Redlynch Grove Apartments [2009] QBCCMCmr 381 (6 October 2009)

Last Updated: 12 November 2009

REFERENCE: 0637-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	36924
Name of Scheme:	Redlynch Grove Apartments
Address of Scheme:	434-446 Kamerunga Road REDLYNCH QLD 4870

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

Dennis Scales, the Owner of lot 66

I hereby order that the application for the following orders: that motions 10, 11, 12, 13, 14, 16 and 17 submitted to the AGM on 27 July 2009 be declared invalid; and that the committee meeting held on Saturday 22 June 2009 was not valid and all matters conducted at that meeting are also invalid; is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0637-2009

“Redlynch Grove Apartments” CTS 36924

THE SCHEME

Redlynch Grove Apartments, is a subdivision of 98 lots recorded under a building format plan of subdivision (formerly a building format plan) and is regulated by the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Accommodation Module) Regulation 2008.

APPLICATION

The applicant, Mr. Dennis Scales is seeking the following final outcomes:

1. A final Order that motions 10, 11, 12, 13, 14, 16 and 17 submitted to the AGM on 27 July 2009 be declared invalid.
2. A final Order that the committee meeting held on Saturday 22 June 2009 was not valid and all matters conducted at that meeting are also invalid.
   

The applicant also previously sought the following Interim orders:

1. An Interim Order that the motion listed on the agenda for the AGM to be held on 27 July 2009 not be implemented pending a final determination of the validity of motions

10, 11, 12, 13, 14, 16 and 17.

2. An Interim Order that the resolutions passed at the committee meeting held on Saturday 22 June 2009 not be implemented pending a final determination of the validity of that meeting.
   

BACKGROUND

On 24 July 2009 I made an Interim Order to the effect that pending the final resolution of this dispute resolution application the body corporate for Redlynch Grove is not to implement or act upon any resolution on motions 13, 16 and 17 to be considered at the AGM for the scheme to be held on 27 July 2009.

While the applicant also sought an Interim Order that the resolutions passed at the committee meeting held on Saturday 22 June 2009 not be implemented, I was not provided with any details or minutes of a meeting held on 22 June, although I was provided with minutes of a meeting held on 20 June. Given the urgency with which interim orders were required regarding the AGM scheduled for 27 June, it was not feasible to seek further clarification prior to making the Interim Order on 24 June. I also perused the minutes of the committee meeting held on 20 June, and was of the view that if indeed the applicant meant to refer to the meeting held on 20 June, then the balance of convenience did not favour the granting of the requested interim order as the legality of the committee meeting could be considered in the context of the application for final orders.

The applicant seeks final Orders that motions10, 11, 12, 13, 14, 16 and 17 submitted to the AGM on 27 July 2009 be declared invalid on grounds which include the following:

• The motions are misleading and not in the best interests of the body corporate;
• Proposed changes to an existing caretaking agreements “will conflict with current legal proceedings”;
• At least one motion is inconsistent with the by-laws;
• Two of the motions require approval of a special levy;
• The motions, if carried, would involve unnecessary expenditure of body corporate funds.
  

Motion 10 relates to the Caretaking Agreement for the complex and proposes that the schedule to the caretaking agreement be varied to clear up uncertainties regarding the obligations of the caretaking service contractor. It is proposed that the schedule be amended to state that the caretaker should be reasonably in attendance or contactable and that common areas and car parking areas should be cleaned.

The applicant alleges that the caretaking service contractor’s staff have failed to carry out cleaning duties in stages 2 & 3 of the complex, stating that they were not being paid for this work, although when confronted with evidence that it had been paid, the caretaking service contractor abandoned the site. The applicant also states that other staff employed by the caretaking service contractor have failed to clean the garden areas and as a result, the body corporate issued remedial action notices, sought to terminate the caretaking service contract and claimed damages from the caretaking service contractor. However, it is claimed that the caretaking service contractor has managed to stack the body corporate committee which “suspended “ the application before the Commercial and Consumer Tribunal proceedings.

The applicant does not believe that this motion is for the benefit of lot owners, but rather, is in the interests of the caretaking service contractor which takes little interest in meeting its contractual obligations. He also believes that if the motion is carried, the committee “will lift the suspension “ of the application and that the caretaking service contractor “will use the amendment to the agreement as part of their defence”.

