THE OWNERS UNITS PLAN NO 116 & NICHOLSON AND ORS (Unit Titles)
[2012] ACAT 63
•17 September 2012
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE OWNERS UNITS PLAN NO 116 & NICHOLSON AND ORS
(Unit Titles) [2012] ACAT 63UT 12/14
Catchwords: UNIT TITLE – special privileges to units in relation to common property car parking spaces –– whether the Owners Corporation could delegate to the executive committee the authority to grant special privileges for car parking spaces and car ports on common property – licence agreement in relation to use of car parking space on common property - procedural fairness – whether opposition to motion in a meeting of the Owners Corporation unreasonable – whether unsucceesful motion needs to be amended – whether the Owners Corporation is a corporation under the Corporations Act 2001 (Cth)
List of legislation: Unit Titles (Management) Act 2011, ss.9, 129
Unit Titles Ordinance 1970, s. 46
Unit Titles Act 2001, ss 49, 82 & 88B
ACT Civil and Administrative Tribunal Act 2008, s 6
Corporations Act 2001 (Cwlth), ss 9, 127, 128 & 129
List of cases: Beaton v McDevitt [1987] 13 NSWLR 134
Katsikalis v Body Corporate for “The Centre” [2009] QCA 77
Minister of State (Army) v Dalzeil [1934] 68 CLR 261
Points North [2004] QBCCMCmr 423
Tribunal: Ms E.Symons, Presidential Member
Date of Orders: 17 September 2012
Reasons for Decision: 17 September 2012AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) UT 12/14
BETWEEN:
THE OWNERS UNITS PLAN NO. 116
Applicant
AND:
HILARY NICHOLSON, JOHN CAMERON, PAM WRIGHT, JUDITH WILSON, MARIETTE DANIEL, ROSEMARY DUNBAR, LINDA RICHARDSON, KATE MURTAGH, M BROWN, HAZEL CHAPPELL, VIRGINIA PASSMORE & JOSIE MCKAY-SIM
Respondents
TRIBUNAL: Ms E. Symons, Presidential Member
DATE:17 September 2012
ORDERS
1.Pursuant to subsections 129(1)(g) of the Unit Titles (Management) Act 2011 the Tribunal makes an order giving effect to Motion 2 of the General Meeting of Owners Corporation of 2nd May 2012, subject to the following amendments:
a. replacing the opening paragraph of motion 2 with the following paragraph:
“THAT The Owners – Unit Plan No. 116 RESOLVES WITHOUT OPPOSITION to grant special privileges for the exclusive use of parking spaces on common property to the owners at any time of the following units “(the Members”), in the locations specified in schedule A circulated with this motion and on the following terms and conditions:” and
b. by including the following clause “l” :
“l) A grant of special privilege may be terminated, in accordance with a special resolution, by written notice given by the Owners Corporation to the person to whom the grant was made. In the event of such termination taking place in respect of the special privileges granted by this motion, then the Corporation shall be at liberty (subject to the provisions of the Act) to make such payments as it sees fit to compensate the Member for the termination of the special privilege.”
2.By consent and pursuant to subsections 129(2) and (3) of the Unit Titles (Management) Act 2011 the Tribunal makes an order giving effect to Motion 5 expressed as follows:
Motion 5
THAT The Owners – Units Plan No. 116 RESOLVES WITHOUT OPPOSITION to grant special privileges for the exclusive use of parking spaces on common property to the owners at anytime of the following units (“the Members”), in the locations specified in Schedule A circulated with this motion for the meeting on 2 May 2012 and on the following terms and conditions:
Unit Number Parking Spaces Number on Schedule A Special Privileges Allocated 64 64 - 2 1 unimproved parking space 66 66 - 2 1 unimproved parking space 68 68 – 2 1 unimproved parking space 69 69 – 2 1 unimproved parking space 70 70 – 2 1 unimproved parking space 72 72 - 2 1 unimproved parking space 73 73 - 2 1 unimproved parking space 74 74 – 2 1 unimproved parking space 75 75 – 2 1 unimproved parking space 76 76 – 2 1 unimproved parking space 77 77 - 2 1 unimproved parking space 78 78 – 2 1 unimproved parking space 81 81 – 2 1 unimproved parking space 82 82 – 2 1 unimproved parking space 83 83 – 2 1 unimproved parking space 84 84 - 2 1 unimproved parking space a) The special privilege granted for units 75 and 81 become operative and effective upon completed construction and usability of the car spaces referred to.
b) The Member has an exclusive right to park vehicles in a parking space allocated to the Member’s unit as a special privilege.
c) The Member shall pay to the Owners Corporation such amounts as the Owners Corporation may from time to time determine are necessary for the maintenance and repair of that part of the common property over which the Member has been granted special privileges. Such amounts shall be paid within fourteen (14) days of the Owners Corporation requesting any such amount in writing unless a longer payment period is specified. In the event that an owner fails to make payment in accordance with this clause the Owners Corporation will be entitled to recover the unpaid amount as a debt owed by the Member together with any reasonable costs incurred in recovering that amount. Costs include without limitation strata management fees and legal fees.
d) The Member shall pay to the Owners Corporation such amounts as the Owners Corporation may from time to time determine are necessary for the construction, maintenance or repair of a carport on that part of the common property over which the Member has been granted special privileges, but not any other improvement unrelated to parking. Such amounts shall be paid within fourteen (14) days of the Owners Corporation requesting any such amount in writing unless a longer payment period is specified. In the event that a Member fails to make payment in accordance with this clause the Owners Corporation will be entitled to recover the unpaid amount as a debt owed by the Member together with any reasonable costs incurred in recovering that amount. Costs include without limitation strata management fees and legal fees.
e) The Member shall not use the area over which a special privilege has been granted or the carport or any other improvement erected on it for any purpose other than the parking and garaging of vehicles, the storage of his, her or their personal effects, and any other purposes from time to time approved in writing by the Owners Corporation. When storing any items other than motor vehicles in the special privilege parking areas Members must:
i.ensure that any such items which are flammable are stored in a fireproof container;
ii.ensure that no items are stored in such a way that they may spill or fall over;
iii.ensure that no items stored pose a trip or fall hazard;
iv.ensure that no sharp edges are left uncovered; and
v.comply with local government requirements for the storage, handling and collecting of stored items.
