Palm Springs Residences [2002] QBCCMCmr 448 (15 July 2002)

C G YOUNGREFERENCE: 0302-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	29467
Name of Scheme:	Palm Springs Residences
Address of Scheme:	1 Twenty First Avenue PALM BEACH QLD 4221

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Julie Anne LILLY and Alan John LILLEY, as the co-owners of Lot 106 and holders of the Letting and Management Agreement for the scheme,



C G YOUNGI hereby order that –

1. The application for an order by Julie and Alan Lilley, co-owners of Lot 106 and holders of the Letting and Management Agreement with the body corporate, for –

“A declaration that:

a. The erecting of the sign was within the powers of the manager as set out in the by-laws of the scheme; and

b. The sign is within the requirements of the by-laws of the scheme; and

c. The sign does not have to be removed from its present position”,

is dismissed; and 2y

2. By-law 14.3 is invalid; and

3. That part of By-law 34.1 commencing with the words “and the owner or occupier of lot 106...” through to the end of the by-law, is invalid.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0302-2002

“Palm Springs Residences” CTS 29467

This is the final order to an application by Alan and Julie Lilley of Lot 106, Resident Unit Managers, who sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”) -

“A declaration that:

a)	The erecting of the sign was within the powers of the manager as set out in the by-laws of the scheme; and
b)	The sign is within the requirements of the by-laws of the scheme; and
c)	The sign does not have to be removed from its present position.”

The above order was sought as an interim order and, given the nature of the orders sought and the absence of a final order in the application, presumably as the final order as well. On 21 May 2002, the following Interim Order 302-2002 with accompanying reasons was issued in respect to the application for an interim order –

“I hereby order that the application for an interim order that the illuminated accommodation sign installed on the common property by Alan and Julie Lilley of Lot 106, who hold the Letting and Management Agreement for the scheme, be allowed to remain, is dismissed”

JURISDICTION:
This is a dispute between the applicants Alan and Julie Lilley in their capacity as both –

(a) the co-owners of Lot 106; and

(b) the holders of a management and letting agent agreement with the body corporate,

and the body corporate, as the respondent, concerning the installation by them of an accommodation sign on the common property under the authority of By-law 14.3 (as the “Manager” under the agreement) and By-law 34.1 (as the owners of Lot 106) – see text of by-laws later. As the application concerns the use of the common property and the application of by-laws regarding that use, this is therefore a matter that falls within the dispute resolution provisions of the legislation (see sections 182, 183 and 223 of the Act).

Section 223(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a) a claimed or anticipated contravention of the Act or the community management statement; or

b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1) of the Act).


APPLICATION AND SUBMISSIONS:
Following the issue of the interim order, copies of the application were provided to the body corporate committee and all owners, inviting them to make a submission to the application (see section 194 of the Act). Submissions were received from the committee and 26 owners; the great majority of owners (4:1) supporting the application to retain the sign. However, on the other hand, the scheme comprises 48 lots meaning 22 owners did not respond. The applicants did not inspect the submissions nor make a reply to them.

The by-laws referred to in the order (“the relevant by-laws”), read as follows –

By-law 14.3 Appearance of Building and Signs.

The Manager shall be permitted without the consent of the Committee to display reasonable signs or notices on the common property for the purposes of offering for sale or lease or letting any lot in the Community Titles Scheme, provided that such signs shall be of a standard that shall not detract from the overall appearance of the common property.

(Adjudicator’s Note: By-law 14.4 defines “Manager” as including the person holding the management and letting agreement for the scheme, that is, the applicants).

By-law 34.2 Management/Letting Unit.

All display signs or notices as allowed for in By-law 34.1 shall be attractive and tasteful having regard to the general appearance of the common property and shall not, at any time and from time to time, be more in terms of number and size than is reasonably necessary.

