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Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders |
Last Updated: 18 March 2011
REFERENCE: 1093-2010
ORDER OF AN ADJUDICATOR
MADE UNDER PART 9 OF CHAPTER 6
BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997
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Number of Scheme:
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13638
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Name of Scheme:
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Conca D’Oro
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Address of Scheme:
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39 - 41 Tallebudgera Drive PALM BEACH QLD 4221
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TAKE NOTICE that pursuant to an application made under the abovementioned Act by Simpat Pty Ltd, the Owner of Lot 18
is dismissed.
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STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1093-2010
“Conca D’Oro” CTS 13638
Conca D’Oro community titles scheme 13638 (Conca D’Oro) consists of 17 lots and common property. The community management statement (CMS) for Conca D’Oro indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme. Department of Environment and Resource Management records show the scheme is registered as Building Units Plan 1469 and 9071.
APPLICATION
Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Smipat Pty Ltd, Owner of Lot 18 (applicant) on 25 November 2010. The applicant sought orders against the Body Corporate for Conca D’Orda (respondent) in the following terms:
PROCEDURAL MATTERS
Under section 243 of the Act, a copy of the application was provided to the Body Corporate, with an invitation to the Committee and all owners to respond to the matters raised by the application. Submissions were made by the Body Corporate Committee and the Owner of Lot 11, Henry Semenowicz. The applicant inspected the submissions received and made a written reply.[1]
A dispute resolution recommendation was made referring the dispute to departmental adjudication. I then investigated the dispute, pursuant to section 271 of the Act, which included reviewing the application and submissions and seeking further information from the applicant.
MATTERS IN DISPUTE
The application relates to the applicant’s proposal to divide Lot 18 into two lots. The history of the dispute is as follows.
On 6 December 2006, the Annual General Meeting (AGM) of the Body Corporate considered Motion 12 which had been submitted by the then Owners of Lots 17 and 18. The motion was “That unit 18 be approved to strata title into two (2) separate units.” The explanatory note to the motion indicated that Lot 18 had been used as two units for many years, which was previously approved by Council and the Body Corporate, and they now wanted separate titles. It indicated that they would move car parks behind the mail boxes at their own cost, and that the change would benefit owners with an extra visitor car park and more revenue for the Body Corporate.
The meeting minutes record that the motion passed with eight votes in favour and two against. The minutes further note that all costs would be at the expense of the owner and the Committee would approve the final plan to change the car park. However the proposal did not proceed.
The Committee meeting of 13 March 2010 referenced (Item 3) the 2006 AGM decision to separate Lot 18 if all costs were paid by the owner and two new car spaces were created. The meeting minutes note that the applicant was happy to proceed with this proposal and that the extra lot entitlement would provide extra levies for owners.
On that basis the applicant then took steps to progress the project, including preparing a draft survey plan and CMS. However the applicant then became aware that a resolution without dissent was required, and the previous meeting decisions were inadequate.
On 31 May 2010 a document was issued under the signature of the Chairperson entitled “Notice of an extraordinary meeting by flying minute where the owner’s attendance is not required”. The notice referred to the March Committee minutes. It said the applicant had asked to proceed with the proposal to split Lot 18 and the Committee had agreed. It noted the applicant had concreted the two car spaces on the front lawn at its expense, with one to become the car space for the new lot and the other would be a visitor car space. It further noted that an extra $1,460 would be contributed to Body Corporate funds from the split, and that the applicant would pay all the costs.
The notice asked owners to vote yes to the three motions on the accompanying voting paper, and return the voting paper to the Body Corporate by 21 June 2010. The motions were as follows:
The application includes a copy of the draft CMS and a draft survey plan for the new Lots 19 and 20. It appears that these were circulated to Owners with the meeting notice.
It seems that there are no minutes of the meeting. In response to a request for a copy of the minutes, the applicant’s solicitors responded that “There was no formal meeting so no minutes of meeting exist.” However the applicant provided copies of the voting papers from two owners, being the Owners of Lots 10 and 11, dated 2 June 2010 and voting against the motions.
The applicant apparently approached the dissenting owners to discuss the matter, although no formal correspondence was sent. The applicant claims that the dissenting owners were adamant that they were against the splitting of Lot 18, but neither would provide reasons for their opposition.
