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Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957[2018] QDC 275

Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957[2018] QDC 275

DISTRICT COURT OF QUEENSLAND

CITATION:

Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957 [2018] QDC 275

PARTIES:

CATHEDRAL PLACE COMMUNITY BODY CORPORATE

(Plaintiff)

v

THE PROPRIETORS CATHEDRAL VILLAGE BUP 106957

(Defendant)

FILE NO/S:

D2754/2010

DIVISION:

 

PROCEEDING:

Civil trial

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

21 December 2018

DELIVERED AT:

Brisbane

HEARING DATE:

23, 25, 26, 31 July, 1 August 2018.

JUDGE:

McGill SC DCJ

ORDER:

Proceeding to be listed for further consideration on a date to be fixed.

CATCHWORDS:

HOME AND COMMERCIAL UNITS – Body corporate fees – whether contribution levied valid – whether owner can go behind decision of body corporate concerning contribution – whether body corporate failing to comply with its duties – whether bylaws valid.

Mixed Use Development Act 1993

ANZ Bank Ltd v Pacoccio (2016) 258 CLR 525 – cited.

Builders Licensing Board v Inglis (1985) 1 NSWLR 592 – considered.

Carre v Owners Corporation-Strata Plan 5302000 (2003) 59 NSWLR 302 – cited.

Casurana Rec Club Pty Ltd v The Owners – Strata Plan No 77971 (2011) 80 NSWLR 711 – cited.

Clay v Clay (2001) 202 CLR 410 – cited.

Coastalstyle Pty Ltd v Proprietors Surf Regency BUP 4246 [1995] 1 Qd R 132 – considered.

Dynevor Pty Ltd v Proprietors of Centre Point BUP 4327 [1995] QCA 166 – considered.

EB 9 & 10 Pty Ltd v The Owners Strata Plan 934 [2018] NSWCA 288 – considered.

Edwards v Bray [2011] 2 Qd R 310 – considered.

Henderson v The Body Corporate for Merrimac Heights [2011] QSC 336 – considered.

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 – cited.

Humphries v The Proprietors “Surfers Palms North” Group Title Plan 1955 (1994) 179 CLR 597 – considered.

Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 – cited.

McNab Developments (Qld) Pty Ltd v MAK Construction Services Pty Ltd [2014] QCA 232 – cited.

Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525 – cited.

Owners Strata Plan 50276 v Thoo [2013] NSWCA 270, 17 BPR 98694 – applied.

Owners-Strata Plan no.43551 v Walter Construction Group Ltd (2004) 62 NSWLR 169 – cited.

Prins v Body Corporate for The Wave [2013] QDC 66 – cited.

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 – cited.

Registrar of Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 – cited.

Ridis v The Proprietors Strata Plan 10308 (2005) 63 NSWLR 449 – cited.

Segal v Barel (2013) 84 NSWLR 193 – cited.

The Proprietors Cathedral Village BUP 106 957 v Cathedral Place Community Body Corporate [2013] QCA 264 – considered.

Victorian Professional Management Pty Ltd v The Proprietors Surfers Aquarius BUP No 3881 [1991] 1 Qd R 487 – considered.

Westpac Banking Corporation v Body Corporate for the Wave CTS 36237 [2014] QCA 73 – considered.

COUNSEL:

A Crowe QC and P Tucker for the plaintiff

S Couper QC for the defendant

SOLICITORS:

Nicholsons Solicitors for the plaintiff

HWL Ebsworth for the defendant

  1. [1]
    In 1848 the Brisbane Collector of Customs, William Duncan, acquired a parcel of land in Fortitude Valley bounded by what in time became St Paul’s Terrace, Gipps, Ann and Gotha Streets.[1]He had built on the site in 1850, close to the Ann Street frontage, a house named “Dara”, large for the time, paid for in part with some of the land.  In time the property was divided by a new street, Wickham Street, and the part to the west sold. After Mr Duncan was promoted and returned to Sydney on the eve of separation, he sold the property to Patrick Mayne.[2]In 1861 it was leased to provide accommodation for Bishop Quinn, the first Catholic Bishop of Brisbane, who purchased the property in 1862, retaining the name. In 1891 the original “Dara” was demolished and replaced with a much larger and more elegant official residence for the Archbishop of Brisbane, as Bishop Dunne had become in 1887.
  1. [2]
    James Duhig, who became Co-adjutor Archbishop of Brisbane in 1912 and Archbishop in 1917, had for some time wanted to build a new and grander cathedral in Brisbane. Sydney architect Jack Hennessy recommended the site of “Dara”, and designed a massive renaissance basilica which would have been the largest church in Australia, capable of seating 4,000 people. Work started in 1927, and in 1928 a Papal Legate, Cardinal Cerretti, laid the foundation stone. In 1935 the crypt was consecrated by Archbishop Duhig so that masses could be held there.[3]
  1. [3]
    The great depression which began in 1929, World War II and an investment in shares in Roma oilwells which did not live up to their promise meant that construction of the cathedral never proceeded beyond the foundations and the crypt.[4]Following the death in 1965 of Sir James Duhig, the Catholic Church reconsidered the project.[5]By 1969 the Church had abandoned plans to construct the cathedral, and at its request the government passed a private Act to authorise the sale of the site, and any other property held on trust for the purposes of constructing that cathedral, with the proceeds to be used for promoting the spiritual and temporal welfare of the Roman Catholic Archdiocese of Brisbane.[6]   The Church sold the site in 1985 to property developers, and it was resold a couple of times before work began in 1997.[7]The site was large, and it was redeveloped in stages under the Mixed Use Development Act 1993 (“the 1993 Act”). Some retaining walls and balustrading from the original cathedral works were entered on the Queensland Heritage Register in 1992, and are retained in the development.

Legislation

  1. [4]
    A Building Units Titles Act had been passed in Queensland in 1965 to facilitate sub-division of land in a way which would enable each occupant of a unit in a development to have a separate freehold title to the unit. Prior to that units were commonly set up with a company title scheme, where the building was owned by a company and part of the building was occupied on the basis of the ownership of shares in the company.[8]In 1973 the Group Titles Act was passed to accommodate the specific requirements of less vertical sub-division, for townhouses or cluster housing, and in 1980 these Acts were combined in the Building Units and Groups Titles Act 1980 (“the 1980 Act”). That Act was the subject of a green paper released in June 1991 identifying a number of deficiencies, including a lack of provisions dealing with staged developments.[9]
  1. [5]
    To overcome this a number of specific Acts for particular developments were passed[10]before the 1993 Act was passed in more general terms. Little use has been made of the 1993 Act. I was told that the present development is one of only two ever constructed under it.[11]The 1980 Act was replaced by the Body Corporate and Community Management Act 1997 (“the 1997 Act”), which facilitated the development of complex, staged and mixed use schemes through layered arrangements, and effectively superseded the provisions of the 1993 Act.[12]It is apparent from the paper by Mr Lim that the 1997 Act was the product of an extended period of investigation by governments into the supposed deficiencies in the 1980 Act, with varying solutions proposed over the years, and no doubt considerable political lobbying, before the 1997 Act came into existence.

The 1993 Act

  1. [6]
    The purpose of the 1993 Act was said to be to permit a scheme which allowed the development of land that consisted of two or more different classes of uses: s 6(1)(a). Staged development was allowed by s 10 which contemplated that an approved mixed use scheme could include land identified as a future development area, though the first sub-division of the site had to be by a community plan which sub-divided the whole site: s 11. On registration of the community plan a body corporate for the community came into existence, called the Community Body Corporate (“CBC”): s 15. The community plan for the plaintiff sub-divided the site into four community development lots and one community property lot, lot 4: s 12.[13]A community development lot could be further sub-divided by a precinct plan: s 16, 17. That in turn could be developed in further stages: s 18. However, the Act went on to provide that a community development lot or a precinct development lot could be sub-divided by a group titles plan or a building units plan under the 1980 Act: s 22.
  1. [7]
    That is in fact what happened with the various community development lots in this community plan. Six building unit plans were registered under the 1980 Act between October 1998 and April 1999.[14]Five of these were for residential blocks within the development. There are eight such blocks, since three building unit plans contain two blocks each. The sixth plan, containing 27 commercial lots on street level at Wickham and Gipps Streets, and one level above, was registered on 9 March 1999, and covers the balance of the community plan, apart from the community property lot. The body corporate for the commercial building units plan is the defendant.
  1. [8]
    Under the 1993 Act, the members of the CBC are the bodies corporate for the six building unit plans registered in respect of the six community development lots: s 24. The members of the body corporate for each building unit plans are, as usual, the owners of the lots within that plan, under the 1980 Act. On registration of the community plan the community property lot was transferred to the CBC: s 66.
  1. [9]
    There are a number of provisions in the 1993 Act which deal with the responsibilities of the CBC. Section 159 permits the CBC to develop or construct facilities on community property or land leased by the CBC for the use of persons who lawfully occupy land within the site, and imposes an obligation to maintain the community facilities. By contrast s 160 permits a precinct body corporate to develop or construct facilities on precinct property or land leased by the precinct body corporate for the use of persons who lawfully occupy land within a staged use precinct, and imposes an obligation on the precinct body corporate to maintain such a facility.
  1. [10]
    The definition of ‘precinct body corporate’ is one created by the registration of a precinct plan sub-dividing a community development lot: schedule 5. See also s 17. However s 22 permits a community development lot or precinct development lot to be sub-divided by a group titles plan or a building units plan, which in turn means such plans under the 1980 Act. Sub-section (4) provides ‘if a community development lot is sub-divided by a group titles or building units plan, it may not then be sub-divided by a precinct plan’. That shows that the Act draws a distinction between a process of sub-division by a plan under the 1980 Act and a process of sub-division by a precinct plan under the 1993 Act.
  1. [11]
    The position therefore appears to be that a precinct plan is a method of sub-division of a community development lot specific to the 1993 Act, but that Act also permits sub-division of a community development lot under the 1980 Act, and if that occurs it seems to me that the body corporate coming into existence as a result of the sub-division under the 1980 Act is distinct from a precinct body corporate which comes into existence on sub-division under the 1993 Act by the registration of a precinct plan. If that is so it follows that the various bodies corporate which are in turn members of the plaintiff, including the defendant, are not precinct bodies corporate for the purposes of the 1993 Act. It follows that s 176(d), which authorises a community body corporate to enter into an agreement with a precinct body corporate, is not a provision which would cover the plaintiff’s entering into an agreement with the various bodies corporate within the scheme, because they are bodies corporate under the 1980 Act, not precinct bodies corporate under the 1993 Act, nor is there any precinct property of the plaintiff within s 177(1)(a)(i).[15]
  1. [12]
    Section 161 permits a CBC to undertake works on any part of the community property “to enhance the amenity of the land or the profitability of any business undertaking within the site” but only at the request of a member of the CBC. Sub-section (5) requires the CBC to “recover all the costs of undertaking the works from the members of the community body corporate who requested the works”, and obliges the CBC to levy contributions to give effect to this obligation: sub-s (8). Section 167 provides in detail for the incorporation of the CBC. Under s 167(9) the CBC has the powers and functions conferred under the Act or by its bylaws and must do all things necessary and reasonable for the enforcement of its bylaws and for the control, management and administration of the community property.
  1. [13]
    A further provision for the levying of contributions is contained in s 174, which provides as follows:
  1. (1)
    A body corporate may levy—
  1. (a)
    the contributions determined by it under section 177 (1) (h); and
  1. (b)
    any amount determined under section 177 (2) in relation to the contributions;

by giving its members written notice of the contributions payable by them.

  1. (2)
    Contributions must be levied, and are payable by the members of the body corporate, in shares proportional to their voting entitlements at the time the contributions are levied.
  1. (3)
    If a contribution is outstanding when a person becomes a member of the body corporate, the member is liable for the contribution jointly and severally with the member who previously owed it.
  1. (4)
    A contribution—
  1. (a)
    is payable to the body corporate in accordance with its decision to make the levy; and
  1. (b)
    if paid within 30 days from the day on which it becomes payable—is to be reduced by the part of the contribution attributable to any amount determined under section 177 (2); and
  1. (c)
    may be recovered as a debt by the body corporate in a court of competent jurisdiction.
  1. (5)
    This section does not prevent the body corporate determining, in general meeting (either generally or in a particular case), that a contribution may be reduced under subsection (4) (b) even if the contribution is not paid within the time mentioned in the subsection.
  1. [14]
    Then s 176(c) permits a body corporate, which includes a CBC, to enter into an agreement for the provision of amenities or services by it or another person to a lot, or the proprietor or occupier of a lot, or a parcel comprised in a building units or group titles plan.[16]Further by paragraph (d) a CBC may enter into an agreement with a precinct body corporate for the provision of amenities or services, but as there is no precinct body corporate, this is irrelevant. 
  1. [15]
    Section 177 which sets out the duties of a body corporate is also important and relevantly provides as follows:
  1. (1)
    A body corporate must—
  1. (a)
    control, manage and administer for the benefit of its members—
  1. (i)
    the community property or the precinct property held by it; or
  1. (ii)
    any road, wharf or land leased by it under section 164.
  1. (b)
    properly maintain and keep in a state of good and serviceable repair—
  1. (i)
    the community property or the precinct property held by it, including any improvements on the community property or the precinct property; and
  1. (ii)
    any personal property vested in it; and
  1. (iii)
    any road, wharf or land leased by the body corporate under section 164 and any improvements on the road, wharf or land;
  1. (c)
    arrange for insurance under section 182; and
  1. (d)
    keep proper records of—
  1. (i)
    notices given to the body corporate under this or another Act; and
  1. (ii)
    orders made by a court and served on the body corporate; and
  1. (e)
    keep—
  1. (i)
    for at least 10 years after their creation or receipt by or for the body corporate—
  1. (A)
    minutes of its meetings, including particulars of motions passed at the meetings; and
  1. (B)
    proper books of account for amounts received or paid by the body corporate, showing the items for which the amounts were received or paid; and
  1. (ii)
    for at least 2 years after their creation or receipt by or for the body corporate—voting tally sheets or other records showing votes for motions and election ballots related to its meetings; and
  1. (f)
    prepare, from the books mentioned in paragraph (e), a proper statement of accounts of the body corporate in relation to each period—
  1. (i)
    starting on the day of its incorporation or the day up to which the last statement was prepared; and
  1. (ii)
    ending on a day not earlier than 2 months before the next annual general meeting; and
  1. (g)
    convene an annual general meeting each year on or after the anniversary of the first annual general meeting, but not later than 2 months after the anniversary; and
  1. (h)
    not later than 14 days after its incorporation and whenever necessary after that, determine the amounts necessary in its opinion to be raised by way of contributions—
  1. (i)
    for the purpose of meeting its actual or expected liabilities incurred or to be incurred under paragraph (b); or
  1. (ii)
    for the payment of insurance premiums, rates or any other liability of the body corporate (other than amounts referred to in paragraph (l)); and
  1. (i)
    on first determining the amounts mentioned in paragraph (h), establish a fund—
  1. (i)
    into which must be paid all amounts received by it (including the proceeds of the sale or other disposal of any personal property of the body corporate and any fees received by it under section 180); and
  1. (ii)
    into which may be paid any amounts paid to the body corporate by way of discharge of insurance claims; and
  1. (j)
    levy under section 174, on each person liable, a contribution to raise the amounts mentioned in paragraph (h); and
  1. (k)
    pay any amounts mentioned in paragraph (i) that are received by it and are not otherwise invested under section 176 (a) into an account established in a financial institution in the name of the body corporate; and
  1. (l)
    if the body corporate—
  1. (i)
    becomes liable to pay an amount that it is unable to pay immediately; and
  1. (ii)
    is not required under paragraph (j) to levy contributions to meet the liability;

levy contributions under section 174 to raise the amount; and

  1. (m)
    implement the decisions of the body corporate.
  1. (2)
    For the purposes of section 174, the body corporate may, in relation to contributions mentioned in subsection (1) (h) or (l), determine by comprehensive resolution an amount that is not greater than 10% of the contributions.
  1. (3)
    The body corporate may disburse amounts from its fund only for the purpose of—
  1. (a)
    carrying out its powers and functions under this Act or its by-laws; or
  1. (b)
    meeting a liability mentioned in subsection (1) (l).
  1. (4)
    A determination made by the body corporate under subsection (1) (h) may specify that the amounts concerned are to be raised by specified regular periodic contributions.
  1. (5)
    If the body corporate fails to convene an annual general meeting within the period required by subsection (1) (g), the next general meeting held after the expiry of the period is to be the annual general meeting of the body corporate.
  1. [16]
    Section 182 requires a body corporate to take out insurance to cover certain matters including, in the case of a CBC, damage to or death or bodily injury happening on or in relation to, the community property, and against the possibility of the members becoming jointly liable because of a claim arising in relation to any other happening against which the body corporate decides to insure by comprehensive resolution. The body corporate may also insure any property in which it has an insurable interest.
  1. [17]
    The Act s 185 provides for the establishment of an executive committee, and for the functions of the chairperson, secretary and treasurer. By s 189(2) a decision of the executive committee on a matter, other than those matters listed in s 189(1), is taken to be the decision of the body corporate. The matters excluded from this provision, termed restricted matters, include one relating to the fixing of a special levy on all members of the body corporate, one that seeks to alter the annual contribution of members of the body corporate, or one on which a decision may be made only by the body corporate under a comprehensive resolution or in general meeting.
  1. [18]
    Section 190(1) provides:

“The executive committee of a body corporate may undertake expenditure only if –

  1. (a)
    authorised by a comprehensive resolution of the body corporate; or
  1. (b)
    authorised in an emergency by the Minister.
  1. [19]
    Subsection (2) contains a mechanism to enable a proposal for expenditure to be determined at a extraordinary general meeting. Subsection (3) provides that subsection (1) does not apply to payment of an insurance premium, the expenditure of complying with a notice or order by a court, a local government, the State, the Commonwealth or a provider of a public utility service, or “in discharge of a liability incurred in relation to an obligation of the body corporate authorised by the body corporate in general meeting.”
  1. [20]
    Under s 192, a body corporate may appoint a body corporate manager and may delegate its powers to the body corporate manager, except for the restricted matters referred to in s 189. The appointment may be made on the terms determined by the body corporate: s 192(2)(c). In each of the years 1999-2010 the plaintiff had an agreement with a professional body corporate manager for it to act as manager in accordance with the agreement, although their functions appear to have been largely administrative rather than involving any great delegation of body corporate power.[17]This would have been a further expense incurred in accordance with the Act.

Caretaker Agreements

  1. [21]
    As is commonly the case, there were at the relevant time caretakers appointed for the buildings. These performed for the residential blocks various services of the kind commonly performed by a caretaker/manager of a residential block of units, under various contracts which have been entered into from time to time with the plaintiff. These services were performed essentially for the benefit of the residents in the residential bodies corporate. There was at one time a separate caretaking agreement between the then caretaker and the defendant for performance of such services in relation to the area of the defendant.
  1. [22]
    The plaintiff entered into a caretaking agreement with Cathedral Place Management Pty Ltd (“CPM”) dated 7 January 1999.[18]The agreement recited that the plaintiff had resolved to appoint CPM to perform various management, maintenance and other services for the plaintiff, and provided that the plaintiff appointed CPM as caretaker of “the property” for a term of five years commencing on 4 November 1998.[19]So far as I can see the term ‘the property’ is not defined in the document, though the term ‘common property’ is defined, and means the community property. From the terms describing the duties of the caretaker, which were set out in the second schedule of the agreement, it appears that the reference to ‘the property’ is a reference to the entire site. That interpretation is also supported by the provision for remuneration, which is set out in the first schedule, and which is based on factors such as the number of registered lots in each of the separate residential bodies corporates, and when the lots in those stages become registered.
  1. [23]
    The caretaker’s duties included carrying out the obligations of the plaintiff under any management agreement entered into between the plaintiff and any of the residential bodies corporate for the performance of management, cleaning and other services of a similar nature to the obligations of the caretaker under its agreement. The caretaker was to ‘use its best endeavours to see that the property (other than the interior of lots) was kept in good order and repair and to protect the interests of the body corporate and the owners of lots’. It was to police the observance of the bylaws and rules of the plaintiff by the proprietors and occupiers including their guests, licensees and invitees of the lots in the property. That provision does not make sense if the property refers only to the common property, that is the community property of the plaintiff, and suggests that the reference was to all of the lots in any of the bodies corporate within the overall site. The caretaker was to keep possession of master keys or keys of the body corporate and the lots in the property, again apparently a reference to the individual lots of the various bodies corporate rather than lots in the plaintiff.
  1. [24]
    The caretaker was also to report on things requiring repair or creating a hazard or danger and take remedial action where applicable, to arrange maintenance contracts, to ascertain and be aware of the general condition of the property, to provide security services to the property as far as the caretaker was reasonably able and lawfully capable of so doing, to inspect firefighting equipment and to arrange for external inspection of it at appropriate intervals, to prepare an emergency evacuation manual according to the requirements of the fire brigade, to inspect drainage, sewerage and septic systems servicing the property and if necessary arrange for the rectification of problems at the plaintiff’s cost, regularly to test the motors of any auxiliary system and arrange for maintenance and other works to be carried out on them, to inspect the lifts and security systems on the property and arrange for maintenance and other works necessary, to ensure that all common electric apparatus including lighting was kept fully functioning throughout the property and arrange for maintenance as required, at the cost of the plaintiff, to operate, inspect and arrange maintenance for the waste disposal system, to remove all rubbish and waste material daily from the point of disposal, to mow the lawns on the property and the adjacent footpath and to maintain the gardens to a high standard, to effect minor repairs and maintenance to the common property, to supervise the car parking arrangements, and to keep the reception manned during at least specified hours.
  1. [25]
    There were also cleaning and grounds maintenance requirements set out, to be performed on the basis of a daily routine, a weekly routine, a monthly routine and a six monthly routine. CPM was to provide monitoring using security cameras supplied and eight hours of night patrols every night with appropriate personnel.
  1. [26]
    There are aspects of the second schedule which suggests that it has not been drafted with careful attention to the definition of the term ‘common property’ in clause 1.1. For example, clause 22 requires the caretaker to clean all glass and windows in the common property (excluding the inside and outside of windows in each lot). This is to involve a professional window cleaner for windows not easily accessed, at the cost of the body corporate. It is not obvious to me from the evidence that there are any windows or glass in the common property as defined, and the reference in the daily routine to cleaning daily as required all exterior windows in common areas except for those windows out of normal reach, seems to be inconsistent with the notion that window cleaning is to be confined to common property as defined.
  1. [27]
    The first schedule provided a system of remuneration with a base figure per annum for the first year, to be increased by a specified amount for the second year, and in addition was to be increased annually in accordance with increases in the consumer price index, or by 3 per cent, whichever was the greater, plus such additional amount if any as may be negotiated between the caretaker and the committee. In addition there was an annual sum for each of the registered lots in each of the residential stages, when the lots in each of those stages became registered, and a specified annual amount commencing upon each of the future bodies corporate “being nominated pursuant to cl A1 of the second schedule.”[20]
  1. [28]
    There was in cl 16.2 a provision that if any clause was held to be illegal or unenforceable that term or provision would to that extent be deemed not to form of the agreement, but the validity and enforceability of the remainder of the agreement would not be affected. By a deed of assignment dated 23 February 2000 CPM assigned its interest in the Caretaker Agreement to two individuals with the consent of the plaintiff.[21]At the same time the Caretaker Agreement was varied by including a provision to accommodate the existence of GST.
  1. [29]
    On 31 October 2008 an agreement was entered into between the plaintiff and Symland Pty Ltd trading as Star Building Management Services (“Symland”) under which Symland agreed to perform the obligations of the caretaker under the 1999 Caretaking Agreement as varied by the deed of assignment and a further deed of variation between the plaintiff and the individual assignees dated 2001, for a period of one year for a remuneration of $476,992.[22]The recitals to this agreement noted that the plaintiff had entered into management agreements with each of the residential bodies corporate within Cathedral Place. The recitals also pointed out that the plaintiff was desirous of providing onsite caretaking, management, administration, control and use of the common property of the plaintiff, including the podium area and gardens, and of the residential “subsidiary” bodies corporate.[23]Nevertheless, this recital does make it clear that the obligations of the caretaker are essentially performed in relation to the common property of the residential bodies corporate within the development.
  1. [30]
    The 2008 agreement was in turn superseded by a caretaking agreement dated 12 October 2009 also made between the plaintiff and Symland.[24]Symland was appointed caretaker for a term of three years from 4 November 2009 in return for the remuneration described in schedule 1. That schedule provided a total remuneration of $637,046.67 per annum, of which $200,000 was apportioned to the plaintiff, with the balance apportioned between the various residential bodies corporate, presumably on some logical basis. The schedule also contained a provision for the annual remuneration to be increased annually by the consumer price index or 7 per cent, whichever was the lesser. The duties of the caretaker in schedule 2 are generally in similar terms to the duties of the caretaker in the 1999 agreement, although there are some differences, including a change in the definition of “common property” which was used in the statement of several of the duties, to cover both community property of the plaintiff and the common property of each of the residential bodies corporate under the 1980 Act. This no doubt had the effect of greatly expanding the amount of glass and windows required to be cleaned.
  1. [31]
    Again there are a number of specific duties. It is notable that in common with the earlier agreements much of the specialised repair and maintenance work required is to be undertaken by others under the supervision of the caretaker, lightbulbs which are not operating in the common areas of the residential bodies corporate are to be replaced with new bulbs supplied at the expense of the plaintiff, any firefighting equipment anywhere within the site is to be maintained at the expense of the plaintiff, and maintenance of lifts anywhere in the site is to be undertaken pursuant to arrangements made by the caretaker but at the expense of the plaintiff. The plaintiff was responsible for the cost of maintenance, repair, servicing and testing of roller and automatic doors, and the cost of pest control throughout common areas.
  1. [32]
    The individual fulfilling the role of caretaker from time to time makes use of an office and air conditioner located in the foyer to the block of units within building unit plan 106912, identified as A block. Also in that foyer are a meeting room said to be used by the plaintiff, furniture owned by the plaintiff and plants which are paid for by the plaintiff, I assume under a contract to supply decorative pot plants, and a quantity of security and communication equipment owned by the plaintiff and to be used by the caretaker to provide the monitoring referred to in the various caretaker agreements.

Management Agreements

  1. [33]
    On 28 September 2004 the plaintiff entered into management agreements with four of the residential bodies corporate which appeared to be in identical terms.[25]The contracts required the plaintiff to perform management duties in accordance with a schedule on the basis that the respective body corporate pay the plaintiff the actual costs of all things done by it pursuant to the terms of the agreement. A mechanism was put in place to permit this to be done. There was also a formula given for the sharing of costs by reference to lot entitlement where a cost incurred by the plaintiff applied to all parcels, so that the costs of the relevant body corporate could be derived: cl 3.4. This formula on its face applied only where the cost applied to all six of the bodies corporate on the site, including the defendant. The formula does not apply directly in circumstances where a cost incurred by the plaintiff applies to all residential parcels, but not to the defendant’s parcel, but the formula could easily be modified to apply the same general approach in such a situation.
  1. [34]
    Those agreements on their face ran for a period of just under five years, but they all appear to be have been superseded by agreements entered into on 4 November or 1 December 2004, at which time an agreement was also entered into with the remaining residual body corporate.[26]The later agreements provide essentially for the same thing, but with a 10 year term beginning on 1 November 2004: cl 2. These agreements also appear to be in identical terms, and indeed in identical terms to the earlier agreements except for the length of the term of the agreement, and the existence of an option to renew on the part of the plaintiff for a further term of 10 years. The new agreements provided also that each body corporate must pay the plaintiff the actual costs for all things done for it pursuant to the terms of the agreement[27]
  1. [35]
    In these circumstances it is unnecessary to determine whether the power of the plaintiff body corporate conferred by s 176(c) is limited to entering into an agreement for the provision of amenities or services on a “user pays” basis, because that is all that the agreements purport to do. On their face the relevant residential body corporate is obliged to pay the cost, that is the actual cost, of the provision of services by the plaintiff under the agreement, and the terms of the agreement make it clear that this extends to services which benefit two or more residential bodies corporate. The duties to be performed by the plaintiff under this agreement are not expressed in anything like the same terms as the duties to be performed by the caretaker under the various caretaking agreements, but obviously many of the duties required of the caretaker could be identified as things done by the caretaker by which it performed the obligations of the plaintiff under one of these agreements.
  1. [36]
    Given the basis upon which the matter was argued before me, and the views that I take of the legal position, it is not necessary or appropriate for me to attempt any detailed analysis of the extent to which particular functions to be performed by the caretaker under the caretaking agreement in relation to the premises of a particular residential body corporate could be characterised as the performance by the plaintiff acting through the caretaker of the plaintiff’s obligations under a management agreement with that body corporate. Nor do I propose at this stage to scrutinise the detail of the work to be done under the caretaking agreement, to see if there are functions of the caretaker identified in that agreement which are concerned neither with the control, management, administration and maintenance of the community property of the plaintiff, or its personal property, nor with the performance of obligations imposed on the plaintiff by the agreements with the residential bodies corporate under s 176(c). No particular obligation falling outside those powers and duties in the caretaking agreements was identified by the defendant. I would however make two comments which arise from the material that I have seen.
  1. [37]
    The first is that the current (or at least the more recent as at 2010) caretaking agreement apportions the remuneration payable to the caretaker between the five residential bodies corporate, and the plaintiff, in a particular way, where the amount apportioned to the plaintiff appears to be essentially arbitrary. That agreement between the plaintiff and the caretaker would be binding in contract between those parties, but it would not limit the liability of a particular residential body corporate to the plaintiff under the management agreement between them. Indeed, where the caretaker arranges for things to be done on the common property of the particular residential body corporate by some suitably qualified tradesman, the caretaking agreement provides for that to be done at the expense of the plaintiff, but the plaintiff would be entitled to recover that cost from the residential body corporate concerned under the agreement between them.[28]
  1. [38]
    The other comment is that I cannot identify in the accounts for the plaintiff which are in evidence what payments have been made when by the various residential bodies corporate pursuant to these various management agreements. Indeed, in the accounting periods ending August 2009 and August 2010 the amount shown in the plaintiff’s accounts as expenditure for caretaker fees[29]seems to be much less than the amount payable under the then applicable version of the caretaker agreement.

