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Wheeler and Smith v Body Corporate for Calypso Towers[2016] QCATA 66

Wheeler and Smith v Body Corporate for Calypso Towers[2016] QCATA 66

CITATION:

Wheeler and Smith v Body Corporate for Calypso Towers [2016] QCATA 66

PARTIES:

Robert Wheeler and Michelle Smith

(Applicant/Appellant)

v

Body Corporate for Calypso Towers CTS 27849

MW Stone Pty Ltd

(Respondents)

APPLICATION NUMBER:

APL292-15

MATTER TYPE:

Appeals

HEARING DATE:

On the papers

DECISION OF:

Senior Member Stilgoe OAM

Member Traves

DELIVERED ON:

3 May 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The appeal is dismissed.

CATCHWORDS:

APPEAL – BODY CORPORATE – Appeal from decision of Adjudicator made under the Body Corporate and Community Management Act 1997 – exclusive use areas – where former owners of lots entered into reallocation agreement – where body corporate consented to the reallocation agreement but request to lodge new community management statement incorporating the agreement not recorded

Body Corporate and Community Management Act 1997 (Qld), s 12, ss 46, 54, 66, 170, 171, 174, 176, 276, 289, 294, Schedule 5, Schedule 6

Land Title Act 1994 (Qld), ss 37, 49, 115L, 115K

Albrecht v Ainsworth [2015] QCA 220

Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300

Bossichix Pty Ltd v Martinek Holdings Pty Ltd  [2009] QCA 154

Cominos v Cominos (1972) 127 CLR 588

Crowbay Pty Ltd v Body Corporate for “Southbank Chambers” [2007] QCA 453.

Double Bay Properties v The Body Corporate for The Caribbean Kawana Island [2015] QCATA 30

Hannah v TW Hedley (Investments) Pty Ltd [2010] QCA 256

Talga Ltd v MBC International Ltd (1976) 133 CLR 622

APPEARANCES

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

  1. [1]
    Robert Wheeler and Michelle Smith own Lot 73 in Calypso Towers CTS 27849.
  2. [2]
    In 2006, the then owners of Lot 73 and Lot 105 agreed that Lot 73 should transfer its car park and storage space to Lot 105 and that Lot 105 would transfer its car park to Lot 73. The body corporate approved the agreement in 2006 but a new community management statement (CMS) was not registered.
  3. [3]
    MW Stone Pty Ltd bought Lot 105 in 2010. Mr Wheeler and Ms Smith bought Lot 73 in November 2014.
  4. [4]
    It was not until Mr Wheeler and Ms Smith purchased Lot 73, that the omission to record a new CMS, reflecting the 2006 agreement, was discovered. Both parties claim to be entitled to the car park and storage space transferred by agreement to Lot 105. The dispute before the adjudicator concerned whether the body corporate could be ordered now to record the new CMS reflecting the agreement made between lot owners in 2006.
  5. [5]
    The determination by the adjudicator required the body corporate to prepare a new CMS reflecting the agreement entered into between the previous owners of lots 105 and 73, extended the time for lodging a request to record it and required the body corporate to lodge the request.[1]
  6. [6]
    Mr Wheeler and Ms Smith have appealed the adjudicator’s order. A person aggrieved by an adjudicator’s order may appeal to the Appeal Tribunal, but only on a question of law.[2] In deciding an appeal, in addition to its jurisdiction and powers under the QCAT Act, the Tribunal may also exercise all the jurisdiction and powers of an adjudicator under the Body Corporate and Community Management Act 1997 (Qld) (the Act).[3]
  7. [7]
    There are four grounds of appeal:
    1. That the notification of the transposition in 2006 was not valid under s 176 of the Act;
    2. That the adjudicator’s decision breaches s 171 of the Act;
    3. That the adjudicator’s decision was not ‘just and equitable’;
    4. That the adjudicator’s decision was incorrect at law as it failed to take into account circumstances that were relevant to the application of the law and was inconsistent (with the relevant authorities).

Ground One: The notification of the transposition in 2006 was not valid under s 176 of the Act.

