Admiralty Towers II [2010] QBCCMCmr 579 (23 December 2010)

Last Updated: 18 February 2011

REFERENCE: 0915-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Gary Borradale, an owner of unit 101

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0915-2010

“Admiralty Towers II” CTS 15344

Introduction

Mr Borradale, the owner of lot 101, says there is disunity within Admiralty Towers II. In his view, a large part of this disunity comes from different levels of the building having separate lifts, foyers and entertainment areas. He says considerable disharmony has resulted from more than half of the owners being excluded from a pool, spa and entertainment area on the top floor of the building.

Mr Borradale has applied for an order to invalidate the by-law that grants exclusive use of the top floor of Admiralty Towers II to the benefit of units on floors 22 to 36.

The application raises questions regarding whether by-law 28 is invalid because it is unreasonable or otherwise contrary to the legislation. I will decide these questions with reference to the Body Corporate and Community Management Act (Act) and the Act’s Standard Module Regulation (Standard Module).

Overview

Admiralty Towers II is a 36 storey building in Brisbane containing 193 residential units. This building can be described as being divided into two separate sections. The two sections of the building are units 1 to 125 on levels 1 to 21 (the lowrise) and units 126-193 on levels 22 to 36 (the highrise). Both the highrise and the lowrise have their own separate entrance foyers and lifts. There are also two separate areas containing a pool, spa and other facilities, one located on the first floor and the other located on the top floor.

By-law 28 provides:

Exclusive use of Facilities/Use of Lifts

(a) The Owners for the time being of Lots 126-193 inclusive shall be entitled to the exclusive use and enjoyment (for himself/herself and his or her licensees) of the common property situated on Level 00 as hachured in solid black lines on the Level 00 plan attached hereto and shown in Schedule E.

(b) The Body Corporate shall continue to be responsible to carry out its duties pursuant to Section 109 Standard Module and at its own expense in respect of the Level 00 area in the preceding paragraph.

(c) Owners or Occupiers of lots 1-125 shall use only the lowrise foyer and lifts to gain access to their lot. Owners of Lots 126-193 shall use only the highrise foyer and lifts to gain access to their lot and may use the lowrise foyer and lifts to gain access to facilities on Level E.

All owners have been given an opportunity to make submissions regarding this application. A number of owners say their exclusion from the top floor entertainment area is unfair when all owners are entitled to use the facilities on the first floor. However, other owners say that, for all practical purposes, people only use the entertainment area in their own part of the building anyway.

Another significant issue is the payment of the costs of maintaining the entertainment areas. Some owners say they should not be paying for the maintenance of a highrise entertainment area they cannot use. However, some owners from the highrise say they are required to pay for the maintenance of the lowrise entertainment area that they do not ever use.

I need to decide, as a matter of law, whether by-laws 28(a) and 28(b) are invalid. An adjudicator has the power to require removal of a by-law, including if it is oppressive or unreasonable (Act, Schedule 5 – Item 20). This does not raise any questions of title to land over which an adjudicator would not have jurisdiction.[1]

Analysis

Concerns about disunity

Mr Borradale expresses concern about the effect of by-law 28 in reinforcing a division of units within Admiralty Towers II into highrise and lowrise units. He has the view that removal of this by-law would go a long way towards achieving harmonious relations and unification in the community of occupiers within the building.

A number of other owners within Admiralty Towers II share similar views. In particular, these owners appear to be upset that the occupiers of highrise units have the choice of using either the highrise or lowrise facilities. In contrast, occupiers of lowrise units can only use the lowrise facilities. The unfairness of all owners contributing to the cost of maintaining the facilities is said to be unfair because of the lack of equal access to both these facilities.

In contrast, some owners say removing by-law 28 would in fact promote more disunity and disharmony. These owners say that the lift arrangements divide the building into highrise and lowrise units. The potential problems of an overcrowding of the smaller highrise facility and people in wet swimming togs having to go through the highrise lobby to travel from the highrise pool to the lowrise units are seen as practical justifications for by-law 28. It is argued that highrise occupiers tend only to use the highrise facilities and it seems likely this is the case.

Obviously different people have different views upon whether occupiers of lowrise units should be able to access the highrise facilities. However, a number of submissions show the availability of the highrise facilities for only the highrise units was part of the marketing on the initial sale. The by-laws for Admiralty Towers are also publicly recorded and it would seem that owners of lowrise units should have known what they were buying and what facilities were available for their use. The applicant’s concerns are not a proper legal ground for invalidating by-law 28.

Discrimination not always unlawful

By-law 28 does discriminate between different lots. However, all exclusive use by-laws discriminate between the lot that is granted the exclusive use and the lots that are not granted the exclusive use.

The Act says that a by-law cannot discriminate between types of occupiers (Act, 180(6)). For example, a by-law cannot say that a common property pool can only be used by owner occupiers and not by tenants. By-law 28 does not discriminate between types of occupiers but, like any exclusive use by-law, discriminates between different lots.

Not so unfair or unreasonable as to be unlawful

Ultimately, there is nothing so unfair or unreasonable about by-law 28(a) that it should be declared invalid. The submissions indicate that different owners have different views on the fairness of by-law 28. However, it seems quite normal that people have these different views and the by-law is not beyond the limit of what an objective person would consider to be reasonable.

