Harbour Side Resort [2005] QBCCMCmr 160 (23 March 2005)

Last Updated: 5 July 2005

Harbour Side Resort [2005] Q.B.C.C.M.C. mr BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997 ADJUDICATION

Applicant: BODY CORPORATE FOR HARBOUR SIDE RESORT COMMUNITY TITLE SCHEME 15500

Respondent: SUNGOLD RESORTS PTY LTD


STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION

These proceedings are a Specialist Adjudication pursuant to Section 178(4) of the Body Corporate and Community Management Act 1997 ("the Act"). The Applicant is the Body Corporate for Harbour Side Resort Apartment Complex situated at 132 Marine Parade, Southport. The Respondent is the current proprietor of Lot 1 in the Community Titles Scheme and was at the date of creation of the Community Titles Scheme 1979 the sole proprietor of all 35 lots contained within the Scheme.


Legislation

According to the explanatory memorandum for the Act, its principal objective was to provide a legislative framework which accommodates the establishment, operation and management of Community Titles Schemes. A secondary objective was to provide an efficient and effective Dispute Resolution process.

Section 178 is contained in Chapter 3 Division 2 Part 5 of the Act which is entitled "Exclusive Use By-Laws".

Section 178 prescribes:-

(1) This section applies if -

(a)	an exclusive use by-law is in force for a community titles scheme; and

(b)	the owner of the lot to which the exclusive use by-law attaches stops being a body corporate manager, service contractor or letting agent for the scheme; and

(c)	the exclusive use by-law is not for the continuing engagement or authorisation of the lot owner as a body corporate manager, service contractor or letting agent for the scheme.

(2) An order may be made under the dispute resolution provisions to resolve a dispute about whether the exclusive use by-law should be continued in force, having regard especially to the interests of all owners of lots included in the scheme in the use and enjoyment of their lots and of the common property for the scheme.

(3) The order may include provision for either or both of the following -

(a)	the lodging of a request for the recording of a new community management statement for the scheme, omitting the exclusive use by-law;

(b)	the payment by the body corporate of compensation to the owner of the lot to which the exclusive use by-law attaches.

(c)	The adjudication to which the application for an order under this section must be referred must be specialist adjudication.

(d)	An application for an order under this section may be made only by the body corporate.

Provisions relating to Specialist Adjudication are contained within Part 8 of Chapter 6 which Chapter relates solely to Dispute Resolution.

The Application for consideration seeks three (3) other Orders affecting the Respondent which are not related to a review of an exclusive use by-law. Reference will be made later to those Orders sought.

Section 228 provides, so far as is relevant:-

"This chapter establishes arrangements for resolving, in the context of community titles schemes, disputes about -

(a)	contraventions of this Act or community management statements; and

(b)	the exercise of rights or powers, or the performance of duties, under this Act or community management statement; and

(c)

......

(d)	matters arising under the engagements of persons as body corporate managers, the engagements of certain persons as service contractors, and the authorisations of persons as letting agents."

The role of an Adjudicator in proceedings such as these is defined in Section 269 of the Act which prescribes:-

(1) The adjudicator must investigate the application to decide whether it would be appropriate to make an order on the application.

(2) Whether investigating the application, the adjudicator -

(a)	must observe natural justice; and

(b)	must act as quickly, and with as little formality and technicality, as is consistent with a fair and proper consideration of the application; and

(c)	is not bound by the rules of evidence.

The investigative powers of an adjudicator are prescribed in Section 271 of the Act. Some of those powers I have exercised in order to reach my conclusion stated later in these reasons.

Orders which an Adjudicator may make are those prescribed in Section 276 and Schedule 5 of the Act. Those Orders include:-

(1) An adjudicator to whom the application is referred 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 this 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.

(2) An order may require a person to act, or prohibit a person from acting, in any way stated in the order.

(3) Without limiting sub sections (1) and (2), the adjudicator may make an order mentioned in schedule 5.

It will be necessary in due course to give further attention to the implications of Section 276 and Schedule 5 of the Act.


The Proceedings

The proceedings were commenced by an Application lodged with the Commissioner for Body Corporate and Community Management dated 4^th November 2004. Leave was subsequently granted by the Commissioner to the Applicant to amend inadvertent mistakes in the Application. An amended Application pursuant to Section 245 was lodged and served. A submission was received from the Respondent to which the Applicant timely replied.


Background to the Dispute

Harbour Side Resort is a fifty-three (53) lot residential scheme situated at 132 Marine Parade, Southport on the Gold Coast.

The scheme commenced on 13^th December 1996 consequent upon the registration of Building Unit Plan No. 105218.

The building contained within the scheme had previously been in existence for many years as a single title freehold motel the owner of which was the Respondent under its previous name of Broadwater Resorts Pty Ltd.

Prior to creation of the scheme the Respondent obtained Development Approval from the Council of the City of Gold Coast for the property now contained within the scheme. I am told that Development Approval specified that the lots were to be used for Tourist Accommodation. No corroborative documents were provided.

The Respondent subsequently sold all lots save for Lot 1 which it currently owns and apparently occupies. At the date of these sales the Respondent obtained from each purchaser a lease of the Lot for a period of twenty-five (25) years.

On 14^th October 1997 the Respondent being the sole proprietor of all Lots granted to itself a Letting Authorisation Agreement and a Property Management Agreement each for a period of five (5) years with four (4) successive options each for a period of five (5) years.

At some point in time, the date of which is uncertain, and unnecessary to ascertain, the Respondent acquired an adjoining freehold titled small motel situated at 134 Marine Parade, Southport.

After acquisition of the motel the Respondent created rights entitling guests of the adjoining motel to use the schemes driveway, swimming pool, half tennis court, bar-b-que and other recreational features from time to time located on the property within the scheme.

The Respondent also recorded a Community Management Statement incorporating by-laws for its benefit namely:-

"BY-LAW 2 USE OF LOTS

2.1 Subject to By-Laws 22 and 27, a Lot can be used as an Accommodation Lot only.

2.2 Company exemption

While the Company is the Owner ofany Lot:

(a) it is entitled to use any such lot for display purposes.

(b) It may allow prospective purchasers of any Lot to inspect such display Lot; and

(c) It may use such signs, advertising or display material in or about the display Lot and Common Property as it thinks fit.

2.3 Any signs erected pursuant to By-Law 2.2 must be attractive and tasteful having regard to the general aesthetics and amenity of the Scheme Land and must not at any time be more, in number an size, than is reasonably necessary.

BY LAW 27 USE OF LOTS

27.1 The Owner from time to time of Lot 1 has the right to use the Lot for the purposes of -

(a) the operation of the management and letting services provided for by the Property Management Agreement and Letting Authorisation agreement;

(b) part of the Lot as a commercial kitchen;

(c) part of the Lot as an office;

(d) part of the Lot as a commercial laundry;

(e) part of the Lot as a storage area;

(f) part of the Lot as a residence; and

(g) part of the Lot as a coin operated laundry ("Laundry") provided however that the Laundry may also be used by the Owners or Occupiers of all other lots on the basis that the Owner from time to time of Lot 1 will be entitled to all monies received for use of the Laundry and the Owner of Lot 1 maintains the washing machines, dryers and washing tubs and is responsible for all expenses associated with the operation and use of the Laundry.

27.2 The Owners from time to time of Lot 7 has the right to use the Lot for the purposes of -

(a) part of the Lot as a residence;

(b) part of the Lot as a storage area.

27.3 The Owner from time to time of Lot 15 has the right to use the Lot for the purposes of a Managers residence.

BY LAW 30 POOL PUMP ROOM

30.1 The Owner or Occupier from time to time of Lot 1 has the right to exclusive use of the area immediately adjacent tot Lot 1 and referred to in the attached plan in Schedule 1 and marked with the number 1 for the purpose of storing pool cleaning equipment and gaining access to the pool pump.

30.2 The Owner or Occupier of Lot 1 shall be required to maintain and repair the pool pump and pool cleaning equipment, at the cost of the Body Corporate."

The consequence of the Respondent’s conduct was that it procured for itself the capability of conducting a comprehensive letting service for Lots within the scheme and in relation to the adjoining motel property.

