Body Corporate and Community Management (Standard Module) Regulation 2020 (Standard Module)

COMMITTEE MOTION - whether two committee members had a conflict of interest - whether those committee members were entitled to vote on a motion resolved via vote outside of committee meeting.

MAINTENANCE - whether works to convert a planter box that forms part of a lot into a bench seat has an improvement to a lot or has a sufficient nexus to the body corporate's maintenance responsibilities in a building format plan subdivision.

1. The resolution of the committee, conducted via a vote outside of committee meeting dated 9 October 2024 and titled 'Planter Box & Dividing Fence Rectification', was at all times void.

• [1] This application is brought by the owner of Lot 5 against the body corporate, lodged on their behalf by their representative who is on the committee, and follows interim orders being granted in Oak Lodge Apartments [2024] QBCCMCmr 388.
• [2] The applicant seeks final orders voiding a decision of the committee to carry out works to convert a planter box into a bench seat. The works, which were restrained by the interim order, include placing a lid on the planter box, adding screeding to the bottom of the planter box, installing a plastic security barrier to the balcony balustrade to reduce fall risks, and replacing a dividing fence the body corporate previously removed to undertake waterproofing works.
• [3] The applicant alleges the planter box is not common property, and none of the proposed works are a body corporate responsibility. Further, the applicant asserts that two of the deciding votes on the motion were made by committee members who had a conflict of interest in the matter because the planter box is between their lots.
• [4] Those opposing the application believe the works are necessary to stop water pooling on top of the waterproofing membrane, and that use of the planter box has caused water ingress and contributed to subsidence issues.
• [5] I have made the order sought as I am satisfied two committee members (the owners of Lot 3 and Lot 4) who voted in favour of the motion had a conflict of interest, resulting in them not being entitled to vote. As they were not entitled to vote, the motion could not have resolved as a majority of those entitled to vote did not agree to it.
• [6] To assist the parties moving forward, I have made commentary that the screeding works appear to be within the bounds of the body corporate's maintenance responsibilities. The material appears to show a sufficient nexus between maintenance of the membrane and ensuring adequate fall to the drain. However, turning the planter box into a bench seat does not appear to be within the bounds of the body corporate's maintenance responsibilities, based on the material currently submitted. These are comments made only on the information in front of me and are subject to any further information or expert opinion .

• [7] The community management statement (CMS) shows the Standard Module applies to this scheme.
• [8] The scheme is a building format plan (BFP) subdivision of 20 lots and common property in Surfers Paradise. The building is 7 levels, with the ground level being mostly common property car parks and garages. Some of those garages are in a separate building to the main building. The CMS shows that exclusive use has been granted over the parking spaces.
• [9] Residential lots start on the first floor. The survey plans show balconies form part of the lots. The area subject of dispute is on the first floor and concerns part of the balconies of Lots 3 and 4. Those balconies form the roofing structure for the common property car park below. A brick planter box runs along the boundary of Lot 3 and Lot 4's balcony.

• [10] The applicant, the body corporate and the relevant owners all held the view that the lot boundary between Lot 3 and Lot 4 ran through the middle of the planter box. There had been a colourbond-style fence installed down the middle of the planter box. When reviewing the survey plans for the scheme and photographs provided in submissions, I found that the boundary separating Lots 3 and 4 does not correlate with the placement of the fence through the middle of the planter box.
• [11] I came to this conclusion because in a BFP subdivision, the survey uses structural elements of a building to define land. Examples of structural elements are floors, walls, and ceilings.[1] Section 49C of the Land Title Act 1994 provides that the boundary of a lot created under a BFP subdivision must be located at the centre of the floor, wall or ceiling separating the lot from another lot or common property. Generally, the boundary runs through the middle of a brick or concrete structure.[2] It was therefore unlikely the boundary between Lot 3 and Lot 4 runs through the middle of the planter box, as it would not be coinciding with a structural element of the building.
• [12] Upon reviewing the survey plans and photos, I find that the boundary is more likely to run through the middle of the brick that forms the parapet-style wall of the planter box on the southern side. In other words, most of the planter box is within Lot 3.
• [13] I put the parties and the owners of Lots 3 and 4 on notice of that view and gave them the opportunity to respond if they did not agree. No objections were received, and the owners of Lot 3 and Lot 4 indicated they agree with my assessment of the boundary.

• [14] Submissions indicate that the planter box was not originally waterproofed. The body corporate says that, due to water ingress issues impacting Lot 4, it waterproofed the planter box in February 2024.
• [15] Whether a body corporate, in a BFP subdivision, is responsible for installing a waterproofing membrane where there was not one previously is complicated and highly dependent on the unique circumstances of each case. Whether the body corporate rightly or wrongly installed the membrane goes beyond the scope of the current application.

