Ikon Apartments [2006] QBCCMCmr 555 (31 October 2006)

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

I hereby declare as follows -

1. that Motion 11 of the Annual General Meeting held on 27^th April 2006 and passed by a special resolution of the body corporate is invalid for the reasons detailed herein in respect of parts 11c, 11d, 11e, and 11f.

2. that a new community management statement lodged with the Land Titles Registry on 5^th May 2006 contained wording not authorised by the body corporate.

I order that within 21 days of the date of this order that the former community management statement be reinstated save only that if the committee so resolves, by-law 27 ( Display Unit) may be deleted, and the new by-laws 46 (Use of Name) and 47 (Signs) may be added.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0591-2006

"Ikon Apartments" CTS 32249

APPLICATION

This is an application dated 26^th July 2006 and amended on 8^th August 2006 by Jangram Pty Ltd, (the Applicant) owner under a trust of Lot 1, against the body corporate of Ikon Apartments (the body corporate) for an order that a special resolution passed by the body corporate on 27^th April 2006 be declared oppressive, unreasonable or invalid and at all times void; and if appropriate, an order requiring the body corporate to lodge a request to record a new community management statement to remove the by-law amendments and to restore the by-laws to their original wording; and such further orders as are fit.

JURISDICTION

"Ikon Apartments" Community Title Scheme is a community title scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module). There are 49 lots in the scheme created under a Building Format Plan of subdivision.

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

(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)).

An application for an order to invalidate a resolution of the body corporate must be made within three months of that resolution being passed. (Section 242(2) Act) The application is therefore made within the time limit.

SUBMISSIONS

The Applicant says that prior to the Annual General Meeting on 27^th April 2006 (the 2006 AGM) the body corporate failed properly to consult all owners and in particular the Applicant and the Applicant’s tenant who is The Coffee Club (Properties) Pty Ltd., (the Coffee Club) about the effect of Motion 11 at the 2006 AGM (Motion 11). Motion 11 was for the consent to the recording of a new community management statement for the scheme to give effect to certain amendments set out as (a) to (g) all pertaining to the scheme by-laws. There was an explanatory schedule circulated with the notice and agenda for the 2006 AGM, but there was no explanatory note about M

The Applicant says that the fact that there was no explanatory schedule is contrary to the legislation, and that the body corporate has a duty to inform lot owners prior to putting a motion to the vote. It also says that Motion 11 contained technical changes to the by-laws which were "questionable" and " forms part of a concerted attack on the registered commercial interests of Lot 1" and the Coffee Club. The body corporate’s actions were not reasonable and in breach of section 94(2) of the Act.

The Applicant asked the committee to withdraw Motion 11 from the Agenda but the committee would not talk about it or withdraw it. Consequently, the body corporate has acted inequitably, unreasonably and the resolution may result in financial hardship for the Applicant and the Coffee Club. It is illegal and unenforceable.

The Applicant says that the body corporate erred in proposing Motion 11 since the motion should have sought separate votes for each by-law amendment. Motion 11 was "unreasonably prejudicial" to commercial lots and contrary to the "structure of the scheme." The amendment to by-law 37 (amendment (f)) has the practical effect of revoking the benefit to Lot 1 of its exclusive use car park, and in any event required a resolution without dissent. Amendment (f) as passed, will create commercial rights in favour of the on-site manager to the prejudice of the commercial rights of Lot 1, and as such was inequitable and unreasonable and contrary to structure of the scheme. Amendment (d) (which contained a typographical error and should have read "consolidation" and not " consideration") resulted in by-laws 1,39 and 44 being rolled into a single by-law, and should have been passed by a resolution without dissent since it concerned an exclusive use by-law, and the current status of the new by-law is now unclear. The resolution should be void. In the case of amendment (c), the amendment to insert a proviso to by-law 19 went beyond the scope of the power given to the body corporate and was a fraud on a power such as was the subject matter in Vatcher –v- Paull [1915] AC 372. Accordingly, the Applicant says that the passing of amendment (c) to Motion 11 was invalid.

