Waterfront Place - Noosa [2006] QBCCMCmr 743 (21 September 2006)

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

I hereby order that the application for orders:

1. That in pursuance of the Body Corporate's obligation to lodge a request for a new CMS to be recorded in the DNR pursuant to section 65 of the Body Corporate and Community Management Act 1997 it must carry out and be directed to carry out the functions given to it under that Act and the Community Management Statement and in doing so must be further directed to act reasonably pursuant to Section 94 of the Act.

2. That the committee of the Body Corporate by way of joint secretaries elected put into effect the lawful decisions of the Body Corporate made on 4 April 2005 when the Body Corporate, at an EGM, validly resolved to record a new Community Management Statement.

3. That Edward John Aitken and Samuel Di Rosa, in their joint capacity as Secretary, both be directed to sign the documentation required to record the new Community Management Statement in the DNR pursuant to the 4 April 2005 Resolution or any subsequent resolution that may be validly passed at a general meeting of the Body Corporate to enable the Body Corporate in respect of recording a new Community Management Statement in the same format as lodged under dealing number 7087946679 to comply with the provisions of Section 65(1) of the Act.

4. In the alternative, in the event that a resolution without dissent cannot be achieved to pass the resolution or authority for only one signatory for and on behalf of the Body Corporate to record a new Community Management Statement, or Samuel Di Rosa is unwilling or refuses to sign under seal or otherwise the new Community Management Statement and associated documentation to enable same to be recorded in the DNR then the Commissioner direct that the signature of Samuel Di Rosa be dispensed with the DNR entitled to receive a written direction from the Commissioner that the new Community Management Statement be recorded without the signature of Samuel Di Rosa or that in such an event a Statutory Declaration of Edward John Aitken accompanying a copy of the Minutes of any general meeting of the Body

Corporate evidencing that the Body Corporate validly consents to the recording of a new Community Management Statement in the same format as lodged under dealing number 708794679 shall suffice to allow the DNR to register such new Community Management Statement.

5. That, so far as it is able, the Commissioner order that Samuel Di Rosa pay any costs of the Body Corporate's in convening any further meeting or meetings of the Body Corporate to consent to the recording of the new Community Management Statement.

6. Any other orders that are deemed necessary or appropriate.

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0357-2006

"Waterfront Place - Noosa" CTS 3592

Application

Gympie Tee Pty Ltd, the owner of Lots 1, 2, 4 & 5 (the applicant) has sought the following orders:

Jurisdiction

"Waterfront Place – Noosa" Community Titles Scheme 3592 is a 5 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Small Schemes Module) Regulation 1997 (Small Schemes 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

(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.

Background

Waterfront Place, Noosa consists of 5 lots, 4 of which are owned by the applicant. Three of the lots are at ground level and abut what is described as a forecourt in front of the building. There are 2 lots upstairs. The minority owner owns lot 3.

On 14 April 2005, Adjudicator Dowling ordered that the positions of secretary and treasurer of the body corporate are jointly held by Mr Samuel Di Rosa as the nominee of the owner of Lot 3 and Mr Edward John Aitken as the nominee of Gympie Tee Pty Ltd, the owner of Lots 1, 2, 4 and 5.

