Calypso Plaza Cairns Commercial [2005] QBCCMCmr 107 (28 February 2005)

Last Updated: 5 July 2005

REFERENCE: 0361-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27323
Name of Scheme:	Calypso Plaza Cairns Commercial
Address of Scheme:	53 - 57 The Esplanade CAIRNS QLD 4151

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

Scientific Management Associates (Victoria) Pty Ltd, the owner of lot 127

I hereby declare that the body corporate for Calypso Plaza Cairns Commercial has not authorised the applicant’s illuminated sign "Italian Restaurant" by special resolution, or at all.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0361-2004

"Calypso Plaza Cairns Commercial" CTS 27323

ORDERS SOUGHT

The applicant, Scientific Management Associates (Victoria) Pty Ltd, has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

1. An order declaring that the body corporate for Calypso Plaza Cairns Site CTS 27262 and the body corporate for Calypso Plaza Cairns Commercial CTS 27323 have given their consent to the sign which is the subject of the application and that the applicant is entitled to continue to display the sign and is not in breach of body corporate by-laws; and
2. An order requiring the body corporate for Calypso Plaza Cairns Site CTS 27262 to withdraw the Notices of Continuing Contravention of a body corporate by-law that have been issued to the applicant in relation to the sign.

JURISDICTION

The application, insofar as the body corporate for Calypso Plaza Cairns Commercial is concerned, evidences a dispute between an owner of a lot included in a community titles scheme and the body corporate for the scheme (section 227(1)(b) of the Act).

However, in my view the applicant has no standing to lodge an application against the body corporate for Calypso Plaza Cairns Site CTS 27262 for the following reasons.

Under section 18 of the Act a "layered arrangement of community titles schemes" is defined as meaning:

(1) A layered arrangement of community titles schemes is a

grouping of community titles schemes--

(a) in which there is 1 community titles scheme (the

principal scheme)4 that--

(i) is not a lot included in another community titles

scheme; and

(ii) is made up of--

(A) the scheme land for all other community

titles schemes in the grouping; and

(B) its own common property; and

(C) each lot (if any) that is not a community

titles scheme, but that is included in the

scheme; and

(b) in which there is at least 1 basic scheme; and

(c) in which there may or may not be 1 or more community

titles schemes located between the principal scheme and

each basic scheme.

4 See schedule 1, parts 2 and 3 for examples of layered arrangements of community

titles schemes.

(2) Each community titles scheme, other than the principal

scheme, in a layered arrangement of community titles

schemes--

(a) is a subsidiary scheme for the principal scheme; and

(b) unless it is a lot included in the principal scheme--may

also be a subsidiary scheme for another community

titles scheme forming part of the layered arrangement.

(3) A subsidiary scheme, for a community titles scheme

(scheme A), is a community titles scheme the scheme land for

which forms part of the scheme land for scheme A.

(4) In this Act, the expression included in, if used in the context

of the inclusion of a lot in a community titles scheme,

establishes the relationship the lot has to the scheme and, in

general terms, is used to establish that the lot is directly a part

of the scheme, rather than only indirectly a part of the scheme.

(5) The diagram and notes in schedule 1, part 35 illustrate more

comprehensively how the expression ‘included in’ is used.

Section 19 provides:

19 Provisions about lots that are community titles schemes

If a community titles scheme (scheme A) includes a lot that is

another community titles scheme (scheme B)--

(a) a reference in this Act to the owner of the lot is a

reference to the body corporate for scheme B; but

(b) a reference in this Act to a lot included in scheme A does

not include a reference to scheme B if the provision is

about--

(i) the subdivision of a lot; or

(ii) the indefeasible title for a lot; or

(iii) a lease or mortgage of a lot; or

(iv) the occupier or registered proprietor of a lot.

Under section 19(a) the body corporate for Calypso Plaza Cairns Commercial would therefore be regarded as the owner of a lot in the principal scheme and could lodge a dispute application against the body corporate for Calypso Plaza Cairns Site under section 227(1)(b), but the applicant would not be similarly regarded, and would therefore be confined to an application against the body corporate for its own scheme (or another owner or occupier in that scheme if that were relevant).

My view is further reinforced by the definition of "owner" in the Schedule 6 Dictionary of the Act:

owner, of a lot (other than a lot that is a community titles

scheme) included in a community titles scheme, means--

(a) the person who is, or is entitled to be, the registered

owner of the lot, and includes--

(i) a mortgagee in possession of the lot; and

(ii) if, under the Land Title Act, 2 or more persons are

the registered owners, or are entitled to be the

registered owners, of the lot--each of the persons;

and

(b) for chapter 6, see section 226.

