Paloma [2009] QBCCMCmr 333 (1 September 2009)

Last Updated: 21 October 2009

REFERENCE: 0789-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9524
Name of Scheme:	Paloma
Address of Scheme:	93 - 97 Albatross Avenue MERMAID BEACH QLD 4218

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

Nanette Blair, the Owner of lot 1

I hereby order that the Body Corporate for Paloma shall not implement any resolutions passed with respect to Motions 2 and 3, listed on the agenda for the Extraordinary General Meeting for Paloma scheduled for 11 September 2009. This interim order has effect until six (6) months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn or otherwise ended (whichever is earlier).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0789-2009

“Paloma” CTS 9524

Paloma community titles scheme 9524 (Paloma) consists of 12 lots and common property. The Community Management Statement (CMS) for Paloma indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme is registered as Building Units Plan 5681.

INTERIM APPLICATION

This is an application for interim orders lodged by Nannette Blair, Owner of Lot 1 (Applicant), on 25 August 2009 under the Body Corporate and Community Management Act 1997 (Act). The Applicant sought interim orders against the Body Corporate for Paloma in the following terms:

That the Body Corporate shall not act upon or put into effect Motions 3 and 2 on the Agenda for the EGM to be convened on 11/09/2009, if carried at that meeting, until a final determination as to their validity, or until otherwise ordered by the Adjudicator.

The application also seeks the following final order:

That motions 2 and 3 of the EGM to be held on 11/09/2009 be declared out of order and/or invalid.

PROCEDURAL MATTERS

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[1].

In the first instance the Committee and the owner of lot 11, Orknie Pty Ltd (whose representative was the proponent of the disputed motions), were provided with a limited opportunity to make a submission. Submissions were received from the committee and from WM McCallum, director and representative of Orknie Pty Ltd.

MATTERS IN DISPUTE

It appears that there has been some history of dispute regarding maintenance and improvements in this scheme, with several previous disputes in this Office on these matters.

This particular application relates to motions listed for consideration at the Extraordinary General Meeting (EGM) on 11 September 2009, regarding the responsibility for rectification and repairs and maintenance of Eastern decks to units 9, 10, 11 and 12 and also the replacement of frames and sliding doors on the Eastern side of the building for lots 9 and 11.

The disputed motions are listed as follows on the Notice of EGM:

2. RESPONSIBILITY FOR RECTIFICATION AND REPAIRS ORDINARY RESOLUTION

AND MAINTENANCE OF EASTERN DECKS

Submitted by W M McCallum Lot no 11

That the body corporate continue to accept responsibility for the rectification and consequential repairs and maintenance of the eastern decks including the walls and balcony entrances to units 9, 10, 11 and 12, and including any damage to membranes, and deficiencies in hobs, frames and sliding doors, which were not fit for purpose following deficient repairs in 1994 and pursuant to a finding of an adjudicator (referee) on 30/06/1997 that “have undertaken such (sic) repairs, it (body corporate) is now responsible for the consequences of those repairs”.

3. FRAMES AND SLIDING DOORS ON EASTERN SIDE OF ORDINARY RESOLUTION

BUILDING FOR UNITS 9 AND 11

Submitted by W M McCallum Lot no 11

As a consequence of that responsibility, the body corporate replace, at this time, the frames and sliding doors on the eastern side of the building for units 9 and 11 which were not replaced in 1994 and were not at that time and are not now fit for purpose.

** Refer to explanatory schedule to voting paper

Alternative Motion A

The body corporate accept the quotation (marked “A”) from O’Brien Glass Industries Ltd in the sum of $14,000 for each unit, a total of $28,200.00 (including GST).

OR

Alternative Motion B

The body corporate accept the quotation (marked “B”) from G James, for equivalent doors, in the sum of $18,612.00 for each unit, a total of $37,224.00 (including GST).

The explanatory note for motion 3 details a history of alleged failed attempts by the body corporate to attend to structural repairs on the eastern walls of units 9, 10, 11 and 12.

The Applicant asserts that both motions 2 and 3 are invalid. She provides grounds to the following effect:

• At the 14 August 2008 budget meeting, McCallum presented a motion for the committee to present to the AGM. This was for the body corporate to pay for new east side doors for units 9 and 11. Four committee members rejected this motion as these doors are within the lots of 9 and 11 and are the responsibility of the owners, as had been stated in the determination of 0256-2009, 23 June 2009.
• Following the committee rejection, McCallum insisted that he would call an EGM, at an added cost to the body corporate estimated to be up to $1,000. As a result, 5 – 2 committee members decided, that to reduce the cost of an EGM, to hold one immediately following the scheduled 11 September 2009 AGM. The Applicant voted against it, claiming McCallum, knowing that it would be rejected by the committee, should have put this motion in as a private motion for the AGM before the deadline of 30 June, the end of the body corporate’s financial year; saving the body corporate the extra expense of an EGM. He has presented not one but two motions in his EGM.
• In relation to Motion 2, the body corporate has not continued to accept responsibility for the rectification and consequential repairs and maintenance of the eastern decks including walls and balcony entrances to units 9, 10, 11 and 12 as claimed in Motion 2. If this motion is approved, this would leave not only present but future owners as well, with an on going unspecified cost, not budgeted for in the sinking fund forecast.
• Motion 3 defies determination 0256-2009, part of which states “If and when any further motion in regard to the replacement of windows is considered, the body corporate should ensure that it only seeks to pay for those windows (and similarly, any doors) that are in the boundary between the lot and common property, and not those wholly within the lot.”
• McCallum could possibly expect 4 penthouse votes and one other owner to vote yes to his motions, and, if as expected, he requests a poll, it will result in a “YES” vote. An interim order is requested to delay any work voted on for motion 3 until a final order has been issued.
• McCallum has not presented two quotes, as required by section 152 of the Standard Module. The second quote for motion 3 is actually a quote for the doors to units 1 to 4 and not a quote for the penthouse doors.
• McCallum has also breached section 73(1)(a) of the Standard Module. His explanatory note is in excess of 700 words, well over the 300 word limit. Also, what is described as the Committee Explanatory Material under Section 73(7) was never discussed or approved by the committee.
  

