Galileo Tower [2004] QBCCMCmr 562 (16 November 2004)

Last Updated: 30 September 2005

REFERENCE: 0701-2004

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14193
Name of Scheme:	Galileo Tower
Address of Scheme:	12 Mullen Street HAMILTON Q 4007

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

Paul Frederick SPOTTISWOOD, the owner of Lot 11; and James Edward DAWES, the owner of Lot 12,

I hereby order that the body corporate must not implement or otherwise act upon the resolutions of the body corporate declared passed at its extraordinary general meeting held on 12 August 2004 in respect of Motions 4 and 11, being for the upgrading of the lift and the replacement of garage doors respectively, pending determination of the final order to this application. I further order that this interim order has effect for a period of three months from the date of this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0701-2004

"Galileo Tower" CTS 14193

The applicants, Paul Spottiswood and James Dawes of Lots 11 and 12 respectively, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") -

"That motions 4, 11 and 12 of the EGM held 12 August 2004 be declared invalid. These motions were presented as ordinary resolutions and declared carried on a majority vote. The "Body Corporate and Community Management (Standard Module) Regulation 1997" (the Regulations) provides that these motions should have been classified as Special Resolutions. As Special Resolutions these motions would have been defeated. Refer s113 of the Regulations.
These motions are shown on the attached minutes of the relevant meeting:
Number 4 – Lift Upgrade, value $107,440.
Number 11 – Replacement of Garage Doors, value $14,982.
Number 12 – Replacement of Hot Water Systems - $8,986."

The applicant has also made application for the following interim order of an adjudicator –

1.	"To require the Body Corporate to carry out no works proposed by these motions, effective immediately. These resolutions should be put on hold until the dispute is resolved.

2.	The Body Corporate should also be required to withdraw each special levy that has been raised in respect of these motions."

JURISDICTION:
This is a dispute between owners (the applicants Spottiswood and Dawes), and the body corporate (the respondent), concerning whether the correct type of resolution was proposed and passed in respect of certain motions considered at an extraordinary general meeting of the body corporate. This is a matter that falls within the dispute resolution provisions of the legislation (see sections 227, 228 and 276 of the Act) and may be determined by a departmental adjudicator.

Section 279 of the Act provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284 of the Act).


APPLICATION:
Under section 247 of the Act, the requirement to seek submissions from interested parties may be dispensed with and the application for an interim order dealt with directly by an adjudicator. That course is considered appropriate in this instance given the sufficiency of the documentary information supplied and the real possibility that the works subject of the relevant motions may be commenced at any time. Of course if the work proposed were carried out then it could only be reversed at a severe financial loss to the body corporate or perhaps result in expensive litigation.


DETERMINATION:
"Galileo Tower" was registered as a building units plan (now termed a building format plan) on September 1973 and comprises 12 lots. It is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module").

To ascertain the present situation in regard to the purported resolutions subject of the application and to confirm the information supplied, I conducted a teleconference with Spottiswood (for the applicants) and Ann Chambers (representative of Strata Care, Body Corporate Manager for the body corporate). Chambers advised that her understanding was that the hot water systems had been replaced; Spottiswood agreed that all or most of that work had been completed.

Chambers stated that the committee was an active body and had considered all relevant information being making its recommendations, including the "Lift Condition Report" report by Norman Disney & Young ("NDY") dated 18 July 2003 submitted by the applicant, as set out in the comprehensive notes to the relevant motions.

At the outset, I sought an explanation from Spottiswood as to the near 3 month delay in disputing the motions by not lodging the application until 10 November 2004. I also pointed out that had the application been lodged only a matter of days later, then he (and the co-applicant) would have had to persuade me that there was good reason for an adjudicator to waive the 3 month statutory limit for such applications (see section 242 of the Act). He stated that the motions were part of a "master plan" to renovate the building, which was in a poor condition and unsightly, however there still was some disagreement amongst owners as to how the renovations should proceed. These disagreements were still under discussion up to and at the annual general meeting held some ten weeks later on 25 October. Spottiswood said that because of the disagreement and comments made, he thought one or two other owners had lodged an application regarding the disputed matters and had only submitted this application when he found that no other had been made.

In this order I am dealing solely with the application for the interim orders shown above; I shall determine the final orders to the application only after the body corporate committee and other owners have been given the opportunity to make a submission on the disputed matters.

I shall deal with each of the purported resolutions in turn, leaving aside consideration of an interim order in respect of Motion 12 as the hot-water systems have already been replaced. That matter will be addressed when considering final orders.

In regard to Motion 4 for the upgrading of the lift, I am of the opinion that an interim order is warranted on the grounds that it appears on the face of it that the proposed work constitutes an improvement by the body corporate within the meaning of section 113 of the Standard Module rather than merely maintenance or like replacement. As the cost exceeds the threshold amount of $$3,600 for the scheme (12 lots times $300) then that section requires approval must be by way of special resolution and not ordinary resolution as was the case.

The distinction between whether proposed work constitutes an improvement rather than maintenance is often a difficult and fine one to determine. In this case, the nature of the changes to the lift system as described in both the report by NDY and the (committee) notes to the motion, suggest strongly it must be categorized as an improvement in that it goes beyond maintaining the lift at its present level of efficiency, functionality, and value, amongst other considerations. The report by NDY, from my reading of the report without any further explanation, seems to state that the lift is in adequate working order, though incorporating some outdated technologies, with no defects to be remedied or changes required by law. That is, the report makes all sorts of recommendations to upgrade the lift technology, performance, comfort and appearance – all of which would considerably add to the value of the lift and therefore the building in general – but the telling phrase is at paragraph 3.1.5 where NDY says, "If the existing lift system was analysed purely on reliability issues, there is clearly no reason to alter the present arrangement, other than for technology upgrade and performance reasons." As well, breakdown rate is within the acceptable standard.

