Sailfish Point [2005] QBCCMCmr 325 (16 June 2005)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Russell Ellis, the owner of Lot 32

I hereby order that the application for an order by Russell Ellis, the owner of Lot 32 seeking the following outcome under the Body Corporate and Community Management Act 1997 (Act), quote:

That The Body Corporate Commissioner order that the Sailfish Point Body Corporate has not acted legally in instructing Hynes Lawyers to prepare a recommendation to all owners in respect to Motion 17 on the Annual General Meeting Agenda and accordingly that appropriate action be taken by The Body Corporate Commissioner.

A Final order that this application be supported on such further or other grounds, namely that the voting on Motion 17, at the Annual General Meeting on 25 February, 2005, was prejudiced by the letter dated 07/02/2005 from Hynes Lawyers to all owners, and further supported by the history of the complex and by the fact that the structure on lot 32 has been in existence for more than five years, that it was built with the knowledge and tacit consent of the body corporate and accordingly that the Body Corporate Commissioner order The Sailfish Point Body Corporate to approve "the improvement on common property" on the basis of the facts presented in this application and that it would be inequitable not to do so.

is dismissed.

I further order that within three months of the date of this order, Russell Ellis, the owner of Lot 32 must remove from the common property for the scheme that part of the wooden deck adjacent to the northern boundary of Lot 32 that is constructed on the common property.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0150-2005

"Sailfish Point" CTS 20973

APPLICATION

This application is by Russell Ellis, the owner of Lot 32 (applicant) against the body corporate (respondent) seeking the following outcome under the Body Corporate and Community Management Act 1997 (Act), quote:

JURISDICTION

"Sailfish Point" Community Titles Scheme 20973 is a 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 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:

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 (excluding the applicant) 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.

DETERMINATION

The applicant had also sought an interim order to prevent the body corporate from taking action to remove the improvement on common property and Lot 32. On 24 March 2005, I made the following Interim Order, quote:

I hereby order that pending a final determination of this application, the Body Corporate for Sailfish Point Community Titles Scheme 20973 (including through its Committee) shall not proceed with, implement or otherwise act upon any resolution or take any steps to require the dismantling of, or removal of the timber decking constructed on Lot 32 and on the common property adjoining the northern boundary of Lot 32.

Although it is evident that the committee has resolved to proceed against the owners of other lots in the scheme who have made additions or improvements, there is no suggestion that the body corporate has to date initiated similar action against the applicant. The current action by the committee is based on a view that these lot owners have contravened a provision of the body corporate by-laws.

While there are a number of lots affected by improvements or additions which do not appear to have been approved by the body corporate, this order only relates to the wooden deck constructed by the applicant which extends onto the common property adjacent to the northern boundary of Lot 32.

The deck was constructed in January 2000 and based on the report from Marendy and Associates, Consulting Surveyors dated April 2003, extends onto the common property by 1.05 metres. The records held for this scheme by the Department of Natural Resources and Mines indicate that at the time of construction, the body corporate only had a general "Appearance of lot" by-law. This by-law did not apply to the construction of the deck. Therefore, if the deck had been erected wholly within Lot 32, it would not have been in contravention of a body corporate by-law. However, the construction of a part of the deck on the common property is an improvement to common property, and as the deck is for the benefit of the lot owner, the owner could only make that improvement in accordance with the applicable legislative provision. At the time of construction, section 114 of the Body Corporate and Community Management (Standard Module) Regulation 1997 was applicable. This provision is similar to section 113 of the Accommodation Module which currently applies to this scheme and which states, quote:

(1) The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot.

(2) The improvement must be authorised by special resolution of the body corporate unless--

(b) the improvement does not detract from the appearance of any lot included in, or common property for, the scheme; and

(c) the body corporate is satisfied that use and enjoyment of the authorised improvement is not likely to promote a breach of the owner’s duties as an occupier.

(3) An authorisation may be given under this section on conditions the body corporate considers appropriate.

(b) must maintain the improvement made under the authority in good condition, unless excused by the body corporate.

The applicant had not sought body corporate approval in accordance with section 114 of the Standard Module before the deck was constructed. The applicant submitted that he had relied on the advice of the then resident manager and some committee members, and that he was not aware of the requirement for body corporate approval until on or about August 2001. It was at this time that the committee, or some of its members seemed to have been investigating the issues relating to the improvements or additions made to lots and common property.

