Allisee [2011] QBCCMCmr 239 (3 June 2011)

Last Updated: 18 July 2011

ADJUDICATOR’S ORDER
Office of the Commissioner
for Body Corporate and Community Management

CITATION:	Allisee [2011] QBCCMCmr 239
PARTIES:	Ian Graham Ingram, co-owner of Lot 7407 (applicant) The Body Corporate for Allisee (respondent)
SCHEME:	Allisee CTS 36881 (Allisee)
JURISDICTION:	Sections 227 and 229(3)(a) of the Body Corporate and Community Management Act 1997 (Qld) (the Act), applying the BCCMA and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).
APPLICATION NO:	1149-2010
DECISION DATE:	3 June 2011
DECISION OF:	S Zeidler, Adjudicator
CATCHWORDS:	VALIDITY OF MOTION – whether Motion 5 of the Extraordinary General Meeting dated 20 December 2010 should be declared invalid. Act, s94.

ORDERS MADE:

I hereby order that the application is dismissed.

REASONS FOR DECISION
Introduction

_[1] Allisee is a staged residential development, of which stage 1, was completed in March 2007. Since this time, there have been problems with the stage 1 ‘Bushmates’ internal road surface. At an Extraordinary General Meeting (EGM) dated 15 October 2009, the body corporate considered motion 2 entitled “Replacement of Internal Road Surfacing” (Motion 2). This motion sought body corporate approval to accept an offer by Stockland Development Pty Limited (Stockland), the developer, to fund and carry out the replacement of the Bushmate road surface with a black asphalt surface on the internal roads in stage 1 and stage 2 of the development. Motion 2 failed with 43 votes in favour, 49 votes against and 49 abstentions.
_[2] Since the consideration of Motion 2, there has been division within the scheme as to whether the Bushmates internal road surface should be repaired or an alternative road surface installed.
_[3] On 24 November 2010, Stockland again offered to rectify the Stage 1 road surface by installing an asphalt surface. Motion 5 of the EGM dated 20 December 2010 (Motion 5) contained Stockland’s offer. This motion sought body corporate approval to replace the existing Bushmates gravel road surface with an asphaltic and exposed aggregate concrete surface. Further, Motion 5 sought body corporate approval to enter into a Deed of Release with Stockland. Motion 5 passed with 89 votes in favour, 56 votes against and 23 abstentions.
_[4] The applicant in this matter, Ian Graham Ingram, co-owner of Lot 7407 (applicant) disputes the validity of Motion 5. On 8 December 2010, the applicant lodged this dispute resolution application with our Office seeking an order that Motion 5 be declared invalid. The applicant’s arguments in support of his outcome sought, as well as those of the supporting and opposing submissions, are discussed below.

Jurisdiction

_[5] An adjudicator may make an order that is just and equitable in the circumstances 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.[1] An order may require a person to act, or prohibit a person from acting, in a way stated in the order. An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[2]
_[6] I am satisfied that this matter falls within the legislative dispute resolution provisions.[3]

Procedural Matters

_[7] As part of this dispute resolution application, the applicant sought an interim order that Motion 5 not be implemented pending a final order. On 20 December 2010, I made an interim order dismissing the interim application.
_[8] 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 did not inspect the submissions received or make a written reply.[4] A dispute resolution recommendation was then made referring the dispute to departmental adjudication.
_[9] Submissions were received from Graeme and Phyllis Coverdale (Owners of Lot 4403), Jon and Anne Fleming (Owners of Lots 5603 and 1203), Ronald Patterson (Owner of Lot 4406), Peter Jackson (Owner of Lot 3206), Craig and Anne Milne (Owners of Lot 6302), Michael and Karleen Sangster (Owners of Lot 7107), Conrad and Wendy Bagley (Owners of Lot 2202), Marjorie Flower (Owner of Lot 4206), Graham and Amanda Robertson (Owners of Lot 1304), Rhonda Drake (Owner of Lot 3302), Cheryl Judd (Owner of Lot 2405), Alice Brodie and Anthony Gilbert (Owners of Lot 4204), Ellis and Suzanne Niven (Owners of Lot 5302), Greg Dare and Iris Dale Hamilton-Dare (Owners of Lot 4205), Ben McDonald (Owner of Lot 3401), G Paul Hughes and Mary Wraith (Owners of Lot 5203), John and June Cummings (Owners of Lot 3201) and Philip and Jennifer Brooker (Owners of Lot 6104) opposing the application.
_[10] Further, submissions were received from Trevor McKean (Owner of Lot 3406), Hannelore Ambrose (Owner of Lot 2403), Johannes and Maria DeBeer (Owners of Lot 3405), James and Lurline Gray (Owners of Lot 2102), Peter and Denise Szep (Owners of Lot 7307), Geraldine Ingram (Owner of Lot 2406), Keith and Deirdre Paul (Owners of Lot 2106), Ronald Hamer (Owner of Lots 1501, 2305, 4201, 7105), Simon and Catherine Paice (Owners of Lot 7106), Neil Macgroarty (Owner of Lot 2503), William and Nonie Brown (Owners of Lot 5204) and Barry Wilson (Owner of Lots 2101, 4401) supporting the application.
_[11] In addition, a submission was received from James Leitch (Owner of Lot 2304) neither supporting nor opposing the application, but requesting a prompt resolution to the dispute.

