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Sanctuary Cove Principal Body Corporate [2008] QBCCMCmr 408 (3 November 2008)

Last Updated: 19 February 2009

REFERENCE: 0875-2008

INTERIM ORDER OF A REFEREE

MADE UNDER PART V OF

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Building or Parcel:	Sanctuary Cove Principal Body Corporate
Number of Plan:	-
Address:	SANCTUARY COVE, QUEENSLAND 4212

TAKE NOTICE that pursuant to an application for an order made under section 77(1) of the Building Units and Group Titles Act 1980 by the Body Corporate for Plumeria

I hereby order that Sanctuary Cove Principal Body Corporate shall not implement Motion 8 passed at the extraordinary general meeting of the Sanctuary Cove Principal Body Corporate on 29 September 2008, or otherwise take steps to transfer Lot 70 on GTP 2207, except with the prior consent of the Body Corporate for Plumeria.

This interim order has effect until three (3) months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn or otherwise ended (whichever is earlier).

STATEMENT OF REFEREE’S REASONS FOR DECISION - REF 0875-2008

“Sanctuary Cove Principal Body Corporate”

APPLICATION

Sanctuary Cove Principal Body Corporate (PBC) is established under the Sanctuary Cove Resort Act 1985 (SCRA), which provides the legal structures for the Sanctuary Cove Resort. The SCRA sets out a number of matters for the regulation of the PBC and the Sanctuary Cove Primary Thoroughfare Body Corporate (PTBC). The members of the PTBC comprise, directly or indirectly, owners of lots in the initial plan of survey. Owners of lots in non-residential zones automatically became members of the PTBC. Owners of lots in residential zones automatically became members of the PBC which became a member of the PTBC. The Body Corporate for Plumeria (Plumeria) is a residential body corporate which was the result of a subsequent subdivision. Plumeria is registered as Group Titles Plan (GTP) 2207.

This application was made under the Building Units and Group Titles Act 1980 (BUGTA) by Plumeria (applicant) on 14 October 2008, pursuant to a resolution passed by the Body Corporate Committee on 5 September 2008. The applicant sought the following orders of a Referee against the PBC (respondent):

That the referee should examine the reasons and justification provided by the RBC in support of the RBC decision to transfer part of lot 70 to lot 90. If the Referee is not satisfied that the reasons and justification provided fulfil the RBC's obligations under section 33 of the SCRA the Referee to order that the Resolutions (Motion 8 parts 4-7 inclusive) passed at the RBC EGM of 29 September 2008 be rescinded and the orders issued by the referee dated 24 June 2008 will prevail.

That a transfer of any portion of lot 70 to the owners of lot 90 on whatever conditions which may be agreed, can proceed only with the consent of Plumeria Body Corporate.

The applicant sought the following interim orders of a Referee:

To restrain the Sanctuary Cove Principal Body Corporate from entering into and executing any agreement with Sonja Trott to transfer land from lot 70 to lot 90 until this matter and "Dispute Application" has been considered by the Commissioner for Body Corporate and Community Management and the Referee has issued final orders on this Dispute.

To order the RBC to proved the Referee with a full explanation and justification as to how the transfer of part lot 70 in GTP 2207 to lot 90 in GTP 3441 (being a subdivision of GTP 2207) fulfils the RBC obligation under section 33 of the SCRA which requires the RBC "to control manage and administrator the secondary thoroughfare for the benefit of its members”.

JURISDICTION

The SCRA is one of a number of pieces of legislation defined as a ‘specified Act’ under section 326 of the Body Corporate and Community Management Act 1997 (BCCM Act). Section 325(2)(a) of the BCCM Act provides that BUGTA continues to apply to plans registered under BUGTA for a specified Act. Section 104A of the SCRA provides for the application of the BUGTA to disputes about the operation of the SCRA or the rights and obligations of persons under the SCRA. Section 5A of BUGTA also provides that BUGTA applies for the operation of the SCRA.

Part 5 of BUGTA concerns disputes, and sections 75 to 94B provide for orders by a referee. Section 77 of BUGTA provides for the general power of referees to make orders.

