Coronation Towers [2006] QBCCMCmr 44 (3 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0043-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10948
Name of Scheme:	Coronation Towers
Address of Scheme:	24 Dunmore Terrace, Auchenflower

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

Donovan Richard Hoult, the co-owner of lot 49

I hereby order that the application by Donovan Richard Hoult, the co-owner of lot 49 for several orders that: 1. Motion 11 as passed at the AGM on 5 December 2005 be declared invalid; 2. Any contracts approved at the AGM for replacement of pergolas be suspended; 3. The present pergolas be declared hazardous by body corporate and be removed immediately; 4. Owners be notified that there is no unanimous approval of owners required to removed the present hazard; 5. Owners be notified that any resolution to replace the pergolas, or resolution to accept a particular tender, can be vetoed by majority; 6. Quotes be sought for the painting of any replacement structures; 7. Quotes as outlined in Motion 11 of 5 December AGM should be clarified whether the quotes include removal of debris of old timbers; 8. Further meeting to be called at a date to be determined; 9. and for interim orders in respect of 1, 2 and 3 above, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0043-2006

"Coronation Towers" CTS 10948

Application

The applicant, Donovan Richard Hoult, the co-owner of lot 49, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote:

1. Request that motion 11 as passed at the AGM on 5 December 2005 be declared invalid.
2. Any contracts approved at the AGM for replacement of pergolas be suspended.
3. Present pergolas declared hazardous by body corporate be removed immediately.
4. Owners be notified that there is no unanimous approval of owners required to remove the present hazard.
5. Owners be notified that any resolution to replace the pergolas, or resolution to accept a particular tender, can be vetoed by majority. There is no compulsory requirement for owners to agree to replacement of the pergolas.
6. Quotes should be sought for the painting of any replacement structures.
7. Quotes as outlined in Motion 11 of 5 December AGM should be clarified whether the quotes include removal of debris of old timbers.
8. Further meeting to be called at a date to be determined.

The applicant has also sought that an interim order be made in terms of items 1, 2 and 3 of the above outcome sought.

The scheme

The scheme is a subdivision of 77 lots recorded under a building unit plan of subdivision (now a building format plan). The regulation module applying to the scheme is the Standard Module.

Jurisdiction

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)).

Application for interim orders

Section 279(1) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances. However, given that an interim order may be made ex parte (ie. without reference to, or submission from the respondent named in the matter), then as a guide, where the circumstances or matters in dispute include matters or allegations not capable of objective consideration, or ready determination, or relate to issues of credibility or character, for example, where an interim order would be inappropriate, then the request for an interim order will be refused. It is a matter for an adjudicator to determine in respect of each application.

There is nothing interim or injunctive in the relief which the applicant seeks by way of interim orders. The applicant seeks the invalidation of the relevant motion, the suspension of contracts with third parties not the subject of this proceeding (which in any event is a matter beyond the jurisdiction of an adjudicator) and finally, the immediate removal of the pergolas. At the very least, these are matters properly categorised as final in nature. They are determinative of the issues in dispute. In the circumstances, the application for the requested interim relief is dismissed.

Submissions and proceeding to final determination

Whilst ordinarily, on dismissal of an interim order application, this office would normally seek submissions from all owners and the body corporate committee, I note that I am in receipt of a submission from the committee responding to all issues the subject of the application and requested of the committee before the consideration of this application. The committee includes in its submission the following statement:

The outcomes sought by Mr Hoult should not be supported by the Commissioner and this dispute should be determined as quickly as possible so that the contracted builder can begin work on about 15 February 2006. The builder advises that any delay will lead to his seeking compensation payments for the Coronation Towers Body Corporate.

Whilst I do not specifically know the views of owners regarding this dispute, I do however know the outcome of voting on motion 11 which is at least suggestive of their view, and further, I consider that owners voted on the motion in question with some background and knowledge of the issues now raised by the applicant. In particular, I note that prior to the AGM held on 5 December 2005, owners were recipients of a number of circulars, both from the body corporate and the applicant, wherein the issues now the subject of this application were canvassed, and the views of the parties stated. I conclude therefore that owners were not voting on the motion in a vacuum; rather they voted with at least some knowledge of the wider issues now being raised by the applicant.

In the circumstances, in particular the urgency for there to be some resolution of this dispute given the engagement of a contractor to commence work on 15 February or thereabouts, I conclude have determined to proceed immediately with a final determination of this application. Further I consider I have sufficient information available to proceed to such determination.

The dispute

The applicant has taken issue with the accuracy of certain information provided by the body corporate to owners, and with the level of resolution required, in respect of motion 11 headed Replacement of Roof Pergola which was resolved carried as an ordinary resolution at the AGM of the body corporate held on 5 December 2005 (the resolution).

