Golden Sands Highrise Community Titles Scheme Number 10906 v Bilston

[2002] QDC 335

DISTRICT COURT OF QUEENSLAND

CITATION:

Golden Sands Highrise Community Titles Scheme Number 10906  v Bilston [2002] QDC 335

PARTIES:

GOLDEN SANDS HIGHRISE COMMUNITY TITLES SCHEME NUMBER 10906
Appellant

and

DON BILSTON
Respondent 

FILE NO/S:

363/2002

DIVISION:

Appellate Jurisdiction

PROCEEDING:

Appeal 

ORIGINATING COURT:

District Court
Southport

DELIVERED ON:

11 October 2002

DELIVERED AT:

Southport

HEARING DATE:

18 July, 20 September 2002

JUDGE:

Alan Wilson SC DCJ

ORDER:

1.   Appeal dismissed.

2. Appellant to pay respondent’s costs of and incidental to appeal (including reserved costs) assessed on the standard basis.

CATCHWORDS:

APPEAL – MISTAKE OF LAW – appeal from decision of Adjudicator under Body Corporate and Community Management Act 1997 – whether Adjudicator’s discretion miscarried

APPEAL – COSTS - whether unsuccessful appellant should pay respondent’s costs of appeal

Cases considered:

House v the King (1936) 55 CLR 499

Lock v John Blackwood Ltd (1924) AC 783

Posner v Collector for Interstate Destitute Persons (Victoria) (1947) 74 CLR 461

Weightman v Gold Coast City Council (2002) QCA 234

COUNSEL:

Mr P Favell – appellant  
Mr S J English – respondent 

SOLICITORS:

Gadens Lawyers – appellant 
Reynolds Lawyers – respondent

1. The appellant is the Body Corporate of a unit building at Main Beach, Gold Coast.  Some of its unit owners wished to amend its Community Management Statement (CMS) under the Body Corporate and Community Management Act (BCCMA) (1997) and, for that purpose, placed a new CMS and a motion to approve it before the 2001 Annual General Meeting which was, however, defective, and did not pass without dissent (as the BCCMA requires).  The Body Corporate appealed the result of the motion to an Adjudicator appointed under that Act who directed that it call an extraordinary general meeting as soon as possible to vote upon the recording of the new CMS.

Background

1. At the Annual General Meeting of the Body Corporate on 8 July 2000 a motion was passed, without dissent, that a new by-law be added to the appellant’s CMS to the effect that the owners of some 15 units in the building be granted exclusive use of a part of the common property on each floor from the boundary of their lot to a point 30cm from the corner of the lift well for the purpose of relocating their front entrances.  Under the resolution the maintenance of what had formerly been part of the common property, but was thereby enclosed and included in each owner’s unit, would be the responsibility of that owner.

1. The chairperson of the Body Corporate then, and at the present time is Mr Hackett who wrote to each unit holder before the 2000 AGM in a letter taking the form of a “Chairman’s Report” dated 13 June 2000 in which the following is said about this motion:

“Motion 13 seeks to permit the owners for the time being of ‘04’ lots to utilise that part of the common area in their respective foyers to relocate their entrance door to a point 30cm back from the lift well.  While there is the obvious advantage to 04 lot-holders in increasing the size of their lot entrance by moving their entrance door approximately 2½ metres there is an anticipated saving to the Body Corporate as well.  Those savings include:-

(a)  reduced cleaning charges;

(b)   reduced repairs and maintenance charges in respect of:

(i)   carpeting and recarpeting;

(ii)  painting and repainting.

While my wife is an owner of an ‘04’ lot and I personally support the motion proposed … I commend the motion to all lot-holders because I foresee no detriment to any other lot-holder but the potential for saving should any particular lot-holder elect to proceed with such works.  It appears self-evident that the only persons that use this part of the foyer are the owners of 04 lots or their guests.  Another advantage would be that the door of the 04 lots would be more readily noticeable from the foyer area to people entering and leaving lifts.”

1. The evidence indicates that some time before, or after the motion was passed Mr Hackett’s wife moved her front door in accordance with it, thereby incorporating part of what had previously been common area into her unit.

1. Because the motion required the preparation of a new CMS, solicitors were instructed for that purpose and it was presented to the Body Corporate’s next Annual General Meeting on 15 September 2001, as motion number 8, in these terms:

“That the Body Corporate consents to the recording of a new Community Management Statement in compliance with the Body Corporate and Community Management Act 1997 in the form attached by the Body Corporate:

(a)  adopts the by-laws in schedule committee;

(b)   adopts the exclusive-use foyer space allocations in schedule E;

(c)   retains the standard module of regulations;

(d)   continues with the existing lot entitlements.

