Independent Finance Group P/L v Myton P/L & Ors [2001] QCA 306

COUNSEL: L Boccabella for the Appellant / D Jackson and K Downes for the First Respondents

SOLICITORS: Broadbent Radich Sampson for the Appellant / Deacons for the First Respondents

McMURDO P: I have read both the reasons for judgment of Atkinson J in which the relevant facts and issues are set out and those of Thomas JA.

It is unnecessary to decide here whether s 184 Body Corporate and Community Management Act 1997 ("BCCM Act") requires disputes of the type listed in s 183 BCCM Act to be determined under Ch 6 (ss 182-249) of that Act, giving the adjudicator exclusive jurisdiction. My preliminary view is that it would be surprising if, in the absence of the clearest words, the inherent jurisdiction of the Supreme Court was diminished by Ch 6, although I agree with Thomas JA that the court would generally be reluctant to grant relief restraining a party from exercising statutory rights before the appropriate specialised statutory tribunal.

I otherwise agree with Atkinson J's reasons for concluding that s 118(3) District Court Act 1967 provides for an appeal by leave to the Court of Appeal from a judgment of a District Court judge determining an appeal from the decision of an adjudicator under s 184(2)(b) BCCM Act. I wish only to add the following comments.

The respondents contend, inter alia, that an appeal from the District Court to the Court of Appeal by way of s 118(3) District Court Act 1967 is excluded by s 184(2) which provides that:

"The only remedy for the dispute is an order of -

…

the District Court on appeal from an adjudicator on a question of law" (my emphasis);

an order of the Court of Appeal cannot be an order of a District Court and so there can be no appeal by leave to the Court of Appeal from the District Court.

Rule 766(1) UCPR provides:

"The Court of Appeal -

has all the powers and duties of the court that made the decision appealed from;".

If leave to appeal were to be given in a case such as this and the Court of Appeal dismisses the appeal, the order of the District Court will stand; if the Court of Appeal allows the appeal it will vacate the District Court order and substitute or vary it. An appeal to the Court of Appeal from the District Court does not therefore negate the requirement in s 184(2) that the only remedy for the dispute is an order of a District Court. For these reasons, as well as for the reasons given by Atkinson J, the respondents have failed to demonstrate that a party who is dissatisfied with a judgment of a District Court on appeal from an adjudicator under s 184(2) BCCM Act has no right to apply for leave to appeal under s 118(3) District Court Act 1967.

I also agree with Atkinson J's reasons for concluding that the adjudicator had jurisdiction under s 223(3)(u) BCCM Act to determine the application as to whether the dissent to the motion considered by the extraordinary general meeting of the body corporate of Welsby Place on 12 August 1999 was in the circumstances unreasonable, even though the motion involved the approval of a community management statement which granted exclusive use rights and despite s 231 which prohibits the adjudicator from resolving a question about title to land.

The Commissioner for Body Corporate and Community Management, through the body corporate of Welsby Place, gave the owners of all units the opportunity to make submissions as to the respondent’s application for an adjudicator to resolve the dispute under Ch 6 BCCM Act. Only the applicant, Independent Finance Group Ltd ("IFG"), the owner of Unit 6, made submissions opposing the application and supporting the stance taken by Mrs Steinfort at the extraordinary general meeting on 12 August 1999. Although the adjudicator wrongly assumed IFG was not the owner of Unit 6, he nevertheless considered its submissions because, again wrongly, he assumed that Mrs Steinfort had instructed IFG's solicitors on her own behalf. These errors did not affect the adjudicator's reasoning which considered only whether Mrs Steinfort's opposition to the motion at the extraordinary general meeting was unreasonable.

On appeal to the District Court, his Honour wrongly considered that Mrs Steinfort was a director of IFG, the appellant before him. But the sole argument considered by his Honour was whether the adjudicator acted beyond his power in resolving a question about exclusive use of areas in the light of s 231 BCCM Act which provides that the adjudicator "… does not have power to resolve a question about title to land".

The applicant IFG did not put forward any argument before the adjudicator or the learned District Court judge to suggest that its interests differed from those of Mrs Steinfort, or that its interests were affected by its status as subsequent purchaser.

The errors made by the adjudicator and by the learned District Court judge were irrelevant to the issues they were each asked to consider and did not render the decisions of either other than "just and equitable".¹

Having had one appeal already which was limited to matters of law, I agree with Thomas JA that the applicant should not now be permitted to raise for the first time a claim that the learned District Court judge "erred in not appreciating the position of the appellant as a bona fide purchaser for value without notice of any exclusive use provisions in relation to the courtyards attached to the ground floor units, a full and proper search of the title having been made prior to completion".

This application raises matters of some importance as to the interpretation of provisions of the BCCM Act and leave to appeal should be granted although the appeal should, in my view, be dismissed. I agree with the orders proposed by Thomas JA and Atkinson J.

THOMAS JA: The applicant (“IFG”) seeks leave to appeal against a decision of the District Court. IFG is presently the owner of Lot 6 which is a unit in a community titles scheme involving eight lots. The three respondents are individual owners of lots numbers 1, 2 and 7.

The circumstances surrounding this application are set out in the reasons of Atkinson J which I have had the advantage of reading.

The original proceedings in this matter were commenced by the respondents who were and are unit owners in an eight‑unit community titles scheme. They sought to resolve a dispute involving other unit owners and brought the matter before an adjudicator under s 223(1) of the Body Corporate and Community Management Act 1997 (“the BCCM Act”). The legislation clearly contemplates the use of this form of alternative dispute resolution for a very wide range of the problems and disputes that may arise in the context of a community titles scheme. The order which the adjudicator made had the effect of validating a resolution granting exclusive use to the owners of particular lots of specified areas which had hitherto been common areas.

