Mawson Place [2010] QBCCMCmr 52 (9 February 2010)

Last Updated: 23 March 2010

REFERENCE: 0743-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	26664
Name of Scheme:	Mawson Place
Address of Scheme:	10 Mawson Place FOREST LAKE QLD 4078

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

Andrej Skalina, the Owner of lot 8

I hereby order that the Extraordinary General Meeting of 13 July 2009 is void for irregularity. I further order that, in all other respects, the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0743-2009

“Mawson Place” CTS 26664

APPLICATION

This is an application by the owner of lot 8, Andrej Skalina (the Applicant), against the Body Corporate for Mawson Place (the Respondent), seeking orders to declare invalid, certain body corporate approvals for specific items of expenditure which the Applicant claims were not legitimate body corporate expenses. The Applicant seeks reimbursement by the owner/s concerned back to the body corporate for such expenses.

The expenses which the Applicant argues should not have been met by the body corporate are as follows:

1. Approval/decision of the body corporate dated 19 August 2008 to pay $1,250 out of the sinking fund for the replacement of floor covering in a bedroom within lot 5.
2. Approval/decision of the body corporate committee chairperson to pay $115.50 out of the administrative fund for plumbing services at lot 3 (paid on 6 April 2009).
3. Approvals/decisions of the body corporate to pay in total $3,205.07 (covering two invoices for $459.25 (paid on 11/06/08) and $2,745.82 (authorised at EGM of 17/06/08; paid on 19/06/08)) out of the sinking fund for plumbing and concreting works carried out within the boundaries of lots 5 and 6.
4. Approval/decision of the body corporate to pay $165 out of the sinking fund for additional roof cleaning work allegedly carried out within the roofs of lots 5 and 6 (paid on 30/06/08).
5. Approval/decision of the body corporate committee chairperson and secretary to pay $439.14 out of the administrative fund for the purchase of alcohol for the chairperson, which payment is described as “Reimbursement for Grounds Maintenance” (paid on 19/12/08).
6. Approval/decision of the body corporate, or the chairperson and the secretary, to pay $220 out of the administrative fund for “Repair of hole between lots 5 and 6” within the boundaries of the lots in question (paid on 12/10/07).
7. Approval/decision of the body corporate, or the chairperson himself, to pay $194.94 out of the sinking fund for “Repair of Water Leak” allegedly carried out within the boundaries and inside the house of lot 3 (paid on 18/12/08).
8. Approval/decision of the body corporate, or the chairperson himself, to pay $440.00 out of the sinking fund for “Repair of blockage in storm water drain” allegedly carried out within the boundaries of lot 6 (paid 22/02/09).
   

In addition, the Applicant seeks certain orders with respect to the Extraordinary General Meeting of the body corporate on 13 July 2009, as follows:

1. That the EGM of 13 July 2009 be declared invalid and void.
2. The results of “Additional Motion” under Motion 6, verbally presented by the chairperson “Recission of Treasurer and Ordinary Member Position of Andrej Skalina” be declared invalid and void, and as such overturned, and that the Applicant be reinstated in the position of treasurer.
3. A new EGM be convened as soon as practicable, where all submitted motions can be dealt with in a proper prescribed manner.
   

The grounds to the application are to the effect that:

JURISDICTION

“Mawson Place” was registered as a building format plan of subdivision on 5 March 1999 comprising 8 lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module).

This is a dispute between the owner of lot 8 and the body corporate and comes within the dispute resolution provisions of the Act (see sections 226, 227 & 228).

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 community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

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

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to the body corporate, care of the chairperson, Ms Christine Weber, for distribution to the owners of all lots (excluding the Applicant) and the Committee, with an invitation to respond to the matters raised in the application.

Submissions from owners of 4 lots were received, as well as a submission from the Committee.

The Applicant exercised his right to inspect the submissions made and responded to them.

