Redlynch Grove Apartments [2009] QBCCMCmr 82 (4 March 2009)

Last Updated: 29 April 2009

REFERENCE: 0153-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	36924
Name of Scheme:	Redlynch Grove Apartments
Address of Scheme:	1-2 Fairweather Road REDLYNCH QLD 4870

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

AM Rights Pty Ltd, the Owner of lot 2

I hereby order that the application for the following orders: An Interim Order that the declaration by the Chairperson of the body corporate at the Extraordinary General Meeting held on 18 February 2009 that motions 2, 3, & 4 were “out of order” is invalid; An Interim Order that the declaration by the Chairperson that the procedural motion considered by persons present at the Extraordinary General Meeting on 18 February 2009 pursuant to section 79(3) Body Corporate and Community Management (Accommodation) Module regulation 2008 was passed; In the alternative an interim order that Carolyn Doyle, Body Corporate Manager, Body Corporate Services Pty. Ltd., Cairns, Queensland be appointed an administrator to convene an Extraordinary General Meeting of the Body Corporate for the purposes of putting to owners for a vote, motions, in the same terms as Motions 2, 3 and 4 considered at the Extraordinary general Meeting held on 18 February 2009; Such further or other interim Order as the Adjudicator considers appropriate to give effect to the outcomes sought by the applicant in this application. Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0153-2009

“Redlynch Grove Apartments” CTS 36924

THE SCHEME

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

APPLICATION

The applicant, AM Rights Pty. Ltd. as trustee for the Redlynch Grove Trust is seeking the following Interim orders:

1. An Interim Order that the declaration by the Chairperson of the body corporate at the Extraordinary General Meeting held on 18 February 2009 that motions 2, 3, & 4 were “out of order” is invalid;
2. An Interim Order that the declaration by the Chairperson that the procedural motion considered by persons present at the Extraordinary General Meeting on 18 February 2009 pursuant to section 79(3) Body Corporate and Community Management (Accommodation) Module regulation 2008 was passed;
3. In the alternative an interim order that Carolyn Doyle, Body Corporate Manager, Body Corporate Services Pty. Ltd., Cairns, Queensland be appointed an administrator to convene an Extraordinary General Meeting of the Body Corporate for the purposes of putting to owners for a vote, motions, in the same terms as Motions 2, 3 and 4 considered at the Extraordinary general Meeting held on 18 February 2009;
4. Such further or other interim Order as the Adjudicator considers appropriate to give effect to the outcomes sought by the applicant in this application.
   

BACKGROUND

The applicant states that there is currently another dispute resolution application on foot between the parties, reference 993/2008. Subsequent to lodgement of application 993/2008, certain lot owners requisitioned the calling of an EGM and on 9 January the body corporate issued a notice of EGM. On 20 January, solicitors for the applicant advised this office of the motions proposed for the EGM which was held on 18 February.

Motion 2 read as follows:
That the positions of Chairperson, Secretary, Treasurer and all of the other committee members be declared vacant and each of the positions be filled by the process set out in section 37 of the Accommodation Module by the appointment of the following persons to the stated committee positions:

Chairperson: Paul Hrynko
Secretary: Stuart Vaughan
Treasurer: Neal Evans
Ordinary Member: Peter Hoggard
Ordinary Member: Scott MacKenzie
Ordinary Member: Sarah Brown
Ordinary Member: leanne Canuto

Motion 3 read as follows:

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

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

Motion 4 read as follows:

That based on the findings of the investigation into the conduct of the current committee, further advice be sought for the issue of a claim for damages against individual members of the committee
as identified in the investigation.

The applicant states that:

• An overwhelming majority of owners requisitioned the calling of the EGM held on 18 February 2009;
• The results of voting were as follows:
  1. Motion 2 - 65 votes in favour, 3 votes against, 1 abstention;
  2. Motion 3 - 44 votes in favour, 7 votes against, 8 abstentions;
  3. Motion 4 - 43 votes in favour, 9 votes against, 9 abstentions
     

The EGM was held on 18 February and at that meeting the Chairperson ruled Motions 2, 3 and 4 out of order pursuant to section 79(1) of the Accommodation Module Regulation. The applicant moved a procedural motion that persons present and entitled to vote reverse the Chairperson’s declaration. The applicant claims that this motion was dismissed on the basis that the applicant was “unfinancial” because he was indebted to the body corporate.

The applicant further states that it does not owe a “body corporate debt” as defined in the Schedule to the Accommodation Module regulation because:

1. There are no outstanding contributions or installments of contributions due by the applicant to the body corporate;

2. There are no outstanding penalties for late payment of any contributions;

3. There exists a disputed claim for damages relating to maintenance functions performed pursuant to the Catretaking Agreement.

SUBMISSIONS

Pursuant to section 243 the solicitors for the body corporate committee made the following submissions in response to the application:

• The first interim order sought should be dismissed because its effect would be to finally determine the matters in dispute without affording the parties the full benefit of the adjudication process;
• The Chairperson’s reasons for ruling these motions out of order are recorded in the minutes;
• the applicant has not provided evidence in support of its contention that the chairperson’s rulings in respect of motions 2, 3 & 4 were invalid;
• It is claimed that Motion 2 was ruled out of order for reasons which included the following:

It does not allow voters to consider each nominee on his or her merits;

It denies other eligible individuals the right to nominate;

The proposed committee does not fairly represent all owners;

The motion was proposed by the service contractor/ letting agent.

• It is claimed that Motion 3 & 4 were ruled out of order for reasons which included the following:

The motion does not name a particular legal adviser or provide a means of choosing an adviser;

It does not include a quote or quotes for the body corporate to approve the expenditure;

There is no provision in the budget for this expenditure and neither this motion nor a subsequent motion provide for a special levy contribution.