The applicant has stated that in June 2000, the committee started to investigate the problems relating to lot boundaries and the various additions or improvements made by lot owners. He submits that legal advice was sought and that during 2001 some committee members did attempt to address the problems relating to these additions or improvements. The applicant and the body corporate have detailed other actions which have been taken since 2002. In 2002, the body corporate contracted a boundary survey and engaged Coastwide Home Inspection Services Pty Ltd (Coastwide) to inspect the scheme to establish encroachments onto the common property and the non-original structures. Legal advice was sought in January 2003. In February 2003, a letter from the body corporate manager addressed to all committee members related to an instruction to take action about the unauthorised improvements to the common property. A letter was also distributed to all lot owners at this time which included legal advice, letters from insurers and the Coastwide report. In April 2003, a survey was conducted of the waterfront properties and all affected owners were provided with a copy of the report as applied to their property. The body corporate submitted that discussions also took place with the Gold Coast City Council during 2003, and that in September 2003, the body corporate manager was instructed to proceed with action against the lot owners with encroachments and unauthorised structures. The body corporate also submits that it was subsequently discovered that the manager did not proceed as instructed and after some time, the body corporate instructed Hynes Lawyers (Hynes) in this matter and that contravention notices were then issued to lot owners.

The body corporate has submitted that the committee was not prepared to decide on the structures until such time as it was in possession with proper information as to the boundaries of lots and the position of improvements or additions with respect to the boundaries. The information relative to Lot 32 was available in the form of survey information in April 2003. The body corporate then gave the applicant a "Notice of Continuing Contravention of a Body Corporate By-Law" in July 2003 citing a breach of By-Law 9(b) relating to erecting a structure on common property. The applicant sought body corporate approval at the Annual General Meeting dated 25 March 2004. The relevant motion was incorrectly ruled out of order by the person chairing the meeting, and the applicant unsuccessfully sought approval at the Annual General Meeting dated 25 February 2005.

"Sailfish Point" was established by the registration of Group Titles Plan 1763. This Plan was subsequently re-subdivided to create additional lots. Lot 32 was created by the registration of the Group Titles Plan of Resubdivision 1797. With the commencement of the Act in July 1997, a group titles plan is taken to be a standard format plan. The boundaries of lots in a standard format plan of subdivision is specified in the Land Title Act 1994 to effectively mean that the land is defined by references to marks on the ground such as survey pegs (section 48B). Generally, a lot owner owns the land on which the building or unit is located and the owner’s lot is defined by survey markings in a similar fashion to commonly accepted private land ownership.

However, the way an owner in a community titles scheme deals with his or her lot and the adjacent common property is regulated by the Act.

Section 169 of the Act provides that the body corporate may make by-laws regulating the use and enjoyment of lots and the common property. The body corporate’s initial by-laws were recorded by the Registrar of Titles on 5 February 1988. It was not until the Registrar recorded additional by-law changes on 29 July 1991 that the body corporate had a specific by-law relating to the appearance of buildings on the lots in the scheme. The existing by-law titled "Alteration to Lots" appears to have been part of the new community management statement recorded in 2000. This by-law relates to the style and colour of buildings on lots and to making an alteration or addition to the external part of a lot in the scheme. Generally, the by-law requires that such alterations can only be made with the written consent of the committee. In addition, By-Law 9 relates to "Damage to Common Property" and signals that a structure can only be erected on the common property with body corporate approval in accordance with the Act.

The Act and the Accommodation Module provide a number of provisions regulating the use of a lot and improvements to common property by a lot owner for the benefit of an owner’s lot. I have referred to section 113 of the Accommodation Module relating to improvements to common property by a lot owner.

Section 167 of the Act can also be applicable and provides the basic rule governing an occupier’s use of their lot and the common property and provides, quote:

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--

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

The first claim by the applicant is that the body corporate did not act legally in instructing Hynes to prepare a recommendation to all owners with respect to Motion 17 on the agenda of the Annual General Meeting dated 25 February 2005.

The applicant contends that the actions of the committee were prejudicial to the outcome of the motion, denying him from presenting his position in the best light as suggested by the Adjudicator in the Order on ref. No. 0256-2004. The applicant states that rather than provide explanatory material to owners with the notice of the AGM, the committee instructed Hynes to distribute a letter to all owners. The applicant claims that the instruction to Hynes was not properly authorised and that the contents of the letter influenced the outcome of the motion. He adds that he could not rebut the recommendation in the letter as he was denied access to the body corporate roll by the body corporate manager due to privacy laws.

The committee has relied on a decision made at its meeting dated 8 November 2004 to provide an explanatory note as authority to instruct Hynes. The committee submit that the letter from Hynes outlined the committee’s concerns, did not misstate the facts and did not prejudice the vote.