DETERMINATION

Part A – First Eight Orders Sought

Boundaries of Lots and Common Property

This scheme was created on the registration of Survey Plan 108689, a building format plan of subdivision. The boundaries of each lot are determined by reference to the survey plan, the Land Title Act 1994, and the Registrar of Titles Directions for the Preparation of Plans. A building format plan “defines land using the structural elements of a building, including, for example, floors, walls and ceilings”[1]. Boundaries that are not defined by structural elements must be dimensioned.

For this scheme, each of the lots shown on the survey plan includes a private yard and all lots share a wall with at least one other lot. Generally, the boundary of each lot is the centre of the common wall and extends to include the dimensions of the private yard. The scheme land outside each lot is common property.

Compliance with s.242 time limit

In respect of the first 8 orders sought by the Applicant, a preliminary question arises as to compliance with the time limit prescribed in section 242 of the Act. Section 242 requires an application for an order declaring void a resolution of the committee to be made within three months of the relevant meeting. In this case, the committee approvals which the Applicant complains of span a period from October 2007 to April 2009. This adjudication application was lodged by the Applicant on 7 August 2009, almost two years from the first approval complained of and four months from the last. I understand that the Applicant also lodged a conciliation application, on 29 April 2009, but that an agreement which was purportedly reached as a result has since broken down, resulting in the current adjudication application. The expenses the subject of the second and eighth orders sought only were therefore incurred within three months of the conciliation application being lodged.

In such circumstances, section 242 of the Act provides that the Commissioner must deal with the application as if the making of the application complied with the section and an adjudicator to whom the application is referred may, for good reason, waive the non-compliance.

Any examination of whether the time limit should be waived involves consideration of the following statement made by Judge Dodds in the appeal of Weeks v. Commissioner for Body Corporate (Maroochydore District Court Appeal 13/99), at pages 4 and 5 of the judgment, “... the objects of the Act, for instance section 5(a) and (h) militate against too strict or legalistic a view about good reason for waiving non-compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the
adjudicator that the time limit should be waived in all the circumstances.”

The applicant explains the delay in lodging the adjudication application with respect to the first eight orders sought in an email to this office dated 14 August 2009, as follows:

• The Applicant believes that, within the documentation forming and supporting his adjudication application, he has demonstrated his continuous approach to get the individual matters right, through his:
  • Repeatedly raising objections against specific incorrect body corporate decisions and/or approvals, when appropriate;
  • Voting against such decisions and/or approvals, in cases when voting by the lot owners was called for; and
  • Communicating those objections and “No” votes to the body corporate and its committee, via Stansure Strata, the then body corporate manager (BCM).
• The Applicant’s objections and “No” votes were ignored and in most cases, not even responded to. Such a negative approach adopted by both the committee and the manager continued for at least the last two to three years. For that reason, the Applicant submitted a conciliation application on 29 April 2009 which resulted in an agreement, which he alleges has been breached and ignored.
• Given the subject matter of the application and its honest aims to right the wrongs for the benefit of all lot owners and the body corporate as a whole, he asks that the time limitation be waived.
  

With regard to the first two factors mentioned by Judge Dodds, in my view, the period of delay in the Applicant lodging his application (almost two years from the first approval complained of and four months from the last) is significant, especially in circumstances where body corporate funds have been expended, in most instances complained of, in previous financial years and new budgets for the administrative and sinking funds have been adopted since then. Further, I do not regard the Applicant’s stated reasons for the delay in lodging the application as satisfactory. In circumstances when the Applicant claims that him voting “No” to motions put to owners and raising objections with the committee and BCM were ignored, it would appear to me that this would increase the need for an application to be lodged in a timely manner, rather than defer it.

Considering the final two factors Judge Dodds mentions, namely, the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought, I again note that body corporate funds have been expended, in most instances complained of, in previous financial years and new budgets for the administrative and sinking funds have been adopted since then. I further note that ownership of some of the lots has changed during the period covered by the expenses the Applicant objects to.

