Laguna Quays Resort Principal Body Corporate v Laguna Quays Resort Primary Thoroughfare Body Corporate
[2013] QSC 303
•7 November 2013
SUPREME COURT OF QUEENSLAND
CITATION:
Laguna Quays Resort Principal Body Corporate v Laguna Quays Resort Primary Thoroughfare Body Corporate & Ors [2013] QSC 303
PARTIES:
LAGUNA QUAYS RESORT PRINCIPAL BODY CORPORATE ABN 75 243 598 244
(plaintiff)
v
LAGUNA QUAYS RESORT PRIMARY THOROUGHFARE BODY CORPORATE
ABN 62 180 246 142
(first defendant)
and
LQ MANAGEMENT PTY LTD
ACN 074 744 976
(second defendant)
and
LAGUNA AUSTRALIA PTY LTD
ACN 092 398 617
(third defendant)
and
TURTLE POINT HOTEL AND SPA PTY LTD
ACN 108 479 723
(fourth defendant)
and
LAGUNA AUSTRALIA AIRPORT PTY LTD
ACN 094 660 616
(fifth defendant)
and
LAGUNA WHITSUNDAYS AIRPORT PTY LTD
ACN 145 751 300
(sixth defendant)
and
KUNAPIPI PASTORAL PTY LTD
ACN 111 098 876
(seventh defendant)
and
ASD LAGUNA INVESTMENTS PTY LTD
ACN 078 360 228
(eighth defendant)
and
FULLSHARE INTERNATIONAL (AUSTRALIA) TURTLE POINT HOTEL PTY LTD ACN 164 341 413
(ninth defendant)
and
FULLSHARE INTERNATIONAL (AUSTRALIA) QUEENS HILL PTY LTD ACN 164 348 350
(tenth defendant)
and
FULLSHARE INTERNATIONAL (AUSTRALIA) PANDANUS PTY LTD ACN 164 339 146
(eleventh defendant)
and
FULLSHARE INTERNATIONAL (AUSTRALIA) MARINA PTY LTD ACN 164 338 925
(twelfth defendant)
and
FULLSHARE INTERNATIONAL (AUSTRALIA) VILLAGE PTY LTD ACN 164 347 095
(thirteenth defendant)
and
FULLSHARE INTERNATIONAL (AUSTRALIA) TURTLE POINT GOLF & COUNTRY CLUB PTY LTD ACN 164 339 682
(fourteenth defendant)FILE NO:
2187 of 2012
DIVISION:
Trial Division
PROCEEDING:
Claim
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
7 November 2013
DELIVERED AT:
Brisbane
HEARING DATE:
21 October 2013
JUDGE:
Applegarth J
ORDER:
1. Direct the plaintiff to submit a form of order to be made pursuant to rule 498 of the Uniform Civil Procedure Rules, 1999 (Qld) stating the answers to the three questions in accordance with these reasons.
2. I shall hear the parties as to costs.
CATCHWORDS:
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION ACTS AND PROVISIONS – PARTICULAR LEGISLATION – OTHER JURISDICTIONS – where the first defendant (Primary) is a top level body corporate in an integrated resort – where issue about voting entitlements in Primary and identity of entities holding those entitlements – where Primary raises levies in proportion to voting entitlements – where development consists of five stages – where there are at least 950 voting entitlements in relation to Stage 1 – where Stages 2 and 3 are amendments to Stage 1 – where Stages 4 and 5 are subsequent stages – whether proprietors of land in Stages 2, 3, 4 and 5 have voting entitlements in Primary
Integrated Resort Development Act 1987 (Qld), s 27, s 30,
s 32, s 102, s 108, s 116, s 134, s 137COUNSEL:
D E F Chesterman for the plaintiff
D R Tucker (Solicitor) for the first defendant
M T de Waard for the second to fourth and sixth to fourteenth defendantsSOLICITORS:
Nicholsons Solicitors for the plaintiff
Tucker & Cowan for the first defendant
McKay Solicitors for the second to fourth and sixth to fourteenth defendants
The Laguna Quays Resort near Airlie Beach is a partially completed, mixed-use resort development which is governed by the Integrated Resort Development Act 1987 (Qld) (“IRDA”). The first defendant (“Primary”) was created as the top level body corporate and has significant statutory obligations. Primary must raise levies to pay certain costs, including Council charges for water, sewerage and refuse services.
The issues that I am required to decide relate to voting entitlements in Primary and the identity of entities holding those entitlements. The determination of those issues is important because voting entitlements within Primary determine, among other things, who is liable to be levied by Primary, and in what proportions.
Disputes over the raising of levies have affected the administration of the resort. The plaintiff (“Principal”) commenced these proceedings on 9 March 2012, seeking a range of relief intended to regularise the affairs of the resort. On 29 March 2012 the Chief Justice appointed receivers and managers over Primary (“the receivers”) to, among other things, raise funds to meet certain urgent expenditure and to make necessary inquiries. Both Principal and Primary sought an early determination, in advance of the trial of other issues in the proceeding, of certain issues in relation to voting entitlements. This was because the dispute over voting entitlements was disrupting the day to day operation of the resort and its residents.
On 14 June 2013, the Court ordered by consent that the following questions be the subject of prior determination:
1.What is the total number of voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate?
2.Who are the holders of the voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate?
3.In what proportion is the total number of voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate held by the holders of those voting entitlements?
(“the questions”).
Principal accounts for 450 of at least 950 voting entitlements within Stage 1. The defendants are or were owners of land within the resort. The second to fifth defendants conduct the commercial parts of the resort.[1]
[1]The fifth defendant is in administration and did not appear. Its administrator consented to the hearing proceeding. The second to fourth and sixth to fourteenth defendants appeared by counsel and it is convenient to refer to them as “the defendants.”
