Kingston Court [2007] QBCCMCmr 11 (9 January 2007)

Number of Scheme:	14996
Name of Scheme:	Kingston Court
Address of Scheme:	14-178 Marine Parade COOLANGATTA QLD 4225

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

I hereby order that the application for an order:

To over rule motion 4 in the minutes of an Extraordinary General Meeting held on the 28th August 2006 and declare is as a passed motion.

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0790-2006

"Kingston Court" CTS 14996

The Kingston Court community titles scheme (Kingston Court) consists of 15 lots and common property. The community management statement for Kingston Court indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Building Units Plan 51.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Michael and Linda Porter, owners of Lot 14 (applicants) on 16 September 2006. The applicant sought orders against the Body Corporate for Kingston Court (respondent) in the following terms:

To over rule motion 4 in the minutes of an Extraordinary General Meeting held on the 28th August 2006 and declare is as a passed motion.

PROCEDURAL MATTERS

In August 2006 the Commissioner’s Office attempted to organise a conciliation session to assist in the resolution of this dispute. Unfortunately all parties did not agree to conciliation.

Under section 243 of the Act, a copy of the application was provided to the Body Corporate and to all owners, with an invitation to the committee and all owners to respond to the matters raised in the application. Four submissions were received from owners. The applicant inspected the submissions received and made a written reply (see sections 246 and 244 of the Act respectively).

A dispute resolution recommendation was made referring the dispute to departmental adjudication.

MATTERS IN DISPUTE

The application relates to the Body Corporate’s refusal to pass a motion approving the enclosure of the applicants’ garage. The facts of the dispute, as outlined in the application, submissions and reply to submissions, can be summarised as follows.

On 28 August 2006 an Extraordinary General Meeting (EGM) considered Motion 4, submitted by the applicants, that the applicants be permitted to enclose their exclusive use garage area. The motion indicated that the enclosure would be constructed of 35x90mm F5 pine framing, sheeted with 5mm hardy-flex, with doors and walls positioned on the perimeter of the Lot 14 exclusive use area with a door inside the current remote garage door. The motion said there would be no cost to the Body Corporate and that any future repairs and maintenance would be the responsibility of Lot 14. The motion was listed as requiring a special resolution. Of the 15 owners in the scheme, one vote was cast in favour with 10 against (poll results were 157 in favour and 1694 against).

The applicants state that when Kingston Court was built, the carpark beneath the units was open and accessible to all. Individual lockers were provided by the Body Corporate at some point but the applicants state these were not included on his disclosure statement in February 2000 as being allocated to an individual or as part of common property. The applicants have asked to enclose their garage on two occasions but state that the location and accessibility of these lockers seems to be the reason why other owners object to the enclosure.

The scheme was created in May 1966. The Community Management Statement (CMS) was registered on 3 March 1998. However there are apparently no annual general meetings minutes which refer to the new CMS being approved. By-law 13 in the CMS sets out exclusive use carpark areas^[1] which are described in an attached plan drawn by B&P Surveys and dated 28 January 1998. A letter from B&P Surveys dated 16 February 1998 implies that the plan was a preliminary drawing based on the existing car spaces in the scheme. The letter notes some difficulties with the plan including that, as there was an intention "...to give each unit access to the designated storage areas contained adjacent to exclusive use areas 10, 14 and 15. If this is the case the adjacent car spaces will need provision for each unit holder to gain access to their storage area."

In May 2005 the current body corporate manager wrote to owners advising them of the history, as known, of the CMS. It relayed legal advice that to clarify the apparently unapproved CMS, application would need to be made to the Commissioner’s Office to overturn the CMS, accompanied by statutory declarations from owners from 1997/8 confirming the CMS was not approved at a general meeting. If the CMS was overturned, a new survey plan for the car parks would need to be commissioned and a new CMS approved and registered – all at an estimated cost in the order of $5,000 for legal and survey fees. The letter invited feedback from owners but only one responded, advising that they wished to retain the current situation.

