Western Bay Community Titles Scheme [2007] QBCCMCmr 586 (9 October 2007)

Last Updated: 18 October 2007

REFERENCE: 0051-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30080
Name of Scheme:	Western Bay
Address of Scheme:	Nocturne Lane COMMERA QLD

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

Graham Alexander Inglis and Margaret Fay Inglis, the owners of lot 218

I hereby order that the application for an order that a $1,000 security bond paid by the owners of lot 218, Graham Alexander Inglis and Margaret Fay Inglis, pursuant to an Architectural and Landscape Code, be returned to them is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0051-2007

"Western Bay" CTS 30080

Scheme

"Western Bay" community titles scheme 30080 was registered as a standard format plan of subdivision on 5 July 2002 comprising 28 lots and common property. The scheme is one of numerous subsidiary schemes in a three-layered scheme, with Coomera Waters Community Titles Scheme 29693 as the principal scheme. Western Bay is one of the subsidiary schemes in the second layer of the layered scheme. The scheme is regulated by the Act and its Standard Module regulation.

Application

This application is brought by the owners of lot 218, Graham Alexander Inglis and Margaret Fay Inglis, (the applicants) against the body corporate, seeking an order that a $1,000 security bond paid by them pursuant to an Architectural and Landscape Code, be returned to them.

While the applicants raise various arguments not directly relevant to the outcome sought, the basis of the applicants’ argument appears to be that the extraction of the bond breaches section 180(6) of the Act by imposing a monetary liability in a by-law.

Submissions

Submissions in response to the application were sought from all owners (excluding the applicants), the committee and the chairperson of the architectural review committee. Only one submission was received, from the owner of lot 217, the neighbouring lot to lot 218. The owner of lot 217 supports the refund of bond to the applicants on the following conditions:

 That the landscaping be completed to a fair and equitable standard accepted by the ARC or generally in keeping with other properties in the scheme, as determined by the committee.

 In particular, to reduce the constant need for weeding lot 217’s garden bed due to the overgrowth of weeds spreading from lot 218:

	Weeding be carried out for the section of garden extending 2500mm from the boundary of lots 217 and 218;
	Mulching to a depth of 70mm for a width of 750mm be included along the boundaries of the adjoining fence line, front and back.

 To ensure a consistent appearance for all properties in the body corporate:

	The remainder of the yard be landscaped to an equivalent level of preparation, density, size, number and general type of planting and depth and extent of mulching
	A letter be issued by the ARC stating the level of acceptability and specifying any action if required, regarding the exterior bagged finish in light of rules and guidelines issued by the committee.

The applicants inspected the submission but did not make a reply.

Jurisdiction

This is a dispute between owners of a lot and the body corporate concerning alleged contraventions of the Act or community management statement and therefore comes within the dispute resolution provisions of the Act.^[1]

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)).

Decision

Is the Body Corporate Permitted to Extract a Bond?

The Community Management Statement (CMS) for a community titles scheme must state certain matters, including by-laws, and may include anything that the regulation module applying to the scheme says it may include (see section 66, Act). Section 6(b) of the Standard Module provides that a CMS may include "provisions adopting and regulating the operation of an architectural and landscape code, including the establishment and operation of an architectural review committee".

The following provision is made in the CMS for Western Bay CTS 30080 in respect of an architectural and landscape code:

Schedule D "Other Details"

1.

This Community Management Statement and each party bound by this Community Management Statement by virtue of Section 53 of the Body Corporate and Community Management Act 1997, adopt the Architectural and Landscape Code promulgated (by delivery to the Body Corporate for the scheme) with Lot Evaluations for each Lot included in the Scheme by the Principal body Corporate, the Community Body Corporate ("the Code") as if each provision of the Code was set out in this Statement in full.

2.

The Code (as so promulgated) operates as if set out in full in this Statement and are binding on each party bound by this Community Management Statement by virtue of Section 53 of the Body Corporate and Community Management Act 1997 as if the provisions of the Code, were mutual covenants binding on each such party and contained in a Deed signed by each such party.

3.	This Community Management Statement and each party bound by this Community Management Statement by virtue of Section 53 of the Body Corporate and Community Management Act 1997, adopt the rules in the Code for establishment and operation of the Architectural Review Committee.

4.	The initial Code shall be the Code held at the office of the developer Coomera Waters Village and Resort Pty Ltd ACN 092 242 638, and marked for identification purposes "Architectural and Landscape Code for Western Bay Community Titles Scheme No. 30080".

Schedule D refers to section 53 of the Act (now renumbered as section 59) which has the effect that a CMS is binding on each member of the body corporate and each person who is a registered proprietor of a lot in the scheme, as if each person bound by the CMS had entered into mutual covenants to observe its provisions and had each signed the CMS.

