Bel Air Retail [2010] QBCCMCmr 139 (24 March 2010)

Last Updated: 15 April 2010

REFERENCE: 0811-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	32401
Name of Scheme:	Bel Air Retail
Address of Scheme:	2623 Gold Coast Highway BROADBEACH QLD 4218

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the body corporate for Bel Air Retail community titles scheme 32401

I hereby order that Amrit Singh as trustee for the Samra Investment Trust, the owner of Lot 7 must, within sixty days of the date of this order, remove the cold store room from common property, and repair any damage caused to common property and/or utility infrastructure as a result of the construction and removal of the room. I further order that in all other respects, the application by the body corporate for Bel Air Retail community titles scheme 32401 is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0811-2009

“Bel Air Retail” CTS 32401

The scheme
“Bel Air Retail” community titles scheme 32401 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Commercial Module) Regulation 2008 (Commercial Module).

Application
This application made on 28 August 2009 is by the Body Corporate seeking outcomes that Amrit Singh as trustee for the Samra Investment Trust, the owner of Lot 7 (Respondent) remove the cold store room from common property, repair any damage caused to common property and/or utility infrastructure as a result of the construction and removal of the room, and indemnify the Body Corporate for any loss or damage suffered as a result of the Respondent’s continuing contravention of by-laws until the room is removed from common property.

The Body Corporate submits on or about 28 June 2007 the Respondent began construction of a cold store room on common property adjacent to Lot 7. It provided a copy of:

• A letter dated 29 June 2007 to the Respondent from Jennifer Berry of Stewart Silver King and Burns (SSKB) on behalf of the secretary of the Body Corporate for Bel Air on Broadbeach stating the unauthorised works carried out on common property (the car park of Lot 902) contravene By-Law 5(a).
• A report dated 8 July 2007 prepared by Mr Wells (stated to be chairperson of the Body Corporate for Bel Air on Broadbeach) describing the construction work and stating work has been carried out on common property.
• A letter dated 10 July 2007 to the Respondent from Katie Todd of SSKB on behalf of the secretary of the Body Corporate for Bel Air on Broadbeach referring to a discussion at the committee meeting on 9 July (at which it is stated Mr Singh was present) about the works carried out on common property without Body Corporate approval and saying it is believed By-Laws 3, 5(a) and 14 have been contravened.
• The minutes of the meeting of the committee for the Body Corporate dated 3 September 2007 indicating (under ‘Confirmation of Minutes’): Mr Samra was present as chairperson; “there was no record of Amrit Samra’s request to lease an area of common property” in the minutes of the committee meeting held on 2 April 2007; Mr Samra was of the opinion that SSKB had advised him that his request for installation of the cold store room was approved; and SSKB was of the opinion Mr Samra was advised to obtain legal advice about leasing common property and that the matter had to be submitted to a general meeting.
• The minutes of the meeting of the committee for the Body Corporate dated 5 December 2007 indicating (under Item 6 of ‘Matters Arising From Previous Minutes’): the committee resolved to obtain legal advice about documentation (including a proposed Deed of Licence) submitted by Mr Samra at the meeting; and that subject to this advice that a general meeting be called for owners to consider a motion/s submitted by the committee on this matter.
• A ‘Report on Cold Room’ dated January 2008 prepared by GK Consulting Engineers Pty Ltd indicating that the cold room has taken up 2 parking lots.
• A ‘Notice of Continuing Contravention of a Body Corporate By-Law’ dated 13 November 2008 given to Mr Samra by the Body Corporate: referring to By-Laws 3, 5(a), 6, 8 and 24(b); stating the unauthorised construction of the room adjacent to the back of Lot 7 has enclosed two common property car parks and, in the absence of exclusive use, obstructs the lawful use of common property car parks and has changed the exterior parts of Lot 7. The notice “requests that you remove the structure that you built on the two (2) common property car parks immediately adjacent to the back of the shop on Lot 7, and restore the common property car parks to their original condition within sixty (60) days from the date of the attached ‘Continuing Contravention Notice’”.
• The minutes of the Annual General Meeting of the Body Corporate held on 4 June 2009 (2009 AGM) where: Motion 15 proposing that the Body Corporate consent to the Respondent making a development application to the local authority about a material change of use of the car parks was lost by ordinary resolution; Motion 16 proposing the Body Corporate grant a licence to the Respondent with respect to the car parks was ruled out of order; and Motion 17 proposing that the Body Corporate make a dispute resolution application “requiring the owner of Lot 7 to immediately remove the room which encloses two (2) of the common property car parks immediately adjacent to Lot 7 at his own cost and expense in accordance with the terms of the Notice of Continuing Contravention of Body Corporate By-law dated 13 November 2008” was passed by ordinary resolution.
  

