Galileo Tower [2005] QBCCMCmr 151 (16 March 2005)

Last Updated: 5 July 2005

REFERENCE: 0717-2004

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 Mullens Street HAMILTON Q 4007

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

Carmford Pty Ltd, the owner of Lot 7; Brezville, the owner of Lot 8; and Peachbroom Pty Ltd, the owner of Lot 10,

I hereby order that the resolutions passed in respect of Motion 6 (elevator maintenance); Motion 7 (waterproofing); Motion 8 (roof anchor points); Motion 9 (roof repair); Motion 10 (exhaust fan ducts and motors); Motion 13 (painting); and Motion 14 (TV antenna), at the extraordinary general meeting held on 12 August 2004, were at all times void. I further order that the body corporate committee must consider and propose motions for the rectification of building and other common property defects identified by Leary & Partners Building Surveyor in its report dated 27 August 2003 and now due in accordance with the priority ratings ascribed to each matter, and necessary repairs to the lift as identified by Norman Disney Young Consulting Engineers in its report of 18 July 2003, taking into consideration any further needs identified by those experts in consequence of the passage of time since the inspections and reports were done.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0717-2004

"Galileo Tower" CTS 14193

This is the final order to an application by, Carmford Pty Ltd, Brezville Pty Ltd and Peachbroom Pty Ltd as the owners of Lots 7, 8 and 10 respectively, which are related companies controlled by a Mr P Hollis and which I shall refer to as the "Hollis Companies", which have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") -

1. "That special resolutions 2 and 3 of the extraordinary general meeting held on 12 August, 2004 which were defeated, shall remain defeated.

2. That motion 4 which was passed at the extraordinary general meeting held on 12 August, 2004 be declared invalid.

3. That the "master plan" resolved by the body corporate in 2000 be implemented by the body corporate forthwith.

4. That the resolutions passed with respect to building works be declared invalid as not being in accordance with a master plan resolved to be entered into in 2000."

The applicants also made application for an interim order and the following Interim Order 88-2004 was issued on 18 November 2004 -

"I hereby order that the application for the following interim order –

That the body corporate may not act on the resolutions in dispute until the final determination of the dispute (namely Resolution 4 Lift Upgrade and resolutions passed with respect to building works),

is dismissed."

Following issue of the interim order, the applicant filed material as a reply to submissions however the Commissioner for Body Corporate and Community Management found it to contain additional material and required that it be treated as a change to the application under section 245 of the Act. The orders sought were unaltered. On 1 March 2005 the applicant advised having served a copy of the additional material on all owners along with a copy of a notice from this office inviting further submissions.


JURISDICTION:
Under this heading in my statement of reasons to the interim order I found jurisdiction existed in the following terms –

"This is a dispute between owners (the three corporate owners of Lots 7, 8 and 10) and the body corporate (the respondent), concerning the validity of certain resolutions passed at an extraordinary general meeting of the body corporate. These are matters fall 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."

Also under this heading, I referred the applicant to section 242 of the Act and the requirement that an application seeking to void a resolution must be lodged within 3 months of the date of the meeting at which the resolution was passed, though paragraph (3)(b) provides that an adjudicator may waive the requirement where good reason exists.

The applicant has submitted that in fact the application was hand delivered to this office before 4.30 pm on Friday 12 November 2004, a date that brings the lodgement within the 3 month period. Administrative staff are satisfied that though the lodgement was not processed until the Monday, it was lodged in time. Accordingly section 242 does not apply.

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 this heading in my statement of reasons to the interim order, I said -

"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."

In accordance with section 243 of the Act, a copy of the application was served on the respondent body corporate (committee) which was required to serve copies (first 5 pages and balance on demand) on all other lot owners along with a copy of the interim order and the department’s notice inviting the committee and each other owner to make a written submission on the dispute raised in the application.

