Orknie Pty Ltd v Body Corporate for Paloma CTS 9524
[2012] QCATA 193
•5 October 2012
| CITATION: | Orknie Pty Ltd v Body Corporate for Paloma (No 2) [2012] QCATA 193 |
| PARTIES: | Orknie Pty Ltd (Applicant/Appellant) |
| v | |
| Body Corporate for Paloma CTS 9524 (Respondent) |
| APPLICATION NUMBER: | APL053-12 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President Kate Buxton, Member |
| DELIVERED ON: | 5 October 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | Appeal dismissed.1. |
| CATCHWORDS: | REAL PROPERTY – BODY CORPORATE – POWERS, DUTIES AND LIABILITIES – OTHER CASES – where the Appellant had sought an adjustment of the applicable lot entitlements – where the Tribunal made an order adjusting the contribution schedule – where the Second Respondent requested the First Respondent amend the lot entitlements 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 289, 290, 378, 379, 385 Mousa v Body Corporate for Q1 & Anor [2012] QCATA 88 Pearce & Anor v Body Corporate for Riparian Plaza Apartments [2012] QCAT 72 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act2009 (‘QCAT Act’).
REASONS FOR DECISION
Justice Alan Wilson, President
I have had the advantage of reading the reasons of QCAT Member, Ms Kate Buxton, in draft. I agree with her reasons, and the orders she proposes.
Kate Buxton, Member
This appeal deals with the way in which a lot holder may move that the contribution schedule lot entitlements revert to those imposed upon each lot in the former contribution schedule.
The appellant, Orknie Pty Ltd, is the owner of lot 11 (as trustee) in the Body Corporate scheme known as Paloma. Orknie has appealed the decision of an Adjudicator[1] in which she refused to make a declaration that the Body Corporate invalidly progressed a motion to amend the current contribution entitlements[2]. The effect of the Adjudicator’s decision, if this appeal does not succeed, is that the committee of the body corporate may continue to take the steps necessary to revert those contributions to those in the former contribution schedule.
[1]Made under the Body Corporate and Community Management Act 1997 by Adjudicator Underdown on 25 January 2012.
[2] Consequential orders about the invalidity of the relevant motions were also refused.
The Adjudicator’s decision is appealed under s 290 of the Body Corporate and Community Management Act1997 (‘BCCM Act’). Mrs Blair, a lot owner, has been joined as a respondent in the appeal.
Background to the Appeal
In the Reasons she gave for her decision the learned Adjudicator sets out the background. It is appropriate to summarise the parts of that background relevant to this appeal:
a) On 29 October 2009 a Tribunal Order was made[3] which had the effect of adjusting the scheme’s contribution schedule lot entitlements. (There is an issue between the parties as to whether this was an “adjustment order” under s 379 of the BCCM Act.)
[3]Described by both Adjudicator Underdown and the parties as a decision of QCAT but was, in fact, a decision of Mr K Dorney QC of the former Commercial and Consumer Tribunal dated 29 October 2009, following which the body corporate adjusted its entitlements.
b) Following amendments to the BCCM Act[4], Mrs Nannette Blair, the owner of lot one, proposed a motion to the committee on 21 June 2011 that, pursuant to s 379(2) of the Act, the contribution schedule lot entitlements be re-adjusted to reflect the pre-adjustment entitlements.
[4] The amendments took effect on 14 April 2011.
c) On 12 August 2011 the committee voted to carry that motion 3-1 and notice was given to lot holders under s 385(2) entitling the lot holders to make a submission on the motion by 10 September 2011. No submissions were made.
d) On 28 October 2011 the committee voted to progress Mrs Blair’s motion.
e) The 28 October vote carried 2-0, with votes being from Mrs Blair and by a proxy vote cast by Mrs Blair on behalf of committee member and lot holder Mr Glen Shillig. Other lot holders present on the day abstained from the vote.
The learned Adjudicator considered the issues raised by the applicant, namely:
a) Whether a conflict of interest arose which would have required Mrs Blair to abstain from the vote[5];
[5]Body Corporate and Community Management (Standard Module) Regulations 2008, s 53.
b) Whether any evidence existed to invalidate to exercise of Mr Shillig’s proxy vote;
c) Whether Mrs Blair was eligible to propose the motion under s 379(1)(a) on 12 August 2011 (having regard to the unusual, and probably unintended, phrasing of that motion); and
d) Whether sending out the notice of proposed new lot entitlements on 31 October invalidated the committee’s actions.
In each case, she was satisfied that there was no fault or action which would have invalidated the resolutions of 12 August 2011 or 28 October 2011, and dismissed Orknie’s application. It is against those findings that Orknie now seeks to appeal.
Orknie has filed:
a) An application to appeal, relying on the following grounds:
(i) The order of the former tribunal dated[6] 29 October 2009 was not an adjustment order as defined by s 378 of the BCCM Act and should not have been interpreted as such by the Adjudicator;
[6]Referred to in the grounds of appeal as a decision of 17 September 2009 but actually dated and elsewhere identified as a decision dated 29 October 2009.
