Scenic Pocket [2006] QBCCMCmr 78 (20 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0673-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30012
Name of Scheme:	Scenic Pocket
Address of Scheme:	11 Scenic Road KENMORE QLD 4069

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

Diann Buck, the Owner of lot 1

I hereby order that the application for orders That an Adjudicator makes an order declaring that Motion No 2 New CMS a resolution purportedly passed at an Extraordinary General Meeting of the body corporate for "Scenic Pocket" Community Titles Scheme 30012 held on 20 June 2005 is void. If satisfied that a by-law is, having regard to the interests of all owners and occupiers of lots included in the scheme, oppressive and unreasonable – an order requiring the body corporate to lodge a request to record a new community management statement- (a) to remove the new by-law, voted by special resolution in the new CMS at an EGM of the body corporate for Scenic Pocket held on 20 June 2005; and (b) to restore the First Community Management Statement executed on 17/1/02. Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0673-2005

"Scenic Pocket" CTS 30012

The purpose of this replacement statement of reasons is to correct an error which appeared in the original statement of reasons dated 14 February 2006. In the last sentence of the last paragraph under the heading "Submissions", below, the words two lots have been replaced with one lot.

THE SCHEME

Scenic Pocket Community Titles Scheme is a 8 lot scheme registered on a Standard Format Plan under the Body Corporate and Community Management Act 1997 (Act). The Standard Regulation Module (Standard Module) applies to the scheme.

APPLICATION

This application is by Ms Buck, the owner of lot 1 who seeks the following outcomes:
That an Adjudicator makes an order declaring that Motion No 2 New CMS a resolution purportedly passed at an Extraordinary General Meeting of the body corporate for "Scenic Pocket" Community Titles Scheme 30012 held on 20 June 2005 is void.

If satisfied that a by-law is, having regard to the interests of all owners and occupiers of lots included in the scheme, oppressive and unreasonable – an order requiring the body corporate to lodge a request to record a new community management statement-

(a) to remove the new by-law, voted by special resolution in the new CMS at an EGM of the body corporate for Scenic Pocket held on 20 June 2005; and

(b) to restore the First Community Management Statement executed on 17/1/02.

BACKGROUND

The applicant claims that the new CMS dated 18/7/2005 is inconsistent with the Act, particularly section 180(1), (3), (5) & (6). It is claimed that new by-law 11 is inconsistent with the Act as it is oppressive and unreasonable. It is claimed that homes have been built on all lots except lots 1 & 3 without having to comply with new by-law 11.

New by-law 11 provides that an owner of a lot is to obtain prior written condsent of the body corporate before commwencement of any building work on the lot.
By-law 11(3) provides as follows:
In considering whether or not to approve the proposed works the body corporate must have regard to the following:
(a) no lot may be subdivided;
(b) no lot may contain more than one detached house;
(c ) houses must have a minimum gross floor area of 270 square metres;
(d) each house must have a lock up double garage;
(e) walls of houses must generally be constructed of rendered brickwork;
(f) roof eaves must project a minimum of 450mm past the face of external walls;
(g) houses, balconies and windows must be designed to consider the privacy of adjoining allotments;
(h) driveways, landscaping and fences must be completed within 90 days of occupancy of the house;
(i) fences must finish at least 1 metre behind the front corners of the house, due considerations can be given on merit by the body corporate;
(j) any external fixtures such as airconditioners or TV antennae must be approved by the body corporate;
(k) no external plumbing is to be visible from the street;
(l) roofing material must be non reflective;
(m) the external paint colour of buildings is to blend in with the natural surrounds;
(n) only colourbond roofing material is to be used;
(o) roofs are to be pitched. Flat styled roofs are generally not permitted, however a flat or curved roof home demonstrating architectural merit may be considewred on its individual merits.

It is also claimed that the by-law offends 180(3) as it "restricts the type of residential use of lot 1 that I purchased the block to enjoy". The applicant claims that the land was sold on the basis that it could be subdivided and she therefore paid a higher price for the land. The new by-law places restrictions on the type of house that can be built on the block. It is claimed that as well as being oppressive and unreasonable, the by-law is discriminatory and imposes a monetary liability.

SUBMISSIONS

Submissions were received from the body corporate and 5 other lot owners. One submission incorrectly assumes that the purpose of the by-law is to prevent sub-division of the lot.

