Shailer Park Central [2004] QBCCMCmr 31 (19 January 2004)

Last Updated: 30 September 2005

REFERENCE: 0802-2003

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27011
Name of Scheme:	Shailer Park Central
Address of Scheme:	44-46 Bryants Road SHAILER PARK QLD 4128

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Sukhdev and Paramjit Sandhu, the Owner(s) of lots 6 and 7

I hereby order that the application for an interim order to allow the owners of lots 6 and 7 to continue to use the common property for outdoor dining, pending resolution of the dispute, is dismissed. No interim orders are made either permitting or prohibiting outdoor dining at this time.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0802-2003

"Shailer Park Central" CTS 27011

Application

Shailer Park Central Community Titles Scheme (Shailer Park) is a 20 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Commercial Module Regulation (Commercial Module). The scheme is designed for commercial purposes.

This application is by Sukhdev Sandhu and Paramjit Sandhu, the co-owners of lots 5 and 6 (applicants) seeking orders against the body corporate (respondent). The applicants are seeking an interim order to allow them to continue to offer outdoor dining pending resolution of the dispute. Final orders overturning a refusal of the body corporate to grant them a lease of the outdoor area on similar terms to other owners are also sought. This order and reasons for decision relate only to the interim application. The final application will be considered in due course, if necessary.

Background

The applicants’ lots are situated in a single storey rectangular building containing twelve lots in total. These lots are used for a range of commercial purposes including real estate agencies and food outlets. The applicants run an Indian restaurant.

Along the front of the lots is a covered walkway approximately four metres wide. In front of the walkway is a customer car park. Both the walkway and the car park form part of the common property of the scheme.

The applicants have been using the walkway in front of their shops for outdoor dining for a substantial period of time. However, the applicants recently requested that the body corporate give them a formal lease of this area of the walkway for outdoor dining purposes.

On 5 December 2003 the body corporate voted against granting the applicants a lease over the walkway in front of their lots for the purpose of outdoor dining. Because other owners have been granted a similar lease, the applicants claim that the body corporate is unfairly discriminating against them by voting against this proposal. They have brought this interim application seeking an order to allow them to continue to use the walkway for outdoor dining pending resolution of the dispute.

Submissions

The applicants’ main submissions were to the effect that:

• They have been using the walkway for outdoor dining since they opened in September 2001;
• In 2003 the body corporate brought it to the attention of all owners that some traders were using the walkway in front of their premises without body corporate approval;
• Lots 8 and 13 had already been granted exclusive use over the walkway adjacent to their lots for the purposes of outdoor dining;
• The remaining lots that were using the walkway for outdoor dining applied for leases of the walkway in front of their lots for the purposes of outdoor dining. These were lots 5, 11, and the applicants’ lots;
• The owners of lots 5 and 11 were granted leases. However, the applicants were refused leases. This shows discrimination against the applicants.

Submissions from other owners supporting the application are to the effect that:

• The majority of owners support the grant of leases but the owners of lots 6 and 7 have been discriminated against for personality reasons. Some owners were unaware of the ownership of the adjacent lot 5 and voted to approve it but voted in a different way for the leases on the applicants’ lots;
• The applicants were original owners in the centre and have been trading with outdoor dining since day one. This should be allowed to continue;
• The applicants are well known for their excellent cuisine and respectability in the restaurant business and have maintained insurance for outdoor and indoor dining and have had the correct licences to operate;
• We feel that some people are voting against the applicants’ lease for hidden issues that have no connection with the granting of the lease.

Submissions from other owners opposing the application are to the effect that:

• The applicants’ lease was rejected because the approval of an additional area for outdoor dining would impact on the car parking required for the scheme. The council is currently considering a relaxation of the car parking issue and Mr Somerville from Roy Somerville Surveys Pty Ltd has advised that if the relaxation is not given the additional car parking could cost approximately $450,000;
• The applicants screen off the area they use for outdoor dining and prevent pedestrian access along the walkway. This endangers pedestrians by forcing them to walk past through the car park area;
• The applicants do not have proper approvals and insurances to use the common property for outdoor dining and this places the body corporate at financial risk;
• Lot 11’s application was different because it was at the end of the block so there is very little obstruction to pedestrians. It is a Subway store with little seating inside so outside seating is more necessary. The owners also erected a huge pylon sign at their expense and allowed a number of businesses to put their own signage on it, which we view as quite generous and to our benefit. They were also paying ten times more per annum for the lease than the applicants proposed.

Decision

Applicable law

Legislation applying to Shailer Park contains provisions to the following effect:

• The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot. The body corporate may impose conditions on the authorisation. The owner of the lot must comply with any conditions and maintain the improvement, unless excused from maintenance by the body corporate (Commercial Module, 94);
• The body corporate must keep a register for recording each authorisation for the owner of a lot to make an improvement to common property for the benefit of the owner’s lot (Commercial Module 126(3), 126(4));
• The body corporate may grant a lease for 10 years or less over part of the common property if authorised by special resolution (Commercial Module, 91(2));
• The body corporate must not lease common property if the lease would interfere with access to a lot or an exclusive use area (Commercial Module, 91(5));
• The body corporate must maintain public risk insurance of the common property (Commercial Module, 116);
• The occupier of a lot must not use, or permit use of, the lot or common property in a way that interferes unreasonably with the use or enjoyment of another lot or the common property or creates a nuisance or hazard (Act, 167);
• The body corporate must act reasonably in carrying out its functions (Act, 94(2)).

