La Porte D'Or [2005] QBCCMCmr 377 (12 July 2005)

Number of Scheme:	12681
Name of Scheme:	La Porte D’Or
Address of Scheme:	3422 Gold Coast Highway SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Vito Giorgio, a member of the committee for the body corporate for the "La Porte D’Or" community titles scheme.

I hereby order that the resolution made at the Committee Meeting dated 15 October 2004 to "authorise the payment of $8118.00 to Fashion Carpet and Tile Court for the supply and installation of new commercial grade wool carpet to the penthouse level foyer" is void.

I further order that the committee resolution at the Committee Meeting dated 15 October 2004 to authorise electrical work on the "penthouse level" to the extent that the electrical work related to the emergency lighting system for the scheme is not void.

I further order that, in all other respects, the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0710-2004

"La Porte D’Or" CTS 12681

APPLICATION

This application is by Vito Giorgio, a member of the committee (applicant) against the committee for the scheme (respondent). The applicant is seeking the following outcomes, quote:

JURISDICTION

"La Porte D’Or" Community Titles Scheme 12681 is a scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

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:

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)).

INTERIM ORDER

The applicant had also sought an interim order, and on 24 November 2004, Adjudicator PJ Hanly made the following Interim Order, quote:

I hereby order that the body corporate shall pay for the carpeting ($8,118.00) and electrical works ($1,734.00) carried out on the penthouse foyer pending final determination of this application.

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot (excluding the applicant) and the committee. A submission was received from a number of lot owners, including the owners of Lots 180 and 181. The respondent committee did not make a submission. The applicant made a written reply to submissions under section 244 of the Act.

DETERMINATION

The outcomes sought make general references to the payment of invoices by the committee relating to the refurbishment of improvements to common property. While the terms of the outcomes sought do not specify particular spending by the committee, the grounds to the application relate primarily to decisions made at the committee meeting dated 15 October 2004 to:

These payments were the subject of the abovementioned Interim Order. As the applicant has not made any reference to other payments, the Order made to determine this dispute will relate to the two payments authorised at the committee meeting dated 15 October 2004.

The penthouse level foyer is part of the common property for the scheme as indicated by Sheet 38 of Building Units Plan 2457 displaying Level HH of the building. This foyer provides access to Lots 179 to 182, and based on the submissions, to other parts of the common property containing utility infrastructure.

The committee decisions relate to work carried out on this part of the common property for the scheme. Section 35 of the Act provides that owners own the common property as tenants in common which gives each owner a general proprietary right to use the common property. The body corporate’s general functions include reasonably administering common property for the benefit of lot owners (Act, section 94). The body corporate also must administer, manage and control common property reasonably and for the benefit of lot owners (Act, section 152). Section 169 of the Act provides a body corporate with the power to make by-laws providing for the administration, management and control of common property and to regulate the use and enjoyment of common property. A lot owner’s right to the use and enjoyment of the common property is subject to proper decisions of the body corporate. For example, the body corporate may make an exclusive use by-law under section 171 of the Act or authorise a use in accordance with a by-law. Section 114 of the Standard Module provides that the body corporate may authorise a lot owner to make an improvement to common property for the benefit of the owner’s lot.

Carpet Installation
It is not disputed that marble floor tiles in the penthouse level foyer had been damaged due to "concrete cancer" in the foyer floor and as a consequence of the work performed to rectify the "concrete cancer". It is also clear that as the damaged tiles could not be properly matched with the existing tiles, it was determined that carpet would be laid on the floor of the foyer. The committee decided that as the foyers on the other levels in the building were carpeted, the body corporate would contribute to that part of the cost of the carpet which was equivalent to the standard of the carpet on other foyers, and the lot owners of the penthouse lots would personally contribute an additional amount constituting the extent to which the carpet laid in the foyer to their lots was of a higher standard. The committee resolved to authorise the payment of $8118.00 towards carpeting the foyer, with the owners of Lots 179 to 182 contributing $2552.00 to prepare the floor for carpeting, and for the superior quality carpet.

