Body Corporate for Quay Terraces Cts v Brisbane City Council [2016] QPEC 12 [2016] QPELR 363

PLANNING & ENVIRONMENT COURT OF QUEENSLAND CITATION: Body Corporate for Quay Terraces Cts 17468 v Brisbane City Council [2016] QPEC 12 PARTIES: BODY CORPORATE FOR QUAY TERRACES CTS (Applicant) v BRISBANE CITY COUNCIL (Respondent) FILE NO/S: 369/16 DIVISION: Planning & Environment PROCEEDING: Application ORIGINATING COURT: Brisbane DELIVERED ON: 8 March 2016 DELIVERED AT: Brisbane HEARING DATE: 8 March 2016 JUDGE: Rackemann DCJ ORDER: Thee appeal is struck out but the costs are reserved, and the matter is listed on Monday, 21st of March 2016, 9.15, before me, to consider the question of costs. CATCHWORDS: PLANNING & ENVIRONMENT – BODY CORPORATE AND COMMUNITY MANAGEMENT SCHEME – where body corporate instituted proceedings without a special resolution – where co-respondent/developer applied to strike out the appeal – where body corporate had attained an order of an adjudicator appointed pursuant to the Body Corporate Community Management Act which purported to require that it be taken that the body corporate was authorised to commence the proceeding pending an extraordinary general meeting called to consider a special resolution to ratify the proceeding – whether that order was within jurisdiction or should be given weight in the strike out application – whether as a matter of discretion the matter should be adjourned to await the outcome of the EGM COUNSEL: D R Gore QC for the co-respondent/applicant J D Houston for the appellant -- 1 of 12 -- 2 J A Langham for the respondent SOLICITORS: Norton Rose Fullbright for the co-respondent/applicant Milne Legal for the appellant Brisbane City Legal Practice for the respondent -- 2 of 12 -- 3 [1] On 29 January 2016, a Notice of Appeal to this court was filed on behalf of the appellant, which is a body corporate. The appeal is against the decision of the respondent to approve, subject to conditions, the co-respondent’s development application in relation to the redevelopment of the Howard Street Wharves. The appellant body corporate had made a submission to the respondent about the development application. [2] It is common ground that: (1) by reason of section 312(1) of the Body Corporate and Community Management Act 1997 (BCCMA), the appellant body corporate could start a proceeding only if the proceeding is authorised by, relevantly, a special resolution of a body corporate; (2) there was no special resolution of the body corporate authorising this proceeding at the time it was commenced and (3) no special resolution has subsequently been obtained ratifying the commencement of the proceeding. [3] In those circumstances, the co-respondent seeks an order that the appeal be struck out. [4] In Sattell v The Proprietor – Be-Bees Tropical Apartments Building Units Plan No. 71593 [2001] 2 Qd R 331 at 334, the Court of Appeal said: It appears to us that where a party having no right to do so purports to begin an appeal in this court, on the deficiency being brought to the court’s attention, the appeal will ordinarily be dismissed or struck out. The circumstances of the present case, so far as they appear from the record, do not suggest that this is a case where justice requires that any other course be followed. [5] The appellant, for its part, seeks an order which would, instead, adjourn the matter until after an extraordinary general meeting of the body corporate, which, subject to any adjournment thereof, is due to be held on 16 March 2016. The body corporate hopes to obtain a special resolution at that EGM to ratify the subject proceeding. [6] The respondent took a neutral attitude with respect to whether the appeal ought now be struck out as the co-respondent seeks, or adjourned as the appellant seeks. [7] It was pointed out, on behalf of the appellant, that the EGM is now relatively near at hand. As was pointed on behalf of the co-respondent, however, that is due, at least in part, to the appellant’s delay in promptly responding to the co-respondent’s inquiries about whether there was a special resolution. [8] On the 18th of February 2016, the solicitors for the co-respondent sent an email to the solicitors for the appellant seeking confirmation as to whether a special resolution was obtained to commence this proceeding. The committee chairperson deposes that, on the same day, the committee sought information from the body corporate’s solicitors (who are not the solicitors on the record in this appeal) regarding the appeal expenditure budget “which prompted the discussion about the general meeting special resolution authorisation”. There had been no resolution and, on 23 February 2016, notice of the forthcoming EGM was issued to unit holders. -- 3 of 12 -- 4 [9] Notwithstanding the above, the solicitors for the co-respondent were left in the dark for sometime. On 19 February 2016, the co-respondent’s solicitors sent an email to the appellant’s solicitors giving notice that an application for directions was being prepared and asking for a response to its request about the special resolution question by Monday, 22nd February 2016. [10] On 24 February 2016, having received no written response to the correspondence and having left telephone messages for the appellant’s solicitor, which had gone unreturned, the co-respondent’s