Fresh Apartments [2016] QBCCMCmr 321 (8 July 2016)

Last Updated: 22 July 2016

ADJUDICATOR’S ORDER

Office of the Commissioner

for Body Corporate and Community Management

ORDERS MADE:

REASONS FOR DECISION

Overview

[1] Fresh Apartments is a large residential scheme in Brisbane containing 92 units. The applicant is the owner of Lot 17. The dispute concerns the area of common property immediately in front of the applicant’s unit (“disputed area”).

[2] The applicant purchased Lot 17 “off the plan” in 2007 at which time she says it was represented to her that the disputed area formed part of the lot. However, seemingly due to an oversight, the survey plan received prior to settlement did not depict this area at all. It was left off the plan and was neither included as part of the lot, nor delineated as common property. As a result, it was agreed as a condition of settlement that the developer would install a gate at the entrance to the disputed area and that the developer would initiate an application to the body corporate for the survey plan to be amended to reflect the applicant’s ownership of the area. Settlement was effected on this basis and the applicant says the developer installed the entry gate shortly after settlement.

[3] At the 2009 AGM, the applicant submitted a motion for the survey plan to be amended to reflect the existence of the disputed area and for it to form part of her lot as originally intended, however the motion was defeated.

[4] The applicant says she used and maintained the disputed area at her expense from 18 November 2008 (date of settlement) until 31 January 2012. At the 2012 AGM, the applicant submitted a motion seeking exclusive use of the disputed area which was also defeated. The applicant says that “under pressure of the then Caretaking Contractor”, she removed all items from the area including the gate installed by the developer.

[5] At the 2016 AGM, the applicant again submitted a motion (“Motion 10”) requesting that the disputed area be granted to her as exclusive use, including the reinstallation of the gate installed by the developer. The motion was defeated with 25 votes in favour, 11 votes against and 27 abstentions.

[6] The applicant has lodged this application seeking an order for Motion 10 to be deemed carried. She argues that no other owner needs to use the area to access their unit, the lift or the fire stairs. Further, she says granting this area to her as exclusive use does not disadvantage any owner and in fact advantages the body corporate in that all maintenance responsibilities would be met by her as the owner.

[7] The issue to be determined in this application is whether there is any basis to give effect to Motion 10. This requires a determination as to whether the body corporate acted unreasonably in failing to grant exclusive use of the disputed area to the applicant. If the body corporate’s decision is found to be unreasonable, an order may be made to give effect to the motion.

Jurisdiction

[8] I am satisfied this matter falls within the legislative dispute resolution provisions.[1] It is a dispute between a lot owner and the body corporate about a claimed contravention of the Act.

[9] An adjudicator may make an order that is just and equitable in the circumstances including requiring a person to act, or prohibit a person from acting, in a way stated in the order.[2] Further, an adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[3]

Procedure

[10] Under section 243 of the Act, a copy of the application was provided to the body corporate, with an invitation to the body corporate committee and all owners to respond to the matters raised by the application.

[11] In total, five submissions were received from lot owners. Four submissions support the application; one submission opposes the application. The applicant inspected the submissions received and made a written reply.[4]

[12] A dispute resolution recommendation was then made referring the dispute to departmental adjudication.

Analysis

[13] The issue in this application is whether there is any justifiable basis to give effect to Motion 10 to grant exclusive use of the disputed area to the applicant.

[14] As Motion 10 sought to record a new community management statement (“CMS”) containing a new exclusive use by-law, section 62(2) of the Act requires that the motion must be passed by a resolution without dissent. A motion is passed by resolution without dissent only if no vote is counted against the motion. Motion 10 did not achieve this.

Body Corporate must act reasonably

[1] Section 94(2) of the Act requires the body corporate to act reasonably in anything it does including making, or not making, a decision. The question of reasonableness is not whether the decision was ‘correct’ but whether it was objectively reasonable.[5] What is reasonable is a question of fact, based upon a consideration of all relevant matters in the circumstances of each case.[6]

[2] In the case of a motion requiring a resolution without dissent, if satisfied the motion was not passed because of opposition that in the circumstances is unreasonable, an adjudicator may make an order giving effect to the motion.[7] Considering this kind of order requires a balancing between the need to protect the genuine interests of dissenting owners, while upholding the justifiable position of a proponent in the face of unfounded or vexatious opposition.[8]

[3] In this decision, I will consider whether the opposition to Motion 10 is unreasonable, having regard to the circumstances of the matter.

Opposition to the motion

[15] The minutes indicate there were 25 “yes” votes, 11 “no” votes and 27 abstentions. I have inspected the voting tally sheet and note that all the “no” votes came from Sam and Anita Vecchio who own 11 lots in the scheme. However, Sam and Anita Vecchio did not make a submission in response to this application. After the application had been referred to me for adjudication, I offered Sam and Anita Vecchio a further opportunity to comment on the application however they have not done so. As such, it is not known why they objected to the motion.

