Carinya Mews [2009] QBCCMCmr 202 (1 June 2009)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Dorothy Blount, the Owner of Lot 1

I hereby declare that Motion 10, considered at the Annual General Meeting of the Body Corporate for Carinya Mews, regarding the grant of exclusive use rights over the courtyard adjacent to Lot 1, was not passed because of opposition that was unreasonable in the circumstances.

I hereby order that Motion 10, considered at the Annual General Meeting of the Body Corporate for Carinya Mews, regarding the grant of exclusive use rights over the courtyard adjacent to Lot 1, is deemed to be passed.

I further order that the Body Corporate for Carinya Mews shall, within six (6) months of the date of this order and at the expense of the Owner of Lot 1, prepare and lodge with the Registrar of Titles a request to record a new community management statement which reflects the inclusion of the new exclusive use by-law.

I further order that nothing in this order prevents the Body Corporate for Carinya Mews from lodging a community management statement that includes other changes to the by-laws currently applying to this scheme, provided that those changes are consented to pursuant to section 62 of the Body Corporate and Community Management Act 1997 and that the Owner of Lot 1 shall not be responsible for any costs associated with preparing and recording any such changes.

Carinya Mews community titles scheme 5179 (Carinya Mews) consists of seven lots and common property. The community management statement (CMS) for Carinya Mews indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008[1] (Standard Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Building Units Plan 10164.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Dorothy Blount, Owner of Lot 1 (applicant) on 8 December 2008. The applicant sought the following orders against the Body Corporate for Carinya Mews (respondent):

An order giving effect to motion 10 of the Annual General Meeting held on 6 November 2008.

Under 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. Submissions were made by three owners. The applicant initially did not avail herself of the opportunity to inspect or respond to the submissions received.[2] However a reply was later made.

A dispute resolution recommendation was made referring the dispute to departmental adjudication. I then investigated the dispute, pursuant to section 271 of the Act, which included reviewing the application and submissions, reviewing the CMS and plans for the scheme, seeking further information from the parties, and inspecting the scheme.

The application relates to the Body Corporate’s decision not to pass Motion 10 at the Annual General Meeting (AGM) on 6 November 2008, regarding a proposed grant of exclusive use. The circumstances of the dispute, as outlined in the material from the parties, are as follows.

The applicant purchased her lot from the developer in April 1991. Adjacent to Lot 1 is a courtyard area (4.3 x 4.4m) which was apparently enclosed with lattice by the developer. The applicant claims that the Lot 1 is the smallest one-bedroom apartment in the scheme but was marketed at a higher price on the basis that the courtyard was for the exclusive use of Lot 1. Since purchase, the applicant has taken responsibility for the maintenance of the courtyard, including mowing it, paving it, purchasing and maintaining plants, installing garden lighting and a water tank, and paying for it to be painted when the Body Corporate painted the rest of the scheme. In November 2002 the Body Corporate passed a special resolution regarding the improvement by an owner to the common property authorising the applicant to install an opening roof on ‘her’ courtyard.

The applicant claims that both the applicant and the Body Corporate believed that the courtyard was the exclusive use of Lot 1. However she says she ‘recently’ realised that there had been no formal grant of exclusive use. On 26 October 2005 the real estate agent who sold the property to the applicant confirmed in writing that he understood that the courtyard was for the exclusive use of Lot 1 and that it was always the intention of the developer that this be the case.

The applicant submitted a motion to the November AGM seeking approval for an exclusive use by-law granting exclusive use of the courtyard to Lot 1. The motion required a resolution without dissent and failed with three votes in favour and three against. The applicant argues that the opposition of those owners is unreasonable in the circumstances. The applicant also notes that members of the Hendra Fire Brigade inspected the courtyard in November 2008 and confirmed that the area is compliant with relevant fire standards.

The submission from one owner supports the application. She says she is the only other original owner in the scheme and confirms the circumstances at the time of the applicant’s purchase.

Submissions from two owners oppose the application. One says the applicant should have obtained a conveyancing search when she purchased, which would have shown there was no exclusive use. She says the developer did not obtain Council approval for the courtyard or fencing. She argues the applicant only pays levies based on the unit itself and not the courtyard. She says the issue has been contentious for years, and argues that the courtyard blocks access to the backyard of the scheme, leaving only one means of access for other owners. In addition, the applicant was never made to pay for the painting but took it upon herself.

