Mineralogy Pty Ltd v Body Corporate for the 'The Lakes Coolum' [2002] QCA 550

PARTIES: MINERALOGY PTY LTD ACN 010 582 680 / (appellant/applicant) v THE BODY CORPORATE FOR “THE LAKES COOLUM” (respondent/respondent)

FILE NO/S: Appeal No 9081 of 2002 DC No 5614 of 2001

DIVISION: Court of Appeal

PROCEEDING: Application for Leave s 118 DCA (Civil)

ORIGINATING COURT: District Court at Brisbane

DELIVERED ON: 23 December 2002

DELIVERED AT: Brisbane

HEARING DATE: 20 November 2002

JUDGES: McPherson and Jerrard JJA and Philippides J Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER: Application for leave to appeal be dismissed with costs

CATCHWORDS: LOCAL GOVERNMENT - PLANNING - whether decisions on planning law establish legal principles / STATUTES - BY-LAWS - VALIDITY - PARTICULAR PHRASES - REGULATING and/or PROHIBITING - whether regulation of an activity under a by-law invalidates by-law where some acts are prohibited / Body Corporate Community Management Act 1997 (Qld), s 53, s 131 / Baker v Cumberland County Council (1956) 1 LGRA 321, 331, discussed Brunswick Corporation v Stewart (1941) 65 CLR 88, followed Lock v Queensland Investment & Land Mortgage Co. [1896] AC 461, followed Swan Hill Corporation v Bradbury (1937) 56 CLR 746, considered Yanner v Eaton (1999) 201 CLR 351, applied

COUNSEL: P D McMurdo QC for the appellant/applicant G D Beacham for the respondent/respondent

SOLICITORS: Mineralogy Pty Ltd for the appellant/applicant Sykes Pearson & Miller for the respondent/respondent

[1] McPHERSON JA: This is an application for leave to appeal from a decision of a District Court judge, who reversed the decision of an adjudicator acting under the Body Corporate and Community Management Act 1997. The issue before the adjudicator was whether s 53 of the by-laws of the body corporate constituted under the Act and known as “The Lakes Coolum” was invalid. That by-law so far as relevant provides as follows:

“53 Building Control

Approval of Works

53.1(a)An occupier must not carry out any construction, improvements, renovations, alterations, additions or landscaping on the lot (any one, or combination of more than one, referred to as “the Works”) other than those to which the Body Corporate Committee (“the Committee”) or the agent as may be nominated from time to time by the Committee (“the Committee’s agent”) has given approval in writing as hereinafter provided. For avoidance of doubt, the Committee has the right, but is not bound, to appoint an agent under this by-law.

…

(c)An owner must submit for approval to the Committee’s agent such information relating to the plans and specifications of the Works (including a formal landscaping plan) and of the proposed building and site access program as the Committees’ agent may reasonably request in order to determine the nature of the Works and the building and site access program proposed by the owner.

The approval of the Works by the Committee or by the Committee’s agent must be processed within a reasonable time and must not be unreasonably withheld provided:-

(i)that the Works are in harmony with the architectural design, quality, style, colours, materials, aesthetics and landscaping of the then existing improvements on other lots and the common property in the scheme; ….

If the owner has not received a formal reply from the Committee or the Committee’s agent within a reasonable time of submission for approval then the application is deemed to be approved.”

[2] Section 131 of the Act is as follows:

“131 Content and extent of by-laws

(1)The by-laws for a community titles scheme may only provide for the following -

(a)the administration, management and control of common property and body corporate assets;

(b)regulation of, including conditions applying to, the use and enjoyment of -

(i)lots included in the scheme, and

(ii)common property, including utility infrastructure; and

(iii)body corporate assets, including easement areas relevant to common property; and

(iv)services and amenities supplied by the body corporate;

(c)other matters this Act permits to be included in by-laws.

(2)If there is an inconsistency between a by-law and a provision (the “other provision”) of the community management statement that is not a by-law, the other provision, to the extent of the inconsistency, prevails.”

[3] The primary question is whether s 131(1)(b)(i) of the Act authorises the adoption as a by-law of a provision in the form of by-law 53.1. Stating it more precisely, it is whether the use and enjoyment of a lot includes the process of erecting or constructing a dwelling on the lot. If it does, then that process, and the conditions applying to it, can be regulated by a by-law like 53.1.

[4] The applicant before us submits that there is authority in the field of planning law that recognises a distinction between regulations affecting the use of land in the sense of the activities conducted upon land, and the regulation of building on land including or by reference to the character of structures that may be erected on the land. See Baker v Cumberland County Council (1956) 1 LGRA 321, 331-334; Jones v Gosford Shire Council (1975) 33 LGRA 368, 371. Detached, however, from the statutory provisions on which they are based, decisions on planning law establish no generally applicable legal principles. It is true that in Baker v Cumberland County Council (1956) 1 LGRA 321, 331, Sugerman J distinguished between the “use” and the “character” of buildings, but that was because, as he said, s 342AC(2)(c) of the Local Government Act 1919 (NSW) recognised such a distinction.

