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- Body Corporate for Aleutian at Seaforth v The Lot Owners for Each of the Applicant Bodies Corporate[2009] QDC 52
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Body Corporate for Aleutian at Seaforth v The Lot Owners for Each of the Applicant Bodies Corporate[2009] QDC 52
Body Corporate for Aleutian at Seaforth v The Lot Owners for Each of the Applicant Bodies Corporate[2009] QDC 52
DISTRICT COURT OF QUEENSLAND
CITATION: | Body Corporate for Aleutian at Seaforth & Ors v The Lot Owners for Each of the Applicant Bodies Corporate & Ors [2009] QDC 52 |
PARTIES: | BODY CORPORATE FOR ALEUTIAN AT SEAFORTH CTS 27405 First Applicant/Respondent and BODY CORPORATE FOR NEWPORT AT SEAFORTH CTS 30880 Second Applicant/Respondent and BODY CORPORATE FOR LAGOON AT SEAFORTH CTS 31929 Third Applicant/Respondent and BODY CORPORATE FOR CASCADE APARTMENTS AT SEAFORTH CTS 33871 Fourth Applicant/Respondent and BODY CORPORATE FOR WINDSOR SHORES AT SEAFORTH CTS 33986 Fifth Applicant/Respondent v THE LOT OWNERS FOR EACH OF THE APPLICANT BODIES CORPORATE Respondents and ALEXANDER MANAGEMENT PTY LTD Respondent/Applicant and Respondent/Applicant and FERGUS JOSPEH GIBBONS Respondent/Applicant |
FILE NO: | 304 of 2008 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Maroochydore |
DELIVERED ON: | 10 March 2009 |
DELIVERED AT: | Maroochydore |
HEARING DATE: | 27 February 2009 |
JUDGE: | K S Dodds, DCJ |
ORDER: | The applications are adjourned to a date to be fixed. Costs are reserved. |
CATCHWORDS: | CORPORATIONS – BODIES CORPORATE – OTHER THAN COMPANIES AND ASSOCIATIONS – NATURE AND POWERS – IN GENERAL – Application to court to amalgamate community titles schemes – where special resolution required to bring application – where voting paper accompanying notice of meeting to owners failed to state a special resolution was required – where minutes record motion as a motion by ordinary resolution – requirement for quotations – where cost of giving effect to a proposal exceeds relevant limit for major spending Body Corporate and Community Management Act 1997 (Qld) ss 85, 104, 106, 312, 316 & Schedule 6 Dictionary Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Qld) ss 40, 40A, 102 & Schedule Dictionary Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) Schedule Dictionary Cases cited: Banks & Anor v Body Corporate “Noosa on the Beach” Community Title Scheme, 6417 [2000] QCA 146 Oceana on Broadbeach Community Titles Scheme 24163 v Searle & Ors [2003] QCA 238 Sattel & Ors v Proprietors Be-Bees Tropical Apartments [2000] QCA 496 Warren v Body Corporate for Buon Vista Community Titles Scheme 14325 (No 2) [2006] QDC 398 |
COUNSEL: | D Atkinson for the applicants C J Carrigan for the respondents (Alexander Management Pty Ltd & Vandan Pty Ltd) S Moody for the 220th respondent |
SOLICITORS: | McColm Matsinger Lawyers for the applicants Short Punch & Greatorix Lawyers for the respondent (Alexander Management Pty Ltd) Macgregor O'Reilly Solicitors for the respondent (Vandan Pty Ltd) Munro Thompson Lawyers for the respondent (Fergus Joseph Gibbons) |
- [1]This matter came before the court by application filed 5 December 2008 for an order pursuant to section 85(3) of the Body Corporate and Community Management Act 1997 (Qld) (“BCCM Act”) to amalgamate the five applicant community title schemes (“The CTS’s”). The order of the court was sought because the Bodies corporate for some of the five applicant schemes failed to agree by resolution without dissent to amalgamation.[1]
- [2]The matter first came before a Judge on 12 December 2008. Orders were made regarding service, some directions were given about the filing and service of material any respondent wished to rely upon in opposition and the matter was adjourned to 27 February 2009 for hearing.