Motion 11 relates to the changing of locks on all front doors at a cost of $20 per lot. The reason given for this motion is that previous committee members have refused to return the master key for the existing locks, giving rise to security concerns. The applicant states that the real reason for this motion is to prevent committee members from accessing common property, stairwells and foyers to check if the caretaking service contractor has been performing its contractual obligations. Further, the applicant states that the real cost is $20 per lock rather than $20 per lot.

Motion 12 imposes a 10 kph speed limit on the site and secondly, allows resident children, under adult supervision, to ride bicycles and scooters on the left hand side of the roadway in Redlynch Grove. The applicant believes that this discriminates against children who ride skateboards and roller blades. The applicant also states that use of bicycles and scooters in the complex creates a danger and nuisance.

Motion 13 relates to a proposal to obtain and erect a sign prohibiting glass in the swimming pool area which is opposed by the applicant on the basis that existing signage already prohibits glass in the pool area.

Motion 14 relates to a proposal to obtain and erect a sign requesting pool users to not use the pool area between 9 pm and 6 am in order to limit noise. The applicant believes that this is in conflict with the current by-laws.

Motions 16 and 17 we submitted by the owner of lot 2 but the applicant claims that this was done at the behest of the caretaking service contractor.

Motion 16 reads as follows:

“That independent legal advice is to be obtained by the body corporate to investigate the past conduct of the current committee specifically as to:

1. acting for their personal gain or benefit (particularly the activities of the Chairman;
2. the issue of vexatious claims and abuse of process;
3. inappropriate conduct including but not restricted to unreasonable harassment of tenants;
4. any abuse of powers and privileges as committee members;
5. misappropriation or unnecessary use of body corporate funds; and
6. general misconduct.

For the total amount not exceeding $5,000 with funds to be met from the administration fund.”

The agenda also included motion 17 which read as follows:

That in the event that the findings of the investigation into the conduct of the current committee, identifies a possible claim for damages that further legal advice be sought and a claim for damages pursued. Any action taken will be for a total expenditure not exceeding $10000 with funds to be met from the administration fund. against individual members of the committee
as identified in the investigation.

As the applicant correctly points out, motions similar to motions 16 and 17 were previously considered at the EGM held on 18 February 2009 and challenged in this forum. However, those motions (i.e. the ones considered on 18 February) did not require authorisation of any expenditure. In response to my inquiries I was then advised that the purpose of those motions was to make a preliminary decision as to whether or not legal advice should be obtained and were not expenditure motions.

The applicant argues that motions 16 and 17 are expenditure motions and are invalid for the following reasons:

• motions 16 & 17 involve proposals for major spending;
• no quotes have been obtained;
• there is no provision for this spending in the budget, a special levy will be required.
  

The applicant further states that his grounds for seeking a final order that the committee meeting was invalid and that all matters conducted at that meeting are invalid, are as follows:

• the meeting was held by the committee in Canberra;
• no notification was sent to the Secretary in writing by Committee members requesting the required 7 day notice period be reduced to 2 days;
• members did not receive notice of the meeting in a time frame allowing any contact to be made with the Secretary as required in accordance with the Act.
• No contact details for the Secretary were provided in the agenda;
• Those committee members who were aware of the meeting had only 19 hours notice , while others were not aware of the meeting until after it had been held;
• Non-members of the committee voted on all matters including expenditure of body corporate funds;
• The committee could not confirm items 4 & 5 on the agenda, previously confirmed as true and correct;
• No correspondence was tabled or addressed;
• A complaint against the caretakers was not tabled or addressed;
• The committee approved payment of accounts which were not the responsibility of the body corporate;
• The committee approved unnecessary expenditure of body corporate funds;
• No documents were produced involving payment of the amount of $1500 to each committee member to attend meetings and there is no provision for this in the budget;
• No documents were produced regarding the cost of lawyers to provide advice concerning suspension of legal proceedings;
• No documents were presented or tabled in relation to the adjudicator’s order concerning the EGM held on 18 February 2009;
  

Pursuant to section 243 of the Act, submissions were sought from the body corporate committee and all lot owners regarding the final outcomes sought by the applicant.

