Fimo Court [2009] QBCCMCmr 367 (28 September 2009)

Last Updated: 9 October 2009

REFERENCE: 0887-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13367
Name of Scheme:	Fimo Court
Address of Scheme:	59 Grayson Street MORNINGSIDE QLD 4170

TAKE NOTICE that pursuant to an application made under the abovementioned Act by John Dimond, the owner of Lot 3

I hereby order that pending a final determination of this application, the body corporate for Fimo Court community titles scheme 13367 (including through its committee) shall not proceed with or implement any resolution passed on Motions 11, 12 and 14 at the Annual General Meeting scheduled to be held on 28 September 2009. I further order that the application for an interim order by John Dimond, the owner of Lot 3 to prevent the implementation of any resolutions passed on Motions 1, 5, 8, 9, 10 and 15 to 17 at the Annual General Meeting scheduled to be held on 28 September 2009 pending determination of the application and that his nomination for election to the committee is reinstated, is dismissed. This interim order has effect until 12 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the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is the earlier).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0887-2009

“Fimo Court” CTS 13367

The scheme
“Fimo Court” community titles scheme 13367 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).

Application
This application dated 21 September 2009 is by John Dimond, the owner of Lot 3 (Applicant) against the Body Corporate seeking outcomes to:

1. Declare the Annual General Meeting to be held on 28 September 2009 (AGM) void, or in the alternative, that Motions 1, 5, 8, 9, 10, 11 and 14 be declared void and the ‘out of order’ notations against Motions 15 to 17 be deleted.
2. Appoint an administrator to convene a general meeting to put in place an election/management process that conforms to the Act.
3. Be reimbursed costs.
   

The Applicant has sought interim orders:

1. To prevent the implementation of Motions 1, 5, 8, 9, 10, 11, 14 and 15 to 17 pending determination of the application.
2. That the Applicant’s nomination for election to the committee is reinstated.
   

Jurisdiction
In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me even though affected persons have not been given notice of the application or afforded an opportunity to make submissions about the application.

Section 276(1) of the Act provides that an adjudicator may make an order to resolve a dispute about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act. An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s 276(2), Act). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (s 284(1), Act).

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, on 23 September 2009 I invited submissions from the committee regarding the interim order application.

Determination
Section 279(1) provides that an 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”. It is therefore necessary to determine whether, because of the nature or urgency of the circumstances, an interim order is in fact necessary or appropriate. The examples under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the Applicant does need to establish that the circumstances of the application warrant the making of an interim order.

The AGM is scheduled to be held today. The Applicant is concerned about particular motions included on the agenda of the meeting and about the election of chairperson. In my view, the Applicant has demonstrated urgent circumstances to warrant consideration of the interim order application.

To assist me in determining whether to grant injunctive relief at this stage, I consider it relevant to briefly consider whether the Applicant raises any serious legal question that will need to be determined. If a serious legal question is raised, then it may be appropriate to make an interim order to attempt to preserve the integrity of the matters in dispute pending the final determination. 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.

The Applicant states the purpose of this application is to avoid further deterioration in the management of the Body Corporate if the AGM goes ahead; the agenda of the AGM is devised to create further conflict; and the Body Corporate and the committee have breached the Act, the code of conduct and a conciliation agreement.

The Applicant provided a copy of the notice of the AGM. The voting paper proposes 17 motions. The Applicant has disputed 10 of these motions. Motion 1 proposes confirming the minutes of the Annual General Meeting held on 23 March 2009. Motion 5 proposes adopting an administrative fund budget for the financial year 1 July 2009 to 30 June 2010. Motion 8 proposes adopting a sinking fund budget for the financial year. Motion 9 proposes fixing contributions payable to the sinking fund. Motion 10 proposes confirming current insurance coverage. Motion 11 proposes the engagement of a qualified quantity surveyor to prepare a sinking fund forecast. Motion 14 proposes spending in relation to fire safety. Motion 15 relates to water charges, Motion 16 proposes voting that an agreement dated 2 December 2008 is unlawful and Motion 17 proposes paying Bob Moltini and John Diamond for services performed. With respect to the committee, the notice states that 1 person nominated for election as secretary and treasurer and 2 persons nominated for election as ordinary members of the committee.