History of By-Laws referred to in dispute

Date & dealing Number	Relevant by-laws
19-12-1992 601128006	29. Exclusive use – car space (a) The proprietors for the time being of each lot in the building shall be entitled to the exclusive use and enjoyment of the car space specified in the plan annexed hereto and marked with the letter "A" the identifying number of which is identical with the number of the lot owned by such proprietor. (b) Each proprietor to whom exclusive use and enjoyment of a car space is given pursuant to this by-law shall use the car space for the purpose of car parking only and shall not litter or use the same to create a nuisance and each such proprietor shall be responsible for the performance of the duty of the Body Corporate under Section 37(1)(c) of the Act. (c) Each proprietor to whom exclusive use and enjoyment of a car space is given pursuant to this By-law shall have the right to erect on such car space a carport provided all necessary local authority or other approvals have been obtained and provided the design, colour and materials of such carport shall be first approved by the Committee. Any such carport shalt be maintained in good order and condition by such proprietor. 30. The Body Corporate shall have the right at any time to grant to the proprietor of Lot 3 on such terms and conditions as the Body Corporate considers appropriate a licence to use an area of common property in front of lot 3 for the purpose of an outdoor eating area and to place tables and chairs thereon.
31-1-1995 700477772	31. The Body Corporate shall have the right at any time to grant to the proprietors from time to time of Lots 1 and 2, on such terms and conditions as the Body Corporate considers appropriate, a licence to use an area of common property in front of Lots I and 2 for the purpose of an outdoor eating area and to place tables and chairs thereon.
6-11-1998 702993781	By Law 31 removed
16-12-2004 70830096	31. The Body Corporate shall have the right at any time to grant to the proprietors of Lots 1 and 2 (but subject to Sec 72 of the Act) (and to amend same) a lease for three (3) years or less on such terms and conditions as the Body Corporate considers appropriate over part of the forecourt of the common property directly in front of each lot for purposes of an outdoor eating area in accordance with the Body Corporate By-laws and all statutory authorities’ regulations. The areas of such common property being as specified in the plan annexed hereto and marked with the letter "B" the identifying number of which is identical with the number of the lot owned as set out in the table below. 32. The Body Corporate shall have the right at any time to grant its consent to a sub-lease in favour of any lessee of the registered owner from time to time of Lots 1, 2 or 3 to use the area in accordance with the terms of the lease and the Body Corporate By-laws and all statutory authorities’ regulations.
4-7-2005 REJECTED on 14-2-2006	30. Leases of Common Property Area The Body Corporate shall have the right at any time to grant to the Lot Owner/s from time to time of Lots 1, 2 and 3 separate Leases of part of the forecourt common property area located between the Gympie Terrace roadway and the building of areas determined by the Body Corporate with such Leases to be: (a) for a term of not more than three (3) years from the date of commencement of such Lease; (b) on terms, covenants and conditions approved of by the Body Corporate’s legal advisors at the cost of the Lot Owner seeking the Body Corporate consent to the granting of such Lease; (c) in a format capable of registration in the Department of Natural Resources and Mines or such other Government Department having jurisdiction to register such Lease documentation from time to time; (d) pursuant to all necessary consents and approvals and otherwise in compliance with all requirements of the Noosa Shire Council or such other authority as may be required regarding the use of such common property area under such Lease with all consents and approvals obtained by or on behalf of the Lot Owner/s of Lots 1, 2 and 3 (as the case may be) prior to the date of commencement of such Lease; (e) for the benefit of the Lot Owner or Tenant of the Lot Owner from time to time of Lots 1, 2 and 3; (f) the subject of a passing of a Special Resolution of the Body Corporate at a General Meeting for the Body Corporate to enter into such Lease on a date prior to the date of commencement of such Lease with the General Meeting of the Body Corporate convened at the cost and expense of the Lot Owner who is to become the Lessee under such Lease from the Body Corporate. 31. Sub-Lease of Common Property Area The Body Corporate shall have the right at any time to consent to a Lot Owner from time to time of Lots 1, 2 and 3 granting a Sub-Lease of a leased area granted under the provisions of By Law 30 provided that such Sub-Lease shall be: (a) on terms, covenants and conditions approved of by the Body Corporate’s legal advisors at the cost of the Lot Owner seeking consent to the granting of such Sub-Lease; (b) in a format capable of registration in the Department of Natural Resources and Mines or such other Government Department having jurisdiction to register such Sub-Lease documentation from time to time; (c) pursuant to all necessary consents and approvals and otherwise in compliance with all requirements necessary of the Noosa Shire Council or such other Authority as may be required regarding the use of such common property area under the Sub-Lease with such consents and approvals obtained by or on behalf of the Lot Owner/s of Lots 1, 2 and 3 (as the case may be) prior to the date of commencement of such Sub-Lease; (d) the subject of a passing of a Special Resolution of the Body Corporate at a General Meeting consenting to such Sub-Lease on a date prior to the date of commencement of such Sub-Lease with the General Meeting of the Body Corporate convened at the cost and expense of the Lot Owner who is to become the Lessor under such Sub-Lease. 32 removed

Grounds

At an adjourned EGM of the Body Corporate held on 4 April 2005 Motion 2 proposed by a Special Resolution that there be a New Community Management Statement to delete to By-laws 30, 31 and 32 from the existing CMS and to be replaced by new By-laws 30 (Leases of Common Property Areas) and 31 (Sublease of Common Property Areas) and, if approved by Special Resolution, that the Body Corporate Solicitors be instructed to prepare a New Community Management Statement and associated documentation for signing under the Body Corporate Seal all such documents necessary to record the New Community Management Statement in the DNR. The motion was passed 4:1, with less than 25% of the lots dissenting and less than 25% of the lot entitlements dissenting.

The new community management statement has no effect unless it is recorded (Section 52 of the Act) and was required to be lodged in the DNR within 3 months after Body Corporate consent (Section 65(1) of the Act)). That is, lodgement was required by 4 July 2005.

Section 62(2) of the Act states that changes to the community management statement require a Resolution Without Dissent. However Section 62(3) provides that only a special resolution is required where the changes only relate to by-laws (other than exclusive use) and changes to regulation module. The applicant states that the changes were solely for the deletion of By-laws 30, 31 and 32 and the inclusion of the new By-laws 31 and 32. Therefore, only a Special Resolution was required.

The Body Corporate’s solicitor sent the prepared documentation to the Body Corporate on 25 May 2005 with a request that the documentation be signed and returned for lodgement in the DNR for recording. Mr Aitken signed the documents on behalf of the Applicant as co-joint secretary and then forwarded it to Mr Di Rosa for execution on 10 June 2005.

Despite the Body Corporate making fourteen (14) telephone calls to Mr Di Rosa between 27 May 2005 and 1 July 2005 inclusive Mr Di Rosa failed to sign the documentation on or before 4 July 2005.