There is uncertainty as to how many voting entitlements actually exist within Primary. Primary’s books only record 950 voting entitlements, which is consistent with the development of Stage 1 of the resort. The receivers have conducted an investigation into the total number of voting entitlements. This has included searches and obtaining documents pursuant to the Right to Information Act 2009 (Qld). There is no dispute that Stage 1 has been established. The searches undertaken by the solicitors for the receivers reveal that there has not been any registration of any lot forming part of Stages 2, 3, 4 and 5 of the development. Based upon the documents which they reviewed, the solicitors concluded that the site for Stages 2, 3 and 4 was fully developed with all the required infrastructure for the development permitted under the current IRDA approval and proposed amended approval. On the basis of Stages 2, 3, 4 and 5 being part of an approved scheme, the receivers of Primary contend that the correct number of voting entitlements may be 3,864.
On one view there are 3,864 voting entitlements comprising:
a. Stage 1 – 950;
b. Stage 2 – 196;
c. Stage 3 – 284;
d. Stage 4 – 134; and
e. Stage 5 – 2,300.
On another view, there are only 950 voting entitlements, being those attributed to Stage 1 of the development. Other results are possible. The answers to the questions depend upon interpretation of the IRDA and the terms upon which the approvals were granted in respect of the various stages.
The scheme of the development consists of various subsidiary schemes. The IRDA contemplates new body corporate schemes being established as integrated resorts expand.[2] The resort has been developed in stages since it commenced operation in the early 1990s. The development is intended to consist of five stages, including residential, golf, marina and town centre precincts.
[2]Integrated Resort Development Act 1987 (Qld), (“IRDA”) ss 134 -137.
The provisions about voting entitlements within Primary are not contained in a single document. It will be necessary to refer to the approvals, some of which approved amendments to the existing approved scheme and some of which approved a subsequent stage. It will be necessary to refer to the legislation in greater detail. A critical provision is s 108 which governs the voting entitlements of proprietors of the land.
There is no dispute that upon the establishment of Stage 1 and the registration of the initial plan of subdivision with respect to that stage, 950 voting entitlements were created within Primary. Principal and Primary contend that additional voting entitlements were created by later approvals.
The defendants contest this and point to the terms of approvals which state that “On registration of the initial plan or plans of subdivision” in the relevant stage, the total entitlements will be increased to a certain number. The defendants’ submissions are simple: the approvals state that only “on registration” will the voting entitlements increase and there has been no registration of a plan of subdivision for the relevant stages.
Principal submits:
1. Stages 2 and 3 are amendments to Stage 1, and by virtue of s 108 of the IRDA the voting entitlements are as set out in the approved amended scheme for the various precincts;
2. an initial plan of subdivision has been registered for Stage 4, s 134 of the IRDA applies to this subsequent stage and the owner of the land within this precinct holds 134 voting entitlements; and
3. since no initial plan of subdivision has been registered for stage 5, there are no voting entitlements held in respect of it.
Primary adopts submissions 1 and 2, but contend that there are 3864 voting entitlements on the basis that Stages 2, 3, 4 and 5 form part of the entire site which was approved initially in the form of Stage 1 and a future development area, and then with later approvals of particular stages.
The resort and its structure
The resort is located in the Whitsundays. It has a golf course and other resort and tourist facilities which are situated in commercial precincts. It also has residential precincts. The owners of residential lots in Stage 1 constitute body corporates which, in turn, are members of Principal.
Primary is created pursuant to s 102(1) of the IRDA. It has numerous statutory duties and powers. Primary is required to do all things reasonably necessary for the control, management and administration of the primary thoroughfare[3] and is required to do so for the benefit of its members.[4] It is required to determine contribution amounts and levy members to raise those amounts in order to pay its actual or expected liabilities.[5] It must keep proper books of account for amounts paid and received[6] and a roll which records the voting entitlements of proprietors of land within the resort.[7] Principal is created pursuant to s 139(1) of the IRDA. It also has particular statutory duties including the control, management and administration of the secondary thoroughfare for the benefit of its members.[8]
[3]IRDA, s 102(5).
[4]IRDA, s 116(1)(a).
[5]IRDA, s 116(1)(h), s 116(1)(j).
[6]IRDA, s 116(1)(e).
[7]IRDA, s 117.
[8]IRDA, s 151.
The IRDA governs the organisational structure of the resort. In general terms proprietors of land within the approved scheme’s non-residential precincts along with the principal body corporate for residential precincts become members of Primary.
Legislative scheme
The IRDA provides for the establishment of a new scheme by application to the Minister.[9] The application is then approved, approved with conditions or rejected by the Governor in Council.[10] Following approval and registration of the initial plan or plans of subdivision for the scheme, the proprietors of land within
non-residential precincts of the site and the principal body corporate for the residential precincts form a primary thoroughfare body corporate.[11]
[9]IRDA, s 4.
[10]IRDA, s 7.
[11]IRDA, ss 102, 139.
An application for a scheme may also seek approval for a “future development area.”[12] The approval of a “future development area” allows a scheme to develop in stages. Each subsequent stage is subject to separate approval under the IRDA as if it were a new scheme.[13]
[12]IRDA, ss 21, 22.
[13]IRDA, s 21(1)(b).
