Body Corporate for Grand Pacific Resort v Cox [2012] QCATA 14

CITATION: Body Corporate for Grand Pacific Resort CTS 29576 v Cox [2012] QCATA 14 PARTIES: Body Corporate for Grand Pacific Resort CTS 29576 (Appellant) v David Merton George Cox Cheryl Myra Cox (Respondents) APPLICATION NUMBER: APL074-11 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Kenneth Barlow SC, Member DELIVERED ON: 25 January 2012 DELIVERED AT: Brisbane ORDERS MADE: Appeal dismissed. CATCHWORDS: Body Corporate and Community Management – right to enter lot and inspect – whether body corporate entitled to enter and inspect a lot to ascertain whether works were necessary Body Corporate and Community Management – adjudicator’s investigation – extent of obligation to investigate matter – whether failed properly to investigate Body Corporate and Community Management – adjudicator’s decision - whether adjudicator gave adequate reasons for decision Body Corporate and Community Management Act 1997, ss 163, 269 -- 1 of 11 -- 2 APPEARANCES and REPRESENTATION (if any): APPELLANT: Fuss Law RESPONDENTS: Self represented REASONS FOR DECISION Introduction [1] This is an appeal, pursuant to s 289 of the Body Corporate and Community Management Act 1997, from an order of an adjudicator concerning a dispute between the appellant, Grand Pacific Resort, and the respondents, Mr and Mrs Cox. [2] Mr and Mrs Cox are the owners of lot 115 in the scheme. Grand Pacific Resort applied to the Commissioner for an order that Mr and Mrs Cox permit its representatives to enter lot 115 for the purposes of inspecting and determining the nature of all building and utility infrastructure alterations which have been made to the interior of the lot. The adjudicator dismissed that application. Factual background [3] Grand Pacific Resort’s scheme is in Bulcock Street, Caloundra. The scheme is governed by the Body Corporate and Community Management (Accommodation Module) Regulation 2008 and by-laws for the scheme contained within its community management statement. The scheme is a 12 storey residential tower. Lot 115 is on level K. Under the approved plans attached to the development approval for the scheme issued by the Caloundra City Council, lot 115 is a single unit with a single entry. [4] In 2007, the body corporate committee received information that lot 115 may have been altered internally by Mr and Mrs Cox to create a “dual key” arrangement. It contends that this may have been done by creating a foyer entry inside the main entry door, off which there are two more doors leading to separate living areas. [5] Between 2007 and 2010, correspondence was exchanged between the body corporate and the local council and letters were written by the body corporate and the council to Mr and Mrs Cox asking them to clarify whether there had been structural alterations made to the internal area of lot 115 and whether it had been altered into two separate living areas. Mr and Mrs Cox declined to respond to any of those requests. The parties’ submissions to the adjudicator [6] In the application to the adjudicator, the body corporate contended (as it does before this tribunal) that, on 12 February 2010, the police forcibly entered lot 115, for purposes which are immaterial to this appeal. On 18 February 2010, the body corporate wrote to Mr and Mrs Cox stating that it “now has conclusive evidence your lot have (sic) been made dual keyed.” Mr and Mrs Cox did not reply to that letter. In its application the body corporate said that, “As a result of information provided to the body corporate by the police officers who entered lot 115 on 12 February 2010, -- 2 of 11 -- 3 the body corporate obtained irrefutable evidence of lot 115 having been changed to a dual key arrangement.” [7] The body corporate informed the adjudicator that by-law 14 of the by- laws, which applied at the time that the body corporate first became aware that alterations had been made to the interior of lot 115, provided as follows: “An owner or occupier of a residential lot shall not make any structural alterations to any lot (including any alterations to gas, water or electrical installations) without the prior written consent of the body corporate.” [8] In its application to the adjudicator, the body corporate contended that, without conducting a proper inspection of the alterations which have been made to lot 115, the body corporate has no way of determining whether or not the building work carried out by Mr and Mrs Cox constitutes “structural alterations” and therefore a breach of by-law 14 as it was at the time. [9] The body corporate contends that it needs to conduct an inspection of the work carried out within lot 115 to determine whether or not a development approval for building work is required and whether or not the alterations made by Mr and Mrs Cox to lot 115 result in an unlawful use of those premises. Mr and Mrs Cox have declined to allow anyone to inspect the internal area of their lot. [10] In response to the body corporate’s submissions to the adjudicator, Mr and Mrs Cox denied what they referred to as “the unsubstantiated allegations raised that my (sic) apartment is in breach of any Grand Pacific Resort by-laws”. Similarly, they denied that any work done in the apartment was in breach of any council laws. They contended that nothing that they have done to the apartment requires council planning or building approval. [11] Mr and Mrs Cox repeatedly said, in their submissions, that the body corporate had produced no evidence to support its allegations. [12] The body corporate was invited to respond to Mr and Mrs Coxs’ submissions and declined to do so. The adjudicator’s decision [13] The adjudicator dismissed the application. He noted that, “There is a long established common law right of occupiers to exclude other persons from entry to their premises.1 