Admiralty Towers [2014] QBCCMCmr 317 (29 August 2014)

Last Updated: 8 October 2014

ADJUDICATOR’S ORDER

Office of the Commissioner

for Body Corporate and Community Management

ORDERS MADE:

REASONS FOR DECISION

Introduction

[1] Owners recently voted, by secret ballot, to extend the existing management rights agreements for Admiralty Towers by an additional three years and five months. This followed the manager asking for an extension to bring the term of the management rights agreement back up to approximately ten years. The manager said that he wanted to do this because he is interested in selling the management rights and wanted the incoming manager to have a satisfactory length of tenure.

[2] Owners have different views on whether the body corporate for Admiralty Towers should be supporting the continuation of a management rights business at the scheme. Some owners appear to consider a management rights owner will provide a better service, perhaps because this manager will have a significant investment in the reputation of the building. However, other owners argue there would be cost savings if the body corporate instead sought competitive tenders from service providers who did not need to pay interest to the banks to cover the cost of purchasing management rights.

[3] As discussed below, owners are entitled to their own opinions and there is no satisfactory evidence that information distributed prior to the meeting resulted in owners being misled or pressured into voting in a way they now regret. An investigation into the validity of all the votes that were counted has disclosed some irregularities that will invalidate some votes. However, the number of substantiated irregularities was insufficient to change the outcome of the vote. Importantly, while the resident manager was obviously interested in the vote and put some pressure on some owners to cast a vote, I am satisfied only one vote was not freely and fairly cast. This was a vote where the manager was present with the owner when the voting paper was completed, and the manager then took the ballot paper away with him to post to the returning officer. A number of other votes are invalid due to irregularities of a much more technical nature.

[4] Overall, I am satisfied the vote freely and fairly favoured the extension of management rights. The application is therefore dismissed. While not relevant to my determination of the legal issues, there seems little doubt based on the submissions that a new meeting would give the same result even if this application had been successful.

Analysis

Were owners misled into voting for the extension?

No specific restrictions on distributing information

[5] The legislation requires a body corporate act reasonably in making decisions (BCCMA 94(2), 100(5)). This means that a decision cannot stand if enough people confirm they would have voted differently if they had not been misled by information provided at the time they cast their vote. However, this does not prevent robust discussion of issues to be voted on at upcoming meetings. There is nothing to stop owners and managers spending their own time and money to promote their views to owners. Even for material distributed by the committee, the legislation does not include any express or implied obligation to present both sides of the argument.[1] Even if incorrect or misleading information is distributed it is only if voters are actually misled that a resolution passed at the meeting should be invalidated.[2]

Were people misled?

[6] It is not disputed that the resident manager, Greg Kelly, encouraged people to vote for the extension of the management rights. Some individual owners seem to have also been vocal in encouraging the management rights extension. Other owners, including the applicant, were vocal in encouraging people to vote against an extension of the management rights.

[7] Some owners submit people must have been misled because they cannot believe that, with the full facts laid before them, a group of people would vote in favour of extending the management rights. However, where people may have different views about the benefits of the management rights model, mere voting by a majority in favour of extending the management rights is not credible evidence of any undue influence.

[8] Other owners claim the committee should have provided owners with more information. However, nobody has made out a case that the committee have misled owners or are in breach of their fiduciary duty.[3]

[9] Importantly, while submissions show that owners are quite polarised on the issue of management rights, these submissions do not show owners were misled, confused or overborne. The resolution therefore cannot be overturned based on claims owners were misled.[4]

Were owners inappropriately pressured into voting for the motion?

Requirements for casting secret votes

[10] To cast a written vote for a secret ballot a person must place their voting paper in the secret voting paper envelope. They must also complete a particulars envelope by providing details of the lot, the owner, and the person having the right to vote. This information must be signed and dated (Standard Module, 90). The secret vote envelope, enclosed within the particulars envelope, must then be given or forwarded to the returning officer (Standard Module, 90(1)(e)).

[11] At the meeting, the returning officer will check the particulars to ensure the vote is valid. If the vote is valid the returning officer will then remove the secret voting paper envelope from the particulars envelope, place the secret voting paper envelopes in a receptacle in open view of the meeting, randomly mix the envelopes, and then inspect and count the secret votes (Standard Module, 89(5)).