[5] No distinction of that kind is made or recognised by s 131(1)(b)(i) of the Act in the present case. It speaks simply of providing for the regulation, including the conditions to be applied, of the use and enjoyment of lots. One way, and perhaps the most obvious way, of using and enjoying a lot is to build a dwelling or other structure on it. By-law 53.1 imposes conditions upon the way in which that may be done on a lot in this community titles scheme. The applicant’s submission that building on the land may be “using” but not “enjoying” does not, I think, warrant close attention. The two functions are referred to in combination in para (b)(i) of s 131(1) and it would be artificial to read them disjunctively.

[6] If that were the only arguable deficiency in by-law 53.1, it would be a valid exercise of the by-law making power and the decision below would not be open to challenge. However, at the conclusion before us of submissions by the applicant, the Court raised the question whether by-law 53.1 can properly be considered as providing for “regulation” as distinct from the prohibition of using and enjoying. What, s 131(1)(b)(i) authorises is the making of a by-law providing “only” for “regulation of .. the use and enjoyment of … lots …”. On its face, it confers no power to make a by-law prohibiting use and enjoyment. The question then is whether by-law 53.1 in substance prohibits rather than regulates the carrying out of any construction, etc on a lot. There is no doubt that in form the provision is stated as a prohibition. It says:

“An occupier must not carry out any construction, improvements … or landscaping on the lot … .”

It then proceeds to qualify the prohibition by adding “other than those to which the Body Corporate Committee … has given approval in writing as hereafter provided”.

[7] In Swan Hill Corporation v Bradbury (1937) 56 CLR 746, 762, Dixon J said:

“… the force of the word ‘regulating’ has been discussed repeatedly and the cases dealing with its application have grown only too familiar. Prima facie a power to make by-laws regulating a subject matter does not extend to prohibiting it either altogether or subject to a discretionary licence or consent. By-laws made under such a power may prescribe time, place, manner and circumstance and they may impose conditions, but under the prima facie meaning of the word, they must stop short of preventing or suppressing the thing or course of conduct to be regulated.”

Similar statements are found in judgments in other cases. For example, in Brunswick Corporation v Stewart (1941) 65 CLR 88, 95, Starke J said:

“Prima facie a power to regulate and restrain a subject matter does not authorize prohibiting it altogether or subject to a discretionary licence or consent … But, as might have been expected, this proposition cannot be universally applied (Slattery v Naylor (1888) 13 App Cas 446).”

[8] The underlying rationale is that a power to regulate an activity implies that the activity will, despite such regulation, be capable of continuing, which it would not do if it were completely prohibited. See City of Toronto v Virgo [1896] AC 88, 93. Prohibition of an activity in part, in a particular case, or in a particular way, may however in some circumstances be needed in order to achieve effective regulation. “The extent to which such partial prohibition is permissible” the Privy Council has said, “depends on the terms of the power to regulate and on the context in which the power is to be operated”: Ng Enterprises Ld v Urban Council [1997] AC 168, 177. The Australian authorities, a few of which are referred to in that decision are in accord with that view. See, for example, Goldberg v Law Institute of Victoria [1972] VR 605, where Gillard J held that a prohibition upon exhibiting a sign or nameplate of more than a specified size on solicitor’s premises was authorised by a power to make rules regulating professional duties, practice, conduct and discipline of practitioners. In Brunswick Corporation v Stewart (1941) 65 CLR 88, 95, Starke J said that the court “should have regard to the body entrusted with the power and the language in which the power is expressed and the subject matter with which the body has to deal”. In reliance on that statement, Gillard J held that the provision relating to exhibiting signs was no more than a particular prohibition in a solicitor’s practice, and was valid as a form of regulation ([1972] VR 605, 610).

[9] The provision in by-law 53.1 does, it must be acknowledged, go considerably further. It commences with a prohibition on the carrying out of construction, improvements, renovations, alterations, additions or landscaping, all of which are described as “the works”. In the case of a vacant lot like that owned by the applicant, the effect is to prevent what is generally accepted as a basic right of a landowner, which is to build a dwelling on the land. That activity is prohibited by the by-law unless it takes place with the prior written approval of the Body Corporate Committee. Prima facie, as Dixon J said in the passage referred to above, such a prohibition goes beyond mere regulation. It begins by committing to the discretion of the Committee or its agent the owner’s ability to construct works. The discretion is, however, not altogether unqualified or unlimited. Approval “must not be unreasonably withheld”, provided that the works “are in harmony with the architectural design …” and other matters specified in subpara (i) of by-law 53.1(c). The quoted formula (“not … unreasonably withheld”) is commonly found in covenants in leases and in statutory provisions regulating them, where its meaning has proved neither elusive nor difficult to ascertain or apply.

