Q1 [2011] QBCCMCmr 24 (27 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0989-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	34498
Name of Scheme:	Q1
Address of Scheme:	9 Hamilton Avenue SURFERS PARADISE QLD 4217

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

the body corporate

I hereby order that the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0989-2010

“Q1” CTS 34498

Introduction

Ardent Leisure Limited is considering building a skywalk from its observation deck located at the top of Q1 to a point half way up the Q1 spire that extends above the building.

This skywalk will make use of areas of common property rooftop administered by the Q1 body corporate of which all owners of residential lots in Q1 are members. This application raises the question of whether owners of the residential lots have validly granted Ardent a right to use their common property rooftop area for the skywalk.

Owners resolved to permit the skywalk by a resolution passed at the annual general meeting on 15 December 2005. Generally speaking, any challenge to the validity of a resolution must be made within three months. However, an adjudicator may waive non-compliance with this time limit for good reason. As this application was not lodged until 25 October 2010, I will need to determine if there is good reason to waive compliance with this time limit. I will decide this question with reference to the Body Corporate and Community Management Act (Act), the applicable regulation module, and principles relating to an application for waiver of the time limit as stated by the District Court.[1]

The regulation module applying to the Q1 body corporate in 2005, when this resolution was passed, was the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Previous Module). However, owners of the Q1 body corporate have subsequently voted to change from the Accommodation Module to the Standard Module and the currently applicable regulation module is the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).

Overview

Q1 is Australia’s tallest building at 322.5 metres, including the spire. The Q1 observation deck is the highest habitable floor of the building at around 230 metres.

The initial basic subdivision of the site was into four lots under a volumetric subdivision. Lot 1 was formed from a large area at ground level on the western side as a location for retail shops (some small basement areas were included as part of lot 1). Lot 2 was a smaller area for retail shops on the ground level at the southeast end. Lot 3 was an area for an observation deck on levels 77 and 78 of the building (including some ground floor areas, some basement areas, and an area for the observation deck lift shaft). Lot 4 was the main lot encompassing the vast majority of the site. This lot 4 was subsequently subdivided into the residential lots and common property areas that comprise the Q1 Community Titles Scheme. Each purchaser of a lot in the Q1 Community Titles Scheme automatically became a member of the Q1 body corporate responsible for administering that scheme. However, owners of lots 1, 2 and 3 under the original volumetric subdivision did not become members of the Q1 body corporate as those lots were never part of the Q1 Community Titles Scheme.

A volumetric subdivision often results in entirely separate legal entities relying upon each other for access purposes and for shared utility infrastructure. It is common for these separate legal entities to register a building management statement that sets out the agreed terms for shared access and shared infrastructure. Ardent and the body corporate for the Q1 community titles scheme have entered into a building management statement. Under this building management statement, Ardent and the Q1 body corporate have agreed on a number of shared access rights. This includes Ardent permitting the Q1 body corporate to use its goods lift, erect signage on part of its ground floor area, and gain pedestrian access over part of its ground floor area. It also includes the Q1 body corporate permitting Ardent to have access to its common property driveway and loading bay, some common property ground floor areas, and some common property rooftop areas.

This dispute is about whether the Q1 body corporate has agreed to give Ardent access to its common property rooftop areas to build and use the proposed skywalk. Specifically, the current committee for the Q1 body corporate question the validity of a body corporate resolution of 15 December 2005. It is by this resolution that owners agreed to amend the building management statement to make parts of body corporate’s common property rooftop a shared area for the benefit of the owner of the observation deck lot.

Analysis

Jurisdiction

The application seeks a declaration about the validity of a body corporate resolution about the authorisation of the construction of a skywalk on the common property roof and the amendment of a building management statement to make the relevant area a shared area with the owner of the observation deck. Questions are raised about whether the resolution is invalid because the voting paper failed to state the type of resolution required (Previous Module, 40A(4)(b)), the resolution failed to comply with requirements for the making of improvements to the common property (Previous Module 112, 113), or the resolution failed to comply with the requirements for the licensing of common property (Previous Module, 110).

I am satisfied the application is a declaratory dispute about an alleged contravention of the Act and about the exercise of powers under the Act (Act 227(2), 228). This dispute therefore falls within the exclusive jurisdiction of the procedures established under the Act (Act, 229).

Procedural matters

Following the procedures established by the Act, the Commissioner has invited all owners in the Q1 body corporate to provide written submissions regarding the application (Act, 243(4)). The Commissioner has also given Ardent an opportunity to provide submissions. This is because Ardent is a person directly and materially affected by the application, even though Ardent is not an owner in the Q1 body corporate that passed the resolution in question (Act, 243(1)(c)).

