White Lea Lodge [2006] QBCCMCmr 19 (13 January 2006)

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

I hereby order that should the applicant Florentina Battaglia, submit a motion or motions to the secretary/acting secretary/ body corporate manager for the scheme, which motion or motions cannot be put to the annual general meeting to be held on 20^th January 2006, owing to the period of notice required to be given to lot owners by the legislation, or because the applicant has not been able to prepare the motion or motions by that date, then the secretary/acting secretary/ body corporate manager for the scheme must convene an extraordinary general meeting within six weeks of the date of receipt of that motion or motions for the resolution of that motion or motions by the full body corporate.

I further order that a copy of this order and reasons for decision be circulated to the remaining six lot owners in the scheme (apart from the applicant Florentina Battaglia ) by the body corporate manager, at the expense of the body corporate, on receipt by the body corporate manager, Australian Unit Administration Pty Ltd.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0671-2005

"White Lea Lodge" CTS 13012

APPLICATION

This is an application dated 3rd October 2005 and amended on 6^th October 2005 by Florentina Battaglia (the applicant), owner of Lot 6, for an order against the body corporate for the scheme (the body corporate) that the body corporate take immediate action prior to repairing the roof of scheme buildings by seeking expert advice on repair and quotations for the necessary work. The applicant further seeks an order that the body corporate submit a claim form to its insurers with respect to damage caused to her unit as a result of water ingress through the roof.

JURISDICTION

"White Lea Lodge" Community Titles Scheme 13012 is a community title scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module). There are ten lots in the scheme created under a Building Unit Plan of subdivision.

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

(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)).

The applicant has been advised by this office that the Commissioner has no jurisdiction with regard to compensation for loss of rent. Such compensation can only be awarded by a court.

SUBMISSIONS

Submissions were invited from all lot owners as well (as the body corporate as respondent) in accordance with section 243(2)(b) of the Act. The body corporate did not wish to make a submission. There were no submissions from any of the other six owners of the 10 lots.

The applicant’s statement of grounds is therefore not in dispute.

She says that following rainwater damage to the ceilings of the kitchen and a bedroom in Unit 6 on 9^th March 1998, insurance brokers inspected the unit and wrote to the Secretary for the scheme, reporting that the unit was " starting to rot." The loss adjusters McLarens Toplis found that the Supersix fibro roof of the building had deteriorated with age, and had lost its waterproofing qualities. The surface was "quite porous." They noted that the ceiling of Unit 6 had damage "consistent with rot occurring over a long period of time and many incidents."
Ceilings were sagging from rot rather than water inundation ponding in them. They recommended that the roof was completely re-sealed, and asked the body corporate to forward copies of a paid invoice for the work done. They said that the insurers were not prepared to pay for decoration and repairs internally until the roof was sealed.

On 11^th September 1998, an Extraordinary General Meeting was proposed to be convened but I am not advised if the meeting in fact went ahead. Motions to accept a quotation from Aquaseal Waterproofing for $5,952 to seal the roof and pay for the repairs from the sinking fund were proposed, but there is no record of whether those motions were passed or not. They were certainly not acted upon.

Repairs to Unit 6 were made and invoiced to the owner on 29^th October 1998. The invoices from M and I Property Maintenance were for $185 and $380 respectively. The history of water ingress into the bedrooms, lounge and kitchen of Unit 6 continued in 2000, with the letting agents for the unit , Peter Curie Real Estate ( the letting agents) repeatedly contacting the body corporate manager Australian Unit Administration ( the body corporate manager) for assistance and action, without response. In 2003, a tenant had to move out because the water ingress was unsupportable. In March and April 2004, the letting agents contacted solicitors Bostock Frazer on behalf of the applicant. The lawyers received no response on writing to the body corporate manager in May and June 2004 .

In June 2004, the body corporate manager arranged for a roofer to inspect the building.. Nothing was done. The leaks naturally continued into September, October and November 2004.