77 General powers of referee to make orders

(1) A referee may, pursuant to an application of a body corporate, a body corporate manager, a proprietor, a person having an estate or interest in a lot or an occupier of a lot in respect of a parcel, make an order on any person entitled to make an application under this subsection or on the chairperson, secretary or treasurer of the body corporate for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.

(2) Where a body corporate has a discretion as to whether or not it exercises or performs a power, authority, duty or function conferred or imposed on it by this Act, it shall be deemed to have refused or failed to exercise or perform that power, authority, duty or function only if it has decided not to exercise or perform that power, authority, duty or function.

(3) Nothing in this part authorises the referee to make an order of the kind that may be made by the Court under section 25 or 26.

(4) Nothing in this part affects the generality of subsection (1), but an order in respect of any matter dealt with in any other section of this part shall not be made under this section.

In this application I am satisfied that the applicant is both a body corporate and a person having an interest in a lot. The applicant is seeking an order against the PBC, as a body corporate regarding the exercise or performance of a power or function conferred on the PBC by the SCRA. Accordingly I am satisfied that I have jurisdiction as a Referee to determine the present dispute due to section 104A of the SCRA and section 77(1) of BUGTA[1].

Section 76 of BUGTA also provides for the making of interim orders:

76 Interim orders

(1) In this section —

interim order means an order made under subsection (2).

(2) Where an applicant for an order under section 77(1) states in his or her application that the applicant requests an interim order, the referee may, if the referee is satisfied on reasonable grounds that, by reason of the urgent circumstances of the case, the referee should do so—

(a) make, under this subsection, any order that may be made under section 77(1) with respect to the application; and

(b) before the expiration of 3 months from the date on which it takes effect and upon a further request made by the applicant, renew an interim order that is in force by serving notice in accordance with subsection (6) that the order is renewed.

(3) An interim order may be made or renewed notwithstanding—

(a) that any power or duty of the referee under section 73(1) has not been exercised or performed with respect to the application; or

(b) where the referee has given written notice of the application under section 73(1)(c)—that any time specified under section 73(1)(d) or (e) in that or any further notice has not expired.

(4) An interim order made pursuant to an application for an order under section 77(1) ceases to have effect—

(a) at the expiration of 3 months from the date on which it takes effect or, where the referee has renewed the interim order, at the expiration of 6 months from that date; or

(b) where the interim order is revoked by a tribunal under section 107(1)(c) or by the referee under subsection (5)—when it is so revoked; or

(c) where—

(i) the referee makes an order under section 77(1) with respect to the application; or

(ii) the referee dismisses the application; before the interim order ceases to have effect under paragraph (a) or (b), when the order is made under section 77(1) or the application is dismissed, as the case may be.

(5) The referee may revoke an interim order and, if the referee does so, the referee shall serve notice in accordance with subsection (6) that the order has been revoked.

(6) A notice of the renewal or revocation of an interim order shall be served—

(a) except as provided in paragraph (b), on the body corporate for the plan to which the order relates; or

(b) where the order requires a person to do or refrain from doing a specified act—on that person.

(7) A person shall not in, or in connection with, a request for an interim order or for the renewal of any such order, make a statement that the person knows is false or misleading in a material respect.

Maximum penalty for subsection (7)—6 2/3 penalty units.

PROCEDURAL MATTERS

Under section 76(3) of BUGTA a referee may make interim order notwithstanding that notices have not been issued pursuant to section 73(1)(c) and (d) of BUGTA inviting submissions. However, in this case I did provide the PBC with a limited opportunity to make a submission in regard to the interim application. A submission was made by the PBC in due course.

MATTERS IN DISPUTE

The following is a summary of the matters in dispute, as ascertained from the application, interim submission and the statement of reasons in the previous application lodged on this matter.