The Body Corporate submits the construction of the cold store room has caused problems such as: there is an inability for owners and occupiers to use the two car parks; the failure to obtain requisite developments approval potentially makes the Body Corporate liable; and there is increased exposure to liability. The Body Corporate referred to section 117 of the Commercial Module and the decision of the Queensland Court of Appeal in Katsikalis v Body Corporate for “The Centre” [2009] QCA 77 at 30-32 saying the Respondent failed to obtain Body Corporate approval at the 2009 AGM. It argues the cold store room is an indefinite disposal of common property. The Body Corporate cited decisions made on dispute resolution applications: London Woolstore Apartments [2007] QBCCMCmr 561; Pivotal Point Commercial [2009] QBCCMCmr 256 (16 July 2009); and 4 Burnside Road [2009] QBCCMCmr 207 (9 April 2009) stating these decisions are analogous insofar as the construction of a cold store room also breaches by-laws.

Submissions to the Commissioner
On 7 September 2009, the Commissioner provided a copy of the application to the Respondent, and to the Body Corporate for distribution to the owner of each lot, with an invitation to respond to the matters raised in the application (s 243, Act).

Respondent’s submissions
The Respondent submits it contacted the Body Corporate and made application to use common property to locate cool-rooms, and that on 2 April 2007 the Body Corporate via the Body Corporate Manager granted conditional approval for the construction of the cool-room. The Respondent provided a copy of a letter dated 2 April 2006 (it is uncontested the correct date of the letter was 2 April 2007) from Joe Tomkins of SSKB on behalf of the secretary of the Body Corporate to Mr Samra certifying “that the committee...has granted provisional approval for your application to use the space behind your retail outlet as per your application to the Committee. The Exclusive use is granted subject to your application for approval from the local Government Authorities...The Exclusive use of the area is subject to a market appraisal...”

The Respondent says it acted in reliance of this approval to enter into a lease, on 26 June 2007 building approval was granted, and that the only condition of the Body Corporate’s approval that is unsatisfied is local authority approval for a material change of use of common property and that is because the Body Corporate has refused to provide requisite written consent to the application.

The Respondent argues that despite giving the Respondent written approval, the Body Corporate is now attempting to rescind that approval by relying on its own failure to comply with the requirements of the legislation before granting approval. It is submitted the Respondent was not aware that such statutory obligations existed or the Body Corporate had failed to comply with them. The Respondent states: the doctrine of estoppel prevents the Body Corporate from attempting to rely upon its own failure to comply with its statutory obligations to rescind its approval; the doctrine should be used to override legislative requirements; and an adjudicator has jurisdiction to order an equitable remedy. The Respondent argues that the decision of the Court of Appeal and decisions of adjudicators referred to by the Applicant can be distinguished from this dispute as these matters involve the body corporate giving its authority prior to the use of the common property and none indicated that the Respondent had raised the issue of estoppel.

In reference to correspondence sent from the Body Corporate for Bel Air on Broadbeach, the Respondent states this correspondence was sent after a lease had been entered into and construction had commenced. The Respondent says this correspondence should be disregarded as the Body Corporate for Bel Air on Broadbeach is not a party to this application.

The Respondent seeks orders directed towards local authority approval and, it and the Body Corporate entering into a lease of the affected part of common property. The Respondent submits that in the event it is found that the Body Corporate is not estopped from bringing their application, a just and equitable outcome would be an order granting a lease over common property for the duration of the lease with Pizza Hut in return for the Respondent paying the Body Corporate rent determined by an independent valuer.

