Lill v Ryan
[2011] QCATA 124
•23 May 2011
| CITATION: | Lill v Ryan [2011] QCATA 124 |
| PARTIES: | Christine Lill (Appellant) |
| v | |
| Dudley Ryan (Respondent) |
| APPLICATION NUMBER: | APL262-10 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President Kenneth Barlow SC, Member |
| DELIVERED ON: | 23 May 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The decision of the Adjudicator is set aside; and 2. Declare that resolution 12, passed at the annual general meeting of the Body Corporate for Isle of Palms Community Titles Scheme 20860 on 24 February 2010, was validly made. |
| CATCHWORDS: | APPEAL – BODY CORPORATE AND COMMUNITY MANAGEMENT – APPEAL FROM ORDER OF ADJUDICATOR – where the appellant is a guarantor of a company that is the service contractor and letting agent for the body corporate – whether amendment to term of engagement as service contractor and authorisation as letting agent valid – whether constituted including a right or option of extension or renewal Body Corporate and Community Management Act 1997 (Qld), s 122 |
APPEARANCES and REPRESENTATION (if any):
Pursuant to an order of the Appeal Tribunal, and s 32 of the Queensland Civil and Administrative Tribunal Act 2009, the matter was heard and determined on the papers.
REASONS FOR DECISION
THE PRESIDENT:
In this matter the QCAT Appeal Tribunal was comprised of Mr Barlow SC and me. I have had the advantage of reading his Reasons in draft. I agree with them, and the conclusion he has reached, and the orders he proposes.
MR BARLOW SC:
Introduction
This is an appeal under s 289 of the Body Corporate and Community Management Act1997 from an order of an adjudicator made under Part 9 of Chapter 6 of that Act. The appellant is a guarantor of a company that is currently the service contractor and letting agent for the body corporate for Isle of Palms, Community Titles Scheme 20860. The respondent is the owner of a lot in that scheme and was the applicant pursuant to what is called, under the Act, an adjudication application.
The Adjudicator who determined the application declared that a resolution passed at the annual general meeting of the body corporate on 24 February 2010 was void, essentially for the reasons that information required to be provided to members was not provided and that special voting procedures required were not followed.
For the reasons set out below, I consider that the Adjudicator was wrong and that the orders below should be set aside.
Background
East Coast Leisure Management Pty Ltd is the caretaker and letting agent for the body corporate pursuant to a caretaking agreement and a letting agreement originally entered into by the body corporate and other parties on 19 September 2005. East Coast became the caretaker and letting agent in 2008, when it took an assignment of the original agreements.
The original agreements provided for a term of 10 years commencing on 1 December 2004, and that the caretaker and letting agent had the option of extending the term of each agreement for the period 1 December 2014 to 30 November 2024. It could do so by giving notice in writing of the exercise of that option not earlier than 1 June 2014 and not later than 1 September 2014.
At the annual general meeting of the body corporate held on 24 February 2010, the body corporate passed an ordinary resolution by which, in effect, it was authorised to agree to amend both the caretaking agreement and the letting agreement to extend the initial term of each agreement by 5 years, namely to 30 November 2019 instead of 30 November 2014. The resolution set out the precise amendments to be made to each of the agreements. The resolution also authorised two other, comparatively minor, amendments to each of the caretaking agreement and the letting agreement, and it authorised the body corporate to enter into a deed of variation to make all of the amendments to the two agreements.
The notice of the annual general meeting was not accompanied by a BCCM form 20, which was the approved form for an explanatory note explaining the nature of an amendment to a person’s engagement as a service contractor, or a person’s authorisation as a letting agent, to include a right or option of extension or renewal, in accordance with s 112(2)(c)(ii) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008. Furthermore, the motion was not decided by a secret ballot.
Mr Ryan contends, and the Adjudicator found, that the consequence of those matters was that the resolution was invalid and that the consequential amendments to the agreements were of no effect.
Mr Ryan also contended before the Adjudicator that the chairman of the meeting had allowed proxy votes to be voted on the motion, but that was apparently incorrect and the Adjudicator found to the contrary. No such contention is made before this tribunal.
