Conomos v Body Corporate for Anzac Square Arcade Community Title Scheme 27978

[2006] QDC 5

DISTRICT COURT OF QUEENSLAND

CITATION:

Conomos & Anor  v Body Corporate for Anzac Square Arcade Community Title Scheme 27978 [2006] QDC 005

PARTIES:

DIMITRI CONOMOS

and

PAUL GEORGES
Appellants
v
BODY CORPORATE FOR ANZAC SQUARE ARCADE COMMUNITY TITLE SCHEME 27978
Respondent

FILE NO/S:

BD3766/04

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane

DELIVERED ON:

30 January 2006

DELIVERED AT:

Brisbane

HEARING DATE:

25 August 2005

JUDGE:

Rackemann DCJ

ORDER:

The adjudicator’s orders are set aside and the matter referred back to the adjudicator through the commissioner, with a direction that the matter be re-determined in light of these reasons.

CATCHWORDS:

Section 289 Body Corporate and Community Management Act 1997 – consideration of by-laws – meaning of “coffee lounge” – “renovation and fit-out works” - failure to give adequate reasons

Body Corporate and Community Management Act 1997

Cases cited:

Cypressvale Pty Ltd v Retail Shop Lease Tribunal [1996] 2 Qd R 462
Hope v Bathurst City Council (1980) 29 ALR 577
Minister for Immigration and Ethnic Affairs vWU (1996) 185 CLR 259

COUNSEL:

W Cochrane for the appellants

P Hackett for the respondent

SOLICITORS:

Kenneally Miley for the appellants

Harkers for the respondent

Introduction

1. This appeal is brought, pursuant to s 289 of the Body Corporate and Community Management Act 1997 (BCCMA), from a decision of an adjudicator.

1. The appellants are the proprietors of “Buzz Café,” a food business operated from Lot 19 Anzac Square Arcade.  Under the relevant by-laws, it is described as a “coffee lounge.”  There is, within the Lot, seating for the patrons of that use.  There are other food businesses within Anzac Square Arcade, but none have their own seating.  Seating is available in the common areas.

1. The appellants purchased the business in early 2004 and soon began effecting certain changes, which prompted the dispute. The respondent contended that the appellants breached clause 18 of the by-laws (by undertaking works without written approval of the committee) and, clause 11, by materially altering the food use without approval.

1. On 8 September 2004, the adjudicator published reasons and made the following orders:

“I hereby order that the occupiers of Lot 19 shall, within 7 days of the date of this order, make a written application to the body corporate committee for approval of the fit-out/renovation works completed within Lot 19 in February/March 2004.

I further order that the occupiers of Lot 19 shall, within 30 days of the date of the committee’s decision on that application, comply with such conditions as the committee might impose in approving the works.

I further order that the occupiers of Lot 19 shall, within 7 days of the date of this order, make written application to the body corporate committee seeking approval for the present food use for Lot 19.

I further order that, in the event the committee does not approve the present food use, the occupiers of Lot 19 shall cease the sale of such food items as the committee does not approve within 24 hours of having been notified of the committee’s decision in that regard.”

The Grounds of Appeal

1. The appeal, to this Court, may only be on the basis of an error of law[1].  The notice of appeal set out a number of grounds.  Not all were pressed on the hearing.  In particular, the appellant did not press paragraph 3 of the notice of appeal.  The argument also ranged beyond the specific grounds set out in paragraphs 1 and 2.  It was contended that the adjudicator had not given adequate reasons.  Counsel for the respondent confirmed that no objection was taken to the Court considering the issues raised at the hearing, notwithstanding that they ranged beyond those specified in the notice of appeal.

   [1] See s 289(2)

By Law 18

1. By reason of by-law 18, if a member proposes to undertake any works, they must first be approved in writing by the committee. 

1. Clause 18.1 provides as follows:

“For the purposes of this by-law:

‘Works’ includes:

(a)  structural alterations;

(b)  renovation works

(c)  fit-out works; or

(d)  works associated with any services to the Lot.

It will also include any change to the external appearance of the Lot.”

1. The definition is inclusive.  Works are not limited to the matters described.  Further, works are not limited to works which would constitute structural alterations as described in subparagraph (a).

1. The changes effected by the appellants were variously described in the material before the adjudicator.  In a letter dated 23 February 2004 the solicitor for the appellants described the scope of works as comprising implementation of new signage (menu boards), upgraded existing bain-marie (to a counter-top model), the addition of a cold display for the sale of cakes and slices and coffee company rebranding. 

