The Rocks Resort CTS 9435 v Bell & Block Pty Ltd
[2012] QCATA 70
•4 May 2012
| CITATION: | The Rocks Resort CTS 9435 and Anor v Bell & Block Pty Ltd [2012] QCATA 070 |
| PARTIES: | The Rocks Resort CTS 9435 Deborah Kerr (Applicants) |
| v | |
| Bell & Block Pty Ltd (Respondent) |
| APPLICATION NUMBER: | APL219-11 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | 29 February 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Kenneth Barlow SC, Member Mrs Patricia Hanly, Member |
| DELIVERED ON: | 4 May 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Appeal allowed. 2. Orders numbers 1, 2, 3 and 4 made by the adjudicator on 11 May 2011 be set aside. 3. The tribunal declares that the owner of lot 5 is responsible for maintaining the grease trap which is connected to lot 5 in good order and condition, including for the regular costs of emptying, cleaning and maintaining the grease trap and necessary repairs from time to time. 4. The respondent, Bell & Block Pty Ltd, reimburse to the Body Corporate for The Rocks Resort CTS 9435, by 31 May 2012, the sum of $433.38 paid by the Body Corporate pursuant to the adjudicator’s order number 4. 5. Bell & Block Pty Ltd reimburse to the body corporate, by 31 May 2012, any other expenses incurred by the body corporate in complying with the adjudicator’s orders numbers 1, 2 and 3. 6. Orders 4 and 5 above are made without prejudice to any entitlement of Bell & Block Pty Ltd to recover those amounts from the owner of lot 5 should it be entitled to do so having regard to the terms of any arrangements between them concerning the occupation of lots 4 and 5. |
| CATCHWORDS: | Body Corporate and Community Management – utility infrastructure – whether owned by body corporate or owner of lot – whether body corporate, owner or occupier liable for costs of maintenance and repair Body Corporate and Community Management Act 1997, ss 20, 94 |
APPEARANCES and REPRESENTATION:
| APPLICANT: | Ray Crowe, Christine Kenword and Deborah Kerr |
| RESPONDENT: | Kevin Bell and Lyn Bell |
REASONS FOR DECISION
Kenneth Barlow SC
Introduction
Bell & Block Pty Ltd operates a restaurant and bar known as “The Point” at lots 4 and 5 in The Rocks Resort Community Titles Scheme. The bar and an office are in lot 4. The restaurant and kitchen are in lot 5. The two lots are joined by an opening in the dividing wall between them. Kitchen waste from the restaurant goes from an outlet in lot 5 to a grease trap on common property of the scheme in the basement below the restaurant. That grease trap is cleaned by an external service provider (currently Zappaway), at a cost of about $200 per quarter. The grease trap, which was installed in about 1982 or 1983, required relining and other repairs in 2010, at a cost of a little over $10,000.
The issue in this appeal, and before the adjudicator from whose decision the body corporate and Mrs Kerr are appealing, is whether Bell & Block or the owner of lots 4 and 5 on the one hand, or the body corporate on the other hand, is liable for the ongoing costs of servicing and the costs of repair of the grease trap. The adjudicator found that those costs are the responsibility of the body corporate and made orders to the effect that it undertake the necessary maintenance and repairs and that it was responsible for all repairs and maintenance, past and future.
The appellants are the body corporate and a member of its committee (although Mrs Kerr does not seem to have any separate interest in the appeal, and was really only supporting the body corporate). The appeal is brought pursuant to s 289 of the Body Corporate and Community Management Act1997. Therefore, it may only be brought on a question of law. The questions that appear to be raised by the notice of appeal are:
a)whether the adjudicator’s orders rest on an unproved assumption, which was contrary to the evidence, that the grease trap is owned by the body corporate rather than by the owner of lots 4 and 5;
b)whether, under s 157 of the BCCM Accommodation Module Regulation, the owner of the lot is responsible for maintaining the grease trap, on the basis that it is utility infrastructure situated on common property that relates only to supplying utility services to the owner’s lot and is a device providing a utility service to a lot;
c)whether the adjudicator erred in finding and taking into account that, although the only current user of the grease trap is Bell & Block, the body corporate or another lot may wish to connect to it in the future and therefore the body corporate must maintain it.
For completeness, I should say that other issues were also before the adjudicator, about which she made orders, but those orders and issues are not subjects of this appeal.
Issue 1 – ownership of grease trap
The body corporate complains that the adjudicator was wrong in stating that utility infrastructure, such as a grease trap, is common property and therefore the responsibility of the body corporate except in certain circumstances. Effectively, the adjudicator held (and the body corporate disputes) that the body corporate is the owner of the grease trap.