The notice of the 2006 AGM was sent out on 31^st March 2006. Motion 11 proposed a new bylaw 46; a new by-law 47; the amendment of by-law 19 by a proviso that Lot 1 cannot be used for any purposes which may compete with the activities of the letting agent; the consolidation of by-laws 1,39 and 44 into one by-law about parking and the addition of a "tow-away" provision for non-compliance; the amendment to by-laws 14,15,18,and 20 by removing the word " residential" whenever it appears; the amendment to by-law 37 to prevent lot owners from lending security car park keys to anyone who does not reside in the scheme; and the deletion of by-law 27 concerning the display home and which is now defunct.

On 26^th April 2006, the day before the 2006 AGM, the Applicant’s solicitors wrote to Body Corporate Services Pty Ltd (the body corporate manager) detailing their "client’s serious concerns in relation to Resolution 11." The letter set out that Motion 11 attacked Lot 1’s commercial interests, and said it would be breach of duty to pass it and that it was unreasonable. They pointed out that such a proposal had never been raised or discussed with the Applicant, and asked the committee to withdraw it pending some discussion about the necessity for the amendments.

The committee did not withdraw Motion 11 and it was carried 15 in favour 2 against at the 2006 AGM. The minutes record that an opportunity was given to anyone who wished to speak on Motion 11 both before and after the vote.

In accordance with section 243(2)(b) of the Act, all lot owners were invited to make submissions. The Coffee Club wrote in support of the application without further comment.

Letting agent Chris and Lyn Simpson (Mr Simpson) say that the application misrepresents the facts, and that at no time in last 18 months has the Applicant or the Coffee Club wanted to talk, or to respond "to numerous requests and communications either from body corporate or from him personally."

Mr Simpson says that the suggested amendments were largely proposed to the committee by him, following his day to day observations in the management of the scheme. He denies that there is any issue with the fact that Lot 1 is fitted out by the Coffee Club franchise or that there is a concerted attack against the Applicant’s commercial interests. The Applicant’s solicitors objected to Motion 11 too late for the motion to be withdrawn, and the Applicant’s representative did not speak at the 2006 AGM.

Mr Simpson questions that the Applicant has demonstrated that any financial hardship will arise from the amendments, and that the changes are simply to improve the operation of the building and to be advantageous to all lot owners. In respect of the proviso to by-law 19, Mr Simpson explains that this is to formalise an existing arrangement in accordance with clause 6.3 of the letting agent’s agreement, and is intended to stop Lot 1 being let to a real estate agent. He says that in any event this is most unlikely since Lot 1 is set up as a restaurant.

The consolidation of the parking by-laws 1, 39, and 44 was just for simplicity. The removal of the word " residential" from by-laws 14,15,18,20, was to correct an oversight of the result that by-laws 14,15,18 and 20 did not refer to Lot 1 since it was not "residential". He says ; "Obviously this was not intended by the authors of the by-laws" and it is no detriment to Lot 1 to comply with the rest of the block.

The amendment to by-law 37 has nothing to do with Lot 1 and is intended to stop owners and tenants from subletting the basement car park. The Coffee Club has a remote control for entry into the car park , has unrestricted use of it, and have never been refused entry. He agrees however that the wording may be a bit ambiguous, but here is no evidence that the body corporate is acting illegally or with an intent to harm the Applicant’s interests. He blames the Applicant’s unfounded worry on the fact that the Applicant does not come to meetings.

Hynes Lawyers made a submission for the body corporate. They point out that there is no obligation on the body corporate to consult with owners, to put out explanatory material, or to draft the motion in separate parts for each amendment. They deny that there is anything "questionable" about the motion and say that the Applicant "had more than 21 days to raise any concerns," and failed to speak out at the meeting.

