Mactaggarts Place [2010] QBCCMCmr 10 (7 January 2010)

Last Updated: 18 March 2010

REFERENCE: 0491-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	16563
Name of Scheme:	Mactaggarts Place
Address of Scheme:	53 Vernon Terrace TENERIFFE QLD 4005

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Jacqueline Bayard, the owner of Lot 28

I hereby order that the application for an order by Jacqueline Bayard, the owner of Lot 28 against the body corporate for Mactaggarts Place community titles scheme 16563 seeking the following outcomes: To determine that voting outside committee on the resolution to pay Piper Alderman Tax Invoice 217847 is a valid meeting issue and not a restricted issue. An order declaring that Motion 13 for payment of Piper Alderman legal fees Tax Invoice 217847 for Letting Arrangements Advice put forward on the agenda of a notice of voting outside committee meeting dated 7 May 2009 be declared irregular and invalid. An order that payment of legal fees is a restricted issue and should be decided by a general meeting of owners. A determination that the notice of voting outside committee meeting dated 7 May 2009 is irregular and that some of the motions are of a restricted nature. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0491-2009

“Mactaggarts Place” CTS 16563

The scheme
“Mactaggarts Place” community titles scheme 16563 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 27 May 2009 is by Jacqueline Bayard, the owner of Lot 28 (Applicant) against the Body Corporate seeking the following outcomes:

1. To determine that voting outside committee on the resolution to pay Piper Alderman Tax Invoice 217847 is a valid meeting issue and not a restricted issue.
   2. An order declaring that Motion 13 for payment of Piper Alderman legal fees Tax Invoice 217847 for Letting Arrangements Advice put forward on the agenda of a notice of voting outside committee meeting dated 7 May 2009 be declared irregular and invalid.
   3. An order that payment of legal fees is a restricted issue and should be decided by a general meeting of owners.
   4. A determination that the notice of voting outside committee meeting dated 7 May 2009 is irregular and that some of the motions are of a restricted nature.
      

The Applicant submits the then chairperson (Deane Giles) obtained legal advice without discussion or approval from the committee, and that the advice given has not been sighted. The Applicant states at no time did the chairperson inform the committee or owners of his action even though committee meetings and the annual general meeting were held after the legal firm (Piper Alderman) was briefed. The Applicant says 5 months after approving payment of the invoice, the chairperson asked the committee to approve the payment without providing details of the matter behind the account.

The Applicant provided a copy of:

• Tax Invoice 217847 dated 18 December 2008 from Piper Alderman for $3,244.78 for “Advice on Letting Arrangements”. The ‘Attendance Schedule’ attached to the Invoice indicates that on 24 November 2008 there was: “Telephone attendance on Deane Giles being advised in relation to owner letting some units from her lot; potential agreement, and owner voting capacity of the owner”. The Invoice is noted as being authorised for payment by Deane Giles and paid on 24 March.
• The ‘Notice of Voting Outside Committee Meetings’ dated 7 May 2009 listing 15 motions. Motion 13 proposed: “That the Body Corporate retrospectively approve the expenditure incurred by the Body Corporate for the obtaining of legal advice in respect of Letting Arrangements (approximately $3,400.00)”.
• An email from Deane Giles dated 9 May 2009 to various people including the Applicant stating with respect to Motion 13: “This is a Piper Alderman account for advice that I requested regarding the practice of the owner of Lot 28 (Jackie) letting units in Mactaggarts. I asked for this advice without committee approval as it involves a committee member and there has been discussion on this issue since...2004. I believed we needed a legal opinion on file and was not in a position to ask the committee without going into detail. I have asked EBCM to write to the committee members about that advice. This motion simply approves the payment.”
• The minutes of ‘Voting on Motions Outside Committee Meeting’ which indicate three votes for Motion 13, three against and 1 abstention and state: “Resolved on 20 May 2009 that the Body Corporate not retrospectively approve the expenditure incurred by the Body Corporate for the obtaining of legal advice in respect of Letting Arrangements (approximately $3,400.00)”.
  

