Peninsula [2011] QBCCMCmr 34 (4 February 2011)

Number of Scheme:	9865
Name of Scheme:	Peninsula
Address of Scheme:	5 Clifford Street SURFERS PARADISE QLD 4217

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

I hereby order that pending the making of final orders pursuant to this dispute resolution application, the Body Corporate for Peninsula is not to implement or otherwise act upon any resolution passed on motions 33, 36 and 37 which are to be considered at the Annual General Meeting scheduled for 5 February 2011.

Peninsula Community Titles Scheme (Peninsula) is a 246 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module).

This application is by BRK (NSW) Pty. Ltd. the owner of lot 1 and letting agent, seeking certain the body corporate.

The final orders sought by the applicant are identical to the interim orders sought.

The application is dated 2 February 2011 and the applicant states that an urgent interim order is required to be made on or before Friday 4 February 2011. The applicant further states that time does not permit for internal dispute resolution and/ or conciliation.

Peninsula Apartments is a 46 storey apartment building on the Esplanade at Surfers Paradise containing 246 lots. The Annual General Meeting for the scheme is scheduled for 5 February and the applicant has a number of concerns regarding motions 33, 36 and 37 which relate to Authorisation of a Letting Agent, engagement of a Caretaking Contractor and engagement of a Gardening contractor. I am advised that a letter dated 28 January 2011 was sent to the respondent body corporate by Hickey Lawyers on behalf of the applicant, raising concerns regarding motions 33, 36 and 37. This letter requested the body corporate to confirm no later than close of business on 31 January 2011 that these motions would be ruled out of order at the AGM. The body corporate committee responded on Tuesday 1 February, dismissing the concerns raised by the applicant.

The applicant is the owner of lot 1 from where it currently carries out its letting business in accordance with by-law 1 which is contained in the Community Management and provides as follows:

An AGM is scheduled to be held on Saturday 5 February 2011 and a circular dated 10 January 2011 has been issued to lot owners providing notice of the AGM along with motions to be considered and voting papers. The applicant submits that motions 33, 36 and 37 are invalid and the explanatory material regarding the motions is deficient, misleading, unclear and/ or misleading for a number of reasons which are set out below.

The committee has submitted a motion that the body corporate authorise a letting agent to conduct a letting business.

Alternative A - to engage Accommodation Management Services Pty. Ltd (“AMS”) to be Letting Agent;
Alternative B - to engage BRK (NSW) Pty. Ltd. (“BRK”) as Caretaker & Letting Agent.

Clause 1(c ) of the proposed Letting Agreement with Accommodation Management Services Pty. Ltd. (AMS) provides:

(c ) The Agent (AMS) shall maintain and staff (either in the agents own premises or in the common area in a location to be agreed upon between the parties) a reception desk for such times as are found to be necessary for the sure provision of the proposed letting service.

The accompanying Explanatory Note states “NIL” with respect to details of any common property granted for the use of AMS. Therefore, if AMS is engaged as a Letting agent, the respondent does not intend to grant an occupation authority to AMS pursuant to section 136 of the Standard Module. In these circumstances AMS would be required to maintain a reception desk from its own premises pursuant to clause 1(c ) of the proposed Letting Agreement.

The content of proposed motion 36 and the Explanatory Note make it clear that AMS proposes to conduct its business on-site. The applicant therefore claims that the Explanatory Note is incorrect and misleading and Motion 36 is void because AMS would not be able to conduct on-site letting. It is therefore argued that because AMS cannot provide on-site letting services as proposed. . However, the applicant is the owner of lot 1, does not intend to sell the lot and cannot be compelled to sell the lot. By-law 1 prohibits letting, selling or provision of reception services from the common property or any lot (apart from lot 1).

It is further argued that the alternatives proposed as part of this motion are inappropriate and technically invalid due to the absence of comparable choices.

Secondly, it is noted that alternative A refers to engaging AMS to be a letting agent only while alternative B refers to engaging the applicant as a caretaker and letting agent. It is submitted that alternative B is an inappropriate and/ or invalid alternative to a motion regarding authorisation of a letting agent. In Pacific Plaza [2005] QBCCMC the adjudicator invalidated such a motion owing to the “absence of comparable choices”. It is further argued that it is misleading to include them as alternatives because they are not comparable.

It is noted that the committee’s note regarding Motion 36A contained in the explanatory Schedule recommends the appointment of a new letting agent and caretaking contractor. It is submitted that the negative comments about the applicant show an unreasonable bias.

The committee has submitted a motion to engage a caretaker. Three alternatives are presented in relation to this motion.

Alternative A - to engage Davbren Pty. Ltd. ATF Hutchinson Management as Caretaker. Alternative B - to engage the family company of Laurence Agius, Manhattan Management Pty. Ltd. as building manager/ caretaker.
Alternative C - to engage BRK (NSW) Pty. Ltd. (“BRK”) as Caretaker.

