Sailfish Point [2006] QBCCMCmr 322 (21 June 2006)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the body corporate for Sailfish Point

I hereby order that the applications by the body corporate for removal of the structures on lots 33, 34, 39, 40, 61, 63, and 65 are dismissed.

I further order that, to the extent these structures encroach on common property, the structures are deemed to have been authorised by special resolution as improvements to the common property for the benefit of the owners’ lots. The respective owners are to be responsible for maintenance of the structures and areas of common property in question and the body corporate must make a notation to this effect in the register of authorisations affecting the common property.

I further order that the deemed authorisation for each structure is subject to each respective owner taking all reasonable steps to ensure the structure meets any local council requirements as soon as possible. The body corporate must cooperate as reasonably required to assist in meeting council requirements. However, if the owner does not take all reasonable steps the committee may revoke the deemed authorisation.

I further declare that this deemed authorisation, based on acquiescence over several years, may be altered or revoked by subsequent special resolution of the body corporate at any time provided that the body corporate acts reasonably in making any such resolution.

I further order that, within two weeks, the body corporate must distribute to all owners a copy of one of these orders and the associated reasons for decision.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0729-2005

"Sailfish Point" CTS 20973

Sailfish Point Community Titles Scheme (Sailfish Point) is a 99 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). This module is commonly adopted by schemes designed predominantly for holiday letting purposes.

This order and reasons for decision are for seven related applications. These applications are all by the body corporate (applicant) against the owners of seven of the lots (respondents). It is alleged that the respondents have unauthorised improvements in the form of decks or pergolas that extend from their lots onto the common property. The various respondents are Craig Leishman and Michael Knowles of lot 33 as trustees,^[1] Jennifer Purdy of lot 65,^[2] Global Village Marketnet Pty Ltd ACN 050 672 681 of lot 34 as trustee,^[3] Oliver Sinclair of lot 39,^[4] James and Teri Lampos of lot 64,^[5] Richard and Wendy Grezl of lot 61,^[6] and Craig and Sarah Balloch of lot 40^[7].

Other owners have also provided submissions. All submissions are available for the parties to inspect upon request and it is unnecessary for me to summarise these submissions here. However, the main concerns expressed in submissions from other owners were:

Structures encroaching without necessary authorisation to use common property

At the time the disputed structures were built, Sailfish Point was governed by the Building Units and Group Titles Act 1980. There were limited options under this legislation for owners to obtain formal approval to make improvements to the common property. A provision allowing for the body corporate to authorise improvements to common property was not inserted until 1988 and only allowed improvements authorised by a resolution without dissent. Prior to that, provisions existed to allow leasing or the grant of exclusive use of common property but these were also by resolution without dissent.

In Platt v Ciriello,^[8] the Court of Appeal considered a dispute about the placing of signs on the facia and roof of the building and placing tables, chairs and rubbish bins on the common property in front of lots. The appellant’s basic contention was that the other owner was making "exclusive use" of the common property in the absence of a resolution without dissent authorising the exclusive use. McPherson JA and Ambrose J formed the majority, with Ambrose J making the point that in many cases an owner will not be able to make any use whatever of common property which does not, at the time he is using it, exclude other persons from making a similar use of that property.^[9] Examples of such "exclusive use" included the parking of a car in a common property car park or even an owner walking across common property and therefore excluding others from walking on that particular area at that particular time.