The applicant argues that the proposal should be approved because:
Lot 18 has already been treated as two lots for some time, and the proposal will simply formalise that situation.
No owner will suffer any real detriment from the subdivision.
The Body Corporate will receive additional levies from the creation of a further lot.
The applicant has already incurred costs in installing the new car park at the direction of the Body Corporate.
The dissenters have not disclosed a reasonable basis for refusing consent.
Submissions
The Committee submission comprises a ‘flying minute’ of a Committee meeting held on 20 December 2010 by telephone. Five committee members participated and the minutes indicate that they unanimously supported the original decision of 6 December 2006 and 13 March 2010.
The Owner of Lot 11, Henry Semenowicz, provided documentation in regard to this dispute on 16, 20 and 22 December 2010. Further correspondence was filed on 28 January and 11 February 2011, after the period for submissions had closed[2]. This material includes documentation that was sent to all owners regarding the vote, some of which include his annotations and comments; an advertisement for the sale of Lot 18, and a letter dated 6 January 2009 from Australian Unit Administration Pty Ltd[3].
The submissions and attachments include the following comments:
The lot has been rented out as two units for the eight years he has resided there.
There is no firewall between the units. What if there was a fire and someone got burnt?
He visited the Deputy Mayor and Councillor about how rates and water are paid for the unit.
He was approached by a person from LJ Hooker who said he needed the money and was there anything that could be done to change his mind like paint his unit. He was approached by a person who said he was the owner who asked what he could do to change his vote.
Since he has resided in the scheme all decisions are made by the Committee.
It seems strange that the letter from the Chairman said they should vote yes.
They have had three body corporate management companies.
In regard to the text in the Notice of the extraordinary meeting about the proposed allocation of the new car spaces, the submitter has commented “what about previous years”.
A copy of the draft new survey plan is annotated with the comment “what is this the balconies around I’d say it was common property its used by the public.”
The six car spaces in Murlong Court that are covered with carports were concreted using Body Corporate funds rather than at the expense of the owners who park there. The concreted carport area is common property but every owner paid the same as for lighting for the carports. It cost $6,500. Prior to the change from body corporate managers Aust Admin to Squires he heard about the concreting. He knew roughly where it would go and asked Aust Admin where it was going. Aust Admin said it was going where the six carports are and it was a Council regulation. He asked Aust Admin for a copy of the Council letter but got no response. He asked the Councillor about the Council regulations in regard to concreting. While he was away there was a meeting at which the concreting was approved.
Comments are made about other decisions made at the meeting on 13 March 2010.
JURISDICTION
I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[4]
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 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; or a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or the authorisation of a person as a letting agent.
An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[5] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[6]
DETERMINATION
The issue to determine in this application is whether it would be just and equitable in the circumstances to deem the Body Corporate for Conco D’Oro to have consented to record a new CMS that cancels Lot 18 and replaces it with Lot 19 and 20, and adjusts the contribution and interest lot entitlement schedules accordingly.
Consent to record a new CMS
The applicant is proposing to record a new CMS for the scheme, which will incorporate a change in the identification of lots and a change to the lot entitlements for the scheme. Under section 62(2) of the Act a body corporate must normally consent to record a new CMS by passing a resolution without dissent. Accordingly, this proposal clearly required a motion to be passed at a general meeting as a resolution without dissent.
Motion 12 purportedly passed at the AGM in December 2006 was clearly inadequate for this purpose. It was not passed as a resolution without dissent. Moreover, even if it had, it is arguable that the wording of the motion was so vague as to not be sufficient to authorise the recording of a new CMS or of the contents of that new CMS.
Item 3 at the Committee meeting in March 2010 is similarly ineffective. Firstly, the minutes do not record a specific decision of the Committee[7], and, while referring to the 2006 vote, do not even specifically record that the previous decision was endorsed or confirmed. More fundamentally, however, a committee very clearly has no authority to approve the recording of a new CMS.
The third consideration of the issue was at the purported “extraordinary meeting” in May/June 2010. The three motions considered at this ‘meeting’ were not passed as a resolution without dissent. If these motions had been validly considered but not passed because of opposition that was unreasonable in the circumstances, I could have considered (as outlined in more detail below) whether it was just and equitable in the circumstances to give effect to the motion. However this is not the case.
