Grosvenor Apartments - Brisbane [2006] QBCCMCmr 58 (10 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0709-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme: 24652

Name of Scheme: Grosvenor Apartments - Brisbane

Address of Scheme: Corner Edward and Alice Streets, Brisbane Qid 4000

APPLICANT: Robert Hines and Margaret Walker

RESPONDENT: The Body Corporate for Grosvenor Apartments -- Brisbane

TAKE NOTICE that, pursuant to an Application made under the Act by the Applicants against the Respondent Body Corporate, I, Richard Anthony Perry Specialist Adjudicator appointed pursuant to the Act, do order that:

1. that each party bear their own costs of the Application;

2. there be no Order as to the cost of the Adjudicator.

Reasons

In this matter I made certain orders with respect to a by law concerning noise abatement and
flooring surfaces in the Grosvenor complex.

I sought submissions from the parties as to costs.

It was submitted that, by reason of the particular proceeding involved, I did not have jurisdiction
to make an order against any party.

Due to the matters outlined below and the decision I have come to in the exercise of my discretion, it is not necessary for me to determine that matter but I should observe that it seems to me that it is difficult to sustain that submission.

In this matter the Applicants required that I waive non-compliance with s. 242(2)(b).

They sought to have the relevant by-law set aside and were, to the extent that it was modified, successful.

As against that, the Body Corporate succeeded in convincing me that a by-law of the kind challenged was appropriate, albeit it in a modified form. The existing by-law was however untenable.

In my view the matter was one where each party might be considered to have been successful to some extent.

The nature of the proceedings and the subject matter of the dispute do not readily lend themselves to an award of costs against either party.

Accordingly, I find that the most appropriate Order is that each party should bear their own costs of the Application and that there be no specific Order as to the costs of the Adjudicator.

REFERENCE: 0709-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme: 24652

Name of Scheme: Grosvenor Apartments - Brisbane

Address of Scheme: Corner Edward and Alice Streets, Brisbane Qld 4000

APPLICANT: Robert Hines and Margaret Walker

RESPONDENT: The Body Corporate for Grosvenor Apartments -- Brisbane

TAKE NOTICE that, pursuant to an Application made under the Act by the Applicants against the Respondent Body Corporate, I, Richard Anthony Perry Specialist Adjudicator appointed pursuant to the Act, do order that:

1. Non-compliance with s.242(2)(b) of the Act be waived.

2. The by law ought be amended by:

a. Deletion of he figure of 77 in the table under sub-rule (b)(i) referable to the lounge bedroom area;
b. Substitution of the figure of 67;
c. Deletion of the description "lounge/bedroom" in that table and substitution of the description "at] other internal areas" -
d. Addition of the following clause under "(b) Conditions":

(iv) the Committee may exempt any applicant fron3 compliance with the standards set under clause (i), if the Applicant, in the Application, demonstrates that special circumstances exist justifying non-compliance;

(v) in exercising its power under (iv) the Committee may impose such conditions upon any exemption which are reasonable necessary to reduce the impact upon other unit owners of non compliance by the Applicant. -

3. The matter be remitted to the Respondent for the necessary action to be taken, pursuant to section 276 of the Act, in order to give effect to these reasons by lodging a request to record a-new CMS containing a by-law in its amended form.

Nature of the Application
The Applicants are the owners of Lot 53- Grosvenor Apartments.
They have installed hard timber flooring in all areas of the unit save for the bedrooms.
That installation is, in terms, contrary to the provisions of clause 22.5 of the By-Laws.
The Applicants essentially challenge the By-Law on the basis that the By-Law is ‘unreasonably onus and fundamentally unjust and goes against the fundamental principle that a rule must be able to be complied with in order to be valid and enforceable’ (para 31 of the Applicants’ initial Submissions).
There are other grounds which will be dealt with below, but for the reasons outlined below, it is my view that the only substantive challenge is that set out in paragraph 31 of the Applicants’ Submissions.
The Body Corporate contends that the By-Law ought to remain in its current form. The specific relief sought in the Application is as follows:

(a) A declaration that By-Law 22.5(vi) of CTS 24652 (‘-the By-Law’) is void and unenforceable against the Lot Owners; and/or

b) A declaration that the resolution passing the By-law is void to the extent that the By-Law was passed; and/or

(c) An Order that the By-Law be amended; and

(d) That the Body Corporate pay the Lot Owners’ costs of and incidental- to the Application.

The Body Corporate has raised a preliminary point, namely non-compliance with s.242(2)(b) of the Act.
The-Body Corporate concedes that 1 may, for good reason, waive non-compliance.
For the reasons set out -below, I have determined that there is good reason to waive non-compliance in that I have determined that-the By-Law should be amended.
For that reason, I do not -accede to the Submission that the Application should be determined due to non-compliance with s242(2)(b).

