Body Corporate for Visage v Wilkinson & Ors [2019] QCATA 35

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Body Corporate for Visage v Wilkinson & Ors [2019] QCATA 35 PARTIES: BODY CORPORATE FOR VISAGE CTS 34888 (appellant) v RAYMOND WILKINSON (first respondent) LYNDA WILKINSON (second respondent) DOUGLAS WEBB (third respondent) APPLICATION NO/S: APL025-18 MATTER TYPE: Appeals DELIVERED ON: 21 March 2019 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Aughterson Member Kanowski ORDERS: 1. The second last order made by the adjudicator on 15 December 2017 (which ends in the words ‘paragraph 97 herein’) is amended by adding the words ‘save for the maintenance and operating costs of the Basement Exclusive Use Area’ after the words ‘paragraph 97 herein’. 2. The appeal is otherwise dismissed. 3. The application by Body Corporate for Visage CTS34888 for costs orders is refused. CATCHWORDS: REAL PROPERTY – STRATA AND RELATED TITLES – MANAGEMENT AND CONTROL – BYLAWS – EXCLUSIVE USE – where by-law gives exclusive use of an area – where by-law requires body corporate to keep area clean and tidy and recover the cost from owners – whether owners or body corporate responsible for maintenance and operation of the area Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld), s 173(2) -- 1 of 10 -- 2 Ocean Side [2005] QBCCMCmr 148 Sattel & Ors v The Proprietors Be Bee’s Tropical Apartments Building [2001] QCA 560 REPRESENTATION: Appellant: Nicholsons Solicitors Respondents: Self-represented APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). REASONS FOR DECISION Introduction [1] This appeal relates to certain areas in basements at the Visage complex. The complex has two apartment buildings, each with six apartments, plus 28 villas.1 The basements in question are in the apartment buildings. The basements are mainly used for car parking and storage for the occupants of the apartments. The areas in question in this appeal form parts of the basements, and are known as basement exclusive use areas. These areas give access to the car parks and storage areas. [2] Raymond and Lynda Wilkinson own an apartment in the complex. In 2017 they applied to the Office of the Commissioner for Body Corporate and Community Management for the resolution of a dispute. The dispute concerned a number of matters, including the basement exclusive use areas, as well as some issues about pools, lifts, foyers etc. An adjudicator made orders to resolve the dispute on 15 December 2017.2 The orders included some changes to the by-law dealing with the basement exclusive use areas, and an order for the refund of some levies paid by Mr and Mrs Wilkinson. [3] On 25 January 2018 the Body Corporate appealed the matter to QCAT. Such an appeal can be only on a question of law.3 The Body Corporate argues that the adjudicator erred in law in deciding how the costs associated with the basement exclusive use areas are to be met. This revolves around: (a) whether certain costs relating to the basement exclusive use areas have to be met by the Body Corporate using its funds – which, of course, are generated from the levies paid by all owners (apartment owners and villa owners) – without recovery of those costs from a sub-group of owners; (b) the extent, if any, to which the Body Corporate can recoup such costs from the owners of apartments in the relevant building; and 1 Mr and Mrs Wilkinson say that the correct term is ‘houses’, rather than ‘villas’: Mr and Mrs Wilkinson’s written submissions filed 22 May 2018, 3. However, we will use ‘villas’ because that term was used by the adjudicator. 2 Visage [2017] QBCCMCmr 623. 3 Body Corporate and Community Management Act 1997 (Qld) (‘Body Corporate and Community Management Act’), s 289(2). -- 2 of 10 -- 3 (c) whether the owners of apartments must directly meet certain costs associated with the basement exclusive use area in their building. [4] As we will explain, this turns on the interpretation of terms in the relevant by-law (by- law 25) and a regulation that applies to the complex.4 More particularly, it turns on the meaning of the terms ‘maintenance and operating costs’ and ‘keeping clean and tidy’. [5] In a nutshell, the adjudicator decided, relevantly, that: (a) the Body Corporate is obliged to keep each basement exclusive use area clean and tidy, and it may recoup the cost of doing so for a particular area from the apartment owners in that building; and (b) any other costs (for example for lighting) associated with the areas have to be met by the Body Corporate from its general funds without the ability to recoup the cost from particular owners. [6] The Body Corporate’s position in the appeal, in a nutshell, is: (a) the Body Corporate is required to keep each basement exclusive use area clean and tidy, and it should be obliged (and not merely entitled) to recoup the cost of doing so for a particular area from the apartment owners in that building; and (b) any other costs associated with an area must be met directly by the owners in that building. [7] The appeal is opposed by Mr and Mrs Wilkinson as the first and second respondents, as well as by another apartment owner, Douglas Webb, as the third respondent. By-law 