The majority took the view that no formal authorisation was necessary for the sort of "exclusive use" comprised by signage, chairs and rubbish bins. Rather, it was considered that this use was within owners’ general rights as owners of common property as tenants in common and was only prohibited if it was in a manner and for a purpose which unreasonably interfered with the use and enjoyment of other persons entitled to use the common property.^[10]

However, Pincus JA dissented from the majority view, having formed the opinion that the signage, chairs and rubbish bins amounted to an absolute exclusion of other tenants in common from those parts of the common property and that the expression of a specific power allowing the body corporate to grant exclusive use implies the body corporate cannot grant the same rights in a different way.^[11] Pincus JA concluded that it was perhaps unduly rigid that any conferral on an owner of exclusive use and enjoyment of common property be based on a resolution without dissent and suggested that it might be more convenient to allow relatively minor exclusive uses to be approved within the body corporate’s general power of control of the common property. However, he could not find anything in the legislation to justify the view that an owner could take part of the common property for their exclusive use simply on their own say-so.^[12]

On the majority view in Platt v. Ciriello, it would be arguable that no body corporate approval was necessary for the relatively small encroachments of 1.05 to 3.4 metres onto areas of common property that were not generally used by other owners. If this use of common property was only prohibited if it was in a manner and for a purpose which unreasonably interfered with the use and enjoyment of other persons entitled to use the common property then I would find that no approval for these structures was necessary. This is based on submissions that the decks and pergolas are located on "dead" areas of the common property that are otherwise not in general use by other owners. In particular, it is difficult to accept that these structures unreasonably interfere with other persons entitled to use the common property given that other owners seemed to be unaware the structures even encroached on common property and no other owner took formal steps to require removal of the structures for a number of years. In fact, the present applications to require removal of the structures only arose after a person slipped on one of the structures and the body corporate was subject to a public liability claim.

However, the building of a deck or pergola is different from the placing of chairs, tables and signage on common property. All these structures do take "exclusive use" of the relevant area of the common property. However, a deck or pergola is a structure of a much more "permanent" or "semi-permanent" nature. The decks and pergolas in question go beyond what could be described as a reasonable use of common property and essentially allow the respondents to use small areas of common property on a semi-permanent basis in the same way they would use their own lots. These circumstances appear distinguishable from the more temporary improvements considered in Platt v. Ciriello. I think the better view in the present circumstances is that formal approval for this type of use of common property would have required the body corporate to grant these owners a lease of the relevant area of common property or exclusive use of that area (Building Units and Group Titles Act 22, 30(7)). In fact, Ambrose J specifically indicated that his determination in Platt v Ciriello may have been different if the "exclusive use" of the common property in that case was the sort of exclusive use which a proprietor makes of his own lot.^[13]

There is some evidence that at least some of the structures were erected with the approval of the committee of the time. However, there is no evidence that satisfies me the body corporate passed resolutions without dissent approving the structures and I therefore conclude that the structures were not formally approved according to the Building Units and Group Titles Act 1980.

Under the present Act there are much more flexible options for persons to gain authorisation to make improvements to the common property for the benefit of their lot. Each of these options allows the owner to take "exclusive use" of an area of the common property at least for some period of time. The critical difference for the various options is in the comparative ease with which the authorisation can be obtained and, equally, the comparative ease with which any authorisation given can be revoked.

Some very limited types of improvements can be approved by committee resolution. These are minor improvements that do not detract from the appearance of the scheme and are not likely to promote a breach of occupier duties (Accommodation Module, 113(1)). The types of improvements contemplated by this provision would typically include the placing of chairs on the common property in front of a lot or the installation of a small flower garden. Alternatively, the committee can authorise improvements worth up to $250 to an area of common property granted to the exclusive use of an owner pursuant to an exclusive use by-law (Accommodation Module, 123(3)). Approvals given by the committee can generally be revoked by subsequent committee resolution or overturned by an ordinary resolution of owners in general meeting.

Other approvals to allow improvements to and use of common property require approval by owners in general meeting. These include approvals by:

Any of these approvals could only be amended or revoked by a resolution of the same type (Accommodation Module, 56). Although, if an owner has been granted exclusive use of an area of common property under an exclusive use by-law then this grant cannot be revoked at all unless the lot owner agrees in writing (Act, 171(2)(b)).

