Gemini Towers [2005] QBCCMCmr 227 (26 April 2005)

Number of Scheme:	14084
Name of Scheme:	Gemini Towers
Address of Scheme:	23 -27 Griffith Street NEW FARM QLD 4005

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

I hereby order that the body corporate is obliged to attend to the repair of the hot water pipe located within the concrete floor of lot 25, and the cost of such repair, or the applicable insurance excess, is payable by the body corporate.

I further order that the application for an order that the hot water pipe in the slab floor of lot 25 be "re-instated" and not "re-routed", is dismissed.

I further order that at this point in time, neither the applicant nor the body corporate is obliged to replace the cold water pipe located in the concrete floor of lot 25 (unit 84).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0045-2005

"Gemini Towers" CTS 14084

Application

The applicant has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):

(1) Reinstatement of the hot water facilities to apartment 84 Gemini Towers – not rerouted.
(2) Body Corporate to pay insurance excess on the reinstatement of the premises.
(3) Cold water pipes not to be re-routed
(4) Preservation of rights to common property insurance cover.

Jurisdiction

Section 227(1)(b) of the Act provides that a dispute between an owner or occupier of a lot and the body corporate for a community titles scheme is a dispute which may be resolved under the dispute resolution provisions of the Act.

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 the 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)).

An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Background

"Gemini Towers" is a subdivision of 33 lots registered under a building unit (now building format) plan and the regulation module applying to the scheme is the Standard module.

The building was constructed in the early 1970’s and therefore the plumbing work in that building is now over 30 years old. This dispute relates to a leaking hot water pipe located in the slab floor of the applicant’s apartment. The applicant states that on informing the body corporate of the leak, the body corporate representative advised him that the matter was a joint responsibility and in the circumstances, it would be appropriate for the pipes to be completely replaced and re-routed so that they were not again laid in the concrete floor. The applicant states that he wrote to the body corporate on 2 November 2004 "confirming that it was a matter for reinstatement " and indicating that he was "not agreeable to the suggested compromise".

The water leak in lot 25 was first discovered in October 2004 when the applicant’s letting agent arranged for a plumber, Guildcraft Brisbane, to inspect the water affected area and provide a quote for repair work.

In a detailed report dated 25 October 2005, the plumber advised as follows:

(1) A hot water pipe has burst in the slab causing water to rise between the slab and floor tiles;

(3) The only way to guarantee against further leaks is to run a new line from the hot water meter to all hot water taps in the unit and to do so by rerouting the pipe outside the slab.

(4) The quotation to do this work, concealing the pipe wherever possible, was $5,795.
(5) An option was to also reroute the cold water pipe at the same time at a cost of $1,975.

On 6 January 2005, the body corporate advised the applicant as follows:

(1) That the insurer had approved replacement and rerouting of the hot water pipe by Guildcraft for $4,570 and the applicant would be liable for the insurance excess of $1,000;

(2) Guildcraft had also quoted for replacement and rerouting of the cold water pipe at a cost of $1,975 if undertaken at the same time. Otherwise the cost would be around $6,000.

(3) The body corporate requires replacement of the cold water pipe at the same time as the insurance work to minimise costs to the applicant and the body corporate, and to remove the risk of current and future damage. The body corporate has offered to meet half of the cost as it has with other owners who elect to replace their plumbing.

The applicant states that "if re-routing were carried out instead of reinstatement, I would not be covered for any future fault which might later be revealed. Thus the rerouting would avoid body corporate ownership and the body corporate would have no responsibility. In this regard I would be left without insurance cover".

The applicant refers to "reinstatement" of the hot water pipe in contrast to the recommended re-routing of the pipe, and claims that re-routing is a cheaper alternative. He submits that he is entitled to have the hot water facility "reinstated" with the cost borne by the body corporate insure, and that he should not have to pay the insurance excess.

In a quotation dated 31 January 2005, Guildcraft has provided an estimate of $1,000 to $3,000 (plus cost of retiling jackhammered area) to locate the hot water pipe in the floor, locate the leak, replace leaking section of pipe and refill jackhammered area, although no guarantee is given that the cost of repairs will fall within this estimate. Guildcraft has also raised the following concerns:
(1) Jackhammering a long deep trench into the floor may affect the structural integrity of the slab.
(2) Jackhammering the floor may damage the ceiling of the unit below.
(3) Water may leak into the unit below.