The applicant points out that the Body Corporate is required to carry out the functions given to it under the Act and must act reasonably pursuant to the provisions of Section 94. The Body Corporate must put into effect the lawful decision to record pursuant to the provisions of Section 10192) of the Act. By his inaction, Mr Di Rosa has prevented the Body Corporate from satisfying its obligations under the Act when he was reasonably requested to do so as a co-secretary.
Despite lacking Mr Di Rosa’s signature, the Body Corporate’s Solicitors elected to lodge the new community management statement in the DNR to meet the deadline for lodgement of 4 July.

On 6 July 2005 the DNR requisitioned the lodgement as follows "If the CMS is not signed under seal by at least two committee members, one being the Chairperson or Secretary (or the Secretary or Treasurer with another for Small Schemes) the Registrar of Titles will require evidence of the authority for execution. Suitable evidence would be a copy of the Ordinary Resolution signed by a Committee Member, with a statement verifying that it is a true copy of the resolution."

The applicant attempted to secure authority to attach the seal and sign the documents on his own, by proposing motion to authorise this. The motion was defeated at an EGM held on 5 October 2005. Despite Statutory Declarations declared by Mr Aitken on 2 August 2005 and 5 December 2005 being presented to the DNR, the DNR then advised that failing attachment of the seal, for the requisition to have been satisfied the Body Corporate must produce a Resolution without Dissent authorising one person to sign the new community management statement documents. This Resolution must be signed by a Committee Member and then an additional statement would be required verifying that the Resolution was a true copy of the Resolution.

Without the cooperation of Mr Di Rosa it was not possible to attach the seal in the presence of the Secretary or Treasurer and at least one other person. Therefore the DNR requisition was not capable of being satisfied and the new community management statement has been rejected.
Solicitors acting for the Applicant wrote to Mr Di Rosa on 10 April 2006 seeking his confirmation that he would sign a new community management statement. The applicant advised that he would need to take the matter to this office if he would not sign.

Mr Di Rosa’ solicitors wrote to the applicant’s Solicitors on 4 May 2006 stating that Mr Di Rosa would not voluntarily be signing the new community management statement. They refer to the Inaugural General Meeting of the Body Corporate held on 24 August 1992 and a resolution that provides:

(*Subsequent to the typing of the Minutes a handwritten word "out" was inserted after the word "with" and before the next word "dissent".)"

Despite the anomaly in the wording of the typed Minutes, if the Notification of Change of By-laws was passed by a resolution without dissent it did not specify in those Minutes that any subsequent change of By-laws would need to be passed by way of a resolution without dissent. A further change of By-laws was registered in the DNR under Dealing Number 708300936 on 16 December 2004 as a result of the passing of a special resolution at the AGM held on 22 October 2006. Consent may be by special resolution if the difference between the existing Statement and the New Statement is limited for differences in the By-laws other than a difference in Exclusive Use By-laws. On the basis of the wording of the 24 August 1992 Minutes there is no basis for the argument that the only way that By-laws can be repealed is by way of a resolution without dissent.

Submissions

The respondent submits as follows:

By-laws were lodged on 28 August 1992 containing by-laws 1-28 (by special resolution) and by-laws 29 and 30 (by resolution without dissent). By-laws 29 and 30 related to the grant of "exclusive use/special privilege" under section 30(7) of BUGTA. The plan attached to the form identifies the car spaces granted to each lot under by-law 29 and the outdoor dining area granted to lot 3 under by-law 30. The respondent attaches the relevant dealing and refers to written requisitions on the backing sheet. The respondent asserts that the Department of Natural Resources clearly considered by-law 30 to be an exclusive use/special privilege area, and they also required it to be identified on a plan.

A community management statement was lodged on 6 November 2002 which contained its existing lot entitlements and the existing by-laws. The plan attached is incorrect in that it does not show the exclusive use/special privilege area for lot 3, however this was rectified in the next community management.

Mr Aitken chaired the annual general meeting of the body corporate held on 22 October 2004. Among other things the body corporate passed the changes to the by-laws 31 and 32 which were registered 16-12-2004.

Following the annual general meeting on 22 October 2004, Mr & Mrs Di Rosa lodged the application which resulted in the order of 14 April 2005 that the position of secretary and treasurer be held jointly by the nominee of the two lot owners. As a consequence of the order regarding the composition of the committee, the seal is to be used by both parties jointly as secretary.

However as a consequence of the passing of the by-laws at the annual general meeting of 22 October 2004, the new by-laws were registered under the signatures of the previous committee composition in the interim.

At that time, Mr and Mrs Di Rosa were not aware that this community management statement had been lodged. It was only after a search of the body corporate’s records that they ascertained that Cartwrights Tebbett & Ostwald had been instructed by the body corporate manager, Qld Body Corporate Management, in November 2004 to prepare the new community management statement .