This right may be abrogated by statute, but even then, entry into a private residence often requires authorisation by a judicial officer.” He then noted that the only provision of the BCCM Act which authorises entry into a lot is s 163. [14] The adjudicator noted that the body corporate had not provided evidence to suggest that it was authorised or required to carry out work in lot 115, although the body corporate believed that the owners of lot 115 may have breached the previous by-law 14. The adjudicator noted that his difficulty was that there was no objective evidence upon which he could be 1 “See for example Kuru v New South Wales [2008] HCA 26.” ((2008) 236 CLR 1). -- 3 of 11 -- 4 satisfied that two separate living areas had been created by means of structural alterations requiring body corporate approval, nor any evidence that the owners of lot 115 had done work which contravenes the development approval or involves a material change of use. In the circumstances, he dismissed the application. The appeal [15] In its appeal to this tribunal, the body corporate contends that the adjudicator erred in law in applying the wrong test, taking into account irrelevant matters, failing to take into account relevant matters, failing to provide proper reasons and failing to investigate and to afford the body corporate natural justice. It seeks a declaration that the body corporate, and any person authorised by it, is entitled, after giving notice pursuant to s 163(2)(b)(i)(A) of the Act, to enter the Coxs’ lot and to remain on the lot while it is reasonably necessary to inspect the lot to ascertain whether they have carried out any internal alterations to their lot and if so to find out whether any work which the body corporate is authorised or required to carry out is necessary. Applying the wrong test [16] The body corporate contends that the adjudicator misconstrued s 163 of the Act by requiring the body corporate to provide evidence that it was authorised or required to carry out works within lot 115. It submits that the only relevant enquiry for the purposes of s 163(1)(a) of the Act was whether or not the body corporate sought to enter the Coxs’ lot with the requisite intention – namely, to carry out an investigation to find out whether work, which the body corporate was authorised or required to carry out, was necessary. It contends that, without having first carried out the investigation, the body corporate cannot be expected to know whether any works needed to be done which it was required or authorised to carry out, much less provide proof to the adjudicator about those matters. It contends that the only necessary precondition to the lawful exercise of a right of entry under s 163(1)(a) is that the body corporate should possess a desire to inspect the lot to find out whether work which it is authorised or required to carry out is necessary. It is not necessary that the body corporate should have reasonable grounds for a belief that a certain state of affairs might exist, much less objective proof that a particular state of affairs does exist. [17] The body corporate relies upon two decisions in particular for contending that s 163 gave it a right of entry: Oceana On Broadbeach v Searle2 and Las Rias3. But in each of those cases there was evidence before the decision maker of facts giving rise to a need to undertake work or a right to inspect, together with references to the relevant sections under which that need and right were granted to the body corporate. In contrast, here there was neither evidence of a need or right, nor reference to any legal provision under which the body corporate would be authorised or required to carry out works if its suspicions proved well founded. 2 [2004] 1 Qd R 229. 3 [2006] QBCCMCmr 370. -- 4 of 11 -- 5 [18] In my opinion, there are two problems with the body corporate’s submission. First, I disagree that the relevant enquiry for an adjudicator is simply whether the body corporate had a specific intention. A body corporate has a general obligation to act reasonably in carrying out its rights and obligations (s 94(2)) and could not itself form the intention without some reasonable basis. It is therefore necessary, when it seeks the assistance of an adjudicator to enforce a right which it claims to have, to demonstrate that there is some reasonable basis for its intention. [19] While the body corporate itself apparently had some evidence that structural alterations may have been undertaken to lot 115, it did not present that evidence to the adjudicator when seeking to have him enforce the body corporate’s alleged right of entry. An adjudicator can only make a decision based upon the evidence before him and, if there was no evidence to indicate that the Coxs may have undertaken unauthorised structural alterations, then there was no basis upon which the adjudicator in this case could make an order requiring entry under s 163. [20] This is particularly a problem given that the body corporate asserted that it did have evidence, but it declined to give that evidence to the adjudicator. One would have thought it was a simple matter for the body corporate to inform the adjudicator of the nature of the “irrefutable evidence” that it said it had from the police officers. It might have done so, for example, by producing a statutory declaration or statement by one of the police officers or even a statement by a representative of the body corporate of the facts which the police officers had relayed to him or her. Neither of these courses was taken by the body corporate and, in the absence of any evidence before the adjudicator, but simply an assertion by the body corporate that some unidentified evidence existed, there was nothing upon which the adjudicator could properly make the relevant determination in favour of the body corporate. [21] The