The dispute relates to proposals by the PBC to enter into deeds or agreements regarding the transfer of part of a secondary thoroughfare. This secondary thoroughfare comprises Lot 70 on GTP 2207 (Lot 70), which is owned by the PBC and services lots within Plumeria. It seems that there is an encroachment on Lot 70 by the Owner of Lot 90 in Plumeria. It seems that Lot 70 runs along the northern side of Plumeria parallel to the Cooomera River, with a section some 8 metres wide and 38 metres long running down to the river between Lot 90 and Lot 50. This section of approximately 310 metres is shown on the registered plans as Easement D. Easement D is an easement over part of Lot 70 for drainage purposes for the benefit of Lot 90. Sonia Trott (Trott) is the registered owner of Lot 90 on Group Titles Plan of Resubdivision (GRP) 3441 which is a resubdivision of GTP 2207 (Lot 90). It appears that Trott has landscaped and fenced the area covered by Easement D and that their house on Lot 90 may encroach onto Lot 70. The PBC seeks to transfer part of Lot 70 to Trott but Plumeria objects to this occurring without its consent.

On 20 March 2006 the PBC passed a special resolution purporting to transfer the area covered by Easement D to Lot 90. The resolution included that the PBC would negotiate with Plumeria to “obtain their consent in the required form to the arrangements”. The PBC then adopted a different process than that set out in the special resolution, without Plumeria consent. Plumeria lodged an application challenging the new process. Referee Toohey found the PBC resolution was made on the basis that Plumeria would consent to the transfer, and so ordered the PBC not to transfer the easement area pursuant to the special resolution of 20 March 2006, and a subsequent decision on 26 may 2008, without Plumaria’s consent. The Referee also ordered that the PBC ensure that all occupiers have a right of way over the easement area as required by section 56 of the SCRA. The Referee commented that if the PBC wished to pursue the transfer without the consent of Plumaria it would need to pass a new special resolution to that effect. However he also commented that “...if the PBC decides instead to proceed with the transfer without the consent of Plumeria it would be open for Plumeria to challenge any proposed transfer under section 33 of the SCRA.”

A new motion (Motion 8) on the proposed transfer was submitted to an extraordinary general meeting (EGM) of the PBC on 1 September 2008. In summary, the motion sought to rescind previous decisions on the matter and to execute an agreement with Trott and obtain Council consent to transfer the relevant portion of land to Trott.

At the EGM the Plumeria representative tabled legal advice dated 27 August 2008 that the proposed motion lacked adequate explanation as to how it would benefit the wider interests of the PBC members, an argument that the interests of the Sanctuary Cove community was to reinstate access to the river frontage; a preliminary view that Trott has limited grounds to pursue a claim for compensation against the PBC and that the prospects of success were poor; that even if a claim were successful any damages would be limited; and that the Lot 90 building unlawfully encroaches onto Lot 70 with rectification the responsibility of Lot 90. The PBC agreed to defer voting on the motion until 29 September, to try and seek a solution acceptable to Trott and Plumeria.

On 2 September Plumeria outlined its proposal that the PBC adjust the boundary between Lot 70 and Lot 90 to transfer a two metre strip of the easement area to Lot 90, conditional on Trott agreeing to extinguish the deed under which they have been permitted to landscape the disputed area. Plumeria says this would “...rectify the existing building encroachment and regularise appropriate building set backs from the Secondary Thoroughfare.” The PBC referred the proposal to Trott’s solicitor. The applicant understands that Trott advised that she was not willing to entertain any compromise proposal and that no right of access by residents would be acceptable.

Motion 8 was put before the EGM on 29 September EGM. It passed as a special resolution with 76.5% of the lot entitlements. Over a third of the lot entitlements in favour of the motion were cast by the proxy for the developer. The applicant notes that no formal justification was provided in support of the motion but claim the verbal justification provided at the meeting was that:

Trott purchased Lot 90 in good faith believing they were purchasing exclusive rights to Lot 70;
The PBC has a duty to protect Trott’s investment, even to the disadvantage of other residents;
As Trott is not prepared to compromise, the PBC must determine whether to insist on reinstating the right of way or pursue the transfer, at which time the problem will go away; and
If the PBC reinstated the right of way it could be liable for ‘millions’ in compensation to Trott.

