Cairns Village Resort [2004] QBCCMCmr 132 (5 March 2004)

Last Updated: 30 September 2005

REFERENCE: 0080-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	18161
Name of Scheme:	Cairns Village Resort
Address of Scheme:	Corner Anderson Road and Bruce Highway CAIRNS QLD 4870

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

I hereby order that, in respect of the exclusive use areas of lot 99, owned by William and Jannine Nason (respondents), and pending a final determination in respect of this dispute: 1. The body corporate is to have access to all exclusive use areas that contain electrical switchboards for the purposes of maintaining the electrical infrastructure. Access is to be on the following terms: a. The respondents are to provide the chairperson of the body corporate with copies of keys to these areas within 7 days (at the cost of the body corporate). However, except in an emergency, the body corporate is only to use these keys to access the areas after notification to the respondents; b. If access is for routine inspections or to perform scheduled work then 7 days notice is to be provided to the respondents by telephoning the reception area during office hours. Any change to scheduled work requires 24 hours’ notice; c. If access is required as a result of an electrical fault then the body corporate is to provide notice to the respondents by telephoning the reception area during office hours or the after hours contact number outside office hours. This notice is to be given prior to access, except in an emergency when notice is to be provided as soon as practicable; d. The body corporate is responsible for supervision of any access to the exclusive use areas and for leaving the areas in the same condition in which they were found. 2. The body corporate is entitled to offer occupiers use of the common property swimming pool and the adjacent exclusive use areas that offer toilet facilities, barbecue facilities and a rotunda. Access is to be on the following terms: a. The respondents are to provide the chairperson of the body corporate with copies of any keys to these areas within 7 days (at the cost of the body corporate); b. If the body corporate offers these facilities to occupiers at times the resort did not regularly offer the facilities in the past then the body corporate has the responsibility to keep those areas in a clean and tidy condition at those times; c. Neither the body corporate or the respondents may discriminate against who may use these facilities based on which lot the person occupies. 3. The respondents are to, within 7 days, return the barbecue (including the hotplate and gas bottle) to the barbecue area. The body corporate is to pay the reasonable costs of supply of gas to the barbecue. This is an interim order and will remain in effect for a period of not longer than six months. It is the responsibility of the applicant to apply to extend this order if no final determination has been made within that period. This order will automatically lapse upon a final order being made or this application being withdrawn.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0080-2004

"Cairns Village Resort" CTS 18161

Interim Application

Cairns Village Resort Community Titles Scheme (CVR) is a 202 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). The scheme operates as tourist accommodation and a resort.

This is an application for interim orders. The body corporate (applicant) seeks interim access to exclusive use areas of lot 99 in the scheme which is owned by William and Jannine Nason (respondents) pending a final determination of whether those exclusive use areas were validly granted. This interim application is related to another application by the body corporate that seeks to invalidate the community management statement for the scheme, including the grant of exclusive use areas to lot 99 under by-law 16 in that statement. ^[1]

Interim Orders Sought

The body corporate seeks full and free access to electricity switchboards located in exclusive use areas of lot 99.

Further, the body corporate seeks to allow occupiers to access toilets, a barbecue area and a rotunda in exclusive use areas of lot 99 adjacent to the common property swimming pool. Reinstatement of the barbecue to the barbecue area is also sought.

Submissions

The body corporate has provided submissions to the effect that:

• The scheme has an onsite manager, F N Management Pty Ltd (FNM). Lot 99 is owned by a related party to the manager;
• The community management statement purports to give the owner of lot 99 exclusive use of maids’ rooms for storage purposes. These rooms contain electrical switchboards that service the lots to the scheme. FNM manages some of these rooms but the majority of rooms are not managed by FNM. The body corporate needs access to these switchboards but has had difficulty obtaining access; and
• The community management statement purports to give the owner of lot 99 exclusive use of areas around the pool including a barbecue area, toilets and a rotunda. The body corporate alleges that the onsite manager has been progressively removing facilities from guests and requests that guests have access to these facilities. In particular, in January 2004 the onsite manager locked the toilets and prevented guests at the resort from using them. Further, in November 2003 the onsite manager prevented guests from using the barbecue gas bottle and removed the barbecue itself in January 2004.

