The Grand Apartments [2009] QBCCMCmr 427 (30 October 2009)

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

I hereby declare that Motion 8, considered at the Annual General Meeting of the Body Corporate for The Grand Apartments dated 17 February 2009, regarding the amending of by-laws 39.1 and 39.4 to allow exclusive use car spaces to be used for the purposes of parking and storage, was not passed because of opposition that was unreasonable in the circumstances.

I hereby order that Motion 8 of the Annual General Meeting dated 17 February 2009, regarding the amending of by-laws 39.1 and 39.4 to allow exclusive use car spaces to be used for the purposes of parking and storage, is deemed to be passed.

I further order that the Body Corporate for The Grand Apartments shall, within three (3) months of the date of this order and at the expense of the Body Corporate, prepare and lodge with the Registrar of Titles a request to record a new community management statement which reflects the change in the body corporate by-laws 39.1 and 39.4.

The Grand Apartments community titles scheme (“The Grand Apartments”) consists of 146 lots and common property. The community management statement (“CMS”) for The Grand Apartments indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (“Accommodation Module”) applies to the scheme. The Department of Environment and Resource Management records show the scheme is registered as Building Units Plan 137586.

Pursuant to the Body Corporate and Community Management Act 1997 (“the Act”), this application was made by Donald Murray and Jennifer Murray, Owners of Lot 503 (“the applicants”) on 17 April 2009. The applicants sought orders against the Body Corporate for The Grand Apartments (“the respondent”) in the following terms:

“That the storage locker installed in my car space no. 25 of the Grand Apartments Labrador be allowed to remain.”

In October 2008 the parties participated in a conciliation session with the Commissioner’s Office pursuant to section 248(3) of the Act. Subsequently, this application was lodged.

Under section 243 of the Act, a copy of the application was provided to all lot owners and the body corporate committee (“the committee”), with an invitation to all lot owners and the committee to respond to the matters raised by the application. Submissions were made by the committee and several lot owners. The applicants did not inspect the submissions or make a written reply.[1]

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 and seeking further information from the parties as detailed below.

The application relates to the applicants’ request for permission to keep a storage locker installed in their exclusive use car space. The facts of the dispute, as outlined in the application and submissions can be summarised as follows.

In 2006 the Applicants purchased unit 503 of The Grand Apartments. In November 2006, the applicants installed a storage locker within their exclusive use car space without body corporate permission.

By-law 39 of the CMS, entitled ‘Allocation of Exclusive Use Area – Car Spaces’ governs the use of exclusive use car spaces. The relevant sub-sections of by-law 39 are set out below:

After installation of the storage locker, the applicants received correspondence from the committee informing them that the allocated car space was for the parking of a car only. The committee further informed the applicants that the body corporate would have to pass a resolution without dissent amending by-laws 39.1 and 39.4 before a storage locker could be placed within their exclusive use car space.

The committee submitted a motion at the 2007 Annual General Meeting (“AGM”), 2008 AGM and 2009 AGM proposing an amendment to by-laws 39.1 and 39.4 so that the exclusive use car spaces could be used for the purposes of ‘car parking and storage’. The first motion, namely motion 8 of the AGM dated 29 January 2007, was defeated with 15 lot owners in favour of the motion, 3 lot owners against the motion and 3 lot owners abstaining from the motion. The second motion, namely motion 9 of the AGM dated 1 February 2008, was defeated with 16 lot owners in favour of the motion, 8 lot owners against the motion and no lot owners abstaining from the motion. While the third motion, namely motion 8 of the AGM dated 17 February 2009 (“Motion 8”), was defeated with 18 lot owners in favour of the motion, 4 lot owners against the motion and 3 lot owners abstaining from the motion.

“That By-Law 39.1 and 39.4 as per attachment “B” be deleted from Schedule C in the Community Management Statement and replaced with the following new By-Laws and that Schedule “E” in the Community Management Statement be amended as per attachment “C”.

“39.1 This exclusive use by-law authorises the original owner, or an agent of the original owner, to allocate parts of the [sic] Common Property to which this exclusive use by-law shall apply (“an authorised allocation”). The parts of the Common Property to be allocated under this exclusive use by-law shall be allocated for the purposes of car parking and storage and are identified in Schedule E purposes.”