The owner of lots 42 and 58 who is also a member of the committee made the following submissions:

• The applicant is the former body corporate Chairperson who seeks an order invalidating the first meeting of the new committee held on 22 June2009. However no meeting was held on that date;
• A committee meeting was held on 20 June 2009 and a flying minute dated 15 June 2009, signed by current members of the committee at that time, agreed to reduce the notice period to 2 days instead of 7 days;
• The meeting was attended by 6 committee members and two additional lot owners as recorded in the minutes;
• The primary purpose of the meeting was for the new committee to meet and “discuss a way forward”;
• Canberra was a “nodal venue” because members are from Sydney, Canberra and Melbourne;
• At that meeting it was resolved that they would not seek reimbursement but rather each would seek a tax deduction for the cost of attending committee meetings;
• The applicant has sought an order that motions 10, 11, 12, 13, 14, 16 and 17 submitted to the AGM on 27 July 2009 be declared invalid. However motions 13,14, 16 and 17 were withdrawn at the AGM by Mr. Arbon of AM Rights following concilliation with the new body corporate committee;
• In the last year alone the previous committee had spent over $30,000 in legal fees to recover $41,773
• Motion 11 regarding changing of keys was deferred until costing quotes could be obtainedand was presented in response to numerous complaints regarding use of the master key and damage to common property ibnside locked areas;
• Motion 10 regarding caretakers duties was to allow reasonable schedules for cleaning and servicing a 98 lot complexwith large garden areas and 2 swimming pools. The proposed change to the agreement allows for regular cleaning throughout the complex and urgent cleaning when required while allowing adequate time to maintainequipment, pools and gardens as the original agreement was “cited for stage one of the complex prior to completion of stages 2 & 3”;
• Motion 12 introduces a speed limit of 10kph within the scheme and allows both adults and children under supervision to ride bicycles;
• The applicant is seeking to derail the excellent progress and reconcilliation so far achieved between the on-site management and the present committee;
• His application to invalidate the first meeting of the committee is without basis;
• The appliction to prevent implementation of motions 14, 16 and 17 contained on the agenda for the AGM is without purpose as these motions were withdrawn whilst motions 10, 11 and 12 were overwhelmingly supported by the majority of lot owners.
  

Another lot owner made the following submissions:

• The previous committee members should give the new committee members a chance to get on with the job instead of focusing on petty, invalid and redundant issues; and
• Most of the problems in the scheme were caused by the inability of the previous committee to negotiate or communicate with other parties such as service contractors.
  

Submissions in support of the application included the following:

• The caretaking service contractor has failed to perform its contractual obligations or has been negligent in performing its duties and therefore legal action against the caretaking service contractor should not have been discontinued;
• The committee is acting in the interests of the caretaking service contractor rather than the members of the body corporate;
• secret voting papers were tampered with;
• it is alleged that the AGM was chaired in a dictatorial manner and that the minutes of the meeting are inaccurate;
• The caretaking service contractor/ letting agent is manipulating owners in their letting pool;
• The caretaking service contractor has employed 5 different caretakers in the last 14 months. On the last two occasions, a single individual was employed, they had no prior experience and were unable to cope with the workload;
• Damage by previous caretakers amounts to approximately $20,000 and the value of services not provided by the caretaking service contractor has been estimated at $24,000;
• The body corporate initially sought payment of $24,000 for services not provided between July 2007 and January 2008 as per the resolution carried at the EGM on 5 March 20078;
• Application was made to the CCT to recover an additional $17,773 as it was considered that the body corporate was owed $41,773 in total;
• It is alleged that AM Rights, the caretaking service contractor, then placed motions on the agenda for the next general meeting to replace the committee and then discredit those former committee members with false allegations;
• The new committee has now ceased taking action against the caretaking service contractor;
• the caretaking service contractor is still being paid for doing virtually nothing.
  

JURISDICTION

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 authorization 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)).

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)).

DETERMINATION

The applicant is seeking the following final outcomes:

1. A final Order that motions 10, 11, 12, 13, 14, 16 and 17 submitted to the AGM on 27 July 2009 be declared invalid.
2. A final Order that the committee meeting held on Saturday 22 June 2009 was not valid and all matters conducted at that meeting are also invalid.
   

This is yet another dispute arising out of the on-going animosity between lot owners who are dissatisfied with the performance of the caretaking service contractor and the current committee which they believe to be stacked with the caretaking service contractor’s supporters.
Although there has been a significant degree of dissatisfaction with the caretaking service contractor & letting agent, the applicant believes that members of the rental pool are unaware of what happens on the site and provide “blind support” to the caretaking service contractor in order to maximise their rental returns.

I note that following the making of the interim order on 24 July motions 13,14, 16 and 17 were withdrawn at the AGM by Mr. Arbon of AM Rights.

Motion 11 was that “the body corporate replace all security locks on the premises and that the costs of the replacwement locks be on-charged to the owners at a cost of $20 per lot”
However, at the AGM, it was resolved that this motion be ruled out of order.

