Adams [2010] QBCCMCmr 89 (25 February 2010)

Last Updated: 23 March 2010

.REFERENCE: 0917-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20511
Name of Scheme:	Adams
Address of Scheme:	QUEENSLAND

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

Anita Sibley, the Owner(s) of lot 13

I hereby order that the application for an order: That Strata & Community Management Services (Frank O’Donnell) [sic] be given authority to hold an EGM of Adam CTS 20511 to elect a new committee for all concerned. That Frank O’Donnell [sic] be appointed as administrator to hold an EGM and vote to put in place a committee of Strata Management. is dismissed. I further order that pending the 2010 Annual General Meeting of the Body Corporate for Adams and unless a new Body Corporate Committee is elected at a valid general meeting conducted after the date of this order, the Body Corporate Committee shall comprise of the individuals purportedly elected to the Body Corporate Committee at the purported Extraordinary General Meeting of the Body Corporate for Adams dated 9 October 2009.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0917-2009

“Adams” CTS 20511

The Adams community titles scheme 20511 (“Adams”) consists of 14 lots and common property. The community management statement (“CMS”) for Adams 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 Group Titles Plan 2418.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (“Act”), this application was made by Anita Sibley, owner of Lot 13 (“the applicant”) on 25 September 2009. The applicant sought a declaratory order in the following terms:

That Strata & Community Management Services (Frank O’Donnell) [sic] be given authority to hold an EGM of Adam CTS 20511 to elect a new committee for all concerned.

That Frank O’Donnell [sic] be appointed as administrator to hold an EGM and vote to put in place a committee of Strata Management.

PROCEDURAL MATTERS

Under section 243 of the Act, a copy of the application was provided to the body corporate, with an invitation to the Body Corporate Committee (“the committee”) and all owners to respond to the matters raised by the application. Submissions were made by the respondent. The applicant inspected the submissions received and made a written reply.[1]

MATTERS IN DISPUTE

The application relates to the applicant’s request to have an administrator appointed to call an Extraordinary General Meeting (EGM) to elect a new committee. The facts of the dispute, as outlined in the application, submissions and reply to submissions, can be summarised as follows.

At the Annual General Meeting (AGM) dated 13 June 2009, the applicant was elected as chairperson, secretary and treasurer of the committee and Michele Woods was elected as an ordinary committee member. No other individuals were elected to the committee. In addition, it was voted at the AGM to increase the levies for the scheme. It is alleged that this increase was to pay for garden maintenance of $9500 which was spent in the previous year.

On 19 July 2009, an EGM was requisitioned by the owners of 8 out of 14 lots, to remove the current committee and elect a new committee. On 23 July 2009 correspondence was sent to all owners informing them that the cost of this EGM would be $450. Subsequently, four lot owners withdrew their support for the EGM.

On 10 August 2009 the applicant stood down from the committee. On 11 August 2009, the Body Corporate Manager, Strata & Community Management Services Pty Ltd (SCMS) sent correspondence to all owners stating that “for the meeting (the requisitioned EGM) to be called an owner will have to make an application to the Office of the Commissioner for Body Corporate & Community Management to give authority to Strata & Community Management Services Pty Ltd to convene the meeting as additional fees and charges will apply”.

An EGM was held on 9 October 2009, where a new committee was elected consisting of six committee members (one of whom was existing committee member Michele Woods). The voting papers and corresponding information regarding this EGM seem to indicate that the EGM was authorised by Michele Woods (in her capacity as a committee member) and primarily organised by Roy Roberts (the spouse of a lot owner within the scheme). The applicant states that the EGM was not held in accordance with the legislation and consequently there is no functioning or valid committee within the scheme. Consequently, the applicant wants Frank O’Donnell of SCMS appointed as an administrator for the scheme to call an EGM to elect a new committee.

Submissions were received from Mr Daniel Diprose and Mrs Kim Baker (Co-owners of Lot 2), supporting the application generally. In addition, a submission was received from Mr Svend Pedersen (owner of Lot 6), neither opposing nor supporting the application, but wanting matter resolved as soon as possible.

