Buderim Village Square [2006] QBCCMCmr 279 (31 May 2006)

Number of Scheme:	28278
Name of Scheme:	Buderim Village Square
Address of Scheme:	59-61 Burnett Street BUDERIM QLD 4556

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

I hereby declare that by ordinary resolution, the Body Corporate has granted permission to the owners of lot 7 to install a gated opening in the boundary structure of the lot for the purpose of accessing gas bottles installed on the lot.
I further order the applicant provide a copy of the Gas System Compliance Certificate for the installation to the Body Corporate; and
The applicant is to display a Dangerous Goods Label for the gas in a prominent place close to installation.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0828-2005

"Buderim Village Square" CTS 28278

The Application

The applicants, Jacques and Dianne Faity are the co-owners of lot 7 in the Buderim Village Square Community Titles Scheme (Buderim Village). Buderim Village is a 12-lot Community Title whose regulation module is the Commercial Module (Body Corporate and Community Management (Commercial Module) Regulation 1997). The applicants have sought an order that:

The Body Corporate give approval to the installation of a small door in the common property wall to give access to gas bottles installed on the private property of lot 7.

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Background

Buderim Village appears to be a small shopping/business centre complex. Buderim Village consists of two clusters of two-storey buildings separated by common property driveway. Lots 1-6 are in one cluster (Buildings A, B and D on the property plan) and lots 7-12 are in another (Building C on the property plan). Lot 7 is tenanted and the tenants run a café-type establishment called "Merlots". On 18 April 2005 the tenants expressed a wish to install and use in their business Liquefied Petroleum Gas (LPG), a commonly used fuel source used for domestic, commercial and automotive purposes. The tenants proposed that the LPG containers would be stored at the rear of Building C.

On 9 May 2005 the Body Corporate Manager, KBH Management (KBH) put the tenant’s request before the Body Corporate. KBH did so by mailing out to all lot owners a voting "consent" form. The wording of the proposal was:

"BY SPECIAL RESOLUTION that permission be granted to the owner/s of LOT 7 to have gas connected to the premises of Merlot’s Café (improvement/s) provided that the following conditions are complied with:....."

A list of six conditions was then detailed. Six lots voted for the proposal, four lots with a single owner voted against the proposal and two lots did not vote. The resolution was deemed not to have passed.

Subsequently, the tenants put forward a second proposal, this time with the LPG containers being located at the front side of the building. On 4 October 2005, the applicants approached KBH on behalf of their tenants seeking the approval of the Body Corporate to the new proposal. Accordingly, on 21 October 2005 KBH mailed out to all lot owners a second voting "consent" form with following wording:

"BY SPECIAL RESOLUTION that permission be granted to the owners of LOT 7 to install gas bottles at the front of the lot in accordance with the attached letter provided that the following conditions are complied with:....."

A list of seven conditions was then attached.

Again, six lots voted for the proposal, the four lots with the single owner voted against the proposal and two lots actively abstained from the vote. The resolution was deemed not to have passed.

Regardless of the above vote, at some point the tenants, without reference to the applicants, decide to go ahead with their proposal. They engaged tradespersons to cut an opening into the concrete boundary structure at the front right hand side of the lot, install LPG containers into the opening and connect the fuel to their stoves. An aluminium louvered cover was then attached to the boundary structure. For the purposes of this decision I will refer to this work by the term used by Buderim Village - "installation".

The applicants, again on the behalf of their tenants, lodged this application on 2 December 2005 seeking the ‘retrospective’ approval of the Body Corporate for the installation.

