Glostermin [2008] QBCCMCmr 71 (3 March 2008)

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

William McCourt, the Co-owner of Lot 9 and Alma Clark, the former Owner of Lots 20 and 24

I hereby order that the application for orders:

The changing of motion is at the AGM of Glostermin CTS 6049 held on 17/9/97, from an ordinary resolution to a special resolution motion 15, submitted by owner of Lot 18 states "To enclose the balcony area as previously requested the specifications as previously supplied will apply to this request."

I wish to apply to have this motion overturned on the grounds that it would be unreasonable and unjust; because the proposed balcony enclosure would detract from the appearance of the Complex and detrimentally affect the value of the other 21 Lots which are in proximity to Lot 18.

is dismissed.

Glostermin community titles scheme (Glostermin) consists of 27 lots and common property. The Community Management Statement (CMS) for Glostermin indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme is registered as Building Unit Plan 9265.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was lodged by William McCourt, the Co-owner of Lot 9 and Alma Clark, the former Owner of Lots 20 and 24 (applicants) on 1 November 2007. The applicants initially sought a final order against Body Corporate for Glostermin (respondent) in the following terms:

Following the issuing of an interim order, the applicants amended their application to add the following final order:

The application sought an interim order. On 6 December 2007 I issued the following interim order:

Prior to determining the interim order, a copy of the application was provided to the Body Corporate Committee and Sarah, Lydia, Benedict and Samuel King (the Kings), the owners of Lot 18, with a limited period to make a submission in respect of the interim order application. Submissions were received from the Committee and the Kings.

Following the interim order, and in accordance with section 243 of the Act, a copy of the application was provided to the Body Corporate, with an invitation to the Committee and all owners to respond to the matters raised by the application. The notice alerted parties to the issuing of the interim order and the amendment to the outcomes sought. Submissions were made by the Committee, the Kings and eight other owners. The applicants did not avail themselves of the opportunity to inspect and reply to the submissions received.[1]

A dispute resolution recommendation was made referring the dispute to departmental adjudication.

This application relates to a motion passed by the Body Corporate at its Annual General Meeting (AGM) of 17 September 2007 to approve the enclosure of a balcony on Lot 18. The motion was “To enclose the balcony area as previously requested. The specifications as previously supplied will apply to this request.” The motion was carried with 12 votes for, 10 against and 1 abstention.

The application (as amended) objects to the motion on two grounds: that the motion should have been a special resolution, and that passing the motion was unreasonable. Despite requests for clarification, the applicants have provided little evidence to support their arguments.

The application argues that the motion should have been a special resolution because the balcony enclosure involves a change to common property with a value of more than $250 and a change to the appearance of the building. The applicants claim the enclosure could not be effected without attaching to common property such as the side walls and ceiling, and imply that the enclosure may also require the removal of balustrade and attachment to the outer edge of the balcony.

It seems that a motion relating to this issue was submitted to the 2006 AGM on 30 November 2006. The motion was apparently ruled out of order by the then Chairperson (McCourt) on the basis that a special resolution was required. It was resubmitted to the 2007 AGM and again listed as an ordinary resolution. At the AGM one of the applicants stated that the motion needed to be a special resolution. The Body Corporate Manager (BCM) advised that it depended whether the enclosure would be on the boundary of the lot, in which case it would require a special resolution, or totally within the title of the lot, in which case an ordinary resolution would be sufficient.

The motions for the AGM had been considered at its Committee meeting on 20 August 2007. The meeting noted that owners were not asked to specify the motion type when submitting motions. Motion types were discussed by the Committee and, on the basis that the enclosure was entirely within Lot 18, the BCM advised that an ordinary resolution was sufficient. The meeting apparently noted the proposal complied with By-law 51 (which prevents alterations or additions to internal walls or structural features of lots without Body Corporate approval, which must not be unreasonably withheld). One of the applicants was present at that meeting.

