Mousa v Body Corporate for Q1 CTS 34498
[2012] QCATA 88
•1 June 2012
| CITATION: | Mousa v Body Corporate for Q1 CTS 34498 and Anor [2012] QCATA 88 |
| PARTIES: | Atef Mousa (Appellant) |
| v | |
| Body Corporate for Q1 CTS 34498 (First Respondent) | |
| Kenneth John McCarthy (Second Respondent) |
| APPLICATION NUMBER: | APL367-11 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President Kenneth Barlow SC, Member |
| DELIVERED ON: | 1 June 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Appeal dismissed. |
| CATCHWORDS: | BODY CORPORATE AND COMMUNITY MANAGEMENT – LOT ENTITLEMENT – CONTRIBUTION SCHEDULE – ADJUSTMENT PROCEDURE – STATUTORY CONSTRUCTION – MEANING OF “ADJUSTMENT ORDER” – where the Appellant had sought an adjustment of the applicable CSLEs – where the Tribunal made an order adjusting the contribution schedule – where the Second Respondent requested the First Respondent amend the CSLEs to pre-adjustment levels – where the body corporate committee declined to proceed with the motion – where the dispute came before an adjudicator – where the Appellant appealed the adjudicator’s decision – whether the earlier Tribunal order was an “adjustment order” – whether the second lot owner was entitled to submit a motion for adjustment to the body corporate committee Body Corporate and Community Management Act 1997, ss 48, 49, 290, 378, 379, 385 Bayview Shores [2012] QBCCMCmr 64 |
APPEARANCES and REPRESENTATION (if any):
The matter was heard and determined on the papers under s 32 of the Queensland Civil and Administrative Tribunal Act 2009.
| APPLICANT: | Ruddy & Company made written submissions |
| RESPONDENT: | McDonald Balanda & Associates made written submissions for the First Respondent Mr Kenneth McCarthy made written submissions for the Second Respondent |
REASONS FOR DECISION
JUSTICE ALAN WILSON
I have read in draft, and agree with, the Reasons of Mr Barlow and his conclusions. I also concur with the order he proposes.
KENNETH BARLOW, SC
Introduction
This appeal raises important issues about the entitlement of a lot owner in a residential community titles scheme to require that the contribution schedule lot entitlements, which had previously been adjusted by the order of a court, tribunal or adjudicator, revert to those in the original community management statement. The issues are likely to affect considerably the amounts that individual lot owners are required to pay to the body corporate by way of regular contributions.
The appeal is made, pursuant to s 290 of the Body Corporate and Community Management Act1997, from the decision of an adjudicator. The appellant, Dr Mousa, is the owner of a lot in the residential community titles scheme of which the first Respondent is the body corporate. Dr Mousa was not a party to the proceeding that led to the adjudicator’s order, but was a person who, on the invitation of the adjudicator, made a submission about the application being considered by the adjudicator. Accordingly, he is entitled to appeal to the Tribunal on a question of law. The second Respondent, Mr McCarthy and his wife Diane McCarthy, were the Applicants before the adjudicator.
Relevant facts
In order to resolve the issues raised, it is necessary to set out the factual history in some detail. The facts are not in dispute.
In January 2010, Dr Mousa lodged an application in QCAT, pursuant to what was then s 48(1)(b) of the BCCM Act, seeking an adjustment of the CSLEs from those that had applied since the commencement of the scheme. The body corporate was the Respondent to that application.
At the time, s 48(6) of the BCCM Act required that the respective lot entitlements should be equal, except to the extent to which it was just and equitable in the circumstances for them not to be equal. Section 49 set out matters to which the Tribunal could and could not have regard in deciding if it was just and equitable for the respective lot entitlements not to be equal.
In support of his application, Dr Mousa filed expert evidence from a quantity surveyor expressing an opinion as to the adjustments that would be required for the lot entitlements to be just and equitable.
In response to the application, the body corporate obtained its own expert evidence, which proposed entitlements broadly similar, although not equivalent, to those proposed by the expert engaged by Dr Mousa.
By letter dated 28 April 2010, Dr Mousa told the body corporate that he would not rely upon his own expert’s report but would accept that of the body corporate’s expert. He asked the body corporate to agree to a consent order for adjustment of the CSLEs based on that report, and enclosed an application for a consent order for the body corporate to sign.
