La Porte D'Or [2002] QBCCMCmr 82 (15 February 2002)

DJ ReardonREFERENCE: 0148-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12681
Name of Scheme:	La Porte D'Or
Address of Scheme:	3422 Gold Coast Highway, Surfers Paradise

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Framir Nominees Pty Ltd, the Owner of Lot 67 and Donjen Pty Ltd, the Owner of Lot 141

I hereby order that the application for orders regarding fire services and hydraulic repairs, emergency lighting, repairs to air conditioning, resurfacing of the driveway and a sinking fund levy as sought by the applicants is dismissed.

I further order that within 2 months from the date of this order, the body corporate must engage a suitably qualified person to rectify the faults in the emergency lighting facilities identified in section 2.5 of the EMF Griffiths report of September 1999. For clarity, this order does not require that body corporate to install a stand-by battery system for the emergency lighting.

I further order within 1 month after the body corporate has carried out the work relating to fire services as resolved at the meeting of 18 August 2001, the body corporate must engage a suitably qualified person to inspect the fire services system, and to provide a report (“the new fire services report”) on the outstanding matters identified as “essential” in the Steve Paul & Partners report of June 2000.

I further order that within four months after the body corporate has carried out the work relating to fire services as resolved at the meeting of 18 August 2001, the body corporate must hold a general meeting for the purposes of considering recommendations arising from the new fire services report.

I further order that the body corporate is not prevented from engaging suitably qualified persons who have previously provided reports to the body corporate, to provide the report required by this order.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0148-2001

“La Porte D'Or” CTS 12681

1.	Orders Sought

The applicants Framir Nominees Pty Ltd and Donjen Pty Ltd, the Owners of Lots 67 and 141 respectively, have sought a number of orders of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), in relation to repairs and maintenance of various aspects of the common property for the “La Porte D’Or” community titles scheme.

Specifically, the orders sought by the applicants relate to fire services and hydraulic repairs, emergency lighting, repairs to air conditioning, resurfacing of a driveway, and the striking of a sinking fund levy. I will restate terms of the orders sought by the applicants in the relevant sections of this statement of reasons.

Section 223(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a)	a claimed or anticipated contravention of the Act or the community management statement; or
b)	the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or
c)	a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

2.	Interim Order

The applicants sought the above orders as both interim, and final orders. On 12 March 2001, a departmental adjudicator dismissed the application for interim orders.

3.	Preliminary

In this application, the applicants have sought very specific orders that the body corporate be compelled to accept the recommendations of particular professionals regarding repair and maintenance work, and further that the body corporate be compelled to accept the quotations obtained and recommended by the same persons.

At the outset I wish to state that I do not intend to order in the terms sought by the applicants. Except in the most unusual of circumstances I do not consider that it is the role of an adjudicator to make an order, which requires the body corporate to engage specific tradespeople or contractors to carry out repairs and maintenance. An order in these terms effectively imposes particular owners’ preferences regarding tradespeople on the entire body corporate.

Rather I consider that if an applicant can demonstrate that the body corporate is not fulfilling its obligations under the Act in respect to repairs and maintenance of the common property, an adjudicator may make a more general order that the body corporate carry out repairs and/or maintenance to relevant parts of the common property. If such an order were made, it would then be for the body corporate to decide how to comply with the order, and which contractors to engage to carry out necessary work. This approach is consistent with the framework of the legislation, which I consider provides owners with an ability to be involved in the decision-making processes of the body corporate.

For this reason, I intend to dismiss the application for orders as sought by the applicant. However, I propose to consider the material provided by the parties to decide whether any further orders are warranted at this time.

I do wish to note in this statement of reasons that the solicitor for the applicant sought to amend and add to the orders sought in the application on 29 January 2002. I refused to allow the applicant to amend the orders sought for two reasons. Firstly, while the Act provides the Commissioner for Body Corporate and Community Management with a power to allow an amendment to an application before an initial case management recommendation is made (section 195(1) of the Act), the Act does not provide a similar power to an adjudicator to whom the Commissioner has referred a dispute resolution application.

Secondly, in refusing approval to allow an amendment I was mindful of the length of time it has taken to resolve this application due to numerous factors, which I consider, have been largely out of the control of this office (the application was originally made on 6 March 2001). To allow the amendment to the orders sought would have required me to also allow a further period of time for the body corporate to respond to the amended application, as well as a further period of time to allow the applicants to obtain and reply to any further submissions made in response to the amended application. I am aware that both individual owners and the body corporate are understandably concerned about the length of time taken to resolve these matters, and I was not prepared to delay making an order any further.

