Sanctuary Pines [2004] QBCCMCmr 652 (20 December 2004)

Number of Scheme:	22961
Name of Scheme:	Sanctuary Pines
Address of Scheme:	19 Santa Barbara Road Hope Island, Queensland

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the Body Corporate for Sanctuary Pines community titles scheme 22961:

I hereby authorise the Committee for the "Sanctuary Pines" Body Corporate to pay invoice number NOV-001 issued by Ceres Group Pty Ltd on 29 November 2004 in the amount of $22,000 (including GST) for work involved in upgrading water mains to the common property.

I further order that if necessary, the Body Corporate shall fix a special contribution pursuant to section 95(2) of the Body Corporate and Community Management (Standard Module) Regulation 1997, to be levied on the owner of each lot towards the above liability.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0553-2004

"Sanctuary Pines" CTS 22961

The Body Corporate for Sanctuary Pines community titles scheme 22961 has (through its Committee) filed an application with the Commissioner for Body Corporate and Community Management under the Body Corporate and Community Management Act 1997 (the Act).

The Body Corporate is seeking an adjudicator’s order authorising the Committee to undertake expenditure above the relevant limit for committee spending, on the basis that the spending is necessary to meet an emergency. The expenditure relates to the upgrading of water mains that support fire protection infrastructure for the scheme.

Department of Natural Resources, Mines and Energy records show that the "Sanctuary Pines" community titles scheme was originally created under a group titles plan of subdivision (now known as a standard format plan) registered on 22 December 1995. The scheme land currently consists of 75 lots and common property, although I understand that one of the lots (Lot 902) is currently being developed as part of a staged subdivision.

A new community management statement was recorded for "Sanctuary Pines" on 19 December 2003. The community management statement shows that the Act’s Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) applies to the scheme.

The Commissioner received this application on 26 August 2004. As the Body Corporate was seeking authorisation for expenditure to meet an emergency, the Commissioner referred the application directly to me.

On 1 September 2004, I attempted to conduct a teleconference with the Body Corporate Manager for the scheme (Mr Peter Young of Body Corporate Managers for the scheme, Stewart Silver King & Burns) and the Chairperson for the Body Corporate (Mr Doug Champion). The purpose of the teleconference was to enable me to clarify some issues about the application. Unfortunately, Mr Champion was unavailable at that time. However, I was able to discuss the application with Mr Young.

In the course of my discussion with Mr Young, I expressed my view that fire safety was an important matter for the owners and occupiers of lots included in community titles schemes, and that in this instance, I was satisfied that the expenditure for upgrading water mains supporting the fire protection infrastructure was urgent and necessary. However, at that time the Committee had not provided me with a specific quotation for the work in question. The Committee had provided a letter from AD&DJ Corfield Pty Ltd which set out costs per metre of water mains as well the prices for other items (such as bends), however, the letter did not give a specific estimation as such of the cost of carrying out the upgrade for "Sanctuary Pines". As a result, I requested the Committee (via Mr Young) to provide me with a specific quotation for the work necessary for an upgrade of the water mains for "Sanctuary Pines".

As the requested quotation was not provided for some time, the application could not progress. However from correspondence to this Office from Mr Young, I am aware that during this time, the Committee was negotiating with the developer of Lot 902 (Ceres Group Pty Ltd) about sharing the costs of the work with the Body Corporate.

On 1 December 2004, Mr Young wrote to this Office and confirmed that the upgrade of the water main had been completed, and that the water main was now compliant with relevant fire safety regulations. Mr Young explained that the Committee had agreed to the work being carried out by AD&DJ Corfield through Ceres Group Pty Ltd, and that the Committee had agreed to contribute $20,000 (plus GST) of the total cost of $32,896.60. Mr Young has provided a copy of the AD&DJ Corfield quote, as well as an invoice issued to the Body Corporate by Ceres Group Pty Ltd dated 29 November 2004 for the Body Corporate’s agreed share of the cost of the work. Mr Young has also provided a copy of a second quotation for the work from Ed Ahern Plumbing (Gold Coast) Pty Ltd. This quotation estimated a cost of $35,500.00 for the upgrade of the water main.

