Verve Broadbeach [2009] QBCCMCmr 415 (23 October 2009)

Last Updated: 13 November 2009

REFERENCE: 0356-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	36416
Name of Scheme:	Verve Broadbeach
Address of Scheme:	173 Old Burleigh Road, Broadbeach Qld 4218

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Mervyn Carey, a co-owner of Lot 31 and Murray Phillips, a co-owner of Lot 51

I hereby order that the application for an order by Mervyn Carey, a co-owner of Lot 31 and Murray Phillips, a co-owner of Lot 51 against the body corporate for Verve Broadbeach community titles scheme 36416 seeking the following outcomes: To have all matters of dispute restored to comply with the Act, namely compliance with scheme by-laws: Visitor Parking; Parking Vouchers; Keeping of Animals; Correspondence; and Power of Committee. That the committee comply with the resolution on Motion 27 at the Annual General Meeting dated 31 March 2008 (2008 AGM) about air conditioning and that the committee pay the Body Corporate for all running costs incurred. That the minutes of the committee meeting dated the 5 June 2008 show a correct record of the meeting to reflect the events that occurred as requested. That motions presented for the Annual General Meeting dated 20 March 2009 (2009 AGM) that have been left out of the meeting be included. Motions that were passed at the 2008 AGM and subsequently overturned illegally at the June 2008 committee meeting be restored. That all rulings of the committee after the June 2008 meeting be declared invalid. To invalidate the election of the committee members elected at the 2009 AGM who were members of the previous year’s committee, and to call for new nominations to fill these vacant positions. That the resolution passed on Motion 20 at the 2009 AGM be declared null and void. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0356-2009

“Verve Broadbeach” CTS 36416

The scheme
“Verve Broadbeach” community titles scheme 36416 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 17 April 2009 is by Mervyn Carey, a co-owner of Lot 31 and Murray Phillips, a co-owner of Lot 51 (Applicants) against the Body Corporate seeking the following outcomes:

1. To have all matters of dispute restored to comply with the Act, namely compliance with scheme by-laws: Visitor Parking; Parking Vouchers; Keeping of Animals; Correspondence; and Power of Committee.
2. That the committee comply with the resolution on Motion 27 at the Annual General Meeting dated 31 March 2008 (2008 AGM) about air conditioning and that the committee pay the Body Corporate for all running costs incurred.
3. That the minutes of the committee meeting dated the 5 June 2008 show a correct record of the meeting to reflect the events that occurred as requested.
4. That motions presented for the Annual General Meeting dated 20 March 2009 (2009 AGM) that have been left out of the meeting be included.
5. Motions that were passed at the 2008 AGM and subsequently overturned illegally at the June 2008 committee meeting be restored.
6. That all rulings of the committee after the June 2008 meeting be declared invalid.
7. To invalidate the election of the committee members elected at the 2009 AGM who were members of the previous year’s committee, and to call for new nominations to fill these vacant positions.
8. That the resolution passed on Motion 20 at the 2009 AGM be declared null and void.
   

Interim order
The Applicants sought an interim order that the resolution passed on Motion 20 at the 2009 AGM be declared invalid and that all proposed work be stopped. On 7 May 2009, I made the interim order: “that pending a final determination of this application, the body corporate...shall not proceed with, implement or otherwise act upon the resolution passed on Motion 20...”

Submissions to the Commissioner
The Commissioner subsequently provided a copy of the application to Stewart Silver King and Burns (Body Corporate Manager) for distribution to the owner of each lot (excluding the Applicants) and the committee, with an invitation to respond to the matters raised in the application (s 243, Act). On 23 July 2009, the Commissioner extended the time for making written submissions. The committee and nine owners made submissions.

Adjudication
A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Jurisdiction
An adjudicator may make an order to resolve a dispute about a claimed or anticipated contravention of the Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under the Act or the community management statement (s 276(1), Act).

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, on 18 September 2009, I asked the Body Corporate Manager to provide information about the minutes of a committee meeting dated 22 January 2009 and to provide a copy of the notice of the 2009 AGM. The requested information and documentation was provided on 21 and 24 September 2009.

Decision
Outcome 1
The Applicants submit the committee appear not to want to carry out their legislative obligations by ensuring the by-laws are enforced.