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)).

SCHEME DETAILS

Calypso Plaza Cairns Commercial (the subsidiary scheme) registered as a building format plan in a layered scheme arrangement on 24 September 1999. It comprises 21 lots and common property. The majority of the lots are used for commercial and retail purposes with lot 127 (the applicant’s lot) specifically authorized to operate as a licensed restaurant although it could also be used for another commercial or retail purpose. Lot 126 is authorized to be used for the purposes of supplying caretaking and letting services, and can also be used for residential purposes. The scheme is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

BACKGROUND

The dispute concerns an illuminated red and green sign affixed to the common property in front of the applicant’s lot. The applicant contends the sign has been approved by the body corporate, but the body corporate denies that assertion. The sign was installed approximately three years ago. In February 2004 a Notice of Continuing Contravention of a Body Corporate By-Law was issued by the principal body corporate against the applicant. A second notice was issued in March 2004 after it was noted that the first notice stated that the sign had been installed with the body corporate’s approval.

The applicant provided copies of relevant correspondence relating to the purported approval of the sign as well as photographs of the sign in situ, and a video of the applicant’s advertising campaign (three short TV commercials) for the PanaRoma Restaurant.

All owners and the committees of both the principal scheme and the subsidiary scheme were invited to respond to the application. A submission was received from CB Richard Ellis on behalf of the owner of two of the lots in the subsidiary scheme. A further submission was received from Hickey Lawyers on behalf of the principal scheme. It was submitted that the sign is located on the common property of the principal scheme; that approval for the sign is required to be given by special resolution; that such approval has not been given and that in the circumstances the applicant should be ordered to remove the sign.

The applicant replied to the body corporate’s submission and reiterated that it had relied upon a letter from the body corporate manager on 11 December 2001 as constituting approval of its sign.

On 10 November 2004 I conducted a teleconference with the applicant’s solicitor and the principal scheme’s solicitor and raised with them the jurisdictional issue concerning the applicant and the principal scheme’s body corporate. I gave both parties the opportunity of lodging further submissions in relation to that issue.

The applicant’s solicitor argued that I should interpret section 227(1)(b) of the Act "broadly" so as to confer standing on the applicant in relation to the principal body corporate. The solicitors for the principal scheme’s body corporate stated that their client considered that the onus of proving whether there had been appropriate consent given for the sign rested upon the applicant. In those circumstances, the principal scheme’s body corporate had not instructed its solicitors to provide detailed submissions about jurisdiction. The submission was confined to the facts of the dispute.


DETERMINATION

In November 2001, when the applicant sought approval for the illuminated sign, by-law 48.1 of both the principal scheme and the subsidiary scheme provided:

"Subject to these by-laws, no sign or notice shall be placed on the common property without the written consent of the committee provided that the committee shall not unreasonably withhold its consent to the placement of the sign or notice which is consistent with the overall appearance of the building as a first class residential resort which incorporates commercial businesses."

Section 113(1) of the Accommodation Module provides that the body corporate may, if asked by the owner of a lot, authorize an owner to make an improvement to the common property for the benefit of the owner’s lot. Section 113(2) provides that the improvement must be authorized by special resolution of the body corporate unless, amongst other things, the improvement is a minor improvement (defined as being an improvement with an installed value of $250.00 or less). The applicant stated in the supporting grounds to the application that it had "incurred several thousand dollars in costs to have the sign constructed and put into place".

Section 180(1) of the Act provides that if a by-law is inconsistent with the Act (including a regulation module applying to the scheme) the by-law is invalid to the extent of the inconsistency.

The illuminated sign clearly required authorization by special resolution. It is common ground that the sign has not been authorized by special resolution. Of course, as the sign is on the common property of the principal scheme, the body corporate for the subsidiary scheme could not have given authorization for it in any event.

I am unable to consider the question of authorization of the sign by the body corporate for the principal scheme because of my finding that the applicant does not have standing in relation to the body corporate for the principal scheme. In these circumstances I do not propose to order that the sign be removed, because that question has not been determined.

Similarly, I am unable to consider the validity of the Notice of Continuing Contravention issued by the body corporate for the principal scheme.

I am aware that this result places the applicant and the bodies corporate for both schemes in a difficult position. However, in my view the legislation as presently drafted allows for no other outcome. This is a significant deficiency, and one which should be remedied at the earliest opportunity