Consideration of issues raised

The applicants have offered outdoor dining on the walkway for a substantial period of time. Clear plastic weather shields have also been installed around this dining area, blocking access to the area when the shields are down. The addition of tables and plastic weather shields constitute improvements to the common property for the benefit of the applicants’ lots. These improvements can be approved by the committee (Commercial Module, 94(1)). Technically speaking, the applicants submit that the body corporate has already approved these improvements by allowing the improvements for the period in which the applicants have used the premises and passing a resolution authorising an application to council to have outdoor dining approved.

The real issue is whether the body corporate has acted unreasonably in refusing to grant the applicants a lease over the area used for outdoor dining. A body corporate must act reasonably in carrying out its functions (Act, 94(2)) and it would not be reasonable for the body corporate to unfairly discriminate against one particular owner. At first glance, it appears that the body corporate is unfairly discriminating against the applicants. The body corporate has granted a lease for outdoor dining facilities to the shop to the left of the applicants. The shop to the right of the applicants has an exclusive use area on which it places tables for customers. The Subway store further to the right of the applicants has been granted a lease for outdoor dining and has erected permanent tables for its customers.

However, some owners have provided a valid explanation for why they voted against the lease for the applicants despite supporting outdoor dining for other stores. The explanation given is that other stores do not block access to people wishing to walk along the walkway. The other stores are of a casual dining nature and customers of Shailer Park tend to be willing to proceed along the walkway, between or around any tables provided. In contrast, the applicants provide ‘fine dining’ and customers are unwilling to interrupt patrons dining in the area so tend to proceed through the car park area rather than along the walkway in front of the applicants’ shops. Further, the applicants sometimes lower the plastic weather shields. These weather shields prevent people proceeding along the walkway.

In response to this, the applicants indicated they would be willing to arrange the plastic weather shields and tables to provide a one metre section of walkway to allow people to proceed along the walkway rather than go out into the car park area. If the applicants were to put this proposal to a vote it would appear to remove the above objection.

The other objections to the applicants’ lease appear to have less merit. The body corporate is currently applying to the council to have the shops approved for any commercial use. This requires the council to grant a relaxation for the number of car parking spaces and some owners are concerned that outdoor dining offered by the applicants may increase the number of car parks technically required by the council and make it more difficult to get this relaxation. However, the body corporate’s surveyor stated that he thought that the body corporate would get the relaxation even with the applicants offering outdoor dining. Further, the applicants have been offering outdoor dining since they commenced trading. It seems unfair to discriminate against the applicants for this reason rather than limit the dining area offered by all restaurants in equal proportion.

It also seems unfairly discriminatory for some owners to approve a lease for Subway but refuse the applicants’ lease on the basis that Subway has assisted in signage for the scheme. Owners should consider each decision on its individual merits without undue consideration of personalities or matters irrelevant to the decision. Further, a claim that Subway is paying ten times more per annum than the applicants offered to pay is somewhat illusory as the amounts concerned are both nominal, being $10 and $1 respectively.

Effecting proper insurance is a matter that is of concern to the body corporate as owners can be held liable for accidents occurring on the common property. The body corporate is required to maintain public risk insurance over the common property (Act, 116). A concern was raised about whether owners were placed at greater risk of public liability claims due to outdoor dining. However, the respondents were able to provide a certificate of insurance covering them for public risk in respect of both indoor and outdoor dining. The applicants also offered to provide details of the terms of their policy.

Finally, there were issues raised about council approvals and liquor licensing. In this respect, the applicants’ liquor licence appears to specifically contemplate outdoor dining. Further, additional council approval may only be necessary where the outdoor dining occurs on the council footpath. However, if the outdoor dining is unlawful for either of these reasons then complaint can be made to the appropriate authorities and the outdoor dining can be stopped irrespective of whether the dining is also in contravention of the Body Corporate and Community Management Act. I have no jurisdiction to make any determination on these matters and this determination is based solely on matters that are relevant under the Body Corporate and Community Management Act.

Interim order sought

The applicants are seeking an interim order allowing them to continue to offer outdoor dining until final resolution of this dispute.

I do not consider necessary to make an order either permitting the applicants to continue to offer outdoor dining or stopping the applicants from offering outdoor dining. If the applicants are satisfied that they are lawfully offering outdoor dining then there is nothing to stop them continuing to do so.

On the other hand, if other owners believe that the applicants are contravening any legislation then it is for those owners to bring an application to the appropriate authority seeking orders that the outdoor dining cease.

Order

For these reasons, I do not propose to make any interim orders changing the status quo. The applicants’ interim application is dismissed, but if the applicants are satisfied they are lawfully offering outdoor dining there is no order from this office preventing them from doing so. This office will shortly seek final submissions from all owners, and a final determination will be made in due course.

There were some indications that only slightly over 25% of owners oppose granting the applicants a lease and the owners may be able to resolve this dispute themselves provided the applicants can arrange for appropriate access past their outdoor dining area. If the dispute is resolved prior to a final determination then the applicants can contact this office to withdraw their application.