Owners who have made submissions are Mr Clark, Ms Bale, Ms Fletcher, Mr Di Nunzio, Mr McCarthy, Mr Dickens and Mr Thiang. Ardent has also made a submission.

Principles regarding waiver of time limit

This application was lodged nearly five years after owners resolved to allow the owner of the observation deck to build a skywalk on the Q1 rooftop. An application seeking to declare void a body corporate resolution normally needs to be made within three months of the resolution being passed (Act, 242). However, for "good reason", an adjudicator may waive an applicant’s failure to comply with this three month time limit.

The legislation does not set out exactly what will constitute a good reason for waiving this three month time limit. The apparent purpose of the legislation is to provide a reasonable period of time for someone to challenge the validity of a resolution while providing some certainty for people who subsequently rely upon the minutes of meeting as providing a record of valid decisions of the body corporate. In deciding whether to waive this time limit it is relevant to balance the length of the delay, the reason for the non-compliance, the effect of the delay and the entitlement of the applicant to the relief sought.[2]

Should the time limit be waived?

Length of delay

The delay of nearly five years in challenging the validity of the resolution is significant. That delay is nearly twenty times longer than the allowed period.

Reason for non-compliance with time limit

The reason given by the body corporate for not challenging the resolution earlier is that the committee only became aware in the last few months that Ardent intended to act upon the resolution and erect the skywalk.

However, some future intention of an owner of the observation deck to act upon the resolution must be inferred simply from the owner submitting the motion for consideration. If any owner had strong doubts about the validity of the resolution at the time it was initially passed then it would seem logical to challenge the resolution immediately rather than wait and see what happened regarding the practical steps required for building the skywalk. This failure to challenge the resolution at the time appears to have led to the receivers and managers for the previous owner of the observation deck being able to sell the lot on the basis that future construction and use of the skywalk had been approved by the Q1 body corporate.[3]

Further, it is not correct that an intention to act upon the resolution only became apparent in the last few months. The body corporate is a member of the building management group and was represented at a meeting of 10 August 2006 in which discussions about the proposed Deed of Indemnity are prominent in the minutes. Further, the resolution was partially put into effect in May 2007 by the recording of a new building management statement incorporating the changes proposed by the resolution. Finally, it seems likely the body corporate was aware of Ardent’s proposal to proceed with the skywalk at least six months before the present application was lodged. I have reviewed notes of a meeting on 29 March 2010 between the general manager of the observation deck and the person who was chairperson of the Q1 body corporate at the time. Even this delay of more than six months is significant in light of the evidence provided by Ardent about the steps it has since taken to progress this project.

Effect of delay

Ardent became the owner of the observation deck in December 2009. Ardent says it relied upon the ability to gain value from the proposed skywalk in deciding to purchase the observation deck. Ardent also says that both Ardent and the previous owner of the observation deck spent significant amounts investigating the options and possibilities for the skywalk. I accept these submissions and am satisfied that waiving the body corporate’s non-compliance with the time limit could potentially cause substantial financial detriment to Ardent.

Entitlement to relief sought

The first argument about the validity of the resolution is technical. The motion included on the voting paper appears not to have listed the type of resolution required. This would amount to a failure to comply with the regulation module that applied at the time (Previous Module, 40A(4)(b)). However, the relevant provisions of the modules, as with the traditional rules of meeting procedure, do not appear to be intended as a series of mandatory rules that invalidate all of the proceedings of the meeting if one essential step is not followed.[4] The courts have commented that non-compliance with the regulations of an insubstantial nature should not be allowed to imperil the actions of bodies corporate or their committees.[5] In fact, the District Court has previously referred to a voting paper incorrectly specifying the motion required as "an irregularity of the most technical nature".[6] It seems unlikely the body corporate would successfully establish that the resolution should be declared void simply because the voting paper omitted the type of resolution required.

The second argument is substantive. The resolution was adopted with 110 votes in favour and 9 votes against. Based on the minutes, it was treated as an ordinary resolution but would easily have passed as a special resolution.

