Oasis [2009] QBCCMCmr 400 (15 October 2009)

Last Updated: 13 November 2009

REFERENCE: 0486-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20870
Name of Scheme:	Oasis
Address of Scheme:	100 Morala Avenue, RUNAWAY BAY QLD 4216

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

Robyn McMinn, the Owners of lot 38

I hereby declare that resolution 16, which was purportedly carried by an ordinary resolution of the Body Corporate at the Annual General Meeting on February 23, 2009 was at all times void. I hereby order that the application for the following orders that the body corporate convene an extraordinary general meeting of lot owners within 21 days; and that a motion be placed on the agenda for the meeting, the effect of which is to propose to allocate (or re-allocate as the case may be) exclusive use of the Marina Berth D4 to lot 38 (the Applicant’s lot); is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0486-2009

“Oasis” CTS 20870

The Oasis community titles scheme consists of 76 lots and common property. The community management statement (CMS) for Oasis indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme.

APPLICATION

The applicant is the owner of lot 38 and made a dispute resolution application seeking both an Interim order and also Final Orders pursuant to section 276 of the Act.

The applicant seeks the following final outcomes:

• An order declaring void, Resolution 16, otherwise declared carried by the Body Corporate at the Annual General Meeting of the lot owners of the Scheme on February 23, 2009.
• An order that the body corporate convene an extraordinary general meeting of lot owners within 21 days;
• An order that a motion be placed on the agenda for the meeting, the effect of which is to propose to allocate (or re-allocate as the case may be) exclusive use of the Marina Berth D4 to lot 38 (the Applicant’s lot);
• Such further, other or alternate order as the adjudicator may determine to be just and equitable in the circumstances.
  

On 22 May 2009 I made the following Interim Order :

that pending the final outcome of dispute resolution application 486-2009, lodged with the Office of the Commissioner for Body Corporate and Community Management on 21 May 2009, the Body Corporate for Oasis, whether by its servants, agents, contractors or employees is not to take any steps to register a new or amended Community Management Statement giving effect to Resolution 16, purportedly carried at the AGM held on 23 February, 2009.

It should be noted that the purpose of an interim order is not to make preliminary findings regarding the matters in issue but rather, to merely to maintain the status quo until such time as submissions can be sought from interested parties and the matters in dispute can be finally determined.

BACKGROUND

The applicant purchased lot 38 in the Scheme on November 5, 1998 and remains the registered proprietor of lot 38. On 26 January 2008, the applicant entered into a contract with the now previous owner of lot 4, Mr. Grice, for the “purchase” of a Marina Berth, referred to as marina berth A 10. The applicant paid $10,000 to Mr. Grice and subsequently requested the body corporate to “reallocate” the exclusive use right in respect of the lot 4 Marina Berth to lot 38.

However, the body corporate has refused to allocate the exclusive use of the berth to the applicant and at the last AGM on 23 February 2009, purported, by means of resolution 16, to allocate exclusive use of the berth to the new owners of lot 4, Mr. & Mrs. Kumar.

That motion read as follows:

16 . Ordinary Resolution
Alteration to by-law 54
That the body corporate amend Schedule C, by-law 54, exclusive use, to include the new allocation of marina berths on marina D and include allocation of exclusive use for new berths and amend sketch plan marked A accordingly.
Schedule C, By-law 54, Exclusive use
Lot No. Berth No.

6. D3
4. D4

2 D2
11 D1
And further that the Body Corporate be authorised to record a new community management statement incorporating these changes and that it be signed under common seal, by two members of the committee and lodged for registration with the Department of Natural Resources.

This motion was purportedly carried as an ordinary resolution with 26 “yes” votes, 4 “no” votes and 11 abstentions. However, the applicant states that resolution 16 purports to allocate exclusive use of Marina Berths D3, D4 (the subject berth), D2 and D1 to lots 6, 4, 2, & 11 respectively, but was framed as an ordinary resolution when it should have been framed as a Resolution without Dissent[1]. Further, the results of voting upon motion were: 26 votes in favour; 4 votes against and therefore it is argued, the requirements of section 171 have not been satisfied.

It is further claimed that the new registered proprietors of lot 4 purchased that lot from Mr. Grice pursuant to a contract in writing which expressly noted that the marine berth was excluded from the sale, and that therefore the new owner of lot 4 has not paid consideration for the exclusive use of the marina berth.

Owing to a perceived urgency on the part of the applicant, I made a temporary or “interim order” on 22 May 2009 to prohibit the registration of a new community management statement giving effect to Resolution 16, purportedly carried at the AGM held on 23 February, 2009.

SUBMISSIONS

Pursuant to section 243 of the Act, a copy of the application was provided to the respondent body corporate and the owners of all other lots in the scheme.

