Body Corporate St James Apartments v Renaissance Assets Pty Ltd
[2004] VSC 438
•9 November 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4089 of 2004
| BODY CORPORATE NO. 1/PS40911511E ST JAMES APARTMENTS | Applicant |
| V | |
| RENAISSANCE ASSETS PTY LTD | First Respondent |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 October 2004 | |
DATE OF JUDGMENT: | 9 November 2004 | |
CASE MAY BE CITED AS: | Body Corporate St James Apartments v Renaissance Assets Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 438 | First revision 1 March 2005 |
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REAL PROPERTY – STATUTES – definition of “building owner” in s.54(3) of the Domestic Building Contracts Act 1995 (Vic) – whether a body corporate under the Subdivision Act 1988 (Vic) is the registered proprietor of common property when the common property “vests” in the lot owners under s.28(d) of the Subdivision Act – whether the lot owners are owners of the common property in law as well as in equity – whether the body corporate, if the registered proprietor of common property, is “the owner for the time being” of the land comprising the common property for the purposes of the Domestic Building Contracts Act – whether VCAT in error in ruling that the body corporate was not “the owner for the time being” of the common property.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P Lacava SC with Ms G Costello | Phillips Fox |
| For the First Respondent | Mr M Derham QC with Mr M Roberts | Deacons |
HIS HONOUR:
By originating motion dated 14 January 2004, Body Corporate No.1/PS40911511E St James Apartments (“the appellant”) sought leave to appeal pursuant to s.148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (“the VCAT Act”) from a decision of Deputy President D Cremean made on 17 December 2003. The first respondent Renaissance Assets Pty Ltd (“Renaissance”) is now effectively the only respondent to the proceeding.
By Order of Master Wheeler made 22 March 2004, the appellant was granted leave to appeal against the decisions of VCAT made on 5 September 2003, 17 December 2003 and 28 January 2004. As recited in the Order, the question of law to be determined is:
“By its decisions made on 5 September 2003, 17 December 2003 and 28 January 2004, did the Tribunal fall into legal error in holding that the [appellant] was not the owner of the common property and/or was not the ‘building owner’ within sections 54(1) and 54(3) of the Domestic Building Contracts Act 1995, with the result that the application commenced by the [appellant] at Victorian Civil and Administrative Tribunal was held to be misconceived and liable to be dismissed in its entirety pursuant to section 75 of the [VCAT] Act?”
A notice of appeal dated 26 March 2004 sets out the same question of law and recites a number of grounds of appeal which are unnecessary to set out. The question of law arises in the following circumstances.
The appellant commenced a proceeding in VCAT against Renaissance (and another) relating to alleged defects in building work arranged by Renaissance in 1997 and 1998 for the conversion of a building at 350 St Kilda Road, Melbourne from an office building to a residential building comprising a number of residential units, now known as the St James Apartments. The appellant brought the proceeding against Renaissance, as a person who had allegedly managed or arranged the carrying out of the domestic building work, and, as such, a “builder” as defined by s.3(1) of the Domestic Building Contracts Act 1995 (Vic) (“the Domestic Building Contracts Act”). The appellant’s VCAT proceeding was an application, as a party to a “domestic building dispute“, seeking that VCAT resolve the dispute concerning the allegedly defective domestic building work, pursuant to Subdivision 1 of Division 2 of Part 5 of the Domestic Building Contracts Act.
Section 54(1) of the Domestic Building Contracts Act provides, so far as relevant, that a “domestic building dispute” is a dispute or claim arising between a building owner and a builder in relation to the carrying out of domestic building work. The parties assumed, for the purposes of this appeal, that Renaissance, being a person who managed or arranged the carrying out of the domestic building work, was a “builder” as defined by s.3(1) of the Domestic Building Contracts Act. It is common ground that, in order for the appellant to have been entitled to make the application to VCAT for the resolution of a domestic building dispute, the appellant had to be a party to the dispute and in order to be a party to the dispute the appellant had to be “a building owner”.