The construction of the skywalk itself involves an improvement to the common property of the body corporate. As there is to be no cost to the body corporate for this construction, no particular form of resolution would be required (Previous Module, 112). From the submissions and plans provided, it seems likely that the proposed skywalk will make some small areas of the common property to which it is attached inaccessible but will generally improve accessibility to a number of areas of the common property and make maintenance easier. The material indicates this improvement to the common property would not be granted to the exclusive use of any party and, in that sense, allowing the skywalk to be built would not appear to amount to a disposition of the common property.[7]

The substantive concern is that the accompanying amendment to the building management statement amounts to the grant to the owner of the observation deck lot of a continuing licence of those areas of common property upon which the skywalk is built. A building management statement is, in essence, a contract between adjacent lot owners within a volumetric subdivision. Some amendments to this building management statement could presumably be made with the authority of a committee resolution. However, a resolution without dissent would have been required for the body corporate to licence use of common property for more than ten years (Previous Module, 110). There is a strongly arguable case that making parts of the rooftop a shared area under the building management statement does amount to the grant of a continuing licence. This in the sense of the licence not creating any interest in land but simply permitting invitees of the observation deck to enter upon those nominated areas of the common property, this being an activity that would otherwise amount to a trespass.

I am therefore satisfied that if the application was made within the time limit, the body corporate would have had strong arguments that the resolution should be declared void.[8]

Conclusion

In light of the factors above I do not consider there is good reason to waive non-compliance with the three month time limit. Despite the strong argument that the resolution resulted in the grant of a continuing licence that would have required a resolution without dissent, it would defeat the apparent purpose of the legislation to create uncertainty by questioning the validity of the resolution so long after it was passed. This is particularly where no good reason was provided for the delay and the effect of the delay has resulted in a third party relying on the resolution in question.

Other matters

Some owners have raised specific concerns about the proposed skywalk in their individual submissions. Some concerns are raised about the skywalk obstructing legitimate access to the rooftop. However, the creation of shared areas under the building management statement only gives Ardent non-exclusive usage rights. Access to the skywalk by the body corporate for legitimate maintenance purposes might reasonably be expected to take priority over any access by Ardent. It is also possible that the erection of the skywalk will actually facilitate safe access for the purpose of body corporate maintenance.

Other concerns relate to the potential for noise and disturbances. These matters do not affect the validity of the resolution in question. However, the common law would appear to provide some protection against these matters even if section 167 of the Act did not apply because the observation deck is not a lot within the Q1 body corporate. I also expect there are a number of issues upon which it would be mutually beneficial for Ardent and the body corporate to cooperate upon. If owners are concerned about issues such as the implementation of suitable guidelines to minimise noise and disturbances then it may be beneficial to ask the committee to raise those issues with Ardent.

I note that the building management statement requires the owner of the observation deck to maintain a public liability insurance policy for at least $20,000,000 per occurrence in the names of the owner and of the Q1 body corporate. It does seem unusual that the body corporate consented to the new building management statement before finalising the deed of indemnity that was also proposed in the resolution in question. However, this does not alter any of the above conclusions. Presumably this would be another issue upon which it might be mutually beneficial for Ardent and the body corporate to negotiate upon.

Conclusion

Now more than five years after it was passed, there is no good reason to revisit the validity of the resolution allowing for the construction of a skywalk and creation of shared areas on the rooftop.

Owners could have challenged the validity of the resolution at the time. Even if the resolution should have been passed without dissent, failure to challenge the resolution at the time deprived the owner of the skywalk of the opportunity to renegotiate the proposal with those owners who voted against the skywalk. Allowing the receivers and managers to sell the observation deck to a third party prior to any challenge to this resolution raises even greater concerns regarding the waiver of the time limit.

I will dismiss the present application on the basis that I am not satisfied that I should waive the non-compliance with the time limit for challenging the validity of the resolution. However, owners with genuine concerns about the skywalk proposal may wish to raise those concerns with the committee given the likelihood that the committee and Ardent might find it mutually beneficial to enter into some negotiations regarding the proposed construction of the skywalk.

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[1] Weeks v Commissioner for Body Corporate, Dodds DCJ, District Court (Maroochydore), Appeal 13/1999, 20 September 1999.
[2] Weeks v Commissioner for Body Corporate, Dodds DCJ, District Court (Maroochydore), Appeal 13/1999, 20 September 1999.
[3] See Information Memorandum, August 2009, prepared by Ernst & Young.
[4] Refer Johnson v Beitseen (1989) 41 IR 395 at 415.
[5] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.
[6] Stainlay & Anor v Body Corporate Port Douglas Road Community Title Scheme 24368 at paragraph 11.
[7] Contrast with Katsikalis v Body Corporate for “The Centre” [2009] QCA 77 at paragraphs 25 to 28. See also Monterey Lodge [2009] QBCCMCmr 171.
[8] Although, as argued by Ardent, even if the resolution was initially void the body corporate could still be bound by a subsequent ratification or as a result of Ardent being a bone fide purchaser for value.