Storage of larger quantities of personal effects for extended periods can become an eyesore and the Owners Corporation may require the removal of items deemed excessive by notice given in writing to the Member concerned. Where the Member does not remove the item within 7 days of receiving the written notice, the Owners Corporation may remove and dispose of the item. The Owners Corporation without providing any notice may remove or make safe items which are deemed to be a hazard to owners, visitors or contractors.
(f) The Member must pay the costs of and incidental to the Owners Corporation and its servants and agents for having any item deemed excessive or a hazard under clause (e) removed, disposed of or made safe in accordance with that clause. Costs include without limitation strata management fees and legal fees which are recoverable by the Owners Corporation as a debt due by the Member.
(g)The Member shall not do anything which might interfere with or prevent the Owners Corporation from carrying out its statutory duties in relation to either the area of the common property over which a special privilege was granted or the carport or any other improvements erected on it or the balance of the common property, and shall allow the Owners Corporation such rights of inspection and access as those duties may require.
(h)The Owners Corporation may carry out any of its functions on the space or the carport or any other improvement without unreasonably interfering with the Member’s use of the space for parking vehicles.
(i)The Member shall not modify the carport or any other improvement erected on the area over which a special privilege has been granted or erect any permanent structure on that area without an ordinary resolution of the Owners Corporation approving the proposed course of action. The Member shall comply with any conditions imposed by the Owners Corporation in its approval.
(j)Rules of Owners Corporation that apply within the Member’s unit shall also apply within special privilege areas associated with that unit.
(k)Members are not obliged to exercise their exclusive parking rights and may permit other Members, tenants or visitors to use the space.
(l)Members may wish to exchange a special privilege area associated with one unit with that of another unit. Such an exchange requires an unopposed resolution of the Owners Corporation.
(m) This clause provides further detail of the location of the spaces to be constructed identified in the plan in Schedule A, and
i.The boundary of the new parking area which is closest to the street will be located approximately 4.2 metres from the roadside kerb, in accordance with the attached plan dated August 2012 , subject to the requirements of any ACT Government planning and building approvals.
………………………………..
Ms E. Symons
Presidential Member
REASONS FOR DECISION
1.This is an application by the Owners of Units Plan No. 116 (‘ the Applicant’) for orders under section 129(1)(g) of the Unit Titles (Management) Act 2011 giving effect to:
a. motion 2 of the General Meeting of the Owners Corporation of 2nd May 2012; and
b. motion 5 of the General Meeting of the Owners Corporation of 2nd May 2012.
Motion 2 and motion 5 relate to car parking on the common property of Units
Plan No. 116.
2.The Respondents named in the Application are Hilary Nicholson, John Cameron, Pam Wright, Judith Wilson, Mariette Daniel, Rosemary Dunbar, Linda Richardson, Kate Murtagh, M Brown, Hazel Chapell, Virginia Passmore and Josie Mackay-Sim, all of whom are unit owners in Units Plan No. 116.
Background
3.Units Plan No. 116, known as Wybalena Grove (“Wybalena Grove”), is a scheme that was set up in the mid 1970s under the Unit Titles Ordinance 1970 and consists of 105 townhouses on 11.5 hectares arranged as five clusters, each cluster having 21 units.
4.The site was designed with a minimum of roads. Originally, all parking spaces in the large shared parking areas were, except for two spaces, entirely open.
5.Thirty two of the units have road access and carports built within their lease areas or on adjacent unit subsidies. The remaining 73 units used nine large shared parking areas distributed on common property around Wybalena Grove.
6.At the first general meeting on 23 September 1976 of The Owners - Units Plan No. 116, (when the developer was in complete control of the Owners Corporation), the Owners Corporation unanimously resolved to pass 18 motions which included replacing the default Articles with a new set that included the clause – ‘The corporation may construct and maintain facilities on the common property and may make by-laws regulating the use of such facilities’ and motion 7 which read:
“The Committee may allocate garages and/or parking spaces to the
proprietors of specific units for any period the Committee decides and that
the relationship between garage space can be varied between units by
mutual agreement of the units proprietors involved and written
notification of such variation must be given to the Committee.”7.A special general meeting was held in 1978 on parking, and the committee’s recommendation of one permanent car parking space per one or two bedroom units and two spaces for each unit of three or more bedrooms was agreed and noted as “passed” in the meeting minutes (“the parking space policy”). The parking space policy was restated in terms of unit owners’ entitlements at a general meeting in 1996.
8.At the annual general meeting on 23 August 1979, it was noted that quotes had been received from builders to construct carports and any unit owner interested should contact the executive committee. The minutes of this meeting show that “an owner raised the question of legal nature of garages and the Chairman, L Arnott, advised that he understood that on the basis of legal advice a form of licence was being considered.”
9.In March 1980, a letter was sent to unit owners by the executive committee secretary advising that “the management corporation has finalized plans for the construction of carports on the common property carparks…” The letter stated that members requiring carports later would be required to follow the same design and legal agreement; “may purchase initially” one or two carports according to the parking space policy and that it “will be necessary to re-allocate parking spaces for some units. Such re-allocations will be carried out by the committee….”
10.Most carport building occurred in the early 1980s but some continued in each of the following decades. As carports were built the executive committee purported to grant ‘carport licence agreements’ (‘the licences’) by which unit owners were granted a special privilege over the parking space in exchange for the unit owner agreeing to meet all of the Owners Corporation’s costs for construction and maintenance of the carport.
11.While parking continued to be a topic at general meetings and executive committee meetings, unopposed resolutions to grant parking allocations made by the execution committee for the past three decades have not been made at any general meeting of Wybalena Grove.
