Shailer Park Central [2011] QBCCMCmr 14 (18 January 2011)

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

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Shailer Park Central [2011] QBCCMCmr 14 (18 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0862-2010

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

the body corporate

I hereby order that the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0862-2010

“Shailer Park Central” CTS 27011

Introduction

The owner of shop 12 in Shailer Park Central needed body corporate committee approval and local council approval in order for his shop to be lawfully used as a Noodle Box food outlet. The committee approved this proposed use in May 2010.

The current dispute is over what the committee actually approved. Noodle Box says the approval covered the entire proposed fitout including painting and signage. The committee says they approved the change of use for local council purposes and said they would support a lease for outdoor dining. However, the committee says Noodle Box should have applied separately for approval for any changes to the common property. Specifically, the committee says their approval did not allow Noodle Box to paint the external walls of shop 12.

This application raises questions about rights, powers, and the performance of duties under the Body Corporate and Community Management Act (Act) and the Act’s Commercial Module Regulation (Commercial Module). The main question in dispute is whether the committee approval covered Noodle Box’s proposed redecoration, including the painting of common property walls. In deciding this question the subjective intention of the parties will not be relevant. I will instead need to review the meaning and legal effect of the committee approval by reference to what a reasonable person would have understood the words of the approval to mean.

Overview

Shailer Park Central is a commercial shopping centre made up of twenty separately titled shops and some common property areas. Neil Cameron represents the company that owns shop 12 in Shailer Park Central. Early in 2010, Mr Cameron began negotiating with Noodle Box Franchising Aust Pty Ltd about Noodle Box leasing his shop for one of their food outlets.

On 7 April 2010, a representative of Noodle Box sent the design documents for the proposed store to the body corporate manager for Shailer Park Central. On 6 May some committee members met with Mr Cameron. On 10 May the committee resolved to approve the proposed Noodle Box tenancy subject to certain conditions.

Committee members say they only reviewed black and white photocopies of the Noodle Box design documents and did not notice the proposed painting of the external walls of the shop. They say they did not intend their approval to cover Noodle Box making improvements to the common property and that Noodle Box should have sought a separate approval to make these improvements. The body corporate has therefore sought an order that Noodle Box re-paint the exterior of shop 12 and remove the window screens.

The main question is whether the committee approval of 10 May should be construed as authorising Noodle Box to make these changes to the common property.

All owners have been given an opportunity to provide me with written submissions regarding this application. A number of owners have said they would prefer the exterior walls of the buildings be kept in a uniform colour although some other owners are happy with the changes made by Noodle Box. As a person with no personal interest in Shailer Park Central, I will decide the application after taking all relevant statements made by lot owners into account.

Analysis

What did the committee approval authorise?

Did the committee have power to approve the external screens and painting?

The committee for Shailer Park Central has the power to authorise improvements to the common property for the benefit of an owner’s shop (Act 100, Commercial Module 120). This means that Noodle Box would be acting lawfully in painting the exterior of shop 12 and screening external windows if the committee approval of 10 May is construed as allowing those improvements.

What circumstances surrounded the granting of the committee approval?

The main issue of dispute is the committee’s claim they only reviewed black and white photocopies of the Noodle Box design documents and were not asked to approve Noodle Box screening some of the external windows or painting the external walls of shop 12.

Having reviewed the submissions it seems reasonable to accept that:

• By email of 7 April 2010, Ray Caruana sent full colour copies of the Noodle Box design documentation to the body corporate manager for Shailer Park Central.
• At an onsite meeting on 6 May, committee members viewed a full colour version of the proposed Noodle Box floor plan but did not view in any detail the pages of the Noodle Box design documents that showed the proposed external colours and signage.
• On 10 May 2010 the committee voted to approve the proposed Noodle Box tenancy subject to certain conditions. The committee members reviewed black and white copies of the Noodle Box design documents before casting their votes.
  

Regarding the onsite meeting of 6 May, Mr Cameron’s submissions satisfy me that he took a full colour version of the Noodle Box design documents to the meeting. Whether or not the committee members present actually looked at those design documents is a matter of dispute. One owner, Mr Mulholland, says all committee members present looked at these drawings. However, the committee disputes this claim. While I am not satisfied any of the submissions are deliberately misleading, this meeting occurred a number of months ago and it would not be unusual for each person's recollection to be biased towards what they wanted to believe. It seems likely Mr Cameron did have full colour copies of the Noodle Box design at this meeting but that the committee members present mainly viewed the page showing the proposed floor plan. It seems likely that the separate pages of this documentation showing the planned alterations to the external appearance of shop 12 were not viewed in any detail. Certainly all submissions agree the discussions at this meeting focused on local council requirements and outdoor dining issues rather than the likely appearance of the shop.

