Category: Exclusive Use Area at Somerset Gardens – Legal Opinion of Peter Hunt

The o

11 July 2018

Somerset Gardens CTS 25221 c/- Body Corporate Services PO Box 444
BROADBEACH QLD 4218

By email: michelle.gabriel@bcssm.com.au Cc: deanscharkie@icloud.com.au

Dear Sirs/Madams

Exclusive use – Fencing issues

We refer to the Committee’s instructions of 7 July 2018 to advise on issues with fencing of exclusive use areas at the scheme.

Legislation

We understand that the Scheme is governed by the:

 Body Corporate and Community Management Act 1997 (‘Act’); and

 Body Corporate and Community Management (Accommodation Module) Regulation 2008 (‘Regulation’).

We have reviewed the community management statement registered on 11 July 2017 with the dealing number 718146715 (‘CMS’) in preparation of this advice. We have undertaken a CTS search which confirms that this is the current CMS for the Scheme.

Background

We are instructed that:

1. the occupation of common property by a majority of owners is not consistent with the exclusive use in the CMS;
2. this occupation includes fencing;
3. the occupation has existed in these locations for many years; and
4. no previous resolution without dissent altering the exclusive use allocations in the CMS has been passed.

66759

   

Please advise if any of the above is incorrect as it may affect our advice.

Options

In our opinion, the Body Corporate’s options are as follows:

1. do nothing and allow the situation to continue indefinitely;
2. submit a motion to a general meeting to amend the exclusive use allocations and plans recorded in Schedule E of the CMS; or
3. issue relevant owners with a BCCM Form 10 – notice of continuing contravention of a body corporate by-law (‘contravention notice’) and file applications in the Commissioner’s Office against owners who fail to comply.

We comment on these options as follows.

1. Do nothing and allow the situation to continue indefinitely

If the Body Corporate takes no action the current situation will continue indefinitely. We do not recommend this option as:

1. under s.94(1)(b) of the Act the Body Corporate has an obligation to enforce the by- laws contained within the CMS;
2. the occupation of areas of common property is likely to amount to an obstruction, particularly in circumstances where fencing has been installed, in contravention of the current by-law 5; and
3. we are concerned that if owners continue to occupy areas outside their exclusive use area, without the appropriate authorisation, the Body Corporate may be liable for injury or damage claims in relation to any incidents that occur in these areas.

2. Submit a motion to the general meeting agenda to rectify the issue

The Committee may submit a motion to a general meeting to amend the exclusive use plans and allocations recorded in Schedule E of the CMS. Such a motion would need:

1. to pass by a resolution without dissent;
2. the written consent of all owners that have exclusive use (if they did not vote on the motion).

If the Committee wishes to proceed with this option it will need to:

1. retain a surveyor to properly identify the areas being occupied on new exclusive use plans;
2. propose a motion at a general meeting to alter the exclusive use allocations in accordance with the plans prepared by the surveyor.

   

2 of 5 Liability limited by a scheme under professional standards legislation

   

We estimate that our costs to draft this motion and accompanying explanatory note will be about $400 plus gst; and

c. hold a general meeting to consider the motion.

If the motion passes, the Body Corporate will need to prepare a new community management statement to include the new survey plans.

Our costs for preparing and lodging a new community management statement with new exclusive use plans is likely to be about $800 – 1,000 plus gst and outays/filing fees. However, we note that the Body Corporate will incur no extra costs for the preparation of the new CMS if this issue and the proposed new by-laws are both passed at the same general meeting.

In our experience, it is almost impossible to achieve an agreement with all owners in relation to amending exclusive use at a general meeting. Therefore, we recommend that the Committee establish that all owners are happy with the proposed amendments of exclusive use prior to the general meeting agenda being sent out.

In our opinion, it is very important that the exclusive use areas attaching to the lots are rectified so that the owners are able to clearly establish their lot’s entitlements, which may result in an increase in value to the lots.

If the Committee would like to proceed with this option, we recommend that we be instructed to draft a letter to all owners advising them of the issue and of the Body Corporate’s attempts to rectify the situation. We estimate that our costs to draft this circular will be about $400 plus gst.

What happens if the motion does not pass?

Item 10 of Schedule 5 of the Act allows an Adjudicator to make an order giving effect to a proposed motion (or variation of that motion) which failed to pass by resolution without dissent if they are satisfied that the opposition in the circumstances was unreasonable.

Accordingly, if any owner votes against the motion to amend the exclusive use areas, an application needs to be filed in the Commissioner’s Office alleging that the opposition to the motion was unreasonable (assuming that there is a basis for that allegation). The adjudication application fee is currently $81.95.

Once an application is filed, the Body Corporate and owners would be given an opportunity to respond. We can draft a response on behalf of the Body Corporate setting out the history of the exclusive use issues at the Scheme and the reason for the Committee’s motion.

These applications generally take about 4-8 months and the Adjudicator will either decide that:

•   a new CMS will need to be registered including the new survey plans, as the Adjudicator is satisfied that the opposition to the motion was unreasonable; or
•   the Committee will need to explore an alternative solution, as the Adjudicator is satisfied that the owners opposed the motion on reasonable grounds.We cannot provide a meaningful estimate for our costs for the application, however, as a very rough guess, our costs may be $4,000 – $6,000 plus gst.

  

3 of 5 Liability limited by a scheme under professional standards legislation

   

3. Contravention notice

The Committee may decide to seek to have owners cease occupying common property outside the exclusive use areas.

This will require the Committee to:

a. pass a resolution to issue a contravention notice in respect of each lot currently in breach of by-law 5;

b. respond to resulting queries and complaints from owners;

c. lodge conciliation applications against owners who fail to comply with the contravention notices; and

d. lodge adjudication applications against owners if the matter is not resolved at conciliation. Please note that the only options the Committee can agree to at the conciliations are:

1. the owner ceasing to occupy the common property; and
2. the Body Corporate putting the matter on hold for a specified period of time while the owner seeks a resolution without dissent to be granted exclusive use of the area in question.

Due to the large number of lots that this issue currently affects, the Committee should:

1. file a conciliation application and subsequently an adjudication application against one lot;
2. advise the other relevant lots of the outcome of the first case; and
3. pursue the other lots (through conciliation and adjudication) that fail to comply after being advised of the outcome of the outcome of the first case.

We do not recommend this option, except as an absolute last resort, as:

1. it will create enormous disharmony within the Scheme; and
2. the Body Corporate will incur significant legal costs that are not recoverable from the relevant owners.

Costs
We estimate that our costs will be about $800 plus gst to:

1. draft a generic contravention notice and accompanying attachment that the Committee can amend for each relevant lot; and
2. draft the Committee motion to issue the contravention notices.

  

4 of 5 Liability limited by a scheme under professional standards legislation

   

We estimate that our costs to draft the conciliation application, and subsequent adjudication application, for the first lot will be about $2,500 plus gst. Our costs for subsequent applications will be significantly less.

Instructions sought

Please advise how the Committee would like to proceed. Please contact Hayley Gath with any queries.
Yours sincerely,

Peter Hunt
Director
MATHEWS HUNT LEGAL

pinion is in the Body Corporate Records of Somerset Gardens