12.In 1996 a resolution was put to the annual general meeting by a member of the outgoing executive committee to restate the parking space policy more precisely in terms of unit entitlements rather than by bedroom numbers as it had been previously described. The resolution made no substantive change except to clarify that extending a smaller unit to a three bedroom unit would not confer an additional claim on the parking space.
13.The executive committee had purported to grant special privileges to covered common property car parking spaces to the majority of units within the scheme. These purported grants were by way of a licence to unit owners for the parking space and any carport erected on the space. These licences have purportedly been transferred from outgoing members of the Owners Corporation to the purchasers of their units under the terms of the licence.
14.There are 13 units that have not been allocated any parking spaces and 27 larger units, 16 of which are in the cluster known as Cluster C, that do not have a second parking space allocated. Currently, there is not space available for all 16 to be afforded a second parking space in line with the parking space policy.
15.In 2011 the executive committee rejected an application to construct carports on the northern side of the shared parking area known as ‘P10” in Cluster C as ACTEW had title for an easement containing high pressure water pipes under that location. Subsequently, five of the unit owners in Cluster C, who do not have covered parking, applied for one carport space each in the area known as P9. This was approved by the executive committee on 31 August 2011.
16.The approval was challenged at the ACT Civil and Administrative Tribunal (ACAT) (matter No. XD1363 of 2011) by 15 unit owners who were accustomed to using that parking area on the basis that the executive committee did not have authority to grant special privileges except for minor uses.
17.The executive committee obtained legal advice from Teys Lawyers. This advice dated 14 November 2011 (‘the legal advice’) stated that none of the carport licences had been validly granted because under the legislation the executive committee did not and does not have authority to make grants of special privileges and the power to make such grants cannot be delegated.
18.The legal advice also stated that special privileges, which were purported to have been passed, needed to be ratified by unopposed resolution of the Owners Corporation otherwise the Owners Corporation could be exposed to claims from unit owners for loss and damage to the value of their units caused by the unlawful grants of parking spaces.
19.Upon the receipt of this legal advice the Owners Corporation set up a parking working group, distributed the legal advice to all owners, held meetings and, with Teys Lawyers, prepared a number of motions. These included a motion described as “giving effect to the unlawful grants of special privilege and to equitably grant car parking spaces to the units that had not previously been granted any parking spaces” and motions to fund various works to provide second car parking spaces and to allocate second spaces in accordance with the parking scheme recommendations in Cluster C for unit owners who did not currently have second spaces.
20.These motions, known as motions 2, 3, 4 and 5, were tabled at the 2 May 2012 general meeting.
21.At this meeting, of these four motions, motion 3 was passed, as a special resolution, to create a Special Purpose Fund. The minutes of this meeting (page 125 of tab 12 annexed to Peter Campbell’s Witness Statement dated 24 May 2012) state that motion 4 was passed as an ordinary resolution “to note the recommendations of the parking working group in the Parking Scheme proposal …to guide future decisions on parking” with the vote stated to be “91 in Favour, 0 Against and 2 Abstaining”. Mr Cameron drew to the Tribunal’s attention that, as recorded under the Proxies in the minutes (at page 122), Units 51(which he owns) and 59 (which unit he owns with Claire Barrett) had voted “no” for Motions 2, 3, 4 and 6 and, while motion 3 was carried, the vote was not carried without opposition as recorded in the minutes.
22.The minutes (at TAB 12 of Mr Campbell’s Witness Statement) show that Motion 2 and Motion 5, both of which required unopposed resolutions, were not passed. Motion 2 was opposed by 12 units (being units 15, 17, 24, 29, 35, 36, 43, 49, 51, 52, 59 and 86) and Motion 5 was opposed by unit 42, which is owned by Ms Mackay-Sim.
23.Motion 2 can be summarized as a motion to validly grant past parking allocations and to grant a single coverable parking space to the last 13 units that do not currently have a space allocated. Motion 5 can be summarized as a motion to allocate a second parking space in accordance with the past policy to each of the larger units in Cluster C that do not currently have a second space.
The hearing
24.Ms Kristy Katavic of Counsel, instructed by Mr D. Dimock of Teys Lawyers, appeared for the Applicant at the hearing. Mr Peter Campbell had filed a Witness Statement dated 24 May 2012 with the Application. His Witness Statement was marked as Exhibit A1.
25.Four members of the Executive Committee, namely Mr P. Campbell, Ms J. Zions, Ms G. Goodall and Mr J. Courtney, also attended the hearing. Ms G. Rose, owner of unit 76, attended the hearing as an observer.
26.One of the 12 unit holders who opposed motion 2, the first named Respondent, Ms Hilary Nicholson, appeared at the hearing. She owns unit 29. Ms Nicholson informed the Tribunal that she had been asked by Mr John Cameron, another of the 12 unit owners and who owns two of the units (units 51 and 59), to ensure that the Tribunal read his written submissions. Ms Nicholson also told the Tribunal that Ms Pamela Wright, another of the 12 unit owners (unit 36), was overseas and had wanted her written submissions taken into consideration. The Tribunal subsequently received the relevant Powers of Attorney appointing Ms Nicholson from Mr Cameron and from Ms Wright.
27.Ms Mackay-Sim, who was the only unit owner who opposed motion 5, appeared at the hearing.
28.Prior to the Directions Hearing on 9 July 2012, Ms Hazel Chappell (unit 86) notified the Tribunal by email on 29 June 2012 that “….I am now prepared to change my prior motion by proxy, and fully support all motions in relation to the Carports and licence arrangements etc set before the Tribunal.”
29.Ms Nicholson had provided the Tribunal with her Witness Statement on 4 July 2012, which included the Orders she sought. Her Witness Statement was marked Exhibit R1 at the hearing. Ms Rosemary Dunbar’s written submissions were emailed to the Tribunal on 6 July 2012. As she did not appear at the hearing, her submissions did not become an Exhibit.