(ii) The Adjudicator erred in law in that the correct interpretation of s 379 of the Act which would lead to the result that no owner had a right to proposed a motion for reversion unless the contribution schedule lot entitlements for each of the lots was increased by the 2009 adjustment.
b) “Final Submissions” filed 23 March 2012 where the issues identified above are traversed in detail; and,
c) Further submissions filed 27 July 2012 that both further traverse the identified issues, and which also address the administrative steps to be taken under s 385(2) and whether the vote by Mrs Blair and her use of a proxy were valid to pass the 28 October Motion.
The summary at the conclusion of those further submissions identifies the issues this Tribunal is now required to determine:
a) Whether the order of the former tribunal dated 29 October 2009 was an “adjustment order” as defined by s 378 of the BCCM Act; and
b) Whether Mrs Blair was entitled to vote as she did, both in her own right and as proxy and, if so, the effect of that.
There are plainly questions of law from which an appeal may be brought as of right.[7]
[7] Body Corporate and Community Management Act 1997, s 289.
Was the 29 October 2009 decision an “Adjustment Order”?
Orknie’s submission set out the way in which the issue of adjustments to lot contributions came before Mr Dorney QC (as his Honour then was) in QCAT’s predecessor tribunal, the CCT.[8] Put shortly, a dispute had arisen between lot holders as to whether contributions should equalize. An initial report was commissioned (the “Leary Report”) which did not support equal contributions and this report was filed with Orknie’s application to the CCT. The Body Corporate committee commissioned a second report and filed it with a response. The Body Corporate then accepted the decision of Mr Dorney QC in the CCT without dissent.
[8] Part C – Grounds of Appeal document filed 23 February 2012, [7]-[13].
Orknie argues that this lack of dissent takes this particular application outside the scope of a s 378 “adjustment order”, which is defined in this way:
Adjustment order -
a) means an order of a court, tribunal or specialist adjudicator, made before the commencement, providing for an adjustment for the contribution schedule for an existing scheme; but
b) does not include an order of a court or tribunal giving effect to a decision that is not made by the court or tribunal (including a decision that is not, but is taken to have been, made by a court of tribunal.
One example given in the statute of a matter falling into sub-paragraph (b) is an order of a tribunal giving effect to the terms of the settlement of a dispute between a lot owner and the body corporate. The argument goes that, because the lot owners and the body corporate did not dissent, the relevant order is simply one giving effect to those parties agreement.
This contention is not supported either by the facts or the law.
The facts of this case indicate that the parties to the “dispute”, being Orknie and the Body Corporate, had not agreed. They had commissioned conflicting reports and required a determination of the Tribunal on the issue of fair and equitable entitlements. The only issue upon which they agreed was that they would accept the Tribunal’s decision.
The parties did not excuse the Tribunal from the undertaking of its statutory decision-making function. Mr Dorney QC set out, as he was required by the nature of the dispute which the parties had left to the tribunal to resolve, the provisions of the BCCM Act upon which he relied and the applicable legal principles. He then examined the reports and formed the necessary views as to how the lot entitlements ought be adjusted on fair and equitable grounds, from the existing contribution schedule. As a matter of law this can be characterised only as an order of a Tribunal providing for a adjustment for the contribution schedule of an existing scheme, falling squarely within s 378(a) of the BCCM Act.
This situation is even clearer than that in Mousa[9]. There the body corporate had submitted a single report and the Tribunal did not provide written reasons for its decision, which was made consistently with the uncontroverted evidence before it. In finding that an “adjustment order” had been made, Mr Barlow SC stated:[10]
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.
[9]Mousa v Body Corporate for Q1 & Anor [2012] QCATA 88, per President Alan Wilson J and Member K Barlow SC.
[10]Mousa v Body Corporate for Q1 & Anor [2012] QCATA 88, [39]; see also Pearce & Anor v Body Corporate for Riparian Plaza Apartments CTS 34665 [2012] QCAT 72, per President Alan Wilson J, Member K Barlow SC and Member P Hanley, especially Mr Barlow SC at [46].
Therefore the 29 October 2009 decision was an “Adjustment Order”.
Was Mrs Blair entitled to vote as she did?
Orknie contends that the motion proposed by Mrs Blair on 21 June 2011 to, pursuant to s 379(2) of the Act, re-adjust the contribution schedule lot entitlements to reflect the pre-adjustment entitlements was invalid, as she did not fall within the category of persons entitled to propose such a motion. Section 379(1) provides:
Motion proposing adjustment of contribution schedule
(1)Subsection (2) applies if-
(a) an adjustment order increased the proportion of the total contribution schedule lot entitlements for all the lots included in the existing scheme that are attributable to a lot included in the scheme; and
(b) before the commencement, a new community management statement reflecting the increase had been recorded.
Immediately, there is a difficulty in sensibly interpreting this provision. The Hon Mr James Thomas AM QC succinctly summarised this difficulty when considering the stay application in these proceedings[11]. I respectfully adopt his reasoning, as follows:
[14]If read literally the requirement of subsection (a) makes nonsense of the entire purpose of the 2011 amendment which inserted Divison 4 of Part 9 into the BCCM in 2011 with effect from 14 April 2011. On a literal interpretation of the words, no adjustment could ever be made.