By-law 34.1 (in part)

..the owners or occupier of Lot 106 may without the consent of the Committee display signs or notices in or within the Community Titles Scheme for the purposes of offering for lease or letting any lot within the Community Titles Scheme.”

(Adjudicator’s Note: The applicants are the co-owners of Lot 106).

The applicants submitted a photograph which shows the original advertising sign, which reads “Palm Springs –Holiday Rentals Available 5520 5788”, was sited back from the road and, being attached to a railing, was limited in height, both of which made the sign difficult to see by passing motorists. For better visibility, they installed a sign (the subject of this dispute) close to the boundary line and mounted high on a post, which reads “Palm Springs Residences - (No) Vacancy – Phone [phone]”. In the interim order I referred to the sign as an illuminated one, however this was incorrect and the sign has no electrical component.

The applicants say they relied on the authority of the above by-laws to install the sign. They also sought and obtained permission from the Gold Coast City Council (“GCCC”) for displaying the sign, however that permission was withdrawn after the committee informed the GCCC that the applicants had no authority to make application on behalf of the body corporate. The applicants say that they signed the application form “in reliance on the by-laws”.

They submit that the sign meets the requirements of the by-laws, namely that it is “attractive and tasteful”, and “of a standard that shall not detract from the overall appearance of the common property”. Accordingly, they had the authority to install the sign and it should be allowed to remain.

The body corporate committee, as the administrative arm of the body corporate, submits that, although the co-applicant Alan Lilley is a member of the committee who regularly attends both formal and fortnightly informal meetings, he never raised the subject of a new sign. His attendance at meetings means he was aware that the committee was compiling a new Community Management Statement which included amendments to both By-laws 34.1 and 43.1 to exclude the right of the owner of Lot 106 and the Manager, respectively, to erect signs without reference to the committee. The committee only became aware of the sign after it was installed. The applicants did seek advice from the Body Corporate Manager, Stewart Silver King & Burns Pty Ltd, however as the applicants did not respond to a request for further information on the proposed sign, the Body Corporate Manager assumed they were not proceeding with the proposal and did not inform the committee.

At it’s meeting on 9 April 2002, the committee resolved the following: the sign be removed at the cost of the applicants; the original sign be approved; and, to meet the by-law requirements, any proposed future sign must –

1. Blend with the décor of the building and not dominate the streetscape.

2. Be in keeping with the tone and level of a predominantly residential building.

3. Advertise a restricted number of residential apartments for lease. Not have a Vacancy/No Vacancy sign attracting overnight passing traffic.

4. Be designed by the Building Architect bearing in mind the above design parameters.

The committee contends that because the sign does not meet these conditions, it is subject to the normal legislative requirements relating to an improvement erected on common property by and for the benefit of an owner, namely prior authorisation by special resolution. It also contends that the language of the by-laws limit the type of sign to one that is displayed rather than one that is erected; all three of the relevant by-laws use the term “display” in respect to signs. In support of this, it suggests, By-law 22 specifically refers to items of “construction or erection”, and “structures”, in contrast to the term “display”. The relevant part of the by-law reads -

By-law 22 Fences, Pergolas, Screens, External Blinds or Awnings.

An owner or occupier of a lot shall not construct or permit the construction or erection of any fence, pergola, screen, external blind or awning or other structure or outbuilding of any kind within a lot or on Common Property. Any work, alteration, improvement or structure carried out or erected in breach of this By-law may be forthwith removed ...

Finally, the committee claims that the applicants had no right to make application to the GCCC by signing on behalf of the body corporate. Only the committee having the duty to “administer, manage and control the common property” has the authority to make such an application (see sections 87 and 114 of the Act). It claims that the applicants circumvented the committee and that this behaviour was consistent with previous actions by them in opposing committee decisions and making decisions concerning body corporate matters without any authority to do so.

DETERMINATION:
The applicants rely on the relevant by-laws both for their authority to install the sign and to make application to the GCCC on behalf of the body corporate. They also claim that the dimensions, content and position of the sign, conform to the conditions of the by-laws.