The second owner notes that this proposal was previously rejected in October 2005. She says the area was not represented as a private area when she purchased in 2005. Since then a door and more building materials have been added to make the area more enclosed. The lattice fence is built to the boundary fence which she understands requires a 1 metre relaxation unless it has Council and Body Corporate approval. She is unclear whether Council approval has been obtained but when she last raised it there had been no inspection. She queries why the developer did not identify the area as for Lot 1 if that was the intention. She argues that no additional levies or Council rates are paid for this area. She claims the applicant undertook work to keep the area exclusive use and until now no one has complained or requested access. She also says the approved roof only goes to a set area and does not include the additional area for which the applicant wants exclusive use. Further, she argues that it should be owner’s rights to walk around the common property which they currently cannot do. While the area is painted to match the trim of the scheme, she says it is rough in nature and does not blend into all materials used. The open style lattice has been added to make the area private. She says no other owner has this private space, although some have balconies. She suggests that the applicant purchase the area, that the current structure be approved, and that levies and rates reflect any ownership by Lot 1.

I sought further information from the applicant who, in response, provided the following:

On 5 May 2009 I conducted an inspection of the scheme land, pursuant to section 271(1)(d) of the Act. All owners and the BCM were invited to attend the inspection. The inspection was attended by the applicant, the BCM and the owners of two lots. The inspection was organised on the basis of the attendance of at least one of the owners who opposed the proposal. The date and time was set following the agreement of one of those owners to attend. However, that owner did not attend the inspection and when I telephoned her at the commencement of the inspection she advised that she was not able to attend.

The inspection then was largely limited to a view of the physical aspects of the scheme and the courtyard. Additional comments made by owners present at the inspection included:

Following the inspection I wrote to the three owners who voted against the motion seeking the following further information:

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

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.[5] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[6]

The primary issue in this matter is whether there is any justifiable basis to deem Motion 10, which failed to achieve a resolution without dissent at the AGM of 28 August 2008, to have been passed.

Carinya Mews was registered under the Building and Group Titles Act 1980 (BUGTA) on 24 September 1990. At that time the by-laws for the scheme were those provided in Schedule 3 of BUGTA, pursuant to section 30 of that Act. No amendment to those by-laws was ever recorded, and specifically no exclusive use allocations were recorded. The current Act commenced on 13 July 2007. At that date plans established under BUGTA were automatically created as new community titles schemes. A CMS for Carinya Mews was automatically registered on 15 July 2000 under the transitional provisions of the Act, stating that the by-laws for the scheme are taken to be those in effect as at 13 July 2000[7]. No further CMS has ever been registered and so the by-laws applying for this scheme continue to be those in Schedule 3 of BUGTA.

Section 170 to 177 of the Act provide for making exclusive use by-laws. An exclusive use by-law is defined as a by-law that attaches to a lot and gives the occupier of the lot exclusive use to the rights and enjoyment of, or other special rights about, common property or a body corporate asset. Pursuant to section 173 of the Act and section 173 of the Standard Module provide that the exclusive use by-law may include conditions and impose obligations.

Under section 62(2) of the Act a body corporate must normally consent to record a new CMS by passing a resolution without dissent. This includes for a change to the CMS relating to an exclusive use by-law. Motion 10 clearly required a resolution without dissent and did not achieve that. Under BUGTA, which applied when the developer registered the scheme and when the applicant purchased, an exclusive use by-law similarly required a resolution without dissent.

The applicant claims it was the intention of the developer to grant exclusive use rights over the courtyard area to Lot 1, and that she purchased in the belief that she had the use of the courtyard. She has supplied correspondence from the real estate agent that he believed the courtyard was the exclusive use of Lot 1 and that the developer intended that to be the case. It does not appear to be disputed by any party that the courtyard area was enclosed by the developer, and that the lattice enclosure was in place when each of the current owners purchased their lots. It is also not disputed that the applicant has used the courtyard exclusively since her purchase in 1991.

Given the legislative provisions for the creation of exclusive use rights that have applied at all relevant times, exclusive use rights cannot be implied or acquired merely by usage. Exclusive use rights need to be expressly granted by a body corporate and then recorded with the Registrar of Titles. Without a clear decision or statement of intention of the developer or the Body Corporate, there is no basis to displace the presumption that the Body Corporate’s intentions were and are as documented in the current CMS, which gives no exclusive use rights. On this basis it is clear that the applicant has never had a legal entitlement to the exclusive use of the courtyard area.

Adjudicators are empowered to make an order that is ‘just and equitable in the circumstances’[8] and so I have considered whether there is any basis to grant exclusive use of the courtyard area in view of the long term use of the space and the claims of an intention to give rights to the area. Two previous adjudicator’s orders give examples of approaches to this matter. In one[9] the Adjudicator ordered the registration of a CMS with new exclusive use car park allocations when a body corporate had passed valid motions approving exclusive use, but there was an error in the form of lodgement of the notice to change the by-laws (rather than in the by-laws themselves) and lodgement was rejected. Another decision[10] considered exclusive use car park allocations that did not reflect the actual usage of the car spaces. In requiring owners to vacate car spaces which they had used contrary to the exclusive use allocations, the Adjudicator was not persuaded by arguments that the usage had been the same for some 25 years, that it was the most appropriate usage, or that no detriment was suffered in that usage arrangement.

