SUPREME COURT OF QUEENSLAND

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1 SUPREME COURT OF QUEENSLAND CITATION: PARTIES: LQ Management Pty Ltd & Ors v Laguna Quays Resort Principal Body Corporate & Anor [2014] QCA 122 LQ MANAGEMENT PTY LTD ACN (first appellant) LAGUNA AUSTRALIA PTY LTD ACN (second appellant) TURTLE POINT HOTEL AND SPA PTY LTD ACN (third appellant) LAGUNA WHITSUNDAYS AIRPORT PTY LTD ACN (fourth appellant) KUNAPIPI PASTORAL PTY LTD ACN (fifth appellant) ASD LAGUNA INVESTMENTS PTY LTD ACN (sixth appellant) TURTLE POINT HOTEL PTY LTD ACN (seventh appellant) QUEENS HILL PTY LTD ACN (eighth appellant) PANDANUS PTY LTD ACN (ninth appellant) MARINA PTY LTD ACN (tenth appellant) VILLAGE PTY LTD ACN (eleventh appellant) TURTLE POINT GOLF & COUNTRY CLUB PTY LTD ACN (twelfth appellant) v

2 2 LAGUNA QUAYS RESORT PRINCIPAL BODY CORPORATE ABN (first respondent) LAGUNA QUAYS RESORT PRIMARY THOROUGHFARE BODY CORPORATE ABN (second respondent) FILE NO/S: Appeal No of 2013 SC No 2187 of 2012 DIVISION: PROCEEDING: ORIGINATING COURT: Court of Appeal General Civil Appeal DELIVERED ON: 27 May 2014 DELIVERED AT: Supreme Court at Brisbane Brisbane HEARING DATE: 20 May 2014 JUDGES: ORDERS: CATCHWORDS: Muir JA and Atkinson and Dalton JJ Separate reasons for judgment of each member of the Court, each concurring as to the orders made 1. The appeal be allowed. 2. The order made on 7 November 2013 be set aside. 3. The first and second respondents pay the appellants costs of and incidental to the application for the determination of separate questions including the costs of the hearing in that regard and the costs of the appeal. APPEAL AND NEW TRIAL APPEAL GENERAL PRINCIPLES RIGHT OF APPEAL WHEN APPEAL LIES ERROR OF LAW WHAT IS GENERALLY where the first respondent is the principal body corporate incorporated by registration of an initial plan of subdivision for a resort where the second respondent is the primary thoroughfare body corporate incorporated by registration of a plan of subdivision where the first appellant is the manager of the commercial aspects of the resort where in trial division proceedings it was ordered by consent that questions regarding voting entitlements within the primary thoroughfare body corporate be the subject of prior determination whether subsequent stages of the development came about through amendments to the initial scheme or through the approval of subsequent stages whether the primary judge erred in finding that subsequent stages of the development came about through amendments to the initial scheme whether the

3 3 COUNSEL: SOLICITORS: primary judge erred in finding that changes in voting entitlements could take place without registration of the plans Integrated Resort Development Act 1987 (Qld), s 7, s 9, s 13, s 26, s 108, s 134, s 137 Laguna Quays Resort Principal Body Corporate v Laguna Quays Resort Primary Thoroughfare Body Corporate & Ors [2013] QSC 303, considered M T De Waard for the appellants D E F Chesterman for the first respondent D F W Tucker for the second respondent McKays Solicitors for the appellants Nicholsons Solicitors for the first respondent Tucker & Cowen Solicitors for the second respondent [1] MUIR JA: Introduction The first respondent is the principal body corporate incorporated by registration of the first initial plan of subdivision in respect of the Laguna Quays Resort Scheme of Integrated Resort Development Stage 1 (the initial scheme) approved by Order in Council made on 1 May 1992 pursuant to the Integrated Resort Development Act 1987 (Qld) (the Act). The second respondent is the primary thoroughfare body corporate, also incorporated by registration of such plan of subdivision. [2] The first appellant is the manager of the commercial aspects of the resort. The other appellants are registered owners of or have interests in lots in the development. On 14 June 2013, in proceedings in the trial division of this Court, it was ordered by consent that the following questions be the subject of prior determination: 1 1. What is the total number of voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate? 2. Who are the holders of the voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate? 3. In what proportion is the total number of voting entitlements within the Laguna Quays Primary Thoroughfare Body Corporate held by the holders of those voting entitlements? [3] The answers to these questions largely depend on whether subsequent stages of the development came about through amendments to the initial scheme, as the respondents contend, or through the approval of subsequent stages, as the appellants contend. [4] The initial scheme, which is set out in Schedule 1 to the order in Council of 1 May 1992, contains the following provision in respect of voting entitlements: 4. The Voting Entitlements of Members of the Primary Thoroughfare Body Corporate. The total voting entitlements of members of the Primary Thoroughfare Body Corporate shall be 950 votes. This figure 1 Laguna Quays Resort Principal Body Corporate v Laguna Quays Resort Primary Thoroughfare Body Corporate & Ors [2013] QSC 303 at [4].