The principal contention of IFG is that the proceedings before the adjudicator, and in turn before a District Court judge on appeal, reveal a misunderstanding of the applicant’s position. It is true that the adjudicator’s reasons show that he did not understand that IFG was the owner of Unit 6. However no objection on that score seems to have been made to his Honour on appeal. Indeed his Honour recorded that the sole argument put to him by counsel for the appellant was “that the adjudicator acted beyond power in that his decision resolved a question of title to land”. It would seem then that no objection as to any misunderstanding of the applicant’s position was raised either in the notice of appeal or in argument.

The material presented to this court suggests that the adjudicator had regarded IFG’s appearance to be on behalf of a Mrs Steinfort. The adjudicator noted that Mrs Steinfort remained registered as the owner of Lot 6. In point of fact IFG had purchased Unit 6 from Mrs Steinfort’s mortgagees in possession on 30 November 1999. Mrs Steinfort remained the registered proprietor of that unit until August 2000, which was after commencement of IFG’s appeal to the District Court. The learned District Court judge seems to have made a somewhat similar error in concluding that Mrs Steinfort was a director of the appellant. However for reasons which I shall develop, I do not regard these errors as of themselves justifying the grant of leave to appeal or the allowance of the appeal. Quite simply the appellant, both before the adjudicator and the learned District Court judge chose not to attach any particular relevance to its status as a person independent of Mrs Steinfort. Indeed its submissions asserted reliance upon her refusal to vote in favour of the amendments to the plan and upon the alleged lack of power of the adjudicator to make an order of the kind that was made.

The evidence suggests that Mrs Steinfort, who had owned a number of units in the scheme sold them to persons including the respondents with express or implied representations that the units had the exclusive use of particular courtyards and carparking spaces. That apparently was not the case in relation to the courtyards which were common property under the control of the body corporate. Moreover, settlements occurred without ensuring that conditions relating to exclusive use of the carparking spaces were fulfilled. At that time Mrs Steinfort also owned other units. It was considered that all difficulties could be best rectified by passing a resolution which would ascribe separate courtyards to each of the units instead of having such areas as common property and also to deal with the question of allocation of car parks to individual units. Accordingly instead of bringing legal proceedings, arrangements were made for the holding of a meeting and the passing of the necessary resolutions, to be followed by the lodging of a new community management statement which would give legal effect to the proposed changes.

Despite initial agreement to this course, Mrs Steinfort frustrated its achievement by a series of manoeuvres that might reasonably be regarded as obstructive tactics. On the third occasion when a body corporate meeting was called to achieve the desired solution, Mrs Steinfort (and she alone) voted against the proposal. The proposal, described as motion number 2 at the meeting of 12 August 1999 would have granted exclusive use of the four existing courtyards to Units 1, 2, 3 and 4, and also would have designated exclusive use of existing garages and newly surveyed carparking spaces in respect of all eight units. Mrs Steinfort’s change of heart was perceived by the respondents as unreasonable. They therefore initiated proceedings to have Mrs Steinfort’s opposition held unreasonable and for an order giving effect to the motion as if it had been carried without dissent. Subject to the question whether such an order resolves “a question about title” and is therefore prohibited by s 231, s 223(3)(u) purports to give an adjudicator the power to provide such a solution.

At the time of the meeting Mrs Steinfort was the owner of Lots 3, 4 and 6. She had defaulted under mortgages over those lots, and there is evidence suggesting that the mortgagees had entered into possession. However neither she nor the mortgagees advised the body corporate of this before the meeting, as they were obliged to do by s 140 of the Body Corporate and Community Management (Standard Module) Regulation 1997. The purpose of that provision is to enable any new owner to give notice to the body corporate so that they may be placed on the roll and therefore be notified of meetings and entitled to vote. In turn, IFG expressly accepted and relied upon Mrs Steinfort’s attendance at the meeting and her casting of a negative vote by reason of her right as owner. I do not think it can at this stage be permitted to depart from that position.

On 13 September 1999, the respondents filed their application with the Commissioner for Body Corporate and Community Management (“the Commissioner”). This was the application which was in due course determined by the adjudicator after the Commissioner had taken the necessary procedural steps to ensure that other interested parties might present their submissions on the matter. On 1 December 1999 IFG purchased Lot 6 from the mortgagees in possession although, as earlier noted, no transfer was registered until the following August. IFG obviously received notice of the pending application, as on 13 December 1999 its solicitors (Broadbent Radich Sampson) sent written submissions on behalf of IFG to the Commissioner which were in due course placed before the adjudicator. Paragraphs 1 to 9 of the submissions make comments about the various statements of fact contained in the respondent’s application, accompanied by submissions that such matters do not fall within the meaning of “dispute” under s 182, and other similar legal arguments. The final three paragraphs of the submission are in the following terms:

“10.Mrs Steinfort’s dissent was recorded and the motion regarding the exclusive use of courtyards and garages was validly defeated.

It is improper for the applicants to seek an order of the Commissioner to overrule a motion, which was defeated at general meeting pursuant to Section 55 of the Act.

In summary, this is a matter between a vendor and purchaser and should be dealt with through other legal avenues. It is not a matter within the ambit of Chapter 6.”

The submissions assert reliance upon Mrs Steinfort’s dissent. There is not a hint of reliance upon the existence of third party rights differing from those of Mrs Steinfort. The essential submissions were that it was “a vendor and purchaser matter” and that it should be dealt with by “other legal avenues”.

As noted above, a similar line was taken when IFG appealed to the District Court. On that occasion the sole argument of IFG’s counsel was that the decision was beyond power because it resolved a question of title to land, and that s 231 expressly prohibits this.

Now, upon application for leave to appeal to this court, a new issue is sought to be introduced. Ground 6 of the notice of appeal alleges:

“The learned Senior Judge further erred in not appreciating the position of the appellant as a bona fide purchaser for value without notice of any exclusive use provisions in relation to the courtyards attached to the ground floor units, a full and proper search of the title having been made prior to completion.”

In my view it is now far too late to seek to litigate such an issue. It is raised against a background which shows that the sole director and shareholder of IFG is the wife of Mr Radich, who was at all material times the solicitor for Mrs Steinfort’s mortgagees and who acted in the sale of Unit 6. The reasons of Atkinson J reveal that this rather complex conundrum has now been solved and completed to the extent that a new community management statement and accompanying exclusive use by‑law has been signed, and lodged for inclusion on the Queensland Land Registry under the Land Title Act 1994 and the Land Act 1994.