All owners, including the applicant, have been able to inform themselves as to the applicable by-laws for the scheme and the entitlements of each lot. While I accept that the applicant misunderstood that the area shown on the plan was the overhang of the lot and not the courtyard area, there seems no reasons to believe that an exclusive use by-law had been recorded. Given all the circumstances, I do not consider that there can be any basis for determining that the applicant should be deemed to have exclusive use rights to the courtyard in the absence of a recorded by-law. However this is different to the question of whether Motion 10 should be deemed to have passed because of unreasonable opposition.

Section 276(1) of the Act requires an adjudicator to make an order that is just and equitable in the circumstances. Without limiting the orders that an adjudicator can make, Schedule 5 of the Act sets out a range of orders that an adjudicator may make. Item 10 specifically contemplates an adjudicator making an order to give effect to a motion, or a variation of a motion proposed, if a motion requiring a resolution without dissent was not passed because of “opposition that in the circumstances is unreasonable”.

It is not disputed that Motion 10 required a resolution without dissent and failed to achieve that. Three owners opposed the motion but only two have put in submissions indicating the reasons for their opposition. I will consider whether this opposition was unreasonable in the circumstances.

In a previous adjudication[11], Adjudicator P Dowling provided the following summary of decisions regarding the test of ‘reasonableness’ in regard to overturning resolutions without dissent:

“In Points North (paras 42 and 44) and Ocean Plaza Apartments[12] (paras 23 and 26), the specialist adjudicator stated:

‘In determining whether such opposition was in the circumstances unreasonable, I do not consider that the “subjective intention” of each of the lot owners who voted in opposition is the appropriate test for the above criteria in Schedule 5 Order 10. Whether the opposition is in the circumstances unreasonable has to be considered “objectively” taking into account all relevant circumstances ... the appropriate test ... is whether opposition to a motion is unreasonable/reasonable when considered in an objective and fair manner in all of the circumstances. A test relying on a subjective intention to oppose a motion would make Schedule 5 Order 10 meaningless and inoperative.’

In Zenith[13] (where the above test was applied), the adjudicator stated the courts have held that where a statute expressly provides that a decision is to be made ‘reasonably’ or upon ‘reasonable grounds’, 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’.[14] In this decision and in the decisions made to resolve disputes in Q1[15] and Allen Court[16], adjudicators also stated:

‘In determining whether votes against a motion constitute opposition that in the circumstances is unreasonable it is necessary to consider all the material facts. What is material will vary from case to case but typically the requirement for an adjudicator to make a just and equitable decision involves some balancing of the interests of the majority and minority and raises questions of fairness.’

In Sirocco Resort[17], reasonableness in the context of withholding approval was considered by the specialist adjudicator who stated:

I will have regard to these comments in considering the reasonableness of the opposition.

There are several reasons which have been raised for the opposition to the motion to grant exclusive use over the courtyard area to the application.

Firstly, there appears to be a concern that the courtyard area required Council approval or fails to comply with Council or other building regulations. The applicant asserts that the only aspect of the courtyard which required Council approval was the roofing structure, which received development approval on 20 January 2003. The opponents of the motion were invited to provide any basis or evidence supporting their contrary assertion but have not done so.

It is beyond the scope of my jurisdiction or knowledge to determine whether the area in question fully complies with all relevant Council requirements. However, I would note that it would seem incongruous for development approval to be given to construct a roof over a structure which itself did not have but required development approval. Ultimately, in the absence of any evidence of a requirement for Council approval, I am not satisfied that the alleged lack of Council approval for any part of the courtyard area is a basis to refuse Motion 10.

Another objection is that the courtyard prevents occupants walking around the entire property and obstructs one potential means of access for occupants along the western side of the property.

The applicant and two owners who support her application assert that none of the grassed areas of common property are used by any occupant in the scheme. They say the western side could only be used to access the washing line and bins at the rear of the property and that it would be illogical for upper level occupants to go down the front steps and along the grassed side for this purpose rather than go along the covered walkway and down the back stairs. They note that only two units use the washing line as the others have laundries. Accordingly these owners assert that the use of the common property is not diminished by the courtyard and that the courtyard area would not be used by any owner if the structures were removed or the space otherwise opened to all owners.