Regarding the committee vote of 10 May 2010, the committee submission satisfies me that the body corporate manager had only supplied committee members with black and white copies of the Noodle Box design documents to allow these members to consider the request for approval.

The approval given by the committee on 10 May 2010 states:

That the body corporate approves the tenancy in Lot 12 of a Noodle Box takeaway outlet on the following conditions:

1. That the Logan City Council approves the tenancy and a material change of use for the lot, and
2. Any flues for kitchen ventilation are located on the rear section of the roof and remain the responsibility of the owner to maintain and clean, and
3. The Logan City Council confirms that any new connection from the lot to any existing grease traps is within their capacity and if not that a grease trap shall be installed in a location acceptable to the body corporate and at the expense of the owner or occupier, and
4. The current partial bin enclosure at the entrance from Belbora Road is modified at the expense of the owner or occupier to accommodate a bin for the use of the owner or occupier to accommodate a bin for the use of the occupier so that the bin is screened from the common property and that the bin is emptied and cleaned at intervals so as not to create a nuisance to occupiers or visitors, and
   

Also, that the body corporate will, at the owner’s expense, put a motion to a general meeting and recommend that owners approve a lease of the area of common property of approximately 70 sq m defined in the attached sketch plan for a term of five years at a rental of $70 per sq m + GST and on the following major conditions:

1. That the occupier hold liability insurance for the area, and
2. The area is limited to outdoor seating for 20 persons only, and
3. The occupier is responsible for the cleaning and maintenance of the lease area, and
4. The occupier shall comply with all fire regulations for the area.
   

What could the approval mean?

The committee approval expressly states that the proposed Noodle Box tenancy is approved. However, the wording of the approval is ambiguous. The approval does not specifically mention the painting, signage and screening of common property as shown in the design documentation. It might therefore be possible for different people to conclude that either:

1. The painting, signage and screening were not approved. The committee only approved the matters expressly mentioned and otherwise provided only ‘in principle’ approval to allow Logan City Council approvals to be sought.

OR

2. The painting, signage and screening were approved. The committee approved all things shown in the Noodle Box design documentation subject to Noodle Box meeting all of the listed conditions.
   

How should the approval be interpreted?

The legal principles relevant to interpreting the terms of the committee approval are similar to those of interpreting a commercial contract. The meaning or legal effect of the committee approval should be determined by what a reasonable person would have understood the words of the approval to mean. The High Court has said this normally requires consideration of the purpose of the transaction and the surrounding circumstances known to the parties.[1] However, the subjective intention of the parties is not relevant.

I am satisfied the overall purpose the committee considering and granting approval for the tenancy of a Noodle Box outlet was to identify any committee objections, if any, to a tenancy according to the Noodle Box design documentation. It is likely some committee members subjectively intended only to provide an ‘in principle’ approval to allow local council approval to be sought. If so, Noodle Box would have subsequently needed to obtain further approvals from the committee. However, Noodle Box had prepared detailed design documentation. This documentation had been provided to the body corporate manager on 7 April, was taken to the onsite meeting on 6 May, and photocopies of this documentation were made available to committee members when they were asked to vote on the resolution that was made on 10 May 2010. If the purpose of the 10 May 2010 resolution was to only provide ‘in principle’ approval for a restaurant or food outlet so local council approval could be obtained it would not have been necessary to prepare or consider any detailed design documents. Also, it would defeat the purpose of Noodle Box obtaining local council approval if the committee was subsequently going to refuse to approve aspects of the store design that were critical to Noodle Box actually entering into a tenancy for shop 12.

The express words of the approval granted by the committee also indicate the approval goes beyond an ‘in principle’ approval for local council purposes. The approval expressly requires modifications to the bin enclosure and limits the location of exhaust flues. Both of these issues relate to the ultimate design of the Noodle Box outlet and the effect it would be likely to have on common property. It is reasonable to infer that the committee unconditionally approved everything apparent in the design documentation apart from those things that the committee included express conditions about.

The proposed painting of the exterior of shop 12 may not have been readily apparent on black and white photocopies of the design documentation. However, the fact of the matter is that Noodle Box had supplied colour copies of the design documentation to the body corporate. A reasonable person would be able to rely upon the external painting being apparent in these colour copies and there is no evidence to indicate that Noodle Box was aware the body corporate manager had only distributed black and white photocopies to the voting committee members.

