Aegean [2009] QBCCMCmr 92 (9 March 2009)

Last Updated: 29 April 2009

REFERENCE: 0941-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9646
Name of Scheme:	Aegean
Address of Scheme:	30 Laycock Street SURFERS PARADISE QLD 4217

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

Scotri Pty Ltd, the Ownerof Lot 40

I hereby order that the application for final orders: EGM to be reconvened and Special Resolution Motion No 2 that was passed at the EGM held 17 October 2008 be suspended until such time another EGM is held. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0941-2008

“Aegean” CTS 9646

Aegean community titles scheme 9646 (Aegean) consists of 126 lots and common property. The Community Management Statement (CMS) for Aegean indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 2008[1] (Accommodation Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme is registered as Building Units Plan 5555.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Scotri Pty Ltd, Owner of Lot 40 (applicant), who is represented by Bryan Hateley, on 3 November 2008. The applicant sought final orders against the Body Corporate for Aegean (respondent) in the following terms:

EGM to be reconvened and Special Resolution Motion No 2 that was passed at the EGM held 17 October 2008 be suspended until such time another EGM is held.

The applicant also sought an interim order. On 13 November 2008 I made the following order:

I hereby order that the application for an interim order:

Suspend the Special Resolution Motion that was passed at the EGM.

Copy of the Motion is attached to this application.

is dismissed.

PROCEDURAL MATTERS

Prior to making the interim order I provided the Committee and the Body Corporate Manager (BCM), Capitol Body Corporate Administration (CBCA), with a limited opportunity to make a submission in regard to the interim order application. Submissions were received from Committee and the BCM.

Following the interim order, I requested a member of the Commissioner’s Office contact the applicant in respect of the concluding remarks in the reasons for my interim order to confirm whether he wished to proceed with the application and whether he wished to provide any further information or evidence in support of his application. The applicant confirmed that he wished to proceed and provided further information in respect of the application.

Under section 243 of the Act, a copy of the application was then provided to the Body Corporate, with an invitation to the Committee and all owners to respond to the matters raised by the application. Submissions were made by the Committee, the caretaker and owe other owner. The applicant inspected the submissions received and made a written reply.[2]

A dispute resolution recommendation was made referring the dispute to departmental adjudication. I then investigated the dispute, pursuant to section 271 of the Act, which included reviewing the application and submissions.

MATTERS IN DISPUTE

This application relates to voting at the Extraordinary General Meeting (EGM) of the scheme held on 17 October 2008. The meeting considered three motions, to confirm the previous meetings minutes (Motion 1), a motion with alternatives requiring a special resolution for lift works (Motion 2), and the rescission of two motions passed at the previous meeting in May 2008 (Motion 3)[3]. The issues outlined in the application and submissions can be summarised as follows.

The applicant outlines the following incidents with votes at the EGM:

• The applicant says he mailed a written vote some two weeks before the EGM, attached to his nominee proxy form. At the meeting he was asked if he was voting from the floor and when he referred to his voting paper he was told it had not been received. After a search of the BCM’s offices a scanned copy of the voting paper was located. The BCM apologised.
• An owner who attended the meeting posted their voting paper and nominee proxy forms to the BCM’s Surfers Paradise address but they didn’t arrive in time for the meeting because they then needed to be mailed to the BCM’s Brisbane address.
• The proxy holder for Lots 15 and 119 posted their votes in sufficient time to reach the Surfers Paradise office of the BCM but were not recorded. The applicant says the owner in question voted no to Motion 2 for both lots and will sign a statutory declaration to this effect.
• The Owner of Lot 9 faxed her votes to the BCM’s Surfers Paradise office on 13 October 2008, as discussed with the BCM, but her votes were not recorded.
• The Owner of Lot 4, who was present, was incorrectly recorded as submitting a postal vote when the vote was actually for Lot 6.
• The meeting was advised that the Owners of Lot 116 and 122 were unfinancial and so eligible to vote. However the applicant says the Owners of Lots 6, 25 and 118 were also unfinancial but their votes were counted.
• The attendance and voting register does not record how the Owners of Lot 91, 92, 94, 95, 97, 113, and 117 voted (that is, by voting paper, proxy or from the floor).
  