At an extraordinary general meeting on 7 March 2005 (partly adjourned) it was resolved by ordinary resolution to approve an application for material change of use (restaurant) of the footpaths outside lots 1 and 2, owned by the applicant, to be lodged with council. At the adjourned extraordinary general meeting on 4 April 2005 the body corporate considered the following motions:

At the meeting on 7 March 2005, Mr & Mrs Di Rosa produced a letter from their solicitors concerning the validity of motions 2, 3 and 4:

At the reconvened meeting on 4 April 2005, Gympie Tee Pty Ltd produced a letter from McKenzie Lawyers disputing the advice obtained by Mr & Mrs Di Rosa. The chairperson of the meeting, Mr Aitken, preferred his own lawyer’s advice and proceeded with the consideration of the motions. All were passed by Gympie Tee Pty Ltd using its majority voting power. At the meeting, Mr & Mrs Di Rosa requested that solicitors not be engaged to draw up the new community management statement as there was disagreement between the parties as to the validity of the motion.

On 10 June 2005 Mr Di Rosa was sent a letter the body corporate manager requesting Mr Di Rosa to attend their office to execute a new community management statement implementing the resolutions of the extraordinary general meeting.

Following the letter of 10 June 2005, Mr McDonell rang Mr Di Rosa (and to the best of his recollection not more than two times) requesting that the new community management statement be signed. Mr Di Rosa responded that he was not prepared to sign the community management statement which removed his exclusive use/special privilege area and that such removal could only be made with his consent which was not going to be forthcoming.

Despite the protests of Mr Di Rosa, the community management statement (with only the signature of Mr Aitken) was subsequently lodged on 4 July 2005. It was only when Mr Di Rosa conducted a search of the body corporate’s records that he found out that the community management statement had been lodged for recording.

Mr Aitken called an extraordinary general meeting, which was held on 5 October 2005 to gain authority (by way of ordinary resolution) to sign a statutory declaration for the Department of Natural Resources. At that meeting, Mr Di Rosa re-iterated his position that he disagreed with the lodgement of the community management statement.

Mr & Mrs Di Rosa were not kept informed as to what was happening, having to search the records to ascertain that the community management statement had been lodged. At no time did Mr Aitken contact Mr Di Rosa to discuss the issue. At all times, Mr Aitken used his majority voting power to railroad these matters through the body corporate. This is evidenced by the fact that the first time this matter was considered at the 22 October 2004 meeting, it was considered by resolution without dissent which was lost. After that time, Mr Aitken decided to consider the matter by special resolution as he had the majority voting power to have a special resolution carried.

The respondent argues that original by-law 30 was recorded under BUGTA and granted exclusive use/special privilege to the owner of lot 3 pursuant to section 30(7) of BUGTA. On 13 July 1997 the by-law was retained, pursuant to section 283 (now section 337) of the Act, as the body corporate was deemed to have adopted the Body Corporate and Community Management (Standard Module) Regulation 1997 and the by-laws that were in force immediately before 13 July 1997, continued to apply and this is re-enforced by section 286 (now section 340) of the BCCMA, which specifically provides that:

The fact that the body corporate later adopted the Small Schemes Module does not affect the validity of original by-law 30.

The respondent argues that any amendment to an exclusive use by-law is now governed by sections 170 and 171 of the Act. The by-law may only stop applying to the lot if the lot owner agrees in writing before the passing of a resolution consenting to the recording of a new community management statement that does not incorporate the by-law or the lot owner votes personally on the matter.

This is re-enforced by section 35 of the Small Schemes Module which provides that if a resolution without dissent, special resolution or ordinary resolution is required for a particular purpose, then a resolution amending or revoking the resolution must be of the same type. Original by-law 30 was passed by resolution without dissent and therefore can only be repealed by resolution without dissent.

Mr & Mrs Di Rosa have not consented to the repeal of by-law 30 and specifically voted ‘no’ to the repeal of by-law 30 on all occasions it was put to a meeting of the body corporate. This is evidenced by the minutes of 22 October 2004 and 4 April 2005 was passed by the owner of lots 1, 2, 4 and 5 using its majority power to ensure the resolution was passed.

The letter from Wayne McDonnell (annexed and marked H to the applicant’s application) does not substantiate that 14 calls were made.

Mr & Mrs Di Rosa allege that it is Mr Aitken that is not acting reasonably and in the best interests of the body corporate. The body corporate has been put on notice on numerous occasions of Mr & Mrs Di Rosa’s objection to the removal of existing by-law 30, yet the body corporate, through the actions of Mr Aitken and assistance of Mr McDonnell of Queensland Body Corporate Management, attempted to record the community management statement without Mr Di Rosa’s consent. If Mr Aitken was acting reasonably, he should have pursued an application regarding the validity of the motion and execution of the community management statement following the refusal by Mr Di Rosa to countersign the community management statement in June 2005 and not after the community management statement was lodged and finally rejected by the Department of Natural Resources because there was only one signature on it.