I appreciate that an error of fact is disclosed in his Honour’s statement that Mrs Steinfort was a director of IFG. But in the absence of the raising of issues such as those which are now sought to be raised it was not an error that falsifies the decision in any material way.

I can see no error in the conclusion of the learned District Court judge that the adjudicator’s finding of unreasonableness against Mrs Steinfort was reasonably open and consider that no error of law had been shown.

The only issues that remain are whether the adjudicator has jurisdiction to make the orders in question, and whether the BCCM Act precludes any further appeal beyond that to the District Court under s 184 of that Act.

Jurisdiction under s 223 of the BCCM Act

Section 223 gives an adjudicator power to make “an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about … the exercise of rights or powers, or the performance of duties, under this Act or the community management statement”. Certain other general types of dispute are designated in s 223(1), but it is unnecessary to refer to these. In my view the dispute that arose concerned the exercise of rights or powers under the Act, namely the exercise of the powers of the body corporate and its members to amend the community management statement and in particular to allocate the exclusive use of areas of the common property to particular lot numbers. On the face of it, it was a dispute to which s 223(1) could apply.

Section 223(3), without limiting subsection 1, mentions many examples of orders that the adjudicator may make. Sub‑paragraph (u) provides that the adjudicator may:

“if satisfied that a motion (other than a motion for reinstatement, termination or amalgamation) considered by a general meeting of the body corporate and requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable – make an order giving effect to the motion as proposed, or a variation of the motion as proposed; or”

Chapter 6 of the Act (ss 182-249) in which the provisions concerning the adjudicator’s powers are contained, is concerned with dispute resolution. The primary object of the Act is declared to be “to provide for flexible and contemporary communally based arrangements for the use of freehold land having regard to the secondary objects”. One of the primary objects is the operation and management of community titles schemes. The secondary objects include flexible administrative and management arrangements for community titles schemes, and “to provide an efficient and effective dispute resolution process”. In this context it is not surprising to find a provision such as s 223(3)(u) which permits a virtually direct managerial solution to defeat a certain type of unreasonable conduct that might otherwise frustrate an objective that could otherwise only be attained by a resolution without dissent. Such a power may seem surprising to those used to the independent management of companies, but there seems little doubt that the legislature has here deliberately established a mechanism for the resolution of community titles scheme disputes in this way. The difficulty of obtaining remedies such as specific performance in the context of disputes which required some action to be taken by the body corporate, and the sometimes unsatisfactory nature of legal remedies in such a context must have been apparent.² That is not to say that recourse may not be had to the courts or that legal remedies are unavailable. There remains of course a concurrent jurisdiction, and the ultimate power of the Supreme Court to restrain concurrent proceedings,³ although experience suggests that the court is generally reluctant to grant injunctions to restrain a party from exercising rights in a tribunal entrusted with a particular task and possessed of a particular expertise.⁴

I have no doubt that this dispute fell within the ambit of s 223.

Question about title to land

The only possible jurisdictional answer to the adjudicator’s power to resolve the dispute is in s 231. It states:

“The adjudicator does not have power to resolve a question about title to land.”

I think that the learned District Court judge’s answer to this point was correct. Whether or not the new community management statement created a lease, it did so lawfully under the Act as an action of the body corporate, not the adjudicator. The body corporate had power to grant exclusive rights over common property if the resolution was unanimous. In the events that happened in this case, the body corporate’s resolution could only be made unanimous by the decision of the adjudicator. Even so, his decision was “to give effect to the motion”. As such the decision partakes more of managerial intervention than it does of the determination of a legal question concerning title to land. The adjudicator’s order was a necessary link in causing property rights to be affected, but neither he nor his order resolved a question about title to land.

The point is however a fine one on which different minds might reach different conclusions. If my primary conclusion is incorrect, I would agree with the analysis presented by Atkinson J which concludes that in the circumstances of this particular case the adjudicator did not resolve the question of title to land in contravention of s 231 of the BCCM Act. On either view, his Honour was correct in dismissing the appeal.

Jurisdiction to appeal to this court

This involves the proper construction of s 184 of the BCCM Act and of s 118 of the District Court Act 1967. The applicant’s submission is that s 184 of the BCCM Act has a privative effect, impliedly overruling the further appeal that s 118(3) of the District Court Act would otherwise permit from a decision in the District Court’s appellate jurisdiction. In my view s 184 is distinguishable from the legislation considered in Stinson v The Pharmacy Board of Queensland⁵ where a privative effect was accorded to a section of the Pharmacy Act 1976. I agree generally with the reasons which Atkinson J has given for concluding that a further appeal, by leave, remains open to this court under s 118(3) of the District Court Act.

Conclusions

The proper construction of ss 223 and 231 of the BCCM Act is a matter of sufficient importance to justify leave being granted, and I do not understand the respondents to have submitted otherwise. I would therefore grant leave. However the appeal should be dismissed because the adjudicator had jurisdiction to make the necessary order and did not err in law. Although it is unnecessary for the disposition of either of the appeals, I am prepared to say that it was reasonably open to him to decide as he did. In turn the learned District Court judge was correct in dismissing the appeal. To the extent to which the applicant has attempted to introduce additional issues not raised by it below, such issues should not be entertained.

Order

Application for leave to appeal granted. Appeal dismissed with costs, including cost of the application for leave to appeal, to be assessed.

ATKINSON J: This is an application pursuant to s 118(3) of the District Court Act 1967 for leave to appeal a judgment of the District Court given on 7 March 2001 on appeal from an order made by the adjudicator under s 223 of the Body Corporate and Community Management Act 1997 (BCCM Act). The applicant has also sought an extension of time pursuant to r 748 of the Uniform Civil Procedure Rules 1999 in which to lodge its Notice of Appeal. The parties were content to have the application treated as the appeal, if leave were granted.

