Key Largo Maroochydore [2006] QBCCMCmr 257 (23 May 2006)

Last Updated: 19 December 2006

REFERENCE: 0009-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	15983
Name of Scheme:	Key Largo Maroochydore
Address of Scheme:	6 Aerodrome Road MAROOCHYDORE 4558

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

Michael and Sharon Grant, the Owner(s) of lot 36

I hereby order that the application for reimbursement for replacement cost of fridge/freezer severely contaminated from loss of power in Unit 36, caused by contractors accessing external power outlet, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0009-2006

"Key Largo Maroochydore" CTS 15983

Purpose of order

The purpose of this order is to:

o replace an earlier order made 18 May 2005, which erroneously described the applicants as the owners of Lot 6, rather than Lot 36; and
o narrow references in the Statement of Adjudicator’s Reasons for Decision dated 18 May 2005, from "external power points" to a single power point.

Application

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

"Reimbursement for replacement cost of fridge/freezer severely contaminated from loss of power in Unit 36. Power loss caused by contractors accessing external power outlet".

Jurisdiction

Key Largo Maroochydore CTS 15983 is a 36 lot scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module). It was 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

(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)).

Grounds

The applicants’ unit has exclusive use of a rooftop area, which is normally locked. Over the 6 months preceding this application, the Body Corporate had provided access to contractors to replace rusted doorframes and to paint the exterior of the building. While undertaking this work, contractors have used external power outlets, one of which is connected to meters and earth leakage in unit 36. The applicants allege that since they had not been in the unit for 5 months, something in the contractors’ equipment has tripped the unit’s safety switch.

They state that it can be seen that the tripping of the safety switch occurred sometime after 30 August 2005, as there is a substantial drop in their electricity bill for the period 30 August 2005 to 29 November 2005. A copy of the electricity account is provided. They allege that based on average usage in previous periods, the power must have tripped within one or two days of the 30 August meter reading. They also provide minutes of a committee meeting held on 26 November 2005, which notes that painting commenced on 1 September 2005.

The applicants provide evidence that the Body Corporate has agreed to meet the estimated cost of running the contractors’ equipment, but states that it will not meet the cost of replacing the applicants’ fridge which has become contaminated by rotting food stuffs. Photographs have been supplied.

The applicants provide an opinion from an electrician, stating the fridge motor is operating normally and note that the power did not trip again while they were in residence over a weekend.

The resident manager admits he did not know that one of the external power points was wired to unit 36. The applicants state that the by-laws require the Body Corporate to "instruct, supervise and communicate" with contractors. They allege that this responsibility extends to minimizing unit "owner risk by installing signage to protect unit owners from increased power costs and this type of loss".

Submissions

Only one submission was received and that was from the Committee of the Body Corporate, through the Body Corporate Manager as follows:

1. S119 of the Accommodation Module places the onus of maintaining a lot in good condition, including the utility infrastructure within the lot. They do not elaborate on how they wish this to be applied to the circumstances here;
2. They provide evidence from the painting contractors that all equipment is turned off at the end of the day;
3. The painting contractors deny that their equipment caused the tripping of the safety switch and state that they believe all points which they plugged equipment into were functional over the period;
4. They note that the contractors did not ask for access at any point to reset the safety switch;
5. While the painters were painting the doors, they could have reset the safety switch without requesting access, but that would have turned the fridge back on too;
6. There were a number of severe storms while unit 36 was vacant though the resident unit manager was not aware of any strikes to the building. They recollect that there were a number of "brown-outs" during the relevant period. They also produce evidence of a lift callout in October as it had stopped operating;
7. They produce evidence that 2 dishwashers have recently required service calls (January 2006), and that this delay only suggests that guests may not have used the dishwashers during the relevant period. The apparent outcome was that the motors had burnt out due to excessive current.

They submit that any of these storms could have tripped the safety switch and that there is no evidence that the contractors’ tools or equipment caused the switch to trip.