Bylaws

  1. [39]
    Under s 15(4) the CBC may make bylaws in relation to the ongoing management of the community property lots. By s 202 the CBC may make bylaws regulating the quality of design and development within the site, and by s 203 the CBC may make bylaws for the control, management, use or enjoyment of lots (other than community property or precinct property) within the site. Bylaws under s 203 are termed ‘activities bylaws’, and bind various people including proprietors, lessees or occupiers of a lot within the site, which would include a lot within any of the community development lots. Section 206 provides for making, and the effect of, bylaws for the control, management, administration, use or enjoyment of the community property of the CBC. This however does not include bylaws which restrict the use of any part of the community property to certain persons or groups of persons; such bylaws have to be made under s 206A of the Act, and require a resolution without dissent: s 206A(2). Such a bylaw may include provisions about imposing and collecting levies from the persons entitled to use the relevant part, called restricted community property: s 206A(5)(b)(iv).
  1. [40]
    The operation of the bylaw making provisions has been considered previously, in litigation between the two parties in the present matter over the operation of the car park on the site: [2012] QSC 301; [2013] QCA 264. The developer had promised purchasers of lots in the defendant unallocated car spaces on the car parking floors, and in purported compliance of this obligation at a time when it controlled the plaintiff made bylaw 28 which conferred an entitlement on the proprietors of the defendant and person authorised by them to use that part of the community property located on the car park floor.[30]In June 2001 it was resolved that a boom gate and ticketing dispenser would be installed, and from about July 2000 the parties acted on the basis that the defendant would manage and maintain the car park at its own cost and risk and receive income from parking tickets: [13]. However on 28 June 2010 by a comprehensive resolution at an extraordinary general meeting of the CBC bylaw 28 was “deleted”: [14].
  1. [41]
    Unsurprisingly, the defendant was unhappy about this and challenged the validity of that resolution. The issue was whether bylaw 28 had been made as a restricted community property bylaw under s 206A, in which case it would have required a resolution without dissent, and could only be revoked by a resolution without dissent: [34], [36]. The resolution in 2010 was not made without dissent, though it was a comprehensive resolution which would have been effective to revoke the bylaw had it been made under s 206. The court held that a resolution would be a resolution without dissent only if it was notified as one to be considered as a resolution without dissent, and was passed as such: [41]. Since neither of those things had occurred the fact that at the meeting which passed the resolution to adopt bylaw 28 there was no dissenting vote did not mean that the resolution was one adopted as a “resolution without dissent” for the purposes of the 1993 Act.
  1. [42]
    There had not been the required notice of an intention to put it to the meeting as a resolution without dissent, nor did the meeting purport to consider it as a resolution which had to be passed without dissent to be valid, or purport to adopt it as a resolution without dissent. On the contrary, it was expressly made as a comprehensive resolution. Hence in fact the bylaw had been made under s 206, not s 206A, and the latter resolution was effective to revoke it.[31]
  1. [43]
    It appears that, from the beginning, provision has been made in the bylaws of the plaintiff for exclusive use of car parking spaces within the community property, or the common property of a residential body corporate, by the owners of lots within the residential bodies corporate. This has been done by bylaw 25, which allocates particular car parking space to the owners and occupiers for the time being of particular lots in the building as listed in the allocation schedule attached to the bylaws, and as identified in a car parking plan.[32]There is capacity for two lot owners who mutually agree to swap car parking spaces, but otherwise there does not seem to be any capacity within the bylaws to make any change in these matters.
  1. [44]
    Bylaw 21 is also relevant to this, because it provides:

“The proprietors to whom the grant of exclusive use of common property has been made shall be responsible, at their own expense, for the carrying out of the maintenance and upkeep responsibilities imposed upon the body corporate [the plaintiff] pursuant to the Act with respect to each such exclusive use area (save and except cleaning of such area).  The aforesaid grant of exclusive use and enjoyment is made subject to and conditional upon the said proprietors allowing the body corporate and its committee and its properly appointed servants or agents, at all reasonable times, access to such area for any proper purpose including inspection and maintenance thereof.”

  1. [45]
    In practice the area of car park allocated in this way covers part of the community property on the car park level, and part of the common property of the residential bodies corporate.[33]One of the defendant’s complaints is that during the relevant period the plaintiff was levying contributions from the defendant and receiving payments from it in respect of costs relating to the maintenance and upkeep of the exclusive use car parks, presumably other than cleaning such areas. One of the matters complained of was the cost of applying a surface coating throughout the car park, including to the surface of the car parking spaces allocated exclusively to the proprietor or occupier of particular lots. In response, the plaintiff argued that this does not represent maintenance or upkeep of such car parking lots, but rather effecting an improvement to the car park, by the installation of a new surface coating system which would make the car park safer and in that way enhance its value.
  1. [46]
    There was evidently some dispute between the plaintiff, the developer and the builder in relation to the car park, and an agreement was reached under which the developer and the builder contributed most of the cost of the application of this surface coating; nevertheless, part of the cost did fall on the plaintiff. It appears that this related to the whole area of the car park, and was not confined to that portion of the car park which was community property of the plaintiff. I think there is force in the proposition that applying such a coating is in the nature of an improvement to the car park, and that the cost of undertaking this work in respect of a particular car parking space the exclusive use of which has been allocated to the proprietor of a particular lot could not be said to be carrying out maintenance and upkeep responsibilities imposed on the body corporate pursuant to the Act, giving an entitlement under the bylaw to recover that portion of the cost from the proprietor of that lot. On the other hand, it is not obvious to me that there is any basis upon which the plaintiff is responsible for paying for an improvement in the nature of a surface coating to that part of the car park which is within the common property of one of the residential bodies corporate.[34]
  1. [47]
    The bylaws also provide in bylaw 27 for what is described as “restricted community property”, namely a part of the community property identified on a plan annexed to the bylaw and marked “recreation area”. This is the whole of that part of lot 4, the community property lot, which is located on the podium level. It contains a swimming pool, a spa, a lagoon, various paths including a bridge over the lagoon, and areas of garden and lawn: Exhibit 2. The persons entitled to use this area are each of the residential bodies corporate,[35]and any proprietor, lessee or occupier of a lot created by the registration of any of those building unit plans. Under the bylaw the plaintiff is responsible for the maintenance of this area, but there is a mechanism for it to strike levies charged on the five residential bodies corporate covering the maintenance of it, including normal operating costs and a sinking fund levy for anticipated periodic capital costs, to be levied in the same manner as the levies for the general maintenance responsibilities of the plaintiff. The bylaw specifies the proportions in which the five residential bodies corporate are to be levied.
  1. [48]
    On the face of it this bylaw complied with s 206A, and the provision for levies was consistent with s 206A(5)(b)(iv). It was not suggested by either party that this bylaw was invalid in either of these respects. I should say that one of the curious features of the documentation is that, as far as I know, the swimming pool in the restricted community property is the only swimming pool on the site. Under the bylaw the plaintiff remains responsible for maintenance of this area, and the responsibility of the residential bodies corporate under the bylaw appears to be limited to paying levies. Yet the agreements made between the plaintiff and each of the residential bodies corporate provided that one of the functions the plaintiff was to perform for them was to ensure that “the pool is kept clean and appropriately treated so that it is fit for use”: schedule cl 1.1(c). There is also an obligation as one of the management duties to ensure that lawns were mowed as required and gardens maintained in good condition: schedule cl 1.1(b). It is not clear whether this is confined to lawns and gardens on the common property of the relevant residential body corporate, or whether it extends to lawns and gardens on the restricted community property.[36]
  1. [49]
    Under the management agreement each body corporate has to pay to the plaintiff the annual cost of all things done pursuant to the terms of the agreement, and as discussed earlier presumably this includes the apportioned cost of keeping the pool clean and appropriately treated, mowing the lawns and maintaining the gardens in the restricted common property. Presumably the residential bodies corporate do not have to pay these costs twice, both through a levy system under the bylaw and pursuant to the management agreements, but nobody seems to have given much thought to the question of how these apparently overlapping obligations to pay costs are supposed to work together.[37]I suppose they can be reconciled on the basis that the levies under the bylaw deal with anticipated costs, but the effect of the management agreements is that, to the extent that those levies are inadequate to cover the actual costs, the bodies corporate are required to pay them under their contractual obligations.

Background

  1. [50]
    In 2007 a dispute arose as to the proper allocation of expenses between restricted property and unrestricted property and the proper raising of levies to meet the expenses. The defendant also identified other expenditure incurred over the years, which the defendant says was incurred for the sole benefit of the residential bodies corporate, or the owners or occupiers of lots in those bodies. Advice was received from an alternative dispute resolution service in relation to the matter, which the plaintiff submitted was in various respects wrong. In the course of the dispute however it emerged as a result of a post-audit report by accountants that levies had been charged on the members of the CBC on the basis of the number of lots involved in each body corporate, rather than in proportion to the voting entitlements of each body corporate, as required by s 174(2). There is no dispute before me that this did reflect an error in the way the plaintiff had been administered. The accountants were asked to prepare a calculation as to the amount of the underpayment, but to some extent the matter was then overtaken by dispute proceedings under the 1980 Act, made applicable to a development under the 1993 Act by s 214A of that Act.
  1. [51]
    The matter went before a referee who noted that there were at that stage two separate disputes, a dispute about adjustments required as a result of levies having been calculated on an incorrect basis, and a dispute about the incorrect allocation of expenses between the CBC and the residential bodies corporate, a matter raised by the defendant. At one stage the referee foreshadowed a decision to require the plaintiff to levy a specific contribution from the defendant in the sum of $168,714.70, which amount upon payment was to be dealt with largely by crediting various amounts to the residential bodies corporate, by reference to the amounts they were said to have overpaid. It appears to me that at that stage the referee did not make any formal order in relation to either complaint. There were some further proceedings between the parties, but nothing further in particular was achieved. A levy was raised on the defendant in accordance with the referee’s proposal, which made it unnecessary for the referee to order that that step be taken. That levy has not been paid, and by the present proceeding the plaintiff claims from the defendant the amount of that levy, together with a later levy, interest and costs.

Summary of cases

  1. [52]
    The plaintiff’s case is essentially straightforward. The plaintiff having levied a contribution from the defendant, the contribution is payable to the body corporate in accordance with the decision to make the levy and may be recovered as a debt by the body corporate in a court of competent jurisdiction: s 174(4). The defendant’s response is also on the face of it quite straightforward: under the 1993 Act, there are only certain matters in respect of which levies can be raised, and the plaintiff has for some time been raising levies on the basis of budgets including amounts which were not properly payable by the defendant under the 1993 Act, so that, if these matters are taken into account, there is actually no money owed by the defendant to the plaintiff.
  1. [53]
    The plaintiff’s response to this defence is twofold. First, it disputes the proposition that it is not entitled to levy the defendant in respect of the matters relied on by the defendant in its argument, but it says that in any event the defendant has no right to dispute the plaintiff’s entitlement to recover these amounts, because the only basis upon which the decision to raise the levy can be validly challenged is by the dispute resolution procedure of the 1980 Act, and there has been a determination by a referee under those provisions supporting the levy on which the plaintiff sues. That submission is in effect that this court has no power to go behind the plaintiff’s decision to levy the contribution from the defendant. If that argument is correct, it means that it is unnecessary to determine much of the defendant’s defence.
  1. [54]
    The defendant’s argument is that the plaintiff’s right to levy a contribution depends on the contributions falling within s 177(1)(h), that is, that it be necessary for the purposes of meeting actual or expected liabilities under paragraph (b), or “for the payment of insurance premiums, rates or any other liability of the body corporate (other than the amounts referred to in paragraph (l)): s 177(1)(h)(ii). Liabilities incurred under paragraph (b) are liabilities in relation to the proper maintenance and repair of community property, including any improvements on the community property, or personal property.[38]It does not appear to be disputed that the plaintiff has been levying contributions for matters which are not confined to the actual or expected liabilities incurred or to be incurred under that paragraph, or indeed for the payment of insurance premiums or rates. The plaintiff however relies on the expression “any other liability of the body corporate”.

Humphries

  1. [55]
    The plaintiff’s argument is that if the body corporate has entered into a contract, a liability which arises as a result of that contract, including a liability for the cost of having done work which is required to be done pursuant to another contract, is a liability of the body corporate and therefore a matter properly taken into account under paragraph (h). The defendant however points to the provision of s 177(3), which restricts the purposes for which a body corporate may disperse amounts from its fund to carrying out its powers and functions under the 1993 Act or its bylaws, or meeting a liability mentioned in sub-s(1)(l). The defendant submitted that funds cannot be dispersed other than for the purpose of carrying out its powers and functions under the Act or the bylaws, so any liability incurred under a contract which did not involve carrying out those powers or functions was not one that was authorised by the Act. Money could not be dispersed for another purpose, and the incurring of an obligation to do so was beyond the power of the body corporate. Hence the wide expression in paragraph (h)(ii), “any other liability” has to be read down to refer to any liability properly incurred, that is to say, only a liability incurred for the purpose of carrying out the powers and functions of the body corporate.
  1. [56]
    This argument relies on the decision of the High Court in Humphries v The Proprietors “Surfers Palms North” Group Title Plan 1955 (1994) 179 CLR 597. In this case the appellants had been the managers under a management agreement with a body corporate. One of the things they had to do in that capacity was provide a letting agency for those individual proprietors of lots within the body corporate, apparently without any remuneration for that service from the individual proprietors, on the basis that this was one of the services in respect of which the body corporate paid an annual lump sum payment.
  1. [57]
    The Queensland Court of Appeal held that there was no power to expend the body corporate’s funds in this way and it follows that the management agreement was beyond the power of the body corporate and invalid: [1992] QCA 369. The court said at p 10 of the joint judgment:

“Whether or not a body corporate has power to appoint a letting agent to provide a service to individual proprietors who seek to avail themselves of it, no power to expend the body corporate's funds in payment of the letting agent for such services to individual proprietors has been identified”.

  1. [58]
    The appellants appealed the High Court but the appeal was dismissed. Brennan and Toohey JJ noted at p 602 that, apart from the care of personal property and a mailbox, the duties of a body corporate imposed by the 1980 Act related to the common property or things associated with one lot to be used for the servicing or enjoyment of the common property:

“None of the duties extends to the provision by the body corporate of services to the proprietors of individual lots”.

  1. [59]
    Reference was made to the powers of a body corporate conferred by s 37(2) of the 1980 Act which relevantly provided:

“A body corporate may –

  1. (a)
    Enter into an agreement, upon such terms and conditions (including terms for the payment of consideration) as may be agreed upon by the parties thereto, with a proprietor or occupier of a lot for the provision of amenities or services by it to the lot or to the proprietor or occupier thereof”.
  1. [60]
    This is similar but not identical to the terms of s 176(c) of the 1993 Act which relevantly provides:

“A body corporate may –

  1. (c)
    Enter into an agreement for the provision of amenities or services by it or another person to –
  1. (i)
    A lot; or
  1. (ii)
    The proprietor or occupier of a lot; or
  1. (iii)
    A parcel comprised in a building units or a group titles plan…”
  1. [61]
    Brennan and Toohey JJ commented that s 37(2)(a) did not authorise the making of an agreement with a person other than the proprietor or occupier of the lot to whom or to which the body corporate was to provide the services. In that respect the position is not the same with s 176(c), which contemplates that the amenities or services may be provided by another person in the alternative to the body corporate, and does not specify with whom the agreement may be made.
  1. [62]
    Their Honours noted that the body corporate had not entered into an agreement with the proprietor or occupier of any lot, and added at p 602:

“Had it done so, it would have had authority to perform that agreement by employing an agent or servant (such as the appellant) to provide the services contracted for…. However, if an agreement had been made with particular proprietors or occupiers, it would not have been a proper exercise of the body corporate’s powers to require the funds raised by contributions from all proprietors to bear the cost of provision of the service for particular proprietors or occupiers.”