“39.4 The car space exclusive use areas granted under this by-law are to be used by the occupiers of each lot for the purpose of car parking and storage only. A storage locker of a of a style, design and colour must be approved by the Committee before installation occurs, and shall not create or allow a nuisance to be created upon such area. In granting approval of a storage locker, the Committee may impose conditions on the style, design and colour so that such storage lockers are consistent and do not detract from the amenity of the adjoining areas. The occupier with the right to the exclusive use area shall comply with the terms of any by-law restricting the storage of inflammable liquids, gases or other materials with respect to any storage locker installed within the car space and shall also be responsible for the maintenance, operating costs and upkeep of such storage locker.”

“That consent is given for the preparation and recording of a new Community Management Statement to reflect the above amendment and any two members of the committee be authorised to affix the Common Seal of the Body Corporate and execute the new Community Management Statement.”

The applicants seek permission to keep the storage locker installed in their exclusive use car space. The applicants have enclosed photographs of their storage locker and the underground car park of the body corporate. The applicants claim that their colorbond steel storage locker is free standing, unobtrusive, neat and does not interfere with safety measures such as fire sprinklers. Further, the applicants state that a number of other lot owners were given permission by the original owner to erect wire cages on common property for the purpose of storage and comment that other lot owners have push bikes, trailers and boats in their car spaces.

The owners of lots 407, 904, 910, 1204 and 1212 made submissions supporting the application. These lot owners made the following comments:

The committee also made a submission supporting the application. The committee state that they submitted a motion to amend by-law 39 at three general meetings, but all three motions were defeated. The committee argue that Motion 8 should be deemed passed as there were only a small number of dissenting voters. The committee also state they would consider suitable conditions for the installation of storage devices should the by-law be amended.

A submission was received from the owner of lot 804 opposing the application. The lot owner raises the following issues:

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[2]

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:

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or

(i) the engagement of a person as a body corporate manager or service contractor; or

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[3] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[4]

The applicants have lodged a dispute resolution application with the Commissioner’s Office seeking an outcome that “the storage locker installed in my car space no. 25 of The Grand Apartments Labrador be allowed to remain”. As by-laws 39.1 and 39.4 set out that the common property car spaces are to be used for the purposes of ‘car parking only’, the applicants are prima facie unable to keep the storage locker in their car space without by-laws 39.1 and 39.4 first being amended and a new CMS recorded.

Although the applicants may have intended the overturning of Motion 8 to be the question before the adjudicator, this was not explicitly stated in their outcome sought. Rather, the applicants’ outcome seems to focus on whether or not they can have permission for the storage locker to remain. Consequently, I wrote to all lot owners on 21 August 2009 and 7 September 2009, explaining that I was considering whether it would be appropriate to overturn Motion 8 and giving them the opportunity to comment on this issue.

Ten lot owners wrote to this Office supporting Motion 8 being overturned. Their comments are summarised below:

The owners of lot 809 opposed the overturning of Motion 8. The owners argued that central car spaces without a wall would require fixed free standing lockers which would clutter up the car park and narrow the car spaces. The lot owners also stated it would be difficult to police the storage of flammable liquids within the lockers. While finally, the lot owners stated that only items with wheels should be placed in the car spaces so that ‘they can be moved if need be’. The lot owners stated that if the applicants ‘had their storage locker on a trailer in their car space, that should be allowed’.

Further, on 26 October 2009, we received a response, from the owners of lot 1102. Although this response has not been viewed by the applicants, I have considered the response in determining this application. The owners of lot 1102 oppose the overturning of Motion 8 and make the following comments:

I am now satisfied that all lot owners have been made aware of the relevant issues contained in this application. In summary, there are 2 questions for determination:

Sections 170 to 177 of the Act set out the requirements for 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 171 of the Accommodation Module, an exclusive use by-law may include conditions and impose obligations upon the individuals to whom exclusive use is given.

