Tutton, W. & B. v Body Corporate For Pivotal Point Residential CTS 33550 [2008] QCCTBCCM 12 (11 June 2008)

Last Updated: 26 June 2008

REASONS FOR DECISION

Introduction

1. This application, filed 2 April, 2008, is an appeal to the Tribunal from an order made by an Adjudicator where the applicants, as the aggrieved persons, seek to have the Adjudicator’s order set aside and to have the respondent pay the applicants’ costs of and incidental to the application and appeal.

2. The appeal is from an order made by Adjudicator D Toohey on 19 February, 2008. It concerns the Pivotal Point Residential Community Titles Scheme 33550.

3. The respondent to the application/appeal is the body corporate for the Pivotal Point Residential CTS.

4. After both the applicants and the respondent filed written Submissions, this proceeding came on for hearing on 5 June, 2008.

Legislation

5. By section 289(2) of the Body Corporate and Community Management Act 1997 (“BCCM Act”) an aggrieved person may appeal to the Tribunal “but only on a question of law”. No issue here arises about the applicants and the respondent being proper parties to this application/appeal.

6. By section 290(3) of the BCCM Act, on request by the director of the Registry under the Commercial and Consumer Tribunal Act 2003 (“CCT Act”), the Commissioner is obliged to send to the Tribunal relevant copies of the Adjudication file. These steps have been done in this case.

7. Section 294(1) of the BCCM Act states that, in deciding an appeal, the Tribunal may:
   1. confirm or amend the order under appeal; or

   2. set aside the order and substitute another order or decision; or

   100. through the Commissioner, refer the order back to the Adjudicator with appropriate direction having regard to the question of law the subject of the appeal.

8. By section 294(2) of the BCCM Act, the Tribunal may amend or substitute an order “only if” the Adjudicator would have had jurisdiction to make the amended or substituted order or decision. In this case, the oral submission of the applicants is that the matter should be one which is referred back to the respondent itself for further determination.

9. Section 276 of the BCCM Act deals with orders to be made by Adjudicators. Section 276(1) states that an Adjudicator to whom the application is referred may make an order that it is “just and equitable” in the circumstances (including a declaratory order) to resolve a dispute. Specifically, by section 276(3), without limiting the effect of section 276(1), the Adjudicator may make an order mentioned in Schedule 5. Schedule 5 sets out 23 different kinds of orders. Clause 20 deals with an order requiring the Body Corporate to lodge a request to record a new Community Management Statement to remove the by-law and, if it is appropriate to restore an earlier by-law, to restore the earlier by-law, if satisfied a by-law is, having regard to the interests of all owners and occupiers of lots included in the scheme, “oppressive or unreasonable”. Clause 21 deals with an order declaring that a by-law is invalid and requiring the Body Corporate to lodge a request to record a new Community Management Statement to remove the by-law, if satisfied that the by-law is invalid.

10. Before considering how the legislation deals with by-laws, it should be noted that Schedule 4, which by section 168(2) of the BCCM Act provides the by-laws for the scheme where the Community Management Statement does not include provisions that are, or that purport to be, the by-laws for the scheme, states by by-law 11 that the occupier of a lot must not, without the body corporate’s written approval –
    1. bring or keep an animal on the lot or the common property; or

    2. permit an invitee to bring or keep an animal on the lot or common property.

11. As noted in a footnote to by-law 11(2), which deals with obtaining the Body Corporate’s written approval for bringing, or permitting an invitee to bring, an animal onto the lot or the common property, section 181 and the Guide Dogs Act 1972 are referred to. Section 181(3) states that a by-law “cannot exclude or restrict a right given by this section”.

12. Section 169 of the BCCM Act deals the content and extent of by-laws. Relevantly, section 169(1)(a) states that the by-laws for a Community Titles Scheme may only provide the administration, management and control of common property and body corporate assets. Section 169(1)(b) extends the by-laws to the regulation of, including conditions applying to, the use and enjoyment of both lots in the scheme and common property: see sub-paragraphs (i) and (ii). Section 169(1)(c) then extends that again to “other matters this Act permits to be included in by-laws”. Changes to by-laws other than exclusive by-laws must be by special resolution: see section 62(3)(a).