• [16] On 9 October 2024, the committee made the following resolution via a vote outside of committee meeting (Disputed Decision):

RESOLVED THAT the Body Corporate agree to approve the following two quotations to rectifying the issue with the planter box between Lot 103 and Lot 104 balconies:

• Calltek: $2,450.00 plus GST
• Scope: 'Lay epoxy screed to the base of the planter box to allow water to fall to the floor waste to avoid continuous ponding water'
• Peter, Handyman: $2,050.00
• Scope: Widen the bench seat by 300mm and reinstall to enable a Colorbond privacy screen to be built on top. At the end, install a 6mm clear plastic safety barrier.

• [17] The motion essentially proposed that the body corporate:
  1. Apply screed over the waterproofing membrane to have water fall to the drain that sits a few inches higher than the bottom of the planter box.
  2. Turn the planter box into a bench seat by placing a cover over the top of the planter box to stop water entering it.
  3. Replace the dividing fence that the body corporate removed to undertake the waterproofing works in 2024.
  4. Install a plastic safety barrier along and above the balcony railing, as the planter box would then become a climbable object and the balcony railing is too low.
• [18] The motion resolved with 4 votes in favour and 2 against.

• [19] The application has been lodged on behalf of the applicant by a person who represents the applicant on the body corporate's committee.
• [20] The applicant seeks final orders that the Disputed Decision be deemed void. The applicant argues this for two reasons:
  1. Two of the committee members who voted on the motion should not have done so, as they had a conflict of interest.
  2. The works are unnecessary and are an improvement to a lot which is not a body corporate responsibility under the legislation.

• [21] The applicant also sought interim orders that the body corporate not act on the Disputed Decision until the matter has been finally determined. I granted the sought interim relief in Oak Lodge Apartments [2024] QBCCMCmr 388.

• [22] Submissions opposing the application were received from the body corporate and the owner of Lot 4.
• [23] The submissions indicate a breakdown of relationship between the applicant's representative and some members of the committee. There were grievances raised, including issues relating to other waterproofing works taking place at the scheme. It is not necessary for me to detail these matters - they are irrelevant to the current application, where I am only considering if the Disputed Decision should be declared void.
• [24] Both the body corporate and owner of Lot 4 had similar submissions. Arguments raised in opposition are that:
  1. The owners of Lot 3 and Lot 4 do not have a conflict of interest where:
     1. The owner of Lot 4 would prefer the planter box to house plants, but there was a request to not use it as a planter box due to suspicion it contributed to subsidence at the scheme. The owner of Lot 4 says they voted in the best interests of the body corporate.
     2. The owner of Lot 3 is indifferent to the use of the area.
  2. The dividing fence atop the planter box was in good condition but was removed and damaged by the body corporate when it undertook waterproofing works to the planter box in 2024. The body corporate should therefore replace it.
  3. Use of the planter box is suspected of causing subsidence issues, so it is best if it is no longer able to be used as a planter box.
  4. The applicant's representative has misunderstood verbal advice from the contractor, and works are required whether or not the planter box is used to house plants.
  5. Ensuring adequate fall to the drain forms part of the effectiveness of a waterproofing membrane.
  6. The height of the balustrade does not meet current safety standards, and the installation of the safety barrier will address this.

• [25] First, I will consider whether the Disputed Decision was impacted by members who held a conflict of interest in circumstances where those members advise they remained impartial and voted in the best interests of the body corporate.
• [26] Next, I will consider whether the works form part of the body corporate's maintenance responsibilities and make comments that may assist the parties moving forward with this matter.

• [27] Section 69(2)(a) of the Standard Module provides that, when voting on a motion given outside of a committee meeting, the motion is decided if the majority of committee members entitled to vote on the motion agree to the motion. It was on this basis that the Disputed Decision passed, with 4 of 6 committee members voting in favour of the motion.
• [28] The applicant argues that 2 of the 4 committee members that voted in favour of the motion were not entitled to vote due to a conflict of interest. If I accept the applicant's argument, this will mean only 4 of the 6 committee members were entitled to vote. It then follows that a majority was not reached as only 2 members voted in favour of the motion and 3 of 4 would be needed for a majority.
• [29] In relation to conflicts of interest, section 66 of the Standard Module provides that:

(1) A member of the committee must disclose to a meeting of the committee the member's direct or indirect interest in an issue being considered, or about to be considered, by the committee if the interest could conflict with the appropriate performance of the member's duties about the consideration of the issue. > > (2) If a member required under subsection (1) to disclose an interest in an issue is a voting member, the member is not entitled to vote on a motion involving the issue.

