Body Corporate for River City Apartments CTS 31622 v McGarvey [2012] QCATA 47 (12 March 2012)

Last Updated: 13 April 2012

APPEARANCES and REPRESENTATION (if any):

REASONS FOR DECISION

Introduction

[1] This is an appeal, pursuant to s 289 of the Body Corporate and Community Management Act 1997, from an order of an adjudicator concerning a by-law of the applicant, River City Apartments. The respondent, Ms McGarvey (who was the applicant before the adjudicator), is the owner of one of the lots in the scheme. The scheme is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 2008, and it has its own by-laws.

[2] Ms McGarvey owns a small dog, which she keeps in her apartment within the scheme. She sought a declaration from the adjudicator that by-law 13 of the scheme is invalid. That by-law provides as follows:

“13 Keeping of animals

An owner or occupier of a Lot must not keep an animal upon their Lot or the common property.”

[3] Ms McGarvey contended before the adjudicator, and contends before the tribunal, that the by-law is invalid because it goes beyond the power of the body corporate under s 169(1)(b)(i) to make by-laws for the regulation of, including conditions applying to, the use and enjoyment of lots included in the scheme. Alternatively, she contends that it is invalid because, as a blanket ban on the keeping of any pets in a lot, it is oppressive and unreasonable, contrary to s 180(7) of the Act.

[4] The adjudicator found that the by-law is within the power provided by s169, but it is invalid because it breaches s 180(7). In doing so, he relied in particular upon the decisions of Tutton v Body Corporate for Pivotal Point Residential CTS 33550 [2008] QCCT BCCM 12 and McKenzie v Body Corporate for Kings Row Centre CTS 11632 [2010] QCATA 57. He directed that the body corporate replace the current by-law with the standard by-law on keeping of animals that is in schedule 4 of the Act.

[5] The body corporate appeals from that decision.

Grounds of appeal

[6] An appeal to this tribunal from a decision of an adjudicator may only be brought on a question of law: s 289(2).

[7] The application commencing the appeal sets out six grounds of appeal, each of which contends that the adjudicator erred in law. In brief, the grounds are that the adjudicator:

1. failed to give adequate reasons for the decision that by-law 13 is unreasonable;
2. failed to give reasons for the decision relating to seven factual issues raised in the submissions;

100. failed to have sufficient regard to, and gave inadequate reasons in respect of, submissions from the body corporate and 43 lot owners opposing Ms McGarvey’s application;

4. erred in concluding that by-law 13 was unreasonable having regard to the facts and circumstances relating to the body corporate and its lot owners, occupiers, invitees and guests;
5. failed properly to interpret and construe the term “unreasonable” in the circumstances of the body corporate; and
6. failed to investigate or make appropriate enquiries to ascertain the relevant facts as to the relationship between lot owners and occupiers on the one hand and those lots which are operated as a hotel within the scheme on the other, to ascertain the extent to which the hotel operates and to address those matters in the reasons.

[8] In submissions filed in the appeal, counsel for the body corporate, Mr Carrigan, altered the grounds upon which the appeal was brought in some respects. He contended that the adjudicator erred in failing to consider the legal effect of the insertion of s 180(7) into the Act on 1 January 2010 and the effect of s 20(2)(c) of the Acts Interpretation Act 1954 in the circumstances of that amendment. Those are grounds which were neither set out in the notice of appeal itself nor argued before the adjudicator. Otherwise, he effectively adopts and makes submissions on most of the grounds set out in the notice of appeal.

Preliminary matters

[9] In support of some grounds of appeal, the body corporate purports to rely upon two affidavits filed in the tribunal which were not before the adjudicator. One is by the manager of Oaks Hotels & Resorts (Qld) Pty Ltd, which apparently operates an apartment hotel within the scheme using some of the lots in the scheme. The other is by the secretary of the body corporate.

[10] The body corporate has not sought the tribunal’s leave to file and rely upon those affidavits.