solicitor sent another email requesting a copy of the special resolution. Having still received no response, the co-respondent’s solicitor sent yet another email on 26 February 2016. That email referred to the earlier correspondence and unanswered telephone messages and warned that the correspondence would be brought to the court’s attention. [11] The first response from the appellant’s solicitor came by an email sent at 4.52 pm on Friday, 26th of February. This was more than a week after the first inquiry was made. It gave no substantive response to the inquiry. Instead, the solicitor apologised for not responding sooner, offered the explanation that he “had other pressing commitments this week” and anticipated being able to respond early the following week. By this stage, a number of days had already passed since the body corporate realised that it had needed, but did not have, a special resolution and had called an EGM in an attempt to remedy the situation. One can only hope that the solicitor who wrote the email of the 26th of February 2016 was ignorant of those things at that time. [12] It was not until the 1st of March 2016, the same date that the co-respondent filed its earlier foreshadowed application for directions, that the appellant’s solicitor finally responded to inform the solicitor for the co-respondent that: (1) there was no special resolution; (2) an EGM had been called to ratify the decision to commence the proceeding; and (3) in its view, no further steps should be taken pending the EGM. [13] The relative proximity of the application to strike out to the EGM must be seen in the context of the conduct of the appellant in keeping the co-respondent in the dark for a not insignificant period after it knew it had no special resolution and had already taken steps to call the EGM. [14] It was rightly pointed out, on behalf of the appellant, that whilst a proceeding brought without the necessary authorisation would ordinarily be dismissed or struck out, that is not the inevitable result. Reference was made to this court’s decision in The Body Corporate La Porte D’Or v Gold Coast City Council and another [2013] QPEC 19 where a proceeding was adjourned for a week to await the outcome of an EGM which was to consider a motion to ratify the proceeding. That case, however, does not establish any new principle of law and is quite different at a factual level. [15] There, the body corporate was aware of the requirement for a special resolution if it was to commence proceedings, had instructed a firm of body corporate managers to conduct the relevant process and had relied upon the incorrect advice it received that a special resolution had in fact been obtained. In those circumstances, the court was influenced by factors which included that: -- 4 of 12 -- 5 “Those behind this appeal appear to have proceeded in a reasonable way to try to ensure that it was properly instituted.” [16] The time involved in awaiting the EGM was also placed in the context of the delay, in that case, which had been caused by the council having overlooked the body corporate’s submission at an earlier time. [17] Counsel for the appellant referred to the fact that the appeal period in this case was in the Christmas/New Year season, but the reality, however, is that the failure to obtain a special resolution here was not because of any complication with the holiday period, but because the body corporate was not aware of its obligations – and there is no evidence of it having taken steps to ascertain what requirements there may have been – and so did nothing to seek to obtain a special resolution prior to instituting this proceeding. It is now acting to try to rectify that, but only after the co-respondent raised the issue and was then kept in the dark for some time in the way described earlier. [18] When this matter first came before the court last Friday, senior counsel for the co- respondent handed up a written outline which drew attention to the fact that, at least at that stage, there was no material to suggest any likelihood that a special resolution would be obtained. That apparently provoked the appellant to obtain material over the weekend. [19] The committee chairperson has deposed that, in the course of the weekend, she and another unit holder attempted to seek support from other unit owners. The material does not descend into the details of what was said to those people other than the contents of an email, which certainly did not canvass all matters which might be relevant to a consideration of the question and which, at least, in part, was somewhat inaccurate (stating that the co-respondent contended that a two-thirds majority was unlikely to be achieved). [20] Although this effort received positive responses from 32 out of the 39 unit holders, counsel for the appellant sensibly did not urge the court to proceed on the assumption that the special resolution would necessarily be passed at the EGM. A court should, of course, be reluctant to prejudge the outcome of mature consideration at the EGM. There is, however, obviously some prospect that the resolution might pass. That is not, however, determinative. [21] While delay in proceedings of this kind is a concern to someone in the position of the co-respondent, who would otherwise have the benefit of a development