Response to Submissions

The applicant has responded as follows:

1. They have always maintained the lot in good condition;
2. Switching equipment off at the end of the day is irrelevant to a Safety Switch/Residual Current Device;
3. They interpret a written statement from the painting contractor, as an admission that the "Manager and painters were unaware that power points in the exclusive use rooftop areas are supplied with power from private utility services". They observe that the painting contractor has admitted that some of his equipment does not have safety mechanisms, by omission;
4. The Body Corporate is responsible for instructing all contractors and they could not have known about utility infrastructure;
5. They note that resetting of the safety switch requires a manual intervention, however I suspect that have interpreted the Body Corporate Manager’s point number 5 differently to the writer. They argue that if the safety switch was tripped during a storm, then all residents would have had to manually reset their safety switch;
6. They provide a quote from the Northern Territory’s Work Safe bulletin, which states that tripping of a safety switch occurs with the use of faulty electrical leads and appliances;
7. They state that burnt out motors are claimable under insurance, unlike the contamination of their fridge which operated normally once power was restored. They again point out that their power must have failed soon after the August 30 meter reading.

They state the contractors were the only ones using the point over the relevant period, as the owners were not in residence and that the minimal electricity usage from the last reading indicates that the switch tripped late August or early September when the contractors commenced. They say that the Body Corporate should have instructed the contractors appropriately. They say that the Body Corporate’s willingness to meet estimated costs of the contractors, means they should also acknowledge the third party property damage.

Determination

This jurisdiction resolves disputes that arise in the context of a community title scheme, largely concerning:

o contraventions of the Act and the body corporate’s by-laws;
o the exercise of rights and powers and the performance of duties under the Act; and
o matters relating to the engagement of service contractors (see sections 228 and 276 of the Act).

I have searched titles office records, but I am unable to locate the Body Corporate by-law quoted by the applicants as saying "it is the responsibility of the body corporate to instruct, supervise and communicate with contractors".

I have specifically examined the Body Corporate and Community Management Act 1997 and Body Corporate and Community Management (Accommodation Module) Regulation 1997 for this provision and I am unable to locate it.

Schedule 5 to the Act lists examples of the types of orders that are able to be made by an adjudicator, including orders:

o invalidating a particular resolution of a meeting;
o requiring an audit of body corporate accounts be done;
o to increase building insurance cover;
o allowing an owner to make an improvement to their lot; or
o removing an unreasonable by-law and other similar orders.

This dispute concerns the actions of a contractor engaged by the body corporate and the assertion that the body corporate should, on the basis of failing to supervise, be held liable for the actions of an unidentified contractor. This dispute is not one which could result in one of the types of orders as set out in Schedule 5 to the Act, though that list is not exhaustive.

Section 281 of the Act provides that an adjudicator may order payment of a sum up to $10,000 to a person as reimbursement for repairs carried out to property where the adjudicator is satisfied that the person has suffered damage to property because of a contravention of this Act or the community management statement.

The section includes an example as follows. If a body corporate fails to repair a waterproofing membrane in a building roof and rain water penetrates the roof and damages wallpaper and carpet in a lot, then an adjudicator may order the body corporate to either carry out the repairs or reimburse the lot owner for (reasonable) repairs done, as the case may be.

In the above example, both parties to the dispute are within the community titles scheme – the same could be said where there is damage between an owner and another owner, or a tenant (occupier). That is, not only are the parties directly concerned with the scheme, but the damage arises directly between the parties.

Here there is a third party involved, and the damage may or may not have resulted from their actions. It is questionable if a direct nexus between the alleged breach of duty and the damage to property can be proven. Because of the involvement of a third party, other issues arise that require examination in a court acting in its civil jurisdiction. These issues include:

o questions of causation;
o determination of whether the body corporate should be held liable; and
o the foreseeability of the damage.

The decision will turn on the determination of certain questions of fact which may have to be determined by the examination of witnesses possibly including experts. These are issues that are properly the province of the courts and the applicants must take civil action in the courts for the compensation they seek – they should seek their own private legal advice in this regard.

Section 270(1)(b) of the Act makes provision for dismissal of the application on this ground by providing –

"The adjudicator may make an order dismissing the application if the adjudicator is satisfied the dispute should be dealt with in a court or tribunal of competent jurisdiction."

For the above reasons I am satisfied the dispute should be dealt with in a court of competent jurisdiction. Therefore, I will dismiss the application.