Body Corporate’s reply to submissions
The Body Corporate submits it has no record of any application from the Respondent seeking approval to construct the cold store room on common property before 2 April 2007. The Body Corporate notes the Respondent did not provide any evidence of such an application. It states the Respondent did not submit an application until motions were submitted to the 2009 AGM and the submission of these motions proves acknowledgement that the conditional approval in the 2007 letter was insufficient.

The Body Corporate says section 117 of the Commercial Module applies to the construction of the cold store room on common property and the conditional approval does not provide any basis to allege the Body Corporate has disposed of its interest in common property. It states: the committee did not give the stated approval; the committee did not authorise the approval at its meeting on 2 April 2007, a meeting Mr Samra chaired; and approval has not been given in general meeting. The Body Corporate argues that as Mr Samra was the chairperson from 25 May 2006 to 4 June 2009 and at the time the conditional approval was given, he should have known that no resolution was made in respect of the conditional approval.

The Body Corporate submits the Respondent has not provided any evidence that it relied on the conditional approval to enter into a lease with Pizza Hut and that the cold store room was a condition of the lease. The Body Corporate says it is not aware of any material change of use application being made to the local authority before the cold store room was constructed and rent appraisals were not obtained before construction.

The Body Corporate states the Respondent’s argument with respect to estoppel is misconceived and unfounded in law.

Adjudication
A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Jurisdiction
An adjudicator may make an order to resolve a dispute about a claimed or anticipated contravention of the Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under the Act or the community management statement (s 276(1), Act). An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s 276(2), Act).

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act:

1. On 17 February 2010, I requested the Body Corporate provide a copy of: the minutes of the last general meeting held before 2 April 2007 and the general meeting first held after this date; any record of voting other than at a general meeting pursuant to section 111 of the Act in 2006 and 2007; and the minutes of committee meetings (including any record of voting outside a committee meeting) held six months before 2 April 2007.
   

On 2 March, the Body Corporate provided a copy of: the minutes of the Annual General Meeting dated 26 May 2006 (2006 AGM); the minutes of the Annual General Meeting dated 21 May 2007 (2007 AGM); the minutes of committee meetings held on 20 April 2006, 3 September 2007 and 5 December 2007; the record of voting dated 13 October 2006; and an email dated 19 February 2010 from Helen Howard of SSKB to solicitors acting for the Body Corporate indicating that there is no record of voting other than at a general meeting pursuant to section 111 of the Act in 2006 and 2007.

2. On 17 February, I invited the Respondent to make submissions about the application made to the Body Corporate to use common property to locate cool-rooms, including about to whom it was made, when it was made and the content of the application.

On 2 March, the Respondent responded to my invitation submitting:

• Mr Samra had limited experience with body corporate law and he relied on the advice of SSKB.
• A copy of a document dated 12 March 2007 addressed to the chairperson (Mr Samra) detailing the “minutes from the informal meeting held on the 07.03.07 at the offices of” SSKB at which Mr Samra, Mr Stevens and Mr Harding are noted as being present. On page 2, the document states: “Amrit, Just for matter of record other matters discussed at the meeting were in relation to your proposed extension of the back of your shop. During the meeting you received advice from Mr Tim Sheehan that the way to circumvent a lot of the approval process is to approach under exclusive use. George asked Tim if it was possible to sell exclusive use areas and Tim advised that yes it was possible only through a vote without dissent. The option for you to have a flying minute was discussed and the following protocols were advised for you. That your motion is to section off a portion of the car park to include plans showing the size of the improvement, taking into consideration fire escape/access. Plans must be forwarded showing the development and time frames for works etc. This is for you to approve and ratify I will then proceed with the actions assigned to SSKB”.
• The Respondent recollects that the committee members discussed Mr Sheehan’s advice that something could be done without calling a general meeting (such as a licence) and SSKB gave no indication this was incorrect.
• A copy of an email dated 18 April 2007 from Mr Samra to Joe Tomkins referring to a “body corporate meeting 2nd April 2007 regarding the Exclusive Use area at the rear of Shop 7” and asking: “as per our previous agreement would you please forward the consent of the body corporate subject to the agreement reached on the fees & necessary statutory approvals”. The Respondent provided a copy of the emailed response from Joe Tomkins dated 18 April 2007 stating (in part): “Amrit, Please find attached a letter regarding the use of the space”. The Respondent stated the attachment was the approval previously filed.