25 and the adjudicator’s orders [8] The adjudicator’s orders relate mostly to by-law 25, which is headed Basement Exclusive Use Area. The by-law provides that the apartment owners have exclusive use of certain basement areas set out in plans. The adjudicator thought that the areas in question included car parking spaces. However, it is common ground in the appeal that the areas in question do not include the car parking and storage spaces, as these are part of the owners’ lots. Instead, the basement exclusive use areas comprise merely areas for accessing those spaces. [9] By-law 25 goes on to deal with various matters: for example providing that occupiers of the relevant lots can use the area; that access devices (such as keys or remote controls) are to be made available to occupiers; and so on. By-law 25(i) makes the grant of exclusive use subject to a right of access to the area by the Body Corporate, the Committee, and its agents. [10] Of particular relevance to this appeal are paragraphs (c) and (d) of by-law 25, as in force prior to the adjudicator’s decision: (c) The Body Corporate is required to keep the Basement Exclusive Use Area clean and tidy. The costs associated with this (including any expenses incurred 4 Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld) (‘Standard Module’), s 173(2). -- 3 of 10 -- 4 or charged to the Body Corporate in establishing separate accounts to hold funds received under this by-law and the expenses of collecting the payments due under this by-law from occupiers) must be shared between the occupiers of the lots to which this exclusive use attaches on the basis of the proportion the lot entitlement of their lot bears to the lot entitlement of all lots from time to time having the benefit of the Basement Exclusive Use Area. (d) The Body Corporate is authorised but not obliged to open, maintain and operate separate bank or similar accounts to hold and disburse money under this by-law 25. [11] The adjudicator ordered that by-law 25(c) be deleted and replaced with the following: The Body Corporate is required to keep the Basement Exclusive Use Area clean and tidy. The costs associated with this may be recouped from the owners of the lots to which this exclusive use attaches in the proportions to which their respective contribution schedule lot entitlements bear to the contribution schedule lot entitlements of all the lots from time to time having the benefit of the Basement Exclusive Use Area. [12] The adjudicator also ordered that by-law 25(d) be deleted; that the Body Corporate apply to record a new community management statement to give effect to these changes; and that the Body Corporate must refund Mr and Mrs Wilkinson a sum to be calculated in a particular way (which we will discuss further in due course). Finally, the adjudicator made an order about how unspent exclusive uses funds were to be applied. [13] The adjudicator in his or her reasons expressed the view that by-law 25 does not in fact grant exclusive use, because of references to use of the area not only by owners and occupiers, but also by ‘others who require similar access and visitors’.5 It is not clear that this view underpinned any of the adjudicator’s orders, so it is not necessary for us to discuss it at length. However, it seems to us that because the by-law provides for access devices to be issued to occupiers of the apartments in the relevant building, and the owners of those apartments can control who occupies them, ultimately those owners are able to control who can access the areas. There is, therefore, a right of exclusive use held collectively by the apartment owners of each building. The scope of the appeal [14] In the appeal, there is no challenge to the adjudicator’s orders relating to the deletion of by-law 25(d), the deletion of the bracketed words in by-law 25(c), or the requirement for a new community management statement. The Body Corporate initially challenged the order about how the unspent exclusive uses funds were to be applied, but it no longer does so.6 Accordingly, we will not need to discuss those aspects further. The challenges in the appeal are to the remaining matters. [15] First, the Body Corporate argues that the appropriate amendment to by-law 25(c) would have been: The Body Corporate is required to keep the Basement Exclusive Use Area clean and tidy. The costs associated with this must be recouped from the owners of 5 By-law 25(e). 