Denmar Court [2006] QBCCMCmr 226 (4 May 2006)

Last Updated: 19 December 2006

REFERENCE: 0881-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11599
Name of Scheme:	Denmar Court
Address of Scheme:	10 Pangarinda Place MOOLOOLABA QLD 4557

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

Peter Star & Donald Rowden, the Owner(s) of lot 3

I hereby order that the application for orders seeking specific performance from a lot owner and the Body Corporate is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0881-2005

"Denmar Court" CTS 11599

Application

The co-owners of lot 3 in the Denmar Court Community Titles Scheme (Denmar Court), Donald Rowden and Peter Star (the applicants), have applied for the following seven orders:

1. Order to direct Mr P.Conduit (part-owner Unit 1) who performed the work, to re-lay the pavers between the unit block and the garages to uncover the weep-holes as suggested in the Exterior Termite Report.
2. Order to direct the Body Corporate to proceed with all preventative measures suggested in the Exterior and Indoor Termite Reports.
3. Order to direct the Body Corporate to proceed and install "Gutter-Guards" in all gutters, and institute a cleaning program as agreed at the Annual General Meeting of 6 July 2005.
4. Order to direct the Body Corporate to clean and paint the steps to the common property landing in front of Units 3&4.
5. Order to direct the Body Corporate to clean, paint or tile the common property landing in front of Units 3&4.
6. Order to direct the Body Corporate owners to contribute the annual amount recommended in the Sinking Fund Budget Forecast dated June 2004.
7. Order that if any of the above orders requested need funding, that a special levy be raised to cover the cost.

Section 276(1) of the Body Corporate and Community Management Act 1997 (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)).

Termites

The first two orders the applicants are seeking is for a lot owner and the Body Corporate to take active steps to prevent termite infestation at Denmar Court. There can be no dispute that the eradication of termites and the prevention of termite infestation is an issue of considerable importance for building owners. Queensland Government’s Department of Housing declares that termites cause more damage to homes than storms and fires combined and that most termite damage could be prevented through effective preventative measures (information taken from the Department of Housing’s web-site at www.housing.qld.gov.au).

At its Annual General Meeting (AGM) on 6 July 2005 it was informally agreed for KBH Management (KBH), the Body Corporate Management agency for Denmar Court, to arrange for an exterior termite inspection. Accordingly, in August 2005 KBH commissioned termite inspections for Denmar Court.
The consequent reports state that while no live termites were found in the building, the property had a number of vulnerabilities to termite infestation including covered "weepholes" – gaps left in masonry for ventilation and drainage purposes. I am informed that while termites use weepholes as a ready means of entry to buildings they are consequently easy to detect and treat at these points also.

The reports also discovered termite damage in the applicants’ unit. The reports recommended a number of preventative measures be taken to safeguard Denmar Court including re-exposing weepholes that have been covered over by tiling and paving work, conducting more detailed inspections and installing an external chemical soil barrier.

The applicant alleges that the owner of lot 1, Paul Conduit, covered over one set of weepholes when he laid pavers between the building and garages at Denmar Court. Mr Conduit denies laying these pavers but a submitted invoice from Paul Conduit Tiling shows that Mr Conduit did at least lay some terracotta tiles to the front walkway of the building in January 2004.

I have not concluded one way or another that Mr Conduit did in fact cover over the weepholes in the area between the building and the garages. Nor am I convinced that even if he had done so that the only method of uncovering the weepholes is for the work to be re-done as the applicants have sought.

Mr Conduit has argued in his response to this application that the orders the applicant is seeking should be progressed through the Body Corporate itself. I agree. The Body Corporate held informal discussions at the conclusion its 2005 AGM. As noted above, one of the topics of these discussions was for the Body Corporate Manager to arrange for an exterior termite inspection. To its credit, KBH acted promptly on this issue. It is now up to the Body Corporate to decide when and to what degree it will address the issues detailed in the reports of the inspections. The weepholes that are the subject of the applicants’ order is but one of three instances of covered weepholes on the property.