The applicant queries how many other voting papers were misplaced or missed the meeting, and how many other errors were made which were not identified. The applicant is concerned of the effect on Motion 2 which required a special resolution to pass. Accordingly he argues that Motion 2 should not be carried out until another EGM can be held and the voting recorded correctly.

The interim submission from the Committee includes the following comments:

• There was considerable tension at the EGM, with particular hostility by Hateley to the BCM.
• Motion 2 is the only disputed motion. It involved required a special resolution.
• At the EGM Motion 2 was declared as being passed. 53 votes were counted with 42 votes in favour of Motion 2, 10 against and 1 abstention.
• The applicant’s concerns have been taken into account by the BCM and the Committee. The EGM minutes set out the issues and the corrected result. If all matters were resolved in favour of the applicant, the result of the motion does not change.
• The result declared at the meeting included votes for Lots 6, 25 and 118 who were unfinancial at the time. If those votes are taken out the special resolution still passes.
• The applicant’s vote was counted on the day and so he was not disadvantaged.
• CBCA received voting papers and proxies from the Building Manager after the EGM which were posted on 15 October 2008. These have been included in the recount.
• Lots 15 and 119 proxy votes were received after the EGM, but do not affect the result.
• The votes for Lots 15, 64 and 119 had a proxy form rather than a company nominee form and arguably could have been disallowed. With a view to reassessing the views of owners, those no votes have been included in the recount but do not change the outcome.
• The vote for Lot 9 was taken into account but this does not change the result.
• The Owners of Lot 91, 92, 94, 95, 97, 113, and 117 voted by voting paper. This is recorded in the minutes and the voting papers were available for inspection at the EGM.
• The modernisation of the lifts is necessary to keep the lifts in good repair and ensure that they continue to be safe for use. Recently two lifts were out of service for weeks.
• After the EGM the Body Corporate notified the successful contractor that the motion was successful. This Committee now has an Agreement for signature. The tenders were only valid until 30 October 2008. This was extended to 14 November 2008 but the contractor will not allow further extensions. As the tender amounts were set when the Australian dollar was over US$0.90, and its value has since decreased significantly, and the lift parts come from overseas, the cost of the work will increase significantly if the Body Corporate cannot accept the current tender. This additional cost could range from $125-200,000 and is unnecessary.
• Notwithstanding some irregularities, there was no impact on the vote and a requirement to reconvene the meeting would disadvantage all owners.
  

The interim submission from the BCM includes the following comments and information:

• Katrina O’Kane was the BCM attending the EGM on behalf of CBCA.
• O’Kane accepts that the count taken at the meeting was flawed, and this is regretted.
• O’Kane acknowledges that the applicant’s voting papers were not included in the documents before her at the meeting.
• Paul Burnell for the Building Manager[4] advised the meeting that his voting papers were not present. These were posted to CBCA on Wednesday 15 October 2008 and received in an express post envelope from Australia Post on Monday 20 October 2008. After the papers were received O’Kane advised Burnell that they did not include company nominee forms appointing him but rather proxy forms from the company nominee. However a company must appoint a nominee and a corporate owner cannot delegate authority by way of proxy.
• Hateley also completed a proxy form instead of a company nominee form.
• In respect of the incorrect proxy votes, CBCA takes the view that the proxies had been given by the owners with the intent that Burnell and Hateley vote on behalf of the companies.
• CBCA received voting papers after the EGM which should have been posted prior to the meeting and received in time to be included in the count.
• To ensure that a correct vote was recorded, CBCA printed a new voting register and recorded votes for all lots received in writing and in person at the meeting. This included the incorrect proxy votes received from Burnell and Hateley. It also included votes sent prior to the meeting with sufficient time to have been received by the date of the meeting, including the vote for Lot 9. The new record of voting also removed the three unfinancial votes.
• The outcome of the motions was not affected by the corrected voting. All the votes referred to in the application as being against the motion have been counted, even if received after the meeting or where a proxy was used instead of a company nominee. This does not change the outcome and the requirements for a special resolution were met.
• The corrected result is that 54 votes were counted for the EGM. Of those, 41 yes votes were recorded. The applicant does not challenge those yes votes.
• CBCA has made every attempt to ensure that the EGM Minutes record all votes submitted and have an extensive note explaining what was done.
• All records, including voting papers, proxies and attendance records, are held at the CBCA office and able to be viewed by the Adjudicator.
• The reconvening of the EGM would not serve any purpose other than to delay acceptance of the quote for refurbishing the lifts.
  