second problem with this submission is that the body corporate failed to identify to the adjudicator any legal basis for it being entitled or obliged to carry out works. While it cited the former by-law 14, it did not provide any evidence of, nor draw the adjudicator’s attention to, any by-laws or other powers pursuant to which, if there had been a breach of by-law 14, the body corporate might be entitled or obliged to carry out works to rectify the breach. [22] Section 169 of the Accommodation Module relevantly provides that if the owner or occupier of a lot does not carry out work that the owner or occupier has an obligation to carry out under the Act or the Module or under a notice given under any other Act or under the Community Management Statement including the by-laws, then the body corporate may carry out the work. It may be that, under that section, the body corporate would be entitled to carry out work to rectify structural alterations undertaken without its consent, but there is nothing in the Act or the Accommodation Module that specifically provides for such a power. If, for example, the by-laws provided that any alterations for which the body corporate had not given its consent must be removed upon demand -- 5 of 11 -- 6 by the body corporate, then s 169 would authorise or require the body corporate to carry out that work if the owners refused to do so after a demand. Or if the council had served a notice on the Coxs requiring them to carry out some form of rectification works, which they had declined to do, then the body corporate would have been authorised to carry out works under s 169. But the body corporate failed to identify to the adjudicator any such power under which, if there were unapproved structural alterations, it would be authorised or required to carry out works. [23] In its submissions to this tribunal, the body corporate now seeks to identify possible powers under which it might be authorised to carry out works. It contends that, if the Coxs have carried out alterations to the interior of their lot, then: a) if the alterations affected utility infrastructure which was common property, the body corporate may have to carry out works in order to comply with its obligation to maintain all common property in good condition, under s 157 of the Accommodation Module; b) if the alterations affected common property that was not structural in nature, the body corporate may have to carry out works to comply with its obligation to maintain the common property in good condition, also under s 157 of the Accommodation Module; c) if the alterations affected common property that was structural in nature, the body corporate may have to carry out works to comply with its obligation to maintain such common property in a structurally sound condition, under the same section; d) if the alterations affected essential supporting framework that was not common property then (as the lots in the scheme were created by a building format plan of subdivision) the body corporate may have to carry out works to comply with its obligation to maintain such supporting framework in a structurally sound condition, under the same section; e) the alterations may impact on the body corporate’s fire safety obligations under relevant legislation, potentially requiring the body corporate to carry out works; f) the alterations may impact on the body corporate’s insurance policy; and g) depending on the nature of the works undertaken, the body corporate may be entitled to apply for an order directing the respondents to remove the improvements and make good their lot to its former condition or, in lieu of them doing so, an order entitling the body corporate to undertake such works. [24] Some of these suggestions appear speculative. Those relating to fire safety obligations and the insurance policy do not make any reference to any legislative powers entitling the body corporate to carry out the works. The others may give some basis for the body corporate to carry out work, but without any evidence at all being given to the adjudicator as to -- 6 of 11 -- 7 whether structural alterations have, or appear to have, been made, there was still no basis for the adjudicator to make an order. Furthermore, as I have said, none of these potential bases of power for the body corporate to carry out work was put before the adjudicator. It cannot now be contended, therefore, that he erred in not taking them into account. An appeal to this tribunal under s 289 is an appeal in the strict sense, in which the only question is whether the adjudicator was wrong in law based upon the material before him. [25] I therefore do not consider that the adjudicator erred in applying the wrong test. Irrelevant matters [26] The body corporate contends that the adjudicator took into account three irrelevant matters: a) the ability of the council to initiate its own legal proceedings if it believed that Mr and Mrs Cox had done work which contravened the development approval or involved a material change of use; b) that the body corporate did not provide any evidence about the works which it was authorised or required to carry out, nor any objective evidence that the respondents had made structural alterations to their lot; and c) the adjudicator’s comment about the long established common law right of occupiers to exclude other persons from entry to their premises. [27] I agree that it is irrelevant that the council may have had the option to initiate legal proceedings, but I do not consider that that was one of the reasons for the adjudicator’s decision. The reference which he made was to a submission that had been made to him by Mr and Mrs Cox, rather than accepting that as a reason for dismissing the application. [28] But even if it were a reason, and were therefore irrelevant, if one were to disregard