Accordingly, it is only necessary for me to adjudicate upon the validity of motions 10 and 12.

Motion 10 was proposed by the committee as the Caretaking Agreement was a standard pro-forma agreement which did not specifically stipulate the responsibilities of the caretaker for this particular scheme. The proposed amendments required the Caretaking Service Contractor to

• “be in attendance at the scheme or to be contactable at all reasonable times to enable the Caretaker to properly and efficiently perform or supervise its duties, but without limiting the foregoing, as a minimum to be in attendance or contactable from 9 am to 5 pm Monday to Friday”;
• “on a weekly basis or as may be reasonably necessary to sweep, vacuum or clean”;
• “maintain the car parking areas on common property in a clean and tidy condition with sweeping or hosing as required”
  

This motion was carried with 22 votes in favour and 4 votes against.

Motion 12 was to “Enforce a speed limit of 10kph on site and to allow resident children to ride bicycles and scooters under adult supervision on the left side of roadways of Redlynch Grove”.

This motion was carried with 33 votes in favour and 6 votes against.

I am unable to see anything untoward with making a resolution to amend the Caretaking Agreement for the complex to clear up uncertainties regarding the obligations of the caretaking service contractor. Accordingly I can see no basis to invalidate Motion 10 or a resolution based upon Motion 10.

The next matter that I turn to is motion 12 and the resolution upon motion 12. A body corporate is entitled to make by-laws to allow it to administer, manage and control common property and body corporate assets and to regulate the use and enjoyment of lots and common property.

More specifically, section 168 of the Act provides as follows:

Meaning of by-laws
(1) By-laws, for a community titles scheme, are provisions that appear in the community management statement under the heading of “BY-LAWS”.
(2) However, if the community management statement does not include provisions that are, or that purport to be, the by-laws for the scheme, the by-laws for the scheme are the provisions stated in schedule 4.

Further, section 169 of the Act provides as follows:

169 Content and extent of by-laws
(1) The by-laws for a community titles scheme may only provide for the following—
(a) the administration, management and control of common property and body corporate assets;
(b) regulation of, including conditions applying to, the use and enjoyment of—
(i) lots included in the scheme; and
(ii) common property, including utility infrastructure; and
(iii) body corporate assets, including easement areas relevant to common property; and
(iv) services and amenities supplied by the body corporate;
(c) other matters this Act permits to be included in by-laws.

Clearly, the body corporate is entitled to make by laws regarding the use of bicycles and scooters on common property and I can see nothing in the proposed amendment (to enforce a speed limit of 10kph on site and to allow resident children to ride bicycles and scooters under adult supervision on the left side of roadways of Redlynch Grove) that would render such a by law “unreasonable”.

The next matteer that I turn to is the applicant’s request for an order that the committee meeting held on Saturday 22 June 2009 was not valid and all matters conducted at that meeting are also invalid. Although no meeting was held on 22 June 2009, I do note that a committee meeting was held on 20 June 2009 and a flying minute dated 15 June 2009, signed by current members of the committee at that time, agreed to reduce the notice period to 2 days instead of 7 days. I also note that most of the current committee members are investors who live in Sydney, Canberra and Melbourne and therefore Canberra was chosen as the venue for the committee meeting.

I believe that this committee meeting was held in accordance with Chapter 3, Part 4 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008. Section 45 of the Accommodation Module deals with Notice of Committee Meetings and provides as follows:

(1) A meeting of the committee is called by giving written notice to all other committee members stating when and where the meeting is to be held.
(2) The notice must be given—
(a) at least 7 days before the meeting; or
(b) at least 2 days before the meeting, if all voting members of the committee—
(i) vote, at the last meeting of the committee held before the proposed meeting, in favour of the
reduced notice period for the proposed meeting; or
(ii) agree in writing to the reduced notice period for the proposed meeting.

Secondly, Section 46 of the Accommodation Module deals with Notice of Meetings and provides as follows:

(1) The first meeting of the committee after the committee is formed must be held where the person calling the meeting decides.
(2) Subject to subsection (1), a committee meeting must be held where the committee decides.
(3) Despite subsections (1) and (2), a committee meeting must not be held more than 15km (measured in a straight line on a horizontal plane) from scheme land if members making up at
least half of the number of committee members needed for a quorum so require by written notice given to the secretary.

Having regard to the above, I believe that the application should be dismissed in its entirety and the interim order dated 24 july 2009 ceases to have effect from the date of this order.