Oscar on Main [2011] QBCCMCmr 539 (2 December 2011)

Last Updated: 15 December 2011

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

CITATION:	Oscar On Main [2011] QBCCMCmr 539
PARTIES:	Terrence Naug, Owner of Lot 52 (applicant) Body Corporate for Oscar on Main (respondent)
SCHEME:	Oscar On Main CTS 24605
JURISDICTION:	Body Corporate and Community Management Act 1997 (Qld), (Act), ss 227(1)(b), 229(3)(a) Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module)
APPLICATION NO:	1083-2011
DECISION DATE:	2 December 2011
DECISION OF:	ID Rosemann, Adjudicator
CATCHWORDS:	INTERIM ORDER – whether an interim order is warranted in the circumstances. Act, s 279

INTERIM ORDERS MADE:

I hereby order that, pending the final determination of this application, the Body Corporate for Oscar On Main shall not implement Motions 6 included on the agenda for the extraordinary general meeting scheduled for 6 December 2011. I further order that the application for interim orders is otherwise dismissed. This interim order has effect until six (6) months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn or otherwise ended (whichever is earlier).

REASONS FOR DECISION
Correction of order

[1] This order, originally issued on 1 December 2011, contained an error in the applicant’s name and lot number. The purpose of this order is to correct, under the ‘slip rule’, those errors. In all other aspects, the order and the statement of reasons remains unchanged.

Introduction

[2] This application relates to motions proposed by the Committee for consideration at an Extraordinary General Meeting (EGM) of the Body Corporate scheduled for 6 December 2011. Disputed Motion 5 proposes that the Body Corporate enter into a deed of settlement and release with the caretaking service contractor, the Mandersons. Disputed Motion 6 then proposes entering into new caretaking and letting agreements with the Mandersons.
[3] The applicant says that the legislation requires a BCCM Form 20 to accompany a motion to amend the terms of a service contractor and authorisation as a letting agent. He argues that because this form did not accompany the motions or explanatory notes, the motions should be ruled out of order.
[4] In the interim the applicant seeks an order that the disputed motions be put on hold pending the final determination of the application. The question in respect of the interim order application is whether serious legal issues have been raised and whether the balance of convenience between the parties warrants the making of the interim order sought.
[5] I note that another interim application disputing the same motions has also been lodged by another owner[1]. I have determined the two matters concurrently.

Preliminaries

[6] Oscar On Main community titles scheme 24605 (Oscar On Main) consists of 93 lots and common property. The community management statement (CMS) shows the Accommodation Module applies. The scheme is registered as Building Unit Plan 106757.

Application

[7] The applicant lodged this matter on 30 November 2011, seeks the following interim order:

I request that a direction be given to the body corporate that motions 5 & 6 are out of order and may not be voted on at the EGM dated 6th December 2011.

[8] In addition, the applicant seeks the following final order:

Motion 5 & 6 in the EGM scheduled for 6th December 2011 are seeking an amendment to the terms of a service contractor and an authorisation as a letting agent. I am seeking that motions 5 & 6 be ruled out of order as there was no BCCM form 20 accompanying the motion or explanatory notes as required by section 112 of the accommodation module.

Jurisdiction

[9] I am satisfied that this dispute falls within the dispute resolution provisions of the legislation.[2]
[10] An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute in a community titles scheme about a claimed or anticipated contravention of the Act or CMS, or the exercise of rights or powers or performance of duties under the Act or CMS.[3] An order may require a person to act, or prohibit a person from acting, in a way stated. An order may contain ancillary and consequential provisions the adjudicator considers appropriate.[4]
[11] 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.[5]

Procedural matters

[12] The Commissioner referred the application to me to decide whether the nature or urgency of the circumstances warrant an interim order[6].
[13] As provided for by the Act, the Commissioner made this referral notwithstanding that affected persons had not been given notice of the application or afforded an opportunity to make submissions about the application.
[14] I provided the Committee and the Mandersons with a limited opportunity to respond to the interim order application. A submission was made by the Committee.