There is no evidence before me that if a suitably worded motion is presented to this year’s AGM, accompanied by quotes for the work as appropriate, the Body Corporate would not resolve to have the preventative work done. That work may include as necessary. remedial work on all the covered weepholes on the property. The Body Corporate may well decide that that the tradesperson who laid the tiles, whether that be Mr Conduit or another, should be approached to remedy this work. I am informed that termites notwithstanding, (uncovered) weepholes greatly assist in maintaining the longevity of any building. However, before the Body Corporate progresses the onerous task of re-laying tiles and pavers, it may wish to consider whether a there is a simpler and/or alternative method to uncover the weepholes.

In the absence of evidence that the Body Corporate would not voluntarily action the recommendations in the reports I am not prepared to simply order that it do so. Nor would I wish to deny the Body Corporate, including Mr Conduit as part of that body and holder of some expertise on tiling and paving, the opportunity to explore alternative methods of uncovering the weepholes to re-laying tiles and pavers. Accordingly, I have decided not to grant the first two orders sought by the applicants.

Gutter-guards

The applicants are seeking an order that the Body Corporate install ‘gutter-guards’ in all gutters and institute a cleaning program. The applicants argue that these measures were agreed to at the AGM of 6 July 2005. The record of the relevant resolution at the AGM does not support the applicant’s argument. Instead of a ‘cleaning program’ the minutes state that what was agreed to was that the owner and occupier of lot 2, Mr Cole Szudja, would check and clean the gutters "if required". Instead of the Body Corporate agreeing to install ‘gutter-guards’ the minutes state that what was agreed to was that a gutter maintenance company, "Guttervac" would provide information to the Chair of Denmar Court on one of its products.
While the orders sought by the applicants go further than those measures agreed to at the AGM, there is no evidence before me that the Body Corporate would not be prepared to go those further steps. For example – instead of the vague condition "as required", Mr Szudja may be agreeable to checking and cleaning the gutters every six months. Instead of researching available gutter products, the Body Corporate may wish to obtain and thence accept a quote for having suitable products installed.

I consider that this is another issue that more properly should be put to the Body Corporate for its consideration. In the absence of evidence that the Body Corporate has considered this issue and unreasonably refused to contemplate the work I am not prepared to order that it do so. Accordingly, I have decided not to grant this order.

Cleaning and painting the common property landing

The applicants are seeking an order that the Body Corporate rejuvenate the common property landing in front of units 3 and 4. The applicants argue that these were steps that were also agreed to at the AGM of 6 July 2005. Again, I do not consider the record of that AGM supports the applicants’ argument.

The Body Corporate did agree to have the exterior of building painted by "Paul Parsey Painter". It is not clear whether this contracted work included painting of the common property landing. It would appear that it did not. If it does, this is a matter the Body Corporate needs to take up with Mr Parsey.

If not, the only other reference to this area is in another of the topics matters informally discussed at the end of the AGM. The record of this discussion states the Body Corporate agreed to "pressure clean the steps and landing to units 3 and 4 and proceed to either paint or tile at a later date". The applicants have stated that the steps were ‘steam cleaned’ but that was only partly successful. Regardless of outcome, the Body Corporate has carried through the resolve informally agreed to at the end of the AGM. The reference to future tiling or painting of this area has no stronger effect beyond an in-principle agreement that the work will be done at some future time.

As above, I am of the opinion that if the applicants want the Body Corporate to (again) clean the steps and then paint or tile the common property landing this should be put to the consideration of the Body Corporate at the AGM of 2006. Again, there is no evidence before me that the Body Corporate would not agree to have this work done; in its absence, I have decided not to grant this order.

Sinking Fund Levies

The Body Corporate commissioned a Sinking Fund Budget Forecast from Graham Lukins Partnership (GLP) Pty Ltd in June 2004. GLP’s consequent report concluded with a table setting out a recommended level of contribution for the following 15 years. To date those recommendations have not be taken up by Denmar Court. In the financial year 2005 – 2006 GLP recommended an overall levy of $3,504. At the AGM of 6 July 2005 the Body Corporate resolved to levy a total amount of $1600, less than half of the amount recommended by GLP.

