The Moorings on Golden Beach [2006] QBCCMCmr 499 (4 October 2006)

Last Updated: 19 December 2006

REFERENCE: 0047-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	27923
Name of Scheme:	The Moorings on Golden Beach
Address of Scheme:	88 Esplanade GOLDEN BEACH QLD 4551

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

Ristorante Al Mare Pty Ltd, the Occupiers of lot 3

I hereby order that the application for the following orders: 1. The poolside toilets including cleaning, supply of toilet paper, hand towels and all consumables. 1.1 With By-law 46, the Body Corporate have a duty of care to keep said toilets to the standard required by the listed Statutory authorities for the café/ restaurant to operate. 1.2 If these works are not maintained and the Café operators are at risk of non compliance, and the Café Operators are at risk of non compliance, the Café Operators will perform these works (cleaning and supply consumables) and then seek reimbursement from the Body Corporate. 1.3 As the café operators have been maintaining these toilets since September 16th, 2004, they are entitled to seek reimbursement for all works as attached. Considering the length of time the café operators have been doing this, this amount is considered due now and payable immediately (see attached sample of invoices). 2. Exclusive Use of Common Area is still Common Area and the Body Corporate is responsible for maintaining these areas with respect to lighting and maintenance. As the By-laws have allowed the establishing and operating of a café/ restaurant: 1. As long as they comply with all Statutory obligations, the Café operators must be allowed to operate without hindrance. 1.1 The Body Corporate must maintain a trade waste area for the café/ restaurant’s food garbage, recycling of glass and cardboard. The café operators must keep the area clean and tidy within acceptable limits of similar businesses. 1.2 The Body Corporate provide the café with 2 recycle wheelie bins in addition to the 2 normal wheelie bins. 1.3 The Body Corporate must expect all the acceptable activities of having such a business on site with respect to noise and patron activity. 2. The café operators can liaise directly with the Body Corporate and resident Managers of the complex in matters that affect the operation of the café/ restaurant as a matter of commercial experience. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0047-2006

"The Moorings on Golden Beach" CTS 27923

THE SCHEME

The Moorings on Golden Beach Community Titles Scheme comprises 67 lots one of which (lot 3) is a combined restaurant and residential unit. The scheme is registered on a Building Format Plan under the Body Corporate and Community Management Act 1997 (Act). The Accommodation Regulation Module (Accommodation Module) applies to the scheme.

APPLICATION

This application is by Ristorante Al Mere Pty. Ltd. the occupier of lot 3 seeking the following outcomes:

Part A – Body Corporate to Maintain All Common Areas

1. The poolside toilets including cleaning, supply of toilet paper, hand towels and all consumables.
1.1 With By-law 46, the Body Corporate have a duty of care to keep said toilets to the standard required by the listed Statutory authorities for the café/ restaurant to operate.

1.2 If these works are not maintained and the Café operators are at risk of non compliance, and the Café Operators are at risk of non compliance, the Café Operators will perform these works (cleaning and supply consumables) and then seek reimbursement from the Body Corporate.

1.3 As the café operators have been maintaining these toilets since September 16^th, 2004, they are entitled to seek reimbursement for all works as attached. Considering the length of time the café operators have been doing this, this amount is considered due now and payable immediately (see attached sample of invoices).
2. Exclusive Use of Common Area is still Common Area and the Body Corporate is responsible for maintaining these areas with respect to lighting and maintenance.


Part B – Body Corporate to Support Restaurant

As the By-laws have allowed the establishing and operating of a café/ restaurant:

2.	As long as they comply with all Statutory obligations, the Café operators must be allowed to operate without hindrance.

1.1 The Body Corporate must maintain a trade waste area for the café/ restaurant’s food garbage, recycling of glass and cardboard. The café operators must keep the area clean and tidy within acceptable limits of similar businesses.

1.2 The Body Corporate provide the café with 2 recycle wheelie bins in addition to the 2 normal wheelie bins.

1.3 The Body Corporate must expect all the acceptable activities of having such a business on site with respect to noise and patron activity.

2. The café operators can liaise directly with the Body Corporate and resident Managers of the complex in matters that affect the operation of the café/ restaurant as a matter of commercial experience.


BACKGROUND

The Moorings on Golden Beach Community Titles Scheme is a 67 lot scheme which is
predominantly residential but also contains one lot which consists of café/ restaurant premises and a one bedroom residential unit. The applicants state that the issues which are the subject of this application were raised with the body corporate manager as early as September 2004 when they took over operation of the restaurant.