Factual background

The factual background to the matter is found in the details given of the dispute between the parties to the adjudicator. The dispute concerns a block of units, being lots 1 to 8 of BUP 106287, known as Welsby Place at 41 Welsby Street, New Farm. Welsby Place is a two-storey building consisting of eight flats. It was purchased by a developer, Steincorp Pty Ltd, which divided the property into eight strata titled units. Fences were built which fenced off courtyards to the ground floor units 1, 2 and 3. Unit 4 already had a covered verandah constructed. Four of the units were sold and the four remaining units were transferred from Steincorp Pty Ltd to Deidre Steinfort. Certain representations were made by Mrs Steinfort to the purchasers about exclusive use of courtyards and car parking spaces. In fact, the contracts for sale of units 1 and 2 included a condition specifying exclusive use of a garage but not the courtyards. The contract for the sale of unit 3 included a condition specifying exclusive use of an allocated parking space. Each of the owners approached Mrs Steinfort to have the exclusive use problem resolved by a meeting of the body corporate to provide for exclusive use of the courtyards and car parking spaces.

Mrs Steinfort called the first Annual General Meeting on 16 October 1998 at which a motion was to be presented to grant the exclusive use areas. However, the resolution which Mrs Steinfort prepared and presented to the meeting incorporated approval for the subdivision of an area of land representing 20 percent of the total area for $1 consideration to be transferred to Mrs Steinfort’s son, Alexander Steinfort. The piece of land proposed for subdivision was valued at approximately $100,000. Mrs Steinfort said that she would not consent to the exclusive use areas unless all owners of the units agreed to the subdivision. The motion was defeated.

After the meeting on 16 October 1998, an application to resolve a dispute was lodged with the Commissioner for Body Corporate and Community Management (“the Commissioner”). The Commissioner dismissed the application pointing out that the unit owners seeking the order to require the Body Corporate managers to prepare and lodge a new community management statement granting certain exclusive use areas, had themselves voted against the motion. The Commissioner suggested that a new community management statement be prepared and submitted again to a general meeting of the body corporate but that the motion covering the exclusive use of courtyards and garages should be separate from any motion dealing with excising any part of the common property.

On 28 April 1999, a plan showing the proposed exclusive use of common property was prepared by a licensed surveyor. An extraordinary general meeting of the body corporate was held on 4 June 1999. Motion 3 related to the recording of a new community management statement granting exclusive use of four existing courtyards to units 1, 2, 3 and 4. Motion 4 related to the recording of a new community management statement granting exclusive use of four existing garages and four newly surveyed car parking spaces. The meeting was attended by Mytan Pty Ltd (the owner of lot 1), Catherine Arndt (the owner of lot 2), Greg Fee (the owner of lot 7) and Mrs Steinfort (the owner of lots 3, 4 and 6). Mrs Steinfort was said to be unfinancial and consequently could not vote on ordinary or special resolutions. She endeavoured to have the meeting cancelled and voted against all motions. Subsequently a further application to resolve a dispute was lodged with the Commissioner. However, due to a deficiency in the by-laws contained in the new community management statement submitted to the meeting, in that it did not include an exclusive use by-law, the application was withdrawn.

Meanwhile on 10 June 1999, the mortgagees of lot 4 (N.F. Casey and J.M. Close) and lot 6 (G.S. and L. White and N.D. and J.E. Fairlie) served Form 7, Notices of Exercise of Power of Sale, on Mrs Steinfort, who was the mortgagor, pursuant to the mortgages over those properties. The solicitor acting for the mortgagees was Nicholas Radich. On 19 July 1999, the mortgagees took possession of units 3, 4 and 6.⁶ As such, they were considered “owners” of those lots for the purposes of the BCCM Act,⁷ wherein the “owner” of a lot included in a community titles scheme is defined to mean:

“the person who is, or is entitled to be, the registered owner of the lot, and includes –

a mortgagee in possession of the lot; and

if, under the Land Title Act 1994, 2 or more persons are the registered owners, or are entitled to be the registered owners, of the lot – each of the persons.”

A further extraordinary general meeting was called for 12 August 1999. The unit owners in attendance were Karen Ross from Mytan Pty Ltd (unit 1), Ralph Kooymans as proxy for Mr Fee (unit 7) and Mrs Steinfort. Ms Ross also held a proxy for Ms Arndt (unit 2). It does not appear from the record whether notice was given to the mortgagees in possession. A motion (Motion 2) was put that related to the recording of the new community management statement to adopt new by-laws which included an exclusive use by-law to grant exclusive use of the four existing courtyards to units 1, 2, 3 and 4 and to grant exclusive use of four existing garages and four newly surveyed car parking spaces. Votes in favour of the resolution were recorded by the three unit owners voting at the meeting apart from Mrs Steinfort who voted against the motion.

On 30 August 1999, Mr Kooymans sent a memorandum to Nicholas Radich saying:

“With regard to the notice of the meeting I sent to you on Friday 27 August, 1999 it will be necessary for the mortgage (sic) to advise the body corporate of the fact that he has entered into possession of the units as per Section 140 of the (Standard Module) regulations 1997.

The definition of an owner includes a mortgagee in possession as set out in Schedule 4 of the Regulations.

Also Section 49 of the Regulations identifies a ‘voter’ as a mortgagee in possession who claims the right to vote by written notice to the secretary.

Could you please discuss these issues with your client and forward the necessary notices.

The notices can be sent to the secretary C/- RF Kooymans & Co, PO Box 1142, Milton Centre, Queensland, 4064 or to my fax number, 07 3368 2460.”

Section 140 of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the “Standard Module Regulation”) provides that a new owner must give notice to the body corporate so that they can be placed on the roll and therefore be notified of meetings and be entitled to vote.