None of the opposing owners responded to my invitation to comment on these assertions. From my own inspection, and in the absence of any real argument to the contrary, I am inclined to accept the applicant’s arguments in this regard. Accordingly, I am not satisfied that the granting of exclusive use would adversely impact on the use of the common property by any occupant. Moreover, this area has always been enclosed, with the lattice installed by the developer.

In addition, the removal of the courtyard structures would expose the main living areas of the applicant’s lot in the event that any other occupant did actually use the area in question. The lot was purchased with privacy for these areas and has had privacy for the intervening 18 years. Therefore, if the Body Corporate were to make a decision to remove the courtyard area it is arguable that it would be unreasonable of it not to replace the courtyard at its own expense with some form of screening to maintain that privacy.

Although it is not specifically raised in the submissions, there is a suggestion that past opposition to the proposal was based on concerned that the structure was a fire hazard or, possibly, that it limited access in the event of a fire. The applicant has asserted that she has obtained confirmation that the area complies with relevant fire regulations and no other party has presented any evidence to the contrary. Although she says it was not required by fire regulations, the applicant says she installed a second gate to ensure access through the courtyard in the event of a fire.

It is beyond the scope of my jurisdiction or knowledge to determine whether the area in question fully complies with all relevant fire requirements. However, in the absence of any evidence of any non-compliance, I am not satisfied that this issue is a basis to refuse Motion 10.

A further issue is the concern that the applicant is not paying additional Body Corporate contributions or Council rates in respect of the area in dispute.

Pursuant to section 141(5) of the Standard Module, body corporate contributions are predominately set on the basis of the contribution schedule lot entitlements. One exception is that contributions for building insurance are based on the interest schedule lot entitlement. In this case the contribution and interest schedules are the same, with lot entitlements set at 12 for Lot 1 and 14 or 15 for the other lots.

Under section 194 of the Act, lots are charged for local government rates with the unimproved value of each lot including a component for the value of common property. The unimproved value of each lot is determined by apportioning the unimproved value of the entire scheme land in proportion to the interest schedule lot entitlement for each lot.

Lot entitlements (and therefore payable contributions) are not based on the floor area of a lot or on the floor area that a lot has rights to. Rather, pursuant to section 48(6) of the Act, contribution schedule lot entitlements should be equal, except to the extent that it is just and equitable not to be equal. Under section 46(7) of the Act the interest schedule lot entitlements should reflect market values of lots, except to the extent that it is just and equitable not to reflect market values.

If any owner considers that the lot entitlement schedules for the scheme are not appropriate, there are various avenues to seek adjustment of those schedules[18]. However, given that the proposed exclusive use by-law provides for the applicant to be financially responsible for maintenance of the courtyard area, it is difficult to see what basis there is for the Lot 1 to have higher lot entitlements (and therefore higher levies) simply because of the exclusive use area.

Other issues arise from the refusal of Motion 10 which impact on the reasonableness of the decision to refuse the motion.

If the applicant is not granted exclusive use, or some other property rights such as a lease or licence, over the dispute area, questions arise as to what should happen to the structures installed by the developer and the applicant on the disputed area. Arguably the Body Corporate would need to pass a resolution agreeing to remove the structures and to then dispose of them. If the Body Corporate decided to remove the structures, there is a question of who would be responsible for undertaking that work and for the cost of the work.

Several improvements to the courtyard (laying pavers over the original grass in around 2000, fireproof cement sheeting installed for security purposes in around 2005, and a second gate) were made to the area by the applicant without approval by the Body Corporate. These are improvements to common property by an owner, which should have been approved by the Body Corporate under section 164 of the Standard Module[19]. Under the current legislative provisions these improvements would amount to minor improvements and only require a Committee resolution to approve. However the legislative provision at the time the improvements were made[20], the improvements would have required an ordinary resolution or (if any involved an installed value of more than $250) a special resolution. Notwithstanding this, as these particular improvements are minor, have been in place for some time without objection, and have no direct impact on owners, there does not appear to be any basis to require their removal in isolation. Moreover, there is nothing to prevent the Body Corporate giving retrospective approval.

However, a particular issue arises with regard to the roof on the courtyard area. The Body Corporate expressly approved the installation of the roof. It would seem that the applicant acted in good faith in reliance on that approval and expended funds to install the roof as a result. It would arguably be unreasonable for the Body Corporate to now require the removal of a roof that they approved, or to prevent the applicant from using the roofed area, without some sort of compensation or reimbursement in respect of the funds she expended.

