C G YOUNGREFERENCE: 0239-2002
INTERIM ORDER OF AN
ADJUDICATOR
MADE UNDER PART 10 OF CHAPTER 6
BODY CORPORATE AND COMMUNITY MANAGEMENT ACT
1997
| Number of Scheme: | 29364 |
| Name of Scheme: | Township 29 |
| Address of Scheme: | 29 Township Drive BURLEIGH HEADS QLD 4220 |
TAKE NOTICE that pursuant to an application made under the abovementioned Act by
Codyhart Consulting Pty Ltd, by its nominee Ron Cody, the owner of Lot 3,
C G
YOUNGI hereby order that the resolution passed in respect of Motion 11 at
the First Annual General Meeting held on 2 April 2002, seeking the consent of
the body corporate to an application by Shayne William and Sheila Ann KISS, the
co-owners of Lot 2, to the Gold Coast City Council
to establish a licensed
brothel in the lot, is invalid and of no effect.
I further order
that as soon as possible, the body corporate is to facilitate a
re-consideration of the same motion, or a similar motion at the option
of Shayne
and Sheila Kiss, to be put as an ordinary resolution, by forwarding a voting
paper to owners containing the motion and
allowing three (3) weeks for owners to
return their vote.
I further order that a copy of this order and
the accompanying reasons is to be forwarded to each lot owner at the address for
service shown in the
body corporate roll, either before or at the same time as
the above voting paper is sent to owners. 2n
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION -
REF 0239-2002
“Township 29” CMS
29364
This is the interim (and final) order to an application by Codyhart
Consulting Pty Ltd of Lot 3, represented by nominee Ron Cody,
which has sought
the following order of an adjudicator under the Body Corporate and Community
Management Act 1997 (“the Act”) -
“To invalidate the First Annual General Meeting of the Body Corporate Township 29364 held on Tuesday 2 April 2002 at Body Corporate Services, Level 1, 45 Nind St., Southport.”
JURISDICTION:
This is a
dispute between an owner, the applicant Codyhart Consulting Pty Ltd of Lot 3,
and the body corporate, the respondent, concerning
the validity of a general
meeting of the body corporate. This is a matter which falls within the dispute
resolution provisions of
the legislation (see sections 182, 182 and 223(see
example (3)(k)) of the Act).
Section 225(1) provides that 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 to
which the application relates. An adjudicator’s order may contain
ancillary
or consequential provisions the adjudicator considers necessary or
appropriate (section 230(1)).
Section 223(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, in the context of a
community titles scheme, about –
a) a claimed or anticipated contravention of the Act or the community management statement; or b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.
An order may
require a person to act, or prohibit a person from acting, in a way stated in
the order (section 223(2) of the Act). An adjudicator’s order may contain
ancillary or consequential provisions the adjudicator considers necessary
or
appropriate (section 230(1) of the Act).
APPLICATION AND
SUBMISSIONS:
Under the provisions of section 194 of the Act, copies of
the application were caused to be provided to all owners, and the Body Corporate
Manager, inviting them to
respond to the matters raised in the application.
Direct notice was given to Shayne and Sheila Kiss, the co-owners of Lots 2 and
4, who are relying on the passing of Motion 11 as consent by the body corporate
to their lodgement of a development application with
the Gold Coast City Council
(“GCCC”) for the operation of a licensed brothel in Lot 2.
Submissions were received from
the Body Corporate Manager, Body Corporate
Services Pty Limited (“BCS”), and Shayne & Sheila Kiss
(“Kiss”).
The applicant sought an interim order in the same
terms as the final order set out above. The immediate concern of the applicant
was to stop the GCCC from approving the brothel licence application as the
consent had been sent by BCS to the GCCC on 12 April 2002.
From enquiries made
by this office, it was found that GCCC had deferred approval of the application
pending confirmation of the
consent. In a later July tele-conference with Ron
Cody (for the applicant) and Shayne Kiss (a co-respondent), I was informed by
Mr
Kiss that he was awaiting the determination of this application before deciding
whether to continue with the brothel in “Township
29” or seek
another location. In the circumstances, no further urgency existed warranting
interim intervention and this determination
is in final resolution of the
matter.