In an email dated 29 April 2010 from the body corporate’s solicitors to Dr Mousa, the solicitors said that, irrespective of whether the experts’ reports were both substantially similar and Dr Mousa was prepared to accept the body corporate’s expert’s report, they considered that the BCCM Act restricted the committee from consenting to the order proposed and that such consent must be put to owners in a general meeting.
No general meeting was called to consider the proposed consent order.
By a letter to the Registry of QCAT dated 10 May 2010, the body corporate’s solicitors referred to an application for consent order that had apparently been filed by Dr Mousa. They stated that they had advised the body corporate that the committee could not execute the proposed consent order and they asked instead that the matter be listed for directions.
The matter came on for directions before a member of the Tribunal on 18 May 2010. On that day, the Tribunal made the following orders:
“1.The contribution entitlement schedule will be amended to reflect the schedule produced on behalf of the Respondent by Martin Walsh SSKB [the body corporate’s expert].
2.The application be determined by a member of the Tribunal on the papers.”
By letter dated 15 June 2010 to the Registry of QCAT, the body corporate’s solicitors referred to the directions made on 18 May and contended that they were somewhat contradictory in that the first direction ordered that the community management statement be amended but the second direction provided that it was still to be determined by the Tribunal. They said that it was their understanding from the directions hearing that:
“it is the determination for [sic] the member yet to be made that will in fact order that the schedule be changed or not. … If the determination is pending then we will simply await that outcome”.
On 16 June 2010 the Tribunal issued the following order:
“IT IS THE DECISION OF THE TRIBUNAL THAT BY CONSENT:
1.The contribution entitlement schedule is amended to reflect the schedule provided on behalf of the Respondent by Martin Walsh SSKB.”
By letter dated 18 June 2010 from the body corporate’s solicitors to the Registry of QCAT, the solicitors referred to the notice of decision dated 16 June 2010. They went on to say the following:
“We confirm that our client, the Body Corporate, does not consent to and did not consent to those orders being made. As the Tribunal is no doubt aware, changing a lot entitlement schedule is a restricted issue for a Committee and there has not been a general meeting of the Body Corporate to authorise such change to the schedule. It is for that reason that the Body Corporate required the Tribunal to make its determination on the application and the evidence before it.
If it is the case that the Tribunal has in fact determined the application accordingly, then we would respectfully request that the Decision Notice be amended to remove the words ‘that by consent’ in the preamble to the order to properly reflect that it is in fact a decision of the Tribunal and not something consented to by the parties. We would respectfully request that the Tribunal issue an amended decision notice at its earliest convenience.”
On 24 June 2010, the Tribunal issued a decision headed “Decision – Amended”, which provided as follows:
“IT IS THE DECISION OF THE TRIBUNAL THAT:
1.The contribution entitlement schedule is amended to reflect the schedule provided on behalf of the Respondent by Martin Walsh SSKB.”
On 14 April 2011, amendments to the BCCM Act came into force. They provided for a different method of determining the appropriate entitlements under a contribution schedule and made provision for a body corporate, on the motion of a lot owner, to revert to its original CSLEs in certain circumstances.
Section 379 of the BCCM Act, as amended, provides relevantly that,
“if an adjustment order increased the proportion of the total contribution schedule lot entitlements for all the lots included in an existing scheme that are attributable to a lot in the scheme,”
and a new community management statement reflecting the increase had been recorded, the owner of the lot may submit a motion to the body corporate or its committee proposing the adjustment of the contribution schedule to reflect the pre-adjustment order entitlements for the scheme.[1] If such a motion is proposed, s 385 sets out the procedure that the body corporate must undertake in respect of that motion.
[1]The owner must have owned the lot at the time the adjustment order was made.
On 26 April 2011, Mr McCarthy wrote to the body corporate manager requesting that the body corporate take steps to amend the CSLEs for all residential lots in the scheme to the pre-adjustment levels.
The body corporate’s committee declined to proceed with the motion on the basis that the adjustment order that had been made by the Tribunal merely gave effect to a change of entitlements to which the body corporate had agreed. Therefore, it said, the order was not an “adjustment order” and s 379 had no application.
