Tokara Quays [2009] QBCCMCmr 9 (12 January 2009)

Last Updated: 19 February 2009

REFERENCE: 0822-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24071
Name of Scheme:	Tokara Quays
Address of Scheme:	52 Naroon Crescent WURTULLA QLD 4575

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Bruce Blades, a co-owner of Lot 8

I hereby order that: The resolution of the body corporate for Tokara Quays community titles scheme 24071 on Motion 7 at the Annual General Meeting dated 28 August 2008 (AGM) is void. The election of Ms C Lawson as chairperson and Mr K Robinson as secretary and treasurer at the AGM is void. Mr B Blades is declared elected unopposed to the positions of chairperson, secretary and treasurer. The election of Mr B Blades as an ordinary member of the committee at the AGM is of no effect. I further order that the application for an order by Bruce Blades, a co-owner of Lot 8 that the resolution of the Body Corporate on Motion 3 at the AGM is void, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0822-2008

“Tokara Quays” CTS 24071

The scheme
“Tokara Quays” community titles scheme 24071 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).

Application
This application made on 26 September 2008 by Bruce Blades, a co-owner of Lot 8 (Applicant) against the Body Corporate seeks the following outcomes with respect to decisions made at the Annual General Meeting dated 28 August 2008 (2008 AGM):

1. That Motions 3 and 7 be declared void.
2. That the executive committee election be declared void and that Bruce Blades be declared elected unopposed as chairperson, secretary and treasurer.
   

The Applicant has named all lot owners and Scott Randall of Whittles Body Corporate Services Pty Ltd (Body Corporate Manager) as affected persons.

The Applicant provided a copy of the minutes of the 2008 AGM which state (in part):

• Motion 3 Appointment of Body Corporate Manager (Ordinary Resolution) - That in accordance with section 87(1)(a) of the Body Corporate & Community Management Act (Standard Module), the Body Corporate engage the Body Corporate Manager for the supply of administrative services as per the standard form of agreement circulated to owners, and that the Body Corporate Manager be authorised to submit a motion for reappointment on expiry of this agreement. The motion was carried by 8 votes to 2 with 2 abstentions.

Mr Green, on behalf of Mr Blades, queried the validity of the above motion as it was not put forward by the committee. The Manager advised that the authority to submit a motion for re-appointment was contained within the motion for re-appointment at the previous annual general meeting.

• Motion 7 Administrative Fund Special Levy (Ordinary Resolution) – That the Body Corporate endorse an administrative fund working levy of $500 per lot to be paid in one instalment on or before 1 October 2008. This levy will ensure enough funds are available to pay accounts as they are due. The motion was carried by 7 votes to 3 with 2 abstentions.
• Election of committee – The election was decided by counting votes received via voting paper and by open ballot at the meeting and members nominated were directed to abstain from voting for themselves. The outcome of the election is:
  • − Chairperson – Ms C Lawson elected with 7 votes to Mr B Blades 1 vote.
  • − Secretary – Mr K Robinson elected with 7 votes to Mr B Blades 1 vote.
  • − Treasurer – Mr K Robinson elected with 7 votes to Mr B Blades 1 vote.
  • − Ordinary members elected – Mr N Hansen, Mr N Price, Mr B Blades, Mr Z Jorden.
    

The Applicant submits that Mr Randall stated he added Motion 3 on behalf of the Body Corporate Manager. He says the two separate levies proposed in Motion 6 for $44,032 and in Motion 7 for $8,000 appears excessive based on the actuals in 2007 of $38,483 and is ambiguous. Mr Blades states there was only one valid written nomination for election of the executive committee members and when asked, Mr Randall produced an invalid nomination where one lot owner had nominated two different members for executive positions. The Applicant says Mr Randall: stated that the 2007 executive members were automatically in the ballot without written nominations; asked members whether they preferred a secret or open ballot for the 2008 election; and directed nominees to abstain and not to vote for themselves.