  1. [63]
    In other words, services could be provided but only on a cost recovery basis. Brennan and Toohey JJ then referred to a passage in the decision of the full court in Coastalstyle Pty Ltd v Proprietors Surf Regency BUP 4246 [1995] 1 Qd R 132. In that case the Court of Appeal had said that the powers of a body corporate extended to allowing a business to be conducted which provided services available for the benefit of all proprietors, whether or not some may choose not to participate. Brennan and Toohey JJ said at p 604:

“The passage cited suggests that it is within the ordinary powers of a body corporate to provide services for the proprietors of individual lots who wish to use those services. With respect, we are unable to agree. The powers of a body corporate are confined chiefly to management and control of common property, and expenditure of the funds of the body corporate on the provision of services for individual proprietors is not sanctioned merely because the services are available to all proprietors who wish to use them. A power to provide such services is not incidental to the body corporate’s statutory duties or powers”.

  1. [64]
    Their Honours concluded that there was no statutory power authorising the respondent to conduct a letting agency for the benefit of some proprietors, nor was there any agreement which might have been implemented by procuring another person to provide a letting services for particular lot proprietors or occupiers, so it was beyond the powers of the body corporate to enter into a contract to procure the provision of those services. They rejected an argument that that part of the contract was severable, and said:

“If the disbursement of the body corporate’s funds for the purpose of procuring the provision of a letting agency is prohibited, the incurring of an obligation to disburse funds for that purpose is beyond the powers of the body corporate. The body corporate is thus incapable of providing consideration for the manager’s promise contained in clause 2(r)”.

  1. [65]
    The reasoning of McHugh J was similar. He said at p 614 that the provisions of the 1980 Act “confer power in relation to the common property. They do not confer a power to enter into an agreement with a third party which affects the lots of other individuals as well as the common property.” Further, the agreement purported to give the manager the exclusive right to carry on the business of letting units in a complex, and the body corporate had no power to prevent other lot owners from carrying on such a business within their premises. In his view, s 37(2):

“Tends to indicate that services for the benefit of a proprietor are to be paid for by the proprietor and not out of the funds contributed by the other proprietors”.

  1. [66]
    He also expressed at p 618 disagreement with what had been said by the Court of Appeal in Coastalstyle (supra). He also agreed that the objectionable parts of the contract were not severable, so the whole agreement was invalid. Deane and Gaudron JJ considered that the terms of the management agreement did not exclude the right of the manager to charge the proprietors of a lot, who used the manager’s services for letting that lot, a fee or commission for those services, but did not consider that that affected the reasoning overall as set out in the other judgments, with which in substance they agreed. They said at p 608:

“Examination of the powers of the body corporate to expend its funds discloses that those powers did not encompass the payment of remuneration of the conduct of such an agency from a unit in the complex”.

  1. [67]
    Although the body corporate had wide powers to do all things reasonably necessary for the control, management and administration of the common property for the benefit of the proprietors, that did not extend to entering into such a contract: p 608. There was no other provision of the Act which expressly or impliedly authorised the body corporate to enter into such a contract or to expend its funds in the payment of such remuneration: p 609.
  1. [68]
    It seems to me that there were therefore two reasons why the contract in that case infringed the requirements of the Act: there was no power in the body corporate to enter into an agreement with anyone other than the proprietor or occupier of the lot for the provision of services by it to the lot or the proprietor or occupier of the lot, and there was no power to expend the funds raised by contribution from all proprietors on the provision of services to particular proprietors or occupiers.
  1. [69]
    In Dynevor Pty Ltd v Proprietors of Centre Point BUP 4327 [1995] QCA 166, Macrossan CJ and McPherson JA in a joint judgment said at p 20-1:

“The essence of the decision in Humphries is that the powers of a body corporate, constituted as it is under the Building Units and Group Titles Act 1980 as a creature of statute, are circumscribed by the specific statutory provisions of the Act. There being no statutory power authorising the body corporate to expend corporate funds for the benefit of individual proprietors or their units, an agreement contemplating or requiring such expenditure was held to be beyond power; or, if otherwise authorised by express agreement with a proprietor, to be an improper exercise of the powers of the body corporate to apply corporate funds for the benefit or purposes not of the body corporate but of a particular proprietor or proprietors”.

  1. [70]
    So far as I am aware the decision in Humphries has never been reconsidered by the High Court, nor has the understanding of its effect changed.
  1. [71]
    The plaintiff submitted that the distinction between the legislation in that case and the 1993 Act is that the latter permits by s 176 the body corporate to enter into an agreement for the provision of amenities or services by another person to the proprietor or occupier of a lot, and in that way authorises the plaintiff to enter into agreements such as the relevant caretaking agreements. Once that point has been reached it is submitted that the plaintiff may disburse amounts from its fund in order to carry out such an agreement, because carrying out an agreement which the Act expressly permits the body corporate to enter into involves carrying out the powers and functions of the body corporate under the Act. It seems to me however that this difference in wording overcomes only one of the concerns of the High Court in Humphries, and does not overcome the point made by Brennan and Toohey JJ at p 602, that if an agreement had been made with particular proprietors or occupiers, it would not have been a proper exercise of the body corporate’s powers to require the funds raised by contribution from all proprietors to bear the cost of provision of the services for particular proprietors or occupiers. The same point was made on p 604 in disagreeing with the earlier statement of the Court of Appeal in Coastalstyle (supra). McHugh J expressed a similar view at p 614.
  1. [72]
    The plaintiff referred to s 176(c) of the Act, which authorises a body corporate to ‘enter into an agreement for the provision of amenities or services by it or another person to a lot, or the proprietor or occupier of a lot, or a parcel comprised in a building units or a group titles plan.’ Section 176(c) refers to the provision of ‘amenities or services’ by the body corporate. The term ‘amenities’ is not defined in the Act, but in schedule 5 there is a definition that ‘service’ means:

“(a) a service for

  1. (i)
    water, sewerage or drainage; or
  1. (ii)
    gas, electricity or oil; or
  1. (iii)
    air conditioning; or
  1. (iv)
    garbage; or
  1. (b)
    a service for television, telephone or another means of telecommunication; or
  1. (c)
    another service prescribed by regulation.”[39]
  1. [73]
    It could be said that regularly inspecting the drainage and sewerage systems amounts to the provision of a service for sewerage and drainage, and an obligation to remove rubbish and waste material daily from the point of disposal could be said to amount to a garbage service, although it is not clear that this is something which is done by reference to a lot, presumably a lot within one of the residential bodies corporate.[40]Otherwise it does not seem to me that the things being done by the caretaker under this agreement amount to the provision of a service as defined to a lot or an owner or occupier of the lot. As well, when the whole of a community development lot is occupied by a body corporate under the 1980 Act, it becomes a parcel and so falls within s 176(c)(iii).[41]The question of whether the performance of the Caretaking Agreement involves providing an amenity to the proprietor or occupier of a lot or a parcel, is more difficult, but it seems to me that there are a number of matters referred to which were not the provision of amenities to such people, such as providing information to the plaintiff, or holding and dealing with keys to lots in the property in accordance with cl A7.
  1. [74]
    The plaintiff referred to the matter of Henderson v The Body Corporate for Merrimac Heights [2011] QSC 336 where the decision in Humphries (supra) was distinguished. In Henderson an issue arose as to whether a caretaking agreement and a landscape maintenance agreement between the parties were valid, where the services to be provided included lawn mowing, and where there was no agreement between the defendant and any lot owner who required the services of lawn mowing and gardening upon his or her lot for that work to be paid for. The body corporate submitted that without the existence of such a cost recovery mechanism, the agreement with the plaintiff was beyond the power of the body corporate, on the authority of the decision in Humphries, and pursuant to the relevant provision dealing with the supply of services by a body corporate for that body corporate.[42]
  1. [75]
    That section expressly permitted the body corporate to engage another person to supply services for the benefit of owners and occupiers of lots, which included mowing services. It also permitted the body corporate to charge for the services by agreement with the person for whom the services were supplied, but only to the extent necessary to recover the cost of supplying the services. Section 118(3) then provided:

“In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate (other than body corporate administrative costs) for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service.”

  1. [76]
    McMurdo J, as his Honour then was, noted that subsection (2) was in permissive terms and did not qualify the power under subsection (1). Further, the obligation in subsection (3) was expressed in relative terms, and could involve a need for estimation and approximation, which made it less likely that the validity of any agreement between the body corporate and the third party for the provision of services depended on whether the requirement in subsection (3) had been satisfied: [22]. In effect, his Honour held that the obligation in subsection (3) was relevant to the relationship between the body corporate and its members, but was not a condition for the validity of an agreement between the body corporate and a third party for the third party to provide any particular services.
  1. [77]
    Insofar as Humphries established a principle that it is not permissible for all lot owners to be levied for the purpose of paying for the provision of services only to some lot owners, that had been displaced by the express, and more limited, terms in the applicable provision in that case. I accept that it is essential in a particular case to focus on the specific legislative provisions which apply in that case, though this decision does not I think detract from the force of the proposition that in the absence of some indication to the contrary the presumption is that it is not a legitimate part of the function of a body corporate to provide benefits for some lot owners only, at the expense of all lot owners.
  1. [78]
    The plaintiff also referred to the decision of Dorney DCJ previously in these proceedings in [2016] QDC 234, at [50] where his Honour noted comment by McHugh J in Humphries at p 616 that the Act then under consideration imposed unlimited liability of the proprietors for all liabilities properly incurred by the body corporate. The same may apply to the 1993 Act, but what is important in that situation is the significance of the limitation implied by his Honour in the word “properly”. The plaintiff also referred to a number of decisions of a magistrate or adjudicators, which are not binding on me.
Analysis re subsidisation
  1. [79]
    In my opinion an aspect of the approach of the Court in Humphries (supra) was that the legislation then under consideration did not contemplate or permit a situation where benefits would be conferred on some lot owners at a cost shared between all the lot owners, in effect, a situation where the owners who were not obtaining those benefits were subsidising those who were. This is a different question from whether that Act authorised the body corporate to enter into an agreement for the provision of services to lot holders in the absence of an agreement between the body corporate and the lot holders, and is therefore not a conclusion which is overcome by the existence of a statutory power to enter into such an agreement.
  1. [80]
    The High Court’s rejection of subsidisation was not based on any express term of the Act, but rather on the absence of any express authorisation in the Act of such subsidisation, or any indication that such subsidisation was intended. In that respect, the position is the same with the present Act. There is nothing in s 176(c) which contemplates the provision of amenities or services to a lot or the proprietor or occupier of a lot, or a parcel, other than pursuant to an agreement; it is not part of the function of the body corporate to provide amenities or services to such people. There are provisions in the Act dealing with benefits conferred specifically on one or some proprietors. Under s 161(5), if certain works are undertaken by the CBC on community property it must recover all the cost of undertaking those works from the members of the community body corporate who requested the works. On the other hand, if the CBC develops or constructs facilities on the community property for the use of persons who lawfully occupy land within the site, that is, all such persons, the obligation to maintain the facility falls on the CBC.[43]
  1. [81]
    Further, s 206A provides that a bylaw restricting the use of part of the community property may include provisions about the maintenance of the restricted community property, and provisions about imposing and collecting levies from the persons entitled to use the restricted community property. That is consistent with an intention that where community property is made available to a particular person or persons, it is to be at the cost of that person or persons. I acknowledge the Act does not in terms make such a situation mandatory, but that is no doubt because a bylaw under s 206A can only be made by a resolution without dissent.
  1. [82]
    Apart from that, the idea of services or amenities being provided selectively to some people within the overall community at the expense of everyone is fundamentally an unfair and unjust way for such a community to function. I would therefore expect that, if there were a legislative intention for that to occur, it would appear with reasonable clarity from the terms of the legislation itself. I can find nothing in the legislation which provides any positive support for such an approach. In my opinion, on its true construction s 176(c) authorises agreements for the provision of amenities or services by the body corporate or another person to the various persons identified, but does not authorise a process of administration which would involve subsidisation, relevantly in the context of the present dispute, of owners of lots in the residential body corporate by the defendant. That is not to suggest that any of the particular agreements entered into by the body corporate were ultra vires and invalid; rather this is concerned with the proper internal administration of the defendant.