Mr and Mrs McCarthy applied to the Commissioner for an order that the committee deal with his proposal. The dispute was referred to an adjudicator. The principal dispute before the adjudicator was whether the Tribunal’s order adjusting the contribution schedule was an “adjustment order” as defined in s 378 of the BCCM Act. The body corporate and Dr Mousa also challenged Mr and Mrs McCarthy’s entitlement to propose the motion. The adjudicator determined that they were entitled to propose the motion, that the Tribunal’s order was an adjustment order, and therefore that the committee was obliged to deal with Mr and Mrs McCarthy’s motion.
The body corporate did not appeal from that decision, but Dr Mousa has. Mr McCarthy was joined as a Respondent to the appeal by an earlier order of this Tribunal.[2]
[2]Mousa v Body Corporate for Q1 CTS 34498 [2011] QCATA 345.
The issues
Dr Mousa and the body corporate both contend that the adjudicator’s decision was wrong and should be set aside. Both of them contend that the decision of the Tribunal made on 24 June 2010 was not an “adjustment order” as defined in s 378 of the BCCM Act, because it was an order giving effect to a decision that was not made by the Tribunal (refer paragraph (b) of the definition).
The body corporate also contends that it was not open to Mr McCarthy to submit a motion proposing the adjustment of the contribution schedule because, even if the order of 24 June 2010 was an adjustment order, it did not increase the proportion of the total CSLEs of all the lots included in the scheme. The body corporate contends that that is necessary in order to comply with s 379(1)(a).
There is no substantive dispute about the facts. The issues therefore concern the proper construction of the definition of “adjustment order” in ss 378 and 379(1)(a).
“Adjustment order”
Dr Mousa and the body corporate contend that, in making its decision on 24 June 2010, the Tribunal in effect misconceived its role and acted as a rubber stamp to approve the schedule recommended by the body corporate’s expert. They contend, therefore, that the Tribunal made no decision of its own but simply gave effect to the decision of the parties to agree that the schedule recommended in that expert’s report was appropriate.
The body corporate submits, correctly, that the question is not whether the order was a consent order, but whether the order simply gave effect to a decision that was not made by the Tribunal. In its submissions before the adjudicator (which it also relies on before the Tribunal), it referred to the decision giving effect to a “consent reached outside the Tribunal’s processes”. It now seeks to go beyond that and to say that, if an order proposed by one party is not disputed by the other and is made by the Tribunal, then the order simply gives effect to the decision of one party to propose and the other party not to oppose the proposed order. The body corporate points to there being no reference to “consent” in paragraph (b) of the definition of “adjustment order” in s 378.
Dr Mousa and the body corporate rely for their contentions upon the process by which the order was made. They note the earlier orders made on 18 May and 16 June 2010, and that no reasons were given for the order of 24 June 2010. They contend that those matters indicate that the Tribunal did not make its own decision but simply gave effect to the decisions made by the parties outside the Tribunal’s processes. Dr Mousa contends that there was no indication that the member turned her mind to an independent consideration of the issues before her because she did not give any reasons for the decision, contrary to s 121(4) of the Queensland Civil and Administrative Tribunal Act2009.
The body corporate relied on the decision of an adjudicator in Bayview Shores[3], in support of its submission that the history leading up to the Tribunal’s decision of 24 June 2010 demonstrates that it did not make its own decision, but simply gave effect to a decision of the parties.
[3] [2012] QBCCMCmr 64.
The circumstances in that case were similar to those before me. The Applicant in that case had originally applied to adjust the CSLEs. In that application, she did not submit any supporting evidence. The body corporate had filed a defence and an expert’s report, and had sought an order declaring that the schedule recommended in that report was appropriate for the scheme. At a directions hearing, the Applicant had confirmed that she agreed with the report and with the committee’s proposed order and on that basis the Tribunal member had said that she would order the adjustment in accordance with the schedule suggested by the expert. The order that was then issued stated that it was made by consent.
After the amendments to the BCCM Act, the body corporate decided to revert the CSLEs to the pre-adjustment schedule. The Applicant challenged that decision as invalid. She contended that, as the original order was a consent order, it was not an adjustment order and therefore it was not possible for the lot entitlements to be reverted. The body corporate in that case contended that, at most, it had consented to the Tribunal relying on its evidence when making a decision and it did not object to the order. The Applicant and owners supporting the application contended that the real issue was whether the order was one giving effect to a decision not made by the Tribunal and that that was clearly the case – the decision was that of the Applicant agreeing to accept the schedule presented by the committee.