[11] An appeal under s 289, as well as being restricted to an appeal on questions of law, is an appeal in the strict sense rather than an appeal by way of rehearing. As Mr Carrigan says in his submissions, when an appeal is permitted only on a question of law, that question is not merely a qualifying condition to ground the appeal, but is the sole subject matter of the appeal, to which the ambit of the appeal is confined.[1]

[12] In Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172, at 180-181 [23], in the joint judgment of the High Court discussing the differences between an appeal by way of rehearing, an appeal by way of hearing de novo and an appeal in the strict sense, the justices said that:

1. in an appeal by way of rehearing, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appeal court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in an appeal de novo, those powers may be exercised regardless of error;[2]
2. this is so unless, in a rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance;

100. a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance;

4. on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand.

[13] Paragraphs (a) and (b) indicate that, unless there was error in the judgment at first instance, or there is an express power to overturn the judgment even if it was made without error, the appellate court cannot exercise its powers. It is only when there was error that it can exercise its powers and then, when doing so, it must apply the facts and law now in existence. In contrast, and as is made clear in paragraph (c), an appeal in the strict sense is decided on the basis of the facts before the tribunal below and the law as it was at the time of the decision.

[14] That an appeal under s 289 is an appeal in the strict sense is confirmed, in my view, by a comparison of ss 146 and 147 of the Queensland Civil and Administrative Tribunal Act 2009. Section 146 makes it clear that, in an appeal on a question of law, the appeal tribunal must make its decision upon the basis of the material that was before the tribunal below and the findings of fact by that tribunal and, if any further evidence is required, the appeal tribunal may set aside the decision and return the matter to the tribunal below for the hearing of additional evidence. In contrast, s 147 deals with an appeal on questions of fact or mixed fact and law. In such an appeal, the section expressly states that the appeal must be decided by way of rehearing, with or without the hearing of additional evidence as decided by the appeal tribunal.

[15] Nothing in the BCCM Act alters this in respect of appeals under s 289. Although s 294 provides that, in deciding an appeal, the appeal tribunal may exercise all of the jurisdiction and powers of an adjudicator, that provision is directed to the decision itself, rather than to the nature or process of the appeal. The section also provides that the appeal tribunal may only amend or substitute an order if the adjudicator would have had jurisdiction to make the order. This is clearly directed to the time at which the adjudicator made the decision, which is consistent with the appeal being in the strict sense.

[16] Therefore, this appeal must be decided on the basis of the findings of fact made by, and the evidence that was before, the adjudicator and the law as it was at the time of his decision. It is not appropriate for this tribunal, in the appeal, to take into account additional evidence. Furthermore, no reason has been given why the evidence that is now sought to be relied upon could not have been given to the adjudicator. It appears clear from reading the affidavits that all of the evidence in those affidavits could have been given to the adjudicator.

[17] The appeal must be decided without regard to the two affidavits filed by the body corporate.

[18] As I have said, one of the grounds upon which the body corporate now seeks to rely, by its submissions, is a ground that was not raised before the adjudicator and therefore not considered by the adjudicator.

[19] A party is generally bound by the conduct of the party’s case at first instance and should not, after the case has been decided against the party, except in the most exceptional circumstances, be permitted to raise a new argument which, whether deliberately or by inadvertence, that party failed to put during the hearing below.[3]

[20] In my opinion, having regard to these principles, the body corporate should not be permitted to raise the new grounds of appeal concerning the insertion of s 180(7) into the Act and the effect of s 20 of the Acts Interpretation Act 1954.

Failure to investigate

[21] The body corporate contends that the adjudicator failed properly to investigate the application in accordance with his obligation under s 269 of the Act. It contends that had he done so he would have learnt considerable details about the letting agreement with Oaks Apartments, that the two lifts which service the 41 levels of the scheme are small and inadequate for the passage of animals and that the common area on each floor is also small and provides little room for passage to apartments. Had he investigated the scheme and undertaken a visual inspection of those features, it would have been apparent, having regard to the interests of all owners and occupiers, that by-law 13 was reasonable.

[22] The body corporate contends that the adjudicator should have addressed the questions:

1. what are the interests of all owners and occupiers of the lots in the scheme?
2. what use is made of the common property of the scheme? and

100. in the circumstances of a and b, was by-law 13 unreasonable?