As a final preliminary issue, I wish to address the applicants’ assertions that the body corporate should engage a supervising engineer to obtain quotations and supervise the carrying out of repair and maintenance work described in the application. While the applicants have mounted an argument that the works in question are too complex for the committee to properly monitor, I have not been provided with reference to any requirement under the Act, or any other legislation, which requires the committee to engage a supervising engineer. Therefore, I do not intend to require the body corporate to engage supervising engineers to assist in the management and supervision of work required of the body corporate.

4.	Fire Services and Hydraulic Repairs

The first repair and maintenance issues raised by the applicants concern fire services and hydraulic repairs. Specifically, the applicants have sought the following orders.

“That the body corporate engage a suitably qualified project manager to work in conjunction with Steve Paul and Partners and engage suitably qualified contractors to carry out repairs identified as essential and potentially life threatening in the Report of Steve Paul and Partners, consulting Hydraulic, Fire and Environmental Engineers (attached hereto and marked “Exhibit 1”)

AND THAT the body corporate:-

(a)	Instruct Steve Paul and Partners to seek new tenders, or obtain at least two new quotations from contractors according to specifications for the above works for Quotations attached hereto and Marked “Exhibit (a)”, “Exhibit (b)”, “Exhibit (c)” and “Exhibit “d”)
(b)	Instruct Steve Paul and Partners to advise the body corporate which of the new quotations or tenders should be accepted;
(c)	Accept the quotation or tender recommended by Steve Paul and Partners;
(d)	Strike, on behalf of the body corporate, a special levy to fund the above repairs”

In the supporting grounds to the application, the applicants make reference to a report by Steve Paul & Partners, which the applicants include as “Exhibit 1”. The report makes a number of recommendations regarding the fire services system, including upgrade and rectification works described as “essential”. The recommendations described as essential include the installation of a new alarm system, the reinstallation of a fire sprinkler pump set, and the replacement of the existing fire hydrant system with a new system with more suitable pipe work.

At the extraordinary general meeting of 18 October 2000, the body corporate considered a number of proposals concerning the fire services in motions 9, 10, 11 and 12, all proposed by the committee. Each motion was accompanied by a quotation for particular works. Each of these motions was defeated at the meeting.

While these motions were defeated, it is apparent that the current committee has been liasing with the Queensland Fire and Rescue Authority (“QFRA”) and a consulting engineer (Peter Eustace & Associates) regarding the adequacy of fire services of the “La Porte D’Or” scheme. In making this comment, I am making particular reference to the information provided to me by the body corporate manager under cover of a letter dated 2 February 2002.

Further, at an extraordinary general meeting held on 18 August 2001, the body corporate considered a number of motions relating to the fire hydrant system (motions 11, 12, and 13, proposed by the committee). Motion 12 sought acceptance of a quotation from Coomera Shores Plumbing (“Coomera”) for the replacement of copper pipe work in the “La Porte D’Or” building with pipe work that complies with regulations. The minutes of the meeting record that this motion was passed with 56 votes in favour, and 16 against.

One of the applicants in this matter (0148-2001) sought to have this motion (along with all of the other motions considered at the meeting) declared invalid in application 0481-2001. I have recently determined application 0481-2001 and decided that motion 12 is not invalid. As a result the body corporate is free to engage Coomera to replace the copper pipe work.

In light of the resolution of the body corporate and the committee’s ongoing liaison with QFRA and Peter Eustice & Associates regarding the fire services, I am satisfied that the body corporate is working toward ensuring that fire services are suitable and effective for the “La Porte D’Or” scheme. However, it does appear that a number of matters raised in the Steve Paul & Partners report have not been addressed to date, most notably the fire alarm system, and sprinkler pump set.

For this reason, I intend to order that after the copper pipe work has been replaced in accordance with the body corporate’s resolution, the body corporate must engage a person with appropriate qualifications and experience, to inspect the fire services system, and to provide a report on the outstanding matters identified as “essential” in the Steve Paul & Partners report of June 2000. I also intend to order that the body corporate convene a meeting to consider recommendations made in the fresh report. While I would expect the committee to prepare any appropriate motions in respect of the recommendations of the fresh report for consideration at the general meeting, individual owners can inspect and obtain a copy of the fresh report, and present motions to the secretary for consideration at the meeting, provided relevant time frames are met.