The final submission from the Committee includes the following:

• It relies on its interim submission and that made by the BCM.
• The additional information provided by the applicant does not raise any further instances of alleged voting irregularities or that there are other votes unaccounted for.
• Since distributing the EGM minutes and the interim order, the BCM and Committee have not received been contacted by any owner indicating that their vote was not recorded.
• In the absence of any submission to the contrary, it seems reasonable to assume that all votes that were submitted have now been accounted for.
• The situation remains the same as it did at the time of the interim order, in that when all the issues raised by the applicant are answered the result of the motion is the same. No purpose would be served by reconvening the meeting.
• After the interim order the Body Corporate entered into a contract with the successful tenderer for the lift works. Reconvening the meeting would create major contractual issues.
• The Body Corporate did not breach the conciliation agreement. While anomalies occurred at the EGM, these were acknowledged and recorded in the minutes.
• The Committee and the BCM have always acted in good faith. Errors were not made deliberately and steps have been taken to correct them.
• Considerable time has been spent by the Committee and BCM to ensure that the legislative requirements are complied with in respect to the EGM in January 2009.
  

The submissions from the caretaker and the other owner say they attended the EGM and support the application. The caretaker notes that his votes including owners proxies were sent to the BCM’s Gold Coast address on 12 October but were apparently not received by the EGM and he later found that mail to the Gold Coast address was sent on to their Brisbane address, which he considers to be an unreasonable delay. He indicates that he was amazed by the events of the EGM and suggests that Hateley’s conduct at the meeting was amazement rather than aggression.

The additional information provided by the applicant, and his reply to submissions, includes the following:

­ He is disappointed in the interim order given voting breaches by the Committee and BCM.
­ The accepting, handling, counting and recording of votes for the EGM were flawed.
­ The lifts modernisation project has blown out from $730,000 to $1.2 million and the Committee has not explained the blow-out, which he believes they are obliged to do.
­ The Committee breached Clauses 1, 3 and 6 of the Conciliation Agreement in application 0720-2008 and has not acted in good faith in complying with the Agreement.
­ The Committee did not comply with the Code of conduct for committee voting members.
­ He withdrew his conciliation application 0509-2008 on the basis that the Committee would act under its duty of care and the Conciliation Agreement.
­ In response to claims that companies filled out proxy forms rather than company nominee forms, he believes companies filled out the proxy forms in good faith because that is what the BCM sent out with the EGM notice.

JURISDICTION

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[5] However I should note that I consider that I have no jurisdiction to make any order in respect to an alleged breach of a conciliation agreement, which is essentially a voluntary and unenforceable good faith agreement between parties.

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 CMS; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or

(c) a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or the authorisation of a person as a letting agent.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[6] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[7]

DETERMINATION

The issues for determination in this matter are whether there were any irregularities in the handling of voting at the EGM on 17 October 2008, and, if so, whether it is just and equitable in the circumstances to require the meeting to be reconvened to reconsider the motions at the EGM.

Counting of votes

Pursuant to section 108 of the Act an ordinary resolution (where no poll is requested) is carried if the votes counted for the motion are more than the votes counted against the motion. EGM motions 1 and 3 clearly passed as ordinary resolutions, regardless of any discrepancies in the voting. The result of these motions is not in dispute.