I consider that the conduct of the meeting was fundamentally flawed. Taken as a whole, these were not minor or inconsequential defects. Although I have no evidence that a proper conduct of the meeting would necessarily have changed the result, more appropriate processes and information could have allayed owner concerns. For this reason, I am of the view that the Body Corporate has not yet properly considered the motions. Accordingly I do not consider that it would be just and equitable to give effect to motions that the Body Corporate has not properly voted on.
The obvious defects with the purported “extraordinary meeting” include the following:
There is no capacity in the body corporate legislation for general meetings to be held by ‘flying minute’. All general meetings must be held at a specified time and place[8], with owners given the opportunity to attend the meeting to vote personally rather than only submit a written vote[9].
A general meeting must be held at least 21 clear days after notice of the meeting is given. The reckoning of time excludes the day notice is given and the date of the event, and a notice is given when it is received in the ordinary course of post, unless some other time can be demonstrated. For a notice issued on 31 May 2010, and where at least some notices are posted rather than just hand delivered to owners lots, the meeting could not be held before at least 23 June 2010.
The purported ‘notice’ of meeting did not comply with the legislative requirements, particularly in that it did not state the time and place of the meeting, apparently did not contain the agenda for the meeting, and apparently was not accompanied by proxy and company nominee forms[10]. Moreover, the notice itself should simply convey factual information about the meeting. Information outlining the background to a motion or the arguments in favour of it should be included in an attached explanatory schedule rather than in the notice itself.
The voting paper did not specify that the type of resolution required for the motions and who submitted the motion (presumably either the Committee or the applicant)[11].
There were no minutes recording the results of the meeting[12].
Although my primary concern is with the conduct of the meeting itself, I have some concerns that the motions themselves were not necessarily helpful. Rather than simply referring to the attached new CMS, it would have been more appropriate if the motion was more specific in detailing the nature of the proposed change to the CMS. The much more detailed form of words proposed in the outcome sought in this application, that the Body Corporate consent to record a new CMS that cancels Lot 18 and replaces it with Lots 19 and 20, and that contains a revised schedule of lot entitlements, would have been considerably more informative.
In addition, rather than presenting three motions, it would be more appropriate that the agreement to affix the seal and lodge the new CMS be contained in a single motion. They are essentially a single issue and require only one motion, and this would avoid any risk of one related motion being passed but another not[13].
Of course, the draft CMS and survey plan should accompany the motion. If the motion is being proposed by the applicant, the applicant should consider submitting an explanatory note[14] explaining the motion and perhaps allaying any perceived concerns of owners.
Overturning resolutions without dissent
Section 276(1) of the Act requires an adjudicator to make an order that is just and equitable in the circumstances. Without limiting the orders that an adjudicator can make, Schedule 5 of the Act sets out a range of orders that an adjudicator may make. Item 10 specifically contemplates an adjudicator making an order to give effect to a motion, or a variation of a motion proposed, if a motion requiring a resolution without dissent was not passed because of “opposition that in the circumstances is unreasonable”. Considering an order of this nature enables an adjudicator to determine the balance between the need to protect the genuine interests of minority owners, and upholding the justifiable position of the majority in the face of unfounded or vexatious opposition.
In a previous adjudication[15], Adjudicator P Dowling provided the following summary of decisions regarding the test of ‘reasonableness’ in regard to overturning resolutions without dissent:
“In Points North (paras 42 and 44) and Ocean Plaza Apartments[16] (paras 23 and 26), the specialist adjudicator stated:
‘In determining whether such opposition was in the circumstances unreasonable, I do not consider that the “subjective intention” of each of the lot owners who voted in opposition is the appropriate test for the above criteria in Schedule 5 Order 10. Whether the opposition is in the circumstances unreasonable has to be considered “objectively” taking into account all relevant circumstances ... the appropriate test ... is whether opposition to a motion is unreasonable/reasonable when considered in an objective and fair manner in all of the circumstances. A test relying on a subjective intention to oppose a motion would make Schedule 5 Order 10 meaningless and inoperative.’
