Warrego Lodge [2011] QBCCMCmr 26 (31 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0037-2011

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14662
Name of Scheme:	Warrego Lodge
Address of Scheme:	22 - 24 Mary Avenue BROADBEACH QLD 4218

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

J Grimsley, the Owner of lot 8

I hereby order that the application for interim orders is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0037-2011

“Warrego Lodge” CTS 14662

Warrego Lodge community titles scheme 14662 (Warrego Lodge) consists of 8 lots and common property. The Community Management Statement (CMS) for Warrego Lodge indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme.

INTERIM APPLICATION

This is an application for interim orders lodged by Judith Grimsley, Owner of Lot 8 (applicant) on 20 January 2011 under the Body Corporate and Community Management Act 1997 (Act). The applicant seeks an interim order against the Body Corporate for Warrego Lodge (respondent) in the following terms:

I request an immediate injunctive relief order that the EGM of 20/01/11 and its resolutions cannot be acted upon or carried out due to the questionable circumstances outlined in Section 9 herein.

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. The Commissioner has referred the application notwithstanding that affected persons have not been given notice of the application or afforded an opportunity to make submissions about the application[1]. In the circumstances, I have provided the Body Corporate Committee (committee) with a limited opportunity to make a written submission in response to the interim application. The committee made a submission in due course.

MATTERS IN DISPUTE

This application relates to the Extraordinary General Meeting (EGM) dated 20 January 2011, wherein the applicant was removed from office as a member of the committee. Seven motions were considered at this EGM. The applicant states that the EGM should be declared invalid due to the following:

• The EGM was allegedly requested pursuant to section 67 of the Standard Module, however there was no written notice accompanying the request at the time. Rather, the EGM was only ‘verbally’ requested.
• It was only after the applicant’s complaints that a purported notice dated 6 January 2011 requesting the calling of the EGM was provided. This notice states that an unofficial meeting was held with Mervyn Welch, Terry Day, Lynda Day, Geoff Spicer and Kevin Carlin (75% of all owners in the scheme) wherein the owners agreed that “vacating the current Treasurer position and voting for another owner to fill that position was in the best interests of this body corporate”. Further, the notice requests that the body corporate vote to appoint Kevin Carlin to act as the Building Rectification Project Manager. However, the notice does not make mention of all of the motions that appear on the EGM agenda.
• The voting papers state that all of the EGM motions were ‘submitted by the committee’. However, there was no committee meeting held wherein the committee approved these motions.
• Motion 2 of the EGM dated 20 January 2011 (Motion 2) seeks to remove the applicant from the position of treasurer of the committee. No valid grounds have been provided to justify removing the applicant from the committee per Motion 2. The applicant believes Motion 2 is an act of retaliation due to the applicant lodging a previous conciliation application with the Commissioner’s Office.
• Section 34 of the Standard Module should be applied in relation to the removal of a committee member from office.
  

Committee Submission

A submission was received from Janie McNeill on behalf of the committee stating the following:

• An informal meeting was held on 16 November 2010 with Geoff Spicer (company nominee for unit 1), Mr and Mrs Terry Day (nominee for the owner of Lot 3 Garth Day), Kevin Carlin (owner of Lots 4, 5 and 7) and Mervyn Welch (owner of Lot 6). These lot owners represent 75% of the owners in the scheme. At this meeting there was a discussion that the applicant should be removed from the committee.
• Not all of the motions were noted on the request to hold the meeting as there were items that were pending to be actioned at the next available general meeting.
• The requested motions were sent to Geoff Spicer and Kevin Carlin for approval on behalf of the committee and there is written email approval for them to be tabled.
• The applicant was removed from the committee due to:
  • the adversarial nature of the relationship between herself and other committee members which has been and continues to be counterproductive to the smooth running of the scheme; and
  • excessive email correspondence to all owners, some of which was unnecessary and seemingly only sent to try to undermine the chairperson’s position.
    

Additional Information Submitted by the Applicant

On 23 January 2011 and 24 January 2011 the applicant submitted additional information in relation to the application. This information was not requested by myself or any member of this Office, and due to the time constraints involved in making this order, has not been provided to the committee for comment. However this is not required pursuant to section 247 of the Act and will not offend natural justice principles. The Body Corporate will be able to respond to the additional information prior to the consideration of the final orders.

