Capri Garden Villas [2007] QBCCMCmr 23 (16 January 2007)

Last Updated: 9 February 2007

REFERENCE: 0725-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	21998
Name of Scheme:	Capri Garden Villas
Address of Scheme:	111 Salerno Street ISLE OF CAPRI

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

Ms Maureen Walsh & Ms Sharon Kells, the Owner(s) of lots 11 and 2

I hereby order that the application for an order: 1. to reinstate the common property easement in its original position; 2. to reinstate the pool fence on common property; 3. to refrain the Body Corporate Capri Garden Villas any monies, except that necessary for essential maintenance and operation of the complex. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0725-2006

"Capri Garden Villas" CTS 21998

Application

Maureen Walsh, the owner of Lot 11 and Sharon Kells, the owner of Lot 2 (the applicants) have sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) (quote):

1. to reinstate the common property easement in its original position;
2. to reinstate the pool fence on common property;
3. to refrain the Body Corporate Capri Garden Villas any monies, except that necessary for essential maintenance and operation of the complex.

Jurisdiction

Capri Garden Villas is a community titles scheme comprising 29 lots and common property, which is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard 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

(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)).

Background

This is a long running dispute, mostly stemming from a decision made by the Committee of the Body Corporate of Capri Garden Villas to close off an access gate from the adjoining scheme, Surfers Garden Villas. Both schemes have registered reciprocal easements.

A visual inspection of the plans registered with the Titles Office suggests that the reciprocal easements extend to all of the common property in each of the schemes. It appears that a dispute may have arisen in the 1980’s in relation to the right of Surfers Garden Villas residents to use Capri Garden Villas’ pool and that the Supreme Court determined that the residents of Surfers Garden Villas could not use the pool. Nonetheless, it appears that the easement through Capri Garden Villas provides a desirable thoroughfare to Salerno Street. The reason why this pedestrian thoroughfare is so desirable is not given by the applicants, although I note that the electrical switchboard for Surfers Garden Villas is located on the Common Property of Capri Garden Villas.

Security and safety concerns regarding the gate were initiated by Surfers Garden Villas in 2003, who suggested either a lock or sealing of the gate to Capri Garden Villas. It appears that the committee indicated they would look into the locked gate proposal, provided Surfers Garden Villas paid half the cost. In December 2003 the committee of Capri Garden Villas distributed notice of locking the gate and distributing keys.

Security and safety problems continued and, in April 2004 the committee issued a notice advising the gate was to be sealed. There is no evidence the issue was taken to the Body Corporate in general meeting in relation to these changes. However, there is evidence that open forums to discuss any issues of concern to residents were made available.

The changes introduced by the committee saw the dismantling of a section of fence around the pool that had also dictated the path along which Surfers Garden Villas’ residents could travel.

Soon after closure the Body Corporate for Surfers Garden Villas commenced forwarding correspondence to the Body Corporate of Capri Garden Villas objecting to the closure of the fence. Ultimately they lodged a series of applications with the Supreme Court. After passing through a frustrated mediation process in the court applications, ultimately de Jersey DCJ ordered that access be reinstated, with various costs to be met by Capri Garden Villas.

The access was reinstated, however the new gate was located in a different position and the dedicated pathway different to before the problems arose. While I do not have ultimate documented confirmation, evidence presented leads me to conclude that the new position was as a result of a negotiated outcome between the schemes.

The costs of defending the action taken by Surfers Garden Villas so far amounts to around $25,000 even after allowing for a costs order made in their favour. The expense associated with defending the action were not taken to a general meeting of the Body Corporate on a pre-emptive basis as forward costs were not know. Contact with the scheme solicitors by owners (within Capri Garden Villas) was restricted on the basis that some owners were co-operating with Surfers Garden Villas. However, it is alleged that known costs appeared in published committee meeting minutes and budgets presented at general meetings.

Grounds

The applicants’ grounds are quoted as follows:

1.

That the Body Corporate Capri Garden Villas, without authorisation, consultation or vote of all owners, removed a pool fence from the Common Property which separated the pool from the easement thoroughfare and prevented access.

2.

That the Body Corporate Capri Garden Villas, without authorisation, consultation or vote of all owners, sealed over and closed off a legal easement adjoining Surfers Garden Villas, without authorisation, consultation or vote of all owners. The Body Corporate CGV also ignored repeated warnings of threat of legal action over the closure and advisement to reopen, for some 12 months prior to action being taken by Surfers Gardens.

The Body Corporate also failed to inform owners of the developing situation or any detailed information of the situation, until some owners gathered costings by examining the records, forcing the issue.

The fact warnings were issued over a significant period negates Body Corporate Capri Gardens argument that it had to respond to legal action – there was ample time and opportunity to put the matter to owners to give them the chance to reopen the gate and avoid the expense and legal cost.

3.

That as a result of above unauthorised removal of fence and closure of easement on Common Property by Capri Gardens Body Corporate, the Body Corporate then spent more than $25,000 unauthorised funds on fighting legal action that followed from Surfers Garden Villas. This costing was not presented to owners for voting, was not included in any budgets, nor officially revealed in any minutes or any official correspondence although it appears on the expenditure statement of Capri Garden Villas 05/06 – 04/05.

4.	That the Body Corporate Capri Garden Villas reinstated easement on Common Property in a new location without putting matter to owners for vote and resolution.

The applicants have provided a significant amount of narrative and evidentiary material to their application. Evidentiary matter includes minutes of committee meetings, correspondence between legal representatives, correspondence between the schemes and correspondence within Capri Garden Villas.