It appears that the Respondent also operated from a Lot or Lots within the scheme laundry and commercial kitchen facilities for both Lots within the scheme and for patrons of the adjoining motel.

In 2002 the Respondent failed to exercise an option for renewal of the Letting Authorisation Agreement and the Property Management Agreement each of which then ceased on 13^th October 2002.

The scheme was created by a refurbishment and strata titling of an existing tourist accommodation complex which had been operated by the Respondent for a number of years. Immediately following the establishment of the scheme, the Respondent continued the use of Lot 1 for purposes associated with the business and the use of the Lots in the scheme for their permitted purpose, including an office, bathroom, kitchen, house laundry, guest’s laundry and garage. The garages were used for the purpose of storing of equipment used in the business, including single beds, bunk beds and cots for use in the lots and replacement of furniture which matches the furniture packages installed in each Lot.

At the Applicant’s Annual General Meeting on 29^th May 2004 it was resolved that a new Community Management Statement be lodged replacing the then existing Community Management Statement.

The New Community Management Statement altered the terms of By-Law 2, deleted By-Law 27 and retained By-Law 30 as renumbered By-Law 28.

The new By-Law numbered 2 is now in these terms:-

"BY-LAW 2 USE OF LOTS

2.1 A Lot can be used as an Accommodation Lot only."

Subsequent to the recording of the new Community Management Statement Contravention Notices were served on the Respondent.


Orders Sought by Applicant

The Applicant seeks the following Orders:-

1. That the owner of Lot 1 cease carrying out all commercial activities from that lot or anywhere else on common property.

2. That the owner of Lot 1 remove a large free standing advertising sign on common property at the front of scheme land adjacent to Marine Parade, Southport boundary.

3. That the owner of Lot 1 cease to occupy all common property garages.

4. That By-Law 28 pertaining to the scheme cease to have any effect and that a new Community Management Statement for the scheme be recorded that is the same as the existing Community Management Statement except that By-Law 28 be omitted all together.

5. Any further Orders considered necessary or appropriate.

Respondent’s Case

The Respondent resists the Orders sought. In its submissions it states its case thus:-

1. The Respondent should not be required to cease using the Lot for such purposes for the following reasons:-

(a) such use is not contrary to the terms of the relevant planning approval and to prevent such use being made of the Lot would cause or contribute to a breach of the terms of such approval;

(b) such use is not contrary to By-law 2.1 as such use is directly related to the use of the lots in the Scheme for short term accommodation purposes;

(c) the use being made of the Lot has been an ongoing use for such a duration that to prohibit its use in this manner (ie approximately 10 years) would be unreasonable and inequitable and this Applicant should be estopped and/or prevented from doing so; and

(d) the ceasing of use of these facilities owned by the Respondent would result in financial hardship for the lot owners and these uses may not be satisfied by any other lot within the scheme.

2. The Respondent not be required to remove the large free standing advertising erected on common property in the Scheme as it has been permitted to be erected in that location for such duration that to require its removal would be unreasonable and inequitable and the Applicant should be stopped from doing so. This will also cause a negative financial impact on lot owners.

3. The Respondent has been utilising certain garages located on common property since the commencement of the business. The use was being undertaken pursuant to rights granted to it by the owners of the relevant lots who were granted the exclusive use rights to those garages by the Applicant. Those rights have not been revoked by the relevant owners and they should be permitted to continue notwithstanding the exclusive use rights have been revoked by the Applicant. Again it would also be unreasonable and inequitable to do so.

4. By-law 28 not be deleted and continue to have effect. To do so would be to unreasonably interfere with the rights of a lot owner in circumstances where there is any legal justification to do so.


Community Management Statement

A Community Titles Scheme is a single Community Management Statement recorded by the Registrar of Titles identifying land and the scheme land. Section 10(1) of the Act.

A Community Management Statement is basic to the identification of a Community Title Scheme. Section 12(1) of the Act. It is a document that identifies land and otherwise complies with the requirements of the Act for a Community Management Statement. Section 12(2) of the Act.

The Community Management Statement takes effect when it is recorded by the Registrar as the Community Management Statement for the Scheme. Land Title Act 1994 S.115L(3).

The Registrar is required to record a reference to the Community Management Statement on the indefeasible title for each Lot that is scheme land and the indefeasible title for any common property that is scheme land. Land Title Act 1994 S.115L(1).

On registration of the Community Management Statement that document forms part of the Freehold Land Register which the Registrar is required to maintain and keep. Land Title Act 1994 SS.31 and 27.

A Community Management Statement is binding on the body corporate, each member of the body corporate, each person who is registered as proprietor of a Lot included in the scheme and each person who is the occupier of a Lot included in the scheme. Section 59(2) of the Act.

Section 59(2) has effect as if the Community Management Statement included mutual covenants to observe its provisions entered into by each person bound by it and each person bound had signed the Community Management Statement under seal. Section 59(3) of the Act.

Section 66 of the Act prescribes the requirements for a Community Management Statement. One of those requirements is the inclusion of the by-laws.

His Honour Judge Wylie Q.C., delivering his Judgment in Mineralogy Pty Ltd and the Body Corporate for "The Lakes Coolum" (Appeal No. D5614/01 - District Court Brisbane 4 September 2002), stated:-

"I consider that a by-law regulating the use and enjoyment of a lot is one which governs, controls or restricts the way in which a lot may be used while the by-law has operation."

and later:-

"A community titles scheme is free to have its own by-laws so long as they, or any particular by-law satisfy the requirements set out in the act."


Common Property

The common property is land in the Community Title Scheme that is not included in a Lot. The common property is owned by the owners of all Lots in the Community Title Scheme as tenants in common in accordance with their interest schedule Lot entitlement. Section 35(1) of the Act.

When a Lot owner sells a Lot, the interest in the common property automatically passes with the title of the Lot to the new Lot owner. The Lot owner’s interest in the common property cannot be separately dealt with by a Lot owner. Section 35(3) of the Act.

The common property is administered by the body corporate and the body corporate deals with the common property as if it was the owner of the common property. Sections 35(6) and 36(1) of the Act.


Respondent’s Commercial Activities

The Harbour Side Resort Apartment Complex is a three (3) storey (ground floor and two (2) upper levels) L shaped complex situated at 132 Marine Parade, Southport. On the northern side of the L is a seven (7) storey (ground floor and six (6) upper levels) apartment building known as Aqualine.

Lot 1 in Harbour Side Resort Apartment Complex is situated on the ground floor adjacent to Marine Parade, Southport.

The Respondent is operating from Lot 1 an office which takes bookings for the Harbour Side Resort Apartment Complex and apparently bookings for the adjacent Aqualine building.

The Respondent continues to use Lot 1 for the uses permitted in the former By-Law numbered 27 namely commercial kitchen, office, commercial laundry, storage area and a coin operated laundry.

To support the commercial activities the Respondent has erected a very large sign on the grassed area between the complex building and Marine Parade, Southport. That sign is affixed on three poles and is approximately six feet wide, twenty feet high. The Respondent also occupies self contained garages that is three walls of which are concrete block with a tilt-a-door. The garages are not side by side but are situated at various locations on the ground level of the apartment complex. In one garage there was a substantial amount of chemicals stored in large plastic containers positioned on shelving.


Failure to comply with Directions

On Tuesday, 22^nd February 2005 I gave written directions to the parties pursuant to Section 271 of the Body Corporate and Community Management Act 1997. Those directions were contained in a letter addressed to the parties representatives Challenge Strata Management and McCullough Robertson Lawyers. The letter was forwarded on the 22^nd February 2005 by facsimile transmission to Challenge Strata Management at approximately 8.58 a.m. and likewise to McCullough Robertson at approximately 9.03 a.m.

The directions given were:-

"I direct the parties provide to me the following documents by 4.00 pm Wednesday 2^nd March 2005:-

The Applicant

1. A copy of the current Community Titles Scheme.

2 A copy of the original Community Titles Scheme.

3. A copy of Registered Building Units Plan numbered 105218.

4. A copy of all documents in your possession or under your control which :-

(a) Currently gives to the Respondent the right to provide to the Applicant any service(s).

(b) Gave to the Respondent the right to previously provide to the Applicant any service(s).