The applicant says that " it only needs a sprinkle of rain to make the unit flood with rainwater. We have tried a tarpaulin on the roof ( 20-10-05) to try to stop the flooding."

Rainwater coming into unit 6’s kitchen and onto the floor has caused damage to the unit below unit 6 as well. The floor of unit 6 is now dangerous, and the kitchen benches are rotten, and electrical apparatus such as the fridge and cooker hotplates are often flooded and therefore dangerous. Carpets and furniture, and then tenant’s clothing has been damaged.

An annual general meting was held on 22^nd December 2004. Sinking Fund Contributions for the next year were approved at $300 per unit of entitlement per year. Australian Unit Administration was appointed as body corporate manager until 31^st January 2006. At the meeting, owner of Lot 5, Mr Wild, who was present, proposed that the roof should be repaired rather than replaced and offered to assist the body corporate manager in rectifying the water penetration problem, although I have no record of what Mr Wild proposed to do, or subsequently might have done. There was no special levy raised for any kind of repairs to the building.

An insurance claim for water damage to the walls, ceilings and carpet was lodged by the letting agent on behalf of the applicant in 2005 , but has not been proceeded with because it is felt that there is no point effecting repairs to the interior if roof not has not been repaired, and a view that the insurers would not entertain the claim until the roof has been fixed.

DETERMINATION

I accept the submissions made by the applicant, as assisted by the letting agent, through whom she rents out her unit to a paying tenant.

However, I am concerned that the statement of grounds shows no dispute with the body corporate. In order to have ‘ a dispute’ with the body corporate, a lot owner must have asked the body corporate to do take certain action and have been refused. However, the body corporate does not seem ever to have been asked to address the issue of the roof at a general meeting, or at committee level.

The applicant, whom I understand from the recorded title to her property, has owned the lot since 1988 and has been aware of the ever-worsening roof leak since 1998. It appears that, with the exception of an attempt in August 1998, when pressure from her prompted a motion about sealing the roof to be put to a general meeting, that she has not proposed a motion to a general meeting of the body corporate that the roof be fixed or quotes be obtained, nor has she sought such quotes herself.

Since that time, the applicant has arranged for others to write letters to the body corporate manager, but the body corporate manager is only the contracted servant of the body corporate. I find that the body corporate manager could have been more helpful in this regard and suggested that the applicant put her motion to a vote at a general meeting, but it is not generally the body corporate manager’s position to propose motions or to be pro-active in property maintenance. The impetus must come from the body corporate, that is, the lot owners who alone are the members of the body corporate.

From the roll of the body corporate it does not appear that any of the body corporate members actually live within the complex, although since owners Rio Red Pty Ltd and Ivydale Pty Ltd are companies, I have no knowledge of the residence of their respective directors. However, I find it likely that this is purely an "investment property" for the owners and that all 10 units are rented out.

I also note that the owners are so inactive in the management of the scheme that there is no chairperson, and they allow the body corporate manager to act as secretary and treasurer of the body corporate, which in fact is contrary to the legislation. A body corporate manager is not eligible to be a committee member, but automatically holds a non-voting position. There must also be a chairperson, secretary and treasurer (even if one person fulfills all three roles) and the committee personnel must be lot owners, or attorneys of lot owners holding a power of attorney, or a family member of lot owners.(section 10(2) Standard Module). There must be a committee to direct the body corporate manager. It is therefore perhaps unsurprising that there has been so little response from the body corporate manager.

A properly elected committee has the power to spend up to $125 times the number of lots ( i.e. $1,250) on repairs without consulting the body corporate by putting a motion to a general meeting. If repairs beyond the limit of committee spending are proposed, then they must be voted on by the full body corporate (all lot-owners) at a general meeting, and if over $250 x 10 is proposed, must be accompanied with a minimum of two quotations for the work proposed circulated in advance to the owners. ( section 104 Standard Module). Where there is no committee, and no authorization given to the body corporate manager by the body corporate, even minor spending on repairs will simply not be done, as has happened in this scheme.

