Charlton on the Esplanade [2004] QBCCMCmr 559 (12 November 2004)

Last Updated: 30 September 2005

REFERENCE: 0674-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	2027
Name of Scheme:	Charlton on the Esplanade
Address of Scheme:	451-452 Esplanade TORQUAY QLD 4655

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

Leonard Louis McNeil and Narelle Olive McNeil, the co-owners of lot 20

I hereby order that pending a final determination of this application, the Body Corporate (including through its Committee) shall not take any steps to implement or otherwise carry out the resolutions of 23 October 2004 purportedly authorising the body corporate to enter into leases with Telstra over part of the common property of the scheme for the purposes of a mobile telephone facility. This interim order has effect until 12 months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is the earlier).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0674-2004

"Charlton on the Esplanade" CTS 2027

ORDERS SOUGHT

The applicants, Leonard Louis McNeil and Narelle Olive McNeil, have sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

The resolutions of motions 1, 2 and 3 are invalidated as they do not comply with the regulations of the Accommodation Module.

The applicants also sought an interim order of an adjudicator as follows:

Telstra lease should be cancelled to prevent possible installation before finality is decided.

JURISDICTION

The application evidences a dispute between owners of a lot included in a community titles scheme and all owners of lots included in the scheme who voted in favour of motions 1, 2 and 3 at the extraordinary general meeting held on 23 October 2004 (section 227(1)(a) of the Act).

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-

(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 the 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.

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

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

In this case, the applicants allege that the Body Corporate has contravened provisions of the legislation by purporting to grant a lease for more than 10 years over part of the common property without being properly authorised to do. As a result, the dispute is one that may be considered by an adjudicator under the dispute resolution provisions.

SCHEME DETAILS

Charlton on the Esplanade was established under a building format plan on 22 March 1994. It comprises 21 lots and is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

BACKGROUND

The applicants provided copies of correspondence which revealed that Telstra was desirous of establishing a mobile telephone facility at the scheme, for which it required "a total lease period of 30 years" (letter dated 5 May 2004 from United KFPW to Krief Bartlett, the resident manager). It appears that Telstra has prepared three separate leases, each having a term of ten years. In a letter dated 23 July 2004 from McCullough Robertson to the body corporate manager, the following passage appears:

"Please note that KFPW have (sic) indicated the lease term will be 30 years documented by 3, 10 year consecutive leases. We understand that 3 separate leases of 10 years each will be prepared and registered at the same time. We have previously advised that under the Accommodation Module a body corporate may only grant a lease for more than 10 years over part of the common property if authorised by resolution without dissent. It is therefore arguable that as each lease does not exceed 10 years, a resolution without dissent will not be required and 3 separate special resolutions will be sufficient."

The body corporate committee and all owners were invited to respond to the application. Several submissions were received from owners, but no submission was received from the body corporate committee. All owners who responded opposed the application.

DETERMINATION

At this time, I am solely concerned with the application for an interim order. Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application "if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates".

Two examples of possible interim orders accompany section 279(1) and are suggestive of the usual circumstances where an interim order might be made. While the range of matters that may be the subject of an interim order is not capable of definition, it is worth noting that both examples of interim orders included in the Act are in the nature of injunctive relief.

The nature of the examples of interim orders mentioned in the Act, and the fact that the operation of interim orders is generally limited to one year (section 279(2)(a)), suggests that the purpose of interim orders is not to simply expedite a final outcome of a dispute. Rather, it seems to me that generally, interim orders are to be used to preserve a situation, in other words to maintain the "status quo", pending a final determination of the issues in dispute. However, in certain circumstances it may be just and equitable for an adjudicator to require a party to take some positive action in the context of an interim order.

The applicants have sought an interim order preventing the Body Corporate from implementing or otherwise acting upon motions 1, 2 and 3 purportedly passed at the extraordinary general meeting held on 23 October 2004. Those motions purport to authorise the body corporate to grant a lease to Telstra for the purpose outlined above. I have decided that an interim order should be issued for a number of reasons.

Firstly, it is quite clear that Telstra has at all times required a 30 year lease for the proposed mobile telephone facility. It is not clear on the material before me why KFPW has submitted 3 separate leases of 10 years each to achieve this outcome. I have not been provided with a copy of the letter dated 30 July 2004 from KFPW to McCullough Robertson, which is referred to in McCullough Robertson’s letter dated 3 September 2004 to the body corporate manager. This letter may explain the reasons for the 3 leases. More importantly, however, I have not been provided with a copy of the leases, which I would have expected to receive with a submission from the body corporate committee.

Section 110(2)(a)(ii) of the Accommodation Module provides that the body corporate may grant a lease of more than 10 years over part of the common property if authorised to do so by resolution without dissent. Motions 1, 2 and 3 were proposed as special resolutions, on the basis of the provisions of section 110(2)(b) of the Accommodation Module..

Secondly, there may be some confusion on the part of at least one owner as to the nature of the leases. This owner stated in her submission:

From my understanding of the situation, we are ultimately talking about 3 10-year leases, which have been voted on separately. Once we have gone through the first lease, there is still an option of not continuing with the 2^nd and 3^rd lease. From what I understand that’s why they can be voted on by special resolution. Therefore I voted "Yes"

Without copies of the leases I cannot make any determination on this aspect of the matter.

For all of these reasons, I consider that there are serious questions to be investigated and determined in this application and furthermore, I consider that the balance of convenience favours the Body Corporate being restricted from carrying out the resolutions to enter into the leases with Telstra pending a final determination of this application. I have made an interim order in these terms.