Crystal Waters Permaculture Village [2009] QBCCMCmr 365 (24 September 2009)

Last Updated: 9 October 2009

REFERENCE: 0493-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20926
Name of Scheme:	Crystal Waters Permaculture Village
Address of Scheme:	65 Kilcoy Lane CONONDALE QLD 4552

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

R Ruppelt, an Owner(s) of lot 74

I hereby order that the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0493-2009

“Crystal Waters Permaculture Village” CTS 20926

Application

Crystal Waters Permaculture Village Community Titles Scheme (Crystal Waters) is an 85 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The plan shows that most lots are acreages and that the scheme contains substantial areas of common property. The community management statement includes a vision statement that includes the community goal of working towards a balanced natural ecology by demonstrating sustainability and encouraging food production.

Background

Crystal Water’s community management statement contains the following by-law:

BY-LAW 6 - LAND MANAGEMENT POLICY

6.1

The Body Corporate shall have a Land Management Policy. The Land Management Policy defines the ways that we share our land and care for it. It is intended to be a ‘living’ document, able to change and grow according to the needs of the community and the land. The Body Corporate Committee or its designated agents will, from time to time, review the existing Land Management Policy. Changes to this policy need the approval by Special Resolution of a General Meeting of the Body Corporate.

6.2

Residents shall conform with the overall policy and how it relates to general landscape, nature conservation, forestry, agriculture, animal husbandry and aquaculture. A Resident shall take all reasonable care and comply with the requirements of the Land Management Policy when using any part of the common property for their own purposes.

6.3

To approve or amend an application for a Land Use Licence, as defined by the Land Management Policy, a motion for such approval will be put to a General Meeting of the Body Corporate, and voted on by a Special Resolution of the Body Corporate. After the initial five-year licence period, a Land Use Licence may be renewable for further five-year periods using the process outlined in the Land Management Policy. To approve an application for a Land Use Licence renewal, a motion for such approval will be put to a General Meeting of the Body Corporate, and voted on by an Ordinary Resolution of the Body Corporate.

6.4

A Resident must not bring or keep an animal on a lot or the common property without the Body Corporate Committee’s prior written approval. Small animals, including poultry and guinea pigs are exempted from this requirement.

I have been provided with a copy of the "Crystal Waters Land Management Policy" (LMP). This policy states that it is the "Second Edition 2003 Updated: April GM 2004, AGM 2004, May GM 2005". Part A of this policy sets some general guidelines for management of soil, water, pests, disease fencing, animals, grazing, weeds, fire, biodiversity, forests, and special places. Part B of this policy sets conditions relating to the licensing of common property.

This application is by Regine Ruppelt, an owner of lot 74 (applicant) seeking orders against the body corporate for Crystal Waters (respondent). The applicant proposed a motion 19 at the general meeting of 5 April 2009 to the effect that by-law 6.1 be amended so that changes to the LMP could be made by ordinary resolution. This motion was ruled out of order on the basis that the LMP is a by-law and changes to the by-laws need to be made by special resolution. The applicant challenges the decision to rule the motion out of order on this basis.

Decision

By-laws

The Act sets up a framework for by-laws to operate in respect of a community titles scheme. All owners and occupiers are obliged to comply with registered by-laws, unless or until the owners vote to modify or remove a particular by-law (Act, 59). Modifications to the by-laws can be made by owners by special resolution (Act, 62(3)) and take effect on the recording of the modified by-laws by the registrar of titles (Act, 179).

The body corporate has a duty to enforce the by-laws (Act 94(1)). Rights of individuals are protected to the extent that the body corporate is required to act reasonably in enforcing the by-laws (Act 94(2)). The legislation generally provides for self-resolution of by-law disputes by requiring that the body corporate attempt to resolve a contravention by issuing a by-law notice before making an application to this office (Act, 184).

Documented decisions of a general policy nature

Any decisions of the body corporate that have been documented in the form of ‘general policies’ or ‘house rules’ can have a persuasive effect on the committee or general meeting in its subsequent decision making functions. However, these general policies are not legally binding on all owners and occupiers in the way that by-laws are binding under section 59 of the Act.

If the body corporate wants to require owners to comply with a policy or decision then it would normally be necessary to adopt an appropriate by-law.

Land Management Policy

The question that arises with regard to the LMP is whether the terms of this document have any legal status as a by-law or if the LMP is only a general policy document.

The failure to include the LMP in the community management statement with the other by-laws leads to some uncertainty as to the status of the LMP. On its face, the LMP is merely a policy document. However, by-law 6.2 requires that “A Resident shall ... comply with the requirements of the Land Management Policy when using any part of the common property for their own purposes.” It therefore seems that the recording of by-law 6.2 will operate to incorporate into the by-laws all terms of the LMP as they stood at the time that the body corporate resolved to adopt by-law 6.2.

Another question arises regarding whether by-law 6.1 can be effective to the extent that it contains an intention that changes made to the LMP by special resolution can be incorporated into the by-laws. The legislation contemplates owners amending the by-laws by special resolution but does not contemplate those changes having effect without the recording of a new community management statement (Act 62, 179). The current community management statement for Crystal Waters was recorded on 3 July 2007 so it is probably the case that any changes to the LMP adopted by special resolution prior to that date are included by reference in the by-laws. However, I would have serious concerns about the validity of any purported changes to the LMP made since the last date the community management statement was recorded. To avoid this uncertainty, and to avoid difficulties in keeping track of any changes to the LMP, owners may wish to consider whether it would be preferable to include the entire LMP with the by-laws in the community management statement.