4 4 has been calculated on the basis of the anticipated use that the proprietors or users of the lands within the site will have of the Primary Thoroughfare Precinct. The voting entitlements of the proprietor or proprietors of land within the precincts shall be apportioned as follows:- Golf Course Precinct 150 Golf Lodge Precinct 325 Administration Precinct 25 First Residential Precinct (Principal Body Corporate) [5] The initial scheme stated that the development was divided into the four precincts described above and the primary thoroughfare precinct. The initial scheme has been amended or new stages of the scheme have been approved, from time to time. There are now five stages. Stages 2 and 3 are of particular relevance for present purposes. [6] A notice in the Government Gazette of 15 July 1994 notified the approval of the Laguna Quays Resort Scheme of Integrated Development Stage 2, pursuant to s 9(1) of the Act. The Governor in Council, on 25 January 1995, approved the Laguna Quays Resort Scheme of Integrated Development Stage 3 pursuant to s 9(1) of the Act. [7] The stage 2 scheme, as appears from the Integrated Resort Development (Approval of New Stage and Amendments) Notice (No 1) 2005 (published in the Queensland Government Gazette on 27 May 2005), applies to an area shown on the Integrated Resort Development Plan The scheme land is divided into marina commercial, western commercial and primary thoroughfare precincts. The provision for voting entitlements is as follows: 2. The Voting Entitlements of New Members of the Primary Thoroughfare Body Corporate. On registration of the initial plan or plans of subdivision in Stage 2 of the Laguna Quays Resort, the total voting entitlements of members of the Laguna Quays Primary Thoroughfare Body Corporate shall be 1,146. The voting entitlements of the proprietor or proprietors of land within the Stage 2 precincts shall be apportioned as follows: - Marina Commercial Precinct 156 Western Commercial Precinct These voting entitlements have been apportioned on the basis of the anticipated use that the proprietors or users of lands and facilities within Stage 2 of the Laguna Quays Resort will make of the Primary Thoroughfare Precincts. (emphasis added)

5 5 [8] The 27 May 2005 notice also shows the division of the stage 3 scheme into a second residential precinct, a secondary thoroughfare precinct and a primary thoroughfare precinct. Voting entitlements were stated as follows: 2. The Voting Entitlements of New Members of the Primary Thoroughfare Body Corporate. On registration of the initial plan or plans of subdivision in Stage 3 of the Laguna Quays Resort, the total voting entitlements of members of the Primary Thoroughfare Body Corporate shall be The voting entitlements of the proprietor or proprietors of land within Stage 3 precincts shall be apportioned as follows:- Second Residential Precinct 284 These voting entitlements have been apportioned on the basis of the anticipated use that the proprietors or users of lands and facilities on Stage 3 of the Laguna Quays Resort will make of the Primary Thoroughfare Precincts. The maximum number of residential lots/units shall not exceed the number of voting entitlements. (emphasis added) The respondents contentions [9] The respondents contentions may be summarised as follows. Stages 2 and 3 were approved as amendments to stage 1 rather than as subsequent stages. That may be seen from the fact that the Order in Council in respect of each of the stage 2 and stage 3 amendments stated that the approval was pursuant to s 9(1) of the Act. [10] Section 9, which is in Division 2 Part 2 of the Act, concerns the amendment of approved schemes. It provides: 9 Application for amendment of approved scheme (1) An application for amendment of an approved scheme may be made to the Minister by the primary thoroughfare body corporate or, if that body has not been incorporated, by the applicant. (2) To remove any doubt, it is declared that an application may be made under this division to amend an approved scheme by varying the boundaries of the site of the approved scheme. [11] The fact that the developer did not register plans of subdivision for stages 2 and 3 is consistent with their being amendments to stage 1 rather than individual new schemes in their own right. I digress to deal with this contention. It is impossible to tell what reasons or incentives the developer may or may not have had for acting as it did. It may be that it took the view that registration of the plans may have involved it or associates or related entities in higher scheme levies. The point lacks substance.