In passages relied upon by the body corporate in this case, the adjudicator in Bayview Shores[4] noted that s 378 does not refer to the term “consent order” and went on to say as follows:
“[40] The test in section 378(b) is whether the order gives effect to a decision of the court or tribunal, or is a decision that is taken to be, but is not in fact a decision of the court or tribunal. In my view the key factor in this wording is not the intention of the parties, but the absence of a determinative decision-making process by the court or tribunal. The examples are obviously situations where the court or tribunal has made an order simply to put into effect the wishes of both parties rather than its own determination on the dispute. In such circumstances, the court or tribunal would not actively evaluate the law or the evidence relevant to the dispute, but would simply formalise the wishes of the parties. While there may have been a dispute between the parties originally, the order is made where there is no longer a discernable dispute to be decided by the decision maker.”[5]
[4] [2012] QBCCMCmr 64.
[5]The typographical errors in the original have been corrected.
The adjudicator in that case noted that the transcript recorded clear agreement between the parties at the hearing as to the contribution schedule lot entitlements that should apply, and that the resulting order was specified as a consent order. She said that it was clear that the Tribunal had not considered the legal or factual issues pertaining to what lot entitlements should properly apply to the scheme, because the application was resolved before it progressed to that stage in the decision-making process. She noted that the order was not appealed and that she had been presented with no evidence that the reference to the consent order was objected to.
It is correct that the definition of “adjustment order” does not refer to “consent”, except indirectly in the examples, which refer to settlement of a dispute and a written agreement. But equally, there is no reference in the definition to a decision that is not disputed.
It is also true that the Tribunal in this case did not give reasons for its decision, notwithstanding that s 121(4) of the QCAT Act provides that it must give oral or written reasons for its final decision in a proceeding. Of course, neither party requested the Tribunal to give reasons, as they were entitled to do under s 122 of that Act.
I do not accept, however, that the Tribunal simply made an order that gave effect to a decision that was not made by it. Firstly, there was no relevant decision to which its order could give effect. Secondly, the parties (and particularly the body corporate) insisted that it make its own decision based on the evidence before it, which it appears to have done.
In the correspondence before the order of 24 June, the body corporate’s committee, by its solicitors, made it very clear to both Dr Mousa and the Tribunal that the committee of the body corporate did not consider that it could consent to an order changing the lot entitlement schedule in accordance with its expert’s report. Rather, it wanted the Tribunal to make its own decision. Indeed, in the solicitors’ letter dated 15 June 2010, commenting on the directions given on 18 May 2010, they said that it was their understanding that “it is the determination of the member yet to be made that will in fact order that the schedule be changed or not.”[6] Again, in their letter of 18 June 2010, commenting on the order of 16 June 2010, the body corporate’s solicitors said that the body corporate did not consent to the orders being made and it “…required the Tribunal to make its determination on the application and the evidence before it”. They also specifically asked that, if it was the case that the Tribunal had determined the application “accordingly” – clearly meaning, on the application and the evidence before it – then it should remove the words “by consent” from the formal order. And that is exactly what then happened.
[6]Emphasis added.
In contrast to Bayview Shores[7], in this case there is clear evidence that the body corporate, by its committee, did not consent and had not reached an agreement nor made a decision as to the appropriate lot entitlements. The body corporate, by its committee, intended, expected and required the Tribunal to make its own decision having regard to the only evidence before it, namely the report of the body corporate’s expert.
[7] [2012] QBCCMCmr 64.
The adjudicator was correct in his finding (at [16] of his reasons) that it was clear that the body corporate did not decide to agree to an adjustment of the lot entitlements in accordance with its expert’s report. It could not do so because such a decision was a restricted issue for the committee, which was conducting the defence of the body corporate on its behalf.
The position was that, given that the parties to the application did not consent to particular orders, the Tribunal still had to deal with the submission that it should make the orders sought, and to be persuaded on the evidence before it that it should do so. It had an obligation to make a determination on the application in accordance with ss 48 and 49 of the BCCM Act. The Tribunal’s decision was its own and it has not been demonstrated that it was simply giving effect to somebody else’s decision. It is distinguishable from the situation before the adjudicator in Bayview Shores[8].
[8] [2012] QBCCMCmr 64.