  1. [8]
    Mr Wheeler and Ms Smith argued before the adjudicator that the transposition in 2006 was not valid under s 176 of the Act. The adjudicator found to the contrary.
  2. [9]
    Presumably, by resubmitting their arguments, Mr Wheeler and Ms Smith submit that the adjudicator erred in law. They submit that s 176 did not apply because it requires a ‘further allocation’ to have taken effect before the body corporate can lodge a request to record a new CMS. They argue that no such agreement was made, and if it was, that it had not taken effect so as to impose an obligation on the body corporate to lodge a request to record a new statement.
  3. [10]
    In particular, they submitted that s 176 was not enlivened because the original owner of Lot 73 never provided a notice of agreement which could be lawfully considered a ‘taking effect of a further allocation’.
  4. [11]
    It is necessary to set out the transactions in some detail before we can consider whether Mr Wheeler and Ms Smith are correct in their submissions.
  5. [12]
    Mr and Mrs Evans (the ‘original owners’ of Lot 73) wanted to sell Lot 73 and buy Lot 105. They also wanted to keep the carpark and storage space that came with Lot 73 (C111 and S30). Mr O'Hara, the owner at the time of Lot 105, which came with its own carpark (C31) but no storage space, agreed with the Evans to an exchange of the exclusive use rights attached to their respective lots.
  6. [13]
    On 12 September 2006, the Evans entered into a contract to purchase Lot 105. This contract was subject to them entering into a contract for sale of Lot 73 no later than 60 days from the contract date and subject to completion of that contract no later than 90 days from the contract date.
  7. [14]
    On 16 September 2006, the Evans entered into a contract of sale of Lot 73 with Mr McKnoulty. That contract contained a special condition that the exclusive use of car park C111 and storage area S30 would be transferred to Lot 105 and that the contract was conditional on the Evans obtaining the approval of the body corporate and a new CMS being registered. It also provided that if the Evans were unable to obtain the approval and subsequent registration of the new CMS prior to settlement they could terminate the contract without penalty.
  8. [15]
    On 27 September 2006, the then owners of Lot 73 and Lot 105 executed an authority for the transposition of carpark C111 and storage space S30 (which used to attach to Lot 73) with carpark C31 (which used to attach to Lot 105).
  9. [16]
    The reallocation agreement provided:

The Owners of Lot 105 and Lot 73 Calypso Towers have agreed to the transposition of the exclusive use of Carpark C31, currently attached to Lot 105 to Lot 73 upon the basis that Carpark C111 and Storage Space S30, currently attached to Lot 73 are to be transferred to Lot 105 and a new Community Management Statement to be prepared by Solicitors for the Owners of Lot 73.

  1. [17]
    On 10 October 2006, the body corporate approved the transposition between the original owners of Lots 73 and 105 by resolution without dissent.
  2. [18]
    The body corporate prepared and endorsed a new CMS reflecting the reallocation agreement but a request to record it was not lodged.
  3. [19]
    On 6 March 2010, MW Stone purchased Lot 105 from the Evans. MW Stone believed Lot 105 came with carpark C111 and storage space S30. This was because it was on the Body Corporate Disclosure Statement dated 3 March 2010, it was on the PAMDA Form 22a dated 6 July 2010 and the real estate agent had represented that the Lot included a carpark and storage space. MW Stone has enjoyed exclusive use of C111 and S30 since its purchase of Lot 105 in 2010.
  4. [20]
    On 14 October 2014, Mr Wheeler and Ms Smith signed a contract to buy Lot 73. On 25 October 2014, Mr Wheeler inspected Lot 73. He noticed most units had a storage space. He made enquiries of the real estate agent but was told that Lot 73 did not have a storage space.  The contract did not provide that the car park or storage space was included and the Owner’s Information sheet attached to the contract dated 14 October 2014 had a column headed Car Space and Storage Space, which was left blank.
  5. [21]
    On 29 October 2014, Mr Wheeler and Ms Smith received the results of their solicitor’s searches including a CMS recorded with the Land Registry on 19 September 2013 which indicated Lot 73 was entitled to S30 storage space and the C111 car park.
  6. [22]
    The contract became unconditional on 3 November 2014.
  7. [23]
    On 5 November 2014 Mr Wheeler and Ms Smith contacted Mr Dickinson, a representative of Mantra, the service contractor and letting agent, requesting a photo of the storage space for their records. Mr Dickinson advised that Lot 105 was entitled to use the space but that the body corporate records had not been updated to reflect this.
  8. [24]
    Settlement of Lot 73 took place on 19 November 2014.
  9. [25]
    The next day Mr Wheeler and Ms Smith contacted MW Stone and, a few days later, the original owners of Lot 73, the Evans. On 24 November 2006, Mr Wheeler and Ms Smith received a copy of the reallocation agreement and new CMS.

