The Hudson [2011] QBCCMCmr 329 (3 August 2011)

Last Updated: 16 August 2011

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

CITATION:	The Hudson [2011] QBCCMCmr 329
PARTIES:	Davies Beach Investments Pty Ltd (applicant) The Body Corporate (respondent) All owners (affected persons)
SCHEME:	The Hudson CTS 31537
JURISDICTION:	Sections 227(1)(b) and 229(3)(a) of the Body Corporate and Community Management Act 1997 (Act), and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).
APPLICATION NO:	0201-2011
DECISION DATE:	3rd August 2011
DECISION OF:	J.D.M. Underdown, Adjudicator
CATCHWORDS:	MOTION CARRIED AT GENERAL MEETING – whether can stand if committee made no valid decision to propose motion – alternatives to repair pool at no cost to body corporate – whether liner for previously tiled pool is repair or improvement – whether amendment to motion in the alternative affects vote – whether lack of information about pool liner and lack of explanatory notes invalidates carriage of the motion.

ORDERS MADE:

I hereby order that the application - “that Motion 10 AGM 5/10/09 be upheld to remembrane and retile vote 10 (ALL) in favour involving $36,722” ; 2. that “the adjudicator overturn motion 2 alternative 1”; and 3. that “the adjudicator make a ruling on - (a) “repair of the Hudson Pool CTS 31357 according to Lord Denning’s principal. (b) “as Motion 10 AGM vote 5/10/09 not rescinded.” is dismissed.

REASONS FOR DECISION

APPLICATION

[1] This is an application dated 25th February 2011 and amended on 1st March 2011 by Davies-Beach Medical Pty Ltd through its nominee Jenny Davies (the Applicant), owner of Lot 6 in the scheme, against the body corporate for The Hudson CTS 31537 (the body corporate).
[2] On 26th March 2011, the Applicant amended her final outcomes sought to the following –

3. “that motion 10 AGM 5/10/09 be upheld to re-membrane and re-tile vote 10 (ALL) in favour involving $36,722”

[3] The previous orders sought were as follows –

2. that Motion 2 alternative 1 carried at a general meeting held on 22nd February 2011 be overturned;
3. that the adjudicator “make a ruling” on -
   • (a) “repair of the Hudson Pool CTS 31357 according to Lord Denning’s principal (sic)”
   • (b) “as also Motion 10 AGM vote 5/10/09 not rescinded.”
     

[4] The Applicant also sought an interim order that work cease on the Hudson pool “as in Motion 2 alternative 1 as passed 5 – 3 at the extraordinary general meeting on 22nd February 2011.” The application for the interim order was refused on 15th March 2011.

JURISDICTION

[5] “The Hudson” CTS 31537 is a community titles scheme governed by the Act and the Accommodation Module. There are 10 lots in the scheme.
[6] 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.

[7] 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

[8] The Applicant’s case is that the body corporate at the annual general meeting on 5th October 2009 voted 10 – 1 for the pool to be re-tiled.
[9] However, at an extraordinary general meeting held on 22nd February 2011 (the EGM), by Motion 2, alternative 1, the body corporate voted to put a new liner in the pool instead. Motion 2 read –

“That the body corporate approve the repair of the pool leak under warranty of the pool Contractor.”