It is clear that the Department of Natural Resources had concerns about the documentation and it required to sight a resolution without dissent. The two statutory declarations of Mr Aitken, one dated 2 August 2005 and one dated 5 December 2005, are not attached to the application. Mr & Mrs Di Rosa have obtained a copy of the statutory declaration of 2 August 2005 from the body corporate’s records, but they do not have a copy of the other statutory declaration. The statutory declaration is annexed and marked "DiR9". The statutory declaration refers to Mr Aitken and Mr Di Rosa being "dual" secretary and treasurer as opposed to being "joint" secretary and treasurer. The use of the word "dual" connotes interchangeable, as opposed to "joint" where both must sign.

As previously stated, and now confirmed by the applicant, the original by laws 29 and 30 were passed by way of resolution without dissent. The last paragraph then states that there was nothing in the minutes that any subsequent change of the by-laws were required to be by way of resolution without dissent. This was not necessary. BUGTA specifically provides that by-laws are made, amended, added, or repealed by way of special resolution (see section 30(2)) and exclusive use/special privilege by-laws are made, amended, added or repealed by way of resolution without dissent (see section 30(7)).

Mr & Mrs Di Rosa are concerned about the applicant’s use (or abuse) of its majority voting power and are concerned that the voting power is not being used in the best interests of the body corporate, but rather in the personal interest of the applicant.

At no time has Mr Aitken, either in writing or verbally, explained to Mr & Mrs Di Rosa his reasons for wanting to remove existing by-law 30. Given that existing by-law 30 relates to and is only for the benefit of lot 3, Mr & Mrs Di Rosa can only assume that it is for some ulterior motive.

They attach a letter where the applicant has referred to the respondent as a "minority shareholder in the body corporate".

Any decision of the body corporate is subject to an overriding restriction in that the body corporate must act reasonably in carrying out its functions and in administering the body corporate assets.

The Commissioner’s Office has recognised that lot owners must not use their majority power to exercise a vote for their own benefit, but rather should exercise their vote for the benefit of the body corporate, particularly where the majority lot owner stands to gain a financial benefit from the outcome of the motion. In this regard, the Commissioner’s Office is referred to order numbers 0521-004 and 0613-2004.

In relation to the orders sought the respondent submits:

Outcome 1 sought goes no further than to re-state the legislation. It does not state any specific function it must carry out, but generally the functions under the Act.

Outcome 2 requires the committee to put into effect a decision of the body corporate made on 4 April 2005 which was not a lawful decision in that the removal of by-law 30 had to be by way of resolution without dissent and not a special resolution.

Outcome 3 seeks to require both Mr Aitken and Mr Di Rosa to sign a community management statement which removes existing by-law 30. Given that existing by-law 30 directly affects their exclusive use/special privilege area, Mr & Mrs Di Rosa do not consent to its removal.

If outcome 4 is granted, it has the effect of removing the existing by-law 30, which Mr & Mrs Di Rosa object to.

Mr Di Rosa strenuously objects to any suggestion that he be responsible for the body corporate’s expenses to date in respect of the failure to record the community management statement and in convening any further meetings for this purpose. The body corporate has clearly and unequivocally being put on notice by Mr Di Rosa of his objection to the removal of by-law 30 (such objection being based on legal advice), but this has simply being ignored by Mr Aitken.

The wording of the original licence By-law clearly gave the Body Corporate a mere right at any time to grant a licence to use an area of common property in front of Lot

The handwritten requisition notes by the DNR on the Form 17 requiring the area to be licensed to Lot 3 to be identified again, does not accord with the wording of By-law 30. The plan attached to the Form 17 was to be for purposes of the exclusive use By-law 29 to identify the car parking spaces that would be allocated by way of exclusive use.

The submission is silent on the fact that on 2 May 1995 a Change of By-laws was lodged pursuant to a Resolution Without Dissent passed on 3 December 1994 to include the new By-law 31. No plan diagram was referred to in the wording of By-law 31 to identify the areas of common property in front of Lots 1 and 2. From the Minutes of the Extraordinary General Meeting of the Body Corporate held on 3 December 1994 it was noted that the Motion was carried by way of a Resolution Without Dissent thereby giving equality to Lots 1, 2 and 3 to use parts of the common property area by virtue of a combined reading of By-laws 30 and 31.

At the Annual General Meeting of the Body Corporate held on 19 September 1998 a special resolution was passed that:

The By-laws lodged under Schedule C to the Community Management Statement deleted entirely By-law 31 but allowed By-law 30 to remain and thereby breaching the provisions of Section 171(2) of the Body Corporate and Community Management Act 1997 in respect of the Registered Owners of Lots 1 and 2 by extinguishing rights of that Lot Owner/s.

The deletion of By-law 31 affects the rights and privileges of the registered owners Lots 1 and 2 of which the Minutes of the 19 September 1998 Annual General Meeting of the Body Corporate do not comply with Section 170 nor make reference to nor is there evidence of a written consent of the registered owner of Lots 1 and 2 agreeing to the deletion of By-law 31 in the New Community Management Statement to be recorded thereby leaving By-law 30 to benefit solely the registered owner of Lot 3.

