Barard Management Pty Ltd v Carmont
[2003] QDC 290
•21 August 2003
DISTRICT COURT OF QUEENSLAND
CITATION:
Barard Management Pty Ltd v Carmont & Anor [2003] QDC 290
PARTIES:
BARARD MANAGEMENT PTY LTD (ACN 010 622 125)
Appellant
v
TRACEY CARMONT
First Respondent
and
THE BODY CORPORATE FOR TUDOR ROSE COURT CTS 17659
Second Respondent
FILE NO/S:
BD 552 of 2003
DIVISION:
PROCEEDING:
Appeal from adjudicator’s order.
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
21 August 2003
DELIVERED AT:
Brisbane
HEARING DATE:
18 August 2003
JUDGE:
McGill DCJ
ORDER:
Appeal dismissed with costs
CATCHWORDS:
HOME AND COMMERCIAL UNITS – Body Corporate – general meeting – quorum for – how ascertained
Body Corporate and Community Management (Accommodation Module) Regulation 1997 ss 46, 47.
Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334 – followed.
Levenstrath Community Association Inc v Shire of Nymboida (1999) 105 LGERA 362 – followed.
COUNSEL:
S L Moody for the appellant
P J Hay for the respondents
SOLICITORS:
O’Shea Corser & Wadley for the appellant
Ros Janes Lawyer for the respondents
This is an appeal from a decision of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”). The decision of the adjudicator was made on 14 January 2003. The adjudicator declared that an extraordinary general meeting of the respondent body corporate held on 26 September 2002 was void and that any resolution purportedly made thereat was invalid and of no effect. One of the resolutions was that the appellant be reappointed body corporate manager for one year from 1 May 2002. The commissioner had on 26 September 2002 invited the appellant to make a written submission about the application, so the appellant is an aggrieved person and entitled to appeal against the decision. By s 289(2) the appeal is only on a question of law.
Background
Tudor Rose Court is a community title scheme under the Act consisting of 48 lots and common property. The Body Corporate and Community Management (Accommodation Module) Regulation 1997 (“the Regulation”) applies to the scheme. The appellant had been appointed body corporate manager for the period 21 April 1999 to 20 April 2002. At the annual general meeting of the body corporate held on 29 May 2002 a resolution that the appellant be appointed for one year from 1 May 2002 was deferred. At an extraordinary general meeting on 26 September 2002 the minutes record that the resolution was carried that the appellant be reappointed for that period, there being six votes for, three against and two abstentions.
On 16 September 2002 the first respondent had applied to the Commissioner for Body Corporate and Community Management seeking the appointment of a particular body corporate manager for a period of three months in order to call for quotes and to conduct the necessary meetings to appoint a body corporate manager in the correct manner. That was sought as an interim order, but on 24 September 2002 the adjudicator dismissed the application for interim relief, although the body corporate was restrained from engaging or entering into further agreements with any body corporate manager pending determination of the application. The commissioner invited the body corporate committee, and the appellant, to make submissions about the application, and the first respondent made a written reply to the submissions. The matter was referred to an adjudicator who on 14 January 2003 ordered that the application for an administrator, relief which had also been sought by the applicant, be refused but made the declarations referred to earlier.
The adjudicator addressed the issue of the continued engagement of the body corporate manager until 26 September 2002, and decided that the appointment of the appellant ought not to be invalidated simply because the owners were not given alternative options regarding body corporate management. The adjudicator then held that there was not a quorum for the meeting of 26 September 2002, although it appeared on the basis of the minutes of the meeting that voters for 11 lots were present at the meeting. The adjudicator concluded that, in accordance with s 46(2) of the Regulation, as the scheme consisted of 48 lots, voters for 12 lots were necessary to form a quorum for a general meeting. Since that number had not been present the meeting was not properly constituted and any resolutions of the meeting were invalid and of no effect. The adjudicator refused to appoint an administrator, and considered that the issue could be resolved at the approaching annual general meeting of the body corporate.[1]
[1]During argument I was told that it had been.