it it seems to me that the decision would have been the same. [29] For the reasons discussed above, I do not consider that the lack of evidence provided by the body corporate was irrelevant to the decision. [30] While the adjudicator noted the common law right to exclude other persons, that is not entirely irrelevant to a consideration of whether the Act in question should be construed as abrogating that right. The adjudicator did then go on to consider s 163 and whether the applicant had proved some right of entry under that section. His reference to that right and to the decision of Kuru therefore did not lead him into error. Failure to consider relevant matters [31] The body corporate contends that the adjudicator failed to consider the body corporate’s evidence about its intention in seeking to enter Mr and Mrs Cox’s lot – that is, its desire to investigate whether work which it was authorised or required to carry out was necessary; and the adjudicator did not take into account an admission by the respondents that they had carried out some sort of alterations to the interior of their lot. -- 7 of 11 -- 8 [32] As discussed above, the intention of the body corporate is relevant, but in order to satisfy the adjudicator that there was a reasonable ground for that desire, some evidence of the basis for needing to determine whether work was authorised or required is necessary. [33] The adjudicator did note that the Coxs had admitted that they had done some works but denied that those works were structural or required anyone’s authorisation. He therefore took that into account. But in any event the admission was simply that they had undertaken some work, not that they had undertaken any structural works. It did not take the matter anywhere. Failure to provide proper reasons [34] The body corporate contends that the adjudicator’s decision does not reveal why he came to the view that the body corporate bore an onus to produce evidence that the respondents had made structural alterations to their lot. [35] In my view, the reasons demonstrate that the adjudicator did not consider that he could be satisfied that there were reasons to grant the order being sought in the absence of any evidence at all. That is a sufficient explanation of the requirement for evidence. Failure to investigate/natural justice [36] The body corporate notes that the adjudicator had a statutory duty to investigate the application pursuant to ss 269 and 271 of the Act. It contended that he was required to take a proactive approach to the dispute and the factual basis for it and that, if he had a concern about some matter, he should have undertaken further investigation in order to properly determine it. The body corporate contends that, as it had told the adjudicator that it had “irrefutable evidence” from police officers that the respondents had made structural alterations to their lot, the adjudicator should have asked what that evidence was, or at least given the body corporate an opportunity to provide the evidence it claimed to have, rather than dismissing the application for lack of evidence. [37] The body corporate relies upon three cases for its proposition that the adjudicator failed to carry out his statutory function of investigating the application before him. [38] In Hablethwaite v Andrijevic,4 Jerrard JA agreed with the District Court judge that an adjudicator is not obliged to seek clarification or further information from a party once that party has responded, apparently sensibly, to an invitation to make submissions to the adjudicator, and it is entirely reasonable for an adjudicator to limit investigations to inviting interested parties to make written submissions (at [17]). His Honour considered that the adjudicator had satisfied the duty to investigate the application by relying on the written submissions made to the Commissioner. 4 [2005] QCA 336. -- 8 of 11 -- 9 [39] In the same case, Keane JA noted that there was no suggestion by the applicants that they had sought to make submissions to the adjudicator but were denied the opportunity to do so. The applicants had been invited to make a written submission that would be considered by the adjudicator and it was reasonable for the adjudicator to expect that they would take that opportunity to put forward submissions. In choosing to make no submission beyond that which they made, the applicants themselves determined the extent to which they sought to be heard by the adjudicator. His Honour noted that it is a rule of natural justice that a person should be afforded the opportunity to be heard before a decision is made against him or her, but such an opportunity was obviously afforded to the applicants in that case when they were invited to make submissions. The adjudicator was not required to do anything more. [40] In Grut-Mackay v Cherwood Lodge,5 McGill SC, DCJ said (at [21]) that, where there is some lack of clarity, and perhaps some questions left unanswered, by an expert report tendered in evidence, then rather than simply rejecting the application on the basis that the evidence in support of it was inadequate, the adjudicator should have drawn the deficiencies to the attention of the applicant so as to give the applicant the opportunity of putting further material before the adjudicator. His Honour noted that the procedure of adjudication was an inquisitorial one rather than an adversarial one and the adjudicator’s obligation was to investigate. He said that that involves a proactive approach to the dispute and the factual basis for it, rather than merely a reactive response, and therefore the adjudicator terminated the investigation prematurely in that case. [41] Grut-Mackay was discussed by Mr Dorney QC (as his Honour then was) in Cox v Body Corporate for Grand Pacific Resort.6 Mr Dorney said it was not his understanding