• If the order is granted and motions 2, 3 and 4 are resolved in favour, the result would be that the new committee appointed pursuant to motion 2 would be investigated pursuant to motions 3 & 4;
• There were 3 procedural motions voted upon at the meeting in respect of the chairperson’s ruling for motions on motions 2; 3 & 4 and the results of the voting were as follows .

Re motion 2: No- 3, Yes- 5, Invalid- 1.

Re motion 3: No- 3, Yes- 5, Invalid- 1.

Re motion 4: No- 2, Yes- 5, Invalid- 1.

• It is claimed that the applicant has not provided any evidence to support its “excessive request” to have an administrator appointed;
• The committee believes that it is effective and professional;
• The committee proposes to call an AGM for early May at which the issues raised in the application can be rectified;
• The results of voting were as follows:

Motion 2 - 40 votes in favour,
Motion 3 - 33 votes in favour,
Motion 4 - 32 votes in favour,

• It is claimed that the applicant owed a body corporate debt in relation to lot 2 at the time of the meeting and was therefore not entitled to vote.
  

One committee member made the following submissions:

• He does not believe that the motions should have been ruled out of order because the criteria contained in subsection 79(1) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 had not been established;
• The Chairperson claimed that his decision was based on legal advice that he had received but refused to present that legal advice despite requests to do so;
• The decision by the Chairperson to rule Motion 2 out of order was misconceived as the ordinary process for election of committee members is not applicable when the committee is being removed by ordinary resolution in accordance with sections 33, 36 and 37 of the Accommodation Module Regulation.
• The committee needed to be replaced to prevent further damage to the finances and reputation of the scheme;
• The collective will of the lot owners should prevail.
  

JURISDICTION

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

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

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

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

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

Sub-sections 279(1) & (2) deal with the making of interim orders and provide that -
(1) The 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.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; (c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...

DETERMINATION

At this point in time, I am concerned with the application for interim orders and the threshold issue of whether an interim order is warranted. 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.[1] The examples in section 279 of the Act indicate the usual circumstances where an interim order might be made and are in the nature of injunctive relief.

The applicant, AM Rights Pty. Ltd. is the owner of lot 2 and also the Caretaking & Letting Agent. It is seeking the following Interim orders:

1. An Interim Order that the declaration by the Chairperson of the body corporate at the Extraordinary General Meeting held on 18 February 2009 that motions 2, 3, & 4 were “out of order” is invalid;
2. An Interim Order that the declaration by the Chairperson that the procedural motion considered by persons present at the Extraordinary General Meeting on 18 February 2009 pursuant to section 79(3) Body Corporate and Community Management (Accommodation) Module regulation 2008 was passed;
3. In the alternative an interim order that Carolyn Doyle, Body Corporate Manager, Body Corporate Services Pty. Ltd., Cairns, Queensland be appointed an administrator to convene an Extraordinary General Meeting of the Body Corporate for the purposes of putting to owners for a vote, motions, in the same terms as Motions 2, 3 and 4 considered at the Extraordinary general Meeting held on 18 February 2009;
4. Such further or other interim Order as the Adjudicator considers appropriate to give effect to the outcomes sought by the applicant in this application.
   

This application was lodged on 20 February and follows an earlier application (993-2008) lodged with this office in December 2008 concerning an ongoing dispute between the same parties.

Subsequent to lodgement of application 993/2008, certain lot owners requisitioned the calling of an
EGM and on 9 January the body corporate issued a notice of the EGM. On 20 January 2009, solicitors for the applicant advised this office of the motions proposed for the EGM which was held on 18 February 2009.

Motion 2 was submitted by some 57 lot owners and read as follows:

That the positions of Chairperson, Secretary, Treasurer and all of the other committee members be declared vacant and each of the positions be filled by the process set out in section 37 of the Accommodation Module by the appointment of the following persons to the stated committee positions:

Chairperson: Paul Hrynko
Secretary: Stuart Vaughan
Treasurer: Neal Evans
Ordinary Member: Peter Hoggard
Ordinary Member: Scott MacKenzie
Ordinary Member: Sarah Brown
Ordinary Member: leanne Canuto

Motion 3 was submitted by some 57 lot owners and read as follows:

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

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

Motion 4 was submitted by some 57 lot owners and read as follows:

That based on the findings of the investigation into the conduct of the current committee, further advice be sought for the issue of a claim for damages against individual members of the committee
as identified in the investigation.

In short, the applicant is seeking interim orders that resolutions upon the above motions are valid resolutions of the body corporate, or alternatively, an interim order that the committee be replaced with an administrator who will convene an EGM at which these motions can again be voted upon.

However, the purpose of an interim order is to keep matters in status quo until the determination of the substantive issues upon the merits i.e. an interim order is merely provisional in its nature, and does finally determine the issues between the parties. With respect, I believe that if made, the effect of the orders sought by the applicant would be to finally determine the matters in dispute.

Therefore I do not propose to make interim orders at this point in time but I do note that the subject matter of this dispute is of a serious nature and intend to expedite the application for final orders.

Finally, I note that the second final order sought by the applicant reads as follows:
An Order that the declaration by the Chairperson that the procedural motion considered by persons present at the Extraordinary General Meeting on 18 February 2009 pursuant to section 79(3) Body Corporate and Community Management (Accommodation) Module Regulation 2008 was passed

This is somewhat ambiguous and given that the applicant’s solicitors have previously indicated that they would be seeking a ”remedy declaring the Chairman’s ruling invalid” I believe that some words may have been inadvertently omitted. I suggest that this matter be clarified by the applicant as soon as possible.

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[1] Section 279 of the Act