The Applicant has provided no evidence of the "significant commercial implications" or the possibility of financial hardship resulting, as claimed. In short, the Applicant has failed to particularise alleged unreasonableness and how the amendments are "contrary to the structure of the scheme." Furthermore, the body corporate exercised its powers in good faith, and the amendments to by-law 15 are " entirely sensible" since it brings the Applicant into line with all the other lot owners. Lot 1 should not be permitted to do any act which would increase the premium for fire insurance, and the owner should be required to seek body corporate approval to make changes to the appearance of Lot 1, although the body corporate acknowledges that the owner of Lot 1 would have to ask for such permission in any event, and has done so in the past.

The body corporate acknowledges that the amendment to by-law 37 "could have been better expressed." In the circumstances that the Applicant has failed to prove its case, the body corporate seeks costs under section 270(3) Act.

The Applicant exercised its right of reply, emphasising points raised in its submission. It adds that
the directors of the Applicant live in Hong Kong and travel on business and are not readily available for discussion, but there was no communication before the notice of the 2006 AGM was received.

The Applicant says there is no need to demonstrate hardship and that the amendments "speak for themselves." It gives the example that if the amendment to by-law 19 stands, then the letting agent could decide to sell coffee from vending machines on the common property, and then the body corporate could by notice require the Coffee Club not to sell coffee, since it would be competing with the letting agent. It points out that the letting agent in the ordinary course of its business may seek to sell products which the Coffee Club also sells.

Further, it submits that the use of the word "residential" in respect of by-laws 14,15,18 and 20 in the original community management statement was deliberate. For example, the very nature of the business conducted on Lot 1 may from time to time increase the rate of fire insurance for the building as a whole and it would be unreasonable for the body corporate now to use by-law 15, as amended, to restrict the nature of the business.

It accepts that the amendment to by-law 37 may not have been intended to affect the Applicant, but the result is the same, in that it is now detrimentally affected.

It confirms that it does not object to the new by-laws 46 or 47, or to the additional clause about the towing away of wrongly parked vehicles.

DETERMINATION

In this matter certain facts are not in dispute. The scheme has 49 lots and only one of those, lot 1, belonging to the Applicant, is a non-residential lot. The first Community Management Statement for the scheme lodged on 16^th January 2004, at by-law 19 states that the proprietor or occupier of Lot 1 may use the lot for any purpose permitted by the Local Authority, and by-laws 40 - 43 inclusively contain provisions pertaining only to the exclusive use by Lot 1 for the purposes of using Lot 1 as a dining area and commercial kitchen.

The Coffee Club is the present occupier of Lot 1 by a by lease dated 12^th April 2005 from Havenland Pty Ltd (Havenland). Havenland is the Applicant’s tenant and is the franchisor of the Coffee Club. The occupation by the Coffee Club is not in dispute. The Coffee Club runs a café business from Lot 1.

At the 2006 AGM on 27^th April, Motion 11 proposed that the by-laws to the scheme were amended, and a new Community Management Statement be recorded. The Motion proposed 7 changes to the by-laws, detailed as (a) – (g). The motion was passed by special resolution 15 – 2. Consequently a new Community Management Statement (new CMS) was recorded by the Registrar of the Land Titles Registry on 5^th May 2006, showing not only the seven amendments as detailed in the motion, but also revised wording to Schedule E of the new CMS " Description of Lots Allocated Exclusive Use Areas of Common Property" and in particular, revisions to plan numbers and descriptions of exclusive uses. I will comment upon these changes later.

The Applicant objects to 4 of these amendments which it says affect it or could affect it detrimentally. The Applicant says that amendments (c) (d) (e) and (f) should not have been proposed without prior discussion with it, and that the resolution by the body corporate was inequitable, unreasonable and the resolution may result in financial hardship for the Applicant and the Coffee Club. It says the resolution is illegal and unenforceable and in breach of section 94(2) Act. Further it says that the motion should not have been proposed by the committee so that seven amendments were proposed in one motion, but that each amendment should have been voted on separately.

For ease of identification, I set out those parts of Motion 11 of the 2006 AGM as are in dispute. The motion was submitted by the Committee.

"That the body corporate consent to record a new community management statement to give effect to the following amendment’s to the scheme’s by-laws:-

And that the body corporate enter into and sign under seal all necessary documentation to record the new community management statement."