[16] The only submission made opposing the application is from the owners of Lot 32 who abstained from voting on the motion. There were 27 abstentions in total however none of the other owners have made a submission. Therefore, the only objections I have before me are those submitted by the owners of Lot 32 who did not actually vote against the motion but clearly object to the grant of exclusive use. The owners of Lot 32 say they abstained from voting on the motion on the basis that other owners had already submitted votes against the motion and as such, they knew the motion would be defeated. While it would have been preferable for the owners of Lot 32 to actually vote against the motion if they oppose the grant of exclusive use, the fact that they did not do so does not mean I cannot now consider their objections.

[17] Below, I will discuss the various arguments that have been raised against the grant of exclusive use of the disputed area to the applicant.

Visual Amenity

[18] The owners of Lot 32 say there are no areas in front of residents’ units that are owned or occupied by individual owners. They say the disputed area is directly visible on exiting the lift and forms part of the “first impression” when a resident or visitor exits the lift. They argue that to convert this area to a lot owner’s exclusive use area including the right to decorate and furnish has potential to significantly reduce the visual amenity of the building.

[19] Conversely, the applicant says that the use of this area has the potential to significantly improve the visual appearance of the facility. The applicant contends that effective use of the area such as when it was decorated with pot plants and furniture, would actually have a positive effect on first impressions of owners, visitors or potential purchasers. Further, the applicant submits by-law 8.2 in the scheme’s CMS provides the committee with authority to make directions about the use of an exclusive use area. Therefore, the applicant says any decoration or use of the area could be challenged by the committee (or any member of the body corporate through the committee), and the grantee of the exclusive use area would need to comply with the committee’s direction.

[20] The issue of visual amenity is inherently a subjective one. What is visually appealing to one person may not be to another. The owner of Lot 16, the unit closest to the applicant submits that the applicant kept the area clean and attractive, and that it helped to “beautify the building”. The owners of Lot 14 state that the gate to the disputed area was in their direct line of sight whenever they exited their unit. They do not express any concerns regarding the appearance of the area but rather, support the applicant’s case. No other submissions were made raising any issues of visual appearance.

[21] Given the disputed area is visible from the common property, concerns about appearance are not unreasonable. However I note the concerns at this stage are purely hypothetical as there is nothing to suggest the use of the area by the applicant will in fact reduce the visual amenity of the building. Further, if appearance issues do subsequently arise, there are various mechanisms available to the body corporate through the legislation and by-laws to address this, similar to any other appearance of lot issues in a scheme. As such, I am not satisfied that the potential effect on visual amenity is in itself a reasonable basis to decline the grant of exclusive use.

Represented as common property

[22] One of the arguments raised by the owners of Lot 32 is that the area in question was represented to them as common property when they purchased their unit in 2014. While this may be the case, the registered survey plan which is the document to be relied upon by potential purchasers does not actually reflect this. More importantly, the fact that owners may have bought into the scheme with the understanding that a particular area is common property does not form a reasonable basis to deny another owner from later being given exclusive use of that area.

Creating a precedent

[23] The owners of Lot 32 say to grant the applicant with exclusive use of the disputed area would create a precedent for the other units with the same layout, that is, the units above and below Lot 17 on the other three levels of the building. It is argued that these other three units would also have the same basis to seek sole access and the right to occupy, decorate and live in these common areas. The applicant responded that other owners who wish to apply for exclusive use of the areas in front of their units would need to submit a motion that needs to be passed without dissent at a general meeting. The granting of exclusive use to Lot 17 would create a precedent however whether the motion is passed or not would be dependent on the body corporate of the day.

[24] I do not consider the potential of setting a precedent to be a valid basis to refuse the applicant’s request for exclusive use in this matter. Each case has to be considered on its own merits. If other owners want exclusive use of the common property outside their units, the body corporate should likewise reasonably consider their requests, taking into account all the relevant matters in each circumstance. Just because there is “no current precedent” of this in the building is not a reasonable basis for the body corporate to refuse the applicant’s request, especially if there is otherwise no rational or substantive basis not to grant the exclusive use.

Other legal remedies

[25] It is also suggested by the owners of Lot 32 that any fraudulent misrepresentations, contractual errors, undertakings or related matters that may have occurred between the applicant and the developer at the time of the purchase or in subsequent negotiations should not be resolved by amending the current common property rights of all owners.

[26] The applicant says she has been advised that the only way to resolve the issue once settlement has been undertaken is to apply to the body corporate for exclusive use of the area.

[27] In my view, whatever other legal avenues may be available for the applicant is largely irrelevant to the current application. Quite obviously, seeking exclusive use of the disputed area is a valid and very reasonable way of rectifying the problem. As a lot owner, the applicant like any other lot owner, has a right to seek exclusive use of an area of common property. The issue to consider is whether the body corporate’s refusal in this instance was reasonable.

