Thornton Tower [2006] QBCCMCmr 74 (16 February 2006)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Lisa Groom, the owner of Lots 15, 61 and 138

I hereby order that within 14 days of the date of this order, that the body corporate provide to the applicant five (5) (fob) keys which are in addition to the ten (10) keys previously issued to the applicant. If, prior to the introduction of the new security system, additional keys were provided to lot owners on request for a sum of money, then the body corporate may make a charge for the five (5) keys now to be issued to the applicant. If prior to the introduction of the new security system, additional keys were supplied free of charge, then the body corporate shall provide the additional five (5) keys free of charge.

I further order that the application for orders in the alternative and for costs are dismissed

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0771-2005

"Thornton Tower" CTS 12433

APPLICATION

This amended application dated 2nd November 2005 by Lisa Groom (the applicant), the owner of Lots 15, 61 and 138 against the body corporate (the respondent). The applicant is seeking the following outcomes:

JURISDICTION

"Thornton Tower" Community Titles Scheme 12433 is a scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). There are 144 lots created under a Building Unit 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:

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)).

There is no jurisdiction to award costs save in certain prescribed circumstances, for example, to the respondent where an applicant’s application is dismissed for being vexatious or frivolous.

INTERIM ORDER

The applicant sought interim orders that the body corporate provide her with an appropriate number of keys to allow access for her tenants whilst awaiting final determination of her application; that it is ordered to provide such keys in the interim period at the applicant’s expense; such further interim orders as may be necessary; and costs.

On 4 November 2005, I made the following interim order:

"that the body corporate for Thornton Tower provide to the applicant Lisa Groom at her expense and within 14 days of this order, three (3) plastic fob keys for her use in relation to Unit 138."

SUBMISSIONS

The applicant, through her lawyers Short Punch and Greatorex says that she needs three keys for each lot owned by her (9 keys), in addition to the seven already issued to her by the body corporate, the total being 16 keys. The applicant gained three more keys after the interim order, making her application now for 6 more keys.

Of the 7 keys issued to the applicant prior to the interim order, three were for unit 15 where the applicant lives, two were for unit 61 which is rented, and two were for unit 138. Unit 138 is available for rent but the applicant says that as she had to give the four tenants of Unit 61 a key each, she could not before the interim order offer prospective tenants of Unit 138 access to the building although she can gain access to the unit itself. Unit 61 was tenanted by 4 university students who do share the same timetable.

She says that in the past, the practice was for body corporate to provide keys to the lot owner on request and on payment by the owner of the required fee. She was led to understand that this practice would not change with the new system, and she remains willing to pay for the keys she requires. Previously she had five keys for each unit (15) approved by, and made available to her, by the body corporate and may have had more which were not meant to be still in circulation.

The applicant further says that the decision of the committee to institute a new key system did not include consultation with lot owners, and that the costs of installing a new security system exceeded the spending limit of the committee for improvements, and should have been authorised by special resolution of the body corporate in accordance with section 113 of the Standard Module.

Following the interim order, 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) and the committee. A submission was received from the committee and form two lot owners, Michael Friedman. (Mr Friedman) and Ruth Groom (Ms Groom).

Mr Friedman was concerned that allowing the applicant a greater number of keys posed a security risk to the building and its residents. He finds the applicant’s request for keys unreasonable. Ms Groom feels that all lot owners should be able to have as many keys as they wish if they pay for them. She has been refused extra keys and has lived in Thornton Towers for over 30 years.

The committee made a submission through body corporate lawyers Adamson Bernays Kyle and Jones. The committee points out that the computerised fob security system was approved by the committee at a committee meeting on 8th August 2005, the aim being to prevent entry into the building by unauthorised persons. All occupiers and owners were notified of the new system by letter dated 23rd September 2005. The applicant was issued with 7 of the new keys, being three keys for Unit 15, and two keys each for Unit 61 and Unit 138 respectively. The committee believes that the issue of two keys per unit is "industry practice."

The committee suggested in a letter dated 4th November 2005 and sent at the time of the interim order that a mechanism be put in place whereby a lot owner would be entitled to a certain number of keys automatically, and that where proprietors required additional keys, they could apply to the Committee for them "on the basis that, in the case of a bone fide long term tenants (sic) who agree to be bound by the by-laws, additional keys will be available to Lot Owners for use by those identified tenants for the specific period of their tenancy or any extension of it." For short term tenants, the committee proposed the question be left to the discretion of the caretaker/letting manager.

A copy of the committee meeting minutes for 8th August 2005 show that the quotation of API Locksmiths for the new security system was for $18,590 and that the fob keys can be " de-programmed" to prevent entry into the building by unauthorised persons.

It its submission dated 25th November 2005, the committee says that the new key system was implemented to overcome "a significant security problem" whereby tenants had retained keys to the common property after moving. The submission states at paragraph 4. that "the committee has resolved" a five point scheme (the five-point scheme) for the issuing of keys, including that two keys are to be given to each lot owner; where two or more people reside in a lot, the lot owner is entitled to one additional key at a cost of $30, which fee is reviewable. The building manager will maintain a register of issued keys, and may "de-activate " a key which has been lost or "retained by somebody who is not (sic) longer entitled to reside in the building.." The submission does not state when this resolution was made, although it would appear to be after the making of the interim order, as at 4th November 2005, the committee was only suggesting such a system be formulated.

