Jadran Court [2005] QBCCMCmr 724 (21 December 2005)

Last Updated: 16 January 2006

REFERENCE: 0757-2005

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13870
Name of Scheme:	Jadran Court
Address of Scheme:	54 Frank Street LABRADOR QLD 4215

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

J Stonham, the Ownerof lot 2

I hereby order that the application for an Interim Order to entitle Unit 2’s owner to the full rights of an owner at the next AGM as he has been made persona non gratia at consecutive AGM’s over a rejected account Is dismissed

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0757-2005

"Jadran Court" CTS 13870

THE SCHEME

Jadran Court, Community Titles Scheme 13870, is a subdivision of 11 lots recorded under a building format plan of subdivision (formerly a building format plan) and is regulated by the Standard Regulation Module.

APPLICATION

The applicant, Mr Joe Stonham has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) seeking the following outcomes:

1. An Interim Order is sought to entitle Unit 2’s owner to the full rights of an owner at the next AGM as he has been made persona non gratia at consecutive AGM’s over a rejected account, which is subject to and explained in the following outcome being sought.

2. To expand on Order 500-2003 to direct that the Committee is responsible for the original pool shed and boundary fences including the fence between the EUA and the non EUA grounds. The committee had demolished part of the defining fence which was a wall to the pool shed while it has replaced all boundary fences except those enclosing unit 2.

3. That the body corporate records be audited because the chairman and his wife have been the biggest expenses over consecutive accounting periods and have refused to explaintheir personal income from the body corporate or to identify the body corporate monies paid to their family and friends and to appropriate unauthorised expenses assigned to unit 2 for the period that the pool was illegally occupied.

4. To overturn body corporate motions denying unit 2 approval make necessary submissions to the GCCC to ensure existing structures comply with GCCC requirements and to have unit 1 owners liable for similar responsibilities for noncomplying details of their holdings within the laundry and what is used as the unit 1 garage, but shown as motel car parking on GCCC plans and to demolish the noncomplying carport erected on common grounds in front of the building and used as a motel car cover and other abuses of common property.

5. That the logistics, laundry, cleaning and administrative and staff activities for the Holiday flats at 56 Frank St. be banned from the grounds of Jadran Court and that the current office be relocated from adjacent to and constantly inpinging on unit 2’s exclusive use area, as it’s traffic is a safety problem and the constant office activities impinge unreasonably on unit 2’s quiet enjoyment of the premises by denying reasonable peace, comfort and privacy.

BACKGROUND

Jadran Court, Community Titles Scheme 13870, consists of 11 lots and is regulated by the Standard Regulation Module. The complex also includes 4 motel units and the motel office which, it appears, may have also once been a motel unit.

It would appear that originally, the developer of the complex resided in lot 2 from where he conducted a letting business for the other units and motel rooms. Lot 2 is the only lot which is entitled to an exclusive use area which is approximately one quarter of the total site area of 2,398 squares.

In the mid to late 1970’s, a brick B-B-Q, besser brick wall and swimming pool were built on the exclusive use area. The applicant has provided a copy of an application form dated 28 April 1977 in which the original developer of the scheme, M. Versic, sought permission to build a swimming pool on land owned by him and described as Lot 1 on RP 135509.

It is also claimed that unit 2 applied to the GCCC to have ground floor parking spaces converted to additional motel units and subsequently, the owner of lot 2 also owned 4 motel units as well as car parking spaces for up to 6 cars.

The applicant submits that in 2001 a three space carport was erected and used as a parking area, wholly within the lot 2 Exclusive Use Area (EUA) and this building was approved on 16 August 2001.

At an unknown time, a small shed was erected on the Western side of the lot 2 building and another small shed was erected on the Southern side of the lot 2 building. It would appear that both sheds were constructed within the EUA.

In September 2002, unit 1 and the motel business were sold by Mr. Coleman to a Mr & Mrs Humphrey. Adjacent holiday flats, also owned by Mr. Coleman, are leased to the Humphreys who sub-let these flats with the motel units as part of the one business. The land on which the holiday flats are built includes a pool which is made available to the Humphreys’ guests.

From September 2002, the body corporate committee consisted of Mr & Mrs Humphrey, Mrs Forsyth and the owner of lot 2 who did not subsequently renominate.