5.	Emergency Lighting

The second repair and maintenance issue raised by the applicants concerns emergency lighting. In this respect, the applicants have sought the following orders:

“That the body corporate engage a suitably qualified electrical contractor to install emergency lighting recommended in the Report of EMF Griffiths Consulting Engineers (attached hereto and marked “Exhibit 2”) accordingly to specifications for quotations attached hereto and marked “Exhibit (e)” and Exhibit “(f)” hereto) and that the Body Corporate:

a) Instruct EMF Griffiths to seek new tenders and obtain at least two new quotations from contractors according to the said specifications;

b) Instruct EMF Griffiths to advise the Body Corporate which new quotation or tender should be accepted;

c) Accept the quotation or tender recommended by EMF Griffiths;

d) Strike, on behalf of the Body Corporate, a levy to fund installation of the emergency lighting”.

In the supporting grounds the applicant makes reference to item 25 (I assume the applicants are referring to item 2.5) of the report of EMF Griffiths (attached to the application as “Exhibit 2”). The applicants go further to state “If emergency lighting in accordance with current codes is not installed, the Body Corporate will be held liable for any loss or damage suffered as a consequence of inadequate emergency lighting.”

The body corporate considered the issue of emergency lighting at the extraordinary general meeting of 18 October 2000 (in motions 5 and 6). Motion 5 sought body corporate acceptance of a quotation from Austwide Electrical Services for purchase and installation of new emergency lighting infrastructure at a cost of $76,629. Motion 6 sought body corporate acceptance of a quotation from O’Donnell Griffith for work relating to the emergency and exit lighting at a cost of $101,944.70. These quotations clearly contemplated extensive supply and installation of emergency lighting facilities for the scheme. The minutes record that motion 5 was lost, with 40 votes in favour of the motion, 73 votes against the motion and 3 abstentions. The minutes record that motion 6 was lost with 3 votes in favour of the motion, 11 votes against the motion and 1 abstention.

I have reviewed the sections of the EMF Griffiths Pty Ltd report referred to me by the parties, and the relevant tenders for the work that were presented to the body corporate for consideration at the extraordinary general meeting of 18 October 2000. In the information provided by the body corporate manager, it is stated that the report provides that there is no need to upgrade emergency lighting unless there has been major refurbishment of the building. The body corporate manager states that as there has not been major refurbishment of the building, there is no need to upgrade the emergency lighting.

However, I consider that the report goes further and identifies a number of faults and defects. Of particular note, are the following comments made in section 2.5 of the report:

•	“We suspect that the wiring within the ceiling space is not fire rated as required by the Building Code effective at the time of construction (and current). This needs to be checked for compliance.”
•	“A number of defective luminaries were also noted in the fire stairs, the fire stairs should be fully checked and all defective fittings rectified or replaced.”
•	“All the basement car park luminaries also provide the Emergency lighting of which many are defective.”

I consider that the above issues have not been satisfactorily addressed in the information provided to me by the body corporate manager. While I do not intend to order that the body corporate undertake the work described in the tenders, I do intend to order that the body corporate rectify the faults identified in the report and described above.

As a separate issue, it appears to me that while the EMF Griffiths report recommends battery back up for the emergency lighting system, the current system is in accordance with relevant standards at the time of construction. While the report clearly identifies the limitations of the current system, it does not indicate that it is essential that the system be replaced. Rather the report indicates that if the current system is retained, “it is critical that these (the generator and switchboard controls) are regularly tested, maintained and that the generator fuel tank is always full.” Therefore, I do not consider that the retention of the generator back-up system is a “fault” that the body corporate is required to rectify as part of its maintenance functions.

In the reply to the material provided by the body corporate manager, the applicants submit that compliance with historical regulations do not necessarily mean that the system is suitable now. I think there is significant merit in this point made by the applicant, and should be carefully considered by both the committee and individual owners. However, on the basis of the comments made in the report, which seem to me to indicate that the current system can continue provided it is strictly maintained, I do not intend to order that the body corporate install a stand-by battery system.

However, I would strongly emphasise to parties that the body corporate is obliged to maintain the current system in good condition as recommended in the report, and I would also point out that there are obvious benefits in the stand by system and limitations to the current arrangement, which should be given careful consideration by the committee and owners.

6.	Repairs to Air Conditioner

The next issue raised in the application concerns repairs and maintenance of the air conditioning infrastructure. The applicants have sought the following orders in relation to repairs to air conditioners.

Orders that the Body Corporate instruct EMF Griffiths to seek new tenders and obtain at least two quotations for air conditioning from contractors according to the recommendation in the report of EMF Griffiths, Consulting Engineers (attached hereto and marked “Exhibit 3”) according to specifications for quotations (attached hereto and marked “Exhibit (g)” and Exhibit (h)”) and that the Body Corporate.