6 Body Corporate’s written submissions filed on 30 April 2018, 3[9]. -- 4 of 10 -- 5 the lots to which this exclusive use attaches in the proportions to which their respective contribution schedule lot entitlements bear to the contribution schedule lot entitlements of all the lots from time to time having the benefit of the Basement Exclusive Use Area. The only proposed change to the adjudicator’s order is in the second line: ‘must’ is used instead of ‘may’. [16] Second, the Body Corporate contends that the amount of the refund should be calculated in a way different, in one respect, to that specified by the adjudicator. The Body Corporate submits that the words ‘save for the maintenance and operating costs of the Basement Exclusive Use Area’ should be added at the end of the relevant order. Whether by-law 25(c) should contain ‘must’ instead of ‘may’ [17] The Body Corporate submits that the adjudicator made the change from ‘must’ in the original wording to ‘may’ in the order ‘without any apparent justification’.7 The Body Corporate submits that making the power discretionary opens up the unwelcome possibility of disputes about whether the discretion has been exercised properly in any particular instance. [18] In their submissions on the appeal, Mr and Mrs Wilkinson do not indicate a preference for ‘must’ or ‘may’. In relation to the wording ordered by the adjudicator, they comment that ‘provided the cost was fair and reasonable then there would be no argument’.8 [19] In his submissions on the appeal, Mr Webb characterises the Body Corporate’s argument as ‘quibbling over semantics’, pointing out that if the Body Corporate were to exercise the discretion to recover the costs, ‘the apartment owners have no discretion in respect to payment’.9 Mr Webb goes on to submit that ‘may’ is preferable because it will leave it open to the Body Corporate not to recover the costs if that exercise proves to be cost-ineffective. [20] It is not apparent from the adjudicator’s reasons why he or she adopted ‘may’ instead of ‘must’. Having regard to the submissions made in the appeal, it is apparent that there are reasonable arguments in favour of each choice. In an appeal on a question of law, it would be open to us to change this aspect of the adjudicator’s decision only if a legal error was apparent. The adjudicator should have explained why he or she changed the wording from ‘must’ to ‘may’, but nonetheless there is nothing irrational, illogical or otherwise improper in the selection of ‘may’. The adjudicator had very broad powers to make orders that are just and equitable to resolve the dispute.10 We consider that it was open to the adjudicator to adopt ‘may’. No legal error has been demonstrated that would warrant changing this aspect on appeal. How the refund is to be calculated [21] The adjudicator ordered that the Body Corporate must refund to Mr and Mrs Wilkinson part of their levies for a period, calculated in accordance with paragraphs 96 and 97 of the adjudicator’s reasons. Those paragraphs relate not only to the 7 Ibid 5[16]. 8 Mr and Mrs Wilkinson’s written submissions filed on 22 May 2018, 5. 9 Mr Webb’s written submissions dated 18 May 2018, 7[50]. 10 Body Corporate and Community Management Act, s 276(1). -- 5 of 10 -- 6 basement areas, but also to other matters that had been in dispute concerning pools, foyers, lifts and so on. The effect of those paragraphs, so far as the basement areas is concerned, is that the Body Corporate is entitled to retain an amount to cover the cost of keeping the areas clean and tidy, but must refund any other amounts such as for basement lighting and ‘anything in the basement other than cleaning’.11 [22] The Body Corporate argues that the adjudicator erred in this respect. It argues that the apartment owners are directly liable to meet ‘maintenance and operating costs’ of the basement exclusive use areas pursuant to s 173(2) of the Standard Module: (2) An exclusive use by-law is taken, in the absence of other specific provision in the by-law for maintenance and operating costs, to make the owner of the lot to whom exclusive use or other rights are given responsible for the maintenance of and operating costs for the part of the common property to which the exclusive use by-law applies. Example of operating cost for part of common property— cost of providing lighting to the part of common property [23] If the Body Corporate is correct in that submission, it is not readily apparent why it is concerned about this aspect of the adjudicator’s orders. If it is the apartment owners’ direct responsibility to meet maintenance and operating costs, why would any of those costs have been met by the Body Corporate, and so why would there be any relevant amount which the Body Corporate wishes to withhold from the refund? Perhaps the Body Corporate has met such costs, whether mistakenly or by some arrangement with the apartment owners. It would seem surprising, for example, if the electricity cost for lighting of the basement areas is billed to owners rather than the Body Corporate. [24] Mr Webb submits, in effect, that it would be inequitable for the Body Corporate to be able to recoup such costs from apartment owners as they have already contributed their levies. However, in our view, if the costs are properly to be borne by a sub-group of owners, such recoupment is not inequitable. [25] The adjudicator did consider s 173(2) of the Standard Module but concluded, in effect, that there is ‘other specific provision’ in by-law 25 which limits the liability of the apartment owners to the cost of keeping the basement areas clean and tidy. It follows, on this approach, that the Body Corporate is obliged to meet maintenance and operating costs, including cleaning and tidying costs, and it can recoup only the cleaning and tidying costs from the apartment owners in the particular building. [26] The adjudicator regarded the matter as analogous to Ocean Side12. In that case, a specialist adjudicator considered an exclusive use by-law which required penthouse owners to keep roof areas in a clean and tidy condition. There was also a provision in the relevant Module identical to s 173(2) of the Standard Module. The specialist adjudicator commented:13 11 Visage [2017] QBCCMCmr 623 [97]. 