1. The respondent’s submissions stated as follows:

“The works that have been effected to Lot 19 for and on behalf of the respondent include:

(i)        Upgraded existing bain-marie to counter-top model, similar to that found in take-aways;

(ii)       Addition of new cold and hot bain-maries, such that there are now two (2) hot and two (2) cold bain-maries, for the purpose of displaying pre-prepared take-away foodstuffs;

(iii)      Replacement of the 10-litre electric deep fryer with two (2) heavy duty 20-litre gas-powered deep fryers (similar to those found in fish and chip shops;

(iv)       Addition of a large two-door supermarket/convenience store style fridge for the display for sale of cold pre-packaged beverages;

(v)        Addition of fifteen (15) large back-lit signs, each approximately 120cms x 100 similar to (but even larger than) those signs found in take-away franchises such as McDonalds, Hungry Jacks and other fast food venues;

(vi)       Other works, particulars of which shall be provided on request.”

1. The adjudicator dealt-with the alleged breach of clause 18 in the following passage:

“The occupiers of Lot 19 have undertaken a renovation and fit-out of Lot 19, and on the material before me it is evident that the works have not been approved by the committee.  I therefore propose to order that …

1. The reasons reveal a finding that the appellants had undertaken “works” for the purposes of clause 18 by reason of having undertaken a “renovation and fit-out.”  The words “renovation works” and “fit-out works” should be ascribed their ordinary meaning.  Whether the appellants carried out such works involves a fact-finding exercise.  The adjudicator’s conclusion may however, be said to involve an error of law where, for example, that conclusion was not reasonably open on the facts[2].

   [2]  See Hope v Bathurst City Council (1980) 29 ALR 577

1. There was argument as to whether it was reasonably open to the adjudicator to find that the appellants’ changes involved “fit-out works” or “renovation works.”  Counsel for the appellants focused, in particular, on changes to the equipment, while counsel for the respondent made particular reference to the menu boards.  The paucity of reasons however, makes it difficult to identify the scope of what was held to constitute “fit out works” or “renovation works” or the basis for so finding.

1. The adjudicator’s reasons baldly state that the occupiers of Lot 19 “have undertaken a renovation and fit-out.”  There is no discussion of the meaning which the adjudicator ascribed to those words, which of the changes were held to be “works” by reason of falling within one or other (or both) of those expressions or why.  The reasons leave uncertainty in relation to the content of the obligation to make written application for approval of the “fit-out/renovation works” in accordance with the adjudicator’s order.  The only specific matters referred to by the adjudicator were changes to the bain-marie, which were referred to later in the reasons, but in the course of considering by-law 11.

1. The adjudicator’s orders were required to be accompanied by a statement of reasons for the decision and an outline of the available appeal rights[3].  The reasons given must be adequate.  Adequacy of reasons refers to their sufficiency in content and form[4]. Failure to give adequate reason can rob a party of the opportunity to exercise the statutory right of appeal on the basis of properly formulated reasons for the decision.

   [3] s274 of the BCCM Act

   [4] Cypressvale Pty Ltd v Retail Shop Leases Tribunal [1996] 2 QdR 462 at 482

1. What is required for reasons to be adequate will vary in response to a number of factors including the role and qualifications of the decision-maker.  As was said in Cypressvale Pty Ltd v Retail Shop Lease Tribunal [1996] 2 Qd R 462 per McPherson and Davies JJA at 485:

“…The calibre, legal training and experience of members of the judiciary raise expectations that reasons they give for their decisions will attain a high level of sophistication.  The same would not always be true of decisions of persons whose primary qualification for decision-making consists of specialist knowledge or experience rather than ability to produce reasons conforming to accepted judicial tradition.  Reasons that would not be considered adequate if given by a Judge may nevertheless suffice for some other decision-makers not chosen for the task because of their resemblance to the judiciary.  In the end, the question of whether reasons are “adequate” falls to be considered in the context afforded by the nature of the question which has to be decided and other factors, including the functions, talents and attributes of the tribunal members or the individual in whom the duty of deciding questions of that kind has been vested …”

1. An adjudicator is not a judicial officer.  The function of an adjudicator is relatively informal.  Pursuant to s 269 of the BCCM Act, the adjudicator “must act quickly, and with as little formality and technicality, as is consistent with a fair and proper consideration of the application.”  Even making due allowance for those factors however, the reasons are inadequate.  The reasons should identify those matters which have been found to be in breach of the by-law, and ought also reveal the adjudicator’s understanding and application of the terms in the relevant definition to an extent sufficient to reveal the basis upon which they were found to be triggered.  The adjudicator’s reasons do not do so and involve error in failing to give adequate reasons. 

1. The orders with respect to the “fit-out/renovation works” will be set aside. I am not persuaded that it would be beyond the power of the adjudicator to properly form the conclusion that “works” or “fit-out works” had been carried out.  The expression is one of fairly wide ambit and, as defined, clearly extends beyond “structural alterations.”  In the circumstances, I will, pursuant to s 294(1)(c), refer the matter back to the adjudicator.

