Rosebank South [2010] QBCCMCmr 15 (13 January 2010)

Last Updated: 19 March 2010

REFERENCE: 1012-2009

ORDER OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Plan:	Rosebank South
Address of Building or Parcel:	Hope Island Resort, Hope Island, QUEENSLAND

TAKE NOTICE that pursuant to an application made under sections 76 and 77(1) of the Building Units and Group Titles Act 1980 by Suzanne Niven, Maclan Investment Pty Ltd and Stuart & Stephanie Innes, the Owners of lots 5, 21 & 42

I hereby order that the application for the following orders: That resolutions on all those motions voted upon in the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid by reason of various breaches of the Building Units and Group Titles Act 1980 and each of those motions are to be voted on again at a newly convened AGM at the earliest possible date. Or, in the alternative That resolutions on all those motions voted upon in the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid by reason of various breaches of the Building Units and Group Titles Act 1980 and each of those motions are to be voted on again at a newly convened AGM at the earliest possible date. The results of the open ballot held at the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid insofar as they resulted in the election of Jennifer Elmslie as secretary and treasurer as her nomination for each position was in breach of the Building Units and Group Titles Act 1980 and those positions are hereby awarded by default to each of her opposing nominees viz; David Macauslane as Treasurer and Stuart Innes as secretary. The results of the open ballot held at the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid insofar as they resulted in the election of Carl Smith as Chairperson by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof and the nomination of Chairperson to be voted on again by open ballot at a newly convened AGM at the earliest possible date. the newly elected committee be restrained from dealing with all body corporate matters by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof. Or, in the alternative The newly elected committee be restrained from withdrawing the appeal in the matter order no. 0508/ 2009 and shall not take any steps to bring that matter to an end by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof. Is dismissed.

STATEMENT OF REFEREE’S REASONS FOR DECISION - 1012-2009

“Rosebank South” CTS 0

APPLICATION

The applicants are owners of lots 5, 21 & 42 in Rosebank South and have submitted a dispute resolution application under the Building Units and Group Titles Act 1980. They seek the following final outcomes relating to certain resolutions made at the Annual General Meeting held on 30 September 2009.

That resolutions on all those motions voted upon in the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid by reason of various breaches of the Building Units and Group Titles Act 1980 and each of those motions are to be voted on again at a newly convened AGM at the earliest possible date.

Or, in the alternative

1. That resolutions on all those motions voted upon in the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid by reason of various breaches of the Building Units and Group Titles Act 1980 and each of those motions are to be voted on again at a newly convened AGM at the earliest possible date.
2. The results of the open ballot held at the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid insofar as they resulted in the election of Jennifer Elmslie as secretary and treasurer as her nomination for each position was in breach of the Building Units and Group Titles Act 1980 and those positions are hereby awarded by default to each of her opposing nominees viz; David Macauslane as Treasurer and Stuart Innes as secretary.
3. The results of the open ballot held at the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid insofar as they resulted in the election of Carl Smith as Chairperson by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof and the nomination of Chairperson to be voted on again by open ballot at a newly convened AGM at the earliest possible date.
4. the newly elected committee be restrained from dealing with all body corporate matters by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof.
   

Or, in the alternative

the newly elected committee be restrained from withdrawing the appeal in the matter order no. 0508/ 2009 and shall not take any steps to bring that matter to an end by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof.

The applicants previously sought an interim order to prevent the new committee from withdrawing an appeal against referee’s order 508-2009. On 30 October 2009, I ordered that “owing to the possibility that the resolution upon motion 23, considered at the AGM on 30 September 2009, could be invalid, the Body Corporate committee is not to take any action to withdraw the appeal in the matter Order Ref No.508-2009 or to otherwise bring that matter to an end, until such time as a final order has been made in respect of this dispute resolution application”.

BACKGROUND

The applicants state that the AGM for Rosebank South was held on 30 September 2009 and a total of 23 motions were voted upon at that meeting, including Motion 23 which was a motion to withdraw an appeal against adjudicator’s order 508-2009.

As the parties would be aware, on 29 May 2009, the Body Corporate Committee for Rosebank South lodged application 508-2009 seeking an order invalidating a motion by the Principal Body Corporate to enter into a Management Agreement with Cambridge Management Services.
Following receipt of detailed submissions from the principal body corporate and the various residential bodies corporate, a final order was made dismissing that application.

The Body Corporate Committee for Rosebank South subsequently lodged an appeal against that order with the Magistrates Court, although the appeal was lodged on the understanding that the lot owners would decide at the next AGM A. However at the last AGM lot owners voted upon the following motion 23:

“That the body corporate immediately withdraw its appeal in the matter Order ref No. 0508/2009 and that the committee take all steps required to bring that matter to an end by such withdrawal”.