Analysis

‘Implicit Resolution’ of Motion 2

_[12] The applicant says that Motion 5 is invalid as it conflicts with the ‘implicit resolution’ of Motion 2. In this regard, the applicant argues that Motion 2, once defeated, implicitly required the road to be repaired with the Bushmates product. In support of his assertions, the applicant refers to several pieces of correspondence such as:

1. A note from the Body Corporate Manager on the scheme’s intranet site dated 23 September 2009 stating, “just to clarify one question – if the Motion outcome was NOT to replace the current Bushmates surface with bitumen, then Stockland will re-do the Stage 1 Bushmates surface”;
2. A letter from the committee to all owners dated 13 August 2009 stating that Stockland “would replace both stage 1 and 2 Bushmates road surfaces with standard bitumen roads or completely redo stage 1 Bushmates surface to achieve the quality standard of stage 2”; and

100. A letter from the committee to all owners dated 15 October 2009 (post the consideration of Motion 2) stating, “the vote was quite close – with the vote deciding to retain the Bushmates surface and repair Stage 1 road”.

_[13] While I note the applicant’s arguments, Motion 2 does not make mention of any alternative to repair the Bushmates surface. Rather, Motion 2 only seeks body corporate authorisation to replace the Bushmate road surface with a black asphalt surface. Accordingly, I am not satisfied that Motion 2 contained any ‘implicit resolution’ that, if defeated, would require the body corporate to resurface the road with the Bushmates product.
_[14] In addition, while there may be correspondence from the committee and/or Stockland indicating that the failure of Motion 2 would lead to the Bushmates surface being repaired, such correspondence does not amount to a valid decision of the body corporate. Rather, body corporate decisions can only be made by either the committee at committee meetings or owners at general meetings. No evidence has been provided to indicate that the body corporate or the committee made a resolution to repair the Bushmates road surface. However, it should be noted that even if the committee had passed a resolution to repair the Bushmates road surface, it would have been rendered ineffectual by the subsequent passing of Motion 5. Consequently, I am not satisfied that Motion 2, or any correspondence regarding Motion 2, amounted to an ‘implicit resolution’ which required the body corporate to resurface the road with the Bushmates product.
_[15] If owners wanted the body corporate to consider a motion to repair the road with the Bushmates surface, they were at liberty to submit such a motion to a subsequent EGM.[5] As Motion 2 was considered on 15 October 2009 and Motion 5 was not considered until 20 December 2010, there was a period of more than 12 months within which such a motion could have been considered by owners.

Deed of Release

_[16] Further, the applicant disputes the validity of Motion 5 due to the inclusion of the Deed of Release in the motion. Specifically, the applicant argues:

1. The Deed of Release cannot be agreed to by way of an ordinary resolution. Rather, item 4 (Release and Indemnity) and item 6 (Confidentiality) of the deed require a resolution without dissent.
2. The Deed of Release was amended by the committee after the notice of meeting was distributed to owners. In amending the deed, the committee have altered Motion 5 from that considered by owners and therefore the motion should be declared invalid.

_[17] Motion 5 was passed by an ordinary resolution. While I note the applicant’s claims that clauses 4 and 6 of the deed require a resolution without dissent, the applicant has provided no evidence to support his views on this matter. Further, there is no provision in the Act or Accommodation Module which requires the passing of a resolution without dissent prior to the body corporate entering into such a deed. Accordingly, I am not satisfied that Motion 5 is invalid on this basis.
_[18] I refer to the applicant’s claim that the amendment of the Deed of Release (after the notice of the EGM was distributed to owners) constitutes an alteration of Motion 5. Whether or not the committee have amended the Deed of Release post the body corporate’s consideration of Motion 5, is not a question which affects the validity of Motion 5. Rather, it is a question which may or may not affect the validity of the amended deed.[6] Accordingly, I am not satisfied that Motion 5 is invalid on this basis.

