Tenalga [2009] QBCCMCmr 8 (12 January 2009)

Last Updated: 19 February 2009

REFERENCE: 0655-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14727
Name of Scheme:	Tenalga
Address of Scheme:	21 Allambi Rise NOOSA HEADS QLD 4567

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

Cooltrans Consolidated Pty Ltd, the Owner of Lot 3

I hereby order that the application for orders: 1. That motion 2 put to Adjourned Extraordinary General Meeting (EGM) of the Body Corporate Tenalga on 17 July 2008 be carried. 2. Such further or other orders to the Commissioner may seem appropriate in the circumstances. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0655-2008

“Tenalga” CTS 14727

Tenalga community titles scheme 14272 (Tenalga) consists of six lots and common property. The community management statement (CMS) for Tenalga indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008[1] (Standard Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Building Units Plan 333.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Cooltrans Consolidated Pty Ltd, Owner of Lot 3 (applicant) on 11 August 2008. The applicant sought the following orders against the Body Corporate for Tenalga (respondent):

1. That motion 2 put to Adjourned Extraordinary General Meeting (EGM) of the Body Corporate Tenalga on 17 July 2008 be carried.

2. Such further or other orders to the Commissioner may seem appropriate in the circumstances.

PROCEDURAL MATTERS

Under section 243 of the Act, a copy of the application was provided to the respondents and the Body Corporate, with an invitation to the Committee and all owners to respond to the matters raised by the application. Six submissions were received. The applicant inspected the submissions received and made a written reply.[2]

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, along with the CMS and plans for the scheme.

MATTERS IN DISPUTE

The scheme was established in 1969. The building comprises three levels with two lots on each level. Lots 1 and 2 are on the top level, Lots 3 and 4 and the car park are on the middle level and Lots 5 and 6 are on the lowest level with the laundry and storage areas.

The application relates to a motion requiring a resolution without dissent, regarding the grant of exclusive use rights to allow the extension of lots, which failed to pass at the adjourned Extraordinary General Meeting (EGM) held on 17 July 2008. The applicant, who is also the Chairperson, submits that all owners other than Lot 4 consider the proposal in the disputed motion to be fair and not binding on those who do not wish to participate.

The history of the dispute, as outlined in the submitted material, can be summarised as follows:

• In 2005 the Committee engaged a consultant (Paul Summers Planning Strategies) to ascertain if it was possible to increase the floor or balcony areas of the lots, and another (Martoo Consulting) to provide advice on town planning matters relevant to the scheme and its potential refurbishment.
• At the 8 September 2006 Annual General Meeting (AGM) the report from Paul Summers (dated 25 August 2006) was tabled and the redevelopment options were discussed.
• In September 2006 the Owner of Lot 4 provided comments which did not appear to oppose refurbishment but noted potential concerns regarding noise, privacy, views and the cost-benefit of the project, with potential for more issues when concept drawings were provided.
• An architect’s quote for design options was obtained in October 2006.
• All owners were provided with drawings and indicative costs in November 2006.
• A motion seeking a grant of exclusive use rights was submitted to the AGM on 14 September 2007 was adjourned, pending revision to remove proposed deck extensions.
• The motion was reconsidered at an adjourned EGM on 6 February 2008 but lost, with the Owners of Lots 4 and 6 opposing the motion.
• The plans were further amended and submitted to the July 2008 EGM, with Lot 4 opposed.
• The AGM on 19 September 2008 approved two motions granting exclusive use. The first was to enable the extension of the western deck of Lot 3, at the owner’s expense, and the second gave Lot 2 exclusive use of their western veranda. The meeting also noted that other owners would seek extensions to their balconies/decks/verandas.
  

Submissions from the Owners of Lots 1, 2 and 6 all support the application. Two note that the scheme is in need of repair and renovation.

A submission from the Secretary/Treasurer (who is the spouse of the Owner of Lot 5) provides some background. He says Council regulations prevent extensions outside the current building footprint. Originally some of the upper level units sought approval to extend over the roof below but this was opposed by the owners of three lower units because of noise and privacy concerns and the potential loss of lot value. The current plan allows the extension of units onto walkways on the southern side and the extension of the second bedroom level with the main bedroom. None of the past or current plans are compulsory and so no owner must spend money. The biggest problem is the forward extension of the second bedrooms of Lots 1 and 2, which would cover a vertical space which allows circulation of air and light to the area to the south of Lots 3 and 4. The extension of the second bedroom of Lots 3 and 4 do not have the same problem and Lots 5 and 6 cannot extend their second bedroom within the current footprint.