As discussed above, the present Act differs from the Building Units and Group Titles Act 1980 in that it has much more flexible arrangements for the authorisation of improvements to, and use of, the common property for the benefit of an individual lot. Given the high degree of specification of different types of authorisation for use of common property, it is no longer arguable that owners can make significant improvements to the common property without an authorisation from the body corporate. Specifically, I am of the view that the prohibition on use of the common property in a way that interferes unreasonably with the use or enjoyment of the scheme by another occupier does not imply any converse right of owners to make improvements to common property without specific authorisation merely because they do not interfere unreasonably with others.^[14]

In the present case, the encroachments in the form of decks and pergolas for the benefit of the respondents’ lots are not types of improvement to common property that could properly have been authorised by committee resolution. I therefore conclude that none of the respondents obtained proper authorisation for their improvements in accordance with the Body Corporate and Community Management Act 1997.

I have concluded that the owners of the respondents’ lots in the early 1990’s did not have any proper authorisation from the body corporate to justify encroachment of decks or pergolas onto the common property in front of their respective lots.

However, the present applications were not lodged until late in 2005. An adjudicator is required to make an order that is just and equitable in the circumstances to resolve a dispute (Act, 276). In making an order it is relevant to consider the fact that no formal steps were taken to require alteration or removal of the structures until a number of years after the structures had been built.

I accept the submissions on behalf of both parties that there were difficulties in establishing exactly where the lot boundaries were. In the absence of specific authorisation to use common property, the onus was on the respective owners to ensure that they did not build so as to encroach on common property. By failing to obtain their own survey these owners were taking a risk that they may encroach on common property. The body corporate could legitimately have acted at the time to require them to alter or remove the structures.
However, other owners would have had the opportunity to make their own assessment of the structures once built. The onus was then on these other owners to take appropriate action if they were concerned that the structures encroached on common property or caused some form of nuisance or interference with other lots.

The decks and pergolas in question were in place for a number of years without any formal complaint being made to this office. In the circumstances, I do not consider it just and equitable to suddenly require the respondents to alter or remove the structures. Rather, I consider that other owners have acquiesced to the structures. That is, they have agreed to allow the structures to remain by failing to take appropriate action to have the structures removed.

In short, I am of the view that the decks and pergolas have been deemed to have been authorised by other owners allowing those structures to encroach onto common property for a number of years and I will make an order to that effect. In making this order it is appropriate that the deemed authorisation should correspond with one of the types of authorisation allowable under the present legislation. As discussed above, a special resolution is needed for any improvements to common property that may detract from the appearance of the scheme, may be likely to promote a breach of occupier duties, or amount to more than a minor improvement (Accommodation Module, 113(2)). Alternatively, for a semi-permanent improvement like a deck, owners may prefer to have authorisation in the form of an exclusive use by-law. This would ensure that the body corporate could not subsequently revoke that authorisation without the owner’s consent.

I consider it just and equitable to order that the deemed authorisation take effect as though passed by special resolution. This is on the basis that acquiescence by other owners can best be characterised as a consent to the structures in their existing form irrespective of whether or not they encroached on common property. This is a more natural characterisation than deeming that owners were aware the structures were encroaching but acquiesced to a grant of any encroached area to the exclusive use of the relevant owners.

The respective owners are to be responsible for maintenance of the structures and areas of common property in question and the body corporate must make a notation to this effect in the register of authorisations affecting the common property (Accommodation Module, 145).

Even if the body corporate has or is deemed to have given its authorisation, this does not mean that the body corporate is never able to revoke its authorisation to make the improvements (Accommodation Module, 58(2)). Owners may wish to consider a special resolution in general meeting to revoke the authorisation and require the respondents to remove the structures. But the body corporate must act reasonably in considering and passing its resolutions (Act, 94(2)).

For example, it may be reasonable for owners to vote to alter the authorisation so that the size of the decks must be reduced if it transpired that the body corporate wanted to allow other owners to install decks but the local council refused to allow any further decks because the maximum allowable footprint of buildings on the scheme was being exceeded. However, it would seem unreasonable for owners to require alterations on the mere hypothetical possibility that this may occur in the future. Similarly, it would be unreasonable to revoke approval based on exaggerated concerns about public liability unsupported by objective evidence.

