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Improvements Affecting Common Property

Body Corporate And Community Management Case Update: Improvements Affecting Common Property

I was recently involved in a matter which became the subject of adjudication before the Commissioner. The decision establishes an important principle in relation to the interaction of statutory easements and body corporate consent to improvements to the common property by the owner of a lot. The case is also a fresh reminder of the principles which govern body corporate decisions more generally and the requirement for such decisions to be reasonable.

Facts

The scheme is regulated by the Body Corporate and Community Management (Commercial Module) Regulation 2008 (Regulation). Nonetheless, the principles equally apply to schemes governed under the standard or accommodation module.

The facts of the case can be briefly summarised as follows.

A new owner purchased a lot in the scheme to allow his business to move to larger premises. The new owner required additional utility infrastructure for his business, including a grease trap, hot water system, air conditioning and lighting. The infrastructure was installed by the lot owner without formal Body Corporate permission – the owner relying on the statutory easement provisions under section 115O of the Land Title Act 1994 (Qld) (LTA).

Section 115O of the LTA provides that an easement exists in favour of a lot against other lots and the common property for supplying utility services to the lot and establishing and maintaining utility infrastructure – provided it does not interfere unreasonably with the use or enjoyment of another lot or the common property.

The Body Corporate made application to the Commissioner for an order of an Adjudicator seeking to have the improvements removed and the common property reinstated to its original condition (on the basis that the owner failed to obtain Body Corporate approval for the works).

Decision

The fundamental determination made by the Adjudicator in the case was that the statutory easement provisions in section 115O of the LTA (where they apply) excuse an owner from the need to obtain a lease or licence of the relevant area of common property affected by an improvement, but does not excuse an owner from the need to obtain body corporate consent. The distinction is significant because a lease or licence of common property requires a resolution without dissent or special resolution, whereas the authorisation of an improvement requires an ordinary resolution and, in many cases, can be approved at Committee level.

In circumstances where a statutory easement under section 115O of the LTA does not apply to a particular improvement (e.g. because it is not for the purpose of supplying a utility service or establishing and maintaining utility infrastructure), the question of whether a lease / licence is required or the improvement otherwise amounts to a disposition of common property depends on the nature of the improvement.

The Adjudicator referred to the decision of Katsikalis v Body Corporate for “The Centre” [2009] QCA 77. In that case, the Court of Appeal determined that approval for the extension of a lot’s bulkhead into common property meant the lot owner would effectively acquire and enjoy exclusive and indefinite use of the relevant area of common property. The Court held that the improvement amounted to a disposition of common property, requiring the grant of a lease or exclusive licence.

The Katsikalis decision shows that careful consideration must be given to the nature of any improvement proposed to be carried out to the common property. If the improvement amounts to a disposition of common property, such authorisation will require the granting of a lease or licence over the common property and the passing of a resolution without dissent or special resolution (depending on the length of the lease/licence).

Conversely, if the improvement simply gives an owner a non-exclusive right to occupy a particular area of common property, an ordinary or committee resolution (depending on the applicable regulation module and value of the improvement) will suffice. An example of the latter might be where a lot owner seeks body corporate consent to fix a bench or place some seats on the common property outside his lot for the benefit of their business’s customers, but which remains accessible to others.

Regardless of whether a lease/licence is required or simply authorisation of an improvement, it is important to be aware that the decision of a body corporate in each instance is subject to review by an Adjudicator and the general requirement for a body corporate to act reasonably in anything it does.

Authorising Improvements

A body corporate’s decision whether to authorise an improvement does not have to be given unconditionally. The Regulation permits the inclusion of conditions attaching to the authority (subject to the requirement of reasonableness).

In addition, the Regulation provides that the owner of a lot who is given authority to make improvements to the common property must maintain the improvement in good condition unless excused by the body corporate. Accordingly, the default position is that the owner is responsible for the upkeep and maintenance of any improvements they make to the common property and, whilst the imposition of a specific condition in this regard is preferable, it is technically unnecessary.

The body corporate should ensure that records of all improvements are kept in the register of authorisations affecting common property, required to be kept by the body corporate under the Regulation, which should include the following details:

  • When the authorisation was given or, if an adjudicator ordered the body corporate consent to the improvement, when the order was made;
  • A description of the area of common property affected; and
  • Any conditions to which the authorisation is subject.

By including these details in the register, a body corporate can ensure that future owners of the lot are bound by the conditions attaching to the improvement.


About the author: Jarad Maher is a Senior Associate with Small Myers Hughes and practices exclusively in the area of body corporate law.

Posted in: Body Corp Blog at 16 March 16

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