A submission was received dated 17 December 2004 from the body corporate committee for the respondent body corporate opposing the application; the submission was marked to be also accepted as a personal submission by Cratburn Pty Lt of Lots 1 and 2, Andrew Mackenzie of Lot 4, Marie Dawson of Lot 5, and Timothy Lowne of Lot 6. A separate submission of even date was received from Jim Gorman of Lot 3 (Ignatatus Pty Ltd) adopting the committee submission.

As stated above, the applicant was required under section 245 to provide a copy of changes to the application together with a copy of a further invitation by this office for all parties to make a submission to the additional material. The material did not alter the orders sought but provided additional grounds in support of the orders sought.

Neither the committee nor any owner made a submission to this additional material

This is one of three applications for this scheme that concern repairs and renovations to various parts of the common property, the others being Application No’s. 557-2004 and 701-2004. Given the commonality of disputes in the three applications, I shall determine them together and orders for all three with be issued together.
The reasons for all three orders should be read together and copies of all three have been sent to all applicants, respondents and parties making a submission to any of the three applications.

The broad facts of the common dispute are as follows.
(NOTE: The following is a copy of the facts as presented under this heading in my Statement of Reasons to Order 557-2004. I have indented the copy so the particular comments relating to this application can be readily identified).

The building is now over 30 years old and parts of the common property are in need of repair, some repairs being of more pressing concern than others. Owners are facing the same decisions that as other owners in other, similar buildings; that is, whether to merely repair items or replace them with a modern equivalent, or some combination of both. In regard to machinery items such as the elevator subject of this application, the decision includes whether to take advantage of new technology which may offer a smoother ride, be more reliable, stave off future repairs for a much longer period, etc (see later). The decisions include questions of cost, the availability of replacement parts, the ability of some owners to pay, how does the benefit fall on owners, a prioritisation of repairs, expert guidance in identifying necessary repairs, whether renovation costs will be reflected in added value to lots, and how the different options must be resolved.

The owners have been considering these questions for some time. The applications and the outcomes of the extraordinary general meeting held on 12 August 2004 ("the meeting") show that owners have varying opinions on what should be done. There is reference to a "Master Plan" being decided on by the body corporate in general meeting in 2000 which was to be prepared setting out details for refurbishment (repairs and improvements) of the building. The body corporate engaged Norman Disney Young, Consulting Engineers, ("NDY") to review the existing lift equipment; it subsequently produced a "Lift Condition Report" dated 18 July 2003, recommending certain changes to the lift. Also around that time, the body corporate engaged Leary and Partners, Building Surveyor ("Leary"), to identify building defects and make repair recommendations. Leary subsequently carried out an inspection of the building and produced a report titled "Defects & Occupational Health & Safety Report" dated 27 August 2003 setting out details of the defect, the recommended repair, a prioritisation of the repairs, and a rough cost of the repair.

The meeting was held for owners to votes on various repairs and replacements. The first motion following confirmation of minutes, Motion 2, was a "motion with alternatives", comprising a principal motion and two alternative motions containing tenders by Milson Projects Pty Ltd ($479,358) and James Trowse Constructions Pty Ltd ($498,724) respectively. The cost per owner (all have equal lot entitlements) is around $33,000 (see section 42B of the Standard Module). The principal motion was put as a special resolution in recognition of the improvements it contained (see section 113 of the Standard Module). The motion failed and Application 557-2004 lodged by 7 owners is for an order to give effect to the motion – while the grounds do not specifically say that the opposing votes were unreasonable, that is easily inferred from their words and I have proceeded on that basis. The application also seeks a similar order for Motion 3 which is the appointment of a supervisor over the renovation works contained in Motion 2 – of course its fate will be decided by the order in respect to Motion 2.