- [3]Prior to 27 February 2009 a number of further applications were filed. There was one by a lot owner, the 220th respondent, Mr Gibbons filed 19 February 2009 which sought the hearing be adjourned until May 2009 and directions about the conduct of the proceedings. The other two applications filed 23 February 2009 were by two corporate owners of commercial lots in Newport and Aleutian. These applications sought an order that the originating application filed 5 December 2008 had been commenced without authority as required by section 312 of the BCCM Act, was beyond the power of each applicant body corporate and be struck out or dismissed. Mr Gibbons supported this application.
Background
- [4]The evidence before the court was: Aleutian, Newport, Lagoon, Cascade and Windsor Shores consist of five tower blocks situated on land bordered by Alexandra Parade, Okinja Road, Wirraway Street and Maroubra Street at Alexandra Headland on the Sunshine Coast. There was one fence around the entire block of land.
- [5]The five towers were built by the developer progressively and as each completed a community titles scheme (“CTS”) came into existence for it.
- [6]It appears that from the time of establishment of a tower, the residents of each have had equal access to all the common property, notwithstanding that some common property may attach to a particular scheme/tower. To facilitate this, the developer apparently established 36 easements over the land containing all the towers. The easements provide, in effect, that when one scheme has the benefit of certain common property, the residents of other schemes have a right to enter and use those facilities. In exchange the host scheme (servient tenement) is entitled to charge the other schemes (dominant tenements) a fee, being a share of the cost of maintaining the property, calculated upon the proportion, the dominant tenement lots have to the total lots in the five towers.
- [7]Because this system was administratively unwieldy and generated expense, an informal arrangement titled the “shared services committee” consisting of 10 members being the chairman and one other member from each body corporate has operated from virtually the commencement of the schemes. It maintained the common property shared by all schemes. Each scheme contributed to the shared services committee budget in the proportion its lots bore to the total lots in all schemes.
- [8]In July 2006 advice was received that the shared services committee had no standing under the legislation and thus:
- no legal authority to manage the assets;
- the various bodies corporate were not required to pay money to it;
- it may be the subject of complaint or legal action by a disgruntled lot owner;
- this advice thereafter impacted on the ability of the shared services committee to function.
- [9]In 2008 each body corporate except Newport at its Annual General Meeting (“AGM”) had, amongst other things, a motion before the meeting proposing that the bodies corporate amalgamate.
- [10]On 4 July 2008 Newport held an Extraordinary General Meeting (“EGM”), at which a similar motion was before the meeting.
- [11]Pursuant to section 85 of the BCCM Act, to succeed, such a motion had to pass without dissent. For Aleutian, there were 32 votes for the motion and 1 against it. That one was a corporate owner of one commercial lot. For Newport, there were 21 votes for the motion and 10 against it. Those 10 were a corporate owner who owned 10 commercial lots. For Lagoon, there were 18 votes for the motion, with no dissent. For Cascade, there were 28 votes for the motion with no dissent. For Windsor Shore, there were 32 votes for the motion and 4 against it.
- [12]Following the voting on the matter at the AGM and at Newport’s EGM, the bodies corporate held further EGM’s.
- [13]Aleutian held an EGM on 6 August 2008. Minutes of the meeting record that a quorum was represented. Motion 2 “amalgamation” is recorded as a motion by ordinary resolution whereby it was resolved: after noting the majority vote at the AGM in favour of amalgamation; that two of the other Seaforth bodies corporate resolved to approve the amalgamation proposal; that legal advice had been received that application may be made to the District Court to approve amalgamation and that an approach to the court could cost up to a maximum of $75,000; to agree that “that as a significant majority of owners has voted in favour of the proposal for amalgamation, it would be appropriate for Aleutian at Seaforth to join with the four other Seaforth bodies corporate if their owners decide to make a formal approach to the District Court; ---that if such an approach is made, Aleutian at Seaforth will commit to expenditure of its share (by lot) of the legal costs- i.e. up to $16,115.70 to be paid from the administrative fund”. Voting was 26 in favour and 3 against with no abstentions.