The appellant’s points
The appellant submits that the decision of the adjudicator contained two errors of law, in that the adjudicator had erred in concluding that:
(a) a quorum for the purposes of s 46(2) of the Regulation was to be ascertained by dividing the total number of lots in the scheme by 25 percent, and
(b) a person may be counted as a voter for the purposes of s 26(2) even though that person did not have a right to exercise a vote because of s 47(11) of the Regulation.
It does appear that the adjudicator simply divided the number of lots by four in order to ascertain a quorum. That process involves two assumptions: that either there were no lot owners owning two or more lots, or whether or not that was the case was irrelevant, and that either there were no lot owners who were prevented from voting on the resolutions which were the business of the meeting pursuant to s 47(11), or that that was irrelevant.
There was evidence before the adjudicator in the form of a copy of the minutes of the meeting that there were six lots in respect of which the owners were unfinancial so as to be prevented from voting (for most purposes) by s 47(11) of the Regulation. None of the unfinancial lot owners attended the meeting, or sought to vote. Accordingly the fact that he disregarded this circumstance indicates that he must have taken the view that this was irrelevant for the purposes of ascertaining the requirement for a quorum under s 46(2). On the other hand, there was no material before the adjudicator to indicate whether or not it was the case that a particular owner owned two or more lots. There is an internal current title search on the file, but this does not identify the owners of the 48 lots.
The legislation
Section 46 of the Regulation provides relevantly as follows:
“(1) A voter is taken to be present at a general meeting if the voter is present at the meeting personally, by proxy or by written voting paper.
(2) A quorum at a general meeting is at least 25 percent of the number of voters for the meeting, except that –
(a) if the number of voters for the meeting is three or more, two individuals must be present personally; and
(b) if the number of voters for the meeting is less than three, there is a quorum if at least one individual is present personally.
(3) If there is not a quorum within 30 minutes of the time scheduled to start the meeting, the meeting must be adjourned to be held at the same place, on the same day and at the same time, in the next week.
(4) If at the adjourned meeting a quorum is again not present within 30 minutes of the time scheduled to start the adjourned meeting, the persons present (whether personally or otherwise) form a quorum if –
(a) the chairperson is present personally; or
(b) the chairperson is not present personally but a body corporate manager, with the delegated authority of the chairperson, is present personally.
(5) Despite subsection (3), if it is not practicable to hold the adjourned meeting at the same place, it may be held at another place if all lot owners are advised personally or in writing of the new location before the adjourned meeting is to start.
(6) For this section, two or more co-owners of a lot are counted as one voter.”
Section 47(1) provides for the meaning of “voter” for a general meeting in the following terms:
“A ‘voter’ for a general meeting of the body corporate is an individual –
(a) whose name is entered on the body corporate’s roll as –
(i) the owner of a lot; or
(ii) the representative of the owner of a lot; or
(b) who is the nominee of a corporation the name of which is entered on the body corporate’s roll as the representative of the owner of a lot; or
(b) who is a corporate owner nominee; or
(c) who is a subsidiary scheme representative.”
Subsections (2) and (3) deal with the mechanism by which a person can be recognised as a representative of the owner of a lot, subsections (4), (5) and (6) set out how a person is to be recognised as the nominee of a corporation which is the representative of the owner of a lot, subsections (7), (8) and (9) set out how a person is to be identified as a nominee of a corporate owner of a lot, subsection (10) deals with the position of a mortgagee in possession claiming to exercise a right to vote for a lot, and subsection (11) provides as follows:
“A person does not have the right to exercise a vote for a particular lot on a motion (other than a motion for which a resolution without dissent is required), or for choosing a member of the committee, if the owner of the lot has not paid to the body corporate –
(a) a contribution, or an instalment of the contribution, owing by the owner to the body corporate, if the contribution or instalment is owing at the time of the meeting; or
(b) a penalty for not paying a contribution or instalment of a contribution by the date for payment, if the penalty is owing at the time of the meeting; or
(c) any other amount owing to the body corporate, other than an amount owing under a legal relationship between the body corporate and the owner not associated with ownership of the lot.”