It may be that the majority of owners do not want to do anything about the roof, certainly not to spend large sums of money on replacing it. Whilst the body corporate has a duty to maintain the fabric and structure of the common property and protecting roofs in good repair and sound structural condition, (section 109. Standard Module), one lot owner cannot force the body corporate to take action if the majority are willing for the building to fall into decline. It is a matter for the lot owners how far such dilapidation may proceed before the building becomes a health hazard or uninsurable with regard to public risk liability, eg injury to the tenants.

The complex holds a ‘prime real estate’ position on the Gold Coast and it is understandable if the owners are interested in the site for its land value only, which is has increased considerably since the body corporate was established in 1976.

I contacted Graham Yeates, of the body corporate manager, and Dian Currie, of the letting agent, by telephone on 12^th January 2006. Mr Yeates advised that his firm continues to be body corporate manager and that he is still acting as secretary/treasurer for the scheme.

He further advised that the annual general meeting is to be held on 20^th January 2006 (AGM of 2006) and that a motion concerning repairing the roof for the sum of $15,000 by a Peter Perkins is to be put to the vote. I do not have details of the extent of the repair proposed for $15,000.

It is unfortunately too late for the applicant to propose a motion to the AGM of 2006. However, if the applicant is not satisfied that the motion currently before the AGM of 2006 covers the areas of concern to her, then she should thereafter propose a motion or motions to the committee ( or ‘acting committee’, the body corporate manager, if there is no committee elected at the AGM of 2006. )

If the applicant wishes to do so, she should propose a motion or motions with quotations for the work which she wants done. These motions might propose some of the ideas mentioned below in the final paragraph.

She might also propose as a separate motion or motions that the body corporate reimburse her for damage to furniture and carpets and the cost of repairs, and/or that the body corporate, through its committee or acting committee, if necessary, or through her, or her letting agent, make a claim to insurers in respect of repairs to Unit 6. All these matters need to be unreasonably refused by the body corporate before the applicant is "in dispute" with the body corporate.

In my view, it would be "unreasonable" for the body corporate to allow such dilapidation that the body corporate members may become liable for negligence. However, the applicant must take substantial steps herself to mitigate the damage, and not rely on a contractor of the body corporate to "do something" about the state of repair of her property. It is her property, owned jointly with others, and they, as the body corporate must decide how it is to be maintained in accordance with the Act and other relevant legislation, eg health and safety legislation.

Section 61 of the Standard Module enables owners of 25% of the lots to request in writing that a general meeting be held. In such circumstances, the body corporate must decide on a date for the general meeting within 14 days of receipt of the request, and convene the meeting within 6 weeks. (Section 61(2) Standard Module.) For this scheme of 10 lots, the request would have to come from 3 lots, which could be in the ownership of one owner. However, in order to make sure that the concerns of the applicant are addressed promptly, if the applicant chooses to propose motions after the AGM of 2006, I order that the secretary (or acting secretary or body corporate manager) convenes an extraordinary general meeting six weeks after receipt of those motions, without waiting for the written request of 25% of lot owners.

I shall also order that a copy of this decision is circulated to lot owners, with the aim that all lot owners shall have a copy prior to the AGM of 2006.

All lot owners may like to consider their legal positions should the body corporate be sued for allowing the building to cause damage to persons or property. The body corporate may like to consider a long-term plan for satisfactory maintenance of the building, eg. the preparation by a professional engineer of a building safety report, and the prioritising of work to be undertaken over a period of time; the obtaining of quotations for repair or replacement; the adoption of a special levy to cover costs; and/or the engagement of a property maintenance contractor for regular "handyman" jobs on site. As a final consideration, if there is no responsible committee for the scheme, owners may wish to apply to the Commissioner’s office that a suitable administrator be appointed to undertake examination of the roof problem and/or organise repairs.

Number of Scheme:	13012
Name of Scheme:	White Lea Lodge
Address of Scheme:	42 Whelan Street SURFERS PARADISE QLD 4217

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

White Lea Lodge [2006] QBCCMCmr 19 (13 January 2006)