What constitutes a ‘further allocation?’

  1. [26]
    Section 176(1) provides:

Within 3 months, or a longer time stated in an order of an adjudicator under the dispute resolution provisions, after the taking effect of a further allocation, the body corporate must lodge a request to record a new community management statement showing all allocations currently in place when the body corporate consented to the recording of the new statement.

  1. [27]
    Further allocation’ means ‘agreed allocation’.[4]Agreed allocation’ is defined in Schedule 6 by reference to s 171(1)(b)(ii).
  2. [28]
    Section 171(1)(b)(ii) provides, relevantly, that the common property to which an exclusive use by-law for a community titles scheme applies must be:
    1. (a)
      specifically identified in the by-law; or
    2. (b)
      allocated –
      1. by a person (who may be the original owner or the original owner’s agent) authorised under the by-law to make the allocation (an authorised allocation); or
      2. by 2 or more lot owners under a reallocation agreement (an agreed allocation).
  3. [29]
    The issue is whether there was an ‘agreed allocation’ between the relevant owners of lots 73 and 105 within the meaning of s 171(1)(b)(ii). 
  4. [30]
    A ‘reallocation agreement’ is defined in Schedule 6 to mean:

An agreement in writing under which 2 or more owners of lots for which allocations are in place under an exclusive use by-law agree to redistribute the allocations between the lots.

  1. [31]
    In the circumstances, each of two lot owners redistributed to the other their respective allocations. 
  2. [32]
    Mr Wheeler and Ms Smith submit that ‘agreement’ in this context must mean an unconditional one. We disagree. An agreement can include a conditional agreement. In any event, the agreement was not conditional.
  3. [33]
    The co-owner at the time of Lot 73, Mr Evans states, in his affidavit dated 17 November 2015 at [7]:

I intended for this reallocation agreement to take effect immediately. My consent to the reallocation agreement was not conditional in any respects, including on the successful settlement of the property under the First Purchase Contract or the First Contract of Sale.

  1. [34]
    The adjudicator found that this was a binding agreement. We agree. It is a binding agreement between two lot owners based on mutual promises, namely to transfer allocations to each other. It is irrelevant that the purchase of Lot 105 was made conditional on the sale of Lot 73 and that the sale of Lot 73 was made conditional on the seller obtaining the consent of the body corporate to the transfer of exclusive use allocations and the registering of the new community management statement. Not only were these conditions in different independent agreements, the Evans could waive those conditions. 

When does a reallocation agreement ‘take effect?’

  1. [35]
    Under s 174(1), an agreed allocation has no effect unless details of the allocation are given to the body corporate.
  2. [36]
    There are no other provisions which deal with the time from when an agreed allocation is to take effect. It is reasonable to infer from this that once details are provided, the allocation takes effect. The issue of consent is not relevant at this stage. Consent affects only whether a new CMS can be recorded.[5]
  3. [37]
    Mr Wheeler and Ms Smith submit that the transfer was to place at a future time and that the agreement could not therefore have “taken effect” until then. There is no requirement in the legislation that the redistribution of allocations under the agreement has to occur immediately or have occurred prior to notification to the body corporate of the agreement. Indeed, it is logical that the notification and approval by the body corporate to the transfer take place first.
  4. [38]
    In conclusion, we agree with the adjudicator’s conclusion that that the body corporate was required to lodge a request to record a new CMS once a binding agreement had been entered into and once details of that agreement had been notified to the body corporate. Both elements were satisfied in this case.

No error of law in relation to the pre-conditions to the application of s 176

  1. [39]
    We find no error of law inherent in the adjudicator’s determination that the agreement of 27 September 2006 was a reallocation agreement within the meaning of the Act.
  2. [40]
    As discussed above, all that needs to be satisfied in order for a “reallocation agreement” to exist is that there be an agreement between two lot owners for which allocations were in place under an exclusive use by-law and under which they agreed to redistribute the allocations between the lots.
  3. [41]
    Mr Wheeler and Ms Smith submitted that the exchange of exclusive use rights was conditional on the sale of Lot 105 to the owners of Lot 73. We do not agree. In our view it was not the transfer agreement that was conditional but the contract of sale of Lot 73 that was conditional on the transfer of the exclusive use entitlement to Lot 105.
  4. [42]
    Mr Wheeler and Ms Smith also submitted that there was no reallocation agreement because the transposition could not happen until some time in the future, that is, once the settlement of Lot 105 took place.
  5. [43]
    In our view, there is no legal force in this argument. The further allocation ‘takes effect’ once the details of it are given to the body corporate. This is implicit in s 174(1) which provides:

An authorised or agreed allocation has no effect unless details of the allocation are given to the body corporate.

