Caloundra Gardens [2011] QBCCMCmr 30 (31 January 2011)

Last Updated: 21 February 2011

REFERENCE: 1063-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27236
Name of Scheme:	Caloundra Gardens
Address of Scheme:	Beerburrum Road CALOUNDRA QLD 4551

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

Mr. Geoffrey Summers, the owner of lot 39

I hereby order that the application for an order invalidating motion 8 passed at the AGM of 16 November 2009, which reads “Resolved that by ordinary resolution we officially become an over 50’s village”. Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1063-2010

“Caloundra Gardens” CTS 27236

Application

Caloundra Gardens is a 75 lot scheme on a Group Title plan (now referred to as a standard format plan) and is regulated by the Body Corporate and Community Management (Standard Module) Regulation 2008.

The applicant is the owner of lot 39 in the scheme and seeks an order of an adjudicator to invalidate motion 8 passed at the AGM of 16 November 2009, which reads “Resolved that by ordinary resolution we officially become an over 50’s village”.

Background

The applicant states that the scheme has operated for the last 23 years on the understanding that it is a Retirement Village and it is therefore legal to impose a restriction on the age of persons residing in the scheme. The applicant further states that there has been no statutory change to the age discrimination provisions that would impact on Caloundra Gardens Village and there have been no court determinations that would affect the position. The applicant therefore believes that this resolution was unnecessary and leads to the conclusion that prior to the making of the resolution on this motion, Caloundra Gardens Village was not officially an age 50+ facility.

The applicant believed that the motion put to the AGM was based on the incorrect supposition that Caloundra Gardens was not an “over 50’s” facility and therefore the resolution should be declared invalid. He believes that a change in the status of the village requires a decision by a special resolution at a general meeting and that the resolution is therefore invalid. The applicant goes on to state that “It is untenable for such a decision to be made without due notice to lot owners and determined by a majority of the 75 owners. (32 votes does not constitute a majority)”.

Previously, a restriction upon the age of purchasers was enforced by means of a lease and sub-lease entered into by each lot owner with the scheme operator at the time of purchase. Under the sub-lease, occupation of units was limited to persons over the age of 50 and the scheme operator ostensibly had the ability to remedy breaches of the age covenant.

Leaving aside the question of whether the lease and leaseback arrangement was valid, I note that these agreements were rescinded by agreement between the operator and lot owners in 2007.
With the departure of the scheme operator, the body corporate has assumed responsibility for the operation of the village but it would seem, has been unable or unwilling to impose a restriction on the age of owners and / or occupiers.

It is alleged that people under the age of 50 are now taking up residence in the scheme because the body corporate manager is acting on the belief that Caloundra Gardens is not entitled to discriminate on the basis of age and potentially, could be sued for discrimination if it sought to impose a restriction on the age of residents. The applicant states that as it is illegal to include an age restriction in the by-laws, “implementation of administrative arrangements within the legal framework of BCCM to enable it to enforce its lawful age 50 mandate” is necessary.

Further submissions made by the applicant in support of the application include the following:

• From the time of commencement of the scheme in 1986 until March 2007 an age restriction of 50 years applied to occupancy of units in the scheme;
• Although “lease- back” and “sub-lease” documents are no longer in existence, he believes that owners remain bound by a covenant not to sell to a person under the age of 50 years;
• The Anti-Discrimination Act exempts retirement villages from age discrimination;
• As Caloundra Gardens Retirement Village is already adequately covered by amalgamation of earlier Acts and the Retirement Villages Act 1999, together with the village’s accepted status as a retirement village for over 20 years, minimal action is required;
• It would be an expensive exercise to seek registration under the Retirement Villages Act and there would be on-going compliance costs;
• If registered under the Retirement Villages Act , it would be necessary to nominate a scheme operator. In this scheme the operator would be the body corporate;
• Alternatively the body corporate could direct the body corporate manager to operate the scheme as directed, including provision of a disclosure statement to potential purchasers of lots in the scheme, stating that occupancy is restricted to persons over the age of 50 years.
  

Submissions

Pursuant to section 243 of the Act, all lot owners and the body corporate committee were afforded the opportunity to make submissions.

In total 12 submissions were received including 10 submissions in substantially the same format.
These submissions included the following:

• They support the application and statements made by Mr. Summers regarding the status of the village as an “over 50” village;
• Over the last 23 years units have been purchased on the understanding that there is a mandatory minimum age requirement. There has been no court decision or statutory change to alter that position;
• It is essential that the body corporate maintain the age restriction and put in place necessary administrative arrangements to authorise enforcement;
• While it was always intended that residents of the scheme would be at least 50 years of age, there are now numerous owners and/or occupiers who are below the age of 50;
• Due to the uncertainty as to the validity of the age restriction the body corporate manager has been reluctant to discriminate on the basis of age and real estate agents having been re-selling lots on the open market so that the units are now occupied by people of all ages.
  

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)).

Determination

The applicant is the owner of lot 39 in the scheme and seeks the following final outcome:

An order of an adjudicator in relation to the validity or otherwise of motion 8 passed at the AGM of 16 November 2009, which reads “Resolved that by ordinary resolution we officially become an over 50’s village”.