The first point
It will be apparent therefore that, although s 46(6) of the Regulation deals with the possibility that there may be two or more owners of a particular lot, there is nothing in these provisions which deals expressly with the possibility that a particular person (individual or company) may be the owner of more than one lot, or indeed the representative of the owner of more than one lot. The Act provides very clearly, in Division 4 of Part 1 of Chapter 3, that, however a vote is taken and whatever sort of majority is required to satisfy the requirements of some particular provision of the Act or Regulation, one vote only may be exercised for each lot. Voting therefore is by reference to lots, but the right to exercise the vote for a particular lot may be restricted by s 47(11), in circumstances which may be summarised by saying that the lot owner is unfinancial.
The respondents’ point in relation to this issue is essentially that the issue does not arise for determination, because it was not part of the basis of the decision of the adjudicator. The adjudicator’s decision was that the effect of s 47(1) was that the number of voters would necessarily equal the number of lots, because there would be one vote per lot (pursuant to the Act) and therefore one voter per lot. It was unnecessary to determine whether the number of voters was to be calculated on the basis that one person who was an owner of more than one lot, or the representative of the owner of more than one lot, or the nominee of more than one corporation, should be treated as one voter for the purposes of s 46(2), or more than one voter. That did not arise because it was not part of the reasoning of the adjudicator, and not a feature which has been shown to have made any difference to the outcome.
The appellant’s argument focused on the use of the term “voter” in s 46(2) of the Regulation, and noted that the term as defined in s 47(1) would apply equally to a person who was the owner of two or more lots, and to a person who was the owner of a single lot. Since words in the singular in a statute include the plural – Acts Interpretation Act 1954 s 32C – subsection (1)(a)(i) should be read as including the owner of lots as well as the owner of a lot. Prima facie that is how it would be read, just as the word “owner” could also be read in the plural to accommodate a situation where a lot has co-owners. The legislature has dealt specifically with that in s 46(6), but appears to have overlooked the converse situation, where one owner has more than one lot.
In circumstances where there were 48 lots, 48 votes could (subject to s 47(11)) be cast in a general meeting, but this merely represented the maximum number of voters that could exist. Since it was possible for one owner to own more than one lot, it was possible for the number of voters to be smaller than the number of votes. Since the quorum was to be calculated by reference to the number of voters not the number of votes, it was necessary to identify the number of voters, that is the number of different owners of lots, before a quorum could be ascertained. The language indicates that voters are individuals, and accordingly the number of voters is to be determined by counting the number of individuals. Even if an individual is there in more than one capacity, that is, as the owner of two or more lots, that person can still only be counted once because that person is still one voter, even if that person has two or more votes. Reference was made to Equity Nominees Ltd v Tucker (1976) 116 CLR 518 at 526 where Windeyer J said: “One man can act in two capacities, but not simultaneously; and one man cannot by acting in two capacities become two men.” In that case it was held that a requirement that two directors or their nominees be present when the seal of a company was affixed to a document was not satisfied when one director was present, that director being also the nominee of another director.
Read literally the section would seem to have the effect contended for by the appellant, although this interpretation could produce some decidedly odd effects. For example, consider a case where there were 40 lots of which 33 were owned by the same person (perhaps the original proprietor). If that person counted as one voter, and the other lots were all owned by different persons, there would be eight voters, if the appellant is correct on this point, so a quorum would be two. That would mean that the owner of the great majority of the lots could not hold a general meeting alone, but had to persuade the owner of at least one of the other lots to come along, even though that person could have no independent say at the meeting because on any vote that was taken,[2] that person’s vote would be irrelevant.
