Body Corporate for Calypso Plaza on Coolangatta CTS 24595 v Larraine Pty Ltd [2014] QCATA 4

CITATION: Body Corporate for Calypso Plaza on Coolangatta CTS 24595 v Larraine Pty Ltd [2014] QCATA 004 PARTIES: Body Corporate for Calypso Plaza on Coolangatta CTS 24595 (Appellant) v Larraine Pty Ltd (Respondent) APPLICATION NUMBER: APL301-13 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Barlow QC DELIVERED ON: 14 January 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. Set aside the decision of the adjudicator made on 23 May 2013. 2. Declare that the costs of operation (including electricity) and maintenance of the exhaust fans and associated ducting for lots 9 to 15 in the Scheme are the responsibility of the body corporate. 3. Order that the Body Corporate for Calypso Plaza on Coolangatta immediately cease charging the owners or occupiers of lots 9 to 15 for any electricity used to power the exhaust fans and exhaust ducting system servicing those lots. 4. Order that the Body Corporate for Calypso Plaza on Coolangatta, within 14 days, reimburse the respective owners or occupiers of lots 9 to 15 for any operational costs (including electricity) that they have been charged and which they have paid in respect of the operation of the exhaust fans and exhaust ducting system servicing those lots. -- 1 of 7 -- 2 CATCHWORDS: Body Corporate and Community Management – power of body corporate to commence appeal from adjudicator‟s decision – whether committee‟s decision validly ratified in general meeting – Body Corporate and Community Management Act 1997 ss 100, 312 – Body Corporate and Community Management (Accommodation Module) Regulation 2008 s 42. Body corporate and community management – utility infrastructure – obligation to pay for costs of operation, including electricity – Body Corporate and Community Management Act 1997 s 20 – Body Corporate and Community Management (Accommodation Module) Regulation 2008 ss 139, 167. Body Corporate and Community Management – jurisdiction and powers of adjudicator – whether power to order reimbursement of amounts incorrectly charged by body corporate to unit holders – Body Corporate and Community Management Act 1997 s 267, schedule 5. APPEARANCES and REPRESENTATION (if any): APPLICANT: Body Corporate for Calypso Plaza CTS 24595 represented by McDonald Balanda & Associates, Lawyers RESPONDENT: Larraine Pty Ltd represented by Grahame A Hill This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION Introduction [1] Calypso Plaza on Coolangatta is a 220 lot scheme consisting of 6 levels with commercial enterprises on the ground floor. The commercial lots are lots 1 to 15. Larraine Pty Ltd is the owner of lots 12 and 13, from which it conducts an Italian restaurant. [2] This appeal, and the decision from which it is brought,1 concern who is responsible for the payment of electricity consumed in the operation of exhaust duct fans for a number of the commercial premises. 1 Calypso Plaza on Coolangatta [2013] QBCCMCmr 215. -- 2 of 7 -- 3 The adjudicator declared that the costs of operation (including electricity) and maintenance of the exhaust fans and associated ducting are the responsibility of the body corporate, ordered that the body corporate immediately cease charging commercial lot owners or occupiers for any electricity used to power the exhaust fans and ducting system, and ordered the body corporate to reimburse the respective owners or occupiers of commercial lots for operational costs (including electricity) that they have been charged and which they have paid. [3] This is the second instalment of disputes concerning the exhaust ducting system for the commercial lots in the scheme. In Calypso Plaza on Coolangatta [2012] QBCCMCmr 528, a different adjudicator determined that the exhaust ducting system is utility infrastructure and held that the body corporate was responsible for the costs of operation of that infrastructure. The adjudicator also ordered the body corporate to reimburse to the commercial lot owners any charges paid by them in respect of the operation of the exhaust ducting system. It is relevant to note that the applicants in that proceeding were the respective owners or occupiers at the time of lots 1, 9, 12 and 13. Although the declaration was made in general terms, it appears to have been limited in reality to lots 1, 2 and 3 and 9 to 15. Lots 1, 2, and 3 share one exhaust duct system and lots 9 to 15 share another. Lot 6 (the other commercial lot which is also the caretaker‟s lot) has its own dedicated exhaust ducting system, which was not the subject of that decision. [4] Notwithstanding that decision, the body corporate has continued to charge the owners or occupiers of the commercial lots serviced by exhaust ducting systems with the cost of electricity used to operate those systems. By its application, Larraine sought declarations that the cost of that electricity was the responsibility of the body corporate and an order that monies paid by commercial lot owners or occupiers for electricity used to power the ducting system for those lots be reimbursed to them. [5] Larraine relies upon the adjudicator‟s reasons in this appeal. However, it has also raised a preliminary point that that the appeal has not been properly authorised by the body corporate and therefore ought to be dismissed. I shall address that contention first. Is the appeal authorised? [6] The