Glades Easthill North [2006] QBCCMCmr 457 (21 August 2006)

Last Updated: 19 December 2006

REFERENCE: 0280-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	32506
Name of Scheme:	Glades Easthill North
Address of Scheme:	Easthill Drive ROBINA QLD 4226

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

Christopher & Donna Rose, the Owner(s) of lot 11

I hereby order that the application for an orders that: • The decision of the Body Corporate committee at its meeting of 23 March 2006 that the body corporate manager forward correspondence to Sunland Group accepting an offer of $36,500 be set aside; and • The Body Corporate committee be directed that the action it is taking to redefine open space common property as exclusive use common property is a matter that can only be given effect by resolution of the Body Corporate, and that any such resolution needs to be a resolution without dissent; is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0280-2006

"Glades Easthill North" CTS 32506

APPLICATION

This application is Christopher and Donna Rose, the owners of Lot 11 (the applicants) against the body corporate (respondent). The applicant is seeking an outcome that:

•	The decision of the Body Corporate committee at its meeting of 23 March 2006 that the body corporate manager forward correspondence to Sunland Group accepting an offer of $36,500 be set aside;
•	The Body Corporate committee be directed that the action it is taking to redefine open space common property as exclusive use common property is a matter that can only be given effect by resolution of the Body Corporate, and that any such resolution needs to be a resolution without dissent.

JURISDICTION

"Glades Easthill North" Community Titles Scheme 32506 is a 80 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

Glades Easthill North ("North") and its "sister" community titles scheme Glades Easthill South ("South"), abut Mudgereega Creek. Within "North" approximately 23 lots have direct access to creek frontage and within "South" arguably 4 to 5 lots have direct access to the creek. Within both schemes, the lots have an area designated as exclusive use between the building and the creek. Further, a strip of "open space" common property lies between the exclusive use area and the creek.

An analysis of the community management statements currently registered to these plans, suggest that the approximate average (combined building footprint and exclusive use) areas for the "North" and "South" schemes are 425 meters squared and 690 meters squared respectively. In other words the square meters that owners in "South" have access to, is considerably larger than the "North" owners.

It appears that this difference in size has in this case evidenced itself in the relevant "South" exclusive use fence lines, running closer to the water line than the "North" exclusive use areas.

This had been a little difficult to fathom without a physical inspection, but I was lucky enough to find the scheme on Google Earth^[1] which has avoided the need for my physical attendance. While it appears the parts of the sister schemes were still under construction at the time, the fence line along the creek for "South" is quite visible. Shadowing (most apparent) approximately in front of lots 14 and 15 also appears to confirm the applicants’ observation that the land in front of "North" slopes away quite steeply to the creek. Unfortunately, no fences appear to have been constructed for "North" at the time of this image was captured.

I gather that the developer of the scheme had originally had an obligation to landscape the land situated between the exclusive use fence line and the creek. It appears that this obligation has not been met and that rather than carry out this obligation, the developer has offered to either move the fence closer to the creek or pay the Body Corporate an amount that is thought to be adequate to carry out its relocation. The developer has suggested that within that, the exclusive use areas of the lots could be extended to capture the larger area and then lot owners would be responsible for the extended areas.

At this point, the committee has resolved to accept Sunland’s compensation payment and is investigating how the area should be planted.

RELEVANT DOCUMENTS

The following documents assist in informing the background:

Date	Document Initiator	Quote of Content
3-2-06	Committee Meeting Minutes	Correspondence from Sunland Group – Various Issues (09/01/06) Correspondence received from Sunland Group addressed a number of matters including general landscaping, security and building issues. Representatives of the committee have had a meeting with Sunland Group to address outstanding matters. It was noted that Sunland, with provisos, may extend the boundary fences of creek frontage houses from Lot 1 to 23 in keeping with similar lots in Glades Hill South.
8-2-06	Sunland letter to Body Corporate	Batter to the Creek This area is difficult for Sunland as everyone wants something different and the Stage 5B area has never been completed as Sunland has never received clear concise instruction. Sunland would be willing to provide the Body Corporate $35,600 for this area. This sum is approximately sufficient to cover movement of the fence closer to the river bank, refer attached quote. We believe turfing/landscaping etc of the amended exclusive use area would be the responsibility of the individual property owner who believes from this increased exclusive use area.
Late 2-06	Body Corporate newsletter	Sunland have also made an offer regarding the creek frontage, with a proposal to extend the fence perimeters to the creek, as was originally promised and still reflected in the CMS. Owners in the affected lots will be asked to comment on their interest for this to occur and subject to majority agreement, arrangements will be made for those owners to undertake landscaping prior to the fencing being erected. We will separately be in touch with those owners.
23-3-06	Committee Meeting Minutes	Boundary fences – Lots 1 to 23 Committee noted that Sunland had offered to extend the boundary fence lines of Lots 1 to 23 down to the creek boundary, as was originally intended, and as constructed in the Glades Easthill South creek frontage homes. Alternatively Sunland would pay the Body Corporate the equivalent value of the works, being $35,600.00. Resolved that the body corporate manager forward correspondence to Sunland Group accepting the offer of $35,600.00. Committee discussed the impact of extending the fence lines in relation to the Common property and exclusive use areas of the Common Property. Resolved further that Treasure and Associates, Surveyors, be consulted to confirm the lot boundaries of Lots 1-23 and further confirm their correctness in the community management statement.
31-3-06	Body Corporate letter to Sunland	Batter to the Creek In relation to the Mudgeeraba Creek frontage, we would like to accept your offer of $35,600 and would ask you to provide this cheque as soon as possible. It is agreed that, with receipt of this money, the committee will be able to investigate options on behalf of individual homes owners.
10-4-06	Body Corporate letter to Sunland	At the committee meting held on the 23rd March, 2006 the committee noted that you had offered to extend the boundary fence lines of Lots 1 to 23 down to the creek boundary, as was originally intended, and as constructed in the Glades Easthill South creek frontage homes. Alternatively you would pay the Body Corporate the equivalent value of the works, being $35,600.00. The committee resolved at the meeting to accept your offer of $35,600.00.