The IRDA facilitates expansion of the scheme by providing for the amendment of an existing scheme or approval of a subsequent stage. An amendment to an existing scheme occurs following an application pursuant to s 9 made by the primary thoroughfare body corporate to the Minister. The Governor in Council can then approve the amendment, approve it with conditions or refuse it.[14] An application for approval of part of a future development area as a subsequent stage is processed as if it was an application for a new scheme. An approval of a subsequent stage is made pursuant to s 26 of the IRDA. The approval of an application for approval of a subsequent stage is taken to be the approval of a scheme.[15] Section 134 provides that on registration of the initial plan or plans of subdivision in the subsequent stage the proprietor or proprietors of land within the subsequent stage (excluding each residential precinct and land comprising the primary thoroughfare) and any new principal body corporate that is created become additional members of the primary thoroughfare body corporate.
[14]IRDA, s 13.
[15]IRDA, s 26(8).
Central to the resolution of the questions in this case is the interpretation of s 108 of the Act which provides:
“Voting entitlements
(1) Until land within a precinct, other than a residential precinct or the primary thoroughfare precinct, is subdivided, the proprietor of that land as a member of the primary thoroughfare body corporate shall have a voting entitlement as set out in the approved scheme in respect of that precinct.
(2) Until the incorporation of the principal body corporate, the proprietor or proprietors of land within the residential precincts shall have the voting entitlement as set out in the approved scheme in respect of those precincts.
(3) When the land comprising a precinct, other than a residential precinct or the primary thoroughfare precinct, is subdivided the voting entitlement for that precinct shall be apportioned by notice in writing by the proprietor of the land given to the primary thoroughfare body corporate amongst parcels thereby created and a proprietor of a parcel shall as a member of the primary thoroughfare body corporate have the voting entitlement apportioned in respect of that parcel.
(4) In like manner the voting entitlement of a proprietor of land that is further subdivided shall be apportioned amongst the parcels thereby created and the proprietor of each parcel shall have the relevant voting entitlement so apportioned.
(5) Immediately upon the incorporation of the principal body corporate –
(a) the proprietor or proprietors referred to in subsection (2) shall cease to have those voting entitlements; and
(b) the principal body corporate shall have those voting entitlements.”
The following defined terms are instructive;
precinct means a part of a site identified in an approved scheme as a precinct.
residential precinct means a precinct, however described, identified in an approved scheme for the purposes of this Act as being a residential precinct.
primary thoroughfare precinct means a precinct identified in an approved scheme for the purposes of this Act as being a primary thoroughfare precinct.[16]
proprietor, in relation to land, means the person for the time being registered, or entitled to be registered, under the Land Title Act 1994 as the owner of the land...[17]
[16]IRDA, Schedule 7.
[17]IRDA, s 101.
The link between voting entitlements and the obligation to pay levies appears in s 109 of the Act, which provides;
“Levies by primary thoroughfare body corporate on members
(1) The primary thoroughfare body corporate may levy the contributions determined by it in accordance with section 116(1)(h) and the amount (if any) determined pursuant to section 116(2) in respect thereof by serving on its members notice in writing of the contributions payable by them.
(2) Contributions levied by the primary thoroughfare body corporate shall be levied and shall be payable, subject to this section, by the members of the primary thoroughfare body corporate in shares proportional to the voting entitlements.
…”
Approval of a subsequent stage brings it within the approved scheme for certain purposes. But approval of a subsequent stage does not automatically make owners of land within its precincts members of the primary thoroughfare body corporate with voting entitlements governed by s 108. Section 134 (to which further reference will be made in discussing Stage 4) makes specific provision for an increase in membership of the primary thoroughfare body corporate on registration of the initial plans of subdivision in the subsequent stage. Sections 134 and 137 provide that the provisions of Part 8, Division 1 (which includes s 108) do not apply until after registration of the initial plans of subdivision in the subsequent stage.
Approvals
Approval of a scheme is notified by gazette notice published in the Queensland Government Gazette. Once approved, the scheme is then subject to the provisions of the IRDA.
On 30 April 1992 the scheme for Stage 1 of the resort was approved, and provisional approval was given for a “future development area.”
Subsequent approvals were either by amendment of the existing scheme or by an application for approval of a subsequent stage pursuant to s 26 of the IRDA. Stages 2 and 3 were approved by way of amendments to Stage 1. Stages 4 and 5 were approved as new schemes following applications under s 26.
The first of the subsequent approvals occurred on 14 July 1994 when the application for Stage 2 was approved. Stage 3 was approved on 27 January 1995. Amendments to Stages 2 and 3 were approved on 27 May 2005. The applications for Stage 4 and 5 were approved on 27 May 2005 and 13 April 2006 respectively.
Approval of Stage 1 and the future development area
As noted, the scheme for Stage 1 of the resort was approved on 30 April 1992 and provisional approval was given for a “future development area.” Stage 1 was to consist of the precincts contained in Schedule 1 to the gazette notice and the plan referred to in that schedule. Schedule 2 set out the “future development area.”
The scheme consisted of the following precincts, with a total of 950 voting entitlements apportioned as follows:
(i) golf course precinct – 150;
(ii) golf lodge precinct – 325;
(iii) administration precinct – 25;
(iv) first residential precinct – 450; and
(v) primary thoroughfare precinct.
The maximum voting entitlement of the members of Principal was 450, which equated to the maximum number of residential lots in the first residential precinct.
The initial plan of subdivision for Stage 1 was registered on or about 15 September 1992. By virtue of ss 102 and 139 of the IRDA, Primary and Principal were created upon the registration of the plan.
Approvals of Stages 2 and 3
The gazette notices for Stages 2 and 3 state that the approvals were made pursuant to s 9(1) of the IRDA. The reference in the gazette notices to approval being “pursuant to section 9(1)” should be understood as approval of an amendment application that was made pursuant to s 9. The actual source of power to approve the amendment is s 13. Nothing turns on this.