The Minutes for the AGM record that there were 25 votes in favour of the motion, 21 votes against the motion and 0 abstentions. However, the applicants have called the results of the vote into question on the following grounds:

• 19 lots were represented in person at the meeting and 31 lots were represented by proxies. However, while 50 lot owners attended in person or by proxy, the minutes record that 46 persons in total either voted or abstained from voting on all 23 motions;
• A re-check of votes indicates that 47 lots voted;
• Lot 18, owned by Roy and Ralda Hooker gave a proxy to Roy Hooker but it is claimed that as that proxy expired before the meeting, the vote by Roy Hooker should not have been included in the tally;
• Lot 81, owned by Mr. & Mrs. Lanigan is an amalgamation of 2 lots and therefore is only entitled to one vote but it is claimed that they were afforded 2 votes;
• It is claimed that proxies were accepted for lots 2, 8, 39 and 48 which were not entitled to vote because at the relevant time, they had not paid all contributions owing to the body corporate, and therefore should not have been included in the tally.
• The applicants therefore claimed that “there is a serious question mark over at least 8 votes and this irregularity also raises the possibility of other errors “ and therefore, all resolutions and motions considered at the AGM on 30 September should be set aside as invalid and reconsidered at another general meeting.
  

SUBMISSIONS

A temporary order was made on 30 October 2009 without firstly seeking submissions. This was because the applicants expressed concern that the Magistrates Court appeal would be withdrawn before an order was made. In making an urgent interim order I pointed out that it was only of a temporary nature and that submissions would be sought before the making of final orders.

Pursuant to section 73 of the Act, a copy of the application was sent to the body corporate committee and all lot owners (apart from the applicants) with an invitation to make submissions. Three lot owners made short submissions suggesting that there were certain irregularities in the voting at the AGM and that the motions should be voted upon again at another AGM.

Mr Carl Smith made detailed submissions which included the following:

• The statement by the applicants that “the Secretary (and therefore Scrutineer) of the AGM was Carl Smith” is false, as he did not act as a scrutineer and there is no requirement in the legislation that the Secretary act as scrutineer;
• The calculations made by the applicants are erroneous. An independent Returning Officer, Mr Logan Irwin, was engaged and his findings were that:

There were 31 eligible votes

Carl Smith held 13 eligible votes

Ray Hutchins held 2 eligible votes

Roy Robertson held the vote for lot 66

Jodi Hayes submitted a voting paper

At least 17 of the 31 valid votes were in favour of motion 23;

• Attached to the submission were pages from the attendance and voting register confirming the above;
• At an EGM held on 28 May 2009, owners were to consider whether to vote for or against the proposed new agreement between the Principal Body Corporate and CMS. However, the Chairman declared the motions out of order ;
• After the management agreement was entered into between the PBC and CMS, it was decided at an impromptu committee meeting attended by the applicants, that the committee would appeal the referee’s decision not to invalidate the management agreement although this was on the proviso that at the next AGM, lot owners would be given the opportunity to vote to continue, or withdraw, the appeal;
• The resolution upon motion 23 was valid. Although there may have been an error in the tally, such an error would not have impacted upon the result;
• Motion 21 regarding endorsement of the committee’s actions was lost with 16 votes for and 29 votes against- this begs the question of why the voting would change regarding withdrawal of the appeal instituted by the committee;
• Ms Jennifer Elmslie paid all outstanding debts prior to the commencement of the meeting and was therefore eligible to vote as confirmed by attached correspondence from the body corporate manager. There is no requirement in BUGTA that a lot owner must be fully paid up at the time of nomination as claimed by the applicants. One only has to be entitled to vote at the meeting and the this was the case here;
• There was no objection to nomination of Ms Jennifer Elmslie. Her name was recorded on the voting and ballot papers and she voted on the night in question without any objections, so her nomination must have been accepted by the chairman and body corporate manager;
• Many other owners view the management agreements differently from the applicants. The so-called 10 year agreement is actually 2 agreements, each of 5 years duration. After 5 years the cost is to be “reviewed at market value” and at that point in time, CMS have the option of entering into a second term at “market value” or opting out;
• The two 5 year agreements were offered as an alternative to continuation of the current perpetual contracts and offered savings of $400 per lot per year;
• Legislative amendments which limit contracts to 3 years duration are not retrospective and therefore do not affect current agreements. If the residents don’t want the new agreements they can vote to retain the current agreement;
• The applicants are now attempting to deny owners the option of withdrawing the appeal even though this was a condition upon the appeal was lodged by the committee;
• Many lot owners want the new agreements and do not want the cost and uncertainty attached to ongoing legal challenges, or to be used as political pawns by a small group of people, many of whom are not members of this body corporate;
• Hope Island Resort is, in reality, a small town which is now 15 years old and facing infrastructure failures and requires long term maintenance arrangements;
• Although certain votes may have been incorrectly counted in favour of Carl Smith, David Macauslane and another candidate, the final results determined by the independent returning officer were 15 votes for David Macauslane and 28 votes for Carl Smith– which is a clear majority and there is no basis for the applicants to request the new AGM;
• In the event that the referee does order that a new general meeting should be called for the purpose of conducting new elections, then the cost should be borne by Mr Macauslane and the body corporate manager as it was their negligence that has placed the residents in this position;
  