As I understand the Applicant’s argument, it says that the body corporate at a general meeting acted unreasonably by voting in favour of Motion 11 because to do so was detrimental to the Applicant and the business conducted from Lot 1; and that the committee acted inequitably because it drafted the motion in such a way that it had to be voted on " globally" and in any event the committee had a duty to discuss with an owner likely to be affected by changes, any proposed changes to the by-laws. Further, the wording of the amendments was also unfair in as much as it affected only the Applicant directly, and demonstrates a "concerted attack on the registered commercial interests of Lot 1." As such it "erodes the structure of scheme as originally established." Amendment (c) of Motion 11 was beyond the power of the body corporate to vote upon and since it was voted on, is a fraud on a power such as seen in the case of Vatcher –v- Paull [1915] AC 372.

Finally, the resolution was technically flawed in as much as amendments (d) and (f) required a resolution without dissent and not a special resolution in order to pass them since they concern the Applicant’s exclusive use by-law (by-law 39) and all lot owners’ car parking spaces (by-law 37); and that the committee was in breach of section 40C Accommodation Module in that explanatory material should have been circulated to lot owners with the motion, and was not

Reasonable actions of the body corporate
Section 94 of the Act states as follows -

There is some authority to say that this section applies only to functions of the committee acting as the representative of the body corporate, and that it cannot be used to overturn a decision of the body corporate taken at a general meeting.^[1] Whilst I am not bound by precedent, I would agree that to overturn the decision of the body corporate would need strong evidence to demonstrate the unreasonableness of the lot-owners exercising their votes at a general meeting. There is no evidence that the lot owners acted unreasonably by casting their votes, simply because the result was unfavourable to the Applicant.

Was it reasonable for the committee to have drafted the motion "globally" as it did? There is no reason why the committee could not draft an "all-or-nothing" motion. Any lot owner who was in favour of only parts of the motion could vote "No." There have been no submissions from lot owners saying that they were confused by the motion or that any lot owner wanted to vote for parts of the motion and not other parts.

Further, there is no duty on the committee to discuss its proposed motions with lot owners, or specific lot owners, before they are submitted to a general meeting. If lot owners think the motion is poorly worded, or wrong, or unfair, they can vote "No."

Was the committee ‘acting reasonably’ in drafting such a motion without first discussing it with the Applicant? The answer to that question will always depend on the circumstances in each case. Here, the committee is proposing changes to the by-laws which in respect of amendments (c) and (e) will affect only Lot 1.

I do not accept the body corporate’s argument that to remove the word "residential" from by-laws 14,15,18 and 20 can have no effect on the Applicant because it merely puts the Applicant on an equal footing with other lots. There is no evidence that such amendment will definitely be detrimental to Lot 1, but I find that the intent of it is directed solely at the Applicant. Mr Simpson says it is just an oversight by the drafters of the first community management statement. I do not agree. The Applicant is in a different position from the owners of other lots as the first community management statement recognises, and as the committee and the letting agent also recognise. By-laws 14,15,18 and 20 are specifically drafted for owners of residential lots. A café would be expected to be able to hang signs, display boards, and bring inflammable materials onto the property of a commercial kitchen. Safeguards for the behaviour of the occupiers of Lot 1 are found at by-laws 40 – 43, by-laws which refer only to Lot 1 because of its unique position in the scheme. Section 167 Act (nuisance) will apply to the Applicant and the Coffee Club if the café patrons make unreasonable noise. By-law 18 is not aimed at controlling noise from the ordinary business of the café.

The proviso now added by amendment (c) to by-law 19 is expressed to be aimed specifically at Lot 1.

In such circumstances, I find that the committee did not act reasonably in submitting amendments (c) and (e) to a general meeting without prior discussion with the Applicant. Mr Simpson says that he has tried to communicate with the Applicant, and the Applicant acknowledges that its directors are based in Hong Kong and difficult to contact. However, neither Mr Simpson nor the body corporate committee have provided any evidence of the "numerous requests and communications from the body corporate" to the Applicant which Mr Simpson mentions, nor is said that such communications concerned this particular matter.