12 [2005] QBCCMCmr 148. 13 Ibid [6]. -- 6 of 10 -- 7 It seems clear to me that the by-law does not intend the owners of the lot entitled to exclusive use to bear maintenance and operating costs beyond those associated with keeping the area clean and tidy. [27] In the current appeal, the Body Corporate argues that the situation is not analogous with Ocean Side: in that case the obligation to keep clean and tidy fell on the owners but in the present case it falls on the Body Corporate. [28] Further, the Body Corporate relies on comments made in the Queensland Court of Appeal in Sattel & Ors v The Proprietors Be Bee’s Tropical Apartments Building14 (‘Sattel’). In that case, the question arose whether a caretaker’s duty to keep a reception area within common property in a clean and tidy condition was merely part of an overall duty borne by the body corporate to ‘maintain and keep in a state of good and serviceable repair’ the common property. de Jersey CJ commented that the latter duty ‘is quite different in kind from mere cleaning and tidying. It centres on the preservation of the fabric of the premises’.15 Chesterman J similarly regarded the maintenance duty as relating to preserving the integrity of the physical structure of the common property, and that this was different in kind and degree to the duty to keep clean and tidy. [29] In the present case, the Body Corporate submits that maintenance and operation are similarly distinct from mere cleaning and tidying. Accordingly, it submits, the reference in by-law 25(c) to cleaning and tidying does not affect the obligation of the apartment owners, under s 173(2) of the Standard Module, to meet maintenance and operating costs. The Body Corporate submits that the adjudicator erred in interpreting the relevant provisions and therefore wrongly concluded that the Body Corporate has to meet, without a right of recourse against unit owners, all of the costs associated with the basement areas apart from the cost of cleaning and tidying. It follows, the Body Corporate submits, that there is ‘no basis to require the body corporate to reimburse the respondents for the maintenance and operating costs of the basement exclusive use areas’.16 [30] The written submissions of Mr and Mrs Wilkinson and of Mr Webb in the appeal discuss various matters associated with the functioning of the basement areas. Some of these matters are outside the scope of what we are required to determine. For example, whether villa owners are advantaged financially in respect of their exclusive use areas is not something that is relevant for us to address. Mr and Mrs Wilkinson and Mr Webb argue that particular reformulations of by-law 25(c) would be fairer, and that if by-law 25 is to be amended then other by-laws should be amended similarly for uniformity. However, the role of the Appeal Tribunal is limited to determining whether the adjudicator erred in law such that some change is required to the adjudicator’s orders. No appeals have been filed by Mr and Mrs Wilkinson or Mr Webb that might enable us to explore alleged errors other than those advanced by the Body Corporate. [31] Mr and Mrs Wilkinson and Mr Webb say that the Body Corporate allows contractors to store items in parts of the basement areas. That may be so, and it might involve an infringement of exclusive use rights, but it does not bear on the interpretation of the 14 [2001] QCA 560. 15 Ibid, 8[26]. 16 Body Corporate’s written submissions filed 30 April 2018, 5[15]. -- 7 of 10 -- 8 provisions in question. Similarly, the fact that one or more of the basements has flooded in the past does not assist in interpretation. [32] Mr and Mrs Wilkinson comment that ‘the operation and maintenance costs of an undercover concrete drive are minimal and are difficult to quantify’.17 Mr Webb argues that the Body Corporate should identify what maintenance and operating costs are relevant, particularly as a wide interpretation could result in unit owners being held responsible for foundation repairs contrary, he contends, to s 173(3) of the Standard Module. While we understand these concerns of Mr and Mrs Wilkinson and Mr Webb, those matters do not fall to be decided in this appeal. [33] No doubt there is some force in the approach taken by the adjudicator. Cleaning and tidying might often be regarded as an aspect of the maintenance of an area; and in allocating ultimate financial responsibility for cleaning and tidying to the unit owners, by-law 25(c) can be read as defining the extent of the financial liability of those owners in respect of maintenance and operation. [34] On the other hand, maintenance in some contexts can be quite distinct from cleaning and tidying. For example, under the lease of a house, commonly the lessor has the obligation to maintain the house but the tenant has the obligation to keep the house clean and