Tobermory [2011] QBCCMCmr 449 (12 October 2011)

Last Updated: 24 October 2011

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

CITATION:	Tobermory [2011] QBCCMCmr 449
PARTIES:	Michelutti Holdings Pty Ltd and Angeline Michelutti (nee Ebejer) (applicants) The body corporate for Tobermory CTS 15022 (respondent) All owners (affected persons)
SCHEME:	Tobermory CTS 15022
JURISDICTION:	Sections 227(1)(b) and 229(3)(a) of the Body Corporate and Community Management Act 1997 (Qld) (Act), applying the Act and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).
APPLICATION NO:	0562-2011
DECISION DATE:	12 October 2011
DECISION OF:	P Dowling, Adjudicator
CATCHWORDS:	GENERAL MEETING – whether the body corporate acted reasonably making decisions on motions at a general meeting. Act, s 94.

ORDERS MADE:

I hereby order the outcome sought that the body corporate for Tobermory CTS 15022 acted unreasonably opposing Motions 6 and 11 at the annual general meeting held 4 April 2011, is dismissed. I further order that the resolution passed on Motion 18 at the annual general meeting held 4 April 2011 is void. I further order that the outcome sought that the body corporate acted unreasonably passing Motion 20 at the annual general meeting held 4 April 2011, is dismissed.

REASONS FOR DECISION
Introduction

[1] The body corporate’s annual general meeting was held 4 April 2011 (AGM). It decided 20 motions and elected a committee.
[2] The applicants are concerned about four decisions made by the body corporate at the AGM. The first is the decision not to audit its financial accounts (Motion 6). The second is its decision to refuse their request to install air conditioning (Motion 11). The third is the decision to register water meters (Motion 18). The fourth is the engagement of Neil Dixon as a body corporate manager (Motion 20).
[3] The applicants ask that each of these decisions be overturned.

Jurisdiction

[4] After receiving the application, the commissioner invited the other lot owners to make submissions about the matters raised in the application (s 243, Act). Submissions were made by Neil Dixon for the body corporate. The applicants made a written reply to submissions.
[5] The commissioner has referred the application to departmental adjudication (s 248, Act). An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act).

Analysis

Motion 6

[6] Motion 6 proposed the body corporate not audit its statement of accounts for the financial year ending 30 June 2010.
[7] This statutory motion had to be included on the agenda of the AGM (s 76(3)(a), Standard Module; statutory motion defined, schedule, Standard Module). The motion had to be decided by special resolution (s 155(1) and (8), Standard Module). It is apparent from the result of voting recorded in the minutes of the AGM that the motion was not passed by special resolution (s 106, Act).
[8] The applicants believe it is reasonable the accounts are audited. They say there is only one common interest as two related persons are the body corporate manager, chairperson, secretary and treasurer. The applicants argue an audit will ensure accuracy and transparency for all owners.
[9] Mr Dixon submits he and Linda Dixon represent Lots 1, 4, 5 and 6 on behalf of the respective lot owners. He states the accounts can be audited if the applicants pay for it.
[10] The applicants believe it is unreasonable to expect them to pay for the audit.
[11] The body corporate must administer common property and body corporate assets for the benefit of lot owners and it must carry out the other functions given to it under the Act (s 94(1)(a) and (c), Act). The body corporate must act reasonably making a decision (s 94(2), Act).
[12] The body corporate will have acted reasonably if the decision made for Motion 6 is objectively reasonable (Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125). The objective test requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’ (Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989) 88 ALR 621). The issue is not whether the decision was “correct” but whether it is objectively reasonable (Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 pp34, 38).
[13] The body corporate is not compelled to have its annual accounts audited. The fact owners have decided not to have the accounts audited is not, of itself, unreasonable. There needs to be something in the circumstances demonstrating it was unreasonable to decide not to have an audit carried out.
[14] The body corporate has not acted unreasonably opposing Motion 6 just because Neil and Linda Dixon represent a majority of owners, they are members of the committee or Neil Dixon is the body corporate manager. There is nothing to suggest these persons or the body corporate will not act properly and in accordance with the Act. The applicants have not pointed to any previous event which establishes a need to support an audit. It is not demonstrated there are justifiable concerns about aspects of the body corporate’s financial management which would be satisfied if an audit is approved.
[15] The applicants can monitor actions taken by the committee and the body corporate manager. As lot owners, they can, on the payment of a fee, access body corporate records, including financial material (s 205, Act). As a committee member, Mrs Michelutti is entitled to reasonable access (without payment of a fee) to body corporate records (s 204, Standard Module). In addition, the applicants are entitled to a copy of any committee decisions (s 55, Standard Module). Further, the body corporate is not prevented from deciding, at a later time, to audit its accounting records (s 155(4), Standard Module).
[16] In conclusion, I am not satisfied from submissions the body corporate acted unreasonably deciding not to audit its accounts for the financial year ending 30 June 2010.
[17] I note though that the material indicates the AGM was held in April and that the financial year ended on 30 June. An annual general meeting must be held within 3 months after the end of each financial year (s 66, Standard Module). While this issue is not relevant to the determination of this (or any other) outcome in this application, the body corporate needs to ensure its annual general meetings are held within the legislated timeframe.