In its letter of 11 March 2004, the Noosa Shire Council wrote to the Body Corporate advising it that it appeared Lots 1, 2 and 3 (or their respective Tenants) may be operating in breach of the approval for Development Permit.

Motion 22 of the 22 October 2004 Annual General Meeting of the Body Corporate sought to achieve, amongst other things, a reinstatement of the rights and privileges of the registered owners of Lots 1 and 2 that were originally By-law contained in By-law 31 which was invalidly removed. The wording of new By-laws 31 and 32 comply with the provisions of Section 72(3)(b) of the Small Schemes Module prescribing any lease be for a further of three (3) years or less requiring a Special Resolution.

Mr and Mrs Di Rosa would have or should have been aware at all times that instructions would have been given to the Body Corporate Solicitors to compile and lodge the New Community Management.

At all times Mr and Mrs Di Rosa were in attendance at General Meetings of the Body Corporate held on 7 March 2005 and 4 April 2005 and were at all times aware that as a result of the passing of the motions that the Body Corporate was empowered to "Instruct the Body Corporate Solicitors to prepare all necessary documentation required for the Body Corporate to endorse its consent on the New CMS documentation and execute under the Body Corporate’s seal all documents necessary to record the New CMS by affixing the seal in the presence of the Secretary and Treasurer."

Multiple attempts were made by the Body Corporate to secure Mr Di Rosa’s signature as joint Secretary between the period 27 May 2005 and 1 July 2005.

It is incorrect to say that Mr Aitken used his majority voting power to railroad matters through the Body Corporate as Motions were submitted in accordance with the provisions of the Act and Small Schemes Module. Mr Di Rosa’s Submissions do not point to any breach or non compliance of the legislation.

It is just and equitable for the extinguished rights and privileges of Lots 1 and 2 to have recognition.

The Applicant refers to the provisions of Section 341 of the Body Corporate and Community Management Act 1997 in regards to By-law 31 that was deleted upon the recording of a Community Management Statement.

Mr Di Rosa’s rights and privileges under By-law 30 were in fact enhanced by incorporating the now existing Small Schemes Regulation Module Section 72(3) for the use and occupation of parts of the common property area by Lots 1, 2 and 3 in equal format. In reality the benefits exclusively in favour of Lot 3 under By-law 30 have not been deleted but have been enhanced and modernised under the current legislation for the benefit of Mr Di Rosa.

The provisions of Section 35 of the Small Schemes Regulation Module does not apply by virtue of a combined reading of the provisions of Section 62(3) of the Body Corporate and Community Management Act 1997 and Section 72(3)(b) of the Small Schemes Regulation Module.

New By-laws 31 and 32 recorded under the New Community Management on 16 December 2004 claw back the rights of the Registered Owners of Lots 1 and 2 to re-establish those rights contained in of By-law of 31.

In the proposed New Community Management Statement lodged (but rejected) an attempt was made to modify the existing wording of By-laws of 30, 31 and 32 to be more flexible and workable than currently exists. As such there can be no loss of rights to the registered owner of Lot 3 if the change of the By-law in fact improves the rights, special privileges and benefits of Mr and Mrs Di Rosa in conjunction with the Applicant whilst at all times Lots 1, 2 and 3 remain on equal footing under the proposed new By laws.

As mentioned in Item 7 above, the rights of Mr and Mrs Di Rosa under By-law 30 remain under the proposed new By-laws 30 and 31 so as to enhance the special privileges, rights and benefits already existing in favour of Mr and Mrs Di Rosa.

It is not correct to say there is a minority status of Mr and Mrs Di Rosa by virtue of the provisions of the Order made by Adjudicator PB Dowling on 14 April 2005 in respect of Application 833 of 2004 as referred to in Item 3 of the Applicant’s grounds. As minority Lot Owner of 1 Lot out of a total of 5 lots Mr Di Rosa is now joint Secretary and Treasurer with Mr Aitken, irrespective of their Lot Ownership in the Scheme and that the seal of the Body Corporate is to be used as Secretary by both Mr Di Rosa and Mr Aitken jointly. In this regard both Mr Di Rosa and Mr Aitken have equality with no existence of fraud on the minority.

Determination

I will limit my discussion to those issues I regard as having a serious question to be considered.

Exclusive Use versus Licence

I refer to the meaning of exclusive use by-law under Section 170(1) of the Act which states:

In my mind the by-law, referring to the giving of a licence to the proprietor of lot 3, does not fall within this meaning for these reasons:

Based on requisitions by the DNR, the respondent argues that the DNR clearly regarded the original registration of the licence as an exclusive use registration. I have taken some time to decipher the requisitions, as best I can:

Date	Text
9-9-1992	Form 17 where indicated. Should not by-law 30 be a grant of exclusive use and adequately identified by means of a sketch plan. Scale on sketch should be shown and the north point.
?	Contents of your letter noted. The Act provides that a Body Corporate may transfer, lease or grant exclusive use of common property. What is the authority for by-law 30.
2-11-1992	The area adjacent to lot 3 over which the licence is to be granted should be identified on the sketch plan.

