The Dees [2004] QBCCMCmr 66 (3 February 2004)

Last Updated: 30 September 2005

REFERENCE: 0454-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14477
Name of Scheme:	The Dees
Address of Scheme:	12 Murlong Crescent PALM BEACH QLD 4221

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Michael William Lockhart & Dorothy Joy Lloyd, the owners of lot 1

I hereby order that the application by Michael William Lockhart & Dorothy Joy Lloyd, the owners of lot 1 for orders that – We request an overturning of the decisions made at the AGM of the above body corporate 16.6.2001 under the headings: BY-LAWS (c) "add new exclusive use by-law 20 We also request that this by-law be declared invalid and subsequently removed from registration at the Titles Office; We also request that the Lot 2 owner refund to the body corporate the sum of 379.50 which they expended on this by-law, comprising $297 surveyor’s fee and $82.50 solicitor’s fee; likewise we request that the body corporate refund us the $32.50 we paid for a copy of the council’s show cause notice after being refused it by body corporate management, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0454-2003

"The Dees" CTS 14477

The applicants, Michael William Lockhart & Dorothy Joy Lloyd, the owners of lot 1 have sought the following order of an Adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote –

We request an overturning of the decisions made at the AGM of the above body corporate 16.6.2001 under the headings: BY-LAWS (c) "add new exclusive use by-law 20 ...

We also request that this by-law be declared invalid and subsequently removed from registration at the Titles Office.

We also request that the Lot 2 owner refund to the body corporate the sum of 379.50 which they expended on this by-law, comprising $297 surveyor’s fee and $82.50 solicitor’s fee; likewise we request that the body corporate refund us the $32.50 we paid for a copy of the council’s show cause notice after being refused it by body corporate management.

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)).

The scheme
The scheme is a subdivision of 5 lots registered under a building unit plan of subdivision.

The application and submissions
The application, submission and reply process, coupled with the provision of further material by the applicants, and the provision of further submissions and a further reply by the applicants has resulted in there being very extensive written material before me, all of which I have considered. In the circumstances, I do not propose to restate the material. The facts of the matter are not in any real dispute. What is in dispute is what the applicants are seeking; namely whether or not to invalidate the by-law in question.

The application seeks the invalidation of by-law 20. The by-law was carried by resolution without dissent at the AGM of the body corporate held on 16 June 2001. This is some 2 years and 18 days after the relevant resolution was carried. The resolution provided that the body corporate consent to the inclusion of by-law 20 in the CMS whereby it grants exclusive use of area A to lot 2. The motion further provided that the body corporate will cause the CMS to be recorded with the registrar of titles for recording.

An exclusive use by-law is required to be carried by resolution without dissent. The meeting voted 5 in favour, with no owner voting against the motion. I note that the applicants voted in favour of the motion, the validity of which they now seek to overturn.

The first requirement which must be considered is section 242 of the Act (formerly section 193), quote –

242 Time limit on certain applications
(1) This section applies to an application for an order declaring void--
(a) a meeting of the committee for the body corporate, or a general meeting of the body corporate; or
(b) a resolution of the committee or body corporate; or
(c) the election of an executive or other member of the committee.
(2) The application must be made within 3 months after--
(a) if subsection (1)(a) applies--the meeting; or
(b) if subsection (1)(b) applies--the meeting at which the resolution was passed or purported to be passed; or
(c) if subsection (1)(c) applies--the meeting at which the executive or other member was elected.
(3) However, if the making of the application does not comply with subsection (2)--
(a) the commissioner must deal with the application (including making a dispute resolution recommendation for the application) as if the making of the application complied with subsection (2); and
(b) an adjudicator to whom the application is referred for specialist or department adjudication may, for good reason, waive the non-compliance.

