Cairns Aquarius [2004] QBCCMCmr 163 (25 March 2004)

Last Updated: 30 September 2005

REFERENCE: 0151-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	1439
Name of Scheme:	Cairns Aquarius
Address of Scheme:	107 The Esplanade CAIRNS QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the Committee for the "Cairns Aquarius" Body Corporate:

I hereby authorise the Committee for the "Cairns Aquarius" Body Corporate to spend $12,870 for the purposes of engaging CBS Contract Building Services Pty Ltd to carry out work described in their quotation of 4 March 2004, (Quote Number 9917KA).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0151-2004

"Cairns Aquarius " CTS 1439

1.	The application

On 10 March 2004, the Applicant (the Committee for the "Cairns Aquarius" Body Corporate) submitted an application to the Commissioner for Body Corporate and Community Management ("the Commissioner") under the Body Corporate and Community Management Act 1997 ("the Act").

The Applicant states that it is seeking the following outcome:

"For an adjudicator to issue an order to authorize the committee to carry out the proposal for spending above the relevant limit in order for them to accept the quotation from Contract Building Services for the rectification of water leaks at a total cost of $12870.00."

2.	The "Cairns Aquarius" community titles scheme

Department of Natural Resources, Mines and Energy records show that the "Cairns Aquarius" community titles scheme was originally created under a building units plan of subdivision (now known as a building format plan) registered on 11 June 1982. The scheme currently consists of 86 lots and common property.

A new community management statement was recorded for "Cairns Aquarius" on 19 February 2001. The community management statement shows that the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module") applies to the scheme.

3.	Administration of the application

As mentioned above, this application was submitted on 10 March 2004. On 19 March 2004, a staff member of this Office contacted the Applicant (via the Body Corporate Manager) and requested further information about the application. The Body Corporate Manager responded to this request by email of the same date. This email (including attachments) has been included with the supporting material accompanying the application.

On 22 March 2004, the Commissioner made a dispute resolution recommendation that the application should be the subject of departmental adjudication. As the application seeks authorisation of expenditure on the basis of an emergency, the Commissioner has made this recommendation even though affected persons have not been given formal notice of the application, or afforded an opportunity to make submissions about the application.

The Commissioner has referred the application to me for consideration.

4.	Jurisdiction

Section 276(1) of the Act broadly authorises adjudicators to make just and equitable orders to resolve disputes in community titles schemes, about-

(a) claimed or anticipated contraventions of the Act or a scheme’s community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or a scheme’s community management statement; or

(c) claimed or anticipated contractual matters about the engagement of a person as a body corporate manager or service contractor for a scheme, or the authorisation of a person as a letting agent for a scheme.

Section 103(1)(c) of the Standard Module specifically contemplates an adjudicator issuing an order authorising a body corporate committee to incur expenditure above the committee’s spending limit, if satisfied that the spending is required to meet an emergency. As a result, it appears that the matters described in this application fall within the jurisdiction of an adjudicator.

5.	Background to the application

This application is a result of a water penetration problem that has caused damage to the ceiling and walls of Lot 80. The Body Corporate Manager has provided a series of inspection reports from Mr Robert Donnan, an engineer with ARUP, concerning the water penetration.

While I do not intend to restate in detail Mr Donnan’s findings as outlined in his reports, the following is a brief summary of my understanding of the issues surrounding the water penetration to Lot 80.

The building units plan for "Cairns Aquarius" shows that Lot 80 is located directly below Lot 84. However, I understand that the two lots are configured differently, with Lot 84 having a significantly larger external balcony area than that included as part of Lot 80. From the material, I understand that the water proofing membrane beneath the Lot 84 balcony has broken down. Combined with a number of cracks in the balcony slab, the defective membrane has allowed water to penetrate the balcony of Lot 84, and to enter Lot 80. Due to different sizes of the balconies of Lots 80 and 84, water has penetrated both external and internal aspects of Lot 80.

The Body Corporate has obtained a quotation from CBS Contract Building Services Pty Ltd to carry out rectification work to the balcony of Lot 84 (dated 4 March 2004, reference number 9917KA). However, the cost of the quotation is above the Committee’s spending limit, and as a result, could normally only be accepted with the approval of the Body Corporate at a general meeting.

In the supporting grounds to the application, the Committee argues that the quotation should be accepted as a matter of urgency, without the delay of being presented to the Body Corporate at a general meeting.

6.	Determination

Section 103 of the Standard Module regulates spending by body corporate committees. In general terms, committees are not permitted to carry out a proposal involving spending above the relevant limit for committee spending except in particular, limited circumstances outlined in sections 103(1)(a), (b), (c) and (d) of the Module. Section 103(1)(c) allows a committee to carry out a proposal involving spending above its spending limit if "an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions."

The phrase relevant limit for committee spending is defined in the Schedule of the Standard Module to mean "an amount worked out by multiplying the number of lots included in the scheme by $125." Therefore, in the case of the "Cairns Aquarius" Body Corporate, the relevant limit for committee spending is $10,750 (86 lots multiplied by $125). In this instance, the committee is seeking authorisation to engage CBS Contract Building Services Pty Ltd to carry out work at a total cost of $12,870.

The main issue to determine in this application is whether the spending is necessary to deal with an emergency. It is an important issue because by authorising expenditure under section 103(1)(c) an adjudicator is effectively denying owners the opportunity to vote on the expenditure that they would otherwise be entitled to consider at a general meeting. However, it is also easy to imagine many circumstances where a body corporate must quickly incur expenditure to avoid serious damage to the building, or to mitigate health and safety risks for owners and occupiers.

In this instance, I am somewhat concerned about the length of time between the Body Corporate becoming aware of the seriousness of the problems with the Lot 84 balcony and the lodgement of this application. It seems to me that the Body Corporate became aware of the significance of the defects in Lot 84’s balcony in late December 2003. In theory, there has been more than sufficient time since that date for the Committee to convene a general meeting to consider the issue. However, having said that, I do accept that somewhat unavoidably, it has taken the Committee some time to arrange follow-up inspections, and to determine the necessary scope of work, and to obtain a quotation.

On 24 March 2004, I contacted Mr Robert Donnan of ARUP to discuss the urgency of the repairs. Following my conversation with Mr Donnan, I am satisfied that there is a real risk of Lot 80 experiencing significant, damaging water penetration in the event of a serious storm. I am also aware that severe storms are not uncommon in Northern Queensland at this time of year.

In the circumstances, I am satisfied that an order authorising the committee to incur the expenditure is necessary and appropriate, primarily to protect Lot 80 from potential, serious damage. I have ordered accordingly.