• [30] Section 70 of the Standard Module confirms that section 66 applies to a vote outside of committee meeting.
• [31] The owner of Lot 4 submits that they do not have a conflict of interest in the matter and their vote was based on the best interests of the body corporate. While I accept that the owner of Lot 4 intended to use their best judgement and act in good faith, this does not mean that section 66 did not apply.
• [32] Section 66 says that the conflict is disclosable if it could conflict with the member's duties. It does not say that it is only disclosable if it will have any sway on the member's vote. It follows that the conflict is disclosable despite the member's good intentions.
• [33] Case law that discusses the conflict of interests in the equitable, corporate context can provide some guidance in interpreting and applying section 66 in the body corporate context.[3] The above interpretation is aligned with conflict of interest in equity where it is applied strictly. Intentions and honesty are irrelevant as the intent of the equitable principle is to discourage all possible breaches, not just where outcomes do not favour the group the duty is owed to.[5] The classic statement of the principle comes from Aberdeen Railway Co v Blaikie Bros: [6]

... it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those with whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of a contract so entered into.

• [34] The question then becomes whether a conflict could exist in the circumstances. Comments from Lord Upjohn in Boardman v Phipps[7] provide guidance on the test to be applied, and was cited in the High Court decision of Chan v Zacharia:[8]

The phrase 'possibly may conflict' requires consideration. In my view it means the reasonable man looking at the relevant facts and circumstances of the particular case would think that there is a real sensible possibility of conflict; not that you could imagine some situation which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict.

• [35] The Disputed Decision proposed changes that would have a material impact (arguably a benefit) to Lot 3 and Lot 4, where both lots were to have access to a bench seat, funded by the body corporate. In the current circumstances, I find the possibility of a conflict is obvious - a reasonable person would consider there is a real possibility that the member could be swayed[9] by their interest in their lot.
• [36] I note that despite the bench seat being located within Lot 3, the Disputed Decision would still have given a benefit to Lot 4. The design was based on the incorrect understanding of lot boundaries and would have seen Lot 4 have access to the seat.
• [37] I am satisfied the owners of Lot 3 and Lot 4 were not entitled to vote on the Disputed Decision due to their conflict of interest. It follows that the Disputed Decision could not have passed where it did not reach majority of those entitled to vote.
• [38] In their submissions, the owner of Lot 4 questions whether conflict of interest provisions exist where the body corporate manager advised it was beyond their role to decide if there was a conflict. The answer is: Yes, and it applies to committee members regardless of the member's good faith and honest intentions to vote in the best interest of the body corporate. It is something the committee member has an obligation to consider and declare, and there is no obligation on others to make the declaration for the member. However, it only applies when the member is acting in their role as a committee member and voting at a committee level - there are no such provisions relating to a lot owner voting at a general meeting.

• [39] While I am already satisfied that the Disputed Decision is void, I will make comment on the other arguments raised by the applicant to help guide the parties moving forward.
• [40] As the body corporate is a creature of statute, the body corporate's powers and functions are generally limited to what is set out in the Act and regulation modules. The legislation does not provide for the body corporate to make improvements to lots. Unless the works can be considered a maintenance obligation that the body corporate is responsible for under the legislation, the Disputed Decision could also be invalid for being outside of the body corporate's functions.
• [41] Maintenance obligations in a BFP subdivision, particularly when it comes to waterproofing or water ingress issues, are complex and highly dependent on the unique circumstances of each case.
• [42] Generally, a lot owner has an obligation to keep their lot in good condition,[10] and the body corporate has an obligation to keep the common property in good condition.[11] There are however exceptions to both rules. There are two exceptions that commonly become relevant in disputes about water ingress and balcony maintenance:
  1. The first is that the body corporate will be responsible for the maintenance of a roofing membrane providing protection to lots or common property, whether or not that membrane forms part of a lot.[12]
  2. The second is that the body corporate must maintain foundations structures, roofing structures providing protection, and essential supporting framework in a structurally sound condition.[13] This means if the work is shown to be necessary to maintain the structural soundness of a roofing structure, then the body corporate can be responsible for the works, even if the area is part of a lot and not common property.
• [43] I will consider whether each aspect of the Disputed Decision's scope of works is the body corporate's maintenance responsibility under the legislation, based on the material provided. Importantly, if further evidence or expert opinion is obtained, this can change the outcome of who may be responsible for works.

