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Adelphi Springs [2007] QBCCMCmr 279 (14 May 2007)

Last Updated: 27 June 2007

REFERENCE: 0421-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28835
Name of Scheme:	Adelphi Springs
Address of Scheme:	100 Cotlew Street East SOUTHPORT QLD 4215

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

Mr John Mathews & Ms Elaine Kennedy, the Owners of lot 17

I hereby order that the application for the following orders:

1. That the body corporate do all things necessary to allow the Applicant to receive the benefit of the exclusive use area for the purpose of a courtyard as entitled to as owner of lot 17 in the scheme;
2. That the body corporate permit the applicant to remove the existing wall erected on the boundary of the applicant’s lot and its exclusive use area and replace it on the boundary of the exclusive use area at the cost of the applicant

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0421-2006

"Adelphi Springs" CTS 28835

Application

The applicants are the owners of lot 17 and seek the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):

1. That the body corporate do all things necessary to allow the Applicant to receive the benefit of the exclusive use area for the purpose of a courtyard as entitled to as owner of lot 17 in the scheme;
2. That the body corporate permit the applicant to remove the existing wall erected on the boundary of the applicant’s lot and its exclusive use area and replace it on the boundary of the exclusive use area at the cost of the applicant; and
3. such further orders as the...adjudicator thinks fit.

Background

The "Adelphi Springs" scheme was established as a group titles plan (now termed a standard format plan) and is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997.

The applicants state that when the scheme was constructed, a residence was built on lot 17 and a partitioning wall was constructed between the boundary of lot 17 and an area of adjoining common property that was allocated for the exclusive use of lot 17. A survey conducted in late 2004 disclosed that a footpath and three carparks are constructed on the other side of the wall and take up most of the exclusive use area allocated to lot 17. The applicants claim that they are entitled to use this area as a courtyard.

Since the scheme was first registered there have been a number of Community Management Statements for the scheme.

Lot 17 on new plan of resubdivision 10560 was created in April 1997 and the Minutes of the AGM held on 11 March 1998 include the following resolution without dissent:

That the Body Corporate consents to the recording of a new Community Management Statement in compliance with the Body Corporate and Community Management Act 1997 in the form tabled whereby the Body Corporate:

(i) Records the existing lot entitlement and the existing by-laws with the additional by-law 25 as set out hereunder:

25. The owner for the time being of lot 17 shall have and be entitled to the exclusive use of that area as shown on the sketch plan marked "A" contained in Schedule E of the Community Management Statement. That area shall be used for car parking only. The owner shall:-

(a) Keep such area in a clean and tidy state at all times;
(b) Not litter the same or so use the same as to create a nuisance;
(c) Not construct or erect any other structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;

But otherwise the Body Corporate shall remain responsible for the maintenance and operating costs for that part of the common property to which this by-law applies.

SCHEDULE E - ALLOCATION OF EXCLUSIVE USE AREAS
Lot 17 GRP 105650
A copy of Plan H including exclusive use area 17 (an area of 36 square metres) was attached to the Community Management Statement.

Subsequently this body corporate was one of 8 related bodies corporate that were amalgamated. At the Annual General Meeting held on 27 March 2000, it was resolved by resolution without dissent:
That the Body Corporate consents to ...the recording of the Community Management Statement circulated with this Notice marked "A" (including any additions, deletions or variations to the statement as may be requested by the Registrar of Titles) recording the title descriptions, entitlements, by-laws and exclusive use areas for the new amalgamated Community Titles Scheme.