Amendments to Stages 2 and 3
On 27 May 2005 Stages 2 and 3 of the scheme were amended pursuant to s 13 and Stage 4 was approved pursuant to s 7 of the IRDA.
The amended scheme for Stage 2 comprised of a marina commercial precinct, a western commercial precinct and a primary thoroughfare precinct.
In respect of voting entitlements of new members of Primary the amended scheme for Stage 2 states;
“On registration of the initial plan or plans of subdivision in Stage 2 of the Laguna Quays Resort, the total voting entitlements of members of the Laguna Quays Primary Thoroughfare Body Corporate shall be 1,146.
The voting entitlements of the proprietor or proprietors of land within the Stage 2 precincts shall be apportioned as follows:-
Marina Commercial Precinct 156
Western Commercial Precinct 40 196
These voting entitlements have been apportioned on the basis of the anticipated use that the proprietors or users of lands and facilities within Stage 2 of the Laguna Quays Resort will make of the Primary Thoroughfare Precincts.”
The amended scheme for Stage 3 provided for a second residential precinct, a secondary thoroughfare precinct and a primary thoroughfare precinct.
Similarly, the approval for the amended scheme in relation to Stage 3 states:
“On registration of the initial plan or plans of subdivision in Stage 3 of the Laguna Quays Resort, the total voting entitlements of members of the Laguna Quays Primary Thoroughfare Body Corporate shall be 1430.
The voting entitlements of the proprietor or proprietors of land within Stage 3 precincts shall be apportioned as follows:-
Second Residential Precinct 284
These voting entitlements have been apportioned on the basis of the
anticipated use that the proprietors or users of lands and facilities
within Stage 2 of the Laguna Quays Resort will make of the Primary
Thoroughfare Precincts.”
The defendants emphasise the following words in the relevant approvals:
“On registration of the initial plan or plans of subdivision in [stage number] of the Laguna Quays Resort, the total voting entitlements of the Laguna Quays Thoroughfare Body Corporate shall be [total voting entitlements number].”
Approval of Stage 4
The Stage 4 approval was granted pursuant to s 7 of the IRDA. It consisted of a second residential precinct.
In respect of voting entitlements the approval states;
“On registration of the initial plan or plans of subdivision in Stage 4 of the Laguna Quays Resort, the total voting entitlements of members of the Primary Thoroughfare Body Corporate shall be 1564.
The voting entitlements of the proprietor or proprietors of land within Stage 4 precincts shall be appointed as follows: -
Second Residential 134
These voting entitlements have been apportioned on the basis of the anticipated use of the proprietors or users of lands and facilities within Stage 4 of the Laguna Quays Resort will make of the Primary Thoroughfare Precincts.”
Approval of Stage 5
As noted, Stage 5 was approved on 30 April 2006 and consisted of a town centre precinct, golf course/residential precinct and a primary thoroughfare precinct.
In relation to voting entitlements the approved scheme states;
“On registration of the initial plan or plans of subdivision in Stage 5 of the Laguna Quays Resort, the total voting entitlements of members of the Primary Thoroughfare Body Corporate shall be 3,864.
The voting entitlements of the proprietor or proprietors of land within Stage 5 precincts shall be apportioned as follows: -
Town Centre 1,300
Golf Course/ Residential 1,000
2,300
These voting entitlements have been apportioned on the basis of the anticipated use of the proprietors or users of lands and facilities within Stage 5 of the Laguna Quays Resort will make of the Primary Thoroughfare Precincts.”
Development of Stages 2, 3, 4 and 5
Some evidence was given of development that has occurred on the land comprising later stages, notwithstanding, subject to the arguments which follow in respect of Stage 4, that no initial plan of subdivision appears to be have been registered by the Registrar of Titles. I conclude that the fact of development does not affect the question of interpretation that I am required to determine.
It is sufficient to briefly summarise the evidence of the expert called by the defendants, Mr Reynolds. By 24 July 1991 aerial photos depict clearing for the golf course as well as for the primary thoroughfare. The stockpiling of rocks for the marina is also depicted. The aerial photos from 22 June 1993 indicate the resort, pool, golf course, tennis court, accommodation buildings and primary thoroughfare through the site have been constructed. In respect of Stages 2 to 4 the primary and secondary road through the marina and the residential allotments around the seawall appear to have been constructed and the general outline of the marina can be seen. In respect of the area which would ultimately become Stage 5 the Beach Club has been constructed on the shores of a man-made lagoon and beach chairs are seen on the shore suggesting the Club is operational. In 1997 several more dwellings are depicted in the Stage 1 area and in relation to Stages 2 to 4 the moorings, car park and Harbour Masters Office have been constructed along with a dwelling at the end of the breakwall. After 1997 no significant changes occur to the site. Mr Reynolds visited the site on 20 September 2013 and observed:
(a) in relation to Stage 1 the main resort and associated facilities are disused and in poor repair. Several residential precincts are occupied and in good repair;
(b) in relation to Stage 2 to 4 all roads appeared complete, the marina was operational but in a poor state of repair. The residential lots appeared complete; and
(c) in relation to Stage 5 the Beach Club and boulevard road were observed, both in a state of disrepair.
Mr Reynolds’ evidence makes clear that commercial parts of the resort have been in operation for some time. However the owners of land upon which these operations are conducted are not listed in the records of Primary as having voting entitlements.
Voting entitlements in Stage 1
There is no dispute that the number of voting entitlements in Primary is at least 950, being the number designated in the approved scheme for Stage 1 prior to its amendment.