The Applicant submits that the payment of legal fees is a restricted issue and should be decided at a general meeting, and that the agenda motions 10, 11 and 12 require two quotes for committee consideration and should not be voted on.

The minutes of ‘Voting on Motions Outside Committee Meeting’ indicate:

• Motion 10 that the Body Corporate approves a quotation from Building Rectification Services for $6,540.00 (plus GST) to repair concrete was passed by 5 votes to 2.
• Motion 11 that the Body Corporate approves a quotation from Building Rectification Services for $3,000.00 (plus GST) to install a new storm water pit was passed by 5 votes to 2.
• Motion 12 that the Body Corporate approves a quotation from Building Rectification Services for $1,745.00 (plus GST) per drain inlet for the installation of drain inlets in the middle areas where water pools in the car park was passed by 5 votes to 2.
  

Submissions to the Commissioner
On 28 May 2009, the Commissioner provided a copy of the application to Ernst Body Corporate Management (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). On 4 June, the Commissioner invited submissions about further material which had been lodged. On 10 June, the Commissioner again invited submissions in response to the matters raised in the application

The owner of Lot 1 submitted it is not clear to him why the Body Corporate should be responsible for the legal costs.

The owner of Lot 54 understands that some time late in 2008, Mr Giles believed the Applicant was not eligible to remain as a committee member because she was a director of a real estate agency that acted on behalf of lot owners. The owner believes that Mr Giles breached sections 100 and 101 of the Act and section 52 of the Accommodation Module by not involving the committee. He states Motion 13 was defeated and as at June 2009 there has not been a committee meeting to discuss the situation.

The owner of Lot 84 does not believe the legal advice is a Body Corporate expense; no lot owner has benefited from the advice as they are not aware of the nature of the advice; and the chairperson incurred a debt in his own name and independently of the committee. The owner posed a number of questions about the advice stating that Mr Giles should reimburse the Body Corporate for the cost of the advice.

The Applicant made a written reply to submissions that owners should not be subjected to legal costs incurred by the sole actions of the chairperson with no discussion at committee level.

Adjudication
A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Jurisdiction
An adjudicator may make an order to resolve a dispute 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).

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, I provided the Body Corporate the opportunity to make submissions about the issues raised in the application.

On 27 November 2009, Samuel Crossin (chairperson and on behalf of the committee) submitted the Applicant is operating a letting business and is restricted from holding a position on the committee; Mr Giles was concerned about this issue and the legal implications of a possible breach of the building manager’s agreement and By-Law 47.2; Mr Giles consulted with the secretary (Mr Crossin) and the treasurer before instructing the solicitors; the advice has been made available to the committee; and as a result of the advice, the Applicant was asked to resign from the committee and a breach of By-Law 47.2 was issued. He states if it is found that the advice was a restricted issue, the committee will determine to ratify it at a general meeting. Mr Crossin submits that only one quotation was obtained for the expenses mentioned in Motions 10 to 12 as the building manager advised that tradesmen and quotes were difficult to obtain, the contractor had been used previously and some of the work was deemed to be of an urgent nature. He adds the work has been completed and the expense has been incurred by the Body Corporate.

On 27 November, I invited the Applicant to make submissions responding to those made on behalf of the committee. On 18 December, the Applicant submitted a breach of By-Law 47.2 was not issued, but a breach of By-Law 47.1 was issued in September 2009. The Applicant relied on section 100(1) and (2) of the Act and sections 42(1)(f) and 43(1) and (2) of the Accommodation Module stating the Tax Invoice payment is a restricted issue for the committee. The Applicant argues the issue relating to the payment of the legal fees should be resolved in general meeting.

Decision
Given the outcomes sought, I do not consider what occurred before or after the committee decision on Motion 13 is relevant to the determination of the application. The application relates specifically to: whether the committee has the power to make a decision to authorise payment of the Tax Invoice; and whether the committee could determine Motions 10 to 12 resolved on 20 May 2009.