Submissions made by the body corporate included the following:

• The marine berths are body corporate property which was acquired after a lease was obtained from the State of Queensland and certain lot owners made a “one off” payment to have pontoons built as well as the connection of water and electricity;
• Exclusive use of the various marina berths is granted by by-law 54;
• In 2004 a number of lot owners requested the creation of additional marina berths;
• The body corporate asked owners who were interested in acquiring a marina berth to pay a deposit or “bond” of $2,000 which was approximately 20% of the total cost of $10,000 for each berth;
• At that point in time it was not possible to grant exclusive use of the marine berths as there was nothing to allocate until such time as a survey plan was prepared;
• When it became apparent that it would take up to 12 months to obtain approvals from various government departments and have the survey plan prepared, the amount of the “bond” was reduced from $2,000 to $300.;
• The additional marina berths were eventually constructed and one-off payments of $8,500 were made by the owners of lots 2, 4, 6 & 11.

Although a number of lot owners believed that the marina berths were the property of those who paid for their construction, the marina berths are in fact the property of the body corporate;

• At the AGM held on 26 February 2008, a motion was included on the agenda “to allocate exclusive use to lots 2, 4, 6 and 11”. However, this motion was withdrawn when it was discovered that there was no plan in existence to support the motion;
• The same motion was again put to an AGM on 23 February 2009 .
• While the body corporate committee was now aware of the agreement entered into between Mr. Grice and Ms. McMinn, the committee noted that the body corporate was not a party to the contract and was therefore not bound. Rather, committee members were of the view that the former owner of lot 4, Mr Grice, was purporting to sell an asset which he did not own. Rather the marina berth was the property of the body corporate.
• To further complicate matters, it would appear that the $10,000 was not paid to Mr. Grice but to another person;
• The former owner of lot 4 was in financial difficulties and the mortgagee, the Bank of Queensland, arranged to sale of lot 4 to the current owners, Mr & Mrs. Kumar. Mr & Mrs. Kumar were also the owners of lot 50 and requested the body corporate to “reallocate” their right to exclusive use of marina berth . The new owner of lot 4 sought to have the “exclusive use” of the lot 50 marina berth reallocated to lot 4 but was told that this was not necessary because lot 4 would come with a right to exclusive use of a marina berth. The new owner of lot 4 therefore sold lot 50 along with the right to exclusive use of a marina berth;
• The contract relied upon by the applicant was entered into with Mr. Grice, a former owner of lot 4. It is expressed to be a deed, is undated and states “the transfer of the pontoon is subject to and conditional upon:

1. approval and acknowledgement of the existence of the pontoon by the body corporate for Oasis at the next AGM (28 February 2008);

2. approval and acknowledgement by the body corporate for Oasis at their next AGM that the berth in question is an exclusive use property to be attached to McMinn’s registered property at 100 Morala Avenue, Runaway Bay.” (Which did not happen.)

• The document went on to state that “Grice gives full indemnity to McMinn if the body corporate for Oasis does not approve and acknowledge at their next AGM (28 February 2008) that the berth in question is an exclusive use property and it is attached to McMinns registered property at 100 Morala Avenue Runaway Bay.
• As the body corporate did not approve of the allocation of exclusive use to Ms. McMinn, she should take proceedings against Mr. Grice rather than the body corporate;
• In accordance with resolution 15 which was carried at the last AGM on 23 February 2009, the berths have been relocated for which the owners of lots 2,4,6,& 11 have paid in excess of $30,000;
• The current owner of lot 4, rather than the applicant should therefore be given exclusive use of the marina berth.
  

Submissions made by the current owners of lot 4, Ms. Gladys Kumar and Mr. Ram Kumar Ramachandran included the following:

• They jointly purchased the lot from the Bank of Queensland which was the mortgagee in possession;
• Mr Grice did not have possession of the property on 26 January 2008 when the transaction with Ms. McMinn purportedly took place. Mr & Mrs Grice had moved out in December 2007;
• The bank had originally advertised the property as having a marina berth but the body corporate manager subsequently advised that the marina berth for lot 4 had not yet been “registered” and exclusive use of the berth would not be finalised until a new community management statement was registered;
• Mr Grice had no berth to sell as this was a body corporate asset ,and the then Chairman and Treasurer of the body corporate committee advised the applicant that exclusive use of the berth, now referred to as D4, would be granted to lot 4.
  • They previously owned lot 50 and sought to have the exclusive use of the lot 50 marina berth reallocated to lot 4, but they were told that this was not necessary because lot 4 would come with a right to exclusive use of a marina berth, and they therefore sold lot 50 along with the right to exclusive use of a marina berth;
  • At the time of the purported contract with Ms. McMinn, the subject berth had not been allocated to any particular lot so Mr Grice was not entitled to deal with the berth;
  • At the date of the contract between Grice and McMinn, 26 January 2008, the Bank of Queensland had already taken possession of the property;
  • The contract was undated and unstamped and the receipt for $10,000 was signed by a person apparently with the surname Waugh;
  • The “contract” was conditional upon body corporate approval of the “transfer” of the berth;
  • The contract was not at arms length because the right to exclusive use of a marine berth in this scheme have previously changed hands for between $20,000 and $25,000. and “a marine berth adds at least $40,000 to the value of a villa”;
    