In Zenith[17] (where the above test was applied), the adjudicator stated the courts have held that where a statute expressly provides that a decision is to be made ‘reasonably’ or upon ‘reasonable grounds’, the test is an objective one that requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’.[18] In this decision and in the decisions made to resolve disputes in Q1[19] and Allen Court[20], adjudicators also stated:
‘In determining whether votes against a motion constitute opposition that in the circumstances is unreasonable it is necessary to consider all the material facts. What is material will vary from case to case but typically the requirement for an adjudicator to make a just and equitable decision involves some balancing of the interests of the majority and minority and raises questions of fairness.’
In Sirocco Resort[21], reasonableness in the context of withholding approval was considered by the specialist adjudicator who stated:
For the reasons outlined above, I do not consider that the Body Corporate for Conco D’Oro has yet properly considered a motion requiring a resolution without dissent to record a new CMS. However the Committee or applicant could submit a new motion on this matter to a new extraordinary general meeting. In the event that a valid motion is put to a validly convened general meeting of the Body Corporate, and fails to pass as a resolution without dissent, the applicant could lodge a further application seeking to overturn the decision of the Body Corporate not to pass the motion.
Basis for opposition
In considering any future application on this matter, an adjudicator would consider whether the opposition to the motion was reasonable. Although, for the reasons outlined above, I do not consider that there is scope for me yet to deem the proposal to have been consented to by the Body Corporate, I will comment on the opposition to the proposal that has been indicated to date.
First, the Owner of Lot 10 has voted against the proposal. However this owner did not make any submissions outlining the basis of her objections and, apparently, has not given the applicant any basis for her opposition to the proposal. If this Owner failed to provide any cogent basis for her opposition to any future motion on this matter, an adjudicator would be unable to conclude that her opposition was reasonable in the circumstances.
Second, the Owner of Lot 11 has voted against the proposal. Having carefully read the various materials submitted by Mr Semenowicz, I remain unclear as to the reasons for his opposition to the proposed new CMS. However there are some matters which seem to be causing him concerns. I will make some observations on these matters for the information of parties.
Mr Semenowicz has indicated concern that there is no fire wall between the proposed Lots 19 and 20, and is worried about what would happen in a fire. I am not aware of the applicable building regulations in this situation and so this may or may not be a genuine issue. It may be a matter that the parties should follow up with the local council for clarification. However, as Mr Semenowicz acknowledges, Lot 18 has been operating as two units for at least eight years. Therefore, any fire safety issue exists regardless of whether the title for the lot is divided or not. For that reason, I fail to see why it is relevant to the issue of whether the lot should be formally divided.
On a copy of the draft new survey plan, Mr Semenowicz appears to have queried the balcony area around the proposed new Lots 19 and 20 and appears to believe that this was common property. As such, he may be concerned that the proposal will result if a loss of common property, with common property converted to part of the new lots. I am satisfied that this is not the case. The current survey plan for the scheme, which was recorded in 1974, clearly shows a balcony within the boundaries of Lot 18. The proposed new survey plan is merely updating the format of the plan, as now required by the Registrar of Titles, and there is no evident change to the dimensions of the areas in question.
Much of Mr Semenowicz’s submission relates to concreting undertaken at some stage near a carport area, and apparently at the Body Corporate’s expense. Indications from the correspondence provided by Mr Semenowicz are that this related to a driveway. Mr Semenowicz appears to object to this work being undertaken at the Body Corporate’s expense. It is not clear what the relevance of this issue is the proposal to divide Lot 18. I am unclear whether there is some actual or perceived correlation between the concreting that Mr Semenowicz refers to and the concreting undertaken by the applicant, at the Body Corporate’s request but at his own expense, to create two new car spaces. Regardless that work has already been done and, to the extent that it was approved by the Body Corporate, it is a separate decision that would need to be challenged independently. I do not consider that the fact that an owner disputes concreting works undertaken by the Body Corporate or an owner on the common property is, of itself, any basis to oppose the division of Lot 18.
Mr Semenowicz has made various comments about other unrelated decisions made in the scheme. The question of whether such decisions were valid or reasonable is an entirely separate matter, which concerned owners should pursue independently with the Body Corporate. They are not a valid justification for opposing this proposal.