30.In accordance with Directions issued on 9 July 2012, Mr John Cameron and Ms K. Claire Barrett lodged, on 27 July 2012, a Statement of Orders they sought, the facts they asserted to be correct and the law which should be applied. Mr Cameron also lodged submissions in the form of a letter to the Tribunal dated 3 July 2012. His statement and submissions were marked Exhibit R3 at the hearing. On 18 July 2012 Ms Pamela Wright lodged a written statement in the form of a letter to which was annexed three photographs. She had previously lodged these submissions earlier in July. Her submissions were marked as Exhibit R2 at the hearing. Ms Josie Mackay-Sim lodged her written submissions and supporting documents on 25 July 2012.
31.On 1 August 2012, Ms Mariette Daniel (unit 15) notified the Tribunal by email “I wish to advise that I am withdrawing as a respondent because of personal reasons.”
32.The Tribunal did not receive any Witness Statements or documentation from Judith Wilson (unit 42), Linda Richardson (unit 24), Kate Murtagh (unit 35), M. Brown (unit 43) or Virginia Passmore (unit 49).
33.The Applicant and Ms Josie Mackay-Sim were able to reach agreement in relation to motion 5 and asked the Tribunal to make orders by consent in relation to that motion.
34.As a result, the hearing proceeded in relation to motion 2.
Preliminary matters:
Procedural Fairness
35.At the hearing, Ms Nicholson raised an issue relating to procedural fairness in that the Applicant was represented by a barrister and had had legal representation throughout the matter and the Respondents were unrepresented. This issue had also been raised by Mr Cameron in correspondence to the Tribunal prior to the hearing.
36.Whether or not a party is represented is a choice for that party. The Respondents could have engaged legal representation if they chose. However, there is no requirement that parties in this jurisdiction have legal representation. Section 6 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) sets out the Objects of the Act. Subsection 6(b) states that the Objects include ensuring that access to the Tribunal is simple and inexpensive, for all people who need to deal with the Tribunal and subsection 6(d) requires the Tribunal to ensure that its decisions are fair. Section 7 of the ACAT Act sets out the principles which apply to the Act. In exercising its functions under the ACAT Act the Tribunal must ensure that the procedures are as simple, quick, inexpensive and informal as is consistent with achieving justice; and observe natural justice and procedural fairness.
37.Mindful of the Objects and Principles in the ACAT Act, and considering the available evidence, the Tribunal is not satisfied that the Respondents have been denied procedural fairness by not having legal representation.
38.Mr Cameron also asked that the Tribunal “in reaching its decision on matters of substance…bear in mind the inherent disadvantages faced by the respondents in this matter and the additional disadvantage faced by the respondents because of the applicant’s failure to comply with the Tribunal’s Order.” This Order followed the Directions Hearing on 9 July 2012 and required the Applicant to give the Respondents by 7 August 2012, inter alia, a written statement setting out the facts which are agreed, the facts it contests and the law it says should be applied. The Tribunal noted that Mr Cameron also referred to the willingness of the Respondents to proceed despite the disadvantage created by the Applicant in not strictly complying with the Order. The Tribunal has noted Mr Cameron’s concerns.
Applicable Law
39.Section 129 of the Unit Titles (Management) Act 2011 (“the 2011 Act”) sets out the kinds of orders this Tribunal may make. Relevantly, subsection 129(1)(g) and subsections 129(2) and 129(3) provide:
129
(1) The ACAT may make the following orders:
...
(g) an order giving effect to an unsuccessful motion for a resolution of a general meeting (either as originally proposed or as amended by the ACAT) if the ACAT is satisfied after a merits review of the motion that opposition to the motion was unreasonable;
....
(2) The ACAT may make any other order it considers reasonably necessary or convenient to resolve a dispute under this part.
(3) This section does not limit the orders ACAT may make in relation to a dispute under this part.
40.Section 49 of the Units Titles Act 2001 (“UTA 2001”) refers to special privileges relating to common property. It provides:
49(1) An owners corporation may, if authorised by an unopposed resolution, grant a special privilege (other than a sublease) for the enjoyment of the common property (or any part of the common property) to a unit owner, a part-owner of a unit, or someone else with an interest in a unit.
(2) A grant under subsection (1) may be terminated, in accordance with a special resolution, by written notice given by the owners corporation to the person to whom the grant was made.
41.Prior to the commencement of UTA 2001 the relevant legislation was the Unit Titles Ordinance 1970 (“the previous legislation”). Section 46 of the previous legislation provided:
46(1) A corporation may, if authorized by a unanimous resolution, grant to a member, or any person who has derived an interest in a unit through a member, any special privilege (not being a sub-lease) in respect of the enjoyment of part or parts of the common property.
(2) A grant made under the last preceding sub-section may be terminated by notice in writing given by the corporation to the grantee in accordance with a special resolution.
42.Section 82 of the UTA 2001 sets out the functions of the executive committee. Relevantly, section 82(3) provides:
82(3) The functions of an executive committee of an owners corporation must be exercised –
(a)as the corporation directs at by resolution at a general meeting; or
(b)in the absence of any such a resolution - as the committee considers appropriate.
Note: The resolution required under (3)(a) is an ordinary resolution, unless this Act provides that the resolution should be a special, unopposed or unanimous resolution – see s. 104(1) (Decisions at general meetings).
43.Section 88B of the UTA 2001 relates to decisions by the executive committee about use of common property. It provides:
88B The executive committee of an owners corporation may consent to an application by a member of the corporation to use the common property if –
(a)the use applied for is minor; and
(b)the use will not unreasonably interfere with the reasonable use and enjoyment of the common property by other members of the corporation.
Example – minor use
Installation of air conditioner or awning on unit that extends over common property
Consideration of the Issues
44.The issues for the Tribunal to determine are:
a. whether the opposition to motion 2 at the General Meeting of the Owners Corporation on 2nd May 2012 was unreasonable; and
b. if the Tribunal finds that the opposition was not unreasonable should the motion as originally opposed be amended in a way that is just and equitable to all parties.