Reasonableness is a question of fact. The objective test requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’.[2] The question is not whether the decision was the "correct" one but whether it is objectively reasonable.[3] There is no evidence or argument provided by Mr Borradale that satisfies me that by-law 28(a) falls outside the range of what would be objectively reasonable.

The most significant argument of unfairness or unreasonableness is that owners of the lowrise lots still need to contribute to the costs of the top floor facilities they are not entitled to use. However, any occupier can only use one set of facilities at once and no evidence has been provided to suggest the cost per unit of maintaining the highrise facilities is greater than the cost per unit of maintaining the lowrise facilities. By-law 28(a) will not be invalid merely because it does not provide for complete fairness in allocation of cost.[4] In fact, complete fairness in contributing to the cost of maintaining the facilities is practically impossible as some people will obviously make more use of the common property facilities than others.

There is no evidence that the use of facilities by occupiers of the highrise units provides a more significant drain on body corporate resources than the use of facilities by occupiers of the lowrise units. Even if there were evidence of significant unfairness, the appropriate course of action would be to adjust the lot entitlements by which owners contribute to those maintenance costs rather than invalidate by-law 28(a). I note a lot entitlement adjustment in 2007 did take into account that owners in the lowrise section were not entitled to use the highrise facilities.[5]

I accept that by-law 28(a) is reasonable in all the circumstances. In particular, I accept that the potential overcrowding of the highrise facility made it reasonable for the developer to implement by-law 28.

Exclusive use can benefit multiple lots

Section 170 of the Act says:

An exclusive use by-law, for a community titles scheme, is a by-law that attaches to a lot included in the scheme, and gives the occupier of the lot for the time being exclusive use to the rights and enjoyment of, or other special rights about—

(a) common property; or

(b) a body corporate asset.

The Court of Appeal has identified two essential elements of the definition of an exclusive use by-law under the Act (Act, 170).[6] Firstly, the by-law must attach to an identified lot included in the scheme. Secondly, the by-law must confer special rights on whoever occupies the lot to which it attaches. The Court of Appeal concluded that a by-law prohibiting occupiers of lots from providing letting agent services was not an exclusive use by-law because it did not attach to a specific lot conferring rights on whoever occupied that lot.

By-law 28(a) does not attach to one specific lot. It attached to lots 126 to 193 and gives exclusive use rights to the occupiers of those lots in respect of the identified facilities on the top level. The question is whether a valid exclusive use by-law that "attaches to a lot" must attach to one specific lot or can attach to multiple lots.

Having reviewed the submissions, I am satisfied an exclusive use by-law can attach to multiple lots. There is no reason in principle for preventing exclusive use of a particular area of common property being granted for the benefit of multiple lots instead of just one lot. The general rule of interpretation should apply that ‘In an Act ... words in the singular include the plural’ (Acts Interpretation Act 1954, 32C).[7]

In any event, the plan for Admiralty Towers II was registered in February 1997 and by-law 28 was recorded on 27 February 1997. At this time, the plan was regulated under the Building Units and Group Titles Act 1980 (BUGTA). Section 30(7) of BUGTA specifically allowed for exclusive use to be conferred ‘on the proprietors of the several lots so specified’. By-law 28 was therefore clearly valid under BUGTA. The present Act has transitional provisions that maintain the validity of exclusive use by-laws that were adopted under BUGTA (Act, 340).

Conclusion

By-law 28 is not invalid. Therefore, unless all owners of highrise units agree to its removal, this by-law will remain in force.

It seems very unlikely highrise owners will agree to the removal of this by-law. It is important to realise that anyone making reasonable enquires when purchasing a unit in Admiralty Towers II should have been aware of what they were buying and what facilities were available for their use. I am also satisfied the by-law is reasonable given the highrise entertainment facility was not designed for a large number of people.

Ultimately the present application is lacking in good legal grounds and it is difficult to see how this application could have achieved Mr Borradale’s expressed aim of increasing harmony within the building. I would encourage Mr Borradale to consider other ways in which he could work with similarly interested occupiers to improve the sense of community within the building.

[1] Independent Finance Group Pty Ltd v Mytan Pty Ltd & Anor [2001] QCA 306.

[2] Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989) 88 ALR 621. See also McKinnon v Treasury [2006] HCA 45 per Hayne J at paragraph 61.

[3] Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission [1997] FCA 1311; (1997) 150 ALR 1 at page 34.

[4] Julian-Armitage v The Proprietors Astor Centre BUP No 8932, Court of Appeal (Queensland) Appeal No 9124 of 1997, 29 May 1998, BC9802198.

[5] Admiralty Tower II [2007] QBCCMCmr 506 at paragraph 9, paragraph 21, paragraph 25(b) [published as 25(i)], and paragraph 26(c) [26(s)] - http://www.austlii.edu.au/au/cases/qld/QBCCMCmr/2007/506.html

[6] McColl & Anor v Body Corporate for Lakeview Park CTS 20751 [2004] QCA 44 at paragraphs 14-15.

[7] For an example of this rule being applied in the converse regarding the power to make by-laws, see Sydney Diagnostic Services Pty Ltd v Hamlena Pty Ltd NSWCA 40548 of 1990, BC9101877.