Bellevue Terrace [2002] QBCCMCmr 65 (8 February 2002)

C G YOUNGREFERENCE: 0546-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9493
Name of Scheme:	Bellevue Terrace
Address of Scheme:	25 Mary Street BRISBANE CITY QLD 4001

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

William Harris KEYS, as a co-owner of Lot 6,



C G YOUNGI hereby order that the application for an order that Donald and Dorothy Knox, former co-owners of Lot 14, and John de Groot for de Groot & Co, occupier of Lot 5, pay to the body corporate all moneys received during the period 1988 to 1998 from renting areas of the common property described as parking bays A, B and C, is dismissed. 2n
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0546-2001

“Bellevue Terrace” CTS 9493

This is the final order to an application by William Keys of Lot 6 who has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote -

“An order of restitution to account to the body corporate for monies received out of the rental of common property belonging to the body corporate and for which the body corporate has not approved.”

The applicant also sought the following interim order of an adjudicator, quote -

“The immediate past chairman of the body corporate (Donald Knox) is selling his interest in the body corporate building. The settlement date is 30/11/2001. The Unit/Lot is No. 14. This person should account to the body corporate for rental monies received by him over the years for common property used as car parking space and for which he has not accounted or received body corporate authority or approval.”

On 17 September 2001 the following Interim Order 546-2001 was issued, quote -

“I hereby order that the application for an interim order that Donald Alexander Knox, a co-owner of Lot 14, should account to the body corporate for monies received for the rental of areas of common property for parking purposes, is dismissed.”

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)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

The application seeks an accounting from Donald and Dorothy Knox, formerly of Lot 14, and John de Groot of Lot 5, for an undetermined amount of money received by them for the respective periods January 1988 to October 1998 and October 1988 to September 2001, from the rental of areas of the common property for vehicle parking purposes. The matter is one alleging the improper use of common property by owners, and the granting of rights of exclusive use over certain common property to owners and occupiers in contravention of the Act. The matter is therefore one falling within the “dispute” provisions of the Act (see section 183).

There are, however, two matters concerning jurisdiction which I need to first consider.

Firstly, since lodging the application the Knox’s have sold their lot and are no longer an owner or occupier in the scheme. Section 182 provides that a dispute must be between certain defined parties, including an owner and another owner, as in this instance with respect to the Knox’s. The requirement was met at the time of lodgement of the dispute and, in my opinion, the dispute concerning as it does the demand for reimbursement by an owner to the body corporate for moneys obtained through an alleged improper use of the common property, survives the departure of the owner from the scheme. Whether a dispute remains on foot after a change in the status of a party, depends on the nature of the dispute – here it concerns a reimbursement of money received during the period of ownership and therefore having no current interest in the body corporate is irrelevant. I am satisfied that jurisdiction continues in regard to the applicant’s dispute with the Knox’s.

The second matter concerns John de Groot as the other respondent. He has submitted that he is neither an owner nor an occupier of a lot in the scheme and therefore cannot be a party to a “dispute” with another owner under section 182(a) of the Act. The applicant has also included the words “(current chairperson)” against de Groot’s name in the application, though I regard this as a descriptive remark rather than defining the dispute as being with John de Groot in his capacity as chairperson, for which no jurisdiction exists under section 182. In any case, from a reading of the applicant’s grounds it is evident that there is no claim that de Groot received the moneys in the capacity of chairperson.

John de Groot is a member and director of Arkel Pty Ltd which is the proprietor of Lot 7. The lot is occupied by de Groot & Co., of which his wife Margot de Groot is a part owner. The company provides “Wills and Estates” legal services and John de Groot is employed as a consultant solicitor. From a reading of the documents that have been supplied by all parties to this application, it seems to me that jurisdiction would have been beyond doubt if the respondent had been nominated as de Groot & Co. However I intend to proceed to determine the application on the grounds that John de Groot has been the representative for de Groot & Co, the relevant documents showing that, apart from his spousal relationship and consultancy employment, he has acted as the representative in dealings with the applicant and others regarding the matter in dispute.

I shall now turn to the substance of the dispute.

There is mostly common ground between parties as to the facts of the matter which follow. At a body corporate committee meeting held on 10 December 1987, the committee resolved “pursuant to By-law 11, for the exclusive use by Mr R (sic) Knox of parking bays “A” and “B” located on the common property”, on condition that the grant of exclusive use only remained in force so long as Knox acted as “Manager of Bellevue Terrace” (see comments later). At the time, Donald Knox was the Building Manager and he had proposed the grant as an alternative to raising his fee which he considered was inadequate. He proposed that he either use or rent out the areas A and B.