Further, it would have been obvious even from photocopies of the design documentation that Noodle Box would be substantially altering the external appearance of the shop, even just in terms of the proposed signage. All parties should have been aware of the need for committee approval for changes of this nature due to the by-laws and legislation applying to Shailer Park Central. If the committee had objections to the proposed changes to the appearance of shop 12 then the committee should have raised these concerns at the same time it raised concerns about grease traps, garbage disposal and exhaust flues. The design documentation provided by Noodle Box showed clearly that significant new signage would be erected.[2] At least in colour versions, it was also clear that the exterior of shop 12 would be repainted.[3] The floor plan in the black and white versions would equally have shown the notation stating that two windows would be enclosed to comply with health regulations.[4] Even if most committee members did not know that Noodle Box intended to paint the exterior of shop 12 because they only viewed black and white copies of the design documents, the approval given by the committee cannot properly be construed as limited to an approval of a change of use from ‘commercial services’ to ‘food outlet’. Rather, a reasonable person would read it as an approval of all improvements to the common property and all changes to the appearance of the shop as shown in the design documentation (albeit subject to the specific conditions listed in the approval).

Failure to strictly comply with the approved plan

Committee submissions satisfy me that the painting of the external walls was not exactly according to the original Noodle Box design documentation. It is also possible a different or additional window was screened, in addition to the two windows indicated in the Noodle Box design documentation. However, I am satisfied these variations in appearance are very minor in the context of the overall changes to the appearance of shop 12. These minor variations from the approved design do not justify the order sought by the body corporate requiring removal of all improvements to the common property. The order sought will therefore be refused. If the body corporate has any good reason for opposing these minor variations then the body corporate can require Noodle Box to change the appearance to comply with the drawing in the Noodle Box design documentation.

Other concerns

The committee have argued that the issue now is whether it is reasonable for the committee to refuse to approve the changes and require Noodle Box to restore the original colour of the walls. I have concluded that a reasonable person would have understood the words of the approval of 10 May 2010 to mean that the committee approved of all painting and other improvements as apparent in the design documentation, subject to the conditions of that approval. This would have included the painting of the external walls and screening of windows as shown in that documentation. However, if there is good reason for doing so, the committee could revoke the 10 May 2010 approval. The legislative restriction is that the committee must act reasonably (Act, 100(5)). As Noodle Box presumably entered into the lease in reliance upon the 10 May 2010 approval, it is unlikely to be reasonable for the body corporate to revoke this approval without also agreeing to compensate Noodle Box for costs or losses that are likely to result from the revocation of the approval.

The committee have also expressed concern that allowing Noodle Box to keep its colour scheme will mean the committee have no option but to approve applications from other shop tenants to make similar changes to the exterior of the building. This concern cannot change the legal effect of the approval given on 10 May 2010. It is also not strictly correct. If any other tenants apply to paint the outside of their shop then the committee must consider each situation upon its merits in all the relevant circumstances. The committee would not be properly performing its role if it automatically allowed the exterior of other shops to be painted simply because the exterior of shop 12 has already been painted according to the design approved for Noodle Box.

Conclusion

It is obvious some committee members did not notice the proposed painting of the exterior of lot 12. This was probably because they were only provided with black and white copies of the Noodle Box design documentation. However, for a person outside the scheme looking objectively at the approval, the approval of 10 May appears to authorise improvements to the common property. This is especially because the Noodle Box design documentation had been provided to the body corporate and the formal body corporate approval dealt with specific issues affecting common property including bin enclosures and the location of kitchen flues. Even with only black and white photocopies, committee members should have been aware that approval of the Noodle Box store would result in a significant change to the external appearance of shop 12.

Submissions from the committee indicate that the subjective intention of at least some of the committee members was to simply provide ‘in principle’ approval for a change of use for shop 12 from commercial services to a food outlet. I am satisfied these committee members would not have authorised Noodle Box to paint the exterior of shop 12 if they had turned their mind to that question at the onsite meeting of 6 May 2010 or as part of the ultimate vote effective from 10 May 2010. However, it is important to note that a subjective intention not properly communicated to the other party can not have any relevance to a determination of the legal effect of an approval.

The application seeking orders that would have required the walls of shop 12 to be restored to their original colour and appearance is therefore dismissed.

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[1] Toll (FGCT) Pty Ltd V Alphapharm Pty Ltd and Others [2004] HCA 52; (2004) 211 ALR 342 at paragraph 40. Codelfa Construction Pty Ltd V State Rail Authority of New South Wales [1982] HCA 24; (1982) 41 ALR 367.
[2] Drawing No: 0A, 26/3/10 and Drawing No: 0B, 26/3/10.
[3] Drawing No: 0A, 26/3/10 and Drawing No: 0B, 26/3/10.
[4] Drawing No: 01/10_049, 26/3/10.