Clarence on Riverwalk [2011] QBCCMCmr 55 (15 February 2011)

Last Updated: 18 March 2011

REFERENCE: 1014-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	32311
Name of Scheme:	Clarence on Riverwalk
Address of Scheme:	1 & 64 Riverwalk Avenue

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

The Body Corporate for Clarence on Riverwalk,

I hereby order that the application for an order that the Occupiers of Lot 413 remove the sofa, buffet and bar table and bar stools from their balcony area and not return them as they are considered to be indoor furniture and therefore not allowed to be on the balcony, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1014-2010

“Clarence on Riverwalk” CTS 32311

APPLICATION

This is an application by the Body Corporate for Clarence on Riverwalk, Community Titles Scheme 32311 (the Body Corporate), against the occupiers of Lot 413/Unit 12, Ms Kerri Kennedy and Mr Dean Baericke (the Respondents), regarding certain furniture which the Respondents keep within the lot, on the balcony/patio.

The furniture is described by the Body Corporate as a modular leather lounge suite, a buffet and a table with two bar stools. The Body Corporate objects to the placement of this furniture on the balcony, alleging that it contravenes their recently re-written by-law 12.1, which prohibits the storage of indoor household furniture on balconies.

The Respondents argue that the furniture complained of is outdoor furniture which is impeccably presented and further, that other occupiers have furniture that could be described as indoor household furniture on their balconies and yet the Body Corporate has not pursued them, as they are pursuing the Respondents.

JURISDICTION

“Clarence on Riverwalk” was registered as a building format plan of subdivision on 4 March 2004. The scheme has since been re-subdivided and now comprises 57 lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module).

This is a dispute between the body corporate and the occupiers of lot 413 and comes within the dispute resolution provisions of the Act (see sections 226, 227 & 228).

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)).

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to Ms Charlotte Divall, of Stewart Silver King and Burns, the body corporate manager, for distribution to the owners of all lots, and specifically to the occupiers of lot 413, as the Respondents, with an invitation to respond to the matters raised in the application.

Submissions from the owners of 5 lots were received. Those owners express their support of the application and the action being taken by the Committee in general. One owner commented that the recently approved by-law 12.1 does not allow indoor furniture outdoors and further, that should a ruling be disallowed, anything and everything could be permitted on the balconies and patios. Another owner made specific comment that as far as she understands the by-laws, only a table and chairs specifically for outside use is allowed and further, that the particular lounge is quite an eyesore when entering the complex either when walking or driving into the garage.

The Respondents made submission opposing the application, to the following effect:

• The Respondents signed a lease to rent the apartment in May 2010 because it was pet-friendly and because it had the huge terrace to house their “outdoor room” furniture which they had had for 3 years.
• Being the most visible lot at the main entrance, the Respondents thought they would be considered an asset to the building.
• They have had no complaints except from the chairperson. People stop to comment on how nice the area is. Other residents have complemented the Respondents on the presentation of their lot. The Respondents consider the lot one of the nicest and keep it neat and tidy at all times. The Respondents are very “house-proud”.
• The lounge was weatherproofed and purpose bought for comfort and function. The Respondents have recently re-arranged the space and the lounge is now at the back under the roof.
• The Respondents feel as though they have been singled out by the chairperson who seems to be coercing other people to agree with her. The Respondents are the only tenants to be taken to adjudication and while they are sure other tenants have been issued with notices, none have been upheld, as the photographs they submitted show.
• The Respondents consider other balconies to be very unattractive and definitely used as a storage area.
• While the Respondents agree that there must be guidelines, there must also, they argue, be realistic expectations. Unless every balcony is issued with the same standard furniture, there will never be consistency with so many people with different tastes, needs and lifestyle.
• Outdoor rooms are very fashionable now and the larger apartments in the scheme were designed with that in mind.
• The Respondents object to the phrase “at my discretion” in the re-written body corporate rules, which they say seems to be up to the chairperson.
• By-law 12.1 was not brought in until after the Respondents moved in. Had they known their furniture was not permitted on the balcony, they would not have committed to the lease.
  

The Respondents’ submission also included a letter from the owner of lot 413 to the Secretary of the Body Corporate, supporting the Respondents, to the following effect:

• Outdoor furniture catalogues show furniture constructed in a diverse range of styles and made from a wide range of materials. She does not see any grounds on which the Committee could make a determination that the furniture in question was not “outdoor” furniture.
• The by-law under which the contravention notice was issued was passed after the Respondents had signed their lease and purchased the furniture.
• The patio area attached to lot 413 is far larger in area than a balcony and by-law 12.1 doesn’t apply to it.
• Patios are often styled as outdoor rooms, forming a natural progression from indoor space to the outdoors. Use of the area in this manner is not inconsistent with this styling approach.
• There is no clear indication that the furniture in question is not outdoor furniture.
• The furniture in question is not conspicuous from the road nor is there any indication that the furniture affects the aesthetics of the property.
• The patio is neat and tidy. Inspection reports from the agent indicate that the property is well maintained by the tenant.
  