The applicant responded to this submission to the effect that the body corporate has not shown that the committee authorised Hynes to write to owners, and that the explanatory note should have been on the meeting agenda. He did respond to the Hynes letter by letter dated 10 February 2005 but only had limited access to owners.

Section 40C of the Accommodation Module makes provision for explanatory material accompanying the voting paper for a general meeting. Neither this section, nor any other provision of the Act or the Accommodation Module restricts giving explanatory material to owners by a method other than in the notice of the general meeting. While the applicant may consider that the decision made on Ref. No. 0256-2004 required all explanatory material regarding the motion to be included with the notice of the Annual General Meeting, I do not consider that this is the effect of this decision. In my view, the Adjudicator required the motion and the accompanying explanation from the motion’s submitter (the applicant) to be included on the agenda to protect the right of that person to have the matter put before lot owners.

It is correct that the committee have not explained the authority to engage Hynes. I consider that the decision at the meeting dated 8 November 2004 is not authority and that the committee should have specifically resolved to engage Hynes for this purpose. However, in my view any order in relation to this point is inconsequential to the resolution of this dispute.

The Hynes letter contained a number of statements which the applicant considers confused and scared owners, and prejudiced the outcome of the motion. However, the applicant has not provided any basis for this claim, other commenting on the veracity of the statements in the letter. While the applicant has personal views on these statements, he has not shown that other lot owners were sufficiently influenced to change how they voted on Motion 17. Certainly, there has not been any submission from lot owners to this effect even though all lot owners were given an opportunity to respond to the application. The application contains sufficient detail about the dispute for owners to form a view regarding the merits of the Hynes letter and the merits of the applicant’s arguments. In addition, it is clear that the issue of encroachments onto the common property have been the subject of body corporate consideration and correspondence for a number of years, so the issues relating to this dispute should have been well known to many lot owners. In the absence of corroboration from a significant number of owners who voted on Motion 17, I cannot accept the applicant’s argument.

Section 113 of the Accommodation Module requires that the improvement must be consented to by the body corporate by special resolution, and a sizeable number of lot owners have opposed the motion. I consider that in the absence of any extenuating factors, the decision of the body corporate at the AGM must be accepted.

The applicant has also sought deemed body corporate consent on the basis "that the structure on lot 32 has been in existence for more than five years, that it was built with the knowledge and tacit consent of the body corporate". In my view, the basis of this argument is that the body corporate has unreasonably refused to consent to the improvement to the common property. There are questions of equity that arise in resolving some disputes and one of those equitable principles arises here, namely that of acquiescence. The principle of acquiescence is essentially to deny a person the right to later object to something that has in fact been in place for some time without any action or complaint having been taken by them, giving rise to an inference of assent. The question is whether the body corporate has acquiesced to the disputed structure.

The deck was constructed in January 2000. In June 2000, the committee started to investigate issues relating to improvements on or adjacent to lots in the scheme. Around this time, the body corporate also developed and established by-laws relating to alterations to lots and to common property. Subsequently, the body corporate took steps through the engagement of qualified persons to determine issues such as the boundaries of lots, the condition of the improvements and the legal options open to the body corporate. The body corporate has submitted that it could not decide how to deal with the encroachments until it had received survey information about the location of the additions or improvements, i.e. whether an improvement was wholly on a lot or partly on the common property. The body corporate received this information in April 2003.

In my view, the essential element for acquiescence in relation to the disputed structure is the time taken from when the body corporate should reasonably have known that the structure was in breach of a by-law or the legislation. The deck is substantially built on land owned by the applicant and given the final determination as to its exact location; it does not extend onto common property to a significant extent. Therefore, without a proper determination, the body corporate could not reasonably claim that the deck was on common property. While there may have been earlier reports and earlier requests for approval from the applicant, I consider that the body corporate had this knowledge when it received the survey information in April 2003. At this time, the committee could make a reasonable decision about the application of the by-law or the Act to the deck. It was at this time that it was clear that the deck was on common property and that body corporate approval was required under section 113 of the Accommodation Module. As the body corporate initiated processes in July 2003 and September 2003 seeking action against owners with encroachments and unauthorised structures, I do not consider that it acquiesced to the deck from the time that it had notice that the deck was on common property.