[15]This is because it is mathematically impossible for any adjustment order to increase the proportion of total contribution loss entitlements for all the lots in a scheme. It is nonsensical to suggest that all the proportions that the component parts of one entity bear to the entity can be increased.
[11]Orknie Pty Ltd v Body Corporate for Paloma CTS 9524 [2012] QCATA 85, see [14] and [15].
The natural conclusion to Orknie’s submission on this point is to accept the non-sensical interpretation and to argue that it cannot be cured by the Tribunal. If Mrs Blair does not comply with a provision, because no-one can comply, then no-one, including Mrs Blair, has standing to make the application.
Whilst there are no doubt difficulties in interpreting s 379(1) of the BCCM Act, there remains a controversy to be quelled which is within the jurisdiction of this Tribunal. It is not appropriate, therefore, to accede to Orknie’s submission and abdicate to the legislature the task of determining the intent of the provision. That is not to say that amending legislation is not needed, or that it would not be welcome. But in the meantime this Tribunal will use the tools available to determine and apply the intended meaning to the provision, as drafted.
The starting point is the plain meaning of the words. They are inelegantly drafted but, when read for meaning, convey the intent that they are there for the benefit of a lot holder whose contribution schedule lot entitlement has been proportionately increased.
If the phrase “that are applicable” was replaced with the phrase “that is applicable” the words would more comfortably bear that meaning. This becomes a question of poor grammar rather than inexplicable legislation.[12]
[12]This view was similarly expressed by Mr Barlow SC in Mousa v Body Corporate for Q1 CTS 34498 and Anor [2012] QCATA 88 at[49] and by the Hon Mr James Thomas AM QC in the stay application in these proceedings, 21 May 2011, at [18].
Sub-section (2) then goes on to discuss what “the owner” may submit by way of motion proposing the adjustment, further supporting the conclusion that sub-section (1) is referring to the individual lot holders position.
The Tribunal may also look to the explanatory note to the amending Bill, which provides, in relation to the proposed s 379:
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.
These observations offer sufficient support for an interpretation of the statute which would allow Mrs Blair, as a person affected by a proportionate increase in her contribution schedule lot entitlement under the adjustment order made on 29 October 2009, to submit a motion for adjustment to reflect the pre-adjustment order entitlements for the scheme.
Voting Issues
Mrs Blair voted both in her own right and by using a proxy given to her by Mr Shillig when the 28 October vote carried 2-0.
Orknie submits that Mrs Blair was estopped, both personally and by use of the proxy, from casting a vote inconsistent with, or unconscionable having regard to, her earlier actions (including earlier voting) on the just and equitable assessment of contribution entitlements in 2009.[13]
[13] Orknie’s further submissions filed 27 July 2012, at [40] to [48].
There are two immediate difficulties with this submission:
a) The just and equitable adjustment was made by the CCT, not by the committee. The committee was obliged to adopt it having regard to the provisions of the statute;
b) Since then the legislative framework has changed, offering lot holders in Mrs Blair’s position rights that they did not previously enjoy, creating the opportunity for Mrs Blair to act in the way which she did.
Further, if Mrs Blair is in position of conflict because she is said to stand to gain from a reversion then the same could be said for any lot holder in that position. If that prevented her from exercising a vote for equitable reasons then the only lot holders who could vote in favour of a reversion would be those who would be adversely affected by it. However, such a lot holder would not be a person affected by a proportionate increase in an adjustment under s 379(1) and thus not entitled to raise the issue in any event. The correct interpretation of voting rights ought not to lead to the position where no-one can vote in favour of the reversion. I do not accept that Mrs Blair was disentitled to vote due to any perceived conflict either as the intended result of the legislation or on application of relevant equitable principles.
The standard module regulations deal with voting rights, exercising of proxy votes and the functioning of the committee. No argument is raised in this appeal that those regulations have been breached.
The next step to be taken by the committee is regulated by s 385 of the BCCM Act. The “Action” minuted on 28 October 2011 following the passing of the resolution to “progress” this action was “Manager to send letter to all owners are required under s 385(a) of the BCCM Act”. Had this dispute not been referred by Orknie for adjudication on 7 November 2011 there is no reason to think that the next step would not have occurred. Indeed, having regard to the requirements of s 385 it is not clear that the motion to “progress” Mrs Blair’s motion on 31 August 2011 giving notice to lot holders under s 385(2) was even necessary. However, it appears to be the point at which the committee ought, under s 385(4) to have decided what (if any) changes to the pre-adjustment order entitlements should be made. Thereafter the committee is obliged under s 385(5), within 7 days after it makes its decision under sub-section (4), give each lot owner written notice of its decision.
These are the steps which the committee will need to consider.
There are no identified concerns which would provide a ground for appeal in relation to the way in which the voting rights were exercised.
Orders
These reasons address each of the grounds of appeal. Where new matters have been raised in submissions but which do not address the grounds of appeal these have been considered by the Tribunal but do not further advance the appellant’s case.
In the circumstances the decision of the learned Adjudicator was correct, and there is no ground to depart from it.
The appeal is dismissed.
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