The question of law raised for determination by the Court, the answer to which, the parties agree, will resolve this appeal, is therefore whether the appellant is a building owner, within the meaning of the Domestic Building Contracts Act. It is common ground that the appellant is not a building owner within the definition contained in s.3(1) of the Domestic Building Contracts Act, because the appellant was not “the person for whom domestic building work has been, is being, or is about to be carried out”. Indeed, the appellant was not a person for whom the domestic building work was carried out, because the appellant body corporate did not exist at all at the time when the work was being carried out. Further, the parties agree that the appellant cannot be a “building owner” and hence cannot be a party to a “domestic building dispute” within the meaning of ss.54 and 55 of the Domestic Building Contracts Act unless the appellant falls within the extended definition of a building owner created by s.54(3) of the Domestic Building Contracts Act. Section 54(3) provides:
“A reference to a building owner in this section includes a reference to any person who is the owner for the time being of the building or land in respect of which a domestic building contract was made or domestic building work was carried out.” (Emphasis added)
The alleged defects in the domestic building work included defects in that part of the building constituting “common property” as referred to in Part 5 of the Subdivision Act 1988 (Vic) (“the Subdivision Act”). The appellant contends that it is “the owner for the time being” of the common property within the meaning of s.54(3) of the Domestic Building Contracts Act.
In the VCAT proceeding, on 5 September 2003, Deputy President Cremean ordered that the proceeding be struck out “so far as it alleges that the [appellant] is the owner of the common property”. The Deputy President had before him an application by Multiplex Constructions Pty Ltd, another party to the VCAT proceeding,[1] pursuant to s.75 of the VCAT Act for the striking out of the proceeding on the ground that it was misconceived and lacking in substance. The Deputy President acceded to the application by Multiplex, stating in his reasons that the appellant was not the owner for the time being of the common property and that the contrary was not even arguable. [I interpolate that the parties before the Court accept that the Court need not decide whether this question was “arguable” or not, but that the Court should simply decide the question of law.] The reasons for the Tribunal’s decision on 5 September 2003 may be summarised as follows: s.28(d) of the Subdivision Act provides that any common property vests in the owners for the time being of the lots on the plan of subdivision as tenants in common in shares proportional to their lot entitlement – that section excludes the possibility of the appellant body corporate being the owner of the common property.
[1]Multiplex Constructions Pty Ltd is the second respondent to the present proceeding, but that aspect of the proceeding has been resolved.
As the VCAT proceeding was not wholly dismissed on 5 September 2003, the appellant sought to amend its points of claim. In support of an application for leave to amend its points of claim the appellant filed an affidavit with VCAT which, inter alia, exhibited a certificate, signed by the Assistant Registrar of Titles pursuant to s.27D of the Transfer of Land Act 1958 (Vic) (“the Transfer of Land Act”). The Assistant Registrar of Titles certified that the document was a “record of the information recorded on folio of the Register Volume 10410 Folio 050”. In substance, the information so recorded was that the appellant body corporate was the sole registered proprietor of an estate in fee simple in the common property on the relevant plan of subdivision.
On 17 December 2003, the Deputy President refused the appellant’s application to amend its points of claim. The reasons of the Tribunal noted that the appellant was now seeking to allege that it was the “sole registered proprietor of an estate in fee simple of common property…”. The Tribunal considered that s.28(d) of the Subdivision Act precluded that amendment, and in any event it was not possible to re-argue the point determined by it on 5 September 2003.
On 28 January 2004, Deputy President Cremean held a further directions hearing in the VCAT proceeding and ordered that the proceeding be struck out in its entirety without adjudication on the merits, for the reason that there was no remaining aspect of the proceeding which had “any independent life” as a result of the previous adverse rulings.
Before noting the submissions of the parties, it is convenient to refer to the relevant provisions of the Domestic Building Contracts Act, the Subdivision Act and the Transfer of Land Act.