Maintenance of the area

[28] The applicant says she will bear all the costs of maintaining the disputed area. However the owners of Lot 32 say that the cost of maintaining the area is nominal and that to maintain it as part of the common property ensures a consistent approach and standard.

[29] It is common for exclusive use areas to be maintained by the lot owner. In fact, the legislation provides that in the absence of a specific provision in the exclusive use by-law regarding maintenance, it is taken to be the responsibility of the lot owner. I do not see how the relative cost or responsibilities associated with maintenance forms a reasonable basis to oppose the motion. Like all maintenance obligations, the applicant would need to fulfil the responsibility to a reasonable standard failing which, the body corporate through its committee can take the appropriate action to address.

Owners’ wishes

[30] Finally, the owners of Lot 32 say owners have clearly and repeatedly made their position clear on this matter, having rejected the motion on three occasions. They say that there does not appear to be a change of circumstances on which to rule against owner wishes.

[31] To clarify, the applicant has sought exclusive use of the disputed area twice, not three times. The first motion she submitted to the body corporate to try and rectify the issue was to have the survey plan amended to reflect her intended ownership of the disputed area; it was not a motion seeking exclusive use of common property. The fact that owners have previously rejected the motion is irrelevant to the question of whether the opposition to the current motion was reasonable.

[32] For a motion requiring a resolution without dissent, there must not be any votes counted against the motion. Therefore, in a scheme of 200 lots, as long as one lot owner votes against the motion, it would not pass. In the current application, all dissenting votes came from one lot owner. That lot owner has not made any submissions regarding the application therefore it is not known why they opposed the motion. One can see then that it is quite possible in this kind of scenario for a minority to obstruct the legitimate interests of another owner who the majority actually support.

[33] The adjudicator in the decision of Q1[9] put it this way:

“In determining whether votes against a motion constitute opposition that in the circumstances is unreasonable it is necessary to consider all the material facts. What is material will vary from case to case but typically the requirement for an adjudicator to make a just and equitable decision involves some balancing of the interests of the majority and minority and raises questions of fairness.[10] It is relevant to consider if any minority opposing the proposal will suffer any real prejudice if their objection is overruled.”

[34] As the dissenting voter has not submitted any objections to the motion, I have only been able to consider the objections raised by the owners of Lot 32. Taking into account all the relevant factors and arguments raised, I am not convinced that the minority in this case will suffer any real prejudice if their objection is overruled.

Conclusion

[35] Based on the information I have been presented with, it is apparent that the applicant entered into the contract with the understanding that the disputed area forms part of Lot 17. However, perhaps due to an oversight, the area was omitted from the registered survey plan. The correspondence that then followed and the conditions that were agreed upon between the applicant and the developer prior to settlement clearly indicate the area was intended to be a part of Lot 17. Finally, the installation of the gate by the developer at the entrance following settlement supports that the area was intended to be part of the applicant’s lot for her exclusive use.

[36] I have inspected the photographs of the area in question and I note it is immediately outside the applicant’s unit and completely set back from the lift foyer and walkways. As has been supported by other lot owners’ submissions, only the occupier and visitors to Lot 17 use the disputed area. No other residents require use of that area to access their lot, the lift or the common property walkways. The owner of Lot 16, the closest neighbour to the applicant submitted that she has not been inconvenienced or impeded in any way by the applicant’s use of the disputed area. Accordingly, I cannot see how any other lot owner, occupier or visitor would be adversely affected by the grant of exclusive use of this area to the applicant.

[37] Taking into account all these factors, I am not satisfied the body corporate acted reasonably in refusing the grant of exclusive use to the applicant. Rather, I consider the opposition to the motion in the circumstances was unreasonable. As such, I deem Motion 10 to have passed.

[38] The body corporate will need to record a new CMS reflecting the exclusive use allocation. I have allowed three months from the date of this order for the body corporate to prepare and lodge a new CMS. I have ordered that the costs associated with the new CMS is to be borne by the applicant as Motion 10 itself stated that the owner of Lot 17 would meet all such expenses and the applicant has consented to this.

[1] See sections 227, 228, 276 and Schedule 5 of the Act

[2] Section 276(2) of the Act

[3] Section 284(1) of the Act

[4] See sections 246 and 244 of the Act respectively

[5] Cwealth Bank of Australia v Human Rights & Equal Opportunity Commission [1997] FCA 1311

[6] Albrecht v Ainsworth & Ors [2015] QCA 220 at 82

[7] Schedule 5(10) of the Act

[8] Per Adjudicator Rosemann in Festival Towers [2015] QBCCMCmr 114

[9] [2007] QBCCMCmr 131

[10] Points North, Order 0261-2004, CJ Carrigan, 2 September 2004 at paragraph 44. Ocean Plaza Apartments, Order 0262-2004, CJ Carrigan, 23 September 2004 at paragraph 26.