Laguna [2003] QBCCMCmr 125 (18 September 2003)

Last Updated: 17 May 2005

REFERENCE: 0335-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13564
Name of Scheme:	Laguna
Address of Scheme:	61 Hedges Avenue, MERMAID BEACH QLD, 4218

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

Lewis Stanley DENOVAN and Estelle Maud DENOVAN, the co-owners of Lot 1A; John Douglas FIHELLY, the owner of Lot 2A; and Selwyn Ian PFEFFER and Lorna Ethel PFEFFER, the co-owners of Lot 4A,

I hereby order that the body corporate is to carry out the rectification work specified in the report dated 20 March 2003 by Barry Kilmister and Associates, Civil and Structural Engineers, Southport, and for that purpose must engage whichever of the three tenderers received the most votes at the extraordinary general meeting held on 23 May 2003 for the replacement of the balcony railings, and also engage whichever tenderer received the most votes for the concrete repairs.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0335-2003

"Laguna" CTS 13564

This is the final order to an application by: Lewis and Estelle Denovan of Lot 1A; John Fihelly of Lot 2A; and Selwyn and Lorna Pfeffer of Lot 4A, who have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") -

"That the body corporate proceed with urgent repairs.
(NOTE: The repairs referred to being those specified in Motions 2 to 10 considered and rejected at the extraordinary general meeting held on 23 May 2003)."

The applicant has also made application for an interim order in the same terms as the final order sought above, and on 6 June 2003 the following Interim Order 335-2003 was issued –

"I hereby order that the application for an interim order that the body corporate carry out repairs to the common property, including: replacement of railings for external stairs and balconies; the repair of concrete on external balconies and balcony ceilings, and a special levy to fund these repairs, is dismissed."

JURISDICTION:
In my "Statement of Reasons" ("the Reasons") to the interim order, I found jurisdiction existed to determine the matter, in the following terms –

"This is a dispute between three owners (the applicant owners of Lots 1A, 2A and 4A) and the remaining three owners (the respondents: Eddie Paradise’s Jewellers & Watchmakers Pty Limited the owner of Lot 3A; H & F Douglas Pty Ltd the owner of Lot 5; and Zitaburn Pty Ltd the owner of Lot 6), concerning the rejection by the respondent owners at the meeting held on 23 May 2003 ("the meeting") of proposed repairs to the common property, including: the replacement of railings for external stairs and balconies; the repair of concrete on external balconies and balcony ceilings, and a special levy to fund these repairs. This is a matter that falls within the dispute resolution provisions of the legislation (see sections 227, 228 and 276 of the Act)."

General powers of an Adjudicator in making an order:
Section 276(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 contractual matter about –
(i)	the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or
(ii)	the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1) of the Act).

APPLICATION AND SUBMISSIONS:
Under section 247 of the Act, the requirement to seek submissions from interested parties was dispensed with and the application for an interim was dealt with directly by me on the evidence then available. In my Reasons to the interim order, I foreshadowed that I would be seeking submissions from owners before making a final order in the matter. Under section 243 of the Act, a copy of the application was served on the remaining owners, namely: Eddie Paradise’s Jewellers & Watchmakers Pty Limited of Lot 3A; H & F Douglas Pty Ltd of Lot 5; and Zitaburn Pty Ltd of Lot 6, with an invitation to each to make a written submission to the dispute raised in the application. Submissions were received from Henry and Frances Douglas for Lot 5, and Timothy and Janet McCarthy for Lot 6.

In my Reasons to the interim order, I made the following comments under this same heading –

The grounds to the application do, however, include a copy of a letter from a tenant to the Body Corporate Manager, Australian Unit Administration Pty Ltd, complaining that a person had been leaning on a balcony railing when it collapsed and fell onto rocks below injuring himself. Temporary repairs were subsequently carried out to the railings. I assume that any other balcony railings in a similar condition have been secured, albeit on a temporary basis, against any similar incident.

At least one of the respondent owners, Henry Douglas of Lot 5, is of the opinion that there may be better options for the body corporate than spending large sums of money on repairs, including selling the land or demolishing and replacing the scheme building with replacement lot buildings.

The brief facts of the matter are as follows.

