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[2012] ACAT 63
ACT Civil and Administrative Tribunal
2012-09-17
Original judgment source is linked above.
The Applicant and Ms Josie Mackay-Sim were able to reach agreement in relation to motion 5 and asked the Tribunal to make orders by consent in relation to that motion.
As a result, the hearing proceeded in relation to motion 2.
(g) an order giving effect to an unsuccessful motion for a resolution of a general meeting (either as originally proposed or as amended by the ACAT) if the ACAT is satisfied after a merits review of the motion that opposition to the motion was unreasonable;
(2) The ACAT may make any other order it considers reasonably necessary or convenient to resolve a dispute under this part.
(3) This section does not limit the orders ACAT may make in relation to a dispute under this part.
49(1) An owners corporation may, if authorised by an unopposed resolution, grant a special privilege (other than a sublease) for the enjoyment of the common property (or any part of the common property) to a unit owner, a part-owner of a unit, or someone else with an interest in a unit.
(2) A grant under subsection (1) may be terminated, in accordance with a special resolution, by written notice given by the owners corporation to the person to whom the grant was made.
46(1) A corporation may, if authorized by a unanimous resolution, grant to a member, or any person who has derived an interest in a unit through a member, any special privilege (not being a sub-lease) in respect of the enjoyment of part or parts of the common property.
(2) A grant made under the last preceding sub-section may be terminated by notice in writing given by the corporation to the grantee in accordance with a special resolution.
82(3) The functions of an executive committee of an owners corporation must be exercised -
(a) as the corporation directs at by resolution at a general meeting; or
(b) in the absence of any such a resolution - as the committee considers appropriate.
Note: The resolution required under (3)(a) is an ordinary resolution, unless this Act provides that the resolution should be a special, unopposed or unanimous resolution - see s. 104(1) (Decisions at general meetings).
88B The executive committee of an owners corporation may consent to an application by a member of the corporation to use the common property if -
(a) the use applied for is minor; and
(b) the use will not unreasonably interfere with the reasonable use and enjoyment of the common property by other members of the corporation.
Installation of air conditioner or awning on unit that extends over common property
The Applicant's response is that Resolution 7 and the amendments to the Articles at the meeting on 23 September 1976 do no more than give the ability to allocate.
The granting of special privilege is a statutory requirement that must be satisfied to the standard identified in the legislation, currently "as an unopposed resolution" or as required by the previous legislation at the relevant time "by unanimous resolution." The actual resolution to pass motion 7 did not mention 'special privilege'; it did not identify the recipients of the grant, the area of common property affected or the terms of the grant. If it was intended, in 1976, to confer special privilege, the outcome fell 'short of the mark.'
Pursuant to section 82(3) of the UTA 2001, the committee's function is limited to matters that do not require a resolution that can only be passed at a general meeting. The only way to give exclusive use or special privileges to the carports is by section 49 of the UTA 2001, which requires the Owners Corporation to pass an unopposed resolution at a general meeting (or a unanimous resolution under the previous legislation) to grant a special privilege to an owner in respect of common property.
Even if the Owners Corporation, in the 1976 general meeting, unanimously purported to delegate power to the committee to grant a special privilege to an owner in respect of the common property, to do so was outside the powers of the Owners Corporation, which is a creature of statute with limited powers.
In the context of car parking on common property what had to occur for a special privilege over common property to be legally granted was:
Section 88B of the UTA 2001 only allows the committee to grant permission for minor use of common property. It does not vest the committee with the necessary powers to act as it has done over the last 30 years in relation to car parking.
The intention of previous committees is irrelevant as the committees have all acted outside their powers under the previous legislation and the UTA 2001. The car parking special privileges over common property have been granted to various unit holders by an executive committee acting beyond its authority and not by general meeting resolutions which are unopposed. They are invalid and the Owners Corporation needs to take appropriate action to lawfully validate these grants of special privilege to protect unit owners.
The Respondents posed the question - if the objective was to correct a fault in the authority behind the licence agreements, why entirely re-write the content as in Motion 2?
Motion 2 purports to replace the carport licences which have gone unchallenged by professionals and owners for over 30 years. It is not modeled on the carport licences. It seeks to entirely rewrite the legal relationship between the Owners Corporation and members for car parking. There is no undertaking that the Owners Corporation will transfer the licence agreement to a new unit owner.
In the licence agreement, there is provision that if the licence is revoked by the Owners Corporation by special resolution then the Owners Corporation may give the unit owner any compensation that it thinks fit. This provision is not in
The changes proposed by motion 2 would void the agreements rather than constructively remedy any problem.