Committees play an important role in the day to day management and administration of bodies corporate for community titles scheme. The Act allows the committee for a body corporate to make decisions on behalf of the body corporate (section 100(1) of the Act).

However, it is important to note that both the Act and the Standard Module impose restrictions on the types of decisions that committees may make on behalf of bodies corporate. For instance, committees may not make decisions on certain "restricted issues" which are set out in section 26 of the Standard Module (see also section 100(2) of the Act).

The legislation also places restrictions on the spending that may be undertaken by a committee on behalf of a body corporate. Specifically, section 103 of the Standard Module provides the following:

subsection (1)(c) or (d)".

The "relevant limit for committee spending" for a community titles scheme means "an amount worked out by multiplying the number of lots included in the scheme by $125" (Schedule of the Standard Module). As mentioned previously, there are currently 75 lots included in the "Sanctuary Pines" community titles scheme. Therefore, the relevant limit for committee spending for "Sanctuary Pines" is $9,375.

The expenditure of $22,000 incurred by the committee in this instance is well above its spending limit. Therefore, the Committee could only properly authorise the expenditure if one of the scenarios outlined in sections 103(1)(a), (b), (c) or (d) applied. In this case, sections 103(1)(a), (b) and (d) do not apply. As a result, the Committee has sought an adjudicator’s authorisation for the expenditure pursuant to section 103(1)(c).

Firstly, I wish to point out that generally I do not consider that it is appropriate for committees to apply for an order authorising expenditure on the basis of an emergency after the work has already been carried out. It seems to me that by engaging and authorising a tradesperson to carry out work, a committee incurs a liability for the body corporate and that the tradesperson is perfectly entitled to be compensated for the work carried out (provided he or she has acted in good faith). It seems to me that a committee potentially puts itself into a difficult situation if in such a case an adjudicator refuses to authorise the expenditure after the event, perhaps on the basis that the adjudicator does not consider that the expenditure was necessary to meet an emergency and should have been presented for owners’ consideration at a general meeting.

However, in this case I have decided to authorise the Committee to pay the invoice issued by Ceres Group Pty Ltd in relation to the work. I have a number of reasons for this decision.

Firstly, I am satisfied that the upgrade of the water main was necessary and urgent. Fire service infrastructure is necessary both to protect property included as part of the community titles scheme, and more importantly, is necessary for the safety of owners and occupiers of lots included in the scheme. I note that the Committee has provided a copy of an email from Burchill Partners Pty Ltd (civil and structural engineers and planners) which states that an extra 248 metres of 150 diameter water main was required to upgrade the existing fire service to comply with statutory requirements.

Secondly, the Committee has obtained two quotations which estimate relatively similar costs for the upgrade of the water main. This goes a significant way to showing that the Committee has obtained a competitive price for the work.

Thirdly, I am satisfied that the water main in question is common property which the Body Corporate must manage and administer for the benefit of the owners of lots included in the scheme. This is not to suggest that the Body Corporate may not have a potential remedy or claim against another party (such as the original owner or builder) for any problems in the common property, however in my opinion, it is reasonable and appropriate that in the first instance at least, the Body Corporate meet the cost of upgrading the water main for the benefit and protection of owners. I am also mindful that in this case, the Committee has already reached an agreement with Ceres Group Pty Ltd which will mean that a significant portion of the cost of the upgrade will be met by that company.

Finally, while I am concerned that the Committee allowed the work to be carried out prior to receiving an adjudicator’s order authorising the expenditure, I am mindful that the application was lodged with this Office well before the work was carried out, and more importantly, that I had indicated to Mr Young that I agreed that the work was necessary and urgent. However, I hasten to add that if a similar situation arises in the future, the Committee should, as far as practicably possible, wait until it receives a formal order authorising expenditure above its spending limit prior to engaging tradespeople to carry out work.

For these reasons, I have issued an order allowing the Committee to pay the invoice issued by Ceres Group Pty Ltd for the Body Corporate’s share of the cost of the upgrade of the water main. I have also made an order requiring the Body Corporate to strike a special levy (if necessary) to raise funds to pay the invoice.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sanctuary Pines [2004] QBCCMCmr 652 (20 December 2004)