The respondents have provided submissions to the effect that:

• The application is not a bona fide application but is part of a cynical strategy by Village Property Group (VPG) to undermine existing lawful rights, is an abuse of process, and ignores the rule of law;
• The orders requested would be contrary to the occupation authorities granted to the respondents;
• Smooth operation of the resort depends on the centralised control of exclusive use areas by the respondents;
• The respondents would be unfairly prejudiced by losing exclusive use of the maids rooms;
• The personnel on the committee cannot be trusted to act reasonably and fairly in utilising any access rights; and
• The Act gives the body corporate adequate powers to deal with issues of access to common property which is the subject of exclusive use by-laws.

Background

There is a complex history to this scheme that requires consideration of the roles of FNM and VPG. In short, it appears that:

•	The resort is managed by a related party to the respondents, FNM, which holds a caretaking and letting agreement in respect of the resort;
•	VPG has taken over effective control of the body corporate by purchasing the majority of lots in the resort;
•	FNM is paid by the body corporate to look after the common property of the scheme. It is also engaged by a few owners as their letting agent; and
•	VPG has withdrawn its lots from the FNM’s letting pool and performs its own letting of the lots owned by it. However, VPG still relies on FNM to look after the common property of the scheme under the caretaking agreement with the body corporate.

The body corporate, controlled by VPG, is seeking a declaration that the community management statement of the scheme is invalid and wishes to lodge a new community management statement. By-law 16 of the disputed community management statement grants exclusive use over certain areas to lot 99. In the interim application, the body corporate alleges that FNM or lot 99 is using these exclusive use rights to interfere with its access to electrical switchboards and to prevent guests of the resort making reasonable use of facilities surrounding the pool area. The body corporate seeks interim orders to allow access to these exclusive use areas pending a final determination of the dispute about the validity of the community management statement and this by-law.

Decision

Interim injunctive relief

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

The body corporate is seeking orders of an injunctive nature designed to allow access to exclusive use areas until a final determination of whether the exclusive use areas were validly granted. For it to be just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I would need to be satisfied that the application raises a serious question to be determined. I would also need to be satisfied that the balance of convenience between the parties justifies the grant of injunctive relief. That is, I would need to balance the inconvenience to the body corporate of refusing to allow access and use of the areas when it may finally be determined that access and use should be granted against the inconvenience to the respondents of allowing the body corporate access and use of the areas beyond what it may finally be determined that the body corporate is entitled to.

Serious question to be determined

The questions raised by the body corporate can be considered in two groups. Firstly, the body corporate claims that the community management statement for the scheme is invalid because it was not properly adopted by the body corporate. The body corporate has provided evidence that procedures were not properly followed. However, the respondents properly point out that an application to void a resolution of the body corporate should be made within 3 months after the resolution was made (Act, 242(2)). In this instance, the disputed resolution was made over four years after the resolution was made. It is possible for an adjudicator to waive the failure to make the application within 3 months (Act, 242(3)). However, this is a significant hurdle for the body corporate to overcome given the length of time that has elapsed.

The second group of submissions is to the effect that the exclusive use areas are inappropriate and should never have been granted. The body corporate makes the point that it could not have reasonably been intended that exclusive use be granted over the electrical switchboards. The arguments also highlight an absurdity in that the toilets, barbecue area, and rotunda adjacent to the pool are designed for use by all occupiers but the grant of exclusive use over these areas could potentially result in only the occupiers of lot 99 being able to use these areas.

The body corporate also raises the argument that the exclusive use areas should have been granted as occupation authorities for the manager rather than as exclusive use areas of lot 99 as the ownership of lot 99 is not linked in any way to the caretaking and letting agreements. This argument has some merit in raising a question of whether the exclusive use by-law is oppressive or unreasonable. However, the evidence indicates that lot 99 is actually linked to the provision of caretaking and letting services and the body corporate has not claimed that the respondents have ceased being service providers and letting agents and sought review of the exclusive use by-laws pursuant to section 178 of the Act.

The respondents claim that the application is an abuse of process that seeks to undermine the respondents’ existing legal rights and ignores the rule of law. However, the community management statement is not an instrument under the Land Title Act 1994 and the recording of a community management statement does not allow for a presumption that a community management statement is valid or enforceable (Land Title Act 1994 115K, 115L). An adjudicator can hear applications about the validity of community management statements and can make orders requiring the lodgement of a new community management statement (Act, Schedule 5 – eg. 2, 20).

The respondents also raise concerns about a fabrication of evidence. This is something that would need to be considered as part of a final determination.