Date	Document Initiator	Quote of Content
4-5-06	Committee Meeting Minutes	Meeting with Sunland Representative It was noted that the body corporate manager tabled correspondence from and to Sunland on this matter, including compensation from Sunland of $36,500.00 for works not originally carried out in Body Corporate common property is front of lots 1-23. Resolved that the following motion be submitted to annual general meeting: "That the Body Corporate endorses the acceptance of the compensation from Sunland of $35,500.00 by the committee and further, that the Body Corporate indemnifies Sunland and Thakral from any further claims in relation to compensation for un-completed works to common property in front of lots 1-23. Boundary Fences Lots 1-23/Landscaping Works It was noted that the Chairperson advised that expert advise was required on the best lawn and plants for the area. Resolved that this matter be deferred until the next committee meeting.
22-5-06	Submission from Sunland’s lawyers to BCCM re another dispute	... contribute the amount of $35,600.00 to the Body Corporate for additional works to the common property, in particular, the work concerning the movement of the fence by the riverbank...
13-7-06	Annual General Meeting Minutes	Indemnity Resolved that the Body Corporate endorses the acceptance of the compensation from Sunland of $35,500.00 by the committee and further, that the Body Corporate indemnifies Sunland and Thakral from any further claims in relation to compensation for un-completed works to common property in front of lots 1-23. VOTE: YES: 26 NO:6 ABSTAIN:1

GROUNDS

The applicants advise that given all of the above, three possible scenarios are operating:

1. the location of the current fence is in accordance with the CMS;
2. the location of the current fence is not in accordance with the CMS;
3. the location of the fence does not reflect the promises made by sales staff.

They present arguments as to why they believe the fence is currently located correctly. This includes recalling sales staff representations and asserting that 23 solicitors acting for 23 purchasers could not all have "got it wrong".

Based on the conclusion that the fence is currently correctly located, they assert that:

...... it is clear that the committee has decided, and acted, to give effect to its own scenarios and redefine open space common property as exclusive use common property. This is fully confirmed by the committee’s decision to seek payment from Sunland of $35,600 to fund the proposed location of the boundary fencing.

We note – with particular concern – that the committee is pursuing this payment from Sunland before confirming the correctness (or likely incorrectness) of its hypothesis in relation to the location of the boundary fencing vis-à-vis the CMS.

It is also clear that the committee has decided that affected lot owners will be responsible for the landscaping and ongoing maintenance of the proposed extended exclusive use area. This is effectively confirmed in Sunland’s letter of 8 February 2006.

The applicants state that while the committee may pursue its proposal, the way they are doing it is in breach of the legislation.

They argue that there are ramifications of the decision that the committee has not considered:

•	changes to lot entitlements and therefore levies;
•	remuneration to building manager under the care taking agreement;
•	ongoing maintenance of large trees on the areas in question.

In conclusion they state that the committee is in breach of Section 24(1)(b) in that they have made a decision changing the rights, privileges or obligations of the owners of lots and that they have also made a decision on a matter which must be decided at a general meeting without dissent (Section 24(1)(d)).

SUBMISSIONS

Six submissions were received in total, including one from the committee.