Domestic Building Contracts Act
Section 53 of the Domestic Building Contracts Act provides that VCAT may make any order it considers fair to resolve a domestic building dispute, including an order for the payment of a debt or damages. Section 54 of the Domestic Building Contracts Act, so far as relevant, defines a domestic building dispute as a dispute or claim arising between a building owner and a builder in relation to the carrying out of domestic building work. I have referred to the extended definition of building owner contained in s.54(3) of the Domestic Building Contracts Act.[2] Section 55(a) of the Domestic Building Contracts Act provides that VCAT may only make an order to resolve a domestic building dispute on the application of a party to the dispute.
[2]See para [6] above.
Subdivision Act
Section 3(1) of the Subdivision Act contains the following relevant definitions:
“"body corporate" means a body corporate which is incorporated by registration of a plan of subdivision …;
"land affected by a body corporate" means the lots of which the owners for the time being are the members of the body corporate together with the common property for which the body corporate is responsible;
"lot" means a part (consisting of one or more pieces) of any land (except a road, a reserve or common property) shown on a plan which can be disposed of separately …;
"lot entitlement" in relation to a lot affected by a body corporate, means a number specified in the plan as the lot entitlement for that lot, expressing the extent of the lot owner's interest in any common property affected by the body corporate;
"owner" means—
(a) for land under the Transfer of Land Act 1958 … the registered proprietor of the fee simple in the land, or a person who is empowered by or under an Act to execute a transfer of the land;
"plan of subdivision" means a plan showing the subdivision of land”
Section 4(1) of the Subdivision Act provides that the Act applies, inter alia, to subdivision of land, the creation of common property and a body corporate, and s.5 provides that the subdivision of land and the creation of common property must be done in accordance with the Act. Subsequent parts of the Subdivision Act deal with the certification of plans of subdivision, the statutory requirements for such plans and the registration of certified plans. Section 24 of the Subdivision Act deals with the effect of registration of a plan. I note that, among other things, s.24(2)(b) of the Subdivision Act provides that land set aside on a plan as a road vests in the Council or other identified person or body, and that s.24(2A) provides:
“(2A) When the land set aside as a road vests in a Council, person or body—
(a) the land continues under the operation of the Transfer of Land Act 1958 and the Council, person or body is deemed to be its registered proprietor; and
(b) the Registrar need not create a folio of the register or produce a certificate of title for the land…”
Section 24(3) of the Subdivision Act provides that the Registrar must create a folio of the Register under the Transfer of Land Act for each lot.
Part 5 of the Subdivision Act is concerned with “Subdivisions With Bodies Corporate” and provides, so far as relevant, as follows:
“27. (1) A plan may provide for the creation of one or more bodies corporate consisting of the owners of specified lots.
(2) A plan which contains common property must provide for the creation of one or more bodies corporate.
…
28. … when a plan providing for the creation of one or more bodies corporate or containing common property is registered—
(a)each body corporate for which the plan provides is incorporated; and
(b)the owners of the specified lots become the first members of the body corporate; and
(c)the owners for the time being of the lots are the members of the body corporate while they are owners; and
(d)any common property vests in those owners as tenants in common in shares proportional to their lot entitlement; and
(e)the Registrar must create folios of the Register for any common property in the name of the body corporate as nominee for those owners but must not produce a certificate of title for those folios, and may require submission of and cancel any existing certificate of title for common property
28A (1) The share in the common property of a member of a body corporate cannot be dealt with except—
(a) as part of a dealing with the member's lot; or
…
(c) by the body corporate, in accordance with the regulations.
(2) A dealing, encumbrance or notification affecting a lot operates as a dealing, encumbrance or notification affecting the lot owner's share in the common property, even though that share is not mentioned in any document giving effect to the dealing, encumbrance or notification affecting the lot.