I also note that the finally registered plan labels the car parks affected under by-law 29 as exclusive use, yet the forecourt area is labelled "licenced (sic) to lot 3".

I am unpersuaded that the DNR viewed the licence as grant of exclusive use. I accept that they initially questioned the mechanism proposed, however I am satisfied that based on correspondence with the lodging party, they determined that the area could be identified and registered as covered by a licence.

In circumstances where the ability to grant a licence does not fall within the meaning of exclusive use, any change to by-laws empowering the Body Corporate to grant a licence is not captured by the exception to Section 62(3)(a) of the Act, and may prima facie be authorised for change by a special resolution.

By inference, Section 89(2) of BUGTA confers authority on the Body Corporate to grant a licence. It states that where a (then) referee makes an order under Section 89, upon registration under section 112, the order has effect as if its terms were a by-law.

It is not clear to me why the Body Corporate has not examined this right to grant a licence and, presumably, their right to revoke the licence. As discussed later however, I have not been provided with any of the terms of the licence granted.

Licence versus Lease

The terms of the licence have not been revealed by either applicant or respondent. The by-law merely states that "The Body Corporate shall have the right at any time to grant to the proprietor of Lot 3 on such terms and conditions as the Body Corporate considers appropriate a licence to use an area of common property in front of lot 3 for the purpose of an outdoor eating area and to place tables and chairs thereon."

While I have not researched this point, it may be that at that time a licence was the chosen method of providing forecourt rights to lot 3, for stamp duty considerations.

A lease has some benefits over a licence. Even if a lease is for a term of less than 3 years, it is afforded the protection provided under Section 185 of the Land Title Act 1994 and need not be registered in order to remain enforceable despite a change in ownership. As a licence does not enjoy the same protection as a registered or a short lease, one cannot assume that the benefit of the licence has necessarily passed from owner to owner.

As the by-law makes provision for terms and conditions to be agreed, it appears that the licence was not intended to be given to successive owners on the same terms in perpetuity. This is reinforced by the separate resolution passed at the meeting of 24 August 1992, where the Body Corporate gave approval for a Deed of Licence to be entered into with the then owners (Hitchin). Assuming that the apparent power to grant a licence under this by-law has been invoked in relation to the current owner of lot 3, I have no detail of the terms and conditions adopted in granting a licence under this by-law e.g. the hours of the licence, the term of the licence, fees for the licence, the termination provisions etc..

The adoption of the Small Schemes Module in September 1998 may have had the unintended effect of removing the power to grant a licence for the scheme. The equivalent provisions within the Standard (Section 111) and Accommodation (110) Modules make specific reference to the "Disposal of interest in and leasing or licensing of common property". However, Section 72 of the Small Schemes Module makes reference only to the "Disposal of interest in and leasing of common property".

The respondent argues that the transitionary provisions of Section 340 of the Act, provide that even though the by-law is not competent for a community titles scheme established after the commencement of the Act, by-law 30 was still able to be included in the CMS. However in my view, the intervening event in this matter is not the commencement of the Act on 13 July 1997, but rather the adoption of the Small Schemes Module in 1998.

The Di Rosa’s purchase of lot 3 was registered on 16 July 2003, well after conversion to the Small Schemes Module. Section 180(1) of the Act provides that if a by-law is inconsistent with the Act it is invalid to the extent of the inconsistency. However Section 310 provides that if a person, honestly and without notice of an irregularity, enters into a transaction with a person who has apparent authority to bind the body corporate, the transaction is valid and binding on the body corporate.

In that event, the Di Rosa’s may like to seek legal advice on the enforceability of any licence agreement they entered into. This office has no jurisdiction in matters relating to contracts.

Some disquiet seems to exist in relation to the majority owner’s preference to move to a lease. In my mind, there was just as much ability to impose a fee or term on a licence as there is a lease. However, with a lease both the lessor and lessee have greater protection of their interests.

Deletion of By-Law 31 in favour of Owner of lots 1 and 2

This by-law was removed at the same time as the scheme moved to the Small Schemes Module. It is arguable that its validity would have ceased at the same time as the adoption of the new module, in the same way as by-law 30.

In my view the applicant’s argument that Section 341 should apply so as to reinstate the by-law cannot succeed. Section 341(1) requires that "immediately before the commencement (13 July 1997) ....... no exclusive use by-law for the purpose of the right or special privilege had been agreed to". In this case, by-law 31 had been agreed to and registered on 31 January 1995, well before the commencement of the Act.

Lease within By-Law

Section 72(4) of the Small Schemes Module provides:

This provision envisages a power within the Body Corporate to grant a foreseen lease, within the Community Management Statement. However, I disagree with the Body Corporate’s attempt to have this captured within a by-law.

Section 72(4) provides that the lease in question must be provided for within the community management statement. Section 66(3)(b) of the Act provides that the community management statement may include anything that the regulation module applying to the scheme says it may include.