Submissions to the Commissioner
The Commissioner provided a copy of the application to the Body Corporate Manager for distribution to the owner of each lot (excluding the Applicant) and the committee, with an invitation to respond to the matters raised in the application (s 243, Act). The Commissioner also invited submissions from the Body Corporate Manager.

Carlu Lawson of Lot 2 submits the Applicant disregards house rules and by-laws, he has demonstrated he cannot work as a team member on a committee, and the Body Corporate Manager carries out his position in a professional manner.

David Wulff of Lot 5 and the on-site manager provided a copy of a caretaker report for August 2008 and an unsigned letter to all owners dated 10 August 2008 which detail concerns about the actions of the Applicant.

Mr Hansen of Lot 9 supports the application saying that Mr Blades was the only written nomination for the executive member positions; it is ludicrous that members were not permitted to vote for themselves and he does not understand the two administrative motions.

Karl and Maureen Robinson of Lot 14 complained about the behaviour of the Applicant.

Gary and Leanne Hodson of Lot 16 believe the committee should remain as is, they received voting papers to complete and placed their votes choosing from the nominated parties and they do not believe the Applicant would uphold the best interests of the complex.

Scott Randall of the Body Corporate Manager submits the appointment of the Body Corporate Manager was placed on the voting paper under the authority of the resolution of the 2007 annual general meeting. With respect to Motion 7, he says funds had run low during the last financial year and the committee considered increasing quarterly contributions to assist the cash flow or leave contributions the same as last year and raise a one-off special levy to ensure enough monies were available to meet forecasted and unexpected expenditures. He says it was decided increasing quarterly contributions would not raise money fast enough to assist the cash flow, so one-off special levies were put forward. Mr Randall states the Applicant has not realised the Motion 6 amount is subject to a 20% discount and the net amount likely to be received is around $35,200 versus budgeted expenditure of $39,600, hence the need for the special levy. In relation to the election of executive members of the committee, Mr Randall states that the Body Corporate Manager was under the impression that a committee member’s term of office continued until another person is elected to the position or the position becomes vacant (s 33, Accommodation Module). He says he advised existing committee members that if they were happy to continue in their present capacity, that they didn’t have to renominate, and they would continue in the same position unless a separate nomination was received. He states those members who were continuing in their present capacity were placed on the voting paper along with the Applicant and that open ballots were held as per motion 8 at the first annual general meeting. Mr Randall submits that to ensure there was no impropriety the existing committee members were directed to abstain from voting so there could be no conflict of interest accusations.

The Applicant made a written reply to submissions stating: no submissions disputed that he was the only person who nominated for all executive member positions; section 69(1)(a) and (b) of the Standard Module Regulation provides that a body corporate manager cannot submit motions; and section 139(2) requires an administrative fund budget and section 141(1)(a) requires contributions to be fixed on the basis of the budgets.

Adjudication
A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.
Jurisdiction
The application was made within 3 months of the 2008 AGM satisfying the time limit for an application of this nature (s 242, Act).

An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), 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 the investigative powers of an adjudicator stated in section 271 of the Act, on 11 December 2008, I asked the Body Corporate Manager:

• To make submissions detailing: the instalments paid as a consequence of the resolution on Motion 7 and the expenses that have been paid applying this levy; the members of the committee at the time of the 2008 AGM; and the current committee members.
• To provide: the minutes of the first annual general meeting; the minutes of the 2007 annual general meeting; the notice given to lot owners inviting nominations for election to the committee at the 2008 AGM; each completed nomination given to the secretary by the end of the financial year; and the complete notice of the 2008 AGM.
  

On 12 December 2008, the Manager made submissions stating:

• All owners have paid the special levies except Lot 3 and there have been numerous transactions. The Manager provided an “Owner Arrears Report”, Income and Expenditure statements for 1 July 2008 to 31 December 2008, and a “Detailed Transaction Listing” for August to December 2008.
• The voting members of the committee at the time of the 2008 AGM were Ms C Lawson (chairperson), Mr K Robinson (secretary and treasurer), and Mr N Hansen and Mr N Price (ordinary members).
• The current voting members of the committee are Ms C Lawson (chairperson), Mr K Robinson (secretary and treasurer), and Mr N Price, Mr B Blades and Mr Z Jorden (ordinary members). The Manager stated Mr N Hansen has sold his lot.
  

