Owltown Pty Ltd v Norwinn Commercial CTS38094
[2018] QCATA 2
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- Unreported Judgment
- Appeal Determined (QCA)
- Owltown Pty Ltd v Norwinn Commercial CTS38094[2018] QCATA 2
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Owltown Pty Ltd v Norwinn Commercial CTS38094[2018] QCATA 2
Owltown Pty Ltd v Norwinn Commercial CTS38094[2018] QCATA 2
CITATION: | Owltown Pty Ltd v Norwinn Commercial CTS38094 [2018] QCATA 2 |
PARTIES: | Owltown Pty Ltd (Appellant) v Body Corporate for the Norwinn Commercial Community Titles Scheme CTS 38094 (First Respondent) JM Family Holdings Pty Ltd and Berridge Enterprises Pty Ltd (Second Respondents) |
APPLICATION NUMBER: | APL005-17 |
MATTER TYPE: | Appeals |
HEARING DATE: | 21 August 2017 |
HEARD AT: | Brisbane |
DECISION OF: | Member Barlow QC |
DELIVERED ON: | 4 January 2018 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
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CATCHWORDS: | REAL PROPERTY – STRATA AND RELATED TITLES – MANAGEMENT AND CONTROL – RIGHTS AND OBLIGATIONS OF PROPRIETORS – Whether owner of only lot occupying upper floor responsible for cost of operating elevator to that floor – Whether elevator is utility infrastructure that relates only to supplying utility services for that lot – Whether resolutions of body corporate rescinding exclusive use levies and resolving that the full cost of the elevator be shared between all lot owners valid Body Corporate and Community Management Act 1997 (Qld), s 20, s 276 Body Corporate and Community Management (Commercial Module) Regulation 2008 (Qld), s 115(3)(b) |
APPEARANCES: |
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APPLICANT: | Owltown Pty Ltd |
RESPONDENTS: | JM Family Holdings Pty Ltd and Berridge Enterprises Pty Ltd No appearance for the first respondent |
REPRESENTATIVES: |
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APPLICANT: | K W Wylie of Counsel, instructed by Zande Law |
SECOND RESPONDENTS: | B P Strangman of Counsel, instructed by Stratum Legal |
REASONS FOR DECISION
Introduction
- [1]The Norwinn Commercial Community Titles Scheme comprises 2 two-storey buildings containing a total of 8 lots. The Body Corporate and Community Management (Commercial Module) Regulation 2008 applies to the scheme. The appellant, Owltown, is the owner of lots 2 and 4 in the scheme. The 2nd respondents are the owners of lot 8.
- [2]This case concerns whether only the owner of lot 8, or the owners of all lots in the scheme, must bear the cost of maintenance of an elevator that is on the common property in one building (building B).
- [3]Lots 1, 2 and 3 are in one building. Each lot has 2 storeys, with access to the upper level by internal stairs. Lots 4, 5, 6, 7 and 8 are in the other building, with an area of common property between lots 7 and 8. Each of lots 4, 5, 6 and 7 has 2 storeys with an external lower floor door and access to the upper level by internal stairs. Lot 8 is differently configured. It also has 2 storeys with access to the ground floor through an external door, but access to the upper storey is by stairs or the elevator, both of which are common property in the area that separates lot 8 from lot 7. There is no access from the common property on the 1st floor to the upstairs areas of lots 4 to 7.
- [4]The common property area in building B (which services lots 4 to 8), on the ground floor has an entrance lobby, toilets (including a disabled persons’ toilet), a shower, a locker room, electrical and communications cupboards, and the elevator and stairs to the upper floor. The elevator services the upper floor, on which the common property has toilets and a shower (but no disabled persons’ toilet) and stairs to the roof of the building.