(a) Instruct EMF Griffiths to advise the Body Corporate which new quotation or tender should be accepted;

(b) Accept the quotation or tender recommended by EMF Griffiths;

(c) Strike, on behalf of the Body Corporate, a special levy to fund the installation of the air conditioning plant.

The applicants make reference to a report of EMF Griffiths (attached to the application as “Exhibit 3”) in support of their contention that the current air conditioning system is obsolete and should be replaced. Of particular note in the supporting grounds to the application, is the applicants’ statement that the plant on level 18 was removed without authority some time ago, and in addition the plant servicing the ground floor is not functioning.

At an extraordinary general meeting held on 18 October 2000, the body corporate considered the issue of repairs of air conditioning in motions 3 and 4. Motion 3 sought the approval of a quote from Hinterland Air Conditioning at a cost of $479,816.00, and motion 4 sought the acceptance of a quote from D&D Air conditioning at a cost of $513,099.45. Both motions were defeated.

At the extraordinary general meeting of 18 August 2001, the body corporate again considered repairs to air conditioners, this time in motions 4, 5, 6, 7, 14 and 15.

Motion 4 sought the acceptance of a quote provided by D & D’s Air Conditioning Services P/L (“D & D”) to replace the air-conditioning unit on the 18^th floor at a cost of $18,975 and was passed with 50 votes in favour, 25 against and no abstentions. Motion 6 sought the acceptance of a quote provided by D & D for the replacement of the air conditioning unit servicing the ground floor foyer at a cost of $28,545. The motion was passed with 57 in favour, 17 against and no abstentions. Motions 14 and 15 sought body corporate approval of the replacement of the air conditioning units on the 5^th floor and the 22^nd floor respectively at a cost not to exceed the cost of the replacement of the air conditioning unit on the 18^th floor. Motion 14 was passed with 42 votes in favour, 24 against and 5 abstentions. Motion 15 was passed with 44 votes in favour, 21 against and 5 abstentions.

As mentioned previously, one of the applicants in this matter sought orders invalidating the motions considered at the extraordinary general meeting of 18 August 2001 in application 0481-2001. In determining application 0481-2001 I decided that the motions concerning the air conditioning units were not invalid as contended by the applicant.

Given the above, I am satisfied that the body corporate is indicating a preparedness to address issues concerning the air conditioning of the “La Porte D’Or” scheme. It is apparent however, that the body corporate is not prepared to authorise the extensive work endorsed by the applicant.

It appears that a regular maintenance program initiated by the current committee is having benefits to the air conditioning plants, as per a letter from D & D’s (the contractor engaged to carry out regular maintenance) to the body corporate. However, I acknowledge the applicants’ concerns regarding the reliance I should place on this letter. However, this, in conjunction with the body corporate’s resolutions to spend a considerable amount of money replacing parts of the air conditioning system, leads me to a conclusion that the body corporate is acting reasonably in respect of the air conditioning system. While the applicant may prefer to have extensive work performed immediately, I consider that it is for the majority of owners to decide how to carry out maintenance responsibilities, provided that the body corporate’s statutory obligations are met.

As a result, I do not intend to make an order regarding repairs to the air conditioning. However, I remind the body corporate that it has a continuing obligation to ensure common property is maintained in a good condition. If problems persist with air conditioning after the replacement units are installed, the body corporate has an obligation to investigate and address any outstanding maintenance or repair issues relating to common property.

7.	Resurfacing of driveway

The final order sought by the applicants concerning repairs and maintenance of common property relates to the resurfacing of a driveway. In this respect the applicants have sought the following orders.

“THAT the Body Corporate instruct Laurie Oar & Associates to seek tenders and obtain at least two quotations from contractors for the resurfacing of the front driveway according to specifications for quotations (attached hereto and marked “Exhibit (i)” and Exhibit (j)”) and that the Body Corporate:

(a) Instruct Laurie Oar & Associates (Structural Engineers) to advise the body corporate which new quotation or tender should be accepted;

(b) Accept the quotation recommended by Laurie Oar & Associates;

(c) Strike, on behalf of the Body Corporate, a special levy to fund the resurfacing of the front driveway.”

In support of these orders sought, the applicants state that “(T)he work has been identified as urgent and there has already been one personal injury action brought against the Body Corporate alleging the surface of the driveway is defective and dangerous”.

The applicants have attached two documents in relation to this order sought (Exhibits (i) and (j)). Exhibit (i) is a tender provided by Building Rectification Services Pty Ltd to Laurie Oar & Associates Pty Ltd dated 28 August 2000.

