Crowbay P/L & Anor v Body Corporate for “Southbank Chambers” [2007] QCA 453

SUPREME COURT OF QUEENSLAND CITATION: Crowbay P/L & Anor v Body Corporate for “Southbank Chambers” [2007] QCA 453 PARTIES: CROWBAY PTY LTD ACN 010 818 390 (first appellant/first applicant) DIANE MARIE WRIGHT (second appellant/second applicant) v BODY CORPORATE FOR “SOUTHBANK CHAMBERS” CTS 25675 (respondent/respondent) FILE NO/S: Appeal No 4020 of 2007 DC No 3182 of 2006 DIVISION: Court of Appeal PROCEEDING: Application for Leave s 118 DCA (Civil) ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 21 December 2007 DELIVERED AT: Brisbane HEARING DATE: 10 October 2007 JUDGES: McMurdo P, Holmes JA and Jones J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDER: Application for leave to appeal dismissed with costs CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – WHAT IS – GENERALLY – where the respondent is the body corporate for a community title scheme in respect of four lots in a commercial building – where the applicants have owned Lot 3 since 2003 – where the use of common property at the rear of the building was the subject of a dispute before an adjudicator – where the adjudicator made a determination under s 289(2) of the Body Corporate and Community Management Act 1997 (Qld) (the Act) – where the District Court upheld the decision of the adjudicator – whether the learned District Court judge erred in the construction of s 60 of the Act and made wrong findings in consequence APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – PARTICULAR CASES INVOLVING ERROR OF LAW – FAILURE TO GIVE -- 1 of 9 -- 2 REASONS FOR DECISION – ADEQUACY OF REASONS – where the applicants contend that the learned District Court judge did not provide sufficient reasons for her conclusions on the interpretation of s 60 of the Act – whether the learned District Court judge failed to give adequate reasons for her conclusions APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – PARTICULAR CASES INVOLVING ERROR OF LAW – DENIAL OF NATURAL JUSTICE – where a letter from the Brisbane City Council expressing no opinion on the matter was sent to the respondent’s solicitors on 8 September 2006 – where the adjudicator at first instance noted the contents of the letter – where the applicant contends that the undisclosed receipt of the letter constituted a breach of natural justice – whether the learned District Court judge erred in failing to set aside the adjudicator’s decision as made in breach of the rules of natural justice Body Corporate and Community Management Act 1997 (Qld), s 52, s 59, s 60, s 289(2) Land Title Act 1994 (Qld), s 115K, s 115L Re JRL; Ex parte CJL (1986) 161 CLR 342, considered Kanda v Government of Malaya [1962] AC 322, considered COUNSEL: M K Conrick for the applicant D J Kelly for the respondent SOLICITORS: D M Wright & Associates for the applicant Redchip Lawyers for the respondent [1] McMURDO P: The application for leave to appeal should be refused with costs for the reasons given by Holmes JA. [2] HOLMES JA: The applicants seek leave to appeal from a decision of a District Court Judge upholding an adjudicator’s determination made under s 289(2) of the Body Corporate and Community Management Act 1997 (Qld). The respondent is the body corporate for a community title scheme in respect of four lots in a commercial building. The applicants have owned Lot 3 since 2003. At the rear of the building is common property; its use was the subject of the dispute before the adjudicator. The appeal for which the applicant sought leave raised, in essence, three grounds: that the learned judge below had erred in construction of s 60 of the Body Corporate and Community Management Act and had made wrong findings in consequence; that she had not given adequate reasons for her conclusions relating to s 60; and that she had erred in failing to set aside the adjudicator’s decision as made in breach of the rules of natural justice. The relevant legislative provisions [3] Under the Body Corporate and Community Management Act, a community management statement is integral to a community title scheme. It performs a -- 2 of 9 -- 3 number of functions, which include identifying the subject property, providing schedules of lots which specify the entitlements and contributions applicable to each, and setting out the by-laws by which the community management scheme is administered and regulated.1 A community management statement has no effect unless it is recorded by the Registrar of Titles under s 115K of the Land Title Act 1994 (Qld).2 However, the Registrar is under no obligation to examine a community management statement to ensure its compliance with the statute’s requirements, and recording does not lead any presumption that the statement is valid or enforceable.3 [4] Section 60(1) of the Body Corporate and Community Management Act precludes, with certain exceptions, the recording of a community management statement without a “community management statement notation”: an endorsement by local government to the effect that it has noted the community management statement. It is one of the exceptions to that