5. A copy of all documents in your possession or under your control which :-

(a) Currently permits the Respondent to carry on from any Lot within the Scheme the short term resort style accommodation business referred to by the Respondent in paragraph 7 of the Respondent’s submissions

(b) Previously permitted the Respondent to carry on from any Lot within the Scheme the short term resort style accommodation business referred to by the Respondent in paragraph 7 of the Respondent’s submissions.

6. A copy of all documents in your possession or under your control which :-

(a) Currently permits the Respondent to use the garages referred to in paragraph 10 of the Respondent’s submissions.

(b) Previously permitted the Respondent to use the garages referred to in paragraph 10 of the Respondent’s submission.

7. A copy of all documents in your possession or under your control which :-

(a) Currently permits the Respondent to erect on common property the large free standing advertising referred to in paragraph 12 of the Respondent’s submission.

(b) Previously permitted the Respondent to erect on common property the large free standing advertising referred to in paragraph 12 of the Respondent’s submissions.

8. A copy of all documents in your possession or under your control pertaining to the rights referred to by the Respondent in the second line of paragraph 13 of the Respondent’s submissions.

The Respondent

1. A copy of all documents in your possession or under your control which :-

(a) Currently gives to the Respondent the right to provide to the Applicant any service(s).

(b) Previously gave to the Respondent the right to provide to the Applicant any service(s).

2. A copy of all documents in your possession or under your control which :-

(a) Currently permits the Respondent to carry on from any Lot within the Scheme the short term resort style accommodation business referred to by the Respondent in paragraph 7 of its submissions.

(b) Previously permitted the Respondent to carry on from any Lot within the Scheme the short term resort style accommodation business referred to by the Respondent in paragraph 7 of its submissions.

3. A copy of all documents in your possession or under your control which :-

(a) Currently permits the Respondent use of the garages referred to in paragraph 10 of the Respondent’s submissions.

(b) Previously permitted the Respondent use of the garages referred to in paragraph 10 of the Respondent’s submissions.

4. A copy of all documents in your possession or under your control which :-

(a) Currently permits the Respondent to erect on common property the large free standing advertising referred to in paragraph 10 of the Respondent’s submissions

(b) Previously permitted the Respondent to erect on common property the large free standing advertising referred to in paragraph 10 of the Respondent’s submissions.

5. A copy of the planning approval referred to in paragraph 11(a) of the Respondent’s submissions.




6. A copy of all documents in your possession or under your control pertaining to the rights the Respondent alleges in the second line of paragraph 13 of its submissions.

GENERAL NOTE

A signed List of Documents should accompany the documents requested.

All documents produced should be clearly marked so that each document can readily be identified and related to each request made herein.

FURTHER DIRECTIONS

Each party give to the other party by the date and time specified in paragraph 1 hereof a copy of the List of Documents and the documents produced to me pursuant to this direction.

The parties to inform me in writing by 4.00 p.m. Wednesday, 2^nd March 2005:-

1. The date when the Respondent effectively lost control of the Body Corporate.

2. The module adopted by the Body Corporate.

3. The date the Body Corporate adopted the module."

The directions were ignored by the parties representatives.

On 8^th March 2005 not having received a response from either of the parties representatives I issued further directions which in part included:-

"I now formally advise the parties that unless I am in receipt of the information and documentation identified in my three page letter to each of you dated 22^nd February 2005 by 4.00 p.m. Wednesday, 16^th March 2005 I will proceed to make my determination without further reference to you both or to your clients."

On Thursday, 10^th March 2005 the Respondent’s Lawyers McCullough Robertson forwarded a letter dated 9^th March 2005 the last paragraph of which states:-

"We apologise for the oversight in not responding and assure you the relevant material will be submitted by 16 March 2005."

As no material was received by McCullough Robertson Lawyers up to and including the close of business Tuesday, 22nd March 2005 I have proceeded to make my decision in the absence of that information and documentation.


Fundamental Principle of Natural Justice

In proceeding as I have I am cognisant of passages contained in two (2) decisions of the High Court of Australia namely Cameron -v- Cole [1944] HCA 5; (1944) 68 C.L.R. 571 and Taylor -v- Taylor [1979] HCA 38; (1979) 143 C.L.R. 1, the Court of Appeal in Grimshaw -v- Dunbar (1953) 1 Q.B. 408 and the Queensland Court of Appeal in W.R. Carpenter Australia Limited -v- Ogle [1997] QCA 383; (1999) 2 Qd. R. 327.

The passages from the decisions of the High Court and the Court of Appeal are encapsulated in the leading judgement of Williams J. in W.R. Carpenter Australia Limited -v- Ogle at 330 and 331.

The passages to which I refer are:-

"The following extracts from the leading judgments clearly indicate what was decided in Taylor. Gibbs. J. began his analysis of the relevant principles by referring to Cameron -v- Cole [1944] HCA 5; (1944) 68 C.L.R. 571 and Grimshaw -v- Dunbar (1953) 1 Q.B.

408. He quoted a passage from the judgment of Rich J. in the former case at 589 to the following effect:

"It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case."

From the latter case he quoted the following passage from the judgment of Jenkins L.J. at 416:

"Be that as it may, a party to an action is prima facie entitled to have it heard in his presence; he is entitled to dispute his opponent’s case and cross-examine his opponent’s witnesses and he is entitled to call his own witnesses and give his own evidence before the Court. Prima facie that is his right, and if by some mischance or accident a party is shut out from that right and an order is made in his absence, then common justice demands, so far as it can be given effect to without injustice to other parties, that that litigant who is accidentally absent should be allowed to come to the court and present his case - no doubt on suitable terms as to costs ..."

........

Mason J. after citing the passage quoted above from Grimshaw -v- Cunbar went on to say at 16:

"A jurisdiction to set aside its orders is inherent in every court unless displaced by statute. In my opinion the jurisdiction extends not only to the setting aside of judgments which have been obtained without service or notice to a party ... but to the setting aside of a default or ex part judgment obtained when the absence of the party is due to no fault on his part."

Finally Aickin J. said at 22:

"The principle that parties to litigation are entitled to be present and heard, either in person or by a duly authorised legal representative, is of fundamental importance and involves the consequence that, where through no fault of his own, a party is deprived of that entitlement, prima facie any order of a court made against him may be set aside by that court. I can see no basis for confining the application of that principle to cases where there has been a failure to serve the process of give other appropriate notice.""

Those passages are, in my view, apposite to this Adjudication.



On 16^th March 2005 Challenge Strata Management sought and was granted an extension until the close of business on Friday, 18^th March 2005 to comply with my directions dated 2^nd March 2005 and 8^th March 2005 respectively.

Challenge Strata Management complied with the directions at approximately 10.03 a.m. on Friday, 18^th March 2005. Accordingly I proceed with the benefit only of the response from the Applicant’s representative.


Inference to be drawn from the Respondent’s failure to comply with Directions

It is well settled that, in the course of the ordinary process of legal reasoning, an inference may be drawn contrary to the interests of a party who, although having it within his or her power to provide or give evidence on some issue, declines to do so. Thus, for example, there may sometimes be an inference in civil cases that the evidence, if called, would not assist the parties case. Jones -v- Dunkel [1959] HCA 8; (1959) 101 C.L.R. 298 [H.C.], G -v- H [1994] HCA 48; (1994) 181 C.L.R. 387 [H.C] per Deane Dawson and Gaudron J.J. at 402.

In considering the material placed before me I am of the view that I can draw the appropriate inferences against the Respondent in view of the two (2) notices which the Respondent had to provide the material to me and its failure so to do.

I am further fortified in my stance by receiving from the Respondent’s lawyers a written assurance on that firm’s letterhead which assurance was subsequently dishonoured without explanation.


Control of the Body Corporate

When the Body Corporate and Community Management Act 1997 commenced on 13^th July 1997 all existing schemes were placed in the Standard Module.

By an Extra Ordinary General Meeting held on 10^th October 1997 the Applicant unanimously resolved to adopt the Accommodation Module in lieu of the Standard Module.

It is not surprising that the resolution was unanimous as the Respondent then owned all Lots within the scheme and the only persons according to the Body Corporate’s records who attended the Extra Ordinary General Meeting was the principal of the Respondent and a representative of the Respondent’s Body Corporate Manager.