[2]Except in the case of a resolution required to be without dissent.
The difficulty is that, although the legislature has dealt with the situation where there is more than one owner of a lot, the legislature has not dealt expressly with the situation where one person is the owner of more than one lot, or indeed where one person is a voter on more than one basis under s 47(1).[3] It would be better if the legislature made clear just what the situation is in these circumstances, and how the calculation of a quorum is to accommodate the possibility that one voter may be able to exercise more than one vote.
[3]For example, a situation where an individual is both an owner of a lot and the representative of the owner, or the nominee of a corporate owner, of another lot.
It seems to me however that, in the absence of some evidence that this point would, if successful,l have some effect on the calculation of the quorum so as to justify interfering with the decision of the adjudicator, the issue is hypothetical and therefore one that I should not decide.[4] The appeal given by the Act is an appeal against the decision of the adjudicator, not the reasons for the decision. It follows that it is not sufficient for the appellant to show that there may be some error exposed in the reasons, unless that has the effect of invalidating the decision of the adjudicator. If for example the adjudicator made an error of law which if corrected would serve to strengthen the justification for the decision actually arrived at, the court would not on appeal interfere with that decision. In the present case, even if the interpretation contended for by the appellant is correct, and the adjudicator was proceeding on the basis of a different interpretation of the Regulation, it has not been shown that the correct interpretation would have made any difference to the decision of the adjudicator.[5] It follows that the question I am asked in relation to this point is hypothetical, and I should not decide it.
[4]Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334.
[5]That is, by showing that in fact there was sufficient multiple ownership to reduce the number of voters to 44.
The second point
The second proposition advanced by the appellant is that, when determining “the number of voters for the meeting” it is necessary to take into account not just the definition of voter in subsection (1) of s 47 of the Regulation, but the whole of s 47. Reference is made to the definition in the schedule to the Act, where the definition of “voter” is “for a general meeting of a body corporate, see s 47.” Counsel for the appellant pointed out that this was a reference to the whole of the section, not just subsection (1).
The point could also be made that the expression used in s 46(2) is “voters for the meeting” so that it is not concerned with voters in the abstract, but by reference to a particular meeting. Furthermore, it follows from s 50(5) of the Regulation that there will be a defined list of business for the meeting prior to the commencement of the meeting. Indeed, that would be necessary in order to enable people to exercise the right to vote by a voting paper contemplated by s 49 of the Regulation. Although, as pointed out by counsel for the respondents, s 47(11) does not deprive the voter of a vote in all circumstances where the owner of the lot is unfinancial, it would be possible to tell in advance for the meeting whether or not that subsection applied to any motion on the agenda. That may mean that a situation could arise where the quorum is different for different parts of the meeting depending on the business to be transacted. In principle there does not seem to me to be any particular difficulty in applying subs 46(3) and (4) if a situation arose where there is a quorum for certain purposes but not for other purposes; the business for which there is a quorum can be transacted, and then, once thirty minutes has elapsed, the meeting can be adjourned for a week, after which, if necessary, the limited definition of quorum can be relied on.
The difficulty here is that the section is unclear. It would be clearer if s 46 provided that a quorum at a general meeting was at least 25 percent of the persons entitled to vote at the meeting, subject to the specific requirements that there must be either one or two individuals present personally. The Regulation does not say that, but it does not necessarily mean that something different was intended.
The respondents’ argument in relation to this point is that s 46(2) of the Regulation is to be interpreted by reference to s 47(1), without regard to the limitations in subsection (11). The Act and the Regulation differentiate between the number of voters and the number of votes; subsection (11) is relevant to the determination of the number of votes in certain circumstances, but not the determination of the number of voters. A quorum is determined by the number of voters, and not the number of votes. Further, the wording in s 46(2) may be contrasted with the wording in s 45(3): “The persons present and entitled to vote …” Where the regulation wishes to talk about people having an entitlement to vote, rather than being “voters” as defined, it says so. In addition s 53 has the expression “persons who have the right to vote at the meeting” rather than “voters”, an expression which would cover both the requirement for a person to qualify as a voter and the existence or otherwise of any disqualification under s 47(11).