[23] As to the interests of all owners and occupiers for the lots, the body corporate contends that, among other things, the interests of Oaks Apartments, which operates a commercial business of letting the lots, should have been considered and the fact that many lots were let on a short term basis was relevant and was not considered by the adjudicator. It also contends that the by-law which the adjudicator ordered the body corporate to adopt is unworkable, because it would be impossible for the written approval of the body corporate to be given to keeping an animal in a lot which was let for short term occupation.

[24] Matters concerning short term letting, the interests of Oaks Apartments, and the workability of the alternative by-law were not put before the adjudicator. Nor was the adjudicator requested to inspect personally the layout of the apartments, the common property and the lifts, which were (in my view) adequately described in the submissions by the body corporate and the opposing lot owners to the adjudicator.

[25] Under s 269 of the Act, an adjudicator “must investigate the application to decide whether it would be appropriate to make an order on the application”. When investigating the application, an adjudicator must observe natural justice, must act as quickly, and with as little formality and technicality, as is consistent with a fair and proper consideration of the application and is not bound by the rules of evidence.

[26] Nowhere in the Act does it require that an adjudicator personally attend and inspect the premises the subject of an application. Certainly, an adjudicator would have the power to do so if he or she considered it appropriate or necessary. But, where none of the persons who made submissions to the adjudicator contended that a personal inspection should be made, and nobody made submissions about the workability or otherwise of a by-law which would entitle a person to keep a pet with the written consent of the body corporate,[4] it cannot be the case that an adjudicator has failed properly to investigate the application and to take into account those facts, provided that the adjudicator has given the parties sufficient opportunity to make submissions to him or her.[5]

[27] I have recently considered the extent of an adjudicator’s obligation to investigate.[6] I adopt what I said in that case.

[28] There was clearly sufficient opportunity given to lot owners and occupiers and the body corporate to make submissions to the adjudicator in this case, and many lots owners, as well as the body corporate, chose to do so. The adjudicator was entitled to consider the matters put before him and not to take proactive steps to ascertain whether there were any other relevant facts to which he should have regard.

[29] In my opinion, there is no substance to the complaint that the adjudicator failed properly to investigate the application.

Is the by-law invalid?

The issue

[30] The adjudicator decided that a by-law that prohibited the keeping of pets in a lot falls within the power to regulate the use and enjoyment of lots.

[31] Although it was not originally dealt with by the parties in their submissions to the tribunal, I invited submissions on the question whether such a blanket ban on the keeping of pets can properly be considered as providing for “regulation”, as distinct from the prohibition, of the use or enjoyment of lots.[7] This question appears not to have been considered in previous decisions but, as the answer to it may affect whether, in this case or in future cases, it is necessary to consider whether such a by-law is reasonable, it seemed to me that it should be raised and considered now.

The parties’ submissions

[32] In response, the body corporate submitted that the by-law does regulate the use or enjoyment of lots. Even though it imposes a blanket ban on one aspect of such use and enjoyment (the keeping of animals), it is merely a partial prohibition on the overall use and enjoyment of lots and the common property. It submitted that the extent to which such a partial prohibition is permissible depends on (a) the terms of the power to regulate and (b) the context in which the power is to be operated.[8]

[33] The body corporate also referred to by-law 11 in the standard by-laws of bodies corporate in schedule 4 to the Act. Section 168 provides that those by-laws apply to a body corporate if its community management statement does not include any by-laws. Standard by-law 11 relevantly provides, in essence, that the occupier of a lot must not, without the body corporate’s prior written approval, bring or keep an animal on the lot or the common property, nor permit an invitee to do so. The body corporate submitted that:

1. that by-law, and therefore any by-law in similar terms, is clearly valid, as it is authorised expressly by the Act;
2. the standard by-law contains a total prohibition on the keeping of animals, which remains in all cases unless the occupier obtains the prior written permission of the body corporate;

100. that by-law gives the body corporate an unfettered and unlimited discretion, that is not qualified by any objective criteria or condition, to give or refuse its approval;

4. therefore, the power to regulate the “use and enjoyment” of lots with respect to animals includes the power to impose a blanket prohibition on bringing or keeping animals on lots or the common property, and by-law 13 of this scheme is valid.