The additional information provided by the applicant can be summarised as follows:

• Motion 1 of the EGM dated 20 January 2011 (Motion 1) should be declared invalid as there was no facility to indicate either ‘yes’, ‘no’ or ‘abstain’. It seems that this was left off the voting paper. Despite this, the result of Motion 1 as displayed in the minutes, was four votes in favour and four votes against.
• The applicant asked the Body Corporate Manager how the vote on Motion 1 was four votes in favour and four votes against (particularly given that the applicant did not vote on the motion and there was no facility in place to vote on the motion). The Body Corporate Manager stated, “unfortunately it was missed however 4 of the 8 voting papers had their vote hand written, those that had no vote were a no automatically”.
  

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) 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.[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 serious legal 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 legal question

The applicant raises several objections to the EGM dated 20 January 2011. I will address the key issues in turn.

Motion 1

The applicant says that Motion 1 should be declared invalid as there was no facility in the voting paper to indicate either ‘yes’, ‘no’ or ‘abstain’ in respect of the motion. Further, the applicant says that despite this omission, the minutes of the meeting indicate that Motion 1 received four votes in favour and four votes against.

The applicant seeks an interim order that the EGM and its resolutions not be acted upon pending a final order. However, the minutes indicate that Motion 1 failed (receiving four votes in favour and four votes against the motion). Accordingly, I am not satisfied that the body corporate (pursuant to Motion 1) actually passed a resolution that could be enacted pending a final order. On this basis, I am not satisfied that the applicant has raised a serious legal issue which requires the making of the interim order sought.

Requesting an EGM

The applicant argues that the EGM should be declared invalid as it was not requested in accordance with section 67 of the Standard Module.

Section 67 of the Standard Module says 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 lots included in the scheme. While owners may have decided at an informal meeting to request an EGM, it seems that no such notice was initially provided. Rather, it seems that written notice was provided later on or about 6 January 2011. Whether or not such notice complies with section 67 of the Standard Module is a question to be considered in the final determination of this matter.

EGM agenda

Further, the applicant questions the validity of the EGM agenda. In this regard, the applicant says that not all of the motions contained in the agenda were mentioned in the notice requesting the EGM. Moreover, the applicant says that no official committee meeting was held to approve the inclusion of the additional motions.

In response, the committee acknowledges that not all of the motions were noted in the request to hold the EGM. However, the committee says that the additional items were pending to be actioned at the next available general meeting.

There is nothing in section 67 of the Standard Module which precludes the inclusion of additional motions on the agenda of a requestioned EGM. Further investigation, pending a final order, is needed to determine whether any additional motions were validly included on the EGM agenda.

Removal of Committee Members

The applicant says that Motion 2 should be declared invalid as section 34 of the Standard Module, setting out the provisions for the removal of a committee member due to a breach of the code of conduct, has not been followed.

Section 34 of the Standard Module states that if the body corporate believes a voting member of the committee has breached the code of conduct, “...the body corporate may decide, by ordinary resolution, to give the member a written notice...” regarding the breach (underlining mine). That member of the committee then has 21 days to respond to the notice[7] after which the body corporate must consider a motion (at the next general meeting) to remove the member from the committee[8]. Based on the evidence before me, it seems that the procedure as set out under section 34 of the Standard Module has not been followed in this instance.

However, section 33(2)(f) of the Standard Module says that a committee member’s position becomes vacant if the member is “removed from office by ordinary resolution of the body corporate”. In the matter of Silverton,[9] Adjudicator Underdown considered the relationship between section 34 of the Standard Module (equivalent to the then section 25AA of the Standard Module) and section 33(2)(f) of the Standard Module (equivalent to the then section 25(2)(f) of the Standard Module). In that matter Adjudicator Underdown stated:

“Section 25AA is...permissive, in that the body corporate may put such a motion, if it believes that a breach of the code has occurred. It is not obligatory that it does so. The introduction of section 25AA on 1st July 2007 gave some teeth to the newly introduced Code, in that standards of behaviour for committee members were now set in the legislation. This required a balancing section as to what might happen if a committee member did not comply with the Code. It is still a matter for the body corporate to choose how to proceed.