Also, owners generally have acquiesced to the structures over a long period of time. If there is no sudden compelling reason to require removal of the structures it would seem unreasonable to require removal unless the body corporate agreed on payment of fair compensation to the respondents to reflect the cost of building the structures or the affect on the value of the lot. The appropriate compensation could be determined by agreement with the respondents or by evidence from a valuer.

Any structures do, of course, have to satisfy any applicable local council requirements in addition to satisfying requirements imposed by legislation governing the operations of the body corporate.

I have no jurisdiction to consider local council issues. However, it would be a reasonable expectation and appropriate condition of a body corporate approval that any approved structures must meet with local council requirements.

Submissions indicate that some of the structures meet with all local council requirements. However, it appears that other structures require some rectification work or at least require confirmation of body corporate approval before they can be certified as meeting local council requirements. This order will provide any necessary confirmation of body corporate approval. Owners who wish to retain their improvements but have not yet had the structures certified as meeting all local council requirements should therefore take all reasonable steps to ensure their structures meet with council requirements as soon as possible. Obviously, the respondents will need to meet any costs associated with obtaining these approvals.

In the circumstances, I will order that the deemed approval of the structures is subject to each respective owner taking all reasonable steps to ensure the structure meets any local council requirements as soon as possible. Cooperation by the body corporate may be necessary in this regard and I will order cooperation as reasonably required. However, I will also order that the committee may revoke the deemed authorisation for any structure for which the owner does not take all reasonable steps to ensure the structure meets council requirements.

A number of owners have referred to an accident that occurred on one of the unapproved decks and have expressed concern that owners could be exposed to insurance liabilities if another accident occurred on one of these structures. In particular, it was submitted that the insurer may be unwilling to accept liability for accidents occurring on unapproved structures.

I have made enquiries with the body corporate’s insurer and consider these concerns to be exaggerated. There is little evidence that the structures are inherently unsafe. In fact, some submissions indicate that a person could be just as likely to injure themselves by falling on the sloping sections of common property that have now been covered by these decks and pergolas.

Further, the insurer has made representations to the effect that, under most circumstances, the absence of council approval would not interfere with an indemnity under the liability section of the policy unless it could be demonstrated that the subject of the non-approval issue in some way contributed to the accident. Similarly, no specific concern was raised about the absence of any body corporate approval. In any event, the deemed authorisation pursuant to this order addresses any concerns in that regard and requires the respondents to take all reasonable steps to meet with local council approvals.

Finally, the insurer did indicate that lack of council approval may make it difficult to replace the structures if they were damaged. However, this would affect the respondents’ directly rather than owners generally.

Another concern expressed by owners is that allowing the respondents to retain their decks or pergolas sets a precedent under which the body corporate will need to allow any owner to construct their own improvements without proper approvals. The body corporate must consider any application by an owner to build a deck or pergola on its individual merits.

The deemed authorisation of encroaching decks and pergolas built approximately fifteen years ago prior to a re-survey of lot boundaries does not oblige the body corporate to approve any subsequent encroaching structures. In fact, the risk taken by owners who build encroaching structures without authorisation was demonstrated in an application lodged in March 2005.^[15] In that application the adjudicator required an owner to alter a deck built in January 2000 so that it no longer encroached on common property. I note that in that instance the body corporate was not deemed to have acquiesced to the deck because the committee took steps within a reasonable time to engage surveyors and legal representatives to determine the extent of any encroachment and any legal options open to the body corporate. This is different from the deemed authorisation of the structures the subject of the present applicants. I have found that these other structures were built from 1991 to 1993 with action on behalf of the body corporate to investigate the extent of encroachments and legal options only commencing in June 2000.^[16]

Particularly if it was made clear to owners and prospective purchasers that the respondents’ structures are a special case that were allowed to remain because no objection was made for a number of years, it would be difficult for any other owner to argue that other owners are bound to approve any future encroaching improvements.