On 1 September 1999, Broadbent Radich Lawyers replied to that memorandum with two letters. The first informed Mr Kooymans, as secretary of Welsby Place, that Mrs Steinfort had committed several defaults and that their clients had taken possession of units 3, 4 and 6 and gave notice that, as their clients were mortgagees in possession, they were intending to enforce their mortgages and assert all the rights which arose thereby pursuant to the BCCM Act. The second letter to the Body Corporate Manager advised that the properties were going to auction on 18 September 1999 and requested Disclosure Statements for each of units 3, 4 and 6.

On 13 September 1999, Ms Arndt, Mr Fee and Mytan Pty Ltd, as owners of units 1, 2 and 7, made an application to the Commissioner to resolve a dispute. They named Mrs Steinfort of unit 6 as the other party to the dispute. The owners of units 1, 2 and 7 sought an order requiring the body corporate manager to prepare and lodge a new community management statement and a plan of survey of exclusive use of common courtyards, garages, and parking spaces to allocate them to the owners of the units. They set out the history which has already been referred to in these reasons. In their application the three unit owners said:

“It is felt that Mrs Steinfort continues to act in a disruptive manner and that she acted unreasonably in withholding her consent to the granting of exclusive use of the courtyards, garages and car parking spaces, particularly where she has acted in a manner when the units were being purchased that indicated the unit has exclusive use of the courtyards and the contract in the case of units 1 and 2 included the exclusive use of garages and in the case of the contract for unit 7, included the exclusive use of a car parking space.”

On 15 September 1999, Broadbent Radich Lawyers wrote to the Body Corporate Manager care of Mr Kooymans, in relation to the body corporate meeting scheduled for Friday, 17 September 1999. Broadbent Radich Lawyers advised that one of the mortgagees refused to become involved in the issues to be raised at the meeting and asked for the meeting to be adjourned for at least a week to see what happened following the auctioning of the properties. They advised that it was most unlikely that Mrs Steinfort would, prior to the auction, be able to re-finance the loans and accordingly it was unlikely that they would have to deal with her again.

On 16 September 1999, Broadbent Radich Lawyers wrote to the Body Corporate Manager with regard to the meeting to be held on the following day, setting out the attitudes for each of the mortgagees for lots 3, 4 and 6 to the motions. Mr and Mrs White, who were two of the mortgagees of unit 6 had instructed Broadbent Radich Lawyers to act as their proxy and instructed them to vote against the new community statement because by-law 18 would grant certain exclusive use of areas, being courtyards, verandahs, garages and car parking bays as set out in that by-law. A handwritten note showed their strenuous objection to this proposal. The evidence does not disclose whether a meeting was held on 17 September 1999.

On 11 October 1999, the mortgagees of lot 4, Ms Casey and Ms Close, agreed to sell that lot to another of Mrs Steinfort’s sons, Brendan Steinfort. On 10 November 1999, that transfer was registered. Mr Steinfort remains the registered owner.

On 25 November 1999, the Commissioner sent a copy of the application to resolve the dispute to the secretary of the body corporate. The Commissioner invited all owners to make written submissions on the matters raised in the application. The notice informed the secretary that she was required to ensure that all owners received a copy of the notice and the application. The submissions were required to reach the office of the Commissioner by 17 December 1999.

On 30 November 1999, the applicant, Independent Finance Group Pty Ltd as purchaser, entered into a mortgage with Mr and Mrs Fairlie and Mr and Mrs White as mortgagees of lot 6. On 1 December 1999, Broadbent Radich Sampson Lawyers⁸ sent a letter to Mrs Steinfort saying that it enclosed a notice of completion of sale with regard to lot 6. The notice of completion of sale referring, presumably by mistake, to lot 4, says the lot was sold by private contract to Independent Finance Group Pty Ltd. Ms Sternbeck, a paralegal at Broadbent Radich Sampson Lawyers, says that the sale to Independent Finance Group was settled on that day.

On 1 December 1999, Independent Finance Group Pty Ltd instructed Broadbent Radich Sampson Lawyers to act on its behalf in lodging a submission to the application lodged with the Commissioner.

On 8 December 1999, Mr and Mrs White executed a transfer of lot 6 to Independent Finance Group Pty Ltd. On 7 February 2000, a transfer was executed by Mr and Mrs Fairlie. The transfer of lot 6 from Mrs Steinfort to Independent Finance Group Pty Ltd was not lodged for registration until 28 August 2000. However the entitlement to registration arose upon settlement on 1 December 1999. The applicant was therefore entitled to be considered as the owner of the lot pursuant to the definition in schedule 4 of the BCCM Act.

On 13 December 1999, Broadbent Radich Sampson Lawyers sent a letter to the Commissioner enclosing the submission by the applicant. The covering letter said that the lawyers acted for Independent Finance Group Pty Ltd, the owners of Lot 6 BUP 106287, and enclosed its submission opposing the application. They submitted that pursuant to s 55 of the BCCM Act, a resolution to record a new community management statement must be passed without dissent unless the resolution changed a by-law which was not an exclusive use by-law. Mrs Steinfort’s dissent was recorded and therefore the motion regarding the exclusive use of the courtyards and garages was validly defeated. They further submitted that the argument was between vendor and purchaser and was therefore not within the ambit of the dispute resolution procedures of the BCCM Act.

The adjudicator’s decision

On 6 July 2000, the adjudicator made the following orders under part 10 of Ch 6 of the BCCM Act:

“I hereby order that motion 2 considered by the Body Corporate at the extraordinary general meeting held on 12 August 1999 shall be deemed to have been carried by resolution without dissent.

I further order that the Body Corporate shall, within one month of the date of this order, endorse its consent on the new community management statement.

I further order that the Body Corporate shall, within three months after the date on which its consent is endorsed on the new community management statement, lodge the new community management statement for recording by the Registrar of Titles.”

Detailed reasons were given for these orders. After reciting the factual history the decision says:

“One submission was received from a firm of solicitors purporting to act on behalf of the owner of lot 6, Independent Finance Group Pty Ltd. The owner of lot 6 is in fact Deidre Una Steinfort, who has owned the lot since 12 June 1998. However, the body of the solicitors’ submission refers to Mrs Steinfort, and I take it, therefore, that Mrs Steinfort did in fact instruct the solicitors to act on her behalf, even if they incorrectly stated the ownership of the lot.”