The applicant has stated that approximately 20 to 25 years ago, the owners of the penthouse lots replaced the original carpet in the foyer to Lots 179 to 182 with marble tiles. While the submission from the owners of Lots 180 and 181 questions whether this was in fact the case, I consider that it is clearly evident from the submissions made for this application that the owners of Lots 179 to 182 did in fact carry out this work to the common property. In my view, the replacement of the original carpet with marble tiles constituted an improvement to common property. This improvement was made by lot owners, presumably for reasons such as enhancing the aesthetics of the common property on this level of the building. I consider that such an improvement could only provide a benefit to the owners of the lots on that level of the building. This work could only be performed with the authority of the body corporate. While there may not be a record of any such authority, in my view it is evident that the then owners of these lots made an improvement to the common property in the form of marble floor and wall tiles for the benefit of their lots, and in my view, were responsible for the maintenance of the improvement.

In this instance, the floor tiles were damaged as a consequence of "concrete cancer". It has not been demonstrated that the "concrete cancer" was caused by the change in the floor covering. Therefore, it is a question as to whether the body corporate or the lot owners should be responsible for the maintenance of the floor tiles given that the damage to the tiles was associated with the "concrete cancer" for which the body corporate was responsible under section 109 of the Standard Module to maintain. The fundamental principle for the responsibility for the improvement was expressed in the making of an order on Gemini Court CTS 9731 Application Ref. No. 0363-2000, where Adjudicator RA Meek relevantly stated, quote:

I do not consider the responsibility of the body corporate for maintenance of the membrane extends to the laying of any new floor covering or surface over the new membrane which has been laid. The body corporate is obliged by section 109(2)(a)(iii) to maintain in good condition the roofing membrane; not to reinstate the lot to its former condition.

If an owner has chosen to install, or to replace, a floor covering or surface over a membrane which the body corporate is responsible to maintain, and the membrane does thereafter require maintenance, then the replacement of any future floor covering or surface is a matter for the owner. It is part of the risk that the owner takes in choosing to install, or to replace, the floor covering or surface.

In my view, this principle applies equally to the issue relating to the marble floor and wall tiles. These tiles were installed on common property by lot owners for the benefit of those owners’ lots. In my view, even though the body corporate had to damage the tiles to maintain a part of the common property, all lot owners should not be responsible for a cost associated with providing a particular benefit to four lot owners. Therefore, in the absence of any contrary material, the benefiting lot owners retain responsibility for the maintenance of the tiles, and a risk associated with the installation of the tiles is that the tiles may have to be removed and replaced if the body corporate has to reasonably maintain the common property on which they have been laid. I consider that the cost of the replacement of the tiles should not be met by the body corporate.

As the tiles could not be satisfactorily replaced, it was decided at the committee meeting dated 15 October 2004 that the tiles would be replaced with carpet and that the body corporate would share the cost associated with the installation of carpet. This carpet is of a type and quality which provides a particular benefit to four lot owners. The carpet is of a higher grade and quality than the carpet which has been installed by the body corporate on other levels in the building. In their submission, the owners of Lots 180 and 181 relevantly stated, quote, "We believe that the final impact of what we have done.......in beautifying what can only be regarded as body corporate property has enhanced the value of the building. Further, the Penthouse owners have been working for only one aim and that is the beautification of the floor upon which they reside, following an unfortunate need to attend to concrete cancer repairs". I agree with this submission to the extent that the benefit is derived by the owners of Lots 179 to 182.

I consider that the committee should not have made the decision to bind the body corporate to the cost of the replacement carpet. Firstly, the committee decision related to an improvement to common property which provides a benefit to specific lots and which is subject to the provisions of section 114 of the Standard Module. The committee is restricted by section 26(1)(d) of the Standard Module and section 100 of the Act from making a decision on this matter. Secondly, the committee decision effectively changed the obligations of the owners of lots included in the scheme by determining that lot owners have become obligated, as members of the body corporate, for the floor covering in the penthouse level foyer. As this is decision is on a restricted issue (section 26(1)(b), Standard Module), the committee cannot make a body corporate decision (section 100, Act). For these reasons, I consider that the resolution made at the Committee Meeting dated 15 October 2004 to "authorise the payment of $8118.00 to Fashion Carpet and Tile Court for the supply and installation of new commercial grade wool carpet to the penthouse level foyer" is void.

In my view, this matter must be referred to a general meeting of the body corporate. The owners of Lots 179 to 182 could seek body corporate authorisation for the improvement made to common property for the benefit of their respective lots in accordance with section 114 of the Standard Module. If these lot owners are given this authorisation, the body corporate and these lot owners may consider appropriate conditions. Alternatively, it could be requested that the body corporate assume responsibility for the floor coverings on this part of the common property. If the body corporate makes this decision, then it will be a matter for the body corporate to decide on the future management of this part of the common property, which may include installing a floor covering which is consistent with the floor covering on the common property foyers on other levels in the building.

