Augusta Terraces [2009] QBCCMCmr 425 (29 October 2009)

Number of Scheme:	15130
Name of Scheme:	Augusta Terraces
Address of Scheme:	97-111 Routley Drive KOORALBYN QLD 4285

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

I hereby order that the resolution of the body corporate committee on 21st June 2009 at “4th point of order” to give two weeks notice to Alan Gatehouse thereby terminating the contract for services for which he was engaged by the body corporate is void.

In all other respects the application is dismissed.

This is an application dated 6th July 2009 and amended on 9th July 2009 by Colin Ponchard (the Applicant) owner of Lot 26, against the body corporate for the scheme (the body corporate) for orders as follows –

1. “that the committee must not sign an agreement for the engagement of “Bandicoots”, or any other caretaker/gardener which falls into the category of a “service contractor” as defined in the legislation, until such engagement is authorised by the body corporate at a general meeting, or until final determination of this application, whichever first occurs;

2. that if the committee has already signed a contract with a caretaker/gardener who is a “service contractor” as defined in the legislation, or at a cost beyond the relevant spending limit of the committee, then such action must be retrospectively approved by a general meeting of the body corporate.”

“Augusta Terraces” CTS 15130 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module.) There are 56 lots in the scheme created under a Building Unit Plan of subdivision.

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

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The Applicant says that there was a committee meeting held on 21st June 2009 for which there was no notice issued to owners, and then no minutes were subsequently provided. At that meeting, the committee voted to terminate the contract of the caretaker Alan Gatehouse (Mr Gatehouse) as from 12th July 2009. Body Corporate Services Pty Ltd, the body corporate manager for the scheme, wrote to Mr Gatehouse on the committee’s instruction on 29th June 2009, terminating the “gardening/caretaking agreement” and thanking him for many years of service.

Mr Gatehouse was “on a contract of approximately $37,000 gross a year.” The Applicant does not believe that the termination complies with the legislation because of the lack of notice of the meeting, and lack of proper minutes; and says that the letter from the body corporate manager was improperly authorised.

Lot owners are unaware of Mr Gatehouse’s termination and this has caused distress as they were happy with the existing arrangements especially on the security aspect as Mr Gatehouse lives on site, and has always been reliable and efficient. He says that owners have been denied the right of voting on this important decision.

The minutes of the committee meeting of 21st June 2009 were obtained by the Applicant on 20th July 2009 from the body corporate manager. The Applicant does not believe that the minutes were forwarded to other lot owners.

The minutes show that five members of the committee were present. The fourth item is that –

“The position of “Gardener/Caretaker” has been decided and filled by Bandicoots of Kooralbyn. Andy and his team are fully qualified in pool and gardening maintenance/design with full insurance and truck plus all machinery to complete the tasks. Their quote was $35,000 per annum which was $5,000 cheaper that the all (sic) others submitted. Alan Gatehouse will be given two weeks notice as from Monday 29th June and we wish him all the best in his future endeavours.”

The Applicant also provides a copy of the minutes of the previous committee meeting on 17th May 2009 wherein at point 4, the committee notes that “over the next four weeks we will be seeking expressions of interest for the position of Caretaker as the current contract has expired for some time. All quotes sorted and tendered will reviewed (sic) at next meeting.”

At the interim stage, the chairman of the committee, Brian Peters (Mr Peters), made a submission on behalf of the committee. He says that tenders were called for the position of gardener/caretaker and Mr Gatehouse submitted a tender, but was not successful as the committee received a cheaper quotation from “Bandacootes” (sic) whom the committee has employed. The new gardeners have insurance and equipment which Mr Gatehouse did not have. Mr Gatehouse was given two weeks notice, and the new gardeners commenced two weeks prior to 17th July 2009.

He says that the minutes of committee meetings are given to the body corporate manager for circulation to lot owners and if the body corporate manager is not performing its duties, no doubt owners will vote not to re-engage it at the annual general meeting.

The Applicant on receipt of the interim order said that Bandicoots had not been engaged “two weeks prior to 17th July 2009” and that this was a “deliberate prevarication” in the committee submission. He saw no person other than Mr Gatehouse working on site up to and including 12th July 2009.

In accordance with section 243(2)(b) Act submissions were invited from all lot owners and also from Mr Gatehouse who is an interested party in this application.