(3) The Registrar may only record on the folio of the Register for common property anything affecting the common property only and not the lots.
(4) A recording made on the folio of the Register for a lot operates in relation to the owner's interest in the common property as if it were also a recording made in relation to that interest on the folio for the common property.
29 (1) A body corporate has perpetual succession and a common seal and is capable of suing and being sued in its own name.
(2) A body corporate and its members have the constitution, duties, functions, powers, rights and liabilities specified in the regulations.
…
(6) The body corporate may in its own name and on behalf of its members execute any document or do anything necessary or convenient to enable it to carry out its duties, functions, powers, rights and liabilities, and the document or thing has effect as if executed or done by the members.
….
(10) A body corporate cannot mortgage common property.
30 (1) Nothing in this Act or the regulations limits the right of a member to effect a policy of insurance in respect of destruction of or damage to a lot owned by him or her or his or her interest in the common property.
(2) A body corporate must be taken to have an insurable interest in the land affected by the body corporate.
…
32 (1) If there is a unanimous resolution of the members, a body corporate may proceed under this section to do one or more of the following—
(a) dispose of the fee simple in—
(i) all or part of any common property;…
…
(b) purchase or otherwise obtain land –
(i) for inclusion in or to become common property;…
…”
Transfer of Land Act
Section 97 of the Transfer of Land Act deals with the inter-relationship of that Act with the Subdivision Act. The two Acts must be read as one, but a provision of the Subdivision Act prevails in the case of inconsistency. Sub-sections 97(1) and (2) of the Transfer of Land Act provide as follows:
“97 (1) This Act and any subordinate instrument … made under it apply to the Subdivision Act 1988 as if that Act formed part of this Act, and that Act must be read as one with this Act.
(2) If a provision of the Subdivision Act 1988 or the regulations made under that Act is inconsistent with a provision of this Act or a subordinate instrument made under this Act, the provision of that Act or those regulations prevails.”
Section 4(1) of the Transfer of Land Act contains the following relevant definitions:
“"folio of the Register" means a folio of the Register under section 27
"proprietor" means any person seised or possessed of or entitled to any estate or interest in land and includes any person who is the donee of a power to appoint or dispose thereof;
"registered proprietor" means any person appearing by the Register … to be the proprietor of any estate or interest in land”
Part III of the Transfer of Land Act deals with the Register and contains the following relevant provisions:
“27 (1) The Registrar must keep a Register of land which is under the operation of this Act.
…
(4) The Register consists of folios of the Register.
…
(6) A folio of the Register—
(a)must contain the recordings that are required or authorised to be made in the Register by or under this Act or any other Act and that affect the land for which the folio is created; and
(b)must include a distinctive identifying reference for the folio; and
(c)may contain recordings of any other information that the Registrar thinks appropriate to record on the folio; and
(d)may describe any land by reference to a separate map or plan in the Office of Titles—
and so much of a separate map or plan as relates to the land in the folio is deemed to form part of the folio in which it is described.
(7) The Registrar creates a folio of the Register by making a recording of—
(a)a description of the land for which it is created; and
(b)… a description of the proprietor for the time being of the land for which it was created;
(c)such other particulars as the Registrar thinks fit of—
(i)other estates or interests, if any, affecting the land; and
(ii)other information, if any, that relates to the land and is required to be recorded on the folio by or under this Act or any other Act—
and by allocating a distinctive identifying reference to those recordings.
…
(8) Subject to section 24(4) of the Subdivision Act 1988, on—
(c)the approval of a plan of subdivision in accordance with any law for the time being in force relating to the subdivision of land; or
(d)being required by or under this Act or any other Act to do so—
the Registrar must create any folios of the Register that are necessary.
…
27B (1) A certificate of title is a document in writing containing the information, or an extract of the information, on a folio of the Register as at the date of production of the certificate of title.
…
(7) Subject to sub-section (7A), on—
(a) the creation of a folio of the Register;
the Registrar must produce a certificate of title for that folio.