[10] The applicant’s lot on which it proposes to build is one of the number of lots in what is known as a “cluster” scheme under the Act of 1997, which repealed the Building Units and Group Titles Act 1980, in turn replacing The Group Titles Act of 1973 which was the first legislation to provide for a group lot subdivided on a horizontal plane. There is a reference in the reasons for judgment in the Distinct Court to evidence from a Mr Penny, chairman of the Body Corporate, that the original developer had proposed a development of “a Mediterranean Tuscan style”, and also to a brochure referring to “Mediterranean villas” evoking “images of the South of France or Tuscany”. This, as the learned judge observed, is capable of comprehending a wide range of housing styles and designs; but by-law 53.1(c)(i) itself supplies an external and objective standard by which to judge the character of the proposed works for which approval is sought. They are to be “in harmony with” the architectural design quality, style, colours, materials, aesthetics and landscaping “of the then existing improvements on other lots and the common property in the scheme”.

[11] It is true that the determination of what is “in harmony” with existing improvements on other lots involves matters of personal predilection, taste and judgment; but that does not necessarily make the process of assessment uncertain or arbitrary. Some cases may be more difficult to decide than others; but examples can also be chosen that it would be comparatively obvious and simple to determine: for instance, a red brick bungalow would appear incongruous among a cluster of plantation-style Southern mansions. In the District Court, the learned judge held that the provisions of by-law 53.1(c)(i) did not introduce such a degree of uncertainty as to require those provisions to be condemned as invalid. A similar conclusion was reached by the adjudicator at first instance. The application for leave to appeal has not challenged that conclusion, with which, in any event, I am in agreement.

[12] Given that the by-law supplies an objective standard by which to judge the harmonious character of the proposed works, and that approval to carrying them out must not be unreasonably withheld, it does not seem to me that the by-law is invalid on the ground of its being prohibitory rather than regulatory. In Brunswick Corporation v Stewart (1941) 65 CLR 88, 96, the question of validity was approached as one to be determined according to whether or not the requisite approval under the by-law could be arbitrarily withheld. Starke J said:

“It thus appears that the by-law does not invest the surveyor with a power of prohibiting building altogether or subject to a discretionary licence or permit or consent. The provisions of the by‑law do not commit the grant or refusal of a permit to build to the discretion or arbitrary and capricious authority of the surveyor but give him an authority merely to examine and satisfy himself that the by-laws are being complied with, subject even then to the arbitrament of an independent and skilled body of architects. Despite Bradbury’s Case, by-law 53 appears to me within the power to regulate the erection and construction of buildings.”

So here, although the question whether the proposed works will achieve harmony with existing improvements involves an element of individual taste, it is not something that is committed to the arbitrary and capricious authority of the Body Corporate Committee or its nominated agent, either generally or without an opportunity for challenging the decision to refuse approval on the ground that it is unreasonable.

[13] In his supplementary written submissions on this point, Mr Beacham of counsel for the respondent pointed out that the standard by-laws embodied in Schedule 2 of the Act contain a series of provisions in by-laws 5(1), 8(1) and 9(1) which impose similar forms of restriction concerning lots or common property forming part of the scheme; for example, by-law 8(1) provides that:

“the occupier of a lot must not, without the body corporate’s written approval, make a change to the external appearance of the lot unless the change is minor and does not detract from the amenity of the lot and its surrounds.”

In the case of this body corporate, the standard by-laws were displaced by other express by-laws; but it is well settled that provisions having, like the by-laws in Schedule 2, the benefit of statutory sanction by way of example are proof against challenge as being beyond power. That has long been recognised in the case of Table A to the Companies Act. See Lock v Queensland Investment & Land Mortgage Co. [1896] AC 461, 466, 467. By comparison, the provisions in by-law 53.1 afford a standard that is considerably more precise and less arbitrary than that prescribed by the words “detracts from the amenity of the lot and its surrounds” appearing in the standard by-law 8(1).

[14] No doubt, as the High Court said in Yanner v Eaton (1999) 201 CLR 351, 372, “regulation may shade into prohibition and the line between the two may be difficult to discern”. In this instance, however, the drafter of by-law 53.1 was evidently well aware of the problem inherent in the difference between regulation and prohibition, and took steps to ensure, successfully as it seems to me, that the by-law was restricted to regulating, as distinct from prohibiting, the construction of buildings on a lot forming part of the scheme.

[15] It follows that the application for leave to appeal should be dismissed with costs. This makes it unnecessary to consider the notice of cross-appeal, which should also be dismissed.

[16] JERRARD JA: I have read and respectfully agree with the reasons for judgment and proposed order of McPherson JA.

[17] PHILIPPIDES J: I agree with the reasons of McPherson JA and the order proposed.