45.Submissions have been received from the Applicant, and from the following unit owners who opposed Motion 2 - Ms Hilary Nicholson, Ms Pam Wright, Mr John Cameron and Ms Rosemary Dunbar. The submissions each contain a number of grounds, some of which overlap.
46.In the Respondents’ submissions there are approximately four grounds raised in opposition to the motion. The Tribunal will deal with each of those grounds separately. The Tribunal does not intend to set out fully the terms of each ground. Rather, a summary is provided below with reference to the response by the Applicant.
(1)The 1976 General Meeting, the unanimous resolutions and the actions taken by the committee
The Respondents’ submissions
47.The Respondents’ position is that special privileges had been legally granted, in accordance with the protocol of the day, at this meeting as part of 18 unanimous resolutions which had been passed prior to the registration of Units Plan No. 116. Prior to the first Annual General Meeting all members of the Body Corporate were members of the committee. They knew the legislation required decisions to be unanimous. The minutes of this meeting record that this was reflected at the meeting. The Owners Corporation unanimously resolved to pass motion 7 which provided that the Committee could allocate garages and/or parking spaces to the proprietors of specific units.
The Applicant’s response
48.The Applicant’s response is that Resolution 7 and the amendments to the Articles at the meeting on 23 September 1976 do no more than give the ability to allocate.
49.The granting of special privilege is a statutory requirement that must be satisfied to the standard identified in the legislation, currently “as an unopposed resolution” or as required by the previous legislation at the relevant time “by unanimous resolution.” The actual resolution to pass motion 7 did not mention ‘special privilege’; it did not identify the recipients of the grant, the area of common property affected or the terms of the grant. If it was intended, in 1976, to confer special privilege, the outcome fell ‘short of the mark.’
50.Pursuant to section 82(3) of the UTA 2001, the committee’s function is limited to matters that do not require a resolution that can only be passed at a general meeting. The only way to give exclusive use or special privileges to the carports is by section 49 of the UTA 2001, which requires the Owners Corporation to pass an unopposed resolution at a general meeting (or a unanimous resolution under the previous legislation) to grant a special privilege to an owner in respect of common property.
51.Even if the Owners Corporation, in the 1976 general meeting, unanimously purported to delegate power to the committee to grant a special privilege to an owner in respect of the common property, to do so was outside the powers of the Owners Corporation, which is a creature of statute with limited powers.
52.In the context of car parking on common property what had to occur for a special privilege over common property to be legally granted was:
·an application for special privilege in relation to a carport had to be received; and
·a motion for an unopposed resolution to grant the special privilege had to be put to a general meeting; and
·at that general meeting there had to be the express act of an unopposed resolution of the owners to grant the special privilege over the common property.
53.Section 88B of the UTA 2001 only allows the committee to grant permission for minor use of common property. It does not vest the committee with the necessary powers to act as it has done over the last 30 years in relation to car parking.
54.The intention of previous committees is irrelevant as the committees have all acted outside their powers under the previous legislation and the UTA 2001. The car parking special privileges over common property have been granted to various unit holders by an executive committee acting beyond its authority and not by general meeting resolutions which are unopposed. They are invalid and the Owners Corporation needs to take appropriate action to lawfully validate these grants of special privilege to protect unit owners.
(2)Whether the licence agreements are valid
The Respondents’ submissions
55.The Respondents submit as follows:
·The parking licences are valid because of the unanimous resolutions passed at the 1976 General Meeting which purported to give the committee the power to allocate carports and car spaces to unit owners.
·The existing licence agreements should be ratified as they currently stand. They guarantee that their ownership of their carports at their existing locations will be transferred to a new owner when their property is sold and they also give the Respondents control over the roof of their carports.
· These licences provide owners with property rights over their carports in the unusual situation that exists at Wybalena Grove where owners have paid for the construction of carports that are located in common property car parks. Pursuant to the licences, the owners undertook to meet all capital and maintenance costs of the carports in return for their exclusive use.
· These licences have gone unchallenged by banks, lawyers, real estate agents, managers and owners for over 30 years. The Respondents entered into them in good faith. They were arms-length transactions. Some of the Respondents’ carport transactions were supervised by a solicitor. When new licence agreements were signed in August 2009 neither the managing agent nor Mr Campbell, who has filed a Witness Statement in these proceedings, expressed any doubts about the validity of the licence agreements.
The Applicant’s response
56.The licence agreements are invalid and have been invalid from the beginning as the committee did not have power under the legislation to grant special privileges over common property to Members.
57.The Respondents are under a misconception over ownership of carports and car parks. The car parks are common property and the carports are on common property and ownership cannot be granted. The licence agreements do not vest ‘property’ or provide title to property to the owners. What the licence agreements do is give exclusive use of the carports to the owners and act to protect them against trespass; i.e. they ensure that someone else cannot park there without the owner’s permission.
58.The fact that the licence agreements were signed in good faith and at arm’s-length and supervised by a solicitor and accepted by other professionals does not address the primary issue that the original actions by the Owners Corporation were ultra vires and the resulting licence agreements were invalid from the beginning.
59.It is, therefore, not possible for the licence agreements to be validated in the way the Respondents propose – by simply ratifying the existing carport licence agreements as they stand. The Owners Corporation has to comply with its statutory obligations to lawfully validate the parking allocation and this means that the Owners Corporation has to put the car parking motion to a general meeting and it has to be passed unopposed.
(3)The effect of the Corporations Act 2001 (Cloth)
The Respondents’ submissions
60.The licence agreements are contracts between the Owners Corporation and the unit owner to which the common seal has been affixed. Even if all the agreements were issued without authority all parties acted in good faith and in the belief that the committee was acting within its powers. The Respondents are entitled to be protected by the Indoor Management Rule (IMR) and by the Corporations Act 2001.