The Manager also provided a copy of:

• The minutes of the First Annual General Meeting dated 7 October 1997 (First AGM). Motion 8 was resolved that in accordance with section 12(2) of the Standard Module Regulation, the election of the committee is to be by open ballot. Motion 13 was resolved to consent to the recording of a new community management statement to record the Accommodation Module as the applicable regulation module.
• The minutes of the Annual General Meeting dated 13 August 2007 (2007 AGM). Motion 3 was resolved that under the authority of section 87(1) of the Standard Module Regulation, the Body Corporate engages the Body Corporate Manager for the supply of administrative services and that the Manager is authorised to submit a motion for reappointment on the expiry of the agreement.
• A notice requesting nominations for election to the committee and for the submission of motions dated 14 May 2008. The notice required the completed nomination forms to be returned to the Body Corporate Manager by 30 June 2008.
• A completed “Nomination of Candidate(s)” form from BW and C Blades of Unit 8. In the space allowed for nominating a candidate, BW Blades has been nominated for the positions of chairperson, secretary, treasurer and committee. The candidate has signed the nomination for each position.
• A completed “Nomination of Candidate(s)” form from Mr N Hansen of Unit 9. In the space allowed for nominating a candidate, Norman A Hansen, owner is nominated for the position of committee. The form is signed and dated.
• A completed “Nomination of Candidate(s)” form from Mr N Price of Unit 11. In the space allowed for nominating a candidate, it is written “As before, chairperson C Lawson, secretary/treasurer K Robinson”. This part of the form is not signed by either candidate or the nominator. A signature dated 27 June 2008 is under “Requisition for Motion to be Included on Agenda” where two motions have been written.
• The notice of the 2008 AGM dated 1 August 2008 stating Motions 3 and 7 as recorded in the minutes.

Under “Election of Committee” on page 5, it is stated (in part) “Members of the committee for last year and subsequent nominations received are:

Chairperson Ms C Lawson – Owner Lot 2

Mr B Blades – Owner Lot 8

Please indicate your preferred nominee for Chairman by placing a tick in the appropriate box. The owner with the most votes will hold the position.

Secretary Mr K Robinson– Owner Lot 14

Mr B Blades – Owner Lot 8

Please indicate your preferred nominee for Secretary by placing a tick in the appropriate box. The owner with the most votes will hold the position.

Treasurer Mr K Robinson– Owner Lot 14

Mr B Blades – Owner Lot 8

Please indicate your preferred nominee for Treasurer by placing a tick in the appropriate box. The owner with the most votes will hold the position”.

The notice included a 4 page body corporate management document for the period 1 July 2008 to 30 June 2009 stating: management fees; fees for additional services; disbursement costs; agreed services including undertaking the duties of the secretary and the treasurer; additional services; and disclosures.

On 19 December 2008, I invited the Applicant to make submissions to me about the information provided by the Body Corporate Manager. On 6 January 2008, the Applicant made submissions stating: as at 22 December 2008, Mr Hansen had not sold his lot, nor had he resigned in writing; and the nomination from Mr Price was not provided at the 2008 AGM.

Applicable regulation module
There are references in the minutes of the 2008 AGM and in the submissions to the Standard Module Regulation. The regulation module applying to the scheme is stated in the community management statement (s 66(1)(b), Act). The minutes of the First AGM indicate it was resolved to adopt the Accommodation Module Regulation. The statement for the scheme — recorded by the registrar of titles on 15 January 1998 — states the Accommodation Module Regulation applies.

At the time of the 2008 AGM, the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Previous Regulation) applied to the scheme. On 30 August 2008, the Accommodation Module commenced and the Previous Regulation was repealed. Anything done under the Previous Regulation is not affected by its repeal and the commencement of the Accommodation Module (s 208-214, Accommodation Module). The determination of this dispute is not affected by the new regulation (s 20, Acts Interpretation Act 1954).