Most significantly, it appears to me that the objections the Applicant raises in relation to all of the orders sought (with the exception of number 5) are based on incorrect information. In relation to the sixth, seventh and eighth orders sought, the Applicant provides no supporting documentation whatsoever, other than a highlighted entry in a ledger or expense account maintained by the previous body corporate manager. In his grounds to the application, the Applicant makes much of the complex being “of standard format” and that the expenses he’s objecting to relate to individual lots and not common property. However, as detailed above, Mawson Place is registered as a building format plan of subdivision, not a standard format plan of subdivision. The scheme is regulated by the Standard Module. The Applicant concedes this throughout other parts of the application.

The body corporate is obliged to maintain common property in good condition (section 159(1), Standard Module) and owners are required to maintain their lots in good condition (section 170(2), Standard Module). Section 159(2) of the Standard Module places some additional responsibilities for maintenance on the body corporate in the case of schemes registered as building format plans of subdivision. For example, the body corporate is responsible for maintaining in good condition railings, parapets and balustrades on the boundary of a lot and common property; doors, windows and associated fittings situated in a boundary wall separating a lot from common property and roofing membranes that are not common property but that provide protection for lots or common property. In addition, the body corporate is required to maintain foundation structures, roofing structures providing protection and essential supporting framework, including load-bearing walls, in a structurally sound condition. In the case of schemes registered as standard format plans of subdivision, these responsibilities fall to the relevant lot owner/s rather than the body corporate.

In addition, it appears to me that the Applicant is ignorant of the legislative provisions relating to the responsibility for the maintenance of utility infrastructure in community titles schemes. Utility infrastructure means pipes, cables, wires, sewers, drains, plant and equipment which supply lots or the common property with a utility service (e.g. water supply, gas or electricity supply, a telephone service or a sewer system). The common property for a community titles scheme (which the body corporate is responsible for maintaining in good condition) includes all utility infrastructure except for utility infrastructure that supplies a utility service to only one lot, is within the boundaries of the lot and is not within a boundary structure for the lot. Only if all three criteria are met, will the utility infrastructure not be considered common property and the lot owner will be responsible. Of the expenditure complained of by the Applicant, I consider that the expenditure the subject of the second, third and forth orders sought relates to common property utility infrastructure for which the body corporate is responsible.

The expenditure the subject of the first order sought, $1,250 to replace floor covering in a bedroom of lot 5, is explained in the submission by the owners of lot 6 as being necessary as the result of water damage caused by inappropriate storm water drainage between the main building and garage which they believe to be common ground and body corporate responsibility. The insurance policy held by the owners of lot 5 would not cover the damage. It appears to me that the reason the floor covering had to be replaced in a bedroom of lot 5 was because of water penetration that resulted from a fault in common property utility infrastructure for which the body corporate was responsible. It is likely that this is the reason the damage was not covered on the individual owner’s insurance policy.

The only order sought by the Applicant in Part A of his application which I believe has any merit at all is the fifth order sought, by which the Applicant challenges the approval/decision of the body corporate committee chairperson and secretary to pay $439.14 out of the administrative fund for the purchase of alcohol for the chairperson, which payment is described as “Reimbursement for Grounds Maintenance” (paid on 19/12/08). Rather than seeking reimbursement of personal expenses which are completely unrelated to the body corporate, the chairperson should simply have submitted an invoice for his work on grounds maintenance for payment by the body corporate. Given that no-one disputes that the chairperson rendered services to the body corporate which included gardening, mowing, light maintenance, bulb replacements, etc, and that he deserved to be paid for those services, I do not intend to make any orders in this regard, especially given the time which has elapsed between the making of the payment and the lodging of this application.

The Applicant has failed to persuade me that any of the expenses he complains of are not legitimate body corporate expenses. I am of the view that this part of the application is, in large part, misconceived and without substance. In all of the circumstances, including the length of time which has elapsed between the incurring of the expenses the subject of all but two of the orders sought and the lodging of this application, I feel compelled to dismiss this entire part of the application.

