Festival Towers [2009] QBCCMCmr 426 (29 October 2009)

Number of Scheme:	35634
Name of Scheme:	Festival Towers
Address of Scheme:	108 Albert Street BRISBANE QLD 4000

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

Laurie Sartori, Mark Carlile & Lynn de Lange owners respectively of Lots 2403, 3601, and 2008 and 2610

I hereby order that the application for interim orders as follows -

“As the next body corporate committee meeting is scheduled for 10 November 2009 and the treasurer’s position is in doubt, an interim order freezing expenditure other than for day to day running costs and maintenance of the building is requested.

As well, an order is also sought so that the body corporate committee can not make decisions on matters concerning the service contractor.”

is dismissed.

APPLICATION

This is an application dated 19th October 2009 by Laurie Sartori, owner of Lot 2403, Mark Carlile, owner of Lot 3601 and Lyn de Lange, owner of Lots 2008 and 2610 (the Applicants) against the body corporate for Festival Towers CTS 35634 (the body corporate) for orders as follows –

“1.That votes for the following lots for the 2009 election to the body corporate committee..... be declared invalid :

Lots 204, 501 ,502, 504, 508, 510, 604, 611, 704, 705, 706, 806, 808, 810, 903, 1211, 1601, 1907, 2004, 2005, 2109, 2110, 2205, 2306, 2401, 2402, 2404, 2505, 2603, 2705, 2806, 3104, 3205, 3206, 3209, 3503 ,3505, 3802, 3902, 3906, 4006, 4008 and 4106

And for votes of the remaining lots to stand and the lawfully elected candidates to be declared to be:

Mark Carlile, Jenny Youngberg, Maree Smith and Laurie Sartori or Narinder Singh as ordinary members.

2. That Oak Hotels and Resorts Pty Ltd be found to have acted in contravention of the Code of Conduct for body corporate managers and caretaking service contractors by not acting honestly, fairly and professionally in relation to the 2009 elections for .....committee.”

The Applicants also seek an interim order “freezing expenditure other than for day to day running costs and maintenance of the building” and an order “that the body corporate cannot make decisions on matters concerning the service contractor.”

Festival Towers CTS 35634 is a community title scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module). There are 401 lots in the scheme.

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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “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”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore sought brief submissions from the body corporate, the body corporate manager (SSKB) and the caretaking service contractor Oaks Hotels & Resorts (Qld)Pty Ltd (Oaks).

The Applicants say that the annual general meeting of the body corporate convened on 30th September 2009 did not attain a quorum and was adjourned until 7th October 2009 (the AGM). At the beginning of the reconvened AGM the body corporate manager placed a bundle of envelopes on the table in front of her and requested another officer of SSKB to be allowed to open the ballot envelopes, remove the green ballot papers and commence the count during the course of the meeting. The ballot for election of committee members was an open ballot. The chairperson agreed to this. At the end of the AGM, the votes for each candidate were declared.

After all the envelopes had been opened, Lynne de Lange, one of the Applicants, saw a large group of votes that were not on the green voting papers which had been distributed by the body corporate manager. These were in “bulk piles” and appeared not to have been received in ballot envelopes. She was able to examine these later at SSKB’s office and found that the count included a significant number of votes by fax that did not appear to have been personally faxed to SSKB but which appeared to have been delivered in bulk by a third party.

On 15th October 2009, Mark Carlile, another of the Applicants examined the ballot papers and noted as follows –

The Applicants noted the lot number for each voting paper which they claim is irregularly produced or received, and the irregularity has been detailed for each one. They say that the faxes show that they were sent to an intermediary, or to Oaks, prior to 29th September 2009 and not delivered personally, by fax or post to the body corporate manager. Some carried no identification details or date. They contend that these 45 votes should be invalid which changes the count for committee members at the election.

At the AGM, the vote for treasurer was 69 for “Marshall.” If the 45 invalid votes are not counted, the vote for “Marshall” would have been 25, with Applicant Ms de Lange winning with 35 votes. Ordinary member “McColl” received 67 votes. Without the 45 invalid votes, he would have received only 22 votes. “Singh” who received 68 votes at the AGM, would only have received 23; “Smith” who got 76 would only have received 31; “Zheng” who received 60 would only have received 15; “Subedhar” who received 63 would only have received 18. This changes the line-up for ordinary members of the committee to Mark Carlile (39), Jenny Youngberg (46), Maree Smith(31) and then jointly held votes Laurie Sartori or Narinder Singh (23).

The votes received in this way show that candidates Marshall, McColl, Singh, Smith, Subedhar and Zheng were the only candidates voted for by all of the 45 lots identically, except for lot 1211 who left the vote for treasurer blank.