The applicants claim that there are "...significant deficiencies and imbalances in the allocation of car spaces when comparing these to lot entitlements." They argue owners have adopted the plan without addressing the ‘obvious’ difficulties and many carpark spaces have been enclosed while they are denied that opportunity. They dispute the need for lockers outside individual carparks and say there is no evidence that any locker is allocated to a specific apartment. It appears the Body Corporate recently spend funds renovating the lockers. They also have concerns about liability insurance because tenants access some lockers through their exclusive use area.

All submissions received from owners oppose the application. Owners who purchased in 1966 say the carpark was initially open but owners voted to enclose the entire garage in October 1983, with all contributing to the cost. Due to the unusual shape of the car spaces for lots 5, 9, 10, 14 and 15, their spaces had to be in a ‘community enclosure’ with lots 10 and 14 and 5 and 15 sharing a garage door. The security door was installed to enable access to Body Corporate and owner storage cupboards. The submission argues that the size of the Lot 14 car space is similar to other small units in the building. They say each of the cupboards is lockable with the lot number on them, and they have treated their cupboard as their exclusive use. They say the whole garage arrangement has worked well and any liability would be covered by the building insurance. The submission says motions on the matter have been defeated by an overwhelming majority.

Another owner says the proposal would inhibit access to the locker which he has had for 28 years. He says his carpark space is in the same location as it was when he purchased and that the location of the lockers (although themselves renewed after deterioration) is unchanged. He suggests it was an oversight if the lockers were not on the disclosure statement. The submission argues that the location and access of the lockers does not prevent the applicants’ enclosure of their garage – the issue is what the applicants claim to be their exclusive use. He says the B&P Survey report was commissioned well after many car spaces were enclosed and was simply a requirement of the new Act. The individual walling was sanctioned by the Body Corporate on the basis of a one car space equivalent, and the size of the spaces was dictated by the concrete support columns which are unevenly spaced. This owner has rejected the applicants’ proposals because the applicants had not provided ‘clear and concise’ plans on what was his exclusive use area. The first request apparently indicated that the security door would be removed and lockers should be cleared out as they were to be demolished. The submission acknowledges that there are some ‘lack of completion’ to the B&P Surveys plan but argues that the applicants have no right to some of the areas which they claim are part of their exclusive use areas.

A further owner says owners make decisions to cater for all owners rather than the betterment of one owner to the detriment of others. She argues that the applicants seek sole possession of an area, including storage cupboards, which is used by all owners of garages at that end of the building. In particular, removing access to the doorway beneath the stairs which has lighting would remove the safest night-time access. The submission suggests that the applicants knew the car parking space available when they purchased Lot 14, and that the sale price took into account the ‘less desirable garage’. She queries why the applicants took five years to raise their concerns.

A final submission by the owners of two lots says the proposal is neither "...feasible, practical nor fair...", as the applicants want to block off three lockers and a door to all owners but themselves. The submission also argues the carpark has never been freely accessible to all – parking has always been allocated. In regard to the size of car spaces comparative to lot entitlements, it says Lot 14 is in the lowest band of lot entitlements. The owners say they would consider supporting the enclosure of Lot 14 if it involved consultation with those affected and did not close off the pedestrian access door. They argue the applicants are simply trying to enclose as large a space as possible and it is not a Body Corporate issue if they have more belongings than their space allows. The submission suggests all committee members other than Michael Porter have left the committee because they know committee business will be monopolised by Mr Porter.

In their reply to submissions the applicants say no-one has provided any proof that the lockers are an entitlement or are not part of the Lot 14 exclusive use area. They note that correspondence was sent to all owners for the AGM on 28 November 2006, suggesting that the CMS be revisited, but only one other lot was represented in person so there was little discussion and no specific motions voted on. Apparently some consideration was given to relocating the storage lockers but I have not received any further information to indicate that this proposal has progressed.