• [44] As the body corporate has installed a waterproofing membrane within the planter box which provides protection to common property car parks below, the body corporate has a responsibility to maintain the waterproofing membrane in good condition.
• [45] The works that are being proposed are not strictly membrane works. The issue is that the drainage pipe for the planter box sits a few inches above the bottom of the planter box, allowing water to pool on top of the membrane as it cannot escape. The Disputed Decision would see screed placed on top of the membrane, raising the bottom of the planter box with a fall towards the drain, allowing the water to escape.
• [46] The applicant argues the screeding works (and other works) are unnecessary and say that if the planter box was used as a garden bed there would be no issue with the drainage. The applicants say that the works are an improvement to a lot.
• [47] The Lot 4 owner claims they and the owners of Lot 3 were asked by the body corporate to not use the planter box as it was believed it was contributing to subsidence issues at the scheme.
• [48] Ultimately, the onus is on the applicant to satisfy me that they are entitled to the relief they are seeking. The only evidence the applicant provides to support the claim that no works would be necessary if there was soil and plants in the planter box is the applicant's representative's recount of a verbal conversation they had with the contractor. I give little weight to this assertion by the applicant without anything more.
• [49] Still, the screeding works are not strictly membrane works and the area is not common property. Therefore, the applicant will succeed in their argument that the body corporate is not responsible for the works unless there is a sufficient nexus between the screeding works and the body corporate's responsibility to maintain the membrane in good condition, or the roofing structure in a structurally sound condition.
• [50] The body corporate has provided some evidence to suggest that the screeding of the planter box is necessary for the correct installation and maintenance of the membrane. The body corporate submits an email from a builder, who states the area is 'defective' and refers to the 'Queensland Building and Construction Commission Standards and Tolerances Guide', specifically at item 14.7 which states:

Waterproof decks and balconies are defective if they leak, pond water and/or do no drain to the outer edge, or storm water outlet.

• [51] Of course, the above does not clarify if the membrane itself is defective, or if it is something else that is defective. Though, the body corporate also relies upon the 'Building Services Authority external waterproofing membranes best practice guidelines' dated 2008 which states:

Industry research and experience has found that the design of roofs, decks, balconies and planter boxes contributes to many of the failures of waterproofing systems... > > Waterproof membranes rely on a complete system to ensure that the waterproofing of the roof or podium slab is not compromised... > > ...planter boxes have additional requirements... The most significant of these is the necessity for adequate drainage.

• [52] Further, the technical datasheet for the waterproofing membrane entitled 'Work Method Statement Building Line - Waterproofing System Planter Boxes MAPEI B06 Version 4/01/2021' states at 1.6 Waterproofing Membrane Application:

Ensure substrate has adequate falls... if not, apply a screed after the primary membrane to create falls.

• [53] On balance, there appears to be a sufficient nexus between the screeding works to create an adequate fall for water to escape, and maintenance of the membrane that the body corporate is responsible for.

• [54] The scope of works includes installing a lid over the top of the planter box, which would also enable Lot 3 (and Lot 4, due to the proposed placement of the dividing fence) to use it as a bench seat.
• [55] Submissions in opposition say the area should not be used as a planter box as it contributes to subsidence issues at the scheme. This argument suggests that the works could relate to keeping the area structurally sound, which the body corporate has a legislative responsibility to do.[14] However, there is limited information in front of me evidencing this. An engineering report by Structural Diagnostics dated 10 October 2023 which investigated subsidence issues does not expressly raise concern with the planter box. The only suggestion of the connection comes from committee meeting minutes and internal correspondence (dated 2019 and 2021) that discuss plants being removed from the planter box while discussing subsidence issues.
• [56] On the other hand, a quote from a licenced builder states:

It is suggested that the best option for the committee would be not to reinstate the planter box, but create a bench seat with CFC sheet, which would offer an additional layer of protection to prevent further water ingress.

• [57] It is not clear if this comment is made based on the committee's claims of subsidence issues, or if this is recommended for maintenance of the membrane in the circumstances. While common sense suggests placing a lid would reduce water entering the area, it is not clear if this necessary where the screeding is installed. Further, the technical data sheets and other information I have referenced regarding waterproofing membrane works do not suggest placing a lid on planter boxes.
• [58] Based on the information provided, there does not appear to be a sufficient nexus between the installation of the bench seat and the body corporate's maintenance obligations under the legislation.