- [14]Newport held an EGM on 4 July 2008. Minutes of the meeting record that a quorum was represented. Motion 4 for “amalgamation-approach to District Court” is recorded as a motion by ordinary resolution whereby it was resolved: after noting that one owner at Aleutian and four at Windsor Shores had dissented at the AGM’s while 32 owners in each tower had voted in favour; that all the owners at Lagoon and Cascade resolved to approve the amalgamation without dissent; that legal advice had been received that an application may be made to the District Court to approve amalgamation and that such an approach could cost up to a maximum of $75,000; to agree “that should a significant majority of owners vote in favour of this proposal for amalgamation it would be appropriate for Newport at Seaforth to join with the four other Seaforth bodies corporate if their owners decide to make a formal approach to the District Court; and agrees--- that if such an approach is made, Newport at Seaforth will commit to expenditure of its share (by lot) of the legal costs- i.e. up to $22,344 to be paid from the administrative fund”. Voting was 19 in favour and 12 against with 1 abstention.
- [15]Lagoon held an EGM on 6 August 2008. The minutes of the meeting record a quorum was represented. Motion 2 “amalgamation” is recorded as a motion by ordinary resolution whereby it was resolved: after noting that the vote at the AGM without dissent was in favour of amalgamation; that one of the other Seaforth bodies corporate also resolved to approve the amalgamation without dissent but that the remaining three recorded dissenting votes; that the five Seaforth bodies corporate had received legal advice that an application may be made to the District Court to approve amalgamation and that an approach to the court could cost up to a maximum of $75,000; to agree “that in view of the fact that a significant majority of Seaforth owners has voted in favour of the proposal for amalgamation, two Seaforth bodies corporate have agreed to make a formal approach to the District Court and the other two will be voting by resolution on the suggestion today; to agree that it would be appropriate for Lagoon at Seaforth to join with the four other Seaforth bodies corporate if their owners decide to make an approach to the District Court; ---that if such an approach is made Lagoon at Seaforth will commit to expenditure of its share (by lot) of the legal costs- i.e. up to $10,847.11 to be paid from the administrative fund”. 10 voted in favour, with none against or abstaining.
- [16]Cascade held an EGM on 6 August 2008. Minutes of the meeting record that a quorum was represented. Motion 2 “amalgamation” is recorded as a motion by ordinary resolution whereby it was resolved: after noting that 28 owners at the Cascade apartments voted at the AGM in favour of amalgamation with no dissenting votes; that one of the other Seaforth bodies corporate also resolved to approve the amalgamation proposal but that three recorded dissenting votes; that the five Seaforth bodies corporate had received legal advice that an application may be made to the District Court to approve amalgamation and that an approach to the District Court could cost up to a maximum of $75,000; to agree that “in view of the fact that a significant majority of Seaforth owners has voted in favour of the proposal for amalgamation, two Seaforth bodies corporate have agreed to make a formal approach to the District Court and the other two will be voting by ordinary resolution on the suggestion today; ---that it would be appropriate for the Cascade apartments to join with the four other Seaforth bodies corporate if their owners decide to make an approach to the District Court; ---that if such an approach is made Cascade apartments will commit to expenditure of its share by lot of the legal costs- i.e. up to $11,157 to be paid from the administrative fund”. Voting was 14 in favour and none against with 1 abstention.
- [17]Windsor Shore held an EGM on 11 June 2008. Minutes of the meetings record that a quorum was represented. Motion 2 “amalgamation” is recorded as a motion by ordinary resolution whereby it was resolved: after noting that 32 owners at Windsor Shores voted at the AGM in favour of amalgamation with four dissenting votes; that two of the other Seaforth bodies corporate had received legal advice that an application may be made to the District Court to approve amalgamation and could cost up to a maximum of $75,000, to agree “that as a significant majority of owners has voted in favour of the proposal for amalgamation it would be appropriate for Windsor Shores to join with the four other Seaforth bodies corporate if their owners decide to make a formal approach to the District Court; and--- that if such an approach is made Windsor Shores at Seaforth will commit to expenditure of its share (by lot) of the legal costs- i.e. up to $14,566 to be paid from the administrative fund”. Voting was 20 in favour and 2 against with no abstentions.