6 6 [12] It was then submitted that, as the initial approvals in respect of stages 2 and 3 are of amendments to the scheme, s 108 of the Act applies. It provides for voting entitlements in respect of the land the subject of these two approvals and the provisions of s 108 must prevail over any conflict between those provisions and the scheme provisions. Section 108 does not make voting entitlements dependent on registration of plans of subdivision for later scheme stages. Section 108 provides: Voting entitlements (1) Until land within a precinct, other than a residential precinct or the primary thoroughfare precinct, is subdivided, the proprietor of that land as a member of the primary thoroughfare body corporate shall have a voting entitlement as set out in the approved scheme in respect of that precinct. (2) Until the incorporation of the principal body corporate, the proprietor or proprietors of land within the residential precincts shall have the voting entitlement as set out in the approved scheme in respect of those precincts. (3) When the land comprising a precinct, other than a residential precinct or the primary thoroughfare precinct, is subdivided the voting entitlement for that precinct shall be apportioned by notice in writing by the proprietor of the land given to the primary thoroughfare body corporate amongst parcels thereby created and a proprietor of a parcel shall as a member of the primary thoroughfare body corporate have the voting entitlement apportioned in respect of that parcel. (4) In like manner the voting entitlement of a proprietor of land that is further subdivided shall be apportioned amongst the parcels thereby created and the proprietor of each parcel shall have the relevant voting entitlement so apportioned. (5) Immediately upon the incorporation of the principal body corporate (a) the proprietor or proprietors referred to in subsection (2) shall cease to have those voting entitlements; and (b) the principal body corporate shall have those voting entitlements. [13] The primary judge rejected the appellants argument that the approvals in respect of stages 2 and 3 were approvals of subsequent stages under s 26 of the Act. That section provides: 26 Application for subsequent stages (1) A subsequent application may be made under part 2, division 1 in relation to all or only part of the future development area. (2) The future development area (whether all or part) that is the subject of a subsequent application under part 2, division 1 is in this Act referred to as a subsequent stage.

7 7 (3) Subject to subsection (4), part 2, division 1 applies to an application for approval of a subsequent stage. (4) The applicant must include with the application for approval of a subsequent stage (a) the information and material set out in clauses 1 to 12, 15, 16, 17, 18 and 21 of schedule 1, part A; and (b) such of the information and material set out in schedule 1, part B as the Minister requires. (5) An application under this section may only be made if all necessary amounts have been paid to, undertakings given to, or securities lodged with, the local government under an agreement entered into between the applicant and the local government. (6) A person must not use construction works that have been undertaken in a future development area unless the works are situated in a subsequent stage that has been approved under part 2, division 1. Maximum penalty 200 penalty units. (7) Applications in relation to stages in a future development area may be made at any time and from time to time. (8) For the purposes of this Act, an approval of an application made under this section is taken to be an approval of a scheme. (9) For the purposes of part 5, the land in a subsequent stage is taken to be the site. [14] The primary judge also rejected the appellants argument, based on the terms of the approvals set out above, that changes in voting entitlements would take place only upon the registration of the plans. The primary judge s reasons state, in this regard: 2 [52] The defendants acknowledge that the proprietors of land forming those precincts became members of Primary, but submit that they have no voting entitlements. The defendants place reliance on the terms of the approval and the use of the words on registration as indicating that the increase in the total voting entitlements in Primary by 196 was deferred until such time as a plan of subdivision in the stage had been registered. The defendants argument is simple and attractive. But, in my view, it reads s 108(1) in isolation and without regard to its apparent purpose. Section 108(1) relates to land within an existing precinct which is part of an approved scheme. It concerns voting entitlements in respect of that precinct before the land within a precinct is subdivided. Such land may never be subdivided. 2 Laguna Quays Resort Principal Body Corporate v Laguna Quays Resort Primary Thoroughfare Body Corporate & Ors [2013] QSC 303 at [52] [53].