The submission from the Owners of Lots 4 opposes the application. They argue:

• The application should be dismissed for technical deficiencies.
• The disputed motion had numerous deficiencies and is so vague as to render it void:
  • ­ It did not have plans attached so the area in question is unclear.
  • ­ It appears to refer to more areas than EU01A, EU02A and EU03C.
  • ­ It did not specify who will fund a survey plan to enable registration of the new CMS.
  • ­ It did not specify who would pay for the works associated with the motion, or that the works were to be completed in a good and workmanlike manner.
  • ­ It is incorrectly framed to grant exclusive use rights as the internal areas of the lots will be increased. This will increase the lot rather than just grant exclusive use, and so the inside of the lot will be partly owned by the owner and party an exclusive use.
  • ­ Exclusive use is usually used for open areas such as gardens or car parks but in this case the area will be totally alienated which is not appropriate for exclusive use.
  • ­ The motion ignores that existing common property walls will need to be destroyed. There is no mention of the costs of this or the effect on insurance.
  • ­ The motion is not subject to Council approval, which is required as the lots will be reconfigured. An inference is that the applicant is avoiding obtaining Council approval as the building exceeds its footprint and reconfiguration is unlikely to be approved.
  • ­ The motion includes an area which is already the subject of an exclusive use grant.
  • ­ Improvements to common property for each owner’s benefit will require approval.
• A grant of exclusive use requires a resolution without dissent, which is reserved for matters serious enough that the minority should be able to prevent the majority from acting.
• An adjudicator can give effect to a motion if the opposition was unreasonable in the circumstances. The requirement for a resolution without dissent should “tip an evenly balanced equation of competing demands in favour of the minority...because Parliament decided that the power of one could stop a motion.”
• Their opposition was reasonable, as the effect of granting the majority of the exclusive use areas would have a real and detrimental effect on Lot 4 which cannot be mitigated.
• Reference is made to a recent Adjudicator’s decision regarding what is ‘reasonable’ in withholding consent. They submit that if there are potential reasons for objection those could be sufficient, and they have demonstrated their objections are based on logic and reason.
• The applicant must demonstrate they are acting unreasonable, which the he has not done.
• They considered the motion on its merits and have shown they are reasonable by not opposing exclusive use grants to Lots 2 and 3 which had no negative impact on Lot 4.
• Because of the layout of the scheme, each proposed grant of exclusive use only affects one or two other lots. This may be why Lot 4 is the only dissenting lot.
• If in separate motions, they would support some grants that have no effect on Lot 4.
• Comments are made on each of the areas in question:
  • ­ In regard to the areas allowing the extension of the second bedrooms in Lots 1 and 2, the grant would block the only sun into the Lot 4 kitchen and bathroom. The loss of sunlight would affect the enjoyment of Lot 4, require them to use more electricity for lighting, and decrease the lot’s value. The only way solution would be a skylight into the Lot 4 bathroom or kitchen but this would be a cost to Lot 4, could be damaged by hail, leaking and inundation, and would allow the lots above to look into Lot 4. The proposal would also worsen existing damp and mould issues outside Lot 4.
  • ­ The other grants to Lot 1 and 2 have either been approved or are not opposed by Lot 4.
  • ­ The area allowing the extension of Lot 3’s second bedroom would mean Lot 4 could see into Lot 3’s bedroom, and they should not be subjected to this outlook. It would decrease the sun to Lot 4’s second bedroom which would decrease the lot’s value. The only solution would be to extend Lot 4’s second bedroom at substantial cost.
  • ­ The expansion of Lot 3 towards the car park would affect Lot 4’s access to the laundry, (as they do not have an internal laundry like other lots) and common storage areas. The only access would be through the car park which is often full, has an oily surface and is also subject to a soapy discharge from the drain when Lot 2 uses their laundry. This expansion would also block the breeze which would result in Lot 4 needed to use air-conditioning more frequently and the existing air conditioner would need to be repositioned at Lot 4’s expense. Loss of breeze would also exacerbate damp issues.
  • ­ The third area to be granted to Lot 3 has already been approved.
  • ­ A grant of exclusive use would make them responsible for the upkeep of the areas. In particular they are concerned about being responsible for the concrete spoon drain and the roof. In addition, Lot 3 would require Lot 4 to grant an easement because runoff from Lot 3’s roof uses infrastructure that would be come Lot 4’s exclusive use.
  • ­ They have no objection regarding the areas adjacent to the Lot 5 and 6 second bedroom.
  • ­ In regard to the other grants to Lots 5 and 6, their only objection is the loss of access to the laundry. If access was available to the common property area outside Lot 3 (which is subject to a separate proposed grant), they would not oppose this grant to Lots 5 and 6.
• They acknowledge the age of the scheme, but the proposed expansion is being carried out in an ill-conceived manner and Council approval will be needed to properly expand lots.
• No thought has been given to infrastructure which would become each owner’s problem.
• The applicant did not take the opportunity to discuss the issues at the September AGM.
  

