River Park [2009] QBCCMCmr 331 (1 September 2009)

Last Updated: 9 October 2009

REFERENCE: 0638-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14630
Name of Scheme:	River Park
Address of Scheme:	40 Watson Esplanade SURFERS PARADISE QLD 4217

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

Audrey Finch, the Owner of lot 1

I hereby order that motions 14, 15 and 16 as submitted to the AGM of River Park CTS 14630 on 15 May 2009, are deemed to have been carried. I further order that the body corporate is to amend its minutes and records accordingly.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0638-2009

“River Park” CTS 14630

THE SCHEME

River Park 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). It is registered on a Building Format Plan of subdivision and consists of 45 lots.

APPLICATION

The applicant seeks the following outcomes:

That motions 14, 15 and 16 as submitted to the AGM of River Park CTS 14630 on 15 May 2009 (being resolutions without dissent) be declared/ ordered to be carried;

That the body corporate be directed to amend its minutes and records accordingly; and

That the costs of the applicant and body corporate be paid by the owner of lot 40.

BACKGROUND

In November 2008 the applicant entered into a contract for the sale of lot 1 to Mr. & Mrs. Wheatley who wish to fully renovate the building located on lot 1. In this regard it is relevant to note the following:

(a) in current by-law 12.1 the owner of lot 1 has exclusive use of the areas identified in the attached plans; and
(b) in current by-laws 12.2, 12.3 and 12.4 the owner of lot 1 is required to demolish the existing building on lot 1 and reconstruct a new building on the lot in accordance with the plans by “Newruss Design”.

However the demolition and construction work referred to above never occurred and the owner of lot 1 has now entered into a contract to sell the property. The purchasers do not wish to demolish the building on lot 1 but to undertake extensive renovations. The contract is conditional upon the by-laws being amended to allow the purchasers to renovate and restore the building on lot 1.

At the last Annual General Meeting for the scheme on 15 May 2009 the body corporate considered motions 14, 15 and 16 relating to lot 1 which required resolutions without dissent.:

These motions were quite lengthy but are summarised below:

Motion 14 is that by resolution without dissent, the body corporate approves new plans in substitution of the plans currently referred to in by-law 12;

Motion 15 is that by resolution without dissent, by-law 12 be replaced with a new by-law that requires the purchaser of lot 1 to do the following within 6 months of settlement:

• repair any timber structure located on lot 1 that has been affected by termite damage;
• remove any asbestos;
• put in place on ongoing termite management system;
• undertake renovation works to certain specifications in order to make it compatible with the “Park Towers” apartment building;
• the owner of lot 1 is to be responsible for the maintenance of the entire lot including the building and grounds within the boundary of lot 1;
• if the owner of lot 1 fails to comply with its obligations, the body corporate would be entitled to recover the cost of ant maintenance and repairs as a debt..
  

Motion 16 is that the body corporate, by resolution without dissent, endorse its consent to the execution and lodgement of a new community management statement.

The applicant states that motions 14, 15 & 16 were lost because the respondent voted against the motions. Attempts at negotiation have proved to be futile as the respondent has stated that he would refuse to consent to any further work being undertaken until certain “long standing issues’ were addressed. The applicant believes that the respondent is being frivolous and obstructive.

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to the chairperson for distribution to all owners (excluding the Applicant) and the committee, with an invitation to respond to the matters raised in the application.

Lot owners who support the application made the following submissions:

• the one owner’s refusal to support the resolutions is motivated by bad faith as he has previously been in dispute with the body corporate on other unrelated issues and now opposes all proposals by the body corporate irrespective of whether or not the proposal has merit ;
• the current owner is elderly and should be able to sell her lot, which is a derelict building, in accordance with the conditions contained in the proposed new by-laws.
  

The respondent, Mr. Bowers, made the following submissions:

• he is not disputing the applicant’s right to have rights equal to those that he has requested from the body corporate;
• he believes that he has been discriminated against by the body corporate because he was refused the right to renovate his unit as outlined in the attached documentation.
  

The attached documents shows that in 2003 the respondent applied to the body corporate for permission to make extensive renovations to his lot and the body corporate granted permission to do the following:

• cut and removal of the inner kitchen concrete walls;
• replacement of the entire kitchen including plumbing and additional wiring;
• removal of all carpets;
• replacement of carpet with sound-proofed floating parquetry floor;
• installation of spa;
• installation of air conditioning;
• replacement of bedroom cupboards and doors.
  