Amendment (c) -The Proviso to By-Law 19
The amending proviso reads: " provided that the proprietor or occupier of Lot 1, must not use that lot for any purposes which may compete with the activities of the letting agent."

The letting agent’s "activities" will be defined by the authority given by the body corporate to the letting agent. The legislation defines the letting agent as a person authorised by the body corporate to conduct a letting agent business, which is a business subject to the Property Agents and Motor Dealers Act 2000, wherein the letting agent acts as agent of owners of lots included in the scheme who choose to use the person’s services for securing, negotiating or enforcing (including collecting rents or tariffs for) leases or other occupancies of lots in the scheme. (Section 16(2) Act.) Ancillary businesses or activities are particularly envisaged eg. video hire, linen hire, and agency tour operator given as examples. (Section 16(4) Act.) Whilst in is not envisaged that the letting agent sells coffee or produces meals, such activity is not be prohibited by the legislation.

It is not unusual to find by-laws in the community management statement which protect the letting agent in a similar way, for example, the body corporate undertakes not to engage another person to perform the same duties whilst a letting agent is acting under an authorisation. However, where a by-law is "oppressive or unreasonable",^[2] it is within the power given to an adjudicator under section 276 Act, to have such by-law removed from the community management statement.

Mr Simpson may be reasonably concerned that Lot 1, which can be used for any purpose which has the consent of the local authority, is not used for example, as a real estate agency, or letting agency. The Applicant says that its concern is that such a proviso may enable the letting agent to sell coffee, for example from vending machines on the common property, and then set up the claim that the Coffee Club is breaching a by-law by competing with the letting agent.

In practice, in those circumstances, if the letting agent asked the body corporate to take action against the Coffee Club to enforce by-law 19, it may well be that such action by the committee would be found to be unreasonable by this Office.

The fears of both the letting agent and the Applicant may be abated if this proviso was better and more particularly worded, so that actual competition, or actual detriment must be in contemplation, not merely an activity which "may compete" which allows for uncertainty. The activities of the letting agent which are to be protected should be detailed. I find the proviso to the by-law, as drafted, uncertain and open to varied interpretation. It gives a power to the letting agent against the owner of Lot 1 which did not previously exist. In the circumstances that this proviso was not discussed with the Applicant, as set out above, I find that the Applicant’s fears are founded, and that this proviso should not be allowed to stand. That is not to say that a better worded proviso drafted following discussion, so that the particular concerns of the letting agent and the owner of Lot 1 can be addressed, would fail.

In practice, any use of Lot 1 which required the consent of the local authority is likely to have as a condition of approval, that the body corporate also approve the use. The body corporate would also have a certain amount of control over Lot 1 in any application to use common property within the new use.

Fraud on a power in the case of amendment (c)
The Applicant submits that the vote by the body corporate in respect of amendment (c) was a "fraud on a power" and quotes the Privy Council case of Vatcher- v – Paull, without giving me any argument in support of that submission.

The famous passage of Lord Parker in that case is as follows -

‘The term fraud in connexion with frauds on a power does not necessarily denote any conduct on the part of the appointor amounting to fraud in the common law meaning of the term or any conduct which could be properly termed dishonest or immoral. It merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power."^[3]

I am given to understand that whilst there is no fraud alleged, the amendment as proposed by the committee, or the vote on the motion by the body corporate, or perhaps the result of the resolution, constitutes the exercise of a power beyond its scope, or not justified by the legislation.

I do not find that this has been demonstrated by the facts in this matter. Both the committee and the lot owners acted within a power given to them by the legislation, and to show that such power has been used in a way beyond its intended scope, I am of the view that some oppression or fraud would have to be shown, even though Lord Parker says that this is not ‘necessarily’ the case. There is no evidence of fraud or oppression. There is no evidence of the "concerted attack on the registered commercial interests of Lot 1."