3. On 8 March, I invited the Body Corporate to make submissions in response to those made by the Respondent.

On 17 March, the Body Corporate responded to my invitation stating:

• The alleged advice from Mr Sheehan would not justify the construction of the cool store room without proper authority. To the extent the advice referred to a licence it could be authorised by a special resolution under 117 of the Commercial Module.
• The advice was clarified at the December 2007 committee meeting.
• The minutes of the March 2007 informal meeting do not include committee authorisation.
• No committee authorisation was ever made and the committee did not authorise any preliminary approval to be issued.

Decision
The Body Corporate seeks to enforce its by-laws. It is apparent it gave a by-law contravention notice to the Respondent on 13 November 2008. This notice referred to By-Laws 3, 5(a), 6, 8 and 24(b). The community management statement for the scheme (having effect from 30 March 2004) indicates these By-Laws relate to obstruction, damage to common property, other common property, appearance of lot and behaviour of invitees.
The by-laws stated in the community management statement bind the body corporate, lot owners and other persons who occupy lots (s 59(2), Act).

A body corporate must enforce the community management statement, including any by-laws for the scheme (s 94(1)(b), Act). The body corporate may enforce the by-laws in the ways stated in sections 182 to 188 of the Act. In this case, the Body Corporate gave a continuing contravention notice. There is nothing to suggest the notice is contrary to section 182 of the Act. In this circumstance, I am satisfied the Body Corporate has given proper notice and complied with the preliminary procedure stated in section 184 of the Act. If the person does not comply with the notice the body corporate may make a dispute resolution application (s 182(4)(e)(ii), Act). The Body Corporate has shown that, at the 2009 AGM, it authorised making a dispute resolution application because the Respondent had not complied with the terms of a continuing contravention notice.

By-Law 3 provides: “An owner or occupier of a lot must not obstruct lawful use of common property by any person”. By-Law 6 provides: “The pathways, drives and other common property shall not be obstructed by any owner or the tenants, guests, servants, employees, agents, children, invitees, licensees of a owner or any of them or used by them for any purpose other than the reasonable ingress and egress to and from their respective lots or the parking areas provided...”

I am satisfied from the submitted material and the plan of subdivision for the scheme (SP168225) that the Respondent has constructed a cold store room on common property for the scheme. It is apparent from submissions the room is (wholly or partly) on a part of common property that was, before the construction, generally available for parking vehicles. A vehicle/s cannot be parked on this part of common property as a consequence of the construction.

The Respondent has argued it had Body Corporate authority to construct the cold store room on common property. Common property is owned by lot owners as tenants in common (s 35(1), Act). The Body Corporate’s general functions include administering common property for the benefit of the lot owners (s 94(1)(a), Act). The Body Corporate has referred to Katsikalis. In my view, Katsikalis endorsed the principle that a lot owner cannot use common property in a way that the Respondent has by constructing the room without appropriate Body Corporate approval. The Respondent argues it has this approval. The Body Corporate disagrees.

It is not contested that the construction of the cold store room was carried out in June 2007. In my view, the construction amounts to an improvement to common property[1]. In June 2007, the Body Corporate could, if asked by a lot owner, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot (s 159, Act and s 94, Body Corporate and Community Management (Commercial Module) Regulation 1997 (the 1997 Regulation))[2]. The committee could authorise an owner to make the improvement (s 100, Act). There is no indication in the submitted records of any such authorisation. Neither is there a minute of a general meeting or record of voting other than at a general meeting evidencing Body Corporate authorisation. There is nothing to suggest the Body Corporate properly authorised the improvement.