In November 2004, the body corporate manager organised a meeting with the body corporate Treasurer, the resident manager and the owner of lot 3, and were given the impression that as tenants they had no standing to raise the matters with the body corporate. However, after consulting a solicitor they became aware that they could seek adjudication of this dispute.

An invoice for $13,000 submitted by the applicants to the body corporate in November 2005 was ignored and the applicants state that the most pressing issue is the cost of maintaining the toilet area and. An attempt to discuss the matters at a subsequent meeting was unsuccessful.

The applicants believe that the café / restaurant is of direct benefit to all lot owners as they entertain their guests there and the resident manager uses the café/ restaurant as a selling point to attract bookings.

This office sought submissions from all owners and the committee regarding the application. The committee, body corporate manager and six individual owners have responded to the application.

The body corporate made the following submissions:

• The complex consists of 67 lots including lot 3 and the resident manager’s lot. Of the remaining lots, 33% are used for permanent residences, 14% are used as "weekenders" by their owners and 53% are used in a letting pool arrangement . the café, pool and three toilets are located down a number of stairs from the rest of the complex.
• Lot 3 was previously owned by the original developer but sold to the current owners on 29 March 2006, some time after the present tenants took over their lease.
• The body corporate believes that the contractual arrangements between the owner and the occupier of the lot are not relevant to the body corporate.
• The café/ restaurant premises are licensed under the Liquor Act and are therefore subject to Liquor Licensing requirements regarding provision of toilet facilities as well as local authority requirements regarding disabled toilet facilities.
• Another toilet is located on common property in the Gym area, making a total of four toilets on common property.
• When the complex first opened and the café/ restaurant was occupied by different operators, the body corporate was concerned that the toilets were used primarily by café patrons and it was agreed that the café operators would pay for consumables while the resident manager would continue to attend to cleaning. It is submitted that this arrangement is fair as their surveys indicate that the toilets are almost totally used by café patrons and it could be argued that all but one of the three toilets were provided for the sole use of the café.
• The resident manager continued to clean the toilets on a daily basis while the café/ restaurant operators provided consumables. In May 2006 the body corporate received a letter from Caloundra City Council indicating that insufficient toilet paper was being provided and after this time the body corporate again took responsibility for providing consumables as well as cleaning.
• The café is licensed premises and is required by law to maintain toilet facilities including a disabled toilet.
• It is the only lot in the complex that is required to provide a which is used by café patrons rather than pool users;
• The café/ restaurant has not been meeting all of its expenses relating to operation of the café including daily cleaning of the stairs and car park due to continual oil and food spills, extra electricity the café was not being charged for; additional car parking and storage areas on common property;
• The area referred to as an "exclusive use area" (the timber veranda along the Southern and Eastern side of the café is in fact part of lot 3 and therefore the responsibility of lot 3 although the body corporate have from time to time maintained this area;
• The body corporate has provided considerable support and assistance to the extent of delaying taking any action concerning breaches of by-laws relating to fire, liquor, tobacco, disability and noise;
• There have also been complaints of non-compliance with State legislation concern8ing breaches of the Liquor Act, Tobacco Act and Fire Services Act;
• The body corporate provides waste disposal services including three garbage collections per week which is more than that provided in other similar complexes;
• The café operators must comply with by-laws prohibiting storage of garbage and trade waste material on common property and prohibiting interference with enjoyment of common property by lot owners;
• The body corporate has attempted to reach a workable arrangement with the café operators to facilitate segregation of café patrons and other persons such as pool users but they have refused to negotiate. A copy of a draft agreement prepared in early 2006 was provided;
• The body corporate does not accept the claim for restitution. It is submitted that a substantial sum of money for outgoings like electricity and extra cleaning was not charged to the café and remains outstanding. Further, the café/ restaurant operators have carried out cleaning of their own choice in recent times but this was not required and this expense was not authorised by the body corporate;
• The cost of providing consumables to the 3 toilets has been $24 for the 2 months since the body corporate resumed responsibility for supplying consumables to all of the toilets. By comparison, the cost to the body corporate of operating the more heavily used gym and sauna toilet over the last 3 years has been $201, $220 and $291 respectively.
• There have been slips and falls on common property, although not in the toilets as yet. The floor of the toilets is sometimes made wet by people who have recently used the pool area. To counter this risk anti-slip treatment is being applied as necessary throughout the common property and the toilets are being segregated between café users and pool users. One toilet will be allocated to pool users while two toilets (including the disabled toilet) will be allocated for café patrons who will not be expecting water on the floor brought in by users of the pool. This will also assist the café to isolate actual usage by their patrons.