[10] Two alternatives were then proposed, alternative 1, that the body corporate approve re-waterproofing and re-lining by Aquatic Pool Renovations (Aquatic) at no cost; alternative 2 was that the body corporate approve re-waterproofing and tiling of the base of the pool and “up to 30cm of the pool walls”, also by Aquatic, at no cost.
[11] Immediately before the vote was taken on alternative 2, Motion 2 was amended after the vote on alternative 1 had been taken. The amendment, proposed by the Applicant, was that the pool be fully tiled to the top. The meeting was somewhat confusing and the Applicant says that the treasurer did not know whether the pool was to be tiled to the top or not.
[12] The Applicant argues that repairs can only be made by repairing or replacing something that is already there, so that alternative 2, the tiles, should be carried and alternative 1 should be held to be overturned.
[13] She further says that the committee has not acted transparently in its dealings, and that tiles were removed from the pool without notification to owners. This led the Applicant to lodge an application 0997-2010 in which she sought an interim order to stop work on the pool.
[14] On 21st February 2011, the night before the EGM, the Applicant received an email from committee member Sharon McDermant that five members of the committee were in favour of the pool liner. She and other owners did not know that the committee had discussed this at a committee meeting as they had received no minutes about it.
[15] She also says that information about the benefits and drawbacks of the liner as opposed to longer lasting tiles, were not circulated to owners, so that owners could not cast an informed vote.
[16] In respect of the third outcome now sought, the Applicant says that the value of the liner is unknown although owners know the tiles are worth $36,722. She is of the view that the liner will need to be replaced every seven years with consequent on-going costs to owners. She also says that the committee has not considered the devaluation of the lots with a vinyl liner pool in lieu of a tiled pool.
[17] The pool was tiled originally and owners voted to repair it by re-tiling at the annual general meeting on 5th October 2009. She considers that the liner is not a repair but an improvement and it should have required a special resolution.
[18] The body corporate at the interim stage submitted that this is the second application made by the Applicant to this Office about the pool. It says that the body corporate has been without a pool for two years because water leaks out of it into the car parks below, causing damage to vehicles. The body corporate wants to rectify the problem as soon as possible. It finds the Applicant’s claim “ridiculous”. It says that the decision was made at a general meeting, and the majority voted for the liner to rectify the leaks.
[19] The minutes of the meeting show that Motion 2 alternative 2 was amended from the pool being tiled “up to 30cm of the pool walls” to “up to the top of the pool walls.” Alternative 1 was that Aquatic re-waterproof and re-line the pool with vinyl at no expense to the Body Corporate. Alternative 2 was that Aquatic re-waterproof and re-tile the base and entire wall at no expense to the body corporate. Alternative 1 received 5 votes and Alternative 2 received 3 votes, so the first option was selected.
[20] In accordance with section 243(2)(b) Act, submissions on the final outcomes sought were invited from all owners in the scheme. There were three submissions in favour and one against.
[21] Three submitters in favour made the following points –

• Owners were given no information about the liner even as to colour, performance or cost;
• Without information owners could not make an informed decision;
• The committee withheld the fact that the contractor was willing to re-waterproof and re-tile free of charge;
• The process of putting the motion to the meeting was not transparent;
• Owners did not have the opportunity of putting their own motion to the meeting as they did not know that the committee was going to propose another motion about the pool repair. The body corporate had already voted to re-tile on 5th October 2009;
• The committee breached section 45(2) Accommodation Module in respect of notice of committee meetings;
• The liner is an improvement requiring a special resolution as it must be worth in excess of $20,000;
• Postal voters and proxy holders were penalised by the amendment to alternative 2 being allowed;
• The liner will devalue the units.

[22] The submitter against, said that the motion had been put to a general meeting and voted on by the majority so it should stand.
[23] There was no further submission from the respondent body corporate.
[24] The Applicant exercised her right of reply.
[25] She says that the committee has now paid $9,218 for the pool when it said it would be at no cost. There was also another general meeting on 19th May 2011 where, by Motion 2, a project manager was appointed for the pool work, entrance, foyer and lift work at a maximum cost of $14,200, which was also put to a general meeting after the committee had already agreed to it.
[26] The one submitter against her application is a new owner.
[27] She points out that after the amendment was made to alternative 2 that those holding proxies were left trying to make a ‘good judgment’ call.
[28] There should have been a committee meeting prior to the EGM so that owners knew that the motion was proposed.
[29] I sought from the body corporate manager copies of the minutes of both the EGM and the extraordinary general meeting of 19th May 2011.

DETERMINATION

[30] The matter of re-instating the outcome of Motion 10 carried at the annual general meeting of 5th October 2009, the Applicant’s third outcome sought, has been dealt with by adjudicator’s order in application 0997-2010, lodged by the Applicant and is therefore res judicata, a matter already dealt with upon which a decision has been made on 15th April 2011. The date for appealing this decision is therefore passed. In that application the Applicant sought the following final order –

Pool be left in condition/finish as fully glassed tiled pool as stated in motion 10 of 2009 AGM.