The Committee made a simple submission attaching a copy of a resolution passed outside a committee meeting on 31 August 2009 “That the Committee have perused the Application by Nannette Blair to Resolve a Dispute to the Body Corporate and Community Management Commissioner’s Office reference 0789-2009/MB and support the Submission. The resolution was carried with three votes for, one against and two abstentions.

W M McCallum, of Orknie Pty Ltd, made submission to the following effect:

• He does not oppose an interim order preventing the implementation of the motions proposed for the EGM to be held on 11 September 2009.
• His concern with the application is that it is an abuse of process. The Applicant opposed the matter being put to an EGM. She was outvoted at the budget committee meeting.
• The Blair’s control four out of the seven committee votes. The committee is therefore conflicted.
• Mr MrCallum supports conciliation and requests that this matter proceed to conciliation.
  

JURISDICTION

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[2]

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.[3] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[4] Section 279(1) of the Act 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.

DETERMINATION

Urgent interim relief

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.[5] Any order granted must be just and equitable in the circumstances.[6] 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 consider the issues raised in the application. As an interim order can be considered on an ex parte basis, an adjudicator must be satisfied that the application raises 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.

Serious questions

I have some concern with the validity of Motions 2 and 3. The legislation contains specific provision in relation to responsibility for maintenance. Generally, the body corporate is responsible for maintaining common property in good condition (section 159(1), Standard Module) while lot owners are responsible for maintaining their lots in good condition (section 170(2), Standard Module). Further specific provision is made for lots included in community titles schemes which are created under building format plans of subdivision, fixtures or fittings installed by occupiers for the occupier’s own benefit and utility infrastructure. Provisions in the Land Title Act 1994 determine where the boundaries of lots and common property lie. It is not open for the body corporate to “accept responsibility” or not for particular items of maintenance, as is proposed in Motion 2. It is a matter of complying with the legislative requirements.

In my view, some investigation is required to determine whether the work proposed in motions 2 and 3 relates to common property or owners’ lots. If Motions 2 or 3 include the cost of repairing, maintaining or replacing items that are the responsibility of individual owners, but purport to require the body corporate (and therefore, all owners) to be responsible for those costs, the motions may be invalid on that basis.

Furthermore, in relation to Motion 3, the Applicant further challenges its validity on the basis that two quotes, as required by section 152 of the Standard Module have not been provided. She asserts that the second quote for motion 3 is actually a quote for the doors to units 1 to 4 and not a quote for the penthouse doors. The Applicant also argues that McCallum has breached section 73(1)(a) of the Standard Module in that his explanatory note is in excess of 700 words, well over the 300 word limit. Also, what is described as the Committee Explanatory Material under Section 73(7) was never discussed or approved by the committee. These are matters which would require further investigation.

Inconvenience from an interim order

No party has raised any particular urgency with regard to the repair or replacement of the items the subject of Motions 2 and 3. In fact, Motion 3 suggests that the frames and sliding doors in question have been defective since at least 1994.

Conversely, if the motions are passed and contractors are engaged in reliance of those motions, but the motions are later determined to be invalid, it may be difficult to withdraw from agreements entered into with the contractors or to undo work that has been commenced or completed. It is for this reason that adjudicators do give careful consideration to preventing resolutions being enacted pending a final determination on the validity of the motions, if there is a serious question over the validity of the motion and no significant urgency with the motions.

Conclusion

I am satisfied on the material before me that there are several potentially serious issues regarding the validity of both Motions 2 and 3 that warrant further investigation. For these reasons I consider it appropriate that Motions 2 and 3 not be acted on, in the event that either of them is passed at the EGM.

If either Motion 2 and/or Motion 3 fail to pass at the EGM, the dispute regarding those motions may well be resolved. If it is not, the matter will investigated in accordance with the usual processes undertaken by this Office, including calling of submissions from all affected parties.

Effect of an Interim Order

All parties should note the provisions of section 279(2) of the Act, which provides that:

(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; and

(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.

I have provided that this interim order has effect for a period of not longer than six months. It is the responsibility of the Applicant to apply to extend this order if no final determination has been made within that period. This Office will not automatically renew an interim order and the order will automatically lapse upon a final order being made or this application being withdrawn.

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[1] Section 247(3) of the Act
[2] See sections 227, 228, 276 and Schedule 5 of the Act
[3] Section 276(2) of the Act
[4] Section 284(1) of the Act
[5] Section 279 of the Act
[6] Section 276 of the Act