In his response to the submission from the Owners of Lot 4, the applicant comments:

• The plans were distributed to owners over the period of consulting on the project.
• Those who wish to participate will share the costs of the works and the new survey plan.
• The areas in question are as per the areas in the architectural plans.
• The costings show that the work is to be completed in a good and workmanlike manner.
• Legal advice confirmed the areas can be granted as exclusive use and all others are happy.
• The costs of alterations to common property will be by the owners accessing the proposal and insurance will not be altered.
• Council approval is required but Body Corporate approval is required first. The Paul Summers report indicates that Council will look favourably on the project. The proposal is not exceeding the building footprint.
• The approved grants exclusive use were processed after the application was lodged.
• There was a 5-1 vote in favour of the motion and so it has no deficiencies.
• The Owners of Lot 4 have been unreasonable in this process.
• They are trying to achieve a fair outcome of all owners. All lots have the same plans for the same changes so the effect on Lot 4 will be no different to any other lot.
• The proposal will not affect sunlight into Lot 4. All units face north, and the sun travels east-west over the building, so sunlight is only on the front of the units.
• Skylights can have one-way glass and there would be solutions to other skylight concerns.
• No mention of damp has been made at any Body Corporate meeting.
• Lot 4 already overlooks the balcony and living areas of Lot 3 so extending the Lot 3 bedroom will make no difference. The view will not be affected because the second bedroom will only come out to the same level as the existing main bedroom.
• There is no expectation that Lot 4 extend their second bedroom.
• In regard to the access to the laundry and storage areas, Lot 4 has access down the stairs beside their unit and the car park area will be altered to suit.
• Claims regarding loss of breeze and increased damp from the Lot 3 expansion are disputed.
• Common property will still be maintained and governed in the ‘usual fashion’.
• Access to the laundry will not be lost by the grants to Lots 5 and 6.
• He has spent three years trying to improve and upgrade the scheme for all owners.
• The Lot 4 concerns are onerous and unfounded. The majority want improvements to improve their asset and stop the ‘patch-up’ maintenance approach. If individuals are prepared to make improvements at their own expense they should be allowed if the majority are in favour. Currently owners cannot move forward and undertake necessary repairs.
  

JURISDICTION

I am satisfied this is a matter which falls within the legislative dispute resolution provisions.[3] The Owners of Lot 4 raise deficiencies in the application form. They argue the respondent is named in 5(a) as the Body Corporate while being described in 5(b) as an owner. The Owners of Lot 4 also say that no grounds were given for seeking to be excused from conciliation and that the grounds of the application did not fully and fairly set out the background to the dispute. Section 49 of the Acts Interpretation Act 1954 provides that substantial compliance with a statutory form is sufficient. The Commissioner accepted the application in its current form (having initially sought some clarification to some aspects of the application) as being sufficiently compliant with the legislative requirements to proceed. I do not consider there is any genuine doubt as to who the respondent to the application is and the adequacy of the grounds goes to the merits of the application. I am not satisfied there is any basis to dismiss the application for any deficiencies in the application form.

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 claimed or anticipated contravention of the Act or the CMS; or the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or the authorisation of a person as a letting agent.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[4] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[5]

DETERMINATION

The sole issue in this matter is whether there is any justifiable basis to deem passed Motion 2, which failed to achieve a resolution without dissent at the EGM of 17 July 2008.