approval, I accept that there is no basis to conclude that an adjournment would occasion significant prejudice to the co-respondent. [22] Counsel for the appellant urged other discretionary considerations, including those relating to the otherwise responsible conduct of its client in seeking appropriate professional help in relation to its submission and its appeal, the apparent relevance of its grounds of appeal, the significance or potential significance of those matters to unit holders and the body corporate, its client’s preparedness to engage in dispute resolution at an early stage and to otherwise act responsibly in the proceeding. Further, reference was made to the fact that the co-respondent has at all material times known that the body corporate made a submission and that an appeal was in fact filed (albeit not with the support of a special resolution). -- 5 of 12 -- 6 [23] Those matters, whilst not irrelevant, would be more weighty if the consequence of striking out the current proceedings was to shut off any prospect of the matters of concern ever being ventilated by proceedings in this court, but that is not the case. Section 497 of the Sustainable Planning Act permits the court to extend time. If a special resolution is obtained to authorise proceedings in respect of the subject development approval, an application could be made to extend the time to permit a notice of appeal to be filed out of time. The situation in this limited respect is analogous to that in Oceana on Broadbeach CTS v Searle and others [2003] QCA 228 where the learned President, after quoting the passage from Sattell, extracted earlier, went on to observe: This supports the striking out or dismissal of the application, rather than an adjournment, in circumstances where, as here, there are no pressing reasons in the interests of justice demanding an alternative course. If and when the applicant has the necessary authorisation of the Body Corporate, there is no reason here why it cannot then bring an application for an extension of time to apply for leave to appeal and a fresh application for leave to appeal. [24] Factors such as those to which reference has been made would be of relevance to an application to extend time. In the meantime, it is possible that the co-respondent would act to its detriment in reliance upon the approval, but if it chose to do so, it would be acting in the knowledge that such an application may well be brought. That would have obvious implications in terms of the weight of that in a consideration of an application to extend time. [25] The striking out of this proceeding at this stage may well be the end of the matter, if no special resolution is subsequently obtained. If a special resolution is obtained then I see no injustice in the appellant having been put in the position, by reason of this proceeding having been struck out, of having to apply for an extension of time to file an appeal after it has done what it should have done to qualify itself to bring the proceeding. There is no pressing reason in the interests of justice which demands the course urged by the appellant. [26] I note that if a special resolution is obtained and leave to appeal out of time is given, then not all costs of this proceeding are necessarily wasted. Any preparation for the appeal proper would presumably be useful in the context of the new appeal. It may also be observed that the current proceedings is, in any event, in its infancy. [27] Subject to the matter to which I will next turn, I am inclined to strike out this proceeding, rather than adjourn it to await the outcome of an EGM. [28] Last Thursday, the day before this matter first came before the court, the appellant lodged an adjudication form under the Body Corporate and Community Management Act 1997 and requested that, pursuant to section 243A of the Act, the commissioner immediately refer the application to a dispute resolution officer, without giving any notice, and requested that a decision be made that day. [29] The basis for the request for the matter to be dealt urgently on an ex parte basis, without giving any notice to any affected person, was that it was said to relate to “emergency circumstances” for the purposes of section 243A. The Act gives an example of emergency circumstances as the need to repair a burst water pipe. The so-called emergency in this case was of a very different kind. The alleged emergency circumstance was simply the fact that the co-respondent’s application to strike out the -- 6 of 12 -- 7 proceedings was about to come before this Court. The appellant wanted to be protected from the prospect that this Court might decide to strike out the proceedings, rather than adjourn them as it requested. So much is clear from the documents which accompanied the request. [30] Having set out the body corporate’s failure to have obtained a special resolution and that it was in the process of convening an EGM, the application stated as follows: 4.14 In the intervening period, the respondent to the appeal has discovered that the appeal was commenced without the necessary authorisation and, on 2 March 2016 (at 6.45 pm), notified the body corporate that it will be applying for orders from the court, at a directions hearing scheduled for 4 March 2016 (tomorrow), that the appeal be struck out (strike out application). 