Specific complaints

  1. [83]
    The defendant complained of the way costs of a number of matters were allocated by the plaintiff for the purposes of imposing levies. One was the costs associated with the maintenance of the restricted community property, that is, the podium level of lot 4, which is the subject of bylaw 27. Here it is not necessary to be concerned with any implication from the structure of the Act as a whole, because bylaw 27(c) requires the plaintiff to collect by levies on the residential bodies corporate sufficient funds to enable it to meet its budget for the maintenance of the relevant area, in terms of normal operating costs and anticipated periodic capital costs. There can be no dispute therefore that all of those costs must be met by levies only on the residential body corporate. That in my opinion includes not just the direct cost of doing the work or having it done, but, if contractors are arranged by and supervised by the caretaker, the cost of the caretaker doing that, since that is a cost of maintaining that area.[44]
  1. [84]
    To the extent that such costs have during the relevant period been included in the amount the subject of levies on proprietors generally under s 177(h) they have in my opinion not been properly included. I shall however deal separately below with the question of what effect this has on the determination of the amount to be raised by way of contributions under that paragraph. The plaintiff submitted that there was no obligation on it to provide in its accounts separately for the costs associated with Restricted Community Property and other expenses: Submissions para 125. It regard that as a startling proposition. Section 177(1)(c)(i)(B) requires the plaintiff to keep “proper books of account … showing the items for which the amounts were received or paid.” Where particular expenditure is, under a bylaw, to be dealt with separately from other expenses in terms of levies on members, proper books of account must distinguish such expenditure in such a way as to enable the obligation of the plaintiff under this bylaw properly to be carried out. It is not to the point that the existing accounts were the subject of debate and decisions taken by the plaintiff. Muddling through is no substitute for doing things properly. In my opinion, the plaintiff has a duty to allocate these costs properly, to perform its function under the bylaw, and therefore has a duty to keep accounts in such a way as to enable that to be done.
  1. [85]
    With regard to the cost of maintaining the exclusive use car parks, again it seems to follow from bylaw 21 that an individual proprietor who has the benefit of a particular car park within lot 4 is responsible for the maintenance of it, except for the cost of cleaning it. Presumably therefore the plaintiff remains liable for the cost of cleaning that part of the car park which lies within lot 4. It does seem to me however that there is no basis upon which the plaintiff can properly incur costs in relation to the maintenance of those parts of the car park which fall within the common property of the residential body corporate, if that cost is to fall on all proprietors including the defendant. Insofar as those costs were incurred pursuant to obligations under the management agreements with the various residential body corporate, pursuant to those agreements those costs are to be reimbursed by those residential body corporate. The obligation to keep proper accounts requires the plaintiff to account for such costs in a way which permits this to be done properly.
  1. [86]
    As I indicated earlier, with regard to the improvement of the car park by the laying of a superior surface, insofar as this related to that part of the car park within lot 4 it was properly a cost of the plaintiff, unless it came within s 161, in which case the cost must be recovered from the members of the CBC who requested the works. I cannot see how the plaintiff has any power to spend money effecting improvements on the common property of any of the residential bodies corporate, unless it was pursuant to the management agreement with that body corporate, in which case the cost of that work is the responsibility of the respective residential bodies corporate, presumably in proportion to their respective shares of the area of the car park so treated.
  1. [87]
    With regard to the expenses incurred under the caretaking agreement, insofar as these agreements involved the performance of the plaintiff’s obligations to the various residential body corporate under the management agreements with those body corporate, the terms of those management agreements require that the appropriate share of the cost be paid by the residential bodies corporate. The present hearing did not extend to an analysis of the detail of those agreements to identify whether there are particular things done by the caretaker which would not fall within the scope of those agreements, though my impression is that the bulk of the caretakers obligations under their various agreements would be within them. Again, this does not go to the validity of the agreements, which are authorised by s 176(c).
  1. [88]
    There can be no question of the caretaker agreements being invalid on the reasoning in Humphries, (supra), because the existence of the management agreements with the residential bodies corporate, which is itself authorised by bylaw 24(a), serves to distinguish this case from the situation in Humphries. Indeed, the scheme here in relation to the provision of services pursuant to the management agreements is an example of the situation that the court in Humphries considered would have been valid. It may be however that there have been errors on the part of the plaintiff in the proper allocation of the amounts paid to the caretaker as between the plaintiff and the residential bodies corporate. That is something which I have not investigated in this proceeding, given the way in which it has been conducted. Nevertheless, there were some matters raised specifically in the submissions in evidence.
  1. [89]
    One matter is that there is within one of the residential bodies corporate an area used as a gymnasium and sauna by the occupiers of any of the lots within any of those bodies corporate, the costs of which are met by the plaintiff. This does not appear to be an obligation on the plaintiff pursuant to the management agreement with the bodies corporate, though it can be said to be the provision of an amenity to the proprietors or occupiers of all of the lots within the residential bodies corporate.[45]
  1. [90]
    The duties of the caretaker under the last caretaking agreement included checking and cleaning the gym area and equipment daily, checking, inspecting and regulating the use of the sauna and scrubbing out, disinfecting the sauna benches and testing the operation of the sauna: Exhibit 1 document 60 p 441. This could be seen as within the scope of the obligation of the plaintiff to keep clean and maintain in good order and condition the common property of the relevant residential body corporate within which the gymnasium and sauna are located, assuming that this is within its common property, in which case it would seem that under the relevant management agreement the cost of doing so would be the responsibility of that body corporate.
  1. [91]
    It appears that the gymnasium and sauna have been set up at the expense of the plaintiff, and the equipment in there is the property of the plaintiff. Although under s 177(b)(ii) the plaintiff must maintain and repair any personal property vested in it, I cannot find any provision in the Act or bylaws which would authorise the body corporate to expend money on the purchase of gym equipment, or for that matter sauna equipment, for the establishment or continuation of a gymnasium and a sauna which is not within the community property of the plaintiff.[46]No particular basis for this expenditure was demonstrated by the plaintiff. In respect of this expenditure, it seems to me that there is force in the defendant’s submission that the plaintiff has incurred expenditure which it was not authorised to incur. If this money was dispersed by the body corporate from its fund, it seems to me that that was not authorised by s 177(3). It does not follow however that the plaintiff is entitled to, or should, behave as though the money had not been spent.
  1. [92]
    The same applies in my view to expenditure on the provision of pot plants within the community property of one or more of the residential bodies corporate. It is no part of the powers or functions of the plaintiff to do that, and in my view the money was not properly spent at the expense of the plaintiff generally; but the fact remains that the money has been spent.
  1. [93]
    Another matter complained of was the cost of painting. Commonly with a building unit or group title the exterior of the buildings is part of the common property, but it appears from the documents I have seen that virtually all the exterior of the buildings on the site is within the common property of the residential bodies corporate. There would be a small part within the common property of the defendant, and there may well be some, though very little, within the community property of the plaintiff.[47]If that part of the car park which lies within lot 4 were painted, that would properly be a cost of the plaintiff, as part of the cost of maintaining the community property. But there is no obligation, or it seems to me power in the plaintiff, to maintain the common property of the individual bodies corporate, except pursuant to the management agreements with them, under which the cost of any such maintenance is to be borne by the relevant body corporate. It follows there is no reason why these costs should be forming part of the amount determined under s 177(h). They are obviously not costs incurred under para 177(b).
  1. [94]
    The defendant also complained about the allocation of insurance costs, and that the plaintiff had taken out insurance policies for the buildings of the residential bodies corporate. There was some dispute about this on the facts, which, because of my views expressed elsewhere, I do not propose to discuss in detail. Section 182 deals with insurance the plaintiff must take out, and insurance it may take out, but it is difficult to see that it includes insurance of those parts of the site in a community development lot, except perhaps for parts of the car park which are the subject of easements in favour of the plaintiff. Insurance of the community property would include all of the community property, but under bylaw 27 there is a right of reimbursement for the insurance cost of the restricted community property.
  1. [95]
    Reference was made to apportioning the insurance costs between the podium level and the car park levels on the basis of their respective replacement costs. The relevance of that will depend on the nature of the insurance, and what cover is against. If it is destruction of the building, that would seem appropriate, but if it is, for example, a public liability policy, I would expect the cost of obtaining such cover for a swimming pool and spa to be much higher than the cost of such cover for a car park, so the cost of such cover should be apportioned differently. This is I expect something to be determined on a case by case basis.[48]
  1. [96]
    The defendant submitted that various agreements made by the plaintiff were invalid, being beyond power, on the basis of the decision in Humphries (supra). So far as this was argued in respect of the caretaker agreements, I have rejected the submission, for the reasons given earlier. I do not consider that it is necessary to decide whether any other particular agreement entered into by the plaintiff, under which a liability was incurred, was validly made, at least at this stage of the proceeding. The inclusion in the budget, which was the basis of the formation of an opinion as to the amount required as contribution, of a liability under an contract which did not exist because making that contract was beyond the power of the plaintiff would not invalidate the formation of the opinion, and the point is therefore presently academic.
  1. [97]
    The plaintiff in submissions referred to the fact that a representative of the defendant had been at relevant times a member of the executive committee of the plaintiff, and had attended general meetings, and had the opportunity to see the accounts of the plaintiff, and to debate them. The relevance of this did not emerge. If, as appears likely, the accounts of the plaintiff were not prepared so as to allocate expenses correctly between those costs which ought to be covered by the residential bodies corporate under bylaw 27, those costs which were to be reimbursed by a residential body corporate under a management agreement with that body corporate, and those costs which were properly the subject of contributions from all members under s 177(1)(h), any discussion on them and decisions taken with respect to them would be meaningless. In any case, no estoppel can arise, if only because the plaintiff cannot be relieved by estoppel from its obligations of proper administration under the Act.

Recovery as a debt

  1. [98]
    The fact that the 1993 Act provides that a contribution is recoverable as a debt suggests that it is a fixed sum payable rather than the recovery of an amount the determination of which involves some exercise of judgment on the part of the court, analogous to the assessment of damages. The interpretation of the words “recover as a debt” in a statute was considered by the New South Wales Court of Appeal in Builders Licensing Board v Inglis (1985) 1 NSWLR 592. Kirby P referred to an action for debt as an action for a fixed sum of money, so that the word “debt” could seldom be interpreted to include damages: p 597. He considered that the effect of this statement was that the claim by the board to recover the amount paid could take advantage of procedural provisions, but where there was a contest about the amount properly recoverable, the board was still required to particularise and prove what that amount was: p 598.[49]He noted that, if that were not the correct interpretation, the respondents would be deprived of any meaningful ability to resist the board’s claim, something which it would be assumed a statute would not seek to do. Further in that case the amount recoverable was not simply whatever amount had in fact been paid by the board in effecting repairs, but only expenses reasonably incurred.
  1. [99]
    Samuels JA agreed, as did Mahoney JA although he approached the matter on the basis that the question was whether from the terms of the statute one could derive the legislative purpose that what was to be paid by the builder was left in effect to the determination of the board, so that the amount paid out under the terms of the agreement was to be assumed to be correct: p 600. That interpretation however was rejected on the ground that it would deprive the person in the position of the respondent of the opportunity to contest the correctness of what the board had done.
  1. [100]
    That decision was considered by the Court of Appeal in Edwards v Bray [2011] 2 Qd R 310 at pp 317-18. In that case a provision then in the Queensland Law Society Act 1952 established a mechanism by which the client could refer a solicitor’s bill of costs for assessment by an assessor appointed under the Act, which was binding unless an application was made to a court to decide the reasonableness of the fees and costs charged in the assessed account: s 6ZE, quoted at p 315. Sub-section (2) provided:

“A binding costs assessment may be enforced as a debt for the assessed amount and the parties may not subsequently challenge the amount payable”.

  1. [101]
    The court held the result of an assessment (subject to review by the court) was binding as to quantum on the parties, but that a separate cause of action did not arise as a result of the assessment for the purposes of Limitation of Actions Act. In that case the statutory provision made clear that except for the mechanism provided the amount payable could not be challenged in any legal proceedings to enforce the debt.
  1. [102]
    Inglis (supra) was also mentioned by the Court of Appeal in Westpac Banking Corporation v Body Corporate for the Wave CTS 36237 [2014] QCA 73. The issue in that case was whether a mortgagee in possession was liable for recovery costs incurred in seeking to recover unpaid levies and penalty from the owners of the lot, the mortgagors, who had become bankrupt.[50]That issue was concerned with the interpretation of s 143 of the 1997 Act , which provided that liability extended to the owner of the lot when the debt became payable, and a person who became an owner of the lot before the debt was paid, including a mortgagee in possession. In that matter there was no issue about whether the defendant was entitled to challenge the quantum of the contribution levied, so the particular question I have to decide did not arise. Inglis was cited simply as an authority relied on for the proposition that the Act “allows the body corporate to take advantage in recovery proceedings of the statutory deeming of any unpaid amounts described in s 143(1) as a debt”: [38].
  1. [103]
    Nevertheless, Mullins J, with whom the other members of the court agreed, discussed the structure of the Act. She said that the relevant section of the regulation assisted the body corporate in recovering the amounts that were specified in that provision by deeming the unpaid amount to be a debt with the procedural advantages in litigation acknowledged in Inglis: [45]. She did however note that one of the situations in which money could be recoverable from an owner by a body corporate was where the owner had failed to comply with an obligation to carry out work imposed by the Act, the community management statement or an order made by an adjudicator, court or tribunal, and the body corporate had itself carried out the work; in such circumstances the body corporate could recover the reasonable cost of carrying out that work from the owner of the lot as a debt: [44]. That would parallel the situation in Inglis, and suggests an interpretation similar to that adopted by Kirby P.
  1. [104]
    In the course of her analysis Mullins J noted the significance of contributions for the proper operation of the body corporate:

“The recovery of all payments due from lot owners for contributions is essential for the body corporate to carry out its functions”: [46].

  1. [105]
    She later commented, in the context of the provision then in issue:

“Section 143(3) of the regulation reflects the deliberate policy choice of the legislature to confer advantage on the body corporate by extending the parties who are liable with the owner of the lot when a body corporate debt became payable”: [49].

  1. [106]
    Her Honour also noted at [59] in the context of the significance of an amendment made to the relevant Regulation in 2003:

“The severe financial hardship for the body corporate caused by arrears in contributions was intended to be addressed by the amendment. The body corporate depends on each lot owner making its payment of the contributions reflecting the proportionate share of the body corporate’s projected expenditures, so that the body corporate meets those expenditures. Ultimately, it is the other lot owners who are meeting their share of the expenditures who will be disadvantaged by the non-payment by one lot owner of that lot owner’s contributions.”