The applicants, in their grounds, refer to section 17.1(a)(xv) of the Architectural and Landscape Code for Western Bay Community Titles Scheme No. 300800 (the Code) as a by-law. Section 17.1(a)(xv) provides as follows:

17. REQUIREMENTS DURING DWELLING CONSTRUCTION
17.1 Specific Requirements
(a) During construction of Your Dwelling, You must ensure:-

(xv) Prior to commencement of construction of the Dwelling, You lodge with the Body Corporate, a bond (in the form of an unconditional promise by a bank acceptable to the ARC, to pay to the Body Corporate on demand) for $1,000 (one thousand dollars) as security for any damage to common property or other Lots during any construction program of Your Lot, or for use towards the rectification of any works constructed on the Lot which are not in conformance with the Approved Application.

The CMS for Western Bay includes some 57 by-laws in Schedule C. The only reference to the Code or the Architectural Review Committee (ARC) in the by-laws is found in by-law 44. By-law 44 provides as follows:

44.

Code

The Owner and Occupier of a Lot must observe and comply with the Code in relation to the Lot.

It appears that the applicants’ main argument is that the body corporate has breached section 180(6) of the Act by imposing a monetary liability (the requirement for the bond) in a by-law. However, the provisions of the Code are clearly not by-laws. The Code is incorporated into the CMS in Schedule D and is a valid inclusion, pursuant to section 6 of the Standard Module. The legislation does not contain any limitations similar to those for by-laws, in relation to the content of an architectural and landscape code. Even if by-law 44 of the Code were invalid on the basis of section 180(6) of the Act (I make no finding in this regard), all owners in the scheme would still be bound by the Code, given its inclusion in Schedule D of the CMS. Given this, I have no grounds on which to rule the extraction of the bond invalid.

It then becomes necessary to consider whether the applicants have complied with the provisions of the Code such that they are entitled to a return of their bond.

Are the Applicants Entitled to a Return of the Bond?

The Code appears to be an extremely detailed list of requirements covering almost every aspect of building work, including landscaping, on a lot.

The applicants appear to allege that the Code has been amended without proper authority, but it seems to me that, rather than the Code having been amended, the applicants disagree with the interpretation of the Code adopted by the former ARC Chairperson, Ms Amy Degenhart, and her application of the Code, particularly in relation to the requirements for payment of the bond to Design Forum Architects. I am not satisfied that the Code has been amended without proper authority, or that the interpretation adopted by the former ARC Chairperson is incorrect. The bond is held in trust for the body corporate, by the ARC. The other differences pointed out by the applicants appear to me to be differences in terminology used by the former ARC chairperson (for example, use of the word "improvements" rather than "works constructed") that are not of any substance and do not affect the application of the Code.


The applicants appear to have paid the $1,000 bond on 23 July 2004. They state that they requested its return by letter advising that the dwelling construction was complete on February 20, 2006. They further state that the return of the bond has been refused without due reason, that they have fulfilled the ARC’s obligations and complied with the Code. In my letter of 6 September 2007, after putting the applicants on notice that it was necessary for me to consider whether the Code conditions had been met, I specifically requested the applicants to inform me as to how they have or have not satisfied the Code conditions. Despite my specific request, the only information provided to me by the applicants is a general statement that they have completed the construction works and that the demands of the former ARC chairperson are outside the by-laws and the Code.

Correspondence submitted by the applicants from the ARC (dated 2 March 2006) suggests that all constructions works have not been completed. In particular, it is alleged that the landscaping works for lot 218 have not been completed in accordance with the applicants’ "approved application" and accordingly, there is still a risk that damage could be caused to the common property or other lots in the course of the completion of the landscaping works. Specifically, it is stated that river gravel covers the entire back yard and sides, there is turf to the front yard only, there has been no mulching or edging, and no paving to the sides. Photographs submitted by the managing agents for lot 218, Maddies Realty, confirm that this is the case, except that it appears as though the gardens have been mulched since the date of the ARC correspondence referred to above (a tax invoice for mulching dated 19 September 2006, submitted by the applicants verifies this aspect). The submission by the owner of lot 217 also suggests that landscaping on lot 218 is deficient in several respects. In addition, the ARC correspondence dated 2 March 2006 includes an allegation that a contractor delivering concrete reinforcing to the lot 218 construction site damaged a common property street light pole in the process.

In response to a request from this office to advise whether or not the body corporate regarded the applicants as having complied with the provisions of the Code, the committee has advised that, according to their knowledge, the property does not comply with the requirements of the Code. As such, the owners need to apply to the ARC for a final inspection once all outstanding breaches of the code have been addressed. Only at that point will the $1,000 bond be refunded.

Ultimately then, whether the applicants are entitled to the return of their bond or not depends upon whether the phrases "construction program" or "works constructed" in clause 17.1(a)(xv) are broad enough to encompass landscaping works. I am of the view that they are. While the terms "construction program", "works constructed", nor "dwelling construction" are specifically defined in the Code for Western Bay Community Titles Scheme, the term "building work" is defined to mean, amongst other things, "the laying, erection, or installation of any landscaping" in section 5(e)(iv)(4) of the Code for the Coomera Waters Community Titles Scheme, which is stated, in section 2.1 of that Code, to apply to all lots in all schemes.

In the circumstances, I must dismiss the application and suggest that the applicants, after remedying the outstanding landscaping breaches, apply to the ARC for a final inspection and after compliance with the Code has been verified, then again request the return of their $1,000 bond.

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^[1] See ss.226, 227 and 228.