Ipanema [2009] QBCCMCmr 283 (6 August 2009)

Last Updated: 17 September 2009

REFERENCE: 0690-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	32267
Name of Scheme:	Ipanema
Address of Scheme:	2865 Gold Coast Highway SURFERS PARADISE QLD 4217

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

Moonlight Group Pty Ltd, the Owner of lot 2

I hereby order that the Motion (Suspension Of Exclusive Use Granted To Lot 2) purportedly passed at the Annual General Meeting of 27 April 2009 must not be implemented. This interim order has effect until six (6) 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the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is earlier).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0690-2009

“Ipanema” CTS 32267

APPLICATION

This application is by Moonlight Group Pty Ltd, the owner of lot 2 (Applicant), against the body corporate (Respondent), seeking an interim order that the motion “Suspension of Exclusive Use Granted to Lot 2” resolved at the Annual General Meeting (AGM) of the Respondent (the “Motion”) be stayed pending further order. The applicant seeks a final order that the Motion be declared void.

The minutes of the AGM of 27 April 2009 record the following in relation to the Motion:

SUSPENSION OF EXCLUSIVE USE GRANTED TO LOT 2

It was resolved that the Owners of Ipanema CTS 32267 resolve to suspend the exclusive use previously granted to the owners of Lot 2.

The Chairperson declared the voting results as follows:

Yes 31 No 0 Abstain 0

JURISDICTION

“Ipanema” was registered as a building format plan of subdivision on 18 February 2004 comprising 82 lots and common property. The scheme is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order being issued. Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act. An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s276(2), Act).

PROCEDURAL MATTERS

In accordance with the Act, a copy of the application was provided to Australian Unit Administration Pty Ltd for distribution to all owners of lots included in the scheme (excluding the Applicant) and the committee with an invitation to make submissions regarding the interim order application. Two submissions were received – one from the committee and one from a part owner of lot 67.

SUBMISSIONS

The Applicant

• There is no statutory power to make a resolution in terms of the Motion.
• By operation of section 171(3)(b)(ii) of the Act, the Motion could only succeed if passed without dissent and in a ballot in which the Applicant voted personally. By voting paper, the Applicant voted against the Motion. By reason of that vote, the Motion was not without dissent. Further, the Applicant did not attend the meeting and vote personally on the Motion.
• The Explanatory note to the Motion contained false and misleading information rendering the Motion irregular and a nullity.
• Neither the Respondent nor the Body Corporate Managers have responded to the Applicant’s attempts to resolve the dispute.
• By reason of the Motion, the Applicant cannot now either itself operate Lot 2 as an ancillary dining area and or the exclusive use areas, continue to advertise alternatively enter into contractual relations with lessees for the lease of these areas and is suffering immediate, significant and on-going financial losses and is adversely affected thereby.
• At significant expense to the Applicant, the Applicant has made a Development Application to the Gold Coast City Council and has received Council’s approval for a material change of use for Lot 2 so that the premises including the Terrace Area my now be operated as a restaurant.
  

The Committee

• The Applicant has made an illegal extension beyond the granted area.
• Lot 2 has never operated as ancillary dining. Previous lessees vacated on termination of lease, in the knowledge that the premises were not licensed to operate a public restaurant.
• Lot 2 has been unoccupied since July 2008.
• The Applicant’s voting paper was not delivered personally. The Solicitor of the Applicant faxed the voting paper one week after the AGM.
• The motion was decided by ordinary resolution. The Applicant was not able to vote as it owed the body corporate a debt.
• The Applicant has not taken any reasonable steps to resolve the dispute.
• The Applicant can operate Lot 2 as an ancillary dining facility. The car spaces are ok, lot 2 is ok and exclusive use will be reinstated if and when the body corporate is satisfied the premises will be operated for the approved purpose – as an ancillary dining facility.
• The body corporate is not aware of any Council approval for a material change in use for Lot 2. In any event, no approval has been given by the body corporate to operate a public restaurant.
• Lot 2 can be operated as an ancillary dining facility at any time.
  

