Harrington Court [2006] QBCCMCmr 303 (14 June 2006)

Number of Scheme:	13079
Name of Scheme:	Harrington Court
Address of Scheme:	14 Paradise Island SURFERS PARADISE QLD 4217

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

I hereby declare that authorisation for the installation of the three split-level air-conditioning units for lots 2, 3 and 8, is required to be given by the Body Corporate through a special resolution.
I further order that the resolution of the Committee from Flying Minute No. 1 on 13 November 2005 is declared invalid.
The application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0080-2006

"Harrington Court" CTS 13079

The Application

The applicant, Mark Tisdale, is the owner of lot 7 in the Harrington Court Community Titles Scheme (Harrington Court). The applicant also speaks on behalf of three other owners (lots 6, 9 and 10) in this application, these lot owners holding similar views to that of the applicant on this subject.

The applicant seeks:

The removal of the split-system air-conditioners off common property of the Body Corporate and to have the common property returned to normal.

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

(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)).

Background

Harrington Court consists of 10 lots contained in a single building. The building is an older-style having been built in the 1950s. The 10 lots are owned by a relatively small number of families. Three families (inclusive of persons associated with those families) between them own 8 of the 10 lots in Harrington Court.

This dispute concerns the installation of three split-system air-conditioners for three of the units owned by one of these ‘families’ – lots 2, 3 and 8 (the owners). The motor and housing units for the three air-conditioning units are located on common property – the ‘services area’ on the south side of the building. The owners are also members of the Committee for Harrington Court and by a Flying Minute on 13 December 2005, the Committee resolved to approve the installation of the air-conditioning units. On 19 January 2006 the air-conditioning units were installed.

The applicant opposes the actions of the Committee on 13 December 2005; he argues that the Committee has no authority in this area. The applicant has sought an order through this application that the resolution of the Committee be declared void and the air-conditioning units be removed from common property.

In anticipation of a declaration that it was beyond the authority of the Committee to approve the installation of the air-conditioners, the owners submitted three motions to an Extra-ordinary General Meeting on 19 April 2006. These motions sought the retrospective approval of the Body Corporate for the installation of the respective three air-conditioning units. Those motions were defeated with only 6 of the required 7 lots voting for each motion.
It is in the above context that I make my decision on this application.

Approval of Air Conditioners

It is not in dispute that the owners of lots 2,3 and 8 have installed split-system air conditioners within their units and the fan motors and housings for the three units sits on common property at the ‘back’ of the building. Nor is it in dispute that the owners installed the air conditioning units without first obtaining the approval of the body corporate.

The air conditioning units are an "improvement" to the property. ‘Improvement’ is defined thus in the Dictionary in Schedule 6 of the Act:

"improvement" includes--

(a) the erection of a building; and
(b) a structural change; and
(c) a non-structural change, including, for example, the installation of air conditioning.

The obligation on the owners to obtain the authorisation of the Body Corporate for an improvement arises under section 114 of the relevant module – the Standard Module (Body Corporate and Community Management (Standard Module) Regulation 1997); this section states

114 Improvements to common property by lot owner--Act, s 159

(1) The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot.

(2) The improvement must be authorised by special resolution of the body corporate unless--

"minor improvement" means an improvement with an installed value of $250 or less.

Section 114 (2) requires that the Body Corporate’s authorisation must be given through a special resolution unless the improvement has an installed value of $250. The co-owner of lots 2 and 3, Kevin Hoey, has argued that because the total cost of the air conditioners was only $499 and only ‘half’ of the total unit – the fan motor and housing – sits on common property, the improvement to the common property is less than $250. Accordingly, Mr Hoey argues that the need for an authorisation by special resolution is not triggered.

I am not persuaded by this argument. I do not consider the externally-located air conditioning motor and housing is severable from the internally-located air-conditioning outlet. Both parts are integral to a functioning air conditioner. A sensible person would not install one without the other. Nor do I think there is much practical benefit from trying to apportion what part of the air conditioning unit is outside and what is inside. Is it to be done on a volumetric basis – is the motor and housing the same size as the outlet box? Or should the apportionment be done on a dollar value basis – what is the cost of the individual motor and housing component compared to the cost of the outlet box component?