Mr Ray Hutchinson, a newly-elected committee member who had previously been Chairman for a total of 7 years, made submissions which included the following:

• The form nominating Ms. Elmslie was correctly filled out and submitted on time;
• the applicants object to her nomination because they believe Ms. Elmslie was not “financial” when she nominated for the positions of secretary and Treasurer, but this is irrelevant because the requirements for a valid nomination in the BUGTA Act are that the owner who nominated her was financial at the beginning of the meeting for which the nomination was made, and was entitled to vote;
• Ms Elmslie made a payment of the disputed amount before the meeting commenced so was fully financial and received a receipt for this amount . She also had a correctly filled out proxy from her husband and herself to allow her to vote at the meeting. As she was fully paid up, clause 1(6A) in Schedule 2 of BUGTA validates the nomination of Ms. Elmslie;
• Motion 23 was decided in the negative and so announced by the Chairman who, under the Act, is responsible for determining the validity of the proxies. The decision to withdraw the appeal was therefore taken by owners at the AGM and no further resolution by the committee was required;
• There is no basis to invalidate the nomination and election of Carl Smith as Chairman. Notwithstanding the possible invalidity of certain proxies, the outcome of the election of the committee was not affected;
• Along with the new committee he has scrutinised the proxies for the AGM. While several proxies may have been invalid, these proxy votes were both for and against the motion and did not affect the final result. This was confirmed by an expert hired by the committee without cost to the body corporate.
  

Submissions similar to those received from Mr. Smith and Mr Ray Hutchinson were received from 5 other lot owners.

Mr Roy Hooker made submissions including the following:

• He believes that the majority have expressed their wish to withdraw the appeal and to end ongoing legal actions and the attendant expense, but the applicants refuse to accept the majority decision;
• There were two proxy forms from him and his wife – an older form and a new form that was signed by both of them on the night before the meeting. They handed this proxy to the body corporate manager who was seated at the door, and they voted for Ms. Jennifer Elmslie as Secretary and treasurer;
• The body corporate manager checked the proxy and confirmed that it was in order.

In response to the above, a reply was received from Ms Niven who reiterated her concerns and made further submissions including the following:

• She is concerned about deteriorating standards in the resort;
• Certain meeting procedures were not followed at the last AGM;
• Owners face the prospect of being bound to a particular body corporate manager for 10 years;
• Many lot owners were complacent about the contracts for body corporate management services;
• At the time of her nomination Ms Elmslie was “unfinancial”;
• She believes that some of the proxies brought to the meeting by Mr Smith may have been invalid.
  

JURISDICTION

The Building Units and Group titles Act 1980 (the Act) applies to this scheme. Part 5 of the Act concerns disputes, and Part 5, division 3 makes provision for orders by a referee. Within division 3, section 77 provides general powers of a referee to make orders. Relevantly, section 77(1) provides a general power that a referee may on application of a body corporate ... a proprietor ... in respect of a parcel, make an order on any person entitled to make an application under this subsection ...for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.

DETERMINATION

The applicants are seeking to overturn resolutions carried at the last AGM as they believe the results of voting upon the various motions, as reported in the minutes of meeting, are incorrect.
For example, it was noted that although 19 lots were represented in person and 31 lots were represented by proxy, the minutes record that only 46 persons either voted or abstained from voting on all 23 motions. They believe that one of these proxies expired before the meeting, that 2 votes may have been recorded for lot 81; that proxies were accepted for lots 2, 8 , 39 and 48 which were not entitled to vote because, at the relevant time, they had not paid all contributions owing to the body corporate.

As mentioned in my reasons for decision dated 30 October 2009, an urgent temporary order was made without firstly seeking submissions because the applicants expressed concern that the Magistrates Court appeal could be withdrawn before an order was made. In making the interim order I pointed out that the order was only of a temporary nature to maintain the status quo until such time as submissions were sought and final orders made.