Under the Commercial Module, section 94 governs ‘improvements’ made to common property by a lot owner; this section states:

94 Improvements to common property by lot owner--Act, s 121 [SM, s 114]

(1) 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.
(2) An authorisation may be given under this section on conditions the body corporate considers appropriate.
(3) The owner of a lot who is given an authority under this section19--
(a) must comply with conditions of the authority; and

Section 94 is mirrored in By-law 5 in Buderim Village’s Community Management Statement; this By-law states:

5. Improvements to Common Property

5.1 An Owner will not make any improvements to the Common Property without the prior written consent of the Body Corporate.
5.2 In giving its consent to any improvement, the Body Corporate may:
(1) obtain advice from consultants; and

(2) comply with all Requirements.
5.4 The Body Corporate may remove any unauthorised improvement and recover the costs of doing so from the person responsible for the Improvement.

The applicants do enjoy exclusive-use areas but none of those areas are in the vicinity of the installation.

There is nothing in section 94 requiring the authorisation of the Body Corporate to be by special resolution. KBH sent out the "Consent Form" concerning the installation to all owners on 21 October 2005. As part of the Consent Form, KBH stated that the vote was one for special resolution. This is an error. I presume that KBH had overlooked the fact that Buderim Village was under the Commercial Module. Certainly, under section 114 of the more commonly-applying Standard Module (Body Corporate and Community Management (Standard Module) Regulation 1997), the same improvement to common property by a lot owner would have had to be authorised by special resolution of the Body Corporate.

Accordingly, the authorisation of the Body Corporate to the installation needed only to be passed by ordinary resolution and it is not in dispute that more votes were cast for the motion than were cast against it. This, in itself, suffices to give the applicants the authorisation they are seeking – see sections 107 and 108 of the Act.

It follows that the vote on the tenant’s first proposal in May 2005 also did not require to be passed by special resolution. However, I do not have to consider the ramifications of this vote as this application concerns only the subsequent resolution on the installation.

Request for a poll

However, I am mindful that the lot owners voted for what they considered to be a special resolution. Accordingly, it would not have occurred to the lot owners that they could request a "poll" for the counting of the vote – see section 109 of the Act.

The option for a poll votes arises from the fact that not all lots are equal in terms of their voting power. For every Community Titles Scheme there is a "contribution schedule" which sets out the entitlement for each lot. The contribution schedule for Buderim Village is set out on page 3 of its Community Management Statement. This schedule lists a total of 146 lot entitlements which are disparately apportioned among the 12 lots. Under conditions set out in the legislation, a person entitled to vote at a general meeting of a body corporate may ask for a poll for the counting of the vote on a motion that is decided by ordinary resolution. When a poll is requested the total of the contribution schedule lot entitlements for the motion must be more than the total of the contribution schedule lot entitlements against the motion.

Woolcock Nominees Pty Ltd

The Secretary of the Body Corporate Committee and the owner of Lots 2, 4, 5 and 6 in Buderim Village, is Maclean Woolcock who operates through his company, Woolcock Nominees Pty Ltd (Woolcock), Woolcock initially developed the property in 1994 and formed a Community Title for Buderim Village in October 2002; Woolcock still owns a third of the lots in Buderim Village. Woolcock, practically speaking, is a majority lot owner for Buderim Village. As has been demonstrated in this matter, Woolcock has the single-handed capacity to fail every motion that is required to pass by special resolution^[1]. As Woolcock also owns almost 61% of the total contribution schedule lot entitlements, it also has the capacity to pass or fail every vote on a motion to be decided by ordinary resolution for which a poll is requested.

It appears that Woolcock’s submissions have been provided in its capacity as significant lot owner of Buderim Village rather than in its role as Secretary of the Committee. KBH has provided scant input on the Committee’s behalf for this matter. In effect, Woolcock is the ‘respondent’ for this application as it is the sole opposer of the installation.

Woolcock has a number of objections to the installation. The objections are:

The first argument is incontrovertible and will be addressed through this application. I have noted that no evidence has been put before me that the Body Corporate issued the tenants with a formal request to remove the installation. I have noted a letter from Woolcock to KBH instructing it to follow this issue up but there is no information before me that it did so.

The second argument is not one that I can give any consideration to. If the tenants are operating a business without proper authorisation of the relevant local authority this is a matter that needs to be addressed through that authority’s processes.

