Admiralty Towers [2009] QBCCMCmr 417 (26 October 2009)

Last Updated: 13 November 2009

REFERENCE: 0936-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	16440
Name of Scheme:	Admiralty Towers
Address of Scheme:	35 Howard Street BRISBANE QLD 4000

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

Roma Properties Pty Ltd, the Caretaking Service Contractor and Owner of lot 34

I hereby order that the Body Corporate for Admiralty Towers is restrained from acting upon the following:- (a) Five Notices to Remedy a Breach dated 23 September 2009; (b) Notice to Remedy a Breach dated 7 September 2009; (c) Five Notices to Remedy a Breach dated 31 August 2009; and (d) Two Notices to Remedy a Breach dated 28 July 2009; until a final determination of this dispute resolution application.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0936-2009

“Admiralty Towers” CTS 16440

The scheme

Admiralty Towers community titles scheme 16440 consists of 152 lots and is regulated by 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 1 October 2009 is made by Roma Properties Pty. Ltd. the caretaking service contractor for the scheme and owner of lot 34, seeking the following Interim Orders:

That the Body Corporate be restrained from acting upon the:-

(a) Five Notices to remedy breach dated 23 September 2009;
(b) Notice to remedy breach dated 7 September 2009;
(c) Five Notices to remedy breach dated 31 August 2009; and
(d) Two Notices to remedy breach dated 28 July 2009.

until a final determination of this adjudication application.

The Applicant also seeks final declaratory orders that:

1. The five Notices to remedy breach dated 23 September 2009 are invalid;
2. The notice to remedy breach dated 7 September 2009 are invalid;
3. The five Notices to remedy breach dated 31 August 2009 are invalid; and
4. The two Notices to remedy breach dated 28 July 2009 are invalid.
   

Background

The applicant, Roma Properties Pty. Ltd., is the caretaking service contractor and has been issued with a number of Notices to Remedy Breach by the body corporate committee.

These notices include the following:

Three Notices to Remedy Breach dated 28 July 2009;
Five Notices to remedy breach dated 31 August 2009;
Notice to remedy breach dated 7 September 2009; and
Five Notices to remedy breach dated 23 September 2009.

In this application, the above notices are referred to collectively as “the Breach Notices”, and the orders sought by the applicant relate to the respondent’s failure to comply with ss.55 to 57 of the Standard Module regarding the issuing of the Breach Notices.

The applicant submits that all of the Breach Notices were issued:

(a) before the circulation of the minutes of each committee meeting where the committee purported to authorise the breach notices to be issued; and/ or

(b)without proper authority, as the relevant committee resolutions are “too vague and indeterminate”.

The applicant goes on to refer to the specific requirements of sections 55, 56 and 57 of the Standard Module Regulation.

Section 55 provides as follows:

55 Minutes and other records of committee
(1) The committee must ensure—
(a) full and accurate minutes of its meetings are taken; and
(b) a full and accurate record is kept of each motion voted on other than at a meeting.

(2) The secretary must give a copy of the minutes of each meeting and a copy of the record of each motion voted on other than at a meeting to the following persons—
(a) each member of the committee;
(b) each owner of a lot who is not a member of the committee.

(3) Subsection (2)(b) does not apply to an owner of a lot who—
(a) has given the secretary a written notice instructing the secretary that the owner does not wish to be given copies of the minutes of committee meetings and records of motions voted on other than at meetings; and
(b) has not withdrawn the instruction.

(4) The copy must be given to the person—
(a) within 21 days after—
(i) for a copy of minutes of a meeting—the holding of the meeting; or
(ii) for a copy of a record of a motion voted on other than at a meeting—the deciding of the motion; and
(b) in 1 of the following ways—
(i) by handing it to the person;
(ii) by sending it by mail;
(iii) by sending it by facsimile;
(iv) by sending it electronically.

(5) In this section—
full and accurate minutes, of a meeting, means minutes including each of the following—
(a) the date, time and place of the meeting;
(b) the names of persons present and details of the capacity in which they attended the meeting;
(c) details of proxies tabled;
(d) for each motion voted on at the meeting—
(i) the words of the motion; and
(ii) the number of votes for and against the motion;
(e) details of correspondence, reports, notices or other documents tabled;
(f) the time the meeting closed;
(g) details of the next scheduled meeting;
(h) the secretary’s name and contact address.

full and accurate record, of a motion voted on other than at a
meeting, means a record including each of the following—
(a) the date notice of the motion was given;
(b) the names of the committee members to whom notice
was given;
(c) the words of the motion voted on;
(d) the names of the committee members who voted on the
motion;
(e) the number of votes for and against the motion.

Section 56 provides as follows:

56 Notice of opposition
(1) A notice opposing the giving of effect to a resolution of the
committee (a notice of opposition), signed by or for the
owners of at least one-half of the lots included in the
community titles scheme, may be given to the secretary.
(2) However, a notice of opposition may not be given for a
resolution that—
(a) is of a routine, administrative nature; and
(b) involves spending not more than the greater of—
(i) $200; or
(ii) $5 multiplied by the number of lots included in the
scheme.
[s 57]
Body Corporate and Community Management (Standard Module) Regulation 2008
Chapter 3 Committee for body corporate
Part 4 Committee meetings—Act, section 101
Page 58 Reprint 1A effective 1 September 2009
(3) A notice of opposition must be given to the secretary within 7
days after the secretary gives a copy of the minutes containing
the resolution or, for a resolution passed other than at a
meeting, a copy of the resolution, to each owner of a lot
included in the scheme as required under section 55.