The body corporate points to a plan of water supply and sewerage services dated 22 January 1982 that was before the adjudicator, which shows the grease trap and the line to it from what is described in the plan as a commercial kitchen. (It is common ground that the kitchen referred to is in lot 5.) It contends that the plan demonstrates that the grease trap was installed after the construction of the resort. In submissions before the Tribunal, the body corporate and Mrs Kerr assert that lots 4 and 5 were originally accommodation units which were purchased by one owner and amalgamated to create the restaurant and bar, and at that stage the grease trap was installed. They therefore contend that the adjudicator’s statement that the grease trap was common property is contrary to the evidence.
I do not accept that contention. There was no evidence before the adjudicator as to when the resort was actually constructed, but the plan upon which the body corporate and Mrs Kerr rely is, on its face, a plan for part of a project that is referred to as “proposed 120 home units”. In the absence of clear evidence (indeed any evidence) as to when the resort was constructed, and when the kitchen and the grease trap were installed, the plan indicates that it was created before the construction of the resort and that the grease trap was therefore installed as part of that construction.
Bell & Block contends, in its submissions in the appeal, that the grease trap became common property on creation of the body corporate in 1983-1984, having been installed during the construction of the buildings in 1982-1983. However, evidence to that effect does not appear to have been before the adjudicator. Bell & Block attached to its submissions a data CD containing original plans for The Rocks Resort from which it sought to make assertions of fact. However, this appeal is an appeal in the strict sense on a question of law only and therefore must be determined upon the basis of the evidence that was before the adjudicator. At the hearing of the appeal, the appellants objected to any new evidence and Bell & Block appeared to accept that new evidence could not be relied upon. I have disregarded it in my consideration of the issues.
Section 20 of the Act provides that common property for a community titles scheme includes all utility infrastructure forming part of scheme land other than certain specific exceptions. One exception is utility infrastructure solely related to supplying utility services to a lot that is within the boundaries of the lot. That exception does not apply, as the grease trap is not within the boundaries of lot 5, but is in common property in the basement below lot 5.
Another exception is utility infrastructure positioned within common property if its positioning is the subject of an agreement to which the original owner or the body corporate is a party and, under the agreement, ownership of the utility infrastructure does not pass to the original owner or body corporate. There was no evidence of such an agreement and therefore that exception does not apply either.
In the circumstances, s 20(1) determines the ownership of the grease trap. It does not fall within any of the exceptions to that subsection and therefore it is common property.
Under s 94(1)(a) of the Act, the body corporate must administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme. Furthermore, under s 157(1) of the Accommodation Module, the body corporate must maintain common property in good condition. That obligation is subject to exceptions set out in subsection (3), one of which is the subject of the second issue in this appeal.
The adjudicator was therefore right in stating that utility infrastructure, such as a grease trap (and this particular grease trap), is common property and therefore the responsibility of the body corporate except in certain circumstances.
Issue 2: Is the owner responsible for maintaining the grease trap?
The body corporate and Mrs Kerr contend that the owner of lot 5 is responsible for maintaining the grease trap in good order and condition pursuant to subsection 157(3)(b) of the Accommodation Module. That paragraph relevantly provides that:
“The owner of the lot is responsible for maintaining utility infrastructure, including utility infrastructure situated on common property, in good order and condition, to the extent that the utility infrastructure –
(i)relates only to supplying utility services to the owner’s lot; and
(ii) is 1 of the following types - …
· another device providing a utility service to a lot …
examples for paragraph (b) –
1.an air-conditioning plant is installed on the common property, but relates only to supplying utility services to a particular lot. The owner of the lot would be responsible for maintaining the air-conditioning equipment.”
The body corporate and Mrs Kerr contend that the grease trap relates only to supplying utility services to lot 5 and is a device that provides a utility service to that lot and therefore the owner of lot 5 is responsible for maintaining it. It is then between the owner and Bell & Block, according to the lease between them (to which the appellants are not privy), as to whether the owner or Bell & Block must pay for the costs of maintaining the grease trap in good order and condition.
The use of the definite article in the phrase “owner of the lot” in the paragraph is puzzling. It tends to indicate that it refers only to the owner of a lot referred to earlier in the subsection, namely in paragraph (a). However, each of paragraphs (a), (b) and (c) of s 157(3) refers to a completely different factual situation. Notwithstanding that the paragraphs are separated by the conjunction “and”, I consider that each paragraph should be treated as an independent exception to the general rule stated in subsection (1), rather than the three paragraphs comprising a set of cumulative requirements. Therefore, if the grease trap in this case falls within the description in paragraph (b), then its maintenance in good order and condition is the responsibility of the owner of lot 5.
