Sanctuary Palms [2006] QBCCMCmr 449 (14 August 2006)

Last Updated: 19 December 2006

REFERENCE: 0360-2006

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(s) of lot 9.

I hereby order that the application for an order seeking to overturn the resolution made on Motion 11 at the Annual General Meeting on 24 April 2006 be overturned, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0360-2006

"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 resolution made on Motions 11 at the Annual General Meeting on 24 April 2006 be overturned. The relevant defeated motion was:

"Moved that the Body Corporate consent to record a new community management statement which amends the current community management statement by including a new by-law which grants exclusive use of the courtyard and car space (identified on the plan attached to this agenda) to the owner of lot 9 as follows:

The owner of lot 9 shall be entitled to the exclusive use of the courtyard area adjoining lot 9 and the car space, both of which are identified on the attached plan, and shall be responsible for keeping such areas in a clean and tidy state at all times.

And that the body corporate enter into and sign under seal all necessary documentation to record the new community management statement. The owner of Unit 9 to meet the cost of execution of this motion".

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 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)).

Background

The applicant’s desire for the allocation of exclusive use areas has been the subject of a previous adjudication in matter 0009-2005. That application was also lodged by the applicant, however it sought to establish exclusive use areas on behalf of all owners. I quote the facts from that determination as follows.

"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."

In the above determination Adjudicator Dowling gave consideration to the fact that a decision was made at the first annual general meeting in 1987 to allocate exclusive use areas. However, he noted that the Body Corporate had made changes to the by-laws in both 1993 and 1995 without including the exclusive use areas. He noted that since 1997, a further two community management statements had been registered without the exclusive use areas. On that basis he formed the view that the issue of allocation of common property had not been an issue for the Body Corporate, even though it may have been envisaged originally.

Adjudicator Dowling dismissed the above application, primarily on the basis that the consent of the beneficial lot owner is required, in order for exclusive use to attach to a lot. He therefore advised that owners who wished to have a right of exclusive use could make submissions to the Body Corporate and, if they failed, could refer the refusal to an adjudicator if they could establish the basis of the opposition was unreasonable. This application appears to be lodged on the basis of that determination.

Grounds

The applicant notes that the explanatory note attached to Motion 11, stated that:

"The owner of lot 9 wishes to formalise the exclusive use of the courtyard area and car space pertaining to lot 9, both of which were allocated as exclusive use areas of lot 9 when the original community management statement was recorded in 1987, but which have since been omitted".

She notes that motion 11 was defeated, with 3 votes in favour, 4 votes against and 3 abstentions.

She states that the opposition to the motion is unreasonable, particularly as the owner of lot 9 is prepared to pay for the cost of execution of the motion.

She refers to the decision made by Adjudicator Dowling and the fact that the application was made in relation to all exclusive possible use areas. She outlines that this was proposed on a two step basis, firstly with a special levy to raise $6,000 to pay for the process and secondly in relation to all exclusive use areas. The first step was defeated 9 to 5 and the second 8 to 5.

In support of this application, she quotes Adjudicator Dowling’s decision as follows:

"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".

and

"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".

Submissions

A total of three submissions were received, all opposing the application. The following is a compilation of some of the reasons for objecting to the application:

•	The matter has been taken to the Body Corporate a total of 5 times now and it the cost of this keeps mounting;
•	The applicant has already erected a timber deck on the area in question, without Body Corporate approval;
•	She has also enclosed the car park, without approval;
•	There is no evidence of threat to any of the areas exclusively used by residents;
•	Approval would allow owners to erect add-ons or gates and damage the appearance of the complex;
•	The areas in the complex are designated the way they are because of issues such as maintenance to plumbing and buildings, easy access re fire etc;
•	Owners purchased their units knowing about the arrangement.

Clarification

I note that a number of the reasons for objecting to the application may be based on a lack of awareness of power of the Body Corporate to regulate exclusive use areas. For the benefit of those who have not read Adjudicator Dowling’s previous decision, I repeat an observation he made within that decision:

"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."

I further note that the Act makes provision for the issue of maintenance of utility infrastructure (such as plumbing) under Section 21 which specifies the conditions that must exist for utility infrastructure to be included as common property. Section 21(1) provides:

"Common property for a community titles scheme includes all utility infrastructure forming part of scheme land, except utility infrastructure--

(a) solely related to supplying utility services to a lot; and
(b) within the boundaries of the lot (according to the way the boundaries of the lot are defined in the plan of subdivision under which the lot is created); and
(c) located other than within a boundary structure for the lot."