The adjudicator was apparently unaware that mortgagees had been in possession of lot 6 since 19 July 1999 and that the sale of the lot to Independent Finance Group Pty Ltd had been settled on 1 December 1999. He incorrectly refused to accept that the applicant’s solicitors acted on the behalf of Independent Finance Group Pty Ltd and not on behalf of Mrs Steinfort. The adjudicator therefore failed to take account of the interests of Independent Finance Group Pty Ltd.

The reasons of the adjudicator also say that the exclusive use areas depicted on the plan had not been registered in the Titles Office and were therefore of no force or effect. The decision continued:

“It is for this reason, of course, that the applicants have been attempting to remedy the situation by taking the steps outlined in the application.”

The adjudicator went on to consider whether or not to make an order under s 223 of the BCCM Act. Section 223(1) provides that:

**“223.(1)**An adjudicator to whom the application for an order of an adjudicator is referred may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a claimed or anticipated contravention of this Act or the community management statement; or

the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

a claimed or anticipated contravention of the terms of, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of –

the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

the authorisation of a person as a letting agent for a community titles scheme.”

Subsection 223(3)(u) provides that without limiting subsections (1) and (2), the adjudicator may:

“if satisfied that a motion (other than a motion for reinstatement, termination or amalgamation) considered by a general meeting of the body corporate and requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable – make an order giving effect to the motion as proposed, or a variation of the motion as proposed.”

In determining whether or not Mrs Steinfort’s opposition to the motion was unreasonable, the Commissioner considered that Broadbent Radich Sampson Lawyers, whom he wrongly thought were Mrs Steinfort’s solicitors, did not deny on her behalf the allegations in the application as to the representations made by her to two of the applicants in respect of the courtyards and the car parking spaces and garages. He considered whether or not the motion would be of benefit to Mrs Steinfort and her previous voting behaviour. He considered in the circumstances that her opposition to the motion at the extraordinary general meeting held on 12 August 1999 was unreasonable. He rejected the applicant’s submissions that the dispute was not within the ambit of the dispute resolution procedures of the BCCM Act.

Broadbent Radich Sampson Lawyers received notice of this decision on 10 July 2000. On 24 July 2000, a new community management statement was signed. It included by-law 18 which provided as follows:

“Exclusive Use Areas

The proprietors of Lots identified in Schedule E, with their licencees, invitees and occupiers, are entitled to the exclusive use areas allocated therein and as identified on the sketch plans marked “A” and “B” attached hereto for the purposes of a courtyard or verandah as applicable and car parking only.

The proprietor gaining exclusive use under this by-law shall be responsible for this property as if it were Part of his or her Lot.”

On 21 July 2000, the body corporate manager informed Broadbent Radich Sampson Lawyers that there would be a general meeting to ratify the endorsement of the community management statement on 27 September 2000. On 11 August 2000, a request for lodgement of the new community management statement was executed and this was lodged on 17 August 2000 for inclusion on the Queensland Land Registry under the Land Title Act 1994 and the Land Act 1994.

Appeal to the District Court

On 17 August 2000, Independent Finance Group Pty Ltd filed a notice of appeal in the District Court under s 237 of the BCCM Act. Subsection 237(2) of the BCCM Act provides that such appeals are restricted to questions of law only.

On 7 March 2001, after a hearing on 27 February, 2001, Senior Judge Skoien of the District Court dismissed the appeal from the adjudicator. In the course of his reasons for decision, his Honour referred to Mrs Steinfort as being a director of the developer who was the appellant before him. The appellant was in fact Independent Finance Group Pty Ltd, of which Mrs Steinfort is not a director or shareholder.

His Honour said that the sole argument put to him was that the adjudicator acted beyond power in that his decision resolved a question of title to land in that to grant exclusive use of an area to a unit holder was to grant a lease which is an interest in land. Section 231 of the BCCM Act provides that:

“The adjudicator does not have power to resolve a question about title to land.”

His Honour held that to grant the right to exclusive possession of land creates a lease. He did not determine whether or not a lease had been created in this instance because he was concerned with what had been decided by the adjudicator which was to resolve a dispute about the conduct of the meeting of the body corporate. His Honour concluded that the adjudicator’s decision merely meant that the motion was deemed to be passed without dissent. If the motion, by adopting a new community management statement, created a lease it did so lawfully under the BCCM Act as an action of the body corporate, not the adjudicator.

Application for Leave to Appeal to the Court of Appeal

The applicant submitted that there are three reasons that leave to appeal from that decision should be granted. The first is that as the adjudicator and the judge failed to understand who the parties were before them, the decision was not “just and equitable” as it was required to be by s 223(1) of the BCCM Act. Secondly, the adjudicator did not make a decision which came within the ambit of s 223(1). Thirdly, the decision resolved a question about title to land and therefore was beyond the power of the adjudicator pursuant to s 231 of the BCCM Act.

The respondents opposed the grant of leave on the ground that there was no capacity to appeal to this court from the decision of the District Court. In any event, they opposed leave being granted on the grounds of appeal that were the first ground argued in this court (or grounds 5, 6 and 7 of the grounds of appeal in the notice of appeal). Further they submitted that any appeal should be dismissed.

It is convenient to consider whether or not this court has jurisdiction to hear an appeal before considering whether or not leave to appeal should be granted.

Jurisdiction

The respondents submit that the applicant cannot appeal to the Court of Appeal from a decision of the adjudicator made under the BCCM Act. In this, they rely on s 184 of the BCCM Act which relevantly provides:

“Exclusivity of dispute resolution provisions

**184(1)**Subsection (2) applies to a dispute if an adjudicator may, under this chapter, make an order to resolve it.

The only remedy for the dispute is an order of –

an adjudicator; or

a District Court on appeal from an adjudicator on a question of law.”