Part B – Three Orders Sought in Relation to EGM of 13 July 2009

The Applicant seeks an order that the EGM of 13 July 2009 be declared invalid and that a new EGM be convened as soon as possible. The Applicant also seeks a specific order that Motion 6 (Recission of Treasurer and Ordinary Member Position of Andrej Skalina) which he states was verbally presented by the chairperson at the meeting, be declared invalid and void, and as such overturned, and that the Applicant be reinstated in the position of treasurer.

The Applicant’s grounds in respect of these orders sought as are follows:

• At the EGM, the chairperson simply minuted the Applicant being rescinded from the position of treasurer, without any due process, without giving a single reason or example of him breaching the Code of Conduct and without any due voting process. It was not supported by a motion or voting paper. In breach of sections 34 and 35 of the Standard Module, the Applicant was not given any written notice or any opportunity to respond.
• The EGM was convened while in breach of the relevant provisions of the Act and Standard Module.
• The minutes of the EGM incorrectly refer to the meeting as being “Minutes of Body Corporate Committee”.
• The meeting was an EGM with its primary purpose to vote on motions as presented. The chairperson refused to distribute motions with the Notice of EGM, so the Applicant provided hard copies of motions and voting papers at the beginning of the meeting, straight after the chairperson opened it.
• In breach of sections 69, 70, 71, 72, 73 and 76 of the Standard Module, the chairperson/secretary refused to include the Applicant’s properly prepared and submitted motions, voting paper and explanatory notes on the EGM agenda and attach same to the Notice of the EGM, rendering the EGM and decisions, or otherwise, invalid and void.
• The minuted outcome under Motion 10 states “Motion declined. Motion superseded by Motion 13”. However, there has been no Motion 13 minuted.
• The minutes do not contain any reference to the information the Applicant presented owners with, which included plans, and information he obtained from fact sheets provided by this office.
• The Applicant suggested that the chairperson update the minutes, but the Applicant has not received any updated or corrected copy.
• The minutes, in breach of section 96 of the Standard Module, do not represent a full and accurate record of the EGM proceedings and, in parts, the minutes are not true.
  

The submissions made in response to the last three orders sought are scant. The owners of lot 5 simply state that due to the actions of the Applicant, it has been deemed that the owners are not able to run the complex themselves. A meeting was attended by the owners of lots 2, 5, 6 & 7 on 12 September 2009 with Mr Trevor Matthews of Matthews Real Estate with a view to him becoming body corporate manager for the scheme. Mr Matthews is in the process of calling for a formal EGM. Whether the Applicant should be reinstated as treasurer should be tested under the management of Matthews Real Estate. Should the decision be that the Applicant is not voted back on to the committee in any capacity then this should be recognised as final by this Office. It is further stated that all owners present at the EGM of 13 July 2009 were in agreement that the Applicant should be removed from his position on the committee.

The owner of lot 7 comments that when a new body corporate management company commences, the entire committee will be terminated, new nominations will be called and voting by all lot owners can occur to resolve any outstanding issues. The owners of lot 6 comment that to their understanding, the EGM was conducted in the appropriate manner and all decisions were noted as per the minutes.

I have perused the minutes of the meeting that occurred on 13 July 2009 in some detail and note the following:

• Contrary to the Applicant’s assertion, it was documented in the minutes that the Applicant had presented each lot owner with a pack of documents, including eleven specified inclusions.
• It appears as though the Applicant sent an email dated 20 June 2009 to various owners purporting to seek to have included five motions (in addition to three he claims he had already submitted) on the agenda of the EGM. The minutes state that these motions had not been submitted to the chairperson prior to the meeting, however, each of them appears to have been discussed at the meeting and an outcome recorded.
• The minutes do refer to the meeting being a committee meeting rather than an EGM.
• The results of voting on motions has not been recorded in accordance with section 93(2) of the Standard Module in that the number of votes for and against each motion, or any abstentions have not been recorded. This also renders the minutes to be in breach of section 96 of the Standard Module as not being full and accurate, as defined in section 96(3).
  

