The New Yorker [2004] QBCCMCmr 8 (8 January 2004)

Last Updated: 30 September 2005

REFERENCE: 0242-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24276
Name of Scheme:	The New Yorker
Address of Scheme:	460 Ann Street, BRISBANE QLD 4000

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Dharmesh Kumar Saha, the owner of lot 11

I hereby order that the body corporate for The New Yorker, and by extension, the resident manager from time to time, are required to allow each owner or occupier of a lot who requests the same, use of the necessary telephone lines and other utility infrastructure installed throughout the building free of charge in order to allow such owners or occupiers to enjoy telephone services, other than the service provided by the resident manager for a fee. I further order that the terms of this order are subject to the terms of any letting agreement entered into between the resident manager and individual owners of a lot whereby the parties have agreed to terms other than, or contrary to, those provided for in the above order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0242-2003

"The New Yorker" CTS 24276

The applicant, Dharmesh Kumar Saha, the owner of lot 11, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote -

1. Monthly line rental, by Nevyl on use of Telstra phone of $44-00 be declared illegal.
2. The overcharge of $75.66 in January 2003 be declared as misappropriation by Nevyl. I will like the money refunded to me.
3. As Nevyl has not returned me 20- piece dinner set, and the ottoman was returned damaged, the cost of these items $340 should be refunded to me.

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 applicant also requested an interim order that the resident manager not "interfere with or disconnect phone line for unit 11 ... until an adjudicator makes a final order on the application". On 19 May, 2003, an interim order was made to the effect that the body corporate direct the caretaking service contractor to refrain from disconnecting, or otherwise interfering with, the telephone line to lot 11 pending a final determination of the application.

Further, in respect of the applications for final orders dealing with items, quote –

The overcharge of $75.66 in January 2003 be declared as misappropriation by Nevyl. I will like the money refunded to me.
As Nevyl has not returned me 20- piece dinner set, and the ottoman was returned damaged, the cost of these items $340 should be refunded to me,

these applications were dismissed for the reasons set out in the accompanying statement of adjudicator’s reasons for decision. I agree with the dismissal of those two orders sought and do not intend to consider them further.

The scheme

The scheme is recorded under a building format plan of subdivision and contains 58 lots.

The application

In his statement of grounds, the applicant states –

... I regard phone lines for telephone and intercom as part of utility infrastructure ... and hence the common property. I do not believe that the law of the land will allow Nevyl’s action of sending invoice for monthly phone line rental for apartment number 11, $44.00. Clearly he does not own Telstra or, the utility infrastructure or, any other common property of the "The New Yorker Apartments".

Essentially, the applicant is asserting that the resident manager (Nevyl Banks) does not "own" the phone lines and associated infrastructure such that the manager is entitled to charge an owner or occupier a monthly line rental charge for such line. The applicant asserts that the lines are part of the common property.

The response

The named respondent to the application is the body corporate. The body corporate did not reply to the notice inviting submissions forwarded by this office. A submission was received from a Mr Nevyl Banks of Rammead Pty Ltd, the resident manager for the scheme. The submission by Banks states that Rammead Pty Ltd purchased the management rights which included plant and equipment listed in schedule A of the contract. Schedule A includes a reference to "Alcatel telephone console and associated hardware". Banks states that the transfer of the management rights was approved by the body corporate and "no objection was made to the contract". Banks concludes that –

It is the view of the company that it owns all items listed in Schedule A and is entitled to use them as it sees fit in the interests of its business.

The body corporate ... has known since 1999 that the Alcatel Phone System is the property of the on site managers and has never offered to purchase the system.

Banks has also provided a statement from the original manager stating that that company "assisted in seeing to the completion of the building. The purchase and installation of the Alcatel Telephone System was organised and paid for and owned by Goldwise Pty Ltd from ABM Communications in 199. All phones, phone system and handsets were the property of and owned by Goldwise Pty Ltd".

Banks has also provided an extract from a publication dealing with the concept of "utility infrastructure" as defined in section 20 of the Act.