The By-Law

On 3 July 2001, an annual general meeting passed a resolution adopting a new Community Management Statement.
Clause 22.5 of the By-Law provided as follows:
‘The Community Management Statement contained new By-Laws. Clause 22.5 of the new By
Laws (‘the By-Law) provi des that:

(a) Installation
An Occupier shall not install or cause td be installed or place in or upon any part of the Lot hard flooring such as timber; tiles, marble or any similar material (the ‘works’) unless the Occupier has first obtained the written approval of the Committee of the Body Corporate.

(b) Conditions

Where the Committee grants consent to the installation of [ floorings such timber, tiles, marble or any similar material], in addition to any other conditions the Committee may impose, the following conditions shall also apply:

(i) The Floor Impact Isolation Class ( of the works when completed, shall not be less than the following performance specification:

AREA	FIIC
Kitchen	60
Lounge/bedroom	77

(ii) Following the installation of the works, the Occupier shall at its cost have the F determined by a field test conducted by an accredited acoustic consultant approved by the Committee. The Occupier will provide a copy of the Consultant’s report to the committee within seven (7) days of receiving same.
(iii) Where the FIIC of the completed works is less, than the level detailed in By-Law 22.4(b)(i), the Occupier must; within a reasonable time, at its cost, cause the removal of the works and/or have any necessary procedures or additional works undertaken in order for the works to comply with the requirement in By-Law 22.5(b)(ii). Following any such remedial action being taken, the provisions of By Law 22.5(b)(ii) must again be complied with by the Occupier’.

The original by-law, passed when the scheme came into existence, provided for a range of 60 to 62. Accordingly, the new by-law imposes a significantly increased standard upon unit owners who wish to install hard flooring.

The challenge to the By-Law is predicated upon a number of bases, which are summarised in the Applicants’ Submissions. They are:

1. That the By-Law is unreasonably onus and fundamentally unjust;
2. That the Applicants have been unfairly singled out by the Body Corporate in a manner constituting unconscionable conduct;
3. That the Body Corporate Committee had an ulterior motive in proposing the By-Law in that the standard set was impossible to achieve and accordingly the By-Law effectively constituted a blanket prohibition on hard flooring, which prohibition however was misleadingly stated to be, by necessary influence, an achievable standard.

Process of Determination of the Application
I initially gave directions to the parties with respect to the provision of Submissions and other interlocutory steps.
Consistently with those directions I attended, on Thursday 4 November at the offices of Messrs Hopgood & Ganim where I received further oral Submissions, conferred with and questioned the experts from each side and conducted an inspection.
At the conclusion of that process, I directed that further Submissions on nominated questions be provided.
The parties have complied with that direction and I will enclose these supplementary submissions on the file.
In coming to my conclusions I have relied upon all of the material provided by the Commissioner’s Office, the written Submissions delivered by each party, the Submissions made to me on Thursday 4 December and the evidence given by the experts on that date as well as my observations during the inspection.
The inspection occurred in the present of a representative of each relevant unit owner as well as the legal representatives of the Body Corporate. I asked the unit owners to elaborate on certain matters and the experts undertook, in a collaborate way, a series of illustrative tests so that] could have some understanding of the level of noise transmission.

Unconscionable Conduct
There is a useful chronology set out between paragraphs 3 and 48 of the Body Corporate’s Submissions. That chronology establishes that the process of disputation leading up to this application has been protracted, including a previous reference to adjudication.
The new by-law incorporates a level reccomended by an expert reatined to conduct noise tests. There is some force in the Applicants’ submission that the level reccomended bears a relationship to carpeted areas rather than to what might be either acheivable or appropriate for hard flooring.