The claim that they were able to rely on the by-laws to make application to the GCCC can be dispensed with easily. Nowhere in these by-laws is there any such explicit authority, nor can it be implied from the terms. Only the committee, as the administrative arm, is able to make such an application for the body corporate. Should the committee refuse to make such an application when it was required to do so, then either the body corporate in general meeting, as the paramount decision-making entity for the scheme, could itself resolve that the committee must do so, or authorise a person to do so. Alternatively an adjudicator could order it be done, as I commented on page 2 of the Reasons to the interim order.

It seems to me that the applicants themselves made the application as part of a deliberate decision to have the sign completed, installed and approved by local government, without reference to the committee and before it could prevent any of these steps being taken. The ill feeling that exists between the applicants and the committee may well have been seen by the applicants as justification for this secrecy.

In relation to the grounds relied on by the committee, I do not agree that a distinction can be drawn between the term “display” in the relevant by-laws and the term “erection” in By-law 22 in relation to signs, as the regulation of signs does not fall within the scope of By-law 22. There is a rule of statutory interpretation called the “ejusdem generis” rule which states that where a list of specific matters are followed by a general matter, then the general matter is limited to things of a like kind to the specific matters. That is, the general words derive their meaning from the context in which they appear. Accordingly, when By-law 22 refers to “any fence, pergola, screen, external blind or awning or other structure or outbuilding of any kind”, then the general terms “structure or outbuilding” are limited in their scope to things of a similar nature to the preceding examples. They would, for example, include a “Rolla-shield” window screen or a lattice wall, but not a television antenna or a window mounted air-conditioner; nor would they encompass a post-mounted sign. The display of signs is specifically regulated by the body corporate’s By-law 14.1.

I therefore discount this ground and will now consider the other grounds raised by the committee, as against the applicant’s reliance on the relevant by-laws, and also whether the relevant by-laws are valid by-laws.

The scheme of the legislation provides for the annual election of a committee to carry out the day-to-day business of the body corporate. The legislation, however, limits the jurisdiction of the committee both in respect of the nature and cost of body corporate matters. Section 24 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (“Accommodation Module”) sets out the types of matters that a committee cannot deal with (“restricted issues”), while section 101 restricts the committee’s ability to spend beyond a calculated amount in individual instances. These matters must be decided by the body corporate in general meeting, however outside of these limitations, the committee may generally make decisions in the name of the body corporate.

The general functions of a body corporate are set out in section 87 of the Act –

87 Body corporate’s general functions

(1) The body corporate for a community titles scheme must—

(a) administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme; and

(b) enforce the community management statement (including the by-laws affecting the common property); and

(c) carry out the other functions given to the body corporate under this Act and the community management statement.

(2) The body corporate must act reasonably in anything it does under subsection (1).

(NOTE: Adjudicator’s underlining)

The body corporate’s duties in respect of the common property are set out in section 114 of the Act–

114 Body corporate’s duties about common property etc.

(1) The body corporate for a community titles scheme must—

(a) administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners; and

(b) comply with the obligations with regard to common property and body corporate assets imposed under the regulation module applying to the scheme.

(2) Nothing in this part, or in a regulation made under this part, stops—

(a) an item of personal property that is a body corporate asset from becoming part of the common property because of its physical incorporation with common property; or

(b) a part of common property from becoming a body corporate asset because of its physical separation from common property.

(NOTE: Adjudicator’s underlining)

While section 37(1) of the Act provides that the owners own the common property as tenants in common, the above two provisions impose on the body corporate the duty to administer, manage and control the common property, and it must do so reasonably and for the benefit of owners. The committee, of course, discharges this duty where it is within its power to do so.