Section 5(h) of the BCCM Act provides that one of the objects of the Act is “to provide an efficient and effective dispute resolution process”. This is done by ensuring that disputes must go to the adjudicator if there is a dispute which is within his or her jurisdiction. This reduces the possibility of sterile jurisdictional questions of the type recently referred to by Young J in Mulwala & District Services Club Ltd v Owners Strata Plan 37724.⁹ The adjudicator has exclusive jurisdiction to deal with disputes under Chapter 6.¹⁰

There is then a statutory right of appeal from that decision to the District Court. No right of appeal is given by the BCCM Act to the Court of Appeal, but that is not necessary. In such a case, appeals from a District Court to the Court of Appeal are governed by s 118 of the District Court Act 1967 which provides:

**“118.(1)**This section –

does not apply to an appeal from a judgment of the District Court in the exercise of its criminal jurisdiction under part 4;¹¹ but

does apply to an appeal from other judgments of the District Court in the exercise of its criminal jurisdiction, including on an appeal brought before the court under the Justices Act 1886, section 222.¹²

(2) A party who is dissatisfied with a final judgment of the District Court in its original jurisdiction may appeal to the Court of Appeal if the judgment –

is given –

for an amount equal to or more than the Magistrates Courts jurisdictional limit; or

in relation to a matter at issue with a value equal to or more than the Magistrates Courts jurisdictional limit; or

involves directly or indirectly any claim, demand or question in relation to any property or right with a value equal to or more than the Magistrates Courts jurisdictional limit.

(3) A party who is dissatisfied with any other judgment of a District Court, whether in the court’s original or appellate jurisdiction, may appeal to the Court of Appeal with the leave of that court.

**(4)**In deciding whether there is a right of appeal under this section, the Court of Appeal may -

inform itself in any way it considers appropriate, including by reference to the appeal record; and

decide the question summarily without hearing evidence.

**(5)**If it is reasonably arguable that a right of appeal under this section exists, the Court of Appeal may treat that circumstance as a ground for granting leave to appeal.

**(6)**If the Court of Appeal grants leave under subsection (3), it may grant it on the conditions it considers appropriate.

**(7)**A single judge of the Court of Appeal may –

grant (with or without condition) or refuse leave mentioned in subsection (3); or

make the decision mentioned in subsection (4)(b).

(8) The Supreme Court**Act 1995, section 254,¹³ does not apply to an order of a single judge of the Court of Appeal under this section.

**(9)**An appeal from a District Court in its original jurisdiction is by way of rehearing.

**(10)**In this section –

“final judgment”, of a District Court, includes a judgment that grants leave to enter a judgment mentioned in subsection(2).

“Magistrates Courts jurisdictional limit” means the amount of the jurisdictional limit of Magistrates Courts for personal actions stated in the Magistrates Courts Act 1921, section 4(a).¹⁴”

The respondents submit that a right to appeal to the Court of Appeal would contradict the express terms of the BCCM Act. It is argued that the specific provision of s 184(2) of the BCMM Act excludes the general provision of s 118(3) of the District Court Act, as s 184(2) provides that the only remedy for a dispute is an order of an adjudicator or a District Court on appeal from an adjudicator on a question of law.

However, s 184 of the BCCM Act does not explicitly exclude s 118 of the District Court Act. The respondent relied upon the decision of the Full Court in Nickelseekers Limited v Vance,¹⁵ but the decision is not helpful in resolving this question since counsel in that case disclaimed reliance on the section of the Act which was the equivalent of s 118(3).¹⁶ In Stinson v The Pharmacy Board of Queensland,¹⁷ the Court of Appeal referred extensively to authority in holding that a section of the Pharmacy Act 1976 which provided that an appeal from the Pharmacy Board could be made to a Judge of the District Court whose decision would be final, precluded an appeal to the Court of Appeal. Such a provision excludes the ordinary incidents of the procedure of the District Court which include “any general right of appeal from its decisions”.¹⁸

In this case, however, s 184 is concerned with the manner in which matters in dispute under part 6 of the BCCM Act are resolved. If the matter is within the jurisdiction of the adjudicator, then the only remedy is to apply to the adjudicator for an order. Section 184(2)(b) of the BCCM Act then gives a right of appeal from the arbitrator’s order to the District Court. Section 118(3) of the District Court Act then provides for an appeal with leave to the Court of Appeal.

Identity of parties

As to the first ground of appeal, the submission by the applicant to the adjudicator disclosed that it was the owner of lot 6 and it was submitted that the District Court judge was told the same from the bar table. Neither the adjudicator nor the judge on appeal, however, understood that Mrs Steinfort, whose behaviour was under consideration, had no apparent connection with the applicant. It is true that the applicant’s interests were not separately considered by the adjudicator but the applicant did not present any argument to distinguish its interests from that of Mrs Steinfort until its submissions in this Court. For the reasons given by McMurdo P and Thomas JA, the applicant should not be able to raise this argument for the first time in this Court. Furthermore the error of fact does not appear to have infected the decisions in any relevant way.

Did the adjudicator have jurisdiction under s 223 of the BCCM Act?

The second ground of appeal was that the adjudicator’s decision did not come within his jurisdiction under s 223 of the BCCM Act. The applicant submitted that the adjudicator did not identify which, if any, of the subject areas, about which he had jurisdiction, he was considering. What is significant, however, is not whether he explicitly identified the subject area but rather whether he was considering a matter over which s 223(1) gave him jurisdiction. In this case, the adjudicator was considering the exercise of rights or powers under the BCCM Act or the community management statement. The original community management statement did not provide for a right to exclusive use to any part of the common area. The proposed by-law granting exclusive use of certain parts of the common area to individual lot owners therefore affected the exercise of rights under the community management statement.

The adjudicator is given further power under s 223(3). In this case, the relevant provision is s 223(3)(u) which gives the adjudicator specific power to make an order giving effect to a motion which is required to be passed without dissent, but was not.