It is regrettable that numerous errors were made in determining the validity of certain proxies, which of course, has impacted on the final voting results. However, I have now had the opportunity of reading various submissions, the attendance and voting register, report prepared by the independent Returning Officer, Mr Logan Irwin of Independent Strata Consultants, email communications from Mr Robertson, email communications from Mr Ray Hutchins and subsequent correspondence between Mr Smith and Mr Irwin. From these documents I have been able to ascertain the following:

• There were 31 valid votes;
• 17 votes were invalid for various reasons including 9 instances where a co-proprietor failed to grant a proxy; 3 cases where lot owners were “unfinancial” as at the time that the meeting commenced, 1 case where the proxy had expired; 1 failure by a proxy holder to sign the proxy form, 2 cases where co-proprietors failed to sign proxy forms and one instance where only 1 co-proprietor signed the proxy form.
• 13 proxy votes cast by Mr Smith were valid (3, 4, 11, 16, 23, 25, 28, 36, 48, 62, 64, 72, & 73), voting “yes” to motion 23;
• Mr. Smith cast another valid vote as a co-owner of lot 19;
• 2 valid proxy votes were cast by Mr. Ray Hutchins on behalf of lots 68 & 69;
• 1 valid proxy vote was cast by Mr. Roy Robertson in respect of lot 66;
• A valid voting paper was submitted on behalf of lot 47;

This material confirms that at least 17 of the 31 valid votes were cast in favour of motion 23 to withdraw the appeal.

I now turn to the final orders sought by the applicants which are as follows:

• That resolutions on all those motions voted upon in the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid by reason of various breaches of the Building Units and Group Titles Act 1980 and each of those motions are to be voted on again at a newly convened AGM at the earliest possible date.
  
• Or, in the alternative
  

That resolutions on all those motions voted upon in the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid by reason of various breaches of the Building Units and Group Titles Act 1980 and each of those motions are to be voted on again at a newly convened AGM at the earliest possible date.

The results of the open ballot held at the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid insofar as they resulted in the election of Jennifer Elmslie as secretary and treasurer as her nomination for each position was in breach of the Building Units and Group Titles Act 1980 and those positions are hereby awarded by default to each of her opposing nominees viz; David Macauslane as Treasurer and Stuart Innes as secretary.

The results of the open ballot held at the AGM of Rosebank South GTP 102509 on 30 September 2009 are hereby set aside as invalid insofar as they resulted in the election of Carl Smith as Chairperson by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof and the nomination of Chairperson to be voted on again by open ballot at a newly convened AGM at the earliest possible date.

the newly elected committee be restrained from dealing with all body corporate matters by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof.

• Or, in the alternative
  

the newly elected committee be restrained from withdrawing the appeal in the matter order no. 0508/ 2009 and shall not take any steps to bring that matter to an end by reason of various breaches of the Building Units and Group Titles Act 1980 referred to at section 1 hereof.

While it is clear that 17 of the proxy votes were invalid, it is also evident that many of the resolutions carried at the AGM are nevertheless valid. For example, resolutions upon motions 1 to 18 were either unanimous or within one of two votes of being unanimous, so the invalidity of a number of votes would not impact on the validity of those resolutions. Similarly, it is evident that at least 17 of the 31 valid votes were cast in favour of motion 23 to withdraw the appeal.

It is noted from the minutes of the AGM that Mr. Carl Smith received 28 votes for the position of Chairperson, while Mr. David Mcauslane received 15 votes. The material at hand indicates that Mr Smith received at least 17 valid votes, so even if I were to assume that all of the remaining 11 votes were invalid, the result would be that Mr Smith obtained a majority of votes.

While it is arguable that Ms. Elmslie owed certain arrears of levies to the body corporate when she nominated for the positions of Secretary and Treasurer, the Building Units and Group Titles Act 1980 does not require that the nominator be financial at the time of nomination but rather, that that the nominator was financial at the beginning of the meeting for which the nomination was made, and was entitled to vote. This is the effect of Schedule 2 Part 2, Clause 1 (6A) which provides as follows:

1 General meetings of body corporate
(6A) A person is not entitled to submit a motion for inclusion in the agenda of a meeting, to move a motion at the meeting or to nominate a person for election as the chairperson, secretary or treasurer of the body corporate or a member of the committee unless the person is entitled to vote on that motion or in that election..........

and Schedule 2 Part 2, Clause 2 (6) which provides as follows:

2 Persons entitled to vote at general meetings
(6) Notwithstanding any other provision of this Act, at a general meeting of the body corporate a person shall not be entitled to vote in respect of—
(a) any motion other than a motion which to be effective must be passed by unanimous resolution or resolution without dissent; or
(b) the election of the chairperson, secretary or treasurer of the body corporate or the other members of the committee;
unless—
(c) all contributions levied and due and payable at least 30 days before the meeting in respect of the lot in respect of which the person is entitled to vote; and
(d) any other moneys recoverable under this Act by the body corporate from the person or the proprietor of the lot at the date of the notice given under section 1(4); have been duly paid before the commencement of the meeting...................

For the above reasons I have decided to dismiss the application.