The Parties’ Contentions
- [18]The respondents contend that none of the five recent EGM’s I have recorded above resolved by special resolution to apply to the court for amalgamations and that therefore the applications are without authority.
- [19]Section 312 of the BCCM Act provides:
“(1) The body corporate for a community titles scheme may start a proceeding only if the proceeding is authorised by special resolution of the body corporate.”
There are some exceptions set out in subsection 2, but they may be put to one side in the circumstances of this matter.
- [20]In Schedule 6 of the Act, the definition schedule, it is provided that a special resolution is a resolution under section 106.
- [21]Section 106 provides:
“(1) ---
(2) One vote only may be exercised for each lot included in the scheme,whether personally, by proxy or in writing.
(3) The motion is passed by special resolution only if—
- for a meeting notice of which is given—
- ---
- after the commencement of this subparagraph—at least two-thirds of the votes cast are in favour of the motion; and
- the number of votes counted against the motion are not more than 25% of the number of lots included in the scheme; and
- the total of the contribution schedule lot entitlements for the lots for which votes are counted against the motion is not more than 25% of the total of the contribution schedule lot entitlements for all lots included in the scheme.
- [22]Section 104 of the BCCM Act provides:
“(1) The body corporate for a community titles scheme (scheme A) must—
- hold meetings of the types, and for the purposes, prescribed under the regulation module applying to scheme A; and
- conduct the meetings—
- in the way prescribed under the regulation module; and
- to the extent the regulation module does not prescribe the way to conduct meetings in the way decided by the body corporate.
- [23]It appears the appropriate regulation module for the Seaforth schemes at the time of the EGM’s was the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Qld) (“the Module”).
- [24]Regulation 40 of the module provided that “written notice of a general meeting must be given to the owner of each lot included in the scheme” either personally or at the owner’s address for service.[2] Subsection (3) provided:
“The notice of a proposed general meeting must—
- ---
- ---
- be accompanied by a voting paper for all open motions to be decided at the meeting;---”.
- [25]Regulation 40A “Requirements for voting papers” provided:
“(1) The secretary must prepare 1 voting paper for all open motions to be decided at a general meeting.
(2) ---
(3) ---
(4) A voting paper must—
- state each motion as required under subsection (5); and
- state for each motion whether a resolution without dissent, special resolution, majority resolution or ordinary resolution is required;----”
- [26]It seems plain that the legislative requirements for a special resolution to commence proceedings in court were not noticed for the material EGM’s. It can be inferred I think that the voting paper required to be sent to each owner did not (contrary to regulation 40A(4)(b)) state that the motion required a special resolution.
- [27]It appears that with the exception of Newport, each body corporate passed the motion by the majorities required by section 106(3) of the Act at the material EGM. The applicants’ contend that it is immaterial that the resolutions in question are recorded in the minutes as an ordinary resolution. With the exception of Newport, the motion passed by the majority required for a special resolution. The failure to appreciate a special resolution was required and to advise the lot owners accordingly should not invalidate the resolutions voted on, where in fact the result of the vote was that required for a special resolution. Pursuant to section 85(3) of the BCCM Act any one or more of those schemes can apply to the court for an order of amalgamation.
- [28]I do consider the respondents’ position to be correct. The schemes came into existence under the BCCM Act. The Act and the regulations thereunder create and regulate the existence of the schemes. Regulation 40 required, amongst other things, written notice of a general meeting must be given to the owner of each lot included in a scheme and must be accompanied by a voting paper for all open motions. Regulation 40A provided, amongst other things, that the voting paper must state for each motion whether a resolution without dissent, special resolution, majority resolution or ordinary resolution is required. The apparent purpose of the regulations is so that owners may know prior to a motion coming before the meeting the voting required for the motion to pass or fail. That knowledge may have a bearing on what they may do, for instance, lobbying other owners, voting at the meeting.
- [29]The regulations are in imperative terms. In the absence of compliance with the process legislated it is not to the point that (with the exception of Newport) the resolutions passed with the majority required by a special resolution.
- [30]Although in view of the conclusion I have reached it is not really necessary to deal with other matters the respondents or rather the 220th respondent in particular submitted that none of the resolutions before the court resolved to make application to the court. Rather each by its terms resolved to join with others in applying to the court if the others decided to do so.