The words “to the extent that” are also puzzling. They suggest the possibility of some type of proportionate responsibility between the owner of a lot and the body corporate. However, that suggestion is negated by the requirement that the utility infrastructure must “relate only to supplying utility service to the owner’s lot.” It seems to me that the phrase “to the extent that” is simply a cumbersome way of saying “if”.
There was evidence before the adjudicator that, for some time (Bell & Block contends at least 9 years before 15 September 2009), a pipe was installed by which a sink situated in a cleaner’s room on common property could be drained into the grease trap. Bell & Block therefore contends that the grease trap does not relate only to supplying utility services to lot 5, but is available for use (and has been used) by the body corporate, and indeed it is available for use by other lots, subject to the consent of the body corporate and appropriate plumbing.
The body corporate and Mrs Kerr contend that they were entirely unaware of the existence of the pipe from the cleaner’s sink to the grease trap until it was pointed out to them after Bell & Block had commenced its adjudication application. Upon becoming aware of the pipe, they took steps to have it disconnected from the grease trap and they contend that there is no evidence that the connection was ever authorised by the body corporate. There was a suggestion before the adjudicator that it had been connected at a time when the owner or occupier of lots 4 and 5, and the person who conducted the restaurant, was the resident caretaking manager. The sink and the room in which it is installed have always been under the day to day control of the body corporate manager.
The evidence before the adjudicator was that, until early 2010, the body corporate had been paying for the cleaning and pumping out of the grease trap. Those services have always been provided by an external company, such as Zappaway. Invoices for the services have been sent to the manager and paid by the body corporate without question. This dispute arose when the body corporate, under a new committee, decided that the costs of cleaning the grease trap were not properly a body corporate expense, but ought be charged to and paid by the owner or occupier of lot 5.
The adjudicator said that she was not satisfied that the body corporate as an entity, rather than individual current committee members, did not have knowledge of the existence of the pipe and the use made of it, whether or not it was authorised by any formal process. She noted that it was a common property cleaning room, running a pipe to common property infrastructure which at the time was maintained by the body corporate. She therefore found that, until the disconnection by the body corporate of the pipe from the cleaner’s room to the grease trap in about January 2011, the grease trap was a shared facility and did not relate only to supplying utility services to lot 5.
Bell & Block contends that the disconnection of the pipe from the cleaner’s sink to the grease trap is a contrived attempt to manipulate matters to the advantage of the body corporate and can have no relevance in interpreting the obligations of the parties.
The question which it was necessary for the adjudicator to determine was whether the grease trap “relates only to supplying utility services to the owner’s lot and is a device providing a utility service to a lot”. That question must be determined at the time at which the decision was made, having regard to the facts concerning the purpose of the relevant utility infrastructure and its use.
The plan that was before the adjudicator demonstrates that the grease trap was specifically installed for the purposes of the commercial kitchen to be operated in lot 5. When installed, therefore, the grease trap related only to supplying utility services to lot 5. (It is not disputed that a grease trap is utility infrastructure used for the purpose of supplying utility services.)
The evidence was also that, for a substantial period of time, the grease trap was used, to some extent, for drainage from the cleaner’s sink. However, there was no evidence that the connection from the sink to the grease trap was ever authorised by the body corporate, or was installed properly in accordance with the legal requirements for proper plumbing.
In my opinion, the adjudicator was wrong in considering that the connection of the cleaner’s sink to the grease trap altered the characterisation of the grease trap as relating only to the supply of utility services to lot 5. That was the purpose for which it was installed and to which it related.
In any event, no matter what may have been the position in the past (while the pipe was connected to the grease trap), now that that pipe has been disconnected and the body corporate disclaims any intention to use the trap, or to permit its use by anyone other than the occupier of lot 5, the grease trap relates only to, and is used only for, the supply of utility services to lot 5.
In these circumstances, I respectfully consider that the adjudicator erred in her conclusion that s 157(3)(b) does not apply to the circumstances of this case.
Issue 3: Are future possible events relevant?
The adjudicator also considered that other lots, or other parts of the common property, may make use of the grease trap as the body corporate requires or permits in future and that the fact that they do not currently do so is not material. In my respectful opinion, she erred in that conclusion too. What may happen in the future may amount to a change of circumstances which would alter the obligation of the owner of lot 5. That does not affect the situation that presently exists. If the body corporate were to authorise itself or another lot to connect to and use the grease trap, then it would no longer be utility infrastructure that related only to, and was used only for, the supply of utility services to lot 5. But speculation about possible future events is irrelevant to the determination of the present situation.
Additional submission
In the course of this appeal, Mrs Kerr submitted that the adjudicator also erred in failing to consider s 167 of the Accommodation Module. She maintained that, having found that the grease trap formed part of the utility infrastructure of the scheme, the adjudicator should have identified that the body corporate was providing a utility service for the benefit of the occupier of lot 5 under s 167(1) of the Module, for which it was entitled (and indeed obliged) to charge the occupier.