On balance, there does appear to be a serious question to be determined. It is arguable that the grant of exclusive use over the areas to lot 99 could be oppressive or unreasonable, or could at least be used by lot 99 to create an oppressive or unreasonable result. The terms of by-law 16 itself indicate that the purpose of the grant of exclusive use to lot 99 was for "carrying out the resort operator’s duties and obligations" and included a requirement that "the areas must be kept clean and tidy at all times". This indicates an intention that the resort operator supervise and maintain the areas rather than have exclusive use of the areas to itself. Allegations that the body corporate is restricted in access to the electrical switchboards and occupiers are unduly restricted in access to the swimming pool toilets are serious allegations and require proper consideration. In particular, the legislation provides that exclusive use by-laws must not give exclusive use to the rights about common property utility infrastructure (Act, 177) and there is some evidence that the exclusive use by-law contravenes this prohibition by giving effective control over the switchboards to the respondents.

It would also appear unreasonable for exclusive use to be granted over common property infrastructure designed for the use of resort guests and there is some evidence that the respondents have placed undue restrictions on the use of this infrastructure. On the other hand, the respondents may be able to provide satisfactory evidence that the by-law is reasonable and necessary to allow them to properly manage the resort. This will need to be determined as part of the final application.

Balance of convenience

The applicants have established that there is a serious question to be determined. However, to gain an interim order the applicants will also need to establish that the balance of convenience favours granting the orders sought.

The submissions of the body corporate appear to show concern that the respondents are using an invalid or unreasonable exclusive use by-law to:

(a)	make it difficult for the body corporate to manage utility infrastructure or owners to manage their own lots; and
(b)	limit use of resort facilities by occupiers to minimise FNM’s maintenance obligations.

The submissions of the respondents appear to show concern that:

(a)	the respondents are making the application as part of a cynical strategy to force FNM out of its caretaking agreement;
(b)	the orders sought will prejudice the management of the resort by effectively depriving the management of necessary storage areas; and
(c)	the orders sought will unreasonably require FNM to provide additional maintenance and deprive management of the ability to control the common property.

It appears necessary to provide interim orders to endeavour to assist the scheme to function effectively pending a final determination. However, I propose to make strict limitations to the orders granted to endeavour to ensure they are just and equitable to both parties.

Firstly, it is necessary that the body corporate have access to utility infrastructure. The respondent concedes that there are occasions when staff are unavailable to immediately provide access to the electrical switchboards and it appears reasonable that the body corporate have its own key. The respondents have made a submission that the body corporate having its own access would be contrary to the occupation authorities granted to the respondents. However, the legislation specifically provides that an occupation authority must not interfere to an unreasonable extent with the use and enjoyment of a lot or the common property by the occupier of a lot. Further, the body corporate has legislated powers of entry to carry out work (Act, 163). I do not consider rights of access to electrical switchboards would be contrary to any occupation authority given to the respondents. The respondents have also expressed concern about access by the body corporate interfering with management of the resort and security of items stored in this area. I am prepared to place conditions on access requiring the body corporate to notify the respondents of any access. This will give the respondents an opportunity to attend and observe if they wish. The body corporate must also supervise any access and ensure the rooms are left in the same state in which they were found.

Secondly, the proper functioning of the scheme would appear to require that guests have reasonable access to resort facilities. If the respondents were to prevent access to these facilities it would clearly damage the operation of the resort. The grant of exclusive use over these areas potentially allows the occupiers of lot 99 to do this. I will therefore make an order that the body corporate can offer access to these facilities to occupiers.

However, in order to avoid placing an undue maintenance burden on the caretaker through leaving facilities open for unreasonable periods I will order that the body corporate is responsible for maintenance if it requires that the facilities be open for periods of time that the resort did not regularly have them open in the past.

Finally, at this interim stage, it is not clear who owns the barbecue. However, this barbecue was obviously a facility offered to guests of the resort and was an improvement to the common property of the scheme. This barbeque should be restored to its original position pending a final determination. However, I consider it just and equitable that the body corporate pay for the supply of gas, meaning that all owners will pay the ongoing costs as part of their contribution levies.

Finally, for the purposes of this order, neither party is entitled to restrict use of common property facilities to occupiers based on whether the occupier is letting a room through FRM or VPG.

Order

For these reasons, I make the interim order above.

The application will be allowed to proceed to submissions and final determination in the normal course.

