Mandalay Port Douglas [2004] QBCCMCmr 371 (28 July 2004)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Donald William INGRAM, Alison Mary INGRAM, Stuart Rainsford INGRAM and Andrew Donald Beardsworth INGRAM, as the co-owners of Lot 29,

I hereby order that within four (4) months of the date of this order Warwick Mark Bourguignon and Roslyn Lesley Bourguignon, the co-owners of Lot 10, must demolish and remove from the common property the timber deck constructed by them adjacent to their western lot boundary and return the area to as near its previous state as is reasonably possible.

I further order that if within the four (4) month period Warwick and Roslyn Bourguignon submit a motion to an extraordinary general meeting called and conducted at their cost (unless a scheduled meeting is available) for a by-law giving them exclusive use over the area covered by the deck, and that motion is successfully passed as a resolution without dissent as required by legislation, and steps have been subsequently taken to have the by-law incorporated into a new Community Management Statement (including any required survey of the relevant area) and to have the statement recorded by the Registrar of Titles for the by-law to have effect; and further, if recording of the by-law does not take place within six (6) months of the date of this order then the first order above to remove the deck takes effect immediately.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0824-2003

"Mandalay Port Douglas" CTS 25704

"An order that Warwick & Ros Bourguignon remove a structure illegally constructed on common property of the body corporate contrary to rule 4 which provides –

JURISDICTION:
This is a dispute between an owner (the applicant co-owners of Lot 29) and another owner (the respondent owners of Lot 10 who are also the caretaking service contractors), concerning construction by the respondents of a deck over part of the area of common property adjacent to the rear of their lot (between the building and the side boundary). This is a matter that falls within the dispute resolution provisions of the legislation (see sections 227, 228 and 276 of the Act) and therefore may be determined by an adjudicator.

General powers of an Adjudicator in making an order:
Section 276(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 –

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1) of the Act).

APPLICATION AND SUBMISSIONS:
Under section 243 of the Act, a copy of the application was provided to the following parties: the respondent owners; to all other owners; and to the body corporate (committee), with an invitation to each to respond to the matter of dispute raised in the application. The respondents Bourguignon made a comprehensive submission, including photographs of the deck and surrounding area, opposing the application. The body corporate committee members (Graham Moore, Colin Chapman and John Henderson) made a submission opposing the application. Individual submissions were made by the following owners, all opposing the application:

G Pitman of Lot 12; A & J Howden of Lot 26; D & C Young of Lot 18; D Belton of Lot 20; G Buschman of Lot 4; M Smythe of Lot 7; D Senior of Lot 2; MT Barker TV Services Pty Ltd – Chapman Family Trust of Lot 5; D & J Sorensen; of Lot 11; J Bieske of Lot 16; R & E Riordan of Lot 15; M & M Tilley of Lot 3; J & R Rath of Lot 8; J & H Henderson of Lot 9; B & S Richmond of Lot 6; C Fairbairn of Lot 17; G Moore of Lot 21; M & A Wylie of lot 28; J & E Mortensen of Lot 1; E Warrand of Lot 19; G Ellery of Lot 13; and W Hill of Lot 27 (R & L Stephens and S Sherlock made submissions but did not identify themselves as a lot owner). The applicants viewed the submissions and subsequently lodged a written reply to them (see sections 244 and 246 of the Act).

The brief facts of the matters are as follows.

In June 2002 the respondent Bourguignons, who are also the caretaking service contractors ("Managers"), constructed a wooden deck over part of the common property situated between their lot and the western scheme boundary. From the photographs and written description, the deck has been built flush with the tiled "verandah" shown on the scheme plan, and extends over a sizeable area of common property; it appears to be in excess of 50 square metres. Photographs show a table and chairs on the deck with a portable barbeque on the adjoining verandah.

It is common ground between the parties that the deck does lie over common property and the body corporate gave no prior authorisation for the work.

When complained to by the applicants, Mr Bourguignon allegedly said he was "entitled to use the Body Corporate property as he saw fit." Lot 10 lies two floors down from the applicant’s lot and both are part of a 6-lot block (3 floors of two lots with common walls) on the inland side of the scheme. The applicants state that only these six lots are affected by the deck. They state –

The applicants say that all of the owners whose submissions oppose the application are absentee letting owners who rely on the respondents to let their lots for income. In these circumstances, they suggest, the respondent Bourguignons are in a position of power and have exploited it by having orchestrated letting owners’ submissions in their favour.

The applicants complaint is not as to the appearance of the deck but regarding the noise resulting from its use as an outdoor dining and living area. The overhanging building roof serves to capture noise from the deck below. They state that they have complained about the noise to the respondents on several occasions and have also complained to the body corporate secretary.

The respondents say that the deck covers part of an area of common property that was previously muddy and poorly grassed because of its position in the shade of the building. They built the deck without any formal permission, though did seek the opinion of some owners, because "It was then our understanding that we had the right to use and improve the area of common property outside our lot and we were not aware of the need to obtain Body Corporate approval."