Creation and operation of exclusive use by-laws

Sections 170 to 177 of the Act provide for exclusive use by-laws. These are by-laws which attach to a lot and give 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. These provisions set out a range of requirements for an exclusive use by-law. Three of these requirements are relevant here.

Firstly, the by-law must specifically identify the common property to which it applies (unless it relates to an authorised or agreed allocation which is not applicable here). The registrar of titles will normally require a plan identifying the common property that is the subject of the by-law. Secondly, under section 177, an exclusive use by-law cannot give exclusive use to utility infrastructure which is common property or a body corporate asset. Finally, section 171(2)(a) provides that an exclusive use by-law can only attach to a lot if the relevant lot owner agrees in writing before the passing of the resolution without dissent for the new CMS or votes ‘personally’ in the resolution. Pursuant to section 86(1) of the Standard Module, which provides the ways which a vote may be cast at a general meeting, the requirement to vote ‘personally’ indicates that the vote must be cast by a person present and casting their vote at the meeting, rather than a vote cast by proxy, written voting paper or electronic vote.

Sections 173 to 175 of the Standard Module make further provision for exclusive use. An exclusive use by-law can impose conditions, if the lot owner to whom rights are given in the first instance agrees to them in writing. The by-law can make specific provision for maintenance and operating costs but, in the absence of such provision, the owner of the lot to whom the exclusive use rights are granted is responsible for the maintenance and operating costs. However, as this scheme is a building format plan of subdivision, section 173(3) of the Standard Module specifically provides that the lot owner is not responsible for maintaining (in good condition) roofing membranes that are in the exclusive use area and provide protection for lots and common property, or maintaining (in structurally sound condition) structural elements which are in the exclusive use area, specifically foundation structures, roofing structures providing protection, or essential supporting structures such as load bearing walls.

Section 174 of the Standard Module provides for improvements to exclusive use areas. An exclusive use by-law may authorise the owner to make stated improvements to the exclusive use area. But if the by-law is silent on improvements, the owner may only make an improvement to the exclusive use area if the body corporate authorises it. If the value of the improvement is more than $3,000 then an ordinary resolution will be required for authorisation but otherwise a committee resolution would be sufficient.

Issues with Motion 2

The Owners of Lot 4 claim, and the applicant does not dispute, that the plans describing the exclusive use areas was not included in the meeting papers. Given that the motion specifically refers to ‘the attached plans’ my prima facie view is that plans must have been included in the meeting papers for the motion to have been valid. However the applicant says that the plans were before all owners during negotiations and so arguably there was and is no doubt about the areas in question. The Owners of Lot 4 say that Motion 2 “appears to refers (sic) to more areas than “EU01A, EU02A and EU03C” however they do not elaborate and it is difficult to see how the wording of the motion implies this. Moreover, the submission from the Owners of Lot 4 describes the areas in question with precision and does not appear to be unclear about the areas that are envisaged. Notwithstanding that, this issue does put the motion in doubt.

I accept that it could be somewhat confusing if Motion 2 were now deemed passed when it includes an area which has since been approved and registered as an exclusive use area. However, as this approval happened since Motion 2 was considered it is not a defect in Motion 2 itself. Moreover, I consider that the areas are sufficiently well known that there would be no difficulty in practice that would make the motion unenforceable.

Although not fatal to the motion, I also agree that the motion, or the explanatory note accompanying the motion, should have made it clear who would be responsible for the cost of preparing and registering the required new CMS, including preparing a new survey plan if required.

The Owners of Lot 4 object to the fact that Motion 2 does not refer to the cost and the quality of the works proposed in the exclusive use areas. I do not consider this is necessary as any such works must be separately approved. Motion 2 only provides for exclusive use rights. The granting of exclusive use does not, in the absence of specific words in the proposed by-law (which are not included here), automatically give rights to make any improvements of the nature contemplated. Any request for Body Corporate approval to make improvements to an exclusive use area, pursuant to section 174 of the Standard Module, should be the subject of a separate motion.