No explanatory material
Section 40 C Accommodation Module requires that an explanatory schedule accompanies the voting papers going out with the notice of the general meeting in certain specific circumstances. The explanatory schedule merely shows who submitted the motion, explains the mechanics of voting on certain motions, and includes copies of up to 300 words as written by any submitter of a motion. Certain motions, for example a motion to change the regulation module, require some explanation (section 40C(1)(d)) but otherwise, the committee must not comment on motions (section 40C(6) and (8)) , and if it wishes to put out any other explanatory material, it must do so separately from the explanatory schedule (section 40C(7)) and it should be of a general or informative nature only.

The fact that there was no explanatory material about the by-law amendment is therefore not a ground which succeeds.

Amendment (d) - The consolidation of By-laws 1,39 and 44
The body corporate has now recorded a new CMS with by-laws 1, 39 and 44 consolidated as a new by-law 1 since all three by-laws concerned parking. The Applicant says that since by-law 39 concerned all lot owners’ exclusive uses to car parking spaces that such an amendment should have been authorised only by a resolution without dissent at a general meeting. The body corporate argues that since the context or text of the exclusive use by-law is not amended, that a special resolution sufficed in this regard, and that only the position of the wording in the CMS has changed.

Section 171 Act sets out the requirements for an exclusive use by-law as follows-

(i) by a person (who may be the original owner or the original owner’s agent) authorised under the by-law to make the allocation (an authorised allocation); or

(ii) by 2 or more lot owners under a reallocation agreement (an agreed allocation).

(i) the allocation is revoked under the by-law (if the by-law provides for the revocation of an allocation); or

(A) consenting to the recording of the new community management statement that does not incorporate the exclusive use by-law; or

The area of the exclusive use must be specifically identified in the by-law. This is why exclusive uses in community management statements are always set out separately, and since the Registrar of Titles can require a plan of an exclusive area to be lodged, Schedule E of a community management statement describes in writing the exclusive use areas for each lot, and is followed by plans.

Whilst the removal of by-law 39 to part of by-law 1 is not unlawful, it is most unusual and does not follow the accepted format for a community management statement.

Section 62(4)(i) Act says that a resolution without dissent (or even a special resolution) is not required if the existing community management statement is reproduced without any change to substance. However, in this case changes have been made to the new CMS which alter the sense of the exclusive uses, and which cannot be allowed to remain. By-law 1 at paragraph 3 now refers to "Annexure "A"". There is no such Annexure recorded on the new CMS. The plans associated with the exclusive use car parking allocations are drawings numbered 58451-003, 58451-004 and 58451-005, respectively. In the former community management statement, the exclusive use car parking space for each lot was shown as a number on one or other of these plans. Only Lot 1 contained a reference to "Area A" on drawing 58451-005. There was no "Annexure A" in the former community management statement either.

The new CMS by-law 1 is meaningless in respect of the exclusive use car parking spaces, and a prospective purchaser will not be able to identify his/her exclusive use area, in contravention of section 171 Act. Since all mention of Area A ( the exclusive use dining area for Lot 1) has been removed, and all exclusive uses are now said to be shown by numbers corresponding to numbered lots on "plan marked A" (at the new Schedule E) and the plan is not marked "A", the new CMS becomes a quite unacceptably flawed document. As drafted, there are no exclusive use car parking areas for any lot, and Lot 1 has lost its outdoor dining area as well, or alternatively it might be taken to mean that Lot 1 could use car space 1 for outside dining.

This is no doubt an error on the part of the draftsperson, and not a deliberate revocation of Lot 1’s exclusive use "Area A" on drawing 58451-005, which would be in contravention of the provisions of section 171, and would require the consent of the Applicant and a resolution without dissent.

Another unauthorised change appears at by-law 40 which refers to Lot 1’s outside dining area. This again refers to "Annexure A" and the identifying number "1". This number is said to be referable to the outside dining area. In fact the number "1" appears only on drawing number 58451-004 and refers to Lot 1’s car parking space. The dining area is only shown as "Area A "on the plan or drawing number 58451-005. By-law 40 as amended now makes no mention at all of Schedule E, the exclusive uses schedule. There was no motion (at the 2006 AGM) to amend by-law 40 in this way, or at all.