They say they have received no complaints about noise from the deck from either the applicants or any other occupiers, and upon their enquiry nor has the Body Corporate Manager, Body Corporate Services Pty Limited (representative Patricia Rowland). They say they do not have parties or noisy gatherings as the applicants allege; the only noise would come from everyday conversation or their young children playing.

The respondents further state that they also use the deck for meetings with tour operators and travel agents regarding letting in the scheme.

They also believe that the deck comes within the meaning of an "improvement" under both section 112 (improvements to common property by the body corporate) and section 113 of the Accommodation Module (improvements to common property by a lot owner), and they would be seeking retrospective approval for the deck under whichever is the appropriate provision given the deck is used for personal and management business purposes. They believe a motion to this effect would be supported by a majority of owners. Accordingly, they ask that any order should allow for ratification of construction of the deck to prevent its needless immediate removal.

DETERMINATION:
Titling records show that "Mandalay Port Douglas" was registered as a building format plan on 15 June 1998 and comprises 30 lots; it is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 ("the Accommodation Module").

There is a small matter that I need to disclose initially. In their reply to submissions to the application, the applicants have raised an argument that was not disclosed in the original grounds made available to the respondents and others. The argument is that Mr Bourguignon by occupying the position of chairperson and Manager had a "legal and equitable duty to act in the best interests of the body corporate and not to use his position in order to profit himself at the expense of the body corporate, particularly through wrongful appropriation of its assets." However, from the evidence before me I will be determining this dispute on a different ground, one not put by the applicants nor raised and rebutted by the respondents. Had the applicant’s argument been relevant to my determination, I would have afforded natural justice to the respondents by seeking a response from them before proceeding to a determination. This is for the reason that an applicant’s "reply to submissions" may only address points raised in the submissions and not introduce new grounds.

For the reasons that follow, it is my determination that the deck cannot be authorised by the body corporate as an improvement by either the body corporate under section 112 or the respondent owners under section 113), but can only remain if the body corporate resolves by resolution without dissent to make a by-law giving the owner of Lot 10 the exclusive use of the relevant area of common property for personal purposes (see section 171(1)(a) of the Act).

I will set out the law concerning common property and its use by owners and then show how the law applies to the present instance of a deck constructed over an area of common property. I shall first detail the relevant parts of the key legislative provisions, then summarise those provisions-

35.(1) Common property for a community titles scheme is owned by the owners of the lots included in the scheme, as tenants in common, in shares proportionate to the interest schedule lot entitlements of their respective lots.

167. 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--

114.(1) The body corporate may make improvements to the common property if ...

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

170.(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--

171.(1) The common property or body corporate asset to which an exclusive use by-law for a community titles scheme applies must be--

(2) An exclusive use by-law that specifically identifies the common property or body corporate asset to which it applies, other than an exclusive use by-law contained in the first community management statement for the scheme--

(a) may attach to a lot only if the lot owner agrees in writing before the passing of the resolution without dissent consenting to the recording of the new community management statement to incorporate the exclusive use by-law, or the lot owner votes personally in the resolution; and

(b) may stop applying to the lot only if the lot owner agrees in writing before the passing of the resolution without dissent consenting to the recording of the new community management statement that does not incorporate the exclusive use by-law, or the lot owner votes personally in the resolution

Section 35 of the Act provides that owners own the common property as tenants in common which gives each owner a general proprietary right to use the common property, though sections 94 and 152 of the Act then provide that it is the body corporate which administers, manages and controls the common property, though it must do so reasonably and for the benefit of owners.

Each owner’s right to use the common property is governed by the legislation (the Act and the relevant regulations, here the Accommodation Module regulations) and the body corporate by-laws. The basic rule governing an owner’s use of common property is contained in section 167 which prohibits an owner from using, or permitting another from using, their lot or the common property in such a way that it interferes unreasonably with another’s use or enjoyment of their lot or the common property.

On the authority of a special resolution under section 113 of the Accommodation Module an owner can effect an improvement on common property for the benefit of the owner’s lot, however there are limits to the use of common property under such authority. Where for example an owner wishes to install an air-conditioner by positioning it in a window where it overhangs common property, this is a valid use of the "improvement" provision as the encroachment onto common property is incidental, not of significant size, and is unlikely to interfere with another’s use of the common property.

Alternatively, where for example an owner wishes to use part of the common property by extending their lot building by constructing a carport or an additional room over common property, then this action is beyond a mere improvement and is in effect an alienation of the relevant area of common property for personal use, not being incidental, not insignificant and may or may not interfere with another’s use of the common property.