[34] In terms of the context in which the power under s 169 is to be operated (the second limb of the test in Ng Enterprises), the body corporate relied substantially on the additional evidence and submissions which it filed in the tribunal. It submitted that, having regard to that material, the by-law is appropriate for the context in which the scheme operates.

[35] Ms McGarvey submitted that regulation of the keeping of animals falls within s 169(1)(b), but a by-law that completely prohibits certain activities would contravene s 180(7). She referred to a passage from the reasons for judgment of the plurality in Yanner v Eaton[9] that “regulation may shade into prohibition and the line between the two may be difficult to discern” and contended that, in this case, there is no line to discern, as the by-law simply imposes a ban on the keeping of animals. That, she submitted, was oppressive and unreasonable, contrary to s 180(7).

Discussion

[36] If one accepted the body corporate’s submissions, then a by-law dealing with any use of a lot in any way, including completely prohibiting it, would be a by-law “regulating” the use and enjoyment of lots. On that basis, a by-law could prevent an owner laying tiles or grass, or planting any type of plant, in the courtyard area of a lot, or playing any music at any volume within a building on a lot in a community titles scheme.

[37] In my view, that goes too far and is not the effect of the cases. As the Court of Appeal made clear in Mineralogy at [8]-[9], the power to regulate an activity implies that the activity will, despite such regulation, be capable of continuing, which it would not do if it were completely prohibited. Prohibition of an activity in part, in a particular case, or in a particular way, may in some cases be needed to achieve effective regulation. In the case of a vacant lot, a basic right of a landowner is to build a dwelling on the land. Such a basic right cannot be prohibited under a provision such as s 169.

[38] The effect of the discussion in Mineralogy is that the blanket prohibition of an activity that an owner or occupier of a lot would normally, according to the ordinary rights of a land owner or occupier, be entitled to carry on in using and enjoying the lot is prima facie invalid. Such a prohibition would go beyond regulation.

[39] Furthermore, ordinarily if a general prohibition were qualified by the right to obtain somebody’s consent, but the right to consent was unqualified and unlimited and not subject to any objective standard by which to give or refuse consent, that too would not amount to appropriate regulation.[10]

[40] However, in the case of the BCCM Act, the extent to which a by-law may regulate the keeping of animals is affected by s 168 and schedule 4, as the body corporate submitted. That by-law makes it clear that a by-law that prohibits the keeping of animals except with the prior written consent of the body corporate, and without setting out any objective criteria by which such consent may be given or refused, would be a valid by-law. To that extent, I agree with the body corporate’s submission which I have summarised in paragraph [33] above.

[41] I do not agree that the exercise by the body corporate of a discretion under such a by-law would be unfettered and unlimited. Such a by-law must be construed in the context of the Act as a whole, including s 94. That section relevantly provides that the body corporate must act reasonably in anything that it does in carrying out its functions under the Act and the community management statement. That obligation is a clear fetter on the discretion given under a by-law such as by-law 11 of the standard by-laws.

[42] In terms of the context in which the power under s 169 is to be operated (the second limb of Ng Enterprises), I have noted that the body corporate relied substantially on the additional evidence and submissions on which it sought to rely. As I have already said, in this appeal that additional material must be disregarded.

[43] But even if I were to have had regard to it, the particular circumstances of this scheme are not relevant to the general construction of a section of the Act. The Act must be construed without reference to any particular circumstances that might arise under it. Such circumstances would only be relevant, in this case, if the question were whether the by-law was oppressive or unreasonable, in the sense provided for in s 180(7), or whether the body corporate had acted unreasonably in giving or refusing its approval under a by-law providing that animals could only be give with its approval.

[44] The relevant context, in my opinion, is simply that there may be a number of types of scheme, in which owners and occupiers may have a number of different objectives and uses for their lots, and the very nature of any community titles scheme requires that relationships between owners and occupiers must be regulated in some discernible fashion, and by reference to reasonable criteria unless otherwise specifically provided.