By Law 11

1. By-law 11 is concerned with the use of Lots and, in particular, with food uses.  A “food use” is defined to mean a use which is predominantly the retail sale of food. 

1. Pursuant to by-law 11.2, a member, other than a member in respect of an Existing Food Use Tenancy, may not conduct a food use from a Lot without the written approval of the committee.  The question, in this case, is whether the appellants’ food use has the status of an “Existing Food Use Tenancy.”  That expression is defined, in s 11.1 as follows:

““Existing Food Use Tenancy” means those Lots set out below in respect of those food uses set out opposite those Lots.  Where a food use is to be nominated by the original owner, the original owner may (but is not obliged to) nominate a food use within 12 months from the date of establishment of the scheme.  If the original owner nominates a food use within that period to the body corporate then that Lot is an ‘Existing Food Use Tenancy.’  To avoid any doubt, if a food use materially alters in respect of a Lot, that Lot is no longer an ‘Existing Food Use Tenancy’ and the member must obtain approval for that food use in accordance with clause 11.2.”

1. Clause 11.1 contains a table which sets out, by Lot number, various Lots and nominates a “use” in respect of each of them.  Some of the uses are described in very particular terms, including as to the food lines which may be offered.  The use for Lot 16, for example, refers to the “sale of fresh croissants, french style pastries including hot savoury and sweet style pastries, danishes, baguettes, pies, muffins, home-made soups and hot and cold beverages.”  In some cases particular food lines are expressly excluded.  The use specified for Lot 17, for example, expressly excludes “the sale of carvery type roasts.”  In some cases however, the use is more generally expressed.  In the case of the subject premises, the specified use is “coffee lounge” without any express inclusions or exclusions in relation to particular food lines.

1. The respondent’s complaint relates particularly to the sale of food lines prepared and presented for immediate take-away, rather than consumption on the premises.  The photographs of the appellants’ menu boards included a variety of such lines.  In a letter dated 12 February 2004, the body corporate acknowledged that a “hot box” had previously been used for the purpose of displaying and selling food, including “limited take-away,” to which no objection was taken, but contended that “any material change to the present situation (e.g. the change in food lines or increase in the size of the hot and cold food display cabinets for the sale of foods to be consumed off the premises) would require committee approval.”  The letter concluded that:

“Your clients are welcome to introduce any new food lines, within the context of “coffee lounge,” that they feel will improve their operation.  However, the sale of food lines that lay outside this context and are specified as usages in other “food use Lots” will not be tolerated.”

1. In finding that there had been a breach of the by-law, the adjudicator concluded that:

“I am therefore satisfied that the food use for Lot 19 has materially altered in that, although there are still food items traditionally associated with a coffee lounge on sale, there has been a significant increase in the availability for sale of take-away foods.”

1. Before coming to that conclusion, the adjudicator referred to the following:

• the upgrading of the existing bain-marie and the addition of new hot and cold bain-maries “for the purpose of displaying pre-prepared take-away foodstuffs”;

• a copy of the menu of the previous proprietor, which had been supplied by the respondent;

• the respondent’s contention that, following the appellants’ ‘fit-out’ there had been a material alteration to the “operation of the business” to include a significant component of take-away food;

• photographs, provided by the respondent, depicting a “large range of take-away foodstuffs available for sale” in the hot and cold bain-maries;

• a site visit, which the adjudicator conducted between 12.30pm and 1pm on 27 July 2004, when the photographs were observed to be accurate, in terms of the types of food available for purchase and the majority of customers were observed to take away their purchases;

• the body corporate’s letter of 12 February 2004;

• the adjudicator’s observation that the take-away foods on display replicated many of the items available in the carvery outlet;

• the respondent’s submission that the purpose of the by-laws regarding food use was to ensure that there was an equitable mix within the scheme.

1. The appellants contend that the adjudicator failed to properly interpret or apply the provision of by-law 11 concerning a “material” alteration.  It was contended, on their behalf, that there was no sufficient evidentiary foundation for the finding that there had been a significant change in the take-away food component.  It was submitted that the expression “coffee lounge” is broad, and would permit the sale of food lines sold by other tenancies, including a significant take-away component.  It was pointed out that the adjudicator’s reasons neither explained the meaning ascribed to a “coffee lounge” nor contained a finding that the appellants’ use did not meet that description.  It was submitted that the adjudicator instead focused upon an unexplained distinction between “take-away food” and “food items traditionally associated with a coffee lounge.”