The owners of lot 3 made the following submissions:

• The body corporate is responsible for maintenance of, and supply of consumables to the common property toilets;
• The body corporate failed to supply consumables including toilet paper for a period of over 12 months and therefore the occupiers of the restaurant were forced to supply consumables including toilet paper;
• Therefore the applicants should be entitled to reimbursement for money spent on toilet paper but not to the extent of $13,000 for which they issued an account to the body corporate;
• The body corporate is required to maintain a level of hygiene and it is obvious that the moorings resort needs to clean the toilets more often when used by restaurant patrons;
• The cost of any additional bins should be borne by the restaurant.
• They do not support a proposal that the disabled toilet should be set aside exclusively for use by the restaurant and its patrons.

The owners another lot made the following submissions:

•	In addition to the matters which are the subject of this dispute, they have concerns regarding noise, breaches of by laws by restaurant guests, health, safety and liability issues.
•	They reject the claim for $13,000 reimbursement for cleaning and consumables during the period 16 September 2004 to the date of the application and submit that many of the items detailed on the invoices relate to running of the restaurant. On their review of the invoices, only $303.70 may relate top toilet expenses. There are no details of actual labour costs which they regard as questionable;
•	The restaurant (rather than the body corporate) requires the toilets to carry on its business and these toilet facilities are far in excess than those required by the body corporate. Similarly, the frequency and standard of cleaning is much higher for a restaurant than for a body corporate;

• They dispute that the restaurant is of benefit to lot owners;

Other submissions were similar to the above.

The resident Managers made the following submissions:

• As caretakers they are required to maintain the common areas to specified standards;
• The café entry and 3 toilets are included in their daily 6AM common area cleaning program, checked at midday and mopped if required. The time involved in performing this work, as evidenced by the provided time and pay sheet is 2 hours per day @ $17.31 per hour.
• They have never observed the café staff cleaning the toilets;
• The area behind the café and stairs down to the basement require constant attention due to greasy boots of kitchen staff, waste material and food contamination. Waste material was not properly stored in the basement.

In reply to the above, the applicants made the following submissions:

• The body corporate advised them that they have no specific standard relating to the cleaning of the toilets;
• They believe that the toilets should be maintained to a particularly high standard akin to that maintained by McDonalds restaurant, Caloundra;
• It is claimed that the body corporate is obliged to maintain the toilets to the standard required of the café and "may be liable for damages incurred by the café if they fail to maintain these facilities";
• They detail the required standards as follows:

Sanitising toilet seat cover (both sides)
Sanitising toilet seat (both sides)
Sanitising rim of bowl
Sanitising crevices at rear of bowl
Sanitising of cistern button
Sanitising of hand rail, basin, hand towel dispenser, toilet roll holder and hand dryer
Sanitising door handles (both sides)
Checking dispensers and topping up as necessary
There should also be a signing system on the back of the door

• They believe the café is of significant benefit to all lot owners;
• They dispute the body corporate’s costing of supplying consumables to the toilets.
• The invoices for $13,000 apply to the period September 2004 to October 2005 and have highlighted relevant figures on the supplied invoices although the highlighting does not show up on the photocopies;
• They claim that they are entitled to reimbursement of the cost of cleaning over a 615 day period (September 2004 to May 2006) calculated as follows: 1 hour per day X 417.31 X 615 days = $10,645.

JURISDICTION

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
(c) a claimed or anticipated contractual matter about-
(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)).

DETERMINATION

The applicants argue that in addition to the body corporate’s general obligation to maintain common property areas, it is also required to bear responsibility for maintaining the toilets to a higher standard and to ensure more frequent cleaning when the toilets are used by patrons of a restaurant situated in one of the lots. In essence it is argued that the body corporate is in some way vicariously responsible for the café operators’ compliance with relevant health or liquor
licensing requirements.

To my knowledge this is the third time that such a dispute has been brought to this Office for adjudication. In the earlier adjudication referred to as
Brewster Corporation v Allenby (2004) QBCCM Cmr 81,
the circumstances were similar to those under consideration in this case and the adjudicator ordered:

"that the body corporate of Allenby is required to maintain (including cleaning of) the common property toilets to a reasonable standard, consistent with the level of cleaning undertaken for other areas of the common property, and further, is required to supply on a regular basis a
level of toilets accessories (soap, paper and towel) consistent with a reasonable but not excessive level of use of such toilets."