REFERENCE: 0080-2004A

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	18161
Name of Scheme:	Cairns Village Resort
Address of Scheme:	Corner Anderson Road and Bruce Highway CAIRNS QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by
the body corporate for Cairns Village Resort

I hereby order that the interim order made on 5 March 2004, as follows - that, in respect of the exclusive use areas of lot 99, owned by William and Jannine Nason (respondents), and pending a final determination in respect of this dispute: 4. The body corporate is to have access to all exclusive use areas that contain electrical switchboards for the purposes of maintaining the electrical infrastructure. Access is to be on the following terms: a. The respondents are to provide the chairperson of the body corporate with copies of keys to these areas within 7 days (at the cost of the body corporate). However, except in an emergency, the body corporate is only to use these keys to access the areas after notification to the respondents; b. If access is for routine inspections or to perform scheduled work then 7 days notice is to be provided to the respondents by telephoning the reception area during office hours. Any change to scheduled work requires 24 hours’ notice; c. If access is required as a result of an electrical fault then the body corporate is to provide notice to the respondents by telephoning the reception area during office hours or the after hours contact number outside office hours. This notice is to be given prior to access, except in an emergency when notice is to be provided as soon as practicable; d. The body corporate is responsible for supervision of any access to the exclusive use areas and for leaving the areas in the same condition in which they were found. 5. The body corporate is entitled to offer occupiers use of the common property swimming pool and the adjacent exclusive use areas that offer toilet facilities, barbecue facilities and a rotunda. Access is to be on the following terms: a. The respondents are to provide the chairperson of the body corporate with copies of any keys to these areas within 7 days (at the cost of the body corporate); b. If the body corporate offers these facilities to occupiers at times the resort did not regularly offer the facilities in the past then the body corporate has the responsibility to keep those areas in a clean and tidy condition at those times; c. Neither the body corporate or the respondents may discriminate against who may use these facilities based on which lot the person occupies. 6. The respondents are to, within 7 days, return the barbecue (including the hotplate and gas bottle) to the barbecue area. The body corporate is to pay the reasonable costs of supply of gas to the barbecue. is extended pending a final determination of the dispute. This is an interim order and will remain in effect for a period of not longer than ten months. It is the responsibility of the applicant to apply to extend this order if no final determination has been made within that period. This order will automatically lapse upon a final order being made or this application being withdrawn.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0080-2004A

"Cairns Village Resort" CTS 18161

Pursuant to this application, the body corporate (applicant) sought interim access to exclusive use areas of lot 99 in the scheme, lot 99 being owned by William and Jannine Nason (respondents). On 5 March 2004 an interim order was granted that gave interim access to certain exclusive use areas on the terms specified in the order above.

In a separate application the body corporate sought to invalidate the community management statement of the body corporate, which would have also invalidated the grant of exclusive use over the areas in dispute.^[2] Pursuant to that application an order was issued on 25 June 2004 declaring that the grant of exclusive use was oppressive and unreasonable. This order required the body corporate to lodge a new community management statement within 1 year to remove the grant of exclusive use. However, presumably the body corporate has not yet done this and has therefore sought the extension of the interim order on this application.

The body corporate is presently entitled to lodge a new community management statement pursuant to the order of 25 June 2004 that would remove the grant of exclusive use over the disputed areas (Act, 62(4)). I therefore have some questions regarding why the body corporate is seeking an extension of the interim order rather than proceeding to lodge a new community management statement. However, I understand that the parties have been involved in settlement negotiations to try to resolve a number of other issues in dispute between them. Presumably, the body corporate has refrained from lodging the new community management statement pending this attempt to reach a negotiated settlement.

The solicitors for the body corporate have now informed this office that settlement negotiations have not been successful. The respondents’ solicitors have said that their client has been observing the terms of the interim order but consider that the subject matter has been resolved by the order of 25 June 2004 and any challenge to the occupation authorities would need to be the subject of a separate application. This seems to be correct to the extent that specific provisions of the legislation deal with the body corporate authorising access to areas covered by exclusive occupation authorities (Accommodation Module, 89(6)). However, I do not agree that the subject matter of the present application has been resolved until such time as a new community management statement removing the grant of exclusive use is registered.

The interim order is presently due to expire by 5 September 2004 and I therefore consider it appropriate to extend the operation of this interim order (Act, 279). The body corporate is required to lodge the new community management statement before 25 June 2005. I will therefore extend the interim order for a period of ten months from today to cover that period.

^[1] Application 791 of 2003.
^[2] Application 791 of 2003.