Three of the submissions support the applicant. Some observe that 6 of the 7 committee members would stand to receive extended exclusive use areas under their understanding of events. One observes that historically there has been significant flooding in this area, which would likely destroy any fence erected. Some express concern as to the increased landscaping obligations placed on the beneficiaries and express concern as to the different styles of gardens that might be created. Others express regret that a common use pathway would not be erected for the benefit of all residents. Some suggest that the cost to either individual owners or the Body Corporate of undertaking the landscaping might exceed the amount of compensation accepted. One suggests that the acceptance of the compensation means the committee has already decided on how the money will be spent, without taking the matter to the Body Corporate as a whole with alternatives as required under legislation. Finally, one suggests that taking the matter to the Body Corporate for ratification is an attempt to circumvent the adjudicator’s decision.

Two of the submissions from private owners are in support of the notion that the exclusive use areas should be extended further towards the water line. One observes that they cannot see any evidence that the fence line will be relocated, and that they only see evidence that the committee has resolved to accept compensation.

The committee’s submission includes:

•	The history of the matter is not debated;
•	The Body Corporate committee are of the opinion that it is in the best interest of the Body Corporate to accept this contribution subject to the annual general meeting approving the Body Corporate indemnifying Sunland Group & Thakral Pty Ltd (the Developers) from any further claims in relation to the compensation for uncompleted works to common property in front of lots 1-23;
•	......the Body Corporate committee have not resolved to amend exclusive use areas nor have any intentions of doing so at this time. As a matter of fact, the committee have not at this time made any resolution in relation to the expenditure of the funds offered by the developers;
•	The Body Corporate committee are fully aware of the requirements of the BCCM Act and Regulations and have no intention of carrying out any changes to exclusive use areas without the express authority of a resolution without dissent at a General Meeting of the Body Corporate, if at all.
•	The Body Corporate committee are of the opinion that a contribution of $36,500.00 to the Body Corporate funds by the developer should not be rejected when it is not detrimental to the Body Corporate.

RESPONSE TO SUBMISSIONS

The original application was dated 17 April 2006. In their response to submissions dated 4 July 2006, the applicants have expressed their agreement with the supporting submissions made. They also refer to the minutes of the committee meeting of 4 May 2006 (see above) and the Sunland solicitor Submission on another file (dated 22 May 2006).

They speculate on whether or not the committee is planning to dictate to exclusive use beneficiaries, how they are to landscape the area or whether they are no longer moving the fences.

DETERMINATION

The applicants appear to be of the understanding that the outcomes sought by them go hand in hand i.e. because the committee has accepted the payment of $36,500.00 they necessarily intend to either move the fence, though they later find room to express their confusion on this point. In my mind, the issue of acceptance of the payment and re-allocation of common property are two separate orders that have been sought and are not necessarily entwined.

I am aware that some of the submissions express the view that the committee has sought ratification of the acceptance of the offer of $36,500, in order to pre-empt the Adjudicator’s decision. However, now that the matter has been to the Body Corporate in general meeting and achieved a carrying vote of 26 to 6, any grounds put to me for regarding the amount as inadequate, would need to be compelling. The applicants have not provided me with any basis on which to determine that the amount of $36,500 is inadequate compensation for the works that Sunland has not carried out.

In the absence of any evidence that the amount is inadequate, I am not prepared to make the first of the orders sought.

It seems very possible the committee found the suggestion made by Sunland very attractive in the first instance, and had set out initially with a view to implementing that suggestion. However, I note that all explicit referrals to the reallocation of common property to exclusive use have only been made by Sunland.

I also note the explicit statement by the committee in their submission that they have "no intention of carrying out any changes to exclusive use areas without the express authority of a resolution without dissent at a General Meeting of the Body Corporate, if at all". Given the strength of this statement, I can see no value in making the second of the orders sought by the applicant.

While no specific order has been sought on this point, some submissions have made reference to the power of the committee to expend the monies received on either building the mooted fence or any other works in the area. In this regard, the applicants may take comfort in the knowledge that expenditure in excess of $250 per lot ($20,000) is usually required to be taken to a general meeting as a motion with alternatives. I do note that a Body Corporate may increase the committee’s expenditure limit to $450 per lot, however this requires an authorisation by special resolution.

Even if such a resolution has been passed within this scheme, the committee’s authority would be limited to $36,000 within a single project. I further refer interested parties to Section 102(9)(b) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 which states that:

If a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for major spending for the scheme if the cost of the project, as a whole, is more than the relevant limit.

Finally, I would like to observe that this dispute seems to have been contributed to by a lack of communication on the part of both the committee and the applicant. I urge the committee to be forthcoming in sharing information on developments, including updates where a change of course has evolved. "Thinking outside the square" can be a very valuable process but it is fully acceptable that sometimes a path that is explored, cannot be taken.

I also urge the applicants to extend goodwill to the committee in trusting that the updating of information will be forthcoming, even if they need to seek clarification from time to time.

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^[1] http://earth.google.com/ - co-ordinates 28deg. 04’ 41.14" S, 153deg. 22’ 31.81" E