- [31]If all applicant bodies corporate had passed a valid special resolution in those terms and all applied to the court, I would consider the terms of the resolution adequate. That would not be the case had one or more of the bodies corporate not passed a valid special resolution and joined in application to the court.
- [32]Another submission on the part of the 220th respondent focussed on the provisions of the legislation relating to financial management of CTS’s. The financial management arrangements applying to a CTS were those stated in the appropriate regulation module.[3]
- [33]At the material EGM’s, each body corporate resolved to contribute up to a specified amount of money to pay for an application to the court for amalgamation which appears to be a share of the maximum of $75,000 which had been advised. Where, as here, the amounts mentioned in the motion appear to have exceeded the relevant limit for major spending (here $250 multiplied by the number of lots in the scheme)[4], regulation 102 required that the owner of each lot must be given copies of at least two quotations for carrying out the work or supplying the--- services with the notice of a meeting.[5] According to the submission there was no evidence this occurred, to the contrary it appeared an indication of a maximum cost of an application to the court for amalgamation was obtained from one legal firm..
- [34]Regulation 102(6) provided that:
“If for exceptional reasons it is not practicable to obtain two quotations, a single quotation must be obtained and must accompany the notice of meeting”.
Unless this subsection applies “the motion must be stated as a motion with alternatives in the agenda and on a voting paper for the meeting”.[6]
- [35]As McGill SC DCJ commented in his reasons for judgment in Warren v Body Corporate for Buon Vista Community Titles Scheme 14325 (No 2) [2006] QDC 398, there was an air of unreality about this process when dealing with spending such as legal expenditure when it may be impossible to give a reliable estimate of costs prior to commencing the work. Here the legal firm involved had apparently advised that the process could cost up to $75,000. Another legal firm in all probability may provide a similarly broad estimate.
- [36]Because the evident intention is to amalgamate 5 separate bodies corporate there is an understandable desire to achieve a cooperative approach and share the cost five ways according to lot numbers in the five CTS’s. Self evidently this requires each body corporate to validly authorise any application to the court. It should also require bodies corporate cooperate in employment of professional assistance in preparing and prosecuting the application.
- [37]There are doubtless difficulties. Unless there can be said to be exceptional reasons making it not practicable to obtain two quotations, where the cost to a CTS of giving effect to the proposed application to the court, joint or otherwise, is more than $10,000[7], then two quotations for the carrying out of the work must accompany the notice of the meeting to each owner and the motion proposing the work must be stated as a motion with alternatives in the meeting agenda and on the voting paper.
Decision
- [38]The opposing submissions are for the striking out of the application (the applicant respondents) and for the adjournment of the application until after the 2009 AGM’s of the applicants which are to take place before 31 March 2009. At the AGM’s deficiencies in the process may be cured (the applicants).
- [39]Section 312 of the BCCM Act provides that a body corporate for a CTS may start a proceeding only if the proceeding is authorised by special resolution of the body corporate. Here the proceeding before the court was not authorised by special resolution.
- [40]In Sattel & Ors v Proprietors Be-Bees Tropical Apartments [2000] QCA 496 the Court of Appeal was concerned with an appeal against a decision of a Judge of the Supreme Court by the proprietors. The respondents, Sattel and others, sought to have the appeal struck out or dismissed on the ground that the appellant had failed to comply with section 259 of the Body Corporate and Community Management Act 1997 (Qld), (the predecessor to section 312 of that Act and in the same terms) because the bringing of the appeal was not authorised by special resolution.
- [41]The Court of Appeal held that the appeal was a fresh proceeding, not within the exception in section 259(2)(b) (now section 312(2)(b) and was not within the appellant’s power since there had been no special resolution authorising it. In response to a submission the appeal be adjourned so the appellant could attempt to obtain a special resolution ratifying what was done, the court said “where a party having no right to do so begins an appeal in this court, on the deficiency being brought to the court’s attention, the appeal would ordinarily be dismissed or struck out. The circumstances of the present case so far as they appear from the record do not suggest this is a case where justice requires another course be followed”.