4.15 The body corporate has received advice from counsel to the effect that: (a) if the strike out application is served tomorrow (or at any time prior to a resolution by the lot owners in general meeting ratifying the commencement of appeal) it is likely that the appeal will be struck out and costs awarded against the body corporate; (b) if the appeal is struck out, the appeal rights of the body corporate in relation to the decision will (for all practical purposes) be irretrievably lost; (c) if the lot owners ratify the commencement of the appeal at the EGM on 16 March 2016, it is very likely that: (i) the strike out application will be defeated; and (ii) the appeal will be able to proceed on its substantive merits; (d) the appeal, if allowed to proceed, there’s good prospects of either succeeding or resulting in a mediated outcome more favourable to the lot owners in the scheme than would otherwise be the case under the decision; (e) if an order in terms of that sort in these proceedings is made, it is likely that the strike out application will be adjourned to a date after the 16th of March EGM either by consent or order of the court. [31] The above not only reveals the obvious purpose of the application, that is, to defeat the co-respondent’s application to this court, but reveals an element of misleading. It is not the case that if the appeal is struck out, that the appeal rights of the body corporate would be “irretrievably lost” given that there is a power in the court to extend time in which to file an appeal out of time. It seems however, that that incorrect information played a role in the decision-maker’s determination, because it was repeated in paragraph 8 of the reasons for decision. [32] It may be noted that the adjudicator’s application form also purported to say that the only other persons affected by the outcome sought in the application were the lot owners in the scheme. If this determination was valid and within power, it obviously had an effect of significance for the co-respondent. Counsel for the body corporate says the application was simply wrong in that respect. -- 7 of 12 -- 8 [33] The decision-maker approached the task on the basis of what would be in the best interests of the body corporate. Obviously, the order, if available, would have been in their interests, but of course, that is to leave to one side the interests of the co- respondent. [34] The order which was in – which was made was in the following terms: I hereby order that subject to the decision of the Body Corporate for Quay Terraces in respect of motions 9 and 10 to be considered at the extraordinary general meeting to be held on 16 March 2016, or any adjournment of that meeting, the Body Corporate for Quay Terraces is authorised to commence and pursue proceedings number 369 of 2016 before the Planning and Environment Court as if a special resolution had already been passed at a general meeting authorising the commencement of those proceedings. [35] It was submitted, on behalf of the co-respondent, that such an order was simply beyond jurisdiction and should be ignored or given no weight for the purposes of this application. It was submitted on behalf of the appellant that, in effect, the order ties this Court’s hands. The order was one which was authorised under the relevant legislation and cannot be set aside save by the exercise as set out in the Act, of appealing the matter to QCAT. In the meantime, this Court, it was contended, is bound by the determination to act on the basis that the body corporate was indeed authorised to commence and pursue the proceedings as if the special resolution had, in fact, been obtained. If that were so, there would simply be no basis to consider the strike out applications. And so it contends, in effect, that by this ex parte mechanism of referral, without notice, to an adjudicator, under the BCCMA, the Body Corporate has effectively thwarted this Court’s consideration of the strike out application. [36] In support of that submission, I was referred to section 229 of the BCCMA, which deals with the exclusivity of the dispute resolution provisions. It should be noted, however, that section 229(1) commences by saying that subsections (2) and (3), which set out the remedies provided for in the Act, apply to a dispute: “...if it may be resolved under this chapter by a dispute resolution process.” [37] It was contended by senior counsel for the co-respondent that, notwithstanding the exclusivity of the dispute resolution mechanism set out in the Act for disputes of that kind, it is not beyond the jurisdiction of this court to consider whether the so-called dispute in this case was a dispute to which those provisions apply, and that there is nothing which should prevent this Court from considering that question as a collateral question in determining the application which is before this court; that is, for the proceeding to be struck out. I accept that submission. [38] I will for that purpose leave to one side any question about whether the circumstances which were relied upon in order to obtain an immediate reference to a dispute resolution officer could be regarded as “emergency circumstances” in and for the purposes of section 243A of the BCCMA. I will instead focus upon whether there was a dispute which was susceptible to resolution by the dispute resolution process in a way which led to the order which was made in this case. What constitutes a dispute is defined in section 227 of the BCCMA as follows. 