13. Section 180(1) of the BCCM Act states that, if a by-law for a Community Titles Scheme is inconsistent with the BCCM Act (including a regulation module applying to the scheme), the by-law is invalid to the extent of the inconsistency. Section 180(5) states that a by-law must not discriminate between types of occupiers. And, as noted above, section 181 deals specifically with guide dogs and the Guide Dogs Act 1972, providing particularly by section 181(3) that a by-law cannot exclude or restrict a right given by section 181 [such as section 181(2) which states that a relevant person who is the owner or occupier of a lot included in a Community Titles Scheme has the right to keep a guide dog on the lot].

14. Finally, section 170 of the BCCM Act deals with the meaning of an exclusive use by-law. Section 170(1) states that 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, relevantly, common property. Section 171 deals with the requirements for such exclusive use by-laws.

Background

15. The application before the Adjudicator was an application by the present applicants seeking orders to invalidate a new by-law 16 of the relevant Community Titles Scheme.

16. In the Adjudicator’s Statement of Reasons for Decision, the previous by-law 16 and the new by-law 16 are set out in full. I do not intend to repeat them here. Suffice it to say, for the moment, that the previous by-law had given all lot owners of lots as at 3 months following the date of establishment of the Community Titles Scheme, and all lot owners who purchased lots after the date of establishment of the scheme where such lot had been owned by the original owner, a right to keep 1 dog in the lot provided it had not been previously registered or owned by another owner. Such a right was subject to certain other requirements which were set out in by-laws 16.2.1 to 16.2.11 inclusive. In contrast, the new by-law 16 meant, subject to certain “preservation” rights, that an owner or occupier “must not bring or keep an animal on the lot or common property or permit an invitee to bring or keep an animal on the lot or common property”. The specific preservation that is dealt with by the new by-law 16.5 states that it does “not apply to any approval that may have been given by the Body Corporate prior to the passing of this by-law” (emphasis added).

17. There were many issues canvassed before the Adjudicator. It will be unnecessary to refer to all of them. Rather, the focus in this appeal will be on 2 only. The first is that, with respect to an Adjudicator’s power to “override the vote to change a by-law if it is just and equitable to do so” (p. 2), is the new by-law unreasonable in the sense that it does not apply to all residents equally and is it “unjust” to owners and occupiers? As to oppression, the argument is whether that is satisfied because the new by-law merely takes into account the interests of owners who do not want pets in the building and, or alternatively, whether it is unjust for a resident who has been allowed to have a pet to have the right to keep a pet taken away if that pet dies? Secondly, does the extent of the prohibition mean that all “animals” (as the term is defined in Local Law No 12) are prohibited, having the effect that unreasonableness arises because it could, for instance, ban the keeping of a goldfish (at p. 8)?

Grounds of appeal

18. There are three general grounds of appeal. They are:
    1. first, that the Adjudicator erred in law in failing to recognise and act upon the legal basis that the previous by-law 16: constituted an exclusive use by-law which could not be modified by a special resolution; constituted a constitutional contract between the lot owners and the respondent which could not be modified by special resolution; and entitled certain unit holders to keep certain specified dogs irrespective of the approval of the Body Corporate (which is contended to a right impermissibly removed from them by the new by-law 16);

    2. secondly, that the Adjudicator erred in law by taking into account “motivation” of the applicants; and

    100. thirdly, that the Adjudicator erred in law in finding that the by-law was reasonable (in 4 more particularised circumstances).

19. Because the finding that there is an error of law on any one of these grounds is sufficient to allow the application/appeal, I do not intend to canvass each and every aspect of each and every one of the 3 grounds specified. Rather, as foreshadowed above, concentration will be focussed primarily on the matter of reasonableness.

Error of law

20. As required by section 289(2) of the BCCM Act, this application/appeal is limited to “a question of law” only.

21. Although stated in those terms, what the Tribunal is concerned with is whether the Adjudicator has made a recognised “error of law”.

