River Park View [2006] QBCCMCmr 29 (20 January 2006)

Number of Scheme:	10898
Name of Scheme:	River Park View
Address of Scheme:	12 Bryce Street, ST LUCIA Q 4067

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

I hereby order that the body corporate for River Park View, within 14 days of the date of this order repay to the applicant Kevin Whimp, the sum of $1,500 (One thousand five hundred dollars) paid by him as an insurance excess for water damage to Unit 47;

I further order that Philip Bracanin, owner of Lot 50 in the scheme, within 14 days of the date of this order, pay to the applicant Kevin Whimp the sum of $250.80 in respect of replacement light fittings in Unit 47.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0634-2005

"River Park View" CTS 10898

THE APPLICATION

This is an application dated 1^st September 2005 by Kevin John Whimp (the applicant) owner of Lot 47 against the body corporate for the scheme (the body corporate) for an order that the body corporate refund to the applicant the sum of $1,500 which the applicant has paid as an excess on an insurance claim for water damage to his property.

JURISDICTION

"River Park View" CTS 10898 is a community title scheme governed by 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 55 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)).

SUBMISSIONS

The applicant’s grounds are that on 27^th November 2004, he sustained water damage to his unit which is situated on the 5^th floor. The damage was caused by the burst waterpipe of an under-sink water purifier in the vacant unit above. The applicant had to replace his carpet, and the body corporate organised repairs to be carried out to his unit. The quotation from the contracted workmen was $1,677.22 plus the cost of two light fittings which also had to be replaced.

On 11^th May 2005, AD Body Corporate, body corporate manager for the scheme, (the body corporate manager) told the applicant that he would be liable for the excess of $1,500 on the insurance claim. This was the first time that the applicant had been told about this, and the repairs were well under way at the time. The repairs were finally completed on 29^th June 2005. The applicant paid the excess under protest. He does not believe that he can be liable for something that was not his fault, and that since it is unreasonable for him to pay the excess, that the body corporate should exercise section 133(3) of the Standard Module and find that it is unreasonable for him to have to pay. The applicant says that if he thought he was liable for $1,500 he would have taken alternative action for example, obtained quotes from other tradesmen or done some of the work himself. He says –

"The whole exercise was organised and executed by the body corporate managers and I had no input whatsoever."

On 11^th May 2005, the applicant wrote to the body corporate manager, stating his amazement that he could be liable for the excess of $1,500, and saying that it was " grossly remiss of your company not to have informed me of this potential liability" earlier. The body corporate manager approached the committee of the body corporate on the applicant’s behalf to no avail. On 8^th June 2005, the applicant forwarded a copy of the same letter to the chairperson of the body corporate Ian Houslander, stating that he found it "unreasonable" that he should be asked to pay the excess. He asked the committee to review its decision. There was no reply to this letter

A quotation from R & S Builders and Consultants dated 6^th December 2004 for $1677.72 is made out to the applicant at his address, but an invoice dated 1^st August 2005 from R & S Trading Pty Ltd, in the sum of $250.80 is made out to the body corporate.

Submissions were invited from all lot owners in accordance with section 243(2)(b) of the Act, as well as from the parties to the dispute. Submissions were received only from David Trezise ( Mr Trezise) owner of Unit 1, and John Sharpe, owner of Unit 24. (Mr Sharpe).

Mr Trezise is of the view that the applicant should receive a full refund for the cost of his repairs, and not just the $1,500, which should never have been solicited from him. He submits that section 120(4) of the Standard Module requires a lot owner to maintain utility infrastructure within the boundaries of a lot, and not part of common property, in good condition. It is therefore up to the owner of the lot above the applicant to maintain the waterpipe, and not a matter for the body corporate as that pipe is not common property. The owner of the lot above has contravened the Act he says. The body corporate should send the bill for the insurance excess to that lot owner.

Mr Sharpe says that he thinks the persons who allowed the insurance excess to exist in the sum of $1,500 should be responsible for paying it. He believes this to be the body corporate.

The body corporate did not make a submission.

DETERMINATION

The facts are not in dispute, nor is it disputed that the applicant neither caused nor contributed to the damage which occurred to his lot on 27^th November 2004.

In investigating this matter I have now been provided with further information from the body corporate and from Mr Philip Bracanin, (Mr Bracanin) the owner of Lot 50 above the applicant’s lot.

The cause of the leak was a burst water filter in the kitchen of Unit 50, as found by J & D Contracting, a plumbing service, which was called out at 8.45pm on Saturday 27^th November 2004. The plumber’s report says –

" Water flooding into unit 47 from Unit 50 above. Contacted police to break into unit 50 (owners/tenants not home)... Located leak in kitchen from burst water filter. Isolated water supply to filter..."

The water filter has a cartridge which Mr Bracanin had a few months earlier had replaced by Freshly Squeezed Water Co ( the water company). The new cartridge was replaced free of charge by the water company because the previous cartridge had leaked slightly. It appears that the water filter cartridges for this design of water filter have a propensity to leak, but Mr Bracanin had no cause to believe that the replaced cartridge would also be faulty.

There was no damage to waterpipes themselves. The water filter is a fitting installed by the lot owner within the lot owner’s lot and does not form part of the common property utility infrastructure. There is no damage at all to common property according to the body corporate manager.

The applicant submitted a claim form to the body corporate insurers CHU, (CHU) in December 2004, with quotations from R and S Builders for remedial work to his unit totalling $1677.72. The claim form was submitted through the body corporate manager’s, insurance manager, Jeff Taverner, who has since retired On the top of the copy of the claim form now supplied by the body corporate manager, there is a handwritten note, the first line of which is illegible, the second line reads: "GST REG’D YES" and the third line reads: " EXCESS $1500".

