Orknie Pty Ltd v Body Corporate for Paloma CTS 9524
[2012] QCATA 85
•21 May 2012
| CITATION: | Orknie Pty Ltd v Body Corporate for Paloma CTS 9524 [2012] QCATA 85 |
| PARTIES: | Orknie Pty Ltd (Applicant/Appellant) |
| v | |
| Body Corporate for Paloma CTS 9524 (Respondent) |
| APPLICATION NUMBER: | APL053-12 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Hon J Thomas, AM QC, Judicial Member |
| DELIVERED ON: | 21 May 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the body corporate take no further action to prepare and lodge a new community management statement amending the contribution schedule lot entitlement applicable to the scheme until the determination of the present appeal. 2. That Nannette Blair be joined as a respondent in these proceedings. |
| CATCHWORDS: | Body Corporate and Community Management – Adjustment of contribution schedule – whether “adjustment order” had been made – whether unit-owner’s motion satisfied requirements of s 379 – avoidance of absurdity – whether unit-owner Committee member disqualified from voting Body Corporate and Community Management Act 1997, ss 379-385 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act2009 (QCAT Act).
REASONS FOR DECISION
These are two applications pending an appeal. One is by the applicant/appellant for an injunction, and the other by a unit owner (Ms Blair) seeking to be joined as a party.
The applicant/appellant (Orknie) is a unit owner in a twelve unit scheme (Paloma). Orknie brought proceedings before an Adjudicator to declare void a committee resolution to progress a motion of another unit owner (Ms Blair) who sought to readjust the contribution entitlements under the relevant scheme. The adjudicator dismissed Orknie’s application for a declaration that Ms Blair’s motion to effect such a readjustment was invalid and ineffective.
The parties to the original proceeding before the adjudicator were Orknie and the Body Corporate.
I will refer to Orknie as the appellant.
The preliminary applications now before me are:
(a) By the appellant for an interim order or injunction directing the body corporate to take no action to effect any new community management statement amending the contribution schedule lot entitlement until the determination of this appeal; and
(b) By Ms Blair to be joined as a party.
I should mention that the appellant also seeks an order that the body corporate be joined as respondent in these proceedings, but consider that application unnecessary as the body corporate is already a party.
The present application by the appellant is tantamount to an application for a stay pending the hearing of the appeal. The principles to be applied in such applications are well settled, and I do not understand there to be any contention about them. I must first be satisfied that the appellant has raised an arguable ground of appeal.[1] It will be convenient to consider firstly the main points raised by the appellant.
First point – whether an adjustment order was made under section 378
[1]Asia Pacific International Pty Ltd v Oeel Valley Mushrooms Ltd (1999) 2 Qd R 458; cf Kennedy v Stewart [2011] QCATA.
The appellant contends that no “adjustment order” within the meaning of section 378 of the BCCM was made at any relevant time.
It is common ground that an order was made by Mr K Dorney QC on 29 October 2009 adjusting the lot entitlements in the relevant contribution schedule. Mr Dorney’s reasons demonstrate that his ensuing order satisfies the definition of “adjustment order” in section 378 of the Body Corporate and Community Management Act 1997 (“BCCM Act”). The appellant’s submissions are that the order gave effect to the terms of settlement of a dispute between an owner and the Body Corporate, and that Mr Dorney's order falls within the exclusion mentioned in paragraph (b) of the definition in section 378. However it is perfectly clear that there was no actual settlement, and that the matter proceeded to a determination by Mr Dorney who exercised his own judicial discretion in making the determination that thereafter bound the parties.[2]
[2]Compare Yates and Anor v Williams and Body Corporate for Magic Mountain Apartments [2012] QCATA 048.
If the appeal depended on this point alone, I would rule that there is no serious question to be tried, and would decline to grant interim relief.
Second point – interpretation of nonsensical provision in section 379(1)(a)
The appellant contends that the relevant motion does not satisfy the requirements of section 379(1)(a) of the BCCM Act.
Section 379(1) provides as follows:-
Motion proposing adjustment of contribution schedule
(1) Subsection (2) applies if—
(a) an adjustment order increased the proportion of the total contribution schedule lot entitlements for all the lots included in an existing scheme that are attributable to a lot included in the scheme; and
(b) before the commencement, a new community management statement reflecting the increase has been recorded.
If the circumstances stated in subsection 1 exist, subsection(2) gives the owner of a lot the statutory right to submit a motion proposing adjustment of contribution schedule, which will reflect the pre-adjustment order entitlements for the scheme.
If read literally the requirement of subsection (a) makes nonsense of the entire purpose of the 2011 amendment which inserted division 4 of Part 9 into the BCCM in 2011 with effect from 14 April 2011. On a literal interpretation of the words, no adjustment order could ever be made.
This is because it is mathematically impossible for any adjustment order to increase the proportion of total contribution loss entitlements for all the lots in a scheme. It is nonsensical to suggest that all the proportions that the component parts of one entity bear to the entity can be increased.
The avoidance of absurdity has always been recognised as a good reason to depart from literal interpretation. As long ago as 1857 this was referred to as “the golden rule” (Grey v Pearson 1857 6 HLC 61, 106; 10 ER 1216, 1234):
“.. the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency...”
Since then the importance of recognising the purpose of the relevant enactment has been given even greater effect, including by statutes concerned with statutory interpretation.
In the present matter the only sensible interpretation of section 379(1)(a) requires the word “are” to be read as “is”, and requires the words “the total contribution schedule lot entitlements for all the lots included in an existing scheme” to be construed as a single concept. In short, the obvious intention of section 379(1)(a) is that subsection 2 will apply when an adjustment order increased the proportion of the whole contribution schedule lot entitlements that is attributable to a lot.
