Penberg Pty Ltd v Body Corporate for Market Town Community Title Scheme 2052

(b) the Body Corporate and Community Management (Commercial Module) Regulations 1997 (Qld) ("the Commercial Module Regulations"); and

(c) the by-laws for the scheme, which are Schedule C to the Community Management Statement for the Scheme dated 31 August 2000 lodged with the Department of Natural Resources and Mines.

[3] It is also common ground that the respondent is the registered proprietor of lot 19, being a building unit in the Applicant scheme "Market Town" more particularly described as lot 19 BUP 13619 County of Stanley, Parish of Yeerongpilly in Community Management Statement 2052 ("the unit").[2]

[4] The respondent filed a claim and statement of claim on 5 September 2006 against the applicant claiming three categories of damages as a result of "leakage" into the unit, namely:[3]

[5] The applicant submits that it is not in issue that the respondent is the owner of the unit; that there was a leakage of water into the unit "... at some unknown time ..." and that damage was caused to the interior of the unit by such leakage.[4] The question then arises as to which entity, that is, the Body Corporate or the unit owner, has the responsibility pursuant to the Act to remedy the problem and/or accept responsibility for any resultant damage.

[6] The applicant submits that there exists a "dispute" between the applicant and respondent within the meaning of that expression as defined under s 227 of the Act and that as a result the "dispute" should be resolved pursuant to Chapter 6 of that Act under which there are "Exclusivity provisions" to resolve such disputes rather than instituting court proceedings at first instance.[5]

[7] The applicant's basic submission is that all of the respondent's claims may and should be determined pursuant to s 276 of the Act relying upon s 229 of the Act where a "dispute" has arisen under s 227 thereof. The applicant further submits that it is only when the Commissioner has acted under s 250 of the Act after an application has been made and the dispute resolution process is exhausted that the respondent is entitled to pursue any available remedy "... in a court or tribunal of competent jurisdiction".[6]

[8] The respondent submits that although it concedes there is a "dispute" between the parties within the meaning of s 227 of the Act, it is not one to which the "exclusivity" of the dispute resolution process applies under s 229 of the Act as it is not a dispute in which a commissioner for body corporate and community management is able to make "... a dispute resolution recommendation for an application"[7] in that it is "a commercial dispute" wherein the respondent claims heads of damage referred to in paragraph [4] above which take it beyond that which an adjudicator may order under s 276 of the Act if the Commissioner were to made a dispute resolution recommendation for adjudication pursuant to s 248(3) of the Act.

[9] Essentially the respondent says an adjudicator has no power to make orders "... to award damages for loss of rent ... [or] to award damages for compensation for loss of capital value"[8] which form part of the respondent's claim.[9]

[10] Finally, the respondent submits "it is not ... a dispute within the meaning of s 229(1) which may be resolved under this Chapter by a dispute resolution process".[10]

[11] Following the hearing of this application, written supplementary submissions were received from the respondent on the question of whether there have been any "authorities" on whether a Commissioner for Body Corporate and community management has considered an application pursuant to Chapter 6 of the Act which has included a number of issues including alleged loss of rental income and loss of capital value as is the case here.

[12] It appears that while there is no formal decision by a commissioner in respect thereof, the respondent is able to point to "correspondence from the Acting Commissioner" in which "... the Acting Commissioner ... expresses an opinion in relation to that question of jurisdiction on these issues."[11]

[13] The applicant has responded to these further submissions and "... objects to the court receiving the document ..." as "the document is not in the form of a decision. Rather it is in the form of private correspondence."[12]

[14] In the circumstances, I am not persuaded that the court should receive this document, as it would appear that the circumstances of its coming into existence are different from the circumstances relevant to the current application and I cannot see that it would be of any assistance to the court in its consideration of the issues currently under review. I therefore decline to receive the document.

[15] The Body Corporate for a community titles scheme has numerous obligations under various sections of the Act and regulations thereunder to administer and otherwise deal with "the common property and Body Corporate assets" relevant to any community titles scheme under the Act.[13]

[16] A significant feature of the Act is the "Dispute resolution" provisions contained in Chapter 6 and the current application requires a close analysis of this Chapter.

[17] Section 227 of the Act defines the "Meaning of dispute" and it is common ground between the parties to this application that on this threshold point there is "a dispute within the meaning of s 227 because it is a dispute between a Body Corporate and a lot owner".[14] The parties differ, however, on the issue that the "exclusivity" provision (s 299) applies because the respondent submits that the dispute is not one which can be resolved under Chapter 6 "... by a dispute resolution process" in that "... the Commissioner has no jurisdiction to resolve this dispute".[15] The pivotal section for consideration in this application is s 229 of the Act in conjunction with ss 248, 250, 252, 276 and 281 thereof and s 89 of the Commercial Module Regulations.