Some owners were concerned that the respondents are taking more than their fair share of the council allowable footprint for buildings on the scheme. This may mean that owners who subsequently seek extensions are refused local council permission on this basis.

This seems to be a largely hypothetical question as there is no evidence that satisfies me that other owners are planning extensions to their own lots that would be refused by the local council on this basis. Further, if this situation does happen to eventuate at some later time, owners could review the situation and may wish to pass resolutions requiring some of the respondents to reduce the size of their decks or pergolas.

Some owners have also expressed concern that the respondents are stealing areas of the body corporate land without paying increased levies.

I do not see any merit in these submissions. The legislation specifically provides for the body corporate to authorise improvements to the common property for the benefit of an owner’s lot (Accommodation Module, 113). The submissions do not satisfy me that the structures deprive other owners of areas of common property that were of significant use to those persons. Further, by encroaching on those areas of common property the individual owners are actually relieving the body corporate of maintenance expenses by taking over maintenance responsibilities for those areas.

Some submissions were to the effect that the structures are unsightly or otherwise detrimental to other lots. There were submissions that the structures contravene the by-laws and a provision of the legislation dealing with nuisance.

I do not see any merit in these submissions. The legislation specifically contemplates that some improvements will detract from the appearance of the scheme or may be likely to promote a breach of occupier duties (Accommodation Module, 113(2)). The real test is the general requirement that the improvement does not amount to a nuisance or hazard or interfere unreasonably with the use or enjoyment of other occupiers (Act, 167). The evidence does not satisfy me that the structures interfere with the enjoyment of lots to an unreasonable extent. I note in particular that the structures have been in place for a long time without neighbouring owners requiring any alterations on this basis. However, I would encourage owners to discuss any concerns and seek the authorisation of the body corporate for any changes that may improve matters in this respect.

^[1] Application 0728-2005.
^[2] Application 0729-2005.
^[3] Application 0730-2005.
^[4] Application 0731-2005.
^[5] Application 0732-2005.
^[6] Application 0733-2005.
^[7] Application 0734-2005.
^[8] Platt v Ciriello [1997] QCA 33, Pincus JA, McPherson JA, Ambrose J, 14 March 1997.
^[9] ibid, at page 32.
^[10] ibid, at page 38-39.
^[11] Platt v Ciriello, supra, at pages 3, 10.
^[12] Platt v Ciriello, supra, at page 13.
^[13] Platt v Ciriello, supra, at page 38.
^[14] Refer to the dissenting judgment of Pincus JA in Platt v Ciriello, supra. This dissent was preferred on the above point by the New South Wales Supreme Court in Lin v The Owners - Strata Plan No. 50276 [2004] NSWSC 88, Gzell J, 12 March 2004. Note also that section 123(2) of the Act provides that owners with the benefit of exclusive use cannot make improvements to those areas without specific authorisation from the body corporate. It would appear strange if there were stricter requirements for making improvements to your own exclusive use area than for making improvements areas of common property that are technically open for use by all occupiers.
^[15] Sailfish Point, Application 0150-2005, P Dowling, 16 June 2005.
^[16] An essential element for acquiescence is knowledge of the essential facts from which their legal rights arise, Hourigan v Trustees Executors and Agency Co Ltd [1934] HCA 25; (1934) 51 CLR 619 at 651. What is required is such knowledge as to make it the persons duty, if they intend to seek redress, to make enquiry and to ascertain the circumstances of the case, Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2005] QSC 233 at paragraph 662. I have concluded that the body corporate was aware of the disputed structures when they were built in the early 1990’s and should have been aware at that time of a right to seek removal or alteration of the structures if they encroached on common property. However, the body corporate did not commence formal steps to identify the extent of any encroachment or obtain legal advice until June 2000.

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

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sailfish Point [2006] QBCCMCmr 322 (21 June 2006)