An instance of the exercise of that power can be found in section 113 of the Accommodation Module which requires that an owner obtain the prior permission of the body corporate before effecting an improvement to the common property for the benefit of the owner’s lot –

Improvements to common property by lot owner—Act, s 121

[SM, s 114]

113.(1) The body corporate may, if asked by the owner of a lot, authorize the owner to make an improvement to the common property for the benefit of the owner’s lot.

(2) The improvement must be authorised by special resolution of the body corporate unless—

(a) the improvement is a minor improvement; and

(b) the improvement does not detract from the appearance of any lot included in, or common property for, the scheme; and

(c) the body corporate is satisfied that use and enjoyment of the authorised improvement is not likely to promote a breach of the owner’s duties as an occupier.

Under the “restricted issues” provisions, the committee may decide a “minor improvement” (with an installed value of $200 or less) but only the body corporate in general meeting can decide other improvements, by special resolution.

The reason for this provision is obvious: owners cannot be permitted to use the common property in a manner that will interfere unreasonably with its lawful use by another owner/occupier. This is set out in section 129 of the Act which provides –

129 Nuisances

The occupier of a lot included in a community titles scheme must not use, or permit the use of, the lot or the common property in a way that—

(a) causes a nuisance or hazard; or

(b) interferes unreasonably with the use or enjoyment of another lot included in the scheme; or

(c) interferes unreasonably with the use or enjoyment of the common property by a person who is lawfully on the common property.

The term “use and enjoyment” includes, in the context of a community title scheme, not only, for example, the erection of a fence across common property interfering with the right of access of other occupiers, but also an owner placing an air conditioner in a widow, or painting the external brickwork of their lot, such that it interferes with the visual presentation of the building.

This control over owners use of common property even extends to areas of common property over which an owner has been granted a right of exclusive use. Section 123 of the Accommodation Module sets out the same requirements as section 113 for an owner wishing to effect an improvement to their exclusive use area.

I have set out these provisions in some detail to emphasise the significance with which the legislation regards the control and management of the common property. It is not an absolute authority as the legislation makes provision for owners and others to acquire rights over the common property, for example: rights of exclusive use or special rights (section 133 of the Act); lease interest (section 110 of the Accommodation Module); an easement (section 111 of the Accommodation Module); and occupation by a service contractor (section 89 of the Accommodation Module). Each of these provisions are prescriptive as to the manner in which the rights are acquired.

Putting aside for the moment the relevant by-laws relied on by the applicants, the sign must be regarded as an improvement installed on common property, with a obvious installed value in excess of $200, and therefore the owner (applicants) installing it should have first obtained body corporate approval by special resolution under section 113 of the Accommodation Module.

Accordingly, if the relevant by-laws were found to be invalid to the extent that they allow the Managers and owners of Lot 106 certain rights to display signs on the common property, then section 113 must apply. It is my view that the by-laws are so invalid, for the following reasons.

Section 142(1) of the Act states –

142 Limitations for by-laws

(1) If a by-law is inconsistent with this Act or another Act, the by-law is invalid to the extent of the inconsistency.

Under this provision, unless the legislation provides otherwise to allow the applicants the right to install the sign, then the relevant by-laws are invalid as they are inconsistent with section 113 of the Accommodation Module regarding improvements effected on common property. What provision of the Act allows for such an exemption from section 113 in a by-law?

The only appropriate provision is under section 133 of the Act which states –

133 Meaning of “exclusive use by-law”

(1) An “exclusive use by-law”, for a community titles scheme, is a by-law that attaches to a lot included in the scheme, and gives the occupier of the lot for the time being exclusive use to the rights and enjoyment of, or other special rights about—

(a) common property; or

(b) a body corporate asset.

(NOTE: Adjudicator’s Underlining)

Section 136(c) then makes specific provision for a by-law to authorise improvements to be made –

Improvements—Act, s 136 [SM, s 124]

123

(3) If the exclusive use by-law does not authorise the lot owner to make an improvement, the lot owner may make the improvement only if the body corporate authorises it to be made.

