Jadran Court [2008] QBCCMCmr 70 (29 February 2008)

Last Updated: 18 April 2008

REFERENCE: 0920-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13870
Name of Scheme:	Jadran Court
Address of Scheme:	54 Frank Street LABRADOR QLD 4215

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

Brian and Mary Humphrey, the Owner(s) of lot 1

I hereby order that the application for orders seeking to overturn the opposition to two motions seeking to grant exclusive use for the benefit of lot 1, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0920-2007

“Jadran Court” CTS 13870

Application

Jadran Court Community Titles Scheme (Jadran Court) is an 11 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). Lot boundaries are designated under a building units plan (now known as a building format plan).

This application is by Brian and Mary Humphrey, owners of lot 1 (applicants) seeking orders against the body corporate (respondent). The applicants are seeking to overturn a vote against granting them exclusive use of a shed and carport by the owner of lot 2, Joseph Stonham (Joseph Stonham).

Decision

Investigation and Submissions

Background

There is a lengthy history of disputes in this scheme.[1] This history indicates that the applicants operate a motel business from the scheme and that Joseph Stonham owns a separate residential lot with its own exclusive use area.

Submissions

The main grounds in support of the application, provided on behalf of the applicants, were to the effect that:

• Joseph Stonham was not fair and reasonable in voting against the grant of exclusive use for a carport and shed;
• All other units have exclusive use garages or carports;
• The shed was purchased and erected by the applicants and has body corporate and local council approval; and
• Joseph Stoneham voted against them due to previous disputes and he disregards orders made against him.
  

Joseph Stonham made a submission to the effect that:

• The application provides no references to the Act or other logic to change the vote recorded, only self interest;
• He did not veto the garages for units 3 to 11 being exclusive use areas, it was the applicants who vetoed the addition of new units of entitlement;
• The shed is not council approved;
• Just because the carport is there at the moment there are no reasonable grounds to legitimize it by making it exclusive use. Through the schedule of entitlements all owners own the area beneath this carport and the carport structure itself; and
• The applicants are creating work for themselves and paying themselves from body corporate funds. The applicants have created an income stream of about $8,000 from these funds and unit 2 is the single biggest contributor to these funds.
  

All other owners were also given an opportunity to provide written submissions. Some submissions were primarily to the effect that it was unfair for lot 1 not to have an exclusive use car port when all other owners have an exclusive use garage. Other submissions indicated that owners have been led to believe that if the applicants cannot have exclusive use to the carport and storage shed then none of the other owners can have exclusive use to their designated garages which they believed they had purchased outright with their unit.

Further enquires

I reviewed a copy of the community management statement, registered plan, and by-laws for the scheme. No further investigations were necessary for the purposes of deciding the present application.

Overturning vote at a meeting

Applicable law

An adjudicator may make an order that is just and equitable to resolve a dispute, including an order giving effect to a motion where the motion is not passed due to opposition that is unreasonable in the circumstances (Act 276, Schedule 5 – Item 10).

A statutory requirement to act reasonably is satisfied if the decision is objectively reasonable.[2] The test is an objective one that requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’.[3]

Determination

The applicants provide very limited grounds to support a conclusion that John Stonham has acted unreasonably in opposing their motion for a grant of exclusive use.

Having viewed the submissions, some owners appear to be under a misunderstanding that the garages for lots 3 to 11 are exclusive use areas. A review of the plan registered 5 April 1974 indicates that the garages for lots 3 to 11 comprise part of the respective lots. These are therefore intrinsically part of the lot and no separate exclusive use by-law is required.

Further, having reviewed the by-laws, it is also clear that a significant area surrounding lot 2 was granted to the exclusive use of that lot from 19 June 1974 when the by-laws were recorded. There is no evidence of any grant of exclusive use for the benefit of any other lot.

Finally, a community management statement was automatically recorded for Jadran Court effective from 15 July 2000, following commencement of the Body Corporate and Community Management Act. Previously, Jadran Court would have only had one schedule of unit entitlements as recorded on the plan, presumably based on the proportionate value of lots in the scheme. The new community management statement now has two schedules of lot entitlements that are both based on the unit entitlements recorded on the plan. However, under the present Act, it is intended that only the interest schedule lot entitlements should reflect the respective market values of the lots (Act, 48(7)). The lot entitlements for the contribution schedule should be equal unless it is just and equitable in the circumstances for them to be otherwise (Act, 48(6)).

If Joseph Stonham was voting against the applicants’ motions simply due to personal dislike then that may have provided a basis for overturning his objection on the basis his opposition to the motions was unreasonable in the circumstances. However, I am not satisfied this is the case. Joseph Stonham indicates that he considers there to be no reason to vote in favour of the grant of exclusive use except the applicants’ own self interest. I accept this submission. Having reviewed the application there does not appear to be any significant benefit to the body corporate in changing existing arrangements to grant the areas in question to the exclusive use of lot 1. In fact, a grant of exclusive use to the applicants may operate to the detriment of other owners by effectively preventing the majority of owners from subsequently voting to remove the carport and shed if there was some good reason to do so in the future.

The applicants have not satisfied me that the vote of Joseph Stonham was cast unreasonably or that it is just and equitable in the circumstances to override his opposition to the motions in question. The application will therefore be dismissed.

Other matters

Joseph Stonham raised an issue about local council approval of the shed in question. It is unnecessary for the purposes of the present application for me to determine whether or not the shed is council approved. If necessary, Joseph Stonham can raise the issue with the local council.

Further, Joseph Stonham raised issues about payments for maintenance and other services and about the lot entitlements for the scheme. I note that the community management statement shows contribution schedule lot entitlements and interest schedule lot entitlements to be the same with lots 1 and 2 having over four times the lot entitlements of most other lots. This probably means that lots 1 and 2 have been paying more than their fair share of the operating and maintenance expenses for the scheme over the past years. This is probably further emphasised in relation to lot 2 due to lot 2 being solely responsible for the maintenance of common property that is within its exclusive use area as well as contributing to the maintenance of common property of other parts of the scheme in accordance with its lot entitlements. In the circumstances, the applicants or Joseph Stonham may wish to obtain a report from a quantity surveyor experienced in the allocation of lot entitlements to determine if the contribution schedule lot entitlements should be changed. Following amendments effective from 1 July 2007, these lot entitlements can be changed by application to the Commercial and Consumer Tribunal if owners cannot agree on proposed new lot entitlements (Act, 48).

Order

The applicants have not satisfied me that there is any good reason to overturn Joseph Stonham’s objections to the desired grants of exclusive use for the benefit of their lots. Further, Joseph Stonham has raised some additional matters in his submissions but I am not satisfied that it is necessary or appropriate to deal with those matters as part of this application.

For these reasons, the application is dismissed.

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[1] Jadran Court, Order 0500-2003, 22 January 2004; Jadran Court, Order 0757-2005, 14 June 2006; Jadran Court, Order 0845-2006, 24 July 2007.
[2] Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125.
[3] Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989) 88 ALR 621.