- [5]The original owner of the entire scheme owned lot 8 until 2014, when the 2nd respondents acquired it. During the period of that ownership, the owner of lot 8 paid all the costs of maintenance of the elevator, notwithstanding that it was common property concerning which there was no exclusive use by-law in the community management statement.[1]
- [6]The owner of lot 8 has, by itself, the majority of the contribution schedule lot entitlements for the scheme, thus enabling it to cause the body corporate to pass a motion requiring a simple majority at a general meeting.
- [7]At the annual general meeting of the body corporate in July 2015, the following resolutions (referred to respectively as motions 17 and 18) were passed on the votes of the owner of lot 8, with the owners of all other lots opposing them.
That the full cost of the lift be shared between all Lot owners in accordance with the contribution entitlement.
That the body corporate rescind the exclusive use levies for Lot 8 in relation to the shared body corporate asset (the lift).
- [8]Owltown applied to the commissioner for body corporate and community management for a declaration that those resolutions were void, effectively seeking an outcome that lot 8 be exclusively liable for all expenses associated with maintenance of the elevator. That application was supported by the owners of several other lots and opposed by the owners of lot 8. The adjudicator dismissed the application, finding that:
- there was substantial common property on the 1st floor outside lot 8, that was available for use by any lots;
- the evidence showed that people other than the owners, occupiers and invitees of lot 8 often use the elevator to obtain access to the 1st floor;
- under the Building Code of Australia (the BCA), having regard to the floor area of the entire scheme the toilets on the 1st floor were required to be available for users and guests of other lots;
- lot 8 did not have a right of exclusive use of the elevator, either under an exclusive use by-law or an agreement with the body corporate for its exclusive use;
- the elevator was utility infrastructure of the scheme that did not relate only to supplying services to lot 8;[2]
- therefore, the usual contribution rule, that lot owners share expenses of the body corporate in proportion to their contribution schedule lot entitlements,[3] applies to this scheme so that the owners of all lots in the scheme must contribute to the cost of maintenance of the elevator.
The appeal
- [9]A number of grounds of appeal are raised by Owltown. They boil down to the following:
- the adjudicator wrongly construed s 115(3) of the Commercial Module as meaning that the infrastructure concerned must be physically available for use exclusively by occupiers and guests of lot 8 in order for that subsection to apply;
- the adjudicator should not have taken into account evidence of the actual use of the elevator by cleaning personnel and occupiers or guests of lots other than lot 8; such evidence of actual use is irrelevant to the determination of the legal question concerning the proper interpretation of s 115(3);
- in determining whether the elevator fells within s 115(3), the adjudicator misconstrued the BCA and wrongly found that the toilet facilities on the 1st floor had to be available for use by persons utilising the other lots; in fact, the 1st floor facilities were only required because of the existence of lot 8.
- [10]The owners of lot 8 submit that:
- the starting point is that the body corporate is responsible for maintaining the common property and there are only 3 exceptions to that rule – if there has been a grant of exclusive use,[4] if the owner of the lot is the owner of the item of common property (in this case, the elevator),[5] or if s 115(3)(b) applies – and clearly neither of the 1st two exceptions applies;
- the elevator is located on common property, is available for use by anyone, and is in fact used by persons other than occupiers and guests of lot 8;
- the elevator is a means of access not only to the 1st floor, but also to the roof of the building (by a set of stairs from the 1st floor), and access to the roof is needed only for the purposes of the body corporate and service personnel to maintain infrastructure on the roof;
- therefore the elevator does not relate only to supplying utility services to lot 8 – it is for the conveyance of any persons and goods between the ground floor and the 1st floor of the building in which it is situated.
The legislation
- [11]It is useful first to summarise the most relevant provisions of the Body Corporate and Community Management Act 1997 (the Act) and the Commercial Module.
- [12]Paragraph 152(1)(a) of the Act provides that a body corporate must manage and control the common property for the benefit of lot owners.
- [13]Subsection 20(1) of the Act provides that common property includes all utility infrastructure (other than certain categories that are irrelevant).
- [14]“Utility infrastructure” is defined in the dictionary to the Act. It is unnecessary to consider it here as it was common ground that the elevator is utility infrastructure that is common property.