An allegation of unconscionable conduct ordinarily imports an element of acting in bad faith. Whilst Mr Jenkins. Solicitor for the Applicants, did not go as far as to expressly suggest such conduct, it seems to me that the written Submission necessarily raises, in paragraphs 33 and 34, just such a conclusion.
The sequence of events surrounding the installation of the hard floor by the Applicants is, in large part, not an issue.
There is a factual dispute as to whether or not an essentially oral consent was given by certain members of the Committee so as to be binding upon the Body Corporate.
There are conflicting statements of various witnesses touching upon this aspect. Whilst I have read those statements, it would be necessary I think, were this an issue critical to my ultimate determination, for each of those witnesses to be cross-examined.
I have formed the view that that process is, in this case, both unnecessary and perhaps undesirable.
It is common ground that written consent was not obtained.
It is the Applicants’ case that the ‘oral consent’ was given in respect of an assertion by the Applicants that that which they were to install would in fact comply with the requisite standard. It is common ground that that is not in fact the case.
Accordingly, even if ‘oral consent’ were given in the terms alleged by the Applicants, such consent would relate only to a timber floor which complied with the relevant standard. As that is not the case it seems to me that a finding as to whether such a conversation occurred and if so in what terms is not necessary.
Nor is it otherwise desirable as it would necessarily impact upon the relationship of the various unit owners in circumstances where such a consequence is not necessarily for the determination of the Application.
I can see nothing in the evidence before me to sustain a conclusion that the Body Corporate acted unconscionably.
There is no doubt that the dispute here is contentious and I accept that the Applicants have acted in a manner which they consider to be fair and reasonable.
Views will necessarily differ as to respective ‘rights’ where questions of domestic amenity arise. Whilst I have formed the view that the By-Law here is unreasonable and warrants amendment. such a conclusion neither establishes nor indeed evidences improper or unconscionable conduct on behalf of the Body Corporate in framing, proposing and ultimately enforcing the By-Law. in setting the standard that it did, the Body Corporate relied upon expert advice, as did the Applicants indeed in seeking consent for the particular type of flooring concerned.
Parties may act in good faith yet take divergent courses in seeking to achieve what each considers to be a reasonable conclusion.
The rejection of one party’s contentions, seen by that party to be utterly reasonable, frequently engenders suspicious that the other is acting unfairly, maliciously or, as is alleged here, unconscionably.
There is no direct evidence of unconscionable conduct. To uphold the Applicant’s submission would require that I draw the inference that such conduct has occurred from noise level set by the by-law or, perhaps, the acrimony with which this matter has been plagued.
I am not prepared to draw that inference. It is my view that, until recently, neither side -has been well served by those that they have retained to advise as to standards which ought be imposed or might be achieved.
Had those currently retained been acting when the by-law was initially considered, the terms would I think have been considerably different. Had the Applicants been given accurate advice as to possible compliance with the by-law, then the floor would not have been laid as compliance was clearly not a prospect.
Neither circumstance leads to the inference that either party has acted other than in good faith.

Ulterior Motive
In essence the Applicants submit that because the By-Law is unreasonable, the Body Corporate must have been aware of that and must therefore have had an ulterior motive in proposing in its current terms.
In my view, that deductive process lacks cogency and lacks any probative evidence to support it. For the reasons canvassed in the preceding paragraph, I am not prepared to make a finding that - the Body Corporate acted in the manner alleged.

Unreasonableness
The By-Law sets a standard of 77 in the lounge and bedroom areas of the units.
In considering that standard in this case, it is necessary to recognise the following:

(a) The units as constructed contain parquetry wooden flooring in the entrance way and kitchen. I am informed by the Solicitors for the Body Corporate that that flooring was fixed to the stab by way of an adhesive on cork.
(b) The Applicants have installed hard wood flooring in the entrance way, kitchen, hall and lounge/dining room. The bedrooms remain carpeted.
(c) The By-Law was passed some time after the building was constructed, that is the reasonab1enes ought to be considered in terms of an existing structure
(d) The Applicants became lot owners after the By-Law was passed and were well aware of its terms. Indeed, they asserted that the proposed flooring would comply with the standard. That assertion was based upon advice received to that effect, which advice must in my view have been erroneous. However, it is my view that potential third party claims are not a relevant consideration in determining this dispute.
(e) There are standards provided for by the Association of Australian Acoustical Consultants. Those standards provide a star rating system with the highest (6 star) rating equating to a factor of 70. That is, the standard required by the by-law here significantly more onerous than the highest standard provided for by the Association.
(f) The current flooring installed in the Applicants’ unit rates at approximately 63.

In determining this matter I was significantly assisted by the views of each of the expert witnesses. Their reports are annexed to the relevant parties’ Submissions. -
In large part, those experts were in accord, save perhaps in questions of probabilities as to whether or not certain sound levels could -ultimately be achieved.
The science here is not exact and depends upon a number of factors.

The Applicants’ position is that a rating of 77 is not realistically achievable. Mr Rumble, on behalf of the Respondent, thought that it could be done but that to do so some 60mm of acoustic material would be required under the timber flooring.

From my inspection of the units, it would seem to me that to require such a level of material under the floor boards renders the standard effectively unachievable.
A change of 2.5 inches in height would have an extraordinary impact upon these units.