Exhibit (j) is a tender provided by Dowell’s Building Services Pty Ltd to Laurie Oar & Associates Pty Ltd dated 30 August 2000. Also attached as part of Exhibit (i) is a letter to the body corporate from Laurie Oar & Associates enclosing the two tenders.

From the material before me, it appears that the body corporate has considered the issue of resurfacing the driveway at the extraordinary general meeting of 18 October 2000, in motions 7 and 8 (described below).

Motion 7 sought the acceptance of the quotation from Building Rectification Services for resurfacing the driveway at a cost of $140,870, and the striking of a special levy to meet the cost of the quotation. Motion 7 was defeated at the extraordinary general meeting with 43 votes in favour of the motion, 70 votes against the motion and 1 abstention.

Motion 8 sought the acceptance of the quotation of Dowell’s Building Services for resurfacing the driveway at a cost of $141,667 and also sought the striking of a special levy to meet the cost of the quotation. Motion 8 was also defeated at the extraordinary general meeting with 2 votes in favour of the motion, 110 votes against the motion and 1 abstention.

I have reviewed the applicant’s attachments (i) and (j) and while they describe the specifications for the work proposed to be carried out to the driveway, the attachments do not evidence to me that the driveway is “defective and dangerous” as described by the applicant.

In the further information provided by the body corporate manager pursuant to my request, the manager states that “(T)he driveway has been repaired and is now the subject of a regular maintenance program”. This statement is disputed by the applicants in their reply to the material provided to me by the body corporate manager.

Apart from statements that the driveway is in need of repair, the applicant has not provided me with information or reports that support a conclusion that the driveway requires the work specified in the tenders attached to the application.

For this reasons, I intend to dismiss the orders sought in relation to the driveway.

8.	Sinking fund levy

The final order sought by the applicants in the application is as follows:

“THAT the Body Corporate strike a Sinking Fund Levy to give effect to the sinking fund analysis prepared by Rider Hunt, Surveyors (attached hereto and marked “Exhibit 4”).”

In the supporting grounds to the application, the applicants state that they are seeking an order “that sufficient monies are made available by means of adequate sinking fund levies to carry out repairs and maintenance in the future”. The applicants also state that the previous forecast did not adequately provide for the raising of a reasonable amount to meet expenditure from the sinking fund. The position is further clarified by the applicants in their reply to the material provided by the body corporate manager in which they state “should the orders be made as sought by the Applicants then it naturally follows that the Sinking Fund Forecast relied upon by the Applicants should be implemented.”

Section 94 of the Standard Module requires the body corporate to adopt a budget for the sinking fund and the administrative fund, for each financial year. In respect of the sinking fund budget, section 94(3) provides the following:

“The sinking fund budget must—

(a) allow for raising a reasonable capital amount both to provide for

necessary and reasonable spending from the sinking fund for

the financial year, and also to reserve an appropriate proportional

share of amounts necessary to be accumulated to meet anticipated

major expenditure over at least the next 9 years after the financial

year, having regard to—

(i) anticipated expenditure of a capital or non-recurrent nature;

and

(ii) the periodic replacement of items of a major capital nature;

and

(iii) other expenditure that should reasonably be met from

capital; and

(b) fix the amount to be raised by way of contribution to cover the

capital amount mentioned in paragraph (a).”

While the legislation does not specifically require a body corporate to engage a professional person to prepare a forecast of expenditure from the sinking fund, in the case a large building such as “La Porte D’Or”, it is almost always necessary to engage a professional to prepare and periodically update the sinking fund forecast.

The body corporate manager has indicated that the body corporate has set its contributions at the annual general meeting in December 2001 based on a sinking fund forecast prepared by Solutions in Engineering. I have obtained and reviewed a copy of the report provided by Solutions in Engineering.

Given that I have not made the orders as sought by the applicant, I do not consider that it is necessary, or in order for me to order the body corporate strike sinking fund 2ycontributions to meet the cost of the work sought by the applicant. Further, as the orders I have made will result in cost to the body corporate that is not readily identifiable from the reports and material presented to me, I do not intend to make an order in respect of sinking fund contributions. However, I draw the body corporate’s attention to section 95(2) of the Standard Module that provides the following:

“(2) If a liability arises for which no provision, or inadequate provision,

has been made in the budget, the body corporate must, by ordinary

resolution—

(a) fix a special contribution to be levied on the owner of each lot

towards the liability; and

(b) decide whether the contribution is to be paid in a single amount or

in instalments and, if in instalments, the number of instalments;

and

(c) fix the date on or before which payment of the single amount or

each instalment is required.”

It may be necessary for the body corporate to fix a special contribution to meet the cost of work that is required by this order.