Motion 2 only grants exclusive rights over a particular parking space whereas the licence agreements recognized property rights over carports. Motion 2 states that owners are entitled to "at least one carport" when a number of Respondents have two carports. Motion 2 states that special privileges are only granted "for the time being."
Motion 2 includes a new condition in subclause (g) - "The owners corporation may carry out any of its functions on the space or the carport or any other improvement without unreasonably interfering with the Member's use of the space for parking vehicles", which was not in the licence agreements and which purports to give the executive committee authority to carry out functions on the carport structure which is beyond its statutory obligations. Subclause (g) is unnecessary and should be struck out.
Motion 2 was put forward by the executive committee after obtaining legal advice as the most efficient and equitable method of validating the previous unlawful grants whilst providing a mechanism that avoids the need for further grants of special privilege each time a unit is transferred.
Motion 2 was designed to provide certainty and uniformity. It provides the unit owners with the opportunity to legally validate the parking allocation in accordance with what was intended. Contrary to what the Respondents allege, it ensures unit owners can continue to have car parking as before.
In relation to the Respondents' concerns expressed by the use of the words in motion 2 as drafted 'for the time being' in describing the owner of the unit - the intention is to cover the owner of the unit 'from time to time' or 'at any time'. This is to overcome the need for a new owner having to sign a form requesting special privileges for car parking from the Owners' Corporation and for the need for a unanimous resolution each time. While acknowledging owners take comfort from seeing their name on a document Counsel informed the Tribunal that the wording was also designed to overcome situations where transferring the car parking had been overlooked and had not occurred. Suitable replacement words would be "at any time."
At the General Meeting on 2 May 2012, a motion to amend motion 2 to include a compensation clause was carried without opposition, however the amended motion 2 containing the compensation clause still failed to pass unopposed.
The inclusion of the compensation clause which is in the licence agreements, namely:
"the corporation shall be at liberty (subject to the provisions of the Act) to make such payments as it sees fit to compensate the Member for the termination of the special privilege.",
is too broad to be a reasonable term or to be enforceable against the Owners Corporation. The clause is too discretionary and is open to abuse by owners if there are no references by which compensation should be assessed. If any compensation clause is to be included, it should specify that compensation is an obligation and should be paid by reference to a valuation of the parking space as improved and allow for arbitration or mediation in the event of a dispute.
Whether opposition to motion 2 at the meeting on 2 May 2012 was
The issue of reasonableness is objective (see Points North [2004] QBCCMCmr 423 at paragraph 42, where the Adjudicator stated "I do not consider that the 'subjective intention' of each of the lot owners who voted in opposition is the appropriate test...........is whether the opposition is in the circumstances unreasonable has to be considered 'objectively' taking into account all relevant circumstances.")
In considering whether an order should be made pursuant to section 129 of the 2011 Act, regard must be had not only for the interest of all owners in the scheme but also the rights and reasonable expectations of any owners deriving or anticipating a particular benefit under a motion.
The grants of special privilege proposed by motion 2 are fair because they give effect to the parking system and policy that has operated at Wybalena Grove for the past 30 years.
Motion 2 is the most efficient and equitable method of validating the previous unlawful grants whilst providing a mechanism that avoids the need for further grants of special privileges each time a unit is transferred. This is because the special privileges are for the benefit of the lot owner from time to time and run with the land.
As the Owners Corporation is on notice that the grants of special privileges by the committee were ultra vires, it is imperative that the owners' corporation validate, by unopposed resolution at a general meeting, these grants of special privilege to protect itself against a damages claim from unit owners who bought into the scheme on the basis that the unit they purchased came with a special privilege car space. Thus, the Respondents' opposition was unreasonable.
Under section 129(1)(g) of the 2011 Act this Tribunal may make 'an order giving effect to an unsuccessful motion for a resolution of a general meeting (either as originally proposed or as amended by the ACAT) if ACAT is satisfied after a merits review of the motion that opposition to the motion is unreasonable.'
The test to determine if the opposition to the motion was unreasonable is not a subjective test of the intentions of the unit owners who voted in opposition. Whether the opposition is in the circumstances unreasonable has to be considered "objectively" taking into account all relevant circumstances.
In Points North [2004] QBCCMCmr 423, which was a matter between Alston Glen Pty Ltd and Body Corporate for Points North Community Titles Scheme 4774 & Others, the Adjudicator, not being aware of any court authority which had previously considered whether 'the opposition is in the circumstances unreasonable' when objectively taking into account all relevant circumstances, referred to authorities in the Corporations Law and at paragraph 44, to the case of Jenkins v Enterprises Gold Mines (1992) 10 ACLC 136 ("Jenkins").