Determination

Of the 29 lots included in the scheme, only three appear to belong to "original" owners within the plan. The transfers of title for these lots were registered on 20 and 22 January 1987. The annual general meeting where it appears it was resolved to adopt by-laws (which included areas of exclusive use) are dated 28 January 1987. None of the original owners appears to have been in attendance.

Therefore in the absence of any submissions to the contrary, it seems the three "original" owners still living in the complex, bought their lots before areas of exclusive use were considered for registration. It appears they took no part in the purported decision to allocate areas of exclusive use, and one of these original owners has made a submission objecting to the allocation of exclusive use areas.

The next closest registration of transfer of title for any current resident, appears to be 1994. Therefore, at least 26 of the 29 lot owners have bought their lots with the understanding that exclusive use areas were not part of the plan. This belief should have been reinforced by the usual titles office searches conducted by prospective purchasers, when no by-laws referring to exclusive use were revealed. They were entitled to rely upon the results of those searches and were content to settle on that basis.

As a change to a community management statement, Section 62(3)(a) of the Act provides that the allocation of exclusive use areas must be by consent in the form of a resolution without dissent.

Section 105 of the Act provides:

Counting of votes for resolution without dissent

(1) This section applies if a motion is to be decided by resolution without dissent at a general meeting of the body corporate for a community titles scheme.

(2) One vote only may be exercised for each lot included in the scheme, whether personally, by proxy or in writing.

(3) The motion is passed by resolution without dissent only if no vote is counted against the motion.

At the most recent general meeting, 3 votes were recorded in favour of the motion, 4 were recorded against the motion and there were 3 abstentions from the pool of 10 lot owners represented (and 29 lots in all).

Of the 4 votes against the motion, an examination of the minutes suggests that 2 of the dissenting owners have made submissions and 2 have not. The maker of the other submission, did not vote at the meeting.

Section 276(3) of the Act provides that an adjudicator may make an order mentioned in schedule 5. Example 10 of the schedule includes the following guidance as to orders an adjudicator may make:

"If satisfied a motion (other than a motion for reinstatement of scheme land or termination or amalgamation of the scheme) considered by a general meeting of the body corporate and requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable--an order giving effect to the motion as proposed, or a variation of the motion as proposed".

In previous matters where adjudicators have intervened in the outcome of a resolution without dissent, the margin by which the motion has failed has been relatively small. I have seen examples of 20% dissent (out of 5 votes) through to 10.5% dissent (out of 19 votes). In those cases, the adjudicator has examined the reasonableness of the basis for each dissenting vote. This might involve a site visit or an examination of the history of the issue in dispute.

Also in these previous matters, the percentages of owners who have voted on the issue have been between 86% and 100%. Another way of looking at these specific examples is that the expressed support for the proposal has ranged between 77% and 80% of all owners.

In this matter, I have 40% dissent of those at the meeting and 57% dissent of those expressing a view. Only 24% of owners have voted on the issue. Ultimately, I have only 10.3% of owners expressing their support for the proposal.

The primary objective of the Body Corporate and Community Management Act 1997 is expressed under Section 2 of the Act:

"The primary object of this Act is to provide for flexible and contemporary communally based arrangements for the use of freehold land, having regard to the secondary objects".

The following are some of the Secondary objects expressed in Section 4:

(a) To balance the rights of individuals with the responsibility for self management as an inherent aspect of community titles schemes;

and

(d) To ensure that bodies corporate for community titles schemes have control of the common property and the body corporate assets they are responsible for managing on behalf of owners of lots in the scheme.

While I am of the view that some of the reasons for objecting to the exclusive use allocation are based on a lack of awareness of the powers of the Body Corporate, I note that a lack of reasonableness does not compel me to overturn the dissenting votes. Section 276(3) states that I may make an order giving effect to the motion, not that I must.

At this point, I do not have sufficient belief that the wishes of even the majority of owners would be met by making the orders sought. The applicant is not seeking to have a "right" balanced against the responsibility for self management, but rather seeks to impose her opinion as to the best course of action on fellow lot owners.

Therefore, having appropriate regard to:

•	the purpose of the Act, which is to encourage self governance; and
•	the absence of a convincing majority in favour of the allocation of exclusive use,

I am not inclined to make an order which goes so far in depriving the scheme of the opportunity to make communally based determinations in regard to their self management.

Accordingly, I will dismiss the application.