Matters in dispute

[15] Motion 5 at the EGM in December 2011 proposes to sign a deed of settlement and release with the caretakers. I understand an application was commenced in the Queensland Civil and Administrative Tribunal (QCAT) by the caretakers for a review of the terms of their service contract[7]. Following a settlement conference on 29 September 2011, that matter has apparently been adjourned until February 2012. It seems an in-principle agreement was reached between the parties which requires the resolution of the Body Corporate to accept. The proposed deed includes terms to pay the caretaker increased remuneration and pay a settlement sum. The QCAT application would then be withdrawn.
[16] Motion 6 at the EGM proposes the adoption of new caretaking and letting agreements with the current caretakers. The new caretaking agreement proposes an 18 year term from the commencement date with the new remuneration level for the first year and thereafter as calculated under the agreement.
[17] In addition, I note that Motion 7 at the EGM proposes no extension to the caretaking and letting agreements after the expiry of the current agreements in 2018.
[18] The applicant argues that section 112 of the Accommodation Module requires a BCCM Form 20 to accompany a motion to amend the terms of a service contractor or an authorisation as a letting agent. As such he asserts that Motions 5 and 6 are invalid.
[19] The interim submission from the Committee opposes the application. It argues:

1. The applicant has failed to establish any proper basis for postponing the meeting.
2. Section 112(c)(ii) of the Accommodation Module requires that if a body corporate is considering a motion for an agreement to amend a person’s engagement as a service contractor or an authorisation as letting agent to include a right or option of extension or renewal, the material forwarded to owners must include an explanatory note in the approved form (BCCM Form 20).

100. Motion 5 or 6 do not seek to amend the terms of the existing caretaking agreements, as these will come to an end upon adoption of the deed of settlement. Therefore section 112(c)(ii) has no application.

4. The applicant asserts that there were no explanatory notes accompanying Motions 5 and 6, but extensive explanations were provided.
5. The EGM has been convened at considerable expense. Failing to provide owners with the opportunity to consider and approve the settlement will jeopardise the compromise negotiated at the QCAT mediation. It may result in the matter proceeding to determination with considerable cost to parties.

[20] The Mandersons also provided a submission noting that the EGM notice was distributed on 3 November. They comment that they are not seeking an amendment to the agreement but a new agreement and so BCCM Form 20 is not required.

Analysis

[21] The only issue at this time is whether an interim order is warranted. However to determine whether it is just and equitable to grant interim relief, it is necessary to consider the substantive issue in the dispute in the application.

Basis for interim orders

[22] Any order granted must be just and equitable.[8] An interim order will not be granted unless it is necessary due to the nature or urgency of the circumstances.[9] The examples in the Act indicate the usual circumstances where an interim order might be made 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 must establish that the circumstances warrant an interim order. An interim order will not be made if the only urgency is a desire to expedite the dispute.
[23] An adjudicator must be satisfied an application raises serious legal questions and 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 an interim order is necessary to prevent serious or irreparable harm.

Serious legal issue

[24] Section 112 of the Accommodation Module provides for a body corporate to make or amend a service contract or letting agent authorisation. The relevant parts of the section for the present purposes are as follows:

112 Authority to make engagement or give authorisation, or amend engagement or authorisation [SM, s 114]

(1) The body corporate may—

(a) engage a person as a body corporate manager or service contractor; or

(b) authorise a person as a letting agent; or

(c) agree to an amendment of an engagement or authorisation mentioned in paragraph (a) or (b).

(2) The body corporate may act under subsection (1) only if—

(a) ...

(b) ...

(c) the material forwarded to members of the body corporate for the general meeting that considers the motion approving the engagement, authorisation or amendment includes—

(i) for an engagement or authorisation—the terms of the engagement or authorisation, including—

(A) when the term of the engagement or authorisation begins and ends; and

(B) the term of any right or option of extension or renewal of the engagement or authorisation; and

(ii) for an agreement to amend a person’s engagement as a service contractor, or a person’s authorisation as a letting agent, to include a right or option of extension or renewal—an explanatory note in the approved form explaining the nature of the amendment; and

(iii) for another agreement to amend an engagement or authorisation—the terms and effect of the amendment.