61.Sections 128 and 129 of the Corporations Act2001 apply. In particular, subsection 129(6) provides that a person may assume that a document has been duly executed by the company if: (a) the company’s common seal appears to have been fixed to the document in accordance with subsection 127(2); and (b) the fixing of the common seal appears to have been witnessed in accordance with that subsection. The Act prohibits the corporation from contesting the agreements. This is what the Applicant (the corporation) is, effectively, doing.
The Applicant’s response
62.The Respondents’ assumptions that they are entitled to be protected by the IMR and the Corporations Act 2001 are not soundly based. In essence, the IMR provides that a person dealing with a corporation is entitled to presume that the internal affairs of the corporation are in order; that the appointment of an officer of the corporation is presumed to have been made in accordance with the constitution of the corporation; and that a document that purports to be signed by an officer of the corporation is presumed to be signed in accordance with the constitution of the corporation.
63.This leads to a consideration of sections 128 and 129 of the Corporations Act 2001, which deal with entitlement to make assumptions in relation to documents duly executed with the company seal. These sections only apply to companies. Section 9 of the Corporations Act 2001 defines ‘company’ as ‘a company registered under this Act’. The Owners Corporation was established under the previous legislation; it is not registered under the Corporations Act 2001. It follows that:
· the Owners Corporation is not a company to which the Corporations Act 2001 applies; and
· the IMR cannot resurrect the Licence Agreements and make them valid.
(4)The content of motion 2
The Respondents’ submissions
64.The Respondents posed the question - if the objective was to correct a fault in the authority behind the licence agreements, why entirely re-write the content as in Motion 2?
65.Motion 2 purports to replace the carport licences which have gone unchallenged by professionals and owners for over 30 years. It is not modeled on the carport licences. It seeks to entirely rewrite the legal relationship between the Owners Corporation and members for car parking. There is no undertaking that the Owners Corporation will transfer the licence agreement to a new unit owner.
66.In the licence agreement, there is provision that if the licence is revoked by the Owners Corporation by special resolution then the Owners Corporation may give the unit owner any compensation that it thinks fit. This provision is not in
motion 2.
67.The changes proposed by motion 2 would void the agreements rather than constructively remedy any problem.
68.Motion 2 only grants exclusive rights over a particular parking space whereas the licence agreements recognized property rights over carports. Motion 2 states that owners are entitled to “at least one carport” when a number of Respondents have two carports. Motion 2 states that special privileges are only granted “for the time being.”
69.Motion 2 includes a new condition in subclause (g) - “The owners corporation may carry out any of its functions on the space or the carport or any other improvement without unreasonably interfering with the Member’s use of the space for parking vehicles”, which was not in the licence agreements and which purports to give the executive committee authority to carry out functions on the carport structure which is beyond its statutory obligations. Subclause (g) is unnecessary and should be struck out.
The Applicant’s response
70.Motion 2 was put forward by the executive committee after obtaining legal advice as the most efficient and equitable method of validating the previous unlawful grants whilst providing a mechanism that avoids the need for further grants of special privilege each time a unit is transferred.
71.Motion 2 was designed to provide certainty and uniformity. It provides the unit owners with the opportunity to legally validate the parking allocation in accordance with what was intended. Contrary to what the Respondents allege, it ensures unit owners can continue to have car parking as before.
72.In relation to the Respondents’ concerns expressed by the use of the words in motion 2 as drafted ‘for the time being’ in describing the owner of the unit – the intention is to cover the owner of the unit ‘from time to time’ or ‘at any time’. This is to overcome the need for a new owner having to sign a form requesting special privileges for car parking from the Owners’ Corporation and for the need for a unanimous resolution each time. While acknowledging owners take comfort from seeing their name on a document Counsel informed the Tribunal that the wording was also designed to overcome situations where transferring the car parking had been overlooked and had not occurred. Suitable replacement words would be “at any time.”
73.At the General Meeting on 2 May 2012, a motion to amend motion 2 to include a compensation clause was carried without opposition, however the amended motion 2 containing the compensation clause still failed to pass unopposed.
74.The inclusion of the compensation clause which is in the licence agreements, namely:
“the corporation shall be at liberty (subject to the provisions of the Act) to make such payments as it sees fit to compensate the Member for the termination of the special privilege.”,
is too broad to be a reasonable term or to be enforceable against the Owners Corporation. The clause is too discretionary and is open to abuse by owners if there are no references by which compensation should be assessed. If any compensation clause is to be included, it should specify that compensation is an obligation and should be paid by reference to a valuation of the parking space as improved and allow for arbitration or mediation in the event of a dispute.
75.Motion 2(g) should remain. Effectively it will turn on what the Tribunal finds in relation to the proprietorship of the carport structure. If the Tribunal is against the Applicant and finds that proprietorship of the carport structure is with the Respondents, then the Applicant invited the Tribunal to reconsider the wording in motion 2(g).
Whether opposition to motion 2 at the meeting on 2 May 2012 was
unreasonable.
76.The parties’ submissions in relation to the issue for determination before the Tribunal, whether the opposition to motion 2 at the meeting on 2 May 2012 was unreasonable, can be summarized as follows:
The Respondents’ submissions
77.The Respondents variously submitted that:
i.their opposition to motion 2 was not unreasonable;
ii.that it was not unreasonable or vexatious to argue that the licence agreements previously granted should be recognized and declared valid as they are contracts between the owners and the Owners Corporation; and
iii.the parking licences are valid because of the unanimous resolutions passed at the 1976 general meeting which purported to give the committee the power to allocate garages and car spaces to unit owners.
The Applicant’s response
78.The issue of reasonableness is objective (see Points North [2004] QBCCMCmr 423 at paragraph 42, where the Adjudicator stated “I do not consider that the ‘subjective intention’ of each of the lot owners who voted in opposition is the appropriate test………..is whether the opposition is in the circumstances unreasonable has to be considered ‘objectively’ taking into account all relevant circumstances.”)