I had hoped to discuss these issues with the parties at the inspection and, failing that, sought comments from the opponents of the motion in writing. Unfortunately none of the owners opposing the motion have provided any response on these issues and it is unclear whether they have properly considered the implications of refusing Motion 10.

I am satisfied on the evidence that there has not previously been a valid grant of exclusive use rights to Lot 1 in respect of the disputed courtyard area adjacent to Lot 1. Further, it is not necessarily unreasonable to oppose the granting of exclusive use rights to an area of common property where the primary basis for that grant is that owners assumed for a long period of time that exclusive rights to that area existed.

However, in the circumstances, I am not satisfied that the opponents of Motion 10 have substantiated any genuine basis to oppose the grant of exclusive use. No evidence has been presented that the enclosure of the courtyard breaches any Council or fire regulations. I am not satisfied that the retention of the courtyard enclosure adversely impacts on any owner or occupier or unreasonably diminishes their use or access to common property, and I have received no indication that the disputed area would genuinely be used by any other occupant.

This is also no basis to suggest that the applicant should be responsible for greater levies because of the exclusive use area, particularly as the proposed exclusive use by-law entrenches her financial responsibility for the maintenance of the area. Furthermore, if there were any real basis for different contributions, parties could seek an adjustment of lot entitlements to reflect that.

On balance, therefore, I am not satisfied that the opposition to Motion 10, considered at the AGM on 6 November 2008, was based on conclusions that a reasonable person would have reached in the circumstances. Accordingly, I propose to make an order deeming the motion to have passed and requiring the Body Corporate to lodge a request to record a new CMS which includes the new exclusive use by-law.

If there is no other decision of the Body Corporate regarding the scheme’s by-laws, the by-laws included in the new CMS must continue to be those outlined in Schedule 3 of BUGTA. However, it may be that owners wish to take this opportunity to update the by-laws for the scheme. Accordingly I have provided six months, rather than the usual three months, for the new CMS to be recorded to allow time for owners to consider amendments to the by-laws if appropriate. New by-laws must be approved by a general meeting. A special resolution is sufficient to adopt by-laws other than exclusive use by-laws. Of course, there is no obligation to consider or pass new by-laws and if no other changes are agreed to, the BUGTA Schedule 3 by-laws must be replicated exactly in the new CMS.

Because the need to record a new CMS arises from a proposal of the applicant and will benefit the applicant, I have ordered that the costs directly associated with preparing and lodging a new CMS must be met by the applicant. The Body Corporate should act reasonably in incurring costs in this regard. As there has been no CMS recorded since 15 July 2000, and that CMS is simply an automatically recorded CMS which refers to the by-laws in place under BUGTA (as outlined previously), there may be higher costs than usual to prepare the CMS. It is likely that the Recorder of Titles will require a survey plan to show the exclusive use area and, if one has not already been prepared, this would need to be obtained at the applicant’s expense. However, if the consideration of new by-laws other than the courtyard exclusive use by-law gives rise to additional costs (for example, if the Body Corporate decides to seek legal advice on other new by-laws) those additional costs would be the responsibility of the Body Corporate and not the applicant.

[1] As of 30 August 2008 the new Standard Module came into force, replacing the Body Corporate and Community Management (Standard Module) Regulation 1997 which applied until that date.
[2] See sections 246 and 244 of the Act respectively

[3] It appears that an application (reference 0899-2005) was subsequently lodged with the Commissioner’s Office on 21 December 2005 but was then withdrawn in February 2005
[4] See sections 227, 228, 276 and Schedule 5 of the Act
[5] Section 276(2) of the Act
[6] Section 284(1) of the Act
[7] See section 339(5)(a) of the Act
[8] Section 276(1) of the Act
[9] Valma Court [2002] QBCCMCmr 413 (25 June 2002)
[10] Aarons [2006] QBCCMCmr 661 (15 December 2006)
[11] One Park Road [2008] QBCCMCmr 3 (7 January 2008)

[17] Sirocco Resort [2006] QBCCMCmr 426 (2 August 2006). This dispute did not give consideration to Schedule 5(10). The decision related to the transfer of rights provisions in the Body Corporate and Community Management (Accommodation Module) Regulation 1997.

[18] These are set out in the fact sheet “Lot Entitlements” available on the Commissioner’s Office website at www.bccm.qld.gov.au

[19] If the courtyard was an exclusive use area, approval for improvements would be subject to section 174 of the Standard Module.
[20] Section 114 of the Body Corporate and Community Management (Standard Module) Regulation 1997

Number of Scheme:	5179
Name of Scheme:	Carinya Mews
Address of Scheme:	80 Beatrice Terrace ASCOT QLD 4007

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Carinya Mews [2009] QBCCMCmr 202 (1 June 2009)