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
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]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.
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]
[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.
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.
[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.
Legislation
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]
[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.
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.
[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.
The 1993 Act
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.
[13]Exhibit 1 document 18 p 84. Two of the development lots were later subdivided.
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.
[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).
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.
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.
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.
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]
[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.
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.
A further provision for the levying of contributions is contained in s 174, which provides as follows:
(1) A body corporate may levy—
(a)the contributions determined by it under section 177 (1) (h); and
(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.
(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.
(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.
(4) A contribution—
(a)is payable to the body corporate in accordance with its decision to make the levy; and
(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
(c)may be recovered as a debt by the body corporate in a court of competent jurisdiction.
(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.
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.
[16]A parcel is the land comprised in a plan of subdivision under the 1980 Act: s 7.
Section 177 which sets out the duties of a body corporate is also important and relevantly provides as follows:
(1) A body corporate must—
(a) control, manage and administer for the benefit of its members—(i) the community property or the precinct property held by it; or
(ii) any road, wharf or land leased by it under section 164.
(b) properly maintain and keep in a state of good and serviceable repair—
(i) the community property or the precinct property held by it, including any improvements on the community property or the precinct property; and
(ii) any personal property vested in it; and
(iii) any road, wharf or land leased by the body corporate under section 164 and any improvements on the road, wharf or land;
(c) arrange for insurance under section 182; and
(d) keep proper records of—(i) notices given to the body corporate under this or another Act; and
(ii) orders made by a court and served on the body corporate; and
(e) keep—
(i) for at least 10 years after their creation or receipt by or for the body corporate—
(A) minutes of its meetings, including particulars of motions passed at the meetings; and
(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
(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
(f) prepare, from the books mentioned in paragraph (e), a proper statement of accounts of the body corporate in relation to each period—
(i) starting on the day of its incorporation or the day up to which the last statement was prepared; and
(ii) ending on a day not earlier than 2 months before the next annual general meeting; and
(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
(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—(i) for the purpose of meeting its actual or expected liabilities incurred or to be incurred under paragraph (b); or
(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
(i) on first determining the amounts mentioned in paragraph (h), establish a fund—
(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
(ii) into which may be paid any amounts paid to the body corporate by way of discharge of insurance claims; and
(j) levy under section 174, on each person liable, a contribution to raise the amounts mentioned in paragraph (h); and
(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
(l) if the body corporate—(i) becomes liable to pay an amount that it is unable to pay immediately; and
(ii) is not required under paragraph (j) to levy contributions to meet the liability;
levy contributions under section 174 to raise the amount; and
(m) implement the decisions of the body corporate.(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.
(3) The body corporate may disburse amounts from its fund only for the purpose of—
(a) carrying out its powers and functions under this Act or its by-laws; or
(b) meeting a liability mentioned in subsection (1) (l).
(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.
(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.
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.
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.
Section 190(1) provides:
“The executive committee of a body corporate may undertake expenditure only if –
(a)authorised by a comprehensive resolution of the body corporate; or
(b)authorised in an emergency by the Minister.
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.”
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.
[17]Exhibit 1 documents 74 – 77.
Caretaker Agreements
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.
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.
[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.
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.
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.
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.
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.
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]
[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.
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.
[21]Exhibit 1 document 57, p 383.
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.
[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.
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.
[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.
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.
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
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.
[25]Exhibit 1 documents 61 p 448; 63 p 462; 66 p 486; 68 p 500. Such agreements are authorised by bylaw 24(a).
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]
[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.
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.
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.
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]
[28]The same would apply to things like the cost of replacement lightbulbs within the common property of a particular residential body corporate.
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.
[29]Exhibit 1 document 147, p 1563 (2009); Document 148 p 1575 (2010).
Bylaws
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).
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].
[30][2013] QCA 264 at [11], [12].
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.
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]
[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.
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.
[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.
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.”
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.
[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.
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]
[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.
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.
[35]Most of which had not come into existence when the bylaw was made, or at least drafted: Exhibit 1 document 51 p 315.
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]
[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.
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.
[37]I have not checked whether the two systems distribute costs in the same proportions.
Background
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.
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
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.
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.
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”.
[38]The other matters referred to in paragraph (b) do not arise on the facts.
Humphries
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.
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
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.
[75]Whether in equity, or under UCPR r 184.
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.
[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.
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.
[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].
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.
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.
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.
[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].
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.
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.
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.
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.”
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.
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.
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.
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.