[12] Previous decisions have considered whether a vote is validly cast by an owner when someone else has assisted them to cast the vote. To cast a written vote by open ballot it has been decided a vote was invalid where the developer had filled out the voting paper for an owner and asked the owner to sign the voting paper to adopt the recommended vote.[5] The reasons provided included that allowing a developer to complete voting papers for owners and have owners submit those votes was inconsistent with a limitation prohibiting a developer from exercising a vote for those owners based on a proxy form signed by those owners. A requirement for the owner to cast the vote by giving the voting paper to the secretary was also construed as requiring, at the minimum, delivery to the secretary in a way that indicates to the secretary the voter’s personal, considered imprimatur and implies a warranty to the secretary that the vote is an enthusiastic, free and genuine one.[6]

[13] The present circumstances relate to a secret ballot instead of an open ballot. The legislative provisions for delivery of votes to the returning officer are not as strict as the requirements for delivery of open ballot votes to the secretary, perhaps because, even if someone feels pressured to vote, the secrecy of the ballot gives the person the freedom to choose which way they vote. However, I still consider there must be delivery to the returning officer in a way that indicates the voter is freely and enthusiastically casting the vote and wanting their vote to be counted. If an owner asks a friend to post a stamped envelope containing their vote that is addressed to the returning officer then I am satisfied that is a valid means of giving the vote to the returning officer. In contrast, merely placing the vote in the body corporate letterbox in the hope it might end up with the returning officer in time does not satisfy me the vote in enthusiastic, free and genuine. Similarly, a vote should not be construed as enthusiastic, free and genuine if someone who is interested in the outcome visits an owner, asks them to complete their vote, and takes the vote away with them for posting.

[14] A vote is also not enthusiastic, free and genuine if someone interested in the outcome completes the secret voting paper or observes the person completing the secret voting paper. However, there is no good reason to invalidate a vote simply because someone else has completed the particulars envelope for the owner but the owner completes their own vote, signs the particulars envelope, and then freely posts their vote to the returning officer.

Irregularities alleged by Mr Boundy

[15] Mr Boundy alleges a number of irregularities with the delivery of votes. Some of these allegations are serious and substantiated, though not enough to change the result of the vote. Other allegations are baseless or trivial.

[16] Mr Boundy makes the serious allegation that Mr Kelly influenced the vote made by a number of owners. However, I am satisfied by statutory declarations provided that only one voter completed their ballot paper in the presence of Mr Kelly and then gave the ballot paper to Mr Kelly to post. This invalidates the vote for unit 119 but no other lots.

[17] Based on alleged handwriting similarities, Mr Boundy says Mr Kelly completed the ballot paper envelopes, excluding the owner signatures, for lots 5, 32, 41, 57, 59, 60, 85, 88, 108, 119, 141. However, a number of owners have submitted letters and statutory declarations confirming most of these allegations are false. I am prepared to accept the statutory declarations as correct, particularly given Mr Boundy has not provided any report from an independent handwriting expert to support his allegations.

[18] Having reviewed these statutory declarations, I am satisfied Mr Kelly helped complete the particulars envelope only for units 32, 119, 141. For unit 32, Mr Bax swears on oath that he collected unmarked voting papers and the completed particular envelopes from Mr Kelly. He says he then completed the voting papers himself and posted them himself without Mr Kelly being aware of how he voted.

[19] For unit 119, Mr Reynolds swears on oath that Mr Kelly was at his unit and completed the particular envelope for him after Mr Reynolds requested Mr Kelly help. Mr Reynolds says he voted himself without Mr Kelly being aware of how he voted.

[20] For unit 141, Mr Kammin swears on oath that he collected unmarked voting papers and the completed particular envelopes from Mr Kelly. He says he then completed the voting papers himself and posted them himself without Mr Kelly being aware of how he voted.

[21] I am prepared to accept this evidence by statutory declaration on its face. Mr Boundy expresses concerns of collusion due to the similarities between a number of these statutory declarations. However, it seems more likely any similarities are due to similarities of questioning from legal representatives who were interviewing owners about Mr Boundy’s claims. I accept that for units 32 and 141 the owners collected voting papers from Mr Kelly that had particulars envelopes already completed. However, I am satisfied these owners completed the voting slip themselves and posted the votes back to the returning officer themselves. Regarding unit 119, I accept Mr Reynolds completed the voting slip himself but I am prepared to infer that Mr Kelly, being at the unit, took the envelope away with him to post to the returning officer.

[22] The vote for unit 119 is therefore invalid. I note the legislative requirements for casting a secret ballot are not identical to the requirements for casting an open vote and less protection for owners may be necessary as a result of the vote being in a sealed envelope. However, the circumstances of Mr Kelly being present when the vote was completed and then seemingly taking the vote away with him are enough to imply the vote was not enthusiastic, free and genuine. I consider section 90(1)(e) of the Standard Module requires the owner be the agent responsible for at least deciding if or how the vote be given to the returning officer rather than having another interested person control the entire process. I will declare this vote to be invalid.