[18] While s 229 could be expressed in clearer terms, it seems to me that it is the intention of the legislature to require any dispute between the Body Corporate and the owner of a lot included in a community title scheme under the Act to seek remedy for the dispute under Chapter 6 if the dispute may be resolved by the dispute resolution process prescribed under the Act. (my emphasis)

[19] Under Part 2 of Chapter 6 the "Commissioner for Body Corporate and community management" has wide powers and "responsibilities" in the administration of his obligations under the Act, and under Part 5 has power to make "Dispute resolution recommendations" which "... must be for one of the following dispute resolution processes--

[20] Section 250 provides:

(1) Instead of making a dispute resolution recommendation for an application, the commissioner may dismiss the application.

(2) The commissioner may dismiss the application only if the commissioner is satisfied that the dispute should be dealt with in a court or tribunal of competent jurisdiction.

(3) If the commissioner dismisses the application, the commissioner must give a certificate in the approved form evidencing the dismissal to each party to the application."

[21] Part 8 provides what is to occur if the Commissioner recommends "specialist adjudication" of a dispute and Part 9 sets out the obligations of an adjudicator to whom/which the Commissioner may have referred the dispute.

[22] Section 276 deals with the "Orders of adjudicators" which may be many and varied, including "... an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute in the context of a community title scheme about" a variety of matters including those set out "in schedule 5".[17]

[23] Further, in s 281 an adjudicator may make orders "... to repair damage or reimburse amount paid for carrying out repairs" subject to certain statutory limits.

[24] On a consideration of all relevant issues in this application, I make the following findings:

(a) that a "dispute" has arisen between the parties to this application within the terms of s 227 of the Act;

(b) that it is well established law that the mechanism prescribed for resolving disputes under the Act is pursuant to Chapter 6 thereof and in particular s 229 of the Act provides for the "Exclusivity of dispute resolution provisions" to be followed in the determination of such a dispute;

(c) that until such time as the dispute resolution process is completed pursuant to the relevant sections contained in Chapter 6 of the Act in respect of such a dispute, the jurisdiction of "... a court or tribunal of competent jurisdiction" is not enlivened unless and until those procedures are completed;

(d) that the "dispute" between the parties to this application is one that may be resolved pursuant to Chapter 6 of the Act but that even if ultimately the dispute is not so resolved, the respondent is required to apply to the Commissioner for Body Corporate and community management pursuant to Part 4 of Chapter 6 of the Act for a resolution of the dispute, as the primary issue of complainant raised for determination in the respondent's statement of claim is one which falls squarely within s 152 of the Act and/or s 89 of the Commercial Module Regulations.

(e) that, although the damages claimed under paragraphs 5(a)(ii) and (iii) of the respondent's statement of claim are items which a commissioner and/or an adjudicator might be reluctant to resolve, the fact that paragraph 5(a)(i) of the respondent's statement of claim is undoubtedly a matter for determination within the provisions of Chapter 6 and the adjudicator's powers within the terms of s 276 are expressed in such broad terms, do not convince me that the dispute resolution process under Chapter 6 could not resolve all matters in issue between the parties. The inescapable conclusion is that by virtue of the respondent by-passing the dispute resolution process, the success or otherwise of that process is an unknown quantity.

[25] On my reading of the authorities, particularly the matter of James v Body Corporate for Aarons Community Titles Scheme 11476[18], it would seem to me that only in a limited number of cases (of which this is not one) parties to a dispute under the Act are entitled to by-pass the "Dispute resolution" provisions of the Act and seek remedy in a court of competent jurisdiction at first instance.

[26] It follows from the above that I am satisfied that the applicant is entitled to the relief sought and the court's orders will therefore be as follows:

(a) It is declared that the Respondent/plaintiff was not entitled to commence the current proceeding before the court and that the proceeding has therefore not been properly started for want of jurisdiction;

(b) the Respondent/plaintiff's claim and statement of claim is set aside on the ground that the court lacks jurisdiction to hear the proceeding at this stage;

(c) the Respondent/plaintiff pay the applicant/defendant's costs of and incidental to the proceeding including this application on the standard basis under the District Court scale.

[1] See paragraph 2 of the affidavit of Stuart Harrigan sworn 26 October 2006.

[Whenever the expression "the Act" is used in these reasons it is a reference to the Body Corporate and Community Management Act 1997 (Qld).]

[3] Paragraph 5 of the Respondent's Statement of Claim.

[5] See s 229 of the Act.

[6] See s 250(2) of the Act.

[7] See s 248 of the Act.

[9] Paragraph 5(a) of the respondent's statement of claim.

[11] Paragraph 5 of the respondent's supplementary written submissions.

[12] Paragraph 4 of the applicant's supplementary written submissions.

[13] S 152 of the Act.

[16] S 248(3).

[17] Schedule 5 to the Act.

[18] [2003] QCA 329