This difference was addressed in the matter of Platt v Ciriello (1997) QCA 33 (14 March 1997), where the Court of Appeal found that the primary test for determining an owner’s use of common property is that of "unreasonable interference" (see earlier reference to section 167 of the Act). That is, an owner may exercise his general proprietary right to use common property so long as it does not interfere unreasonably with another’s use of their lot or the common property. This interference may not just be physical, it may, for example, include a consideration of the effect the use has on the appearance and aesthetics of the scheme generally. However, even where the use may not be causing an unreasonable interference, an "exclusive use" test may apply in the circumstances to require the owner to only hold that use under an exclusive use by-law. That use was characterised by Ambrose J as being "the sort of exclusive use which a proprietor makes of his lot". Pincus JA gave as an example of a unilateral claim by an owner amounting to exclusive use, which therefore required an exclusive use by-law, an annexe from the owner’s lot being built out onto common property.

While this is only a brief overview of the case, it is sufficient to show that the construction of the deck, even if it does not interfere unreasonably with another’s use of the relevant area of common property (though I do not say this) or does not adversely effect the appearance or aesthetics of the scheme, is such a use of common property that requires the authority of an exclusive use by-law. That is, the use of the area of common property by the respondent owners of Lot 10 by building a deck adjoining the lot verandah, is a use that comes within the sort of use that a proprietor makes of his lot and therefore requires an exclusive use by-law. Like an annexe to an owner’s lot building, a deck similarly gives the owner exclusive use of a permanent or semi permanent nature, to the owner.

Because the respondents are also the caretaking service contractor for the scheme, employed by the body corporate under contract to provide services to it and to offer services to owners, there are special provisions in the legislation concerning such contractors having exclusive use that I need to also refer to. Section 89 of the Accommodation Module provides that a body corporate may, by ordinary resolution, give a service contractor or letting agent (the respondents) an "occupation authority" to occupy part of the common property to perform obligations as a service contractor or operate as a letting agent. However, section 89(7) then states –

This provision has two ramifications for the respondents. Firstly, it does not prevent them as owners from obtaining the benefit of an exclusive use by-law provided it is for personal purposes and not for service and letting business purposes. That is, provided the use of the deck can be characterised as being for everyday/recreational/domestic/personal use by the occupants, then an exclusive use by-law is available even if the deck is used occasionally for such business purposes.

Secondly, because the deck is predominantly for that personal use described above, although it is used for management business occasionally as the respondents describe (for visiting travel agents and tour operators), then it must be characterised as being for personal use and cannot be subject of an occupational authority.

The only remaining matter to consider is By-law 26(1) of the body corporate by-laws, which states-

In the respondent’s submission there are two comments that disclose the respondents have a misunderstanding as to their right to use the common property. The first I have already quoted but the second appears on the second page of the submission -

While the two comments do not appear related to By-law 26, it may assist if I briefly look at it within the whole work environment of the Manager. The by-law must be read subject to the legislation, especially the restriction placed on caretaker service contractors (service contractors/letting agents) to have the benefit of exclusive use provisions – the purpose of this restriction is to allow the ready resumption of common property from contractors upon their agreement being terminated by the body corporate. Also, the by-law refers to special privileges over all of the common property, though the subject of those rights is only stated in very general terms. It certainly does not allow the respondents to use the deck area, or any other area of the common property exclusively.

In my order I have ordered the respondents to remove the deck and to restore the common property to its previous state. However, I have stayed the operation of this provision for a period of four months to allow the respondents time to put a motion to a meeting of the body corporate (with the meeting to be called and conducted at their cost unless a scheduled meeting conveniently falls within the period) for exclusive use of the deck area. Providing the motion is properly passed within the 4 months, and steps are in progress to have the community management statement drawn up and lodged for recording by the Registrar of Titles, then the deck may remain.

The by-law can contain such conditions as are appropriate (maintenance of the area, terminate for noise, payment of a fee, allowing space for escape from fire, etc) and the cost of preparing the Community Management Statement to incorporate the by-law must also be met by the respondents. It will be a matter for the respondents to persuade owners, including the applicants, to vote for the by-law motion but that is a matter for owners to resolve.

Number of Scheme:	25704
Name of Scheme:	Mandalay Port Douglas
Address of Scheme:	1 - 5 Sand Street PORT DOUGLAS QLD 4871

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 contractual matter about –
(i)	the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or
(ii)	the authorisation of a person as a letting agent for a community titles scheme.

•	Section 35 of the Act – owners own the common property as tenants in common.
•	Section 167 of the Act - Unreasonable interference to others caused by an owner’s use of common property.
•	Section 112 of the Accommodation Module – Improvement to the common property by the body corporate.
•	Section 113 of the Accommodation Module – Improvement to the common property by an owner for the benefit of the owner’s lot.
•	Sections 170 and 171 of the Act – Granting of exclusive use over a part of common property to an owner by by-law.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Mandalay Port Douglas [2004] QBCCMCmr 371 (28 July 2004)