Gorrie [2011] QBCCMCmr 38 (8 February 2011)

Last Updated: 18 March 2011

REFERENCE: 0789-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	4335
Name of Scheme:	Gorrie
Address of Scheme:	Cnr Herron Street & David Low Way PEREGIAN BEACH QLD 4573

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

Ermelo Pty Ltd, the owner of Lot 2 and Neil Gorrie and Janet Olarenshaw, the owner of Lot 3.

I hereby order that the application for the following orders That motion 2 passed by the body corporate at an extraordinary general meeting on 23 July 2010 is void insofar as it approves the construction on common property by the owner of lot 4 of a new stairway in the common property walkway area between lots 3 & 4. That any improvements on common property by the owner of lot 4 constructing a new stairway on common property between lots 3 and 4 be removed. Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0789-2010

“Gorrie” CTS 4335

The scheme

“Gorrie” community titles scheme 4335 is regulated by the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Commercial Module) Regulation 2008 (Commercial Module).

Application

This application, made on 19 August 2010 by Ermelo Pty Ltd, the owner of Lot 2 and Neil Gorrie and Janet Olarenshaw, the owner of Lot 3 (Applicants) against the Body Corporate seeking the following final outcomes:

That motion 2 passed by the body corporate at an extraordinary general meeting on 23 July 2010 is void insofar as it approves the construction on common property by the owner of lot 4 of a new stairway in the common property walkway area between lots 3 & 4.

That any improvements on common property by the owner of lot 4 constructing a new stairway on common property between lots 3 and 4 be removed.

The applicants are of the view that motion 2, passed by the body corporate at an extraordinary general meeting on 23 July 2010 is void as it approves the construction of a new stairway on the common property walkway area between lots 3 and 4, by the owner of lot 4. The applicants do not oppose the approval for a new roof over the existing deck on lot 4 and for raised walls to the height of the new roof.

Motion 2 read as follows:

IMPROVEMENTS TO COMMON PROPERTY BY THE OWNER OF LOT 4

Ordinary Resolution proposed by Mr R Rogers – Lot 4

That the body corporate approve the construction of the following improvements on the common property by the owner of lot 4-

• A new stairway in the common property walkway area between lots 3 & 4 which will involve the relocation of the keyboxes used by the occupier of lot 3, and
• A new roof over the existing deck on lot 4 and raised wall to the height of the new roof;
  

As shown on the plans attached to the motion, subject to the following conditions-

• The construction of the improvements is to be completed at the expense of the owner of lot 4;
• The owner of lot 4 shall obtain all necessary approval from the local Council (if required) and comply with any relevant fire and/ or building regulations applicable to the construction;
• The construction of the improvements shall be carried out in a proper and workman like manner by an appropriately qualified tradesman carrying appropriate insurance (evidence of which must be provided to the body corporate upon demand);
• The improvements are to be constructed of good quality materials and in accordance with the plans supplied by the body corporate;
• The owner of lot 4 will be responsible for the repair and maintenance of the improvements, and;
• The owner of lot 4 will take out and maintain at all times public Liability insurance with respect to the use of the improvements (evidence of which must be provided to the body corporate upon demand).

(Meeting note: At the request of the owner of lots 1 & 4 this motion was decided by a poll vote which determines the result of the vote by the number of Contribution Lot Entitlements for and against the Motion.)

The scheme consists of an older building which was subdivided by means of a building unit plan in 1991 and consists of 4 lots and common property. Each lot has a shop front on level A, (ground floor) while lots 1, 3 and 4 also have a second level, referred to as level B on the building unit plan.

Access to the second level of lot 3 is by means of a narrow internal staircase, while current access to the second level of lot 4 is by means of an external staircase at the rear of the building. There is currently a 2.4 metre wide walkway at street level, which provides access to common property toilets at the rear of the building. The walkway was previously open but is now closed off with a hinged lattice-work gate. The respondent proposes to replace the gate with hinged glass doors and to complete the staircase inside the walkway. The applicants state that the effect of the proposed staircase is to halve the width of the walkway and to reduce it to “single person access”.