Decision
Motion 3
It is not disputed by the parties that the Motion was submitted by the Body Corporate Manager (the notice of the 2008 AGM does not state who submitted the motion). It has been submitted — and it is stated in the minutes of the meeting — that the resolution made at the 2007 AGM authorised the Manager to submit the motion to the 2008 AGM.

The minutes of the 2007 AGM indicate that the Body Corporate Manager was engaged pursuant to section 87 of the 1997 Standard Module Regulation. While the Motion incorrectly refers to the Standard Module Regulation, it is relevant that section 85 of the Previous Regulation is equivalent to the cited section 87. Given the basis of the engagement and the fact that a committee was elected at the 2007 AGM, the extent of the engagement was limited to the supply of administrative services. In relying on the authorisation of the 2007 AGM resolution, neither the Manager nor any owner has referred to a legislative provision empowering the Body Corporate to authorise a person who is engaged as a body corporate manager in this way to submit a motion to a general meeting.

There is a legislative framework for submitting a motion to a general meeting. Section 104 of the Act provides that a body corporate must hold and conduct meetings for the purposes and in the way prescribed under the regulation module. Part 4 of the Previous Regulation makes provision for general meetings. Relevantly, section 39(1) provides that a motion for consideration at a general meeting may be submitted by a member of the body corporate or the committee. The notice of a general meeting must contain an agenda and be accompanied by a voting paper (s 40). Section 43(2) provides the items that must be included in an agenda. The voting paper for all open motions to be decided (other than a motion with alternatives) must state, if the motion is not submitted by the committee—the name and, if applicable, the lot number of the person submitting the motion (s 40A(5)).

Given these provisions, I consider the legislation does not allow a body corporate to authorise a person who is engaged as a body corporate manager limited to the provision of administrative services to submit a motion to a general meeting. In my view, despite the resolution at the 2007 AGM, the Manager could not submit Motion 3. The fact that the motion was included on the agenda is a ground for making an order voiding the resolution passed on the Motion.

However, non-compliance with the legislation of an insubstantial nature should not be allowed to imperil the actions of bodies corporate: Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.

The Applicant has correctly questioned the ability of the Body Corporate Manager to submit Motion 3. It is also apparent that the Motion incorrectly refers to the Standard Module Regulation. The Applicant has not, however raised any other questions relating to the Motion or the way voting was conducted. In my view, these irregularities are of an insubstantial nature. Firstly, the incorrect legislative reference is minor given the equivalent provision in the Previous Regulation. Secondly, the Motion was of a type that is capable of determination by the Body Corporate and given the resolution of the 2007 AGM, would seem to have been submitted with the knowledge and consent of lot owners. The Motion is in similar terms to the Motion passed at the 2007 AGM. The notice of the 2008 AGM clearly stated the Motion and included a copy of the proposed terms of the engagement. The proposed terms seem to be in accordance with section 76 of the Previous Regulation including: the proposed term of the engagement; the proposed functions the Manager would be authorised to carry out; and the basis on which payment for the Manager’s services is to be worked out. Further, eight of the sixteen owners supported the Motion. There is no question relating to the material given to owners in the notice of the 2008 AGM or in relation to the notice owners had of the meeting. Nor has it been disputed that owners were not provided proper opportunity to vote on the Motion, or that the presence of the Motion prejudiced consideration of similar business at the meeting relating to an alternative way of dealing with the same issue.

In these circumstances and given the term of the engagement has less than six months remaining, I have concluded the balance of convenience does not justify the making an order in the terms of the outcome sought. While the Manager cannot rely on the resolution on Motion 3 to submit another motion to a general meeting, in the circumstances I do not consider the identified irregularity warrants making an order in the terms sought. For these reasons, I have dismissed the outcome sought.

Motion 7
The Applicant argues the two levies fixed by Motions 6 and 7 appear to be excessive and are ambiguous. In the reply to submissions, the Applicant has referred to specific legislative provisions. The Manager’s submissions outline the basis for Motion 7.