There was therefore no decision by the body corporate or Dr Mousa to which the Tribunal was able to give effect by its order. I do not accept that the evidence demonstrates otherwise. To the contrary, it supports the fact that the Tribunal made its own decision. Indeed, the only evidence before the Tribunal when it made its decision was that of a qualified expert, which was relied upon at that stage by both parties. It would be unusual, in those circumstances, for the Tribunal not to be satisfied that the adjustment proposed by that expert met the statutory requirements and that therefore it was appropriate to order an adjustment in terms of that proposed by the expert.
A party seeking a finding that an order of the Tribunal is not one within paragraph (a) of the definition of adjustment order in the BCCM Act has an onus to refer to some evidence demonstrating that the order falls within that exclusion.[9] While the decision of 16 June 2010, said to be “by consent”, is some evidence supportive of the submission by Dr Mousa and the body corporate, in my view it is outweighed by the evidence comprising the letters of 15 and 18 June 2010 from the body corporate’s solicitors to the Tribunal, and the ultimate order made on 24 June 2010. As the Tribunal was required to be persuaded by the evidence before it, its decision was not simply giving effect to a decision by either or both of the parties before it at the time.
[9]Yates v Williams (No 2) [2012] QCATA 48, at [27].
I therefore consider that the order of the Tribunal made on 24 June 2010 was an “adjustment order” within the definition in s 378 of the BCCM Act.
Mr McCarthy’s entitlement to submit the adjustment motion
As I have indicated above, the body corporate contends that Mr McCarthy was not entitled to submit a motion to the committee for the adjustment of the contribution schedule to reflect the pre-adjustment order entitlements for the scheme, because s 379(1)(a) did not apply. It contends that, for that paragraph to apply, it is necessary that the proportion of the total contribution schedule lot entitlements must have been increased by the adjustment order for all lots in the scheme.
Mr McCarthy contends that that proposition is a nonsense because it incorporates a mathematical impossibility, namely that it is impossible for all lots’ proportions of the total CSLEs to be increased. The body corporate contends that that could occur, for example, if all of the lots were amalgamated at the same time.
A number of factors demonstrate that, not only is the body corporate’s proposition absurd, and therefore not one that should be accepted as a proper construction of the section, but also the section means that the only people who can apply to reverse an adjustment order are those owners who owned a lot when the adjustment order was made and are contributing proportionately more because of that order than they had before the order.[10]
[10]As the adjudicator determined at [29].
Firstly, the body corporate’s contention does involve a mathematical impossibility and an absurdity. Simple amalgamation of all lots into larger lots would not increase the proportion of all lots because in fact all of the lots that existed before the amalgamation would have disappeared and been replaced by new lots comprising the amalgamated lots. Furthermore, unless there was some other change to the contributions, the contributions of the amalgamated lots would be equivalent to the combined contributions of the lots from which they had been derived.
Secondly, on a plain reading of paragraph 379(1)(a) it seems clear to me that it refers to an increase in the proportion that the CSLEs of one lot bears to the total CSLEs of all lots in the scheme. I do not consider that the paragraph is ambiguous, although it appears to be grammatically incorrect[11].
[11]The phrase “that are applicable” should be “that is applicable” – the subject of the verb is obviously “the proportion”.
Thirdly, if there were any ambiguity in the paragraph, the explanatory note to the Body Corporate and Community Management and Other Legislation Amendment Bill 2010, which introduced s 379, clarifies it. The note says:
“The lot owner submitting the motion must have been an owner of the lot at the time the adjustment order was given effect and, as a result of the adjustment order, the proportionate share of contribution schedule lot entitlements for the lot increased.”
I read “for the lot” as meaning “for the owner’s lot”.
Fourthly, this is also supported by s 379(2). It refers to “the owner of the lot” as the person who may submit a motion for adjustment of the schedule. The definite article reflects the reference in paragraph (1)(a) to “the proportion of … lot entitlements … that are attributable to a lot”.
For these reasons, I reject the body corporate’s submissions regarding Mr McCarthy’s entitlement to submit a motion to the committee. The adjustment order increased the proportion of CSLEs attributable to Mr McCarthy’s lot, and a new community management statement reflecting that increase had been recorded before the commencement of s 379. Therefore, he was entitled to submit a motion proposing adjustment of the contribution schedule to reflect the pre-adjustment order entitlements for the scheme.
Conclusion
Having regard to my conclusions above, I consider that the adjudicator’s decision was correct.
I therefore dismiss this appeal.