The Respondents’ submission also included 8 photographs of balconies of other lots within the scheme as well as 8 photographs of the balcony of lot 413, from various different angles. The photographs of other lots’ balconies depicted cane furniture with upholstered cushions, an upholstered chair, a timber dining suite, bird cages, full size fridges, clothes airers, a timber dining suite with upholstered chair pads, a bike, shade umbrellas, stacked furniture and an object covered with a tarpaulin. The photographs of the balcony of lot 413 depicted the modular lounge, buffet and table and bar stools the subject of the application.

The Body Corporate exercised its right to inspect the submissions made and the chairperson responded to the following effect:

• The Committee represents the view of the residents, many of whom have voiced complaints at the appearance of the Respondents’ balcony and how it contravenes by-law 12.1. The Committee has acted on those complaints, as it does on all residents’ complaints, therefore negating the Respondents’ statement that they have been singled out.
• The issues the Respondents raise regarding the appearance of other lots are being dealt with in their own right. In regards to lot 532 (bike on balcony) a contravention notice was issued on 15 November 2010 and the bike was removed. In relation to lots 221 and 131, a contravention notice was issued in respect of each lot on 9 November 2010 and the items on the respective balconies have since been removed.
• The Respondents state that there will never be any consistency across the scheme with people of varying tastes and lifestyles – that is exactly the reason why this Scheme has this particular by-law and why it should be allowed to be enforced.
  

DETERMINATION

Applicable Law

By-law 12.1 provides, as follows:

12.1 Appearance of Balconies

• (a) An owner or occupier of a lot which contains a balcony shall be responsible for the maintenance of the balcony area.
• (b) An owner or occupier of a lot is permitted to store balcony specific appliances and outdoor furniture on their balcony. By way of example, such permitted items (“Permitted Items”) may include outdoor settings, seasonal decorations, a small bar fridge or a barbeque which does not exceed the height of the balcony rail. Items which are not permitted (“Non Permitted Items”) to be kept on an owner or occupier’s balcony include, but are not limited to, household furniture, household appliances, bicycles, gym equipment, tarpaulins, packing boxes, beds and dog kennels.
• (c) The committee shall have the sole discretion to determine what Permitted Items and Non Permitted Items may or may not be kept on an owner or occupier’s balcony. The committee shall at all times maintain a list of both Permitted Items and Non Permitted Items which shall be made available to all lot owners and occupiers upon request.
  

.........

(f) If the committee considers that by-laws 12.1(b) 12.1(d) or 12.1(e) have not being (sic) complied with, then the body corporate may give the owner or occupier fourteen (14) days notice requiring rectification and if the owner fails to rectify may arrange for the proper rectification and maintenance of the relevant area at the cost of the owner and the owner, on reasonable notice must allow access for the rectification and maintenance to be carried out.

Decision

Before dealing with the substance of the dispute, I note that the Respondents’s furniture which is now the subject of this application, was placed on the balcony of lot 413 before by-law 12.1 was recorded. There is no question that before by-law 12.1 was recorded, there was no applicable by-law which the placement of the Respondents’ furniture on the balcony of lot 413 could be said to contravene. While the body corporate is entitled to adopt new by-laws providing for the management of common property and body corporate assets as well as for regulation of the use and enjoyment of lots, common property, body corporate assets, and services supplied by the body corporate, these by-laws apply only from the time they are recorded (in this case on 26 August 2010), rather than having any retrospective operation. Therefore, the Respondent can only be accused of a potential breach of by-law 12.1 from 26 August 2010.

The by-laws are part of a scheme’s community management statement (CMS), which is binding on the body corporate, each member of the body corporate (each owner) and each person who is otherwise the occupier of a lot in the scheme (s 59 and 66, Act). A function of the body corporate is to enforce the CMS, including the by-laws (s 94(1)(b), Act). The body corporate must act reasonably when doing so (s 94(2), Act).

The Act provides a framework for dealing with by-law contraventions.