Sections 62(2) and 62(3) of the Act set out that a resolution without dissent must be passed before the body corporate can consent to recording a new CMS where the difference between the old and new CMS is a change in exclusive use by-laws. I am satisfied that by-laws 39.1 and 39.4 are exclusive use by-laws. As such a resolution without dissent is required to be passed before the body corporate could agree to record a new CMS containing the amended by-laws.

Moreover, not only must the new CMS amending the exclusive use by-law be consented to by a resolution without dissent, but each owner whose lot is subject to the exclusive use by-law must consent to the by-law. Under section 173(1) of the Standard Module an exclusive use by-law can include conditions only if the owners of the lots to whom rights are given under an exclusive use by-law agree in writing. Section 171(2)(a) of the Act indicates that the lot owner to whom the exclusive use by-law attaches must consent to the by-law either in writing before the passing of the resolution without dissent to record the new CMS incorporating the exclusive use by-law, or the lot owner must vote personally for the resolution.

If satisfied a motion requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable, an adjudicator may make an order giving effect to the motion as proposed or a variation of the motion as proposed.[5] Accordingly, I will consider whether the opposition to Motion 8 was unreasonable in the circumstances.

Adjudicator P Dowling[6] has summarised a number of decisions regarding the issue of “reasonableness”. This summary is set out below:

“In Points North (paras 42 and 44) and Ocean Plaza Apartments[7] (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[8] (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’.[9] In this decision and in the decisions made to resolve disputes in Q1[10] and Allen Court[11], 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 determining whether the opposition to Motion 8 was unreasonable in the circumstances, it is necessary to consider the objective basis for each lot owners’ opposition to the motion. Initially, Motion 8 was defeated with 18 lot owners in favour of the motion, 4 lot owners against the motion and 3 lot owners abstaining from the motion. As I had only received opposing submissions from two lot owners, on 21 August 2009 I requested that the Body Corporate Manager provide our Office with a copy of the meeting minutes, notice and voting register from the 2007 AGM, 2008 AGM and 2009 AGM.[12] In regards to Motion 8, the owners of lots 203, 206, 804 and 1102 voted against the motion and the owners of lots 410, 712 and 904 abstained from voting on the motion. However, only the owners of lots 804 and 809 (and subsequently 1102) made opposing submissions in this matter.

In Bayview Shores,[13] the adjudicator commented that “in the absence of argument from those opposing owners who did not make submissions, the objective basis for their opposition cannot be tested...These owners were invited to make submissions on the application. In the absence of submissions, weight cannot be given to this opposition in determining this application.” Therefore, as the remaining opposing owners did not make a submission in this application I cannot test the objective basis for their opposition. Consequently, weight cannot be given to their opposition in this instance.

The submissions from the owners of lots 804, 809 and 1102 raise a number of issues about the practicalities of owners installing storage lockers in their exclusive use car spaces. These issues include the following:

As stated above, there are two questions for determination in this instance – whether Motion 8 should be overturned, and if answered in the positive, whether approval should be given for the applicants’ storage locker. The first question for determination is whether Motion 8, proposing an amendment to by-laws 39.1 and 39.4, should be overturned. The opposing submissions contain arguments primarily associated with the installation of storage lockers. These arguments, whilst setting out a number of valid concerns, relate more to the second issue for determination (whether permission should be granted for the applicants’ storage locker) rather than whether by-laws 39.1 and 39.4 should be amended to allow exclusive use spaces to be used for the purposes of ‘car parking and storage’. In fact, the owners of lot 809 whilst objecting to certain styles and aspects of storage lockers, seem to express support for the overturning of Motion 8 to enable car spaces to be used for car parking and storage by stating that if the applicants ‘had their storage locker on a trailer in their car space, that should be allowed’.

Further, even if Motion 8 is overturned, there is no automatic right of approval for owners to keep or install storage lockers in their exclusive use car spaces. An owner can only install a storage locker in their exclusive use car space if they obtain body corporate permission. In considering each application, the body corporate can set a number of conditions around any approval given. Such conditions can incorporate the issues canvassed in the submissions such as that of fire risk, interference with adjoining cars and common property, the impact on centrally located car spaces, the storing of hazardous chemicals as well as issues associated with the appearance, style and design of storage facilities. Therefore, while I have noted the owners’ concerns regarding the installation of storage lockers, I am of the view that these issues can be dealt with by the body corporate setting conditions around any approval given. Consequently, I find that the opposing owners have failed to show sufficient objective opposition to Motion 8 in this instance.