Any change to common property, such as the removal of walls, would be the subject of that separate motion and the cost and effect of that change would be considered at that time. Similarly, the requirement for Council approval to any change to the configuration of lots would need to be considered at the time of the motion considering the improvements. It may well be that, if applicable, motions could be approved on the condition that all necessary Council approvals are applied for and received. However I see no reason why Council approval must be given simply for the exclusive use areas themselves to be granted.

I do not accept the assertion from the Owners of Lot 4 that the areas in question are not inherently appropriate for exclusive use and that exclusive use rights are only intended for open areas or areas where there will be total ‘alienation’. There is no such restriction in the legislation and grants of exclusive use are commonly given for enclosed areas. By its nature, exclusive use grants are used so that an area is given solely to the use of one owner to the exclusion of all others. Even if an area is enclosed to become an extension of the internal part of the lot, the grant of exclusive use will in no way amount to the conversion of the exclusive use area to part of the lot. The area in question will remain common property, in common ownership of all owners[6].

Although not raised by the parties, I consider that the most substantive failing with Motion 2 is that it purports to include grant exclusive use rights to Lot 4 which the Owners of Lot 4 object to. While the Owners of Lot 4 did vote on Motion 2 (voting against it), they voted by voting paper. They were not physically present at the meeting and did not vote in person. They did not agree to the allocation in writing before the resolution was voted on. Because all the proposed allocations were included in a single motion, I am of the view that the absence of compliance with section 171(2)(a) of the Act in regard to the proposal allocations to Lot 4 is fatal to the entire motion.

It is not necessarily improper for all the proposed allocations to be included in one motion. But, given the different issues with different allocations, it may be preferable to have a separate motion for each area. I understand that this could give rise to concerns for some owners if they only intend to support allocations to other lots if the allocations to their lots are approved, however the passing of two allocations in September suggestions that this is not necessarily the case. If separate motions were considered, an individual motion could be ruled out of order if there was no prior written consent or a personal vote by the owners of the lot to which the exclusive use rights were to attach, without affecting the motions relating to other allocations.

Impacts on Lot 4

I am of the view that Motion 2 could not pass, because of the absence of consent or personal vote by the Owners of Lot 4 in respect of the proposed allocations to Lot 4. However, I will comment on the potential impacts of the allocations to give guidance to owners in the event that any of the proposed allocations are resubmitted to a future meeting. Expert opinions, for example from a registered architect, may be warranted if objections on some of these issues were maintained.

Firstly I note that the Owners of Lot 4 do not appear to object to several of the proposed allocations and it may well be that these areas could be progressed independently of the others. Secondly, I note that while Motion 2 was not actually outlining or seeking approval for the proposed improvements that could be made to the respective areas if exclusive use rights were granted, I do consider it is reasonable for the Owners of Lot 4 to have regard to the likely future use of and improvements to the areas when considering whether to consent to the grants of exclusive use. This is particularly the case when the improvements themselves can be approved with only an ordinary resolution.

Some of the concerns outlined by Lot 4 appear to be largely unfounded. Because exclusive use cannot be granted over utility infrastructure, the ‘spoon drain’ could not be part of the allocation as it appears to be utility infrastructure providing a utility service[7]. Therefore the Body Corporate would maintain responsibility for the maintenance of the drain. Similarly, under section 173(3) of the Standard Module, the Body Corporate would continue to have responsibility for maintaining the roof of any allocated area in structurally sound condition and any roofing membrane in good condition. Depending on the boundary of the specific allocation, it could be that owners could become responsible for maintaining roofs in good (rather than structurally sound) condition. However this could be clarified, if appropriate, by including provision in the by-law that the allocation did not include the roof area or that the Body Corporate would maintain responsibility for roofing structures. I am unclear from the material provided why the Owners of Lot 4 consider that Lot 3 would require an easement in regard to water on the roof – common guttering on the roof would be utility infrastructure and so could not be included in the grant of exclusive use rights.

One concern of Lot 4 is the loss of direct access to the external laundry and storage areas. The exact location of the external laundry is not shown on the plans provided to me but this may well be a valid concern. The applicant suggests that there will be alterations to the car park to facilitate this access. However the applicant has not described these alterations or provided any evidence that they have been discussed with the Owners of Lot 4. It may well be that there is a practical solution to this concern that could be negotiated between the parties. Regardless of the progress of the refurbishment plans, it may be that any concerns regarding an oily surface and soapy discharge in the car park are safety issues which should be addressed.