79.In considering whether an order should be made pursuant to section 129 of the 2011 Act, regard must be had not only for the interest of all owners in the scheme but also the rights and reasonable expectations of any owners deriving or anticipating a particular benefit under a motion.
80.The grants of special privilege proposed by motion 2 are fair because they give effect to the parking system and policy that has operated at Wybalena Grove for the past 30 years.
81.Motion 2 is the most efficient and equitable method of validating the previous unlawful grants whilst providing a mechanism that avoids the need for further grants of special privileges each time a unit is transferred. This is because the special privileges are for the benefit of the lot owner from time to time and run with the land.
82.As the Owners Corporation is on notice that the grants of special privileges by the committee were ultra vires, it is imperative that the owners’ corporation validate, by unopposed resolution at a general meeting, these grants of special privilege to protect itself against a damages claim from unit owners who bought into the scheme on the basis that the unit they purchased came with a special privilege car space. Thus, the Respondents’ opposition was unreasonable.
CONSIDERATION
83.Under section 129(1)(g) of the 2011 Act this Tribunal may make ‘an order giving effect to an unsuccessful motion for a resolution of a general meeting (either as originally proposed or as amended by the ACAT) if ACAT is satisfied after a merits review of the motion that opposition to the motion is unreasonable.’
84.The test to determine if the opposition to the motion was unreasonable is not a subjective test of the intentions of the unit owners who voted in opposition. Whether the opposition is in the circumstances unreasonable has to be considered “objectively” taking into account all relevant circumstances.
85.In Points North [2004] QBCCMCmr 423, which was a matter between Alston Glen Pty Ltd and Body Corporate for Points North Community Titles Scheme 4774 & Others, the Adjudicator, not being aware of any court authority which had previously considered whether ‘the opposition is in the circumstances unreasonable’ when objectively taking into account all relevant circumstances, referred to authorities in the Corporations Law and at paragraph 44, to the case of Jenkins v Enterprises Gold Mines (1992) 10 ACLC 136 (“Jenkins”).
86.The Adjudicator said that the Court said, in the Jenkins case, the application of the test of oppression involved a question of fairness. It is for the Court to decide whether, in balancing the interests of a company as a whole against minority interests, the directors have acted so as to unfairly prejudice the interests of the minority. The Court makes a determination of this issue according to the ordinary standards of reasonableness and fair dealing.
87.The Adjudicator then said in the Points North case “I consider that the appropriate test.................is whether opposition to a motion is unreasonable/reasonable when considered in an objective and fair manner in all of the circumstances. A test relying on a subjective intention to oppose a motion would (be) meaningless and inoperative.”
88.In considering whether the order sought by the Applicant should be made regard must be had not only to the interest of all owners in the scheme but also the rights and reasonable expectations of any owner deriving or anticipating a particular benefit under a motion.
89.In the current situation the Respondents are firmly of the belief that the licence agreements are valid and should be upheld or validated by the Owners Corporation to correct what some of the Respondents described as ‘a technicality to do with the language’.
90.A determination of this application requires that all of the circumstances be taken into account when considering each of the Respondents’ grounds of opposition to the motion.
91.The Respondents’ opposition to motion 2 was partly based on their claim that special privileges to park in common property car parks were granted to all owners by unanimous resolution at the September 1976 meeting. The September 1976 resolution, while unanimous, purported to delegate functions and powers to the executive committee. Acting upon that delegation, the executive committee purported, subsequently, to grant special privileges to some of the owners, including the Respondents, in respect of car spaces and carports on common property which were formalized in a licence agreement.
92.The relevant law at the time of the September 1976 meeting was ‘the previous legislation.’ Section 34 stated:
Corporation to act through committee
34. (1) On and after the constitution of a corporation, there shall be a committee of the corporation which, subject to this Act, shall perform all the duties and functions, and may exercise all the powers, imposed or conferred on the corporation.
(2) Those duties and functions shall be performed and those powers shall be exercised by the committee in such manner as the corporation by resolution passed at a general meeting directs or, in the absence of such a resolution, in such manner as the committee thinks fit.
93.While the previous legislation enabled the Corporation to establish and act through a committee and gave that committee the powers referred to in that section, critically the subsection stated that these powers were “subject to this Act”. The provision to grant special privileges over common property in section 46 of the previous legislation, to which section 34 is subject, provided that the Corporation may grant special privileges if authorized by a unanimous resolution in relation to that special privilege being granted.
94.The statutory functions of committees at that time were set out in Division 3 of Part V of the previous legislation. Subsection 55(1) provided that at meetings of the committee, all matters were to be decided by a majority of the votes of the committee-men present and voting.
95.The Tribunal is satisfied that the executive committee did not, in 1976, have the statutory power to grant special privileges for car spaces and car ports on common property and their actions in making these grants were ultra vires. It is irrelevant that the September 1976 unanimous resolutions purporting to give the committee such powers were unanimous as the committee was, statutorily, unable to grant special privileges.
96.The UTA 2001 unambiguously sets out the statutory functions of executive committees in subsection 82(3) of the UTA 2001 and the powers of executive committees in section 88B of the UTA 2001. Importantly, the executive committee of an Owners Corporation may only consent to an application for the use of common property by a member if, inter alia, the use applied for is minor. The example given is the installation of an air conditioner or awning on a unit that extends over the common boundary. Use of car park spaces, which are on common property, is not a minor use.
97.The Tribunal notes the significance of the observance of the statutory requirements for special privileges as stated by Douglas J in Katsikalis v Body Corporate for “The Centre” [2009] QCA 77. The power to grant special privilege over common property can only be granted by the Owners Corporation pursuant to a unanimous resolution or unopposed resolution. The Tribunal accepts the Applicant’s submissions in relation to this ground.