The applicant made a written reply to submissions through her lawyers under section 244 of the Act. She says she was never made aware how the new system was to be administered, or of any formal policies or guidelines. She requests that if there are to be formal guidelines for the issuing of keys that the committee be denied from unreasonably withholding a key from an applicant, and that no keys are to be de-activated without the express written authority of the person held responsible for the key.

DETERMINATION

Certain facts are not in dispute. At the committee meeting on 8th August 2005 the Committee resolved to update the key security system (fob system) in the building. The minutes of the meeting of this date provided by the committee indicate that:

There is nothing noted in the minutes about guidelines or the policy for issuing the keys, save that the initial issue of keys would be sent from the body corporate manager’s office to each owner.

I have two concerns with the committee meeting of 8th August 2005. Firstly, a decision of the committee is a decision of the body corporate provided the decision is not on a restricted issue for the committee (section 100, Act). Certain decisions may be on a "restricted issue" for the committee as set out at section 26(1)(b), of the Standard Module.

(1) A decision is a decision on a restricted issue for the committee if it is

(e) to start a proceeding, other than-- etc,

As stated in the interim order, it is not disputed that the applicant previously enjoyed the benefit of 15 keys. The introduction of a new system should not have altered that right. If the committee sought to restrict that right or privilege, then the matter is a "restricted issue" that must be put to a general meeting of the body corporate. It does not appear that there has been a general meeting putting the new policy for issue of keys to the lot owners.

Even if that had been put as a motion to the body corporate, the body corporate must be aware that any policy or by-law which discriminates between owners and tenants, or long stay tenants and short-stay tenants, or any types of occupiers will be unlawful (section 180(5) Act). If a lot may lawfully be used for residential purposes, the by-laws (nor any policy of the body corporate) cannot restrict the type of residential use (section 180(3) Act.) The body corporate may not prevent a lot owner from leasing a lot (section 180(4) Act. All occupiers have rights to use all the common property, not set aside for exclusive use.

The body corporate has a duty to act reasonably in the administration of the common property and the body corporate assets, and in carrying out its functions. ( Section 94 Act).

"Industry practice," referred to frequently by the committee, has no grounding in the legislation. It is not clear what "industry" is referred to, whether it is the industry of holiday letting, tourism, real estate tenancies or some other "industry." The body corporate may of course adopt reasonable, fair and sensible arrangements for issuing keys, and maintaining security.

Secondly, the committee carried a resolution to spend more than the permitted limit of committee spending being $125 times the number of lots. ($18,000). However, this point has not been raised by the applicant although she states that the costs of installing the security system, if more than $43,200 should have been put to a general meeting and been voted on by special resolution. (Section 159 Act and section 113 Standard Module). That would be correct, but since the cost of installing the security system appears to be $18,590, this should have been put to a general meeting for a vote by ordinary resolution as it is within the limit of spending on improvements to the common property. I do not have enough information about the cost of the installation to make an order in respect of this matter, which is not strictly within the area of dispute.

The expense has been incurred and that the new system is now operational. The applicant has not specifically sought to invalidate the decision, but to retain a particular right she had previously enjoyed. In addition, it would appear that other lot owners have not disputed the decision given the submissions made to the application. However, it is evidence that the committee has a somewhat cavalier approach to committing the body corporate to major changes without consulting the body corporate.

That leaves the issue of the number of keys to which the applicant should have access . In the committee’s submission to the final order application, the committee represented the five point scheme as a resolution of the committee. There is no evidence that the committee made this decision, or if it did that it contemplated its restrictions under section 26 of the Standard Module as set out above.

In my view, this is fundamental to the resolution of this dispute. The committee has imposed a system to which section 26 applies and the committee must put the matter to owners for their determination, mindful of section 180 of the Act which refers to by-laws but which would encompass any "policy" or "house-rule" less than a by-law.

It is reasonable to allow the applicant (an indeed any other lot owner) to possess the number of keys which she had use of previously until otherwise determined by body corporate at a general meeting. I do not propose to establish an exhaustive list of conditions with regard to the application of the new key system. This is a matter for the body corporate and lot owners provided it is reasonable (Section 94 Act), eg, keys only to be de-activated on the written instruction of the lot-owner that a key is lost or a tenancy has ended, or on enquiry being made by the caretaking service contractor. Such matters should be voted on at a general meeting.

I understand that the arrangement prior to the introduction of the new key system was that spare keys could be purchased. If that was the system, the body corporate may charge for the issue of additional keys without going to a general meeting. However, if the arrangements now proposed changes the rights, privileges or obligations of the owners from the previous arrangements, then the question of payment for additional keys is another matter which must be out to a general meeting if the committee wishes to change it.

The applicant should now be given five more keys to bring the total number of keys issued to the applicant to 15. If previously, the applicant would have had to pay for additional keys above a certain number, then the body corporate may charge the applicant for these keys.

The applicant has, without much determination, sought costs for loss of rent, or loss of rental opportunity in Unit 138. I have no jurisdiction to award such costs and this part of the application is therefore dismissed.

Number of Scheme:	12433
Name of Scheme:	Thornton Tower
Address of Scheme:	31 Thornton Street SURFERS PARADISE QLD 4217

(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.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Thornton Tower [2006] QBCCMCmr 74 (16 February 2006)