Voting entitlements in Stages 2 and 3
The voting entitlements in Primary are determined by s 108 of the IRDA. That section makes a distinction between land which is in a residential precinct and land which is not. In the case of land within a precinct, other than a residential precinct or the primary thoroughfare precinct, until the land is subdivided the proprietor of that land as a member of the primary thoroughfare body corporate shall have a voting entitlement “as set out in the approved scheme in respect of that precinct.”[18] In the case of land within the residential precincts, until the incorporation of the principal body corporate, the proprietor or proprietors of land within the residential precincts shall have the voting entitlement “as set out in the approved scheme in respect of those precincts.”[19]
[18]IRDA, s 108(1).
[19]IRDA, s 108(2).
Stages 2 and 3 were approved as amendments to Stage 1. The approved scheme in respect of the precincts in Stage 2 is the scheme for Stage 1, as amended. Likewise, the approved scheme in respect of the precincts in Stage 3 is the scheme for Stage 1, as amended.
Neither Stage 2 nor Stage 3 was a “subsequent stage” within the meaning of that term in the IRDA, so as to attract s 134 (which relates to the effect of registration of an initial plan or plans of subdivision in a “subsequent stage”) or the other provisions of Part 8, Division 2.
Stage 2
Stage 2 consists of commercial precincts and a primary thoroughfare precinct. In accordance with s 108(1), the proprietor of the land in each of those commercial precincts is a member of Primary and has the voting entitlements set out in the approved scheme in respect of those non-residential precincts.
Principal and Primary contend that this is 196 because the approved scheme, as amended, states that the voting entitlements of the proprietor or proprietors of land within the Stage 2 precincts shall be 196, apportioned between the Marina Commercial Precinct (156) and the Western Commercial Precinct (40).
The defendants acknowledge that the proprietors of land forming those precincts became members of Primary, but submit that they have no voting entitlements. The defendants place reliance on the terms of the approval and the use of the words “on registration” as indicating that the increase in the total voting entitlements in Primary by 196 was deferred until such time as a plan of subdivision in the stage had been registered. The defendants’ argument is simple and attractive. But, in my view, it reads s 108(1) in isolation and without regard to its apparent purpose. Section 108(1) relates to land within an existing precinct which is part of an approved scheme. It concerns voting entitlements in respect of that precinct before the land within a precinct is subdivided. Such land may never be subdivided.
The owner of land in such a precinct might be expected to have an interest in the affairs of the scheme and to benefit from the maintenance of the primary thoroughfare (and any improvements on it) and the payment of rates and other liabilities incurred by the primary thoroughfare body corporate in administering the primary thoroughfare for the benefit of its members.[20] On the defendants’ interpretation, the owner of a commercial precinct is a member of the primary thoroughfare body corporate but does not have a voting entitlement (and a consequential obligation to contribute by way of a levy).
[20]IRDA, s 116.
The IRDA does not contain any obvious mechanism by which the owner of a commercial precinct, which enjoys membership in the primary thoroughfare body corporate and the benefits provided by the primary thoroughfare body corporate, can be required to contribute to the costs of providing those benefits, or be forced to subdivide its precinct, in which event the voting entitlement for that precinct is apportioned in accordance with s 108(3).
Section 108 is immediately followed by a section about levies by the primary thoroughfare body corporate on members. Section 109(2) provides for contributions levied by the primary thoroughfare body corporate to be levied and to be payable, subject to s 109, by the members of the primary thoroughfare body corporate “in shares proportional to the voting entitlements.”
The terms of the relevant document which set out the voting entitlement in the approved scheme in respect of Stage 2 reinforces the link between voting entitlements and the use that the proprietors or users of lands and facilities within Stage 2 will make of the primary thoroughfare precincts. It states that the voting entitlements of 196 had been apportioned 156 to the Marina Commercial Precinct and 40 to the Western Commercial Precinct on the basis of the anticipated use that the proprietors or users of land and facilities within Stage 2 would make of the primary thoroughfare precincts.
When s 108 is read in its context it relates to voting entitlements which, in turn, determine contributions levied in accordance with s 116(1)(h) to meet actual or expected liabilities incurred for maintenance, insurance, rates and other liabilities of the primary thoroughfare body corporate.
Construed in its context, s 108(1) determines the voting entitlement that a proprietor of land within a precinct shall have before the land within that precinct is subdivided. When the terms and apparent purpose of s 108 are considered it can be seen that its concern is to determine voting entitlements (and consequential obligations to contribute to the primary thoroughfare body corporate) before a precinct is subdivided. Section 108(1) contemplates that the relevant approval will state a voting entitlement that is to apply before a precinct is subdivided. The approval in this case does so by setting out that there are 156 voting entitlements for the Marina Commercial Precinct and 40 voting entitlements for the Western Commercial Precinct.
The relevant approval also addresses the matter of voting entitlements on registration of the initial plan or plans of subdivision in Stage 2.
Simply put, applied to the facts of this case, s 108(1) provides that the proprietor of land within each commercial precinct shall have the voting entitlement set out in the notice. Once the precinct is subdivided, s 108(3) governs the apportionment of voting entitlements. Instead of the votes being held by the proprietor of the land that comes to be subdivided, the voting entitlement for that precinct is apportioned by notice in writing by the proprietor of the land given to the primary thoroughfare body corporate amongst the parcels thereby created.
A plan of subdivision in Stage 2 has not been registered. But this does not alter the fact that Stage 2 is a precinct in an approved scheme and that the proprietor of land within a commercial precinct in that stage has the voting entitlement set out in the approved scheme in respect of that precinct until the land within the precinct is subdivided. Such a proprietor may choose to operate its commercial precinct and not subdivide it. There is no apparent obligation to subdivide. The proprietors of and users of lands and facilities in that commercial precinct will make use of the primary thoroughfare and be a member of Primary, but, according to the defendants, have no voting entitlements and no consequential obligation to contribute to the liabilities of Primary of which it is a member.