With respect to parking, they say that since June 2008 there has been no supervision of visitor parking. They say committee members park illegally and that they want a disciplined/supervised policy enforced. The Applicants provided a copy of a letter dated 29 September 2007 from Mr Phillips (secretary) to owner/occupiers outlining a visitor parking policy instigated by the committee. They also provided a copy of letters dated 7 October 2008, 24 October 2008, 11 November 2008 and 18 December 2008 to the secretary stating their concerns about the use of the visitor car parks. The Applicants provided two completed by-law contravention notices addressed to the Body Corporate dated 12 January 2009 from the owner of Lot 51 complaining about Diana Scott of Lot 14 contravening By-Laws 2 (parking in a visitor parking space) and 28 (privacy screen).

The committee submitted it believes the issue relates to the secretary parking on a visitor parking bay when acting as a real estate agent and that Ms Scott has now ceased this practice. It says there is a voucher system in place and if the Applicants are dissatisfied a motion may be proposed to the next general meeting suggesting an alternate system. The committee is not aware of any vehicle which has been parked in the visitor car parks for such a time to warrant being towed; and it has received legal advice that it should exercise caution with towing cars as the Body Corporate may be liable for any loss suffered by the owner of the towed vehicle. It states it has adopted another process which it believes is more reasonable—placing notices on vehicles before determining if the vehicle is to be towed. An extract of the minutes of the committee meeting dated 22 January 2009 indicates at (Motion 11): “the Caretaking Contractor is to obtain approval from Don Meers prior to having cars removed from Common Property or in his absence one other Committee Member.” A letter dated 19 February 2009 from the Body Corporate Manager to Mr Carey says the visitor carking is monitored by the caretaking contractor and he has been requested to be vigilant in ensuring that parking procedures are followed.

The Applicants have not provided any discernible grounds on which outcomes were sought relating to keeping of animals and correspondence. In the circumstances, the reference to power of committee appears to relate to the issue of parking.

With respect to keeping of animals, the committee submitted that to its knowledge, all animals being kept have the required approval. In relation to correspondence, the committee submitted that it is responsive, but that it receives voluminous correspondence from Mr Phillips which it acknowledges receipt of and that it deals with those issues raised that need attending to. It states is not unresponsive just because Mr Phillips does not get what he wishes all the time. The committee says the Body Corporate Manager did send correspondence requesting that correspondence be sent to the attention of the chairperson; this was a mistake which has been rectified. It submits Mr Phillips sends voluminous correspondence to the secretary via her work email address despite numerous requests to send the correspondence to her care of the Body Corporate Manager. The committee seeks an order that Mr Phillips be directed to send all future correspondence to the secretary care of the Body Corporate Manager. With respect to the power of the committee: it submits there is no specification whether it is believed the Body Corporate is currently failing to do so; and no details are given of a specific occurrence where a breach has occurred but the breach notice was not issued.

While the application is against the Body Corporate, the issues stated in the first outcome sought specifically concern the committee. A person may make an application if the person is a party to and is directly concerned with a dispute, and has made reasonable attempts to resolve the dispute by internal dispute resolution (s 238(1), Act). A dispute may be between the owner of a lot and the body corporate (s 227(1)(b), Act). However, a lot owner cannot have a dispute with the committee for the body corporate. There may be a dispute between the body corporate and a member of the committee or between the committee and a member of the committee (s 227(1)(g) and (h), Act). Consequently, with respect to each of the abovementioned outcomes being sought, the onus rested with the Applicants to demonstrate that a dispute exists with the Body Corporate and that there have been reasonable attempts to resolve the dispute by internal dispute resolution.

Outcomes are sought with respect to parking vehicles on common property, specifically on visitors parking area or a ‘regulated parking area’. By-Law 2.1(a) included in the community management statement states: “The occupier of a lot must not park a vehicle, or allow a vehicle to stand, in a regulated parking area”. The Applicants have shown that the owner of Lot 51 had completed a notice asking the Body Corporate to give a contravention notice to the owner of Lot 14 about a contravention of By-Law 2.1(a). Unless special circumstances of the nature stated in section 186 of the Act exist (not being argued in this case), this notice must be given to the body corporate before the complaining owner may make a dispute resolution application (s 185, Act). Ordinarily, the application may be made if the body corporate does not advise the complainant within 14 days of the receipt of the request that the contravention notice has been given to the accused owner or occupier (s 185(2)(b), Act). In this circumstance, the complaining owner or occupier may make an application against the owner or occupier being accused of contravening a by-law.