The Adjudicator said that the Court said, in the Jenkins case, the application of the test of oppression involved a question of fairness. It is for the Court to decide whether, in balancing the interests of a company as a whole against minority interests, the directors have acted so as to unfairly prejudice the interests of the minority. The Court makes a determination of this issue according to the ordinary standards of reasonableness and fair dealing.
The Adjudicator then said in the Points North case "I consider that the appropriate test.................is whether opposition to a motion is unreasonable/reasonable when considered in an objective and fair manner in all of the circumstances. A test relying on a subjective intention to oppose a motion would (be) meaningless and inoperative."
In considering whether the order sought by the Applicant should be made regard must be had not only to the interest of all owners in the scheme but also the rights and reasonable expectations of any owner deriving or anticipating a particular benefit under a motion.
In the current situation the Respondents are firmly of the belief that the licence agreements are valid and should be upheld or validated by the Owners Corporation to correct what some of the Respondents described as 'a technicality to do with the language'.
A determination of this application requires that all of the circumstances be taken into account when considering each of the Respondents' grounds of opposition to the motion.
The Respondents' opposition to motion 2 was partly based on their claim that special privileges to park in common property car parks were granted to all owners by unanimous resolution at the September 1976 meeting. The September 1976 resolution, while unanimous, purported to delegate functions and powers to the executive committee. Acting upon that delegation, the executive committee purported, subsequently, to grant special privileges to some of the owners, including the Respondents, in respect of car spaces and carports on common property which were formalized in a licence agreement.
The relevant law at the time of the September 1976 meeting was 'the previous legislation.' Section 34 stated:
34. (1) On and after the constitution of a corporation, there shall be a committee of the corporation which, subject to this Act, shall perform all the duties and functions, and may exercise all the powers, imposed or conferred on the corporation.
(2) Those duties and functions shall be performed and those powers shall be exercised by the committee in such manner as the corporation by resolution passed at a general meeting directs or, in the absence of such a resolution, in such manner as the committee thinks fit.
While the previous legislation enabled the Corporation to establish and act through a committee and gave that committee the powers referred to in that section, critically the subsection stated that these powers were "subject to this Act". The provision to grant special privileges over common property in section 46 of the previous legislation, to which section 34 is subject, provided that the Corporation may grant special privileges if authorized by a unanimous resolution in relation to that special privilege being granted.
The statutory functions of committees at that time were set out in Division 3 of Part V of the previous legislation. Subsection 55(1) provided that at meetings of the committee, all matters were to be decided by a majority of the votes of the committee-men present and voting.
The Tribunal is satisfied that the executive committee did not, in 1976, have the statutory power to grant special privileges for car spaces and car ports on common property and their actions in making these grants were ultra vires. It is irrelevant that the September 1976 unanimous resolutions purporting to give the committee such powers were unanimous as the committee was, statutorily, unable to grant special privileges.
The UTA 2001 unambiguously sets out the statutory functions of executive committees in subsection 82(3) of the UTA 2001 and the powers of executive committees in section 88B of the UTA 2001. Importantly, the executive committee of an Owners Corporation may only consent to an application for the use of common property by a member if, inter alia, the use applied for is minor. The example given is the installation of an air conditioner or awning on a unit that extends over the common boundary. Use of car park spaces, which are on common property, is not a minor use.
The Tribunal notes the significance of the observance of the statutory requirements for special privileges as stated by Douglas J in Katsikalis v Body Corporate for "The Centre" [2009] QCA 77. The power to grant special privilege over common property can only be granted by the Owners Corporation pursuant to a unanimous resolution or unopposed resolution. The Tribunal accepts the Applicant's submissions in relation to this ground.
The Tribunal considered the Respondents' submissions that urged the Tribunal to find that the licence agreements are contracts between the unit owners and the Owners Corporation which are entitled to the protection of the Corporations Act 2001.
However, the Tribunal had no hesitation in accepting the Applicant's submissions in response. The Corporations Act 2001 does not apply to the Applicant. Section 9 of the Corporations Act 2001 defines 'company' as 'a company registered under this Act'. The Owners Corporation was established under Part V of the previous legislation. Section 9 of the 2011 Act is now applicable. The Owners Corporation is not a corporation registered under the Corporations Act 2001. It is not entitled to the benefit of sections 128 and 129 of that Act.