requirement which has presented difficulty here. At the time when this community management statement was recorded, s 60(6) provided: “(6) Despite subsection (1), a new community management statement may be recorded without the endorsement on it of a community management statement notation if— (a) there is no difference between the existing statement for the scheme and the new statement for any issue that the local government could have regard to for identifying an inconsistency mentioned in subsection (4) …” [5] Subsection 60(4) provided: “(4) For a community titles scheme intended to be developed progressively, the local government is not required to endorse the notation on the proposed statement if there is an inconsistency between a provision of the statement and— (a) a lawful requirement of, or an approval given by, the local government under the Planning Act; or (b) the local government’s planning scheme; or (c) a lawful requirement of, or an approval given by, the local government under its planning scheme.” [6] The language of s 60(6) does not make for an easy incorporation of the instances identified in s 60(4); but, in essence, the first subsection is directed at establishing whether any changes as between successive community management statements may have town planning implications to which the local government’s attention should be drawn. The community management statements [7] The first community management statement for this community title scheme was recorded in 1998. Its by-laws entitled the owners and occupiers of the lots in the scheme to “exclusive use and enjoyment for car parking” of areas identified on a 1 See ss 66 and 46. 2 Sections 52 and 59 Body Corporate and Community Management Act. Section 115L(3) of the Land Title Act. 3 Section 115L(2) Land Title Act. -- 3 of 9 -- 4 schedule (Schedule E) and a sketch plan. The areas so identified were 10 designated car parks in the common property at the rear of the building. Each lot holder had two car spaces. That community management statement was replaced by another in 2000,4 the relevant by-law of which (By-law 19) did not alter the parking arrangement. However, Schedule E was changed slightly in its form and now bore a sub-heading “Exclusive use – car spaces Lots affected:” The body of Schedule E then identified the lots and the exclusive use area allocated to each by reference to the sketch plan. [8] On 22 November 2002, the respondent body corporate approved another community management statement. By-law 19 was amended so as to alter the way in which the common property was allocated into exclusive use areas. Instead of one general area with designated car parks, each occupier was allocated that part of the common property which abutted the rear of the unit he or she occupied, so that each now had the use of a quarter of the common property in the form of a long narrow strip of land. No reference was now made to car parking. Instead, the by- law provided: “19. EXCLUSIVE USE (a) The Owner holding a grant of exclusive use shall be responsible at the Owner’s expense for the performance of the duties of the Body Corporate as defined in Section 123(2) of the Body Corporate and Community Management (Standard Module) Regulation 1997. (b) The Owner holding a grant of exclusive use under the by-law may authorise the reallocation of any such exclusive use area from that Owner to any other Owner of a Lot in the community titles scheme subject to notice in writing to the Body Corporate from both Owners. (c) Owners may only use an exclusive use area for the purposes permitted by the town planning scheme of the local government and any other federal, state or municipal authorities having jurisdiction in that regard and shall ensure that all necessary consents, permits and approvals are obtained before commencing such use”. Schedule E, however, remained unaltered. The new community management statement was recorded on 11 July 2003. [9] The third community management statement did not contain any community management statement notation. In 2006, conflict arose between the lot holders when resolutions (against which the applicants voted) were passed permitting the holder of Lot 1 to make certain alterations to its premises. The effect was to allow Lot 1’s owner to use its exclusive use area as an adjunct to a bar it was proposing to establish on its premises, for which it had lodged a development application with the Brisbane City Council. The dispute was referred to an adjudicator for resolution under Part 9 of the Act, the applicants contending that the resolutions relating to the use of the exclusive use area and the lot itself for the purposes of the bar were null 4 Section 54 of the Act permits the recording of a new community management statement. -- 4 of 9 -- 5 and void, because the community management statement on which the resolutions were based was itself invalid for non-compliance with s 60. They sought declarations accordingly. The adjudicator’s decision [10] The applicants’ argument before the adjudicator (to which they adhere) was that the exception contained in s 60(6) did not apply, because the