Section 106 of the Act provides that a special resolution is passed if at least two thirds of the votes cast are in favour of the motion, and the number of votes against the motion are not more than 25% of the number of lots in the scheme and represent not more than 25% of the contribution schedule lot entitlements for the scheme. As there are 126 lots in this scheme, less than 32 ‘no’ votes must cast for the motion to pass. It is clear that that level of opposition could not be achieved in this matter. Give that all lots have similar contribution schedule lot entitlements, a calculation on that basis will have little effect. But the number of votes needed to achieve the two-thirds support for the motion depends on the total number of votes cast for and against the motion.

The original voting declared in respect of Motion 2 was 42 in favour and 10 against. This clearly achieved the two-thirds majority. The EGM minutes apparently record the ‘corrected’ voting tally for Motion 2 as 41 in favour and 12 against. Again, this achieved the two-thirds majority. The minutes say that if the three incorrect proxy votes and the three votes which were not received in time were counted, the result for Motion 2 would be 41 votes in favour and 15 against. Again, this result would achieve the two-thirds majority[8].

There does appear to be some discrepancy in the information provided by the Committee and BCM as to what has been included or not in the ‘corrected’ voting. The tally sheet marked up by the applicant questions three votes in favour of Motion 2 which were apparently unfinancial (Lots 6, 25 and 118) and that votes in respect of Lots 9, 59, 15 and 119 were not recorded. If the three unfinancial votes are excluded, and the disputed four votes are included, from my calculation it would appear that a total of 54 votes were cast in respect of Motion 2, with at least 39 votes in favour (if all four of the originally excluded vote were against ). Again, this clearly exceeds the two-thirds majority.

Effect of voting irregularities

The courts have previously held that, where there have been minor errors, omissions or other irregularities in meeting procedures, the meeting and the decisions made at the meeting should nevertheless be preserved, unless it can be shown that there has been some fundamental disadvantage to voters (owners). For example, His Honour Judge Boulton made the following statement in dismissing a District Court appeal of a previous adjudicators order:

“The very detailed provisions of the standard module regulation ... make it almost inevitable that from time to time there will be non-compliance. Equally though 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 bona fide.”[9]

In this case the Body Corporate has not disputed that irregularities have occurred. They have, at least substantively, corrected the errors. The applicant has not asserted the purported corrections are not accurate. The applicant has not asserted that there are any additional irregularities and none have been identified through the submissions process or raised with the Body Corporate. On the evidence it can be assumed then that all irregularities have been identified.

The applicant does not dispute the preliminary finding in my interim order than the correction of the irregularities will not change the voting tally for Motion 2 sufficiently to prevent the motion from achieving the requirements for a special resolution. As the result of the motion will not change, the applicant has not demonstrated that there has been any fundamental disadvantage suffered by owners as a result of the voting irregularities that would warrant the motion or the meeting generally being invalidated. Moreover, I have received no evidence that the significant cost and inconvenience to owners and the Body Corporate of setting aside the meeting and requiring the motions to be reconsidered would result in a different outcome. As such I consider that it is just and equitable in the circumstances that the voting intentions of owners as expressed at the EGM be preserved.

Other issues

An issue has been raised as to the validity of company votes cast by proxies rather than company nominees. Pursuant to section 81 of the Accommodation Module, a voter for a general meeting includes an individual who is a corporate owner nominee. Subsections 5-7 provide for the nomination of a person as a corporate owner nominee. Section 105 of the Accommodation Module provides for the appointment of proxies. As it provides that only a ‘voter for a general meeting’ may appoint a proxy, and as section 81(1) provides than a voter for a general meeting must be an individual, it follows that a company cannot directly appoint a proxy. Of course a company nominee, who is an individual who is the voter for the company, can appoint a proxy. Accordingly, the Body Corporate is correct in that companies must complete a company nominee form rather than a proxy form.