And authorise the execution of all forms necessary to record the new Community Management Statement by affixing the common seal of the Body Corporate under the signature of the chairperson and secretary or any two (2) committee members of the Body Corporate.”

1. The motion was lost.  The dissent of the respondent Mr Don Bilston was recorded, with an additional Note:

“It was noted that Don Bilston (owner lot 4) voted against the motion because he believed the Community Management Statement was not in a form that was registerable with the Department of Natural Resources.  The chairperson disputed the comment.  Don Bilston acknowledge that he would reconsider his vote should it be proven that the Community Management Statement is in a registerable form.”

1. The Body Corporate then arranged for its agents (Body Corporate & Community Management Services Pty Ltd) to write to The Commissioner, Office of Community Titles, Department of Natural Resources on 16 November 2000 enclosing an “application to resolve the dispute” regarding registration of the new CMS.  Mr Bilston was shown, on that document, as the other party to the dispute.  By letter 18 January 2002 the Commissioner advised the Body Corporate that he had determined the matter should be the subject of a departmental adjudication under s 218 of the Act.  Mr Bilston was also informed of this and both he, and the Body Corporate, made submissions in writing to the Adjudicator.

1. The Adjudicator delivered a statement of the reasons for his decision on 11 April 2002 in which he summarised the matters set out above; discussed his powers under BCCMA s 223 and said, relevantly:

“A new Community Management Statement requires the consent of the Body Corporate in the form of a resolution without dissent which occurs if no vote is counted against the motion (see ss 55 & 97 of the Body Corporate and Community Management Act 1997).

At the Annual General Meeting, the dissenting vote was recorded because of an apprehension on the part of a dissenting lot owner that the new Community Management Statement was not capable of being registered.

As far as the Act is concerned, the requirements for a Community Management Statement are set out in s 57 of the Act.  In my opinion, the requirements of s 57 have been met except for the failure to incorporate a ‘sketch’ plan A which depicts the location of car spaces which have been allocated under an exclusive by-law to all lots.  However, I regard this omission as being quite a significant oversight which means that the Community Management Statement presented to the Annual General Meeting was consequentially deficient, as it must be presented to the Body Corporate in the form in which it is recorded (s 50(3) of the Act).

In the result, I think the most sensible outcome is the calling of an Extraordinary General Meeting as soon as possible to vote upon the recording of a new Community Management Statement, in terms of motion 8.  It is imperative that the new Community Management Statement comply with s 50(3) of the Act and be in the form in which it is to be recorded.”

1. The Adjudicator’s decision is appellable to this Court, but only on a question of law: BCCMA s 237(2).

Course of the Appeal

1. The appellant’s notice of appeal filed in this Court was addressed to Mr Bilston, and the Adjudicator.  Mr Bilston appeared through Counsel on the first hearing date 18 July 2002 when the matter was adjourned, with costs reserved, after the appellant was given leave to read and file a further affidavit from Mr Hackett.  Subsequently the appeal hearing was conducted on 20 September 2002, when Mr Favell appeared for the appellant and Mr English for the respondent, Mr Bilston.

1. Part of the material relating to the appeal, presented in the form of affidavits and exhibits from Mr Hackett, and Mr Bilston, related to Mr Bilston’s right to vote at the AGM last year, and the question whether he was a proper respondent in this proceeding.  Unit 4 at Golden Sands is owned by a company, Don Bilston Pty Ltd as trustee for Don Bilston Family Trust but, in 1998, the company had properly nominated Mr Bilston to attend meetings and vote on its behalf.  It was submitted, for Mr Bilston, that he was not properly a respondent to the appeal.  The appellant did not seek to substitute the company Don Bilston Pty Ltd for him as respondent and, as this matter has unfolded, I do not think that step was necessary.  Mr Bilston made submissions in writing to the Adjudicator, and appeared at this appeal and took an active role, through Counsel, opposing it.  As a general rule a notice of appeal of this kind should be served on any persons having a real interest in upholding the decision and, as Mr Bilston’s submissions to the Adjudicator confirmed, his interest is active and vivid.  In written submissions to the Adjudicator he said:

“It appears that exclusive-use car space allocation to unit 4 as per existing CMS is removed.  This greatly reduces the value of the investment.  I believe as manager of Don Bilston Pty Ltd, managing the Don Bilston Family Trust that I have a responsibility to protect the Trust’s investments.  Please declare motion 8 failed as per the results of the AGM.”

