Munna Beach Apartments [2009] QBCCMCmr 350 (11 September 2009)

Last Updated: 9 October 2009

REFERENCE: 0725-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10299
Name of Scheme:	Munna Beach Apartments
Address of Scheme:	291 Gympie Terrace, NOOSAVILLE QLD 4566

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

Keith Bunting, the Owner of lot 39

I hereby order that the application for the following interim order: That any preliminary planning etc. Being carried out by Nautilus Pools, Motion 2(a) cease immediately Is dismissed

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0725-2009

“Munna Beach Apartments” CTS 10299

APPLICATION

The applicant, an owner of a lot in the scheme and a committee member, seeks the following interim order:

That any preliminary planning etc. Being carried out by Nautilus Pools, Motion 2(a) cease immediately

The final outcomes sought are as follows:

That the results of voting under Motion 2 of the EGM of 15/7/09 are invalid with respect to declaring the quotation (a) Nautilus pools option 1 – 10 votes the successful tenderer. The amount of $168,335 is considered not to conform to the requirements of an ordinary resolution and should in fact be a special resolution with its voting requirements i.e. 2/3 for a motion etc.

My favoured outcome would be that quotation 2(e) 9 votes would become the successful tenderer – Motion carried (i.e. Kris Chilton etc amount $58,193.80.

SCHEME DETAILS

Munna Beach Apartments consists of 48 lots and was registered as a building units plan (now described as a building format plan) under the provisions of the Building Units and Group Titles Act 1980 (BUGTA). It is now regulated by the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).

BACKGROUND

An extraordinary general meeting was held for this scheme on 15 July 2009 and at this meeting Motion 2 regarding a “Pool Area upgrade” was considered with the following alternatives attached:

(a) Nautilus Pools – Option 1 $168,335with $75,000 from the sinking fund and the balance of $93,335 be met by the striking of a special levy of $1,944.50 per lot entitlement to be due and payable at a date to be set at the meeting.

(b) Nautilus Pools – Option 2 $111,164 with $75,000 from the sinking fund and the balance of $36,164 be met by the striking of a special levy of $753.42 per lot entitlement to be due and payable at a date to be set at the meeting.

(c) Nautilus Pools – Option 3 $91,034 with $75,000 from the sinking fund and the balance of $16,034 to be met by the striking of a special levy of $334.05 per lot entitlement to be due and payable at a date to be set at the meeting.

(d) Chris Gadsby $119,856.26 with $75,000 from the sinking fund and the balance of $44,856.26 be met by the striking of a special levy of $934.50 per lot entitlement to be due and payable at a date to be set at the meeting.

(e) Kris Chilton $38,000
Regency Glass $14,161.40
Chris Gadsby $2,732.40
Tod Engineers $3,300 (15 hours)
Total $58,193.80

Although the motion to upgrade the pool area was carried unanimously, and subsequently, option was adopted with 10 votes in favour, the applicant claims that voting “did not comply with the requirements of the BCCM Act for such a costly job”. The applicant submits that the “spending limit” for this scheme is $2,000 per unit and as there are 48 units, the limit is $98,000 and any expenditure above this amount must be approved by way of a special resolution.

On the other hand, the applicant believes that option (e), which was approved by 9 votes and involves expenditure of $58,193.80, complies with the legislation.

Another concern raised by the applicant is that option (a) involves upgrading the tiles and fencing as well as construction of a rock wall and “waterfalls/ features” and associated pumps “which will seriously affect the OH&S of the pool and surrounds plus noise problems for nearby units”.
Other concerns raised by the applicant include the following:

• Ms Margaret Bainbridge had a power of attorney from the owners of lots 5 but he questions whether the power of attorney was sighted;
• He believes that 2 votes may have been cast by the owners of lot 13;
• The minutes record that the applicant represented lot 29 when in fact he is the owner of lot 39.
  