Pursuant to section 68(3)(b)(ii) of the Accommodation Module, the notice of a general meeting must include, if issued to the corporate owner of a lot, a form under which the owner may advise the body corporate of the corporate owner nominee. The Body Corporate has not commented on the applicant’s assertions that company nominee forms were not included with the notice of meeting as required. I note that the applicant highlights the reference on the meeting notice to company nominee forms and so it is unclear, if he did not receive one, why he did not simply contact the BCM to obtain one. In the circumstances I do not consider it necessary to investigate this further as the disputed votes by companies have been included in the recount and regardless do not affect the outcome of the motion.

The applicant claims breaches of the Code of conduct for committee voting members. However the applicant does not explain the basis for this claim, provide any evidence in support of the claims, or seek any orders in this regard. If the applicant has genuine concerns in this regard, he could give consideration to the processes provided in section 34 and 35 of the Accommodation Module in regard to actioning alleged breaches of the Code. If the applicant is unable to obtain general meeting support to issue a notice against any Committee members for alleged breaches of the Code, he could consider lodging a dispute resolution application on that matter. However, any such application would need to be supported by evidence rather than just bare allegations.

The applicant claims breaches of the Conciliation Agreement reached between the parties in September 2008. As indicated above, this is a voluntary and non-binding agreement and I consider that I have no jurisdiction to make any order in respect of an alleged breach of the agreement (except to the extent that the substantive issue is the subject of an adjudication application). However I would make the observation that the applicant has not demonstrated that the agreement has been breached in any event, particularly as the applicant has not provided any evidence that any voting irregularities were deliberate rather than inadvertent errors.

Conclusion

As indicated in my interim order, it does appear that there were errors in the declared voting for the EGM on 17 October 2008. This was particularly unfortunate given that the EGM arose because a dispute over the handling of voting papers and the parties were put on notice in a previous interim order and conciliation application regarding the handing of voting papers, albeit in the context of a different issue.

I do not consider it necessary in the circumstances to investigate and make findings on every vote in question in thus matter, or to determine what the final tally for each motion should have been. Based on the material before me, I am not satisfied that the applicant has provided any evidence that the apparent voting irregularities at the EGM have not now been corrected by the Body Corporate or that any of the voting irregularities would have changed the overall result of any of the three motions passed at the EGM. Accordingly, I can find no basis to require the Body Corporate to incur the expense and inconvenience of convening a new EGM. It follows that I have dismissed the application.

This decision is no reflection on the appropriateness or reasonableness of Motion 2. The applicant has provided information regarding the history of this motion but has not sought to overturn the motion on the basis of it being unreasonable for the Body Corporate to have made the decision. Accordingly that history has no relevance to the determination of voting on the motion.

The decision also does not condone any invalid or inappropriate conduct on the part of the Committee or the BCM. I would urge the BCM and Committee to pay much closer attention to such matters in future, and ensure that any difficulties with facsimile machines and mail delivery between offices are addressed as a priority. It appears likely that this has already occurred. Moreover, the Committee and BCM have appeared quite willing to accept that errors occurred and have attempted to clarify the issues– a situation which the applicant fails to acknowledge.

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[1] As of 30 August 2008 the new Accommodation Module came into force, replacing the Body Corporate and Community Management (Accommodation Module) Regulation 1997 which applied until that date.
[2] See sections 246 and 244 of the Act respectively

[3] Those motions were the subject of a previous dispute lodged by the applicant – reference 0509-2008.
[4] Jonjen Pty Ltd, Owner of Lots 1 and 2
[5] See sections 227, 228, 276 and Schedule 5 of the Act
[6] Section 276(2) of the Act
[7] Section 284(1) of the Act

[8] I note that abstentions are not counted in calculating the total number of votes cast. See Windsor Shores at Seaforth [2007] QBCCMCmr 451 (30 July 2007) for a detailed discussion on this issue.

[9] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001 (Unreported).