...”
It is unnecessary to set out the fundamental provisions of the Transfer of Land Act concerning the conclusive effect of the Register and the paramountcy of the title of a registered proprietor.[3]
[3]See ss.40-44 of the Transfer of Land Act.
Submissions
Mr Lacava SC, who appeared with Ms Costello of counsel for the appellant, submitted that the appellant is the owner for the time being of the common property in that it is the registered proprietor of the common property,[4] and hence the legal owner of the common property, whereas the lot owners are the beneficial owners.[5] Mr Lacava submitted that the meaning of owner in s.54(3) of the Domestic Building Contracts Act was not limited to a beneficial owner. Nor was the appellant body corporate a bare legal owner or “bare trustee”[6], given the duties and powers conferred upon a body corporate by the Subdivision Act and the regulations thereunder. In particular, Mr Lacava submitted that the body corporate’s capacity to dispose of the fee simple in the common property under s.32(1)(a)(i) of the Subdivision Act, was a highly persuasive indication that it was the owner of the common property.[7]
[4]This submission is in accord with the practice of the Registrar of Titles in noting the body corporate as the registered proprietor on the folio of the Register relating to the common property.
[5]The same approach finds expression in Halsbury’s Laws of Australia: Real Property, para [355-9060] fn.3: “Despite use of the term ‘nominee’, it would seem that the effect of [the Subdivision Act 1988] s.28(d), 28(e) is to set the equitable title to the common property in the lot owners in shares proportional to their lot entitlement and the bare legal title to the common property in the body corporate. The body corporate is thus the trustee for its members but can only deal with the property in the manner specified in the Act … This approach simplifies the registration process …”
[6]See Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271, 281 per Gummow J and Corumo Holdings Pty Ltd v ITOH Ltd (1991) 5 ACSR 720, 747 per Meagher JA.
[7]Citing Wily v St George Partnership Banking Ltd (1999) 161 ALR 1, 9 per Finkelstein J.
Mr Lacava submitted that the Tribunal’s decision was impractical and unjust in its operation. For example, in a multi-storey residential block, in relation to faulty building work, say, in the stairwell or the foyer entrance next to a lift on the twelfth floor, who other than the body corporate would have standing to commence a proceeding in VCAT? Would a lot owner on the first floor have standing to bring such a proceeding and in respect of what damage? Again, if a VCAT proceeding was commenced by a number of named lot owners, what would happen if a lot owner sold his unit? Would the new owner have to be substituted in the proceeding? Mr Lacava submitted that the whole concept of a body corporate as the owner of the common property was devised to avoid such problems. He further contended that without a body corporate a proceeding could only be commenced with the unanimous agreement of the lot owners.
There was a subsequent decision of VCAT which had come to the opposite conclusion to that reached by the Tribunal in this case. That was a decision of Senior Member Mr R Walker in Hansen Yuncken Pty Ltd v TS Services Pty Ltd[8] in which the Tribunal held that the body corporate was the registered proprietor and the owner for the time being (along with the lot owners) for the purposes of s.54(3) of the Domestic Building Contracts Act. Mr Lacava submitted that this decision was to be preferred.
[8][2003] VCAT 2020 (8 September 2003).
The primary submission on behalf of Renaissance was that by virtue of the provisions of the Subdivision Act a body corporate had no estate or interest in the common property, either legal or equitable. The owners for the time being of the lots on the plan of subdivision were, by force of the Subdivision Act, both legal and beneficial owners of the common property and hence “the owners for the time being” within the meaning of s.54(3) of the Domestic Building Contracts Act.
