This QLD article is about protecting Queensland apartment buyers.
On Thursday 19 May 2022, Corella Rd Dev Pty Ltd was found guilty of an offence under section 29 of the Body Corporate and Community Management Act 1997.
This is the first ever conviction under section 29, which was introduced in 2003, as part of a suite of consumer protection provisions aimed at protecting Queensland apartment buyers.
Section 29 applies to developers of community titles schemes that are intended to be developed progressively; that is, in stages.
Sometimes the developer of such a scheme will want to change the scheme in a way which, if carried out, would affect the nature of the development or one or more stages of it.
If that is the case, and the change is not consistent with the current development approval for the scheme, then the developer must give certain notices at least 30 days before the developer applies for the development approval required for the changed scheme.
The notices must be given to the body corporate and each person that has entered into a contract with the developer to buy a proposed lot in the scheme.
For a developer company, breach of section 29 can attract a fine of up to $206,775. This is the second largest potential fine that can be imposed under the BCCM Act.
In the case of Corella, the development lot is part of a community title scheme, together with 54 residential townhouses, adjacent to a golf course. The current community management statement for the scheme provides for 2 more stages of development, comprised of 36 single or double story dwellings, with one, two or three bedrooms. Those new lots were to be created by two new building format plans.
If this original development was carried out, the scheme would comprise 90 residential townhouses, each on a separate title on building format plans and all used as residential multiple dwelling units.
Corella applied for a development approval for 21 single storey dwellings, being 18 two bedroom and 3 one bedroom dwellings. The single bedroom dwellings were proposed to be occupied by ‘residential plan managers’ for the occupants of the two bedroom households. This was to provide an option for the dwellings to be offered as NDIS accommodation. All of the dwellings were to be built on the (currently vacant) development lot, and no new lots were to be created.
If this new development was carried out, the scheme would comprise 54 residential townhouses, each on a separate title on building format plans and all used as residential multiple dwelling units plus one standard format plan lot, with 3 clusters of 7 dwellings each, all of which could be used for (low care) NDIS accommodation.
Standard format lots and building format lots have different maintenance requirements, and arguably would also have different contributions to the joint expenses of the Body Corporate. That is, the body corporate levies would be different to what was originally proposed.
The developer applied for the development approval required, without giving notice to the Body Corporate. The Body Corporate found out about the development approval being given in the local newspaper.
The court held that the proposed changes to the scheme were inconsistent with the current development approval, as reflected in the community management statement for the scheme.
In consequence, and based on other key findings, Corella was found guilty of the offence.
The court is yet to decide a penalty.
Stratum Legal and Mr Ben Strangman of Counsel represent the Body Corporate in the prosecution.
Michael Kleinschmidt
Bugden Allen Graham Lawyers
E: michael.kleinschmidt@bagl.com.au
P: 07 5406 1280
This post appears in Strata News #571.
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
Have a question or something to add to the article? Leave a comment below.
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Thanks Ross – the appeal period has not yet expired, so I have to be circumspect in my comments about this case. Generally however, I would agree that few strata lawyers, let alone body corporate managers, appreciate the implications of s29, and its companion section s57. The issue is that in any staged development those sections need to be understood well enough to assist a developer to structure their ‘description of development’ in Schedule B of the First CMS, to cater for ‘fair’ flexibility – to balance the rights and expectations of buyers and the financial imperatives of developers.
On the penalty, as the developer is a company, the maximum penalty is multiplied by 5.
Needless to say, I’ll update readers after the next major development.
MichaelK…thanks for bringing this to our attention. I’ve just checked s.29 of the Act and it provides for a maximum penalty of “300 penalty points”. If each penalty point is currently worth $137.85 [Penalties and Sentences (Penalty Unit Value) Amdt Reg.2021], this means the developer in your case could be hit with a fine of $41,355. I await the outcome…should be interesting.
Also, I understand you recently presented a paper to the Australian College of Strata Lawyers about selecting a lawyer early rather than late, and selecting a good lawyer who knows what he/she is talking about, ie a strata law expert?
I would think that s.29 of the BCCM Act is outside the scope of most strata practitioners, including the BCMs, who do not have real knowledge of this level of the intricacies and complexities of our strata world, So I assume the Corella case confirms your advice about getting early advice and getting it from expert strata lawyers.
Well done on both counts.