There have been delays in determining the matters associated with the disputed structure. However, the delays are understandable and reasonable given that there are many unapproved additions on lots and on the common property and the body corporate started the process without knowledge of the boundaries between some lots and the common property. In addition, the applicant did not seek to compel a body corporate decision until the Annual General Meeting held in 2004, and it is unfortunate that the matter was not determined at this time. However, I believe that the applicant was not entitled to simply do nothing before the body corporate sought removal of the structure. He constructed the deck and it would seem that he was uncertain as to whether the structure was on common property. He had an obligation to ensure that the deck was built on his property and in accordance with not only the body corporate legislation, but in compliance with other regulations such as those of the local authority. He did not have a right to extend the deck onto the common property which is owned by all lot owners as tenants in common (section 35, Act) without their approval. He did not seek this approval until the 2004 AGM. While the body corporate may not have had an applicable by-law at the time of construction, the applicant nevertheless had a duty to comply with the relevant legislative requirement which at that time was section 114 of the Standard Module. In the circumstances, I do not consider that the time delay in the body corporate taking action is unreasonable.

In my opinion, the actions of the body corporate clearly indicate that it has reasonably sought to manage this issue in accordance with its legislative obligation and that it has not acquiesced to the disputed structure. Further, there is no evidence that the body corporate has discriminated against any particular lot owner. I consider that the body corporate has consistently and reasonably sought the removal of the disputed structure from the common property. For the reason that this matter has been ongoing for some time, and that if the applicant refuses to remove that part of the structure on the common property as a consequence of the decision made at the Annual General Meeting, it could result in a further application to this office from the body corporate, I have also ordered that the applicant must remove that part of the structure situated on the common property. I have not ordered that the applicant must reinstate the common property to its previous condition as there has been five years since the construction, and it is a matter for the body corporate to determine how this part of the common property is to be maintained in accordance with its legislative obligation.

While I have not made a determination on the issue relating to exclusive use, it should be noted that the making of an improvement to common property for the benefit of an owner’s lot such as the construction of a deck could give rise to exclusive use. The general approach to this issue was considered by Adjudicator CG Young in the matter of the Mandalay Port Douglas community titles scheme, Ref.No. 0824-2003 dated 28 July 2004 where he stated, quote:

Each owner’s right to use the common property is governed by the legislation (the Act and the relevant regulations, here the Accommodation Module regulations) and the body corporate by-laws. The basic rule governing an owner’s use of common property is contained in section 167 which prohibits an owner from using, or permitting another from using, their lot or the common property in such a way that it interferes unreasonably with another’s use or enjoyment of their lot or the common property.

On the authority of a special resolution under section 113 of the Accommodation Module an owner can effect an improvement on common property for the benefit of the owner’s lot, however there are limits to the use of common property under such 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.

Alternatively, where for example an owner wishes to use part of the common property by extending their lot building by constructing a carport or an additional room over common property, then this action is beyond a mere improvement and is in effect an alienation of the relevant area of common property for personal use, not being incidental, not insignificant and may or may not interfere with another’s use of the common property.

This difference was addressed in the matter of Platt v Ciriello (1997) QCA 33 (14 March 1997), where the Court of Appeal found that the primary test for determining an owner’s use of common property is that of "unreasonable interference" (see earlier reference to section 167 of the Act). That is, an owner may exercise his general proprietary right to use common property so long as it does not interfere unreasonably with another’s use of their lot or the common property. This interference may not just be physical, it may, for example, include a consideration of the effect the use has on the appearance and aesthetics of the scheme generally. However, even where the use may not be causing an unreasonable interference, an "exclusive use" test may apply in the circumstances to require the owner to only hold that use under an exclusive use by-law. That use was characterised by Ambrose J as being "the sort of exclusive use which a proprietor makes of his lot". Pincus JA gave as an example of a unilateral claim by an owner amounting to exclusive use, which therefore required an exclusive use by-law, an annexe from the owner’s lot being built out onto common property.

While this is only a brief overview of the case, it is sufficient to show that the construction of the deck, even if it does not interfere unreasonably with another’s use of the relevant area of common property (though I do not say this) or does not adversely effect the appearance or aesthetics of the scheme, is such a use of common property that requires the authority of an exclusive use by-law. That is, the use of the area of common property by the respondent owners of Lot 10 by building a deck adjoining the lot verandah, is a use that comes within the sort of use that a proprietor makes of his lot and therefore requires an exclusive use by-law. Like an annexe to an owner’s lot building, a deck similarly gives the owner exclusive use of a permanent or semi permanent nature, to the owner.

Number of Scheme:	20973
Name of Scheme:	Sailfish Point
Address of Scheme:	300 Cottesloe Drive MERMAID WATERS QLD 4218

(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.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sailfish Point [2005] QBCCMCmr 325 (16 June 2005)