JURISDICTION

I am satisfied that this is a matter which falls within the dispute resolution provisions of the legislation (see sections 227, 228, 276 and Schedule 5 of the Act).

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about:

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

DETERMINATION

This application centres on the right of the applicants to enclose their exclusive use car parking space and the extent of that exclusive use area.

Status of the registered CMS

The applicants query the validity of the CMS and there is certainly some question over whether it has been validly approved. While the CMS has been registered, section 115L(2)(c) of the Land Titles Act 1994 provides that the fact of registration of a CMS cannot be relied upon to demonstrate the validity or enforceability of a CMS.
However the applicants have not sought an order that the CMS as currently registered be invalidated. No specific argument or evidence has been presented, and so other parties have not been invited to respond on this point. Accordingly, it is not appropriate for me to investigate or make a determination or the validity of the CMS. All owners have been put on notice that to clarify the issue a specific application seeking to validate or invalidate the CMS should be lodged with the Commissioner’s Office but to date owners have chosen not to pursue this course of action.

In the absence of a determination that the CMS is invalid, it is reasonable for owners to treat the registered CMS as the current CMS applying to the scheme. I must stress that I am making no determination as to whether the CMS was validly created or not, but merely that owners are entitled to rely on the registered CMS until there is an order of an adjudicator invalidating the CMS.

I do consider that it is in the interests of all owners to clarify this matter, either by lodging an application with the Commissioner to clarify the matter or by simply preparing, approving^[2] and registering a new CMS. The latter may be a more direct solution if owners believe that there are anomalies in the registered CMS that they would like to resolve. Notwithstanding the cost of this course of action, it is desirable that the legal basis of the scheme is unambiguous.

For the information of owners only, I will clarify the situation if an order was sought and granted invalidating the registered CMS. While this scheme was created under the Building Units Titles Act 1965 (BUTA), the introduction of the current Act in 1997 created the concept of a community management statement. A CMS is a key identifying document for a community titles scheme and details the management and administration of the scheme, including lot entitlements and by-laws.^[3] Under the transitional provisions for the new Act, existing building units plans (such as Kingston Court) and group titles plans immediately became a community titles scheme. On commencement of the new Act, these newly created schemes were taken to have an interim CMS with basic information. If schemes did not record a new CMS to replace the interim CMS within three years, the interim CMS became the CMS for each scheme on 15 July 2000, with the by-laws being those that were in place in the scheme as at 13 July 2000.

Accordingly, if the registered CMS was invalidated, the CMS would revert to the contents of the interim CMS. The by-laws for the scheme would be those in place as at 13 July 2000.

When first created, the default by-laws under BUTA would have applied to Kingston Court. In November 1966 by-law amendments were recorded which amended the default by-laws^[4]. The by-laws (which can be obtained through a search of Department of Natural Resources and Water records) largely relate to administrative procedures now covered by the Act and Standard Module. However a new By-law 42 is added which establishes the exclusive use carpark spaces for the lots. The wording of the by-law is very similar to the current exclusive use by-law except that it refers simply to car space numbers rather than areas on a plan.

BUTA was superseded by the Building Units and Group Titles Act 1980 (BUGTA). BUGTA also had ‘default’ by-laws in its Schedule 3 but section 5(10) of BUGTA’s transitional arrangements provide that the by-laws existing prior to the BUGTA continued together with any of the by-laws in BUGTA’s Schedule 3 that were not inconsistent with the former by-laws. In January 1989 a change of by-laws was recorded which formally adopted the BUGTA Third Schedule by-laws. This does not indicate an intention to replace the previous by-laws and so is taken to be in addition.