- [15]“Utility service” is relevantly defined in the dictionary to the Act as a system or service designed to improve the amenity, or enhance the enjoyment, of lots or common property.
- [16]Subsection 170(1) of the Act provides that an exclusive use by-law is a by-law that attaches to a lot and gives the occupier of that lot exclusive use to the rights and enjoyment of common property.
- [17]But subsection 177(1) of the Act provides that an exclusive use by-law must not give exclusive use to the rights and enjoyment of utility infrastructure that is common property.
- [18]Subsection 115(1) of the Commercial Module provides that the body corporate must maintain common property in good condition.
- [19]Subsection 115(3) is crucial and I shall therefore set out the relevant parts in full. It relevantly provides:
Despite anything in subsections (1) and (2) –
- (a)the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier’s own benefit; and
- (b)the owner of the lot is responsible for maintaining utility infrastructure, including utility infrastructure situated on common property, in good order and condition, to the extent that the utility infrastructure relates only to supplying utility services to the owner’s lot; and
Example for paragraph (b) –
An air conditioning plant is installed on common property, but relates only to supplying utility services to a particular lot. The owner of the lot would be responsible for maintaining the air conditioning equipment.
Consideration
- [20]The body corporate is responsible for the maintenance of the elevator, being common property, and the costs of that maintenance must be shared by all lot owners in the scheme in proportion to their contribution schedule lot entitlements, unless an exception to that position is provided. The only exception that may be applicable in this case is s 115(3)(b) of the Commercial Module.
- [21]The paragraph is peculiarly worded in commencing with the words “the owner of the lot.” The use of the definite article indicates that it is referring to a lot previously referred to in the section or sub-section. On its normal reading, it would refer to the lot referred to immediately before this paragraph – that is, the lot referred to in paragraph (a). If one read paragraph (b) in this manner, it would refer only to a lot for the benefit of which the occupier had installed fixtures or fittings that comprised common property.
- [22]While that is the ordinary reading of those words in paragraph (b), it is not a sensible reading. Paragraph (c) also commences “the owner of the lot” but refers to the maintenance of the tray of a shower that services the lot. Each of paragraphs (a), (b) and (c) appears to deal with a different situation. In my view, each of paragraphs (b) and (c) should be read as if they commenced “the owner of a lot”. I did not understand the parties to submit otherwise. Thus I need to consider only paragraph (b) in determining this appeal.
- [23]Paragraph (b) imposes on the owner of a lot the responsibility for maintaining utility infrastructure “to the extent that [it] relates only to supplying utility services to” that lot. The crucial issue, on which the parties concentrated in their submissions, is whether the elevator relates only to providing such services to lot 8. The respondent described the relevant “utility service” as the conveyance of persons or goods between the ground floor and the 1st floor of the building. That is an appropriate description of the service.
- [24]Does the elevator relate only to providing such a service to lot 8?
- [25]I agree with Owltown’s submission that, in considering this question, one must do so by reference to objective evidence of what the elevator relates to rather than subjective evidence of who in fact uses it and for what purposes. Whether the obligation to maintain it rests with the body corporate or the owner of lot 8 must be discernible at any time and by anybody by reference to the Act, the module and the body corporate records; not by also having to ascertain how it is used and by whom at any particular time.
- [26]Clearly the elevator would be unnecessary if lot 8 did not exist, as each of the other lots has only internal access to its upper floor. Lot 8 is the only lot that has public access to its upper floor. That access is provided by the elevator and by stairs that are also common property.
- [27]It is common ground that the buildings in this scheme are “class 5” buildings for the purposes of the Building Code of Australia. That code requires that buildings be accessible for persons with a disability to and within all areas normally used by the occupants. There is no chair lifting device up the stairs, so the elevator in this case is the only means of access to the 1st floor of lot 8 by disabled persons. It is also the only means of access by disabled persons who are on the 1st floor of lot 8 to a disabled toilet facility (which is on the ground floor).