Viewed in isolation, the approval of Stage 2 addresses voting entitlements of new members of Primary on registration of the initial plan or plans of subdivision in Stage 2. It does not address voting entitlements of proprietors of land within a commercial precinct before the land is subdivided. However, s 108(1) does that.
When the relevant approval is read in conjunction with s 108, the effect of s 108 is that the proprietor of the commercial precinct before the precinct is subdivided has the same voting entitlement as the proprietor or proprietors of land within the precinct after registration of the subdivision. Such a construction does not ignore the words “on registration” or the other words emphasised by the defendants. Instead, it recognises the approval as being concerned with voting entitlements on registration of a plan of subdivision and interprets s 108 as saying that before the subdivision owners of the relevant land have the same number of voting entitlements.
Section 108(1) contemplates that until the land in a non-residential precinct is subdivided its owner will have a voting entitlement, being the voting entitlement set out in the approved scheme. The defendants’ argument, in effect, is that because the owners of land within a subdivided precinct do not have voting entitlements before registration of the plan of subdivision, neither does the owner of the land before any subdivision. This literal interpretation of the terms of the approval does not have sufficient regard to s 108(1). That sub-section contemplates that the owner of a precinct will have a voting entitlement until the land within the precinct is subdivided. It is hard to see why an owner of a commercial precinct who is a member of the primary thoroughfare body corporate should not have a voting entitlement (and consequential obligations by virtue of s 109) in the primary thoroughfare body corporate. The concluding words of s 108(1) suggest that one looks to the relevant approval simply to find a voting entitlement “in respect of that precinct.” When one does that in respect of Stage 2, the total voting entitlement is 196.
Section s 108(3) uses the expression “the voting entitlement for that precinct”. Section 108(1) and 108(3) address voting entitlements for a non-residential precinct during two different periods of time: before and after the land is subdivided. The approved scheme sets out a voting entitlement in respect of a precinct. Before subdivision, the owner of the land as a member of the primary thoroughfare body corporate has that entitlement. After subdivision, the voting entitlement is apportioned amongst parcels thereby created. During both periods, the total voting entitlement is the same.
In summary, after the approval of the scheme in its unamended form on
30 April 1992 an initial plan of subdivision was registered with the Registrar of Titles on 15 September 1992. Primary was thereby constituted pursuant to s 102 of the IRDA. The amendment of the scheme to include Stages 2 and 3 meant that the site of the approved scheme consisted of all land within the boundaries of the site as set out in the approved scheme, as amended.[21] The proprietor of land within a precinct (other than a residential precinct or the primary thoroughfare precinct) as a member of Primary has a voting entitlement as set out in the amended approved scheme “in respect of that precinct”. These concluding words of s 108(1), when interpreted in their context, mean that one looks to the relevant approval simply to find a voting entitlement in respect of that precinct.
[21]IRDA, s 27(2).
Stage 3
Stage 3 consists of a Second Residential Precinct. In accordance with s 108(2), until the incorporation of the principal body corporate for that residential precinct, the proprietor or proprietors of land within the residential precinct have the voting entitlement set out in the approved scheme in respect of that precinct.
Principal and Primary contend that this is 284 because the approved scheme (as amended) states there are 284 voting entitlements in respect of that precinct.
The defendants acknowledge that the proprietors of the land forming the residential precinct in Stage 3 became members of Primary upon the approval (and will remain so until the incorporation of the Second Residential Principal Body Corporate), but contend that they have no voting entitlements because no plan of subdivision has been registered for Stage 3.
The arguments are essentially the same as those which have been canvassed in relation to Stage 2. Section 108(2) should be interpreted on the basis that it contemplates that until the incorporation of the principal body corporate the proprietor or proprietors of land within a residential precinct will have a voting entitlement, being the voting entitlement set out in the approved scheme. One looks to the approved scheme in respect of the Second Residential Precinct to find the voting entitlement. It is a voting entitlement of 284.
Voting entitlements in Stage 4
Stage 4 was approved as a “subsequent stage,” not by way of an amendment to an existing approved scheme. It attracts the specific provisions about an increase in membership of a primary thoroughfare body corporate contained in Part 8, Division 2.
Section 134 of the IRDA also arises for consideration, it provides:
“Effect of subdivision in subsequent stage
(1) On registration of the initial plan or plans of subdivision in a subsequent stage mentioned in part 3—
(a) the proprietor or proprietors of land within the subsequent stage (excluding land within each residential precinct and land comprising the primary thoroughfare); and
(b) if a new principal body corporate is created in relation to the subsequent stage—the body corporate; become additional members of the primary thoroughfare body corporate for the site.
(2) Until the incorporation of the principal body corporate, the proprietors of the land within the residential precincts are members of the primary thoroughfare body corporate instead of the principal body corporate.
(3) If the proprietors of lots within a subsequent stage become additional members of an expanded principal body corporate, the body corporate continues as a member of the primary thoroughfare body corporate.
(4) For the purposes of this division and part 8, division 1 on registration of the initial plan or plans of subdivision in a subsequent stage, the site comprises that stage and any earlier stage.”
Section 137 states that except where inconsistent with Division 2 (which is about increasing membership of the primary thoroughfare body corporate) Part 8, Division 1 (which is about the primary thoroughfare body corporate and includes ss 108 and 109) applies in relation to the primary thoroughfare body corporate “after the registration of the initial plan or plans of subdivision in a subsequent stage.”