Janet Clements, owner, says that the caretaker should live on site for security reasons. She says that Mr Gatehouse helps everyone day or night, so would be a real loss if he was replaced.

Brian Weekes, owner of Lot 23 says that he supports the application, and that the body corporate has had little say in the decision. The committee should not have sacked a reliable and diligent worker like Mr Gatehouse.

Richard Cayzer, owner, supported the application, saying the matter should have been put to a general meeting. Mr Gatehouse is friendly, conscientious, hardworking and lives on site.

Dr Ananda Krishnan, owner; Kay Emert Curtin, representative of the owner of Lot 32; and Barry Huxley, owner of Lots 34 and 39 support the application.

Clinton Moore, (Mr Moore) owner of Lot 33, says that he was not advised of the time and place of the last committee meeting or the one before that, and in May 2009 he received a text message saying there was a meeting but it was cancelled the day before. In April, he was advised that the committee meeting was at 11am, and when he arrived, found out that it had started at 9am.

Katy Godfrey, owner of Lot 15 says that she is concerned about the lack of communication eg, agenda and minutes to owners.

Jennifer Lukowski, owner, says that such important decisions as the engagement if a caretaker should only be made at the annual general meeting, and that the committee does not have the right to change appointments.

Julie Latter, owner of Lot 2 says that the committee is spending body corporate funds without consultation with the owners. She has also not received agendas or minutes. Major contractual decisions should be decided at an annual general meeting.

William Holmes, representative of the owner of Lot 1 says that Mr Gatehouse’s work is outstanding and that he should be reinstated.

Gail Ellmers, owner of Lot 21 says major contractual agreements “must be done at an AGM.”

Nicolle Collins, owner of Lot 43 says that there should be “a more consultative approach” especially where the decision has a major impact on residents.

Mr Gatehouse made a submission that he has been the occupier of Lot 3 for 12 years, and first had a contract dated 19th May 1997 with the body corporate as caretaker. His second contract expired “in 2005”, and he approached the committee to renew it. The committee did nothing about it and he gave up asking for a contract, but “continued to work as an employee from 2005 to 2009.”

On 9th June 2009 he was shown the committee minutes of a committee meeting dated 17th May 2009, and noted that the committee were to call for tenders for the position of caretaker/gardener. He was upset as he had no prior knowledge of this and was acting as the caretaker/gardener at the time. His first reaction was to resign, but after some consideration he submitted a tender for the position. On 21st June 2009 the committee met in the chairman’s unit instead of at the usual BBQ area, and the tender for caretaker was voted on. He was told after the meeting that he was not successful. On 26th June 2009 he received a formal letter from the body corporate manager giving him two weeks’ notice to terminate on 12th July 2009. His wages were paid monthly on the 15th of each month. He found this to be very poor treatment of him and his service to the body corporate.

Lot owners to whom he spoke were amazed at his dismissal. He felt that the view of five committee members did not express the view of the body corporate.

He says that Bandicoots Garden and Lawn Services Pty Ltd commenced duties on 13th July 2009 not as stated by the body corporate in its interim submission. His equipment was always supplied by the body corporate, and he understood himself to be an employee of the body corporate.

The Applicant exercised his right of Reply to note that all submitters shared his own views about the non-compliance of the committee.

The body corporate, the respondent to this application did not make a submission but chairman Mr Peters asked for the submission made at the interim stage to be considered in the making of the final order. The body corporate manager advised on 9th September 2009 that an annual general meeting (the AGM) had been convened for 30th September 2009.

At the annual general meeting, the Applicant was elected as chairman. After the close of submissions this Office received a letter from Mr Peters complaining about the performance of the body corporate manager. He also disputed that the wording of Motion 12 of the AGM, calling Mr Gatehouse “a current live-in Caretaker” was correct, and said that, as the chairman of the meeting, he had attempted four times at the meeting to have Motion 12 held as “illegal”, but the body corporate manager intervened to overrule him. He asks for this further submission to be considered in this application.

A copy of the AGM minutes was also sent to this Office on 7th October 2009 by the Applicant.