That submission appears to me to have raised a new question of law that was not the subject of submissions to the adjudicator. Not having been the subject of the submissions, the adjudicator cannot have made an error in not taking it into account. Therefore, in this respect there was no error which can or ought be corrected by this tribunal.
But in any event I consider the submission to be misconceived. The utility service being supplied, namely that of collecting waste, is in fact being supplied by Zappaway. It is not the body corporate’s concern or obligation to provide that service, nor does it do so. That is a service which it may provide, under s 167, in which case it may enter into an agreement under that section. If it does not provide the service, then the owner or occupier (according to their own agreement between them) may need to obtain the service themselves from someone like Zappaway. Certainly, it is not an obligation of the body corporate to supply that service.
Conclusion and orders
In my opinion, therefore, the owner of lot 5 is responsible for maintaining the grease trap in good order and condition. That includes the costs of emptying and cleaning it from time to time, which are necessary in order to maintain it in good order and condition. The owner is also responsible for the necessary repairs, including the recent relining.
Whether, as between the owner and the occupier, Bell & Block, the owner or Bell & Block must incur the costs of maintaining the grease trap in good order and condition is a private matter between them which is likely to depend upon the terms of the lease. I am not privy to those terms and in any event that question is not one which is before (or which would be within the jurisdiction of) the Tribunal.
In its response to the notice of appeal, Bell & Block has said that the commercial lease between it and the owner of lots 4 and 5 contractually requires the lessee (Bell & Block) to pay all outgoings. I understand the submission to mean that, if it is the owner’s responsibility under the Accommodation Module to maintain the grease trap in good order, then the owner is entitled under the lease to pass on those costs to (and to have them paid by) Bell & Block as the lessee. That submission, and the fact that the owner is not a party to the appeal, are relevant to the orders which should be made by this Tribunal about reimbursement to the body corporate of expenses incurred by it in complying with the adjudicator’s orders.
The adjudicator ordered that the body corporate effect the necessary repairs to the grease trap within 2 months of the date of her order, that it reimburse Bell & Block the sum of $433.38 in respect of servicing charges recently paid by them to Zappaway, and that it was responsible for all repairs and maintenance of the grease trap, past and future.
I understand that the body corporate has since caused the repairs to be undertaken. Presumably it has also reimbursed Bell & Block and been paying the quarterly Zappaway fees since the order was made.
Having regard to my conclusions as to the responsibility for maintaining the utility infrastructure, the expenses that have been incurred by the body corporate pursuant to the orders must be reimbursed to it.
In an appeal from the decision of an adjudicator, this Tribunal may exercise all the jurisdiction and powers of an adjudicator under the Act: s 294(1). Under s 276(1) of the Act, an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute.
I do not consider that it would be just and equitable to order that the body corporate be reimbursed for maintenance expenses which it paid without question before its recent change of heart. The appropriate orders should concern only those amounts the subject of the adjudicator’s orders, and future costs of maintenance of the grease trap.
In the circumstances, although the owner is not a party to the proceeding, I consider it appropriate for the Tribunal to make a declaration as to the person responsible for the maintenance of the grease trap and consequential orders for the reimbursement of the body corporate for the expenses which it has recently incurred pursuant to the adjudicator’s orders. I make it clear, however, that I am not expressing any opinion as to whether the owner or Bell & Block is liable, as between themselves, for these expenses.
I consider that the orders which the Tribunal should make on this appeal are:
1. Appeal allowed.
2.Orders numbers 1, 2, 3 and 4 made by the adjudicator on 11 May 2011 be set aside.
3.The tribunal declares that the owner of lot 5 is responsible for maintaining the grease trap which is connected to lot 5 in good order and condition, including for the regular costs of emptying, cleaning and maintaining the grease trap and necessary repairs from time to time.
4.The respondent, Bell & Block Pty Ltd, by 31 May 2012, reimburse to the Body Corporate for The Rocks Resort CTS 9435, the sum of $433.38 paid by the Body Corporate pursuant to the adjudicator’s order number 4.
5.Bell & Block Pty Ltd reimburse to the body corporate, by 31 May 2012, any other expenses incurred by the body corporate in complying with the adjudicator’s orders numbers 1, 2 and 3.
6.Orders 4 and 5 above are made without prejudice to any entitlement of Bell & Block Pty Ltd to recover those amounts from the owner of lot 5 should it be entitled to do so having regard to the terms of any arrangements between them concerning the occupation of lots 4 and 5.
Patricia Hanly
I have had the advantage of reading in draft the reasons of Mr Barlow SC and the orders proposed by him. I agree with those orders and his reasons.
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