The Applicant submits the March 2009 AGM was not in accordance with the Act. He states that the explanatory schedule contains no information or amendments provided by the committee or the Body Corporate about Motions 5, 8, 9, 10, 11 and 14 and the Motions are not factual and were not proposed by the committee. With respect to Motion 10, the Applicant also argues that the Motion refers to the March 2009 AGM with the resulting insurance valuation being excessively and unreasonably high and a substantially higher premium was paid by the Body Corporate. With respect to Motion 11, the Applicant submits it is his responsibility as it formed part of the conciliation agreement, the forecast has been submitted, he has not been paid and Motion 17 appears to be an attempt to refuse payment. The Applicant argues that Motions 15 to 17 should be amended or declared void if carried. The Applicant states the committee nominated him for the position of chairperson along with the other nominations and only his name has been excluded. He submits the committee has abdicated its powers to the body corporate manager and has failed to give any instructions regarding compliance with the Act. The Applicant provided copies of correspondence in the application including an email sent 10 August 2009 from Heidi Mason containing the minutes of a committee meeting dated 27 July 2009 indicating: the agenda of the AGM and statutory motions were considered; that the Applicant will be putting a nomination forward for chairperson as will the other persons mentioned in the notice of the AGM; and that the AGM would be held on 28 September 2009.

Given that the committee has not made submissions about the interim order application, it could be argued that it is unnecessary for me to investigate the issues raised further. Nevertheless, I consider it is appropriate to be satisfied on the material submitted by the Applicant that it is necessary in the circumstances to grant injunctive relief pending final determination of the application. The balance of convenience may be an important consideration.

While the Applicant seeks a final outcome that the AGM be declared void, he has not sought an interim order to for example, prevent the holding of the meeting. For the purposes of making an interim order, I have not examined the calling of the AGM. However, I have noted the occurrence of the March 2009 AGM. Although not argued, there would seem to be a question about the basis for another annual general meeting being called in the same year and within six months of the March meeting. A body corporate must hold and conduct meetings in the way prescribed under the regulation module (s 104, Act).
An annual general meeting must be called within 3 months after the end of the scheme’s financial year (s 66, Standard Module). While the financial motions suggest the end of financial year is 30 June, this date has not been confirmed.

The agenda of any general meeting must include a motion to confirm the minutes of the last general meeting (s 76(2)(a)(v), Standard Module). Motion 1 seeks to confirm the minutes of a previous meeting which the Applicant argues is invalid. Despite this view, there is no record that an order has been made under the dispute resolution provisions of the Act about this meeting. The Applicant has not sought any outcome about the meeting in this application. The Applicant’s opinion about the March 2009 AGM is not a reason for making the interim order. The basis of the Motion is to confirm that the minutes of the previous general meeting are for example, a full and accurate reflection of what occurred at the meeting. The Applicant has not provided any material that suggests this meeting should not be recognised in Motion 1 or that questions the accuracy of the minutes proposed to be confirmed.

An annual general meeting is integral to the management of a body corporate as consideration is given to statutory motions such as reviewing the past financial year’s income and expenditure, considering future spending needs through the adoption of an administration fund budget and a sinking fund budget; fixing contributions to be paid by lot owners; determining whether the next financial year’s accounts should be audited; and reviewing insurance (s 76(3) and schedule, Standard Module). These things would appear to be on the agenda of the AGM. The Applicant has questioned 5 of these motions. In doing so the Applicant has made general statements and, to a large extent, has not provided any material substantiating the claims made or to demonstrate the specific action that is contrary to the legislation. He comments that motions were not submitted by the committee. The abovementioned email dated 10 August 2009 does suggest there was committee consideration about statutory motions. Whether this consideration involved the disputed motions in the form stated on the voting paper is uncertain at this stage. Nevertheless, the Applicant has failed to establish that each Motion is not in the form approved by the committee.

Motion 5 proposes adopting an administrative fund budget. The amount of the contributions proposed to be fixed in the subsequent and not disputed Motion 6 would seem to be on the basis of this budget (s 141(1), Standard Module). He has however questioned Motions 8 and 9 which seek to establish sinking fund contributions. Contributions to the administrative and sinking funds are necessary to enable the Body Corporate to meet its obligations. There may be dire consequences if the money available to the Body Corporate is restricted. As these Motions are important to the ongoing management of the Body Corporate, the Applicant needs to establish significant grounds to support making an order of the nature being sought. While not evident at this time, there may be a question about the person who submitted the Motions. However, the Applicant has not provided specific grounds to warrant this interim order. It is a matter for owners to decide on the proposals submitted. Any question about the presentation of a motion/s or the reasonableness of a proposal/s may be dealt with in any final determination of the application.

The Applicant has expressed concern about the insurance statutory motion. He has not however provided any substantive material such as for example, the opinion of a person with appropriate qualifications or expertise to suggest that the coverage is inadequate or excessive. Nor has he provided any reasoning to support making an interim order. The Motion is required to be included on the agenda of the AGM and it would seem, reflects the current insurance coverage. It is a matter for owners to decide whether a policy should be reviewed.