The applicant Codyhart Consulting Pty Ltd supports its
application by alleging that: there were a number of breaches of legislative
procedure in the convening and holding of the First Annual General Meeting
(“the meeting”); the terms of Motion 11 are
unlawful or at least
uncertain; and there was favoured treatment of Kiss by BCS, which had
effectively convened and controlled the
meeting.
Both Kiss and BCS have
made submissions opposing the application. The matters raised by the applicant,
and the opposing arguments
of both parties, will be canvassed in an examination
of the separate matters under “Determination” which follows.
DETERMINATION:
At the outset I wish to make certain
comments regarding the circumstances of this application and the issues it
involves.
Firstly, while the order sought by the applicant is the
invalidation of a meeting, and the supporting grounds concern procedural matters
and other applications of the legislation which relate to meeting matters, the
real concern of the applicant is undoubtedly the operation
of a brothel within
the scheme. This is evident from a reading of both the minutes of the meeting
relating to Motion 11 and the
grounds submitted in support of the interim order
application being to stop the GCCC approving the brothel development
application.
As I, and no doubt the respondents and others, recognize
this to be the core issue of the application, I intend to deal with it first.
The establishment of licensed brothels is a recent development made
possible by the government’s introduction of the Prostitution Act 1999.
This statute, and the Integrated Planning Act 1997, permits
the GCCC to approve the establishment of a brothel in “Township 29”
providing certain conditions are met (see
section 64 of the Prostitution Act)
and, because the “application land” is a lot in a community titles
scheme, be satisfied that the body corporate has
given its consent to the
brothel. There is nothing in the Integrated Planning Act 1997, which
specifies how that consent is to be given by the body corporate, for example, by
the passing of an ordinary resolution, special
resolution or resolution without
dissent, or even perhaps by by-law. In the absence of any specification as to
the manner of obtaining
the consent required, one needs to then look at the Act,
the Body Corporate and Community Management Act 1997, itself.
The
scheme of the legislation is that decisions of the body corporate are generally
made by a simple majority vote in general meeting,
namely an ordinary
resolution, unless in particular instances the legislation specifies that either
a special resolution or resolution
without dissent is required. Further,
decisions in the name of the body corporate can be made by its committee unless
either of
the three preceding resolutions are specified, or in the case of an
ordinary resolution it is a “restricted issue” (see section
15 of the Commercial Module regulation), or the motion involves expenditure
beyond the committee’s spending limit (not relevant
here).
It is my
view that it would be inappropriate for a decision of such a nature to be made
by the committee. It would have been preferable
if the Act, or perhaps the
Integrated Planning Act, were to specify that the consent must be by way
of an ordinary resolution, or if the government considers a higher level of
support
from the body corporate (ie the owners) is desirable, by special
resolution or resolution without dissent. Specifying the type of
resolution
would put the level of owner consent beyond doubt, and in that regard I intend
to pass this information to the appropriate
government body for consideration.
The other important aspect of this matter which needs to be considered
is whether the core duty of the body corporate to act reasonably in
carrying out its functions under the Act, might impinge on the consent decision
(see sections 87 and 114 of the Act). In considering
the term
“reasonably”, the duty to act ”for the benefit of lot
owners” in respect of common property can also be applied to other
body corporate decisions. A simple example of the operation of
this overriding
duty is where 99 out of 100 owners vote to construct a barbecue, but then
proceed to site it under the bedroom window
of the remaining owner. This owner
could successfully argue against the siting on the basis that the body corporate
was not acting
for the benefit of owners. In respect of the present matter, the
question is whether there are circumstances where a resolution
giving consent to
a brothel may be invalid because of its unreasonableness. For example, had not
there been a planning restriction
against brothels being established in or close
to residential areas, it could be argued that the passing of an ordinary
resolution
(say by the majority vote of the potential brothel licensee) giving
consent to the establishment of a brothel in a residential community
title
scheme would be unreasonable in the interests of owners.