Mr Derham QC, who appeared with Mr Roberts of counsel for Renaissance, said that the question was whether the appellant was “the owner for the time being of the building[9] or land[10]” within the meaning of s.54(3) of the Domestic Building Contracts Act. Mr Derham stressed that the expression “the owner for the time being of the building or land” employed the definite article. He submitted that the Domestic Building Contracts Act embraced all interests in land (whether under the Transfer of Land Act or under the general law) which might for the purposes of that Act be considered to give rise to ownership of that land. The Court had to determine who was the owner for the time being of the common property for the purposes, not of the Subdivision Act, but of the Domestic Building Contracts Act. Turning to the Subdivision Act, he submitted that the definition of “owner” in that Act did not govern the definition of “the owner for the time being” in the Domestic Building Contracts Act.
[9]Mr Derham referred to the definition of “building” in s.3 of the Domestic Building Contracts Act, namely, “’building’ includes any structure, temporary building or temporary structure and also includes any part of a building or structure”.
[10]Mr Derham referred to the definition of “land” in s.38 of the Interpretation of Legislation Act 1984 (Vic) as including any estate or interest in land.
Mr Derham next submitted that, upon a proper construction of s.28 of the Subdivision Act, a body corporate had no estate or interest in the common property and should not be recorded in the relevant folio of the Register as the registered proprietor of the common property. Mr Derham submitted that the effect of s.28(d) of the Subdivision Act, which vested the common property in the owners for the time being of the lots on the plan of subdivision (“the lot owners”), as tenants in common in shares proportional to their lot entitlement, was to vest the legal title in the fee simple of the common property in the lot owners.
Mr Derham further submitted that s.28(e) of the Subdivision Act did not confer upon a body corporate any estate or interest in the common property. In referring to the obligation of the Registrar, in s.28(e), to create folios of the Register for any common property “in the name of the body corporate as nominee for” the lot owners, Mr Derham pointed to the use of the word “nominee” as indicating that the body corporate was a mere agent[11] for the lot owners and not an “owner” in any sense. He said that all the powers of a body corporate in relation to common property were specifically dealt with by particular provisions of the Subdivision Act, and left no room for any general title to be conferred on the body corporate.
[11]Reliance was placed upon one of the definitions of nominee in The Macquarie Dictionary (3rd ed): “someone appointed by another to act as their agent”.
Alternatively, Mr Derham submitted that if (contrary to his contention) the appellant body corporate was the registered proprietor of the common property, the appellant was still not “the owner for the time being” of the common property within the meaning of s.54(3) of the Domestic Building Contracts Act. From a “substantive perspective”, the lot owners, as beneficial owners, were the owners pursuant to s.54(3).
Is the body corporate the registered proprietor of the common property?
In my opinion, upon a proper construction of the provisions of the Subdivision Act and the Transfer of Land Act, a body corporate is the registered proprietor of a fee simple in the common property and it is the equitable or beneficial ownership but not the legal ownership of the common property which is vested in the lot owners by s.28(d) of the Subdivision Act.
The Torrens system is a system of title by registration and one would not expect to find, in respect of land under the Transfer of Land Act, that there was no registered legal title holder, at least not without express provision to that effect. Yet the primary submission of Renaissance embraced the contention that the lot owners, who are not made the registered proprietors of the common property, are entitled to the legal estate in fee simple in the common property and, as a consequence, that there is no registered proprietor of the common property. This surprising result is not, in my view, justified by the language of the Subdivision Act.[12]
[12]That is not to say that the Subdivision Act is an example of good drafting: see Walker v Registrar of Titles [2001] VSC 354, at [1] per Eames J.
The contention that s.28(d), which “vests” the common property in the lot owners, is intended to vest legal title in the lot owners is rendered suspect, I think, when that provision is compared with s.24(2A) of the Act dealing with land set aside as a road on a plan of subdivision. In that instance the Subdivision Act specifically provides that the vesting has the effect that the person in whom the road is vested is “deemed to be its registered proprietor” and that, while the land continues under the operation of the Transfer of Land Act, the Registrar need not create a folio of the Register for the land. Contrast that with s.28 which, while vesting common property in the lot owners, does not provide that they are deemed to be the registered proprietors. The use of the word “vests” is consistent with the creation or passing of either a legal or an equitable interest in the common property.