In response to these arguments Plumeria asserts that:

It is accepted that Trott purchased in good faith but reasonable title and record searches would have revealed that no exclusive rights existed;
While there will be some disadvantage to Trott by reinstating the right of way, residents are lawfully entitled to a right of way and should not be denied that right due to an error by Trott;
Trott will gain a benefit of a gift of land by the transfer, at the expense of other residents who will receive no benefit and will lose open space and amenity; and
Without a legal opinion as to Trott’s likely causes of action, the prospects of success and the PBC’s exposure to damages, the PBC could not properly consider the merit of the motion.

Plumeria claims the PBC is failing in its duties under section 33 of the SCRA. They argue that:

Section 63 of the SCRA entitles the PBC to transfer parts of the secondary thoroughfare by special resolution. But without the projection of section 33 this allows 75% of qualifying votes to transfer any part of the secondary thoroughfare to the detriment of the remaining 25%.
Residents cannot be excluded from any part of the secondary thoroughfare.
Easements contribute to open space and property values. Other easements in Sanctuary Cove have been landscaped in a manner which conforms to the requirements in section 56 of the SCRA that residents have unrestricted access over the secondary thoroughfare.
The previous order found that the Owner of Lot 90 was not given exclusive use of Lot 70.
By failing to investigate properly the arrangements approved in 1996 the PBC has failed to manage and administer the secondary thoroughfare in the interests of members.
The Lot 90 building was not approved by the PBC, was not retrospectively approved and remains non-complaint, so there is no basis to the claim that the boundary location gives a right to exclude resident access to the area.
The PBC has not released any legal advice supporting its claim that a challenge to Trott’s exclusivity would expose the PBC to damages in excess of $1,000,000.

The submission from the PBC opposes the application. The submission states that:

Section 63 of the SCRA provides that the secondary thoroughfare may be transferred with the approval of the PBC and Council.
On 29 September 2008 the PBC carried a special resolution to transfer of part of Lot 70 to Lot 90 by way of the steps outlined in the motion including obtaining Council consent. 15 members voted yes, three voted no and one abstained. This was an overwhelming majority.
They dispute that the duty of the PBC under section 33 of the SCRA to control, manage and administer the secondary thoroughfare for the benefit of its members must be observed when transferring land under section 63. Section 63 does not refer to section 33, no doubt because it is not relevant to section 63. The words ‘control’, ‘manage’ and ‘administer’ do not relate to a transfer but to actions such as regular maintenance. It does not relate to some continuing obligation where part of the secondary thoroughfare is to be transferred and amalgamated with another lot, which is governed by section 63. If section 33 was to govern the transfer it would need to say so. Each section has its own unique and individual test or protection.
Plumeria is seeking to restrain the PBC from carrying out steps to effect a transfer that has been authorised by the PNC and meets the requirements of the SCRA.
Plumeria relies on comments made by Referee Toohey in his decision on 24 June 2008 that for the PBC to proceed with the transfer without the consent of Plumeria it would be open to challenge. However the PBC argues that those comments were observations on matters not directly before the Referee and were speculation as to future matters, and were not correct.
There is no basis for an order that the transfer cannot proceed without Plumeria’s consent.
There is no requirement in section 63 for consent to be obtained from Plumeria.
Referee Toohey found that the particular process agreed to on 20 March 2006 required the consent of Plumeria and, consent having not been achieved, the transfer could not proceed on the basis of the agreed process. However he considered that the PBC wished to pursue the transfer without the consent of Plumeria it could pass a special resolution to that effect.
The PBC has proceeded to pass new special resolutions which do not seek or require the consent of Plumeria, and have revoked the previous resolution.
Section 110 of BUGTA a Referee may determine that an application is vexatious in nature. This application is vexatious and should be dismissed with legal costs awarded to the PBC. Plumeria did not oppose the motion considered on 20 March 2006 but simply abstained. Plumeria had planned this application even before the recent motions were considered.

DETERMINATION

This application raises complex matters. I see merit in the PBC’s argument that there is nothing in section 63 of the SCRA that requires the consent of Plumeria or anyone other than the PBC and Council. However the argument that section 33 is not relevant to section 63, and so the PBC is not required to consider its duties under section 33 when acting under section 63, is more contentious. I am satisfied the applicant has have made out a prima facie case that the transfer of the area in question would not be for the benefit of PBC members. These matters warrant full investigation.