Section 242 of the Act (formerly section 193) relevantly provides that in certain circumstances, applications must be commenced within 3 months of the relevant date. The section relates to applications to invalidate resolutions purportedly carried at meetings of the body corporate, or its committee. It imposes a requirement that applications must be commenced within 3 months of the relevant meeting. Where an application is made after this time, then it must be dealt with, and "an adjudicator to whom the application is referred ... may, for good reason, waive the non-compliance".

In an appeal of a previous adjudicator’s order (Weeks v. Commissioner for Body Corporate), Judge Dodds of the District Court stated –

As to waiving compliance for good reason ... the objects of the Act, for instance section 5(a) and (h) mitigate against too strict or legalistic a view about good reason for waiving non-compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought.

Considering the criteria mentioned by Judge Dodd, I note that –

• The total length of the delay is in excess of 2 years, where the section requires that such an application be made within 3 months. I conclude that this delay is considerable; to my recollection, the longest delay I have ever been required to consider in respect of determining good reason. What is clear is that in the extended period, the by-law has been recorded, and all other owners might reasonably have assumed that no dispute could arise about the validity of the by-law. In fact there have been a number of other disputes which have arising and been dealt with in the interim.
• The applicants have provided reasons for their delay. The applicants blame incomplete records, and that they "had to spend many months researching these matters". Contrary to this however, there is direct evidence to show that the applicants acknowledged their "yes" vote to the motion for a considerable period after the AGM. This suggests that much of the period was not spent researching, but rather was a period when the applicants accepted their "yes" vote to the motion. The applicants also allege that they were misled by certain statements of the owner of lot 2. From the material, I have reason to doubt the accuracy of this allegation. The material suggests to me that the applicants are not gullible or naïve. They further allege that their attention was diverted by a spate of other accusations. Whilst there have clearly been other disputes involving the applicants and other members of this body corporate in the interim period, I consider that these disputes were not such as to cause the applicants to overlook for two years the basis of the dispute which they now seek to raise. The evidence suggests rather that the applicants did not choose to raise the dispute earlier because for a long period, they accepted their "yes" vote to the motion at the meeting in question. In my view, the applicants have, for whatever reason, had a change of mind regarding their vote in respect of the motion, and are now seeking to have the motion invalidated. The considerable delay therefore was due principally to an acceptance on the part of the applicants of their validity and correctness of the original motion. In my view, the application is a consequence of a change in this position. I consider that the legislature did not intend that such circumstances would constitute "good reason" for waiving the time limitations.
• I consider that the effect on others in consequence of the delay is very relevant. As I indicated, the exclusive use by-law was recorded, and all other owners might reasonably have assumed that the matter was settled. Now, some two years later, the applicants seek to reverse the matter. This outcome would have considerable detrimental consequences for the owner of lot 2. That owner would be denied a garage and car parking space. This has wider implications for the body corporate generally. It is clear to me from the material that the owner of lot 2 might be able to seek redress from the body corporate regarding this issue in the form of a realignment of the existing 4 carparking spaces into five, to comply with the original local authority approval.

I now turn to what Judge Dodd considers the most important criteria, namely whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. This appears to involve a merits assessment of the application; namely excepting the delay, whether the applicant would ordinarily have been entitled to the relief sought. However, I do not intend to embark on a full merits assessment of the application, as in my view, this would defeat the intent of the relevant assessment required under section 242.

On the basis of the material, I conclude that the application is likely to be dismissed. I consider that the merits of the applicant’s grounds are debatable. All other owners have argued strongly against the accuracy and validity of much of those grounds. I conclude that on balance, it is likely that the applicants would not succeed in their application. In particular, the jurisdiction of an adjudicator is to make orders which are "just and equitable" for the resolution of a dispute. The outcome sought by the applicants does not strike me as a just and equitable outcome. I conclude that the evidence suggests that the applicants have had a change of heart regarding their initial vote in favour of the motion, and are now seeking to reverse this. I conclude that it would not be just and equitable to entertain such application. I have dismissed this application on the basis that there is not good reason to waive the non compliance with the requirements of section 242.