Grounds of Appeal

1. When the matter was first placed before the Commissioner the Body Corporate indicated it was seeking an order:

“…giving effect to motion 8 as defeated at the Annual General Meeting held on 15 September 2001 pertaining to the consent of the new Community Management Statement.  Furthermore, the Community Management Statement as sent with the notice of the Annual General Meeting and also including a plan of exclusive use in accordance with the Registrar’s directions, be declared to be in a registerable form and now be lodged for recording with the Registrar of Titles for recording in the Department of Natural Resources as soon as practicable.”

1. The notice of appeal to this Court sought orders allowing the appeal, setting aside the Adjudicator’s orders, and ordering instead:

“…That motion 8 of the Annual General Meeting held on 15 September 2001 together with the car park plan exhibit ‘C’ to the affidavit of Peter William Hackett be given effect to as if passed without dissent and that the appellant to take all necessary steps to have a new Community Management Statement pursued to motion 8 registered.

The respondent pay the appellant’s costs of and incidental to this appeal”.

1. At the hearing on 20 September 2002 the appellant informed the Court that it did not seek any costs order against the respondent, in any event.

1. A good part of the submissions to the Adjudicator, and evidence on this appeal, concerned the note to motion 8, and the nature of Mr Bilston’s objections to the CMS at the AGM.  He disputes that the note accurately records his objection which, he told the Adjudicator, arose because the CMS had, necessarily, to attach proper sketch plans prepared by a surveyor and capable of registration (as the Adjudicator found).  In its submissions in reply, the Body Corporate’s representative said it had always maintained that the expense of engaging a surveyor should not be incurred until the motion was approved.  I am satisfied, and find, that Mr Bilston was concerned about this matter and expressed those concerns at the AGM.

Issues on Appeal

1. The appellant contended that the questions of law arising on appeal were:

(a)        whether s 57 of the BCCMA fetters the discretion the Adjudicator has under s 223 of the Act; and

(b)        whether Mr Bilston’s opposition was unreasonable and whether the Adjudicator considered that question and, if not, whether he was obliged to do so.

1. The respondent did not directly address the question whether those matters constitute a question of law in terms of s 237(2) and, indeed, appeared to concede the point; but, argued that, the Adjudicator’s power being discretionary, no error in the exercise of that discretion was apparent.

Legislation: BCCMA

1. Under the BCCMA, the CMS is “…basic to the identification of a Community Titles Scheme”: s 13(1).  It is a document which records, under the Community Titles Scheme, procedures for setting up and continuing a Body Corporate and a Body Corporate committee and all associated matters; entering, if necessary, into arrangements with managers, service contractors and letting agents; managing the property itself, and the finances associated with it; and, all associated administrative affairs.  A Community Titles Scheme is established when the first CMS is recorded: s 26(2).  That recording is performed by the Registrar of Titles under the Land Title Act 1994: s 11. It is an instrument under that Act: schedule 2. The Registrar of Titles may only register the instrument if it complies with the Land Title Act 1994 and appears on its face to be capable of registration: Land Title Act 1994, s 153.

1. The CMS cannot be amended but may, however, be replaced by a new scheme in place of an existing one: BCCMA, s 50(1).  Under s 55(1) a motion for the Body Corporate to record a new CMS providing, e.g., for exclusive use of common property must be passed by resolution without dissent.

1. Under s 50(3) before the Body Corporate can consent to a new CMS it must have before it that new CMS “in the form in which it is to be recorded”.

1. It is not in issue here that the proposed new CMS presented to the AGM in 2001 did not comply with s 50(3); and, was not passed without dissent: s 55(2).

The Adjudicator’s Discretion

1. S 223 relevantly provides:

“(1) An adjudicator to whom the application for an order of an adjudicator is referred 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 powers, or the performance of duties, under this Act or the community management statement; or

(c)     a claimed or anticipated contravention of the terms of.  Or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of –

(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 letting agent for a community titles scheme.

(2)   An order may require a person to act, or prohibit a person from acting, in a way stated in the order.

(3)   Without limiting subsections (1) and (2), the adjudicator may, for example –

(a)   if satisfied that the body corporate’s decision about a proposal by the   owner of a lot to make improvements on, or changes to, the common property is an unreasonable decision – order the body corporate -

(i)   to reject the proposal; or

(ii)   to agree to the proposal; or

(iii) to ratify the proposal on stated terms or …

(t) despite the failure (including because of a refusal) of the body    corporate to consent to the recording of a new community management statement, order the body corporate to lodge a request with the registrar for the recording of a new community management statement; or …

(u)   if satisfied that a motion (other than a motion for reinstatement, termination or amalgamation) 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 – make an order giving effect to the motion as proposed, or a variation of the motion as proposed…”.