Having concluded that the applicants have raised an argument that warrants further consideration, it follows that I do not consider that, at this stage, that the application is frivolous or vexatious. Accordingly I do not propose to dismiss the interim order application for that reason or to consider any order of costs against the applicant in regard to the interim order application.

I have not been provided with any information to indicate that there is any particular urgency in this matter and the status quo has existed for a considerable time. I do not consider that the parties will be adversely affected by granting an interim order that the transfer not be effected until this application is determined. But if that interim order is not made and the proposed transfer was effected, the result of the final order application will be meaningless. For these reasons I am satisfied that it is reasonable in the circumstances to grant an interim order that the transfer not proceed without the consent of Plumeria until this application is finalised.

I am not convinced that it is necessary or appropriate to make an interim order requiring the PBC to provide an explanation and justification of how the proposed transfer satisfies its obligations under section 33 of the SCRA. To the extent that this information is relevant to the determination of the final application, the onus is on the PBC to present its own case.

I will now proceed to invite submissions from affected parties in regard to the final orders sought by the applicants. The interim order I have made has effect for a period of three months. I would anticipate that the submissions process and the subsequent investigation of the final orders should be complete within that timeframe however, if it is not the applicant may request in writing a renewal of the interim order.

REFERENCE: 0875-2008A

INTERIM ORDER OF A REFEREE

MADE UNDER PART V OF

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Building or Parcel:	Sanctuary Cove Principal Body Corporate
Number of Plan:	-
Address:	SANCTUARY COVE, QUEENSLAND 4212

TAKE NOTICE that pursuant to an application for an order made under section 77(1) of the Building Units and Group Titles Act 1980 by the Body Corporate for Plumeria

I hereby order that the following interim order issued on 3 November 2008:

I hereby order that Sanctuary Cove Principal Body Corporate shall not implement Motion 8 passed at the extraordinary general meeting of the Sanctuary Cove Principal Body Corporate on 29 September 2008, or otherwise take steps to transfer Lot 70 on GTP 2207, except with the prior consent of the Body Corporate for Plumeria.

is extended.

This interim order now has effect until and including 2 May 2009 (being six months after the date of the original interim order), or this interim order is revoked, or a final order for the application is issued, or until the application is withdrawn or otherwise ended, whichever is earlier.

STATEMENT OF REFEREE’S REASONS FOR DECISION - REF 0875-2008

“Sanctuary Cove Principal Body Corporate”

APPLICATION

Sanctuary Cove Principal Body Corporate (PBC) is established under the Sanctuary Cove Resort Act 1985 (SCRA), which provides the legal structures for the Sanctuary Cove Resort. The Body Corporate for Plumeria (Plumeria) is a residential body corporate within the PBC, registered as Group Titles Plan (GTP) 2207.

This application was made under the Building Units and Group Titles Act 1980 (BUGTA) by Plumeria (applicant) on 14 October 2008. The applicant sought the following orders of a Referee against the PBC (respondent):

That a transfer of any portion of lot 70 to the owners of lot 90 on whatever conditions which may be agreed, can proceed only with the consent of Plumeria Body Corporate.

The applicant also sought the following interim orders of a Referee:

On 3 November 2008 I made an interim order in the following terms:

On 5 January 2009 the applicant requested an extension to the interim order.

JURISDICTION

The SCRA is a ‘specified Act’ under section 326 of the Body Corporate and Community Management Act 1997 (BCCM Act). Section 325(2)(a) of the BCCM Act provides that BUGTA continues to apply to plans registered under BUGTA for a specified Act. Section 104A of the SCRA provides for BUGTA to apply to disputes under the SCRA. Section 5A of BUGTA also provides that BUGTA applies for the operation of the SCRA.

Part 5 of BUGTA concerns disputes, and sections 75 to 94B provide for orders by a referee. Section 77 of BUGTA provides for the general power of referees to make orders, and section 76 provides as follows for interim orders: