statutory motions and consider body corporate management.

DETERMINATION OF AN INTERIM APPLICATION

In this application, the Applicants wish to put the forthcoming AGM “on hold” pending a final outcome that it is found to be invalidly called because of the failure of the body corporate to adhere to the legislative processes for convening a meeting. The final outcome seeks inter alia that an administrator is appointed to convene the annual general meeting.

An interim order is in the nature of an injunction, and an adjudicator must weigh up the balance of inconvenience which will be caused to the respondent if the applicant is successful, against the loss of a remedy, or increased expense in seeking a remedy, of the applicant if he or she is not successful. The applicant must also demonstrate that there is prima facie a breach of the legislation or the community management statement, that is, that the applicant has a good chance of success in obtaining the final order sought.

The agenda for the AGM was notified to the Applicants on 7th August 2009 for a meeting on 26th August 2009 at the offices of the body corporate manager, although the current contract with the body corporate manager has ended.

Section 64 Accommodation Module requires that an annual general meeting must be called and held within three months of the end of the financial year, which I am advised in this scheme is May. Section 14(1) Accommodation Module states that the committee must be chosen at the annual general meeting. Section 17 Accommodation Module says that the secretary must serve a notice on each owner setting out that owner’s right of nomination under section 18 Accommodation Module, and that notice must be given at least 3 weeks before, but not earlier than 6 weeks before the end of the body corporate’s financial year.

Section 67(5) Accommodation Module requires that if a notice is forwarded to members of the body corporate inviting nominations for committee member positions to be filled at an annual general meeting of the body corporate, the members must also be invited to submit motions for inclusion on the agenda for the meeting.

The body corporate manager says that there was an administrative error in sending out the notices for nominations and to submit motions, but that has been corrected so far as the Applicants themselves and committee members are concerned. It asks that the AGM might go ahead so that at least statutory motions might go ahead before the end of the financial year, and the matter of the body corporate manager might be decided.

I am satisfied that the Applicants have demonstrated that there is prima facie a serious flaw in the convening of this AGM proposed for 26th August 2009, as is admitted by the body corporate manager. However, I am not of the view that putting the AGM “on hold” will be able to remedy the defects caused by the administrative failure of the mail-out agency and/or the body corporate manager.

The legislation requires that the steps as set out above are taken, and I am of the view that such steps are mandatory, that is, they are so serious in nature and go to the essence of self-government by the owners in a body corporate that they can be excused if the body corporate has made an error, as can happen from time to time. Any insignificant error might not cause the entire meeting to fail if there is no evidence that any owner suffered detriment, but I am of the view that in a scheme of 66 owners, even where they are largely apathetic about the running of the scheme, the failure to seek nominations for committee and to seek motions is so vital as to invalidate this AGM.

There are perhaps several owners, or new owners, who wish to make nominations even if they do not want to nominate themselves. This AGM cannot proceed without all owners having the opportunities provided by the legislation.

I am therefore unable to save “part” of the AGM so that voting may proceed on the matter of the statutory motions and the motion for body corporate manager. I regret to say in this matter that the body corporate must start again, and if that means that an annual general meeting is held out of time, then application should be made to this Office for a declaration that such meeting may be held to be the annual general meeting. Such applications for declaratory orders are dealt with swiftly.

The Applicants also argue that to hold a general meeting more than 15km from scheme land is contrary to section 73 Accommodation Module. However, section 73(2) states -

(2) However, if the committee notifies the owners of its intention to hold the meeting at a stated place more than 15km from scheme land, and allows them a reasonable opportunity to object in writing to the proposed place, the meeting may be held at the place unless written objections to the proposed place of meeting are given by or for owners of at least 25% of the lots included in the scheme. (my underlining)

The place of the meeting was notified to the Applicants at the latest by 7th August 2009, and they objected to it on 8th August 2009. Another lot owner (co-owners) also signed. I consider that 21 days is a reasonable time in which to allow objection to the place of the meeting, but there is no evidence that the required 25% objected, but only 2 lot owners in a scheme of 66.

I understand the Applicants’ frustration with the chosen venue if they are one of the few lot owners who wish to attend the meeting and the majority are not resident and perhaps do not care where the meeting is held, but I do not find that the selection of the venue by the body corporate, at a place where the records of the body corporate are currently held, is contrary to the legislation, or unreasonable. In any event, the Applicants have given no evidence that there is any particular reason why they cannot travel 32km to the meeting in lieu of 15km.

For the reasons set out above, I make an interim order that the annual general meeting as convened for 26th August 2009 is invalidly convened and of no effect, and any voting papers received for that meeting, are invalid. In respect of the two first final outcomes sought, this interim order has the effect of a final order.

In respect of the third final outcome sought, the Applicants seek that an administrator is appointed to convene an AGM. Submissions from all owners have not been sought on this, but the Applicants may decide that if the AGM is convened in accordance with the legislation, as would have been the case save for the unexplained administrative error, that the body corporate should hold its annual general meeting as soon as possible. I note that Capitol body corporate management is proposed as a motion to a forthcoming AGM, and where more than one management company is proposed, the motion must be in the alternative as set out at Motion 9, (although the lot number of the proposer of the alternative should be stated.) I also note that the contract of BCS is at an end although BCS is holding over on a month by month arrangement as is common in such circumstances.

In respect of the fourth outcome sought, I am of the view that this is not a suitable outcome sought. There is no merit in an adjudicator requiring the body corporate to consider something. If the Applicants wish to put a motion to a general meeting that Mr Ratcliffe, or any other committee member, is served with a notice under section 34 Accommodation Module, then they can do so in accordance with section 35 Accommodation Module. Committee members are in any event replaced at each annual general meting. The Applicants, and their supporters, may vote against Mr Ratcliffe, if he should nominate.

It seems to me that there is little merit in either the third or fourth outcome sought.

In accordance with law, the current committee continues until the next annual general meeting.

Whether any subsequent annual general meting convened is at the expense of the body corporate manager or not, is a matter for the body corporate to decide.

This application is now referred to the Commissioner in accordance with section 279(4) Act.