In my view, whilst the standard set out in the By-Laws may be theoretically achievable, it is not practically achievable.
In determining whether an obligation imposed by a by-law is unreasonable or unjust in the context of domestic units, one ought to to take into account that which is realistic and practicable. Whilst it is not strict]y necessary for the determination of this case, I wish to add some observations about the reasonableness of a blanket prohibition on hard flooring as this aspect is touched upon by the Applicants in their Submissions.
Strictly speaking, it would be open to the Body Corporate to take just such a step. However, each of the units, as constructed, already contain areas of timber flooring. Further, it is I think sufficiently apparent that there are those who, for particular or special reasons, require non- carpeted surfaces.
Were I to simply strike down this By-Law, it might be open to the Body Corporate to replace it with one expressly prohibiting further hard flooring.
In my view, such a By-Law might well contravene the relevant terms of the Act. It may be that a special circumstances provision could ameliorate the mischief that such a By-Law would contain. However, I would remain concerned about such a By-Law even with that proviso.

The Body Corporate is of course a representative of the wishes of the majority of unit owners. In certain circumstances the rights of unit owners can only be effected by a unanimous resolution. There is much to be said for the notion that the democratically expressed will of the majority of unit owners should be given significant weight in an application of this kind but the very purpose of the provision under which this Application is made is to avoid a circumstance where that expression of will is manifested in an unjust result.

In determining whether or not I should exercise my powers with respect to the By-Law. I have taken into account interests wider than simply the interests of the Applicants.
It seems to me that the fate of a By-Law of this kind should be determined by reference to:

(a) the interests of the unit owners as a whole, including of course the Applicants;
(b) any particular circumstance or element, usually but not necessarily, specific to the Applicant, which might have the result that the by-law has a disproportinate impact upon one or certain unit owners.
(c) the ordinary balancing exercise between competing interests which the principle of "reasonableness" requires.

In my view a By-Law which sets a standard which is not realistically achievable is not one which ought be allowed to stand unaltered, unless there is a particular justification for it. It is my view no such justifiaction exists here. The by-law concerns the ability of existing unit owners to. install hard flooring. Subject to the usual constraints concerning the amenity of other owners, the subject matter is neither remarkable nor special. There is no basis therefore to contend that the installation of timber flooring should be essentially impossible. Indeed I do not believe that that was what was intended by the Respondent.
There are a multiplicity of reasons why timber flooring, particularly of the kind installed by the Applicants, is both consistent with and appropriate for the quality, type and use of these units. As against that there is no doubt that the flooring in question impacts significantly upon the amenity of the unit owners below. Those unit owners do not assert that they are entitled, in an inner-city environment, to a level of quiet more consistent with a different setting and different density of occupation.
In determining what is reasonable and just, I am required to strike a balance between the competing interests of those who may wish, or indeed must, install appropriate types of flooring against the interests of those whose amenity is affected by a change from an essentially carpeted unit to art essentially hard floored unit.
I am of the view that it is entirely appropriate for the Body Corporate to set a standard for compliance with respect to hard, flooring but that standard ought be both achievable and consistent with appropriate industry standards for construction of this kind.
In my view those appropriate industry standards ought be assessed ‘by reference to the Association star ratings.
It is apparent that this By-Law was passed in response to complaints about noise transmission. The development is of a deluxe standard and already subject to significant noise intrusion. The provision of carpeting in the majority of each of the units when constructed is indicative I think of an awareness of the likely consequence upon amenity of impact noise transmission. However, the original configuration did include timber flooring in some areas.
In my view the competing interests which I have identified above are best served by the By-Law being amended so as to provide for:

1. A FIIC sufficiently high to reflect the level of concern from the majority of tenants which prompted the framing and passage of the resolution but which is consistent with Association standards. In my view that standard, for this building ought to be at the upper end of the Associations scale. In this case that will be a figure of 67, being between the 5 star and 6 star rating. I have not required a 70 rating as there are already areas of timber flooring present in the as-built configuration. I accept however that the by-law was passed in response to complaints about noise which reflect the inadaquacy of the previous by law.
2. A special circumstances proviso which allows non-compliance where the circumstances warrant. It is neither desirable nor necessary for that proviso to be defined with any more specificity that simply ‘special circumstances’. Those special circumstances be established by reference to factors unique to the Applicant e.g. of a medical nature, to the particular unit e.g. some aspect of construction making compliance impossible or to the circumstances f which a unit owner has acted in a particular way e.g. akin to an estoppel.
3. The special circumstances provision should however also be tempered with a provision that the body Corporate, by its Committee, be able to impose reasonable conditions upon non-compliance.

Costs.

In the light of these reasons and the result of the determination I will give each party seven days to make submissions as to costs.