I have not made an order against the owners of Lots 179 to 182 with respect to the cost of the carpet as these persons were not named as respondents to the application. However, I do not consider that the body corporate is presently liable for the cost associated with the laying of the carpet which has been paid by the body corporate.

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

As outlined on page 2 of the "Statement of Adjudicator’s Reasons for Decision", the body corporate has an obligation with respect to the control, management and administration of common property. This responsibility would include establishing and maintaining appropriate lighting of areas of common property. The body corporate would also be responsible to ensure that the appropriate lighting arrangements are in place for emergency situations.

In this case, the disputed electrical work in the foyer of the penthouse level involved in part, or in whole, providing lighting or access to electricity for those persons using this part of common property. These persons include lot owners, occupiers, and invitees, body corporate members and body corporate contractors. Part of the electrical work involved making an alteration to the emergency lighting system.

The body corporate has considered the issue of emergency lighting and the minutes of the Extraordinary General Meeting dated 10 July 2004 (EGM) note at Motion 6 that the current lighting system would shut down if there is an overload on the generator and the proposed system operates on a battery back up, and therefore the lighting will not shut down even if the generator overloads. The applicant claims that this upgrade of the emergency lighting is an improvement to common property and is outside the powers of the committee. I disagree with this contention. The body corporate has identified a problem with the existing provision of emergency lighting and the circumstances given for the upgrade do not, in my opinion, constitute an improvement to common property. I consider that an alteration to emergency lighting of this nature is the rectification of an identified deficiency to ensure reasonable access to, and use of this part of common property, and to other parts of scheme land.

In this instance, the committee has approved work to upgrade the emergency lighting on the penthouse level. The type of work authorised by the committee is consistent with the decision of the body corporate. In view of the submissions made on this application, I consider that this was a reasonable decision, and to the extent that it relates to the maintenance of the emergency lighting system was not improper. I certainly do not consider that the owners of Lots 179 to 182 are deriving a particular benefit which would be sufficient to trigger the requirements of section 114 of the Standard Module. The emergency lighting not only benefits the owners of Lots 179 to 182, but also other body corporate members, body corporate contractors, and any other persons lawfully using this part of the common property. In addition, the body corporate, not individual lot owners should control such an integral part of the scheme infrastructure. Given that the anticipated total cost to the body corporate for the changes to emergency lighting is more than the "relevant limit for committee spending" and more than the "relevant limit for major spending" (Dictionary, Standard Module), the committee should have given regard to the requirements of section 103 and section 104 of the Standard Module. However, the mere fact that the committee may have approved expenditure which is part of a proposed entire project which exceeds the spending limitations specified in the Standard Module should not be to the detriment of the owners of Lots 179 to 182. The work has been completed; it would seem by the contractor considered at the EGM and in the absence of contrary material, was a reasonable body corporate expense. While the committee should not continue expending body corporate monies on changing the emergency lighting system throughout the building without the authority of the body corporate in general meeting, I do not consider that it is reasonable to require the penthouse owners to be responsible for the costs incurred relating specifically to the emergency lighting.

For these reasons, I have ordered that the committee decision to authorise expenditure to pay for the electrical works on the penthouse level foyer to the extent that the expenditure related to alterations to the emergency lighting system is not void. In relation to the other electrical works performed on this part of the common property, in my view this is a matter for determination of the body corporate. I will only comment that the body corporate should not be contributing for electrical work which for no good reason is different to, or of a quality which is better or different to the electrical fixtures and fittings on other levels of the building. If it can be shown that the owners of Lots 179 to 182 derived a unique benefit from fixtures and fittings installed on this level, then those lot owners should be responsible for the costs associated with their installation, and the owners should seek body corporate authority in accordance with section 114 of the Standard Module.

The applicant has also sought an outcome with respect to the general powers of the committee and spending limitations. The body corporate and its committee are subject to the requirements of the legislation and I do not consider that it is necessary that an order restating the provisions of the legislation is warranted in this instance. That being said, obviously the committee has an obligation to ensure that body corporate spending is authorised in accordance with the processes and limitations specified in the legislation.

(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.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

La Porte D'Or [2005] QBCCMCmr 377 (12 July 2005)