Marcoola Beach [2006] QBCCMCmr 467 (25 August 2006)

Last Updated: 19 December 2006

REFERENCE: 0330-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30404
Name of Scheme:	Marcoola Beach
Address of Scheme:	885 David Low Way MARCOOLA QLD 4210

TAKE NOTICE that pursuant to an application made under the abovementioned Act by CCC Marcoola Pty Ltd, the owner of Lot 6

I hereby order that the application for an order by CCC Marcoola, the owner of Lot 6 seeking the following outcome: To invalidate a resolution of the body corporate dated 06 February 2006 which rejected the inclusion of the words "except for Lot 6 which shall be used for any other lawful use provided the owner of Lot 6 first obtains the written approval of the Body Corporate which shall not be unreasonably withheld" in by-law 12.1 of the Community Management Statement for the Marcoola Beach Community Title Scheme. An order is also sought to have the Body Corporate include these words in by-law 12.1. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0330-2006

"Marcoola Beach" CTS 30404

APPLICATION

This application is by CCC Marcoola Pty Ltd, the owner of Lot 6 (applicant) against the body corporate. The applicant is seeking the following outcome, quote:

To invalidate a resolution of the body corporate dated 06 February 2006 which rejected the inclusion of the words "except for Lot 6 which shall be used for any other lawful use provided the owner of Lot 6 first obtains the written approval of the Body Corporate which shall not be unreasonably withheld" in by-law 12.1 of the Community Management Statement for the Marcoola Beach Community Title Scheme. An order is also sought to have the Body Corporate include these words in by-law 12.1.

The applicant’s main submissions were to the effect that:

• Lot 6 is a commercial/retail space facing into the reception area opposite the manager’s reception desk. The Lot is not fitted out for residential purposes and is too small for residential use. The Lot is not dealt with by a separate by-law due to an oversight.
• By-Law 12 provides that all lots in the scheme shall be used for residential purposes.
• In 2005, the applicant sought to sell Lot 6. The proposed buyer of the Lot informed the applicant that By-Law 12 prevented the use of Lot 6 as a commercial unit.
• As the body corporate committee would not agree to an amendment to By-Law 12 that was satisfactory to the applicant or the proposed buyer, the Contract of Sale was terminated.
• The By-Law should be amended to include the words "except for Lot 6 which shall be used for any other lawful use provided the owner of Lot 6 first obtains the written approval of the Body Corporate which shall not be unreasonably withheld" to provide an assurance that the body corporate will act reasonably in deciding on a proposed use of Lot 6. The additional words which shall not be unreasonably withheld are no more than an attempt to assure a buyer of Lot 6 that the property is capable of accommodating either commercial or retail use and that the body corporate will not unreasonably withhold approval. The applicant states that by not incorporating the words, the body corporate is taking a position contrary to the interests of the owners in the scheme.

JURISDICTION

"Marcoola Beach" Community Titles Scheme 30404 is a scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the 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 claimed or anticipated contravention of the Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under the Act or the community management statement.

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). A submission was received from the body corporate and a number of lot owners. The applicant made a written reply to submissions under section 244 of the Act.

The body corporate’s main submissions were to the effect that:

• The body corporate has not made any resolution to amend By-Law 12.1.
• The committee, at its meeting dated 6 February 2006 resolved to recommend the proposed wording for the amendment to the By-Law.
• The committee subsequently informed the applicant that it would not recommend the additional words proposed by the applicant as the committee considered it important that the body corporate retain discretion to approve proposed use of the Lot and that the committee was not prepared to qualify that discretion.
• The By-Law can only be amended by special resolution in general meeting (s62(3), Act).
• A dispute is not evident as the applicant has not sought the proper consent of the body corporate.
• The applicant pays to the body corporate the legal and other expenses incurred by the body corporate.

Submissions from four lot owners supported the application.

In the written reply to submissions, the applicant stated:

• The body corporate did make a decision to exclude the applicant’s suggested wording in both the committee resolution at the 6 February 2006 meeting and in the subsequent email (dated 9 February 2006) informing the applicant of the committee’s reasons for not incorporating the additional words. The decision to refuse the requested words is properly the subject of a dispute.
• The committee resolution at the 6 February 2006 meeting not to include the additional words is neither valid, proper nor reasonable. The resolution is a decision of the body corporate (s100(1), Act) and is unreasonable (s94(2), Act). The committee is a representative body of the body corporate and its recommendation would be prejudicial to the interests of the applicant at a general meeting as owners may rely on the recommendation.