In this matter, the Applicant seeks three final outcomes, the first being that the committee be ordered to follow “correct procedure at committee meetings.” I am not prepared to make such an order since the legislation requires that a committee act in a prescribed way, and an order to comply with the legislation would be meaningless. Any aggrieved person already has a remedy whenever the allegation is that the committee has breached the legislation, and no order from me would give the complainant greater security or impose further duties on the committee.

The second outcome sought is a declaration that the committee meeting of 21st June 2009 was “void for irregularity.” The irregularity alleged is that there was no notice issued to owners about the meeting or the agenda which the committee proposed and no minutes provided, as at the time the Applicant lodged this application on 6th July 2009.

The (undated) minutes of the committee meeting of 21st June 2009 were received by the Applicant on 20th July 2009. The Applicant does not believe that the minutes were forwarded to other lot owners, and he had to request them specifically from the body corporate manager. The body corporate responded that the body corporate manager is charged with the duty of circulating the minutes.

Section 45 Standard Module requires that notice of a committee meeting is given to owners at least seven days before the meeting and section 47 Standard Module requires that an agenda is sent with the notice. However, the items on the agenda are not fixed as they are for a general meeting, and the committee may consider issues other than those on the agenda.

Several lot owners have submitted that generally there is poor communication between the committee and lot owners and that they do not get notice of committee meetings or minutes after meetings have been held. Mr Moore, I believe, says that he had no notice of the June meeting. There is some evidence that lot owners, or some lot owners did not receive notice of the meeting of 21st June 2009. However, whether that is sufficient to invalidate a meeting may depend on the intention of the legislation in the case where there was a lack of compliance, and evidence that persons who should have been notified of the meeting were thereby prejudiced.

The legislation is silent about the effect of non-compliance. It has been held in Wei-Xin Chen -v- Body Corporate for Wishart Village [1] that the very detailed provisions of the Standard Module make it almost inevitable that from time to time there will be non-compliance with it. At the same time, the provisions of the Act make it clear that non-compliance of “an insubstantial nature” will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bone fide. However, the question of whether a legislated requirement is mandatory or merely directive has been recently explored[2], with it being said that the “better test” for determining the validity of an action which has not been complied with, or only partially complied with, is to “ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid... In determining the question of purpose, it was further held that regard must be had to “the language of the relevant provision and the scope and object of the whole statute.”[3]

Section 45 Standard Module contains detailed provisions for notice to be given of committee meetings. I am of the view that a tenet of the legislation is to provide transparency and accountability to lot owners in the dealings of their elected committee. It is germane that all members of the body corporate know when a committee meeting is being held so that owners have the opportunity to exercise their right to attend that meeting, albeit with notice to the committee (section 51 Standard Module.) Whilst such an attendee may or may not be invited to speak, a lot owner has a right to see its committee “at work” and know what the current issues in management of the scheme are. If the body corporate failed to comply with the seven days’ notice required, the question of whether or not any lot owner was prejudiced might arise. Where no notice at all was given to lot owners, save for the note on the last committee meeting’s minutes, I find that the breach is such that the meeting should be held invalid.

However, I am not satisfied that there is evidence that the notice of the committee meeting was not sent to any lot owner. Mr Gatehouse, although not an owner, had submitted a tender for the gardening and caretaking contract and he knew that the meeting was being held. It does not appear to me that the committee met by stealth on 21st June 2009, even though there is a suggestion of that in the evidence.

Nor is there any evidence that any owner was prejudiced, in that, there are no submissions that an owner wanted to be heard by the committee before a vote was taken on any of the items of business on 21st June 2009 and there is no evidence that a committee member has been denied a vote. The item about calling for tenders was on the minutes of the previous meeting on 17th May 2009, clearly to be discussed at the next meeting scheduled in those minutes to be held on 21st June 2009. There is no compelling evidence that the minutes of 17th May 2009 were not sent out to lot owners, and they were shown to Mr Gatehouse, who is not an owner, on 9th June 2009.

There were five committee members present at the meeting on 21st June 2009, and no member absences noted. Section 55 Standard Module requires that the committee ensures that full and accurate minutes of meetings are taken, which means that the date, time and place of meeting is recorded; the names of the persons present and the details of the capacity in which they attended; any proxies tabled; the wording of each motion and the number of votes for and against each motion; details of correspondence, reports, notices or other documents tabled; the time the meeting closed; the details of the next scheduled meeting and the secretary’s name and contact address are all stated.