[31] The adjudicator refused to reinstate the motion. I find that the outcome now sought is identical and cannot be re-opened by the Applicant. The Applicant had the right to appeal the order in 0997-2010 if she thought that the adjudicator had erred on a question of law.
[32] The adjudicator said that whilst she could find no minuted decision of the committee to surplant the tiles with a pool liner, since the matter had by the time of the order been voted on at a general meeting, the lack of a prior decision by the committee was irrelevant. She said –

“The mere fact of a previous decision to tile does not prevent a subsequent decision for a liner. ....... Given that owners have now had an opportunity to vote on whether they would like a liner or pool tiles, and given that a majority have voted in favour of a liner, the question of the validity of any previous approval for the liner is no longer relevant. There is no basis to require the retention of the tiles based on the decision in 2009, as sought by the applicant in this application, because owners have voted to override[1] that previous decision by virtue of the recent EGM vote.”

[33] This would be the end of the Applicant’s application if I did not go on to consider the outcomes sought by her prior to the amendment of 29th March 2011. The submitters addressed these previous outcomes sought, as did the Applicant, despite the amendment. I am taking the amendment to be in addition to the previous outcomes sought, and not in lieu of them, as they are not in conflict with it.
[34] However, the only question remaining, is whether there were any procedural failures which could invalidate Motion 2 of the EGM.
[35] The Applicant and the submitters point to the following which I will consider under individual headings.

Special Resolution required.

[36] A special resolution is required for approving an “improvement” to common property if the “cost of the improvements” is beyond the “ordinary resolution improvement range”, which is $2,000 per lot, or $20,000 in this scheme. (Section 161(5) Accommodation Module.)
[37] Whilst the value of the liner may well be over $20,000 (although there is no evidence provided by the Applicant of the value of the liner), it seems to me that Motion 2 involved no cost at all to the body corporate. Motion 2 was to repair the pool under warranty. Neither the tile proposal, nor the liner proposal was to cost the body corporate anything. Each of the two alternatives are stated to be “at no cost.”
[38] The adjudicator in file 0997-2010 indicated that the committee might have validly made the decision to repair with a liner since there was no cost to the body corporate, although she found that the committee had not made such a decision at the time when she issued an interim order.
[39] The Applicant says that in fact the body corporate had by 15th May 2011 paid “$9218 for the pool.” This argument fails for two reasons – firstly if the pool liner had cost the body corporate $9,218, it would be within the range which can be approved by an ordinary resolution; and secondly, the sum appears to be part of a payment to a project manager engaged to oversee the pool work as well as the entrance, foyer and lift at a maximum cost of $14,200. Whether it is approved by the Applicant or not, the subsequent engagement of a project manager cannot be said to be “an improvement” to the common property, requiring a retrospective special resolution.
[40] Further, there is no argument that the liner is “an improvement” and not a method of repair, but that argument is not relevant in the circumstances. Even if the liner was an improvement, it has not cost the body corporate in excess of $20,000.

No information given/explanatory notes

[41] The submitters and the Applicant say that there were no explanatory notes, which is not denied by the body corporate. Whilst some explanation of what the committee was thinking and why it preferred the liner alternative to existing tiles might have prevented these applications made now by the Applicant, there is no legal requirement to provide explanatory notes in the case of repairs/improvements.
[42] Owners are taken to be pro-active and to enquire of the committee or the body corporate manager if there is a motion about which they need some explanation. The danger to those proposing the motion is that if they do not provide satisfactory background to the motion, it may fail.
[43] I have some sympathy with the Applicant and those who support her application because they say they were taken by surprise by Motion 2. The matter had been dealt with in 2009, and they were not aware that the committee was still discussing the pool repair, so to see the motion on the agenda with the liner alternative was unwelcome and unexpected.
[44] However, it is the right of owners to vote against any motion of which they are uncertain or about which they need more information.
[45] The committee may have discussed the liner either at a possibly invalid meeting, or informally as neighbours. The result is the same. If the majority of owners in a scheme make up the committee, such as might be the case in this scheme, then those owners will carry the day at a general meeting.
[46] Committee member Michael d”Emden said that he did not know why “a pool liner should ever have been suggested as an alternative” as the pool contractor was happy to re-lay the tiles. The chairman seems to have kept some information to himself.
[47] The adjudicator in application 0997-2010 found that –

“ the Chairperson has no unilateral right to make any such decision, and owners may well have valid queries as to why the Chairperson apparently purported to withhold information as to the detail of the offer from Aquatic from other Committee members and purported to direct Aquatic to install a liner without Committee approval....