The by-laws included in the currently registered CMS are very similar to those included in BUGTA Third Schedule although there are differences and in fact they that bear closer resemblance to the default by-laws in Schedule 4 of the current Act. There are two additional by-laws – 12 which relates to transmission of noise and 13 relating to exclusive use by-laws.
It is interesting to note that an earlier version of the registered CMS was lodged for registration in November 1997. This was essentially the same as the registered CMS, except that the version of the new By-law 13 was identical to the By-law 42 which was recorded under BUTA and no plan was attached. Presumably this version was rejected by the Titles Office because it did not clearly identify the exclusive use areas. The original version was withdrawn when the new version with a plan was lodged and accepted for registration.

The upshot of this history is that, in the absence of any further evidence from affected parties, if the registered CMS was deemed to be invalid I would be inclined towards the view that exclusive use areas would be those recorded in 1966. However it would not appear that this would assist the applicants because there is no definition of the boundaries of exclusive use areas.

Sections 170 to 178 of the Act provide for exclusive use by-laws, which give owners exclusive rights and enjoyment of common property or a body corporate asset. Section 171 requires, in part, that the common property or asset to which the exclusive use by-law applies must be ‘specifically identified in the by-law’. It is arguable that the previous version of the exclusive use by-law does not describe the exclusive use areas in sufficiently precise manner. While it is not an issue requiring a determination in this context, it may be that if the registered CMS were invalidated, the previous exclusive use by-law, if tested, could be held to also be invalid for failing the current requirements of an exclusive use by-law. This could leave no exclusive use allocations.

Scope of Lot 14’s exclusive use area

The boundaries of Lot 14’s exclusive use area are not determined by an assessment of what the applicants have argued is reasonable, desirable, logical or fair, but what is described in the CMS. As I have outlined above, in the absence of any determination that the register CMS is invalid, owners are entitled to rely on the contents of the registered CMS. It is on the basis of the registered CMS that I will make my determination.

There are two particular points highlighted by the registered CMS in relation to the carpark spaces. The first is that By-law 13 refers to the allocation of a "car space". This indicates that the intended purpose, or at least primary purpose, of the owners’ right to their allocated space is for car parking. While the by-law does not prohibit other uses of the space, it does not indicate that owners are being given a right to sufficient space for storage of possessions other than a car or for other uses.

The second point is that the area described in the B&P Surveys plan is all common property and the only areas of common property that are allocated to lots for their exclusive use are those areas specifically marked as such. The area marked 14 is defined by boundary measurements. These measurements clearly show the Lot 14 area abuts but does not include the ‘storage area’.

The applicants also suggest that part of the Lot 9 allocation should have been part of the Lot 14 allocation but was ‘lost’ due to incorrect information being given by another owner to B&P Surveys. The applicants have provided no evidence to demonstrate that this space was previously allocated to Lot 14. There may have been a range of reasons that, at the time of the original space allocation or the compilation of the B&P Survey plan, the Body Corporate chose to apportion the space as it is in the CMS. These reasons could have included the needs of owners at the time, the comparative size and value of their lots, the location of pillars and the orientation of the space available. However, regardless of what space was previously allocated to Lot 14 or what the current owners of Lot 14 think is desirable, the space on the plan is the space allocated by under the registered CMS. This space was known to the applicants when they purchased their Lot.

For the general information of parties, I note that pursuant to section 123 of the Standard Module, an owner who is granted exclusive use to an area of common property is responsible for the maintenance and operating costs of that part of common property unless the by-law provides otherwise. There is no provision in By-law 13 for maintenance and operating costs and so these remain the responsibility of individual owners.

Status of the storage lockers

As outlined above, the storage lockers are located on common property. If they are installed as a fixture they form part of the common property, but if they are freestanding (or in the event that they are detached from the common property) they would be defined as an asset.^[5]

While the lockers may not be as necessary to owners as they were before the entire carpark area was enclosed, it is for the Body Corporate to determine how it uses common property (providing it is not contrary to the legislation). As such it is entirely within the power of the Body Corporate to provide storage lockers for owners, and it is not an unreasonable exercise of its power.