The introduction of Section 25AA in 2007 did not diminish in any way section 25(2)(f), but provides a secondary process whereby the performance of committee members may be measured against the provisions of the code.

Therefore, it seems that section 34 of the Standard Module does not in any way diminish the procedures as contained in section 33(2)(f) of the Standard Module.[10] Rather, it seems that section 34 of the Standard Module merely provides a secondary process whereby the performance of committee members may be measured against the provisions of the code. Accordingly, it appears that a committee member may be removed from the committee pursuant to either section 34 or section 33(2)(f) of the Standard Module. Therefore, based on the evidence provided, I am not satisfied that the applicant has raised a serious legal issue in relation to the application of section 34 of the Standard Module.

Reasons for Removal from the Committee

Further, the applicant says that Motion 2 should be declared invalid as no grounds have been provided to justify the removal of the applicant from the committee. In this regard, the applicant says that she was removed from the committee as an act of retaliation due to the applicant lodging a previous conciliation application with the Commissioner’s Office.

In the matter of Silverton[11] Adjudicator Underdown stated:

“Section 25(2)(f) [now known as section 33(2)(f) of the Standard Module] has long been relied upon as the process which may be used by the body corporate to remove a committee member from office if it is the wish of the lot owners at a general meeting to do so.[12] The section does not require any blame to be laid, or a case to be made out. It relies on the satisfaction of lot owners with their committee members, and gives a body corporate power to change or “spill” the committee during the scheme year...” (underlining mine).

Therefore, it seems that no ‘reasons’ or code of conduct breaches need to be provided for the removal of a committee member pursuant to section 33(2)(f) of the Standard Module. Accordingly, I am not satisfied that any arguments relating to the ‘reasons’ behind the submission of Motion 2 form a sufficient basis for granting the interim order sought.

Inconvenience from an interim order

In considering whether to grant the interim order sought, it is relevant to 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.

If the interim order is granted now and final orders are ultimately refused, the body corporate would have lost, on a temporary basis, the opportunity to decide motions as it thinks fit. Further, an interim order, if granted, would prevent the body corporate from functioning per its democratic rights pending a final order.[13]

On the other hand, if the interim application is dismissed now and final orders are ultimately awarded, the applicant would have lost an opportunity to serve on the committee pending the final order and any resolutions (if implemented) may ultimately have to be ‘undone’.

On balance, I am not satisfied that the applicant has presented sufficient ‘urgent’ grounds to justify postponing the implementation of all EGM resolutions pending a final order. Nor am I satisfied based on the information presented, that the applicant has presented sufficient evidence of a serious legal issue in relation to Motion 2 to justify postponing the implementation of this motion pending a final order. Accordingly, I have declined to grant an interim order at this time.

However, to the extent that there is any doubt regarding the validity of the EGM dated 20 January 2011, I would like to note that nothing in this interim order prevents the committee from calling a subsequent EGM (or a lot owner requesting a subsequent EGM) to reconsider or confirm the motions which were the subject of the EGM dated 20 January 2011. If such an EGM were held, the body corporate may wish to consider a motion to rescind any resolutions purportedly passed at the EGM dated 20 January 2011 to avoid conflicting outcomes.

The matter will now proceed in accordance with the normal processes undertaken by this Office, including the calling of submissions from all affected parties.

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[1] Section 247(3) of the Act.
[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] Section 34(1)(c) of the Standard Module.
[8] Section 35 of the Standard Module.
[9] Silverton [2008] QBCCMCmr 213 (25 June 2008).
[10] This conclusion is also supported by Attenborough 4 [2007] QBCCMCmr 659 (23 November 2007).
[11] Silverton [2008] QBCCMCmr 213 (25 June 2008).
[12] 0601-2000 Magic Mountain Apartments; 0525-2003 Centrepoint; 1024-2007 Coronaton Gardens.
[13] See sections 2 and 4 of the Act.