Sanctuary Palms [2005] QBCCMCmr 226 (26 April 2005)

Last Updated: 5 July 2005

REFERENCE: 0009-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	7571
Name of Scheme:	Sanctuary Palms
Address of Scheme:	543 Gold Coast Highway, TUGUN Q 4224

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Michelle Miners, the owner of Lot 9

I hereby order that the application for an order by Michelle Miners, the owner of Lot 9 that the resolutions made on Motions 2 and 3 at the Extraordinary General Meeting adjourned to 5 October 2004 be overturned, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0009-2005

"Sanctuary Palms" CTS 7571

APPLICATION

This application is by Michelle Miners, the owner of Lot 9 (applicant) against the body corporate (respondent). The applicant is seeking an outcome that the resolutions made on Motions 2 and 3 at the Extraordinary General Meeting adjourned to 5 October 2004 (EGM) be overturned. The applicant also seeks an order that the body corporate consent to exclusive use by-laws and lodge a new community management statement (CMS) to give effect to these additional by-laws.

JURISDICTION

"Sanctuary Palms" Community Titles Scheme 7571 is a 29 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

Section 242 of the Act provides that an application declaring void a body corporate resolution at a general meeting must be made within three months of the meeting. While the applicant has not sought to void a resolution, she has sought to have a resolution overturned. The applicant has stated that the non-compliance with three month restriction was due to the fact that she was waiting instructions from her solicitor. In light of the subject matter of the dispute, I am of the view that the restriction specified in section 242 should not inhibit a determination of this application.

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)).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot and the committee. A submission was received from the committee and a number of lot owners. The applicant made a written reply to submissions under section 244 of the Act.

FACTS

The documentation provided by the applicant indicates that it was resolved to adopt by-laws, including by-laws allocating areas of exclusive use at the First Annual General Meeting dated 28 January 1987. A Notification of Change of By-Laws containing 24 by-laws which included a By-Law 21 relating to allocating exclusive use of car spaces, and a By-Law 22 relating to an allocation
of common property for exclusive use as courtyards was prepared. This Notification is typed as February 1987 and has been signed by an unidentified person under the then seal of the body corporate.

An examination of the Land Registry records, Department of Natural Resources and Mines indicates:

• A Change of By-Laws recorded on 5 April 1993 added a By-Law relating to costs for recovery of outstanding body corporate contributions.
• A Change of By-Laws recorded on 26 June 1995 added a By-Law concerning the provision of letting services.
• A New CMS recorded 17 February 1999 included 20 Schedule C By-Laws, none of which related to exclusive use allocations.
• A New CMS recorded 11 April 2000 included 20 Schedule C By-Laws, none of which related to exclusive use allocations.

The applicant has also provided a copy of the minutes of the EGM which indicates that:

• Motion 2 was submitted by the committee and sought body corporate approval to fix a special contribution for the purpose of a new CMS. The motion was defeated by ordinary resolution with 9 no votes and 5 yes votes. The minutes show that 8 lots abstained from voting on the Motion.
• Motion 3 was submitted by the committee and stated "that if the motion to enter the new CMS is not passed by resolution without dissent, and the Committee believes that the opposition to that resolution is unreasonable, that it be authorised to lodge an application with the Commissioner for Body Corporate and Community Management for an order that the votes be overturned and the motion passed". This motion required a resolution without dissent and was defeated with 8 no votes and 5 yes votes recorded.

The applicant also provided two by-laws relating to exclusive use. The first numbered 21 relates to a grant of exclusive use for car parking. The second relates to exclusive use of common property courtyard areas.

DETERMINATION

The votes on the disputed Motions at the EGM and the submissions made in response to the application indicate that lot owners are divided with respect to exclusive use allocation. The basis of the applicant’s claim is that the opposition to the proposed allocation of common property is unreasonable as lot owners are not fully aware of the circumstances and the benefits gained if the motions were passed. The applicant states that the allocation would protect the interests of all lot owners and that she is seeking to formalise a decision made at the First AGM.

"Sanctuary Palms" was originally registered as a building units plan and since the commencement of the Act in 1997 is now known as a building format plan of subdivision. The boundaries of lots are defined in the Land Title Act 1994 to basically be the centre of the wall, floor and ceiling bounding the lot. Therefore, the outside of the buildings and the land in this scheme is common property. Section 35 of the Act provides that owners own the common property as tenants in common which gives each owner a general proprietary right to use the common property.
Sections 94 and 152 of the Act provide that the body corporate administers, manages and controls the common property. Each owner’s right to use the common property is governed by the Act and the Standard Module and the body corporate by-laws. The basic rule governing an owner’s use of common property is contained in section 167 of the Act which provides, quote:

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.

As the body corporate administers, manages and controls the common property, a lot owner does not have a right to use common property for the owner’s own benefit without body corporate authorisation in accordance with the Act, or in accordance with a by-law for the scheme (for example, an exclusive use by-law).

The applicant is correct that lot owners do not a special right with respect to the courtyard areas as is evidenced by the absence of a proper exclusive use allocation. Therefore, a lot owner does not have a right to deny another lot owner or occupier access to or use of part of common property which may adjoin their lot and which may be seen as being the courtyard for the lot (section 167, Act). In addition, a lot owner or occupier does not have a right to park a motor vehicle on the common property except with body corporate consent under By-Law 3 of the scheme by-laws. This may, or may not be a problem for the owners who oppose the proposed allocation of exclusive use.

