Paloma [2010] QBCCMCmr 129 (18 March 2010)

Number of Scheme:	9524
Name of Scheme:	Paloma
Address of Scheme:	93 - 97 Albatross Avenue MERMAID BEACH QLD 4218

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

I hereby order that the application for

An interim order preventing the Body Corporate from acting upon or putting into effect Motions #3 to #7, on the Agenda of our General Meeting 24th March 2010, if passed

is dismissed.

Paloma community titles scheme 9524 (Paloma) consists of 12 lots and common property. The Community Management Statement (CMS) for Paloma indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme. The Department of Environment and Resource Management records show the scheme is registered as Building Units Plan 5681.

This is an application for interim orders lodged by Helen Blair, Director of I.J. Holdings Pty Ltd (Owner of Lot 5) (applicant) on 5 March 2010 under the Body Corporate and Community Management Act 1997 (Act). The applicant seeks an interim order against the Body Corporate for Paloma (respondent) in the following terms:

An interim order preventing the Body Corporate from acting upon or putting into effect Motions #3 to #7, on the Agenda of our General Meeting 24th March 2010, if passed.

An order declaring motions #3 to #7, on the Agenda of our EGM 24th March 2010 - VOID.

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order. The Commissioner has referred the application notwithstanding that affected persons have not been given notice of the application or afforded an opportunity to make submissions about the application[1]. In the circumstances, I have provided the Body Corporate Committee (committee) with a limited opportunity to make a written submission in response to the interim application. Several submissions were received from committee members.

This application relates to Motions 3, 4, 5, 6 and 7 on the agenda for the Extraordinary General Meeting (EGM) scheduled for 24 March 2010, regarding the removal of certain members of the committee. The circumstances of the dispute are as follows:

On 18 January 2010 Michael McCallum delivered a notice (initiated by Peter Jones) to the Body Corporate Manager requesting the removal of four committee members (Nanette Blair, Helen Blair, Kim Donges and Greg O’Connor) pursuant to section 33 of the Standard Module. The applicant states that Michael McCallum was advised by the Body Corporate Manager that the removal of committee members would have to be considered at an EGM. Consequently, on 9 February 2010 Michael McCallum delivered a notice (initiated by Peter Jones) to the Body Corporate Manager requisitioning an EGM pursuant to section 67 of the Standard Module wherein the removal and replacement of certain committee members could be voted upon by the body corporate.

The requested EGM has been scheduled for 24 March 2010. The relevant motions are set out below:

The applicant states that Motions 3, 4, 5, 6, and 7 of the EGM dated 24 March 2010 are invalid for the following reasons:

A joint submission was received from Nannette Blair, Kim Donges and Gregory O’Connor supporting the application. This submission states the following:

Submissions were also received from Andrew Abrahamson and William McCallum opposing the application. These submissions state the following:

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[2] 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:

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

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

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[3] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[4]

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

At this time, I am concerned with the application for an interim order and the threshold issue of whether interim orders are 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.[5] Any order granted must be just and equitable in the circumstances.[6] 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. While it is not possible to define the range of matters that might be the subject of an interim order, an applicant needs to establish that the circumstances warrant an interim order. An interim order will not be made if the only urgency relates to an applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order.

It is not appropriate to consider the substantive issues in the application in detail at this time. But to determine whether it is just and equitable to grant interim relief, it is relevant to briefly consider the issues raised in the application. As an interim order can be considered on an ex parte basis, an adjudicator must be satisfied that the application raises serious legal questions and that the balance of convenience between the parties justifies injunctive relief. That is, an adjudicator must balance the inconvenience of granting relief now if final orders are ultimately refused against the inconvenience of refusing relief now if final orders are ultimately granted. Of particular relevance is evidence that an interim order is necessary to prevent serious or irreparable harm.

The applicant raises several objections to Motions 3, 4, 5, 6 and 7 of the EGM scheduled for 24 March 2010, regarding the removal of four members from the committee. I will address the key issues in turn.

The applicant argues that any action to remove the four committee members should have been pursued via the code of conduct provisions in section 101B of the Act and section 34 of the Standard Module. The applicant states that section 34 of the Standard Module would have given the ‘presumed innocent until proven guilty’ a chance of reply.

On the other hand, the submissions opposing the application argue that they are not required to proceed under section 101B of the Act and sections 34 and 35 of the Standard Module. Rather, these submissions state that the motions in question are within section 33 of the Standard Module and consequently valid.

Section 34 of the Standard Module states that if the body corporate believes a voting member of the committee has breached the code of conduct, “...the body corporate may decide, by ordinary resolution, to give the member a written notice...” regarding the breach (underlining mine). That member of the committee then has 21 days to respond to the notice.[7] Section 35 of the Standard Module states that if the body corporate gives a member of the committee a notice under section 34 of the Standard Module and the 21 day period for a response has ended, the body corporate must include on the agenda of the next general meeting a motion to remove the committee member. If the motion is passed by an ordinary resolution, the member may be removed from their position as a committee member.[8] Based on the evidence before me, I am satisfied that the 2-step procedure as set out under sections 34 and 35 of the Standard Module for the removal of committee members for a breach of the code of conduct has not been followed in this instance.

However, section 33(2)(f) of the Standard Module states that a committee member’s position becomes vacant if the member is “removed from office by ordinary resolution of the body corporate”. In the matter of Silverton,[9] Adjudicator Underdown considered the relationship between section 34 of the Standard Module (equivalent to the then section 25AA of the Standard Module) and section 33(2)(f) of the Standard Module (equivalent to the then section 25(2)(f) of the Standard Module). In that matter Adjudicator Underdown stated:

“Section 25AA is...permissive, in that the body corporate may put such a motion, if it believes that a breach of the code has occurred. It is not obligatory that it does so. The introduction of section 25AA on 1st July 2007 gave some teeth to the newly introduced Code, in that standards of behaviour for committee members were now set in the legislation. This required a balancing section as to what might happen if a committee member did not comply with the Code. It is still a matter for the body corporate to choose how to proceed.