The applicants dispute that the balcony can be enclosed without affecting common property, on the basis that the Body Corporate is responsible for the exterior walls on balconies. They claim that it is their understanding that it is an “absolute no-no” to alter the exterior appearance of a lot and refer to a previous adjudication on the matter.[2]

The application also argues that the alteration to the appearance of the building would be a “...violation of the basis on which people purchased their properties, as it was the understanding of purchasers and the developers that the external appearance could not be altered.” It claims that the proposed enclosure would detract from the appearance of the complex and detrimentally affect the value of other lots. They say that while five lots in the south-facing southern Block 4 are enclosed, these are not visible to the other lots in the scheme. However they say that none of lots in the western and northern Blocks 2 and 3 have enclosed balconies, and that the proposed enclosure would be visible to all the lots in those blocks and to everyone coming into the scheme.

The application also comments that the by-laws prevent owners doing anything to increase the rate of fire insurance or conflict with fire regulations.

The submissions from the Kings say that, while they are not a party to the dispute, they face the prospect of deferring their plans long after they were given approval. They say that since the AGM they have proceeded with construction planning, which has incurred some expense. They note:

Six submissions from other owners supporting the enclosure include the following comments:

Two owner submissions oppose the application. Both claim that section 114 of the Standard Module requires changes to units to be authorised by a special resolution. One also claims that the enclosure would look unsightly and that, as John King is the Chairman, the decision at the AGM to pass the motion as an ordinary resolution arose from a conflict of interest.

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[4]

In late 2007 Alma Clark sold her two lots and has ceased to be a current owner in the scheme. The applicants did not advise this Office of this change and have not sought to amend their application as a result. It is unlikely that the outcomes sought could continue to be relevant or required by that applicant once she ceased ownership of a lot in the scheme. Pursuant to section 270(e) of the Act an application may be dismissed by an adjudicator if a party is ceases to be a party described in section 227(1) of the Act and the outcome is not longer relevant or required. However, given that the other applicant, William McCourt, retains his standing in this matter such an order is not necessary.

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 claimed or anticipated contravention of the Act or the CMS; or the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or the authorisation of a person as a letting agent.

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)).

There are three key issues arising from this dispute: whether the Body Corporate is required or is able to authorise the enclosure to a balcony, what type of resolution is required to effect that authorisation, and whether the purported authorisation was reasonable in the circumstances.

The first consideration in regard to the requirement or capacity of the Body Corporate to approve an enclosure to a lot’s balcony is the differing requirements for an improvement to common property or only a lot.

Section 114 of the Standard Module allows owners to make improvements to common property in certain circumstances. Unless the improvement is minor, does not detract from the appearance of the lot, and is not likely to promote a breach of the owner’s duties as an occupier, the improvement requires approval by a special resolution. But, contrary to claims in some submissions, this applies only to common property and not to improvements to lots themselves.

The applicants refer to the proposed enclosure as an improvement of more than $250 and it seems that they may mistakenly have in mind section 124 of the Standard Module. That provision relates to improvements to a common property exclusive use area and requires that a special resolution is required to approve an improvement if the value of the improvement is more than $250 or the improvement is not authorised by the exclusive use by-law. However section 124 does not apply in this case. The Lot 18 balcony is part of the lot and is not an exclusive use area.

If an improvement is entirely contained within the lot there is no provision in the Act or Standard Module that prevents it or requires body corporate approval for it. While the applicants seem to mistakenly believe that changes to the external appearance of a building are prohibited, this is not the case – rather it is entirely a question of what is included in the by-laws applying to the scheme.

Glostermin was registered in June 1989 under the Building and Group Titles Act 1980 (BUGTA), which applied to schemes prior to the commencement of the current Act. The community management statement (CMS) for Glostermin that was registered on 15 July 2000 under the Act states that the by-laws for the scheme are taken to be those in effect as at 13 July 2000. Accordingly, while the current Act now applies to the operation of the scheme, the applicable by-laws are those which were registered under BUGTA in August 1989.

Glostermin does not, like many schemes, have a general by-law that requires Body Corporate consent for changes to the external appearance of the lot. However, the following by-laws may relevant to the proposed enclosure of the Lot 18 balcony:

7(b) A proprietor or occupier of a lot shall not alter the exterior colour scheme of his lot without the prior approval in writing of the Body Corporate.

By-laws 3 and 31 refer to damage or alteration to common property. However, as section 114 provides for improvements to common property, consideration of those by-laws is not necessary.