The minutes of the meeting of 21st June 2009 are therefore not in compliance with section 55(5) Standard Module. However, that is not in my view a ground to invalidate the committee meeting itself.

I find that the committee meeting of 21st June 2009 was a valid committee meeting although poorly executed and recorded.

The third outcome sought is that “the resolution to terminate Alan Gatehouse and the gardening/caretaking contract as purportedly passed at the committee meeting for the body corporate on 21st June 2009 is void.”

The “4th point of order:” at the committee meeting on 21st June 2009 stated -

I find that in this statement the committee has made a resolution to do two things:

It is the notice to Alan Gatehouse which concerns the Applicant, and I am not asked to make an order about the appointment of Bandicoots, which I flagged as a concern in my interim order.

Section 116 Standard Module sets out the requirements for the form of engagement of a person as a “service contractor”, that is, a person contracted to the body corporate for at least one year, under a written agreement to supply services. Such a person may be engaged only by ordinary resolution of the body corporate at a general meeting (section 114 Standard Module).

The termination of a service contractor can also only be made by following a procedure set out at section 131 Standard Module, and there may be legal ramifications to terminating a contract, possibly dependent on the wording of the contract itself.

Mr Gatehouse says that he held contracts from 1997 until 2005 when the second one expired. From 2005 he continued in the role without a contract. His role is that of gardener/caretaker. He describes himself as “an employee” and received monthly “wages.” It does not seem to me that Mr Gatehouse was “an employee” since it seems unlikely that the body corporate is paying any contributions towards government tax on his behalf, or performing any other duties of “an employer.” Certainly, as an employee, he might have had justification for a complaint to the Industrial Relations Commission if he was given two weeks notice without the opportunity to be heard, or to remedy any alleged defects in his work practices. However, that is not within my jurisdiction. He would appear to me to be a self-employed contractor holding over on a month to month basis after a contract has expired, with the full knowledge, acquiescence and willing agreement of the body corporate, which allows him to use its tools to perform duties required of him.

A “service contractor” is defined as a person engaged by the body corporate (other than as an employee of the body corporate) for a term of at least one year to supply services to the body corporate for the benefit of the common property or lots included in the scheme eg. caretaking services, or pool cleaning services.[4]

I have not been shown a copy of either of the former contracts, and I do not think there will be anything to gain by seeing if the last contract complied with the terms of engagement of a service contractor under section 116 Standard Module. There is no argument by the body corporate that Mr Gatehouse was not a service contractor for the reason that his original contract was void. The argument, if any, appears to be that since Mr Gatehouse no longer had a contract, he could be dispensed with by the committee alone.

When the contract expired in 2005, the body corporate might immediately have put a stop to Mr Gatehouse working for it, claiming that the contract was at an end, but instead, it has let him go on working for four years. He was still doing the job as per the prior contract, and still being paid in the same way. He has performed services under the contract and thereafter for 12 years. In my view, a service contractor who is holding over at the wish of the body corporate, is still a service contractor, and therefore entitled to termination approved by ordinary resolution of the body corporate in accordance with section 129(2) Standard Module.

Therefore, whilst the body corporate committee might resolve that the agreement with Mr Gatehouse’s should be terminated, either by agreement, or under the engagement, or by requiring him to comply with a remedial action notice (section 131 Standard Module), any such resolution would be invalid without the approval of the body corporate by ordinary resolution at a general meeting.

I therefore order that the committee’s resolution to dismiss Mr Gatehouse and thereby to hold that his gardening/caretaking contract was at an end was invalid and is void.

However, I note that the body corporate has now held an AGM, and understand that Mr Gatehouse is to be re-engaged for 12 months by the body corporate, by way of a new contract for services.

Any dispute about the wording of Motion 12, or any matters arising from the AGM, must form the basis of a separate application for dispute resolution.

[1] [2001] District Court (Brisbane) 4080 of 2000
[2] Silva Care Australia Pty Ltd , Gunadam Pty Ltd & Sirichandra Pty Ltd –v- Body Corporate For Indigo Blue Beachside Residences [2009] CCT KC003-07
[3] Tasker –v- Fulwood [1978] 1 NSWLR 20 approved by the High Court in Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355
[4] Section 15 Act.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Augusta Terraces [2009] QBCCMCmr 425 (29 October 2009)