22. If the decision maker errs in concluding that a particular by-law is “reasonable” when it is not, it can be held that an error of law has been established. In Luu v Renevier [1989] FCA 518; (1989) 91 ALR 39, Davies, Wilcox and Pincus JJ held that the relevant Tribunal under consideration erred in law in that, in making a finding that lacked a legally defensible foundation in the factual material or in logic, there was an improper exercise of power: at 50. Furthermore, where it is established that the findings of fact which are made show that there has been an error in the understanding of the legal meaning of the words to be interpreted (such as oppressive or “unreasonable” here), an error of law can be established: see Crowbay Pty Ltd & Anor v Body Corporate for “Southbank Chambers” [2007] QCA 453 at [20].

“Approval”

23. Although this issue was not raised before the Adjudicator, when it was raised in oral argument by Counsel for the applicants, Mr. Morris QC, the respondent did not object to it on any basis, much less that it had not been raised below. It was first raised in the written Submissions. Such an approach by the respondent is understandable, given that there would be no evidence which could have been led on this issue had it been raised before the Adjudicator. It is simply an issue of legal interpretation: see O’Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 at 319.

24. The applicants’ argument is that, since the particular preservation provision in the new by-law 16.5 is limited to “any approval” that may have been “given by the Body Corporate prior” to the passing of the new by-law 16, what was not preserved was the “right” which the previous by-law 16.2 had given to what might termed “original” lot owners.
25. It is not possible to interpret the use of the word “approval” in the new by-law 16.5 to include “as of right” lot owners, not only because the new by-law 16.5 refers to such approval being “given by” the Body Corporate but also because it is clear from the previous by-law 16.1 that there was provision giving a right to bring or keep an animal on a relevant lot or the common property with the Body Corporate’s “written approval”. Therefore, there can be no doubt that “approval” in any contextual interpretation does not cover an express right given which does not depend upon the giving of such approval. It is not open to argue that the new by-law 16.5 deals with “inferred” (perhaps, more correctly, “implied”) approvals, because the old by-law 16.2 gives a “right”, not any implied “approval”.

26. Once that position is reached, it is clear that a “new” by-law which does not preserve such a right must offend the requirement of reasonableness. Such a conclusion is clearly established by the express preservation of such rights that did arise from “approval”. All residents who have dogs validly are not treated equally; and it is unjust, and therefore unreasonable, to treat them unequally.

27. Thus, even if no other ground were to be established, the Tribunal concludes that the Adjudicator has erred in law in determining that the new by-law 16 is reasonable, in circumstances where it clearly is not. Hence, it becomes unnecessary to consider whether there is oppression as well, at least in the terms formulated in the grounds of appeal and the written Submissions.

28. It would be sufficient to stop at that point. But the Tribunal, although it is not proceeding to consider the very many other grounds in the Grounds of Appeal, has formed the opinion that some discussion ought to be undertaken on several more grounds of appeal. The first and most important of these is whether the blanket ban on all defined “animals” effected by the new by-law 16.1 is itself unreasonable.

Ban on all “animals”

29. As discussed in the Adjudicator’s Reasons, to give meaning to the new by-law 16.1 as to what is an “animal”, reference is first to be had to the new by-law 16.7, and then to the local laws to which it refers.

30. The new by-law 16.7 states that, for the purpose of by-law 16, an “animal” is one that is mentioned or referred to from time to time by the Gold Coast City Council in its local laws “relating to keeping and control of animals”.

31. As appears in the Reasons (p. 7), the Local Law No. 12 (Keeping and Control of Animals) 2007 has the term “animal” defined to include “any live member of a species, including any mammal, reptile, amphibian, bird and fish but does not include an animal of a species excluded by local law policy from the application of this law”. As also noted by the Adjudicator, there is no local law policy which specifically excludes any species. Additionally, apart from listing minimum standards for the keeping of any animal, the local law policy seeks only to regulate certain classes of animals being: dogs; horses, cattle and other animals of a similar size; sheep, goats, pigs and other animals of a similar size; cats; budgerigars, canaries and other birds of a similar size; cockatoos, galahs and other birds of similar size; pigeons; bees; geese, ducks, chickens, turkeys, and poultry; and roosters, peacocks, ostriches and emus (p. 7). Both parties before the Adjudicator submitted that the by-law consequentially prohibited all animals as the term is defined in Local Law No. 12.