Section 182 provides that if a body corporate reasonably believes that an owner or an occupier is contravening a by-law and the circumstances make it likely that the contravention will continue, the body corporate may give a continuing contravention notice to the person to remedy the contravention. The notice must state the by-law the body corporate believes is being contravened and details sufficient to identify the contravention. The person must comply with the notice.

Section 183 provides that if a body corporate reasonably believes that an owner or an occupier has contravened a by-law and the circumstances make it likely that the contravention will be repeated, the body corporate may give a future contravention notice to the person not to repeat the contravention. The notice must state the by-law the body corporate believes has been contravened and details sufficient to identify the contravention. A future contravention notice has effect for 3 months after it is given or a shorter period mentioned in the notice. The person must comply with the notice.

In both cases, the notice must state that if the person does not comply, the body corporate may start proceedings in the Magistrates Court or make a dispute resolution application (s 182(4)(e) and s 183(4)(e)). A Magistrates Court may impose a maximum penalty of 20 penalty units for failure to comply with either notice (s 182(5) and s 183(6), Act). Unless special circumstances exist, a body corporate may make a dispute resolution application only if it has given the owner or occupier a contravention notice (s 184, Act).

Rather than starting proceedings in the Magistrates Court, the Body Corporate has made this dispute resolution application and has named the Respondents as the persons against whom an order is sought. The Body Corporate has demonstrated that before making this application it issued the Respondents with a letter dated 10 September 2010 enclosing a Notice Regarding Likely Future Contravention of a Body corporate By-law and a Notice Regarding Continuing Contravention of a Body Corporate By-Law in relation to an alleged breach of by-law 12.1(b) (Appearance of Balconies).

In the circumstances, it appears as though only one of the Notices (that in relation to a Continuing Contravention) need to have been issued. The placement of the furniture on the balcony of lot 413 is of a continuing nature rather than a single event which might be repeated in the future. While I have mentioned this irregularity, I consider it to be minor in the circumstances.

Two issues arise for consideration. The first is the validity of by-law 12.1. The second is, has the Committee’s action in seeking to enforce by-law 12.1 against the Respondents, been reasonable?

Validity of By-law 12.1

While the validity of by-law 12.1 has not been specifically challenged, the Respondents have objected to the phrase in by-law 12.1(c) that “The Committee shall have the sole discretion to determine what Permitted Items and Non Permitted Items may or may not be kept on an owner or occupier’s balcony”.

The legislature has, in effect, delegated to owners in general meeting the power to make laws providing for the management of common property and body corporate assets as well as for regulation of the use and enjoyment of lots, common property, body corporate assets, and services supplied by the body corporate (Act, 169).[1]

There are a number of specific limitations on by-laws (Act 180, 181). If a by-law is inconsistent with the Act, the by-law is invalid to the extent of the inconsistency (section 180(1), Act). If a lot may lawfully be used for residential purposes, the by-laws cannot restrict the type of residential use (section 180(3), Act). A by-law cannot prevent or restrict a transmission, transfer, mortgage or other dealing with a lot (section 180(4), Act). A by-law must not discriminate between types of occupiers (section 180(5), Act). A by-law (other than an exclusive use by-law) must not impose a monetary liability on the owner or occupier of a lot included in a community titles scheme (section 180(6), Act). A by-law must not be oppressive or unreasonable, having regard to the interests of all owners and occupiers of lots included in the scheme and the use of the common property for the scheme (section 180(7), Act). A by-law must not include a provision that has no force or
effect under the Building Act 1975, chapter 8A, part 2 (section 180(8), Act). If satisfied a by-law is invalid, an Adjudicator may require “the body corporate to lodge a request to record a new CMS to remove the by-law” (section 21, schedule 5). However, all owners and occupiers are obliged to comply with valid by-laws, unless or until the owners vote to modify or remove a particular by-law (Act, 59). If the body corporate consents to a new CMS containing different by-laws, the body corporate must, within 3 months, lodge a request to record the new statement (section 65, Act).

By-laws are stated in the CMS for the scheme (section 66(1)(e), Act). The CMS is binding on the body corporate, each lot owner and each person who is otherwise an occupier of a lot or common property (section 59(2), Act). A by-law comes into force on the day the registrar records the relevant CMS (section 179, Act). However, “it must not be presumed that a CMS is valid or enforceable, including, for example, that the by-laws for the scheme included in the statement are valid and enforceable, because the registrar records it” (section 115L(2)(b), Land Title Act 1994). The body corporate has a duty to enforce the by-laws (section 94(1), Act).