SUBMISSIONS

The body corporate committee was invited to respond to the application and the following submissions were made by solicitors acting for the body corporate:

• The vote for option (a) complies with the requirements of section 72 of the Standard Module regulation which governs motions with alternatives;
• The pool area in question is an area of common property and therefore the responsibility of the body corporate;
• There is a variety of decisions regarding the distinction between “improvements” and “maintenance”, and although each decision is dependant upon its own facts, there are a number of authorities applicable to this case including the following passage from the judgement of Lord Denning in Morcom v Campbell- Johnson & Ors:
  

It seems to me that the test , so far as one can give any test in these matters is this:

If the work which is done is a provision of something new for the benefit of the occupier, that is properly speaking, an improvement but if it is only a replacement of something already there, which has become dilapidated or worn out, then, albeit that it is a replacement by its one equivalent, it comes within the category of repairs and not improvements”

It is submitted that a substantial amount of the work is to replace materials that are over 20 years old including pavements, tiles and fences. Due to the age of the materials and the requirements of relevant legislation, it is submitted that the work to be performed falls predominantly within the category of repairs/ maintenance and not improvements.

• Although the agenda for the meeting refers to the subject motion as an “ordinary resolution”, 100% of the votes cast were in favour of the motion. Therefore, the requirements for a special resolution have been met.
• The power of attorney was validly granted by the owners of lot 5;
• The anomalies raised regarding the content of the minutes of the EGM are attributable to typographical errors.
  

JURISDICTION

The application evidences a dispute between an owner of a lot included in a community titles scheme and another owner of a lot included in the scheme (section 227(1)(a) of the Act).

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)).

Sub-sections 279(1) & (2) deal with the making of interim orders and 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. ...

DETERMINATION

At this point in time, I am concerned with the application for interim orders and the threshold issue of whether an interim order is 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.[1] 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.

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[2] and any order granted must be just and equitable in the circumstances.[3] In determining whether it is just and equitable to grant interim relief it is relevant to briefly consider whether the application raises any serious questions for final determination. It is also relevant to consider whether any inconvenience likely to result from the interim order is outweighed by the potential detriment alleged in the application. Any evidence that an interim order is necessary to prevent serious or irreparable harm will be significant.

I have reviewed the documentation provided by the applicant, solicitors for the body corporate and the Chairman of the body corporate committee and have formed certain preliminary views regarding this matter.

Firstly, I believe it is probable that the proposed work goes beyond maintenance or repairs and could most probably be characterised as improvements to common property.

Secondly, I believe that section 163 of the Standard Regulation Module is applicable and this section provides that
(1) the committee can approve improvements valued at up to $300 x Number of lots in the scheme; or
(2) expenditure of not more than $2,000 x Number of lots in the scheme can he authorised by an ordinary resolution, but only on one occasion per year; or
(3) the improvements may be authorised by a special resolution.

Thirdly, while the proposed expenditure of $168,335 exceeds the amount of $98,000 (i.e. $2,000 x 48), I note that the resolution to upgrade the pool area was unanimous. Accordingly I believe that the requirements for a special resolution have been met.[4] As regards the various alternatives attached to the motion, I refer the applicant to section 72 of the Body Corporate and Community Management (Standard Module) Regulation 2008.

Finally, I refer to the applicant’s concern that votes may have been counted twice for lot 13. I have perused the body corporate roll and note that Mr. Peter Sibly is the owner of lot 14 (not lot 13) and that therefore the minutes contain a typographical error.

For the above reasons I do not believe that it is appropriate for me to make the requested interim order at this point in time. However this interim decision does not dispose of the application in its entirety and this matter will be referred back to the commissioner to determine what further action is appropriate in respect of the outstanding application for final orders.

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[1] Section 279 of the Act
[2] Section 279 of the Act
[3] Section 276 of the Act
[4] See District Court judgement of White J in Stainlay and Tecelec (QLD) Pty Ltd v Body Corporate for No. 9 Port Douglas Road 177/2006