appeal was commenced following a resolution of the committee of the body corporate, which was made on 8 July 2013 in the following relevant terms: That the body corporate committee consents to the flying motion to appoint McDonald Balanda & Associates Lawyers … for the purposes of MBA acting on behalf of the body corporate in relation to lodging a formal notice of appeal of the Adjudicator‟s Order (0089-13/BP) dated 23 May 2013, to appeal such order to the Queensland Civil and Administrative Tribunal. Further for the body corporate to call and convene an extraordinary general meeting … for the purpose of ratifying the notice of appeal. … -- 3 of 7 -- 4 [7] The committee then called an extraordinary general meeting at which a motion was put in the following terms: To ratify the Committee Resolution dated 8 July 2013, namely to commence proceedings pursuant to s 312 of the Body Corporate and Community Management Act Qld 1997 („BCCM Act‟) in order to appeal the Adjudicator‟s Decision and Orders of 23 May 2013 in the matter of Calypso Plaza on Coolangatta [2012] QBCCMCmr 528. [8] That motion was passed. [9] Larraine submits that the motion is of no effect because it referred to the incorrect proceeding from which an appeal was to have been brought, referring to the 2012 decision rather than the decision of the adjudicator in this matter. Therefore, it submits, this appeal ought to be dismissed because it was not authorised. [10] Subsection 312(1) of the Act provides that a body corporate may start a proceeding only if authorised to do so by a special resolution. However, subsection (2) provides that a body corporate does not need a special resolution to start, among other things, an appeal from a decision of an adjudicator. [11] A body corporate acts by its committee, whose decisions are those of the body corporate unless they are on a restricted issue for the committee.2 Section 42 of the Accommodation Module prescribes what are restricted issues. Relevantly, a decision to start an appeal against an adjudicator‟s order is such a decision.3 Therefore, it was necessary for the body corporate in general meeting to authorise this appeal, although a special resolution was unnecessary. [12] The appeal was commenced after the committee‟s decision but before the general meeting. However, that does not make the appeal ineffective or a nullity. The body corporate in general meeting could validly authorise the appeal retrospectively by ratifying the committee‟s decision.4 [13] An explanatory note accompanied the notice of the meeting proposing the resolution. Relevantly, the note said: Most recently Larraine Pty Ltd commenced an Adjudication Application against the Body Corporate in relation to the costs and operation of electricity meters and subsequent charges. … The Committee resolved by way of flying minute to instruct MBA Lawyers to lodge a formal Notice of Appeal of the Adjudicator‟s Orders dated 23 May 2013. … The Committee now seek your support in approving the said appeal and ratifying the Committee Resolution. Should the Orders of 23 May 2013 stand the lot owners of the Body Corporate will be forced to outlay the back-pay ordered. … 2 Section 100 of the Act. 3 Section 42(1)(e)(iv) & (2)(b) of the Accommodation Module. 4 McEvoy v Body Corporate for 9 Port Douglas Road [2013] QCA 168 at [28], [30]-[40]; The Owners Strata Plan No 73943 v 2 Elizabeth Bay Road Pty Ltd [2013] NSWSC 1769 at [28]-[29], [36]. -- 4 of 7 -- 5 [14] Certainly the motion and the resolution of the body corporate made at the extraordinary general meeting refer to an appeal from the 2012 decision rather than from the 2013 decision. However, the motion that was passed was to ratify the committee‟s decision made on 8 July 2013. The only committee decision made on that date was the decision quoted in paragraph [6] above, which referred to the correct proceeding. Also, the explanatory note made it clear that the adjudicator‟s decision was dated 23 May 2013 and concerned the costs of electricity. There is no suggestion that any other decision was made against the body corporate on that date or about such matters. In my opinion, the motion was clearly intended (and would have been understood by the members voting at the meeting) to refer to an appeal from the adjudicator‟s decision which is the subject of this appeal. [15] In my view, the motion validly authorised this appeal and therefore it has been properly brought. Grounds of appeal [16] The body corporate accepts, for the purposes of this appeal, that the exhaust ducting system is utility infrastructure and that the body corporate is responsible for the costs of its operation. However, it appeals the adjudicator‟s decision on two grounds: a) that the application concerned only the exhaust ducting system for lots 9 to 15 (which affects the applicant); and the adjudicator went too far in applying the order to all commercial lots – each of lots 1 and 6 has infrastructure (either exhaust fans of the entire ducting system) dedicated solely to it, which is therefore exempt from the definition of “utility infrastructure” under s 157(3)(b) of the Accommodation Module;5 b) that the adjudicator had no power, under s 276 and Schedule 5 of the Act, to order reimbursement of monies incorrectly charged by the body corporate to the owners of commercial lots for electricity used to power the exhaust ducting systems for those lots. Limited application of orders [17] In its submissions for this appeal, the applicant expressly accepted that lots 9 to 15 are served by common property utility infrastructure and that the body corporate is responsible for the costs of supplying electricity to the exhaust ducting system servicing those lots. It appears therefore to accept that it is not entitled to charge the owners or occupiers of those lots for the electricity involved in operating those systems. 