Motion 6 dealt with adopting an administrative fund budget and fixing contributions to be paid by lot owners. The Motion is a statutory motion and must be included on the agenda of an annual general meeting (s 43(3) and schedule, Previous Regulation). The body corporate must, by ordinary resolution, adopt an administrative fund budget for each financial year (s 92(1)). The administrative fund budget must contain estimates for the financial year of necessary and reasonable expenditure to cover the cost of maintaining common property and body corporate assets; the cost of insurance; and other expenditure incurred annually or more frequently; and must fix the amount to be raised by contributions to cover the estimated expenditure (s 92(2)). The body corporate must, by ordinary resolution determine, on the basis of its budgets, the contributions to be levied on the owner of each lot; decide the number of contribution instalments to be paid; and set the date on or before which the payment of each instalment is required (s 93(1)). Motion 6 would seem to comply with the legislative requirements. The Applicant does not dispute the Motion or it would seem, the estimates stated in the adopted budget.

Motion 7 relates to a special levy payable by owners to the administrative fund to ensure there are enough funds available to pay accounts. The fundamental difference between this contribution and that proposed in Motion 6 is that the Motion 6 contribution is supported by a proposed budget as required by the legislation. The only contribution that does not require a budget is a special contribution fixed pursuant to section 93(2). A prerequisite to a section 93(2) special contribution is that there must be “a liability ... for which no provision, or inadequate provision, has been made in the budget”. The Motion does not identify any due accounts and is not supported by a specific liability. On the basis of the information presented, I am satisfied such a liability had not arisen when the Motion was considered.

The Manager has stated the reasons for the Motion. I do not agree these reasons constitute a basis for the Motion. At each annual general meeting, the Body Corporate must adopt an administrative fund budget containing “estimates for the financial year of necessary and reasonable spending”, must fix contributions to be paid by owners based on the adopted budget, and must decide the dates contributions are paid. Provision for a discount for the timely payment of a contribution is not a reason for fixing a contribution in the way mentioned in Motion 7. Given the section 92(2) requirements for an administrative fund budget, it would seem prudent to make allowance in a budget for any agreed discount. There is no legislative provision to allow the Body Corporate to set an additional amount paid by owners in case an unexpected expenditure is incurred. Expenditure of this nature is dealt with as it arises pursuant to section 93(2).

In the circumstances, the Body Corporate could not fix the contribution as resolved in Motion 7. For these reasons, I have made an order voiding the resolution passed on Motion 7.

Given that owners have paid the contribution fixed by the resolution on the Motion and the Body Corporate has possibly expended some of the monies paid, the Body Corporate will now have to decide how to deal with the payments that have been made. In the absence of a proper general meeting decision otherwise (which should be made as soon as practicable), the contributions paid must be reimbursed to owners. I also note that the resolution passed on Motion 9 similarly fixed a special contribution to the sinking fund. For reasons similar to those I have mentioned, the Body Corporate could not fix such a contribution unless it was supported by a liability. However, given the terms of the outcomes sought, I have not made an order with respect to this resolution.

Election of chairperson, secretary and treasurer
The Manager has provided a copy of the written nominations made for election to the committee at the 2008 AGM. It is apparent the Applicant nominated for election to the positions of the chairperson, secretary and treasurer and ordinary member. The Applicant says this is the only valid nomination for election to the executive member positions.

The members of a committee are chosen in the way provided in the regulation module (s 99(2), Act). The Previous Regulation contains detailed provisions relating to the election of the committee. The election must be conducted in accordance with sections 14 to 21 unless the body corporate has decided that members are to be elected in another way (s 13(1)). It is not being argued that the Body Corporate has decided another way to elect the members. Therefore, sections 14 to 21 applied when the election was conducted. Relevantly:

• A notice must be served on each lot owner before the end of each financial year inviting each owner to nominate the lot owner or another eligible individual (s 14).
• A nomination must be signed and dated by the nominating lot owner and if another individual is nominated — it must be signed and dated by the individual (s 14A(1)).
• The notice of an annual general meeting must include — for each position for which a ballot is required — a list of the candidates properly nominated for each position (s 17A)).
• If only 1 person is nominated for the position of chairperson, secretary or treasurer, the person chairing the meeting must declare the person to have been elected unopposed (s 20(1)).
• If more than 1 person has nominated for a position, a ballot is conducted (s 20(5)).
  