While I think that this is the correct ultimate conclusion, I cannot say that the matter is beyond argument and would at this point rule that the appellant has raised a seriously arguable point on this issue.
Third point – voting by committee member who owned a unit
The relevant community titles scheme comprises 12 lots. It seems to be common ground that the relevant community titles scheme is governed by the Body Corporate and Community Management (Standard Module) Regulation 2008. Sections 52-54 of the Standard Module deal with the situation of conflict of interest in committee proceedings and provide that a member is not entitled to vote on a motion involving issues with respect to which there is a conflict of interest.
The motion in question was a substantive motion proposed by Ms Blair on 21 June 2011. It was that the contribution schedule lot entitlements for the scheme be readjusted to reflect the pre-adjustment entitlements. That motion was “carried” by a vote of three to one.
The committee of course, had no right of refusal of any "motion under section 379"[3], and had no power to "carry" it, or to refuse it. Its function was to determine whether or not it was a "motion under section 379". If it was, the committee was simply bound to comply with the mandatory requirements of the following subsections (subs 385(2), 385(3), 385(4) and (385(5)). The only of these under which the committee could exercise any discretion or adjudicator function, are ss(3) and (4), under which it might be necessary to select a valuer and, in the light of any submissions received, decide what changes should be made to the pre-adjustment order entitlements.
[3] See BCCM, s 385(1).
In the event the committee decided to proceed with the motion, thereby treating it as a motion under section 379. The appellant (in the first and second points above) contends that it erred in so doing, and I have indicated that one of these points is fairly arguable. In case I am wrong about this I shall express a view as to whether the present point is also fairly arguable.
Having "carried" Ms Blair’s motion on 21 June 2011, the committee proceeded generally in accordance with section 385 and sent out the necessary notices to the various owners. Apparently no submissions were received, and, consistently with section 385(4) the committee proposed no changes to the pre-adjustment lot entitlements.
On 28 October 2011 the committee voted on Ms Blair’s motion of 21 June 2011, and decided that it should be “progressed”. This is the resolution that is challenged in the present proceedings. So far as the present point is concerned it is said to have been invalidly carried because Ms Blair was disentitled from voting. The motion was carried by two votes to nil with affirmative votes being cast by Ms Blair in her own right, and as proxy for committee member, Mr G Shillig, with five members of the committee abstaining from vote. Ms Blair was at that time committee secretary and a unit owner.
No doubt the position of every unit owner in the complex would always be affected by any decision in relation to readjustment of lot entitlements. But the BCCM Act contemplates that committees will deal with readjustment motions.[4] It is therefore immediately obvious that there is some tension between the relevant provisions in the Act (Division 4 of Part 9 of the BCCM Act) and those of the Standard Module. In the event of conflict, one would expect the statutory provisions to prevail, but the matter deserves fuller argument.
[4] See s 385.
It seems to me to be arguable that the “progressing” motion which the appellant seeks to invalidate was quite unnecessary. If that motion was a section 379 motion, the committee was under a duty to proceed administratively as section 385 prescribed.
Assuming (as s 385 does) that dealing with such a motion is entrusted to the committee, it would be an extraordinary situation if it could not be dealt with because all of the members of the committee were unit owners, and were thereby disqualified for conflict of interest. That would seem to be the situation in most unit schemes.
Possible answers to the present point which immediately occur to me include the following:
(a) The duty of a committee under s 385 is to take the administrative steps required by subsections (2) to (5). No resolution or motion to "progress" the original motion is necessary or appropriate. The appellant’s application to set it aside is therefore unnecessary and misconceived.
(b) Infringement of rules 52-54 does not render the act of the Committee in dealing with an earlier motion a nullity.
(c) The doctrine of necessity is recognised by the common law as justifying action taken when a person might otherwise be disqualified from taking that action. Where there is a statutory duty to act, a person who might otherwise be disqualified on the ground of bias may proceed to perform the action, and the action may be validly performed.[5]
(d) All the members of the Body Corporate and all the committee members have the same conflict, and the conflict being equal, the conflict disappears.
(e) As secretary of the committee, Ms Blair did not have a conflict of interest because she is a committee member representing all owners.
[5]Laws v Australian Broadcasting Tribunal 1990 170 CLR 70, 88-89, 102; Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSW LR 411, 421, 443-445; Shaman, “Bias on the Bench: Judicial Conflict of Interest” (1989) 3 Georgetown Journal of Legal Ethics 245, 248-249.
However the point is a substantial one, and it deserves full argument along with the above possible answers to it.
It should be noted that that this point, which relies upon incapacity by Ms Blair to vote, will in the end be of no use to the appellant if the correct view of section 385 is that no resolution to progress the original resolution was necessary, and that the committee was simply under a statutory duty to move forward administratively. This is a point which will also need to be considered in the eventual determination of this appeal.
Determination of appellant’s application for stay
I therefore consider that the appellant surmounts the first obstacle and shows some arguable points. The balance of convenience clearly favours the holding of the status quo until the matter is determined. If the appellant were to delay in the prosecution of the appeal this could change, but on present information it seems unwise to incur the expense of effecting the proposed changes unless and until it is finally determined that Ms Blair’s motion satisfies the requirements of s 379(1).
I will therefore order that the body corporate take no further action to prepare and lodge a new community management statement amending the contribution schedule lot entitlement applicable to the scheme until the determination of the present appeal.
Application for joinder of Ms Blair as a respondent
Ms Blair’s conduct has been called into question, and she clearly has an interest both personal and in property to protect. She is desirous of becoming a respondent and it is appropriate that she be joined as a party.
I shall therefore order that Nannette Blair be joined as a respondent in these proceedings.
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