This estimate also disclaims any liability for damage created by carrying out the repair.

Submissions

In response to the application, submissions were received from the body corporate and from the owner of lot 27 who is an Engineer by profession.

The owner of lot 27 advised as follows:

(1) The issue of leaking water pipes is not new in this building. To his knowledge there have been at least 4 identical failures in the past;

(2) The cause of the water leaks is copper pipes which have been improperly embedded directly in the suspended concrete floor rather than being placed in a sleeve or within a service duct, creating stresses which inevitably lead to failure;

(3) In the past, repairs have been re-runs outside the floor slab. It is submitted that this is the correct engineering solution. The alternate repair method involving jackhammering of the suspended concrete floor and repairing the damaged pipe, would perpetuate the problem;

(4) In addition to perpetuating the problem, the suspended concrete floor would be weakened in the process; and

(5) In his view, the applicant should not be required to contribute financially to correct a basic building fault such as this.

The Body Corporate made the following submissions:

(1) As the applicant has made an insurance claim which has been accepted by the insurer, the dispute is actually between the applicant and the insurer, as he has chosen to ignore the recommendations of his own plumber and reject the offer of the insurer to replace and reroute the hot water pipe;

(2) The plumber has also provided an estimate of the cost of repairing the pipe and leaving it in the slab. While the estimated cost is $1,000 to $3,000 (plus cost of retiling jackhammered area) to locate the hot water pipe in the floor, locate the leak, replace the leaking section of pipe and refill the jackhammered area, the cost of locating water leaks within slab floors is "open ended" and can run into several thousand dollars even though such repairs are piecemeal and do not remove the possibility of future failure in close proximity. Further, this method of repair would require aggressive excavation of the building structure and the plumber will not provide a 10 year guarantee (as they will with the re-routing option) that the pipe encased in the slab will not leak again.

(3) The Body Corporate should not, in the future, be required to contribute to repairs on plumbing within the slab floor of lot 25, or alternatively, any future body corporate contribution toward such repairs should be capped at $1,985 which is the maximum amount the body corporate would have been required to contribute if the applicant had proceeded with the repairs approved by the insurer.

(4) The Body Corporate had previously asked the applicant to pay the insurance excess on the claim due to uncertainty about the actual location of the leak. Although the plumber has stated that the leak is "definitely in the slab", no exploratory work has been carried out to determine whether the leak is in fact located within the walls or floor. Accordingly, the insurer has now given permission for limited exploratory work to be undertaken by cutting into damaged wall.

(5) The body corporate position is that if it is proven that the leak is within the slab, it will pay the insurance excess. Otherwise the applicant is to pay the excess.

(6) In relation to the applicants claim that "if rerouting were carried out instead of reinstatement, I would not be covered for any future fault which might later be revealed" the body Corporate has advised as follows:

"The rerouted plumbing will be covered to the same extent by the body corporate insurances as the existing work. However Mr. Smith should be aware that the insurer may impose conditions or disclaim liability for future claims because he has chosen not to proceed with the rerouting of hot and cold water lines within his lot".

DETERMINATION

It is not uncommon for this Office to deal with disputes involving buildings of this age where water pipes and fittings have been improperly laid directly into suspended concrete floors between the lots. Due to differing rates of expansion and contraction between the copper pipes and encasing material, it is almost inevitable that in time, the pipes begin to leak, causing water to seep upwards or downwards through the concrete slab and often causing the steel reinforcing to corrode.

The evidence suggests that the source of the leak is a hot water pipe within the concrete slab floor that is connected to a hot water system servicing a number of lots. The first question to be determined is whether the pipe is utility infrastructure and therefore included in the definition of common property, in which case the body corporate bears responsibility for the repair.

In this regard section 109 of the Standard Module Regulation provides as follows:

(1) The body corporate must maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition.

(a) the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier’s own benefit; and

(b) the owner of the lot is responsible for maintaining utility infrastructure, including utility infrastructure situated on common property, in good order and condition, to the extent that the utility infrastructure

1. An airconditioning plant is installed on the common property, but relates only to supplying utility services to a particular lot. The owner of the lot would be responsible for maintaining the airconditioning equipment.

2. A hot-water system is installed on the common property, but supplies water only to a particular lot. The owner of the lot would be responsible for maintaining the hot-water system and the associated pipes and wiring.