The Respondent controlled the Body Corporate at all material times from 13^th December 1996, the date of registration of Building Units Plan No. 105218 until the Annual General Meeting held on 22^nd November 2001.


Letting Authorisation Agreement and Property Management Agreement

The Respondent and the Body Corporate each executed a Property Management Agreement dated 14^th October 1997 and a Letting Authorisation Agreement of that same date. Both documents were for an initial period of five (5) years commencing on 14^th October 1997 and ending on 13^th October 2002 or the earlier date on which the Agreement terminated other than by effluxion of time.


Each Agreement contained clauses which would on the happening of defined events terminate each Agreement. None of those events occurred.

Each Agreement contained four (4) successive option periods each of which was for a period of five (5) years. Property Management Agreement clause 12, Letting Authorisation Agreement clause 11.

Each Agreement required the Respondent to give to the Body Corporate written notice of exercise of the option not more than six (6) months nor less than three (3) months before the end of the initial term. Refer Clause 12.1 and Clause 11.1 respectively.

The Respondent did not provide the relevant notices.

The Respondent appears not to concede that its rights pursuant to the Property Management Agreement and Letting Authorisation Agreement have terminated. Paragraph 5 of its written submissions states:-

"The Submitter is the Original Owner for the Scheme. The Submitter was engaged as a service contractor for the Scheme and has reserved its rights with respect to the purported termination of the management rights."

I am not told what if any steps have been taken by the Respondent as a result of its alleged reservation of rights to the purported termination of the Management Rights.

The authorities make it clear that exact compliance with the terms of an option is required. United Scientific Holdings Ltd -v- Burnley Burrow Council (1978) A.C. 904 [H.L.], Gilbert J. McCaul (Aust) Pty Ltd -v- Pitt Club Ltd 1959 S.R. (NSW) 122 [C.A.], Duncan Properties Pty Ltd -v- Hunter (1991) 1 Qd. R. 101 [De Jersey J.].

It appears to me that as no notice of exercise of option was given by the Respondent to the Applicant Body Corporate within the time specified in the relevant clause of each document and as the Applicant Body Corporate has not waived such requirement each document expired by the effluxion of time on 13^th October 2002.


Ongoing use - Unreasonable and Inequitable to prevent Respondent from continuing enjoyment

The Respondent in paragraph 11(c) of its Submissions says:-

"The use being made of the Lot has been ongoing for such a duration that to prohibit its use in this manner (ie. approximately 10 years) would be unreasonable and inequitable and the Applicant should be estopped and/or from doing so;"

It appears from such Submission that the Respondent is claiming a right by prescription.

The doctrine of prescription generally is based upon the presumption of a grant, the common law doctrine being that all prescription presupposes a grant once made and validly subsisting, but sine lost or destroyed. .... The presumption in the former instance of such grant arises under the doctrine of prescription from the fact of quiet enjoyment of the right. Halsburys Laws of England 4^th Ed. Vol 14 para 74.

The reason the doctrine of prescription is applied in law is that it is the policy of the law to do all it can to quiet titles so as to avoid litigation and preserve the security of property. Foster

-v- Warblington U.D.C. (1906) 1 K.B. 648 [C.A.] per Fletcher Moulton L.J. at 679, Neaverson -v- Peterborough R.D.C. (1902) 1 Ch. 557 [C.A.] per Collins M.R. at 573.

Where an open and uninterrupted enjoyment of what appears to be an easement or other incorporeal right has continued for a long time the court will, where such enjoyment is wholly unexplained, presume, if it is reasonably possible, that the enjoyment is referable to a right which had a lawful origin. Davies -v- Whitby 1974 Ch. 186 [C.A.].

It must be remembered that the Respondent granted to itself the rights which it says it enjoyed for a period of approximately ten years, when the Respondent was the sole member of the Body Corporate and whilst the Respondent controlled the Body Corporate up until the Annual General Meeting held on 22^nd November 2001.

The rights previously enjoyed by the Respondent were pursuant to the terms of the then Community Management Statement, the Letting Authorisation Agreement and the Property Management Agreement. The latter two (2) documents expired by the effluxion of time on 13^th October 2002 due to the Respondent’s lack of due diligence and inaction by not timely exercising the option contained in the Letting Authorisation agreement and the Property Management Agreement.

A New Community Management Statement was subsequently recorded in 2004 which materially changed the Respondent’s rights in relation to Lot 1 and the Respondent’s rights generally to conduct a business from any Lot within the scheme.

The Respondent has not taken any steps to challenge the New Community Management Statement and accordingly is bound by its provisions. Sections 59(2) and 59(3) of the Act.

Consequently this Submission must fail.


Relevant Planning Approval

The Respondent in paragraph 11(a) of its Submissions says that it should not be required to cease using the Lot for such purposes as:-

"Such use is not contrary to the terms of the relevant planning approval and to prevent such use being made of the Lot would cause or contribute to a breach of the terms of such approval."

I am not aware of the terms of the document referred to as Relevant Planning Approval as the Respondent has failed to provide that document to me in accordance with my directions dated 2^nd March 2005 and 8^th March 2005. In addition the documentation has not been provided by the Respondent pursuant to its solicitor’s written assurance dated 9^th March 2005.

Pursuant to the decisions of the High Court in Jones -v- Dunkel [1959] HCA 8; (1959) 101 C.L.R. 298 and G -v- H [1994] HCA 48; (1994) 181 C.L.R. 387 I draw the inference that the current planning approval for Harbour Side Resort Apartment Complex does not support the Respondent’s Submission.

Consequently this Submission must fail.





By-Law 2.1

The Respondent in paragraph 1(b) of its Submissions says that it should not be required to cease using the Lot for the purposes as:-

"Such use is not contrary to By-Law 2.1 as such use is directly related to the use of the Lots in the Scheme for short term accommodation purposes."

By-Law 2.1 contained in the First Community Management Statement of the Applicant stated:-

"2.1 Subject to By-Laws 22 and 27, a Lot can be used as an Accommodation Lot only."

The subsequent Community Management Statement recorded in 2004 changed the wording of By-Law 2.1 to read as follows:-

"2.1 A Lot can be used as an Accommodation Lot only."

The definition of only contained in the Macquarie Dictionary includes - solely.

The definition of only contained in the Shorter Oxford English Dictionary includes - as a single or solitary thing or fact. Only may be distinguished from more or opposed to any other.

I am of the view that the latter definition contained in the Shorter Oxford English Dictionary and that definition referred to from the Macquarie Dictionary are apposite accordingly Clause 2.1 should be read and interpreted that a Lot cannot be used for any other purpose other than residential accommodation.

Accommodation can be for short, medium or long terms. In my view the duration of the period of accommodation is irrelevant for present purposes.

Consequently this Submission must fail.


Financial Hardship to the Respondent

The Respondent in paragraph 11(d) of its Submissions says that it should not be required to cease using the Lot for such purposes as:-

"The ceasing of use of these facilities owned by the Submitter would result in financial hardship for the lot owners and these uses may not be satisfied by any other lot within the scheme."

The facilities there referred to I assume are those enunciated in the former By-Law 27 which is reproduced at pages 4 and 5 hereof. That By-Law was omitted from the Community Management Statement recorded in 2004.

Neither the current Community Management Statement nor the By-Laws therein contained are challenged in any way by the Respondent.

The Shorter Oxford English Dictionary defines "by-law" as, "a law or ordinance dealing with matters of local or internal regulation, made by a local authority, or by a corporation or association".

A similar view was expressed by Lindley L.J. in London Association of Ship Owners and Brokers -v- London and India Docks Joint Committee (1892) 3 Ch. 242 [C.A.] at 252 as follows:-

"A by-law is not an agreement, but a law binding on all persons to whom it applies, whether they agree to be bound by it or not. All regulations made by a corporate body, and intended to bind not only themselves and their officers and servants, but members of the public who come within the sphere of their operation, may be properly called "by-laws" whether they be valid or invalid in point of law; for the term by-law is not restricted to that which is valid in point of law."