Douglas J stated in Katsikalis[3] (at paragraph 25): “Where the improvement...has the effect of granting the use of part of the common property exclusively to a lot owner for an unlimited period...s. 94 cannot be treated separately in its effect from s. 91. The sections are not necessarily mutually exclusive as there is the real likelihood of the creation of a disposition of the land in those circumstances”. In June 2007, section 91 of the 1997 Regulation provided for disposal of interest in and leasing of common property. With respect to this dispute, there is nothing to suggest a particular period was contemplated for which the common property would be used.
In June 2007 and currently, the Act has provided that a body corporate: may dispose of an interest in, lease or licence of common property in the way and to the extent authorised under the regulation module applying to the scheme (s 116 renumbered as s 154); or may make an exclusive use by-law that attaches to a lot and gives the occupier of the lot exclusive use to the rights and enjoyment or other special rights about common property (s 133 and 134 renumbered as s 170 and 171).

While the 1997 Regulation did not make provision for granting a licence, a body corporate could under that regulation: sell or otherwise dispose of a part of common property by resolution without dissent (s 91(2)(a)(i)[4]); grant a lease for more than 10 years over part of common property by resolution without dissent (s 91(2)(a)(ii)[5]); or grant a lease for 10 years or less over part of common property by special resolution (s 91(2)(b)[6]). An exclusive use by-law may be made by resolution without dissent (s 62(2) and (3), and s 171(1) and (2), Act). A special resolution and a resolution without dissent can be made in general meeting or by voting other than at a general meeting (s 100(1) and (2), 105, 106 and 111, Act and s 15(c), 1997 Regulation[7]). Even if it was argued that a body corporate could grant a licence despite the regulation, it would seem any such decision would be a restricted issue for the committee (s 100(1) and (2), Act and s 15(a), 1997 Regulation[8]).

There is no evidence in the minutes of the 2006 AGM of an authorisation of the nature mentioned above being given or of the Body Corporate approving a grant of exclusive use. There is nothing in the minutes of the 2007 AGM about this issue. Further, there is no evidence of any decision by the Body Corporate by voting other than at a general meeting (s 111, Act, s 132, 1997 Regulation[9]). The Respondent has relied on the letter incorrectly dated 2 April 2006 (should be 2007) which refers to committee authorisation.

The letter refers to exclusive use. There is not an exclusive use by-law in the community management statement for the scheme in relation to the affected part of common property. There is nothing to suggest the owner of Lot 7 sought a grant of exclusive use (s 171(2)(a), Act). Despite my request, the Respondent did not provide a record of the application stated to be made to the Body Corporate. I do not accept Mr Singh’s claimed lack of knowledge or understanding of the law is a basis for excusing non-compliance with the legislation. I am satisfied Mr Singh was the chairperson of the committee of the Body Corporate at the time of the letter as he was elected chairperson at the 2006 AGM and he chaired the later 2007 AGM. As a member of the committee, Mr Singh had a right to be notified of matters to be determined by the committee (s 17 and 24, 1997 Regulation).

It would seem from the undisputed minutes of the March 2007 ‘informal meeting’ that legislative approval processes were discussed. These minutes indicate Mr Singh was on notice that the Body Corporate had to be involved in the approval process. For example, reference is made to ‘exclusive use’, ‘a vote without dissent’, ‘flying minute’ and ‘improvement’. It would seem further material was sought. There is nothing in the minutes which suggests any approval was given to construct the cold store room.

Given Mr Singh’s involvement with the administration of the Body Corporate at the time of the letter and the minutes of the March 2007 ‘informal meeting’, I believe there is a reasonable basis to question his apparent belief that the letter was properly authorised by the committee and that the statements in the letter constituted proper Body Corporate authority to construct the cold store room on common property. I do not agree that, in the circumstances, it can be held the Body Corporate gave approval.

In my view, the Respondent has possession of a part of common property without any right to that possession in the way prescribed by the legislation. The construction of the cold room constitutes an obstruction[10]. The Body Corporate is entitled in the circumstances to enforce By-Law 3 against the Respondent and seek outcomes of the nature sought. By-Law 6 applies to “pathways, drives and other common property”. Its bearing in the circumstances has not been disputed by the Respondent. Given my finding with respect to By-Law 3, I do not consider there is any reason to consider the significance of By-Law 6 further.