The initial order sought in Application 717-2004 (by three related companies which each own a lot) was directly contrary to 557-2004 in that it sought Motions 2 and 3 remain as defeated motions. The applicants later made a change by adding to the application, permitted under section 245 of the Act but which required the submission process be restarted in respect to the additional matters. The additional orders sought was in effect seeking the invalidation of all of the motions passed at the meeting that related to building works, namely resolutions in respect of Motions 4, 5, 6, 7, 8, 9, 10, 11, 13, and 14.

The orders sought under this application (Application 701-2004, is for the invalidation of the resolutions passed in respect of Motions 4 (the lift), 11 (the garage doors) and 12 (the hot water systems). I have dealt in some depth with these particular resolutions in my Statement of Reasons to the interim order and I will be dealing specifically with them under "Determination" which follows.

Apart from Motion 2 (which was put as a special resolution), the determination of whether resolutions passed should stand or fall depends on whether the subject matter of each motion should be properly characterised as merely a repair, in which case an ordinary resolution is sufficient, or (assuming the cost is above the legislative threshold of $3,600 (12 @ $300 per lot) or alternatively is under the threshold amount but is part of a project of improvements that are in excess of the value) is an improvement, in which case section 113 requires a special resolution. All of the other motions were resolved by ordinary resolution, presumably on the basis that the committee considered all of them were repairs and not improvements, or if an improvement’s cost was under the threshold amount then they were not part of a project over the threshold amount.

I have broadly set out the facts of the matter and the orders sought under the three applications.

I might say at this point that in my Statement of Reasons to the interim order I made the following comment in respect of this and the other two applications –

"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."

I thought it may have been possible with the benefit of the comments and references I made in the interim orders to this and 717-2004, that owners might have been able to negotiate a suitable compromise outcome and call a further meeting to formalise that outcome. That obviously did not happen.

In regard to this particular application, the first and second orders sought, namely that Motions 2 and 3 (for various building renovations) "remain defeated" and that Motion 4 (upgrading of the lift) be "declared invalid", have been resolved by Orders 557-2004 and 701-2004 respectively. The only disputes to be canvassed in this order are that the "master plan" be implemented and that all "resolutions passed with respect to building works be declared invalid".

In regard to these two matters, in my statement of reasons to the interim orders I said –

Order 3: That the "master plan" resolved by the body corporate in 2000 be implemented by the body corporate forthwith.
In seeking the implementation of a "master plan" for renovation of the scheme building, the applicants are seeking the final determination of a matter and not the staying of a proposed action as can only be provided under an interim order. That is, an interim order is inappropriate for the interim order sought.

Order 4: That the resolutions passed with respect to building works be declared invalid as not being in accordance with a master plan resolved to be entered into in 2000."
As stated above, "no evidence is offered other than a reaffirmation of the statement in the order sought, namely that certain proposed building works are not in accordance with a master plan."
Additionally, the relevant motions containing the proposed works have not been identified by the applicants. Accordingly I cannot make an interim order in respect of this matter.

The comments I initially made under "Application" and referred to above that "no evidence is offered other than a reaffirmation of the statement in the order sought, namely that certain proposed building works are not in accordance with a master plan" were taken up by the committee in its submission in stating, "It is submitted that the Application does not disclose any grounds upon which the Adjudicator could make such an order"

When the committee (and adopting owners) received the additional material to the application, largely giving grounds to the orders sought, it chose not to make a further submission in answer to these points. In view of the robust manner in which the committee and certain owners had addressed the other applications, I find it strange that no submission was made. Perhaps they thought that their case had been sufficiently put in their own application and in their submissions.


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").

A core submission by the applicant is that the resolution of the year 2000 to prepare a "master plan" of repairs and replacements to the building has been abandoned by the committee, as evidenced by the substance of its motions presented to the 12 August 2004 meeting, without the owners being given the opportunity to approve or abandon the "master plan" concept.

The committee does not dispute that the master plan has effectively been abandoned and that the motions have departed from the previous proposals. However, it contends that it is not necessary that the body corporate in general meeting needs to pass a specific resolution to change or alter the master plan motion, and it is sufficient that a meeting pass a resolution that is inconsistent with the previous resolution when the resolution is valid to the extent of any inconsistency.