Submissions were also received from Mrs Gillian Roberts (Owner of Lot 9), Ms Kelly Potter (Owner of Lot 8), Ms Jade Pippin (Owner of Lot 10) opposing the application. These owners made the following comments:

• The EGM was requisitioned because lot owners were unhappy with the increase in levies.
• When the requisitioned EGM was not held Mr Roberts called and held his own EGM. This involved getting the only member of the committee to sign a copy of the proposed meeting minutes and sending out voting papers.
• The EGM was held on 9 October 2009. Out of 14 lot owners, 8 sets of voting papers were received. A new committee was elected.
• An auditor needs to be appointed to audit the body corporate records.
• An order is needed declaring the engagement of SCMS, the current body corporate manager, to be terminated.
• There is no longer a need for an administrator to be appointed as an EGM has already been held and a committee appointed.
• Frank O’Donnell can not be considered as an administrator for the scheme as he is not impartial.
• The key issue here is that Anita Sibley awarded a gardening contract to her son without proper body corporate approval.
  

In addition, Gillian Roberts included a letter from Roy Roberts nominating himself as administrator for the scheme, should an administrator be appointed.

Further, a submission was received from the Body Corporate Management Company, SCMS. An adjudicator has wide investigative powers and discretion under the Act when making an order.[2] Accordingly, despite not being directly invited to make a submission, I have decided to consider the information provided by SCMS as set out below:

• SCMS did not have authority to call the requisitioned EGM without due authorisation from the body corporate as additional fees would apply.
• The only way Michele Woods could have authorised the requisitioned EGM is in accordance with section 68 of the Standard Module and there is no documentation to suggest that this had happened. In fact, Roy Roberts called the EGM.
• Additional motions were included in the EGM dated 9 October 2009 which were not previously included in the agenda of the requisitioned EGM.
• The minutes of the EGM are not sufficient.
• There was no quorum for the EGM as only the owners of Lots 8, 9 and 10 and R Roberts were present.
• The motion (motion 1) appointing members of the committee is not valid as one lot owner nominated persons for all of the committee positions.
• As the formation of the committee is by election, it can not be conducted as a single motion to be voted on.
• Motions 2-12 of the EGM are invalid as they were not requested as part of the requisitioned EGM.
  

In reply to the submissions received, the applicant made the following comments:

• People were always encouraged to join the committee, but chose not to.
• In good faith, I have endeavoured to serve the body corporate on the committee.
  

INVESTIGATION

On 10 February 2010 I instructed a member of this Office to contact SCMS and request a copy of the 2009 AGM minutes.[3] On 11 February 2010 SCMS forwarded the 2009 AGM minutes to our Office along with a covering letter which stated that “after a meeting of the Directors of Strata & Community Management Services Pty Ltd any consent relating to acceptance of being appointed as an Administrator for the scheme is revoked”.

JURISDICTION

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[4] 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 -

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

(ii) 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.[5] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[6]

DETERMINATION

The key issue for consideration in this matter is whether it is appropriate in the circumstances to appoint an administrator to call an EGM to elect a new committee. The applicant states that Frank O’Donnell should be appointed as the administrator for the scheme as there is no functioning or valid committee.

Validity of the committee

At the AGM dated 13 June 2009, the applicant was elected as chairperson, secretary and treasurer of the committee and Michele Woods was elected as an ordinary committee member. No other individuals were elected to the committee. Section 9(3) of the Standard Module states that the committee must consist of the ‘required number’ of voting committee members. The dictionary of the Standard Module defines the ‘required number’ of voting committee members as at least three, but not more than seven, voting committee members.[7] Therefore, it is questionable whether the committee as elected at the 2009 AGM was a valid committee.

On 19 July 2009, an EGM was requisitioned by the owners of 8 out of 14 lots, to elect a new committee. Section 67 of the Standard Module states that an EGM must be called if a notice asking for an EGM to consider and decide motions is signed by the owners of at least 25% of all the lots in the scheme. Further, the EGM must be called within 14 days after the notice is given and held within six weeks.

On 23 July 2009 correspondence was sent to all owners informing them that the cost of this EGM would be $450. Subsequently, four lot owners withdrew their support for the EGM. Despite the loss of support from four owners, the remaining four owners still made up more than 25% of all the lots in the scheme. As section 67 of the Standard Module states that an EGM must be called if a notice asking for an EGM is signed by the owners of at least 25% of all the lots in the scheme, I question why the requisitioned EGM was not called and held within the legislative timeframes.

In any event, on 10 August 2009 the applicant stood down from the committee, leaving Michele Woods as the only purported committee member. Clearly, at this point there was no valid committee.[8] Consequently, the applicant lodged this dispute resolution application seeking the appointment of Frank O’Donnell as administrator for the scheme.

Should an administrator be appointed?