The Body Corporate has also sought to enforce By-Law 5(a) which states: “An owner or occupier of a lot must not, without the Body Corporate’s written approval mark, paint, drive nails, screws or other objects into, or otherwise damage or deface, a structure that forms part of the common property”. Further, By-Law 8 provides: “The owner of occupier of a lot must not, without the Body Corporate’s written approval, make a change to the exterior parts of the lot unless the change is minor and does not detract from the amenity of the lot and its surrounds”.

The Respondent has not argued these By-Laws do not apply in the circumstances. The committee is not prevented from giving approval under either By-Law. As I have indicated, I am not satisfied the Respondent has the necessary Body Corporate approval to the extent that either By-Law would apply to the work carried out to construct the cold store room.

By-Law 24 relates to the behaviour of invitees. By-Law 24(b) states: “The owner or occupier of a lot shall be liable to compensate the body corporate in respect of all damage to the common property or personal property vested in it caused by that owner or occupier or their invitees”. The relevance of this By-Law to the circumstances has not been specifically argued. The Body Corporate has not demonstrated that the Respondent is liable to it pursuant to the By-Law. It has sought an outcome that the Respondent indemnifies the Body Corporate for any loss or damage suffered as a result of the contravention. It has not however demonstrated the Respondent’s failure to obtain Body Corporate approval potentially makes it liable and there is increased exposure to liability. It has not specified the loss or damage or that a dispute exists which is determinable under the Act. The Respondent has an obligation under the order to repair any damage caused to common property and/or utility infrastructure as a result of the construction and removal of the room. I do not consider an order in the terms sought the Respondent indemnifies the Body Corporate is warranted.

Section 94(2) of the Act provides that the Body Corporate must act reasonably in anything it does under section 94(1) including making a decision for the subsection. Relevantly, there is nothing to suggest that by its actions, the Body Corporate acquiesced to the construction work[11]. In this regard, I consider it is significant there was a discussion about the matter at the March 2007 ‘informal meeting’; there is no minute or other record of a Body Corporate decision approving the construction; and the Respondent was notified of concerns shortly after the work was carried out.

I accept the initial correspondence was not sent by the Body Corporate. However, it is noted Bel Air Retail is a subsidiary scheme in a layered arrangement where Bel Air on Broadbeach is the principal scheme and the letter dated 29 June 2007 referred to the car park on Lot 902 (the plan of subdivision for Bel Air Retail cancelled Lot 902 on SP133675). It is not disputed that Mr Singh was present at a meeting on 9 July 2007 where this matter was discussed. The notifications should have put the Respondent on notice that there were concerns about work carried out on common property for Bel Air Retail. There is nothing to suggest the Respondent did not receive these notifications, that it had cause to disregard the notifications or that it acted in a particular way to satisfy the concerns. With respect to the Body Corporate, it is evident that the committee, at its September 2007 meeting (the first meeting held after construction of the room) raised the issue and that the matter was again dealt with at the subsequent December 2007 committee meeting.

In my view, the Body Corporate is not estopped from now requiring the removal of the cold store room. It is complying with its legislative functions and powers in enforcing the community management statement. In the circumstances, I am satisfied the Body Corporate has acted reasonably in doing so (s 94(2), Act). For these reasons, I have made an order consistent with the contravention notice and the authorisation at the 2009 AGM. The Body Corporate sought an order that the room be removed within 14 days. It initially required the Respondent to remove the room and to restore the common property to its original condition within 60 days of the contravention notice. In my view, it is appropriate that the Respondent have a similar timeframe to comply with this order.

---

[1] “improvement” defined schedule 6, Act, see also Body Corporate for The Phoenician community titles scheme 27745 v Herme Pty Limited BD2346/05, paragraphs 44 to 46.
[2] The current Commercial Module commenced on 30 August 2008.
[3] A decision applying the 1997 Regulation.
[4] s 117(2)(a)(i), Commercial Module.
[5] s 117(2)(a)(ii), Commercial Module.
[6] s 117(2)(b), Commercial Module.
[7] s 18(1)(c), Commercial Module.
[8] s 18(1)(a), Commercial Module.
[9] s 162, Commercial Module.
[10] The Phoenician, paragraphs 29 to 32.
[11] he Phoenician, paragraphs 56 and 57.