Body Corporate and Community Management (Standard Module) Regulation 2020 (Standard Module)

GENERAL MEETING MOTION - A motion proposed commencing legal proceedings against an owner who changed lot boundaries without the requisite body corporate approval, but did not say what the proceedings would seek to achieve. It was voted down. The applicant argues that was unreasonable and asks that the motion is declared carried.

Act, ss 37(1)(b), 94(2), 154(1), 312(1)(b); Standard Module, ss 173, 184(2)(a)(ii).

• [1] This application is a continuation of a long-running dispute about changes to lot boundaries made by the owner of lots 1-96, Hachma International Pty Ltd.[1] Those lots and the surrounding common property are a nightclub and shopping precinct, while the remainder of the lots are residential. Hachma has renovated the commercial area, including changing the boundaries between lots and the common property without proper approval and without updating the registered plans or community management statement.
• [2] Hachma and the body corporate have been negotiating about subdividing Hachma's commercial precinct from the residential part of the scheme to establish two independent schemes, with a building management statement to regulate their interaction. Hachma expects that will resolve the dispute, but Ms Clark points out that negotiations have been ongoing for over a decade without resolution.
• [3] Ms Clark and some other owners put motion 3 to an extraordinary general meeting on 21 November 2024 in the following terms:

Institution of Legal Proceedings against Hachma International (Australia) Pty Ltd (in it's capacity as owner of Lots 1 through 96) Ordinary Resolution

THAT the Body Corporate resolves by ordinary resolution pursuant to s.312 of the Body Corporate and Community Management Act (QLD) 1997 (Act) to file and institute legal proceedings in a Court or Tribunal of competent jurisdiction (including (if necessary) the Office of Commissioner for Body Corporate) against Hachma International (Australia) Pty Ltd for its unlawful improvements, encroachments and disposal of common property (which is a statutory breach enforceable by the Body Corporate against an owner) which arises from the owner undertaking Stage 1 and 2 building works including the reconfiguration of lot and common property boundaries;

AND FURTHER THAT the Body Corporate resolves and directs the Committee to:

1. engage/instruct a surveyor to prepare an expert report detailing the changes in the common property boundaries; and

2. instruct OMB Solicitors to prepare and file any such proceedings in accordance with the attached costs agreement and disclosure; and

3. instruct OMB Solicitors to retain a Barrister to assist in such proceedings; and

4. to recover all costs and expenses associated with the above from Hachma International (Australia) Pty Ltd, in accordance with Motion 14 and Motion 15 of the Extraordinary General Meeting held 20 June 2014.

• [4] The motion failed with 29 votes in favour and 97 against, though Ms Clark says 96 of the opposing votes were cast by Hachma.
• [5] Ms Clark seeks an order:

That Motion 3 of EGM-24 be declared as carried due to the decision not to pass Motion 3 being unreasonable.

• [6] The body corporate must act reasonably in the exercise of its functions, including when making or not making a decision.[2] Ms Clark's arguments that the body corporate acted unreasonably appear in the following paragraphs of her application:

36. The Applicant's grounds can be summarised as follows:

a. The Body Corporate requires new Survey Plans and a New CMS as a result of the substantial renovations by Hachma (as explained above).

b. There is continued uncertainty regarding the boundaries which create complexities for understanding repair and maintenance obligations of the relevant parties and insurance obligations;

c. The CMS is outdated - standard one page CMS and the by-laws applicable to the Scheme have never been properly incorporated and registered with the Titles Registry...

d. The volumetric subdivision is not progressing as the parties have reached a stalemate in negotiations. These negotiations have been ongoing for over 10 years and the Scheme cannot continue to wait any longer to rectify these issues.

37. It is objectively unreasonable on the factual circumstances surrounding this dispute for the Body Corporate not to pass Motion 3 of EGM-24.

43. The Applicant submits that when section 94(2) is considered in the context of this dispute, the only conclusion is that the decision of the Body Corporate not to pass Motion 3 was "unreasonable" because:

a. Hachma (as a lot owner) is currently in contravention of the Act;

b. Hachma has unlawfully disposed of common property;

c. the actions of Hachma in such disposal of common property and boundary realignment has resulted in the current survey plans for the Body Corporate being incapable of application to the scheme land; and

d. it is the duty and obligation of the Body Corporate to enforce the Act on behalf of all other lot owners within the scheme.

• [7] Hachma counters that it was not unreasonable to oppose litigation, with its "inherent complexities, costs, and inefficiencies", while negotiations toward subdivision are ongoing and may yet bear fruit.
• [8] The present situation is clearly irregular. Hachma has incorporated common property within its lots, and purported to add part of its lots to the common property, without the authority of a resolution without dissent as required by the Act and Standard Module.[3] Had Ms Clark sought orders against Hachma to compel it to restore the previous boundaries unless it obtains body corporate approval by resolution without dissent or subdivides the commercial precinct from the remainder of the scheme, I would have been open to considering such orders.
• [9] But Ms Clark has sought an order against the body corporate to give effect to motion 3. Motion 3 was not sufficiently clear and specific to be put into effect. It proposed commencing legal proceedings without identifying the objective of the proceedings, making it impossible to implement. The proceedings were to be in relation to Hachma's "unlawful improvements, encroachments and disposal of common property", but what orders were to be sought? The reinstatement of Hachma's lots to their former boundaries? Motions put to a general meeting to seek approval for the changes by resolution without dissent? The preparation and registration of a new survey plan and community management statement? The motion does not say.
• [10] That lack of clarity was reflected in submissions in support of the application, several of which urged me to order the body corporate to register a new community management statement, notwithstanding that motion 3 made no mention of that.
• [11] The application fails for that reason. I will not declare motion 3 carried when it is so unclear how it could be put into effect or what the intentions of owners might have been when voting in support.
• [12] I also note that a second quotation might have been required. Ms Clark did not submit a copy of the costs agreement mentioned in the motion, but Hachma says it estimated fees exceeding $300,000. A motion proposing the acquisition of services for more than the "relevant limit for major spending", which by default is $10,000 at a scheme with 177 lots, must give owners a choice between at least two quotations.[4]
• [13] The body corporate may generally only start a proceeding if authorised by special resolution too, yet motion 3 was slated for decision by ordinary resolution.[5]

[1] See Top of the Mark [2012] QBCCMCmr 94; Top of the Mark [2012] QBCCMCmr 382; Top of the Mark [2015] QBCCMCmr 85; Top of the Mark [2024] QBCCMCmr 475.

[2] Act, s 94(2).

[3] Act, ss 37(1)(b) & 154(1); Standard Module, s 184(2)(a)(i).

[4] Standard Module, s 173 & schedule 1, "relevant limit for major spending".

[5] Act, s 312(1)(b).