Conor Court [2009] QBCCMCmr 12 (13 January 2009)

Number of Scheme:	3011
Name of Scheme:	Conor Court
Address of Scheme:	32 Suncoast Beach Drive MT COOLUM QLD 4573

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

I hereby declare as follows -

that the calling of an extraordinary general meeting on 7th August 2008 was not valid for reasons given in the interim order dated 6th August 2008; and

2. that a motion to spend sinking fund monies to the extent of $6,650 to provide garage doors to common property car-ports over which owners have exclusive uses, and to reimburse three owners who have privately installed a garage door previously, would have been unlawful and subject to invalidity.

This is an application dated 28th July 2008 and amended on 1st August 2008 by Glenn Trute (the Applicant) owner of Lot 2 against the body corporate for the scheme (the body corporate) for orders as follows –

On 6th August 2008, I made an interim order that the extraordinary general meeting proposed for 7th August 2008 is not validly called; that any voting papers given to the secretary or body corporate manager preparatory to the extraordinary general meeting are void; and that if the body corporate calls an extraordinary general meeting, and the substance of a motion is that the body corporate pays for and/or reimburses owners for garage doors to their respective lots, with funds from the sinking fund or otherwise, that this motion, if carried, is not put into effect until after the final determination of this dispute.

“Conor Court” CTS 3011 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module). There are 6 lots in the scheme created under a Building Unit Plan of subdivision 12617.

The current Standard Module commenced on 30th August 2008, replacing the previous Standard Module that operated from July 1997 (Previous Module). A number of provisions of the Standard Module are the same, or substantially the same as provisions in the Previous Module despite the provisions having different section numbers. These provisions are generally to be dealt with as replacements of the similar provisions of the repealed legislation and anything done under the Previous Module will not generally be affected by the commencement of the present Standard Module (sections 209 -216, section 20 Acts Interpretation Act.).

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

(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)).

The Applicant submitted that owners were not given 21 days notice of the extraordinary general meeting, and in relation to Motion 1 (which proposed the installation of garage doors to three carports and that three owners “who [have] installed their garage door” previously, be reimbursed) that the sinking fund budget for 2008/2009 did not include an item for garage doors; the amounts in the sinking fund were allocated for painting, fencing, security lighting etc. and longer term maintenance; the 10 year budget would be depleted by one half if the proposal for garage doors proceeds; and that existing accumulations of the sinking fund “excluded funding of this nature, as owners had previously agreed that installation of a garage door was at the owner’s expense, subject to body corporate approval prior to installation.”

The thrust of the Applicant’s argument was that the meeting was called improperly to consider a motion which was unlawful.

The body corporate did not make any submission at interim order stage although the body corporate manager, Alpha CTS Managers (Alpha) made a brief submission in the available time, that five out of six lot owners approved the idea to install doors on the carports and wished to use sinking fund monies for the three new roller doors and to reimburse those owners who had already installed doors.

Alpha also stated that the sinking fund budget, which had been prepared by the Applicant, did not mention specifically various categories for repair or maintenance, including windows, external doors, guttering, driveways, and the letter box amongst others. Susanne Young from Alpha enclosed a copy of the approved sinking fund. Alpha points out that improvements may be made to the common property if authorised by special resolution or the consent in writing of all owners.

In accordance with section 243(2)(b) Act submissions were invited from all lot owners. There were no submissions from owners, nor from the body corporate committee on behalf of the body corporate, the Respondent in this application.

On 15th September 2008, the Applicant exercised his right of Reply to the only submission made, the interim submission made by Alpha. He points out certain inaccuracies and technical errors in the submission all of which refer to the committee resolution to call the extraordinary general meeting. He also said that there had previously been no criticism by the body corporate manager of his sinking fund budget which was approved at the AGM in May 2008. He also provided information that of the three garage doors already installed by lot owners, each had received permission from a resolution passed at general meetings between 1998 and 2004. He also said that Lot 2 (his co-owned lot) was given permission to install a roller door at the AGM of 2000.

At the interim determination, I found that the body corporate had not given proper notice of the general meeting, and I was concerned about the effect of the body corporate imposing garage doors on lot owners who did not want to have garage doors; what by-laws might be relevant to installation of doors on owners’ respective lots; and who was to maintain the doors. The body corporate is not, without more, empowered to make improvements to an owner’s lot; or to request lot owners to pay for such improvements to other lots.

The Applicant seeks a final order outcome that the extraordinary general meeting convened for 7th August 2008 is invalid. I made an interim order that the convening of the meeting was fatally flawed, but also made an ancillary order that if the body corporate reconvened the general meeting correctly, that Motion 1 or its equivalent should not be put into effect if carried.