The respondents submitted that s 47(1) on its face defines who the voters are, and s 46(2) defines the quorum by reference to the number of voters, and not by reference to the persons entitled to vote. Whether a particular voter is entitled to vote is relevant to whether that voter can be part of a quorum, but not relevant to how many voters are needed for a quorum. Bearing in mind s 46(6), and putting aside for the moment the question of a person or corporation owning more than one lot, the number of “voters” as defined will equal the number of lots. Apart from being the outcome achieved by reading the Regulation literally, such a scheme has the benefit of ease of operation in calculation of the quorum required in any particular circumstances.
Notwithstanding that benefit of simplicity, it seems to me that there are difficulties with that interpretation. The first is that it does not seem to give any meaning to the words “for the meeting” in S 46(2); it will always be possible to determine the number of voters, and, unless some limitation is imposed by those words, they do not seem to serve any useful purpose. The limitation suggested is that they would be voters entitled to vote on the business of the meeting, as determined by s 47(11). In this way the words can be seen to be a reference to the voters entitled to vote pursuant to s 47(11) in relation to the business of the meeting, identified as required by s 50(5).
The appellant submitted that the regulation did not depart from the common law rule that a quorum is identified by reference to the number of persons entitled to be present and vote at a meeting: ReGreymouth Point Elizabeth Railway & Coal Co Ltd [1904] 1 Ch 32 at 34; A M Spicer & Son Pty Ltd v Spicer (1931) 47 CLR 151 at 186-7; R v Byrnes (1995) 183 CLR 501 at 517. These cases dealt with the situation where directors were not be entitled to vote in relation to a particular matter, and held that, in that situation, a director not entitled to vote could not be taken into account when determining whether a quorum was present at a meeting of directors. See also Joske “The Law and Procedure at Meetings” (5th Edition 1972) p.25.
In Re Greymouth (supra) the quorum was fixed by the articles at two, and the matter in issue was whether there were two directors present; the court held that directors not entitled to vote could not be counted to determine whether two directors were present. The position was the same in Spicer: the articles provided that a quorum would be two, and the issue was whether there were two or more directors present and entitled to vote. In Byrnes at p.517 their Honours said: “The quorum of the board required to deal with the transaction will ordinarily be interpreted as excluding directors whose interests preclude them from voting.” Their Honours cited Spicer, and Richard Brady Franks Ltd v Price (1937) 58 CLR 112 at 140. In a passage commencing on the previous page, Dixon J said in that case: “Under the company’s articles of association, at meetings of the board of directors two formed a quorum and the powers of the directors remained exercisable so long as is sufficient number to form a quorum wss present. … A proviso forbade every director to vote upon any matter in which he had an interest. Articles of such a kind are interpreted to mean that there must be present at the meeting a quorum consisting of directors none of whom is disqualified from voting upon the business transacted.” His Honour cited Spicer which he noted cited earlier authorities.
Clearly in all of those cases the issue was not “how many directors make a quorum” because that was fixed at two by the articles. The issue was, “was a quorum present”, that is, were two directors present, and that meant, two directors entitled to vote.
In Levenstrath Community Association Inc v Shire of Nymboida (1999) 105 LGERA 362 an issue arose as to the existence of a quorum at a meeting of councillors of the shire, in circumstances where two councillors who were present were prohibited from voting, pursuant to a provision of the relevant New South Wales act, on a particular question which was to be decided at the meeting. The council only had six members, and a quorum was four, and another councillor was sick, so unless one of the interested councillors was counted as part of the quorum the issue could not be decided until the remaining member recovered. The relevant act provided in relation to a quorum: “The quorum for a meeting of the council is a majority of the councillors of the council who hold office for the time being and are not suspended from office.” It was submitted in reliance on that section, as it was submitted before me, that this was not defined by reference to an entitlement to vote; the common law position had been displaced by the terms of s 368.