However the respondent was not given permission to reposition the glass panels and sliding doors to the edge of the balcony. The material indicates that although the owner of lot 43 was previously given approval to enclose the lot 43 balcony, the same person, as a member of the committee, has argued that the respondent should not be permitted to do likewise;

The following submission in response were made on behalf of the applicant:

• Mr. Bowers’ concerns pertain to separate, irrelevant and unrelated issues or grievances with the Body Corporate. Specifically, they relate to the body corporate denying him permission to enclose his balcony as part of his renovations in 2003;
• Section 10 of Schedule 5 to the Act provides:

If satisfied a motion considered by a general meeting of the body corporate and requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable;

• Mr Bowers was the lone dissenting vote to the motions put forward by the applicant at the last AGM on 15 May 2009 and his objections relate to unrelated matters and are vexatious;
• The irrelevance and unreasonableness is further emphasised by the fact that lot 1 is a stand-alone timber structure away from the tower building whereas his dispute with the body corporate related to uniformity of appearance in the tower building;
• The respondent should pay the costs associated with this application pursuant to section 280 of the Act.
  

JURISDICTION

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

(c) a claimed or anticipated contractual matter about-

(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)).

DETERMINATION

Motions 14-16 relate to a proposal by the purchasers of lot 1 to restore and maintain a dilapidated building on lot 1. It was originally proposed that the building would be replaced but the owner of lot 1, who is now 86 years of age, has entered into a contract to sell the property. The purchasers do not wish to demolish the building on lot 1 but intend to undertake extensive renovations. The contract for the purchase of lot 1 is conditional upon the by-laws being amended to allow the purchasers to renovate and restore the building.

As the lot is registered on a Building Unit Plan (now known as a Building Format Plan) the boundaries of the lot are determined by structural elements. The outside of the building is regarded as “common property”, and therefore, in the absence of an exclusive use by-law, responsibility for external maintenance is the responsibility of the body corporate. In order to ensure that the lot owner is responsible for the external maintenance of lot 1, it is necessary for the body corporate to grant to lot 1 exclusive use of the exterior of the building and to make provision in the by-laws for the owner to maintain or make improvements to that common property area. This is the purpose of motions 14, 15 and 16.

The respondent admits that the basis of his refusal to vote in favour of the motions is the failure by the body corporate to refuse certain alterations to his lot a number of years ago as well as a number of other long standing grievances.

However, the body corporate has a statutory obligation to act reasonably in performing its functions.[1] The applicant, argues that the opposition to motion 14, 15 and 16 is unreasonable and having regard to Schedule 5 of the Act, an Adjudicator may deem a resolution to have been carried if satisfied a motion considered by a general meeting of the body corporate and requiring a

resolution without dissent was not passed because of opposition that in the circumstances is unreasonable.

Therefore the primary issue for me to determine in this dispute is whether the respondent’s dissenting vote, that prevented Motions 14–16 from passing, was unreasonable. If I am satisfied that the dissenting vote was unreasonable, I am entitled to give effect to the motion as proposed.

The appropriate test is whether it is just and equitable to override the opposition because the opposition was unreasonable when viewed objectively. In this regard I note the High Court has supported a view that to formulate a more specific test could place an unwarranted gloss on relatively plain words applying a test of reasonableness.[2] The preferred approach is to determine objectively whether the respondent’s votes against motions 14-16 constitute opposition that in the circumstances is unreasonable.

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.[3] In this case the respondent admits that the basis of his refusal to vote in favour of the motions is the failure by the body corporate to refuse certain alterations to his lot a number of years ago, as well as a number of other long standing grievances regarding expenditure by the body corporate committee. At this point in time I am unable to determine whether the respondent has a legitimate grievance against the body corporate. In any event however, the correct course of action for the respondent would have been to make a dispute resolution application to this office rather than seeking to frustrate the operation of the body corporate. In my view, the dissenting voter has acted unreasonably and motions 14-16 should be regarded as having been approved by the body corporate as if the motions were carried by resolution without dissent.

Accordingly, I propose to make the following orders:

That motions 14, 15 and 16 as submitted to the AGM of River Park CTS 14630 on 15 May 2009 (being resolutions without dissent) be declared/ ordered to be carried; and

That the body corporate be directed to amend its minutes and records accordingly

While the applicant has also sought an order that the respondent pay the costs of the applicant and body corporate, I do not believe that I am entitled to make such an order in the circumstances. One of the objectives of the Act is to provide an inexpensive dispute resolution process and for this reason, an adjudicator has little discretion to make a costs order. Section 270(3) entitles me to order costs against an applicant only, and in order to do so I must be satisfied that the application is frivolous, vexatious, misconceived or without substance. Section 280 only entitles me to order that a respondent pay the applicant’s adjudication application fee in circumstances where a conciliation application was firstly lodged and the respondent refused to participate in a departmental conciliation. In this case the applicant quite rightly decided not to firstly seek conciliation as she considered that it would be a waste of time.

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[1] See sections 94 & 152, Act
[2] McKinnon v Treasury [2006] HCA 45 per Hayne J at paragraph 61. Waters v Public Transport Corporation (1991) 173 CLR 349.
[3] Points North  [2004] QBCCMCmr 423 (2 September 2004), CJ Carrigan, at paragraph 44. Ocean Plaza Apartments  [2004] QBCCMCmr 452 (23 September 2004), CJ Carrigan, at paragraph 26.