8 8 [53] The owner of land in such a precinct might be expected to have an interest in the affairs of the scheme and to benefit from the maintenance of the primary thoroughfare (and any improvements on it) and the payment of rates and other liabilities incurred by the primary thoroughfare body corporate in administering the primary thoroughfare for the benefit of its members. On the defendants interpretation, the owner of a commercial precinct is a member of the primary thoroughfare body corporate but does not have a voting entitlement (and a consequential obligation to contribute by way of a levy). (citations omitted) [15] The primary judge also stated in this regard: 3 [61] A plan of subdivision in Stage 2 has not been registered. But this does not alter the fact that Stage 2 is a precinct in an approved scheme and that the proprietor of land within a commercial precinct in that stage has the voting entitlement set out in the approved scheme in respect of that precinct until the land within the precinct is subdivided. Such a proprietor may choose to operate its commercial precinct and not subdivide it. There is no apparent obligation to subdivide. The proprietors of and users of lands and facilities in that commercial precinct will make use of the primary thoroughfare and be a member of Primary, but, according to the defendants, have no voting entitlements and no consequential obligation to contribute to the liabilities of Primary of which it is a member. [16] The primary judge s reasons were embraced by the respondents. Consideration [17] I regret that I am unable to agree with the primary judge s conclusions. Even if, assuming in favour of the respondents, the approvals were of amendments to the initial scheme under Division 2 rather than approvals of subsequent stages under s 26, s 108 would not be applicable. Section 108(2) is concerned with the position of the proprietor of land within a residential precinct prior to incorporation of the principal body corporate. The principal body corporate existed prior to the creation of the schemes for stages 2 and 3. [18] Subsections (1) and (3) do not apply either. They provide for circumstances in which land within a precinct (in the case of subsection (1)) or land comprising a precinct (in the case of subsection (3)) is subdivided. The parties accepted that the land the subject of approvals for stages 2 and 3 was all contained in the future development area shown on the future development plan for the development. 4 A future development area is not a precinct. Precinct is defined as part of a site identified in an approved scheme as a precinct. 3 4 Laguna Quays Resort Principal Body Corporate v Laguna Quays Resort Primary Thoroughfare Body Corporate & Ors [2013] QSC 303 at [61]. Referred to in the Order in Council approved by the Governor in Council on 30 April 1992.

9 9 [19] The respondents contended that the Court should be reluctant to question the accuracy of the statements in the Queensland Government Gazette that the approvals for stages 2 and 3 were given pursuant to s 9 of the Act. It was pointed out that: the subject notices were required by the Act to be published in the Gazette; once received into evidence the notices were evidence that the approval of the Governor in Council was given pursuant to s 9 of the Act; no evidence was adduced on the trial by the appellants with a view to challenging the correctness of the statement in the notices; and the applications were not in evidence. [20] These contentions have merit but when the content of the Gazetted notices is considered, it becomes apparent that the references to s 9(1) are erroneous. The approvals could not have been pursuant to s 9(1). That subsection authorises applications for amendment of approved schemes to be made to the Minister by the primary thoroughfare body corporate. The primary judge observed that the reference in the Gazette notices to approval being pursuant to s 9(1) should be understood as approval of an amendment application made pursuant to s 9. Subsection (2) of s 9 is, however, even less relevant for present purposes than subsection (1). It declares that an application under Part 2 Division 2 may be made to amend an approved scheme by varying the boundaries of the site of the approved scheme. It was not suggested that any site boundaries were affected by the subject applications. [21] As the primary judge pointed out, it is s 13 that empowers the Governor in Council to approve amendment applications. Where an amendment application is approved, s 13(2) requires the Chief Executive to notify the approval of the amendment by a Gazette notice that specifies the modifications, if any, made by the approval. [22] Not only do the subject notifications not specify modifications made by the approvals, their language and effect is consistent with notification of an approval under s 26 and inconsistent with the notification of approval of an amendment application under s 13. The notice for the stage 2 approval is described as the Laguna Quays Resort (Approval of Scheme) Notice (No. 1) There is a heading Approval of Scheme above paragraph 3 of the notice which states: 3. Pursuant to section 9(1) of the Integrated Resort Development Act 1987, the Laguna Quays Resort Scheme of Integrated Development Stage 2 has been approved by the Governor in Council, subject to the conditions set out in the Schedule. [23] Paragraph 4 of the notice states that a copy of the approved scheme is available for inspection. There is a schedule of Conditions Attaching to the Scheme which imposes requirement[s] of this approved Scheme. [24] The scheme for stage 2 is described in it as the Scheme of Integrated Resort Development and states that it applies to the area shown on the Laguna Quays Resort Stage 2 Scheme of Integrated Resort Development Plan ( ). It states that the scheme of integrated resort development is divided into three precincts: (a) (b) (c) Marina Commercial; Western Commercial; Primary Thoroughfare.