It is evident that the scheme was established in the mid 1980’s and marketed as a scheme for “Over 50’s in Retirement” in close proximity to a private hospital and nursing home. It is also evident that like many title-based schemes marketed to retirees in the 1980’s, a restriction upon the age of purchasers was enforced by means of a lease and sub-lease entered into by each lot owner with the scheme operator at the time of purchase. Under the sub-lease, occupation of units was limited to persons over the age of 50 and the scheme operator ostensibly had the ability to terminate the sub-lease in the event that an occupier breached a term of the sub-lease.

While the developer’s advertising material stated, or implied, that the scheme was a retirement village, the scheme was never registered (or exempted) under the Retirement Villages Act 1988 or the subsequent Retirement Villages Act 1999. I have verified with staff of the Office of
Fair Trading Department of Employment, Economic Development and Innovation, which administers the Retirement Villages Act 1999, that the scheme is not registered.

In this regard it is useful to briefly refer to Retirement Villages Act 1999 (RVA).

Section 5 of the RVA defines a retirement village in the following terms:
(1) A retirement village is premises where older members of the community or retired persons reside, or are to reside, in independent living units or serviced units, under a retirement village scheme.

Section 7 of the RVA defines a retirement village scheme in the following terms:
A retirement village scheme is a scheme under which a person--
(a) enters into a residence contract; and
(b) in consideration for paying an ingoing contribution under the residence contract, acquires personally or for someone else a right to reside in a retirement village, however the right accrues &
(c) on payment of the relevant charge, acquires personally or for someone else, a right to receive 1 or more services in relation to the retirement village

Section 26 provides:
Certain age restrictions on residence not unlawful
Despite the Anti-Discrimination Act 1991, it is not unlawful for a scheme operator to discriminate on the basis of age if the discrimination merely limits residence in a retirement village to older members of the community and retired persons.

Section 24 provides:
Application of Body Corporate and Community Management Act 1997
If there is an inconsistency between this Act and the Body Corporate and Community Management Act 1997 in relation to a person's rights and obligations under a retirement village scheme, this Act prevails to the extent of the inconsistency

Section 34 provides:
Offence to operate etc. an unregistered retirement village scheme
(1) If a retirement village scheme is not registered, the scheme operator or proposed scheme operator must not--
(a) operate the scheme; or
(b) induce or invite a person to participate in the scheme by--
(i) residing in the retirement village to which the scheme relates; or
(ii) paying an ingoing contribution; or
(iii) doing another act in relation to the scheme; or
(c) use a document, or publish an advertisement, to induce or invite a person to participate in the scheme by--
(i) residing in the retirement village to which the scheme relates; or
(ii) paying an ingoing contribution; or
(iii) doing another act in relation to the scheme; or
(d) extend an existing retirement village.
Maximum penalty--540 penalty units.

Under the Retirement Villages Act 1999 it is lawful for a retirement village to discriminate on the basis of age if the discrimination merely limits residence in a retirement village to older members of the community and retired persons. However, it also follows that if the premises are considered to constitute a “retirement village”, then the scheme should be registered with the appropriate Government Department (Department of Employment, Economic Development and Innovation).

While each lot in the scheme was previously subject to a lease to Peter Anna Pty Ltd. and a sub-lease back to each individual lot owner, there was a mechanism available to enforce the age restriction, notwithstanding that the scheme had not been registered under the Retirement Villages Act 1999. However since termination of these contractual arrangements, there has been no legally enforceable means of maintaining an age restriction and therefore, it has become necessary for the body corporate to consider what needs to be done to ensure that future purchasers or occupiers of lots are over the age of 50.

Minutes of AGM held on 16 November 2009 state that 32 owners were present in person or by way of voting paper and it was resolved that “by ordinary resolution we officially become an over 50’s village” . I note that the motion was carried, with 24 votes for, 4 votes against and 4 abstentions. I have also confirmed that the copy of the Notice of Annual General Meeting was issued on 19th October 2009 and subsequently amended to include additional motions including the above motion.

I have perused the Minutes of a subsequent committee meeting on 22/4/2010 and note that

• Munro Thompson (Lawyers) provided the committee with information regarding the process of registering the complex as a retirement village. The meeting noted this advice and agreed that a meeting with Peter Porcellini from Munro Thompson would be necessary. It was agreed that copies of all documentation obtained by Munro Thompson Lawyers, from Sunshine Coast Regional Council, should be obtained and reviewed by the committee; and
• in relation to the over 50 age restriction, “the committee will be further investigating the body corporate’s options with regard to ensuring that the complex is an over 50’s community”.
  

Finally, I refer to the applicant’s statement that “a change in the status of the village under the legal framework of BCCM requires that such decision be resolved by special resolution”.
There is no provision to this effect in the Act, although I note that subsection 62(3) provides that a change of regulation module (e.g. from standard module to accommodation module) requires consent by the body corporate in the form of a special resolution. For the purposes of the BCCM Act the requirements are set out in section 106 as follows:

• at least two thirds of the votes cast are in favour of the motion; and
• the number of votes counted against the motion are not more than 25% of the number of lots included in the scheme; and
• the total contribution lot entitlements for the lots voting against the motion is less than 25% of the total contribution lot entitlements
  

I would also point out that in any event, under section 242 of the Act , an application to challenge a resolution of the body corporate should be made within 3 months of the making of the resolution.

I believe that the body corporate is entitled to make inquiries regarding registration under the Retirement Villages Act 1999 to ensure that any restriction upon the age of owners or occupiers is valid and legally enforceable.

The application is therefore dismissed.