On page 8 of these reasons I have referred to part of Reasons for Judgment of Judge Wylie Q.C. in Mineralogy Pty Ltd and the Body Corporate for "The Lakes Coolum" (Appeal No D5614/01 - District Court Brisbane 4 September 2002). I adopt what His Honour there said.

As the By-Laws form part of the Community Management Statement they are binding on the Body Corporate, each member of the Body Corporate, each person who is registered or proprietor of a Lot included in the scheme and each person who is the occupier of a Lot included in the scheme. Section 59(2) of the Act.

The By-Laws have effect as if they were mutual covenants signed by each person to be bound thereby. Section 59(3) of the Act.

Consequently in my view any purported financial hardship the Lot owners may sustain is irrelevant.

Consequently this Submission must fail.


Freestanding Advertising Sign

A sign approximately six (6) feet wide and twenty (20) feet high has been affixed to three (3) substantial in ground poles which are located between the complex building and Marine Parade, Southport.

The sign is in seven (7) sections. Those sections are a logo, black lettering on a white background, yellow lettering on a blue background, white and yellow lettering on a blue background, a photograph, white lettering on a blue background and yellow lettering on a blue background.

The sign reads:-

HARBOURSIDE
-RESORT-


GRAND OPENING
SPECIAL OFFERS


OVERNIGHT OR WEEKLY
53 NEW STUDIO, 1 & 2 BEDROOM,
MOTEL STYLE & HOLIDAY APARTMENTS
ALL ROOMS AIR CONDITIONED


PHOTO

• RESORT POOL . SPA . BBQ

• QUIET TROPICAL GROUNDS
• OFF HIGHWAY UNITS

- VACANCY -

The sign appears from its discolouration to be an old sign. This opinion is supported by the wording contained on the sign in particular - 53 new studio, 1 & 2 bedroom apartments.

There is no doubt that the contents of the sign clearly relates solely to the Respondent’s former business and the letting business which the Respondent is currently conducting from Lot 1 from the Apartment Complex.

By-Law 8.2 specifically deals with signs. That By-Law states:-

"Signs prohibited

An Owner of Occupier must not paint or affix any sign, advertisement, notice or poster to or on any part of his Lot or the Common Property, nor do anything to vary the external appearance of such Lot or the Common Property, without the prior written consent of the Body7 Corporate."

McPherson J.A. in Platt -v- Ciriello [1997] Q.C.A. 033 said at p24:-

"What constitutes unreasonable interference is a question of fact. The erection of commercial advertising signs may well interfere unreasonably with the enjoyment of the common property of residential units, but not necessarily with the enjoyment of a common property of a commercial complex."

It appears to me that this view was based on the sign unreasonably interfering with the enjoyment of the common property by other occupiers rather than the use of the common property. That is, it was based on both the inappropriateness of an advertising sign and how it would it would detract from the appearance and aesthetics of a scheme building, rather than on any interference with the use of that area of common property.

The sign in my view detracts from the appearance and aesthetics of the scheme building.

The law and reasoning published in the Section Ongoing Use - Unreasonable and Inequitable to prevent Respondent from continuing enjoyment on pages 14 and 15 of these reasons are apposite to the large freestanding advertising sign.

Consequently the Respondent’s Submission that to require the removal of the sign would be unreasonable and inequitable and the Applicant should be estopped from doing so must fail.





Respondent’s Use of Garages on Common Property

The Respondent in paragraph 13 of its written Submissions acknowledges that it has been using certain garages located on common property since the commencement of its business. That date would, I assume, be the date of the Letting Authorisation Agreement and the Property Management Agreement which is 14^th October 1997.

In that same paragraph the Respondent says that the use of the garages was being undertaken pursuant to rights granted to it by the owners of the relevant Lots who were granted the exclusive use rights of those garages by the Applicant. The Respondent asserts those rights have not been revoked by the relevant owners.

In my written directions dated 22^nd February 2005 I directed both the Applicant and the Respondent to provide to me a copy of all documents in their possession or under their control which:-

(a) Currently permits the Respondent to use the garages referred to in paragraph 10 of the Respondent’s Submissions.

(b) Previously permitted the Respondent to use the garages referred to in paragraph 10 of the Respondent’s Submissions.

The reference to paragraph 10 should have been to paragraph 13.

The Applicant was the only party to provide to me any documentation. The documentation which the Applicant provided did not contain any documents relevant to the Respondent’s use of the garages.

Pursuant to the decisions of the High Court in Jones -v- Dunkel [1959] HCA 8; (1959) 101 C.L.R. 298 and G -v- H [1994] HCA 48; (1994) 181 C.L.R. 387 I draw the inference that the Respondent does not have the documentation to support its allegations contained in paragraph 13 of its written Submissions.

The common property is owned by the owners of all Lots in the Community Titles Scheme as tenants in common in accordance with their interest schedule lot entitlement. Section 35(1) of the Act.

The common property is administered by the Body Corporate and the Body Corporate deals with the common property as if it was the owner of the common property. Sections 35(6) and 36(1) of the Act.

The rights previously enjoyed by the Respondent were pursuant to the terms of the then Community Management Statement and Letting Authorisation Agreement and the Property Management Agreement. The latter two (2) documents expired by the effluxion of time on 13^th October 2002 due to the Respondent’s lack of due diligence and inaction by not timely exercising the option contained in the Letting Authorisation Agreement and the Property Management Agreement.

By-Law 8.4(c) of the Community Management Statement recorded in 2004 states:-

"The Owner or Occupier must use his garage only as a garage and for general storage purposes and may not convert it to any other use unless the written consent of the Body Corporate is first obtained and then only in accordance with the terms of such consent."

In the matter of Platt -v- Ciriello (1997) Q.C.A. 033 (14 March 1997) the Court of Appeal had before it a dispute concerning the varied use of common property by the owner, including the placement of café tables and chairs, display stands, advertising signs and bins. Although the matter was decided in the context of the relevant legislation at the time, the Building Units and Group Titles Act 1980 similar provisions exist under the current Act.

The three (3) particular provisions which the Judges relied on in reaching their decision were firstly the unreasonably interference in the use of the common property by others set out in Section 51(1)(c) of the Building Units and Group Titles Act 1980 now contained in Section 167 of the Act, secondly, improvements to common property for the benefit of a Lot and thirdly granting exclusive use over common property to an owner by By-Law.

Section 167 of the Act prescribes:-

"Nuisances

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 -

(a)	causes a nuisance or hazard; or

(b)	interferes unreasonably with the use or enjoyment of another lot included in the scheme; or

(c)	interferes unreasonably with the use or enjoyment of the common property by a person who is lawfully on the common property."

The Applicant asserts that there are two (2) rectangular areas between Lots 24 and 25 and also adjacent to that part of Lot 1. These rectangular areas which comprises garages

numbered 3 and 4 respectively with roller shutter doors are not allocated for the exclusive use of any Lot nor are they part of the title of any Lot. The Respondent has apparently used these two (2) garages together with a further five (5) garages for its own purpose since inception of the Scheme.

Whether co-owners of land are tenants in common or joint tenants each is entitled to the possession or enjoyment of the whole of the land. Halsburys Laws of Australia parap 355-11500.

The Respondent by unilaterally claiming for itself exclusive use of the seven (7) garages has denied the other Lot owners their legal right of enjoyment of this part of the common property.

This unilateral action of the Respondent in my view interferes unreasonably with the use or enjoyment of that part of the common property which it has subsumed for itself and consequently its actions is a nuisance within the ambit of Section 167 of the Act.

Ambrose J. in Platt’s case at pp37-38 said in relation to exclusive use of common property:-

"When any proprietor of a lot makes use of the common property for a reasonable purpose from time to time, he will often be making an exclusive use of it while doing so. In my judgment that lot proprietor will not be making "the exclusive use" of


common property in such cases to which S30(7)(a) of the Act refers. The "exclusive use" contemplated by that Section is the sort of exclusive use which a proprietor makes of his lot. While he is proprietor of that lot no other person with out his assent may use it for any purpose - subject of course to any personal obligation upon him founded upon contract or equitable principles which gives some other person entitlement to use it."

On His Honour’s test the use by the Respondent of the garages and the common property occupied by the Respondent come within those uses described in the test.