community management statement had altered the car parking arrangements so as to contemplate tandem parking in each of the exclusive use areas. That meant that cars had to reverse onto the lane at the rear of the property in order to leave it. Those changes raised issues of conflict with the Brisbane City Council’s Transport Access Parking and Servicing (TAPS) policy. The relevant parts of the TAPS policy were said to be ss 3.4, 6.2.1 and 6.8.1, which, respectively, regulated the construction of driveways so as to provide minimum site distances on egress; regulated car park design so as to provide for appropriate site distances in areas of potential pedestrian and vehicle conflict; and required a minimum width of 2.3 metres in at least a quarter of the available car park spaces. [11] The adjudicator had the difficult task of construing s 60. She identified two possible interpretations. The first was that s 60(6) required that regard be had to inconsistencies of the kind identified in ss 60(4)(a), (b) and (c), whether or not the community title scheme was “intended to be developed progressively”. The second was that the reference to “an inconsistency mentioned in ss 60(4)” embraced the whole of sub-s (4), so that it applied only to schemes “intended to be developed progressively”; since this was not such a scheme, no relevant inconsistency would arise. [12] The adjudicator expressed a preference for the second interpretation, but made findings for the purposes of the first: “If I were to apply the first interpretation, I am not entirely persuaded that a relevant issue exists. While the applicants suggest that the Third CMS ‘contemplates tandem parking’, I am not of the view that the Third CMS necessarily contemplates parking in the exclusive use areas at all. By-law 19 [does] not indicate the exclusive use areas are intended for parking or for any other specific purpose. A plain reading of By-law 19 suggests it is for each owner to determine how and for what purpose their exclusive use areas is to be used, subject to them ensuring that any use complies with the relevant planning scheme and that they have all relevant approvals. Because the new By-law 19 does not specifically contemplate car parking, it arguably does not specifically contemplate tandem parking or any other particular form of parking arrangement.” She continued: “Moreover, the applicants have provided no expert advice, other than their own opinion, that By-law 19 is contrary to a requirement or approval under the Planning Act or BCC planning scheme. Their claim is not supported by any opinion from an authority in planning law, or any evidence that the BCC considers that the Third CMS parking requirements are contrary to BCC requirements. They have also provided no evidence of the original development approval for -- 5 of 9 -- 6 the scheme and any requirements or approvals provided in respect of parking.” [13] The adjudicator reached the view that no notation was required. Giving her reasons in point form, she dealt first with the second possible interpretation of s 60(6)(a), and then went on to say: • “If the first interpretation of subsection (6)(a) is correct, the applicants have not sufficiently convinced me that the difference in the two CMS is an issue that the BCC could consider. • I consider that there is merit in the argument that the provision of clause (3) of By-law 19 provides coverage to the BCC for any issues arising under the planning provisions.” She dismissed the application to invalidate the statement and the resolutions. [14] In the course of giving her determination, the adjudicator noted the content of a letter dated 8 September 2006 from the Brisbane City Council. The solicitors for the owners of Lot 1 had written to the Council asking for an opinion as to whether it considered there was a requirement that the community management statement be endorsed. Originally the Council had indicated that it would give an opinion, but it advised in the letter of 8 September that it considered it inappropriate to do so: the query concerned a matter under the Body Corporate and Community Management Act, it related to an already recorded community management statement, and any debate about whether the community management statement was valid and enforceable without a local government notation was up to the Body Corporate and did not concern the Council. The adjudicator expressed her regret that no opinion was forthcoming on whether the changes in the third community management statement were inconsistent with the planning scheme. The appeal to the District Court [15] A person aggrieved by an adjudicator’s order may appeal to the District Court, but only on a question of law.5 On the District Court appeal, the parties agreed that the Certificate of Readiness they had filed identified the issues. Those issues included two which remain relevant on this application: whether the adjudicator had erred by concluding that a difference between community management statements for the purposes of s 60(6)(a) required an actual inconsistency, as opposed to a difference which could give rise to a relevant issue of