[45] So where does this leave a by-law such as by-law 13, which purports to prohibit altogether the keeping of animals on a lot?

[46] In McKenzie, the by-law in question did not prohibit the keeping of pets, but only the keeping of certain types of pets. Therefore, I concluded, it did purport to regulate, rather than to prohibit, a use of lots in the scheme – namely, the keeping of pets.

[47] In Tutton, as in this case, the by-law prohibited altogether the keeping of pets in the scheme. But it does not appear to have been submitted there that the by-law went beyond regulation and was therefore not within the power under s 169.

[48] In prohibiting the keeping of pets altogether, the by-law in this case is analogous to a by-law that prohibited altogether a particular manner of using or enjoying a lot by carrying out building works. In Mineralogy, the Court of Appeal expressed the view that such a by-law would be invalid. Similarly, a by-law that prohibited altogether the playing of music in a lot would be invalid, whereas one that prohibited playing music above a certain level of sound between certain hours would be one regulating the use and enjoyment of lots.

[49] In my view, a by-law that prohibits altogether the keeping of pets in lots is not a by-law regulating the use or enjoyment of lots, but purports to prohibit a particular use and type of enjoyment altogether. It therefore goes beyond the scope of a valid by-law permitted by s 169 and is invalid.

Reasonableness of by-law

[50] The body corporate challenged the correctness of the adjudicator’s decision that the by-law was unreasonable and therefore contravened s 180(7).

[51] Given my conclusion that the by-law is invalid in any event, I do not need to consider this issue. However, as the grounds raised are of some importance, were dealt with at length and may affect other decisions, and as my decision in McKenzie v Body Corporate for Kings Row Centre may have been misconstrued, I shall express my views.

Inadequate reasons

[52] The body corporate contended in its submissions to the adjudicator that the building was not suitable for pets, that the common property areas were small with little room for passage to apartments, and that servicing 41 floors with only two lifts was not adequate or appropriate for the passage of animals. It submitted to the tribunal that, given that those statements were not contradicted or contested (because Ms McGarvey did not make any submissions to the adjudicator beyond what was stated in the attachments to her application), there was no reason given by the adjudicator why he should not have made a finding consistent with those submissions.

[53] The submissions were precisely that: they were submissions, not evidence of the facts. They were assertions of conclusions.

[54] The adjudicator did not expressly deal with those submissions. Rather, he dealt more specifically with concerns expressed by lot owners as to noise, mess and health issues. Nor did the adjudicator deal with submissions by the body corporate that the change of by-laws proposed could have a detrimental effect on property values and that approving the proposed change could leave the body corporate liable for damages if someone was injured or attacked by an owner’s dog on common property. The body corporate submitted that, as there are no reasons for dismissing those submissions, the failure to give reasons is an error of law. It submitted that, had the adjudicator properly addressed and considered those issues, he could only have come to a conclusion that the by-law was reasonable.

[55] In Drew v Makita (Australia) Pty Ltd [2009] QCA 66; [2009] 2 Qd R 219 at [58], Muir JA said:

“The rationale for the requirement that courts give reasons for their decisions provides some guidance as to the extent of the reasons required. The requirement has been explained, variously, as necessary: to avoid leaving the losing party with a ‘justifiable sense of grievance’ through not knowing or understanding why that party lost; to facilitate or not frustrate a right of appeal; as an attribute or incident of judicial process; to afford natural justice or procedural fairness; to provide ‘the foundation for the acceptability of the decision by the parties and the public’ and to further judicial accountability.”

[56] It is not necessary for a court or tribunal, in order to give procedural fairness, to discuss in reasons for decision every submission that was made by the parties. Although the failure to give sufficient reasons is an error of law, the reasons given need only apprise the parties of the broad outline and constituent facts of the reasoning on which the decision maker has acted. In other words, what is necessary is a basic explanation of the fundamental reasons which led to the conclusions reached.