• [59] The Disputed Decision includes works to install a plastic safety barrier to part of the balcony railing. The body corporate says this is necessary because the bench seat would be a climbable object and the balcony railing is not high enough to meet relevant safety standards and building codes. An email from a builder suggests that, while the balcony railing may not meet current standards, the body corporate may only need to meet current safety standards if it is undertaking new works to the area. However, the current balcony height may still be a safety concern, even if the planter box is not altered into a bench seat.
• [60] The body corporate is responsible for maintaining in good condition railings, parapets and balustrades on the boundary of a lot on common property.[15] Therefore, if the works are necessary for the balcony railing to function as it should, the body corporate can be responsible for those works.
• [61] Where the body corporate is not responsible for placing a lid on the planter box, it follows that the body corporate may not have an obligation to place the safety barrier. However, just because a body corporate does not strictly have a legislative obligation to increase the height of the balcony balustrade does not necessarily mean that it is not reasonably open for the body corporate to do so, particularly where there is a legitimate safety concern.
• [62] The body corporate must act reasonably when making decisions,[16] and reasonable decision making involves adequate consideration of all relevant facts in the circumstances, and the disregarding of irrelevant facts.[17] Therefore, if the body corporate makes a decision to install the safety barrier based on the incorrect belief that it was responsible for turning the planter box into a bench seat, it may arguably have acted unreasonably in its decision. If it made the decision because it is concerned that the area is currently unsafe, it may arguably be a reasonable decision.

• [63] The fence that was located over the top of the planter box does not form part of common property and is wholly within Lot 3. As such, the body corporate generally has no obligation to maintain the fence. However, if the body corporate removed the fence to undertake the waterproofing works in 2024, it is arguable the body corporate should replace the fence as the works reasonably incurred as a result of the membrane works.[18]
• [64] The Applicant's Representative says in emails to the committee that the fence was in disrepair and the lot owners would have needed to replace the fence anyway. If this was the case, the body corporate may not be responsible for the costs of the fence.[19] However, I note the applicant has not provided any evidence that the fence was in poor condition.
• [65] Whether a fence is installed in the same place or in a different place (now there is a new understanding of the lot boundaries) is largely a matter between the owners of Lot 3 and Lot 4. There is a question as to whether the body corporate could be responsible for erecting the fence in a new position where it was incorrectly installed to begin with. However, the new understanding of lot boundaries took place after submissions were received and parties' position on this matter may have changed. There is also a suggestion that the lot owners may have already resolved the issue. I will therefore not comment further other than to say, the body corporate should act reasonably and consider all relevant factors if it is to make any future decisions on reinstalling the fence.

• [66] I am satisfied that the Disputed Decision could not have passed in circumstances where two members who cast a vote in favour were not entitled to vote due to a conflict of interest. Without those two votes, the motion could not have resolved. I will make an order that the Disputed Decision was at all times void.

[1] Land Title Act 1994 (Qld) s 48C; Registrar of Titles Directions for the Preparations of Plans at 9.6.1

[2] There are exceptions to this. See Registrar of Tiles Direction for the Preparations of Plans at 9.6. However, it does specify that the boundary would be at the centre of walls even where the walls are not full height.

[3] In Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd,4 the District Court accepted that the equitable principle of providing substantially full and true materials to meetings of the corporates by the directors of the company, also applied to members of the committee in a body corporate context. It may follow that other equitable principles arising from a fiduciary relationship could also apply to committee members.

[5]Jason Harris, Company law: theories, principles and applications (Lexis Nexis, 2nd edition, 2016) 12.2.

[6] Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461 at 471; [1843-60] All ER Rep 249.

[7] Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46 at 124, as cited by Jason Harris, Company law: theories, principles and applications (Lexis Nexis, 2nd edition, 2016) 12.5.

[8] Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 at 198 by Deane J,

[9] Bell Group Ltd (in liq) v Westpac Banking Corporate (No 9) [2008] WASC 239 at [4512] per Owen J, as cited by Jason Harris, Company law: theories, principles and applications (Lexis Nexis, 2nd edition, 2016) 12.5.

[10] Standard Module, s 211.

[11] Standard Module, s 180(1).

[12] Standard Module, s 180(2)(a)(iii).

[13] Standard Module, s 180(2)(b).

[14] Standard Module, s 180(2)(b).

[15] Standard Module, s 180(2)(a)(i).

[16] Act, ss 94(2), 100(5).

[17] Body Corporate For Beaches Surfers Paradise v Backshall [2016] QCATA 177 at [42] citing McKinnon v Department of Treasury [2006] HCA 45; (2006) 228 CLR 423 at 430.

[18] Klinger & Anor v Body Corporate for Costa D'Ora Apartments [2007] QDC 300.

[19] See, for example, Klinger & Anor v Body Corporate for Costa D'Ora Apartments [2007] QDC 300 at [72]; Amelia Place [2018] QBCCMCmr 627 at [35].