  1. [44]
    There is no requirement in the Act that the transfer or redistribution be immediate.
  2. [45]
    Mr Wheeler and Ms Smith submit that the body corporate did not have notice that the Evans’ sales had been effected and, therefore, the assignment agreement was unconditional.
  3. [46]
    The body corporate did have notice that the sales had been effected; it is a normal part of conveyancing practice that the body corporate is notified of a new owner on settlement, if for no other reason than to update the records for billing purposes. The body corporate was given a copy of the agreement and passed a resolution consenting to it. Any argument that the body corporate needed further notification once the settlement of Lot 105 had occurred is a technical one and without merit. The body corporate was entitled to assume that the transfer would occur in accordance with the details of the unconditional agreement already notified to it.
  4. [47]
    Mr Wheeler and Ms Smith point out that there is a provision in the Act which states that, where there is inconsistency between an agreement reached at conciliation and the Act, the agreement is ineffective to the extent of the inconsistency.[6] Mr Wheeler and Ms Smith cannot rely on this provision to argue that the reallocation agreement was invalid. Firstly, the provision is limited in its terms to an agreement reached at conciliation. This agreement was not reached at conciliation. Secondly, the agreement is not inconsistent with the Act. As we have pointed out, the Act sets out a clear process for agreements about the reallocation of common property. The question for the adjudicator, and for us, is whether that process was followed. We have found that it was followed and that the adjudicator was correct in the conclusions drawn.
  5. [48]
    Mr Wheeler and Ms Smith also submit that, if the body corporate had acted against the Evans’ instruction and lodged the CMS even though the sale of the lots did not progress, there would have been legal action against the body corporate that would have been ‘undefendable’.
  6. [49]
    As we have already noted, the Evans wanted the reallocation regardless of the transfer of the lots, so the argument is an arid one. Further, the appeal tribunal is not inclined to deal with hypothetical situations. We have dealt with what, in fact, occurred and that is a sufficient answer to this ground of appeal.
  7. [50]
    We conclude that there has been no error of law demonstrated by this ground.

Ground Two: That the adjudicator’s decision breaches s 171 of the Act.

  1. [51]
    Mr Wheeler and Ms Smith argue that the adjudicator’s exercise of the power in s 276 was in breach of s 171. They argue that s 171 provides that an exclusive use by-law can only be changed with the written consent of the relevant lot owner, which, they say, was themselves. It follows, they say, that as they provided no consent, the order is invalid.
  2. [52]
    Section 171 is not relevant to the current owners of Lot 73 and, for that reason, there has been no error of law by the adjudicator in failing to refer to it in the decision under appeal. 
  3. [53]
    Under s 171, an exclusive use by-law may attach to a lot or stop applying to a lot only if the lot owner agrees in writing before the passing of the resolution without dissent consenting to the recording of the new CMS to either incorporate or not incorporate the by-law or the lot owner votes personally in the resolution.
  4. [54]
    The relevant exclusive use by-law was by-law 49. The exclusive use by-law provides, relevantly:

Each owner for the time being of a Lot in the Community Titles Scheme ….shall be entitled to the exclusive use for himself and his licensee of the car space or spaces, identified in Schedule E of the Community Management Statement  and delineated on plans 6894-104, 6894-105 and 6894-106 attached to the Community Statement, the identifying number or numbers of which shall be notified in writing ….to the body corporate within 12 months after the date of recording of the Community Management Statement. In respect of those spaces allocated pursuant to this By-law, the Committee hereby authorises to vary the allocations so made and to transpose spaces or any part of those spaces from one Lot to another Lot at any time and from time to time on the written request of the owners of the Lots involved.

  1. [55]
    There is an equivalent by-law in relation to storage spaces.
  2. [56]
    The reallocation agreement did not require a change to the exclusive use by-law, only to the details that were recorded in Schedule E to the CMS. There was, therefore, no need to comply with s 171.
  3. [57]
    In any event, the requirement to obtain the consent of the affected Lot owner applies to the lot owner immediately prior to the resolution without dissent consenting to the recording of the new CMS. That is, the relevant lot owners in 2006, not the current lot owner of Lot 73.
  4. [58]
    There was no further resolution without dissent required here. The relevant consent was the consent given by the body corporate on 10 October 2006 and the lot owners immediately prior to that resolution were the owners, at the time, of Lot 73 and Lot 105.