1. The issue of relevance to by-law 11 was whether the appellants’ food use was in respect of an “Existing Food Use Tenancy.”  That issue required a determination of whether the food use carried out on Lot 19 by the appellants was other than a “coffee lounge”. In this context, the expression “coffee lounge” should be given its ordinary meaning.  The expression is apt to refer to a broad range of businesses offering a variety of food lines, including those which have a take-away component.  The reasons do not state what meaning the adjudicator ascribed to the expression “coffee lounge”.  It is possible that a meaning attributed to it in the body corporate’s letter of 12 February 2004 was influential, but that is not clear.

1. While the designation of different uses for different tenancies would achieve a degree of diversity in the food lines offered, it would be wrong to approach clause 11 on the basis that it required that there could be no overlap between the food lines offered by the coffee lounge and those offered by other tenancies, or that there is an implied prohibition on the coffee lounge selling food lines specified for other tenancies, so long as the food use did not become something other than a coffee lounge.

1. I note that, in their letter of 27 April 2004, the solicitors for the body corporate said that it would be not unreasonable for the proprietors to sell focaccias which, as it happens, is a specified food line for Lot 17.  There are also other specified food lines for other tenancies (for example, Lot 16) which, one would expect, might be offered by a coffee lounge. 

1. The adjudicator observed that the take-away food component offered at Lot 19 “replicated many of the items available in the carvery outlet.”  That observation, together with the body corporate’s submission in relation to ensuring an “equitable mix within the scheme” and its opposition to the “sale of food lines that lay outside this context and are specified uses in other food use Lots” would appear to have been influential. The adjudicator’s orders require the appellants to “cease the sale of such food items such as the committee does not approve” in the event that the food use is not approved. Save in the case of an express exclusion, by-law 11 does not however, prevent an element of replication in food lines per se even in respect of items specified for other uses.  The by-law is concerned with the conduct of a “Food Use”.  The extent of replication would only be of relevance to the extent that it bore upon whether the food use conducted from Lot 19 was other than for a coffee lounge.

1. The adjudicator’s decision appears to have been based on the “significant increase in the availability” of takeaway food.  As was pointed out for the appellants, there is no specification of impermissible take-away food lines or set proportion of take-away lines to other lines for the coffee lounge.  As a matter of common experience, there is a degree of variation among coffee lounges.  That does not mean however, that the proprietors are free to conduct whatever food business they like.  In the absence of written approval the food use, properly characterised, must not be other than a “coffee lounge.”  As counsel for the appellants conceded, it would be possible for the business to become so focused upon the sale of take-away food components that it could no longer, as a matter of fact and degree, be regarded as a coffee lounge rather than, say, a fast-food take-away.  Indeed, counsel for the respondent submitted that is what the adjudicator found.  The reasons do not however, go so far.

1. The reasons state that the adjudicator was satisfied that the food use had “materially altered”.  That draws upon that part of the definition of “existing food tenancy” which provides:

“To avoid any doubt, if a Food Use materially alters in respect of a Lot, that Lot is no longer an ‘Existing Food Use Tenancy’ and the member must obtain approval for that Food Use in accordance with clause 11.2.” 

1. The reasons do not reveal the adjudicator’s understanding of what is necessary for an alteration to be material for the purposes of that definition.  In context, that part of the definition is referring not simply to a change in the operation of the business, but rather a change whereby the food use is altered to something other than that specified.  The issue is not simply whether the current proprietors’ operation is different from the previous one in terms of foodlines or the way the food is displayed but whether, having regard to all the facts and circumstances, the appellants are conducting a food use other than that specified in respect of their Lot (a “coffee lounge”). 

1. It might be noted that this part of the definition is introduced by the words “to avoid any doubt.”  Its purpose is not to change the test from one which focuses on whether the food use being conducted is other than that nominated, but rather to make it clear that an Existing Food Use Tenancy will lose its status if it is materially altered from the specified use.

1. The reasons do not demonstrate that the adjudicator, in concluding that there has been a material alteration, addressed the question of whether the food use being conducted by the appellants has become something other than a coffee lounge, being the food use set out in the table for their lot.  While the reasons are not to be construed minutely and finely with an eye keenly attuned to the perception of error,[5] an examination of the reasons leads to the conclusion that the adjudicator has failed to ask the right question or has failed to give adequate reasons. 

   [5] Minister for Immigration and Ethnic Affairs v Wu (1996) 185 CLR 259 at 272

1. Reaching a conclusion in respect of the right question would involve matters of fact and degree, which are matters for the adjudicator.  I am not persuaded that, in properly addressing the right question, the adjudicator would be precluded from properly coming to a conclusion which is adverse to the appellants.  I propose to refer the matter back to the adjudicator.

Conclusion

1. I will set aside the adjudicator’s orders and refer the matter back to the adjudicator.

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