Finally, I have taken careful note that the wording is that the "installed value" must be less than $250. I consider that the phrase "installed value" means exactly what is says –it necessarily includes both the cost of all of the components plus the costs associated with installation. Thus, if a $500 air conditioning unit cost $300 to install – the installed value is $800. I have no information before me on whether a dedicated tradesperson installed the air conditioning units but the cost of the units in itself passes the $250 limit.

Accordingly, I find that the authorisation of the Body Corporate through a special resolution is required for each of the air conditioning units. As such, this issues becomes a "restricted issue" for a Body Corporate Committee as set out in section 26 of the Standard Module; this section states:
26 Restricted issues for committee--Act, s 100

(1) A decision is a decision on a restricted issue for the committee if it is
a decision--

(a) ...
(b) ...
(c) ...

My decision

I find that the owners were required to obtain the authorisation of the Body Corporate through a special resolution prior to installing their air conditioning units. This did not occur and I have no hesitation in declaring that the air conditioning units are on common property without authorisation. I similarly find that the installation of the air conditioning units are a ‘restricted issue’ for the Committee and that accordingly, the Flying Minute of 13 December 2005 is invalid and I make an order to that effect.

The applicants have sought a further order that the air conditioning units be de-commissioned and the motors and housing removed from the common property. I decline to make this order for the following reasons.

The underlying premise for Community Titles Schemes is that they self-manage through the use of majority vote. The obligation on a Body Corporate is to "administer the common property and body corporate assets for the benefit of [all] the owners of the lots included in the scheme" (section 94(1) of the Act). The Body Corporate is charged to act reasonably in this administration (section 94(2) of the Act).

Accordingly, the voting of a Body Corporate on any particular issue must not be a capricious action but must rather reflect a reasoned and considered position that has considered the interests of all owners in the scheme. I have carefully read all the submissions provided by the owners for this application. I am very concerned over what appears to be a rigid split between the ten owners in Harrington Court. On the one hand, there is a group of six owners, allegedly associated with two of the ‘majority families’ – "Group A". On the other hand is a group of the four remaining owners, the applicant and those standing behind him – "Group B". Six of the seven Committee members for Harrington Court are the six members of Group A.

It strongly appears that Group B is implacably opposed to any action or proposal of Group A. I have noted that the submissions from alleged members of both Groups are consistent in identifying these two groups and the voting history shows that invariably the voting will be 6 to 4 regardless of the issue being decided.

I have noted submissions from the applicant and those he speaks on behalf of that the issue was less about the air conditioning units and more about the failure of process. I am not persuaded by this assertion. When the owners did try to correct the omission to obtain authorisation as set out in section 114 of the Standard Module at the Extra-ordinary General Meeting (EGM) on 19 April 2006, the vote on the motions seeking the authorisation were all - not unsurprisingly - 6 votes for and 4 votes against.

I do not consider that body corporate members voting on factional lines as opposed to on the merits of the motion does discharge the body corporate’s responsibilities under section 94 of the Act. Nor do I necessarily consider the body corporate’s decisions made as a result of this voting pattern to be reasonable.

The corollary of this voting pattern is that Group A can pass anything that requires an ordinary resolution, without any reference to the interests of Group B. Group A for example will be able to ensure that only its group members are on the Committee. Neither group will be able to pass anything that requires either a special resolution or a resolution without dissent. There is the ridiculous potential that for even when there are universal interests involved – for example, the maintenance of a common property driveway – no consensus could be reached.

Air conditioning is an issue that can cut across factional interests. While in this circumstance, the owners have installed air conditioning in their units, it is not inconceivable that at some future point, the applicant or other lot owners may wish to install air conditioning units in their lots. Under a factional voting system that option will never be realised.