- [28]If it were not for the upper floor of lot 8, the elevator would not be required under this part of the BCA. I should note, however, that neither party appears specifically to have relied on this part before me, although the relevant part of the BCA was in evidence and Owltown made submissions about it to the adjudicator. Therefore I shall not rely on it as the answer to the issue before me.
- [29]Both parties made submissions about the requirements of the BCA for the provision of sufficient toilet facilities in a class 5 building. Notably, section F2.1 provides:
Suitable sanitary facilities for personal hygiene must be provided in a convenient location within or associated with a building, to the degree necessary, appropriate to –
(a) the function or use of the building; and
(b) the number and gender of the occupants; and
(c) the disability or other particular needs of the occupants.
- [30]Section F2.3 requires that sanitary facilities must be provided in accordance with Table F2.3. Those requirements assume one person per 10m2 of occupiable floor space in a building and require a certain number of facilities depending on the number of people accommodated by a building.
- [31]There was evidence before the adjudicator that, based on the BCA’s requirements, if lot 8 did not exist then there would be sufficient toilet facilities in both buildings within the scheme to comply with BCA requirements for lots 1 to 7, but if only the ground floor of lot 8 existed there would not be sufficient facilities in both buildings to comply with the requirements for lots 1 to 8.
- [32]This evidence, though, was of no real use because, as Owltown submitted, the BCA requires that the availability and number of toilet facilities be determined separately for each building. That appears to be correct, having regard to section F2.1. Therefore, one must have regard only to the area of building B in order to determine the sufficiency of sanitary facilities in that building.
- [33]The relevance of the number and location of toilet facilities to the determination of the issue before me is that the owners of lot 8 submitted that the facilities on the 1st floor were necessary to comply with the BCA, having regard to the total assumed number of people using the building (in lots 4 to 8). Therefore the elevator was required to enable all persons in the building to have access to the necessary toilet facilities. Consequently, the elevator did not relate only to providing services to lot 8, but was required to provide services to all occupiers of the building.
- [34]Owltown originally relied on a calculation that it said demonstrated that the toilet facilities on the ground floor were sufficient to cater for lots 4 to 7 and the ground of floor of lot 8. It submitted that that demonstrated that the upstairs facilities and the elevator necessary to have access to them related only to lot 8. However, the owners of lot 8 pointed out, and Owltown subsequently conceded, that the calculation was incorrect. On a correct calculation, the ground floor facilities by themselves were insufficient to cater for lots 4 to 7 and the ground floor of lot 8. On that basis, the owners of lot 8 submitted that the elevator and the upstairs facilities were necessary to comply with the BCA requirements for toilet facilities in the building and therefore the elevator did not relate to the supply of utility services only to lot 8.
- [35]In reply, while conceding the error, Owltown submitted that it did not matter. The question of the sufficiency of toilet facilities must be approached on the basis of the existence or not of lot 8 as a whole. But for the existence of lot 8, the downstairs facilities would have been sufficient for lots 4 to 7. That being so, the elevator and the upstairs facilities became necessary only because of lot 8 and therefore relate only to lot 8.
- [36]The owners of lot 8 submitted that, even if the upstairs toilets were not necessary in the absence of lot 8, they and the elevator are still accessible to, and able to be used by, any occupants or guests of all lots (including those in the other building). Also, the elevator can be used to obtain access to the roof or to transport heavy goods to the 1st floor. Therefore the elevator does not relate only to lot 8.
- [37]In response, Owltown submitted that that submission equates the phrase “relates only” to “can be used exclusively”. That cannot be correct, as s 177 prohibits an exclusive use by-law for utility infrastructure that is common property. Notwithstanding that prohibition, s 115(3)(b) uses the concept of utility infrastructure relating only to a lot. To relate only to a lot must be a lesser concept than the lot having exclusive use of it. The fact that the elevator can be used by persons not associated with lot 8 does not mean that it does not relate only to lot 8.