DETERMINATION

By-Law 12
By-Law 12 stated in the community management statement for the scheme recorded under the Land Title Act 1994 in August 2002 is titled "Use of Lots". By-Law 12.1 states that "Each lot shall be used only for residential purposes only".

The scheme was established in June 2002 by the registration of the plan of subdivision (SP136706) and the recording of the first community management statement (the First CMS) under the Land Title Act 1994. The First CMS included By-Law 12.1 in the same terms as the existing By-Law.

Committee resolution at the meeting dated 6 February 2006
The minutes of the Committee Meeting dated 6 February 2006 at Motion 5 indicate that the committee considered a request on behalf of the owner of Lot 6 to amend By-Law 12 to allow the Lot to conduct a retail business. The committee resolved that the solicitors acting for the owner of Lot 6 be notified that the committee recommends that By-Law 12.1 be changed to "each lot shall be used for residential purposes only except for Lot 6 which shall be used for any other lawful use provided the owner of Lot 6 first obtains the written approval of the Body Corporate" and to remind the solicitors that the owner of Lot 6 must pay the Body Corporate costs of approving and recording a New Community Management Statement to formally change the By-law".

The body corporate must carry out the functions given to it under the Act and the community management statement^[1]. The body corporate must act reasonably in anything it does under section 94(1)^[2]. The body corporate has all the powers necessary for carrying out its functions and has the powers given to it under the Act^[3]. The committee has the power to make a body corporate decision provided the decision is not on a restricted issue^[4].

The by-laws are included in the community management statement for the scheme^[5]. The body corporate may, by special resolution, consent to a new community management statement identifying a difference in a by-law (other than an exclusive use by-law)^[6]. The committee cannot make a decision on an issue that may only be made by special resolution^[7]. The disputed resolution of the committee did not change By-Law 12.1, but was a determination about the firstly, the recommended words (in the committee’s view) for an amendment of the By-Law, and secondly about associated costs. In the circumstances, it is evident that the committee has not made a decision contrary to its legislative powers.

The applicant has primarily sought to void the committee’s resolution on the basis that it was unreasonable.

The applicant claims that the resolution is unreasonable as it is prejudicial to the interests of the applicant at a general meeting as lot owners may rely on the recommendation included in the resolution, increasing the likelihood of the motion at the general meeting being defeated and the Lot being unoccupied. The applicant chose to seek the support of the committee before submitting the matter to lot owners. There is a disagreement between the committee and the applicant about the appropriate words to be used in the amended By-Law. In my view, this does not constitute unreasonableness on behalf of the committee in making a body corporate decision. While the consent of the committee is necessary to call an extraordinary general meeting (if the support of other owners is not sought under section 59 of the Accommodation Module), the committee’s support to the proposed By-Law amendment is not prerequisite to the consideration of lot owners. The applicant submits that the committee’s recommendation will influence the vote of lot owners. This is a subjective view and does not support any decision in the applicant’s favour. Further, the argument that the committee decision may cause the Lot to remain unoccupied is conjecture and does not constitute unreasonableness.

The applicant (as the original owner for the scheme) may have views with respect to the terms of the By-Law, but given that these terms were not included in the First Community Management Statement or in subsequent statements, a review of the terms must be made by the body corporate in accordance with the Act. To date, this has not occurred.

For these reasons, I have dismissed the outcome seeking to void the resolution passed at the committee meeting relating to amending By-Law 12.1.

The body corporate amend By-Law 12.1
The body corporate has only considered amending By-Law 12.1 at the Committee Meeting dated 6 February 2006. The amendment has not been determined in general meeting in accordance with the Act. Consequently, the body corporate has not made a decision, or acted in anyway with regard to the proposed amendment of the By-Law. For this reason, this outcome sought has been dismissed.

Body corporate costs
The body corporate (in its submissions) have sought to recover legal and body corporate management costs. There is very limited jurisdiction under the Act for costs to be ordered, and this matter does not fall within those parameters^[8]. In the circumstances, I do not consider it appropriate that any order be made regarding costs.

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^[1] Section 94(1)(c), Act.
^[2] Section 94(2), Act.
^[3] Section 95(1), (2), Act.
^[4] Section 100(1), (2), Act; section 24, Accommodation Module.
^[5] Section 66(1), Act.
^[6] Section 62(3), Act.
^[7] Section 24(1)(d), Accommodation Module.
^[8] Section 270(3), Act.