Section 28(e) of the Subdivision Act requires the Registrar to create folios of the Register for common property “in the name of the body corporate as nominee” for the lot owners. If a folio or folios of the Register must be created for common property, one would expect that the folio would identify the registered proprietor. That is what s.27(7) of the Transfer of Land Act in fact requires, by providing that a folio of the Register is created by making a recording of, inter alia, “a description of the proprietor for the time being of the land for which it was created”. Reading the two Acts together, the requirement of s.28(e) of the Subdivision Act, that a folio for common property be created in the name of the body corporate, should in my view be construed as identifying the entity that is to be described in the relevant folio of the Register as the proprietor of an estate in fee simple in the common property. I do not think that s.28(e) of the Subdivision Act is therefore inconsistent with the requirement contained in s.27(7) of the Transfer of Land Act that a description of the proprietor for the time being be recorded in the relevant folio of the Register.
The position of the lot owners under the Subdivision Act should be contrasted with the former position under s.13(1) of the Strata Titles Act 1967 (Vic). Section 13(1) provided that the registered proprietors for the time being of the units on a registered plan should by virtue of that section be the registered proprietors of the common property as tenants in common in shares proportional to their unit entitlement, whereas the Subdivision Act does not provide that the lot owners shall either be or be deemed to be the registered proprietors of the common property.
The argument for Renaissance in part depended upon the qualifying words “as nominee for”, it being put that the body corporate is to be recorded as being the “agent” for the lot owners and not as the registered proprietor. In my opinion that is not the connotation of the word “nominee” in s.28(e). I consider that the draftsperson was using the word to mean a person holding the legal title for the benefit of or on behalf of the lot owners.[13]
[13]Compare one of the definitions in a US legal dictionary – Blacks Law Dictionary (7th ed): “a party who holds bare legal title for the benefit of others …”
The use of the word “nominee” in a sense more or less synonymous with “trustee” is not unusual . For example, the Corporations Act 2001 (Cth) s.9 formerly defined a “nominee corporation” as “a body corporate whose principal business is the business of holding marketable securities as a trustee or nominee”. The same definition can still be found in s.4 of the Trustee Companies Act 1984 (Vic). Likewise, the term “nominee shareholder” in ordinary usage means an entity that is registered as the holder of shares in a company but which holds the shares as nominee or trustee for another person who is the beneficial owner.
The same usage of the word “nominee” can be found elsewhere in Victorian legislation. For example, the Duties Act 2000 (Vic) s.35 refers to a transfer “to a trustee or nominee to be held solely as trustee or nominee of the transferor without any change in the beneficial ownership of the dutiable property” and s.236 of that Act refers to the transfer of registration of a motor vehicle made “by a person for whom, when a minor, the vehicle was acquired by another person as nominee or trustee”. Again, the Co-operatives Act 1996 (Vic) s.164(1) provides that a person is deemed to hold particular shares non-beneficially if the person holds the shares in a capacity other than that of sole beneficial owner or holds the shares “as trustee for, as nominee for, or otherwise on behalf of, or on account of, another person”.
The argument that the body corporate is intended by the Subdivision Act to be recorded in the relevant folio of the Register as a mere agent for the lot owners and not as the proprietor of the common property is not, in my opinion, supported by a consideration of the provisions of Part 5 of the Subdivision Act when taken as a whole, although it would be fair to say that the indications are not all one way.[14] The lot owners when the plan of subdivision is registered are the first members of the body corporate[15] and the lot owners are the members of the body corporate while they are owners.[16] A body corporate is not simply an agent of those lot owners – it is an entity “consisting of” the lot owners[17] with powers of its own.[18] The body corporate has power to deal with a lot owner’s share in the common property in accordance with the regulations.[19] A body corporate can dispose of the fee simple in all or part of any common property[20] and may purchase or otherwise obtain land for inclusion in, or to become, common property[21] (subject to a unanimous resolution of the members).[22] However, it is specifically provided that a body corporate cannot mortgage common property[23] (a prohibition which arguably would be unnecessary if the body corporate were not the registered proprietor).