Owners Misled or Influenced by the Committee

_[19] The applicant and Geraldine Ingram say that the committee misled or influenced owners in relation to Motion 5. Specifically, these parties raise the following arguments:

1. Firstly, the applicant argues that the committee misled owners regarding the requirement to enter into a Deed of Release as part of Motion 5. In this regard, the applicant says that the committee contacted a number of owners, lobbying for votes, but did not advise owners they had to sign a Deed of Release. Consequently, the applicant says a number of owners were misled into voting for Motion 5 and wished to change their vote once they found out about the Deed of Release. As evidence of this assertion, the applicant refers to letters from Greg and Lilly Ford (Owners of lot 6204), Bill and Nonie Brown (Owners of lot 5204) and Marie Roberts (Owner of lot 2201).
2. Secondly, the applicant says that the committee attempted to influence the outcome of Motion 5 by posting comments on the intranet such as “firstly could I thank the large number of owners who have voted and overwhelmingly supported your Committee, 100% at the latest count this morning, in our endeavours to get a satisfactory Internal Road surface for Allisee” (dated 8 December 2010).

100. Thirdly, Ms Ingram says that the committee made a number of unsubstantiated and misleading claims in the explanatory note of Motion 5. For example, the explanatory note says that some of the benefits of the new road surface include, “reduced clearing costs and pump maintenance”, “no loose gravel migrating to basements and sumps which cause premature wearing of pump impellers” and “reduced OH&S liabilities and insurance risk from an unstable surface”. Ms Ingram says that no evidence has been provided to suggest that cleaning costs and pump maintenance costs can be reduced. Further, Ms Ingram says that no evidence has been provided to suggest that the garage sump pumps were being damaged by gravel from the road or that insurance risks will be reduced if the surface of the road is changed.

_[20] There is nothing in the Act which prevents an owner and/or the committee from lobbying or seeking support from owners for their desired outcome. However, an owner and/or the committee are not allowed to mislead voters into supporting their particular cause. Before a motion can be overturned on the basis of misleading information it must be shown that owners were actually misled by the information presented. Further, it must be demonstrated that sufficient owners were misled to have changed the outcome of the voting.[7]
_[21] I refer to the applicant’s claim that owners were misled regarding the requirement to enter into a Deed of Release as part of Motion 5. While the applicant has produced letters from three owners expressing their general dislike for the bitumen road and/or the deed of release, there is nothing in these letters which indicates that the owners were misled or unduly influenced by the committee to vote in favour of Motion 5. In fact, after reviewing the voting tally sheet for the EGM dated 20 December 2010[8], it seems that all three owners voted against Motion 5. Further, the applicant has produced no evidence to indicate that any other owner was actually misled by the requirement to enter into a Deed of Release as part of Motion 5.
_[22] I refer to the applicant’s claim that the committee attempted to influence the outcome of Motion 5 by posting comments on the intranet. The applicant has presented no evidence to suggest that the abovementioned intranet statement or any other statement made by the committee actually misled owners into voting for Motion 5. Accordingly, I am not persuaded that such arguments form a suitable basis for declaring Motion 5 invalid.
_[23] Finally, I refer to Ms Ingram’s claims that owners were misled by the explanatory notes of Motion 5. While I acknowledge that some of the comments in the explanatory notes appear to be unsubstantiated, no evidence has been presented to suggest that any owners were misled by these comments or that had it not been for these comments owners would have voted against Motion 5.
_[24] Therefore, after considering the information presented, I am not satisfied that owners were misled or unduly influenced by the committee in relation to Motion 5.

Numbering of Motions

_[25] Motion 5 was submitted to the EGM by the committee. However, Ms Ingram also submitted a motion for the EGM. Ms Ingram’s motion requested that the committee continue negotiations with Stockland for a better offer than that presented in Motion 5. Both the applicant and the body corporate agree that this motion should have been listed as Motion 6 in the voting paper, however it was erroneously numbered as motion ‘5’, the same as the committee’s motion. The applicant states that this misnumbering of Motion 6 created confusion amongst owners as many thought that Motion 6 was part of the committee’s motion. Consequently, the applicant argues that the resolution passed on Motion 5 is not valid.
_[26] In response, the committee states that the misnumbering of Motion 6 was clearly a typographical error. Further, the committee notes that on 30 November 2010 they distributed correspondence to all owners which, in reference to Motion 6 stated, “please note that this Motion was number 5 on the Voting Paper, but it is in fact No. 6”. In addition, the committee says that Motion 5 and Motion 6 are numbered correctly in the explanatory schedule; listed in the voting paper as being submitted by different entities; presented in the voting paper on separate pages and each have their own voting area to the right of the motion.
_[27] While I note the applicant’s comments, the applicant has presented no evidence to suggest that owners were confused or misled by the misnumbering of Motion 6. Further, the applicant has presented no evidence to suggest that the misnumbering of Motion 6 had any impact upon owners’ consideration of Motion 5. Accordingly, I am not satisfied that the misnumbering of Motion 6 is a sufficient basis to invalidate Motion 5.