Exclusive Use of Pool Pump Room

By-Law 28 in its current form states:-

"BY-LAW 28 POOL PUMP ROOM

28.1 The Owner or Occupier from time to time of Lot 1 has the right to exclusive use of the area immediately adjacent tot Lot 1 and referred to in the attached plan in Schedule 1 and marked with the number 1 for the purpose of storing pool cleaning equipment and gaining access to the pool pump.

28.2 The Owner or Occupier of Lot 1 shall be required to maintain and repair the pool pump and pool cleaning equipment, at the cost of the Body Corporate."

Section 170 of the Act defines an exclusive use By-Law for a Community Titles Scheme as 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 common property or a Body Corporate asset.

It appears to me that the pool pump room is common property and that its content that is the machinery and equipment therein located is a Body Corporate asset.

Section 178 of the Act permits a review of an exclusive use By-Law if:-

(a)	an exclusive use By-Law is in force for a Community Titles Scheme; and

(b)	the owner of the Lot for which the exclusive use By-Law attaches stops being a Body Corporate Manager, Service Contractor or Letting Agent for the Scheme; and

(c)	the exclusive use By-Law is not for the continuing engagement or authorisation of the Lot owner as a Body Corporate Manager, Service Contractor or Letting Agent for the Scheme.

Clause 5 of the Property Management Agreement dated 14^th October 1997 set out twenty (20) duties which it was required to diligently discharge. Those obligations ceased on 13^th

October 2002 be reason of the Respondent’s failure to exercise the option for renewal contained in Clause 12.1 of the Property Management Agreement.

The pool pump room does not form part of Lot 1 but is immediately adjacent to it.




By-Law 30.1 permits the owner or occupier from time to time of Lot 1 not only the exclusive right to use the pool pump room but to use that area for the sole purpose of storing pool cleaning equipment therein.

As the Respondent’s obligations pursuant to the terms of the Property Management Agreement have ceased there is now no requirement on the Respondent to access the pool pump room or to store pool cleaning equipment therein.

Likewise the obligation imposed upon the owner or occupier of Lot 1 by By-Law 28.2 to maintain and repair the pool pump and pool cleaning equipment at the cost of the Body Corporate is superfluous.

Accordingly I see no need to maintain By-Law 28 in its present form.

Orders 1. The Respondent forthwith cease and desist carrying out from Lot 1 its current commercial activities. 2. The Respondent forthwith cease and desist using any part of the common property for commercial activities. 3. The Respondent vacate all common property which it occupies on or before 4.00 p.m. Friday, 29th April 2005 save and except a common property garage for which it has received the Applicant’s written consent to occupy as proprietor of Lots. 4. The Respondent remove the large freestanding advertising sign erected on the common property between the complex building and Marine Parade, Labrador on or before 4.00 p.m., Friday, 29th April 2005. 5. The Applicant forthwith prepare or have prepared a New Community Management Statement identical to the current Community Management Statement recorded save and except for By-Law 28.

Costs

Section 280(2) of the Act prescribes that unless the Adjudicator otherwise orders the Applicant is responsible for the costs of the Adjudication.

Before determining this aspect of the Adjudication I direct that the parties provide to me by 4.00 p.m. Friday, 8^th April 2005 any Submissions they wish me to consider.

Stephen J English
Chambers
23^rd March 2005

Harbour Side Resort [2005] Q.B.C.C.M.C. mr BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997 ADJUDICATION

Applicant: BODY CORPORATE FOR HARBOUR SIDE RESORT COMMUNITY TITLE SCHEME 15500

Respondent: SUNGOLD RESORTS PTY LTD


STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION AS TO COSTS

On Wednesday, 23rd March 2005 I provided to the parties’ representatives by facsimile transmission and by email my Statement of Adjudicator’s Reasons for Decision and my Orders.

The last paragraph of my Reasons referred to costs of the Adjudication. I refer the parties to Section 280(2) of the Act which prescribes that unless the Adjudicator otherwise orders the Applicant is responsible for costs of the Adjudication. I then directed the parties to provide to me by 4.00 p.m. Friday, 8^th April 2005 any Submissions they wish me to consider in determining this aspect of the Adjudication.

It is interesting to note that when the Body Corporate and Community Management Act 1997 was originally passed and subsequently came into effect on 13^th July 1997 it did not contain any provision which permitted an Adjudicator or a Specialist Adjudicator to award costs in an Adjudication or a Specialist Adjudication. Refer the Original Act in particular Section 223(1) thereof which did not specifically mention costs. The Section merely gave to the Adjudicator or Specialist Adjudicator the power to make an order which is just and equitable in the circumstances.

Mr. John C. Sheahan S.C., Specialist Adjudicator in Grand Marnier [2000] QBCCMCmr 214 (8 May 2000) Application number 0279 of 1998 considered this earlier edition of the Act. Mr. Sheahan examined the provisions of the Act in particular Section 223(1) thereof and considered that he did not have the power to make an order as to the costs of the Specialist Adjudication.

The Act was subsequently amended, no doubt as a result of Mr. Sheahan’s decision, to include the present Section 280.


APPLICANT’S SUBMISSIONS

On 7^th April 2005 the Applicant through its representative Challenge Strata Management provided to me its Submissions. The Submissions were:-

"Further to your order of 25/03/05, we make the following submissions on behalf of the Applicant for a supplementary order that the Respondent should pay the Applicant’s costs of this application.

Reasons in support of this submission are:-

1.	As a general principle of litigation, costs should follow the judgement. There is nothing in the Body Corporate and Community Management Act that would preclude this rule being applied.

2.

The Respondent has displayed a blatant disregard over a considerable period of time for its obligations to the other members of the Applicant body corporate in utilising common areas, both for the carrying out of commercial activities and display of signage, for its own use and benefit to the detriment of the other members.

3.	The Respondent failed to comply with, or even properly address, the several written requests to desist from its said activities, all of which were given before this application was commenced.

4.	The Applicant has successfully established that all elements of its application were justified and has been given orders in its favour in all of them.

5.	The Applicant has at all times acted reasonably and responsibly towards the Respondent.

6.	In all of the circumstances, it would not be reasonable for the other members of the Applicant body corporate to now be required to bear the Applicant’s costs and it would be fair and reasonable for those costs to be paid by the Respondent.

The Applicant’s costs of this application, including GST but not including the Adjudicator’s fee, are as follows:-

Administrative & secretarial costs of reviewing files and $ 880.00
records to retrieve attachments for application, preparing and
filing application, reviewing Adjudicator’s requisitions and
preparing response

Filing fee for application $ 22.60

Outlays for copying documents for application and $ 132.00
Adjudicator, and postage and communication costs between
Committee and body corporate manager
_____.__

Total $ 1,034.60

In addition to an order that the above sum be paid by the Respondent to the Applicant, the Applicant also seeks that the Respondent be ordered to pay all of the Adjudicator’s fees in relation to these proceedings.

That concludes the Applicant’s submissions. Please advise if any other information is required."

RESPONDENT’S SUBMISSIONS

The Respondent did not provide any Submissions.


COSTS - CREATURE OF STATUTE

Costs are a creature of statute. At common law neither the Plaintiff nor the Defendant was entitled to costs. In Re Birkman, Ex-parte Pickering (1860) 1 Q.S.C.R. 14 [Lutwiche J.] at 15.

Connolly J. who wrote the leading Judgment in Queensland Fish Board -v- Bunny 1979 Qd. R. 301 said at 303:-

"It must be remembered that there is a well established principle that apart from the inherent jurisdiction of the court of chancery, costs are entirely the creation of statute and there is no common law jurisdiction in tribunals to grant costs: R -v- Justices of South Brisbane ex-parte Zagami (1901) 11 Q.L.J. 81 at p.83; Garnett -v- Bradley (1878) 3 App. Cas. 944 at p.962. Some of the older decisions suggest that the power to award costs must be conferred in express terms. See eg. Service -v- Flateau (1900) 16 W.N. (NSW) 248; Victorian Phillip-Stephan Photo-Litho Co -v- Davis (1890) 11 L.R.N.S.W. 257 but the better view would seem to be that the power can be conferred expressly or by necessary implication: Spicer -v- Carmody 48 S.R. (NSW) 348 at p350. Having regard to this principle however, the power must at least clearly appear."