By letter dated 14 January 1988, the committee advised Knox of the grant of exclusive use over “parking bays A and B” to run for so long as he was manager. An accompanying sketch plan showed areas A and B marked as being located at the eastern and southern corners of the basement car park (Level A in the registered plan). At some later time, an additional parking bay sized area of common property on the north western side of the basement, described as parking bay “C”, was also rented out by Knox – Knox states that the committee agreed to extend the exclusive use grants to also cover this area but I have no minute confirming that.

Knox carried out the tasks of Building Manager and rented the three areas for the next ten years, apparently without any complaint from other owners, including the applicant for some years after his purchase of Lot 6 in 1994. Knox asserts that he informed the applicant of the exclusive use renting arrangements with the body corporate when asked by him to rent out parking bay 6A, though the applicant states that he only became aware of the arrangement in August 2001.

In November 1998, de Groot & Co took over the building management tasks from Knox after Knox approached Margot de Groot stating that he wished to retire from the position. De Groot & Co accepted on the basis of the same arrangements, namely that remuneration for the building manager services was the use of, or rental income from, the three areas A, B and C. By letter dated 30 October 1998, Knox informed the Body Corporate Manager, Mr Nick Jones as representative for Body Corporate Services Pty Limited, of the change in building management and the transfer of the renting of the three parking bays, adding that the matter should be tabled at the next committee meeting. I have no minute of that occurring, though John de Groot states that at a committee meeting shortly after that time, he informed other committee members that the building management task was unpleasant and asked whether any of them would take over the arrangement, but they declined.

The management and renting by de Groot & Co continued until the validity of the arrangement was contested by the applicant in late 2001. This application was lodged on 10 September 2001 and shortly afterwards on 24 September, de Groot & Co informed the body corporate in writing that it wished to withdraw from the arrangement. At its meeting on 27 September 2001, the committee accepted the withdrawal of de Groot & Co, noting in its minutes that it was satisfied with the arrangement and its services since 1998. It resolved to employ RJTiffen & Associates to take over the services for a set fee.

Simply put, the facts are these. An arrangement was entered into between Knox and the body corporate in 1988 for him to carry out certain building management and caretaker duties in return for the right to rent out three parking bay sized areas of common property. In 1998 the arrangement was taken over by de Groot & Co until the applicant raised allegations that the rental moneys first taken by Knox and later by de Groot & Co, was rightfully income of the body corporate, whereupon Groot & Co withdrew from the arrangement in September 2001. The applicant wants an accounting by both parties for the rental income and for the moneys to be ordered paid over to the body corporate.

The applicant is correct in stating that the committee acted beyond its jurisdiction in purporting to grant Knox “exclusive use” of the three parking bays. The records of the Registrar of Titles show that “Bellevue Terrace” was registered on 11 July 1983 as a building units plan (now termed a “building format plan”) under the then relevant legislation, the Building Units and Group Titles Act 1980 (“the BUGT Act”). Shortly afterwards, on 22 August 1983, and based on a resolution without dissent passed by the body corporate on 25 July 1983, the by-laws of the body corporate were amended by, amongst other things, adding a new By-law 22. This by-law was one providing a mechanism whereby the original owner (developer) could allocate the exclusive use of common property parking bays to owners of lots, identifying the bays allocated, with notification of the allocations to be provided to the committee at the statutory First Annual General Meeting. This was a common by-law in large schemes, designed to allow a developer to allocate favoured parking bays to purchasers. (The applicant states that he has been unable to locate the notification in the body corporate records, however the new community management statement of July 2000 restates this by-law, though in paragraph form for easier reading)


Section 30(7) of the BUGT Act provided for rights of exclusive use over common property to be granted to owners by by-law authorised by a resolution without dissent. Any amendment of the by-law had to be authorised by a like resolution. While machinery by-laws to allocate exclusive use areas, such as provided for by By-law 22, were valid within the meaning of the section, the further provision in By-law 22 seeking to empower the committee to “vary the allocations so made and to transpose car spaces from one lot to another..on the written request of owners” seems to me to be granting a power to the committee that is in conflict with the requirements for a resolution without dissent by the body corporate in general meeting. This is particularly so in respect of the first limb of the extension, namely the power to “vary the allocations so made”. If given its widest meaning, this would allow the committee to vary the original allocations at its whim (the condition for a written request from the owner only applies to the second limb).