The applicant submits that there is a conflict between motion 37 and motion 36 which is likely to confuse and/or mislead lot owners in that motion 36 proposes appointment of a caretaker and letting agent while motion 37 proposes 3 alternative caretakers. Further, it is submitted, the explanatory material fails to provide an explanation regarding the conflicting provisions with the probable result that adversely affect voting intentions. In this regard, the applicant also refers to subsection 72(5) of the Standard Module regulation which provides:
If more than 1 motion about the same issue is listed in the agenda, or stated in a voting paper for the meeting, all motions about the issue are void.

The applicant points out that this motion is also invalid as it fails to address a conflict which arises between motions 36, 37 & 33 because the caretaking agreement proposed by the applicant includes mowing and gardening. Again it is argued that by operation of subsection 72(5) this motion is also invalid.

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

(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.

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)).

Further, sub-sections 279(1) & (2) provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; (c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...

Determination

At this point in time I am considering the application for the following interim (or temporary) orders:

Sub-sections 279(1) & (2)are applicable to applications for interim orders and provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
(2) An interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; (c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...

At this point in time, I am concerned with the application for interim orders and the threshold issue of whether an interim order is warranted. While it is not possible to exhaustively define what matters 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. Of particular relevance is evidence that an interim order is necessary to prevent serious or irreparable harm. Given section 279(1) of the Act, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made.
Both of the given examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the Applicants do need to establish that the circumstances of the application warrant the making of an interim order.

While I do not propose to finally determine the issues raised by the applicant before affording other lot owners and the body corporate an opportunity to make submissions, I have set out below some of my preliminary observations.

Motion 37 is a motion relating the authorisation of a Letting Agent with the following alternatives:

Alternative A - to engage Accommodation Management Services Pty. Ltd (AMS) as Letting Agent;
Alternative B - to engage BRK (NSW) Pty. Ltd. (BRK) as Caretaker & Letting Agent.

Motion 36 is a motion relating the engagement of a caretaker with the following alternatives:
Alternative A - to engage Davbren Pty. Ltd. ATF Hutchinson Management as Caretaker. Alternative B - to engage the family company of Laurence Agius, Manhattan Management Pty. Ltd. as building manager/ caretaker.
Alternative C - to engage BRK (NSW) Pty. Ltd. (“BRK”) as Caretaker.

Motion 33 is a motion relating the engagement of a gardening and lawn mowing contractor with two alternatives.

I note that Motion 37, alternative B, relates to the engagement of the applicant as both Caretaker and Letting Agent. However motion 36, alternative C, relates to the engagement of the applicant as Caretaker. I am concerned that because of this overlap between motions 37 and motion 36, owners may not be able to make a comparable choice between the alternatives.

I also believe there may be some substance to the applicant’s claim that the two motions deal with the same subject matter and may therefore be void pursuant to subsection 72(5) of the Standard Module Regulation which provides:
If more than 1 motion about the same issue is listed in the agenda, or stated in a voting paper for the meeting, all motions about the issue are void.

A further concern which I have regarding Motions 36 and 37 is that the applicant currently carries out its letting business from lot 1 and part of lot 1 is also used for the purpose of carrying out caretaking functions. The applicant does so in accordance with by-law 1 which provides as follows:

each lot shall be used for residential purposes except:-lot 1 may be used for residential purposes and for the purpose of management of the building and for the sale and letting of lots in the building on behalf of the owners, and the provision of services to occupiers of lots. The owner or occupier of lot 1 may without the consent of the committee display signs for the purpose of offering for sale or for letting any lot in the building and the provision of services to occupiers. The body corporate has power to grant the owner of lot 1 in the building the right to carry on in the building the business of letting of lots and may enter into an appropriate agreement on such terms and conditions as the body corporate

The draft Letting Agreement submitted by AMS states that it will maintain and staff a reception desk but clearly, an on-site letting business may only be conducted from lot 1 or from common property. The applicant states that the explanatory material accompanying the motion indicates that the body corporate will not grant an occupation authority for the purpose of conducting a letting business. The applicant has indicated that it does not propose to dispose of lot 1 and cannot be compelled to do so in order to allow another entity to carry out the functions of Letting Agent or Caretaker from lot 1. I therefore believe there is some substance to the applicant’s claim that the explanatory material accompanying Motion 36 is misleading and if carried, the would conflict with the by-laws or be unenforceable.

At the same time I am conscious of the fact that given the short period of time in which I have been required to consider this application, I have not been able to seek a reply from the respondent body corporate. I am therefore reluctant, at this stage, to rule the motions invalid or to direct the Chairperson to rule the motions out of order.

I have therefore decided to order that pending the making of final orders pursuant to this dispute resolution application, the Body Corporate for Peninsula is not to implement or otherwise act upon any resolution passed on motions 33, 36 and 37 to be considered at the Annual General Meeting which is scheduled for 5 February 2011. Accordingly, the body corporate must not enter into a new Letting Agreement, Caretaking Agreement or Gardening/ Lawn mowing Contract until a final order is made, or this interim order is otherwise revoked.

Prior to any final orders being made, the body corporate and all lot owners will be afforded the opportunity to make submissions regarding the final outcomes sought by the applicant.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Peninsula [2011] QBCCMCmr 34 (4 February 2011)