See also Knight -v- F.P. Special Assets Ltd [1992] HCA 28; (1992) 174 C.L.R. 178 [H.C.] per Mason C.J. and Deane J. at 182-3, R -v- Scott [1993] FCA 398; (1993) 42 F.C.R. 1 [F.C. Fed Ct.], Canceri -v- Taylor (1994) 123 A.L.R. 667 [Moore J. Industrial Relations Court of Australia] at 672.

There is no doubt in my mind that I have the power to award costs in this Specialist Adjudication pursuant to the provisions of Section 280 of the Body Corporate and Community Management Act 1997 which clearly and unambiguously says so.

The Section gives to the Specialist Adjudicator an absolute and unfettered discretion to award costs or not to award them.

In my view the discretion must be exercised in a judicial manner and not on grounds unconnected with the subject matter of the proceedings between the parties. Main -v- Main [1949] HCA 39; (1949) 78 C.L.R. 636 [H.C.] per Latham C.J., Rich and Dixon J.J. at 643.

Lord Halsbury L.C. in Sharp -v- Wakefield 1891 A.C. 173 [H.L.] at 179 encaptulated the meaning of discretion when he said:-

""Discretion" means when it is said that something is to be done within the discretion of the authorities that that something is to be done according to the rules of good reason and justice, not according to private opinion: Rooke’s Case [(1598) 5 Co Rep 99 b]; according to law, and not humour. It is to be, not arbitrary, vague, and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man competent to the discharge of his office ought to confine himself: Wilson -v- Rastall [(1792) 4 Term Rep at 757]."

I consider the following matters are relevant for my consideration namely:-

(a) Proved facts connected with or leading up to the Adjudication. Tela Pty Ltd -v- Ampol Ltd 1986 A.T.P.R. 48, 120 (Fed Ct. Wilcox J).

(b) Conduct of the parties in relation to the Adjudication. Verna Trading Pty Ltd -v- New India Assurance Co Ltd (1991) 1 V.R. 129 [F.C.].

(c) The success or otherwise of each party in attaining the relief sought. Windsurfing International Inc -v- Petit 1987 A.I.P.C. 37, 861 [NSW Sup Ct Widdell j].


A. PROVEN FACTS CONNECTED WITH OR LEADING UP TO THE ADJUDICATION

The Respondent controlled the Body Corporate from its inception until the Annual General Meeting held on 29^th May 2004.

The Respondent being the sole member of the Body Corporate granted to itself in October 1997 a Property Management Agreement and a Letting Authorisation Agreement for an initial term of five (5) years ending on 13^th October 2002 with four (4) successive options of renewal each for a term of five (5) years.

The Respondent failed to exercise the option contained in the Property Management Agreement and the Letting Authorisation Agreement the consequences of which was that each document ended by the effluxion of time on 13th October 2002.

Notwithstanding the termination of the obligations contained in the documents, the Respondent continued with its commercial operation at the Apartment Complex.

In or about July 2004 a New Community Management Statement was recorded restricting the use of Lots to Accommodation purposes only.

The Respondent was issued with not one (1) but three (3) Notices of Contravention of By-Law which it apparently ignored.

Sections 94(1)(a) and (b) of the Act prescribe:-

"The body corporate for a community titles scheme must -

(a) administer the common property and body corporate assets for the benefit of the owners of lots included in the scheme; and

(b) enforce the community management statement (including any by-laws for the scheme);"

Section 94(2) of the Act prescribes that the Body Corporate must act reasonably in anything it does under Subsection (1).

Section 152(1)(a) of the Act prescribes:-

"The body corporate for a community titles scheme must -

(a) administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners."

The word "must" has been used by the draftsmen in both Sections 94 and 152 of the Act.

"Must" is a word of absolute obligation and clearly has a mandatory effect. Posner -v Collector for Interstate Destitute Persons (Victoria) [1946] HCA 50; (1947) 74 C.L.R. 461 [H.C.] per Williams J. at 490-1; Weightman -v- Gold Coast City Council [2003] QPELR 43; (2003) 2 Qd. R. 441 [C.A.].

The draftsman in Section 94(1)(a) has included the words - "for the benefit of the owners of the lots" whilst in Section 152(1)(a) has incorporated the words - "for the benefit of lot owners". Both these phrases in my view have the same meaning. That meaning being for the benefit of all Lot owners.

The draftsman has also incorporated the word "reasonably".

The Courts have since at least 1851 wrestled with the interpretation of this word. In Booth -v- Clive (1851) 10 C.B. 827 at 834, 837: 84 RR 795 at 799 - 800 Cresswell J. in delivering the judgment of the Court consisting of himself, Williams J and Jervis Ch. J. said - The Lord Chief Justice told the jury, that ........... if "reasonably" meant anything else than "in good faith" it meant, "according to this reason", as contradistinguished from "caprice".

The English Court of Appeal in Re A Solicitor 1945 1 K.B. 368 at 371 said:-

"The word "reasonable" has in law the prima facie meaning of reasonable in regard to those existing circumstances of which the actor, called on to act reasonably, knows or ought to know."

In Opera House Investment Pty Ltd -v- Devon Buildings Pty Ltd [1936] HCA 14; (1936) 55 C.L.R. 110 [H.C.] Latham C.J. at 116 said:-

"The word "reasonable" has often been declared to mean "reasonable in all the circumstances of the case." The real question, in my opinion, is to determine what circumstances are relevant. In determining this question regard must be paid to the nature of the transaction. A circumstance which has no relation to the property which was the subject matter of the transaction but which depended entirely upon the person or position or personal desires of the owner of the property, would not, in my opinion, be a relevant circumstance in determining what was reasonable."

On reviewing the case put by the parties in their respective Submissions, the conduct of the parties in responding to my directions, the contents of the documents subsequently provided and my statement of Adjudicator’s Reasons for Decision, I am of the view that the Applicant has at all material times acted reasonably for the benefit of all Lot owners.


B. CONDUCT OF THE PARTIES IN RELATION TO THE ADJUDICATION

Written Directions were given to the parties’ representatives by facsimile transmission on Tuesday, 22^nd February 2005 requiring the parties to provide identified documentation and information by 4.00 p.m. Wednesday, 2^nd March 2005.

Neither of the parties through their representatives provided the information and documentation required by the Direction.

On Tuesday, 8^th March 2005 a further Direction was given requiring the parties through their representatives to comply with the Direction dated 22^nd February 2005 by 4.00 p.m Wednesday, 16^th March 2005.

On Thursday, 10^th March 2005 the Respondent’s Lawyers McCullough Robertson forwarded a letter dated 9^th March 2005 the last of paragraph which states:-

"We apologise for the oversight in not responding and assure you the relevant material will be submitted by 16 March 2005."

No material was received from McCullough Robertson and accordingly the Adjudication proceeded without the benefit of the documentation and information sought from the Respondent.

McCullough Robertson has not provided any explanation for its failure to honour its assurance.

On 16^th March 2005 Challenge Strata Management the representative of the Applicant sought and was granted an extension until the close of business on Friday, 18^th March 2005 to comply with the Directions dated 22^nd February 2005 and 8^th March 2005 respectively.

Challenge Strata Management complied with the Directions at approximately 10.03 a.m. on Friday, 18^th March 2005.

C. SUCCESS OR OTHERWISE OF EACH PARTY IN ATTAINING THE RELIEF SOUGHT

The Applicant was wholly successful in obtaining the relief it sought.

The Respondent was totally unsuccessful in obtaining any of the relief it sought in the Adjudication.


EXERCISE OF DISCRETION

There is a settled practice of the Courts that in the absence of special circumstances, a successful litigant should receive his costs and that it is necessary to show some grounds for exercising the discretion of refusing an order which would give them to him and that discretion must be judicially exercised. Donald Campbell & Co -v- Pollack (1927) A.C. 732 [H.L.] in particular Viscount Cave L.C. at 809, reaffirming the decision in Ritter -v- Godfrey (1920) 2 K.B. 47 [C.A.[. See also Chalet Holmes Pty Ltd -v- Kelly (1978) Qd. R. 389 [Connolly J.] at 393.