Motion 11

[18] Motion 11 proposed that the applicants “be allowed to install an air conditioning unit...and that ... (they) will cover all cost for the installation of the air condition... The air condition unit would be installed following all local, state & government laws. This will be installed by a qualified company”.
[19] While it is not clear from the minuted resolution, the applicants have submitted they propose to install the air conditioning unit on common property.
[20] The installation of air conditioning is an improvement (improvement defined schedule 6, Act). The body corporate may, by ordinary resolution in general meeting, authorise an owner to make an improvement to common property for the benefit of the owner’s lot (s 164, Standard Module). It is apparent from the result of voting recorded in the minutes of the AGM that Motion 11 was not passed by ordinary resolution (s 108, Act).
[21] The applicants would like to install air conditioning to improve the use and enjoyment of their lot. They say the unit can be located on the right hand side of the building and there would not be any visual impact. The applicants submit the proposed area is not used and there would not be any walkway problems.
[22] Mr Dixon submits:

• He was advised by an electrician a separate electrical circuit would have to be run to the switch board, and the cables and conduit would need to be surface mounted on external walls. He believes this work would be an eyesore and would not be supported by the four lots he represents.
• Placing the unit on common property has the potential to become a legal minefield due to possible trip hazard.
• The four lots he represents would support the installation if the condenser unit is placed on Lot 2 and no electrical cables or conduits are secured on common property.
• The applicants need to make a formal application to the body corporate setting out the location of the unit and the decibel rating. The body corporate would need to be advised of all works to be undertaken to shield or omit noise from the unit and a written undertaking that no cable or conduit is placed on common property or any space in the switch board.
• No air conditioning units have been installed previously.
• Reverberation or noise amplication will occur if the unit is placed on common property as proposed. The proposal is contrary to the Australian Institute of Refrigeration, Air Conditioning and Heating.

[23] In reply, the applicants submit:

• The proposed air conditioning contractor has completed many air conditioning unit installations.
• It is proposed the power supply would be run up the cavity wall from the main switch board on the driveway side of the property, travel across the roof space of the building and down the cavity wall on the northern side of the building to the air conditioning unit which would be mounted at a high level to allow access.
• The contractor recommended this location as it would be the least disruption to any lots. The operation of the unit would have less noise impact on the side of the building.
• Installing the unit on the front balcony would be aesthetically unpleasing to the appearance of the building.

[24] Similarly, to Motion 6, the question is whether the body corporate acted unreasonably opposing Motion 11 (see paragraphs [11] and [12]).
[25] Ordinarily, the onus rests with the person proposing the motion to persuade the body corporate to authorise the improvement. This may include providing material explaining the proposed location of the air conditioning unit and the scope of the proposed work. It may be relevant to provide information about the type of the proposed unit, including its anticipated noise levels. Explanatory material may be included in the notice of the meeting or given to owners in another way. There is a risk the body corporate may oppose a motion if it is not properly informed about the proposal.
[26] There is nothing to suggest the applicants provided any more information to the body corporate or to owners than Motion 11. In my view, the motion did not adequately explain the proposal. While the motion did not indicate whether common property would be affected, it would seem Mr Dixon was aware where the air conditioning unit was being proposed to be placed. However, the motion did not explain any relevant details about the proposed installation. In the absence of an explanation from the applicants, the body corporate could reasonably oppose the motion because of advice from an electrician about the proposed installation. The body corporate may reasonably ask why the applicants could not install the unit mainly on their lot.
[27] There needs to be an objective basis for opposing a proposal of the nature submitted by the applicants. A personal opinion that the infrastructure would be an eyesore is not justification. A concern about the legal implications of the installation is not, without good reason, a basis for opposing a proposal. The body corporate cannot, again without good reason, oppose a proposal claiming it is contrary to an industry standard.
[28] The body corporate could not reasonably oppose a proposal just because common property would be affected. This is because the applicants can ask the body corporate for permission to make an improvement to common property. As well, infrastructure such as cables, wires, pipes and plant and equipment may be installed on common property to supply a utility service such as air conditioning.
[29] The proposed air conditioning unit (including its associated wiring etc) is utility infrastructure which would supply a utility service to Lot 2 (utility infrastructure and utility service defined schedule 6, Act). An easement exists in favour of a lot and against common property for establishing and maintaining utility infrastructure reasonably necessary for supplying utility services (s 115O(1), Land Title Act 1994). The exercise of an easement right must not interfere unreasonably with the use or enjoyment of the part of common property against which the easement lies (s 115O(2), Land Title Act 1994). “Rights under a statutory easement must not be exercised in a way that unreasonably prevents or interferes with the use and enjoyment of a lot or common property” (s 68(1), Act).
[30] Therefore, an objection to accessing the common property switch board cannot be relied on unless for example, it is demonstrated the proposed work may unreasonably affect common property or a lot included in the scheme. Noise concerns may be valid if verifiable. Given the applicants did not provide any information to the body corporate about the noise emitted by proposed air conditioning unit, it is difficult for Mr Dixon to argue there will be reverberation or noise amplication.
[31] While additional information about the proposed installation has been provided in the reply to submissions, this material is not relevant to the determination of the outcome sought. To be successful, the applicants need to demonstrate the body corporate, armed with information provided to it, acted unreasonably opposing Motion 11.
[32] The absence of a proper explanation is the problem the applicants face in this application. For the stated reasons, I am not satisfied the body corporate acted unreasonably opposing their proposal.