Based on the material provided to me to date, I have difficulty seeing how the extension of Lot 3’s second bedroom to the same extent as Lot 3’s main bedroom would have a significant detrimental impact on the view from, sunlight into or market value of Lot 4. Moreover I do not accept that the extension of Lot 3’s second bedroom would require them to extend Lot 4’s second bedroom.

The bedroom extensions in Lot 1 and 2 could potentially have some impact on filtered light entering Lot 4. It may be that an architect could provide advice on the real extent of any impact, ways in which the design of the extensions and/or the installation of skylights in Lot 4 could ameliorate this, and whether the concerns held by the Owners of Lot 4 regarding the privacy and resilience of skylights can be addressed. If skylights would resolve the problem, it may be that the cost of their installation could be negotiated between the affected owners.

From the information submitted I am unclear whether, given the orientation of the building, the proximity of adjacent structures, and the prevailing breezes in the area, any extension of Lot 3 towards the car park or the bedroom extensions in Lot 1 and 2 would materially effect airflow and ventilation. An architect may be able to provide advice on this and whether the design of the extensions or other solutions could address this. As it seems that other owners may not previously have been aware of any concerns regarding damp and mould outside Lot 4, it could be that an investigation of the actual cause of the problem could assist in determining the extent of the problem, whether it could be addressed, and whether it would be exacerbated by the proposed extensions.

Reasonableness of opposition in the circumstances

Section 276(1) of the Act requires an adjudicator to make an order that is just and equitable in the circumstances. Without limiting the orders that an adjudicator can make, Schedule 5 of the Act sets out a range of orders that an adjudicator may make. Item 10 specifically contemplates and adjudicator making an order to give effect to a motion, or a variation of a motion proposed, if a motion requiring a resolution without dissent was not passed because of “opposition that in the circumstances is unreasonable”. The applicant argues that the opposition of the Owners of Lot 4 was unreasonable and, conversely, the Owners of Lot 4 assert that their reasons were reasonable.

In a previous adjudication referred to by the Owners of Lot 4[8], Adjudicator P Dowling provided a summary of decisions regarding the test of ‘reasonableness’ in these circumstances:

“In Points North (paras 42 and 44) and Ocean Plaza Apartments[9] (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[10] (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’.[11] In this decision and in the decisions made to resolve disputes in Q1[12] and Allen Court[13], 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 Sirocco Resort[14], reasonableness in the context of withholding approval was considered by the specialist adjudicator who stated:

• In general terms ... provided there are objectively established circumstances showing potential reasons, there could be “sufficient reasons for withholding consent” (para 56).
  
• My own conclusion, reached from a consideration of relevant authority and principle, is that where there has been a constructive, implied, or deemed, decision of a withholding of consent/approval, it is open to a body corporate ... to still rely upon the objectively established circumstances at the time to glean the existence of reasons, although a Court, or Specialist Adjudicator, might be able, in particular circumstances, to more readily imply that the deemed withholding was unreasonable. But each case would depend on its own set of circumstances (para 59).
• The question of whether the body corporate’s conduct was reasonable or unreasonable is one of fact to be decided by the adjudicator (para 64).
• In determining whether the conduct was reasonable, it is not necessary to determine that it was either right or justifiable, if the conclusions which led to refusal of consent might have been reached by a reasonable person in the circumstances (para 66).
• The essence of a reasonable decision is that there are reasons for it which can be justified at some level (even if only by showing the reasons are genuine and not wholly fanciful), what is not required is for those reasons to be justified by reference to some objective standard of correctness (para 67).
• The Applicant has not discharged its onus of establishing that the deemed withholding of the Respondent’s approval ... was unreasonable, given the actual circumstances that existed ... and given the advice on which it could rely which had been placed before it (para 108).”
  

In the circumstances, I am of the view that the objections of the Owners of Lot 4 at the time, based on the proposals and level of information before them at the time, were objectively reasonable. While it may be that at least some of the concerns could (and can) be adequately resolved by open and constructive negotiation between the parties, the number and uncertainty of these issues at the time of the vote was, to my mind, enough basis for them to reasonably oppose the motion. On face value, I consider they were concerns that a ‘reasonable person’ could have held in the same circumstances and that they were not ‘fanciful’. Moreover, I consider it is entirely reasonable for an owner to oppose the grant of exclusive use rights which would attach to their own lot. It would be quite inappropriate for an adjudicator to deem a motion passed if that would have the effect of forcing exclusive use rights on an owner against their wishes.