Rights of individuals are protected to the extent that the body corporate is required to act reasonably in enforcing the by-laws (section 94(2), Act). Also, the body corporate must act reasonably in deciding to adopt a particular by-law and an Adjudicator can require the body corporate to remove a by-law that is oppressive or unreasonable (section 94(2) Act, Schedule 5 – Item 20, Act).

I consider by-law 12.1 to be within power, regulating the use and enjoyment of owners’ balconies (albeit in quite a prescriptive way), although there is an argument that it could fall foul of the limitation referred to in section 180(7) of the Act in that it could, at least in part, be considered oppressive or unreasonable.

In Tutton v Body Corporate for Pivotal Point Residential[2], it was held that since there was clearly no rational basis upon which it could be said that the keeping of some animals (such as a gold fish) in a safe and healthy environment could cause any difficulty to other lot owners, a by-law which imposed an absolute prohibition on the keeping of such animals would be unreasonable.

In this case, the Body Corporate states that By-Law 12.1 exists to maintain a consistent appearance across all lots. It further states that there had been a number of complaints from lot owners regarding what was deemed acceptable to be placed on balconies. It is rational to say that the keeping of certain items on balconies which are viewed from other lots and common areas could detract from the aesthetic appearance of the scheme and in that way, cause inconvenience to lot owners. On the other hand, the keeping of certain items, such as outdoor furniture, on balconies is a generally accepted practice.

In the circumstances, I do not consider by-law 12.1, itself, oppressive or unreasonable. However, I consider the Committee’s application of it in this particular instance, questionable.

Has the Committee Acted Unreasonably in Seeking to enforce By-Law 12.1 against the Respondents in this particular case?

A Body Corporate must act reasonably in making a decision (Act 94(2), 100(5)). This would include in deciding whether or not by-law 12.1 had been breached.

Reasonableness is a question of fact. The objective test requires a balancing of factors in all the circumstances according to the ordinary meaning of the term “reasonable”[3]. The question is not whether the decision was the "correct" one but whether it is objectively reasonable.[4] Where a body corporate fails to act reasonably in making a decision an adjudicator can make orders of the nature of direct managerial intervention to overturn the body corporate’s decision.[5]

In the circumstances of this particular case, I consider that it was objectively unreasonable for the Committee to enforce by-law 12.1 against the Respondents and not enforce by-law 12.1 against other occupiers for storing other pieces of furniture photographed by the Respondents on various balconies within the scheme. In particular, it is not objectively reasonable for the Committee to take issue with the Respondent’s modular lounge, buffet and bar table and stools (classifying them as “household furniture” rather than “outdoor furniture”) and yet consider a cane setting with upholstered chair cushions, an upholstered chair, a timber dining suite with upholstered cushions, etc acceptable as “outdoor furniture”. Of the 8 photographs of other lots submitted by the Respondents, there are only three instances in which the Body Corporate has taken any action for an alleged breach of by-law 12.1; in relation to the storing of a bike on the balcony of lot 532, a full size fridge and objects under a tarpaulin on the balcony of lot 221 and a bookcase/storage shelves on the balcony of lot 131. The other furniture photographed by the Respondents on other balconies does not appear to have been objected to by the Committee. The distinction the Committee (and chairperson in particular) is attempting to make between the furniture of the Respondents and other furniture which has been photographed by the Respondents and not objected to by the Committee is not able to be objectively maintained, in my view.

In particular, I note that only one submission received in response to this application made any comment as to any specific detriment suffered by any other lot owner or occupier, that “the particular lounge is quite an eyesore when entering the complex either when walking or driving into the garage”. The Respondents state that the outdoor space has since been rearranged and the lounge is now at the back, under the roof. The photographs submitted by the Respondents depict the space in the recently reconfigured way. These photographs reveal that the furniture complained of (in particular the modular lounge and buffet, but also the bar stools and table) is barely visible from the common property, being largely obscured by balustrades, greenery and the outdoor dining setting which the Committee does not object to. I cannot agree that the furniture in question is an “eyesore”. On the contrary, the photographs, in my view, depict a well-maintained, contemporary and thoughtful use of the large outdoor area within lot 413.

ORDER

For these reasons I have made the order above.

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[1] Refer generally Dainford v Smith [1985] HCA 23; (1985) 155 CLR 342 at paragraph 6. See also paragraph 9.
[2] Tutton v Body corporate for Pivotal Point Residential CTS 33550 [2008] CCT KA005-08 at paragraph 35.
[3] 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 paragraph 61.
[4] Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 at page 34.
[5]Act 276, Schedule 5 – Items 8 and 10. See also Independent Finance Group Pty Ltd v Mytan Pty Ltd & Anor [2001] QCA 306, at paragraph [31].