As noted in the interim order, this leaves the matter of the validity of Motion 1 as hypothetical, since it is not a motion which has been put to a general meeting. I understand that the body corporate has not in fact reconvened a general meeting to decide the issue proposed in Motion 1.

In preparation for making a final order in this matter, I looked at the plans for the scheme lodged in the Land Titles Registry. The Plan of Level A of BUP 12617 shows that the carports are in fact areas of common property, and are not parts of owners’ respective lots as previously understood from the application, because of the Applicant’s reference in the outcomes ought to the “provision of garage doors to three units” and the wording of Motion 1. By-law 12 for the scheme recorded in the Titles’ Office on 29th March 1993, states that each owner has exclusive use of certain parts of the common property including the carport with the corresponding number to the number of his or her unit. The carports remain common property even if owners have exclusive use of a specific area.

It is therefore relevant to this application to look at the powers of the body corporate to make changes to an owner’s exclusive use area, and the nature of that exclusive use.

I sought further information from the Applicant on 28th November 2008 about the lay-out of the common property and the use made of the exclusive use areas.

The Applicant says that conditions were imposed by the body corporate on the owners who have installed garage doors that “there were to be dividing walls to each garage area,” although he has not personally observed dividing walls. He is aware that there is a dividing wall now constructed in Unit 3’s and Unit 6’s exclusive use areas. The roller door on Lot 6 prevents access to other areas, but he does not know if this is the case for Lots 1 and 3. Any lot owner can gain access to garage areas 4, 5 and 2 which do not have the roller door installed, and there is no dividing wall between unit 4’s and 5’s exclusive use areas. The Applicant’s exclusive use area (Unit 2) is self contained in that one wall is the enclosed building stairwell and the other is the wall to his lounge room.

Despite the consent given to his unit, Lot 2, it appears that he has not installed a roller door himself.

I also sought further information from Alpha, and copies of the minutes of general meetings at which consents were given to owners of lots 1, 3 and 6, as well as to Lot 2.

On 22nd May 1993 at an extraordinary general meeting, the then owner of Lot 1, a Ms McPherson was to be given approval by the Secretary to install a roller door and enclose “her” garage on condition that it is to be of a cream colour, competently built and that she bear the costs of building, any additional insurance necessary, and all future repairs and maintenance.

On 3rd May 1998, at the annual general meeting, by ordinary resolution, the owner of Lot 6 (Julie Stewart) at no cost to the body corporate was permitted to put a dividing wall between unit 6 car accommodation and the next garage (unit 5). It was to be built in fibro or besser bricks and painted to tone etc, and to erect a roller door at the entrance to make the garage “a complete lock up one.” The Applicant was present at this meeting although the details of the vote on the motion are not recorded.

On 17th June 2000, at the annual general meeting, the “owner of unit 2” which at the time was the Applicant and wife, were permitted by ordinary resolution and at no cost to the body corporate to install a roller door to “the garage area of Unit 2”. The Applicant was also present at this meeting, although the details of the vote were not recorded. On 25th May 2003, at the annual general meeting, the owner of Lot 3 which at the time was Ray Wilson, was permitted by ordinary resolution to “have dividing walls put between unit 3 car accommodation and the next garages (units 1 and 4) with the walls to be built with Besser bricks and painted to tone in with the existing paintwork of the garages,” and to hang a roller door to create a lock-up garage, all at his own cost. The Applicant was the chairperson at this meeting although the details of the vote are not recorded.

On 3rd January 2004, at an extraordinary general meeting the owner of Lot 1 was again granted unanimous approval by at least the three owners present at the meeting, (which did not include the Applicant) to install a roller garage door to the carport at her own expense. The owner of Lot 1 was at that time Loraine Korving. It is not recorded whether the Applicant cast a vote at this meeting.

Exclusive use areas are created by a by-law relating to them. An exclusive use by-law is a by-law that attaches to a lot in the scheme and the gives the occupier for the time being exclusive use to the rights and enjoyment of, or other special rights about, the common property.[1] By-law 12 gives each owner the “exclusive use of occupation and enjoyment” of a numbered carport, but the carports do not become part of the respective owner’s lots.

Section 174(3) Standard Module (previously section 124 Standard Module as amended on 30th August 2008) states -
174 Improvements

(1) An exclusive use by-law may authorise the owner of a lot who has the benefit of the by-law to make stated improvements to the part of the common property to which the by-law applies.

(2) Without limiting subsection (1), improvements stated in the by-law may include the installation of fixtures on the common property and the making of changes to the common property.

(3) If the exclusive use by-law does not authorise the owner of a lot to make an improvement, the owner may make the improvement only if the body corporate authorises it to be made.