For this reason alone, the new CMS as it stands cannot be relied upon. I have not perused the entire new CMS but any such changes to " tidy up" the wording in pursuit of the motion as passed, must be authorised by the body corporate in the detail in which such change is to be made. Whilst the committee does not have to seek the consent at a general meeting to the whole re-drafted community management statement, if the new community management statement as drafted is inconsistent with the consents given by the body corporate, the statement as recorded is void to the extent of the inconsistency. (Section 64 Act.)

Amendment (f) - By-law 37
It is agreed by the body corporate that this amendment might have been better worded and as it stands it is "a bit ambiguous." Mr Simpson says that the objective is to stop owners and tenants from subletting the basement car parking spaces, and that for security reasons. The Applicant says that it has the practical effect of revoking the benefit to Lot 1 of its exclusive use car-parking space, since it now reads that a lot owner cannot let a non-resident park in the owner’s space. The Coffee Club, of course, is technically "non-resident" within the meaning of "resident" as maintaining a habitual place of abode within the scheme. It is "resident" in that it occupies a building in the scheme for which it pays rent under a lease. However, the Applicant cannot comply with the wording of the new by-law 37 as its tenant does not "live in" its lot.

The words "resident" and "residential" are not defined in the former community management statement or in the legislation, but from the references to the word "residential" as used in the former community management statement, it appears that a difference is to be drawn between those owners who have habitable areas within the scheme, designed as homes; and those ( Lot 1 only) who have non-habitable spaces, designed as commercial areas.

I accept that this is the meaning intended by the body corporate. However, as by-law 37 currently stands, the 5^th and 6^th paragraph conflict with each other. Paragraph 5 details how the owner of Lot 1 may issue tokens to visitors to facilitate car-parking; paragraph 6 now reads that no visitors may use the secure car-parking spaces. This wording needs some further thought as has been accepted by the body corporate.

I am also concerned that if the car-parking spaces are those to which the owners have exclusive uses, then any re-wording which changes, extends or curtails the use of such exclusive use areas, for any lot owner, will need a resolution without dissent. Conditions may be imposed on an exclusive use area (Section 173 Act; section 122 Accommodation Module) but only with the consent of the owner of the exclusive use.

General comment in this matter
I note that emphasis is laid by the body corporate and Mr Simpson on the fact the Applicant had 21 days’ notice in which to query the contents of Motion 11 and a further opportunity at the 2006 AGM to speak out. That such opportunities were not taken and that the Applicant’s solicitors sought the withdrawal of Motion 11 only the day before the AGM of 2006 are put forward as evidence that the Applicant is not genuine in its complaint and/or the level of distress suffered.

I do not agree. The Applicant could have done nothing to prevent the motion being put to a general meeting once the notice of meeting and agenda had been sent out. The legislation, particularly the Accommodation Module, is structured so that lot owners may vote by post, and there is no requirement for a general discussion of motions at the meeting prior to a vote being cast. Whilst those present at the meeting (who may be few) may try to canvass their cause, and influence those who have not yet voted, the general meeting is not a forum for debate.

The Accommodation Module is silent on the question of the withdrawal of a motion placed on the agenda, but there is a previous order of an adjudicator that has decided that it would be illogical and impractical to refuse to allow the submitter of a motion to withdraw that motion prior to the vote being cast.^[4] There is of course no duty whatsoever on the submitter of a motion to withdraw the motion when requested to do so by someone else, and the body corporate has not indicated that had it been given more notice to withdraw the motion, it would have done so.

I am satisfied that under section 276(1) Act, that an adjudicator could make an order that parts of a motion stand whilst others fail, as submitted by the body corporate, that is, that a motion could be severed and still be valid. I find there are no flaws in the passing of Motion 11 (a), 11(b) and 11(g). All other parts of Motion 11 are flawed in some respect as detailed in these reasons. Since any amendments to a community management statement will require the lodging of a new community management statement, I am going to order that the former community management statement be reinstated save only that by-law 27 may be deleted, and the new by-laws 46 and 47 may be added.

