The Proprietors Cathedral Village BUP 106957 v Cathedral Place Community Body Corporate

This judgment considered whether unpaid contributions levied by a body corporate could be challenged. The issue turned on the effect of s 177(1)(h) of the Mixed Use Development Act 1993 which required the body corporate to make a determination that the amounts to be charged were necessary to be raised by way of contributions under s 174 of the Act. Here, the Court of Appeal found that, as the body corporate had failed to form an opinion under s 177(1)(h), the purported determination was a nullity and no contributions could be levied. Accordingly, leave to appeal was allowed and the appeal granted.

Fraser and McMurdo JJA and Jackson J

4 November 2020

Background

This judgment arises out of the same factual circumstances as the case summarised above – Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106957 [2020] QCA 239.

The parties have been in dispute about the levying of contributions by the respondent from the applicant for amenities and services from which the applicant receives no benefit. [3]. The respondent sued the applicant in the District Court in an attempt to recover unpaid levies; the applicant counter-claimed for amounts it contended had been overpaid. [4]. As explained in the summary for [2020] QCA 239, the primary judge essentially agreed with the applicant’s key contention that the respondent could not require it to subsidise the provision of services or amenities from which it could not benefit. [5].

Despite the primary judge agreeing with the applicant on the subsidisation issue, it was held that this did not provide a defence to the respondent’s claim, or a basis for the counterclaim against it, because of the supposed effect of s 174(4)(c) of the Act. [5]. The applicant sought to appeal in relation to that issue. Ultimately, the applicant was successful, with reasons for that conclusion being given by McMurdo JA (with whom Fraser JA and Jackson J agreed). [1], [46].

The statutory provision and primary judge’s reasoning

Section 174 of the Act provides that a body corporate may levy contributions determined by it, and that once levied, those contributions (per sub-s (4)(c)) “may be recovered as a debt by the body corporate in a court of competent jurisdiction”. [14].

The primary judge found that, as a result, the applicant could not resist the respondent’s claim for the unpaid levies. In supporting that conclusion, the primary judge also noted that a body corporate’s determination of levies payable “is not conditioned upon its having made a correct assessment of the amounts properly payable in accordance with the Act”. [23]. His Honour said that, if there had been errors, they could be corrected by adjustments to future levies. [24].

The Court of Appeal’s reasons

McMurdo JA disagreed with the primary judge’s view that the levies could not be challenged. [38]. Notably, his Honour said that s 177(1)(h) of the Act requires a community body corporate to form an opinion about the amounts necessary to be raised by way of a contribution, prior to their being levied. [32]. His Honour said that the respondent “could not have thought that it was necessary to do so, and it must be inferred that [it] did not consider that question”. [38]. It was not necessary because by-law 27(c) required the community body corporate to collect levies from the residential bodies corporate (i.e. not including the applicant, representing the commercial and retail areas) to enable it to meet its budget for maintenance of certain restricted areas, which the levies imposed required the applicant to subsidise (e.g. a gymnasium and sauna area). [37].

In conclusion, his Honour considered that the community body corporate “did not do what the provision [s 177(1)(h)] required, which was to form an opinion of whether it was necessary to raise an amount for expenditures by way of contributions under s 174”. [38]. Accordingly, “the purported determination was a nullity”. [42]. The trial judge had therefore erred in holding that there was no defence to the respondents’ claim. [43]. Accordingly, the judgment in favour of the respondent was set aside, and the claim and cross-claim were remitted to the District Court for further determination. [43].

W Isdale