(4) However, if the value of the improvement mentioned in subsection (3) is more than $3000, the making of the body corporate’s authorisation must be by ordinary resolution.

Prior to 30th August 2008, improvements to an exclusive use area over the value of $250 had to be made by special resolution. The legislation now allows a committee to authorise the improvement up to $3,000.

I note that all consents were given prior to 30th August 2008, and therefore required a special resolution of the body corporate if the value of the improvement (roller door and in some cases also a wall or walls), was more than $250, which seems likely. Where the type of resolution is stated in the minutes referred to above, it is an “ordinary resolution.” However, even if this was a legislative error, it appears that for each consent, the voting was in any event unanimous, and would have passed the requirement for a special resolution, although this is not certain. In any event, after such a long period of time, I would not now be prepared to disturb the consents given (and in most cases acted upon) by individual owners.

The manner in which certain lot owners have in the past been allowed to build walls, and/or erect roller doors on common property reflects the fact that these improvements, whilst not for the benefit of that respective owner’s lot, are for the benefit of the holder of an exclusive use. An exclusive use is similar to the rights enjoyed by a freehold owner. In Platt –v- Ciriello [1977] QCA 033, a decision of the Court of Appeal, Ambrose J. observed that the use made by the holder of an exclusive use granted by the body corporate is the sort of use that a proprietor makes of his own lot.

“While he is proprietor of that lot no other person without his assent may use it for any purpose ...”

Motion 1 which was to be proposed to a general meeting on 7th August 2008, was a motion by the body corporate, and not by a lot owner, to put garage doors on common property over which owners have rights of exclusive use. The reason given for the improvement was that having only three roller doors looked “unsightly” and that “it is not secure for valuables.” The Applicant advises that there are no body corporate assets stored on the common property. One might therefore question why the body corporate is proposing to pay for owners’ valuables to be kept secure in their respective exclusive use areas. What is the benefit to the body corporate in fixing roller doors, other than perhaps an aesthetic appeal?

Further, could the body corporate require the holder of an exclusive use to have a roller door installed against his or her wishes? Even if it could, can it require him or her to keep the roller door closed so that the desired uniformity and security is obtained? To both questions, I think not. As referred to in the Platt-v-Ciriello case quoted above, no other person may tamper with an exclusive use without the consent of the holder, and I am of the view that for the body corporate to require a lot owner to close a roller door as an after-condition of a pre-existing exclusive use would be unreasonable.

In this scheme, this argument is hypothetical because, in accordance with the copies of the consent notices submitted by Alpha, five out of six owners wish to have roller doors. In fact, the sixth owner, the Applicant, has permission to install a roller door himself, so it appears that all owners are in favour of the installation of roller doors.

The dispute at heart concerns the way in which the roller doors should be paid for. Whilst four owners have the permission of the body corporate to pay for their own and three have done so, five owners (all accept the Applicant) are now in favour of the body corporate fitting the roller doors, and reimbursing the owners of Lot 1, 3 and 6.

Even if it is the wish of the majority of lot owners, I cannot see that this is an act which can be forced upon lot owners by the body corporate. Section 174 envisages that improvements might be made by the lot owner with the consent of the body corporate. It is clear that consent might be given on conditions such as, that the lot owner pay for the improvement, and subsequently maintains it, as has in fact occurred in the past. Equally, a lot owner might refuse to have an improvement made to common property over which he has exclusive use, and an obligation already to maintain “in a husband-like manner at his expense.”

In respect of the reimbursements proposed, Lot 6 might have fitted her roller door as long ago as 1998, whereas Lots 1 and 3 might have fitted theirs respectively in 2003 and 2004. There is no evidence provided at present of the actual cost. Reimbursement, if it to be achieved, must reimburse the owner for the cost expended, and not be some figure approximating the cost of the work done.

The Applicant is concerned that the body corporate has not budgeted for such an expense in its sinking fund for this financial year, and that existing funds should not be used in this way.

I am of the view that such an expense cannot be budgeted for in the sinking fund since the responsibility for fitting doors (and building walls) in exclusive use areas of common property is that of the respective lot owner with the benefit of the exclusive use, with the consent of the body corporate, and not the responsibility of the body corporate. Even if all unit owners were in agreement that the sinking fund should pay for the roller doors and also reimburse owners a chosen sum, the sinking fund monies belong to the body corporate as a separate entity whilst the body corporate exists, and not to the six owners in proportionate shares. Therefore, the sinking fund should not, in accordance with the legislation, be used in this way.

Motion 1 would therefore have been an unlawful motion had it proceeded, and subject to invalidity.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Conor Court [2009] QBCCMCmr 12 (13 January 2009)