To the extent that the proposed balcony enclosure falls within the scope of By-laws 7(b), 47 or 51, it would not be prohibited outright. However Body Corporate consent would be required. The Body Corporate would need to consider the proposal on its merits and in light of the specific circumstances, rather than applying blanket prohibition of a type of change. Committee approval would be sufficient unless a general meeting had resolved that such an issue was a restricted issue for the Committee.[5] However, that does not mean that the matter could not be determined at a general meeting, rather than by the Committee, and given the history of dispute regarding balcony enclosures it could be advisable for such matters to be referred to a general meeting.

However there is a question as to whether the enclosure would fall with the scope of these three by-laws at all. Without the final specifications of the proposed enclosure I am not in a position to make a determination on that matter.

In considering the application of the by-laws to the approval of the final specifications it would be relevant for the parties to consider:

If the enclosure is not covered by the by-laws, no Body Corporate consent is necessary. However it may be a difficult distinction and so if the Kings are in any doubt as to whether their proposal would fall within the scope of the by-laws, it may well be advisable to proceed through the approvals process that they have already commenced to ensure that there is no question regarding any necessary Body Corporate consent before they construct the enclosure. The Body Corporate must act reasonably in granting approval under the by-laws.

By-law 11 provides that a proprietor or occupier shall not do anything to increase the rate of fire insurance on any property on the group title plan or which may conflict with the laws and/or regulations relating to fires or any insurance policy upon any group title plan or the regulations or ordinances of any public authority for the time being in force. The applicants have referred to this requirement but provided no evidence as to how the proposed enclosure could amount to a breach of this by-law. Moreover, given that this scheme is a building format plan rather that a group title plan, the applicants have not demonstrated the relevance of the by-law to the lot in question.

Section 108 of the Act provides that an ordinary resolution is passed (if no poll is requested) if the votes cast for the motion are more than the votes counted against. Section 106 of the Act provides that in this scheme there are three tests for whether a special resolution has passed. Firstly, two-thirds of the votes cast (which excludes abstentions) must be in favour of the motion. Secondly, the votes cast against the motion are not more than 25% of the total number of lots (in this case seven). The third test is that the votes against the motion not represent more than 25% of all contribution lot entitlements (in this case 48).

While the motion in question passed as an ordinary resolution, it is clear that it would not have passed as a special resolution because it did not achieve two-thirds of the votes cast in favour. As outlined above, if the proposed balcony enclosure were to encroach onto common property, a special resolution would certainly be required. However, if the enclosure is entirely contained within the lot (including attaching only to the inside of boundary structures) then an ordinary resolution will be sufficient. .

The applicants imply that balustrades have been removed in previous enclosures. The approval required for the removal of the balustrade would be a separate matter from any approval required for the enclosure within the lot. An improvement can include the removal of something, and if the balustrade was part of the common property, section 114 of the Standard Module would apply. However it is a issue that could only be determined on the factual circumstances (which is not necessary here because the question has not specifically arisen) whether the removal of the balustrade was an improvement that is minor, does not detract from the appearance of the lot, and is not likely to promote a breach of the owner’s duties as an occupier. If those conditions existed, a special resolution may not be required to approve the removal of the balustrade.

If no special resolution was required, committee approval may be required pursuant to By-law 3 which requires Body Corporate consent to damage or deface common property.

In my view, the fact that the Chairperson did not rule the motion out of order on the basis of the resolution time does not amount to a conflict of interest. The provisions of section 34 of the Standard Module regarding conflict of interest refer only to a committee member’s role in a committee meeting, and not in a general meeting. Committee members are not restricted in their voting at a general meeting because of their interest in a matter. If a chairperson did not properly exercise their responsibility to rule a motion out of order under section 47 of the Standard Module, that decision could be overturned. In this case, the Chairperson was acting in accordance with a decision of the Committee (following advice from the BCM) as to the relevant motion type.

The key question is whether the enclosure will change common property. The Kings and the Committee say that the enclosure will be entirely contained within the boundaries of Lot 18. The applicants say that the enclosure must attach to common property, although they provide little detail or explanation of this assertion.