Determination

Due to the insufficiency of the evidentiary material provided by both parties, including the body corporate who failed to provide a submission, I convened a teleconference of the parties. This teleconference was held on 20 November 2003 and involved the applicant, the resident manager, and Mr Angus Logan, the chairperson for the body corporate. During the teleconference I indicated to the parties my view of the insufficiency of the evidence provided in support of ownership of the telephone line and other infrastructure. I particularly directed these comments towards the body corporate who I consider, as representative of all owners, has a real interest in the matter in dispute, but appeared to have no position or view on the outcome of the dispute. In the circumstances, I advised that I intended to allow the parties further time (three weeks) to provide to me any further information they might obtain regarding evidence of ownership of the phone system, including by whom the wiring etc was installed.

During the teleconference, I indicated what I considered to be the usual scenario in respect of such matters. Rather than "re-invent the wheel" I proposed to quote from a previous order of a fellow adjudicator in a previous order (0516 of 2002), the circumstances of which I consider to be apposite to those here, quote –

In summary, the absence of conclusive evidence as to who installed the original loop line, and what arrangements may have been made between the body corporate and the original Resident Manager if indeed that person installed it, requires a decision to be made on other grounds.

There is nothing in the minutes of meetings (either committee or general) that records any arrangement such as that referred to above. If the Resident Manager did install the connecting loop, and the proper requirements were met, then the records should at least show a minute authorising the Resident Manager to effect an improvement to common property, namely the installation of the loop cable and conduit and any associated fittings on the MDF and IDF. As that would have taken place when the governing legislation was the Building Units and Group Titles Act 1980, then a resolution without dissent under section 37A of that legislation was necessary to approve a formal motion to that effect -

37A. Improvement etc to common property by proprietor of lot.
A body corporate may, upon such terms as it considers appropriate, at the request of a proprietor of a lot, by resolution without dissent, authorize the proprietor of a lot to effect improvements (including erect or install fixtures and fittings) in or upon the common property for the benefit of that proprietor.

However, even that authority, if it existed, would not have been sufficient authority as not only was an improvement (the loop) being installed on common property for the benefit of the Resident Manager, he was also being given access (in practical terms an exclusive access) to the individual lines from the IDF to lots, in order to be able to commercially offer a telephone service to owners. The PABX facility incorporated into the system was only an addition to the basic telephone service. This use of the IDF and the lines to each lot, involved both a use of common property (where the lines and conduit passed over common property) and private property (where the lines and conduit passed over the lots, these being lots in a group title plan).

The current legislation would only allow such an arrangement in exceptional circumstances. The legislation generally provides that utility infrastructure, which includes utility services such as a telephone service (see schedule 4 of the Act), is part of the common property which cannot be interfered with so as to affect supply of the service to another (section 128 of the Act) or be the subject of an exclusive use by-law, or special rights, for the benefit of an owner (sees section 139 of the Act). The intention of these provisions and prohibitions is for the body corporate to retain ownership and control over utility infrastructure for the benefit of owners.

In a scheme such as "xxx" with a large proportion of lots being for short-term holiday rental, there is a need for a PABX facility in the hands of the Resident Manager to monitor and charge for tenant calls on a daily basis. Owner-occupied lots, and lots let through an outside agent, generally have no need for PABX monitoring and either no phone or a normal Telstra line is all that is required.

In my view, owners in "xxx" have the right to the alternative of either connection to the Resident Manager’s PABX system or a private direct line.

Section 223 of the Act provides that an adjudicator has an overarching responsibility to make an order to resolve a dispute that is just and equitable in the circumstances.

It seems to me that the most appropriate determination I can make in the circumstances of this scheme, is that the body corporate must provide a private, direct telephone line to any owner that requests one. The body corporate, in my opinion, improperly allowed a person (the Resident Manager, at some point in time) to install a connecting loop cable in an open telephone system installed by the developer, for private commercial purposes. The PABX system should, however, continue for the benefit of letting pool owners, even though the ownership of the loop cable at this time remains unresolved. ...