inconsistency; and whether she had failed to observe the rules of natural justice. (In investigating an application the adjudicator is not bound by the rules of evidence but must observe natural justice.)6 The relief sought was that the appeal be allowed, the adjudicator’s decision set aside and orders substituted declaring the various resolutions and the community management statement null and void. [16] On appeal, the applicants made these arguments. The adjudicator’s preferred interpretation of s 60(6)(a) was wrong. Although she had posed the correct question for the alternative interpretation, namely, “was there a difference between the third CMS and the second CMS for an issue that the local government could have regard to for identifying such an inconsistency?”, she had in fact addressed whether the 5 Section 289(2). 6 Section 269. -- 6 of 9 -- 7 community management statement was inconsistent with the terms of the Town Planning Scheme requirements or approval. Car parking arrangements were an issue which fell within s 60(4). The adjudicator’s receipt of the letter from the solicitors for Lot 1’s owner, without advising the applicants, gave rise to a reasonable apprehension of bias. [17] The learned District Court judge (consistently with a concession by the respondent) concluded that the second interpretation of s 60(6)(a) considered by the adjudicator was not open. Adopting the first interpretation, she decided that the adjudicator’s approach to s 60(6) was correct. As to the question of whether the adjudicator’s decision had been made in breach of the rules of natural justice, her Honour observed that, while it might have been preferable had the letter been disclosed, it did nothing more than confirm the Council’s position that resolution of the notation question was best left to the adjudicator. Its receipt did not give rise to any reasonable apprehension of bias. The District Court judge’s “findings” [18] On this application, the applicants argued that the District Court Judge had wrongly found that the difference between the second and third community management statements was that the third community management statement did not limit the use of exclusive use areas to car parking. The applicants sought to argue that the finding was wrong, because the sub-heading to Schedule E still referred to car parking; the relevant difference, it was said, was the introduction of new car parking arrangements, which conflicted with the provisions of the TAPS policy. [19] But her Honour’s reference to the extent of the difference appears under the heading “Background Facts”. It is no more than a reiteration of what the adjudicator had found. The learned judge did not make the finding; she could not have been asked to do so on an appeal limited to questions of law, and nothing in the Certificate of Readiness, said to identify the issues, suggests that she was. The content of the respective community management statements involved, in this case, no construction question. It was a matter of fact, as was establishing in what respect they differed. The adjudicator having made the finding of fact as to what the difference between the statements was - that the amended By-law 19 did not indicate the exclusive use areas were intended for parking or for any other specific purpose - no appeal lay from it; and it is certainly not open for agitation in this Court. The construction of s 60(6) [20] The question of law for the District Court judge was as to the correctness of the adjudicator’s application of s 60(6). It was no longer contended that the second interpretation was sustainable, so the controversy was limited to whether her approach to the combined operation of ss 60(4) and (6) was correct. [21] The relevant portion of her Honour’s judgment is as follows: “While the argument put forward by Counsel for the appellant, at first blush, certainly holds some attraction, I am unable to accept that submission. It ignores in my mind, the true meaning of s 60(6) and s 60(4) and its’ intended effect, particularly when regard is had to s 60 as a whole. In this instance, clause 3 of by-law 19 specifically states that owners may only use an exclusive use area for the purposes permitted by the town planning scheme of the local -- 7 of 9 -- 8 government and other relevant bodies and shall ensure that all necessary consents, permits and approvals are obtained before commencing such use. The adjudicator was of the view that clause by-law 19 therefore covered the situation, whether it was accepted or not, that the use of that area might include tandem car parking arrangements, a matter relevant under the local government town planning scheme, clause (3) of by-law 19 would cover that situation together with any other situation where the proposed use might be of a kind that a relevant government body could have regard to for identifying whether there was an inconsistency between that provision in the 3rd CMS and any of the matters set out in s 60(4)(a), (b) or (c). While there is no case authority relating to the interpretation of s 60 of the Act which may have been of assistance, I am of the view