32. Further, “hypothetically speaking”, both parties agreed that the keeping of a gold fish would be contrary to by-law 16.1, based upon the definition of “animal” in Local Law No. 12 (p. 8). Intriguingly, the Adjudicator noted that a teleconference held between the parties proceeded on the basis that hypothetical examples such as gold fish could be taken into account in considering whether the by-law was oppressive or unreasonable in taking away rights of owners, “but that the applicants’ onus was to show the by-law was invalid in the present circumstances rather than in some possible hypothetical example” (p. 8).

33. In oral submissions before the Tribunal, the applicants’ Senior Counsel described such approach to “hypothetical” matters as “nonsense”. While counsel for the respondent, Mr. Crisp, referred to the undoubted fact that the parties consented in the way just expressed, the Tribunal has great difficulty in understanding just what is meant by invalidity “in some possible hypothetical example”. The actual facts which brought this proceeding before the Adjudicator, and now bring it to the Tribunal, are facts that show that the issues in the proceeding are actually matters in contest between a proposer and a contradictor. It is in this context only that a reference to “hypothetical” can have some meaning: see Bass v Permanent Trustee Company Ltd [1999] HCA 9; (1999) 198 CLR 334, discussed by Keane JA in Hablethwaite & Anor v Andrijevic & Ors [2005] QCA 336 at [24]. But the present proceeding is not seeking an advisory opinion. This is a proceeding in which there are live issues of fact and law.

34. Hence, if in the determination of this proceeding it can be held that the meaning given to “animal” in the new by-law 16.1 is a meaning which makes the particular provision “unreasonable” because it has the effect that an animal such as a gold fish is also the subject of the absolute ban once all “prior” approvals have been spent, it is open to the Tribunal to decide that the provision is invalid as being unreasonable. It is not hypothetical in the sense that a hypothetical case should not be entertained by courts or tribunals. It is only hypothetical in the sense that the hypothesis of the ban extending to such an animal comes within the purview of the consideration of the effect of such a provision.

35. Since there is clearly no rational basis upon which it can be said that the keeping of a gold fish in a safe and healthy environment could be a matter which could cause any difficulty to any other lot owner, yet is the subject of an “absolute” ban, the conclusion is fairly open that such a by-law is “unreasonable”.

Other issues

36. Although it is unnecessary for the Tribunal to determine any other issues, a number of further conclusions will be made.

37. First, as to the issue of “motive”, to the extent that any motive of the applicants was taken into account by the Adjudicator and to the further extent to which that had any effect on the Adjudicator’s conclusions (which is difficult to determine even after a full consideration of the reasons given), it would constitute an error of law. This is because “motive” has no part at all to play in any determination of justice or equity in resolving a dispute, particularly where that dispute concerns the reaching of a satisfaction, or not, that a particular by-law is, having regard to the interests of all owners and occupiers of lots included in a scheme, “oppressive or unreasonable”. Why the particular applicants brought the original application before the Adjudicator is an irrelevant matter.

38. Secondly, the Tribunal accepts the analysis by McColl JA, with Mason P agreed, in Owners of Strata Plan No. 3397 v Tate [2007] NSWCA 207 that by-laws may be characterised as either delegated legislation or statutory contracts, but whatever be the appropriate characterisation, by-laws should be interpreted objectively by what they would convey to a reasonable person and that, particularly for exclusive use by-laws, they should be construed consistently with statutory context with a tight rein being kept on having recourse to surrounding circumstances: at [71]. It is unlikely that by-law 16 in its previous form was an exclusive use by-law. This is because such a by-law, as established by section 170(1) of the BCCM Act, does “attach” to a “specific” lot and does “give” an occupier “for the time being” “exclusive use” to the rights and enjoyment of, or other “special rights” about, common property only. Whereas the “right” to deal with an animal must involve not only common property but also the lot itself.