Other lot owners confirmed the above and also pointed out that Mr & Mrs Kumar agreed in December 2008 to pay their share of the marina relocation costs. As a result they were invoiced, and have paid, an amount of approximately $8,500.
It is also suggested that that it would be an exercise in futility for the applicant to seek to seek exclusive use of the marina area as this would require a resolution without dissent and there would be strong opposition.

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)).

DECISION

At this point in time the applicant is seeking the following final orders:

• An order declaring void, Resolution 16, otherwise declared carried by the Body Corporate at the Annual General Meeting of the lot owners of the Scheme on February 23, 2009.
• An order that the body corporate convene an extraordinary general meeting of lot owners within 21 days;
• An order that a motion be placed on the agenda for the meeting, the effect of which is to propose to allocate (or re-allocate as the case may be) exclusive use of the Marina Berth D4 to lot 38 (the Applicant’s lot);
• Such further, other or alternate order as the adjudicator may determine to be just and equitable in the circumstances.
  

I have reviewed the relevant Group Title Plan 1920 and note that on one side the common property of the scheme is bounded by lots 1 to 64 while on the other side, the common property is bounded by a canal. The various marina berths to which exclusive use has been granted, do not form part of the common property but rather, are leased from the State of Queensland by the body corporate. The marina berths therefore come within the definition of “body corporate property”.

The most recently registered Community Management Statement for this scheme is dated 22 September 2007 and includes the following by-law 54:

54 EXCLUSIVE USE
(a) The owner of each lot listed in the columns below shall be entitled to exclusive use (for himself or a tenant of his lot) of the marina berth or berths the identifying number or numbers of which is or are set out in Schedule E and identified on Sketch Plan and Draft Plan marked “A”:

Lot Number	Berth Number
63	A1
5	A2
7	A4
8	A3
10	A8
17	A6
12	A7
15	A5
18	B8
23	B4
29	B2 & B3
36	B1
37	B7
63	B5

Lot Number	Berth Number
51	C1
3	C2
53	C3
54	C4
55	C5
31	C6
58	C7
60	C8
57	C9
56	C10

I note that this by-law does not refer to lots 2, 4, 6 & 11.

The term “Exclusive Use” is defined in section 170 of the BCCM Act and provides as follows:

Meaning of exclusive use by-law
(1) An exclusive use by-law, for a community titles scheme, is a by-law that attaches to a lot included in the scheme, and gives the occupier of the lot for the time being exclusive use to the
rights and enjoyment of, or other special rights about—
(a) common property; or
(b) a body corporate asset.
(2) If an exclusive use by-law attaches to a lot that is another community titles scheme, the exclusive use or other rights are for the benefit of the other scheme.

Section 171 sets out the requirements for an exclusive use by-law, including the requirement for a resolution without dissent, and provides as follows:

Requirements for exclusive use by-law
(1) The common property or body corporate asset to which an exclusive use by-law for a community titles scheme applies must be—
(a) specifically identified in the by-law; or
(b) allocated—
(i) by a person (who may be the original owner or the original owner’s agent) authorised under the
by-law to make the allocation (an authorised allocation); or
(ii) by 2 or more lot owners under a reallocation agreement (an agreed allocation).
(2) An exclusive use by-law that specifically identifies the common property or body corporate asset to which it applies, other than an exclusive use by-law contained in the first community management statement for the scheme—
(a) may attach to a 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 to incorporate the exclusive use by-law, or the lot owner votes personally in the resolution; and
(b) 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.
(3) If an exclusive use by-law authorises the allocation of common property or a body corporate asset for the purpose of the by-law—
(a) the by-law may attach to a lot on the basis of an authorised allocation only if the lot owner agrees in writing before the allocation of the common property or body corporate asset to which the by-law applies; and
(b) the by-law may stop applying to the lot only if the lot owner agrees in writing before—
(i) the allocation is revoked under the by-law (if the by-law provides for the revocation of an
allocation); or
(ii) the passing of the resolution without dissent—
(A) consenting to the recording of the new community management statement that does
not incorporate the exclusive use by-law; or
(B) in which the lot owner voted personally.