Legal Advice

_[28] The applicant says that the body corporate has received insufficient legal advice regarding whether, and to what extent, Stockland would be legally liable for the Stage 1 road. The applicant acknowledges that MacGillivrays Solicitors (MacGillivrays) has provided a letter of advice on Motion 5. However the applicant says that this advice does not consider the contractual obligations of Stockland in light of the standard of work initially performed on the road.
_[29] The committee on the other hand, disputes that insufficient legal advice was obtained regarding the contents of Motion 5. Instead, the committee notes that it obtained legal advice from MacGillivrays (dated 28 November 2010), distributed this advice to all owners, and had Michael Kleinschmidt (Senior Associate of MacGillivrays) attend the EGM to answer any questions.
_[30] Whether it was reasonable for the body corporate to consider Motion 5 without advice regarding the contractual liabilities (if any) of Stockland is a difficult question. The test of ‘reasonableness’ was considered by Adjudicator Toohey in the matter of Seachange Retirement Village[9]. There the Adjudicator stated:

“The legislation requires that a body corporate must act reasonably in carrying out its functions, including in making or not making a decision.[10] Individual owners who vote at a general meeting are not under any statutory obligation to act reasonably or to provide any reasons why they voted in a particular manner. However, section 94 of the Act provides a statutory obligation that the body corporate act reasonably in making a decision. This statutory requirement is only satisfied if the ultimate decision is objectively reasonable.[11] This requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’.[12] The question is not whether the decision was the "correct" one but whether it is objectively reasonable.[13]”

_[31] While it may have been useful for the body corporate to obtain legal advice regarding such contractual issues prior to the consideration of Motion 5, I am not satisfied that the absence of such advice renders the resolution on Motion 5 objectively unreasonable. This is particularly the case given that the body corporate did obtain legal advice from MacGillivrays regarding Motion 5 and the fact that owners were under no obligation to vote in favour of Motion 5 if they felt they had insufficient information to adequately consider the motion.
_[32] Further, I note there is no legislative provision which requires the body corporate to obtain legal advice prior to considering a motion at a general meeting. Moreover, I consider it impractical to suggest that the body corporate cannot consider a motion without first obtaining legal advice regarding every possible facet of the motion. Accordingly, I am not satisfied that Motion 5 is objectively unreasonable or invalid on this basis.

Negotiations regarding Motion 5

_[33] The applicant disputes the validity of Motion 5 on the basis that an owner, not the committee, negotiated with Stockland regarding the offer that became the substance of Motion 5. The applicant says that the committee should have undertaken such negotiations, or alternatively, that the committee should have authorised a non-committee member to conduct negotiations on behalf of the body corporate.
_[34] The applicant has produced no evidence to verify that the committee (or a member of the committee) was not involved in the negotiations with Stockland. In any event, there is nothing in the Act which prevents a non-committee member from conversing with Stockland, investigating options and/or submitting motions for the consideration of the committee or owners in general meeting.[14] Accordingly, I am not satisfied that any allegations of a non-committee member negotiating with Stockland form a reasonable basis to invalidate Motion 5. This is particularly the case given that no arguments were submitted to suggest that a non-committee member made any binding decisions on behalf of the body corporate or undertook any of the statutory functions of the body corporate.[15] Rather, it seems that all owners in general meeting considered the offer from Stockland in Motion 5.