The introduction of Section 25AA in 2007 did not diminish in any way section 25(2)(f), but provides a secondary process whereby the performance of committee members may be measured against the provisions of the code.

Therefore, it seems that section 34 of the Standard Module does not in any way diminish the procedures as contained in section 33(2)(f) of the Standard Module.[10] Rather, it seems that section 34 of the Standard Module merely provides a secondary process whereby the performance of committee members may be measured against the provisions of the code. Accordingly, I am of the opinion that a committee member may be removed from the committee pursuant to either section 34 and 35 of the Standard Module or section 33 of the Standard Module.

I have been provided with no information to suggest that Motions 3, 4, 5, 6 and 7 are contrary to the requirements contained in section 33 of the Standard Module. Accordingly, without further information, I am not sufficiently satisfied that Motions 3, 4, 5, 6 and 7 are in breach of section 33 of the Standard Module.

Further, the applicant states that Michael McCallum is seeking to remove committee members so that he can fill the committee vacancies with his ‘mates’. The applicant asserts that this is a conflict of interest by Michael McCallum.

In this jurisdiction, it is only committee members who are specifically prohibited from exercising their vote subject to a conflict of interest at committee level.[11] Owners are not subject to any specific provisions regarding a conflict of interest when voting in general meetings or submitting motions for general meetings.[12] However, decisions of bodies corporate are subject to an overriding restriction in that the body corporate must act reasonably in carrying out its functions and administering body corporate assets.[13] Based on the information before me, I am not sufficiently satisfied that the applicant has raised a serious legal issue regarding any conflict of interest pertaining to motions 3, 4, 5, 6 and 7.

In addition, the applicant has stated that Motions 3, 4, 5, 6 and 7 should be declared invalid as Peter Jones (the initiator of the motions) is seeking to remove the committee due to reasons contained in, and associated with, application 1191-2009 (which has not been finally determined by the adjudicator). In support of this assertion, the applicant has set out, in some detail, the issues and her arguments relating to application 1191-2009.

While the applicant may consider the issues in application 1191-2009 to be related to, or a motivating factor behind the lodging of, this application; the two applications do not contain the same legal issues. The legal issue for determination in this application concerns the validity of Motions 3, 4, 5, 6 and 7 and consequently any issues regarding the merit of application 1191-2009 will not be considered in this application.

“Section 25(2)(f) has long been relied upon as the process which may be used by the body corporate to remove a committee member from office if it is the wish of the lot owners at a general meeting to do so.[15] The section does not require any blame to be laid, or a case to be made out. It relies on the satisfaction of lot owners with their committee members, and gives a body corporate power to change or “spill” the committee during the scheme year...” (underlining mine).

Therefore, it seems that no ‘reasons’ or code of conduct breaches need to be provided for the removal of a committee member pursuant to section 33 of the Standard Module.[16] Accordingly, I am not satisfied that any arguments relating to the ‘reasons’ behind the submitting of Motions 3, 4, 5, 6, and 7 or any arguments associated with application 1191-2009 form a sufficient basis for making the interim order sought.

In considering whether to grant the interim order sought, it is relevant to balance the inconvenience of granting relief now if final orders are ultimately refused against the inconvenience of refusing relief now if final orders are ultimately granted.

If the interim order is granted now and final orders are ultimately refused, the body corporate would have lost, on a temporary basis, the opportunity to implement any motions (if passed) as it thinks fit. On the other hand, if the interim application is dismissed now and final orders are ultimately awarded, the applicant and affected committee members may have lost an opportunity to serve on the committee pending the final order.

On balance, I am not satisfied that the applicant has presented sufficient evidence of genuine concerns relating to the validity Motions 3, 4, 5, 6 and 7 to be considered at the EGM of 24 March 2010. Accordingly, I have declined to grant an interim order at this time.

The applicant should consider the comments I have made. If she is unable to provide further substantiation of her allegations she may decide to withdraw the application. Should the applicant choose to continue with the application, the matter will proceed in accordance with the normal processes of this Office, including the seeking of submissions from all owners.

Further, I draw the parties’ attention to sections 36 to 41 of the Standard Module regarding the filling of casual vacancies on the committee. The body corporate may wish to consider these provisions should any of the motions scheduled for consideration at the EGM dated 24 March 2010 be passed by the body corporate.

[1] Section 247(3) of the Act.
[2] See sections 227, 228, 276 and Schedule 5 of the Act.
[3] Section 276(2) of the Act.
[4] Section 284(1) of the Act.
[5] Section 279 of the Act.
[6] Section 276 of the Act.
[7] Section 34(1)(c) of the Standard Module.
[8] Section 35(3) of the Standard Module.
[9] Silverton [2008] QBCCMCmr 213 (25 June 2008).
[10] This conclusion is also supported by Attenborough 4 [2007] QBCCMCmr 659 (23 November 2007).
[11] See section 53 of the Standard Module.

[13] See section 94 of the Act.
[14] Silverton [2008] QBCCMCmr 213 (25 June 2008).
[15] 0601-2000 Magic Mountain Apartments; 0525-2003 Centrepoint; 1024-2007 Coronaton Gardens.
[16] Silverton [2008] QBCCMCmr 213 (25 June 2008).

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Paloma [2010] QBCCMCmr 129 (18 March 2010)