It is apparent from the copy of the record of voting provided by the Applicant that Motion 13 was not passed. A majority of voting members of the committee entitled to vote on the Motion did not agree to the Motion (s 54(1), Accommodation Module). As indicated by the record, the Body Corporate did not retrospectively approve the expenditure incurred for obtaining the legal advice. Consequently, there is no basis for making an order about the Motion.

It is not contested that an expense was incurred for legal advice. There is nothing to suggest the advice was sought as a consequence of a Body Corporate decision in general meeting or after a decision of the committee. Mr Crossin has submitted that the secretary and treasurer were consulted. However, this is not proof of a proper decision of the committee on the issue. As there is no evidence that the Body Corporate has considered the payment of the Tax Invoice subsequent to the abovementioned Motion 13, it can be concluded the expense and payment has not been authorised by the Body Corporate in accordance with the legislation.

However, this fact does not prevent the Body Corporate from ratifying the expense and payment. The legislation does not specifically prevent ratification. A body corporate may ratify a decision even if the work was carried out before it properly passed a resolution authorising the work (Warren v Body Corporate for Buon Vista CTS 14325 [2007] QCA 160, de Jersey CJ, Keane JA and Holmes JA, 18 May 2007 at para 12).

The Applicant questions the committee’s power to make a decision on this issue. As indicated by the Applicant, while a committee decision is a decision of the body corporate, the committee cannot make a decision on a restricted issue (s 100(1) and (2), Act). Restricted issues for the committee are stated in section 42 of the Accommodation Module. The Applicant has referred to section 42(1)(f) which provides that a restricted issue includes: “a decision to pay remuneration, allowances or expenses to a member of the committee unless, under section 43, the decision is not a decision on a restricted issue for the committee”. Section 43 provides exceptions to restricted issues for the committee.

I am not convinced from submissions that section 42(1)(f) is applicable in the circumstances. In my view, this provision primarily applies to remuneration, allowances or expenses payable to or incurred personally by a person performing functions as a committee member. Remuneration ordinarily equates to a payment for service. Typically, an allowance is a payment to meet particular needs associated with the person’s involvement as a committee member and may be of the nature of a meeting allowance or a travel allowance. In this context, expenses encompass things such as “out of pocket” costs incurred personally by a member to for example, attend a meeting or to carry out a specific function and may be an expense incurred to travel by taxi or for incidental telephone calls. It would not include costs for goods or services that are not personal to a committee member. Such costs are outside the scope of section 42(1)(f) and may be met by a body corporate pursuant to the legislation.

I am not satisfied that spending of the nature stated in the Tax Invoice is a restricted issue for the committee. Given the number of lots included in the scheme, it is apparent the amount of the Invoice is within the relevant limit for committee spending (s 149 and schedule, Accommodation Module). In these circumstances, I am of the view that the committee had the power to authorise the payment of the Invoice.

It is evident that to date the payment has not been authorised by the committee. In the absence of any committee decision, the matter may need to be considered by the Body Corporate in general meeting. Failing any proper authorisation, either the committee or the Body Corporate may need to consider its options with respect to the payment of the Tax Invoice.

The Applicant has also referred to Motions 10 to 12 passed by the committee. The Applicant states two quotes should have been obtained. In making this claim, the Applicant has not substantiated the basis for requiring two quotes. At least two quotations for carrying out work or supplying personal property or services must be given for the consideration of committee members if section 151 of the Accommodation Module applies. This section relates to quotes for major spending decided by the committee. There is nothing to suggest that the spending proposed in each of the Motions individually is more than the relevant limit for major spending for the scheme. Collectively, the spending proposed is more than the default $10000 (s 151(6) and dictionary, Accommodation Module). However, I have not investigated this matter as I am not satisfied from submissions that each of the proposals formed a single project and that the default amount applies. It is also significant that undisputed submissions have been made on behalf of the committee that the work mentioned in the Motions has been completed.

For these reasons, the outcomes sought are dismissed.