The above statement covers several issues which are relevant to the current dispute.

Following the teleconference, no further submissions were received from either the resident manager or the body corporate. This office recently contacted all parties to see if any late submissions were to be made. The resident manager indicated that he relied on what he submitted previously. The body corporate chairperson stated that the body corporate manager was "looking into it" and would provide us with any documents that she obtains. This office then spoke to the manager, Gillian Reilly, who provided further vague verbal information. I am not prepared to rely on this further information for the follow reasons –

1. It was provided well out of the time period allowed by me in the teleconference;
2. It is verbal and therefore not able to be considered and possibly responded to by the applicant; and
3. The additional information is simply heresy without any written substantiation.

I consider that I have afforded all parties reasonable opportunity to substantiate their position, and will now determine the application on the very limited material available.

The resident manager asserts that its owners the telephone system on the basis of its purchase of the management rights. The body corporate is mute on this point. The applicant asserts that the phone system is utility infrastructure the property of the body corporate.

I conclude that the onus of proving ownership of the phone system lies with the entity asserting it, namely the resident manager. Whilst I am satisfied that the resident manager did purchase the "Alcatel Telephone console and associated hardware", I consider that this plant and equipment does not include all telephone lines and other infrastructure by which telephone services are provided to lots.

Section 20 of the Act provides that –

20 Utility infrastructure as common property
(1) Common property for a community titles scheme includes all utility infrastructure forming part of scheme land, except utility infrastructure--
(a) solely related to supplying utility services to a lot; and
(b) within the boundaries of the lot (according to the way the boundaries of the lot are defined in the plan of subdivision under which the lot is created); and
(c) located other than within a boundary structure for the lot.

(2) However, common property does not include utility infrastructure positioned within common property if--
(a) its positioning is the subject of an agreement to which the original owner or the body corporate is a party; and
(b) under the agreement, ownership of the utility infrastructure does not pass to the original owner or body corporate.
Example of utility infrastructure for subsection (2)--
Cable television wires positioned in the service shaft of a multistorey building that is scheme land for a community titles scheme, if the wires remain in the ownership of a cable television provider.
(3) In this section--
"boundary structure", for a lot included in a community titles scheme, means a floor, wall or ceiling, other than a false ceiling, in which is located the boundary of the lot with another lot or common property.

I conclude that it is for the resident manager to establish its ownership of the entire telephone system on the basis provided in section 20(2). The resident manager has not been able to evidence the requisite agreement referred to in that section, and consequently, I conclude that whilst the actual phone console and associated equipment is the property of the resident manager, the phone lines and other associated infrastructure (eg cords and cables etc) (the utility infrastructure) remains the property of the body corporate. I do not include in this the actual telephones (ie the handset etc located in each lot). The material is silent on this aspect and I decline to determine this aspect. Perhaps these were purchased in bulk by the resident manager, and are the property of the manager. However, even if this is the case, it simply means that each lot owner or occupier is able to purchase their own phone, or to "rent" one from a telecommunications company, and to then connect that phone to the relevant lines servicing that lot.

The crux of this determination is that the agreement identified in section 20(2) has not been produced to evidence the assertion of ownership by the resident manager. Unless and until such agreement is produced, if it exists at all which I doubt, then the body corporate, and by extension, the resident manager, will be required to allow each owner or occupier of a lot who requests the same, use of the necessary telephone lines and other utility infrastructure installed throughout the building free of charge in order to allow such owners or occupiers to enjoy telephone services, other than the service provided by the resident manager for a fee. I have ordered to this effect.

I have further ordered that the terms of the order are subject to the terms of any letting agreement entered into between the resident manager and individual owners of a lot whereby the parties have agreed to terms other than, or contrary to, those provided for in the above order. Essentially where the letting is conducted by the resident manager via a letting agreement with the individual owner of a lot, then the parties are at liberty in that agreement to agree to terms different from that provided for in the order to this application. The terms of the order made will not apply to such agreements.