- [42]In Oceana on Broadbeach Community Titles Scheme 24163 v Searle & Ors [2003] QCA 238 the Court of Appeal was concerned with an application for leave to appeal against a decision of the District Court dismissing an appeal from the order of the Commissioner for Body Corporate and Community Management. Almost 2 months after the application was filed, the applicant’s solicitor notified the Registrar that applicant did not have authorisation by special resolution of the body corporate to commence the appeal. The applicant sought adjournment of its application to a date suitable to the court about a month away by which time an EGM already called would have been held at which the applicant hoped to achieve the necessary authorisation.
- [43]The court considered Banks & Anor v Body Corporate “Noosa on the Beach” Community Title Scheme, 6417 [2000] QCA 146 and Sattel (supra). It concluded the appropriate order was to strike out or dismiss the application rather than adjourn it “in circumstances wherein as here, there are no pressing reasons in the interests of justice demanding an alternative course. If and when the applicant has the necessary authorisation of the body corporate, there is no reason why it cannot then bring an application for an extension of time to apply for leave to appeal and a fresh application for leave to appeal”.
- [44]In Banks (supra) an application for leave to appeal to the Court of Appeal by the body corporate was not authorised by special resolution of the body corporate at the time the application was filed. About 3 months after the application was filed and before the hearing date, a special resolution of the body corporate resolved to authorise the commencement and conduct of the appeal and incurring any necessary legal expenses.
- [45]The court considered that the resolution in substance ratified the proceeding already commenced and rejected a submission the application and appeal were incompetent.
- [46]Banks was a case where the court held the application for leave to appeal, that is, the start of the proceeding not authorised by a special resolution, may be ratified by special resolution at a later time, but before the matter comes on for hearing thus authorising the proceeding.
- [47]Sattel and Oceana were cases where ratification had not occurred by the date of hearing and adjournments were sought to allow the opportunity for ratification by special resolution to occur. In these cases the adjournments were refused. In refusing the adjournments, the court in each case seemed to accept it may have been otherwise if the circumstances suggested that the case was one “where justice requires that any other course be followed”[8]; “there were pressing reasons in the interests of justice demanding an alternative course”.[9]
- [48]Matters favouring adjournment here include the following:
- four of the five bodies corporate achieved the number of votes in favour of an application, required for a special resolution to pass;
- the other, Newport, which has 72 lots achieved 19 for votes and 12 against votes. Of the 12 against, 10 were from the corporate owner of 10 commercial lots;
- a deal of time, effort and money has already been expended;
- no additional prejudice will be done to the respondents by an adjournment.
- [49]Matters opposed to adjournment include that:
- the cause of the present situation is the applicants’ failure to comply with the requirements of the relevant legislation governing the bodies corporate;
- consequently the application to the court for an order amalgamating the CTS’s was not authorised as required by the BCCM Act.
- [50]I have reached the view the applications should be adjourned until after the 2009 AGM’s are held. Four of the bodies corporate have already achieved a vote which except for the deficiencies identified, would pass as a special resolution. It is not necessary all bodies corporate join in application to the court.[10]
- [51]The applications are adjourned to a date to be fixed.
- [52]This should not be taken as an indefinite adjournment. Its purpose is to provide an opportunity for all or some of the bodies corporate to pass a special resolution ratifying the application. If that is not practicably achievable at the AGM’s or shortly thereafter it may then be appropriate to strike the applications out.
- [53]The parties have liberty to apply on notice to all other parties.
Costs
- [54]Costs of the application will be reserved until the matter is again before the court.
- [55]I will hear further from the parties.
Footnotes
[1] Body Corporate and Community Management Act 1997 (Qld) section 85(1).
[2] Subsection (1).
[3] Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Qld) section 102.
[4] See the definition in the Dictionary Schedule.
[5] See regulation 102(1), (2), (5).
[6] Subsection (7).
[7] Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld), in force from 30 August 2008 repealing the Module.
[8] Sattel & Ors v Proprietors Be-Bees Tropical Apartments [2000] QCA 496 at [10].
[9] Oceana on Broadbeach Community Titles Scheme 24163 v Searle & Ors [2003] QCA 238 at 4.
[10] Body Corporate and Community Management Act 1997 (Qld) section 85(3).