Ground 3 – that the adjudicator’s decision was not just and equitable

  1. [59]
    There is power under s 176 for an adjudicator to extend the time for lodging a CMS. Mr Wheeler and Ms Smith submit that the power should only be exercised when it is just and equitable to do so. They say that a consideration of ‘just and equitable’ requires a consideration of: the time that has passed since the reallocation was made; any changes of ownership in that period; whether an extension would affect the rights of a bona fide purchaser; and whether a party relied on the CMS to its prejudice.
  2. [60]
    The initial question raised by this ground is whether an order made by an adjudicator on the basis it was ‘just and equitable’ is able to be challenged on the basis it demonstrates an error of law.
  3. [61]
    The phrase ‘just and equitable’ has been considered in other statutory contexts. In Talga Ltd v MBC International Ltd[7] the High Court considered the meaning of the phrase in the context of its power under the banking legislation to treat as valid a transaction not done in accordance with the regulations if it is ‘just and equitable’:

The court will have before it an existing transaction replete with all its surrounding facts and circumstances and in their light will determine what is just and equitable. In doing so it will certainly be exercising a wide discretion but this is a commonplace of the curial process; the court will be bound to act judicially, exercising its discretion by reference only to such considerations affecting the transaction as on an examination of the legislation may be seen to be material to the decision which it is called upon to make.  Irrelevant matters...which have no relational connection with the policy of the regulations but would be expressions only of the personal predilections of the court, cannot be allowed by it to play any part in its decision.

  1. [62]
    Further, in the context of a statutory power to require parties to make a property settlement the court considers ‘just and equitable’, it was held that the discretion had to be exercised in accordance with accepted principle, for what is just and equitable was not a matter of “unfettered individual opinion”.[8]
  2. [63]
    Accordingly, although the power in s 276 is a wide power it is not a power which can be exercised arbitrarily according to the adjudicator’s unfettered opinion.  In order for the adjudicator to make an order under s 276 that is “just and equitable in the circumstances” there must be some proper basis in law or equity for the grant of relief and not just a notion of unfairness as subjectively determined by the adjudicator.[9]
  3. [64]
    The issue therefore is whether the adjudicator failed to apply the law, failed to take into account relevant considerations or took into account irrelevant matters which had no relational connection with the policy of the legislation.[10]
  4. [65]
    The adjudicator found that there was no evidence to suggest that the vendor of Lot 73, or his agent, represented that the Lot was entitled to exclusive use of a storage area in addition to a car parking space. The contract did not refer to the exclusive use areas. The vendor understood that what was being transferred was one car park (C31) and no storage space. Mr Wheeler and Ms Smith did not believe, when they entered into the contract, that they were entitled to C111 and storage space S30. It is reasonable to infer that the purchase price was struck on that basis.
  5. [66]
    A search of the register after the contract was signed showed a result different from that which the parties understood to be the case at the time the contract was signed. The search showed that Lot 73 was entitled to C111 and a storage space. This inconsistency was not a matter, on the facts presented below, which Mr Wheeler and Ms Smith chose to raise with the vendor. This is surprising: the vendor was not in a position to transfer rights over the car park the parties had understood was allocated to the Lot but was in a position, (but had not purported to or apparently intended) to transfer rights in a different car park and in a storage space not referred to in the contract between the parties.
  6. [67]
    We support the adjudicator’s decision on the basis it was open to find that Mr Wheeler and Ms Smith chose to complete the contract notwithstanding these discrepancies.
  7. [68]
    It should be noted that a purchaser is entitled to undertake a search of the records of the body corporate. A proper search would have established that the body corporate had consented to a new CMS and should have led Mr Wheeler and Ms Smith to the realisation that the cause of the discrepancy was an omission to lodge a request to record it.
  8. [69]
    Further, it was likely to be apparent to Mr Wheeler and Ms Smith that another unit owner was, or was likely to be, exercising rights of possession over the other car park and the storage space. Thus, having identified the discrepancy, the means of resolving it lay wholly within their hands.
  9. [70]
    On the other hand, so far as the material shows, the Evans sold lot 105 to MW Stone on the basis that the sale included car park C111 and the storage space. It is reasonable to infer that the contract price was struck on that basis. The successive owners of Lot 105 have used the car park and storage space since 2006, that is, for a period of at least nine years.
  10. [71]
    We see no error in the approach of the adjudicator who took into account matters which he was entitled to take into account in reaching his decision. Further, his decision was not inconsistent with the provisions of the Act relevant to further allocation agreements between lot owners.
  11. [72]
    We find no error of law in the order made on the ground the order was not ‘just and equitable.’