Part Owner of Lot 67

• The restaurant was open to the building at lunch and dinner times, but was open to the public as well as the Ipanema residents. She also witnessed numerous busloads of tourists being catered for, not just residents and guests of the building.
  

DETERMINATION

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application. In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.

The urgency relating to this interim application must be questioned in circumstances where the application was made only just within the three month time limit for the making of such applications under section 242(1)(a) of the Act and where, according to the committee, lot 2 has been vacant since July 2008 and remains vacant at this point in time.

The Applicants seek to stay the implementation of the Motion, pending further order. The Applicant claims that the Motion is unlawful. By reason of the Motion, the Applicant claims it cannot either itself operate Lot 2 as an ancillary dining area and/or the exclusive use areas, or continue to advertise or enter into contractual relations with lessees for the lease of these areas and is suffering immediate, significant and on-going financial losses and is adversely affected thereby.

I accept that, since the purported passing of the Motion at the AGM on 27 April 2009, the Applicant may be suffering financial loss and have therefore proceeded to consider the application for an interim order.

In these circumstances, it is appropriate to briefly consider whether the Applicant raises any serious questions that will need to be determined. If the application raises such a question then it may be appropriate to make an interim order to attempt to preserve the integrity of the matters in dispute until the application is dealt with.

The Applicant argues that there is no statutory basis for the Motion. I tend to agree. By law 36 grants exclusive use to the owner or occupier of Lot 2 to an area of common property for the purposes of an outdoor dining area ancillary to the use of Lot 2. There is no statutory mechanism for exclusive use by-laws to be “suspended”. Section 171(2)(b) of the Act provides that an exclusive use by-law that specifically identifies the common property to which it applies, may stop applying to the lot only if the lot owner agrees in writing before the passing of the resolution without dissent consenting to the recording of the new community management statement that does not incorporate the exclusive use by-law, or the lot owner votes personally in the resolution. There is no evidence that the Applicant has agreed in writing that by-law 36 may stop applying to the lot. On the contrary, the Applicant asserts that it voted “no” to the Motion, by voting paper hand delivered to the Office of the Body Corporate Manager. The Body Corporate Manager denies that the Applicant’s voting paper was delivered in person, stating that it was faxed to their office one week after the AGM. In any event, the requirements of section 171(2)(b) of the Act have not been met.

On the face of that alone, without needing to consider the other grounds put forward by the Applicant, I am prepared to make an interim order that the Motion (Suspension Of Exclusive Use Granted To Lot 2) not be implemented. For the reasons above, I have formed a preliminary view that the Motion is invalid and propose to make a final order that the Motion, purportedly passed at the AGM of 27 April 2009, was, at all times void. However, I am satisfied that further investigation is necessary before any final determination in relation to this dispute is made.

In my view, the likely inconvenience should no interim order be granted outweighs any inconvenience likely to result from the interim order, particularly in circumstances where Lot 2 has been vacant since July 2008 and remains vacant at this time.

The parties should note that this interim order does not affect the operation of the by-laws themselves. In particular, I note that by-law 35.1 provides that “The Owners or Occupiers of Lot 2 may provide ancillary dining conduct from that lot. For the purposes of this by-law “Ancillary Dining” means the provision of meals and conference services to owners and occupiers of Units and their guests.” I also note the terms of by-law 36 which provides in part that “In using the exclusive use area the owner or occupier shall ensure that in using the area the requirements of all relevant by-laws are strictly complied with and not use the area for any purpose other than that specified in this by-law”. The body corporate appears to be of the view that the Applicant has breached by-law 35 and 36 in the past by using the lot and exclusive use area as a public restaurant and appears to be concerned that this breach may be repeated in the future. In such circumstances, the body corporate should consider the provisions of Division 4 of Part 5 of the Act in relation to by-law contraventions.

This application will now be administered in accordance with the Act.