This practice is in my view a good yardstick by which one measures the accuracy of one’s reasoning for exercising the discretion as to costs.

It appears to me that the Respondent’s conduct solely precipitated the dispute which has led to this Specialist Adjudication. Such conduct one may say in retrospect was provocative at the very least.

The Respondent’s conduct throughout the Adjudication was nothing less than contemptuous. The Respondent not only ignored both Directions but its legal representatives proffered a written assurance which was dishonoured without explanation.

The meaning ascribed to the word "assure" by the Macquarie Dictionary includes:-

1. To declare earnestly to; inform or tell positively.
2. To make one sure or certain; convince, as by a promise or declaration.
3. To make (a future event) sure; ensure: This assures the success of our work.
4. To secure or confirm; render safe or stable: To assure a persons position.
5. To give confidence to; encourage.

I am of the view that the costs of the Adjudication should be paid by the Respondent.


QUANTIFICATION OF COSTS

Section 280(2) of the Act prescribes:-

"Unless the adjudicator otherwise orders, the applicant is responsible for the costs of the adjudication."

I consider the critical words of this provision to be:-

"the costs of the adjudication."

The word "adjudication" is not defined in the Act nor any of the Modules. Neither is that word defined in the Acts Interpretation Act 1954.

Similarly the word "costs" is not defined in the Act, the Modules or the Acts Interpretation Act 1954.

Rule 679 of the Uniform Civil Procedure Rules 1999 defines the expression "costs of the proceeding" as:-

""Costs of the proceeding" mean costs of all the issues in the proceeding and includes-

(a) costs ordered to be costs of the proceedings; and
(b) costs of complying with the necessary steps before starting the proceeding; and
(c) costs incurred before or after the start of the proceeding for successful or unsuccessful negotiations for settlement of the dispute."

The Uniform Civil Procedure Rules 1999 completely revised the Rules for the Courts of Queensland namely Supreme Court, District Court and Magistrates Court. Those Rules commenced on 1^st July 1999 and were part of a new regime introduced by the Civil Justice Reform Act 1998. Whilst those Rules do not apply to Adjudication pursuant to the provisions of the Body Corporate and Community Management Act 1997 they provide guidance as to possible meanings of words and phrases.

Consequently one cannot say that the content of Rule 679 of the Uniform Civil Procedure Rules to which I have referred is apposite in my deliberations regarding the express - "costs of the adjudication" in Section 280(2) of the Act.

In the Common Law Courts and Courts created by statute, whether superior or inferior, terms used in relation to orders for costs include "costs of the action", "costs of the trial" and "costs of and incidental to the action" are not uncommon. Phillips and Trebilco Bills of Costs with Precedents, 3^rd Ed. p79; Oliver, Law of Costs p3.

The expression "precedings" has now replaced the expression "action".

Isaacs ACJ and Starke J in The Minister for Home and Territories -v- Smith [1924] HCA 41; (1924) 35 C.L.R. 120 at 130 said:-

"It thus appears that the two phrases "costs of" and "costs of and incidental to," when used with respect to an arbitration of this nature, cover the same ground;"

In Smith’s case a disputed claim for compensation in respect of land compulsory acquired by the Commonwealth arose. By agreement the complaint was referred to the Arbitration of a Justice of the High Court. The agreement provided that "the costs of the arbitration and award shall be in the discretion of the arbitrator, who may direct to and by whom and in what manner those costs or any part thereof shall be paid, and may ........... direct a taxation thereof by the proper taxing officer of the said High Court."

The Current Commercial Arbitration Act 1990 S.34(1) prescribes:-

"Unless a contrary intention is expressed in the arbitration agreement, the costs of the arbitration (including the fees and expenses of the arbitrator or umpire) shall be in the discretion of the arbitrator or umpire, who may -

(a) direct to and by whom and in what manner the whole or any part of those costs shall be paid; and

(b) tax or settle the amount of costs to be so paid or any part of those costs; and

(c) award costs to be taxed or settled as between party and party or as between solicitor and client."

Section 34(2) of the Commercial Arbitration Act 1990 prescribes:-

"Any costs of the arbitration (other than the fees or expenses of the arbitrator or umpire) that are directed to be paid by an award shall, except so far as taxed or settled by the arbitrator or umpire, be taxable in the Court."

The Body Corporate and Community Management Act 1997 does not contain any provisions identical to or similar to those contained in the Commercial Arbitration Act 1990 or the Uniform Civil Procedure Rules 1999 concerning the quantification of costs. The Act is silent on the quantification of "the costs of the adjudication" and who is to perform such task.

Section 239 of the Act prescribes how an application for Adjudication is to be made to the Commissioner. If the Adjudication is to be conducted by a Specialist Adjudicator as required by the Act eg. Section 265 the Applicant must disclose in the Application certain information regarding the Adjudicator. I have been provided with a copy of that form. In the information sought from me by the Applicant I disclosed to the Applicant my hourly rate which was inadvertently shown as $485.00 inclusive of GST instead of $385.00 inclusive of GST. A copy of my letter was provided by the Applicant to the Commissioner with the Dispute Resolution Application.

The costs payable to me as the Adjudicator are in my view clearly costs of the Adjudication. Particulars of those costs are:-

Date Particulars Amount
$

09.02.05

Peruse letter from Acting Commissioner for Body Corporate and

and Community Management, scan brief - 5 minutes 29.00

10.02.05 Formal letter to parties - 5 minutes 29.00

14.02.05

Peruse formal letter from McCullough Robertson - 1 minute 6.00

21.02.05 Peruse and consider brief - 60 minutes 350.00


22.02.05 Settle Directions to the parties - 30 minutes 175.00

24.02.05 Inspect site - 45 minutes 262.00

08.03.05 Settle further Directions to the parties - 15 minutes 87.50

10.03.05 Peruse formal letter from McCullough Robertson - 1 minute 6.00

16.03.05 Peruse formal letter from Challenge Strata Management - 1 minute 6.00

Formal response to Challenge Strata Management - 1 minute 6.00

18.03.05

Peruse letter from Challenge Strata Management and six (6)

documents provided - 45 minutes 262.00

21.03.05 Settle Statement of Adjudicator’s Reasons for Decision and
to Orders - 22 pages - 8 hours claimed 2,800.00
23.03.05

11.04.05

Settle Statement of Adjudicator’s Reasons for Decision as to

Costs - 5 pages - 3 hours claimed 1,050.00

5,068.50

GST 506.85

TOTAL $ 5,575.35

As I have previously said the Act is absolutely silent on the quantification of the costs of the Adjudication.

The Act sets out in Sections 1, 2 and 3 the Primary Object of the Act, how the Primary Object is to be achieved and Secondary Objects respectively. Section 4(h) prescribes as one of the Secondary Objects - "To provide an efficient and effective dispute resolution process."

To me the use of the words - "the applicant is responsible for the costs of the adjudication" immediately after the words "Unless the adjudicator otherwise orders" signifies that unless the Adjudicator otherwise orders the Applicant is primarily responsible for and liable to pay the costs of the Adjudication.

It would be absurd if the Legislature intended the interpretation of Section 280(2) was that the Applicant be responsible for and liable to pay the Respondent’s costs of the Adjudication unless the Adjudicator otherwise ordered.

There is no power given to an Adjudicator to award costs of an Adjudication unless the Adjudication be a Specialist Adjudication. I respectfully adopt the reasoning of Adjudicator C.G. Young in Aussie Resort [2000] QBCCMCmr 33 (27 January 2000) in this regard subject to the provisions of the current Act and his examination of the cost free nature of the Dispute Resolution process.

As the Legislature has seen fit not to clearly articulate matters relating to "the costs of the Adjudication" I am of the view that the only costs which can be dealt with under that expression is the Adjudicator’s costs of adjudicating the dispute between the parties.



Consequently the Applicant’s submission that the Respondent pay its costs of and incidental to the Applicant’s costs of the Adjudication must fail.

ORDER 1. The Respondent is responsible for the costs of the Adjudication. 2. The costs of the Adjudication are fixed in the sum of $5,575.35. 3. The Respondent pay the costs of the Adjudication by 4.00 p.m. Friday, 29th April 2005.

Stephen J English
Chambers
13^th April 2005