The owner of Lot 51 has not taken this action. There is nothing to suggest the other Applicant, a co-owner of Lot 31, has completed the legislated preliminary procedures. Rather, they both have proceeded against the Body Corporate. In doing so, the Applicants have not demonstrated that a notice was given to the Body Corporate and that the Body Corporate (including through the committee) either did nothing or decided not to give a contravention notice. It would seem the Applicants seek an outcome that the Body Corporate enforces this By-Law. A body corporate must enforce the community management statement, including the by-laws (s 94(1)(b), Act). I am not satisfied from the material presented that the Body Corporate has acted, or not acted, in a way that warrants an order to this effect. I am satisfied from submissions that the committee is well aware of its role with respect to the enforcement of by-laws, and there is nothing in the stated circumstances to suggest the committee has not acted reasonably in this regard, particularly given that it is claimed Ms Scott has ceased the practice of parking in a ‘regulated parking area’.

The second issue appears to relate to an internal policy about parking vouchers. The Applicants have not pointed to a by-law regulating parking vouchers and have not provided any material to substantiate that for example, a Body Corporate decision has been made about this policy and that it is not being properly implemented.

Similarly, the Applicants have not provided any material about the keeping of animals to suggest there is a dispute with the Body Corporate about this issue. For example, the Applicants do not specify the occupier they believe is keeping an animal in contravention of By-Law 11 and have not explained the internal processes applied to seek enforcement of the By-Law.

Although not referenced by the Applicants, By-Law 22 relates to correspondence. By-Law 22.1 provides: “All complaints or applications to the Body Corporate or its Committee shall be addressed in writing to the Secretary or the Body Corporate Manager of the Body Corporate.” By-Law 22.2 states: “An owner or occupier of a lot shall direct all requests for consideration of any particular matter to be referred to the Committee, to the Secretary, and not to the Chairman or any member of the Committee.” The Applicants appear to seek an order against the Body Corporate restating the terms of the By-Law. On the basis of the material presented, I do not consider there is any justifiable reason for such an order. The Applicants have not shown that correspondence sent in accordance with the By-Law has been for example, rejected or ignored. There may be a question about the timeliness of a response from the committee. However, a connection has not been established between the By-Law and any such response time. The committee has sought an order that Mr Phillips be directed to send all future correspondence to the secretary care of the Body Corporate Manager. I do not consider it is appropriate that an order of this nature be made in the determination of this application.

Although not referred to by the Applicants, By-Law 23 provides that the committee may make rules relating to the common property. It would seem this is the By-Law relied being on. Certainly, no submissions have been made suggesting otherwise. As with other elements of this outcome, the Applicants have not provided any grounds to establish that there is a dispute with the Body Corporate about this issue. In my view, there is no reason to give any other consideration to this issue.

For these reasons, the first outcome sought is dismissed.

Outcome 2
At the 2008 AGM, Motion 27 was lost by ordinary resolution: “That as high-rise lobbies are normally air-conditioned from early morning to late evening, I propose that our lobby should be air-conditioned 7 days a week, say from 7am to 7pm.”

The Applicants submit the committee has disregarded this resolution and despite being informed the resolution can only be overturned in general meeting, the committee turned the air-conditioning on from 5.30am to 6pm. They submit it had been the practice since March 2007 to operate the air conditioning from 7am to approximately 11am based on the requirements of the Workplace, Health and Safety Act 1995 to coincide with the working hours of the caretaker. They say in December 2008, a committee member adjusted the time clock of the air conditioner to operate from 5.30am to 6pm without advice of a minute. The Applicants provided a copy of a letter dated 12 December 2008 from the Body Corporate Manager stating the resolution at the 2008 AGM or any previous general meeting resolution do not record a motion to turn off the foyer air-conditioning at 10 or 11am and that the committee does not understand why it was turned off in the first instance.

The owner of Lot 4 supported the committee saying numerous owners were pleased when the committee turned on the air conditioning in the foyer. The committee submitted the air conditioning is part of the infrastructure; it is necessary as parts of common property including the lobby get hot without it operating; the decision to limit operation hours from 6am to 10am was never approved in general meeting; and in the absence of a validly passed motion stating otherwise, the air conditioning should be left on so its climate control mechanism is allowed to properly provide for the cooling of these areas. The committee has reviewed the Workplace, Health and Safety Act 1995 and can find no reference to air conditioning or about the caretaker.