tidy. Significantly, in a body corporate context, the Court of Appeal in Sattel saw the duties as quite different. While each case must turn on its own facts, we see no reason to adopt a different view in the present case. Accordingly, the better reading of the provisions in question is that the financial responsibility for cleaning and tidying placed indirectly on apartment owners under by-law 25(c) – in any of its incarnations – is not a ‘specific provision … for maintenance and operating costs’ for the purposes of s 173(2) of the Standard Module. Accordingly, under that section, the apartment owners are responsible for the maintenance and operating costs of the relevant basement exclusive use area. [35] Therefore, we will amend the relevant order made by the adjudicator to reflect this conclusion, using the words suggested by the Body Corporate. The listed grounds of appeal [36] We have not set out the grounds of appeal listed by the Body Corporate in its appeal form; instead preferring to incorporate into the discussion above the key arguments as we understand them. One of the listed grounds relates to an alleged error by the adjudicator about voting rights. However, as that issue does not seem to be pivotal, we have not discussed this ground. Costs [37] The Body Corporate seeks orders against the respondents for its costs of the appeal. The Body Corporate acknowledges that in a proceeding before the Appeal Tribunal each party must bear its own costs, other than as provided for in the QCAT Act or another Act.18 The Body Corporate submits that costs orders should be made under s 102 of the QCAT Act. That section allows an order for costs where the Appeal Tribunal considers the interests of justice require such an order. The section goes on to list factors to which the Appeal Tribunal may have regard. These include whether 17 Mr and Mrs Wilkinson’s written submissions filed on 22 May 2018, 3. 18 QCAT Act, s 100. -- 8 of 10 -- 9 a party has unnecessarily disadvantaged another party; the nature and complexity of the dispute; and the relative strengths of the competing claims. [38] The Body Corporate submits that the matter is complex; errors by the adjudicator need to be corrected; and the Body Corporate has a strong case. The Body Corporate notes that the Appeal Tribunal granted leave for the Body Corporate to be legally represented at directions hearings. Further, the Body Corporate submits, the cost to the Body Corporate of running the appeal was increased by the fact that Mr and Mrs Wilkinson did not elect to simply abide the decision of the Appeal Tribunal. Instead, they made submissions which needed to be considered and responded to by the Body Corporate. Similarly, Mr Webb applied to become a respondent, which added to the cost. The Body Corporate also mentioned ‘the nature’ of the submissions made by Mr and Mrs Wilkinson,19 which presumably alludes to some of their submissions not being relevant. [39] The respondents oppose the application for costs. Mr and Mrs Wilkinson characterise the appeal as ‘frivolous and unreasonable’20, relating to what they say are trivial amounts of money. Mr Webb submits that an award of costs would undermine the statutory objective for QCAT to deal with matters ‘in a way that is accessible, fair, just, economical, informal and quick’.21 [40] We accept that the matter is somewhat complex. It was reasonable of the Body Corporate to engage lawyers to assist it. While the monetary amounts involved in the maintenance and operating costs may not be large, over the long term they would not be minimal. We would not characterise the appeal as frivolous or unreasonable. Further, we regard many of the submissions made by the respondents as not strictly relevant to the issues to be determined. [41] However, self-represented parties are not in a good position to judge what will be considered relevant in an appeal. The respondents’ submissions did not stray beyond matters that most self-represented parties would consider relevant. They were thorough and measured. They did not descend into insult or hyperbole. In our view, the respondents did nothing other than exercise their rights to express their reasonably-held views. They sought to defend, or improve upon, the orders of an independent decision-maker. [42] On any view, by-law 25 as originally drafted left much room for dispute. Further, the Body Corporate has had only partial success in the appeal. It is not an appeal in which the merits have favoured the appellant in some overwhelming fashion. [43] In all of the circumstances, we are not persuaded that the interests of justice warrant orders for costs. Conclusion [44] We will allow the appeal to the extent that the refund amount is not to include, in addition to the amount of any cleaning and tidying costs, any maintenance and 19 Body Corporate’s written submissions in reply filed on 7 September 2018, 16[78(c)]. 20 Mr and Mrs Wilkinson’s written submissions filed on 22 May 2018, 1. 21 QCAT Act, s 3(b). -- 9 of 10 -- 10 operating costs incurred by the Body Corporate in relation to the basement exclusive use areas. We will otherwise dismiss the appeal, and refuse the application for costs. -- 10 of 10 --