Decision to rule applicant’s motion out of order

Submissions on behalf of the body corporate are to the effect that the chair ruled the applicant’s motion out of order but informed attendees that these rulings could be challenged by being put to a vote at the meeting. It was further submitted that the committee arranged for a forum prior the general meeting to assist owners to reword motions that might otherwise be badly worded, unenforceable or unworkable.

The Standard Module provides:
47 Power of person chairing meeting to rule motion out of order

(1) The person chairing a general meeting of the body corporate must rule a motion out of order if—

(a) the motion, if carried, would—

(i) conflict with the Act, this regulation or the by-laws, or a motion already voted on at the meeting; or

(ii) be unlawful or unenforceable for another reason;

or

(b) except for a procedural motion for the conduct of the meeting, or a motion to correct minutes—the substance of the motion was not included in the agenda for the meeting.

(2) The person chairing the meeting must, when ruling a motion out of order—

(a) give reasons for the ruling; and

(b) for a ruling given under subsection (1)(a)—state how the ruling may be reversed by the persons present and entitled to vote on the issue.

(3) The persons present and entitled to vote may reverse a ruling given under subsection (1)(a) by passing an ordinary resolution disagreeing with the ruling.

(4) The reasons given by the person chairing the meeting for ruling a motion out of order must be recorded in the minutes of the meeting.

The submissions by the body corporate have not been disputed and I accept that the chairperson acted appropriately in ruling the motion out of order. In particular, I am satisfied that by-law 6.2 operates to include in the by-laws by reference the wording of the LMP at the time by-law 6.2 was adopted. Further, while there may be some legal uncertainty as to whether by-law 6.1 gives a by-law type effect to changes to the LMP that are made by special resolution without a new community management statement being recorded, it seems clear that a special resolution is a minimum legislative requirement for a change of by-laws (Act, 62(3)). The motion proposed by the applicant would be ineffective to the extent that by-law 6 purports to include the LMP as part of the by-laws but the applicant proposed changes that would purport to allow the by-laws to be changed by only an ordinary resolution.[1]

Other issues with the LMP

I am aware that Crystal Waters has large areas of common property and there is evidence of a desire to have a flexible LMP and significant flexibility in managing the use and licensing of areas of this common property. However, the community management statement is the fundamental document that regulates the use and enjoyment of scheme land and it is difficult to imagine any significant binding changes to the use of the land without changes being recorded in the community management statement. In particular, it seems unlikely to be practicable to avoid having provisions in the community management statement that provide for the granting of licences (Standard Module, 161(4)). Otherwise, occupiers may have to merely rely upon a right to shared use of the common property of the scheme based on ownership of the common property as tenants in common (Act, 35(4)) or seek licences under the specific provisions requiring at least a special resolution for all licences of common property and a resolution without dissent for licences of more than three years (Standard Module, 161).

The application highlights the uncertainty created by by-laws that refer to a separate document and, especially, the uncertainty of by-laws that purport to also incorporate changes made to that separate document. As noted above, owners may wish to reduce uncertainty by resolving to register a new community management statement that directly includes all significant parts of the LMP as by-laws.

Other motions ruled out of order

The applicant has also challenged the ruling out of order of two motions submitted by other persons.

One of these motions proposed an ordinary resolution placing limitations on bringing mulch into the scheme. This was properly ruled out of order on the basis that it was unenforceable. Owners could pass a special resolution to decide to adopt a by-law that regulated mulch brought into the scheme. However, a body corporate resolution by itself is only a decision binding only on the artificial legal person of the body corporate. The proposed motion would therefore not have had any legal effect upon any owners or occupiers who were bringing mulch into the scheme.

The other motion proposed that the administration budget not increase beyond the CPI and that the committee endeavour to reduce the budget by saving costs allocated to the bureaucratic section of the body corporate. This motion as a whole is uncertain and unenforceable particularly as owners vote each year by ordinary resolution to adopt the administrative budget and the passing of an earlier resolution to limit the amount of the budget would not restrict owners in their casting of their votes. If the motion solely sought to require the committee to endeavour to find savings in the preparation of the next year’s budget then it would have been valid but probably ineffectual if it was not more specific in terms of where those savings should be found.

Conclusion

Having reviewed the application I am not satisfied that it is appropriate to make any of the orders sought. I am satisfied that the chairperson acted properly in ruling the relevant motions out of order at the meeting and informing attendees that these ruling could be challenged. I also commend the committee on the obvious benefits of engaging in discussion of the wording of submitted motions prior to the agenda for the meeting being finalised. This appears to be a sensible approach that gave persons submitting motions an opportunity to clarify the wording prior to a vote taking place. This is a strategy that appears likely to be effective in avoiding many disputes, even if it failed to avert the present dispute.

Order

For the above reasons, the application is dismissed.

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[1] Such a change would effectively be a change to the by-laws contrary to the requirement for a special resolution or resolution without dissent. It would also appear to be an invalid delegation of the body corporate’s by-law making powers - see Dainford Lt v Smith [1985] HCA 23; (1984) 155 CLR 342 and re Taylor [1995] 2 Qd R 564