It is evident that the Body Corporate opposed a proposal to air condition the lobby each day from 7am to 7pm. This decision has not been disputed. Nor is it apparent that the Body Corporate has subsequently amended or revoked the resolution (s 95, Standard Module). In this circumstance, I agree that the lobby cannot be air conditioned every day from 7am to 7pm. However, the resolution does not generally limit air conditioning of the lobby in any other way and as submitted by the committee, there is no evidence of another Body Corporate decision that would otherwise regulate the operation of air conditioning. The Applicants have not provided any evidence of a relevant Body Corporate decision. The Applicants suggest that the operation times now are 5.30am to 6pm. These times are not subject to the resolution, nor would it seem any other resolution. The Applicants have referred to the Workplace, Health and Safety Act 1995, but have not demonstrated that operation times are restricted by this legislation.

There is nothing to suggest that scheme land other than common property is benefiting from the air conditioning at the cost of the Body Corporate. In my view, it is not apparent that the Body Corporate (through the committee) has acted contrary to the resolution made on Motion 27 at the 2008 AGM. Nor it is apparent that the Body Corporate has contravened the Act or the community management statement. In my view, there is no basis to give consideration to the second element of the outcome sought. For these reasons, the outcome sought is dismissed.

Outcome 3
The Applicants have provided minutes of the June 2008 committee meeting which note Mr Phillips (chairperson and secretary) departed the meeting at 9.25am. In a letter dated 18 December 2008 to the Body Corporate Manager, Mr Phillips stated he tendered his resignation as chairperson and secretary at this meeting effective immediately; the minutes did not indicate that he had resigned; and new minutes should be issued to reflect the true events of the meeting.

The committee submitted that the committee members in attendance at the meeting believe the minutes are accurate; it understands Mr Phillips is now purporting to have incorporated into the minutes his resignation and reasons for the resignation; the committee consider Mr Phillips walked out on the meeting; Mr Phillips sent an email on 17 June 2008 which was considered to be his resignation; and the resignation did not have effect until the written resignation was received (s 33, Standard Module).

The committee correctly refer to section 33 of the regulation. Subsection (2) describes the instances where a member of the committee’s position becomes vacant. Subsection (2)(c) provides a position “becomes vacant if the member resigns by written notice given to the chairperson or secretary”. Mr Phillips’ December 2008 letter details the events from his perspective. Significantly however, neither the letter nor any other material presented by the Applicants demonstrates that Mr Phillips resigned by written notice at the June meeting. Given the requirements of section 33(2)(c), I agree with the committee on the point of when the resignation has effect.

The committee must ensure full and accurate minutes are taken of a committee meeting (s 55(1)(a), Standard Module). Section 55(5) defines full and accurate minutes. I am not satisfied that the issue being claimed warrants inclusion in full and accurate minutes of the June 2008 committee meeting.

For these reasons, the outcome sought is dismissed.

Outcome 4
The Applicants seek an outcome that the motions presented for the 2009 AGM left out of the meeting be included. The Applicants have not however clearly explained the motion/s which they believe were properly submitted to the Body Corporate and which were not included on the agenda of the 2009 AGM. The committee submitted the Body Corporate received two motions from Mr Phillips and both were included on the agenda of the 2009 AGM. The minutes of the 2009 AGM include two motions (numbered 25 and 26) from the owner of Lot 51.

In a 12 page letter from Mr Phillips dated 19 March 2009 he states (at page 10): “One of Motions that the current committee have failed to include in our AGM Agenda, was to all owners asking them if they wished to connect to the current system, or install a Heat Pump System as stated in everyone’s contract, then commence legal action to received compensation for this action”, and at page 11 he states that a motion is required to determine if a compensation package would be appropriate in lieu of carrying out specified rectification work. Motions of this nature may be relevant to Motion 20 on the agenda of the 2009 AGM (see Outcome 8). However, the Applicants have not provided any material to support a view that a committee acting in accordance with the legislation would submit motions of the nature referred to in the abovementioned letter at the same time as a motion of the nature of Motion 20. Mr Phillips may be of the opinion that this should be the case. However, the Applicants have not provided any material demonstrating that the committee had a duty or obligation to do so. Further, no material has been presented which suggests that a lot owner had submitted a motion/s about these matters in accordance with section 69 of the Standard Module. For these reasons, the outcome sought is dismissed.