227 Meaning of dispute -- 8 of 12 -- 9 (1) A dispute is a dispute between— (a) the owner or occupier of a lot included in a community titles scheme and the owner or occupier of another lot included in the scheme; or (b) the body corporate for a community titles scheme and the owner or occupier of a lot included in the scheme; or (c) the body corporate for a community titles scheme and a body corporate manager for the scheme; or (d) the body corporate for a community titles scheme and a caretaking service contractor for the scheme; or (e) the body corporate for a community titles scheme and a service contractor for the scheme, if the dispute arises out of a review carried out, or required to be carried out, under chapter 3, part 2, division 7; or (f) the body corporate for a community titles scheme and a letting agent for the scheme; or (g) the body corporate for a community titles scheme and a member of the committee for the body corporate; or (h) the committee for the body corporate for a community titles scheme and a member of the committee; or (i) the body corporate for a community titles scheme and a former body corporate manager for the scheme about the return, by the former body corporate manager to the body corporate, of body corporate property. (2) An application by a person mentioned in subsection (1)(a) to (h) for a declaratory order about the operation of this Act is also a dispute even if there is no respondent or affected person for the application. [39] It is common ground that there was no dispute in this case which fell within s 227(1). Rather, in supporting the jurisdiction of the adjudicator to have entertained the application and to have made the order, counsel for the appellant relied upon s 227(2), and in particular, submitted that the application made by his client was for a “a declaratory order about the operation of this Act” for the purposes of that subsection. [40] The only real dispute, in the ordinary sense of that term, in this case was not a dispute about the way the Act operated but rather was a dispute as between the body corporate and the co-respondent, as the applicant for development approval, as to whether this appeal should be struck out. That is self-evidently a matter for this court and does not appear readily to fall within the purview of the BCCMA. [41] Senior counsel for the co-respondent submitted that the scope of section 227(2) must be seen in the context of the balance of the section and of the Act as a whole. It can be seen from subsection (1) that it is concerned with disputes between the owner/occupier of one lot and the owner and occupier of another within the scheme, -- 9 of 12 -- 10 or a dispute between the body corporate and an owner or occupier of a lot in the scheme, or between the body corporate and the body corporate manager for the scheme, or the body corporate and the caretaker service contractor for the scheme, or the body corporate and a letting agent for the scheme, or the body corporate and a member of the committee for the body corporate for that scheme, or the committee for the body corporate for the scheme and a member of that committee, or between the body corporate and a former body corporate member of that scheme about certain things. [42] In short, the provision deals with disputes which concern the body corporate for a community title schemes and the owners or occupiers of the lots, the manager or caretaking service contractor, letting agents, members of the committee or the like in relation to the community title scheme. It is fundamentally about matters of concern to those people, who are all connected in having an interest concerning the community title scheme. That sits, it was submitted, with the purpose of the dispute resolution chapter, as stated in section 228, which begins by saying: This chapter establishes arrangements for resolving, in the context of a community title schemes, disputes about – And also, with the orders which an adjudicator may make under section 276 which in subsection (1) refers to the making of orders which are just and equitable in the circumstances (including a declaratory order) to resolve a dispute: …in the context of a community title scheme. About various things. [43] Section 227(2), which was included in the Act by way of amendment, expanded the scope of a dispute so that a declaratory order could be sought where there was no respondent or where there was no affected person. It provides, for example, for the seeking of a declaratory order which has the effect of giving guidance about the operation of the Act. It is understandable that provision would be made for such a thing but, on the submission of senior counsel for the co-respondent, the dispute resolution provisions, including s 227(2), have nothing at all to do with disputes between the body corporate and someone who is a complete stranger to the community titles scheme or anything to do with it, such as his client, who is the applicant for a development approval in respect of other land. In this regard senior counsel for the co-respondent also pointed to the definition of