  1. [107]
    On the face of it Inglis (supra) supports the defendant, in holding that the party sued to recover something payable as a debt is still entitled to dispute whether the amount is properly payable. However, it is important to bear in mind that the reason for that conclusion in Inglis was that otherwise there would be no capacity for the person sued to dispute whether the debt had properly arisen. In the present case however there is such a capacity, at least in the form of the dispute resolution mechanism provided under the 1980 Act. Section 214A of the 1993 Act provides that, with certain exceptions “a dispute about the operation of this Act or the rights and obligations of persons under this Act may be dealt with under the” 1980 Act, part 5. The exceptions are disputes about the transfer of a letting agents management rights, s 2012K, the appointment of engagement of person as a body corporate manager or caretaking service contractor for a site or precinct, or the authorisation of a person as letting agent for a site or precinct, s 201ZL, the application of a community development control bylaw for a site to a particular person, or a contravention or alleged contravention of a community development control bylaw for a site, s 214B, or the application of a precinct development control bylaw for a precinct to a particular person, or a contravention of a precinct development control by law: s 214C. There is a requirement that internal dispute resolution processes, as defined in the section, be used before an application is made: s 214D.
  1. [108]
    The 1980 Act s 77(1) provides that a referee, that is a person employed under the Public Service Act 2008 to decide disputes under this part of the 1980 Act, may, on application by the body corporate, body corporate manager, a proprietor, a person having an estate or interest in a lot or an occupier of a lot in respect of a parcel, make an order on any of such persons, or on an office holder of the body corporate, “for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.”
  1. [109]
    Apart from that general provision, there are other sections in the Act conferring power to deal with particular kinds of disputes, or to take certain particular steps. These include s 91, which permits a referee, on application by a proprietor who considers that any amount of contributions levied under s 32 is inadequate or excessive, to vary payment of the amount or order payment of contributions in a different manner, or both, or determine otherwise under s 38A. Section 32 is the equivalent in 1980 Act to s 174 in the 1993 Act, and s 38A in the 1980 Act is the equivalent of s 177(1)(h) in the 1993 Act, though the machinery is slightly different in the two Acts. It follows that, if a contribution is levied on a proprietor of a lot in the body corporate under the 1993 Act, it is open to the proprietor to refer a dispute about the amount of the contribution levied to a referee under the 1980 Act. That referee may make an order varying the amount required as a contribution. There is no reason to limit the power to the time before the contribution has been paid.[51]
  1. [110]
    The 1980 Act provides that where a referee makes an order certain specified persons may appeal to a tribunal (that is, a stipendiary magistrate: s 96) against the order, and s 107 permits the tribunal to affirm, vary or revoke the order appealed against or to substitute the tribunal’s order for the order appealed against. An appeal lies to the Supreme Court for an order made by a tribunal under s 107, on the ground that the order is wrong as in law, but on no other ground: s 108. Otherwise, no appeal lies from an order made by a tribunal: s 109. Accordingly, if a contribution is levied, it is open to the proprietor, by this mechanism, to dispute the appropriateness or correctness of the amount of the contribution by an appropriate mechanism which can permit an independent review of that process. For that reason, the consideration, which led the Court of Appeal in Inglis to conclude that it was open to a defendant to dispute the quantum of the amount sued for as a debt in that case, does not apply here.
  1. [111]
    The defendant submitted that the contribution in the present case is not a contribution levied under any of the specific provisions of the 1993 Act referred to earlier. It is not a contribution levied in respect of the ordinary expenses of the body corporate, nor a contribution levied on some other specific basis contemplated by the Act or bylaws. It can however be characterised as an adjustment to earlier contributions in respect of those matters. If it emerges that for some reason the contribution levied, either generally or on a particular member of a body corporate, was incorrectly levied in an amount too low, in principle there is no reason why a further contribution cannot be levied in order properly to give effect to the obligation under the Act.[52]
  1. [112]
    The plaintiff submitted that the proceeding brought before the referee and what the referee had decided meant that it was not open to the defendant to dispute its liability for the contribution. What actually happened in the present case was that the referee foreshadowed an order that the body corporate levy a contribution on the defendant in a particular sum, but before that order was made, an extraordinary general meeting of the body corporate was convened and a motion to levy the contribution from the defendant, in an amount the plaintiff’s accountants had advised was necessary in order to correct the earlier mistake in the allocation of levies, was carried by five votes to one.[53]  In the light of that resolution, the referee concluded that there was no longer any need to make an order, so the application before him could be and was dismissed.[54]He specifically rejected the argument that this levy should not be enforced until the dispute as to the allocation of costs had been resolved. It does not appear however that the referee decided anything else in particular about the dispute about the allocation of costs and expenses; rather it was concluded that that matter could be resolved in due course. No appeal has been brought against the referee’s decision by the defendant, nor did the defendant refer to the referee any dispute about the contribution levied at the extraordinary general meeting.
  1. [113]
    So far as I can see there is nothing in either the either 1993 Act or the 1980 Act which makes the system of reference of a dispute to a referee mandatory for the resolution of those disputes which can be so referred. Nor was I referred to any such provision. The Acts appear to be formulated on the basis that this is a method of dispute resolution available to a person in connection with those matters where the dispute can be dealt with by the referee, and no doubt that would have a practical effect on the availability of some alternative remedy. A decision of a body corporate to levy a particular contribution would obviously be a decision under an enactment which in principle could be challenged, on administrative law grounds, under the Judicial Review Act 1991. Prima facie rights conferred by that Act are in addition to any other rights to review a decision – s 10 – but in the circumstances it may well be that any such application to review would be dismissed under s 12 or s 13.
  1. [114]
    As to whether a challenge can be brought to the amount of any particular levy in a proceeding to enforce the levy, in my opinion it is necessary to focus on what it is that is made recoverable as a debt under the Act. By s 174(4) what is recoverable as a debt is “a contribution … payable to the body corporate in accordance with its decision to make the levy … .” That in turn is a reference to the duty imposed on a body corporate by s 177(1)(h) and (j). Having determined the contributions under s 177, the body corporate then levies the contributions on its members by giving them written notice of the contributions payable by them under s 174(1). But the amount recoverable is the contribution payable in accordance with the decision to levy the contribution, which under s 177(h) is a decision to “determine the amounts necessary in its opinion to be raised by way of contributions” for the specified purposes.
  1. [115]
    If therefore a body corporate has made a determination in accordance with s 177(h), that determines the amount to be raised by contributions overall, with the share of each individual member being determined in accordance with s 174(2). In principle a situation could arise where a purported decision under s 177(1)(h) was a nullity, on what might be concisely described as administrative law grounds. That is to say, if a decision maker in arriving at a particular decision makes what may be described as a jurisdictional error, the effect is that the purported decision is a nullity, and, in the context of a case like the present, there would have been no contribution validly determined, and therefore nothing to enforce by recovery as a debt.
  1. [116]
    It is not however every decision made by a decision maker under an enactment which, if erroneous, has the effect of depriving the decision maker’s purported decision of validity. For example, there have been a number of challenges to the validity of decisions of adjudicators under the Building and Construction Industry Payments Act 2004, s 26. In that context, it has been said that an adjudicator does not make a jurisdictional error so long as the adjudicator made a genuine attempt to understand and apply the relevant contract and to exercise the power in accordance with the Act.[55]I accept that these cases are concerned specifically with decisions under a particular Act, bearing in mind the purpose of that Act and its terms in relation to such decisions.

Preliminary point

  1. [117]
    The plaintiff raised an issue about whether the defendant had, in the third amended defence and counterclaim filed on 20 January 2015, purported to withdraw admissions of paragraphs 4, 5, 6, 8, 10 and11 of the statement of claim without leave. I do not propose to take up time over this issue, because it seems to me that none of the facts alleged in those paragraphs of the statement of claim are material facts anyway for the plaintiff’s cause of action.[56]So it really does not matter what the response of the defendant to them is, though the amended pleading in relation to some of them did raise the issue that certain levies were invalid because of their inclusion of matters are not properly the responsibility of the plaintiff. The relevant levy, the one in dispute, is that alleged in paragraphs 12 of the statement of claim, which remains admitted on the face of the defence in paragraph 1.

Analysis of defence of invalidity

  1. [118]
    In relation to that part of the claim, the question is whether that levy, of the sum of $168,714.70, is valid. The essence of the defendant’s defence is that at other times the plaintiff mistakenly, unlawfully and improperly levied the defendant in respect of expenses not permitted by ss 177 and 174(1) of the Act, in respect of the costs associated with restricted community property, works carried out by the plaintiff on the common property of residential members, and suspense account expenditure incurred as a result of agreements entered into between the plaintiff and the third parties who are not the defendant.[57]This gives rise in particular to the issue of whether in the determination of the amounts necessarily raised under s 177(h), an error on the part of a body corporate in the form of including expenses which ought not to have been incurred, or which ought to have been recovered in some other way, either from certain members only pursuant to bylaw 27, or which ought to have been reimbursed by a specific bodies corporate other than the defendant, means that the determination has not been validly made and is ineffectual.
  1. [119]
    In effect, the argument is that because of errors of this nature, the determination is a nullity. That in turn raises the issue of whether an error of this nature can have that effect. It must be remembered that the decision involves the determination of the amounts of contributions to be raised. There can be different types of contributions, but in respect of any particular contribution there will be a particular amount to be contributed which will be determined, and that determination in my view is either validly made or invalid. The issue therefore is whether the incorrect inclusion of an amount in the figures taken into account in arriving at such a determination has the effect of invalidating the determination.
  1. [120]
    Ultimately this is a question of statutory construction, but it seems to me clear that that is not the correct interpretation of s 177. There are two reasons for this. The first depends on the wording used in paragraph (h), where reference is made to the body corporate determining the amounts necessary “in its opinion”. The body corporate’s determination is not conditioned upon its having made a correct assessment of the amounts properly payable in accordance with the Act; it is merely required to form an opinion about the amount that ought to be raised in this way. As long as a body corporate has formed a particular opinion on a bona fide basis, that is, has been attempting in good faith to give effect to its obligations under the Act, it is difficult to say that the statutory provision has not been complied with.
  1. [121]
    The other factor is derived from the significance of the contributions in the operation of a body corporate. Contributions are, as I have noted previously, the life blood of a body corporate. Reference may also be made to the comments of Mullins J in the Court of Appeal referred to earlier, on the significance of contributions.[58]In those circumstances, it would be exceedingly inconvenient if an incorrect view as to what matters should or could properly be taken into account in determining the amounts necessary to be raised by way of contributions had the effect of invalidating the process of levying contributions from members.[59]The position in my opinion is that, if there is such an error, it is open to a member to dispute the determination of the contributions, for example by the dispute resolution mechanism provided in the 1980 Act, but I do not consider that it is open to a member sued in respect of a contribution levied under the Act to dispute the validity of the levy on the basis that the amount determined under paragraph (h) included amounts which ought not to have been taken into account, for one reason or another, in determining that matter. If it emerges that there have been errors, they can be corrected subsequently by adjustments to future levies. Although it looks to me as though there is some substance in the defendant’s complaints about the way in which the accounts of the plaintiff have been dealt with, I do not consider that any of these, or indeed all of them collectively, produced a situation where the inclusion of any such amounts in the amounts determined under paragraph (h) had the effect of invalidating the determination. In the terms discussed earlier, they were not jurisdictional errors.
  1. [122]
    Prima facie the 1993 Act confers the power to determine the amounts to be levied on the body corporate. There is at least one remedy available if this process miscarries, but I do not consider that it is a remedy which intercepts the ordinary process of levying contributions from members, at least in the absence of circumstances justifying interlocutory relief,[60]which would have to be quite unusual circumstances. The proposition therefore that any errors of this nature have the effect of invalidating the determination is in my opinion not made out, as a matter of law. Further, in my opinion, unless the determination is rendered invalid on administrative law grounds, it provides an effective basis for the recovery as a debt of the relevant contribution. That is to say, it is not open to dispute, in an action to recover that amount as a debt, whether the contribution levied from the defendant has been correctly determined.
  1. [123]
    In those circumstances, it is strictly unnecessary to determine the point also raised in the defence, about whether the defendant is bound by the outcome of the referee proceedings. But where the application was dismissed, on the basis that it had become unnecessary, in my opinion it did not have any effect analogous to res judicata, even as between the parties to the proceeding. The status of a determination by a referee under the Act is not, so far as I can see, something explicitly spelled out in the Act. A referee is not made a court, let alone a court of record, and there is nothing to indicate that a fact found by a referee could give rise to an issue estoppel or something analogous to that in a later proceeding. The Act does not even expressly make the decision of the referee binding on the parties to the dispute, but presumably it does so by implication. Given the actual outcome therefore in my opinion the referee proceedings did not determine anything relevant to the real issues in this action.
  1. [124]
    For the same reason, it does not matter that the various accountants who have looked into this question have not always come to the same conclusion as to what amount ought to be levied in order to put right the error produced by the plaintiff’s failure to levy contributions as required by s 174(2). This seems somewhat surprising, but may be due to the fact that, from what I have seen of them, the accounts of the plaintiff have not been kept in a consistent manner and not kept in a way which is really adequate for its proper administration. However, it has not been shown that the decision of the body corporate to fix on the figure of $168,715, as the amount by which contributions of the defendant had been underpaid because of a failure to comply with s 174(2), was one which was so clearly wrong that the decision to determine that amount was a nullity on administrative law grounds. In those circumstances, that decision cannot in my opinion be challenged in these proceedings.
  1. [125]
    It would have been open for the defendant to have applied to a referee for an order that the amount of the contribution be varied, and even if, in view of what had previously been foreshadowed by a referee, that application was unlikely to succeed at that level, there would have been a capacity to test the referee’s decision on appeal to the tribunal, and if the tribunal erred in law, on a further appeal to the Supreme Court. Those steps were not taken. In my view in these proceedings it is not open to the defendant to go behind that decision.

Other matters raised in the defence

  1. [126]
    The defence in paragraph 3 disputed the validity of the levy notices, on the ground that they did not contain proper information, notifying the defendant of the basis of each amount claimed against it, so that they were ambiguous and confusing. This ground of defence has not developed in argument, and I am not persuaded that there is anything ineffective in the imposition of the levy by the plaintiff under s 174(1).
  1. [127]
    I must say I reach that conclusion with some regret, because the levy notices in evidence appear to have been drafted with a view to obscuring, rather than clarifying, the amounts claimed. A notice dated 19 January 2007 refers adequately to contributions to the administrative fund and the sinking fund, and then claims an amount in respect of “arrears/adjustments” of $3,625.41.[61]Whether this meant anything to the defendant is unclear, but it seems unlikely; it is utterly incomprehensible to me, and there is no evidence to which I have been directed to support the proposition that any arrears or adjustments were in fact owed by the defendant at that time.
  1. [128]
    Paragraph 13 of the Statement of Claim referred to a levy notice on or about 20 May 2010, which does not appear to be in evidence. There is however something described as a “notice of contribution levied”[62]said to be issued 12 August 2010 which refers, misleadingly, to a “referee order 13/5/10”, together with a “balance brought forward”, also completely unexplained, of $6,094.90.[63]There was no referee order of 13 May 2010.[64]The basis of the levy was the resolution of the extraordinary general meeting on 18 May 2010. The notice then purported to require payment by 20 June 2010, almost two months before the notice was issued, and advised that payments received after 21 May 2010 would appear on the next notice!  The notice seems to be a tribute to the incompetence of people who describe themselves, with stunning optimism, as “professional” body corporate managers.[65]Nevertheless, I am not persuaded that the state of the notice meant that the contribution in question was not validly levied for the purposes of s 174(1).
  1. [129]
    The defendant then pleaded an estoppel on the basis that levy notices were issued purporting to set out amounts properly recoverable from it, and that the defendant relied on such representations, in paying monies it was not lawfully obliged to pay: paragraph 8F. There cannot be an estoppel on the basis that the contributions previously levied, which were not allocated in accordance with s 174(2), in some way prevent the plaintiff from recovering the additional amount by which those earlier levies fell short of the amounts properly allocated. The only consequence of failure to comply with s 174(2) would have been that the amount sought from the defendant, and presumably paid by it, was less than it ought to have been, and that does not give rise to a relevant detriment. Even if it can be said that the amounts previously levied were not levied in accordance with the Act and were therefore not payable, the defendant did not suffer any relevant detriment because the amounts which were properly payable by it were greater. In my opinion there is no valid estoppel available to the defendant in relation to the failure to comply with s 174(2).[66]
  1. [130]
    I should add that in paragraph 11(d) of the defence the defendant disputed that the “balance brought forward” in the levy notice issued 15 September 2010, the one sued on, of $4,694.51, represented an amount due from the defendant to the plaintiff at that time. In the reply at paragraph 11 the plaintiff joined issue with that allegation, with respect to this “balance brought forward”, but the plaintiff’s submissions did not direct my attention to any evidence demonstrating that that amount was in fact owing, and no argument was addressed to this point. The mere fact that the amount is referred to as a “balance brought forward” in a notice of contribution is of no significance; it does not amount to notice of a contribution levied under s 174(1), though it is I suppose notice of the fact that the plaintiff asserts that such a balance is owing as a result of the contributions previously been levied, and the payments made. Since the notice does not contain details of what payments are admitted, or what the amounts previously owing were, it is not even useful as an “evidence making” document. The position is that the plaintiff has failed to prove this amount is owing.
  1. [131]
    The plaintiff also claims, on the basis of a levy notice said to be issued on 15 September 2010, an amount of $12,220.76 for further administration contributions, and an amount of $2,722.74 for additional sinking fund contributions, presumably levied by that notice: statement of claim paragraph 21. There is no such document in evidence, though there is in Exhibit 1 document 15 what is said to be a notice of contribution levied, issued 24 September 2010, which purports to claim an administrative levy and a sinking fund levy, both for the period of September to November 2010, in the amounts referred to, if one takes into account GST. The pleading did not allege that these represent contributions determined under s 177(1)(h). However, paragraph 11 of the defence, which responds to paragraph 21 of the statement of claim says nothing to put in issue the proposition at paragraph 21(b) and (c) that those amounts were contributions levied upon the defendant. It is an unsatisfactory way of dealing with the point, but I must conclude that the unsatisfactory defence means that the unsatisfactory statement of claim is in this respect nevertheless effective. The plaintiff has therefore proved that an amount of $183,658.20 has been levied and is unpaid. The defendant admits that these amounts have not been paid: defence paragraph 1, statement of claim, paragraph 22.