The owners of lot 1102 have also raised issues regarding their rights as owners in the complex. The owners have stated that they are entitled to vote against the motion and do not have to give any reasons for their decision.

One of the objects of the Act is to balance rights of individuals with the responsibility for self management within the scheme.[14] Accordingly, when determining the ‘reasonableness’ of the opposition to Motion 8, it is necessary to ‘weigh’ or ‘balance’ the rights of the dissenting owners with that of the body corporate. The owners of lot 1102 have quite correctly stated that they are entitled to vote against the motion and have rights as minority owners. However, I am empowered to balance the rights of individuals against the interests of the scheme as a whole. After balancing the above interests, I am of the view that the owners of lot 1102 have not provided sufficient evidence or reasons to demonstrate that their rights would be unreasonably affected by the passing of Motion 8 in these circumstances.

The owners of lot 1102 have also commented that they would not like the value of the property diminished by the installation of storage lockers in car spaces. It is beyond the scope of my jurisdiction to determine whether particular property values will increase, decrease or have any change at all by the amending of by-laws 39.1 and 39.4. Further, the opposing lot owners have provided no evidence to support their concerns in this regard.

Another issue raised by the owners of lot 1102 concerns the availability of purchasing storage space in the open market and the implications that the overturning of Motion 8 may have on competition law and other market practices. In this regard the owner of lot 1102 states, “it is up to anyone who needs more storage space to buy it in an open market...open market must be allowed to freely operate in Australia under the Australia’s Competition Laws...” While the purchase of storage space may be available outside the body corporate, I am of the opinion that this is an irrelevant consideration as to whether Motion 8 should be overturned (consequently amending by-laws 39.1 and 39.4). Further, I have been provided with no evidence from the opposing lot owners to support their assertions in this regard.

Therefore, while I have noted the opposing owners’ concerns, I find that the opposing owners have failed to show sufficient objective opposition to Motion 8. On this basis, I am ordering that Motion 8 is deemed to be passed.

The next issue for determination in this instance is whether approval should be given for the applicants to keep the storage locker installed in their exclusive use car space.

A lot owner may only perform work on common property if authorised by the Act, the body corporate in accordance with the Act or pursuant to a body corporate by-law. Section 162 of the Accommodation Module provides for improvements to common property by a lot owner for the benefit of the owner’s lot. Section 172 of the Accommodation Module makes provision for improvements by a lot owner to a part of the common property to which an exclusive use by-law applies. Section 172 of the Accommodation Module is set out below:

(1) An exclusive use by-law may authorise the owner of a lot who has the benefit of the by-law to make stated improvements to the part of the common property to which the by-law applies.

(2) Without limiting subsection (1), improvements stated in the by-law may include the installation of fixtures on the common property and the making of changes to the common property.

(3) If the exclusive use by-law does not authorise the owner of a lot to make an improvement, the owner may make the improvement only if the body corporate authorises it to be made.

(4) However, if the value of the improvement mentioned in subsection (3) is more than $3000, the making of the body corporate’s authorisation must be by ordinary resolution.

Pursuant to the above section, a lot owner with an allocation of exclusive use can only make an improvement to the exclusive use area if either – the improvement is authorised by the exclusive use by-law (by-law 39 in this case) or the body corporate has authorised the improvement in accordance with sections 172(3) and (4) of the Accommodation Module. Sections 172(3) and (4) of the Accommodation Module state that where an exclusive use by-law does not authorise the owner of a lot to make an improvement, the owner may make the improvement only if the body corporate authorises it to be made. Further, if the value of the improvement is more than $3000 the body corporate must authorise the improvement via an ordinary resolution.

In this instance, by-law 39 does not authorise the making of improvements to the exclusive use area. Therefore, the applicants require body corporate authorisation to keep the storage locker. If the value of the storage locker is $3,000 or less, the applicants’ may seek permission from the body corporate committee. However, if the value of the storage locker is more than $3,000 the applicants’ must seek permission from the body corporate at a general meeting in the form of an ordinary resolution.