The construction of the staircase on common property has been treated as an improvement to common property by the owner of lots 1 & 4 pursuant to section 120 of the commercial Module. The applicants are the owners of lot 2 (with a lot entitlement of 1) and lot 3 (with a lot entitlement of 2). The respondent is the owner of lot 1 (with a lot entitlement of 3) and lot 4 (with a lot entitlement of 2). The relevant motion was carried by means of a poll vote (5 to 3).

However, the applicants believe that the improvements will be for the exclusive use of the owner of lot 4, which requires a resolution without dissent. They refer to the Court of Appeal decision in Katsikalis v Body Corporate for “The Centre” [2009] QCA 77 and in particular, the following paragraph in the judgement of Douglas J. at paragraph 32: “It is important that the rights to common property of bodies corporate are not removed unheedingly or inadvertently and to the detriment of their members. That is why the rules require such resolutions to be passed without dissent. That the infringement on those rights is relatively trivial in this case does not excuse what occurred. The principle is significant.”
That case involved an extension to the bulkhead of a shop so that it aligned with the bulkheads of adjoining shops. The court regarded this as a grant of exclusive use of common property and as it was not approved by a resolution without dissent, the purported resolution was held to be invalid.

The applicants also refer to the following passage from the decision of the adjudicator in Fountain View [2004] QBCCMCmr: “If the improvement proposed is such as to amount to an annexation or alienation of part of the common property such that other owners are precluded from using and enjoying that part of the common property, then it may be concluded that the improvement requires authorisation by way of a by-law granting exclusive use of the common property by the owner proposing the improvement.”

Pursuant to section 243 of the Act, the respondents were invited to make submissions regarding the final outcomes sought by the applicant.

Submissions made on behalf of the respondent included the following:

• The building is over 40 years old and renovations have recently been undertaken to lots 1 and 4. As part of the renovations, the respondent has engaged a builder to modernise the walkway and construct a staircase in the walkway area;
• At an EGM held on 23 July 2010 it was resolved by ordinary resolution to approve the staircase as an improvement to common property;
• The applicants have failed to provide any reason why the works should not be approved;
• The building is over 40 years old, is poorly designed, and was constructed when there were minimal requirements regarding fire safety or workplace health and safety;
• Until recently the building was in a derelict state which impacted on the value of all lots and made them difficult to rent;
• The definition of “improvement” in the BCCMA includes:
  • - erection of a building;
  • - a structural change; and
  • - a non-structural change.
• Unlike the Standard Regulation Module and Accommodation Regulation Module, the Commercial module requires only an ordinary resolution to approve the making of an improvement to common property. Therefore, the motion carried by ordinary resolution on 23 July 2010 is sufficient authority for Ralph Rogers to construct the stairway on common property;
• The respondent does not require exclusive use of the subject area and the stairs may be used to access lot 3 if the current or future owners/ occupiers of lot 3 would like to use them.
• The stairs will not be locked off to prevent access by occupiers of other lots as these stairs are intended to serve the same function as the existing external access stairs to lots 1 and 4 which are on common property and for which exclusive use has not been granted;
• The applicants have not explained how the stairway would prevent their use or enjoyment of the common property;
• The walkway is currently used to access the toilet block but has become dilapidated. He stairway will not obstruct access to the rear of the property through the walkway which will still exceed the minimum legal requirements for a corridor and would not prevent their use or enjoyment of the common property;
• Lots 2 and 3 do not have windows or doors opening onto the walkway so the works will not impact on the use of their lots or access to natural light or air flow;
• In the case Katsikalis v The Centre [2009] QCA the improvement in question was to be enjoyed exclusively by the lot owner;
• The intended stairs will provide access to lot 4 but could also be used to access the second level of lot 3 if required. Although the current owner has declined this offer;
• The only reason for enclosing the staircase is to prevent unauthorised access from outside the building and all occupiers will be able to access the stairway by using their common key which is also used to access the common toilet block;
• In any event, if a resolution without dissent was required it would be unreasonable to oppose the subject motion;
• The proposed works will improve the scheme as a whole by providing a long overdue refurbishment of the walkway and creation of a proper foyer building. Applicants will also obtain a benefit at the respondent’s expense;
• Being a commercial building, the owners are required to comply with workplace health and safety laws and fire safety regulations. It is important to provide an exit from the upper level to the road at the front of the property.
  