Engineers Report

Woolcock have provided an engineer’s report to support its general argument that the installation contravenes the Building Code of Australia. The ‘report’ is a one-page letter dated 18 May 2006. The report is of little help. Indeed, the only concrete information in the report is the fact that LPG gas is denser than air and arguably, this is a matter of common knowledge. The report does not provide detail on the alleged contravention of the Building Code of Australia.

The report states that the installation "contravenes the Health and Amenity provisions of the Queensland Building Act". This statement is of little assistance. I have presumed that the reference to the ‘Queensland Building Act’ is a reference to the Building Act 1975 (Qld) and to the Standard Building Regulation 1993. These pieces of legislation provide the statutory framework for consistency in the erection of buildings and their consequent certification. I have been unable to see how the installation contravenes the legislation. As an example – the phrase "health and amenity" is mentioned only three times in the regulation and then only in a general sense^[2]. I cannot see how these general references in any way advance an argument against the installation.

The report goes on to argue that the installation should be removed in case it should interfere with what can only be described as a fanciful speculation – that the owner of the adjoining property would construct a retaining wall or erect another structure that would cover the installation. Presently, I note the space adjoining the installation contains a substantive pathway which not only provides access to the neighbouring property but also provides throughway through its arcade to a major shopping store. In the unlikely event that the neighbour decides to remove this significant access way and builds a covering structure without noticing the installation or the provision of notice to Buderim Village, this would be a matter that could still be taken up between the tenant and the neighbour. I do not consider that this mere possibility is a sufficient reason to remove the installation at the present time.

The report does make a significant commonsense point. If the LPG containers in the installation were to develop a fault and consequently the LPG was to leak out, it would pool and then descend to street level. It is then a flammable hazard. However, this is the same wherever there is a source of contained fuel. Woolcock has stated it has no issue with the installation for LPG containers being contained wholly within the boundaries of the lot yet logically, the potential for the flammable hazard would be the same.

Applicant’s Report

The applicants have also provided a supporting ‘report’ from the local gas authority. This report is only marginally more helpful than the engineer’s report. This report confirms that it was the decision of the gasfitter in consultation with the tenants to place the LPG containers in the installation. The report does provide the useful information that the positioning of the LPG containers accords to Australian/New Zealand Standard 1596 - Storage and Handling of LP Gas. This Standard specifies industry requirements for the location, design, construction and commissioning and operation of installations for the storage and handling of LPG; the standard incorporates the management of emergencies.

The report also states that the current location of the LPG containers minimises the risk of hazard.

My decision

Sub-section 94(1)(a) of the Act obligates a body corporate for a community titles scheme to administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme. A principal mechanism for this administration is self-management by the body corporate through majority decision. If a lot owner considers the decision of the majority, whether that consists of a majority of lot owners or a majority of the total of the contribution schedule lot entitlements, does not benefit them, that owner can bring an application before this Office seeking remedial orders.

I am empowered under section 276 of the Act to make an order that is just and equitable in the circumstances.

In considering the circumstances in this matter I have been mindful of the following facts: the tenant of lot 7, either through their lack of knowledge or for reasons of commercial self-interest, did go ahead with the installation without the ostensible approval of either their landlords or the Body Corporate of Buderim Village. This then put the applicant in the difficult position of having to apply to this Office for an order for ‘retrospective’ approval that had previously been ‘denied’ on two occasions. However, in regard to these occasions, I have found it was an error for this approval to have been the subject of a special resolution – an ordinary resolution would have been sufficient.

By a majority of lot owners, the Body Corporate of Buderim Village did give conditional approval to the installation. One of the more significant conditions was that when the installation is removed the applicants are obligated to restore that section of the common property back to its original state. I note that the condition does not provide detail on the circumstances under which removal would occur. For example – would removal occur if there was a change of tenant or if tenants no longer needed to use LPG as a source fuel? I consider this is a matter for the Body Corporate to consider and decide – I advise that section 44 of the Commercial Module gives the Body Corporate the power to amend or revoke an earlier ordinary resolution by another ordinary resolution.

