Oscar on Main [2011] QBCCMCmr 569 (19 December 2011)

Last Updated: 4 January 2012

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

CITATION:	Oscar On Main [2011] QBCCMCmr 569
PARTIES:	Beaumaris Properties Pty Ltd, Owner of Lot 29 (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:	1043-2011A
DECISION DATE:	19 December 2011
DECISION OF:	ID Rosemann, Adjudicator
CATCHWORDS:	INTERIM ORDER – whether there is a basis to vary or cancel the interim order previously made. Act, s 279

INTERIM ORDERS MADE:

I hereby order that the request by the Body Corporate for Oscar of Main to cancel the interim order made on 1 December 2011 is dismissed.

REASONS FOR DECISION
Introduction

[1] This dispute relates to motions considered at an Extraordinary General Meeting (EGM) of the Body Corporate on 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.
[2] On 1 December 2011 I made interim orders[1] in respect of this application and a related application[2]. I ordered that, pending the final determination of the applications, the Body Corporate shall not implement EGM Motion 6.
[3] On 2 December 2011 the Body Corporate requested that the interim order be cancelled. The only issue to consider at this time is whether there is any basis to cancel the interim order.

Preliminaries

[4] Edgewater community titles scheme 11512 (Edgewater) consists of 51 lots and common property. The community management statement (CMS) shows the Standard Module applies to the scheme. The scheme is registered as Building Unit Plan 3654.

Application

[5] The originating application was lodged by the Owner of Lot 29 on 21 October 2011.
[6] The originating application sought the following interim order:

That Motions 5 and 6 should not be considered (voted on) at the general meeting to be held on the 6th December 2011 and that they may be resubmitted for consideration at a General Meeting in the 2012/13 or subsequent Body Corporate financial year.

[7] In addition, the applicant sought the following final order:

That motions 5 and 6 not be considered (voted on) at the General Meeting to be held on the 6th December 2011 ie these motions be put on hold pending the adjudicator's determination.

[8] On 1 December 2011 I made the following interim order:

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).

[9] On 2 December 2011 the Body Corporate requested that the interim order be cancelled.

Jurisdiction

[10] I am satisfied that this matter falls within the legislative dispute resolution provisions.[3]
[11] An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about: a claimed or anticipated contravention of the Act or the CMS; or the exercise of rights or powers, or the performance of duties, under the Act or the CMS.[4]
[12] An 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.[5] An interim order may be extended, varied, renewed or cancelled by the adjudicator until a final order is made.

Procedural matters

[13] I invited the applicant, the applicant in the related application (Terry Naug), and the Mandersons to make submissions on the Body Corporate’s request. The applicant and Naug requested an extension of time to make a submission. The Body Corporate advised that it did not object to the extension, and accordingly it was granted. The applicant and Naug subsequently made written submissions.

Issue in dispute

[14] EGM Motion 5 proposed acceptance of a deed of settlement and release with the caretakers. The deed includes terms to pay the caretaker a reviewed remuneration and a settlement sum. The caretakers would then withdraw their current application in the Queensland Civil and Administrative Tribunal (QCAT). Motion 6 proposed the adoption of new caretaking and letting agreements with the current caretakers. The new caretaking agreement proposes an 18 year term with increased remuneration. Motion 7 proposed no extension to the caretaking and letting agreements after the expiry of the current agreements in 2018.
[15] Although I have not yet been provided with the EGM minutes, I am advised that Motions 5 and 6 were passed. Motion 7 was ruled out of order but the Body Corporate says the votes received on the motion would have resulted in it being lost.
[16] The basis for making the interim order was section 70 of the Accommodation Module. This section 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. I indicated that it was arguable that both Motions 6 and 7 proposed alternative matters of dealing with 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. I noted that if it was determined these matters should have been dealt with as a single motion with alternatives, there would be no discretion to do other than void both motions.
[17] This issue was not raised by either of the applicants. Therefore, the Body Corporate did not have the opportunity to make a submission on that point. I indicated in the interim order that if the Body Corporate could present cogent argument why Motion 6 was 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 to vary or cancel this interim order. It has made that application.
[18] The arguments presented by the Body Corporate for cancelling the interim order are:

1. The issue of whether section 70 has any application to Motions 5 and 6 is whether they are dealing with the same issue. They submit that they deal with different issues and scenarios.
2. Motion 6 is borne out of Motion 5. One of the provisions in Motion 5’s deed of settlement is that, if passed, the Body Corporate will execute new caretaking and letting agreements. If Motion 5 is passed, a necessary consequence of the deed is an obligation to sign the new agreements. In addition, once the deed is signed the current agreements will come to an end.

100. Motion 7 proposes negative propositions relating to the existing agreements at some point in the future. However if Motion 5 is passed, Motion 7 is necessarily out of order because it is dealing with a letting agreement that doesn’t exist.

4. They submit that Motions 6 and 7 doe not propose alternative ways of dealing with the same issue because Motion 6 deals with the new agreement that will come into existence as a consequence of passing Motion 5. Motion 7 will only have relevance if Motion 5 is not passed.

[19] The submission from the applicant includes the following:

1. The Body Corporate’s argument is that a necessary consequence of passing Motion 5 is to sign the new agreements. This in effect says that if Motion 5 is passed, the Body Corporate must pass Motion 6. This is not what was presented to owners. The explanatory notes make no reference to the dependency of the motions. By presenting two motions, owners would have understood that they could accept or reject either motion. If this was not the case, the motions should have been one motion.
2. The explanatory notes are misleading as they refer only to an extension to the agreements, but in fact what is proposed is not an extension but new agreements.