The Tribunal also considered the Respondents' submission that the licence agreements recognize the property rights of owners over their carports in the unusual situation at Wybalena Grove where the owners have paid for the construction of their carports that are located in the common property car parks.
Having considered all of the evidence in relation to this submission the Tribunal is satisfied and finds that the licence agreements do not and cannot confer interest in land or title to land per se. In Minister of State for the Army v Dalziel Claimant [1944] HCA 4 Williams J stated: "A licence does not create any estate or interest in the land but creates merely personal rights between the parties to a contract. Such personal rights are binding solely upon the parties to the contract and do not run with the land." At their highest, the licence agreements only confer personal rights.
The Respondents, not unreasonably, have an expectation that their parking space privileges, which they have been using and claiming to have a right to use, are validly passed to them under the motion. The Tribunal notes the Applicant's submission that motion 2, as drafted, will ensure that the Respondents' present allocation of carspaces and carports will be protected.
In relation to whether or not a compensation clause should be included, as stated above, the Tribunal notes that the second amendment to motion 2 at the 2 May 2012 meeting, which related to compensation, was carried without opposition. In these circumstances, notwithstanding the Applicant's submissions set out above in relation to the compensation clause, the Tribunal is satisfied that the amendment to this clause which was passed without opposition should be included in motion 2.
In relation to clause (g) in motion 2, the Respondents' concerns are that such a clause was not previously included in the licence agreements, that it effectively gives control of the carports to the committee and that the executive committee may use this clause to carry out functions on the carport structures, such as installing solar panels, which are beyond its statutory obligations. The Tribunal notes these concerns; however, it is satisfied that the Owners Corporation cannot lawfully undertake activities which are beyond its statutory function.
It was apparent to the Tribunal that the Respondents genuinely believed that the licence agreements provided them with some sort of property rights which they could on sell with their unit. Some of the Respondents have been very long term owners of units at Wybalena Grove and a number of units have been sold with car ports. It was not until legal advice was sought in relation to parking, that did not concern a number of the Respondents, that the issue of the invalidity of all licence agreements came sharply into focus.
It is, indeed, fortunate that the legal advice, which is correct, was obtained and the proper and necessary procedure to address this problem was advised to the Owners Corporation, so appropriate action to rectify the problem could be taken. This problem cannot be reversed or overcome as the Respondents propose as the licence agreements are ultra vires and, therefore, fatally flawed.
Having considered each basis of the Respondents' objections to the motion set out above, and the Applicant's submissions and the surrounding facts and circumstances, the Tribunal is persuaded that in respect of each of the grounds of opposition referred to above, all of the Applicant's submissions, excluding those for the compensation clause, which the Tribunal has already dealt with, should be accepted.
The Respondents have set out submissions which the Tribunal considers, when objectively taking into account all relevant circumstances, including that 79 of the unit owners were in favour of motion 2 being passed at the meeting on 2 May 2012, do not amount to a reasonable basis for opposition to that motion.
Once the Respondents became aware of the problem with the purported granting of special privileges, the Tribunal concurs with the Applicant, and finds that opposition to the motion to rectify the problem is also, in itself, unreasonable.
Therefore, the Tribunal is satisfied and finds that the opposition to Motion 2 by the Respondents, excluding Ms Josie Mackay-Sim (who was a Respondent only to Motion 5 and did not oppose Motion 2) was, in the circumstances, unreasonable.
In relation to the actual wording of Motion 2, the Tribunal notes the Respondents' concerns in relation to the wording "for the time being" in the third line of motion 2. Counsel for the Applicant suggested at the hearing that the words "for the time being" be replaced by the words "at any time." The Tribunal proposes to amend the motion pursuant to section 129(1)(g) of the 2011 Act to provide that the words "at any time" are used in lieu of the words "for the time being." In doing so the Tribunal considers this to be just and equitable to all parties.
The Tribunal, as stated in paragraph 103 above, considers it to be just and equitable to all parties to further amend motion 2 and to include the second amendment (in relation to the compensation clause) which was carried unopposed on 2 May 2012, namely:
"l) A grant of special privilege may be terminated, in accordance with a special resolution, by written notice given by the Owners Corporation to the person to whom the grant was made. In the event of such termination taking place in respect of the special privileges granted by this motion, then the Corporation shall be at liberty (subject to the provisions of the Act) to make such payments as it sees fit to compensate the Member for the termination of the special privilege."
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
List of cases: Beaton
McDevitt
Katsikalis v Body Corporate for "The Centre" [2009] QCA 77
Minister of State (Army) v Dalzeil [1944] HCA 4; [1934] 68 CLR 261