5 The body corporate‟s assertion that lot 1 has dedicated infrastructure which is therefore exempt appears to be contrary to the adjudicator‟s findings and the evidence and submissions before her. On appeal this tribunal cannot accept further evidence, as it is a strict appeal: Body Corporate for River City Apartments v McGarvey [2012] QCATA 047 at [11]-[16]. Nevertheless, the point at issue remains that the infrastructure for lots 1 to 3 and 6 is not directly the subject of this appeal. -- 5 of 7 -- 6 [18] In the committee‟s submissions to the adjudicator (which were not in this respect disputed as I understand it), it said 3 exhaust systems serviced commercial lots. Shops 1 and 2 were connected to a common property vertical riser by their own infrastructure and were separately metered for electricity consumed by exhaust fans within those lots. Lot 6 has its own dedicated exhaust ducting. No particular mention was made of lot 9 and lots 11 to 15 were said to share a vertical riser and exhaust ducting system, including fans. [19] It seems that the facts concerning the exhaust ducting system servicing lots 9 to 15 are different to those servicing the other commercial lots. The applicant was only concerned with the exhaust fans and ducting system concerning its own lots (12 and 13). Any decision concerning that ducting system would also affect the other lots serviced by the same system. The situation concerning the other commercial lots with different systems was not the subject of the application before the adjudicator and ought not to have been the subject of the adjudicator‟s orders. I therefore agree that the adjudicator‟s orders ought to be amended to apply only to the costs of operation (including electricity) and maintenance of the exhaust fans and associated ducting for lots 9 to 15. Power to order reimbursement [20] So far as the reimbursement order is concerned, the body corporate submits that it is beyond the jurisdiction of the adjudicator because neither s 276 nor schedule 5 of the Act grants power to order reimbursement of monies paid to a body corporate by any of its members. [21] It is correct that there is no specific power granted to an adjudicator to order reimbursement of monies incorrectly charged by a body corporate to its members and paid by those members. However, that is not determinative of the issue. Subsection 276(1) relevantly provides that an adjudicator may make an order that is just and equitable to resolve a dispute. An order may require a person to act in a way stated in the order (subsection (2)). Without limiting subsections (1) and (2), the adjudicator may make any orders mentioned in schedule 5 (subsection (3)). Schedule 5 is not an exhaustive list of powers, and the fact that an order for reimbursement of monies paid is not included does not mean that there is no power to make such an order. On the contrary, provided that it is just and equitable in order to resolve a dispute, subsection 276(2) makes it clear that an adjudicator may require a person to act in a way stated in the order. That would include, in my opinion, an order requiring the body corporate to reimburse to its members amounts that it has charged those members and that they have paid, but which it was not entitled to charge. [22] Therefore, to the extent that the adjudicator ordered the body corporate to reimburse the owners or occupiers of lots properly the subject of the application, it was within power. -- 6 of 7 -- 7 [23] The body corporate goes on to submit that, insofar as the order concerned lots 1 to 3 and 6, it was not just and equitable because the exhaust ducting systems to those lots are different to the system for lots 9 to 15. [24] For the reasons discussed above, I agree that no order should have been made in respect of any lots other than those serviced by the ducting system which services Larraine‟s lots. Orders [25] In the circumstances, the orders made by the adjudicator should be varied in the ways that I have indicated. [26] The appropriate orders are that the orders made by the adjudicator on 23 May 2013 be set aside and be replaced by the following orders: a) declare that the costs of operation (including electricity) and maintenance of the exhaust fans and associated ducting for lots 9 to 15 in the scheme are the responsibility of the body corporate; b) order that the Body Corporate for Calypso Plaza on Coolangatta immediately cease charging the owners or occupiers of lots 9 to 15 for any electricity used to power the exhaust fans and exhaust ducting system servicing those lots; c) order that the Body Corporate for Calypso Plaza on Coolangatta, within 14 days, reimburse the respective owners or occupiers of lots 9 to 15 for any operational costs (including electricity) that they have been charged and which they have paid in respect of the operation of the exhaust fans and exhaust ducting system servicing those lots. -- 7 of 7 --