In summary, it appears to me that the "Lift Upgrade" is just that, an upgrading of the current lift standard to something that is beyond a mere maintenance and replacement, and constitutes an improvement for which the higher order of resolution, namely a "special resolution", is necessary for approval.

In regard to Motion 11 for the "Replacement of Garage Doors", the applicant’s grounds merely state that "Until such time as the committee presents an acceptable solution (including colour scheme) for an overall upgrade of the building, there is no valid reason for replacing the garage doors." This is no evidence in support of the interim order sought. However, the attached copy of notes to the motion appear to show that the replacement is not based on necessity but more on improving the appearance of the scheme building –

"The existing doors are dilapidated and do not present an appealing face to the common areas. The appearance of the garage areas, including the garage doors, is a very important part of the visual statement made by the common areas. If left as they are, the existing panels will continue to deteriorate and will detract from the remainder of the common areas, which are to be refurbished as outlined in the other motions."

Again the proposed work appears to be an improvement rather than for maintenance purposes, and given the cost of $14,982 can only be approved by way of a special resolution of the body corporate under the requirements of section 113 of the Standard Module.

As well, it seems that the garage doors are part of an overall project to renovate the scheme by a series of improvements and this may well place it, and the other proposals, all within the context of a "single project" as referred to in section 113(2) and therefore each improvement is caught by the special resolution requirement.

For the above reasons, I am satisfied that an interim order is necessary because of the urgency of the circumstances in preventing the body corporate from implementing the relevant resolutions, until the matter has been investigated, including seeking a response from the body corporate committee and other owners.

I also refer owners to Application 557-2004 submitted by 7 owners who seek an order for Motions 2 and 3, which failed to pass at the same meeting of 12 August, be given effect to. Additionally, there has been a further application for several interim orders concerning motions passed at the same meeting, including one to invalidate the Lift Upgrade resolution. There are therefore 3 applications concerning renovation motions passed at the 12 August meeting, evidencing a wide divergence of opinion amongst owners over the whole renovation proposal.

While I am ready to deal with the applications in time, perhaps the owners might think a better outcome will be achieved if they were to strive for a negotiated outcome encompassing all of the intended and suggested works, rather than fight each other through the adjudication system and later perhaps through the District Court on appeal. It may be more timely and effective (cost and otherwise) in this instance, to engage a trained mediator for the purpose. In any case, that is a matter for owners to decide.

The matter will now be investigated in accordance with the usual processes undertaken by this office and a final order to the application will be made in due course. Section 279(2) of the Act provides –

279 Interim orders in context of adjudication
(2) An interim order--

(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when--

(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred.

In my order I have provided that the interim order has effect for a period of three months. All parties should be aware of this section and its effect on the interim order. In particular, it is the responsibility of the applicant to request an extension to the interim order period should it become necessary, as this office will not automatically renew an interim order.2n

REFERENCE: 0701-2004A

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14193
Name of Scheme:	Galileo Tower
Address of Scheme:	12 Mullen Street HAMILTON Q 4007

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

Paul Frederick SPOTTISWOOD, the owner of Lot 11; and James Edward DAWES, the owner of Lot 12,

I hereby order that the substantial interim order made on 16 November 2004 which reads as follows – "I hereby order that the body corporate must not implement or otherwise act upon the resolutions of the body corporate declared passed at its extraordinary general meeting held on 12 August 2004 in respect of Motions 4 and 11, being for the upgrading of the lift and the replacement of garage doors respectively, pending determination of the final order to this application", is extended until such time as a final order to the application is made.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0701-2004A

"Galileo Tower" CTS 14193

The applicants, Paul Spottiswood and James Dawes of Lots 11 and 12 respectively, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") -

"That motions 4, 11 and 12 of the EGM held 12 August 2004 be declared invalid. These motions were presented as ordinary resolutions and declared carried on a majority vote. The "Body Corporate and Community Management (Standard Module) Regulation 1997" (the Regulations) provides that these motions should have been classified as Special Resolutions. As Special Resolutions these motions would have been defeated. Refer s113 of the Regulations.
These motions are shown on the attached minutes of the relevant meeting:
Number 4 – Lift Upgrade, value $107,440.
Number 11 – Replacement of Garage Doors, value $14,982.
Number 12 – Replacement of Hot Water Systems - $8,986."

The applicant has also made application for the following interim order of an adjudicator –

3.	"To require the Body Corporate to carry out no works proposed by these motions, effective immediately. These resolutions should be put on hold until the dispute is resolved.

4.	The Body Corporate should also be required to withdraw each special levy that has been raised in respect of these motions."

DETERMINATION:
By email letter dated 15 February 2005 the applicants have requested that the interim order be extended as the period for which the interim order had effect was about to expire, and the application had not resolved by final order.

Section 279(2) of the Act states –

279. Interim orders in context of adjudication.
(2) An interim order--

(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when--

(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred.

This application is one of three applications largely concerning the same dispute, the others being Application No’s 557-2004 and 717-2004. All three matters will be determined together. An amendment to Application 717-2004 has been allowed, requiring notification of the new material to the relevant parties and an extension of time for the making of submissions and a reply by the applicant to those submissions. This delay would have meant that this interim order would have expired before any final orders could be made.

In the circumstances I am satisfied that the interim order should be extended until such time as the application is determined by final order.