Conclusions
- [38]I consider that the proper approach is:
- to have regard only to objective criteria such as the design of the building and the requirements of the BCA and, in the light of those criteria,
- to consider whether the elevator would be necessary for the use of lots 1 to 7 so that, if it were not for lot 8, the elevator need not exist, and
- to compare that situation with the existing situation where lot 8 exists.
- [39]If lot 8 did not exist, there would be no need for toilet facilities on the 1st floor of the building (which would then comprise only the internal upstairs areas in lots 4 to 7), nor would there be a need for disabled access to that floor. The elevator is only necessary because of the design of lot 8 and the consequent requirement to have additional toilet facilities.
- [40]Alternatively, if only the ground floor of lot 8 existed and the 1st floor did not, the elevator would not be required, which would have allowed space for additional toilet facilities on the ground floor, sufficient to cater for the requirements of the building housing lots 4 to 8.
- [41]These facts demonstrate sufficiently to my satisfaction that the elevator does relate only to the supply of utility services to lot 8. That being so, under s 115(3)(b) of the Commercial Module, the owner of lot 8 is responsible for maintaining the elevator.
- [42]If I were wrong, it seems clear to me that the elevator would relate only to supplying utility services to lots 4 to 8, given that lots 1 to 3 are in a different building that has adequate facilities and services for those lots. In my opinion, s 115(3)(b) could apply in that situation to make only lots 4 to 8 responsible for maintaining the elevator. The singular terms “the lot” and “the owner’s lot” include the plural of those terms unless the contrary intention appears from the Act or the module.[6] Nothing that I have seen indicates a contrary intention in this case. I consider that the phrase “to the extent that” indicates an intention to enable responsibility for the maintenance of utility infrastructure that relates only to a number of lots in a scheme to be shared between those lots only.
- [43]When I suggested this outcome to counsel for the owners of lot 8, he submitted that the argument is wrong because the Act provides a method for one building in a scheme not to share the costs of another building, by permitting the creation of subsidiary bodies corporate for each building, that do not share the costs associated solely with other buildings. I assume that by this he was referring to a layered arrangement under s 18 of the Act.
- [44]Certainly such an arrangement may be available when creating a community titles scheme. But it would not be likely to be appropriate in a comparatively small scheme such as this. The fact that it is possible does not, to my mind, affect the construction of s 115(3)(b). I continue to consider that this paragraph permits proportionate responsibility for maintenance of utility infrastructure in appropriate cases.
- [45]Given my conclusion in paragraph [41], the body corporate cannot, at least by ordinary resolution, alter the responsibility of the owner of lot 8 by obliging all lots to share the cost of maintenance of the elevator. Resolutions that effectively have purported to do that are inconsistent with the module and therefore beyond the power of the body corporate.
- [46]I therefore consider that the adjudicator erred in concluding that the owner of lot 8 is not solely responsible for the maintenance of the elevator. The appeal should be allowed.
- [47]
- [48]I consider that the appropriate orders are:
- to declare that the relevant resolutions, and any levies imposed by the body corporate consequent on the resolutions, were void;
- to order the body corporate to refund to the owners of lots 1 to 7 all amounts levied on them in respect of the maintenance of the elevator consequent on the invalid resolutions; and
- to order the body corporate to levy the owner of lot 8 for any costs of the maintenance of the elevator for which it has not been levied since the resolutions were passed.
Footnotes
[1] As will be seen, there could not be such an exclusive use by-law concerning the elevator.
[2] This is relevant to s 115(3) of the Commercial Module, which Owltown submitted applies to make the maintenance of the elevator the responsibility of lot 8.
[3] Commercial Module, s 100(5).
[4] Commercial Module, s 129(2).
[5] By an agreement under s 20(2) of the Act.
[6] Acts Interpretation Act 1954 (Qld), s 32C, s 4.
[7] Act ,s 294(1).
[8] Act, s 276.