The material they have provided in relation to the third outcome sought (to place restraints on spending by the committee) consists of nearly one inch of A4 photocopies which cannot productively be documented here. However, they summarise their concerns as relating to:

•	the legal fees incurred above;
•	a practice of engaging solicitors to deal with owners’ complaints or enquiries;
•	hiring of a security guard at a cost of $130 a day (for perhaps up to 3 weeks during plumbing work);
•	threats of charges claimed as payable to the chairperson, secretary and plumber to undertake the security guard duties after the security guard engagement was stopped;
•	extra charges being added to costs after voting has taken place e.g. cost of removal of trees etc when a new fence was voted upon;
•	changes the materials used in the fence from brick to concrete without consultation;
•	terms of engagement of a lot owner’s husband as gardener.

Submissions

Submissions were received from the owners of 11 lots. Two submissions are considered to be neutral.

Submissions from 5 lots are in support of the application and include the submissions of 4 current committee members.

The owners of 4 lots oppose the application.

I have received one submission that the application should be disregarded due to the amount of time that has elapsed since the gate was removed (31 May 2004) until lodgement of the application. In light of the vigorous Supreme Court activity that has taken place in relation to this matter in the interim, I have considered the applicant’s concerns (as this action has to a large extent kept the issue alive). However, the submission’s implication in relation to acquiescence (on the part of the applicants) is noted.

Determination

Section 26 of the Body Corporate and Community Management (Standard Module) Regulation 1997 states that:

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

(a) fixing or changing a contribution to be levied by the body corporate; or

(b) to change rights, privileges or obligations of the owners of lots included in the scheme; or

(c) ..................................

It is clear to me, that that the benefit and burden of easements in relation to these schemes fall into the provisions of Section 26(1)(b) and therefore were a matter that should have gone to the Body Corporate in general meeting.

Further Section 111(2)(a)(i) provides that the body corporate may, if authorised by resolution without dissent, sell or otherwise dispose of part of the common property. This therefore invokes the provisions of Section 26(1)(d) of the Body Corporate and Community Management (Standard Module) Regulation 1997 and places decisions regarding the easement beyond the authority of the committee.

Section 103 of the Standard Module is also relevant to the application of Section 26(1)(d) in relation to committee spending limits. Legal fees can be a difficult matter. It would be a wise approach to attempt to seek owner consent to perhaps a ceiling expense, informed by an indicative quote by the legal team.

Gate and Fence

Nonetheless, in this matter the committee has implemented actions which are in breach of these provisions. I believe that closure of the gate was done with the best of intentions, though with flawed judgement. I am satisfied that residents were given notice of both the intention to lock the gate and the later intention to seal the gate, before either step was taken.

Technically, residents should have had an opportunity to object to any decisions made by the committee pursuant to Section 36 of the Standard Module with an opportunity to oppose any resolutions under Section 37. If anyone making submissions on this matter have demonstrated to me that minutes of committee meetings were distributed in accordance with Section 36, then I am afraid I have missed that evidence. However in my view, the distribution of the notice of intention to carry out the resolutions of the committee should nonetheless have prompted a reaction from members of the Body Corporate had they had an objection to raise. The applicants have not demonstrated to me that they sought to raise objections at the time the notices were distributed.

I wish to make it clear, that I do not condone the actions taken by the former committee. The steps taken were not in accordance with the legislation and at odds with some indicative legal advice received. Essentially, they appeared to misjudge the risk associated with the position they had adopted.

However, I am puzzled by the applicants’ (and other current committee members’) inaction at the time. Had they approached the current committee, they could have broached their concern regarding the easement rights of Surfers Garden Villas and sought to have the matter referred to a vote of the Body Corporate. If the committee had not reacted in any way, then the applicants would have been able to demonstrate they had a dispute with the Body Corporate and sought the intervention of this office. If their argument is that they did not themselves foresee the legal ramifications of closure of access (as they did not have the solicitor’s letter), then what are their objections to the current positioning of the gate and dedicated path, given that access has been reinstated?

In my mind, this is the most significant aspect in which the applicants’ case is deficient. Apart from the procedural irregularities and expense that led up to the current position of the gate and dedicated path, I am unclear as to their objection to the current position of the gate. This is particularly so given:

•	the monies spent in moving the fence and closing the gate initially;
•	the difficulty of satisfying Surfers Garden Villas that another variation of the access arrangements is required;
•	the cost incurred to date in rectifying Surfers Garden Villas’ requirements;
•	the cost that would be incurred by all owners in reinstating the position of the fence and gate to their former positions.

Without compelling argument from the applicants as to why the Body Corporate should be put through the difficult process of negotiating new arrangements with Surfers Garden Villas again and incurring further costs, I find I am unable to make the orders sought.

If the applicants wish to pursue reinstatement of the gate and pathway to pre 2004 arrangements, they will need to refer the matter to the Body Corporate in general meeting. It is up to the members of the Body Corporate as a whole as to whether or not they wish to incur further expense.

Spending Generally

I note there has been a change in committee since the date the application was made.

However leaving aside that issue, in my view had the committee complied with the spending limits and restricted issue parameters contained in the Standard Module most, if not all, of the difficulties associated with owners’ perceptions as to the administration of the scheme, could have been avoided.

Committee membership changes over time. The members of the Body Corporate appear to have expressed a view that they would like to entrust day to day administration of the scheme to a different committee at this time. Provided this current committee complies with the requirements of the legislation and resists the temptation to become entrenched in protecting "positions", I see no reason to place any further restrictions on the spending powers of the committee.

The application is dismissed.