Ground 4 – that the adjudicator’s decision was incorrect at law as it failed to take into account circumstances that were relevant to the application of law and was inconsistent.

  1. [73]
    This ground overlaps to some extent with the previous ground. We will confine our reasons under this ground to new arguments.
  2. [74]
    Mr Wheeler and Ms Smith submitted that the adjudicator was in error in finding that the responsibility for lodging the request to record the new CMS lay with the body corporate. Mr Wheeler and Ms Smith submitted that this led to the adjudicator’s failure to take into account that it was the vendor’s solicitor who was responsible for the omission to lodge the request to record the new statement.
  3. [75]
    Related to this Mr Wheeler and Ms Smith argued, was the adjudicator’s inappropriate reliance on a particular authority, namely Double Bay Properties v The Body Corporate for The Caribbean Kawana Island.[11]

Who was responsible for failing to lodge the request for the new statement?

  1. [76]
    The body corporate committee must prepare the new statement.[12] The body corporate is also responsible for the costs of preparing and recording the new statement unless the Act provides otherwise.[13] If the body corporate consents to a new statement being recorded the body corporate must, within 3 months of its consent, lodge a request to record the new statement.[14]
  2. [77]
    Although the minutes of the body corporate meeting indicate it was resolved that the solicitors for the Evans’ solicitor would attend to lodging, the adjudicator found that this did not absolve the body corporate from responsibility.
  3. [78]
    Mr Wheeler and Ms Smith submit this is an error because the minutes show that the solicitors for the then owners of Lot 73 were instructed to do it.
  4. [79]
    We agree with the adjudicator’s finding. The body corporate has a statutory obligation to ensure that the CMS is up to date and reflects current allocations. The body corporate is able to authorise an agent, in this case the Evans’ solicitors, to undertake this on its behalf. This does not absolve the body corporate from responsibility. This also reflects the overriding obligation of the body corporate to ensure its records are up to date.

Misplaced reliance on a particular authority

  1. [80]
    Mr Wheeler and Ms Smith argued that the adjudicator wrongly relied on Double Bay Properties v The Body Corporate for The Caribbean Kawana Island.[15] It is not usually an error of law to rely on an authority of even marginal relevance.[16]
  2. [81]
    They argue that the case should have been distinguished on the basis that there the body corporate was at fault in failing to lodge the request to record the new CMS, which was not the case here. While we agree that the conduct of the body corporate in this instance was not the same, this does not mean there was an error in law in relying on the case. The adjudicator, in any event, was aware of Mr Wheeler and Ms Smith’s argument in this regard.[17]
  3. [82]
    The adjudicator found, notwithstanding the submission from Mr Wheeler and Ms Smith, that the body corporate was responsible for lodging a request to record the new CMS under s 176, notwithstanding the belief of the committee, as recorded in the minutes, that the owner of Lot 73 would attend to it.[18] The adjudicator referred to the case, in particular to the finding that it was ‘in the interests of justice’ to exercise the discretion to enable a lot owner to ‘regularise its position’ by recording a new statement in circumstances where the body corporate was negligent or had refused to do it. 
  4. [83]
    In circumstances where the adjudicator had found that the body corporate had a statutory responsibility to lodge a request to record a new statement, there was no error of law in referring to the case or applying that approach.

What is the effect of Mr Wheeler and Ms Smith relying on the 2013 CMS?