The body corporate manager says –

The body corporate manager says that the applicant would also have known about the excess because at the annual general meetings for 2003 and 2004, the excess provisions of the insurance policy were set out in the statutory motion concerning insurance.

Subsequently, two light fittings had also to be replaced at a cost of $250.80. On 15^th September 2005, CHU declined to pay for the light fittings saying that in the policy of insurance with the body corporate, light fittings fell under the category of proprietor’s contents, and were therefore outside the policy.

In a Building Unit Plan of subdivision (now called a "Building Format Plan" of subdivision) such as is created in this community titles scheme, the body corporate must insure for full replacement value, each building in which is located a lot included in the scheme. (Section 128(2) Standard Module.) The owner of each lot that is included in the scheme is liable to pay a contribution levied by the body corporate that reflects the interest schedule lot entitlement for the lot. (Section 130(1)(a) Standard Module.) In putting the insurance in place, the body corporate must ensure the arrangements for the liability for an excess under the insurance would not impose as unreasonable burden on the owners of individual lots. (Section 133(2) Standard Module.) Further, section 133(3) et seq states as follows-

In other words, the legislation gives the body corporate a discretion to apportion the excess which may be payable, (such excess itself being a sum which would not " impose an unreasonable burden on the owners"). The exercise of that discretion is not fettered, that is, it may be exercised in accordance with the concept of ‘ fault’, or ‘ability to pay’ or ‘compassionate grounds’ provided that the body corporate acts reasonably in the decision to which it comes.

The reason behind the provision is that bodies corporate may be able to obtain a cheaper premium if they agree a bigger excess with the insurance company, and in such circumstances, it might be considered ‘unreasonable’ for one lot owner to bear the excess, when the benefit of the reduced premium was for the whole body corporate. The decision whether to seek the excess or not, is one that can be made by the committee without calling a general meeting.

Section 94 of the Act requires that the body corporate (through its committee, or at general meetings) acts reasonably in anything it does.

The wording of section 133 also needs special attention. The wording is " for an event affecting only one lot ....".etc and the section specifically does not say " where damage is caused to only one lot" which must have been in contemplation of the draftsmen. In both examples given in that section about the shower screen breaking and the internal fire, since the damage arose in one lot, there is no damage to any other lot and only one lot is " affected;" however, where a leak in one lot causes damage to another lot, whilst only one lot is damaged, two lots, and possibly the body corporate (depending on what infrastructure or parts of the building have been traversed by the leak) are "affected." The "event" must affect the lots, that is, the "event" against the happening of which the body corporate is insured, and not the "damage". The "event" against which the body corporate is insured, is the event which caused the water damage to a building and the "event" occurred in Lot 50.

I find that even if the applicant knew of the existence of the excess on the policy, it may not have occurred to him that he would be liable to pay it in the circumstances where he had done nothing to cause the damage. For what it’s worth, I find that scribbling " Excess $1500" on top of a blank claim form, is not sufficient to notify a claimant that may be liable for that excess. Further, since the insured is the body corporate, and not the individual lot owner, it would be reasonable on the part of the lot owner to consider the excess would be at the expense of the policy holder. However, overall, I find the question of whether or not the applicant knew about the excess does affect the question of whether it is reasonable in the circumstances for him to pay it. I mention it only because this point has been raised by the applicant, who says he would have perhaps acted in a different way with regard to the remedial work, and the body corporate has rightly addressed that point.

There is no record of the committee meeting at which the committee found that it would be "reasonable" in the circumstances for the applicant to pay the excess in its entirety. In fact, there appears to have been no response at all to the applicant’s email of 8^th June 2005 to the Chairman Ian Houslander. I am doubtful as to whether the applicant’s request has ever been considered by the committee, as understood by section 133(3) Standard Module.

I find the treatment of the applicant in this respect shameful.

The body corporate’s argument is that the applicant must bear the excess. I do not agree. The applicant is the innocent party. Section 109(3)(b) Standard Module states that the occupier of the lot is responsible for maintaining utility infrastructure..... in good order and condition, to the extent that the utility infrastructure relates only to supplying utility services to that lot. Whilst I accept that Mr Bracanin may have maintained the water filter to the best of his ability, he must bear the responsibility for the fact that it was defective, or became defective. He has failed in his statutory duty to maintain the water filter. He may well have a claim against the water company.

In the meantime, the body corporate has organised repairs to the applicant’s unit, and become involved with a dispute which in origin should have been between two lot owners. Since the works have been done and a claim made on the body corporate’s insurers, the body corporate should now repay to the applicant the sum of the excess of $1,500. Whether or not the body corporate then seeks to recover that sum from Mr Bracanin and Mr Bracanin pursues the water company, or involves the water company’s insurers is a matter for the body corporate and Mr Bracanin. I am not making an order that Mr Bracanin pay the excess, as the matter has been complicated by the involvement of the body corporate.

In its simplest form, I order that in all the circumstances of the matter, it is unreasonable for the applicant to bear the liability of the excess in accordance with section 133(3) Standard Module.

Further, the applicant should not have to pay the R &S Trading Pty Ltd bill for the replacement light fittings in the sum of $250.80.

Section 281 of the Act provides:

(1) If the adjudicator is satisfied that the applicant has suffered damage to property because of a contravention of this Act or the community management statement, the adjudicator may order the person who the adjudicator believes, on reasonable

I am satisfied that the applicant has suffered damage to his lot because of a contravention of the Act, albeit unintentional, by Mr Bracanin. I order that Mr Bracanin pay to the applicant the sum of $250.80. As stated above, Mr Bracanin may like to pursue a claim against the water company.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

River Park View [2006] QBCCMCmr 29 (20 January 2006)