Following earlier disputes regarding the status of the relevant common property area, it was determined in a previous adjudication by this Office (500-2003) that lot 2 is entitled to exclusive use of the relevant area in accordance with a by-law created pursuant to a unanimous resolution dated 14 May 1974.

However, it is claimed that during 2003 Mr Humphrey closed the pool in the exclusive use area and without the consent of lot 2’s owner, Mr Humphrey cut the grass, engaged pool specialists to restore the pool water to acceptable standards and made an area of approximately 10 square metres available to all guests as well as the pool.

The applicant claims that there is limited evidence that Mr Humphrey’s actions have been authorised and efforts to obtain minutes were resisted. It is claimed that on 14 March 2005 Archers Body Corporate forwarded a set of minutes of the AGM held on 6 November 2004 although the applicant claims that these minutes are false and misleading.

The issues raised by the applicant can be summarised as follows:

• The Chairman of the body corporate, Mr Humphrey, has commandeered the swimming pool located on unit 2’s exclusive use area and made it available to all residents;
• The Chairman of the body corporate has charged unit 2 for personal unsolicited labour and commercial expenditure on the pool and exclusive use area;
• The body corporate has refused unit 2 vehicles access to the EUA including the carport;
• body corporate costs have increased dramatically in recent years;
• The Chairman of the body corporate has demolished structures within the EUA including the boundary fence;
• The body corporate refused a request for approval to permit unit 2 to meet GCCC requirements to undertake rectification in regard to unit 2, and structures in the unit 2 EUA including the pool shed and carport.

The applicant also requests that the body corporate records should be audited because the current Chairman has incurred unusually large expenses and refused to provide details as to how his family and friends have benefited financially. Questions have also been raised regarding the following charges to the body corporate:

• reasonableness of monies paid to the "Secretary";
• reasonableness of $2,000 paid for painting of railings; and
• pool expenses including electricity costs of $196 and pump replacement cost of $461.50 when these costs had been billed to lot 2.

Unit 2 has been charged $821.10 for the Chairman’s labour, pool contractors and lawn mowing. In addition, an invoice for a new pool pump was also forwarded to unit 2 seeking $461.50. Additional charges relating to this claim, court costs and administrative costs, have been added and even though a cheque for $3,673.50 (the exact value of the unit 2 entitlement levy) was paid by the applicant, the amount of the cheque was not applied for the purpose for which it was paid. As a result, the owners of unit 2 are prevented from voting and speaking at meetings.

SUBMISSIONS

Three submissions were received from other lot owners, summarised as follows:

• the carport referred to in the application was not approved by the body corporate and such approval is a perquisite to obtaining approval from the GCCC;
• the motel unit previously used by Mr Coleman as an office was originally approved for residential accommodation;
• pool maintenance was undertaken to ensure compliance with GCCC requirements regarding safety and hygiene when the applicant was overseas and uncontactable;
• Mr Stoneham was refused the right to address the AGM of the Body Corporate as he owes a debt to the Body Corporate;
• The EUA surrounding the pool has been left in a derelict condition involving a decaying fence, a carport in a poor state of repair, long grass, an abandoned car and rubbish.

A very lengthy submission was received from Mr & Mrs Humphrey in which they advised:

• In 2003 the applicant indicated that he wished to place 2 demountable buildings on the EUA which led the body corporate to inspect the area and realise that there were numerous non-complying structures in the area;
• The developer did not own the EUA (this may be a misinterpretation of the titles office records);
• The "3 bay" carport should not have been built without body corporate approval;
• The "shed at the back of unit 2 was not approved by the body corporate or the GCCC;
• Unit 2 is "illegal";
• An "illegal" power line runs to the hot water system in unit 2;
• The pool on 56 Frank Street belongs to Mr Coleman and is leased by the Humphreys;
• Mr & Mrs Humphrey were asked to serve as chairman and secretary of the body corporate;
• They are entitled to access the front door of the kitchen, office and laundry;
• As at November 2003, they were not aware that the pool was located on the EUA and were awaiting the results of a departmental adjudication on this matter;
• They arranged for mowing of grass in the EUA and for the pool to be closed owing to health and safety concerns and possible liability of the body corporate for any accidents or diseases;
• The applicant was refused speaking/ voting rights owing to unpaid body corporate accounts and "speaking out of line";
• Archers Body Corporate Management were responsible for sending out minutes for the meeting held on 4 September 2004 and all other unit owners received signed minutes for that meeting;
• An audit had been ordered at the 21/1/05 meeting & they were not aware that the applicant requested an audit at the AGM or on the agenda for the meeting;
• Detailed accounts for their body corporate work have been prepared and disclosed;
• Accounts for work performed are presented to the body corporate manager and the body corporate manager has provided reimbursement ;
• Agenda items submitted by the applicant were received after the closing date;
• Maintenance was required in order to reduce the risk of injury to persons entering the exclusive use area for which the body corporate could be liable;
• The owner of unit 2 has not been banned from meetings but was "unfinancial" and therefore could not vote;
• The fence referred to by the applicant was infested with white ants and therefore required demolition;
• The majority of owners are entitled to refuse to retrospectively grant permission for unapproved structures on the EUA;
• the grass in the EUA is often not mowed for 8 weeks at a time and an old Volvo motor vehicle standing on blocks is danger to children who play in the area;
• The cupboard containing the hot water system was treated for termites and is structurally sound;
• The occupants and owners of lots in the complex are concerned about the effect of the run down EUA on the value of their lots.
• The pool pump is now a body corporate asset as the applicant refused to pay for replacement of the pump.

JURISDICTION

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)).

DETERMINATION

The Applicant seeks an Interim Order to accord him the right to vote future Annual General Meetings.

In addition, the applicant seeks the following Final Orders:

2. To declare that the Committee is responsible for the original pool shed and boundary fences including the fence between the EUA and the non EUA grounds as the committee had demolished part of the defining fence which was a wall to the pool shed while it has replaced all boundary fences except those enclosing unit 2.

3. That the body corporate records be audited.

4. To overturn body corporate motions denying unit 2 approval make necessary submissions to the GCCC to ensure existing structures comply with GCCC requirements and to have unit 1 owners liable for similar responsibilities for noncomplying structures on common property.

5. That the laundry, cleaning and administrative activities for the Holiday flats at 56 Frank St. be banned from the grounds of Jadran Court and that the current office be relocated from adjacent to and constantly inpinging on unit 2’s exclusive use area, as it impinges unreasonably on unit 2’s quiet enjoyment of the premises.

INTERIM ORDER

Right to Vote

In relation to the denial of voting rights I advise as follows:
Subsection 49A (2) of the Standard Regulation Module titled "Displacement or disentitlement of right to vote" provides as follows:

A person does not have the right to exercise a vote for a particular lot on a motion (other than a motion for which a resolution without dissent is required), or for choosing a member of the committee, if the owner of the lot owes a body corporate debt at the time of the meeting.

The Dictionary located at the back of the Standard Regulation Module defines
a body corporate debt owed by a lot owner to the body corporate in the following terms-

(a) a contribution or instalment of a contribution;
(b) a penalty for not paying a contribution or instalment of a contribution by the date for payment;
(c) another amount associated with the ownership of a lot.
Examples of another amount for paragraph (c)--
• an annual payment for parking under an exclusive use by-law

• an amount owing to the body corporate for lawn mowing services arranged by the body corporate on behalf of the lot owner

In the circumstances under consideration I note that on 9 March 2004 the Gold Coast City Council (GCCC) issued a notice to Jadran Court regarding the failure of maintain the swimming pool and non-compliance with pool fencing laws.

It would appear that the applicant was overseas and/ or uncontactable at that time so the Chairman arranged for mowing of grass in the EUA and for work to be done on the pool owing to health and safety concerns and possible liability of the body corporate for any accidents or diseases.

In this regard, I draw the applicant’s attention to Section 121 of the Standard Regulation Module,
titled Body corporate may carry out work required of owners and occupiers which provides as follows:
(1) This section applies if the owner or occupier of a lot included in the scheme does not carry out work that the owner or occupier has an obligation to carry out under--
(a) a provision of the Act or this regulation, including a provision requiring an owner or occupier to maintain a lot included in the scheme; or
(b) a notice given under another Act or a Commonwealth Act; or
(c) the community management statement, including the by-laws; or
(d) an adjudicator’s order; or
(e) the order of a court.
(2) The body corporate may carry out the work, and may recover the reasonable cost of carrying out work from the owner of the lot as a debt.