10 10 [25] It then proceeds to explain the role and permitted uses of the three precincts. Voting Entitlements of New Members of the Primary Thoroughfare Body Corporate are provided for and Conditions Attaching to the Scheme are specified. [26] The approval and schemes in respect of the stage 3 amendment have a similar format and wording. Although, in a practical sense, schemes 2 and 3 affect the operation of the stage 1 scheme, they do not purport to amend it. The language of the approvals of the stages 2 and 3 schemes and the wording of the stage 2 and 3 schemes is quite inconsistent with the applications for and approvals of amendments to the initial scheme. [27] It is instructive to have regard to the Queensland Government Gazette of 27 May 2005, headed Integrated Resort Development (Approval of New Stage and Amendments) Notice (No. 1) 2005 which relevantly provides: Amendment of Previous Orders and Approval of Scheme 4. In this Notice - Pursuant to Section 13 of the Integrated Resort Development Act 1987, the Governor in Council has approved an application for amendment of the Laguna Quays Resort Approved Scheme of Integrated Resort Development Stage 2. Pursuant to Section 13 of the Integrated Resort Development Act 1987, the Governor in Council has approved an application for amendment of the Laguna Quays Resort Approved Scheme of Integrated Resort Development Stage 3. Pursuant to Section 7 of the Integrated Resort Development Act 1987, the Governor in Council has approved the Laguna Quays Resort Scheme of Integrated Resort Development Stage 4. [28] The document gave notice of amendment to the approved schemes for stages 2 and 3 and approved the stage 4 scheme. Its language in respect of the amendment of the stage 2 and 3 schemes is the sort of language that would have been used in respect of the initial stage 2 and 3 approvals, had they been approvals of amendments to stage 1. [29] The respondents contended that the erroneous reference to s 9 resulted from a renumbering of sections in the Act in the reprint which took effect on 29 April In the earlier version of the Act the section numbered 9 contained the provisions now in s 7. It addressed approvals of schemes. It will be recalled that s 26(8) provides that an approval of an application under s 26 is to be taken as an approval of a scheme. The appellants pointed out that, although the stage 2 approval was given very shortly after 29 April 1994, the stage 3 approval was some six months later. That delay may have helped in avoiding confusion resulting from the renumbering of sections of the Act but it is just as likely that the stage 2 documentation was used as a precedent for stage 3 and perpetuated the stage 2 error. In any event, whatever the reason for the reference to s 9(1), it is apparent from the foregoing discussion that the stage 2 and 3 approvals were not approvals of amendments to the stage 1 scheme.

11 11 [30] There is also merit in the appellants argument that the primary judge s construction of s 108 fails to have sufficient regard to the words the voting entitlement as set out in the approved scheme in subsection (2). In each of the stage 2 and stage 3 schemes, the voting entitlement is stated to arise on registration of the initial plan or plans of subdivision in the particular stage. The reference to such plan or plans is plainly a reference to what is referred to in each of the stage 2 and 3 schemes as the Laguna Quays Resort Stage [ ] Scheme of Integrated Resort Development Plan. No such plan was registered for stage 2 or stage 3. [31] There was no challenge to the primary judge s findings that s 134 and s 137 were applicable to the determination of the voting entitlements in respect of stages 4 and 5 as those stages were approved as subsequent stages and not by way of amendment to an existing approved scheme. The primary judge concluded that, by operation of those sections, the coming into existence of the stages 4 and 5 schemes had no effect on voting rights. There was no challenge to those findings either. Conclusion [32] For the above reasons, the appeal should be allowed. [33] Contrary to the requirements of Practice Direction 2 of 2010, the appellants outline of argument did not set out the form of order sought by the appellants should the appeal be allowed. Moreover, no submissions were made in that regard on the hearing of the appeal. [34] I would order that: 1. The appeal be allowed. 2. The order made on 7 November 2013 be set aside. 3. The first and second respondents pay the appellants costs of and incidental to the application for the determination of separate questions including the costs of the hearing in that regard and the costs of the appeal. [35] I would direct that the appellants, within seven days of today s date, after consultation with the respondents legal representatives, provide to the Registrar draft minutes of order reflecting these reasons which deal with the questions in the form of declarations. [36] ATKINSON J: I agree with the reasons for judgment of Muir JA and the orders proposed by his Honour. [37] DALTON J: I agree with the orders proposed by Muir JA, and with his reasons.