[23] Regarding units 32 and 141, I accept the votes were validly cast. The owners obtained votes from Mr Kelly with particulars information complete. It is possible that Mr Kelly pressured these owners to partake in the vote and encouraged them to vote for the management rights extension. However, these owners completed the voting paper themselves, signed the particulars envelope themselves, and, importantly, posted the voting paper themselves. I consider these votes should be accepted as being enthusiastic, free and genuine.[7] While an owner must sign the particulars envelope themselves, I do not consider the legislation should be construed as also requiring the owner complete the particulars details personally or risk their otherwise freely given vote being held to be invalid.

[24] For unit 23, I would have accepted the vote was validly cast even if the owner did not directly post the vote to the returning officer but gained the agreement of a friend to post the vote on her behalf. Provided this friend acted on the owner’s instructions to post the vote via Australia Post, as the agent of the owner, the vote should be counted. This is because there would be no doubt the vote was enthusiastic, free and genuine. However, given the lack of postal markings, it seems likely the friend did not post the vote to the returning officer and merely placed it in the body corporate letterbox. As discussed in the next paragraph, merely placing a vote in the body corporate letterbox, without a clear agreement by the body corporate to act as agent for safe delivery of the vote to the returning officer, does not amount to giving the vote to the returning officer as required by the legislation.

[25] Placing a vote in the body corporate letterbox in the hope the body corporate would provide these votes to the returning officer is different from agreeing with a friend that the friend will give the vote to the returning officer. There is no satisfactory evidence the body corporate agreed to act as agent for the owner to deliver the votes to the returning officer. There is therefore no clear chain of delivery that can show these owners ‘gave’ the votes to the returning officer as opposed to giving them to the body corporate in the mere hope they would end up with the returning officer. I am therefore not satisfied any votes placed in the body corporate letterbox were cast in the manner required by section 90 of the Standard Module. On the other hand, I do not consider the entire vote should be invalidated simply because some votes were placed in the body corporate letterbox. It is up to individual owners to comply with the instructions of the secret ballot if they want their vote to count. Any votes placed in the body corporate letterbox should be invalid whether they were for or against the motion, and whether they were tampered with or not. Ultimately, the returning officer improperly included three votes that had been placed in the body corporate letterbox instead of being sent to him but provided this number of votes is insufficient to change the result then the resolution should stand. As discussed below, up to ten invalid votes of a total of 91 are insufficient to change the result.

[26] The next issue is five votes by corporate and trustee owners that Mr Boundy challenges because the owner failed to properly appoint a company nominee or other representative. This is a very technical argument by Mr Boundy because, if the meeting was held again, these owners could properly appoint a representative and validly cast their vote. However, I do consider Mr Boundy is correct in saying the returning officer should not have counted the votes for units 42, 69, 85, 111 and 141.

[27] The last serious issue is a concession that one valid vote was improperly excluded based on records that incorrectly showed that owner to not have paid all their outstanding levies. Assuming this vote was against the extension, this would have taken the number of votes against to 41. However, there would still have been more votes in favour. This is even assuming the extreme case that all invalid votes were in favour of the extension - this being the five votes above without correct nominees; the three votes placed in the body corporate letterbox; and the vote by unit 119.

[28] Mr Boundy does allege further irregularities. However, all these allegations are trivial or unfounded. As discussed above, I am satisfied with the evidence by statutory declaration about people posting their own votes or obtaining the agreement of a friend to post the votes on their behalf. Provided votes were freely and enthusiastically cast in this way then the vote will not be invalid simply because Mr Kelly encouraged people to vote, or even photocopied forms for them, or filled in particulars for them. I do not see merit in Mr Boundy’s argument a new original form needs to be provided when each voter must sign the particulars envelope. Just because the legislation requires the secretary prepare voting papers, papers prepared by someone else are not automatically invalid. Similarly, it is trivial to object to someone else completing the particulars envelope if the voter then adopts that information by signing the particulars envelope themself. For technical procedural breaches, the courts have recognised that the very detailed provisions of the applicable regulations make it almost inevitable that there will be failures to comply with the regulations from time to time.[8] The courts have always been reluctant to invalidate an act done in breach of a statutory provision if doing so would cause public inconvenience.[9]