Motion 18

[33] Motion 18 proposed that once installed, Lot 2 will make application to have all water meters registered with the Gold Coast City Council and submit appropriate documentation.
[34] It is apparent from the result of voting recorded in the minutes of the AGM that the motion was not passed by ordinary resolution (s 108, Act).
[35] The applicants submit they live in Sydney and they would have to take time off work to travel to the Gold Coast to submit water meter numbers to the council.
[36] Mr Dixon states the applicants submitted Motion 12. He says the four units he represented supported the motion and passed another motion that the applicants make application to the local authority to have the water meters registered. Mr Dixon submits the applicants appear to want water meters but not want to follow through with the registration of the water meters.
[37] In reply, the applicants submit it is unreasonable that they contact all owners and ask them to supply a water meter number.
[38] Motion 12 proposed that all lots have their own water meter and that the meter be registered with the relevant bodies so each lot is responsible for paying their own costs. It is recorded in the minutes that the motion was not passed. It is not known if the minutes incorrectly record the voting on the motion. This issue is not significant to the determination of this outcome.
[39] I am not satisfied from submissions the applicants have an obligation to do what the body corporate has decided in Motion 18. The applicants did not propose the motion, they did not agree to do the work proposed in the motion and there is no indication that the applicants have a legislative obligation to make the application to the council. Mr Dixon relies on Motion 12. I am not persuaded the body corporate can compel the applicants to make the application just because they submitted this motion. I am not aware of any body corporate power that allows it to make this decision in the circumstances.
[40] For these reasons, I have voided the resolution passed on Motion 18.
[41] It should be noted the Act provides guidelines with respect to measuring water usage. If supply is separately measured and charged, the body corporate and individual owners are liable for the charge for water (s 195, Act). Section 196 makes provision for the circumstance where there is no practicable way available for the water supplier to measure the water supplied to each lot and common property.

Motion 20

[42] Motion 20 proposed the engagement of Neil Dixon as body corporate manager for one year.
[43] The motion had to be decided by ordinary resolution (s 114(2)(a), Standard Module). It is apparent from the result of voting recorded in the minutes of the AGM that the motion was passed by ordinary resolution (s 108, Act).
[44] The applicants submit it is unlawful that Mr Dixon is engaged as body corporate manager and elected as chairperson. They say an independent company should have the role of body corporate manager. The applicants are concerned the body corporate manager and the secretary/ treasurer have a common interest in, or authority to act for, four out of the six lots, and a conflict of interest and unreasonable bias can occur.
[45] Mr Dixon states he is not sure what the affect an independent body corporate manager would have as they would not have a voting right.
[46] The body corporate may engage a person as a body corporate manager even if a committee is elected (s 119(1), Act). The person may be authorised to exercise some or all of the powers of the chairperson, secretary and treasurer (s 119(2), Act). The engagement must comply with sections 114(2), 116 and 118 of the Standard Module.
[47] There is nothing to suggest Mr Dixon’s engagement did not comply with the above provisions of the legislation. The fact that Mr Dixon is related to an owner or represents an owner does not exclude him from being engaged as body corporate manager.
[48] The question is whether the body corporate acted reasonably passing Motion 20 (see paragraphs [11] and [12]).
[49] The applicants concerns about possible consequences of the engagement are not a justifiable basis for finding the body corporate acted unreasonably. They did not submit an alternative to the body corporate for its consideration and even if they did, the body corporate is not prevented from deciding to engage Mr Dixon.
[50] The applicants are concerned about conflict of interest and bias. It should be noted the schedule 2 code of conduct is taken to be included in the terms of the body corporate manager’s contract (s 118, Act). The code requires for example, the body corporate manager to act honestly and fairly, and to act in the body corporate’s best interests. The body corporate may terminate the engagement if the code is contravened (s 131, Standard Module).
[51] The applicants are correct that Mr Dixon was wrongly elected as chairperson. His engagement as body corporate manager made him ineligible to be elected as chairperson or to be elected as any other voting member of the committee (s 10(2)(a), Standard Module). However, the election does not affect the engagement. The applicants have not sought to void Mr Dixon’s election. However, the irregularity should be rectified immediately (if still necessary) and the vacancy in the position of chairperson filled as soon as possible by the appointment of an eligible person.
[52] In conclusion, the applicants’ grounds do not establish the body corporate acted unreasonably engaging Mr Dixon as body corporate manager.