While some owners are definitely against the application, I would comment that it is misguided to assume that proper exclusive use allocations would automatically allow the installation of structures such as gates, sheds and other buildings. It should be recognised that a lot owner with an allocation of exclusive use may only make an improvement to the common property in accordance with the By-Law, or in the absence of terms in the By-Law, in accordance with section 113 of the Accommodation Module. While some of the opposing lot owners may not fully appreciate the circumstances surrounding the allocation of exclusive use, their opposition is the principal reason for the dismissal of this application.

The applicant seeks to have by-laws recorded in the CMS to entitle the owner for the time being of each lot to exclusive use of part of the common property for car parking purposes and for use as a courtyard. It is obvious that a significant number of lot owners are opposed to such an allocation. These owners cannot be compelled to accept a by-law which attaches to their lot and which allocates a specified part of the common property for their exclusive use. An allocation of exclusive use is a right conferred on a lot, and an owner cannot be obliged to accept that right. Section 171 of the Act provides that an exclusive use by-law that specifically identifies the common property to which it applies may only attach to a lot with the agreement of the lot owner. Without this agreement, the owner of a lot in this scheme cannot be forced to accept a right of exclusive use and therefore, the application to overturn Motion 3 must fail.

As the subject matter in Motion 2 is connected to Motion 3, I have dismissed the application that the resolution on this motion be overturned.

I have given consideration to the fact that a decision was made at the First AGM in 1987, and a set of by-laws were prepared. However, it is clear that in 1993 and 1995, the body corporate made changes to its by-laws without including provision for exclusive use. Since 1997, the body corporate has recorded two new CMS’s without including exclusive use by-laws. In my view, the continual absence of the lodgement of exclusive use by-laws demonstrates that the issue of the allocation of common property has not been on the body corporate’s agenda, even though it may have been envisaged at the time of the First AGM.

While I have dismissed this application, all lot owners should note that in the absence of a by-law, a lot owner does not have an exclusive right to use common property. Lot owners should also be aware that exclusive use may be implied because of the use a lot owner enjoys over common property. This implication could be drawn where for example, a lot owner makes an authorised improvement to the common property. Section 113 of the Accommodation Module provides that a lot owner may make an improvement to the common property for the benefit of the owner’s lot if authorised by the body corporate. While the body corporate can authorise an owner to make an improvement on common property for the benefit of the owner’s lot, there are limitations to the use of common property under only that authority. Where for example an owner wishes to install an air-conditioner by positioning it in a window where it overhangs common property, this is a valid use of the "improvement" provision as the encroachment onto common property is incidental, not of significant size, and is unlikely to interfere with another’s use of the common property. In contrast, body corporate authorisation under section 113 may not be sufficient authority where the effect of the improvement to common property is that part of the common property is alienated, is not insignificant and may or may not interfere with another’s use of the common property. In these circumstances, an "exclusive use" test may apply to require the owner to only hold that use under an exclusive use by-law. This test may also be necessary where it is claimed that a lot owner is using common property in a way which the owner makes of his or her lot.

Therefore, while some owners may not want exclusive use, the use they may be enjoying of common property may require the authorisation of the body corporate under such an exclusive use by-law. If an owner is using common property for a purpose to which I have referred, that owner may have to give serious consideration to whether a formal exclusive use allocation is necessary for that use to continue.

This being said, I would also suggest that those lot owners who do want exclusive use may choose to progress this matter further with respect to their specific intentions and submit appropriate motions to the body corporate. The dissenting lot owners should also be aware that an exclusive use by-law can include conditions and impose obligations. Section 122 of the Accommodation Module provides:

122 Conditions and obligations under exclusive use by-law--Act, s 173 [SM, s 123]
(1) If the owner of a lot included in the scheme to whom rights are in the first instance given under an exclusive use by-law agrees in writing, the by-law may impose conditions (which may include conditions requiring the owner to make a payment or periodic payments to the scheme’s body corporate or the owners of lots included in the scheme, or both).
(2) An exclusive use by-law is taken, in the absence of other specific provision in the by-law for maintenance and operating costs, to make the owner of the lot to whom exclusive use or other rights are given responsible for the maintenance of and operating costs for the part of the common property to which the exclusive use by-law applies.
Examples of operating cost for part of common property--
Cost of providing lighting to the part of common property.
(3) However, if the lot was created under a building format plan of subdivision, in the absence of other specific provision in the by-law, the owner of the lot is not responsible for--
(a) maintaining in good condition roofing membranes that--
(i) are on the part of the common property to which the by-law applies; and
(ii) provide protection for lots or common property; or
(b) maintaining in a structurally sound condition any of the following elements of scheme land that are part of a structure that is on the part of the common property to which the by-law applies and is not constructed by or for the lot owner--
(i) foundation structures;
(ii) roofing structures providing protection;
(iii) essential supporting framework, including load-bearing walls.

If the owners who wish to have a right of exclusive use make appropriate submissions to the body corporate and are subsequently refused the necessary consent, they then may choose to make application under the dispute resolution provisions of the Act if they have reason to support a claim that for example, the opposition was unreasonable.