Moreton Towers [2007] QBCCMCmr 629 (8 November 2007)

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

I hereby declare that the purported change of by-laws by dealing number 601150393 recorded on 26 June 1990 is void and of no effect.

I further order that:

1. The body corporate is to, within six months, lodge a request to record a new community management statement (replacing community management statement 5809 dealing number 704180894). This statement is to include all by-laws for the scheme except that the purported change of by-laws by dealing number 601150393 that has been declared void;
2. The respondents are to pay the body corporate's costs of this new community management statement, except to the extent that those costs are additional to costs reasonably necessary to prepare and lodge a new community management statement consolidating all valid by-laws for the scheme; and
3. Nothing in this order prevents the body corporate from lodging a community management statement that differs from the existing community management statement 5809 in other respects to those required to comply with this order, provided that the body corporate has consented to those changes to the community management statement pursuant to section 62 of the Body Corporate and Community Management Act 1997.

I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0535-2007

"Moreton Towers" CTS 5809

Moreton Towers Community Titles Scheme (Moreton Towers) is an 11 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme is designed for residential purposes.

This application is by Albert Slack, the owner of lot 1 (applicant) seeking orders against the body corporate for Moreton Towers (body corporate) and Jackson and Netta Mobbs, owners of lot 11 (respondents).

At an extraordinary general meeting on 8 June 2007 the body corporate voted eight against one that the by-law granting exclusive use of the rooftop to the owners of lot 11 cease having force. However, the motion was not passed due to this single objection. The present application seeks the order of an adjudicator to override the objection to this exclusive use by-law being revoked. This objection was presumably by the respondents.

A response on behalf of body corporate disputes a number of the assertions made by the respondents, asserting that the solar hot water system was in fact connected to the body corporate power and that the respondents had to employ their own electrician and plumber to install two separate hot water systems within their own lot.

Other owners have also provided submissions. Some of these submissions make particular reference to the need for the body corporate to gain access to the rooftop area and install anchorage points to facilitate the use of a swinging stage to perform maintenance of the outside of the building. All submissions are available for the parties to inspect upon request and it is unnecessary for me to summarise these submissions in detail here.

Moreton Towers was first registered in September 1989 under the Building and Group Title Act 1980 (BUGTA), which applied to schemes prior to the commencement of the current Act. Minutes of the first annual general meeting of the body corporate in October 1989 show that a resolution was adopted to grant the rooftop area to the exclusive use of lot 11. This resolution appears to have complied with the requirements for the creation of an exclusive use by-law (BUGTA, 30(7)). There is no evidence that any owners opposed or challenged this exclusive use by-law at that time. The by-law therefore continued in effect under the present Act (Act 337, 340).

Most present owners of lots in the scheme do oppose the exclusive use of the rooftop by lot 11, as demonstrated by a vote of eight against one that the exclusive use by-law cease to have effect. However, the whole point of an exclusive use by-law is to allocate an area that attaches permanently to a lot for the permanent use of occupiers of the lot. The consent of the owner of the lot in question is therefore required before an exclusive use by-law can be revoked (Act, 171).

The exception is that an adjudicator can make an order that is just and equitable in the circumstances to resolve a dispute and this may include an order remove a by-law that is oppressive or unreasonable having regard to the interests of all owners and occupiers of lots included in the scheme (Act 276 & Schedule 5 Item 20). Specifically, a dispute about an exclusive use by-law is a dispute about a statutory rather than a proprietary right so is within the jurisdiction of an adjudicator.^[1]

The appropriate test is to determine whether it is just and equitable to require the exclusive use by-law to be removed because the by-law is oppressive or unreasonable having regard to the interests of all owners and occupiers of lots in the scheme.

I do not consider there is any particular formula or test for reasonableness and note that the High Court has supported a view that a paraphrase can place an unwarranted gloss on relatively plain words applying a test of reasonableness.^[2] The preferred approach is simply to objectively determine whether or not the by-law is unreasonable.

Similarly, it is appropriate to objectively determine whether the by-law is oppressive. However, it is generally accepted that something that is oppressive goes beyond being merely unreasonable.^[3]

Even if the submissions of the applicant are accepted, I consider these submissions are a long way from establishing that the grant of the exclusive use of the rooftop to lot 11 is oppressive or unreasonable. Any failure by the respondents to maintain the rooftop area as required can be dealt with by a specific request by the body corporate or, if necessary, by order of an adjudicator. Similarly, any allegations of unauthorised improvements or usage can be dealt with on a case by case basis. The only evidence provided in the present application is of relatively minor issues that should be able to be easily dealt with. These issues do not justify removing from the owners of lot 11 the benefit of this potentially highly valuable exclusive use area.