(c) the owner of the lot is responsible for maintaining the tray of a shower that services the lot, whether or not the tray forms part of the lot.

Section 20(1) of the Act relevantly provides:
Common property for a community titles scheme includes all utility infrastructure forming part of scheme land, except utility infrastructure-
(a) solely related to supplying utility services to a lot; and
(b) within the boundaries of the lot (according to the way the boundaries of the lot are defined in the plan of subdivision under which the lot is created); and
(c ) located other than within a boundary structure for the lot.

The expression "utility infrastructure" is defined in Schedule 6 to the Act to include:
cables, wires, pipes, sewers, drains, ducts, plant and equipment by which lots or common property are supplied with utility services.

The definition of "utility service" includes "water reticulation or supply".

"boundary structure", for a lot included in a community titles scheme, means a floor, wall or ceiling, other than a false ceiling, in which is located the boundary of the lot with another lot or common property.

Hot Water Pipe

The supply of water is a utility service and in this case, the pipe used for the supply of hot water is utility infrastructure within the defined meaning of the term as the leaking pipe is connected to a hot water system servicing a number of lots. On the balance of probabilities, I am of the view that the source of the leak is the hot water pipe within the concrete slab floor and the body corporate is responsible for its repair.

It should be noted however, that as a subdivision by Building Unit Plan, the whole of the building, including lots and common areas, is covered by the insurance policy taken out by the Body Corporate. The body corporate has advised that it will pay the insurance excess if it is proven that the leak is within the slab. Otherwise the applicant is to pay the excess. I believe that the body corporate has attempted to reach a fair and practical resolution of this matter.

As I have outlined above, it is not uncommon for buildings of this age to have water pipes that have been improperly laid. In such circumstances it is often necessary to reroute water pipes rather than jackhammering the concrete floor to locate the leak and then backfill with concrete.
In this case the applicant’s nominated plumber has advised that the only way to guarantee against further leaks is to run a new line from the hot water meter to all hot water taps in the unit and to do so by re-routing the pipe outside the slab. He also notes that Jackhammering a trench into the floor may affect the structural integrity of the slab and damage the ceiling of the unit below and accordingly disclaims any liability for damage created by carrying out the repair.

This approach is supported by the owner of lot 27, an Engineer who advised that where this problem has previously occurred in this building, repairs have been re-runs outside the floor slab and that this is the correct engineering solution.

Accordingly, I do not propose to order that the leak should be repaired by jackhammering the suspended concrete floor and replacement of the hot water pipe in the suspended slab instead of rerouting as proposed.

Cold Water Pipe

The plumber has proposed that the cold water pipe could be re-routed at the same time as the hot water pipe at an additional cost of $1,975. The body corporate has offered to meet half of the cost, as it has with other owners who elect to replace their plumbing. This offer has been rejected by the applicant who suggests that if this is done as a preventative measure in his apartment, it should be done in all apartments. While I believe that funds are being accumulated in the sinking fund for this purpose, it believe that to do so at this stage would require payment of a sizeable special levy by each of the lot owners.

At present it is not evident whether the cold water pipe has deteriorated to such an extent that it requires replacement. In the circumstances I do not propose to order that the cold water pipe be replaced or re-routed. However, it is possible that if there is a future insurance claim in respect of the cold water pipe, the body corporate may require the applicant to pay the insurance excess pursuant to section 133(3) of the Standard Regulation Module.

Insurance

It should be noted that as a subdivision by Building Unit Plan, the whole of this building, including lots and common areas, is covered by the insurance policy taken out by the Body Corporate. Accordingly, the applicant’s contention that re-routing of the water pipes would avoid body corporate ownership and therefore leave him without insurance cover, is misconceived. I do not propose to make an order in this regard.

ORDERS

I hereby order that the body corporate is obliged to attend to the repair of the hot water pipe located within the concrete floor of lot 25, and the cost of such repair, or the applicable insurance excess, is payable by the body corporate.

I further order that the application for an order that the hot water pipe in the slab floor of lot 25 be "re-instated" and not "re-routed", is dismissed.

I further order that at this point in time, neither the applicant nor the body corporate, is obliged to replace the cold water pipe located in the concrete floor of lot 25 (unit 84).

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Gemini Towers [2005] QBCCMCmr 227 (26 April 2005)