The applicants state that there was objection by two of the four lots in Denmar Court to paying the levy amount recommended by GLP. However, the minutes of the AGM state that the motion to contribute a lower levy amount was passed unanimously – that is, the applicants voted for the lower levy amount. Regardless, the applicants are now seeking that GLP’s recommendation be followed this year. The seeking of this order is prudent having regard to the applicants’ other orders. If the Body Corporate agrees to have the proposed work done, the cost of the work will need to be met from the Sinking Fund.

The purpose of a Sinking Fund for any body corporate is to finance anticipated spending of a capital or non-recurrent nature. The Act and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) obligate a body corporate to establish and maintain a Sinking Fund (section 100(1) of the Standard Module) but the legislation does not prescribe the amount of monies that are to kept in the fund. This is only sensible; every body corporate is individual in terms of the type and scale of its needed capital work.

It is left to the Body Corporate itself to determine what amount will be levied each year to contribute to the Sinking Fund. While it is arguably a waste of money to commission a Sinking Fund Budget Forecast and then disregard its recommendations this is entirely a matter for the Body Corporate of Denmar Court to decide. While it may appear advantageous in the short term to keep Sinking Fund levies low, the consequence of this course is that when it is necessary to have significant capital work done, the lot owners invariably need to supplement the Sinking Fund by raising a "special levy".

The amount for the Sinking Fund contribution for Denmar Court for 2005-2006 was unanimously passed by the Body Corporate in the 2005 AGM. The amount for the 2006-2007 financial year will be decided upon by the Body Corporate at its 2006 AGM. For reasons consistent with my decisions on the other orders sought in this application, I decline to order that the Body Corporate follow the recommendation of GLP and instead leave this matter to the Body Corporate to determine at the AGM.

Finally, I decline to grant the last order of the applicants for the reason that this course is self-evident. If the Body Corporate decides to undertake the proposed capital works in 2006 -2007 and there are insufficient funds in the Sinking Fund to pay for these works – the mechanism for raising the required funds will be the imposition of a special levy on all lot owners.

AGM Agenda

Section 238 of the Act provides for the applicants to lodge this application concerning their ‘dispute’ with the Body Corporate of Denmar Court. In turn I am able to make orders to resolve that dispute (see section 276 of the Act).

My decision to not grant the orders sought by the applicants is based on my conclusion that the applicants do not have a dispute with their Body Corporate. The applicants have not approached the Body Corporate and sought to have the specific work done. For example – the Body Corporate has not been asked whether or not it will action the recommendations in the termite reports. The applicants may be pre-empting a dispute should the Body Corporate refuse to condone the work but a possibility alone is not a sufficient grounding for the operation of the Act. There is simply no evidence before me that if the applicants had formally sought their orders of the Body Corporate, they would not have been agreed to. Indeed, the submissions of both Mr Conduit and Mr Szudja indicate a willingness to consider the proposed work through the formal Body Corporate processes.

While it is not the only means of obtaining the Body Corporate’s sanction, the 2006 AGM is an ideal opportunity to raise and discuss these issues. At the AGM the Body Corporate can plan its repairs, maintenance and renovations for the upcoming year and correspondingly set the Sink Fund levies to a level where there is sufficient funds to pay for these works.

I have found that the resolutions passed at the 2005 AGM, both formal and informal, were not sufficiently specific to be considered agreement for that the work sought to be done by the applicants would in fact be done over the 2005-2006 year. For example – I consider that an informal resolution at the end of the AGM that the Body Corporate will "proceed to either paint or tile at a later date" gives no assurance that the work would have been done in the year following.

It is open for the applicants to put their proposals for work they consider needs doing on the property as motions for the consideration of the Body Corporate at the AGM.
If the applicants were to consider doing so, I would advise them taking their time over the drafting of their motion(s). A motion that has a specific focus, with a measurable outcome, sensible timelines and a clear line of responsibility is easier to action than a generalised statement of good intent. Section 104 of the Standard Module also requires that the mover of a motion which would cost more an amount more than $250 per lot (in the case of Denmar Court – an amount over $1000) is required to provide two quotations to accompany the motion.

It appears from the minutes of the 2005 AGM that Denmar Court successfully followed the above process with the painting of the exterior of the building. There is nothing before me to suggest that this process will not be similarly effective with regard to the work sought by the applicants in this application.