Another issue raised is the desirability for the body corporate to be able to access the area and attach anchorage points to facilitate maintenance of the outside of the building. The body corporate has statutory powers of entry to any lot or exclusive use area where reasonably necessary for maintenance purposes (Act, 163). If necessary the body corporate could obtain orders from an adjudicator to enforce its rights of access. However, it would not be necessary to remove the entire rights to the exclusive use area and this argument does not satisfy me that the exclusive use by-law is oppressive or unreasonable.

Other arguments raised are more of the nature of a preference than any legal right. If the owners of lot 11 have exclusive use of the rooftop then, legally, whether or not they wish to use the area is a matter for them. If the majority of owners consider it would be better for the rooftop to be altered and open to the benefit of all owners then owners can vote that the body corporate seek to negotiate a financial arrangement by which the owners of lot 11 will relinquish part of the area. Similarly, it is open for the body corporate and the respondents to reach a consensual agreement about the installation of gas hot water, generation of solar power or catching of rain water. However, I am not satisfied that it is just and equitable to make an order requiring the respondents to relinquish the area.

After considering the submissions, I do not consider that the exclusive use by-law is oppressive or unreasonable. In all the circumstances, it is not just and equitable to remove the right of lot 11 to exclusive use of the rooftop area. However, I would encourage the parties to negotiate in good faith to resolve the specific maintenance issues raised in this application. The parties may also wish to and consider if some mutually beneficial arrangement can be made regarding issues raised including the potential subdivision of lot 11 and the stated desirability that some part of the rooftop area be available for the use of all owners.

For the reasons above, it is not just and equitable to invalidate the exclusive use by-law recorded on 11 January 1990 pursuant to the resolution without dissent at the first annual general meeting on 16 October 1989.

However, a purported amendment to this by-law was lodged 26 June 1990. One of the owners has made a submission that this change would have been required if it was proposed to subdivide lot 11 as the original by-law granting exclusive use of the rooftop for the benefit of lot 11 would cease to have effect if there was no longer any lot 11 within the scheme. This submission is persuasive. Based on this submission and the wording of the purported amendment, I conclude that the purported amendment was to facilitate the division of lot 11 into two lots and provide for the exclusive use of the rooftop area to continue for the benefit of one of these new lots.

The problem is that any amendment to an exclusive use by-law requires a resolution without dissent (Act, 62). Submissions indicate that there was no resolution without dissent or even any meeting of the body corporate to authorise the purported amendment. In fact, even submissions on behalf of the respondents are to the effect that they are bewildered as to how this purported amendment was registered. This is particularly surprising as the purported amendment affects the respondents' exclusive use area, is for the respondents' benefit, and appears to have been signed by the respondents and the person making submissions on the respondents' behalf.

I conclude that this purported amendment to the by-laws was not properly authorised by the body corporate. I also conclude that, more likely than not, the lodgement of this purported amendment was made with the knowledge or assistance of the respondents.

In the circumstances, I consider it just and equitable that this purported amendment is treated as being void. If this amendment was void then, as a matter of law, the original by-law granting exclusive use of the rooftop to lot 11 would continue in effect. Even if there was some technical problem with this then, as a matter of discretion, I would order that the body corporate reinstate the by-law to how it was prior to the purported amendment. I consider that a new community management statement should be lodged for the scheme including all by-laws for the scheme. Given the purported amendment appears to have been made with the knowledge or assistance of the respondents I further conclude that the respondents should be responsible for the costs of preparation and lodgement of the new community management statement.

In summary, I do not consider it just and equitable to deprive the owners of lot 11 of the benefit of their exclusive use area based on the submissions made in this application. However, the purported amendment to the by-law apparently to facilitate continued exclusive use if lot 11 is subdivided was not properly authorised and should be treated as being void and of no effect.

I note from the submissions that the parties may wish to negotiate upon a number of matters affecting the community management statement including a possible subdivision of lot 11, possible change of lot entitlements, and possible changes to the exclusive use area to facilitate use of part of the rooftop by all owners. I will therefore frame the order to allow six months for the body corporate to lodge the new community management statement to give owners time to consider any other amendments they may wish to make to the community management statement.

For these reasons, I make the order above.

^[1] Independent Finance Group Pty Ltd v Mytan Pty Ltd and the Body Corporate for Welsby Place [2001] QCA 306, McMurdo P, Thomas JA and Atkinson J, 3 August 2001 at paragraphs 88-89.
^[2] McKinnon v Treasury [2006] HCA 45 per Hayne J at paragraph 61. Waters v Public Transport Corporation [1991] HCA 49; (1991) 173 CLR 349.
^[3] Edelston v Wilcox (1988) 83 ALR 99.

Number of Scheme:	5809
Name of Scheme:	Moreton Towers
Address of Scheme:	25 Moreton Parade CALOUNDRA QLD 4551

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Moreton Towers [2007] QBCCMCmr 629 (8 November 2007)