While this
aspect has not been explicitly raised by the applicant, it is implicit in the
applicant’s grounds and comments recorded
in the minutes of the meeting
where its nominee Cody states: “The establishment of a brothel and the
reputation it would import to Township 29 would denigrate the reputation of the
Scheme”; and “their (the lot owners) staff have to
share common property with sex workers, brothel staff, clientele and brothel
owners; and in respect to the value of lots, “Who would want to buy
or lease a property on the same land as a brothel other than a brothel
owner?”
This is the first application for adjudication which
concerns the establishment of a licensed brothel in a community titles scheme.
While the restriction of brothels to non-residential use areas resolves what may
otherwise have been a major point of contention
in residential community title
schemes, there are still a variety of commercial schemes which contain various
types of businesses.
Having considered the matter, and while not saying that
there can be no instance when body corporate consent to a brothel could
be held
to be unreasonable, I am of the opinion that, generally, the intention of the
government in legislating for brothels should
be given effect to when
considering the issue of reasonableness. In the particular instance of this
scheme, I note that the applicant
carries on an environmental consulting
business, and a waterproofing material business is conducted from Lot 6 (whose
owner also
voted against consent); I am unaware what business is conducted from
Lot 5, however the owner voted for Motion 11 then it is irrelevant.
I can see
nothing in the circumstances of the scheme to persuade me that consent to an
application would be unreasonable.
That is, in the particular case
of “Township 29” I am of the opinion that the passing of a lawful
ordinary resolution by the
body corporate in general meeting giving consent to
the establishment of a brothel in the scheme, is a reasonable decision of the
body corporate in keeping with its duties and functions under the
legislation.
Having said that, I shall now turn to a determination of the
validity of the meeting.
The circumstances of the meeting are unusual.
The scheme was established on 14 June 2001 as a building format plan comprising
5 lots
(for whatever reason, perhaps the future re-subdivision of Lot 2, they
are numbered Lots 2 to 6) and is regulated by the Commercial
Module. The body
corporate management agreement with BCS is dated 28 June 2001 so presumably a
general meeting of the body corporate
was held sometime between 14 and 28 June
for the engagement of BCS to have been resolved in accordance with the
Act.
Under section 48 of the Commercial Module, unless more than 50% of
the lots were sold sooner, the latest date for holding the statutory
First
Annual General Meeting (“First AGM”) was 14 December 2001. This
meeting was not held. Sub-section (4) provides
that an adjudicator may appoint
a person by order to call a meeting deemed to be the First AGM. Adjudicators
make such orders routinely
and it would have been a simple matter for the body
corporate, with the advice and assistance of BCS, to make application for such
an appointment. As pointed out by BCS in its submission, it is usual that the
adjudicator appoint a Body Corporate Manager and,
if it agreed, it would have
been appointed.
However this was not done and BCS itself convened the
meeting, as BCS states, “...under Clauses 4(a) and (b) of the
Administration Agreement...(it) has a delegated authority to call and
hold the FirstAGM “, These clauses relate to a general delegation of
the powers of the executive members of the committee (but not explicitly
of the
committee itself, though the delegation of powers of “ordinary
members”, not provided for in section 106 of the Act, may have sought
to achieve this) and an expression of when the powers might be
used.
It
appears that the elected secretary (a BCS employee) had resigned before the
meeting, and the chairperson had sold his lot. It
also appears that these
casual vacancies were not filled by the remaining committee members at the
relevant times, leaving the body
corporate without a valid committee. A Body
Corporate Manager would normally have advised the body corporate on this
procedure so
that the body corporate complied with the legislation in having a
functioning committee. In the circumstance that no committee existed
to
properly instruct on the holding of a deemed First AGM, BCS should have then
made application under section 48(4) for appointment
to convene and hold the
meeting. Instead it chose to convene the meeting of its own accord, and,
further, there are aspects of the
subsequent meeting, especially in respect to
Motion 11, that have led me to the order made.
Firstly, it is standard
practice for adjudicators in orders for deemed First AGM’s, to require
that both a copy of the order
be promptly served on all owners in the scheme,
and that at least two weeks written notice be given to owners inviting them to
submit
motions for inclusion on the agenda of the meeting. This would have
averted the complaint of the applicant that he had no opportunity
to put a
motion to the meeting, and to further claim that the respondent Kiss received
favoured treatment in being the only owner
to know in advance of the meeting and
have a motion included on the agenda.