.......Ultimately I find that the installation of the liner was not properly approved at the time that this application was made. However this is now a moot point. The installation of the liner has since been approved by a resolution at the February EGM. That resolution has effect unless or until the order of an adjudicator determines otherwise. “

Committee did not make owners aware that motion was to be put at general meeting

[48] A body corporate committee is not required to have any set number of meetings per year, or per month. If the committee does not seem to be getting on with body corporate business, an owner might ask the committee to discuss a certain issue, or make an application to this Office for a reasonable number of meetings to be held and issues discussed. Owners can also vote at each annual general meeting to change the make-up of the committee if they are not satisfied with its performance.
[49] The committee cannot make decisions outside a committee meeting, save pursuant to section 54 Accommodation Module, which is a section enabling the committee to deal with an emergency.
[50] Motion 2 was proposed by the committee. However, there is no minuted decision of the committee to present the motion. The committee meeting before the general meeting was held on 9th December 2010. The agenda for that meeting included Item 5 “pool”, and Item 7 “date for EGM to vote on tile quotes, pool liner”. The Applicant did not receive notice of this meeting until 10th December 2010, and the notice is dated 8th December 2010 for a meeting on 9th December 2010.
[51] I have sought a copy of the minutes of this meeting from the body corporate manager without success. The body corporate manager says that it does not have a copy of the minutes and did not attend the meeting.
[52] It seems to me that this meeting did not give correct notice to owners pursuant to section 45(3)(b) Accommodation Module. Owners had no opportunity to attend the meeting which is their right. This behaviour of the committee cannot be condoned. The failure to circulate minutes is also contrary to legislation.
[53] I agree with the Applicant that this behaviour of the committee demonstrates “scant respect for owners.”
[54] However, even if the committee meeting is held to be invalid because of the failure of correct process, I am not of the view that it changes the result of the general meeting at which the committee proposed Motion 2. There is no suggestion that the Applicant and other owners did not have correct notice of the extraordinary general meeting at which Motion 2 was proposed.

Amendment was unfair on those not present and those who had voted already

[55] The Applicant says that the amendment to alternative 2, which was made by her and accepted before the vote on it, but after the vote on the first alternative was taken, was unfair on those who were not present at the meeting, and on those who had voted already.
[56] From the minutes of the extraordinary general meeting now obtained from the body corporate, I note that representatives of all lots were in fact present in person, with the exception of Lot 4 and Lot 7.
[57] The representatives of Lot 4 and Lot 7 did not vote by post, so all eight owners who wanted to vote were present in the room.
[58] An amendment to a motion may be made by those present at a general meeting unless it amends the “subject matter” of the motion (section 92 Accommodation Module.). The “subject matter” of the motion was the repair to the pool, which had been voted on 8-0 as the substantive motion of Motion 2. The alternatives were the way in which the pool should be repaired.
[59] A person not present at the meeting who has cast a vote prior to the amendment must be counted as voting against the motion to amend the motion (Section 92(3) Accommodation Module.) This is not relevant in this instance where all eight voters were present.
[60] A proxy vote was held only by “M. Williams” for Veronica Williams, owner of Lot 2. There is no submission from “M.Williams” that he or she did not know how to vote on Motion 2 following the amendment. There are no submissions that any of the five owners who voted for alternative 1, wanted to change their minds when they heard of the amendment to alternative 2. There is also no evidence to this effect.

Reasonableness

[61] The Applicant has not sought to demonstrate that the option chosen by the body corporate, to repair the pool with a liner in lieu of tiles, was in itself unreasonable. If the motion as passed was objectively unreasonable such that a reasonable person could not have voted for it. Then Motion 2 might have been overturned.
[62] There is no evidence that repair with a liner is unreasonable. Whilst clearly the Applicant and three submitters prefer tiles, there is no evidence for example, that a lined pool will not result in a good repair, or that a lined pool will devalue the units as alleged. This argument in any event is unlikely to succeed since the value of a lot is what a willing purchaser and a willing buyer will agree to on the day.

CONCLUSION

[63] In the circumstances, I find that there is no procedural reason why the vote on Motion 2 of the EGM should be overturned. It was the vote of the majority. The Applicant may request a general meeting in order to vote again on the issue (and any other motion) if she can get the support of 25% of lot owners for the calling of a requested general meeting, pursuant to section 65 Accommodation Module.
[64] In the meantime, I dismiss this application.

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[1] Pursuant to section 95 of the Standard Module, a resolution passed at a general meeting may be amended or revoked by a resolution of the same type.