Section 58 of the Standard Module provides that a resolution may only be amended or revoked by a resolution of the same type. That is, a meeting can only amend a previously passed special resolution by a further special resolution, not an ordinary resolution. I agree with the submission of the committee that a further resolution (of the same type) may validly amend a resolution in part; the previous resolution survives to the extent the further resolution does not alter it. That is, if the master plan motion dealt specifically with, for example repairing the lift in a certain manner, a further resolution may alter that manner.

That is, the body corporate in general meeting may alter all or any of the aspects of the proposed master plan.

The second point for consideration is that the applicant seeks the implementation of the master plan, or more correctly, the preparation of one in accordance with the general principles of the 2000 resolution.

The legislation requires that a body corporate must implement its resolutions. However, I have not made an order for this for the following reasons: the period of time since the passing of the motion is now some 5 years and there will have been many changes in the condition of the building; the motion seems to have been very general and no plan has ever been prepared detailing the repairs and renovations considered at the time; and the outcome of the orders made by me will require a reconsideration of the whole of the renovations and repairs. Accordingly, I decline to make an order requiring the body corporate implement the master plan resolution of 2000.

In regard to the last order sought, the applicant has in the additional material specified the resolutions referred to as the "resolutions with respect to building works". Leaving aside the resolutions already subject of an order (including supervisory Motion 5), they are: Motion 6 (elevator maintenance); Motion 7 (waterproofing); Motion 8 (roof anchor points); Motion 9 roof repair); Motion 10 (exhaust fan ducts and motors); Motion 13 (painting); and Motion 14 (TV antenna).

The submission of the applicant is that these motions are all part of the renovation of the building and therefore must be regarded as being part of an overall project. I have previously referred to section 113(2) of the Standard Module in Order 701-2004 (page 6). The provision states –

113 Improvements to common property by body corporate--Act,s 159
(1) The body corporate may make improvements to the common property if--

(a) the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is not more than an amount (the "improvements limit")
worked out by multiplying the number of lots included in the scheme by $300; or
(b) the improvements are authorised by special resolution; or
(c) an adjudicator, under an order made under the dispute resolution provisions, decides the improvements are reasonably necessary for the health, safety or security of persons who use the common property and authorises the improvements.

(2) For subsection (1)(a), if a series of associated improvements forms a single project, the cost of any 1 of the improvements is taken to be more than the improvements limit if the cost of the project, as a whole, is more than the improvements limit.

That is, the threshold cost of works contained within a series of motions for improvement works that are part of the one project, is irrelevant in determining whether a special resolution is or is not necessary. If they are part of a project then works below the threshold of $3,600 must still be resolved by special resolution.

The question then is whether these motions refer to works that are mere maintenance or are improvements under the tests I referred to in my reasons to Order 701-2004. The difficulty I have in considering this is that the committee made no submission opposing the grounds put by the applicant. I have tried to match these motions with those works identified by Leary as requiring urgent attention and then would have attempted to determine whether the works went beyond mere repair to encompass improvement. I was unsuccessful in this.

After having made the major orders on Motions 2 and 4, I have considered referring the parties (the dissenting owners and the committee) to mediation to determine what common ground there was in respect to these remaining motions. However that may only serve to prolong the dispute.

It seems to me that in consequence of the failure of Motions 2 and 4 that the parties need to meet and discuss at least those matters identified by NKY in respect to the lift and Leary in respect to other defects, and determine how these matters can be resolved promptly in everyone’s interests. The result may be basic repairs in some areas and some aspects of improvements in others. These should then be put to a meeting and resolved so that the body corporate can move on to the other matters of repairs and renovations. This process recognizes the practical reality of the voting pattern in the body corporate and the need for the parties to discuss and compromise. Accordingly, my order is to void these motions.