[57] Regrettably I must conclude that, in this case, the adjudicator does not appear to have considered, or has not given any reasons for his rejection of, the submissions made to him by the committee of the body corporate and referred to above. That is likely to have been a result of his construction of s 180(7), to which I now turn.

Construction of s 180(7)

[58] The body corporate contended that the adjudicator misconstrued s 180(7) and cases referred to by him, concerning whether or not a blanket ban on pets being kept in a scheme is unreasonable.

[59] The adjudicator noted a number of previous decisions that had determined that an absolute ban on the keeping of animals in a community titles scheme was unreasonable. He said he could find no reason to conclude otherwise and by-law 13 was therefore unreasonable and must be removed. That decision appears to have been made on the basis that the adjudicator considered that a by-law that places an absolute ban on the keeping of animals (or certain types of animals) in a community titles scheme is unreasonable in all circumstances, simply because it imposes a blanket ban.

[60] Subsection 180(7) provides that a by-law must not be oppressive or unreasonable, having regard to the interests of all owners and occupiers of lots included in the scheme and the use of the common property for the scheme.

[61] That subsection clearly requires the consideration of a by-law in the context of the particular scheme for which the by-law operates.[11]

[62] It cannot be said that in all cases a by-law prohibiting the keeping of certain pets in a scheme is automatically unreasonable or oppressive. It must be determined in the context of each particular scheme. Although, in many cases, a by-law which did not provide for the body corporate to consider individual circumstances in determining whether or not to allow a particular lot owner to keep a certain type of pet would be unreasonable or oppressive, it is necessary for that question to be considered in each case having regard to the facts before the adjudicator and, in the context of those facts, the interests of all owners and occupiers in the scheme and the use of the common property.

[63] My decision in McKenzie did not mean that any by-law prohibiting the keeping of a certain type of pet in every scheme must of itself be oppressive or unreasonable. It should not be read as disregarding the facts upon which that decision was based.

[64] The body corporate contends, in this respect, that the adjudicator was wrong in applying the “gold fish test” referred to in the decision of Mr Dorney QC (as his Honour then was) in Tutton v Pivotal Point.[12] That test, which I also applied in McKenzie, is likely to be of relevance in many cases, but it must be considered having regard to the circumstances of each scheme.

[65] Therefore, in my opinion, the adjudicator was incorrect not to consider the reasonableness of the by-law having regard to the particular circumstances of the scheme before him. However, in this case that error has not affected the outcome of this appeal.

Conclusions and orders

[66] The adjudicator did err in failing to give adequate reasons for his decision and in misconstruing the application of subs 180(7). However, his conclusion that the by-law was invalid is correct, although for different reasons.

[67] The appeal should therefore be dismissed.

[1] HIA Insurance Services Pty Ltd v Kostas [2009] NSWCA 292, at [85].

[2] Their Honours relied on CDJ v VAJ (1998) 197 CLR 172, at 201-202 [111]. They also referred to Re Coldham; ex parte Brideson (No. 2) [1990] HCA 36; (1990) 170 CLR 267, as an example of a situation where there was a law allowing the appellate body to impose its own decision even though there was no error at first instance.

[3] Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2011] QCA 379 at [7], citing in University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483.

[4] Ms McGarvey submitted that such a by-law would be appropriate.

[5] See Hablethwaite v Andrijevic [2005] QCA 336, at [17], [26]-[31].

[6] Body Corporate for Grand Pacific Restor CTS 29576 v Cox [2012] QCATA 14, at [38] to [49].

[7] A similar question was raised by the Court of Appeal, though in a different context, in Mineralogy Pty Ltd v The Body Corporate for “The Lakes Coolum” [2002] QCA 550; [2003] 2 Qd R 381.

[8] Relying on a statement to that effect in Ng Enterprises Ltd v Urban Council [1996] UKPC 30; [1997] AC 168, at p.177 [8].

[9] [1999] HCA 53; (1999) 201 CLR 351, at [37].

[10] Mineralogy at [9], [12].

[11] That, of course, is in contra-distinction to consideration of the proper construction of s 169 in which, as I have said above, the circumstances of an individual scheme are not relevant.

[12] [2008] QCCT BCCM 12.