  1. [84]
    Mr Wheeler and Ms Smith also argued that the adjudicator had failed to take into account that they had checked the register while the owner of Lot 105 had not.
  2. [85]
    The adjudicator did refer to the fact that Mr Wheeler and Ms Smith’s  solicitors had provided them with results of searches including a CMS showing that lot 73 was entitled to use of storage space S30 and the C111 car park.[19]
  3. [86]
    We infer from this that the adjudicator did consider this fact. The fact it was not determinative is not an error of law.
  4. [87]
    As we discussed above, an interest created under a CMS recorded with the Registrar does not take effect as a registered interest. There is also no guarantee that the CMS is correct. Indeed the very existence of the power to permit ‘late’ requests to record new statements recognises that the Register may not have ‘caught up’ with the true state of affairs.
  5. [88]
    The adjudicator did not, as a matter of law, have to find in favour of the party who checked the Register. This does not undermine the utility of the Register. Indeed, here, where the Register was different from the position upon entry into the contract, as understood by the contracting parties, real estate agent and letting agent it was reasonable to expect that Mr Wheeler and Ms Smith would have used what they had learned from the Register to make further meaningful enquiries, in particular of the vendor, or of the person using the relevant car park and storage space (MW Stone or its tenant). It is noted that the true state of affairs, including the agreement itself, was disclosed to them within days of contacting MW Stone. 

What is the consequence under the Act if a new CMS is not recorded?

  1. [89]
    It is also relevant to take into account the existence of consumer protection provisions aimed at buyers of lots in a community titles scheme. Before the seller of a lot enters into a contract to sell the lot, they must give a disclosure statement to the buyer.[20]  The statement must be signed by the seller or a person authorised by the seller and the information in the statement is warranted by the seller to the buyer. In the case of existing lots where the contract has not been settled, if the statement was inaccurate when the contract was entered into and the buyer would be materially prejudiced if compelled to complete, then the buyer may by written notice cancel the contract. Alternatively, a buyer may cancel the contract if they have not been able to verify the information contained in the statement, the onus of proof being on the buyer.
  2. [90]
    There are also standard warranties in the contract of sale (REIQ contract for residential lots in a community titles scheme). Under cl 7.4(3) the seller states that, except as disclosed in this contract, at the contract date:

(b) there is no proposal to record a new community management statement for the Scheme and it has not received a notice of a meeting of the body corporate to be held after the contract date or notice of any proposed resolution or a decision of the body corporate to consent to the recording of a new community management statement for the Scheme.

  1. [91]
    Clause 7.4(d) provides that:

the community management statement recorded for the Scheme contains details of all allocations that affect the Lot or the registered owner of the Lot.

  1. [92]
    If a second category warranty is incorrect and the buyer is materially prejudiced, it can terminate the contract by notice to the seller within 14 days after the date of the contract but cannot claim damages or compensation.
  2. [93]
    The power to permit a request to lodge a new CMS does not deprive a buyer of rights as against the vendor. The legislation has to be viewed as a whole and the exercise of the discretion against the backdrop of these protections, does not demonstrate an error of law.

Conclusion

  1. [94]
    There is no error of law demonstrated in the adjudicator’s reasoning or orders on the basis of any of the grounds raised by the appellants.
  2. [95]
    The appeal is therefore dismissed.

Footnotes

[1]Calypso Towers [2015] QBCCMCmr 268.

[2]Body Corporate and Community Management Act 1997 (Qld), s 289(2).

[3]Body Corporate and Community Management Act 1997 (Qld), s 294(1).

[4] Body Corporate and Community Management Act 1997 (Qld), s 176(4).

[5]Body Corporate and Community Management Act 1997 (Qld), s 54(2).

[6]Body Corporate and Community Management Act 1997 (Qld), s 252I(3).

[7](1976) 133 CLR 622 at 634.

[8] Cominos v Cominos (1972) 127 CLR 588 citing Saunders v Saunders (1967) 116 CLR 366 at 379.

[9] Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300 at [100].

[10]Talga Ltd v MBC International Ltd (1976) 133 CLR 622 at 634.

[11] [2015] QCATA 30.

[12] Body Corporate and Community Management Act 1997 (Qld), s 63(2)(b)(ii).

[13]  Ibid, s 63(3).

[14]  Ibid, s 65(1).

[15]  [2015] QCATA 30.

[16]Albrecht v Ainsworth [2015] QCA 220.

[17]Calypso Towers [2015] QBCCMCmr 265, at [17].

[18]  Ibid, at [34].

[19]  Ibid, at [13].

[20]Body Corporate and Community Management Act 1997 (Qld), s 206.

Close

Editorial Notes

  • Published Case Name:

    Wheeler and Smith v Body Corporate for Calypso Towers

  • Shortened Case Name:

    Wheeler and Smith v Body Corporate for Calypso Towers

  • MNC:

    [2016] QCATA 66

  • Court:

    QCATA

  • Judge(s):

    Senior Member Stilgoe OAM

  • Date:

    03 May 2016

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