There is no exclusive use by-law relating to the storage lockers and so the lockers are not the ‘exclusive use’ of the owners who use them. However this does not mean that the Body Corporate cannot agree to assign the lockers to individual owners for their use. As the Body Corporate retains responsibility for the lockers it is responsible for their maintenance, but it can also decide to move the lockers or to change the use of those lockers at any time. However, to the extent that such a decision would affect the rights and privileges of owners, it would be a restricted issue for the Committee^[6] and so require a vote at a general meeting.

In addition, because the lockers are on common property and remain the responsibility of the Body Corporate, their existence was not required to be included on the disclosure statement (body corporate information certificate) unless they are within the category of an asset and they have a value of more than $1,000 each.^[7]

As the storage lockers adjacent to the applicants’ car space are not part of the applicants’ exclusive use area, the applicants have no right to the space upon which the lockers are situated or any right to interfere with the lockers.

Failure of Motion 4

The enclosure of an exclusive use car space constitutes an improvement to common property. Accordingly, pursuant to section 114 of the Standard Module, the owners of Lot 14 require the authorisation of the Body Corporate, by a special resolution^[8]. It is entirely within the power of the Body Corporate to decide whether or not to agree to this enclosure, providing of course that they act reasonably in what they do.^[9]

The applicants have provided no evidence that the enclosure of the other garages, installation of the lockers, or the installation of the security doors were not approved by the Body Corporate, or that any Body Corporate expenditure on these items was not appropriately authorised. I consider that there is a logical reason for why some garages were allowed to be enclosed but that the spaces at the western end of the carpark have been left as a ‘common’ area. While the Body Corporate chooses to retain storage lockers in this area it is not unreasonable for the Body Corporate to want the area to remain accessible by other owners. Similarly, while a security door is located on the boundary of the Lot 14’s exclusive use allocation, it is again not unreasonable for the Body Corporate to want the door to remain accessible by other owners.

It is unfortunate that the plan attached to the CMS does not provide a clearer access to the storage lockers and security door for other owners. It might have been desirable that there be a ‘corridor’ between the various exclusive use allocations to facilitate access. However I do not consider that the absence of explicit access is fatal to the exclusive use allocation.
Conclusion

I am satisfied that it was within the power of the Body Corporate to refuse to pass Motion 4 at the EGM of 28 August 2006. A significant majority of owners opposed the motion and I do not consider that their decision was manifestly unreasonable in the circumstances. Accordingly I have dismissed the application.

There appears to be a willingness on the part of some owners to negotiate an outcome that meets the needs of all parties. Options to consider include relocating the storage lockers, or commissioning a new survey plan and approving a new CMS with consideration to adjustments to the allocations and clarified access to the security door, or allowing an enclosure that retains access to the lockers and security door. I would encourage the applicants to try and work with other owners in a conciliatory and constructive manner if they wish to pursue this issue. The applicants should bear in mind that if they seek to increase their allocated exclusive use area with a consequential lost to that of other owners, some form of compensation may be warranted.

^[1] In what is presumably a typographical error, By-law 13(a) refers only to the entitlements of Lots 1 to 5 to the exclusive use car spaces allotted on Schedule E but Schedule E lists allocations to Lots 1 to 15.
^[2] Under section 62 of the Act, if owners simply wish to adopt amended the by-laws or change the regulation module, only a special resolution is required – otherwise a resolution without dissent is required.
^[3] See sections 12 and 66 of the Act
^[4] Pursuant to section 13(4) of BUTA
^[5] See sections 10-11 of the Act
^[6] See section 26 of the Standard Module

^[7] See section 205 and 206 of the Act regarding the contents of Information Certificates and section 144 of the Standard Module regarding the Register of Assets.
^[8] See section 106 of the Act
^[9] See section 94 of the Act

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kingston Court [2007] QBCCMCmr 11 (9 January 2007)