(3) ...

[25] Motion 6 is not seeking to amend the caretakers’ engagement or authorisation. It proposes entirely new agreements. Accordingly I do not consider section 112(2)(c)(ii) can apply.
[26] Motion 5 could be argued as an amendment to the existing agreement. Even though the terms of settlement may result in the end of that agreement, the remuneration paid under that agreements seems to be altered. However there is no suggestion that the deed will add adding a right or option of extension or renewal. Rather the term would be shortened. Therefore, again I do not consider section 112(2)(c)(ii) can apply to the proposal in Motion 5.
[27] It is not immediately apparent that the material included in the notice for the EGM failed to include the information required in section 112(2)(c)(i) or (iii).
[28] There is a further matter not raised by the applicant. Section 70(5) of the Accommodation Module provides that if more than one motion about the same issue is listed on the agenda or stated in a voting paper for a meeting, all motions about the issue are void. It is arguable that both Motions 6 and 7 on the EGM agenda propose alternative matters of dealing with future caretaking and letting arrangements in the scheme: either by agreeing to a new 18 year agreement or by not extending the agreements beyond the current term. If it was determined that these should have been listed as a single motion with alternatives, there would be no discretion to do other than void both motions.

Balance of convenience

[29] The applicant has sought an interim order to put the motions on hold pending a final order. It is common in such circumstances for adjudicators to make an order to allow disputed motions to be voted on but prevent the body corporate from implementing them until a final order is made.
[30] There are potentially serious implications of the interim orders sought. If the Body Corporate were to pass Motions 5 and 6 and the Committee subsequently signed the deed and new agreements, it would be very difficult and potentially expensive to undo the situation if it was ultimately held that the motions were invalid. However if the motions were not passed, there may be cost implications for the Body Corporate if the mediated agreement fails and the QCAT application must proceed to final determination. Where there is a genuine legal issue, in my view the risks associated with the former alternative are more serious than the latter.

Conclusion

[31] I am not satisfied that the applicant has raised a serious legal issue about the validity of Motions 5 and 6 listed for consideration at the EGM of 6 December 2011, in respect of section 112((2)(c)(ii) of the Accommodation Module.
[32] However, there does appear to be a serious issue regarding Motion 6 that has not been raised by the applicant – in that it appears to require a motion with alternatives in light of Motion 7. In the circumstances I consider that it is just and equitable to make an order preventing the Body Corporate from implementing Motion 6, if passed, pending a final order.
[33] I appreciate that the Body Corporate has not had the opportunity to make a submission on this issue. If it can present some cogent argument as to why Motion 6 is not required to be included in a motion with alternative or otherwise why Motion 6, if passed, should be able to be implemented, it can apply for a variation or cancellation of this interim order.
[34] The matter will now be progressed in accordance with the legislative processes. If the disputed motions fail to pass at the EGM there would be presumably be no basis to proceed with the application. If either of the motions pass and the application is pursued, submissions on the final orders will be sought from all affected parties. It may be that the outstanding issues can be resolved between the parties without the need for a final order. If not, the matter will then be referred back to me for investigation and a final order will be made in due course.
[35] I note that nothing in this order prevents the Body Corporate convening a new EGM that includes the substance of Motion 6 and 7 as a motion with alternatives.

Effect of an interim order

[36] All parties should note the provisions of section 279(2) of the Act below. I have provided that this interim order will have effect for a period of not longer than six months. It is the responsibility of the applicant to apply to extend this order if no final determination has been made within that period. The interim order will not automatically be renewed and will automatically lapse upon a final order being made or this application being withdrawn.

(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; and

(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.

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[1] Adjudication application reference 1083-2011
[2] See sections 227, 228, 276 and Schedule 5 of the Act
[3] Section 276 of the Act
[4] Section 284(1) of the Act
[5] Section 279(1) of the Act
[6] Section 247 of the Act
[7] Pursuant to section 133 of the Act
[8] Section 276 of the Act
[9] Section 279 of the Act