an affected person in schedule 6 of the Act, which, whilst broadly expressed, gives examples of an affected person. Those examples are, in differing circumstances, a service contractor, or another lot owner. Accordingly, he submitted that the whole topic of this application was not one which was available for the application of the dispute resolution provisions. [44] I should also note that it was pointed out that both s 228 - meeting the chapter’s purpose - and 276 - dealing with the orders of adjudicators - refer to either disputes, in the case of section 228, or orders, in the case of 276, about contraventions, or anticipated or claimed or anticipated contraventions, of the BCCMA or the community management statement and the exercise of rights or powers or the performance of duties under the BCCMA or the community management statement. It was submitted that a failure to pass a necessary special resolution to authorise the commencement of proceedings for the proceeding pursuant to a right which, in this -- 10 of 12 -- 11 case, is given under the Sustainable Planning Act, does not concern the exercise of rights, powers or the performance of a duty under the BCCMA, nor does it involve a contravention of the BCCMA, but rather simply concerns a failure to obtain the necessary qualification to have properly commenced proceedings, which the body corporate may have a right to do under other legislation. It is unnecessary for me to pause on that. [45] Whilst there is apparent force in the submissions of learned senior counsel for the co- respondent about the breadth of s 227(2), it is ultimately unnecessary for me to express a concluded view on that because, in my view, and in any event, for the reasons which I shall give and which were advanced by senior counsel for the co- respondent, I do not consider that the application here was an application “for a declaratory order about the operation of this Act”. [46] It has already been observed that there was both no dispute between the body corporate and anyone else, and indeed, no misunderstanding or confusion on the part of the body corporate itself at the time it made its application, as to the operation of the Act. That was entirely uncontroversial. It was well-known to and appreciated by the body corporate that the Act provided that it may have started the subject proceedings only if it had been authorised to do so by a special resolution. It was also clearly understood that the body corporate was aware that no such special resolution had been obtained, and indeed, none had even been sought. This was not a case where there was some uncertainty about a potentially misfired attempt at getting a special resolution. The operation of the Act insofar as getting a qualification to start this proceeding is concerned, had not been engaged or attempted to be engaged. [47] The order made was not in the form of a declaration about the operation of the Act. Rather, what was obtained was an order that, on its face, purported to authorise the body corporate to commence and pursue the proceedings notwithstanding the operation of the Act, on an assumed factual fiction that a special resolution had already been passed when it had not. It seems to me that that extends well beyond a declaratory order about the operation of the BCCMA. [48] It was pointed out that the powers of an adjudicator are rather broadly expressed in s 276, but I was not pointed to anything which would justify categorising the subject application or order as being for a declaratory order about the operation of the BCCMA. [49] I note that s 284(4) provides that: An adjudicator’s order may provide that the order is to have effect as, amongst other things, a special resolution. [50] There are some things to note about that. The first is that the order, as made, does not, in terms, purport to do that. Secondly, even if it did, s 284(4) is concerned with ancillary provisions. The order here is not ancillary to any order relating to a dispute which falls within the purview of s 227. Thirdly, as Mr Gore QC pointed out, the inclusion of such power is understandable given that the adjudicator’s powers otherwise include those in schedule 5 which include in item 10, for example, a power, in certain circumstances, to make an order giving effect to a motion which was considered at a general meeting but which was not passed because of opposition that, in the circumstances, was unreasonable. The existence of a provision such as s 284(4) does not mean that the scope of s 227 is expanded such that what appears to be a -- 11 of 12 -- 12 power to consider a declaratory order about the operation of the BCCMA becomes, instead, a power to consider making orders which invest the body corporate with a power to commence and pursue proceedings against someone in the position of the co-respondent, notwithstanding the provisions of section 312 of the BCCMA. [51] In the circumstances, I accept the submission that the determination, or the purported determination, of the adjudicator was beyond jurisdiction and should be given no weight in the circumstances. The appeal is struck out. [52] I will order that the appeal be struck out but the costs be reserved, and that the matter be listed on Monday, 21st of March 2016, 9.15, before me, to consider the question of costs. -- 12 of 12 --