100. The Body Corporate argues that if Motion 5 is passed, Motion 7 is out of order because the existing agreements are cancelled. However Motion 6 was still to be presented and Motion 7 is an alternative to that. If Motion 5 resolves to end the agreements, the Motions 6 and 7 provide alternative positions. Motion 7 is still valid if the term of the existing agreement has ceased.

4. Motion 6 seeks the extension of the term of the contracts and Motion 7 seeks no extension. These are clearly alternative outcomes.
5. The order of the motions on the agenda should not determine the outcome. Had Motion 7 (which was submitted before Motions 5 and 6) been listed first, the result could have been that Motion 5 and 6 would have been ruled out of order. If the order of motions dealing with the alternative outcomes has the potential for motions to be ruled out of order then the motions should be listed as a motion with alternatives.
6. Reference is made to alleged errors in the December “Chairman’s Communications”.
7. At the annual general meeting in May 2011 the Body Corporate resolved to adopt Motion 12 for a review of the caretakers agreement be undertaken but not before 20 March 2013. EGM Motion 6 is in breach of that resolution.
8. The settlement sum proposed by Motion 5 is a negotiated outcome arising from claims since May 2008. This disadvantages owners who purchased since then, had no indication of the claims and will have to pay for services they did not benefit from.
9. The new agreements and proposed plans for occupation authorities are unclear and confusing. A person could not rely on what was presented to accurately determine what areas have actually been granted to the caretaker in the contracts.

[20] The submission from Naug indicates his concern is that the Committee have breached their duty and compromised the Body Corporate’s decision-making process. He refers to spending unbudgeted funds to legally challenge owner motions; circulating information promoting its motions and discrediting opposing motions; keeping negotiations secret; incorrectly ruling motions out of order; and failing to rule the unbudgeted Motion 5 out of order. He would support the matter being determined by a new properly convened EGM before the QCAT deadline. This should include a motion to raise a special levy for the remuneration increases. He believes that the voting was prejudiced because these increases were not pointed out.

Analysis

[21] It is not appropriate for me to finally determine at this time whether Motions 6 and 7 should have been listed as a motion with alternatives pursuant to section 70 of the Accommodation Module. Rather, the question is whether there is any basis to displace the prima facie view in the interim order that there was a serious legal issue regarding that question, or there was new evidence to shift the balance of convenience in favour of cancelling the interim order.
[22] I am not satisfied that the Body Corporate has demonstrated either point. The Body Corporate has not presented any argument that Motion 6 should be able to be implemented notwithstanding any potential procedural defect in the agenda. Rather, they have argued only that there was no procedural defect.
[23] The Body Corporate’s arguments are largely predicated on the basis that Motion 5 results in the termination of the current agreements and that the execution of new agreements is a necessary consequence of passing that motion. I have some difficulty with this proposition.
[24] I see nothing in the deed that explicitly terminates the current agreements. Rather it appears to be implied that the current agreements will end when the new agreements are entered into. However the deed provides 28 days for the signing of new agreements and so the new agreement would not exist (and override any previous agreement) until it was signed. Therefore the current agreements continue unless and until a new agreement is signed.
[25] There is a further question as to how Motion 5 and 6 operate. What was the intended effect if Motion 5 were to pass but Motion 6 did not? If Motion 5 could operate in isolation to authorise the new agreements, why was Motion 6 included? I do not intend to consider at this time whether Motion 5 would be adequate alone to authorise the new agreements. However, if Motion 5 were sufficient to authorise the new agreements, then arguably it too would be an alternative to Motion 7.
[26] Regardless of the cause or source of Motion 6, given the material presented to date I fail to see how it was not an alternative to Motion 7. Motion 6 proposes new agreements and Motion 7 proposes no agreement after the conclusion of the current agreements. Both consider alternatives for managing the caretaking and letting functions of the scheme into the future. Similarly, if Motion 5 has effect of authorising the new agreements without Motion 6, it too would arguably be invalid because it was not included in a motion with alternatives.

Conclusion

[27] In the circumstances I have dismissed the request to cancel the interim order. I am not satisfied the Body Corporate has demonstrated there is not a prima facie legal issue to decide about whether the disputed motions should have been listed as a motion with alternatives.
[28] As noted in the interim order, nothing prevents the Body Corporate convening a new EGM that includes the substance of Motions 6 and 7 (and Motion 5 if the Body Corporate purports to rely on it as authorisation for the new agreements) as alternatives. Although I appreciate that has cost implications for the Body Corporate, it may be the quickest and simplest option for the Body Corporate. Although the apparent defect in the EGM agenda is a technical one, the legislation provides no discretion but to invalidate these motions if it is ultimately determined that a motion with alternatives was required.
[29] Following the voting at the EGM, the parties have an indication of the likely voting if a motion with alternatives was considered at a new EGM. The applicant (and the applicant in the related matter) may wish to consider the appropriateness of and basis for pursuing the matter further if the majority of owners support the approach in EGM Motions 5 and 6.

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[1] Oscar On Main [2011] QBCCMCmr 538 and Oscar On Main [2011] QBCCMCmr 539
[2] Adjudication application reference 1083-2011
[3] See sections 227, 228, 276 and Schedule 5 of the Act
[4] Sections 276 and 284(1) of the Act
[5] Section 279(1) of the Act