Glostermin is a building format plan of subdivision. Pursuant to section 49C(4) of the Land Titles Act 1994, the boundaries of a lot in a building format plan with another lot or common property is the centre of the wall, floor or ceiling. Accordingly, the inside face of the exterior balcony walls, ceiling and floor are part of the lot. Therefore, if the enclosure is attached to the inside ceiling, walls, balustrade or floor of the balcony, the enclosure could remain contained within the boundary of the lot if any bolts or other fixtures remain within the centre of the boundary structures. While the enclosure would have an external face to it, if the enclosure is contained within the boundary of Lot 18, that external face would not form part of the exterior wall of the Lot and would not fall within common property (or, by reference, Body Corporate responsibility).

No specifications have yet been presented for this enclosure. However, while the AGM minutes do not record it, the Committee and the Kings agree that the AGM resolution only gave in-principle approval to the enclosure and will be subject to the Committee approving the specifications. If the specifications show the enclosure encroaching onto common property, the Committee can and should refuse it pending approval by special resolution.

The applicants argue that the removal of balustrades in the enclosure of other balconies means that common property has been interfered with. However it is conceivable that an enclosure could affixed only to the inside of a lot, but that a balustrade that (potentially) forms part of common property could be removed as part of the work.

Section 94 of the Act sets out the general functions of bodies corporate and required in section 94(2) that a body corporate must act reasonably in carrying out its functions, including in making or not making decisions in relation to its functions. The applicants seek to overturn the Body Corporate’s decision approving the balcony enclosure on the basis that it was unreasonable.

The applicants refer to a previous adjudication (Massey Lodge[10]) relating to a balcony enclosure to support their assertion that balcony enclosures are not permitted. That case related to a proposed balcony enclosure in a scheme where two other lots had enclosed their balconies. In that case the Adjudicator upheld the body corporate’s decision not to approve a balcony enclosure which, it appears, involved an improvement to common property. However the decision did not say that all balconies were prohibited. Although there are obvious differences in the factual circumstances, the Adjudicator’s reasoning provides a useful guide to the approach to considering this question.

The adjudicator refers to one of the secondary objects of the Act being to “balance the rights of individuals with the responsibility for self management as an inherent aspect of community titles schemes.” She goes on to say[11]:

In light of this objective, a clear decision of the body corporate should only be disrupted if the decision is unreasonable or unlawful. In my view, to do otherwise would be an unwarranted interference in the ability of the body corporate to make its own decisions, and to independently manage its affairs as contemplated in the secondary objects of the Act.

The reasons the applicants give for the Body Corporate’s decision being unreasonable are that the proposed enclosure would detract from the appearance of the scheme and affect the value of those lots in proximity to the Lot 18. Similar arguments are raised in the Massey Lodge dispute.

I agree with the previous Adjudicator in that the visual impact of the proposed enclosure is a subjective question and owners are entitled to hold differing views about the matter. The Kings have not yet provided specifications of the proposed balcony and so it is difficult to assess the impact of the enclosure. However the Kings have said that it is envisaged that the specifications would be the same as the enclosures in Lots 1-4. The applicants have not provided photographs of the other balconies in the scheme or provided any other details as to what it is about the existing or proposed balconies that they find visually unappealing. Several other owners disagree that there will be any adverse visual impact.

In regard to the impact on the value of other lots, no party has presented any objective evidence that the existence of the enclosure would affect the value of Lot 18 or any other lot, either positively or negatively. Several owners are of the opinion that the enclosures add to the value of the lots.

Another question in determining whether a body corporate’s decision is reasonable is how they have determined similar decisions in the past, and whether there is any justification for the difference. It is clear that the Body Corporate has either approved, or allowed (that is, failed to act on the failure to obtain approval for) the enclosure of four other balconies in the scheme. Prima facie it would be unreasonable for the Body Corporate to have refused this balcony when others had been permitted.

However the Body Corporate must determine each request on its merits and if the circumstances are different a different decision could be warranted. The applicants claim that the location of the other four lots is such that they are not visible from the other lots, but that Lot 18 is visible from all lots. Others disagree. The fact that other enclosures have been approved does not necessarily mean that it would have been unreasonable to refuse this enclosure. However that of itself is not enough to say that it would be unreasonable to approve the enclosure.

My primary consideration here – aside from the lack of evidence from the applicants to support their claims – is that a majority of voters that the AGM supported the balcony enclosure. Given the lack of specifications included in the motion it would have been entirely reasonable for owners to have voted against the motion until more information about the visual or other impact of the balcony was provided. However a majority of owners voting at the meeting did not do so, and voted in favour of the motion. This implies that they did not share the applicants’ views as to the impact of the balcony.