Outcome 5
The Applicants suggest motions passed at the 2008 AGM were subsequently overturned by the committee at the June 2008 committee meeting. The Applicants do not specify the resolutions passed the 2008 AGM, nor do they particularise the relevant committee decisions. The Applicants do state a motion was approved to install a garage enclosure on the condition that a traffic report is provided to ensure that the enclosure complies with the necessary approvals. They say at the next committee meeting the condition was waived and the garage allowed to be installed without the traffic report; and there was a conflict of interest as the applicant was a committee member and the other member present failed to disclose the conflict of interest.

The committee submitted there are no details about which motions the Applicants refer to; and the Applicants may refer to motions passed approving the installation of a garage door on car parks, motions which the committee say it has not overturned.

The minutes of the 2008 AGM include motions from owners numbered 20 and 22 to 26 which relate to the installation of garage doors. The minuted resolutions on these Motions gave conditional approval to proposals from the owners of Lots 1, 4, 9, 11, 12, 39 and 43 to install garage doors. At the June 2008 committee meeting, Motion 11 (relating to garage enclosure – Lot 13) was passed: “Issues and concerns about installing garage doors on exclusive use car parks were raised at the Annual General Meeting. The Committee discussed the issue and determined that a policy was required to determine the suitability of each application...The policy is to include the following items: traffic flow impact, electrical impact on the building and insurance during construction...the Community Manager is to write to each Lot Owner who has currently gained Body Corporate approval to install a garage door advising that Committee approval has been withheld until each application is assessed using information gained from the traffic report.”

It would seem, given the lots identified as gaining approval at the 2008 AGM, that one of the Applicants may have an interest in the Motion 20 approval. Mr Phillips has not explained the effect (if any) of the subsequent committee decision on this garage door installation. The owner of Lots 4 and 9 (Motions 25 and 26) did not comment in submissions because he did out know the specific topic. No other affected owner has made submissions, nor is it apparent these owners experienced problems implementing the relevant resolution as a consequence of a subsequent committee decision. The committee must put into effect the lawful decisions of the Body Corporate (s 101(2), Act). In my view, there is nothing presented to suggest the abovementioned decision of the committee at the June 2008 meeting does something other than put the resolutions passed at the 2008 AGM into effect. I am not satisfied from the material presented that the committee decision amends or revokes a resolution passed in general meeting. There is nothing presented to suggest another committee resolution is relevant to the outcome sought or that the alleged conflict of interest is of any consequence. For these reasons, the outcome sought is dismissed.

Outcome 6
The Applicants propose that all rulings made by the committee after the conclusion of the June 2008 meeting be declared invalid for the reason that there was a deficiency in the appointment of some committee members. Given the information in Mr Phillips’ letter dated 18 December 2008 to the Body Corporate Manager, it would appear the basis of the claim is the time taken by the committee to fill casual vacancies on the committee.

I have dealt with the question of the resignation of Mr Phillips as chairperson and secretary at page 5 of these reasons. I am not satisfied from the material presented that the committee did not fill the vacant positions in a way prescribed by section 38 of the Standard Module. Reference is also made to another resignation. As I have stated, the onus rested with the Applicants to establish the basis for making the application. I do not consider the Applicants have provided any grounds with respect to this resignation to warrant making an order in the terms sought.

In addition, section 242 of the Act places a time limit on an application for an order proposing to void a meeting of the committee or a resolution of the committee. The application must be made within 3 months of the relevant meeting. The 22 January 2009 committee meeting was held within 3 months of the application being made. The minutes of this meeting suggest that the preceding committee meeting was held on 22 August 2008 and that there was a resolution of the committee outside a meeting on 7 November 2008. The minutes of the August 2008 meeting refer to the June 2008 meeting and to the filling of casual vacancies. Other than the 22 January 2009 committee meeting, it would seem that any other meeting of the committee or resolution of the committee passed outside a committee meeting (not identified by the Applicants) is outside the 3 month time limit. The Applicants have not provided any reason for making the application outside this period. While an adjudicator may, for good reason, waive the non-compliance I do not consider there is any basis for further investigating this aspect of the outcome sought. I have reached this conclusion for the abovementioned reasons about the resignation of committee members and because the Applicants have not explained the detriment to warrant such an order even if their allegation was proven.

For these reasons, I have dismissed the outcome sought.

