Zenith [2011] QBCCMCmr 20 (25 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0019-2011

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10343
Name of Scheme:	Zenith
Address of Scheme:	20 The Esplanade SURFERS PARADISE QLD 4217

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

Michael Crass, as executor of the estate of Maria Cass, the Owner of lot 30

I hereby order that the application for an order that the Committee not take any further action until a final order is made on this matter is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0019-2011

“Zenith” CTS 10343

“Zenith” community titles scheme 10343 (Zenith) consists of 91 lots and common property. The Community Management Statement (CMS) for Zenith indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme. Department of Environment and Resource Management records show the scheme was registered as Building Units Plan 4847 on 5 April 1982.

INTERIM APPLICATION

This is an application for interim orders lodged by Michael Cass on behalf of Maria Cass[1], owner of Lot 30 (Applicant), on 11 January 2011 under the Body Corporate and Community Management Act 1997 (Act). The Applicant seeks an interim order against the body corporate (Respondent) in the following terms:

That the Committee not take any further action until a final order is made on this matter.

The application also seeks the following final order:

That the Committee withdraw the action in the Magistrates Court against Carefree Pty Ltd.

The Applicant has provided a copy of a claim which has been filed in the Southport Registry of the Magistrates Court by the Body Corporate against Carefree Pty Ltd as first defendant and Ronald Nicholls as second defendant (Defendants) (Reference number M10/11), seeking the sum of $15,019.23. The Applicant contends that these proceedings have not been authorised by the body corporate in general meeting and that the Committee has acted outside of their authority in initiating the proceedings. The Applicant further claims that the Committee have not, at the time the application was made, resolved to take the action.

PROCEDURAL MATTERS

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.

In the first instance the Respondent was provided with a limited opportunity to make a submission in response to the application for the interim order. A submission was received from Maxene Jackson, Secretary, for the Committee of the Respondent.

MATTERS IN DISPUTE

The Applicant contends that the proceedings which have been brought by the body corporate in the Magistrates Court have not been appropriately authorised.

The Committee made submission to the following effect:

• The Defendant of the Magistrates Court proceedings is also the tenant of the Applicant. The monies the subject of the claim were incorrectly paid to the Defendant during the Applicant’s chairmanship of the previous Committee.
• The Committee was only made aware of this dispute when it received notification from this Office, on 14 January 2011.
• The Applicant has made no effort to raise his concerns with the Committee, although he has had every opportunity to do so, having been made aware of the matters forming the subject of this dispute as early as September 2010.
• The matter only affects the Applicant’s tenant. It only affects all owners to their benefit as the monies the subject of the claim are funds that were misappropriated and belong to them.
• There are no legal fees in relation to the claim.
• The Applicant has named the Respondent as the body corporate, yet throughout the application, requests that orders be made against the Committee.
• Interim orders are for urgent matters. This is not an urgent matter as the Defendant has 28 days to respond to the Claim. An interim order is unnecessary because neither the Committee nor the body corporate can take any further action at this time.
• The Committee contends that section 42(1)(e)(iv) applies; that the proceedings instituted in the Magistrates court are a prescribed chapter 6 proceeding and that the proceedings are authorised.
• With respect to the final order sought, the Committee do not intend to voluntarily withdraw the action against the Defendant. The Committee have made numerous requests of the Defendant, who has provided the Committee with no response.
• An EGM is scheduled to be held on 4 February 2011 and a secret motion to terminate the Defendant as Caretaker and Letting Agent of Zenith is expected to pass. Time was of the essence in lodging the proceedings in the Magistrates Court at the time as the Defendant had threatened to walk off the premises without notice. Time remains of the essence as the Body Corporate have no alternative address for service and it is in the owners’ interest to recover the debt prior to the Defendant walking off the premises.
  

JURISDICTION

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: a claimed or anticipated contravention of the Act or the CMS; or the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or 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.[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.

DETERMINATION

Urgent interim relief

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 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.

Serious questions

The Applicant alleges that the proceedings initiated by the Body Corporate and currently before the Magistrates Court have not been appropriately authorised. The Committee contends that it had the authority to commence proceedings and has rightly done so.

A decision of the body corporate to commence legal proceedings needs to be made by resolution of the body corporate in general meeting or by resolution of the committee (Act 94, 100). A body corporate cannot delegate its decision making powers (Act, 97). The scheme of the legislation requires a body corporate decision specifically authorising the legal proceedings and the expenditure of the body corporate related to that legal proceeding. The body corporate has not provided me with any minuted resolution which satisfies me that the proceedings currently on foot have been appropriately authorised. The Committee did provide a copy of a resolution of 23 October 2010 “That the Committee investigate what action should be taken so as to protect the investment of the unit holders of Zenith be it either to instruct BCS to issue further notices, do an Audit on the Caretaker/Letting Agent, or instruct a solicitor to issue Breach Notices upon them” and of 10 December 2010 “That the Body Corporate engages Affinity Lawyers to prepare a Breach against Carefree Pty Ltd regarding Clause 6.1.4, 6.12.4 and 7.3 of Caretaking Agreement with costs not to exceed $4,000”. I am not satisfied that either of these resolutions is adequate to authorise the proceedings which have been commenced in the Magistrates Court.

However, the absence of a resolution specifically authorising the legal proceedings does not necessarily assist the Applicant to any great extent. This is because, as a general proposition, a body corporate may validly resolve to ratify past irregular conduct[7]. The body corporate could ratify the initiation of the proceedings by passing an appropriate resolution at some future time. Further, it is a matter for the Defendant to allege any irregularity in this regard in the Magistrates Court proceedings.

In these circumstances, I do not consider it appropriate, at this stage, to interfere with the proceedings currently on foot in the Magistrates Court. However, the body corporate may wish to provide me with copies of resolutions that authorise or ratify the initiation of those proceedings.

In my view, some investigation is required to determine whether the proceedings currently on foot have been appropriately authorised or ratified, before making a final determination in this matter.

Inconvenience from an interim order

I do not consider that an interim order is necessary to prevent serious or irreparable harm. As stated above, even if the proceedings have not been appropriately authorised, the body corporate can validly resolve to ratify past irregular conduct and the Defendant can allege any irregularity in this regard in the Magistrates Court proceedings. Further, the claim has already been filed and the costs of issuing the claim and statement of claim have already been incurred, contrary to the assertion of the Secretary that “there are no legal fees in relation to this claim”.

Conclusion

While I agree with the Applicant that it does not appear that the proceedings which have been initiated in the Magistrates Court have been appropriately authorised at this point in time by the Body Corporate, I am not satisfied on the material before me that the balance of convenience favours the making of the interim order sought.

This matter will now be investigated in accordance with the usual processes undertaken by this Office, including calling of submissions in relation to the final orders sought.

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[1] As executor of her estate.
[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] Warren v Body Corporate for Buon Vista [2007] QCA 160