The power of the adjudicator under s 223(3)(u) arises where the adjudicator is satisfied that the resolution was not passed without dissent because the opposition was unreasonable in the circumstances. Prima facie, the decision was within the power given to the adjudicator pursuant to s 223(1) and s 223(3)(u) of the BCCM Act. This ground of appeal would not be successful.

Resolution of a question of title to land

The third ground on which the applicant seeks leave to appeal is that the adjudicator’s jurisdiction to make the decision he made was removed by s 231 of the BCCM Act which prohibits the adjudicator from resolving a question about title to land. The respondent concedes that this question is a question of law of some significance and warrants the grant of leave to appeal if the appeal is not otherwise incompetent. The applicant submits that the grant of exclusive use of common property affects the title to common property.

The respondents submit that the only resolutions to which s 223(3)(u) could apply are resolutions which are required to be passed without dissent and which are not excluded by the terms of s 223(3)(u). These are resolutions passed pursuant to s 39 which provides for the acquisition and incorporation into common property of land in fee simple contiguous to the scheme land or a lot included in the scheme, and s 55 requiring the body corporate to consent without dissent to the recording of a new community management statement if there is a change to the exclusive use by-laws. It was submitted that since it could be argued that both of those sections involved questions of title they would be equally excluded by s 231 and therefore s 223(3)(u) would be left with no operation. This would not be a result intended by the legislature.

It is true that s 223(3)(u) excludes certain motions required to be passed without dissent from its operation. These include motions for reinstatement,¹⁹ termination²⁰ or amalgamation.²¹ The only resolutions which are required to be passed without dissent in the BCCM Act itself are those found in s 39, s 55 and s 134. In addition, however, the Community Management Statement for Welsby Place, which was in effect at the relevant date provided that the relevant regulation module which applied to this scheme was the Standard Module Regulation. In the Standard Module Regulation, a number of provisions provide for resolutions that must be passed without dissent in order to exercise powers given by the BCCM Act. They include regs 111 and 117 which provide for the disposal of an interest in or the leasing of common property pursuant to ss 116 and 119 of the BCCM Act; reg 102 which deals with the maximum amount of money that may be borrowed by the body corporate; reg 112 which deals with the grant of easements over common property pursuant to s 117 of the BCCM Act; and reg 116 which deals with acquisition of freehold land or entry into a lease of more than 3 years pursuant to s 118 of the BCCM Act.

Some of these sections relate to title to land; some do not. Section 116 of the BCCM Act, for example, deals with the disposal of common property and the grant or amendment of a lease or licence over common property. If the adjudicator were asked to resolve a dispute about a lease over land that was common property, then he or she would be being asked, contrary to s 231, to resolve a question of title to land. A similar problem would not arise if the common property were a chattel or the dispute was over a licence to use land which was common property.

In order to determine whether the arbitrator was being asked to resolve a question about title to land²² one must consider the nature of the right or interest the adjudicator was being asked to consider in this case.

In form, what the adjudicator decided was whether or not to give effect to the resolution. However, the substance of that resolution was to allocate areas of the common property for the exclusive use of owners of individual lots. The adjudicator’s decision would therefore in substance resolve a question about title to land if it in effect created a demise. The High Court determined in Radaich v Smith²³ that the grant of a legal right of exclusive possession gave rise to a lease rather than licence at common law²⁴ and so created a demise.²⁵ But this case is concerned with the effect of rights given by statute rather than at common law.

The right to exclusive possession might tend to suggest that an exclusive use by-law gives rise to an interest which is in substance a common law lease, but there are a number of reasons why this is not so.²⁶ An exclusive use by-law is not a common law interest in land but rather a statutory right. The statutory right is created under Part 5 div 2 of the BCCM Act which provides for the meaning, requirements, identification of the subject matter and regulation of exclusive use by-laws. It also regulates the making and notifying of allocations, what is prohibited in exclusive use by-laws and how certain of them are reviewed. Although an exclusive use by-law attaches to a lot included in a community titles scheme, it merely grants the occupier of the lot for the time being exclusive use to the rights and enjoyment of, or other special rights about common property or a body corporate asset.²⁷ It does not create a demise.

This view conforms with the decisions of the Supreme Court of New South Wales. In North Wind Pty Ltd v Proprietors – Strata Plan 3143,²⁸ Rath J rejected a submission that an exclusive use by-law created an interest in land in the nature of a leasehold by analogy with the principle in Radaich v Smith. His Honour observed:

“Counsel could not place the right in any known category of real property interests, and I think that there is no such category, for the reason that the right is not an interest in land in any sense known at common law. The right is not defined directly by reference to some right existing apart from statute, and whatever incidents it has are to be found in the statute itself.”²⁹

The statutory rights created are not proprietary rights. The right to have the benefit of an exclusive use by-law exists by virtue of the statute and, as the High Court found in regard to pastoral leases,³⁰ is not the same as the incidents of a lease at common law. As the respondents submitted, the language of the BCCM Act does not support the contention that the rights under an exclusive use by-law constitute a lease. The exclusive use by-law does not take effect by way of a grant or demise, it is not for a term, it does not create a reversion, it is not assignable as a separate proprietary interest, it is not subject to forfeiture, it is not capable of surrender and there is no rent reserved. Leasehold interests are elsewhere recognised in the BCCM Act.³¹

An exclusive use by-law will be part of a community management statement which must be lodged with the Registrar of Titles. Section 53(1) of the BCCM Act provides that a community management statement takes effect only when it is recorded by the registrar. However, a community management statement is not an instrument under the Land Title Act 1994³² and s 48(4) of the BCCM Act provides:

“An interest created under a community management statement recorded under this Act does not have effect as a registered interest under the Land Title Act 1994.”

Once it is registered, the community management statement takes effect as a statutory contract between the body corporate, each member of the body corporate, each registered proprietor and each occupier of a lot or common property. While it affects rights inter partes, it can not create a registered interest in the land.

It would appear that the adjudicator was not therefore resolving a question of title to land in contravention of s 231 of the BCCM Act.

Order

The application has raised significant legal questions. I would grant the application to extend time and for leave to appeal, but dismiss the appeal.