Submissions made in response on behalf of the applicant included the following:

• The common property toilets must be available for the use of all occupiers and visitors to the scheme;
• The applicant considers that a resolution without dissent is required;
• Despite the applicants’ objections, the respondent proceeded with construction of the staircase;
• An improvement to common property does not become part of the common property. The stairway provides access to lot 4 only and lot 3 does not require access to the staircase.
• In order to use the staircase it would be necessary to go through lot 4;
• They do not believe that the works will improve the scheme or create a “proper foyer”.
  

Final submissions by the respondent included the following:

• They had already commenced the subject works before the application was made;
• The owner of lot 3 would be able to use the stairway to access the upper level of lot 3 by making a doorway through the wall. The respondent has offered to transfer of allow access through his lot to enable the occupants of lot 3 to use the stairway;
• The builder who is undertaking the work has advised that the lot 3 internal stairs do not comply with current fire safety standards so it is likely that the present or future owner of lot 3 may wish to use the new staircase to upgrade the fire safety of lot 3;
• The tenants of all lots in the scheme approve of the works and believe it will improve the aesthetics of the building as well as enhancing the safety and security of people working in the building.
  

Jurisdiction

The application evidences a dispute between an owner of a lot included in a community titles scheme and another owner of a lot included in the scheme (section 227(1)(a) of the Act).

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.

Determination

The applicant previously sought and obtained an interim order requiring the respondent to immediately cease work on construction of the stairway. As explained at that point in time, the interim order was made to maintain the status quo until the matters in issue could be considered in detail and final orders made:

To gain a full appreciation of the circumstances of this case, I perused the Building Units Plan as well as the architectural plans for the renovations, and conducted an inspection of the site on 1 February 2011. The building is located on the corner of the David Low Way and Heron Street, Peregian Beach. It consists of a 1960’s brick building which was subdivided by means of a building unit plan in 1991. Each of the 4 lots has a shop front at street level, while lots 1, 3 and 4 also have a second level. Lots 3 and 4 face the David Low Way, and at street level, are separated by a common property walkway which is 2.4 metres wide. Access to the second level of lot 3 is by means of a narrow internal staircase, while current access to the second level of lot 4 is by means of an external staircase at the rear of the building. A toilet block is located on common property at the rear of the building. At present, occupants of lots 2 & 3 need to go out onto the footpath and down the walkway in order to access the toilet block. Similarly, occupants on the upper level of lot 4 need to use the external staircase at the rear to access the toilet block.

The builder has partially completed the installation of the staircase, which is 114 centimetres wide, so that the walkway is now 116 centimetres wide. It is proposed to place hinged aluminium and glass doors at the doorway entrance to replace the existing latticework gate. While the staircase currently services only lot 4, the owner of lot 3 would be able to access the staircase by making a doorway through the rear wall. Following installation, there is a small section of lot 4 to the left of the staircase. The respondent has offered to transfer, or to allow access through this section (approx 750mm wide by 1.2 metres long) to lot 3, so that the occupiers of lot 3 can also use the staircase.

The question that arises for my consideration is whether the construction of the staircase involves an improvement to common property, or a grant of exclusive use. Common property is owned by all owners of lots in the scheme as tenants in common (section 35). Further, all lot owners and occupiers are entitled to reasonable use and enjoyment of common property. Indeed, section 167 prohibits an occupier of a lot from acting in a way which interferes unreasonably with the use or enjoyment of the common property by a person who is lawfully on the common property.
In Platt v Ciriello[1] the Queensland Court of Appeal held that each owner may exercise his general proprietary right to use common property so long as it does not interfere unreasonably with another’s use of their lot or the common property.

Clearly, the body corporate can authorise an owner to make an improvement on common property for the benefit of the owner’s lot. Section 120 of the Commercial Module Regulation provides as follows:
120 Improvements to common property by an owner of a lot
(1) The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner's lot.
(2) An authorisation may be given under this section on conditions the body corporate considers appropriate.
(3) The owner of a lot who is given an authority under this section--
(a) must comply with conditions of the authority; and
(b) must maintain the improvement made under the authority in good condition, unless excused by the body corporate.