of Grut-Mackay that the principle to be extracted was that, in every case where the adjudicator has some doubt about the material, the adjudicator is obliged to investigate further or otherwise there may be an error of law. The principle is much narrower. If the evidence being examined contains some relevant evidence, it is an error for the adjudicator to treat that evidence as not providing any evidence without also investigating the matter further before rejecting that evidence. It is one thing to reject, improperly, some relevant evidence as being inadequate when there is some evidence showing a basis for adequacy and when the use of investigative powers under a general obligation to investigate might resolve the matter. It is completely different to say that there is some principle that where further investigations could have been made, but were not, there is necessarily an error of law in the approach of the adjudicator to the resolution of a question of fact. It is more a question of whether there is, or is not, an absence of logically probative evidence (perhaps as a result of a choice by the adjudicator to refrain from further investigation). His Honour also noted cases in which it was held that failure to answer a letter (or, I interpolate, a submission) may amount to an admission if there are circumstances which render it more probable that a person who denied 5 [2004] QDC 229. 6 [2007] QCCTBCCM 001. -- 9 of 11 -- 10 the assertion made against him in the letter (or submission) would answer those assertions than that he would not.7 Mr Dorney noted that what those cases establish is that, in particular circumstances of a civil proceeding, which may well extend to an administrative inquiry, the decision maker can rely upon what might be reasonably expected of persons by way of response to assertions made, particularly where directed against them personally. [42] I agree with Mr Dorney’s summary of the relevant principles. In this case, they raise two questions: first, whether there was some logically probative evidence before the adjudicator which, if inadequate, should have led him to investigate further; and second, whether the adjudicator was entitled to expect that, if the body corporate had evidence, it would produce it in the face of assertions that it had no probative evidence. [43] As to the first of these questions, in its submissions attached to the application the body corporate made assertions that it had obtained evidence of structural alterations to lot 115. However, it did not provide that evidence to the Commissioner or the adjudicator. There was no logically probative evidence before the adjudicator which he was required to investigate further if it appeared to be inadequate. [44] As to the second question, the material before the adjudicator discloses that the following occurred: a) on 4 October 2010, the body corporate filed its adjudication application, containing detailed reasons why the order sought should be made; b) on 18 November 2010, Mr and Mrs Cox filed (and apparently served on the body corporate) a BCCM form 12 requiring information from the body corporate, in which they requested copies of all evidence that the body corporate had that their apartment was in breach of the Grand Pacific Resort by-laws and or council laws or regulations; it appears that the body corporate did not provide any information in response to that request; c) on 14 December 2010, Mr and Mrs Cox filed their submissions in response to the application; d) on 21 December 2010, the Commissioner forwarded a copy of submissions by Mr and Mrs Cox to the body corporate and requested any response by 12 January 2011; the letter enclosing the submissions informed the body corporate that its reply must be limited strictly to matters canvassed or issues raised in submissions and should not raise new material or issues; e) on 18 January 2011, the body corporate informed the Commissioner that it would not make a response to the submissions of Mr and Mrs Cox; f) on 20 January 2011, the Commissioner informed the body corporate (and presumably Mr and Mrs Cox) that the matter had been referred 7 For example, Thomas v Hollier (1984) 156 CLR 152, at 157. -- 10 of 11 -- 11 to an adjudicator who would consider the application, submissions and response to submissions to determine whether the matter required further investigation; the letter said that the Commissioner would contact the body corporate again if anything further was required; g) on 28 January 2011, the adjudicator published his decision. [45] In their submissions, Mr and Mrs Cox noted on several occasions that the body corporate had not produced any evidence to support its assertions. [46] The body corporate, in the face of the submissions by Mr and Mrs Cox, did not produce any evidence. [47] Although the adjudicator did not specifically request the body corporate to provide the evidence to which it had referred, in the face of the submissions from Mr and Mrs Cox to the effect that the body corporate had produced no evidence in support of its assertions, one might have expected the body corporate to produce that evidence in submissions in reply. [48] In these circumstances, it seems to me that the body corporate was afforded natural justice and, for reasons best known to itself, decided not to submit any relevant evidence to the adjudicator. It was afforded sufficient opportunity to present its case as it wished and the adjudicator was not required (although he was entitled) to investigate further. [49] I therefore do not consider that the adjudicator failed to carry out his obligation to investigate or failed to afford the body corporate natural justice. Conclusion [50] In the circumstances, the body corporate has failed on each of its grounds of appeal and the appeal should be dismissed. -- 11 of 11 --