As stated by Adjudicator Schmidt[9] “an order appointing an administrator for a scheme is not made lightly. Generally, to be successful in an application for the appointment of an administrator, an applicant must demonstrate that the day-to-day administration of the body corporate has broken down irretrievably, and/or that the affairs of the body corporate are in such disarray as to warrant the appointment of an administrator.”

Therefore, in determining whether to appoint an administrator, it is necessary to examine whether the administration of the body corporate has broken down irretrievably or is in significant disarray such that the appointment of an administrator is necessary to put the body corporate back on a proper legal footing.

While I note that at the time of lodgement of this application, the scheme had no functioning committee and appeared to be approaching a state of disarray; since the lodgement of this application the body corporate has held an EGM, dated 9 October 2009, wherein a new committee was purportedly elected. While I note there are numerous concerns regarding the validity of the EGM, it appears that by holding the EGM the body corporate is attempting to regain a functioning committee. This is an important consideration given the fact that self-management is an inherent aspect of community titles schemes.

Further, there is no evidence that the scheme to date has not met its legislative obligations including the payment of insurance, the setting of budgets and the issuing of levies. In fact, an AGM was held on 13 June 2009 wherein all of these issues were addressed. Therefore, it appears that the body corporate is largely functioning on a proper legal footing, save some confusion regarding the committee. Accordingly, I am reluctant to order the appointment an administrator for the sole purpose of electing a committee. This is particularly the case, given that the body corporate has already attempted to elect a committee at the EGM dated 9 October 2010.

In addition, when determining whether to appoint an administrator, consideration needs to be given to the fact applicant’s nominated administrator, Frank O’Donnell of SCMS, has withdrawn his consent to be appointed as an administrator for the scheme.

Therefore, considering the circumstances of the scheme as a whole (including the need for self-management as well as the fact that Frank O’Donnell has withdrawn his consent to be the administrator for the scheme), I feel it is appropriate to deem the committee as elected at the purported EGM dated 9 October 2009 to be a valid committee. This will enable the body corporate to function in accordance with the legislation pending their upcoming AGM which I understand is due to be held around May/June.

Accordingly, I am ordering that pending the 2010 Annual General Meeting of the Body Corporate for Adams and unless a new Body Corporate Committee is elected at a valid general meeting conducted after the date of this order, the Body Corporate Committee shall comprise of the individuals purportedly elected to the Body Corporate Committee at the purported Extraordinary General Meeting of the Body Corporate for Adams dated 9 October 2009.

Additional outcomes sought by owners

I note that a number of owners have sought additional outcomes in this application such as:

• The auditing of body corporate records;
• The return of body corporate records;
• The validity of the EGM dated 9 October 2009;
• The validity of motions considered at the EGM dated 9 October 2009;
• The appointment of Roy Roberts as administrator for the scheme;
• As well as numerous issues regarding the Body Corporate Managers, SCMS.
  

As stated above, because this application only concerns whether or not Frank O’Donnell of SCMS should be appointed as administrator for the scheme to call an EGM to elect a new committee, I am unable to consider any additional concerns raised, or outcomes requested, in this application. If a lot owner has concerns regarding any of the above issues, they are at liberty to lodge a dispute resolution application with our Office. However, as these issues are not part of the outcomes sought in the present adjudication application, I have not considered these issues further.

In addition, I note that the body corporate is due to hold their next AGM around May/June 2010. Many of the issues raised above can and should be considered at the upcoming AGM. All owners have the opportunity to submit motions to the AGM to be considered by the body corporate and I would encourage owners to take advantage of this opportunity.

Moreover, I would encourage owners wishing to inform themselves as to their rights and responsibilities under the body corporate legislation, to contact the Information Service of the Commissioner’s Office on freecall 1800 060 119, or view our range of factsheets, forms and guides online at www.justice.qld.gov.au/bccm .

CONCLUSION

For these reasons, I consider it appropriate to make the orders as set out above.

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[1] See sections 246 and 244 of the Act respectively.
[2] See section 271 of the Act.
[3] See the investigation powers of an adjudicator pursuant to section 271 of the Act.
[4] See sections 227, 228, 276 and Schedule 5 of the Act.
[5] Section 276(2) of the Act.
[6] Section 284(1) of the Act.
[7] Sections 29 – 32 of the Standard Module deal with the situation where the total number of voting committee members elected at an AGM is fewer than three. In this instance, the body corporate is required within one month after the AGM to call an EGM to appoint an eligible person/s to fill a vacancy on the committee so as to bring the minimum number of voting committee members to three.
[8] Section 9 of the Standard Module.
[9] Harbour Court  [2008] QBCCMCmr 41 (5 February 2008).