Hamilton J of the New South Wales Supreme Court concluded that the common law position had not been displaced. He said at [13]: “Section 368 clearly speaks of those to be taken into account in determining the number whose presence is necessary to constitute a quorum; in my view, it does not speak at all of those who are to be counted or not counted towards the number present; certainly it does not speak clearly of them. Nor can I derive from other provisions of the Act the clear indication the defendant seeks that the legislative intent was to include disqualified councillors in the count of the quorum and thus to displace the common law rule. … If there were an ambiguity, then, in the absence of clear legislative intention to the contrary, the common law rule should be taken to survive.” His Honour cited authority for that proposition.
In that case the quorum was not fixed at a particular number by the statute. It was therefore different from the position in the other authorities, where the articles did fix a particular number. But his Honour in this passage drew the distinction relied on by the respondents, between the process of determining the number to constitute a quorum and the question of whether the requirement for a quorum of that number has been met. The statute required a majority of the councillors. Since there were six councillors, a majority and therefore a quorum was four. His Honour held that neither of the two councillors disqualified from voting could make up the four required for a quorum. He did not decide that the majority should be determined by reference to the number of councillors not disqualified from voting. Had he adopted that approach (the approach contended for here by the appellant) he would have found that there were four councillors not disqualified, of whom a majority was three, so a quorum was three, and the plaintiff’s claim would have failed. His Honour obviously took into account all of the councillors, whether disqualified from voting or not, in deciding how many constituted a majority, but then held that that majority could be made up only of councillors not disqualified from voting.
It follows that that decision does not support the appellant, but rather supports the argument advanced on behalf of the respondents. Although the quorum is to be derived without regard to the question of whether particular voters are disqualified from voting, only voters not disqualified from voting can make up a quorum. Because of the way in which s 47(11) operates, there might be a quorum present for some purposes but not others. As pointed out earlier, that would not necessarily be a matter of great significance.
It was submitted on behalf of the appellant, and I think with some force, that the terms of s 46(2) are no more clear than the terms of s 368 of the New South Wales Act then under consideration, and it follows that they are no more effective to displace the common law rule that a quorum is to be determined by reference to the persons who are entitled to vote. A person will have to come within the terms of s 47(1) to satisfy that, but that is not the only requirement to be satisfied; if and insofar as the meeting involves the determination of any business in respect of which the voter would not be entitled to vote pursuant to s 47(11), that voter could not be taken into account in determining if a quorum is present.
It was submitted that if the appellant’s argument were not accepted a situation could arise where there could be a quorum present consisting of voters none of whom was entitled to vote. But that necessarily could not occur if only voters entitled to vote are counted in determining whether there is a quorum present. If unfinancial voters are particularly numerous, a situation might arise where a meeting was impossible because more than three quarters of the voters were disqualified from voting, but it seems to follow from the authorities referred to that an inability to generate a quorum is something that may well happen depending on the circumstances, and is not a reason for modifying the interpretation of the common law rules. It would also not be a reason for straining the interpretation of this statutory provision, particularly when s 46 contains a mechanism to accommodate a situation where there is difficulty obtaining a quorum.
It follows that there are considerations either way, but on balance I prefer to follow the approach adopted in Levenstrath, including that the common law position ought not to be departed from unless there is a clear provision to the contrary. The provisions of the Regulation are no more clearly to the contrary than the provisions of the Act considered in that case. It follows that the position at common law has not in my opinion been departed from, although it might have been better if s 46(2) had been expressed in terms which did not give rise to such a dispute about its meaning.
It follows that in respect of this matter the adjudicator has not been shown to have erred in law. Indeed, I think his interpretation of the Regulation in this respect was correct. The appeal must be dismissed with costs.
0
7
1