BCS has submitted that Kiss did not
receive favoured treatment but had coincidentally sought advice from BCS
regarding the wording
of a motion at the time, which Kiss then submitted. The
applicant states, however, that Chris Beavan of BCS told him on 8 April
that
Kiss had requested the meeting. BCS is correct in saying there is no obligation
to seek motions from owners for the First AGM,
however, as I have said, had it
been held under an adjudicator’s order this would have occurred for this
meeting.
In its application, BCS acknowledges that, “The
representative of Body Corporate Services Mr Chris Beavan invited Mr Shane Kiss
to act as Chairperson for the First AGM ...however all owners present
were asked if that was acceptable to them. No objection was lodged by owners
present...”. The legislation provides that where the elected
chairperson is not present, as occurred here, those present and entitled to vote
may
select a chairperson (see section 35 of the Commercial Module). BCS had no
right to select a potential chairperson and then ask
those present whether they
agreed or not with the choice. A Body Corporate Manager has a duty to not only
be impartial as between
owners, but be seen to be so; this pre-selection of
Kiss, especially when he it is likely he was the only owner with foreknowledge
of the meeting, and had a contentious motion on the agenda, could easily be seen
to be giving Kiss favoured treatment even if this
was not actually the
case.
In my view, the foregoing events, particularly in respect to
Kiss’s Motion 11, give a taint to the meeting.
In addition, the
wording of Motion 11 regarding the use of common property car parking by brothel
clients, reads –
“That clients be allowed to park whilst conducting business at these premises in the allocated common property, having due care and diligence for all other users of the premises.”
By-law 33 provides
each owner with a right of exclusive use over designated areas of common
property, with Lot 2 having a significantly
larger area of grant. There also
remains a fairly large balance area of vacant common property.
While the
motion is poorly worded, it could not in any case allow the owner of Lot 2
(Kiss) to use the exclusive grant areas of the
other owners for parking by
clients. The reference to “allocated common property” could
be read to refer only to the exclusive use areas of Lot 2, though such a
statement is unnecessary. It could also be
read to refer to all exclusive use
areas, though, as already pointed out, this would have no legal effect in
respect to the other
owners’ areas. It could also be read to refer to
both the Lot 2 exclusive use areas and to visitor car spaces, and this latter
reference is that interpretation put forward by BCS in its submission as being
the correct meaning of “allocated common property”. That is
not an interpretation that is first evident from a reading of the motion. It
appears then, that this limb of Motion 11 is
meant as notice to other owners
that clients of the proposed brothel will be using visitor car spaces, but with
a recognition of
the rights of the visitors of other owners. How the owner of
Lot 2 would police this fair sharing of spaces is not stated; it will
be
difficult in practice if clients use the scheme property during the working
hours of other lot owners.
In summary, adjudicators have an overarching
responsibility to make orders that are “just and equitable in the
circumstances” to resolve a dispute. In regard to the events
surrounding the meeting of 2 April 2002, and in particular to those relating to
Motion
11, as set out in the foregoing reasons, I am of the opinion that the
resolution passed in respect of Motion 11 should not have effect,
and that it
should be reconsidered by the body corporate in general meeting. Given the lack
of clarity in the second limb of the
motion, perhaps Kiss may wish to redraft it
so that its meaning is clear, or alternatively consider that it is not necessary
at all.
In any case, Kiss has that opportunity under the order.
To save
both time and expense, and in the interests of Kiss and owners generally, I have
provided that the reconsideration of Motion
11, or substitute Motion 11, can be
done by a “flying minute” motion without the necessity of holding a
general meeting.
I have also provided that a copy of this order and these
reasons be provided to all owners – this will allow owners to make
an
informed decision on the motion, with the knowledge of what the consequences
will be if the consent motion is either passed or
rejected.
In the circumstances, it is not intended to invite further submissions
regarding this matter, or to make a further order, since this
decision, though
an interim one as sought by the applicant, is final in its determination of this
matter. If the applicant considers
that an appeal of this decision is warranted,
then it should appeal the interim order.