As a result of s 137, the provisions of Part 8, Division 1, including s 102 (which relates to membership of the primary thoroughfare body corporate) and s 108 (which relates to voting entitlements), do not apply until after the registration of the initial plan or plans of subdivision in Stage 4. Nothing in Part 8, Division 2 is inconsistent with ss 102 and 108 not applying until after the registration of the initial plan or plans of subdivision in Stage 4.
Section 134(4) serves to emphasise that for the purposes of both Division 1 and Division 2 of Part 8, it is only on registration of the initial plan or plans of subdivision in a subsequent stage such as Stage 4 that “the site comprises that stage and any earlier stage.” It may be that for other purposes, the site of the approved scheme comprises both an approved subsequent stage and any earlier stage. However, for the purpose of determining membership of the primary thoroughfare body corporate, including any increase in membership of it, and the voting entitlements of members of the primary thoroughfare body corporate, there is only an increase in membership of the primary thoroughfare body corporate on registration of the initial plan or plans of subdivision in the subsequent stage.
Section 134(1) states that on registration of the initial plan or plans of subdivision in a subsequent stage, the proprietor or proprietors of land within the subsequent stage (excluding land within each residential precinct and land comprising the primary thoroughfare) and any new principal body corporate that is created in relation to the subsequent stage become additional members of the primary thoroughfare body corporate for the site.
Section 134(2) is linked to s 134(1)(b). The reference in s 134(2) to “the incorporation of the principal body corporate” is to a new principal body corporate that is created in relation to the subsequent stage. Section 169 provides that on registration of the first plan of subdivision creating a lot or lots within a residential precinct in a subsequent stage, the proprietors of all land within the residential precincts in that subsequent stage become either:
(a)a body corporate under the name of the subsequent stage; or
(b)additional members of an existing principal body corporate.
The procedure for an increase in membership of an existing principal body corporate is contained in s 170.
Section 134(2) applies where a new principal body corporate has yet to be incorporated. In such a case, until the incorporation of the principal body corporate for the subsequent stage, the proprietors of land within the residential precincts are members of the primary thoroughfare body corporate instead of the principal body corporate.
Section 134 is premised upon the registration of an initial plan or plans of subdivision in the subsequent stage.
The issue, then, is whether there has been registration of an initial plan or plans of subdivision in Stage 4. The defendants submit that there has not been.
Principal’s submissions note that little guidance is given as to what amounts to an initial plan of subdivision for the purposes of the IRDA. However, if reference is made to the statutory definition which points to s 32 and in turn to s 30 then, on a proper construction of the IRDA, a plan of subdivision which complies with the requirements of s 30 must be an initial plan of subdivision for the purposes of the IRDA.
Stage 4 consists only of a Secondary Residential Precinct; there is no primary thoroughfare precinct provided for it in the approved scheme for that stage. This would seem to preclude the plan from complying with s 30. In any event, to engage s 30 the relevant plan must be one which subdivides the land into lots which comprise the land within the site.
Principal points to plans of the Secondary Residential Precinct (being the sole precinct referred to in the approval of Stage 4). It notes that the plan of the lot which forms the Secondary Residential Precinct on Stage 4 has already been registered. This is so and can be seen from a comparison of the Secondary Residential Precinct in the affidavit of Mr Reynolds and Lot 2 on Plan 866551. The plan of that lot has been registered. However, the plan that has been registered is a plan of the lot which constitutes Stage 4. It is not a plan of “subdivision in” that subsequent stage. There is no evidence of registration of a plan of subdivision in Stage 4. The lot that reflects Stage 4 itself may have come into existence because of a subdivision. There has been no registration of a plan of subdivision “in” Stage 4. Principal acknowledges that there has been no lot created within the residential precinct by such a further subdivision.
Because Stage 4 is a subsequent stage that does not include a non-residential precinct, the effect of s 134 is that on registration of the initial plan or plans of subdivision in Stage 4:
(a)if a new principal body corporate is created in relation to the subsequent stage the body corporate will become an additional member of the primary thoroughfare body corporate for the site; and
(b)until incorporation of that new principal body corporate in relation to Stage 4, the proprietors of the land within the residential precinct are members of the primary thoroughfare body corporate instead of the principal body corporate.
But an increase in membership of the primary thoroughfare body corporate pursuant to s 134 depends on registration of the initial plan or plans of subdivision in Stage 4. This has yet to occur. Expressed differently, for s 134(2) to apply (pending the incorporation of a new principal body corporate for Stage 4) the initial plan or plans of subdivision in Stage 4 must have been registered. They have not been. Therefore, s 134 does not apply to create additional members of Primary.
Presently, there are no voting entitlements in Stage 4.
Voting entitlements in Stage 5
Stage 5 also was approved as a subsequent stage. The parties agree that, to date, there has been no registration of an initial plan of subdivision in Stage 5. The end result in terms of voting entitlements is the same as for Stage 4. Section 137 applies. The provisions of Part 8, Division 1, including s 108 in relation to voting entitlements, do not apply until an initial plan of subdivision has been registered.
The receivers of Primary initially submitted there were 3,864 voting entitlements on the footing that Stages 2, 3, 4 and 5 form part of the entire site. However, in later submissions and in the light of Principal’s concession in respect of Stage 5, the receivers for Primary expressed some reservation about Stage 5.
I accept Principal’s submissions that because there has been no registration of an initial plan of subdivision in respect of land which is the subject of Stage 5, the proprietors of land within Stage 5 are not additional members of Primary by virtue of s 134 and ss 102 and 108 do not apply to them. Presently there are no members of Primary in respect of the Stage 5 precincts, and accordingly no member of Primary has the voting entitlements set out in the approved scheme in respect of those precincts.
