Galileo Tower [2005] QBCCMCmr 359 (30 June 2005)

Last Updated: 2 August 2005

REFERENCE: 0326-2005

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

Mr James Dawes, the Owner(s) of lot 12

I hereby order that the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0326-2005

"Galileo Tower" CTS 14193

Application

Galileo Tower Community Titles Scheme (Galileo Tower) is a 12 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme is designed for residential purposes.

This application is by James Dawes, the owner of lot 12 (applicant) seeking orders against the body corporate for Galileo Tower (respondent). The applicant is seeking orders opposing decisions made by owners in general meeting on 12 August 2004 and 25 October 2004. In particular, the applicant seeks orders to rescind special levies (including penalties for non-payment). The applicant also seeks an order requiring the body corporate to reposition two hot water systems to their original position if it cannot provide evidence that the position of the hot water systems does not compromise certain features of the building or the efficiency of the system.

Background

The majority of the resolutions passed by owners in general meeting on 12 August 2004 have already been the subject of disputes determined by this office. These resolutions proposed total spending of $17,947 per unit entitlement on a number of improvements and repairs. A special contribution was levied accordingly.

However, the validity of these resolutions was challenged and the applicant, among other lot owners, did not pay the levy. As these owners had not paid the levy they were not entitled to nominate for committee membership or vote at the annual general meeting held on 25 October 2004.

Subsequently, by orders dated 16 March 2005:

1.

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) were declared to be at all times void on the basis that those resolutions comprised improvements rather than repairs and should have been determined by special resolution;[1]

2.

Resolutions passed in respect of Motion 4 (for the lift upgrade) and Motion 11 (for the replacement of garage doors) were declared to be at all times void on the basis that those resolutions comprised improvements rather than repairs and should have been determined by special resolution. However, a resolution in respect of Motion 12 (for replacement of hot water systems) was determined only to require an ordinary resolution given it was a preventative repair involving replacement of a similar system rather than an improvement.[2] A resolution pursuant to Motion 15 (concerning installation of fire extinguishers) was not opposed at the time.

As a result of these orders, the contributions properly levied pursuant to the resolutions on 12 August 2004 totalled only $937 per lot entitlement, being $749 for the replacement hot water systems and $188 for installation of fire extinguishers. However, by the time of making this application the applicant had incurred penalty interest on the $937 special contribution owning. The applicant had also failed to pay three quarterly contributions of $1,436.62 each and lost discounts and incurred penalty interest on those amounts. The body corporate is therefore seeking the amount of $5,773.46 from the applicant.

Submissions

The applicant’s main submissions were to the effect that:

• There should not have been any special contribution levied in the amounts of $749 for the replacement hot water systems and $188 for installation of fire extinguishers as these amounts should have been paid from the ninety thousand dollar sinking fund that has not been allocated to any specific expenses;
• Adjustments were made to owners’ accounts subsequent to the orders invalidating some of the special levies. The manner in which these adjustments were effected was confusing and required reference to various bits of paper together. It would have been far more satisfactory to rescind the old notice of contributions and issue a new notice of contributions. This would also have made it clear that no arrears were owed at the date of the annual general meeting because the old notice of contributions would have been rescinded;
• Six owners were correct in their decision not to pay the special contributions levied as a number of these contributions were later shown to be void. However, these owners were deprived of their vote and opportunity to stand on the committee because the amounts were owing at the date of the annual general meeting held on 25 October 2004. The meeting was therefore improperly constituted and all business transacted at the annual general meeting is invalid. Certain owners were prevented from exercising their rights and it does not matter whether the outcome would have changed if the votes had been allowed; and
• The resolution to replace the hot water system should have involved removing the old hot water system and putting a new hot water system in its place. Instead of this, a new hot water system was placed on the roof of the building rather than at the top of the internal stairway. It was submitted that this created exclusive use and an easement without proper authorisation. Further submissions were to the effect that the installation is visually offensive and no information was provided about the ability of the roof to support this weight, the likely damage to the roof or units below or the cooling influence of the wind.

Submissions on behalf of the committee were to the effect that:

• There are many aspects of the building that require significant maintenance and repair and the sinking fund balance may be barely sufficient to cover basic repairs and maintenance. Special contributions were therefore proposed for the additional matters voted upon;
• The special contributions of $749 for the replacement hot water systems and $188 for installation of fire extinguishers remain valid and stand as proper binding resolutions of the body corporate;
• The notice of contributions did not separate the special contribution by reference to the individual motions but the amounts of these valid levies are very clear from reading the minutes of the meeting;
• In any event, amended statements of contributions were sent to lot owners after the order invalidating some of the motions. This included a letter and updated statement dated 26 May 2005;
• Six lot owners were not entitled to vote or nominate for committee membership at the annual general meeting on 25 October 2004 because they had not paid their levies. Of these owners, four did not attend the annual general meeting so it is likely the outcome would not have been affected even if the unfinancial members attending had exercised a vote;
• The hot water system was replaced by accepting a quotation from Gasworks and Plumbing Pty Ltd. This quotation was included with the notice of meeting and clearly states that the new systems would be placed on the roof area. This was the strong recommendation of Gasworks and Plumbing Pty Ltd and was reviewed by Leary Partners. It does not amount to a conversion of common property to exclusive use or creation of an easement over common property; and
• Generally, an application to declare void a meeting or resolution must be made within three months of the meeting. The present application is more than three months after the meetings of 12 August 2004 and 25 October 2004. Issues raised by the applicant could have been raised within this time limit or in a previous application brought by the applicant. No appropriate application was made within the time limit required by the Act.