In determining whether the applicants’ should be given permission to keep their storage locker, regard should be had to the submissions lodged in this matter. Most lot owners supported the installation of the applicants’ storage locker, commenting that it was practical and neat in appearance. However, the owners of lots 802, 804, 809 and 1102 objected to the applicants’ storage locker. The objections from the owners of lots 804, 809 and 1102 have been detailed previously. The owner of lot 802, while expressing support for the overturning of Motion 8, objected to the particular storage locker installed by the applicants. This lot owner preferred an ‘over the bonnet’ style of storage locker.

Section 238 of the Act provides that a person may make an application if the person is a party to, or is directly concerned with, a dispute to which this chapter applies. Accordingly, we require demonstration that a dispute actually exists in relation to each matter before it falls within the scope of the dispute resolution provisions of the Act. The clearest means of demonstrating that a dispute exists is for the matter to have been considered at a general meeting or committee meeting of the body corporate. It is clear from the evidence provided that the first issue regarding the amending of by-laws 39.1 and 39.4 had been considered by the body corporate at three general meetings. However, the current issue, namely whether permission should be given for the applicants’ to keep their storage locker, does not appear to have been adequately considered by the body corporate. Rather, as stated in the committee minutes dated 11 December 2006, the body corporate felt they ‘did not have the authority to approve the request’ and thereafter concentrated only the by-law amendment issues. Therefore, I am of the opinion that the applicants’ request to keep the storage locker has not been sufficiently considered by the body corporate. Further, I note that the body corporate has not had the opportunity to consider the applicants’ request for a storage locker in light of the new amendments to by-laws 39.1 and 39.4. Consequently, I am not inclined to make an order as to whether or not the applicants’ storage locker should remain.

As I have deemed Motion 8 to be passed (consequently amending by-laws 39.1 and 39.4) the applicants should now put a formal request to the body corporate (either at a committee meeting or a general meeting depending on the value of the storage locker) for permission to keep their storage locker. The applicants are able to challenge a decision of the body corporate pursuant to the dispute resolution provisions under the Act if they believe a decision of the body corporate was in contravention of the Act or CMS.

While I note that the owners of lots 804, 809 and 1102 have put forth a number of arguments against the installation of storage lockers, I am not satisfied these arguments have substantiated any genuine basis for the opposition of Motion 8, namely, whether by-laws 39.1 and 39.4 should be amended to allow the exclusive use car spaces to be utilised for the purpose of car parking and storage. Rather, I am of the view that the issues as set out by the opposing owners can be adequately addressed by the body corporate imposing conditions around any approval granted. Further, I do not have a sufficient belief that the interests of the majority of owners would be met by dismissing the orders sought. Therefore, having appropriate regard to the purpose of the Act, which is to encourage self governance, as well as the absence of any objective arguments substantiating that the opposition to Motion 8 was ‘not unreasonable’, I am inclined to order that Motion 8 be deemed as passed.

Further, as the body corporate will need to record a new CMS reflecting the change of name, I have allowed three months from the date of this order for the body corporate to prepare and lodge a new CMS at its expense with the Department of Environment and Resource Management.

While finally, I am of the view that the applicants’ request to keep their storage locker has not been sufficiently considered by the body corporate. Consequently, I am not inclined to make an order as to whether or not the applicants’ storage locker should remain. The applicants can now put a formal request to the body corporate (either at a committee meeting or a general meeting depending on the value of the storage locker) for approval to keep their storage locker in light of the amended by-law provisions.

[1] See sections 246 and 244 of the Act respectively.
[2] See sections 227, 228, 276 and Schedule 5 of the Act.
[3] Section 276(2) of the Act.
[4] Section 284(1) of the Act.
[5] Schedule 5(10) of the Act.
[6] See Bayview Shores [2008] QBCCMCmr 309 (2 September 2008).

Number of Scheme:	29822
Name of Scheme:	The Grand Apartments
Address of Scheme:	360 Marine Parade LABRADOR QLD 4215

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

The Grand Apartments [2009] QBCCMCmr 427 (30 October 2009)