It is not appropriate for me to give any consideration to any owner’s expectations as to whether the appearance of the scheme could be altered or not, if that expectation was not based on any current requirements in the legislation or scheme by-laws. If owners were led to believe by the developer or a former owner that the appearance of the scheme could not be changed they could seek private legal advice about any scope to pursue their rights under their purchase contract. Such matters are clearly beyond the jurisdiction of this Office.

On the basis of the material provided to date, I have no evidence that the proposed enclosure will encroach on common property (by attaching to the exterior of the boundary between the lot and common property, rather than just the interior of the boundary). Accordingly I have no basis to determine that a special resolution was required to approve the enclosure.

Moreover, I have been provided with no compelling reasons to support the applicants’ claims that the Body Corporate’s decision on 17 September 2007 to approve the enclosure (at least in-principle) was manifestly unreasonable, such that it is appropriate to overturn the decision.

In due course the Kings may submit specifications for the proposed balcony enclosure to the Body Corporate or its Committee to determine whether approval for the enclosure should be granted, pursuant to any by-law that the parties consider is relevant to the enclosure. There may be potential to challenge that decision, if and when it is made, if appropriate grounds exist. However the applicants should be aware that it may be that any future application that sought to dispute approval for the enclosure on the same grounds as this application would be functus officio.[12]

It is also open to owners to pass a resolution to revoke a motion previously passed at a general meeting.[13] If, having considered the information included in my reasons, any owner concludes that a different result would be appropriate, they may submit a revocation motion to a general meeting. However owners must act reasonably in considering such a motion. Moreover, unless and until such a motion is passed the Kings are entitled to, as appropriate, proceed to seek Committee approval for their specifications (if necessary) and act on any approval given by the Committee.

[1] See sections 246 and 244 of the Act respectively
[2] Massey Lodge [2004] QBCCMCmr 356 (15 July 2004)

[3] The applicants dispute this and one submission includes a letter from one committee member to the BCM claiming that the motion should be ruled out of order on the basis that it requires a special resolution.
[4] See sections 227, 228, 276 and Schedule 5 of the Act

[5] See section 26 of the Standard Module. I have received no evidence that the Body Corporate has determined that approvals under any of these by-laws are a restricted issue for the Committee
[6] If it is simply a clear glass sheet this prima facie seems unlikely.

[7] While By-law 47 includes the words ‘or other structure’, the ejusdem generis rule of statutory interpretation states that where a list of specific terms are followed by general terms, the general terms are limited in scope to the general category of items established by the specific terms. So the meaning of ‘other structure’ is limited to structures of the nature of a fence, pergola, screen or awning. With the limited details provided on the specifications of the proposed enclosure or of the other enclosures in the scheme, it is difficult to determine whether the enclosure would be akin to a screen or awning. It may well be.

[8] While the enclosure is to be in the interior of the lot it will apparently be attached to the inside of the exterior wall so it does not appear to be an alteration to an existing internal wall. It could be seen as the addition of an internal wall but if it is more akin to the installation of a window it may be hard to define the enclosure as a ‘wall’.

[9] ‘Structural’ suggests a part of the supporting framework of the lot. A body corporate would arguably only have a proper interest in an internal wall, or other structural feature, to ensure that any alteration to that feature does not affect the structural integrity of the building. In a building format plan scheme the body corporate has responsibility for structural elements of the scheme. See section 109, and particularly subsection (2)(b) of the Standard Module in this regard. It is not immediately apparent that the enclosure of an existing balcony would be structural in nature.
[10] Massey Lodge [2004] QBCCMCmr 356 (15 July 2004)
[11] Adjudicator K Ryan at Paragraph 13 and 14

[12] That is, having discharged its legislative authority to determine a dispute on that question, this Office would arguably have no further jurisdiction to determine that issue.
[13] Section 58 of the Standard Module

Number of Scheme:	6049
Name of Scheme:	Glostermin
Address of Scheme:	17 Whyenbah Street, HAMILTON QLD 4007

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Glostermin [2008] QBCCMCmr 71 (3 March 2008)