Club Esplanade Ltd v Acott
[2002] QSC 256
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- Notable Unreported Decision
- Club Esplanade Ltd v Acott[2002] QSC 256
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Club Esplanade Ltd v Acott[2002] QSC 256
Club Esplanade Ltd v Acott[2002] QSC 256
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial | |
PROCEEDING: | Application |
ORIGINATING COURT: | |
DELIVERED ON: | 19 August 2002 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 13 August 2002 |
JUDGE: | WILSON J |
ORDER: | Applications dismissed |
CATCHWORDS: | REAL PROPERTY – STRATA AND RELATED TITLES AND OCCUPANCY – GENERAL MATTERS – COMMON PROPERTY – where applicant company managed timeshare scheme and sought to appoint statutory trustees for sale, pursuant to s 38 Property Law Act 1974 (Qld), of unit building co-owned by timeshare members – where one of the timeshare co-owners opposed the application – whether applicant had standing to bring application – whether proposed sale would effect a winding up of the business of the timeshare scheme Property Law Act 1974 (Qld), s 38 |
COUNSEL: | N Thompson for the applicant J Critchley (by leave) for the respondent Wendy Joan Crichley |
SOLICITORS: | Gustafson’s Solicitors for the applicant J Critchley (by leave) appeared on behalf of the respondent Wendy Joan Critchley |
[1] There are 10 applications pursuant to section 38 of the Property Law Act 1974 for the appointment of statutory trustees for sale. The applications relate to the 10 lots in building units plan 1463. Those lots, together with the common property, are situate at 116 The Esplanade, Surfers Paradise, and operated as a timeshare resort.
[2] Ownership of each lot is comprised of 51 undivided shares as tenants in common. Each lot was leased to Club Esplanade Limited, the applicant, by the developer of the resort, Quinn Group Gold Coast Pty Ltd, from 25 November 1986 until 31 December 2082. The leases are registered.
[3] The applicant is a public company limited by guarantee. It operates the resort on behalf of its co-owners, who are referred to as "members of the Club". Each 1/51 interest is referred to as "a week", there being a total of 510 "weeks". Mr Raymond George Dunstan, the president and public officer of the applicant, has summarised how the scheme operates in these terms:
"8.Each lot is divided into 51 fractional interests, making a total of 510 fractional interests, each 1/51st interest being usually referred to as a 'week'. A purchaser of one week acquires 'a Prescribed Interest' under Corporations Legislation, which interest consists of title to at least one week in the particular Lot in which the week was purchased, together with entitlement to membership in the Club, upon submitting an application. Pursuant to the Club's Articles of Association, each member is entitled to occupy the Lot in which the week is owned during the specific week or in the period each year for which it was purchased, subject to compliance with the Articles.-----"
He went on:
"9.Under the Articles, the 51 weeks in each Lot are assigned specific classifications, together with a related permanent membership number, in accordance with the Schedules contained in the Articles 6 to 8. The weeks are numbered 1 to 52 consecutively, from January through December. Week 9 in each Lot is set aside for maintenance. Six weeks in each Lot are fixed entitling the owner/member to occupancy of the particular unit for a specific week during the Christmas, New Year or Easter holidays. Thirteen weeks in each Lot are assigned to various Autumn and Spring holiday periods, and the balance of thirty-two weeks to General Floating Time. Non-fixed weeks must be booked through the resort management in advance for the appropriate period on a first come first serve basis.
10.The members' rights and obligations in respect to their weeks are prescribed by the Articles. Each member's entitlement to occupy the relevant Lot for the relevant week (see Articles 6-10) as well as other rights, like voting (see Article 4) is subject to the member's obligation to pay annual levies and otherwise comply with the Articles (See Articles 12-15, 22 in particular). The number of votes at Members Meetings at which members are entitled to vote are determined by the number of weeks owned, one vote for each week regardless of classification or Lot. (See article 4.)"
[4] The building is 28 years old and expensive to maintain. The applicant seeks to have its solicitors, Robert Stephen Gustafson and John Graham Campbell, appointed as statutory trustees for the sale of each lot. In April 2002 it entered into a contract with Elvio Pugliesi and/or his nominees, whereby it undertook to use its best endeavours to have statutory trustees for sale appointed and to have them execute the contract for sale for $2.9 million.
[5] According to Mr Dunstan, the applicant is or is entitled to be registered as owner of at least 1/51 share as tenant in common in each of the 10 lots, and so it makes these applications in its capacity as a co-owner.
[6] Although all the tenants in common were served, pursuant to an order made by Justice White on 4 July 2002, only one of them, Wendy Joan Critchley, appeared to oppose the applications. With the leave of the Court, her husband represented her at the hearing.
[7] Mrs Critchley has three weeks in each of lots 7 and 8 - that is, she is a co-owner as tenant in common in each of those lots to the extent of 3/51 undivided shares.
[8] Mrs Critchley challenged the applicant's standing to bring these applications. As her husband pointed out in submissions, according to the spreadsheet list of members which is exhibited to Mr Dunstan's affidavit, the applicant does not have any interest in lots 1, 6 and 8. Mr N Thompson of counsel, who appeared for the applicant, informed the Court that the applicant holds unregistered transfers from the developer. However, those transfers were not in evidence and Mr Critchley opposed their late receipt into evidence. On the evidence before me the applicant has not shown that it has standing to bring the applications with respect to lots 1, 6 and 8.
[9] If that were the only difficulty I saw in the applications, I should be inclined to allow further evidence. But it is not. What is proposed is simply that the 10 lots be sold for one lump sum, and the net proceeds of sale be divided equally amongst the holders of the 510 interests as tenants in common.
[10] In 1997, the articles of association of the applicant were amended to require all members to put their certificates of title in escrow with its solicitors and to grant it irrevocable powers of attorney. Not all members have done so.
[11] According to the contract, the property is to be sold free from encumbrances. There is no mention of the registered leases, which will not expire for another 80 years. There is no proposal advanced for the surrender of the leases. There is no proposal for the winding up of the timeshare business or the winding up of the applicant and the distribution of any surplus among the members.
[12] Mrs Critchley's position seemed to be that there is provision in the articles of association of the applicant for changes in membership, and that the new owner ought, in effect, to buy the 510 weeks. That is, that he ought to acquire not just the freehold title to the 10 lots in the building units plan, but also the bundle of timeshare rights and obligations associated with membership of the applicant. She was concerned that, if this were not done, the outgoing owners may have ongoing liabilities under the articles. I note articles 13 (annual contributions), 16.2 (special levies), and 11.3 (liability of a person to pay contributions, notwithstanding having ceased to be a member).
[13] Further, there is the question of how the net proceeds of sale should be distributed. The lots are unlikely to be of equal value. Some weeks, for example at peak holiday times, are potentially more valuable than others. However, there was no evidence of present values. All Mr Critchley could point to was the variations in price in 1986.
[14] In the usual case, an application for the appointment of statutory trustees for sale is granted quite readily, the right to approach the Court for such relief being seen as an incident of co-ownership of property. On the material it seems that it may have become, or at least may fast be becoming, the case that it is no longer commercially viable to use the property as a timeshare resort. However, merely to sell the real estate interests would not effect a winding up of the business relationships between the parties, and the proposed method of distributing the net sale proceeds may not result in returns to the members that accord with the true value of their respective interests. For these reasons, I am unwilling to grant the applications for the appointment of statutory trustees for sale.
[15] The applications are dismissed.