This version of the CMS, was executed on 15 July 2000, and contained the following:

46. Exclusive Use Areas

46.1 The owner for the time being of lots 1, 2, 3, & 4 BUP 105160 (Adelphi Springs – Terraces) lots 1, 2, 3, & 4 BUP 106720 (Adelphi Springs – North Terraces) lots 1, 2, 3, & 4 BUP 106721 (Adelphi Springs – Terraces Central) lots 1, 2, 3, & 4 BUP 106790 (Adelphi Springs – Park Terraces) lots 1, 2, 3, 4,9,10,11,12,17 and 18 SP 112128 (Adelphi Springs – Parkview) and lots 1 & 2 SP 116631 (Adelphi Springs – Paros) shall have and be entitled to the exclusive use by the owner or occupier of the lot from time to time of that part of the common property being the courtyard and garden area adjacent to each said lot as identified with the corresponding lot number in Schedule E and plans A-G thereto PROVIDED THAT:

(a) Each such area shall be used for courtyard and garden purposes only;
(b) Each such owner must at its cost keep such area in a clean and tidy state at all times; and
(c) Any such owner shall not construct or erect any structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;

lots 1 & 2 SP 116631 (Adelphi Springs – Paros) shall have and be entitled to the exclusive use by the owner or occupier of the lot from time to time of that part of the common property being the courtyard and garden area adjacent to each said lot as identified with the corresponding lot number in Schedule E and plans A-G thereto PROVIDED THAT:

(a) Each such area shall be used for courtyard and garden purposes only;
(b) Each such owner must at its cost keep such area in a clean and tidy state at all times;

(c) Any such owner shall not construct or erect any structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;

• The scheme was developed progressively from 1996 to 1999 resulting in 8 separate bodies corporate which were eventually amalgamated into one during 2000;
• The original development on GTP 105159, together with its further development as GRP 105650 comprised 25 standard format plan lots, one of which was the lot provided specifically for the resident manager of lot 17, which is the subject of this application;
• The unit was built as the managers’ lot with additional floor space of approx 35 square metres, specifically to accommodate the office;
• The Gold Coast City Council (GCCC) development approval nominates lot 17 as the only lot to be used for commercial purposes including caretaking, letting agent, real estate agent and kiosk. The original CMS (dated 21/5/1998) stated that the owner of Lot 17 will have exclusive use of the nominated common area but that area is to be used for car parking only. That CMS has now been superseded;
• The applicant is seeking to build a wall on common property some 1.5 metres beyond the boundary of the lot. The committee is aware of the boundaries and the structural walls for lot 17 are contained wholly within the lot. The lot boundary on the western side is approximately half a metre beyond these walls.
• The applicant has previously sought approval from both the committee and the body corporate to build a wall across common property to enclose part of an area over which the manager’s lot has been granted exclusive use;
• The committee has offered to swap the applicant’s preferred area of expanding their courtyard westward (i.e. across the car parking spaces) with an equal or greater area of common property to the south (into a garden area) together with the sum of $5,000, but this offer was rejected by the applicants ;
• Lot 17 is a purpose built lot, distinctly different from other ordinary residential lots;
• The area that the applicants wish to annex is an integral part of the residents’ facilities since inception and should not be changed;
• the large wall proposed by the applicants would be unsightly and damage the appearance and amenity of the scheme;
• their proposal would make the three visitor car parks unusable ;
• the GCCC required car parking spaces outside the service contractor’s office;
• successive resident service contractors have not disputed the disposition of the exclusive use area;
• the current service contractors were aware of the situation when they purchased the management rights;
• the current exclusive use area is a nonsense as it cannot wholly be used either for car parking (the original provision in the by-law) or a courtyard (the current provision in the by-law.);
• the exclusive use area is over approximately one third of each of the three visitor car parking spaces, traverses part of the common property walkway and can not practically be used as either a courtyard or for car parking;
• if the wall was built as proposed, three visitor car park spaces would be lost as the area would be too small to park a vehicle. The parking spaces cannot be extended as they would protrude into the common property driveway ;
• the body corporate has conducted searches to obtain an understanding of why the by law was changed from car parking to courtyard;
• it is suggested that the adjudicator consider making an order to cancel either all or part of the exclusive use area granted to lot 17 over the subject common property as currently it cannot be used as either a courtyard area or car parking area.