An authorisation obtained pursuant to section 120 of the Commercial Module is appropriate where an owner seeks to make an improvement that is unlikely to interfere with another’s use of the common property. On the other hand, the use of a common property area in a manner which excludes other occupiers, may effectively involve an alienation of the relevant area of common property for personal use[2] and involve an exclusive use for which a resolution without dissent is required.[3]

While the staircase is primarily for the benefit of lot 4 at this point in time, the (owner of lot 4) has indicated that he does not require exclusive use and states that the applicants are welcome to also use the internal stairway if they wish to create a new entry point for lot 3.

In this regard I note that the following advice has been received from the builder undertaking the renovations: “The original brief from the owner of lot 4 was to enable access to both lots 3 & 4 and any associated works to achieve this. Part of the works comprise the construction of a new set of entry stairs/ fire escape from the ground floor to the first floor of the Gorrie Building. The stairway has been positioned in an existing walkway and access to both lot 3 and 4 can be achieved via the new stairway. The original walkway was used to access the M/F toilets at the rear of the building and rear entry to Wahoo Seafood restaurant. The construction of the new stairway has not changed the ability to access all of these areas as before. To achieve the installation of the stairs to access unit 4, a small amount of structural work was required. A similar amount of work will be required to install the new stairway/ Fire Escape to unit 3, but if this work is completed it will ensure proper escape in case of a fire. The existing internal stairs to unit 3 do not comply with the current fire escape laws.”

The occupiers of lots 1 and 4 have stated that the existence of the stairway does not impede their use of the walkway and renovations to the stairway will improve the safety of tenants using it. I am also aware that occupants of lots 2 & 3 have indicated to the applicants that they support the renovation work. It is evident that female staff have concerns regarding the current arrangements they have to make use of a darkened the walkway in order to access the toilet facilities.

On balance, I am of the view that while the installation of the stairway provides a benefit to the occupiers of lot 4, it does not involve a grant of exclusive use. The respondent has indicated that he has no objection to lot 3 making use of the staircase should they choose to create a rear entry to the upper level of lot 3. Further, it is evident that although the passageway is now 114 centimetres wide, this is sufficiently wide for use as a walkway and current occupiers have stated that the presence of the stairwell does not impede the continued use of this thoroughfare.

Finally, I would point out that even if the applicant did require a grant of exclusive use, my decision would be no different. While a resolution without dissent is required to effect a grant of exclusive use, subsection 94(2) of the Act provides that the body corporate must act reasonably in anything it does under subsection 94(1). In this regard an adjudicator is able to exercise a degree of discretion an adjudicator is entitled to make orders which include those orders specified in Schedule 5 to the Act which include the following:

If satisfied a motion considered by a general meeting of the body corporate and requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable – an order giving effect to the motion as proposed or a variation of the motion as proposed.

The test to be applied in determining whether an action was “reasonable” is an objective one, requiring a balancing of factors in all the circumstances according to the ordinary meaning of the term: Secretary, Department of Foreign Affairs and Trade v Styles ([1989] FCA 342; 1989) 88 ALR 621 (see also McKinnon v Treasury [2006] HCA 45 per Hayne J at p61).
On an objective consideration of the circumstances I believe that the opposition to the motion was unreasonable for the following reasons:

• The owner of lot 3 would be able to use the stairway by making a doorway through the wall. The respondent has offered to transfer a small section of lot 4, or allow access through his lot, to enable the occupants of lot 3 to use the stairway. This would enable occupiers to access toilet facilities without going out onto the footpath and down the walkway as at present;
• After installation of the stairway, the walkway is 116 centimetres wide, which is sufficient for its continued use as a walkway;
• Lots 2 and 3 do not have windows or doors opening onto the walkway, so the installation of the stairway does not impact on the use of their lots or access to natural light or air flow ;
• The renovation of the walkway area enhances the visual amenity of the scheme which benefits all lot owners;
• The tenants of all lots in the scheme approve of the works and believe it will improve the aesthetics of the building as well as enhancing the safety and security of people working in the building; and
• The applicants have failed to identify any detriment which would be experienced by owners or occupiers as a result of the work undertaken by the respondent.
  

For the above reasons, the application is dismissed.

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[1] Platt v Ciriello [1997] QCA 033,
[2] See Katsikalis v Body Corporate for “The Centre” [2009] QCA 77, Fountain View [2004] QBCCMCmr
[3] See Sections 129 & 130