Outcome 7
The Applicants argue that the election of the committee members at the 2009 AGM who were members of the previous year’s committee should be invalidated and that new nominations be called to fill these positions. They say this new committee should have the interests of the Body Corporate as a priority and one which declares a conflict of interest when the need arises. The Applicants have not argued that a provision of the legislation was contravened when nominations were invited for election to the committee; when a nomination was made; in calling the 2009 AGM; or in the way the committee was elected at the 2009 AGM. It would seem the claim is based on the Applicants’ concerns about the members of the committee. This is not a reason for making an order in the terms sought. On the basis of the material presented, the outcome sought is dismissed.

Outcome 8
Motion 20 at the 2009 AGM was passed by ordinary resolution. The Applicants seek to void the resolution passed on Motion 20. The Applicants have not argued that there is a procedural defect in the presentation and consideration of the Motion. They have not claimed that the Motion conflicts with the legislation, or is unlawful or unenforceable for another reason.

The resolution contained nine parts. Of significance in the dispute is that as a consequence of the resolution, the Body Corporate: “(a)...authorises Verve Broadbeach Pty Limited ACN 100 384 423 (‘VBPL’) to construct a wind buffer on the Anne Avenue entry of the building to supplement the existing windbreak...(g)...releases VBPL from any further obligation in relation to the construction with respect to...the separate pool and spa; the gas heating system provided for the pool; the omission of a ‘wet edge’ feature of the pool; the non-provision of a water feature in the building Anne Avenue entry; and the design and construction of the basement car park”.

The work contemplated by part (a) of the resolution would appear to be on common property of the scheme. Parts (b) to (e) relate to the construction of the wind buffer. No material has been presented to suggest this work would not be carried out on common property. The Body Corporate has functions and duties about common property (s 94(1) and 152, Act). Under part (g), the Body Corporate resolved to release VBPL from any further obligation with respect to the things listed under the part. It is not argued that the Body Corporate does not have the power to make this decision. Rather, the Applicants would seem to contend the Body Corporate has not acted reasonably in making the decision.

The Body Corporate must act reasonably in anything it does under section 94(1) including making a decision for the subsection (s 94(2), Act). In determining whether the Body Corporate acted reasonably in deciding Motion 20 it is appropriate to consider if the decision is objectively reasonable: Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125. The objective test requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’: Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989) 88 ALR 621 (see also McKinnon v Treasury [2006] HCA 45 per Hayne J at p61).

It is evident that the committee, at the June 2008 committee meeting, discussed outstanding issues relating to the original construction of the building and that concerns were raised about no self enclosed spa, no wet edge pool, no heat pump for the pool, no water feature at the front door and underground car park turning circles; and that it was resolved that the treasurer and Diana Scott would meet with the developer to negotiate a suitable outcome on behalf of the Body Corporate. The minutes of the August 2008 committee meeting note that Ms Scott and Mr Cummane met with the developer who agreed to assess the items and provide a report addressing the concerns.

The committee submits it entered in negotiations with the developer at the request of Mr Phillips and that the negotiations centred on what Mr Phillips asserted are the developer’s failures to provide what was contained in the contract to purchase his lot. It states the committee received no other complaints from owners and the committee conducted the negotiations in an effort to respond to the concerns. The Applicants argue the persons authorised to handle discussions with the developer have relationships with the developer. They are concerned that the outcome of discussions has been heavily loaded in favour of the developer because of a conflict of interest. The committee denied this assertion submitting that Ms Scott denies there was any conflict of interest and that Mr Cummane has had limited conversations with the developer. It would seem the Applicants argue these members put a skewed proposal to the committee and that the committee acted unreasonably in deciding unanimously at the January 2009 committee meeting to submit Motion 20 to the 2009 AGM. It would seem the Applicants consider these actions affected the outcome of voting on the Motion.

While the Applicants argue conflict of interest, I am not satisfied from the submissions made that conflict of interest has been demonstrated. Even if it could been shown that a member of the committee had a relationship with the developer, nothing has been presented which would justify a finding that the proposal submitted to the 2009 AGM was crafted because of the relationship. A member of the committee must disclose to a committee meeting the member’s direct or indirect interest in an issue being considered by the committee if the interest could conflict with the appropriate performance of the member’s duties about consideration of the issue (s 53(1), Standard Module). In this circumstance, the member is not entitled to vote on a motion involving the issue (s 53(2), Standard Module). The minutes of the January 2009 committee meeting indicate that all six members voted on the motion to accept the response from Amalgamated Property Group and to submit Motion 20 to the 2009 AGM. Even without the votes of Mr Cummane and Ms Scott (if it was assumed they had a conflict of interest), the motion would have been passed by the committee.