Numerous individual lot owners made submissions supporting the body corporate’s opposition to the application. On the other hand a number of lot owners stated their belief that the owners of lot 17 should be able to extend their courtyard over the exclusive use area if this is permitted by the by laws.

In reply the applicants made the following submissions:

• they deny that a new wall would be "unsightly" as it would be built in the same fashion as the existing wall;
• the town planning consent permit referred to in the body corporate’s submission expired in 2001;
• the land swap offered by the body corporate was rejected as the cost to the applicants of converting that land to a courtyard would have been in the vicinity of $30,000;
• the committee only offered them $3,000 and not $5,000 as claimed;
• there is adequate visitor parking available within the scheme;
• previous owners of lot 17 did not assert their rights because the location of the lot boundary and exclusive use area boundary only came to attention following the survey conducted in late 2004;
• the applicant has been granted exclusive use of an area on "plan H" for the purposes of a courtyard under by-law 46 and it is claimed that the body corporate is attempting to extinguish existing exclusive use rights.

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

I have reviewed the various Community Management Statements for the scheme and note that the Community Management Statement (CMS) dated 24 April 1998 contained the following by-law:

26. The owner for the time being of lot 17 shall have and be entitled to the exclusive use of that area as shown on the sketch plan marked "A" contained in Schedule E of the Community Management Statement. That area shall be used for car parking only. The owner shall:-

(a) Keep such area in a clean and tidy state at all times;
(b) Not litter the same or so use the same as to create a nuisance;
(c) Not construct or erect any other structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;

Subsequently, at an Annual General Meeting held on 27 March 2000, it was resolved by resolution without dissent:
That the Body Corporate consents to ...the recording of the Community Management Statement circulated with this Notice marked "A" (including any additions, deletions or variations to the statement as may be requested by the Registrar of Titles) recording the title descriptions, entitlements, by-laws and exclusive use areas for the new amalgamated Community Titles Scheme.

The new consolidated version of the CMS, was executed on 15 July 2000, and contained the following clauses:

46. Exclusive Use Areas

(a) Each such area shall be used for courtyard and garden purposes only;
(b) Each such owner must at its cost keep such area in a clean and tidy state at all times; and
(c) Any such owner shall not construct or erect any structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;

46.2 The owner or occupier for the time being of certain lots in the Scheme shall be entitled to the exclusive use of the car space or spaces as specified in Schedule E for each such lot and identified on Plans H-L annexed thereto. Each space may be used for the purpose of car parking only. Each owner shall keep such area in a clean and tidy state at all times and shall not litter or use the same as to create a nuisance but otherwise no such owner shall be responsible for the performance of the duties of the Body Corporate under the Act.

SCHEDULE E - ALLOCATION OF EXCLUSIVE USE AREAS
Courtyard Exclusive Use
Lot 17 GTP 105650 Area "17" on Plan H" (an area of 36 square metres).
A copy of Plan H containing the exclusive use area was attached to the by-laws.

The above by-law was included in the subsequent version of the CMS executed on 15 April 2004.

I note that at the Annual General Meeting held on 27 March 2000, it was resolved by resolution without dissent to adopt the new CMS in total and consequently there is no explanation on record as to why there was a change in the permitted use for the exclusive use area. For example, there is no correspondence between the then owner of lot 17 and the body corporate, or written notice from the then owner of lot 17 consenting to the alteration of the exclusive use by-law.

Given the complexities of consolidating eight Community Management Statements into one CMS and the uncertainty regarding the location of lot boundaries at that time, it is possible that errors were made in the CMS executed on 15 July 2000. Nevertheless, I have considered this application on the assumption that the provisions of the CMS were valid and reflected the intention of the body corporate.

Consequently, for the purposes of this application, the issue for me to determine as an adjudicator is whether the body corporate in general meeting has acted in accordance with the CMS, the by-laws for the scheme and Standard Module regulation.