[14]The draftsman’s use of the words “vests” and “owns” leads to ambiguity (see ss.28(d) and 32(1D)) and the clumsy definition and use of the expression “land affected by a body corporate” leads to a lack of clarity.
[15]Section 28(b) of the Subdivision Act.
[16]Section 28(c) of the Subdivision Act.
[17]Section 27(1) of the Subdivision Act.
[18]See s.29(1), (2) and (6) of the Subdivision Act; see too, under the Subdivision (Body Corporate) Regulations 2001 cl.201, the power of the body corporate to repair, maintain, manage and administer the common property, under cl.206 to permit the use of the common property by members of the public, and under cl.218, by special resolution, to lease or license the whole or any part of the common property.
[19]Section 28A(1)(c) of the Subdivision Act.
[20]Section 32(1)(a)(i) of the Subdivision Act.
[21]Section 32(1)(b)(i) of the Subdivision Act.
[22]Reference should briefly be made to s.30(2) of the Subdivision Act which provides that a body corporate must be taken to have an insurable interest in the land affected by the body corporate – this provision gives the body corporate an insurable interest in the lots of the lot owners as well as in the common property, thereby not affecting the present question one way or the other.
[23]Section 29(10) of the Subdivision Act.
When a lot owner disposes of his or her lot, the interest of that lot owner in the common property is automatically transferred when the transfer of the lot is recorded in the Register.[24] On the other hand, in the event that the lot owners unanimously resolve that the body corporate may dispose of the fee simple in all or part of any common property, the body corporate may dispose of the fee simple in such common property, both at law and in equity. It is consonant with the fundamental structure of the system of registration under the Transfer of Land Act (and the Subdivision Act) that an entity which can dispose of the fee simple in the common property that is recorded in the Register in its name should be regarded as the proprietor of such common property.[25]
[24]See s.28A(4) of the Subdivision Act.
[25]If the body corporate is a “bare trustee” of the common property that would be a sufficient basis for it to be treated as the registered proprietor, but I think that under the Subdivision Act a body corporate is more than a “bare trustee”.
For the foregoing reasons, I consider that the appellant body corporate is the registered proprietor of the common property under the Subdivision Act and the ownership or interest of each of the lot owners in the common property, as referred to in s.28(d) and s.28A(4), respectively, of the Subdivision Act, is an estate or interest in equity.
Is the body corporate the owner for the time being of the land comprising the common property under s.54(3) of the Domestic Building Contracts Act?
The use of the definite article in the expression “the owner for the time being” in s.54(3) does not to my mind mean that there cannot be more than one owner of the common property, as Mr Derham contended. Of course, even on this argument, each of the lot owners is an owner for the time being of a share in the common property as tenant in common – but I do not think that the use of the definite article excludes the possibility that the expression “the owner for the time being” covers both legal and equitable owners.
If the expression “the owner for the time being” includes the lot owners as equitable owners of the common property, it seems to me, both as a matter of reasonable interpretation and in order to serve the purposes of the Domestic Building Contracts Act in a practical way, that the expression must also include the registered proprietor.
The conclusion that the body corporate falls within the expression “the owner for the time being” in s.54(3) of the Domestic Building Contracts Act is also in accord with the definition of “owner” in s.3(1) of the Subdivision Act, the body corporate being “the registered proprietor of the fee simple” in the common property and “a person who is empowered by or under an Act to execute a transfer” of the common property.
The question raised by the Master’s order should be answered in the affirmative. The appeal should be allowed and the decision of VCAT dismissing the VCAT proceeding and the rulings made on 5 September 2003, 17 December 2003 and 28 January 2004 should be set aside.
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