39. Thirdly, there is nothing which convinces the Tribunal that the relevant principles that arise from the doctrine of fraud on a power or from any principle arising from the concept of a “constitutional contract” (dealt with in Bailey v New South Wales Mental Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399) are applicable here. This is because by-law 16 in its previous form, not being an exclusive use by-law, was one that could be changed from time to time by the Body Corporate at any general meeting; and in the way that it was (subject to the invalidating provisions). Although it is acknowledged (for instance, in Radford v The Owners of Miami Apartments, Kings Park Strata Plan 45236 [2007] WASC 250 at [137]) that the doctrine can be applied to voting by proprietors at general meetings of strata title corporations, the aspect of the disqualifying conduct, characterised as being, in a special and peculiar way, inconsistent with conceptions of honestly so widely held or professed that its departure from them is described, without further analysis, as fraud, is totally inapplicable here.

40. The analyses just undertaken are, it is repeated, unnecessary for the determination of this application/appeal; but they were done because the considerable effort by both parties deserved some treatment by the Tribunal.

Orders to be made

41. Besides allowing the appeal, consideration has to be given by the Tribunal to what further orders it makes. It can under section 294(1)(b) of the BCCM Act set aside the Adjudicator’s order and substitute another order or decision. Alternatively, it can utilise section 294(1)(c) and, through the Commissioner, refer the order back to the Adjudicator with appropriate direction having regard to the question of law the subject of the appeal.

42. Since the substitution of another order is the preferred course that the Tribunal intends to take, it is unnecessary to consider further referring the order back to the Adjudicator. The reason why it is preferable to decline to refer the order back to the Adjudicator is that the Body Corporate needs to review its position fully. In the meantime, justice and fairness dictates that the original by-law 16 should be reinstated.

43. But such a course depends upon the requirement under section 294(2) that the Tribunal can only substitute an order if the Adjudicator would have had jurisdiction to make the substituted order or decision.

44. Given that Clause 20 of Schedule 5 permits the removal of by-laws and, if appropriate, the restoration of an earlier by-law, the Tribunal has power to make an order to such effect.

Costs

45. Both parties in their written submissions have sought costs.

46. Section 70 and section 71 of the CCT Act set up the basis for the exercise of the discretion by the Tribunal with respect to costs.

47. Regarding the proper interpretation of those provisions, the Court of Appeal in Tamawood Ltd v Paans [2005] QCA 111; [2005] 2 Qd R 101 has laid out the authoritative exposition on their application. Given that both parties have been permitted legal representation in the proceeding, and given that this application/appeal has generated issues of substantial complexity which clearly have needed the attention of legal advisors and advocates, since the applicants have succeeded, bearing in mind the proper conduct of both of the parties, the relative strengths of the claims made by each party and that no party has acted in a way that unreasonably has disadvantaged the other, the Tribunal exercises its discretionary power to allow the applicants their costs.

Summary

48. A summary of the orders to be made by the Tribunal are:
    1. the application is allowed;

    2. the order of the Adjudicator dismissing the application challenging by-law 16 of Pivotal Point Residential relating to the keeping of animals within the Scheme is set aside;

    100. in substitution for that order set aside, upon the Tribunal being satisfied that by-law 16 is, having regard to the interests of all owners and occupiers of lots included in the Community Titles Scheme 33550, unreasonable, it is ordered that the respondent, as the Body Corporate, lodge a request to record a new Community Management Statement:
         1. to remove by-law 16; and
         2. since it is appropriate to restore an earlier by-law, to restore the prior by-law 16;

    4. order that the respondent pay the applicants’ costs of and incidental to the proceeding assessed on a standard basis according to Magistrates Court Scale “G”;

    5. if the parties cannot agree as to the proper assessment of those costs within 21 days of this order, then:
       1. the applicants should deliver to the respondent an itemised claim for costs;

       2. if, within 14 days of that delivery, the parties have not agreed to the amount of those costs, they will be assessed by such Costs Assessor as the parties agree on, with the costs of such assessment being added to provide a total assessment of costs (and failing agreement as to an appropriate Costs Assessment, the proceeding is to be referred back to the Tribunal with appropriate submissions by both parties as to who shall be such an assessor); and

       3. the respondent will pay the applicants’ costs (as agreed, or after total assessment) within 14 days of the date of agreement, or assessment, as the case may be.

______________________________

MR K D DORNEY QC

MEMBER

Commercial and Consumer Tribunal