Although the applicant refers to the plans being developed over several years, he does not provide evidence of any attempt to ascertain the objections of the Owners of Lot 4 following their opposition to the proposal in February 2008, or of attempts to address those concerns. Although the applicant and others may have made such attempts, in not describing or providing any evidence of them the applicant fails to demonstrate that the Owners of Lot 4 were objectively unreasonable in opposing the motion at the time.

However, my finding on this issue does not mean that the current objections (aside to objections to a grant of exclusive use rights for Lot 4) will always be reasonable. Owners may be able to negotiate modifications to the plans or other practical solutions to the substantive concerns. If this occurred, and motions in respect of each of the proposed allocations were resubmitted in future, it may be the case that continued objections could no longer be justifiable.

The applicant and others suggest that the opposition from the Owners of Lot 4 are preventing the necessary maintenance and upgrading of the scheme. I do not entirely accept this. The failure to approve exclusive use does not prevent the Body Corporate from agreeing to undertake necessary maintenance of common property. In fact, the Body Corporate has a legislative obligation to maintain common property in good condition. While I appreciate that owners may wish to take the opportunity to improve the appearance and amenity of the scheme, the failure to reach agreement on a scheme of improvements does not prevent maintenance proceeding.

I also have difficulty with the applicant’s claims that the same improvements are being planned for all units and that the effect on all units is the same. It seems clear that existing constraints in the scheme will affect what can be undertaken in each lot (for example, that Lot 5 and 6 cannot extend their second bedrooms) and that the effects of expansions with be different for different.

Conclusion

At this time, and on the material before me, I am not satisfied that the applicant has demonstrated that the opposition of the Owners of Lot 4 to Motion 2 at the EGM of 17 July 2008 was unreasonable in the circumstances. Moreover, I am of the view that Motion 2 could not pass because the motion sought, in part, to attach exclusive use rights to Lot 4 and the Owners of Lot 4 had neither consented to the proposal in writing nor voted personally in respect of the motion. For these reasons I have dismissed the application.

This decision does not necessarily mean that it would always be reasonable for the Owners of Lot 4 to oppose the proposed exclusive use allocations to other lots. If appropriate, owners should consider their options to pursue this matter. This may include submitting separate motions in respect of each of the proposed allocations, seeking expert advice on the impact of proposed improvements to the exclusive use areas, and undertaking constructive dialogue to ascertain if there are any modifications of the proposals or other solutions which would address any justifiable concerns of the Owners of Lot 4.

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[1] As of 30 August 2008 the new Standard Module came into force, replacing the Body Corporate and Community Management (Standard Module) Regulation 1997 which applied until that date.
[2] See sections 246 and 244 of the Act respectively
[3] See sections 227, 228, 276 and Schedule 5 of the Act
[4] Section 276(2) of the Act
[5] Section 284(1) of the Act

[6] Section 161 of the Act provides the alternative that the Body Corporate could choose to sell the areas in question to the respective owners.

[7] See section 20 of the Act regarding utility infrastructure that is common property, and the definitions in Schedule 6 of ‘utility infrastructure’ and ‘utility service’.
[8] One Park Road [2008] QBCCMCmr 3 (7 January 2008)

[9] Points North [2004] QBCCMCmr 423 (2 September 2004); Ocean Plaza Apartments [2004] QBCCMCmr 452 (23 September 2004)
[10] Zenith [2007] QBCCMCmr 115 (28 February 2007)
[11] Secretary, Department of Foreign Affairs and Trade v Styles (1989) 88 ALR 621
[12] Q1 [2007] QBCCMCmr 131 (8 March 2007).
[13] Allen Court [2007] QBCCMCmr 297 (21 May 2007).

[14] Sirocco Resort [2006] QBCCMCmr 426 (2 August 2006). This dispute did not give consideration to schedule 5(10). The decision related to the transfer of rights provisions in the Body Corporate and Community Management (Accommodation Module) Regulation 1997.