It would seem the Applicants contend that the committee acted unreasonably in voting to submit Motion 20. A committee must act reasonably when making a decision (s 100(5), Act). In making its decision at the January 2009 committee meeting, the committee accepted a response from Barry Morris of Amalgamated Property Group dated 11 November 2008 providing the developer’s perspective on the matters subsequently listed in part (g) of Motion 20. The committee resolved to attach the report to the minutes of the meeting. On 21 September 2009, the Body Corporate Manager informed me that the minutes of the meeting held on file include a copy of the response. A copy of the minutes of a committee meeting must be given to each lot owner (other than a lot owner who instructed the secretary otherwise) within 21 days of the meeting (s 55, Standard Module). On 21 September 2009, the Body Corporate Manager informed me that a copy of the minutes of the January 2009 committee meeting was sent to lot owners on 13 February 2009 and a copy of the abovementioned response was attached to the copy of the minutes sent.

I am satisfied from this material that owners had notification of the committee decision and the information provided by Amalgamated Property Group. Owners were on notice that the committee intended to submit a proposal to the 2009 AGM for their consideration. On 21 September 2009, the Body Corporate Manager provided a copy of the agenda of the 2009 AGM; the schedule B explanatory notes identified Motion 20 as being about ‘Owner/Developer’. On 24 September 2009, the Body Corporate Manager informed me that the ‘Chairman’s Report’ was included with the agenda and provided a copy of this report. The Applicants provided a copy of this 7 page report in the application. It states the committee position with respect to the owner/developer proposal; a stance that is clearly objected to be the Applicants.

On the question of the information provided by a committee in the notice of a general meeting, McGill DCJ stated in Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300:

• “...I cannot understand why the notice [of a general meeting] should be required to be balanced ...I cannot see anything in the regulation which requires the submitter of the motion to include in the explanatory note arguments against the motion as well as arguments in favour of it, so as to be balanced, and such a proposition strikes me as not supported by anything in the legislation or the general law” [31].
• “...lot owners...are expected to make up their own mind as to whether they will support the motion or not, and ordinarily those opposed to the motion, like those supporting it, have the opportunity to persuade, and the task of persuading, those lot owners to vote in favour the position they advocate. The mere fact that the committee was on one side can hardly be a basis of rendering that process unbalanced and unfair, and therefore incapable of producing a valid result...” [40].
• “The fiduciary duty (of a committee) is a duty to provide such material information as will fully and fairly inform members of what is considered at the meeting...The information is to be such as will enable members to judge for themselves whether to attend the meeting and vote...” Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at p 466 [61].
• The court added at p 468: “The need to make full and fair disclosure must be tempered by the need to present a document that is intelligible...likely to assist rather than to confuse...The need for the applicants to establish the materiality of errors and omissions is an important step in the proof of their claims” [62]
• A distinction should be made “between disclosing material disadvantages known to the committee which would not have been obvious to the lot owners if they supported the proposal (which was required) and setting out arguments against the proposal (which was not required). There is nothing in the cases which suggest any obligation to be “balanced” about an issue put forward; if the committee is proposing a course of action, it is entitled to support it vigorously, so long as the fiduciary obligation is not breached”. [73]
  

The committee explained the basis for undertaking negotiations with the developer. It has shown that it decided to submit the outcome of these negotiations to owners for their consideration and it has demonstrated that it provided owners with information it had obtained with respect to the issues put for their consideration. There is nothing to suggest that the committee withheld information of substance from owners or otherwise provided inaccurate or biased information to owners. The ‘Chairman’s Report’ explained the actions taken by the committee and its view on the proposal. It was a matter for owners to decide whether they would support or oppose the proposition. The Applicants were entitled to express their opinion to owners and to seek to persuade owners to vote against the Motion. In my view, there is nothing in the material presented to suggest that the committee acted unreasonably or contrary to its obligations in submitting Motion 20 to the 2009 AGM.