In my view, if the relevant by-laws were meant to be “exclusive use by-laws”, with the resultant diminution of the body corporate’s power to control and manage the common property, then there would need to have been very clear words used in the by-laws identifying them as having being made under that head of power. Those words could have been a legislative reference or use of the term “special rights” (which is the more appropriate description than “exclusive use”). But there are no such words. Accordingly, in my view, the general power of the body corporate to manage and control the common property remains unaffected, and the relevant by-laws are invalid to the extent of the inconsistency with the Act.

I believe I am supported in this view by the manner in which the body corporate has worded By-law 56.1, a by-law which confers “special privileges and rights” on owners in respect of identified areas of common property for the purpose of maintaining and servicing their respective air-conditioners. The by-law is accompanied by a sketch plan identifying the respective areas of common property for which owners have the “special privileges and rights”. While the term “special privilege” is not the language of the Act, the term “special rights” brings the by-law within the scope of an “exclusive use by-law”. If the body corporate wished to identify the relevant by-laws as such by-laws, then it should have used similar language to that used in By-law 56.1 – by not doing so, it contrasts its treatment of the relevant by-laws.

Also, I consider I am further supported in this view by the language of the relevant by-laws in referring to the consent of the “committee”. If there was an intention that these by-laws were to confer “special rights” as “exclusive use by-laws”, then that would have been better served by excluding the body corporate and not just the committee. Had the words “special rights” been used then of course nothing needed to said concerning the approval role of either the committee or the body corporate. From my reading, it seems possible that the body corporate was not seeking to grant a special right in the by-laws, but was prohibiting any role by committee in determining the appropriateness of signs and, by implication, providing that only the body corporate in general meeting could decide (presumably by ordinary resolution) such matters - and of course such a by-law is not possible in the face of section 113 of the Accommodation Module and section 142 of the Act.

(Of course in ascribing the responsibility for by-law wording to the body corporate, I am aware of the reality that the by-laws were drawn up by the developer’s solicitors and came into operation upon establishment of the scheme (or registration of the plan) when the developer was the sole owner of all the lots and constituted the body corporate. Although the body corporate replaced its community management statement since establishment, the relevant by-laws remained unchanged).

In summary, I consider that, at the very least, there is considerable doubt as to the intent and meaning of the relevant by-laws, and the most appropriate course is to preserve the power of the body corporate over the common property.

I realise that I have dealt at some length on what is really a simple matter of sticking a sign in the ground. I have done so because the applicants, like many other holders of management rights agreements, have paid a considerable sum of money for those rights, and it may well be that this decision is appealed.

My order is therefore to dismiss the application sought by the applicant. I have also included orders that the relevant by-laws are, to the extent described, invalid – this will allow this central finding from which my dismissal of the application flows, to be appealed.

Having made my decision, there are some comments I wish to add. The committee, and at least one owner, has emphasised that the scheme is mostly owner occupied (only 18 are let) and that this state of affairs should determine what emphasis on the type of rental should prevail in the Manager’s advertising. I requested and obtained copies of the developer’s advertising brochures for “Palm Springs”. At page 7 of the brochure titled “Experience the privilege of absolute beachfront” is the comment “You may choose to live here permanently, holiday at your leisure or let at your discretion...” Clearly the developer sought buyers for investment as well as residential purposes, and potential purchasers should have been aware of this fact with the only unknown being the mix of the two types of owner.

I do not want to comment on this aspect any further - I have not, and should not, make any comment as to how I view the decision of the committee regarding the sign, or its list of compliance requirements for future signs. However, I am aware that my decision has not really resolved the dispute. The parties still must do that. Perhaps upon receipt of this order, the committee and the applicants should meet and attempt to determine what is a reasonable compromise sign, so that when an “improvement” motion is put to the body corporate in general meeting, there is joint support which will best enable a special resolution to pass. If this does not happen, and the resolution fails, then the matter may drag on into another dispute.