Spending Requirements

_[35] One owner, in their submission, argued that Motion 5 should be declared invalid on the basis that two quotations were not obtained for the proposed spending. This owner argued that two quotations were required due to the proposed spending being above the relevant limit for major spending.
_[36] Section 150 of the Accommodation Module states that if a general meeting motion proposes the carrying out of work and, the cost of giving effect to the proposal is more than the relevant limit for major spending, then the owner of each lot must be given copies of at least two quotations for the carrying out of the work. The relevant limit for major spending is defined as either the amount last set by ordinary resolution of the body corporate or $10,000.00.[16]
_[37] Although the spending mentioned in Motion 5 is likely to be above the relevant limit for major spending, the body corporate itself is not seeking approval to undertake the specific spending. Rather, the only spending specifically mentioned in Motion 5 relates to funds which Stockland is to provide. Accordingly, I am not satisfied that section 150 of the Accommodation Module or the requirement to distribute two quotations to each owner applies to this situation. However, the body corporate should consider section 150 of the Accommodation Module in regards to subsequent spending.

Miscellaneous Issues

_[38] In addition, the applicant raises a number of miscellaneous issues, as discussed below.

Validity of a Poll

_[39] Firstly, the applicant raises concerns regarding the validity of a poll conducted by the committee in about August 2009. In this regard, the applicant says that the committee circulated a poll to owners asking if they agreed to engage consultants to recommend an alternative road surface. The applicant says that the results of the poll were erroneously published as “a majority of owners were in favour of engaging consultants” and the committee engaged consultants on this basis.
_[40] The sole outcome for consideration in this matter is the validity of Motion 5. While the poll and Motion 5 contain similar subject matter, namely the internal road surface within the scheme, the validity of the poll is a separate issue from the validity of Motion 5. Accordingly, I am not satisfied that any issues associated with the validity of the poll affect the validity of Motion 5. On this basis, I have not considered this issue further.

Decision to postpone the repair of the Bushmates surface

_[41] Secondly, the applicant raises concerns with the committee’s decision in February/March 2010 to postpone the repair of the Bushmates surface. In this regard, the applicant says that pursuant to the erroneous August 2009 poll results (as mentioned above), the committee advised Stockland (who were about to commence the repair of the Bushmates road surface due to the defeat of Motion 2) to postpone the commencement of any repair works pending the outcome of the consultants report.
_[42] The validity of the committee’s decision to postpone the repair of the Bushmates surface is a separate issue from the validity of Motion 5. Irrespective, of the validity of the committee’s decision, the body corporate was still entitled to consider Motion 5 at a general meeting. Accordingly, I am not satisfied that this issue has any bearing on the validity of Motion 5.

Previous legal advice

_[43] Thirdly, the applicant argues that the committee deliberately withheld legal advice obtained by Philips Fox Lawyers in relation to Stockland’s original offer (dated February 2009) to replace the road with black asphalt. In response, the committee denies that they made any attempt to stop the advice from being provided to owners prior to the consideration of Motion 5.
_[44] In this instance, the legal advice in question relates to a previous offer of settlement from Stockland and not the offer which formed the basis of Motion 5. The applicant has provided no evidence to demonstrate that the previous legal advice in any way relates to, or is relevant for, the consideration of Motion 5. Accordingly, irrespective of whether or not a dispute exists regarding the provision of the legal advice, I am not satisfied this issue has any bearing on the validity of Motion 5.

Conclusion

_[45] After considering the information presented, I am not satisfied that the applicant or supporting submissions have presented sufficient reasons to justify an order declaring Motion 5 invalid. On this basis, I am dismissing the application.

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[1] Section 276 of the Act
[2] Section 284(1) of the Act
[3] See sections 227, 228, 276 and Schedule 5 of the Act
[4] See sections 246 and 244 of the Act respectively.
[5] Alternatively, owners could have requested an EGM pursuant to section 65 of the Accommodation Module.
[6] Any issues concerning the validity of the amended Deed of Release are outside the outcomes sought in this application and the jurisdiction of this Office.
[7] Merrimac Heights [2010] QBCCMCmr 545 (7 December 2010); Batwing Resorts Pty Ltd v Body Corporate for Liberty CTS 27241 [2008] CCT KA004-08.
[8] Pursuant to the investigative powers of an adjudicator in section 271 of the Act, on 19 April 2011, I requested that a member of our Office contact the Body Corporate Manager and obtain a copy of the voting tally sheet for the EGM dated 20 December 2010. This information was provided later that day.

[9] Seachange Retirement Village [2011] QBCCMCmr 94 (4 March 2011).

[10] See section 94(2) of the Act.
[11] Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 at page 12.
[12] Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989) 88 ALR 621. See also McKinnon v Treasury [2006] HCA 45 per Hayne J at paragraph 61.
[13] Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 at page 34.
[14] Buderim Heights [2010] QBCCMCmr 537 (30 November 2010).
[15] Section 97 of the Act.
[16] See the ‘Dictionary’ in the Schedule of the Accommodation Module.