At an extraordinary general meeting held on 23 May 2003, motions for both the replacement of balcony railings and concrete repairs to the balconies and stairwell ceilings were lost on a vote of 3 votes in favour and 3 against. The notice of meeting included a report by Barry Kilmister and Associates, Civil & Structural Engineers, dated 20 March 2003, which states that Luguna ...now requires repairs to concrete cracks. It is also necessary to replace the existing aluminium railings to the stairways. The report goes on to specify what work is necessary and how it should be carried out and supervised. The agenda also included 3 alternative motions for alternative service providers for each project.

The application also included a copy of a letter dated 12 May 2003 from Henry Douglas to the Body Corporate Manager, Australian Unit Administration Pty Ltd ("AUA"), advising that he was unable to attend the meeting. Douglas also states that, in view of the age of the building (some 30 years old) it was past its used by date and it would be better not to expend money repairing it but to sell for redevelopment. He also offers I am prepared to negotiate with any owner who might want to sell their unit.

In their submission to the application, the respondents Henry and Frances Douglas reject comments by AUA as being defamatory and inaccurate, and states that Mr Yeates of that company had acted in a dictatorial manner in meetings and showed bias against him. They state that the repairs are not urgent and owners should merely lock-off their balconies to prevent the possibility of any further mishaps. They ask that the engineer’s and electrician’s reports be produced.

The other respondents who made a submission, Timothy and Janet McCarthy for Zitaburn Pty Ltd, object to the urgent replacement projects. They state that they have read the Douglas’s submission and they are of the same view.

DETERMINATION:
"Laguna" was originally registered as a building units plan (now termed a building format plan) on 6 December 1974 (1543) and then resubdivided (1774) on 2 May 1975, and comprises 6 lots. It is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module").

The applicable law in the matters is as follows. Section 35 of the Act provides that the common property is owned by all of the lot owners as tenants in common. The body corporate administers, manages and controls the common property, and it must do so reasonably and for the benefit of lot owners (see sections 94 and 152 of the Act). Section 109 of the Standard Module provides that the body corporate must maintain common property in good condition.

In the submission of the respondents Douglas and McCarthy, they ask for the engineer’s and electrician’s reports to be produced. Under the heading "Application and Submissions" I have referred to a copy of a report by Barry Kilmister and Associates, Civil & Structural Engineers, which was included as an accompaniment to the notice of meeting in the application. Assuming both parties have seen this document, I do not see what further professional opinion they want beyond Kilmister’s, quote Laguna is a multi unit residential building that now requires repairs to concrete cracks. It is also necessary to replace the existing aluminium railings to the stairways. As previously pointed out, the report then goes on to specify the work necessary to remedy the defects.

To put the matter beyond doubt, the applicants have had forwarded to this office a letter dated 27 June 2003 from this engineering company stating that he (Barry Kilmister) had inspected the building on 11 March 2003 and, though finding that the building is generally sound, recommended two areas for rectification , (a) replacement of the balcony railings to current Building Code standards, and (b) repair of concrete cancer as described in the report of 20 March 2003.

There have been no contrary engineering opinions put by the respondents and accordingly I accept Kilmister’s opinion as to the repairs necessary. Under the maintenance provisions described above, the body corporate has a duty to carry out the work specified in Kilmiuster’s report.

The request for production of the electrician’s report presumably relates to the statement in paragraph 6 of the "Amended Grounds for Order" concerning the state of repair of the electrical wiring in the roof void of Lot 5 (Douglas). However this has nothing to do with the orders sought in the application which is for the carrying out of the railing and concrete cancer work. In any case, the committee has forwarded to this office a copy of a letter dated 11 June 2003 from Glenn Jones, Manager of RetraVision Palm Beach, stating that a tradesman had tested "wiring throughout" and it was found to comply with electrical standards. The respondents can take this up further with the body corporate if it wishes to find out more details regarding the testing.

It seems to me that Douglas and perhaps others would rather the owners sell the building for development and realise the considerable profit to be gained. However, that is not the desire of at least three owners, and any such complete sale would need the agreement of all owners. Of course there is nothing to prevent Douglas or others selling their lot individually for a price that would reflect the increased value, and perhaps eventual potential, of a lot in the scheme.

In the meantime the body corporate has a duty to keep the common property in good condition and therefore it must undertake the work on engineering advice. Rather than delay the matter any further by putting the 6 quotes back to owners for a fresh decision, I consider the body corporate should engage whichever of the two tenderers received the most votes at the meeting of 23 May 2003, and I have ordered accordingly.