In summary, I am not satisfied the Applicant has established a case to be answered with respect to Motion 1 and the statutory Motions 5, 8, 9 and 10 to justify an interim order in the terms sought. These motions are required to be included on the agenda and owners are being invited to vote on the proposals submitted. In my view, in the circumstances the balance of convenience rests with the Body Corporate. I do not consider the stated the purpose of this application or the terms of a conciliation agreement is a basis for an interim order in the terms sought.

Motion 11 proposes consideration of a sinking fund forecast. A body corporate must adopt a sinking fund budget for each financial year (s 139(1), Standard Module). The sinking fund budget must be in accordance with the requirements of section 139(3) of the Standard Module; it must forecast spending for a period of at least 10 years. The committee must prepare a proposed budget for adoption at an annual general meeting (s 139(5), Standard Module). A body corporate is not prevented from obtaining advice or assistance from a person with appropriate qualifications or expertise to prepare a budget that satisfies section 139(3). It would seem to have been correctly included on the agenda as a motion with alternatives as 2 quotations would seem to have been obtained to deal with the same issue (s 72(1), Standard Module). It is stated as being proposed by the committee (s 72(2)(a), Standard Module). There may be a question as to whether the quotations were obtained under the direction of the committee or were otherwise submitted by a lot owner. However, of more significance is the fact that Motion 12 also seems to propose engaging a person to undertake a sinking fund forecast (even though the Applicant has submitted that the forecast has been completed). There is nothing in the notice that I am aware of that would differentiate this Motion from the preceding Motion 11. Motion 12 would seem to propose an alternative way to deal with the same issue. In this case, it should have been included as an alternative in Motion 11. “If more than 1 motion about the same issue is listed on the agenda, or stated in a voting paper, for the meeting, all motions about the issue are void” (s 72(5), Standard Module). In this regard, I am satisfied there is a question to be determined about both Motions.

I acknowledge that the Applicant has not disputed Motion 12. However, given the framework of the regulation with respect to motions dealing with the same issue, Motion 12 cannot be transacted while Motion 11 is on the agenda. There is nothing to suggest the implementation of any resolution on either Motion is urgent. For these reasons, I consider it is appropriate to make an interim order about any resolution passed on Motions 11 and 12.

It would seem the main argument mounted by the Applicant with respect to Motion 14 is that it was not submitted by the committee. There is no evidence that the committee did authorise the submission of this Motion. Even though it would seem the Motion proposes work relating to the administration, management and control of common property (s 152, Act), I have decided that an interim order is warranted in the circumstances. In the absence of any submissions from the committee, there is a question about the whether the Motion was properly submitted (s 69 and 76, Standard Module). As this Motion is not a statutory motion and in the circumstance where there is no claimed urgency in dealing with a resolution passed on the Motion, I consider the balance of convenience favours granting injunctive relief to preserve the status quo pending a final determination.

It is noted on the voting paper included in the notice of the AGM that Motions 15 to 17 must be ruled out of order as each motion is unlawful. Reference is made to section 81(1)(a)(ii) of the Standard Module. The authorisation for the inclusion of the notations is not known at this time. However, it is clear that there is no power under section 81 for the notation to be made in the notice of a general meeting. The person chairing the meeting has the power to rule the motion out of order (s 81(1)). The person who chairs a general meeting is prescribed by section 80; the chairperson must chair the meeting if present at the meeting or if the chairperson is not present another person is elected in accordance with the section. Despite any ruling given at the meeting, the persons present and entitled to vote may reverse the ruling (s 81(3)). Even though notations have been made in the voting paper, the person chairing the AGM will still need to make a decision about each Motion. The effect of the notation is negligible and does not warrant an interim order. As the Applicant wants the ‘out of order’ notation deleted, it would seem he wants the Motions voted on at the AGM. However, the submitted grounds suggest the Applicant is arguing that any resolution passed on these Motions should be declared void. Given the material presented, I am not satisfied from the Applicant has made any argument to warrant an interim order about any resolution passed on these Motions.

The last issue is the alleged nomination of the Applicant as chairperson. Even though the email dated 10 August 2009 refers to the Applicant putting a nomination forward for chairperson, the Applicant has not provided any material evidencing that he made a nomination in accordance with section 18 of the Standard Module and that the nomination was given to the secretary by the end of the Body Corporate’s financial year (s 16(4), Standard Module). It would seem the relevant committee meeting was held after the end of the financial year. The Applicant questions the other nominations identified in the notice of the AGM. However, this fact does not justify an interim order in the terms sought. The notice suggests that a nomination has not been received for the position of chairperson. The election of a committee also must happen at the annual general meeting (s 13(1), Standard Module). In this circumstance, the person chairing the meeting must invite nominations for the position at the meeting (s 26(2), Standard Module). This issue may be resolved in this way.

This application will now be administered in accordance with the Act and the normal processes of this Office. The application will be finally determined in due course.