In particular, it should be noted that section 114 of the Standard Module Regulation provides as follows:

114 Improvements to common property by lot owner
(1) The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot.
(2) The improvement must be authorised by special resolution of the body corporate unless--
(a) the improvement is a minor improvement (i.e. valued at $250 or less); and
(b) the improvement does not detract from the appearance of any lot included in, or common property for, the scheme; and
(c) the body corporate is satisfied that use and enjoyment of the authorised improvement is not likely to promote a breach of the owner’s duties as an occupier.
(3) An authorisation may be given under this section on conditions the body corporate considers appropriate.
(4) The owner of a lot who is given an authority under this section--
(a) must comply with conditions of the authority; and
(b) must maintain the improvement made under the authority in good condition, unless excused by the body corporate.

The area in question is common property and is therefore owned by the body corporate, albeit subject to an exclusive use by-law. Therefore the applicants’ request for permission to make an improvement on common property must be authorised by special resolution of the body corporate. However, as mentioned above, the applicant’s request was put to the last Annual general Meeting at which it was resolved to deny the request by 39 votes to 10.

The remaining matter that arises for consideration is the validity of the resolution to deny the applicant’s request. As an adjudicator, I have limited powers to overturn the legitimate decisions of a body corporate committee except in exceptional circumstances, for example, where a body corporate committee has acted unlawfully or unreasonably. As I can see nothing unlawful about the decision taken by the body corporate, the next matter for consideration is whether the body corporate in general meeting has acted reasonably as required by section 94 of the Act which provides as follows:

94 Body corporate’s general functions
(1) The body corporate for a community titles scheme must--
(a) administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme; and
(b) enforce the community management statement (including any by-laws for the scheme); and
(c) carry out the other functions given to the body corporate under this Act and the community management statement.
(2) The body corporate must act reasonably in anything it does under subsection (1).

The term "unreasonable" has been given various meanings in various contexts over the years.
For example a leading administrative law case which continues to be cited today is
Associated Provincial Picture Houses Pty Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223
where the test adopted by the court was "whether the opinion held was so unreasonable that no reasonable person could have ever formed that opinion". More recently, in decisions such as
McKinnon v Treasury [2006] HCA 45 (see for example Hayne J at paragraph 61)
the courts have indicated that a wider test of "reasonableness" is applicable where a statute expressly provides that a decision is to be made ‘reasonably’ or upon ‘reasonable grounds’. In such circumstances the test involves an objective consideration and balancing of all the
circumstances to determine what is ‘reasonable’.

The body corporate has a number of concerns regarding the applicants’ request for permission to demolish the existing wall and to build a new wall on common property some 1.5 metres beyond the boundary of the lot. It believes that the area in question is an integral part of the residents’ facilities and should not be changed. For example the body corporate submits that the applicants’ proposal would make the three visitor car parks outside the service contractor’s office unusable, and is concerned that the new wall proposed by the applicants would be unsightly and damage the appearance and amenity of the scheme.

On the other hand I note the applicants’ argument that the proposed new wall would not be unsightly as it would be built in the same fashion as the existing wall. I also note the applicants’ argument that the car parking space would still be able to accommodate two vehicles in an alternative configuration and that there is adequate visitor parking available elsewhere within the scheme.
From an objective point of view, I do not believe that the body corporate committee has acted unreasonably in refusing permission to build the new wall. While the CMS states that the applicant is entitled to exclusive use of the subject area, the fact remains that the body corporate continues to be the owner of the fee simple (freehold) interest in the land and is entitled to decide what improvements may be made thereon. In my view the body corporate has genuine concerns regarding the possible impact of the applicant’s request on the appearance and amenity of the scheme and is reasonably entitled to they deny permission to the applicant.

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(a)	Keep such area in a clean and tidy state at all times;
(b)	Not litter the same or so use the same as to create a nuisance;
(c)	Not construct or erect any other structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;

(a)	Each such area shall be used for courtyard and garden purposes only;
(b)	Each such owner must at its cost keep such area in a clean and tidy state at all times; and
(c)	Any such owner shall not construct or erect any structure or improvements whatsoever in or upon such area without prior consent in writing of the committee;