57 Giving effect to resolutions of committee meetings
(1) The committee may give effect to a resolution of the
committee only if—
(a) the time for giving a notice of opposition under section
56 in relation to the resolution ends without a notice of
opposition being given to the secretary; or
(b) the resolution is necessary to deal with an emergency,
and—
(i) the amount required to put the resolution into
effect is within the relevant limit for committee
spending for the community titles scheme; or
(ii) an adjudicator acting under the dispute resolution
provisions authorises the committee to give effect
to the resolution; or
(c) the resolution is ratified by ordinary resolution of the
body corporate; or
(d) the resolution is of a routine, administrative nature and
involves spending not more than the greater of—
(i) $200; or
(ii) $5 multiplied by the number of lots included in the
scheme.
(2) In a proceeding involving a challenge to a committee’s right
to give effect to a resolution under subsection (1)(a), the
burden of proving that action required to be taken under
section 55(2) and (4) was in fact taken lies on the person
asserting the right.

Having regard to the above provisions, the applicant submits that:

• Prior to issuing each Breach Notice the committee was required to give all body corporate members notice of the committee resolutions to within 21 days;
• After the above notice was given, the committee could not give effect to the above resolutions until the expiration of a further 7 days during which time a notice of opposition could be given to the committee by members of the body corporate;
• There were no circumstances to indicate that the committee was entitled to dispense with compliance with sections 55 to 57 of the Standard Regulation Module because:
  • - the purpose of the committee resolution was to deal with an emergency;
  • - the issue of a breach notice amounts to “a routine administrative”matter; or
  • - the breach notice was ratified by an ordinary resolution.
• The effect of committee’s failure to follow the procedures in ss 55 to 57 is to render the breach notices void and of no effect, as the adjudicator found when considering similar circumstances in the decision Beaches Surfers Paradise [2007] QBCCMCmr;
• It is also submitted that there are strong public policy reasons for ensuring that a committee adheres to ss 55 to 57 of the Standard Module regulation prior to the issue of a Notice to Remedy a Breach. The lack of transparency in committee decision making and the denial to lot owners of the opportunity to give a Notice of Opposition or otherwise discuss the proposed committee resolutions prior to implementation, is unacceptable;
• The Breach Notices were incorrectly issued and to allow the body corporate committee to further act upon the breach notices would most probably escalate into a complex dispute costing both the applicant and the body corporate thousands of dollars in legal fees;
• The actions of the committee in implementing resolutions in contravention of section 57 of the Standard Module cannot be regarded as bona fide. In correspondence dated 11 August 2009, the respondent’s lawyer acknowledged that section 57 of the Standard Module applies to the committee’s resolution to issue the Breach Notices. Although the applicant’s lawyers have put the committee on notice, the body corporate committee has nevertheless disregarded the requirements of section 57 by implementing the above resolutions;
• For the above reasons there can be no argument that the committee’s contravention of section 57 is merely insubstantial but rather compliance with section 57 is mandatory. Failure to comply with these requirements will invalidate the committee resolutions to issue the breach notices and also the breach notices. This was the decision of the adjudicator in Beaches Surfers Paradise [2007].
• The balance of convenience favours granting injunctive relief to maintain the status quo because both parties will otherwise incur significant legal costs in the short term if the interim order is not granted. No inconvenience would be suffered by the respondent as it remains entitled to issue new Breach Notices;
• The nature and urgency of the circumstances warrant the issue of an interim order.
  

Jurisdiction

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me, and pursuant to section 276(1) of the Act I 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 my investigative powers under section 271 of the Act, on 5 October 2009 I invited submissions from the body corporate committee regarding the interim order application.

On 15 October 2009 this Office received a response from Herdlaw, lawyers for the body corporate committee which advised as follows:

“ We note that the applicant is seeking interim orders that the Respondent be restrained from acting upon the
(a) Notices to remedy breach dated 28 July 2009;

(b) Notice to remedy breach dated 31 August 2009;

(c ) Five Notices to remedy breach dated 7 September 2009; and

(d) Two Notices to remedy breach dated 23 September 2009;..

until a final determination of this adjudication application.

We note further that the Applicant is seeking is seeking the final outcome that the Notices to remedy Breach listed above be declared invalid.

We note that at this stage the Commissioner is only seeking submissions with ritselfpect to the interim order application only.

We are instructed by the committee of our client that they do not oppose the interim orders sought by the applicant and that they accordingly will not be making any submissions in relation to the interim orders.

The body corporate , however does oppose the application for final orders and will be making submissions in relation to this aspect of the application in due course.”

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 for me 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 potentially very broad, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

The Applicant is concerned about the legality of the resolutions by the committee to issue a number of Notices to Remedy Breaches and has correctly pointed out that certain aspects of this case are similar to those which I considered in the case referred to as Beaches Surfers Paradise [2007] QBCCMCmr.

To assist me in determining whether to grant injunctive relief at this stage, it is relevant to briefly consider whether the application 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. As an adjudicator I 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. 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 (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

While service of notices pursuant to a resolution of the committee does not of itself create an emergency, it is possible that if an interim order is not granted, the committee may proceed to call an extraordinary general meeting at which lot owners will decide whether to terminate the engagement of the Caretaking Service Contractor. As the applicant points out, this could lead to a purported termination of the Caretaking Agreement, notwithstanding the applicant’s contention that such a termination would be unlawful. In the event that the body corporate seeks to terminate the Caretaking Agreement, the present application, including the application for final orders would be otiose. Further, given that the body corporate does not oppose the interim orders sought by the applicant, and has declined to make any submissions in relation to the interim orders, I propose to make the interim orders sought by the applicant.