The irregularities noted indicate that Jodie Hanson received completed voting papers faxed to her after Oaks had contacted lot owners. They were then submitted to the body corporate manager in bulk. Some of the voting papers had had lot numbers written on them after they had been received. It seems that lot owners were being asked to sign a completed voting sheet. The votes were entered on the fax sheet after the fax had been received in two instances. Four owners had withdrawn their green voting sheet and submitted faxed voting sheets through the intermediary after they had already submitted a completed green voting sheet by post to the body corporate manager. This indicates that Oaks had had contact with them and may have influenced their substituted vote.

They say that whilst persuasion or canvassing may be lawful, and that lot owners may even sign a completed voting paper, it is not lawful for the caretaking service contractor “to enter details on a faxed voting sheet after it has been received.” Nor is it honest, fair or professional behaviour to purport to lot owners that they are authorised to receive completed voting papers on behalf of the body corporate.

Oaks manages more than 220 units in the short term letting pool and has access to owners’ contact details. The faxes show that Oaks used contact details known to them to contact owners directly in order to influence the outcome of the elections. This is an unfair practice. Candidates do not have access to lot owners’ personal contact details. Nor is it a function of the caretaking service contractor or their employees to solicit votes for preferred candidates, or to receive them.

In respect of the second final outcome sought Oaks submitted that a breach of the code of conduct is not relevant where the conduct alleged is not part of the caretaker’s function under the engagement. The conduct of an election is not a function of Oaks under its engagement. It says that there is nothing preventing Oaks, a lot owner in the scheme, from preferring candidates and recommending those candidates to owners. It says that in the absence if fraud or duress there is no reason why votes should not be solicited at election time. There is no claim of duress by the Applicants, or that the votes cast were not a free expression of the respective owners’ intentions.

In respect of the first final outcome sought, which does not directly concern it, Oaks says that in its view an adjudicator does not have the power to invalidate votes, but could call for a re-election or for owners to confirm their votes.

It says that whilst a lot owner cannot give a voting paper to a third party to hand to the secretary, it argues that a faxed or posted voting paper does not have to be faxed or posted by the lot owner him or herself, and it would be impossible to verify that such was the case. It finds nothing in previous authorities quoted by the Applicants to prevent the faxing or posting of votes to an intermediary, who then faxes or posts then to the secretary.

The body corporate, through its body corporate manager SSKB, says that SSKB was unaware of “any conclusive evidence that would have given grounds for the Chairperson declaring any votes invalid” and that the votes were tallied as presented. Further, it says that when an election is held by open ballot, there are no procedures imposed or requirements that the ballots are given to the secretary. It relies on previous order “Aegean” (2009) QBCCMCmr 229 (25 August 2008) in which the adjudicator pointed out that the Accommodation Module does not require that ballot papers are given personally to the secretary, whereas the Body Corporate and Community Management (Standard Module) Regulation 2008 is more prescriptive.

SSKB also provided its own submission. It says that at the AGM the body corporate chairman delegated the opening and counting of ballot papers to the body corporate manager. SSKB had sent ballot papers to all owners with the agenda and notice of the AGM, and had included a stamped addressed envelope for their return to the office of SSKB. The body corporate committee would therefore not have been aware if any voting papers were returned to a third party.

The Applicants seek two interim orders, the first to freeze expenditure by the committee, save for the day to day running costs and maintenance of the building; and the second to restrict the body corporate from making any decisions “on matters concerning the service contractor.”

They have provided absolutely no evidence about why these steps, either of which could have a very severe effect on the management and running if the body corporate, should be taken.

They allege that 45 votes for committee membership were improperly solicited by the caretaking service contractor, so that the committee membership is open to challenge. They have not alleged any impropriety or incompetence on the part of the “current” committee membership or the treasurer. To “freeze expenditure” by the committee of a large body corporate because three positions on the committee are in doubt would in my view be a draconian and potentially dangerous way to proceed. In any event, generally committee expenditure is only for day to day running costs and the maintenance of the building. The Applicants have not demonstrated that there is any looming expenditure about which the committee can make a decision which, in the current circumstances, it would be unsafe to allow the committee to proceed.

The second outcome sought is also so vague as to be almost meaningless. Again, there is no evidence that the committee as formulated, is about to, or will make any decisions “concerning the service contractor,” or that those decisions will be unsafe if they do.

Section 94 Act requires the body corporate, including its committee, to act reasonably in everything it does and to administer the common property and body corporate assets for the benefit of owners. That might be some comfort to the Applicants.

In respect of the final outcomes sought, there are clearly legal arguments to be considered and the manner in which the 45 votes were cast is open to challenge and raises legitimate questions to be decided on merit in the light of the evidence, and submissions from lot owners.

This file is now referred back to the Commissioner pursuant to section 279(4)Act.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Festival Towers [2009] QBCCMCmr 426 (29 October 2009)