[29] Similarly, there is no reason to consider votes for units 34 or 145 would be invalid when the particulars envelope was signed by the authorised company nominee but the returning officer mistakenly recorded the votes as being signed by the owner. Other objections are also unsubstantiated or ill-conceived. For example, Mr Boundy alleges fraud based on some stamps on the particulars envelope not being cancelled by Australia Post. However, Andrew Berry provides a statutory declaration stating he posted votes for units 57 and 145 in an express post envelope so they would be received by the returning officer in time. I accept this explanation for why some stamps on the particulars envelope were not cancelled by the post office. Further, Mr Boundy alleges there were 89 particulars envelopes and 91 votes. However, the returning officer explains that there were two separate secret ballot voting papers for the meeting. One of these ballots concerned the extension of management rights and the other concerned committee elections. The returning officer says a couple of voters included both secret voting envelopes in a single particulars envelope. As the voter’s entitlement to vote could be validated from one particulars envelope, the returning officer deemed both secret ballot envelopes valid, placed them on the table in view of the meeting, shuffled them and opened them in due course. I am satisfied this explains the inconsistency and this action should not invalidate their vote.

[30] In conclusion, I accept all votes were valid apart from those listed above. Even in the most extreme case that all votes improperly included were in favour of the motion and the one vote improperly excluded was against the motion, the resolution would still have narrowly passed. This is even if there has been no doubling up between votes where the owner failed to ensure proper delivery to the returning officer and where the owner failed to ensure proper appointment of a company nominee or other representative. The application should therefore be dismissed.

Other issues

[31] For completeness, I will clarify a few final issues.

[32] Mr Glasgow expresses a concern the resident manager could have removed votes against the extension of management rights that were placed in the letterbox. However, there is no evidence to suggest the resident manager tapered with any votes that had been placed in the letterbox and it would make no difference if he had because none of the votes placed in the body corporate letterbox would be valid irrespective of whether they were for or against the motion.

[33] Mr Glasgow also provides a statutory declaration saying he had a conversation with Mr Kelly in which he understood Mr Kelly asked him to give him his completed voting papers. Mr Kelly has provided a statutory declaration saying he spoke with Mr Glasgow about a renovation request. Mr Kelly said that, knowing Mr Glasgow had only recently purchased in the building, he asked if Mr Glasgow had received his voting papers. According to Mr Kelly, Mr Glasgow said he believed they would be at another address and he would check. Mr Kelly says Mr Glasgow left saying he would check the required contractor details and Mr Kelly commented ‘and your voting papers’, meaning that Mr Glasgow should check he had received his papers. Mr Kelly denies he requested or inferred Mr Glasgow bring the voting papers to him. Based on the evidence provided, including the lack of evidence of Mr Kelly collecting voting papers from other owners, it appears there was a misunderstanding and I will not infer Mr Kelly requested Mr Glasgow give him the completed ballot papers.

[34] Mr Boundy, in his reply, raises some new concerns about the validity of the appointment of the returning officer. If this was a serious concern then Mr Boundy should raise it as a separate application or as part of the original application. It is not appropriate to raise new issues as part of a reply when other owners do not have a proper opportunity to respond. In any event, any issues regarding the appointment of the returning officer seem to be very much of the nature of minor irregularities that cannot invalidate the outcome of the vote.

Conclusion

[35] Mr Boundy has shown a small number of irregular votes. However, these irregularities would not have changed the result. This is even in the extreme scenario that every improperly counted vote was in favour of the motion and every improperly excluded vote was against the motion.

[36] While some owners may not believe that other owners would freely vote to extend the management rights contracts, I am satisfied this is what has occurred. No grounds have been substantiated upon which the vote should be declared unreasonable or invalidated.

[37] The application is therefore dismissed.

[1] Batwing Resorts Pty Ltd v Body Corporate for Liberty CTS 27241 [2008] QCCTBCCM 23, paragraph 45

[2] Batwing Resorts Pty Ltd v Body Corporate for Liberty CTS 27241 [2008] QCCTBCCM 23, paragraph 45

[3] Body Corporate for Palm Springs Residences Community Titles Scheme 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300.

[4] Lattuga & Anor v Body Corporate for Merrimac Heights CTS 19563 [2011] QCATA 253.

[5] Bayview Residences [2014] QBCCMCmr 187.

[6] Body Corporate for Surfers Waters v Angland [2000] QDC 34 at paragraph 19.

[7] Body Corporate for Surfers Waters v Angland [2000] QDC 34 at paragraph 19.

[8] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.

[9] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at paragraph 97.