The notice of the meeting at which the motion was to be considered did include material setting out the terms and effect of the proposed amendments, in accordance with s 112(2)(c)(iii). I do not understand there to be any contention to the contrary. Although Mr Ryan contended before the Adjudicator that the material provided was misleading, the Adjudicator determined to the contrary and his finding is not in issue in this appeal.
The Adjudicator considered that the amendment extending the initial term of the contracts by 5 years was ‘creating a new contract’ because
it is not the term of years which was assigned … Without creating a new contract, East Coast has only the term assigned to it, and has one opportunity to exercise the 10 year option, unless the body corporate grants a renewal or extension pursuant to s 117 Accommodation Module. I am of the view that the retrospective change to the original term of years creates a new contract between the parties.
The Adjudicator also said he was not convinced that the motion did not propose ‘an extension’ of the contracts.
Having formed those conclusions, the Adjudicator concluded that the motion should have been determined by a secret ballot and therefore it was invalid. He also appears to have considered the failure to provide a BCCM form 20 constituted a failure to comply with the requirements of the Accommodation Module and therefore also led to the resolution being invalid.
Consideration of issues
The issues to be determined in this appeal are in essence the following:
a)whether a motion to extend the original term of an engagement or authorisation comprises a motion to include a right or option of extension or renewal, and therefore must comply with ss 112(2)(b)(ii) and 112(c)(ii) of the Accommodation Module; and
b)whether a motion to extend the original term of an engagement or authorisation results in a new contract, and therefore must comply with ss 112(2)(b)(i) and (ii) and 112(c)(i).
Section 112 of the Accommodation Module itself distinguishes between an engagement or authorisation, on the one hand (ss 112(1)(a) and (b)), and an amendment of an engagement or authorisation, on the other (s 112(1)(c)).
Most amendments to an existing engagement or authorisation may be made if approved by an ordinary resolution in which no votes are exercised by proxy and material has been forwarded to members of the body corporate that includes the terms and effect of the amendment: ss 112(2)(a) and (2)(c)(iii).
However, an amendment to an existing engagement or authorisation to include a right or option of extension or renewal may only be made if approved by an ordinary resolution by a secret ballot in which no votes are exercised by proxy and material has been forwarded to members of the body corporate that includes an explanatory note in BCCM form 20: ss 112(2)(a), (2)(b)(iii) and (2)(c)(ii).
Sections 114 (dealing with engagements of service contractors) and 115 (dealing with authorisations of letting agents) of the Accommodation Module distinguish between the term of an engagement or authorisation and the term of ‘any right or option of extension or renewal’.
Sections 117 (in the case of a service contractor) and 118 (in the case of a letting agent) also distinguish between ‘the term provided for in the’ engagement or authorisation, on the one hand and a ‘right or option of extension or renewal’ on the other.
The term of an engagement or authorisation is therefore the term stated in it under ss 114(2)(b)(i) and 115(2)(b)(i) respectively. The term of any right or option of extension or renewal of an existing engagement or authorisation is different and must be stated separately, in the engagement or authorisation, pursuant to ss 114(2)(b)(ii) and 115(2)(b)(ii).
The amendment in this case did not purport to ‘include’ a right or option of extension or renewal. Instead, it changed the term of each of the engagement and the authorisation. Nothing in the Act or the Accommodation Module prevents this occurring, even though one might think that it is not in the spirit of the provisions that require secret ballots for amendments to terms of engagements or authorisations.
One might contrast a ‘right or option’ with what has been effected by the amendment authorised under this resolution. East Coast, as service contractor and letting agent, is now bound, with immediate effect, to continue to operate in those capacities until 30 November 2019, whereas before it was entitled to choose whether to extend the contracts, and to continue to provide services under them, beyond 30 November 2014.
Furthermore, the amendments proposed to the engagement and authorisation were exactly that: amendments. They did not terminate the existing contracts and replace them with new contracts, as the Adjudicator found. It is very clear that the parties intended to amend the existing contracts, and not to replace them. There were no new contracts and therefore there was no requirement to comply with the obligations under s 112 of the Accommodation Module with regard to the engagement of a person as a service contractor or the authorisation of a person as a letting agent.
Conclusion
Therefore, in my opinion, the Adjudicator was wrong and the orders made ought to be set aside. For clarity, a declaration ought to be made that resolution 12, passed at the annual general meeting of the body corporate on 24 February 2010, was validly passed.
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