Conclusion

Having regard to the various submissions I am satisfied that in the circumstances the owner of lot 2 failed to maintain the EUA and swimming pool and the body corporate was entitled to undertake remedial work and recover the cost from the applicant. As this amount is a body corporate debt
as defined, the applicant is in debt to the body corporate and disqualified from voting until the outstanding debt is paid.

INTERIM ORDER

Accordingly, the application for an Interim Order to entitle Unit 2’s owner to the full rights of an owner at the next AGM as he has been made persona non gratia at consecutive AGM’s over a rejected account Is dismissed.


PRELIMINARY OBSERVATIONS REGARDING FINAL ORDERS SOUGHT

I would like to take this opportunity to make some observations which may be of assistance to the parties should they wish to make additional submissions regarding the final orders sought.

Replacement of fence

The second issue for consideration is responsibility for the fence dividing the EUA from other common property. Firstly it is relevant to note that the by-law which grants the exclusive use to the respondent is silent on the question of responsibility for maintenance. In this situation the provisions of section 123 of the standard module are relevant to determine responsibility for maintenance of the exclusive use area, and any improvements included therein. Section 123 provides -

Conditions and obligations under exclusive use by-law--
(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...

The provisions of this section are relevant to the circumstances of this application. The owner of lot 2 is responsible for the maintenance and operating costs of the exclusive use area and all improvements in the exclusive use area. For example, the costs of maintaining the pool and fences which divide the EUA from other common property.

Having regard to the submissions and photographs of the EUA fence, I am inclined to the view that the body corporate was entitled to remove it and the body corporate is not responsible for its replacement. The owner of unit 2 enjoys the benefit of a substantial exclusive use area. The fence separating the EUA from other common property benefits unit 2 only, and having regard to section 123 above, is the responsibility of the applicant.

Audit

At this point in time I note that despite the increased body corporate levies, no other lot owners have raised concerns in this regard. I also note that the buildings and grounds have been neglected over a number of years necessitating a considerable amount of remedial work and therefore realistic levies.

Further, the lot owners are able to make a decision at each AGM as to whether the accounts are to be audited if they have concerns as to whether particular items of expenditure have been properly incurred.

Unapproved Structures on Common Property

The applicant seeks a final order that the body corporate approve the necessary applications to the GCCC to ensure existing structures including the pool shed and carport are approved by the GCCC.

From a perusal of photographs it would seem obvious to me that the shed at the back of unit 2A could not be approved as it is very crudely constructed and further, from the photographs, I note a significant amount of tracking, indicating that it has significant termite damage.

However, I believe that the additional unit accommodation and the 3 bay carport may be structurally sound and capable of GCCC approval, subject to any remedial action required in order to make the structures compliant with relevant building regulations .

Similarly, I believe that the carport used by unit 1, and the cupboard built under the stairwell could be capable of GCCC approval subject to any remedial action required in order to make the structures compliant with relevant building regulations .

While these structures may have been built without the permission of the body corporate, the question arises whether the body corporate is entitled to require their removal several years after construction. Under section 94 of the Act, the body corporate is required to act reasonably in carrying out its functions and an adjudicator is required to make an order that is just and equitable to resolve a dispute under section 276. Having regard to the circumstances of this case it could be considered unreasonable and inequitable for the body corporate to require removal of the additional unit accommodation built in the former garage of unit 2 and the 3 bay carport. In particular, there are questions of equity that arise in this dispute including the principle of acquiescence. The principle of acquiescence operates to deny a person the right to later object to something that has in fact been in place for some time, giving rise to an inference of assent. It is arguable that it would be unreasonable to now require removal of the structures referred to above.
Should the Gold Coast City Council subsequently require modifications or removal of these structures, then it would not be unreasonable at that time, for the body corporate to require the respondent to undertake modifications or removal as necessary.

Conduct of Motel and Holiday Flats Office

As I have outlined above, the body corporate is required to act reasonably in carrying out its functions and an adjudicator is required to make an order that is just and equitable to resolve a dispute under section 276. Having regard to the circumstances of this case, it could be considered unreasonable and inequitable to require the Humphreys to move their operations elsewhere after carrying on their business from the same premises for a number of years. I would be pleased to receive further comments from the parties on this matter.