Reference to the DNR’s instructions for completing the documentation required for community management statements^[1] indicates that Schedule D should contain "Any other details required or permitted to be included in the CMS. For example - Details that the relevant regulation module says must or may be included in the CMS." This is clearly a reference to the terms of Section 66(3)(b).

I conclude that the provisions of new by-laws 30 and 31 cannot be registered as by-laws and would require an entry in Schedule D. Therefore, introduction of these provisions into the community management statement would require a resolution without dissent.

While I could at this point consider the reasonableness of the respondent’s dissenting vote, I do not believe that the applicant is materially disadvantaged by the omission of these provisions from the community management statement. This is because Section 72 of Small Schemes Module has already conferred power on the Body Corporate to enter into a lease of less than 3 years, by special resolution. In that regard, it is not readily apparent to me why new by-law 30 was proposed in the first instance.

Section 35 and Revocation of Resolution without Dissent

The respondent has argued that, as the licence by-law was originally authorised by resolution without dissent (as the BUGTA required in relation to either "exclusive use" or "special privilege"), then Section 35 of the Small Schemes Module requires that any revocation of that by-law would need to be on the same basis.

The term "special privilege" does not appear in the current act, though the term "special right" does. As discussed earlier, I do not regard the power to grant a licence conferred on the Body Corporate as a by-law that "confers on the proprietor of a lot specified in the by-law ...... special privileges in respect of ...... part of the common property upon conditions specified in the by-law"^[2]. In fact, this by-law specifically states that the terms and conditions are to be established separately.

Therefore, while the Body Corporate resolved at the time to approve the by-law on the basis of a resolution without dissent, it appears that the decision to do so was made based on a different interpretation of the law, rather than on need. I regard by-law 30 as a by-law that does not meet the exception within Section 62(3) of the Act and may therefore be amended or revoked by means of a special resolution.

Fraud on Minority

To establish that there has been a fraud on the minority, the respondent would need to demonstrate that:

The respondents have themselves complained that they do not know the applicant’s reasons for seeking to amend the by-laws. They have expressed some disquiet as to the applicant’s motives and suggested that some of the applicant’s attempts to have the new CMS registered might be seen by some as "sharp". However, it has not been demonstrated to me that the actions of the applicant are inconsistent with concepts of honesty or that the actions can be classified as fraudulent.

Further, I am not persuaded that the changes to the by-laws are motivated only by personal gain. The two most apparent reasons for this are that changes to the by-laws are not necessary in order for the Body Corporate to:

As stated earlier, the Body Corporate’s powers in relation to the licence at this point may be constrained by either or both the power to grant a licence under the Small Schemes Module or the terms of the licence currently on foot.

Further in my mind, all parties’ interests would be better protected by the granting of a short term lease rather than a licence.

I would also like to observe that in considering the reasonableness of the applicant’s decision to move to a lease system (rather than a licence system) should be viewed not in terms of the fact that there is a majority owner, but rather, whether it would be unreasonable for this course of action to be adopted by four different owners of a total of five. The fact that the wishes of a majority owner are different to those of a minority owner does not automatically brand the wishes of the majority owner as unreasonable.

Conclusion

In these circumstances, I intend to dismiss the application. Should the applicant still wish to have the new provisions included in the CMS for some reason, he should again seek a resolution without dissent for a change to Schedule D. If the applicant feels that the outcome of such a resolution is unreasonable, it is open to him to apply to this office for an order overturning any dissenting votes.

^[1] www.nrm.qld.gov.au/property/titles/pdf/form_cms_version2.pdf
^[2] Section 30(7) Building Units and Group Titles Act 1980
^[3] Houghton v Immer [1997] 44 NSWLR 46, pp 52-53
^[4] Dindas & Anor v Body Corporate for One Park Road CTS 2114 & Ors [2006] QDC para 31

Number of Scheme:	3592
Name of Scheme:	Waterfront Place - Noosa
Address of Scheme:	255 Gympie Terrace NOOSAVILLE QLD 4567

•	As the power to give a licence had been given by a resolution without dissent, it could only be revoked by a resolution without dissent;
•	The Body Corporate is not restricted as to the term of a lease, but the type of resolution required depends on the term of the lease. The proposed by-law seeks to limit the term of the lease to 3 years which is outside the Body Corporate’s power;
•	The Body Corporate has no power to declare a resolution or an agreement entered into it as invalid;
•	While the Act is silent on this issue, as the material change of use affects common property, in effect the motion grants to the owners of lots 1 and 2 a special privilege over the Common Property.

•	The by-law does not of itself grant the licence. It merely confers power on the Body Corporate to grant a licence;
•	The wording of the by law gives the Body Corporate the right to grant a licence. It does not give the proprietor of lot 3 the right to receive a licence;
•	Given that it is a power given is to grant a licence to the proprietor of lot 3, it does not necessarily follow that any "right" travels with the lot.

•	enter a lease in relation to common property; or
•	if the power to licence has survived, revoke a licence, decline to renew a licence or negotiate a new licence granted under by-law 30.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Waterfront Place - Noosa [2006] QBCCMCmr 743 (21 September 2006)