The issue of ‘retrofitting’ air conditioning units to older-style buildings is a common one for body corporates for the simple reason that air conditioning is becoming a standard inclusion in Queensland dwellings. The uptake of air conditioning is also an accelerating phenomenon. In 2005 58.2% of Queensland domestic households had at least one air-conditioning unit. Five years previously, the figure was 29.4%. It is estimated that by 2010 almost two-thirds of all Queensland domestic households will have an air conditioner^[1].

For some persons – such as people with Multiple Sclerosis^[2] – having an air conditioner is a health necessity rather than a lifestyle luxury. A person who has been refused authorisation to install an air conditioner by a Body Corporate and who has a medical reason for the installation has potential redress for that refusal under both State and Federal anti-discrimination legislation.

It is of course wholly open for a Body Corporate to have a position opposing the installation of air conditioning units for its property. Alternatively, it is open for a Body Corporate to have a relatively detailed set of procedures and conditions attaching to each request for the installation of an air conditioning unit. Either way, I consider it only reasonable for the Body Corporate to reach its final position by way of considered and reasoned debate on the merits and drawbacks of air conditioning.

If I were to grant the order sought by the applicants that the air conditioning units should be removed, the owners could challenge my decision in the District court under section 289 of the Act. Alternatively, the owners could lodge their own application before this Office, both for interim orders and final orders, seeking that the air conditioning units be permitted to stay in situ. The basis of the owners’ application would be that the decision of the applicants to refuse to agree to authorisation at the EGM on 19 April 2006 was ‘.unreasonable’. In responding to this application, the applicants would be called upon to support an argument that their refusal was reasonable in all the circumstances.

I find the blanket refusal of Group B to the air conditioners be incongruous with Harrington Court’s By-laws in its Community Management Statement. By-law 38 states:

38.1 The owner of each air conditioner will be responsible for the maintenance and operation of the air conditioner installed under this By-law or already installed for the benefit of the Lot.
It was obviously contemplated by the Body Corporate that air conditioning would be installed at some point at Harrington Court.
The stance taken by Group B (and presumably that will now be held by Group A in kind) is that no air conditioning is to be installed at Harrington Court. This stance effectively renders By-law 38 redundant.

In the submissions from the applicants, I have received scant material on why air conditioning generally should not be installed at Harrington Court. As stated previously, the applicants are aggrieved at the unilateral manner in which the air conditioners were installed by the owners. The declaration in this decision and the concession of the owners which lead to them proposing the three motions at the EGM have to a large extent addressed the fact that proper process was not followed for the air conditioning units.

From my careful reading of the submissions provided in the course of this application I have concluded that a debate on content – is air conditioning generally permitted to be installed at Harrington Court and if so, under what conditions - has yet to occur. It may be that after reasoned consideration of all relevant factors, the ‘majority will’ of Harrington Court is that the installed air conditioners must be removed for practical reasons. However, at the current time, the level of argument is put before me as being no more considered than ‘you put this in without permission and for this reason you must take it out immediately’.

If I were to grant the order sought by the applicants then I consider it is a strong likelihood the owners would either appeal my order or lodge a counter-application. In the course of this appeal/application, a thorough canvassing of positions and reasons of the parties on air conditioning would ensue. I consider that these conversations are best held between the members of Harrington Court outside of either litigation or a formal dispute process; both of which processes are costly, time-consuming and slow.

My decision not to grant the order sought by the applicants does not preclude it from ever being made. My decision is to simply provide to Harrington Court the opportunity to have a reasoned debate on the merits and/or drawbacks of air conditioning for Harrington Court, unaffected by personality issues. I would urge Harrington Court to use this opportunity constructively.

^[1] Chapter 12.3 – Individual State Data – Queensland in the Status Of Air Conditioners In Australia – Updated with 2005 data, report authored by Energy Efficient Strategies(EES) for the National Appliance and Equipment Energy Efficiency Committee, January 2006, page 43.

^[2] See http://www.msaustralia.org.au/msinformation/temperature_sensitivity.html

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Harrington Court [2006] QBCCMCmr 303 (14 June 2006)