Answer to question 1 – the total number of voting entitlements within Primary
For the reasons given, currently there are a total of 1,430 voting entitlements within Primary comprising:
(a)Stage 1 – 950 voting entitlements;
(b)Stage 2 – 196 voting entitlements; and
(c)Stage 3 – 284 voting entitlements.
On a superficial level, it may seem odd that the owners of land in a resort that was developed in stages should not all be members of Primary with the voting entitlements set out in the approved scheme in respect of each precinct, and consequential obligations to contribute towards the expenses of Primary in accordance with s 109. However, the different position in relation to, on the one hand, Stages 2 and 3, and, on the other hand, Stages 4 and 5, is a consequence of the legislation’s differential treatment of a stage that becomes part of an approved scheme by way of amendment and a future development area that is approved as a “subsequent stage.” Precincts that form part of an amended scheme are subject to the membership and voting entitlement provisions contained in Part 8, Division 1. Those provisions, and s 108 in particular, do not apply to a subsequent stage until after the registration of an initial plan or plans of subdivision in the subsequent stage. Because there has been no registration of an initial plan of subdivision of the land in Stage 4 or of the land in Stage 5, these stages presently do not attract voting entitlements pursuant to s 108.
The fact that development has occurred on Stage 2, 3, 4 and 5 and businesses have operated on some of those stages explains why disputes over voting entitlements and contributions to Primary have arisen and provides a background to the hearing which is intended to determine questions of voting entitlements. The fact that development has occurred also has a potential relevance to the determination of the question of voting entitlements since if development occurred it may have occurred in accordance with a plan of subdivision. But it has limited weight in deciding whether any such plan was registered. The questions for separate determination turn upon interpretation of the IRDA and the terms upon which the approvals were granted in respect of the various stages, together with more probative evidence about registration of plans of subdivision.
I am not presently concerned with the apparent omission of parties to lodge pursuant to s 30 a plan of subdivision, the failure to register any approved plan of subdivision or the fact that, as a result, the burden of levies to pay Primary’s expenses has fallen on some owners of land in the resort, while other land owners who enjoy the benefit of Primary’s property and the services it provides have not made a contribution. Those may be issues for another day.
Answer to question 2 – holders of voting entitlements
This question requires the determination of the lots that make up Stages 1, 2 and 3 as well as their respective owners since the owners of certain lots hold voting entitlements under the IRDA.
Stage 1
The parties agree that Stage 1 includes the following lots and owners;
Lot number and general description Owner 1 on RP 846432 (Primary Thoroughfare) Primary 17 on SP 167816 (Golf Course) Fullshare International (Australia) Turtle Point Golf & Country Club 16 on SP 167816 (Golf Lodge) Fullshare International (Australia) Turtle Point Golf & Country Club 18 on SP 167816 (Golf Lodge) Fullshare International (Australia) Turtle Point Hotel Pty Ltd 3, 4 and 8 on RP 846432 (Golf Course) Fullshare International (Australia) Turtle Point Golf & Country Club 2 on RP 846432 (Administration Precinct) Laguna Whitsundays Airport Pty Ltd
Stage 2
The parties agree that part of lot 12 on CP 858244 comprises Stage 2 of the resort. This lot is owned by several of the defendants as tenants in common, proportioned as follows:
a. Fullshare International (Australia) Queens Hill Pty Ltd – 23/100;
b. Fullshare International (Australia) Pandanus Pty Ltd – 57/100;
c. Fullshare International (Australia) Marina Pty Ltd – 1/100; and
d. Fullshare International (Australia) Village Pty Ltd – 19/100.
Stage 3
There is no dispute between the parties that Stage 3 is comprised of lot 28 on CP 866551. The owner of that lot is Fullshare International (Australia) Marina Pty Ltd.
Answer to question 3 – voting entitlements within each stage.
Stage 1
The parties agree the 950 voting entitlements in Stage 1 are divided as follows;
a. Golf Course Precinct – 150;
b. Golf Lodge Precinct – 245;
c. Racquet Club – 79;
d. Connecting Road – 1;
e. Administration Precinct – 25; and
f. Principal – 450.
I find that Fullshare International (Australia) Turtle Point Golf & Country Club Pty Ltd holds 230 voting entitlements, Fullshare International (Australia) Turtle Point Hotel Pty Ltd holds 245 voting entitlements, Laguna Whitsundays Airport Pty Ltd holds 25 voting entitlements and Principal holds 450 voting entitlements in Primary.
Stage 2
The approval for Stage 2 apportions 156 voting entitlements to the Marina Commercial precinct and 40 voting entitlements to the Western Commercial precinct. I find that the four defendants listed above at [95], that own the lot comprising Stage 2, hold 196 voting entitlements in Primary as tenants in common.
Stage 3
The approval for Stage 3 sets out 284 voting entitlements in respect of the Secondary Residential Precinct. I find that Fullshare International (Australia) Marina Pty Ltd holds 284 voting entitlements in Primary.
Costs
The issue of costs was addressed in written submissions by Counsel for Principal. Principal submits the proceedings were brought for the benefit of all members of Primary and that a declaration as to the members of Primary and their voting entitlements is required to allow the receivers to comply with their obligations under the IRDA. I accept Principal’s submissions.
I will hear the parties in relation to costs.
Answers to questions
The questions should be answered in a form that reflects these reasons.
The first question is answered:
“Currently there are a total of 1430 voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate.”
The second and third questions should be answered in accordance with these reasons in a form that states the identities of the current holders of current voting entitlements and the proportion in which they are held. I will direct Principal to submit a form of order to be made pursuant to rule 498 of the Uniform Civil Procedure Rules, 1999 (Qld) containing the answers to the three questions.
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