It is clear from the abovementioned provisions that owners are given opportunity to nominate an individual for election to a position on the committee before the end of each financial year. If there are excessive nominations, a ballot must be conducted. The regulation does not prescribe the ballot process. To a large extent, the Body Corporate must decide the ballot process (s 17). Other than a reference to the resolution made at the First AGM, there has not been any submissions made about such a decision.

Giving owners opportunity to nominate is not being disputed. Significantly, the regulation prescribes the nomination process in the absence of a contrary body corporate decision. It is clear that the Applicant was nominated for each of the executive member positions, and that he signed and dated the nomination. There is nothing to prevent a person being nominated for each position on the committee. Submissions have not questioned the nomination. In my view, the Applicant was properly nominated. The other relevant nomination is from the owner of Lot 11. On the basis of the submissions, there may be a question about when this nomination was produced. However, this point is not significant. The owner nominated more than one individual when an owner can only nominate one individual (s 14); and the nominated candidates did not sign the form (s 14A). In these circumstances, there is a question about the validity of this nomination.

The Manager has referred to section 23(1) of the Previous Regulation which provides that the term of office of a committee member continues until another person is chosen for the position. I do not consider this provision provides any basis for automatically including current committee members in an election to be conducted at an annual general meeting. A committee member is in the same position as any other person eligible to nominate or be nominated for election to the committee at each annual general meeting.

In the absence of a proper nomination, there was no basis for including Ms C Lawson in the ballot for the election of chairperson. Similarly, there was no basis for including Mr K Robinson in the ballot for the election of secretary and treasurer. The only proper nomination made for each of these positions as at 30 June 2008 was BW Blades. In this circumstance, a ballot was not required and Mr Blades should have been elected unopposed to each of these positions. The fact that a ballot was conducted and a different result achieved is not relevant. It is apparent that Ms C Lawson and Mr K Robinson currently hold the elected positions. Given the legislative requirements which applied at the time of the 2008 AGM, the election of Ms C Lawson as chairperson and Mr K Robinson as secretary and treasurer must be voided. For these reasons, an order is warranted in the terms sought. Given Mr Blades is a current ordinary member of the committee; I have also ordered that his election to this position is of no effect.

The Applicant has only questioned the election of the executive members of the committee. It is apparent that of the four individuals elected as ordinary members, Mr N Hansen and Mr B Blades nominated in writing. The basis of the nomination and election of Mr N Price and Mr Z Jorden is unknown. Given the outcome sought, I have not investigated this aspect of the election. However, I note that section 21(4) of the Previous Regulation permitted the invitation of nominations at the meeting in the event the number of candidates nominated for ordinary member positions plus the number of executive member is less than 7.

Although not relevant to the determination of the outcome sought, it is apparent candidates were directed that nominees abstain from voting. No reference has been made to a relevant legislative provision. Section 13(3) of the Previous Regulation provides that the value of a vote cast for a lot for choosing a member of the committee is the same as the value of the vote able to be cast for each other lot included in the scheme. A person does not have the right to exercise a vote for a lot for choosing a member of the committee if the lot owner owes a body corporate debt at the time of the meeting (s 47A(2)). A proxy must not be exercised at a general meeting for electing a committee member (s 72(3)(c)). While there are some restrictions on voting in an election, the regulation did not specifically exclude an individual who was a candidate for election to the committee from voting in a ballot for the election.

A number of submissions have expressed concern about the behaviour and/or actions of the Applicant. These are not factors which are relevant to this determination or to the eligibility of a person to be chosen to the committee. If the Body Corporate is concerned about an owner or occupier complying with a scheme by-law, the Act provides a process to enforce the by-law against that person.