Interest

  1. [132]
    The plaintiff also claims interest on the amount outstanding, on the basis of bylaw 20, a resolution at a general meeting held on 5 June 2008, and the ratification by the executive committee of the plaintiff of that resolution on 30 August 2010: statement of claim 24(b), 25, 26. The defendant’s pleading in response to this is somewhat obscure, but it seems to me that three matters raised by it are that bylaw 20(a) is invalid, not being authorised under the 1993 Act, the mechanism provided for in bylaw 20(a) has not been followed in the present case, and in any event the interest rate claimed is invalid as a penalty.
  1. [133]
    As to the question whether bylaw 20(a) was validly made, the 1993 Act contains powers in relation to the making of bylaws in ss 202, 203, 206 and 206A. Unlike other legislation, the CBC does not have bylaws provided for automatically by statute on its creation, nor is there a requirement for there to be bylaws incorporated in the community management statement when first registered. Section 172(3)(e) does however require the first meeting of a body corporate to have as an item on the agenda “to decide whether to make bylaws”. Section 202 concerns bylaws regulating the quality of design and development within the site, and s 203 concerns bylaws for the control, management, use or enjoyment of lots within the site; obviously neither of those authorise a bylaw for the imposition of interest on unpaid contributions. Section 206A deals with the making of bylaws restricting the use of any part of the community property in particular ways; again plainly that section does not support such a bylaw.
  1. [134]
    Section 206 is concerned with bylaws “for the control, management, administration, use or enjoyment of the community property”, that is to say, in the case of this community, lot 4. This is however somewhat narrower than the power to determine amounts to be raised by way of contributions in s 177(h). It would include the matters in paragraph (h)(i), and some of the matters in paragraph (ii), insurance or rates which were related to the community property, but, as submitted on behalf of the plaintiff, sub-paragraph (ii) is wider than that, and includes any other (proper) liability of the body corporate. That will not necessarily be a liability in respect of the control, management, administration, use or enjoyment of the community property.
  1. [135]
    In my opinion s 206 only authorises bylaws for the control, management, administration, use or enjoyment of the community property. I accept this provision should not to be narrowly interpreted, but nevertheless there must be some connection shown between the community property and the operation of the bylaw in order to justify the validity of the bylaw. If the provision in relation to interest was confined to the contributions raised which had some connection with community property, then in my opinion a bylaw providing for interest on non-payment of contributions would be valid. But the bylaw purports to apply to all contributions, including those which do not have any connection with the community property. In my opinion as a result it goes too far. On its face it applies to any contribution whatever, whether or not connected in some way to the control, management, administration, use or enjoyment of the community property, and therefore is not justified by s 206. In those circumstances, in my opinion bylaw 20(a) is invalid.
  1. [136]
    There is a further difficulty with the proposition that interest at 30 per cent per annum is payable under bylaw 20(a). That bylaw provides that if a contribution levied under the Act is unpaid 30 days after it falls due for payment then the amount of unpaid contribution “will bear interest at an annual rate to be determined by the body corporate by ordinary resolution in general meetings from time to time.” The effect of that bylaw is that the function of the ordinary resolution of the general meeting is to determine the annual rate at which unpaid contributions will bear interest. The plaintiff relied on an ordinary resolution passed at the annual general meeting the plaintiff on 5 June 2008: “that, in accordance with Cathedral Place community bylaw 20, a late payment fee be charged on all areas of unpaid levies and that one of the following options be accepted and that the decision to implement this motion at any time shall require a motion of the Cathedral Place community body corporate committee.”[67]There then followed two options, one of which was 30 per cent per annum. The meeting then adopted, in a separate vote, option B, the 30 per cent figure.
  1. [137]
    In my opinion it was not a matter for the general meeting to decide whether a late payment fee would be charged, since bylaw 20(a) provides that the unpaid contribution “will bear interest”; the only function of the resolution of the body corporate in general meeting was to determine the annual rate of interest to be charged. In addition, the resolution as carried purports to make the decision whether or not to implement the motion at any time a matter for decision, presumable from time to time, by the plaintiff’s committee. There is no foundation for that approach in bylaw 20(a). In my opinion what this resolution purported to do was something different from what it was permitted to do under bylaw 20(a), namely, fix a rate of interest which then applied pursuant to the bylaw. In those circumstances, even if bylaw 20(a) were valid, in my opinion this was not a proper determination of a rate of interest for the purposes of that bylaw, and was ineffectual.
  1. [138]
    The defendant also submitted that the rate determined, 30 per cent per annum, was usurious, penal in nature and unreasonable: defence para 13A(c)(v). I am inclined to agree that the rate is excessive and unreasonable, particularly in the current low interest rate climate. However, it is not at all clear that the ordinary principles about excusing a party from a contractual liability on the ground that it is penal in nature apply in the present circumstances. The bylaw is not said by the Act to take effect as a contract between the members, and it seems to me that it actually takes effect as a piece of subordinate legislation, and I have not been given any authority for the view that those principles apply in this context.
  1. [139]
    In any case, the test for whether a contractual obligation is invalid as a penalty depends on whether it is exorbitant and unconscionable in amount, having regard to the interests sought to be protected by the payment.[68]I have already referred to the importance for a body corporate of the prompt payment of contributions, and in those circumstances it would be unsurprising if an interest rate which could be characterised as penal in nature were implemented.[69]Besides, in circumstances where 30% per annum is the rate fixed, admittedly as a maximum rate, under the various module regulations made under the Body Corporate and Community Management Act 1997, it is really impossible to say that the adoption of that rate is exorbitant and unconscionable in the circumstances. If the rate had been otherwise validly fixed under the bylaw, it could not in my opinion have been set aside on this basis.
  1. [140]
    That does not mean that the plaintiff is not entitled to recover interest; the plaintiff can recover interest by statute under the Civil Proceedings Act 2011 s 58.

Costs

  1. [141]
    The position in relation to costs is similar. Bylaw 19 purports to impose on a proprietor an obligation to pay on demand the whole of the body corporate’s costs and expenses, including solicitor and client costs, incurred in recovering levies or monies payable to the body corporate pursuant to the Act duly levied upon the proprietor by the body corporate, or otherwise pursuant to the bylaws of the body corporate. Further paragraph (b) requires all costs to be paid by the proprietor of “all proceedings including legal proceedings concluded in favour of the body corporate taken by or against the proprietor…. including but not limited to applications for an order by the referee, appeals to the tribunal and appeals to the Court.”
  1. [142]
    The 1980 Act provides in s 75(7) that a referee may not in connection with application for an order make any order for the payment of costs. The provisions of Division 4 of Part 5, dealing with tribunals, provide in s 107(1)(d) expressly that a tribunal “shall not make any order as to costs”. The 1980 Act says nothing about the question of costs in relation to an appeal to the Supreme Court on a question of law under s 108, so the ordinary provisions would apply. The scheme of the Act is that, short of an appeal to the Supreme Court, the dispute resolution mechanism under the 1980 Act is a “no costs” process. That is a legislative judgment which in my opinion a body corporate cannot overrule by a provision like that contained in bylaw 19.
  1. [143]
    Further, the bylaw purports to apply in relation to proceedings generally, not just proceedings under the dispute resolution mechanism in the 1980 Act. Insofar as it purports to apply to legal proceedings, the mechanism sought to be put in place is inconsistent with the discretionary power of the Courts in matters brought before them in relation to costs. This in my view is not analogous to the position of a provision in a contract dealing with the question of costs, and in particular the rate at which costs are to be payable. As I said earlier, bylaws do not take effect as a contract between the members and the body corporate. Rather this provision purports to create a right in the body corporate to recover costs regardless of any order made by a court in legal proceedings.
  1. [144]
    The authorities on the effect of contracts make it clear that the contract is not binding on the Court, though it is a very relevant matter in the exercise of the Court’s statutory discretion in relation to costs.[70]But this bylaw goes further and purports to override any exercise as statutory discretion as to costs by a Court. In those circumstances I consider that it goes too far and is invalid as being inconsistent with the relevant provisions of the 1980 Act,[71]and the legislation conferring statutory discretion in relation to the costs of proceedings in courts on the various courts. On this ground bylaw 19 in my opinion was beyond the power of the body corporate and is invalid. Accordingly the ordinary principles in relation to costs apply in this proceeding.
  1. [145]
    I should say that apart from this matter, bylaw 19, in purporting to apply to all proceedings for the recovery of unpaid levies, and any other monies payable, suffers from the same deficiency about the power to make bylaws referred to in the discussion of the validity of bylaw 20(a). For that reason as well in my opinion it is invalid.
  1. [146]
    Apart from that the defendant submitted that the specific mechanism laid down in bylaw 19(b) has not been followed; in effect after the proceedings are over the amount is to be determined and can then be the subject of an obligation to pay on the part of the unsuccessful proprietor. Accordingly it is not open in these proceedings for the plaintiff to pursue any right under that bylaw if (contrary to my conclusion) that bylaw is valid. Any such right cannot in terms arise and be enforced in this proceeding.
  1. [147]
    It was submitted by the plaintiff that the court should construe bylaw making powers widely, and that it should be particularly reluctant to strike down any bylaw which was described as an “original bylaw”.[72]That was a case where the bylaw in question was very similar to one in a set of model bylaws which could be adopted under the relevant statute. The court held that a provision in the form of a model bylaw could not be ultra vires, and something similar in type to a model bylaw was also within the competence of the owners corporation: p 715.[73]In that particular case, the principal bylaw making provision was expressed in very general terms, the section containing only the limitation that a bylaw not be inconsistent with that or another Act or law; the court noted that there were other sections in the Act which imposed other limitations, but essentially held that subject to those limitations there was a general power to make bylaws.
  1. [148]
    That in my opinion is very different from the situation here, where the powers to make bylaws are specific, and in my opinion limited. I note that in Victorian Professional Management Pty Ltd v The Proprietors Surfers Aquarius BUP No 3881 [1991] 1 Qd R 487, the Full Court had no hesitation in finding that certain bylaws in that case were invalid on the ground that they were inconsistent with the terms of the 1980 Act. The provisions in that Act for making bylaws, in s 30, are much more limited than the provisions in the New South Wales Act considered in the Casuarina Rec Club case, though it seems to me that s 30(2) is somewhat wider in terms than the bylaw making powers in the 1993 Act.[74]
  1. [149]
    I note that in the 1997 Act the basic provision in relation to bylaws, s 169, is expressed in a limiting way, providing that “the by-laws… may only provide for the following….”  There are other limitations on bylaws contained in s 180, including a restriction in ss (7) that the bylaw must not be oppressive or unreasonable. These are really inconsistent with the notion of a body corporate having broad, sweeping powers conferred upon it by its bylaws. The issue in any particular case must depend on the terms of the relevant legislation; not all Acts deal with this issue in the same way, and decisions under other Acts are therefore necessarily of limited value.

Set-off

  1. [150]
    The remaining issue is whether the defendant has a cause of action for a money sum against the plaintiff, which can be set-off against the defendant’s liability to the plaintiff.[75]In the counter-claim this is alleged to arise on the basis of unjust enrichment, or on the basis of negligence, or on the basis of recovery of moneys paid by mistake. In addition the defendant seeks an account for the whole period from 1999 of the amount properly payable by the defendant to the plaintiff and paid by the defendant to the plaintiff. With regard to the question of an account, if there is an issue as between the parties with regard to the actual amount in fact levied from time to time, and the actual amount in fact paid by the defendant from time to time, then that can be the subject of an account, but it is not at all clear to me that that is the context in which the defendant is seeking an account, even though there is apparently some dispute as to whether some amount claimed on the basis of an accounting balance is payable. Rather the account is sought for the purpose of having the court determine what amount ought to have been included in the contributions determined by the body corporate from time to time on a proper allocation of the costs and expenses of the body corporate. That depends on whether the court can go behind the decisions taken in various years to levy contributions on the basis of determinations by the body corporate of the amounts necessary, purportedly in accordance with the Act. It is not clear that the defendant has shown any valid basis on which the court can do so.
  1. [151]
    In submissions counsel for the defendant advanced the defendant’s claim as one for equitable compensation for breach of fiduciary duty. Such a claim does not leap out of the current pleading, but it may well be that all the necessary material facts are pleaded in the defence.[76]In the light of this approach, I do not need to consider the specific causes of actions pleaded expressly.
  1. [152]
    I accept that a trust or a fiduciary relationship may be created by a statute, or indeed otherwise, without an express statement to that effect.[77]It was submitted that the effect of the Act was that the body corporate was required to administer the community property for the benefit of the members, and for that purpose was entitled to raise money from those members. Accordingly it met the classic description of the fiduciary relationship in the statement by Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at [96]-[97]. Certainly the way in which the body corporate conducts its statutory function, in particular the determination of the amount necessary to be obtained by way of contributions under s 177(1)(h), affects the interest of the members in a legal and a practical sense. Further, if the body corporate neglects its obligations to give effect to the entitlement to recover costs in connection with the part of Lot 4 covered by bylaw 27, or if it neglects to enforce, or enforce in full, its contractual entitlement to recover the real costs incurred under the agreements with the residential bodies corporate, that will adversely affect the members, and in particular the defendant, by inflating the amount recovered from it under the ordinary contributions levied on members generally.
  1. [153]
    It could be seen that, where such rights of reimbursement exist, it would not be consistent with an obligation on the body corporate to administer the common property in the interests of members generally to neglect to enforce rights of reimbursement, with the result that members generally are put to additional expense. The fact that the rights of reimbursement lie against the majority of the members of the body corporate does not really alter this situation, in my opinion, though it does explain why it is difficult, indeed it seems to me impossible, for the defendant to do anything about this under the ordinary democratic processes of the body corporate. In simple terms the other members of the body corporate will vote to exploit their practical capacity to enforce what amounts to a subsidy of them by the defendant. Expressed in those general terms, there is certainly an attraction in the defendant’s argument. If, as seems to me to have been the case, the defendant has in the practical sense been discriminated against in the administration of this body corporate, there ought to be some form of remedy available to it.
  1. [154]
    I am however concerned by the fact that the defendant has not been able to refer me to any authority where it has been held that there is a fiduciary obligation on a body corporate of the kind alleged by the defendant. Indeed, it appears that such cases as exist which have touched on this subject proceed on the basis that the obligations on the body corporate are statutory in nature, and that either this leaves no room for equity to impose additional obligations, or any equitable obligations could not add to or detract from the statutory obligations, and therefore become irrelevant.
  1. [155]
    In New South Wales the view has been taken that the effect of the statute in that state is that each proprietor of the lot is regarded as the equitable owner of an undivided interest, as one of several tenants in common, in the common property of which the owners corporation is the legal owner.[78]To some extent this depends on the use of the expression “agent” by the Act in speaking of the position of the Owners Corporation with respect to the individual lot owners, and the reference to the individual lot owners having a “beneficial interest” in the common property. It seems to me that the 1993 Act does not identify any particular status by which the CBC holds the community property under that Act. The Act simply provides that the property is vested in it as a corporation capable of owning property (s 66, 167) and in these circumstances there is nothing in the 1993 Act to suggest that the equitable obligations of a CBC would be more extensive than those which have been recognised in New South Wales.
  1. [156]
    In Owners Strata Plan 50276 v Thoo [2013] NSWCA 270, 17 BPR 98694, Tobias AJA, with whom the other members of the court agreed, describe the position of the owners corporation as holding the common property on trust for the several lot owners from time to time in proportion to the unit entitlements: [136]. It was said that this could be regarded as the source of general law duties additional to the statutory duties to which it was subject, [136], but: “those general law duties do not include positive duties or, more precisely, duties to act in any positive way. They are negative duties not for profit or benefit from the trust, not to prefer one’s own interests, not to allow one’s own interests to come into conflict with those of the beneficiaries, not to impeach the title of the beneficiaries, not to depart from the terms of the trust and not to delegate the trust except as permitted by its terms.” [137]  “Thus the general law duties are necessarily confined so that they do not conflict with any of the statutory duties of the owners corporation. To put this another way, the general law duties complement the statutory duties but cannot modify them.” [138]. The effect of this analysis is that, unless it can be shown that the general law duties have been breached in some way, the existence of a trustee relationship will not provide a basis for any equitable remedy to an individual proprietor, as it was held in that case.
  1. [157]
    I am not aware of any Queensland decision which has referred to that decision, but the analysis appears to me with respect to be correct. That decision does not support the existence of a positive duty of proper administration imposed on the plaintiff because of its status as trustee which could be enforced by a claim for equitable compensation for breach if the duty has not been complied with. Nevertheless, it does not follow that the obligations on a CBC to carry its functions properly are unenforceable. Proceedings can be taken under the dispute resolution provisions of the 1980 Act. As I have noted, those provisions are not exclusive. It has been recognised in New South Wales that the Supreme Court at least can exercise a supervisory jurisdiction over the administration of an owners corporation.
  1. [158]
    In EB 9 & 10 Pty Ltd v The Owners Strata Plan 934 [2018] NSWCA 288 the plaintiff had obtained in the Supreme Court a declaration that he as owner of a lot in a strata scheme had a right to the reasonable use of a small strip of the common property when manoeuvring a motor vehicle in and out of his lot. The particular issue before the Court of Appeal was as to the application of a specific statutory provision in the Strata Schemes Management Act 2015 which imposed cost consequences if the relevant right of the owner could have been adequately enforced under the mechanism provided by the Act. The effect of the decision was that the right could have been adequately enforced by that mechanism, which had the consequence provided for under that Act, but there was no suggestion that that had the effect of depriving the Supreme Court of power to make a declaration.
  1. [159]
    At [65] Barrett AJA, with whom the other members of the Court agreed, said:

“The Strata titles legislation shows an intention that owners corporations and lot owners will conduct themselves in accordance with the legislative regime and not subvert it. Central to the statutory scheme is the notion that demarcations of function, limits on power and constraints on conduct that the legislation creates within the corporation and in relation to the operation of the scheme will be observed. A specific right of the owners corporation or a lot owner to have the other desist from particular action may not be stated in express terms but the existence of a legislative restriction that will be exceeded by the action is sufficient to provide access to equitable jurisdiction as a means of correction and enforcement. Section 208 subjects an owners corporation to a legislative restriction unless a unanimous resolution has been passed. Where the unanimous resolution rule protects the position of a particular lot owner, that owner has a clear and separate personal interest in the observance of that rule and the affairs of the corporation will not be conducted in accordance of the legislative regime unless the rule is obeyed.”

  1. [160]
    That decision stands as authority that there is some access to equitable jurisdiction to correct a failure of an owners corporation, or by analogy a CBC, properly to undertake its statutory powers and obligations. It follows that the jurisdiction of a referee under the dispute resolution arrangement is not exclusive. In those circumstances, some relief may be available to the defendant in relation to the allocation of expenses by the plaintiff, even if only prospectively.
  1. [161]
    The New South Wales Court of Appeal was speaking of the jurisdiction of the Supreme Court, but the District Court has the power of the Supreme Court for the purpose of exercising its jurisdiction under the District Court of Queensland Act 1967 s 69. This includes power conferred on the Supreme Court by another Act, such as the Judicial Review Act. In addition, the defendant’s claim for relief is raised in a counterclaim. There is however nothing in this decision to indicate that the relief available to a lot owner in the defendant’s position extends to relief in the form of a money judgment. Rather, there may well be a power to grant relief in the form contemplated by the New South Wales Court of Appeal, by way of declaration and injunction, requiring the plaintiff properly to perform its statutory functions.
  1. [162]
    None of this was raised in terms by the current pleading. Insofar as the plaintiff’s claim was advanced on the basis of a claim for a money sum derived by taking an account in a way which would involve the court going behind the decisions from time to time in fact taken by the plaintiff as to the determination of levies, I am not persuaded that that relief is available. But it may be that some other form of equitable relief is available which will produce some practical benefit for the plaintiff.
  1. [163]
    The upshot of that is that in my opinion there is no set off available, and the plaintiff is entitled to judgment for the unpaid levy referred to earlier, subject to the enforcement of any other equitable relief available to the defendant in respect of the due internal administration of the plaintiff. What I propose to do in the circumstances is simply to publish these reasons and list the matter for further consideration, when I can hear further argument on the question of whether some form of equitable relief is available to the defendant in respect of these matters, and if so what form it should take. I note that apart from anything else the decision of the New South Wales Court of Appeal in EB 9 & 10 Pty Ltd was only delivered very recently, on 28 November 2018. At the hearing the matter was advanced on the basis that I would not at this stage arrive at a final determination of all detailed issues, even on a precautionary basis, and at this stage I would decide only broad issues of principle. I have attempted to do that, and will seek submissions on where the matter proceeds from this point, in the light of the conclusions I have arrived at.

Footnotes

[1]  See generally Fr D W Martin “A Hill in the Valley” (2018, Brisbane Archdiocesan Archives) for a detailed and interesting history of the site. See also T P Boland “James Duhig” (1986, University of Queensland Press) esp pp 230 – 241.

[2]  R Siemon “The Mayne Inheritance” (1997 University of Queensland Press) p 54.

[3]  Courier Mail Saturday 17 August 1935 p 19, accessed through Trove. This was to prevent the site being charged rates: Martin, op cit, p 41.

[4]  Something similar happened with a large Catholic Cathedral planned for the city of Liverpool in England, where the foundations and crypt were constructed before the depression hit; ultimately a cathedral to a modern design was constructed above them, and the crypt remains accessible.

[5]  By the end of the 1940’s it was clear to everyone else that the cathedral would never be completed: Boland, op cit, p 334. When Hennessey sued for his fees in 1950 Duhig was defended (unsuccessfully) by A D McGill KC, my great uncle: Boland, op cit, pp 331 – 337.

[6]  Queensland Parliamentary Debates 28/11/69 p 1944; The Queensland Statutes, 1969, p 204. 

[7]  Martin, op cit, pp 44, 47, 51.   

[8]  Lim A “History of Community Titles Legislation in Queensland” Office of Regulatory Policy 24/10/2012, pp 1, 2. This article traced the history of Community Titles Legislation in Queensland to that date. Company title was mostly for residential units, but was also used for other purposes; the Brisbane Inns of Court established in a converted building in the 1960’s used company title.

[9]  Ibid p 9.

[10]  Ibid p 13. An example was the Sanctuary Cove Resort Act 1985.

[11]  It has been said that few practitioners regarded this Act as the best solution: MacDonald et al, “Real Property Law in Queensland” (3rd Ed, 2010) p 471 n 16.

[12]  Lim, op cit, p 11.

[13]  Exhibit 1 document 18 p 84. Two of the development lots were later subdivided.

[14]  Although this was after the commencement of the 1997 Act on 13 July 1997, plans could still be registered under the 1980 Act for the 1993 Act: see 1997 Act s 325(2)(b), s 328(4).

[15]  Section 177 can apply to a CBC or to a precinct body corporate: s 166. It may be that the references to community property and precinct property apply in the alternative depending on the type of body corporate. 

[16]  A parcel is the land comprised in a plan of subdivision under the 1980 Act: s 7.

[17]  Exhibit 1 documents 74 – 77.

[18]  Exhibit 1 document 56 p 383.

[19]  By cl 8 CPM had an option to renew for a further period of five years if not in default.

[20]  This appears to be a reference to a future body corporate having entered into a management agreement with the plaintiff for the performance of management, cleaning and other services.

[21]  Exhibit 1 document 57, p 383.

[22]  Exhibit 1 document 59, p 414.

[23]  The use of the term “subsidiary” is I think unfortunate because the bodies corporate for each of the community development lots are not subsidiaries of the plaintiff in the usual understanding of that term in the context of company law.

[24]  Exhibit 1 document 60 p 418. This contract in turn was terminated in November 2012, after which the functions were performed by employees of the plaintiff: Exhibit 1 document 151 p 1602 note 12.

[25]  Exhibit 1 documents 61 p 448; 63 p 462; 66 p 486; 68 p 500. Such agreements are authorised by bylaw 24(a).

[26]  Exhibit 1 documents 62 p 454; 64 p 468; 65 p 478; 67 p 491; 69 p 505.

[27]  The opportunity was not taken to remedy the drafting deficiency in the earlier version of the agreement, in that the clause dealing with the division of shared costs applies only to costs incurred which apply to all parcels, and not to costs incurred which apply to all residential parcels.

[28]  The same would apply to things like the cost of replacement lightbulbs within the common property of a particular residential body corporate.

[29]  Exhibit 1 document 147, p 1563 (2009); Document 148 p 1575 (2010).

[30]  [2013] QCA 264 at [11], [12].

[31]  There was some discussion of whether the bylaw was within s 206A anyway, but not whether a bylaw under s 206 could grant exclusive use of part of the community property.

[32]  Exhibit 1 document 51 p 314. It is not immediately obvious how this bylaw can give exclusive use of any car parking space located in the common property of a residential body corporate, since s 206A applies only to a part of the community property, that is, lot 4: Schedule 5. I am not sure that bylaw 24(b) is a sufficient basis. This was not argued before me, and I will assume bylaw 25 is valid and effective. 

[33]  There is a two level car park within the site, with access from Gotha Street, part of which is in the community property lot, and part in the common property of residential bodies corporate. There are easements for access in favour of the plaintiff over those parts of the common property of the residential bodies corporate used as pathways in the car park, but not over designated car parking spaces: Exhibit 1 documents 47 – 50.

[34]  If the improvement of the car parks in the community property fell within s 161 of the 1993 Act, the plaintiff has a right of reimbursement under s 161(5). Whether this is so was not argued before me.

[35]  Most of which had not come into existence when the bylaw was made, or at least drafted: Exhibit 1 document 51 p 315.

[36]  I assume that there are no lawns or gardens on that part of the community property lot which is located on lower levels than the podium level.

[37]  I have not checked whether the two systems distribute costs in the same proportions.

[38] The other matters referred to in paragraph (b) do not arise on the facts.

[39]  As at 2010, no regulation had been made under the Act. That is still the case.

[40]  This I think follows from the reference to an owner or occupier of a lot; there can be an owner of a community development lot, but in the nature of things not an occupier of one.

[41]  See 1980 Act, s 7(1).

[42]  The Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Qld) s 118.

[43]  The 1993 Act s 159, emphasis added. This would not apply to facilities on the common property of a body corporate for a development lot.

[44]  I reject the submission to the contrary of the plaintiff, para 133(b).

[45]  I assume that all of them are entitled the gymnasium, without payment.

[46]  And therefore not within s 159 of the 1993 Act.

[47]  The only part suggested by plans that I have seen is a small amount of frontage of lot 4 onto Gipps Street: Exhibit 1 document 19 p 89.

[48]  It would not depend on the way such a cost was allocated at any particular time by the representative on the body corporate of the defendant.

[49]  The issue had arisen in the context of an application for particulars of the Board’s claim for reimbursement of a payment made for carrying out rectification work.

[50]  Although the unpaid contributions amounted to only $12,475.83, the amount claimed as recovery costs (as at 20 August 2013) amounted to $335,057.34, worth fighting over: [20].

[51]  In view of this, the limitation of $1,000 in s 78(1)(a) is of no real significance in a dispute about the amount of a contribution.

[52]  Reference may be made to the Acts Interpretation Act 1954 s 23, s 24AA.

[53]  Exhibit 1, document 303. The defendant dissented.

[54]  Exhibit 1 document 356 p 3670.

[55]Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525 at 564. See also McNab Developments (Qld) Pty Ltd v MAK Construction Services Pty Ltd [2014] QCA 232; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4.

[56]  In submissions counsel for the defendant was willing to adhere to the admission.

[57]  The pleading contains variations on this theme, but the basic allegation is that the levy was not validly imposed because of this sort of thing. It is really a challenge to the validity of other contributions raised on other occasions, the contributions to be varied by the levy.

[58]Westpac Banking Corporation v Body Corporate for the Wave CTS 36237 [2014] QCA 73 at [46], [59].

[59]  Compare the reasoning in Henderson (supra) at [21] – [25].

[60]  Under the 1980 Act s 76.

[61]  Exhibit 1 document 12 p 77.

[62]  Presumably composed by the then body corporate manager: see plaintiff’s submissions paras 40, 41.

[63]  Exhibit 1 document 13 p 78.

[64]  The order dismissing the application was made on 16 June 2010: Exhibit 1 document 356 p 3668.

[65]  Happily I have never had to deal personally with a body corporate management company, but such experience as I have had of them in the course of my work does not suggest that basic competence is a pre-requisite for such an occupation, or even that it is particularly prized in such circles. Perhaps the explanation is that, where bodies corporate are competently managed, the matter never comes to the attention of a judge.

[66]  If that is not the true point of the estoppel plea, its true point has escaped me.

[67]  Exhibit 1 document 262 p 2131.

[68]ANZ Bank Ltd v Pacoccio (2016) 258 CLR 525 at 547

[69]Prins v Body Corporate for The Wave [2013] QDC 66.

[70]Platinum United II Pty Ltd v Secured Mortgage Management Ltd [2011] QCA 162.

[71]  The 1993 Act s 193 assumes that the ordinary powers of a court in relation to costs otherwise apply.

[72]  Citing Casurana Rec Club Pty Ltd v The Owners – Strata Plan No 77971 (2011) 80 NSWLR 711.

[73]  See also Mineralogy Pty Ltd v The Body Corporate for The Lakes Coolum [2003] 2 Qd R 381 at 386.

[74]  It seems to me that one consequence of this decision is that bylaw 26, insofar as it purports to permit a body corporate to grant exclusive rights of use in respect of part of the community property other than by way of an exclusive use bylaw under s 206(A), is also invalid.

[75]  Whether in equity, or under UCPR r 184.

[76]  I must say I find the defence and counter-claim, which were not said to have been settled by counsel who appeared at the hearing for the defendant, very difficult to follow, and I am reluctant to be dogmatic as to any proposition about what is or is not pleaded in it.

[77]Registrar of Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165-6; Clay v Clay (2001) 202 CLR 410 at [35]; Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 at [6].

[78]Carre v Owners Corporation-Strata Plan 5302000 (2003) 59 NSWLR 302 at [28], approved by the New South Wales Court of Appeal in Owners-Strata Plan no.43551 v Walter Construction Group Ltd (2004) 62 NSWLR 169 at [45], Ridis v The Proprietors Strata Plan 10308 (2005) 63 NSWLR 449 at [119], and Segal v Barel (2013) 84 NSWLR 193 at [81].

Close

Editorial Notes

  • Published Case Name:

    Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957

  • Shortened Case Name:

    Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957

  • MNC:

    [2018] QDC 275

  • Court:

    QDC

  • Judge(s):

    McGill DCJ

  • Date:

    21 Dec 2018

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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