A motion for consideration at a general meeting of the body corporate may be submitted at any time by a member of the body corporate and it must be included on the next general meeting agenda on which it is practicable to include the motion (section 69, Standard Module). It appears as though the Notice of EGM was prepared on 19 June 2009, prior to the Applicant notifying the chairperson of an additional five motions he wished to have included. I cannot therefore find fault with the omission of those additional five motions from the EGM agenda. I have not been informed as to when the Applicant submitted the first three motions he refers to so cannot make any determination as to whether or not those three motions were or were not appropriately excluded from the agenda. In any event, however, it appears as though the Applicant’s motions were considered at the meeting by those present. I am therefore not prepared to invalidate the meeting on the basis of this alone.

However, the Notice of EGM itself appears to be defective in that the text of each motion to be considered was not stated in the voting paper attached to the Notice, in contravention of section 71 of the Standard Module. Section 87(5) of the Standard Module provides that a general meeting may pass a resolution on a motion only if the motion is included as an item of business on the general meeting’s agenda and stated in the voting paper accompanying the notice of the meeting. This, it appears to me, is the major problem with the EGM and, I find in combination with the irregularities I identified above, significant enough to compel me to declare it invalid. Having said this though, I wish to commend the body corporate on its efforts to move forward in a very difficult situation – the termination of their contract with their body corporate manager, by the body corporate manager, which was allegedly due to the actions of the Applicant.

The Applicant has advised that the body corporates’ end of financial year is 28 February and that the AGM is usually held shortly after that date. In such circumstances, I cannot see any point in ordering, as the Applicant desires, that an EGM be called as soon as possible. Given that the end of financial year is near, owners will have an opportunity to submit agenda items for consideration at the AGM and nominate for committee membership. Owners should use the AGM as an opportunity to address any issues not resolved by the making of this determination.

Given that I intend to order that the EGM of 13 July 2009 is void for irregularity, it is unnecessary for me to make the second order sought by the Applicant in Part B of his application, that he be reinstated to his position as treasurer. However, the Applicant should note that section 33(2)(f) of the Standard Module provides that a committee member’s position becomes vacant if they are removed from office by ordinary resolution of the body corporate. This section operates independently of sections 34 and 35 of the Standard Module which make provision for the body corporate to remove a voting member of the committee for a breach of the Code of Conduct. Provided the body corporate passes an ordinary resolution that a committee member be removed from their position, that is all that is required. There is no need to provide any reason or for the member to have committed a breach of the Code of Conduct first. Given that the AGM will be held in the near future, it seems futile for the body corporate to call an EGM before the AGM. At the AGM, owners can elect a new committee in any event.

Possibility that application is frivolous and vexatious

A number of the submissions made in response to this application suggest that it is frivolous and vexatious. The former body corporate manager is stated to have terminated their contract to provide body corporate management for the scheme due to inappropriate correspondence from the Applicant. One owner comments that “there’s no way that any of us want to continue dealing with Mr Skalina’s repeated and numerous demands”. The owners of lot 5 go so far as to request “restitution” from the Applicant, seeking compensation for their costs in responding to the application.

There is support for the notion that an excessive or oppressive volume in itself could render an application to be of a vexatious nature. This application was certainly very lengthy especially considering its lack of substance. However, the same criticism could be made against the owners of lot 5, whose submission was even more lengthy.

While I have found very little merit in this application, determining that Part A was largely misconceived and without substance, the Applicant has raised some legitimate concerns with the validity of the EGM of 13 July 2009. For this reason, I have not dismissed the application under section 270(1)(c) of the Act. I therefore cannot order costs against the Applicant.

ORDER

For these reasons I have made the order above.

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[1] Section 48C (1), Land Title Act 1994.