There was a single opposer to the approval – Woolcock. Geographically, Woolcock is relatively unaffected by the installation. The applicants’ immediate neighbours – lots 8 and 10 – approved the installation. While it of course, is a matter of personal opinion, I consider that aesthetically, the installation has a relatively small visual impact. There does not seem to be an issue with the quality of the work of the gasfitter involved. The installation has the approval of Elgas and conforms to the requirements of Australian/NZ Standard 1596. Further, the cover of the installation is fire resistant powder coated aluminium. I do not find that Woolcock has proved its argument that the installation has contravened the Building Code of Australia or relevant Queensland building legislation.

It would be unreasonable outcome that the tenants be prevented from conducting their business. The tenant needs a fuel source to conduct its business operations and it has chosen and installed cooking equipment that is reliant on LPG. The LPG containers need to be situated somewhere close to the lot. I consider that containers’ current placement in the installation is practical, in that it is accessible yet minimises both the containers vulnerability to damage and the potential hazard should any leakage occur.

For all the above reasons I have decided to grant the order sought by the applicants. I consider that even if Woolcock had decided to rely on its majority holding of the total of the contribution schedule lot entitlements, that its veto would have been unreasonable in all the circumstances.

Accordingly, I declare that, by ordinary resolution, the Body Corporate has given approval to the installation in accordance with the conditions set out in the "Consent" distributed by the Manager on 21 October 2005. I order that the Body Corporate records reflect this resolution.

Ancillary orders

Section 284 of the Act permits me to make ancillary and consequential provision that I consider necessary or appropriate. I have carefully noted the commonsense concern expressed in the engineer’s report. I consider that when it comes to issues of public safety - there can be no surfeit of prudence. To minimise the potential risks associated with the installation I have decided to make two ancillary orders of a minor nature of the applicants.

Firstly, if the tenants used a certified gas-fitter for the installation, they would have either been provided with a "Gas System Compliance Certificate" or they can arrange for the gas-fitter to provide this certificate. I order that a copy of the certificate is to be provided to the Body Corporate for its records as soon as practicable. I consider this would provide a measure of re-assurance for the Body Corporate. I will leave the logistics of obtaining the certificate to the applicants.

I have also noted the point made in the engineer’s report that if there was a leak in the LPG system, a flammable hazard would be created in the immediate area of the installation which would be susceptible to sparks or naked flame, for instance through a cigarette. I consider that in this regard, the installation is perhaps too unobtrusive as it is not immediately apparent that LPG is stored in this area. I understand that a sulphur based chemical - ethyl mercaptan - is added to LPG to give it a smell like rotten cabbage as an aide to detection of a leak.^[3]

Nonetheless, I consider only prudent to inform the public of the presence of LPG in this area. Accordingly, I order the owner to arrange for a "dangerous good label" for LPG to be obtained. The label would inform persons both of the presence of LPG and should provide the emergency telephone number of the supplier (Elgas - 1800 819 783). I order that the label then be displayed in a prominent place close to the installation and that it remain there for the time that LPG is stored in the installation.

^[1] Sub-section 106(3)(b) and (c) of the Act require that for passage of a special resolution at Buderim Village no more than three lots and 25% of the total of the contribution schedule entitlements for the property be against the motion. Woolcock owns four lots and almost 61% of the total contribution schedule entitlements. However, Woolcock does not have the lot numbers and contribution schedule entitlements to carry a special resolution by itself.
^[2] In sub-section 69(b)(v) – temporary buildings, sub-section 70(v) – special structures and sub-section 92(1)(f) – substantially completed buildings.
^[3] http://www.lpgaustralia.com.au/displaycommon.cfm?an=4

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Buderim Village Square [2006] QBCCMCmr 279 (31 May 2006)