The Applicants argue the resolution is not in the best interests of the Body Corporate. They say the resolution takes away the rights of owners and would influence the rights of the original owners from seeking compensation through courts. They submit owners’ values have been severely reduced and as the monetary value involved is considerable, a deed of release should not be executed. Pages 2 to 4 of Mr Phillips’ letter dated 19 March 2009 details his concerns with the proposal. It is not known whether he also provided this information to owners. In my view, there is nothing in the letter which would suggest that a body corporate acting reasonably would oppose Motion 20. It is Mr Phillips opinion that the Body Corporate should commence legal action against the developer. This is borne out from the inclusion of Motions 25 and 26 on the agenda of the 2009 AGM. Both Motions were submitted by the owner of Lot 51. There is nothing to suggest that the owner provided any explanatory notes about either Motion to be included in the notice of the 2009 AGM or that the owner otherwise sought to persuade owners to their point of view. The minutes indicate that both Motions were lost by special resolution.

It is apparent that the Applicants views about the action that should be taken by the Body Corporate differ markedly from owners generally. Significantly, the Applicants have not demonstrated that the Body Corporate has a legislative obligation to take legal action. Nor have they shown that it would be reasonable for the Body Corporate to do so. Owners have considered and opposed such action. Owners prefer the proposal in Motion 20.

The ‘Chairman’s Report’ states (at page 5): “...it is not up to the Body Corporate to take legal action on behalf of an individual or number of lot owners, who believe their contracts of purchase were not properly honoured. The Committee would also like to point out to all owners that any legal action taken against the developer is likely to be protracted, very costly and have an unpredictable outcome. The Committee also notes that the requirements of the motion, if addressed by the developer would result in the pool area being dug up over a lengthy period...” It would be appropriate to consider factors such as the cost of any action, the benefits it seeks to obtain and the likelihood of success. In my view, it would be prudent for the committee to inform owners about the issue, especially when there could be protracted legal action. The Applicants have not provided any information from a person with appropriate qualifications or expertise to suggest that the Body Corporate is obliged to do something or that the statements made by the chairperson are inaccurate. As submitted by the committee, in light of the resolution of the Body Corporate, it is a matter for owners, individually or collectively, to decide whether they have a right of action.

The Applicants say the chairperson did not allow any debate. The Applicants consider that further discussions should be held to obtain a better result for owners. The committee submitted that the chairperson’s position was that debate must be directed to the motions rather than any issue Mr Phillips might like to debate. There is nothing to suggest that significant or relevant information was withheld or not disclosed because of the absence or limiting of any debate. The Applicants also submit that motions lodged were omitted. I have dealt with this issue at Outcome 4 on page 5 of these reasons.

While the committee has submitted it has no objections to invalidating the Motion, I am not satisfied the Motion or the resolution contravened the legislation to warrant an order in the terms sought. On the basis of the material presented, I do not consider there is a justifiable basis for finding that the opposition to Motion 20 was in the circumstances unreasonable. For these reasons, the outcome sought is dismissed. It should be noted that a decision by ordinary resolution may be amended or revoked by a resolution of the same type (s 95, Standard Module).

Frivolous, vexatious, misconceived or without substance
The committee has made submissions stating the application should be dismissed on the basis that it is vexatious, misconceived and without reasonable basis. An adjudicator may order costs against the applicant to compensate the respondent for loss resulting from the application (s 270(3)(a), Act). The adjudicator may make such an order if the adjudicator makes an order dismissing the application for the reason that it appears to the adjudicator that the application is frivolous, vexatious, misconceived or without substance (s 270(1)(c) and (3), Act).

I have given consideration whether the application should be dismissed under section 270(1)(c) of the Act. I consider the first, third, fourth, fifth, sixth and seventh outcomes sought are without merit. The Applicants simply did not detail the grounds on which these outcomes were sought. Nor do they make a specific claim about a contravention of the Act or the community management statement. In my view, they included material not relevant to the outcomes sought. The Body Corporate was expected to distribute this material to 56 owners and was asked to respond to the claims made. There would have been a cost to the Body Corporate to do so particularly given the amount of material provided by the Applicants. In these respects, this application is of a character which could fall within the scope of frivolous, vexatious, misconceived or without substance.

However, I have decided not to dismiss it on that basis. I do not wish to prolong the application or the time and costs for the parties by seeking specific submissions from the parties on whether the application should be dismissed under 270(1)(c) or what costs may have been incurred in responding to this application. There is no evidence of previous applications and in some respects (Outcomes 2 and 8) I do not believe there is any basis for dismissing the application for these reasons. For these reasons, I have not dismissed the application under section 270(1)(c) of the Act.