Having regard to the matters raised to date by Mr Semenowicz, then, it is not evident that he has yet demonstrated any reasonable basis for opposition to the applicant’s proposal.
In general terms, and on the information presented to date, I would make the observation that it is difficult to see how any owner would be adversely affected by the applicant’s proposal. The proposal merely formalises a situation that has existed for many years, without apparent complaint. Owners will benefit from the additional Body Corporate contributions (or, conversely, a lowering of their individual contributions) because the applicant would contribute for two lots rather than one.
Conclusion
Adjudicators have the capacity to give effect to a proposal requiring a resolution without dissent that was not passed because of opposition to the motion was not reasonable in the circumstances. To date I have not been presented with any evidence of reasonable opposition to the proposal.
However I do not consider that it would be just and equitable at this time to give effect to the proposal. Due to significant procedural defects with the Body Corporate’s past consideration of this issue, I do not consider that the Body Corporate has yet given proper consideration of this proposal through a valid motion requiring a resolution without dissent at a validly convened general meeting.
I would suggest that the applicant now submit a new motion on this matter to the Body Corporate, having regard to my comments above. On receipt of this motion and the accompanying material I would encourage the Body Corporate to convene a new extraordinary general meeting as soon as practicable. While I would assume the scheme’s body corporate manager can advise the Committee on how to convene the meeting in accordance with the legislation, they can contact the Information Service in the Commissioner’s Office[22] if they have general queries in this regard. The Body Corporate may wish to circulate a copy of this order and the statement of reasons to its members so that they are aware of the issues before any new vote on the matter.
In the event that this matter is reconsidered at a general meeting and fails to pass, the applicant could return to this Office. It would be unfortunate if there was a necessity to take this further step, however I would anticipate that any future application could be handled expeditiously. Although I have expressed a view that there is no evidence yet of any reasonable opposition to the proposal, that does not preclude genuine concerns being elucidated in future.
[1] See sections 246 and 244 of the Act respectively
[2] The material filed after the date of submissions was not included in the material inspected by the applicant. However in the circumstances, at this stage I do not consider it necessary to delay this matter further by providing this to the applicant and invite their response to it.
[3] This letter
refers to correspondence from 30 December 2008 and says that the driveway is a
council requirement; they were obtaining
quotes for the driveway adjacent to the
carports; that the committee can approve expenditure up to $200 per lot and
above that all
owners are consulted and can view quotes.
[4] See sections
227, 228, 276 and Schedule 5 of the
Act
[5] Section
276(2) of the
Act
[6] Section
284(1) of the Act
[7] I note that, pursuant to section 55 of the Standard Module, the Committee is required to produce full and accurate minutes of a Committee meeting which includes setting out the wording and voting of the motions voted on at the meeting.
[8] Sections 70(2) and 75 of the Standard Module
[9] Section
86(1) of the Standard Module regarding , and section 76 regarding the
requirements for the agenda of a general
meeting.
[10]
Section 70 of the Standard
Module
[11]
Section 71 of the Standard
Module
[12]
Section 96 of the Standard Module
[13] I note also
that section 72(5) of the Standard Module provides that if more than one motion
about the same issue is listed on the
agenda or stated in the voting paper for
the meeting, all motions about the same issue are
void.
[14]
Section 73 of the Standard
Module
[15] One
Park Road [2008] QBCCMCmr 3 (7 January 2008)
[16] Points
North [2004] QBCCMCmr 423 (2 September 2004); Ocean Plaza Apartments
[2004] QBCCMCmr 452 (23 September
2004)
[17]
Zenith [2007] QBCCMCmr 115 (28 February
2007)
[18]
Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989)
88 ALR 621
[19]
Q1 [2007] QBCCMCmr 131 (8 March
2007).
[20]
Allen Court [2007] QBCCMCmr 297 (21 May 2007).
[21] Sirocco
Resort [2006] QBCCMCmr 426 (2 August 2006). This dispute did not consider
Schedule 5(10). The decision related to the transfer of rights provisions in
the
Body Corporate and Community Management (Accommodation Module) Regulation
1997.
[22]
Freecall 1800 060 119 and www.justice.qld.gov.au/bccm
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