The rationale for this outcome was that the body corporate is obliged to maintain the toilets to
the extent that it is required to keep the toilets in a reasonably clean and tidy condition. However the toilets are no different to any other part of the common property which must be maintained for the benefit of lot owners and if owners or occupiers of a commercial lots, in connection with the carrying on of their businesses, require or expect a greater level of cleaning (e.g. to meet clients’
expectations or to ensure compliance with legislative hygiene requirements) then this is a responsibility that they will need to attend to in conjunction with or in addition to the maintenance undertaken by the body corporate.

There is no doubt that the toilets in question form part of the common property of the scheme and the obligation of the body corporate to maintain common property is set out in section 108 of the Accommodation Module Regulation as follows:

108 Duties of body corporate about common property Act
(1) The body corporate must maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition.

Further, under section 152(1) of the Act, the body corporate has a duty to "administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners".
However, I am also of the view that the facts of this case are very similar to those considered in the case Brewster Corporation v Allenby (2004) QBCCM Cmr 81 which is relevant to the consideration of what standard of maintenance should reasonably be expected of the body corporate.
As in that case, the evidence suggests the expectation of a level of cleaning / maintenance
commensurate with a high level of regular use, and high standard of cleaning to meet the expectations of restaurant and cafe clients. The availability of toilets facilities is usually necessary for licensing of premises under applicable food hygiene regulations administered by the local City Council and the Liquor Act. I do not consider that the obligation of the body corporate extends to such a high level of maintenance. This is a difficult practical issue, and the only real guidance in the legislation is section 152(1) which provides that the body corporate has a duty to "administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners"(section 152(1)).
I believe that the body corporate is obliged to maintain the toilets to the extent that it is required to keep the toilets in a reasonably clean and tidy condition. However, I consider that the toilets are no different to any other part of the common property which must be maintained for the benefit of lot owners. For example I do not consider that it is likely that pool or garden maintenance is attended to more often than on a daily basis and I do not consider that the common property toilets should be any different.
I consider that the body corporate is required to maintain (including clean) the toilets on a regular basis in the same way as it maintains other areas of common property. A reasonable period might be daily, or even less frequently, although the caretaking agreement may require the resident managers or their agent to clean the toilets on a daily basis. As was considered by the adjudicator in the case Brewster Corporation v Allenby, I consider that if the occupiers of the cafe premises, in connection with the carrying on of their business, require or expect a greater level of cleaning (e.g. to meet clients’ expectations or to ensure compliance with legislative hygiene requirements) then this is a responsibility that they will need to attend to at their own expense either in conjunction with, or in addition to the maintenance undertaken by the body corporate.
I consider that a similar approach should be applied to the provision of necessary toilets items including soap, paper etc. The body corporate should be expected to supply a reasonable amount of such items, consistent with ordinary and reasonable use, on a reasonably regular basis. However, in my view, this expectation should not extend to an unlimited provision
of such items. If the reasonable quantity supplied is insufficient due to demands of business clients, then I conclude that it is reasonable that the owners or occupiers of the café premises will themselves contribute to the supply of such items.

Similarly, there is no basis upon which to require the body corporate to provide additional rubbish removal in the form of 2 wheelie bins for recyclables for the benefit of the café/ restaurant. The cost of additional bins is a normal business expense which is borne by the business operator.
As stated above, the role of the body corporate is to administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners. The body corporate is prohibited by law from carrying on a business and has no role to play in meeting the business expenses of lot owners or occupiers.

I would point out however, that lot owners/ occupiers are entitled to reasonable use of common property and on this basis should be provided with adequate space to accommodate any rubbish or recycling bins.

Unfortunately, disputes of this nature are rarely anticipated when a scheme is first established. A sensible approach would have been to grant to lot 3 exclusive use of certain toilet facilities or to grant a lease (and therefore exclusive possession for the term of the lease) of the toilet facilities to the owners of lot 3. The consideration for such a lease need only be nominal and the respective obligations of the body corporate and the owner and/ or occupiers of lot 3 would be clear.

I note that the body corporate is currently considering segregation of two toilets including a disabled toilet for the use of the café / restaurant. The third toilet would be available for persons using the pool area and consequently there would be less risk of slips and falls to café/ restaurant patrons. I believe that this is a commonsense solution provided that the arrangement is formalised appropriately so that all parties are aware of their rights and obligations.

To sum up, I do not believe that the body corporate’s obligation to "administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners" extends to meeting expenses such as the cost of additional waste disposal, additional toilet cleaning and additional consumables which could be characterised as incidental business expenses of the café/ restaurant.

Accordingly, I believe that the application should be dismissed.