It seems to me that, although it has not been mentioned by any party, when the committee granted exclusive use over spaces A, B and C to Knox, it may have been acting under a misunderstanding of its powers given by this by-law. Such an interpretation, however, would be stretching the by-law’s meaning beyond a variation of allocations, itself unlawful, to allocations of fresh areas of common property. Clearly the committee had no power to grant exclusive use of the areas A, B and C to Knox.

The significant point here is, though, that these purported grants were never recorded as by-laws for “Bellevue Terrace”. Grants of exclusive use by by-law only took effect under the BUGT Act (see section 30(3) of that Act) when recorded on the registered plan – a similar provision now exists in respect of by-laws recorded as part of a community management statement (see section 53(1) of the Act). Also, I can find no record of the committee ever lodging any documents for these grants to be recorded formally on the registered plan, or (after commencement of the new Act) as a new community management statement.

Under both the previous and current legislation, the body corporate has the power to rent or lease part of the common property, as well as the power to grant exclusive over part of it or even sell part of it. However, all of these means of dealing with the common property were beyond the jurisdiction of the committee. The committee could have formalised the arrangement by, for example, leasing the areas to Knox for a nominal rent. Better still, the body corporate could have rented out the areas for parking itself and paid Knox a wage for his work as Building Manager, though the income may have had tax implications for the body corporate.

There is no doubt that the applicant is correct in holding that the committee acted in contravention of the legislation by its arrangement with Knox, and later with de Groot & Co. Additionally, in regard to the transfer of the arrangement to de Groot & Co, there is no evidence before me of even a formal committee resolution adopting the fresh arrangement.

The next question concerns the liability of Knox and de Groot & Co to reimburse the body corporate for the rentals received, as sought by the applicant.
The original arrangement between the committee and Knox, as resolved at its meeting of 10 December 1987 and confirmed in writing on 14 January 1988, clearly shows that the use or rental of the spaces was intended as a benefit in lieu of wages to Knox for the carrying out the duties of building management. No one has stated that the building was not in need of a building manager, or some other party providing the same services, during the period of management by either Knox or de Groot & Co. Knox has described the situation of “Bellevue Terrace” in 1988 as one of little or no building security, with break-ins, vandalism, and parking by outside vehicles. Duties, both then and since, include the overall supervision and management of both the car parking security system and the building, and the general point-of-contact duties that flow from these responsibilities.

Apart from the absence of any allegation that building management services were unnecessary for the relevant period (January 1988 to September 2001), the applicant has chosen not to consider what was a fair and reasonable wage for the duties performed, and how those amounts compared over time to the estimated rentals received. The applicant states that there should be no quantum meruit consideration for the services rendered, but that I should merely apply the law in ordering the recovery of funds obtained under an unlawful arrangement and leave the parties to then settle on a fair and reasonable amount of wages. However, that is not an efficient or reasonable means of resolving a situation of claim and counter claim as exists here.

Section 223 of the Act imposes on an adjudicator the overarching responsibility to make orders that are “just and equitable in the circumstances” to resolve a dispute. The application of that principle to this dispute leads me to go beyond the order sought by the applicant to a consideration of all of the circumstances, including the need for Knox and de Groot & Co to be recompensed for their work.

In regard to the comparative amounts for rentals received and work done, de Groot & Co state that at the time of its withdrawal from the arrangement it was receiving: $190 a month for space B; space A was used by a staff member but presumably would rent also for around $190; and $50 was (until recently) rented for $50 a month. The monthly total of $430 compares favourably with the fee of $550 which the body corporate agreed to pay the service provider engaged to take over the duties from de Groot & Co. This does not necessarily mean that the rental income and the value of work done for each of the previous 10 years, was also roughly equivalent (if not slightly favouring the body corporate), but it appears that one could say that there was no significant imbalance in favour of Knox and de Groot & Co.

Also, I have noted that the arrangement was not a hidden one but was recorded in the books and records of the body corporate. If owners were unaware of it, then the availability of the records to all owners gave them the means to have knowledge of it.

Taking into account all of the circumstances, it is my decision in this matter that neither of the respondents should be required to disgorge the rentals they received but that the moneys should be regarded as being reasonable payment for the building management services they provided to the body corporate. The matter now extends back some 13 years and it would be difficult to assess a reasonable wage for the services given, and also may be difficult to obtain a proper accounting of rentals. There is nothing to undo in regard to the grants of “exclusive use” as they were never recorded to have force and effect. My order is therefore to dismiss the application.