The other submissions oppose the application and state that the new CMS containing by-law 11 was introduced to ensure all future developments conform to the same standards, guidelines and "building covenants" which formed part of the original sale contracts for lots in the scheme. Annexure 2 to the original contracts of sale contained the following covenants:

• Each allotment will only be approved for one single detached house;
• houses must have a minimum gross floor area of 270 square metres not including garage;
• each house must have a lock up double garage;
• walls of houses must generally be constructed of rendered brickwork;
• roof eaves must project a minimum of 450mm past the face of external walls;
• houses, balconies and windows must be designed to consider the privacy of adjoining allotments;
• driveways, landscaping and fences must be completed within 21 days of occupancy of the house;
• fences must finish at least 1 metre behind the front corners of the house, due considerations can be given on merit by the body corporate;
• any external fixtures such as airconditioners or TV antennae must be approved by the body corporate;

It is submitted that existing owners bought into the development specifically because there were controls on the style and character of the development and it is unreasonable for this to be compromised by 1 new owner.

The owner of lot 2 advised that the covenants/ controls have been applied to and complied with by the other owners. Although not subject to the covenants, the building on lot 2 was constructed in 1972 and plastered and painted to fit in with the development. Any future modifications to lot 2 will need to comply with by-law 11. It is further advised that external fixtures on the other buildings have been approved by the body corporate. Finally it is submitted that the requirement to build houses to a particular standard on the lot owned by the applicant should not be regarded as the imposition of a monetary penalty.

JURISDICTION

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

(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.

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)).

DETERMINATION

In hindsight it may have been preferable for the original proprietor to include the relevant development controls in the scheme by-laws rather than in the original sale contracts as there are obvious difficulties in enforcing such covenants against subsequent purchasers.

Nevertheless, I am of the view that by-law 11 contained in the new CMS is a valid by-law. I am unable to see any thing harsh or oppressive about this by-law as it seeks to impose certain building controls in order to maintain uniformity of the development.

The legislation provides that a body corporate is able, by by-law, to regulate the use and enjoyment of lots included in the scheme (see section 169(1)(b)(i) of the Act) and a recent appeal decision of an adjudicator’s order in the Brisbane District Court on 4 September 2002, provides guidance as to how a by-law may regulate the construction standards of dwellings in a scheme.

In Mineralogy Pty Ltd v. The Body Corporate for "Lakes Coolum" CTS 233375, the District Court considered whether a body corporate by-law (By-law 53) could regulate construction, alterations, etc, on a lot, including that
An occupier must not carry out any construction, improvements...on a lot...(" the Works") other than those to which the Body Corporate Committee...or agent as may be nominated from time to time by the Committee...has given approval in writing.... that the Works are in harmony with the architectural design, quality, style, colours, materials, aesthetics and landscaping of the then existing improvements on other lots and the common property in the scheme,

At page 4 Judge Wylie QC states
The primary question here is whether By-law 53 is one which regulates the use and enjoyment of a lot. In my opinion the operative three words are to be read as having their ordinary meanings. I consider that a by-law regulating the use and enjoyment of a lot is one which governs, controls or restricts the way in which a lot may be used while the by-law is in operation. That includes, in my opinion, a by-law which, when operating, defines what may be built upon a lot since the building activity is "use" of the lot and, further, occupation of the completed building is part of the enjoyment of the lot. That a by-law may expressly or by necessary implication prohibit some activity which would otherwise be the use and enjoyment of a lot does not mean that, if other uses and means of enjoyment are permitted, the by-law is not one which regulates the use and enjoyment of the lot in question. I refer to the well established principle that prima facie powers to regulate an activity does not include a power to prohibit that activity altogether: Foley v Padley (1984) 154CLR349."

He went on to say that the environmental and building controls could be contained in a by-law, and at page 6 said
"My conclusion is that, as By-law 53 of the respondent (the body corporate) does no more than regulate how an owner or occupier of a lot in the scheme may use and enjoy the lot by building thereon a dwelling house, the by-law is intra vires (ie within power)."

It is therefore obvious that the Court’s view of what a body corporate may do by by-law to regulate the construction of dwellings and the addition of improvements, is a wide one. Further , I am unable to see anything discriminatory about the by-law. The by-law applies equally to any future construction on all vacant lots and to future building or renovations to all lots.


Finally, I am unable to agree that the by-law involves oppression or a "fraud on the minority".
There is a considerable amount of case law regarding the application of the doctrine of "fraud on the power" or "fraud on the minority" from which it is clear that the doctrine is applicable to cases where a power is used for an ulterior purpose to benefit certain persons at the expense of others.

See for example Peters American Delicacy Ltd. V Heath (1939) 61 CLR,
Gambotto v WCP Ltd. (1995) 182 CLR
Houghton v Immer (No.155) Pty. Ltd. (NSW CA 40764/96).

In this case the by-law merely seeks to maintain a certain standard of construction within a particular scheme consistent with the standard of houses which have already been constructed within the scheme.

I have therefore dismissed this application.