that the adjudicator was correct in her approach to s 60 and as such, did not fall into error as asserted.” [22] The thrust of that passage seems to be that the adjudicator was correct in her conclusion that Clause 3 of By-law 19 (by restricting use of exclusive use areas to purposes permitted by the town planning scheme for which any necessary consents, permits or approvals had been obtained) precluded the arising of any inconsistency, and hence of any s 60(4) issue. The applicants say, with some justice, that the conclusion suggests a focusing of attention, not on whether there were relevant differences between the two community management statements which could give rise to s 60(4) issues, but on whether inconsistency had been precluded by the effect of that clause. [23] By-law 19(3) could not, in my view, be conclusive against any possibility of an inconsistency of the s 60(4) kind. Whatever the sub-clause’s practical effect, it was still possible that other parts of the new statement might raise an issue of inconsistency meeting one of the s 60(4) descriptions. In concluding otherwise, the learned judge and the adjudicator were, in my respectful opinion, in error. But the adjudicator’s view in this regard was independent of, and did not detract from, her earlier conclusion that she was not satisfied that any relevant difference had been identified. In making that finding, she correctly directed her attention to what the differences between the statements were, and whether they were such as to raise a s 60(4) point. [24] Nor do I think that the reference to the applicants’ having identified no conflict suggests that the adjudicator departed from that approach. It is true that the applicants were not required to identify inconsistency, as opposed to a difference between the statements in respect of an issue relevant to identifying inconsistency; but it is hard to see how the latter could be achieved without evidence as to what might give rise to an inconsistency. The observation as to the absence of that evidence does not demonstrate error. The failure to give adequate reasons [25] The applicants complained that the learned District Court Judge had not provided sufficient reasons to explain why she preferred the adjudicator’s interpretation of s 60 or why she had dismissed their argument that the adjudicator erred in approaching s 60 as if it required an actual inconsistency between the new statement and the relevant town planning scheme. There may be something to those complaints, but given the conclusion that the adjudicator made the necessary finding -- 8 of 9 -- 9 in accordance with the requirements of s 60(6)(a), they would not justify the granting of leave to appeal. The natural justice argument [26] In respect of the natural justice argument, counsel for the applicants relied on statements in Kanda v Government of Malaya7 and Re JRL; Ex parte CJL.8 In the first, Lord Denning, delivering the Privy Council’s opinion, said: “If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them … It follows, of course, that the judge or whoever has to adjudicate must not hear evidence or receive representations from one side behind the back of the other. The court will not enquire whether the evidence or representations did work to his prejudice. Sufficient that they might do so.”9 [27] In Re JRL, Mason J had this to say: “[T]he receipt by a judge of a private communication seeking to influence the outcome of litigation before him places the integrity of the judicial process at risk. A failure to disclose that communication will seriously compromise the integrity of that process. On the other hand, although the terms of a subsequent disclosure by the judge of the communication and a statement of its effect in some, perhaps many, situations will be sufficient to dispel any reasonable apprehension that he might be influenced improperly in some way or other, subsequent disclosure will not always have this result. The circumstances of each case are all important. They will include the nature of the communication, the situation in which it took place, its relationship to the issues for determination and the nature of the disclosure made by the judge.”10 [28] Here, as the learned District Court Judge observed, it would have been better had the adjudicator informed the applicants that she had received the letter before proceeding to give her decision. But the Council letter did no more than decline to express an opinion. It did not amount to evidence or statements affecting the applicants, and it did not seek to influence the outcome of the litigation. The concerns identified in Kanda and Re JRL do not arise. Her Honour was right to conclude that there was no breach of natural justice in an undisclosed receipt of the letter. [29] The application for leave to appeal raises no error of law warranting the intervention of this Court. I would dismiss it with costs. [30] JONES J: For the reasons expressed by Holmes JA I believe the application for leave to appeal should be dismissed. 7 [1962] AC 322. 8 (1986) 161 CLR 342. 9 [1962] AC 322 at 337. 10 (1986) 161 CLR 342 at 351. -- 9 of 9 --