I recommend that in respect of any future motions to amend the by-laws, that each item of amendment is put to a separate vote; that separate motions are proposed where the amendment proposed requires a resolution to be passed by a special resolution and a resolution without dissent; and that where a by-law will particularly affect one or a small group of lot owners, that some discussion is entered into for the lot owner(s) input prior to the amendment being put to the body corporate.

Section 180(5) Act requires that a by-law must not discriminate between types of occupiers. Where the types of occupier play different roles in the scheme, there will need to be careful wording of the by-laws (as seen in the former community management statement) about which by-laws relate only to Lot 1. Such by-laws must be reasonable and not oppressive and must be passed in accordance with the legislation.

I note that there is some underlying concern in this matter that Lot 1’s legitimate use of its premises puts it outside the by-laws by which every other lot owner must live. In a scheme such as this, there is potential for friction between domestic and commercial uses. The former community management statement recognised that friction and addressed certain issues at by-laws 40 - 43 in respect of Lot 1. The body corporate may, under the powers given to it in the legislation, still require the owner or occupier of Lot 1 to maintain it properly and not to make noise or cause a nuisance, without resorting to changing its by-laws. Section 113 Accommodation Module requires that an owner seeks authorisation from the body corporate to make improvements to the common property for the benefit of the owner’s lot. If the body corporate is concerned that the Applicant is not restrained by By-law 20 from making alterations to the exterior of Lot 1, then this may be addressed in particular by a new by-law with wording relevant to Lot 1, following consultation with the owner of Lot 1 ( and the subsequent voting process.)

In respect of the Coffee Club’s need to bring gas canisters or the like onto Lot 1, if this results in an increased insurance premium, then section 129(2)(c) Accommodation Module enables the body corporate to seek the increase in premium from the lot owner.

Finally, in respect of Mr Simpson’s observation that the Applicant does not come to meetings, that is entirely the prerogative of the Applicant as an owner. Schemes under the Accommodation Module in particular may have a high number of absentee or investor owners. The legislation requires that full and accurate minutes of both committee meetings and general meetings are sent to lot owners within 21 days of the meeting. This is to keep owners informed without the need for them to attend meetings in person.

Since this application is not dismissed, the question of costs under section 270 Act does not arise.

^[1] Dindas & Anor –v- Body Corporate for One Park Road CTS 2114 & Ors [2006] QDC para. 34; McColl & Anor –v- Body Corporate for Lakeview Park CTS 20751 [ 2004] QCA 44 para. 25
^[2] see examples of Adjudicator’s Orders Schedule 5 Item 20
^[3] [1915] A.C 372 at p. 378
^[4] Calm Waters CTS 13535 – 0494-1997

Number of Scheme:	32249
Name of Scheme:	Ikon Apartments
Address of Scheme:	27 Station Road INDOOROOPILLY QLD 4068

(a)	addition of a new by-law 46 ....(no objection)
(b)	addition of new by-law 47 ....(no objection)
(c)	the amendment of by-law 19 by inserting the following sentence at the end of the by-law : Provided that, the proprietor or occupier of Lot 1, must not use that lot for any purposes which may compete with the activities of the letting agent."
(d)	the consideration (sic) of by-laws 1,39 and 44 into a single by-law and the addition of the following provision .....(about towing away vehicles.... The additional provision is not objected to by the Applicant although the consolidation of the three by-laws is in dispute.)
(e)	the amendment of by-laws 14,15,18 and 20 by removing the word " residential" wherever it appears.
(f)	The amendment of by-law 37 to include a new provision as follows – " A lot owner of a lot to whom any key or operating system is provided pursuant to these by-laws shall not make the same available for used by a person who does not reside in a lot in the scheme. To avoid doubt, a lot owner may not make a key or operating system available to a person for the purpose of providing access to the owner’s basement car space unless that person lives in the owner’s lot."
(g)	Removal of by-law 27 .....(no objection)

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Ikon Apartments [2006] QBCCMCmr 555 (31 October 2006)