Decision

Time Limit

Before considering the merits of the submissions in detail, it is necessary to consider whether there is good reason to waive the failure of the applicant to make this application within 3 months of the date at which the resolution was adopted (Act, 242).

This three month time limit provides certainty for the scheme. Persons inspecting the records prior to purchasing a lot, and any other persons dealing with the body corporate, have some certainty that resolutions passed more than three months previously cannot ordinarily be challenged. It can also assist in bringing closure to any disagreements and encouraging harmonious relationships over the longer term between owners with differing viewpoints.

Having said this, an adjudicator can waive non-compliance with the time limit for "good reason" (Act, 242(3)(b)). What constitutes "good reason" was considered by the District Court in Weeks v Commissioner for Body Corporate.^[3] Judge Dodds stated:

"... the objects of the Act, for instance section 5(a) and (h) militate against too strict or legalistic a view about good reason for waiving non-compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the adjudicator that the time limit should be waived in all the circumstances."

Request for extension of time limit

The applicant requests that the time limits be waived in this instance. In particular, he indicates that the delay is partly because he has waited for the committee to take appropriate action following the orders dated 16 March 2005 referred to above. The applicant makes submissions to the effect that owners were correct in not paying the special levies as most of the motions incurring a levy were declared to be void. It is further submitted that it would be unreasonable to expect owners would have sufficient information to adjust payments to remove amounts for motions found to be void as the contribution notice for the special levy was not itemised.

On balance, the applicant has not satisfied me that there is good reason to waive non-compliance with the time limit. Both meetings were over six months before the present application was lodged. Shortly after the meeting of 12 August 2004 the applicant was involved in an application seeking to have certain of the motions declared invalid. The special levy set at the meeting was a relevant issue in this respect and could have been challenged by the applicant at the time.

If the applicant wanted to avoid being disqualified from voting and committee elections then the applicant should have paid the disputed amount in full subject to bringing an application to seek reimbursement of any amount not properly owed. Alternatively, the applicant could have brought an application with grounds showing why he did not owe the disputed amount and sought an order to allow him to vote and stand for committee membership pending a final determination of any amount owed. The applicant did not do either of these things. In particular, the applicant failed to pay the regular quarterly contributions of $1,436.32 each. The validity of these contributions has not been challenged and the applicant has been unfinancial ever since those contributions were due.

There would be significant inconvenience for the body corporate to have its entire annual general meeting invalidated over six months later as sought by the applicant. Further, even if I were to consider the merits of the claim, the applicant’s grounds appear to have little likelihood of success. I accept the applicant has a genuine concern that the documentation from the body corporate manager reversing certain of the levies is unsatisfactory and confusing. However, in itself, this does not appear to justify the orders sought. The minutes of meeting did identify the amounts owing for replacement of the hot water systems and installation of fire extinguishers. Notices of contribution also itemised the quarterly administrative and sinking fund contributions. If there was ongoing confusion then the applicant could presumably have spoken with the body corporate manager to work out the exact amount payable. In these circumstances, the applicant has not shown any real likelihood of successfully obtaining the orders sought.

The applicant has also failed to establish any real likelihood of success in relation to concerns about the relocation of the hot water systems. Owners voted to adopt a quotation from Gasworks and Plumbing Pty Ltd that proposed the relocation of the hot water systems to the roof. These hot water systems are common property utility infrastructure and are not improvements for the benefit of one particular lot owner. No question of creation of exclusive use or easements arises. The applicant wants the hot water systems returned to their original position unless an engineers report is given to show the relocation has not adversely affected certain matters. However, the systems were installed at the recommendation of a company in the trade of installing hot water systems and it is for the applicant to provide evidence raising a serious question about these matters if he is to successfully challenge the installation.

Order

I am not satisfied that there is any good reason to extend the time limit to consider the placement of the hot water system or consider whether the special contributions levied should have been rescinded and re-levied rather than simply readjusted. For these reasons, the application is dismissed.

^[1] Application 0717-2004, Galileo Tower, CG Young, 16 March 2005.
^[2] Application 0701-2004, Galileo Tower, CG Young, 16 March 2005.
^[3] District Court (Maroochydore), Appeal 13/99, Judge Dodds at pages 4-5.