An exclusive use by law is therefore a by-law attaching to a lot, giving the occupier of the lot exclusive rights to a specific part of the common property, or a body corporate asset. The common property or body corporate asset to which an exclusive use by-law applies, must be specifically identified in the by-law along with the lot to which the exclusive use has been granted. Alternatively a by-law may state that a right to exclusive may be allocated by a person authorised under a by-law. For example a by-law may permit the original owner (i.e. the developer) to allocate exclusive use car parking spaces as the units are sold and in those circumstances the subsequent community management statement recording the allocation need not be approved by a resolution without dissent.[2]

I have reviewed the various community management statements lodged for this scheme over the years and can find no record of a by-law which allows a particular person to allocate exclusive use of the various marina berths. Rather, I note that the exclusive use by-laws for this scheme specifically identify the marina berth to which a particular lot owner has exclusive use. Accordingly, it is my view that exclusive use of a particular marina berth in this scheme can only be granted by way of a resolution without dissent.

I have sighted the minutes of the AGM held on 23 February 2009 at which the following motion was purportedly passed as an ordinary resolution with 26 votes in favour, 4 votes against and 11 abstentions:

16 . Ordinary Resolution
Alteration to by-law 54
That the body corporate amend Schedule C, by-law 54, exclusive use, to include the new allocation of marina berths on marina D and include allocation of exclusive use for new berths and amend sketch plan marked A accordingly.

Schedule C, By-law 54, Exclusive use
Lot No. Berth No.

7. D3
4. D4

2 D2
11 D1

And further that the Body Corporate be authorised to record a new community management statement incorporating these changes and that it be signed under common seal, by two members of the committee and lodged for registration with the Department of Natural Resources.

Having regard to sections 62 and 171 of the Body Corporate and Community Management Act (Act), I am of the view that the resolution upon motion 16 is not a valid resolution of the body corporate because it was not carried as a resolution without dissent. Accordingly it will be necessary to resubmit the motion to a subsequent general meeting on the basis that a resolution without dissent is required. In the event that there are dissenting votes upon such a motion, a further adjudicator’s order may be sought, to give effect to the motion on the basis that the opposition to the motion is unreasonable.[3]

I do not believe that the invalidity of motion 16 is of any real benefit to the applicant. The subject marina berth was at all times, and remains, the property of the body corporate and exclusive use of the marina berth had not been granted to lot 4 at the time of the agreement entered into between Mr. Grice and the applicant.

The body corporate’s ownership of marine berth D4 (previously referred to as A10) was recognised in the agreement entered into between Mr Grice and the applicant which reads as follows:

“The transfer of the pontoon is subject to and conditional upon:

1. approval and acknowledgement of the existence of the pontoon by the body corporate for Oasis Villas at their next Annual General Meeting; and
2. approval and acknowledgement by the body corporate for Oasis Villas at their next annual general meeting that the berth in question (as part of the pontoon) is an exclusive use property to be attached to McMinn’s registered property at 100 Morala Avenue, Runaway Bay Qld. 4216.

Grice provides a full indemnity to McMinn that:
1. the pontoon has been authorised by the Body Corporate for Oasis Villas; and

2. He will return to McMinn the amount of ten thousand dollars ($10,000) being the sum paid by McMinn to Grice for the pontoon and remove the pontoon if:

a. the body corporate for Oasis Villas do not approve and acknowledge the existence of the pontoon at the next Annual General Meeting; or

b. the body corporate for Oasis Villas require McMinn to remove the pontoon; or

c. the Body Corporate for Oasis Villas do not approve and acknowledge at their next Annual General Meeting that the berth in question (as part of the pontoon) is an exclusive use property and it is attached to McMinn’s registered property at 100 Morala Avenue, Runaway Bay Qld 4216.”

In light of the above, I propose to make a declaratory order to the effect that Resolution 16, which was declared carried by the Body Corporate at the Annual General Meeting of the lot owners of the Scheme on February 23, 2009 was at all times void because a resolution without dissent is necessary to confer exclusive use of a body corporate upon a lot owner.

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 my opinion the applicant has failed to establish any basis upon which it is entitled to assert an interest in Marina Berth D4 and therefore, I do not believe that it would be just and equitable to make the other orders sought by the applicant, namely

• An order that the body corporate convene an extraordinary general meeting of lot owners within 21 days; and
• An order that a motion be placed on the agenda for the meeting, the effect of which is to propose to allocate (or re-allocate as the case may be) exclusive use of the Marina Berth D4 to lot 38 (the Applicant’s lot);
  

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[1] See Section 171 of the Act.
[2] See section 62 of the BCCM Act 1997, and in particular subsection 62(4).
[3] See Schedule 5 to the Act, item 10.