1. In his reasons the Adjudicator referred to s 223(1) and (2), but not 223(3).  The passage from his reasons indicates he placed considerable emphasis on the fact that there had been non-compliance with the requirements of s 57 but he has not adverted to s 223(3)(a), (t), or (u) and, in those circumstances, it is possible to infer that he failed to properly exercise the discretion reposed in him: House v the King (1936) 55 CLR 499, at 505. The same conclusion is open in respect of the second ground argued, i.e. whether or not Mr Bilston’s opposition was unreasonable. It is not clear, from his reasons, whether the Adjudicator considered that question and, in light of s 223(3)(u), he was obliged to do so.

Discussion

1. Under s 242 this Court may confirm or amend the order under appeal, or set it aside and substitute another, or refer the order back to the Adjudicator, with appropriate directions.  The fact the Adjudicator may have been in error is not, however, determinative.  As was said in House v the King, at 504-5:

“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles.  It is not enough that the Judges composing the appellate Court consider that, if they had been in the position of the primary Judge, they would have taken a different court.  It must appear that some error has been made in exercising the discretion.  If the Judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate Court may exercise its own discretion if it has the materials for doing so.”  (Emphasis added).

1. S 50 is in very clear terms:

“Subsequent Community Management Statement

50.1    The existing statement for a Community Titles Scheme cannot be amended, but a new Community Management Statement for the scheme may be recorded in the place of the existing statement.

2   The new Community Management Statement may be recorded only if the Body Corporate –

(a)      consents to the recording of the new statement; and

(b)      endorses its consent on the new statement.

3   For giving its consent under subsection (2)(a), the Body Corporate must have before it the new Community Management Statement in the form of which it is to be recorded.”  (Emphasis added).

1. While car park entitlements were not, it appears, to be altered the absence of the plan showing them was, in light of the language used in the section, properly categorised as “a significant oversight” by the Adjudicator.  “Must” is a word of absolute obligation and, as used here, clearly has a mandatory effect: Posner v Collector for Interstate Destitute Persons (Victoria) (1947) 74 CLR 461 per Williams J at 490-1; Weightman v Gold Coast City Council (2002) QCA 234. In light of his remarks, in his Reasons, concerning the obligation under s 223(1) to make an order that is “just and equitable”, it is possible the Adjudicator did consider the discretion which vested in him under s 223(3) and neglected to mention it; but, even if that presumption is wrong I am not persuaded the discretion would, or should have been exercised in some other way.

1. The tenor of the Body Corporate’s submissions to the Adjudicator suggested it intended saving surveyor’s costs by deferring them until the motion had been approved, but that would always have created a conflict with s 50.  Mr Bilston’s objection was, then, germane.  The fact the car park plan was not being altered does not derogate from the requirement, clearly expressed in the legislation, that the CMS, a critical document, be approved in the form in which it is to be presented for registration.  Mr Bilston’s opposition was not, then, unreasonable.

1. When, as here, the issues involved in the exercise of the discretion are basically questions of fact, all the circumstances must be looked at: Lock v John Blackwood Ltd (1924) AC 783 at 788, and 791. The Adjudicator reached the view that the requirements of s 57 had not been met, and the consequential deficiency involved a breach of s 50. He plainly regarded that as an important matter; and found, by inference, that the Body Corporate should have appreciated its importance and acted accordingly. Hence the matter was one which could only now be remedied by the Body Corporate acting upon that proper appreciation and presenting the resolution to another AGM, or EGM. I do not think that conclusion, even if it was reached without reference to s 223(3), was itself erroneous. For these reasons, the appeal should be dismissed.

Costs

1. The Body Corporate ought to have appreciated the significance of the new CMS, and the strict requirements of the BCCMA touching the form in which it should be presented to the AGM.  In the face of its own acknowledged error concerning the car park plan, it should have refrained from appealing and, simply, dealt with the matter in accordance with the Act and, if it wished, presented the new CMS again.  The appeal to the Adjudicator, and this Court were attempts to circumvent clear statutory requirements about a document which, under the Act, is of the highest importance.

1. Before the Adjudicator, and on this appeal, Mr Bilston was cast in a role which was, effectively, that of defender of the legislation.  It is true he was not obliged to contest the matter vigorously, and retain Counsel, but in the result his opposition has been proper.  There is no reason costs ought not follow the event.   I order that the appellant pay the respondent’s costs of and incidental to this appeal, including reserved costs (for the adjournment on 18 July occasioned by the late filing of a further affidavit from Mr Hackett, assessed on the standard basis.

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