98.The Tribunal considered the Respondents’ submissions that urged the Tribunal to find that the licence agreements are contracts between the unit owners and the Owners Corporation which are entitled to the protection of the Corporations Act 2001.
99.However, the Tribunal had no hesitation in accepting the Applicant’s submissions in response. The Corporations Act 2001 does not apply to the Applicant. Section 9 of the Corporations Act 2001 defines ‘company’ as ‘a company registered under this Act’. The Owners Corporation was established under Part V of the previous legislation. Section 9 of the 2011 Act is now applicable. The Owners Corporation is not a corporation registered under the Corporations Act 2001. It is not entitled to the benefit of sections 128 and 129 of that Act.
100.The Tribunal also considered the Respondents’ submission that the licence agreements recognize the property rights of owners over their carports in the unusual situation at Wybalena Grove where the owners have paid for the construction of their carports that are located in the common property car parks.
101.Having considered all of the evidence in relation to this submission the Tribunal is satisfied and finds that the licence agreements do not and cannot confer interest in land or title to land per se. In Minister of State for the Army v Dalziel Claimant [1944] HCA 4 Williams J stated: “A licence does not create any estate or interest in the land but creates merely personal rights between the parties to a contract. Such personal rights are binding solely upon the parties to the contract and do not run with the land.” At their highest, the licence agreements only confer personal rights.
102.The Respondents, not unreasonably, have an expectation that their parking space privileges, which they have been using and claiming to have a right to use, are validly passed to them under the motion. The Tribunal notes the Applicant’s submission that motion 2, as drafted, will ensure that the Respondents’ present allocation of carspaces and carports will be protected.
103.In relation to whether or not a compensation clause should be included, as stated above, the Tribunal notes that the second amendment to motion 2 at the 2 May 2012 meeting, which related to compensation, was carried without opposition. In these circumstances, notwithstanding the Applicant’s submissions set out above in relation to the compensation clause, the Tribunal is satisfied that the amendment to this clause which was passed without opposition should be included in motion 2.
104.In relation to clause (g) in motion 2, the Respondents’ concerns are that such a clause was not previously included in the licence agreements, that it effectively gives control of the carports to the committee and that the executive committee may use this clause to carry out functions on the carport structures, such as installing solar panels, which are beyond its statutory obligations. The Tribunal notes these concerns; however, it is satisfied that the Owners Corporation cannot lawfully undertake activities which are beyond its statutory function.
CONCLUSION
105.It was apparent to the Tribunal that the Respondents genuinely believed that the licence agreements provided them with some sort of property rights which they could on sell with their unit. Some of the Respondents have been very long term owners of units at Wybalena Grove and a number of units have been sold with car ports. It was not until legal advice was sought in relation to parking, that did not concern a number of the Respondents, that the issue of the invalidity of all licence agreements came sharply into focus.
106.It is, indeed, fortunate that the legal advice, which is correct, was obtained and the proper and necessary procedure to address this problem was advised to the Owners Corporation, so appropriate action to rectify the problem could be taken. This problem cannot be reversed or overcome as the Respondents propose as the licence agreements are ultra vires and, therefore, fatally flawed.
107.Having considered each basis of the Respondents’ objections to the motion set out above, and the Applicant’s submissions and the surrounding facts and circumstances, the Tribunal is persuaded that in respect of each of the grounds of opposition referred to above, all of the Applicant’s submissions, excluding those for the compensation clause, which the Tribunal has already dealt with, should be accepted.
108.The Respondents have set out submissions which the Tribunal considers, when objectively taking into account all relevant circumstances, including that 79 of the unit owners were in favour of motion 2 being passed at the meeting on 2 May 2012, do not amount to a reasonable basis for opposition to that motion.
109.Once the Respondents became aware of the problem with the purported granting of special privileges, the Tribunal concurs with the Applicant, and finds that opposition to the motion to rectify the problem is also, in itself, unreasonable.
110.Therefore, the Tribunal is satisfied and finds that the opposition to Motion 2 by the Respondents, excluding Ms Josie Mackay-Sim (who was a Respondent only to Motion 5 and did not oppose Motion 2) was, in the circumstances, unreasonable.
111.In relation to the actual wording of Motion 2, the Tribunal notes the Respondents’ concerns in relation to the wording “for the time being” in the third line of motion 2. Counsel for the Applicant suggested at the hearing that the words “for the time being” be replaced by the words “at any time.” The Tribunal proposes to amend the motion pursuant to section 129(1)(g) of the 2011 Act to provide that the words “at any time” are used in lieu of the words “for the time being.” In doing so the Tribunal considers this to be just and equitable to all parties.
112.The Tribunal, as stated in paragraph 103 above, considers it to be just and equitable to all parties to further amend motion 2 and to include the second amendment (in relation to the compensation clause) which was carried unopposed on 2 May 2012, namely:
“l) A grant of special privilege may be terminated, in accordance with a special resolution, by written notice given by the Owners Corporation to the person to whom the grant was made. In the event of such termination taking place in respect of the special privileges granted by this motion, then the Corporation shall be at liberty (subject to the provisions of the Act) to make such payments as it sees fit to compensate the Member for the termination of the special privilege.”
Motion 5
113.As stated above, the parties reached agreement in relation to the amendment of motion 5 as originally proposed in a way that is just and equitable to all parties and asked the Tribunal to make orders to give effect to this agreement.
………………………………..
Ms E. Symons
Presidential Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A
FILE NUMBER:
UT 12/14
PARTIES, APPLICANT:
The Owners Units Plan 116
PARTIES, RESPONDENT:
Hilary Nicholson and ORS
COUNSEL APPEARING, APPLICANT
COUNSEL APPEARING, RESPONDENT
SOLICITORS FOR APPLICANT
Mr M. Teys , Teys Lawyers
SOLICITORS FOR RESPONDENT
TRIBUNAL MEMBERS:
Ms E. Symons, Presidential Member
DATES OF HEARING:
10 August 2012
PLACE OF HEARING:
Canberra
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
6
2
0