I note that the applicant failed in his application to advise the result of voting on the resolution. Perhaps the applicant somehow thought this information might not be relevant, or perhaps he considered it not in his interests to advise this information. I consider it incumbent on all applicants to indicate to an Adjudicator all relevant facts, even if those facts, arguably, don’t support their position. The outcome of voting on a resolution is a "relevant fact" in the context of this application, and should have been indicated by the applicant.

The committee submission states the result of voting on the first part of the motion was Yes 32, No 4 with 5 abstentions. Further, the owners then voted to accept the first alternative of the three provided. The vote in this regard was Yes 30, No 1 and with 1 abstention.

The motion itself was as follows:

Replacement of Roof Pergolas (Ordinary Resolution)

Motion with alternatives as recommended by the committee

That the body corporate approves the replacement of the roof pergolas which are currently in a bad state of disrepair, the work to be financed from the sinking fund. YES/NO/ABSTAIN (vote – yes(32)/no(4)/abstain(5))
And that one of the following contractors be engaged to carry out this work, as detailed in the enclosed quotations:
A] ... YES/NO/ABSTAIN (vote – yes(30)/no(1)/abstain(1))
B] ... YES/NO/ABSTAIN
C] ... YES/NO/ABSTAIN

The applicant’s submissions

The applicant alleges that a statement in a committee circular regarding the resolution that "any proposal to dispense with them would require unanimous approval of owners" was misleading. The applicant states regarding this:

... The body corporate needs no approval to immediately remove the hazard – it is incumbent on it to do so without further delay. ... it (is) erroneous and misleading for the body corporate to make the assertions contained therein.

I submit there has been a deliberate attempt to mislead owners by suggesting that the present pergolas cannot be removed without unanimous approval and likewise it is compulsory for their immediate replacement to be effected. ...

It is clearly evident from the working of motion 11 ... the body corporate was aware its circulars ... were erroneous and misleading.

Why did motion 11 allow for a "no" vote if the Body Corporate had stated in its two circulars that the pergolas could not be dispensed with except by unanimous approval?

The applicant concludes:

The body corporate, and a certain lobbying group, wanted to "cloud" the issue by combining the removal and replacement of the pergolas as a single non-negotiable issue. They failed to inform owners that ... 2. A majority of owners could vote "no" to Motion 11 and that would be the end of any replacement structures.

The applicant concludes his grounds with other objections regarding the resolution including that:

• The motion allegedly failed to deal with the cost of removal of the structure; and
• The cost did not include the painting of the replacement structure.

It is clear from the applicant’s material that he addressed the meeting with these concerns (as per his statement in middle of page three of his grounds) and further, from the challenge issued by the applicant to the committee and owners present to confirm they would be joining the working bee.

These final points will not be determinative of the validity of the resolution, and for this reason I do not intend to consider them in any detail. Firstly, I note that the quotation accepted does state "dismantle existing timber pergolas, cut into lengths small enough to be removed via the lift". In my view, this statement implicitly includes removal. Perhaps the committee should clarify this aspect, however, this is minor in my view. Further, how a body corporate determines to maintain common property is a matter for it to determine, and if owners, or certain of them, wish to engage in a "working bee" then it is not for this office to intervene and to direct them otherwise.

I consider these final objections suggest an intention on the part of the applicant to muddy or confuse the issues somewhat, and perhaps to elicit support amongst owners for a "no" vote in respect of the motion. However, based on the outcome of voting on the motion, it appears that owners were not particularly concerned by these issues notwithstanding the applicant having raised them at the meeting.

The body corporate committee submissions

In response to the application, the body corporate committee have stated:

... Because motion 11 was for repair and maintenance (replacement of like with like) it could be approved by a majority vote on an ordinary motion. If it had dealt with the disposal of common property, the motion would have required a resolution without dissent. ...

Subsequent to the distribution of voting papers, as "it appeared to the committee that a number of owners did not understand the scope of motion 11 ... the committee prepared and distributed an undated circular to owners providing a more detailed explanation of the options that were contained in Motion 11". This is the circular containing the statement to which the applicant objects as erroneous and misleading, and it was this circular that precipitated the exchange of correspondence between the applicant and the committee and others on the issue. It is clear from that correspondence that the committee took the applicant’s concerns seriously, and ultimately sought legal advice on the issue. That legal advice from Teys Legal was available to the committee under cover of letter dated 2 December 2005. That legal advice states:

Your have asked us what type of resolution is required if the pergolas were to be removed and not replaced. ... the part of the pergolas above the height of 2.3 metres is common property. Section 111 of the standard module provides that common property may only be disposed of by way of resolution without dissent. ...

... In relation to the proposed work, if it is replacing "like with like" then it is only an ordinary resolution as it is repair and maintenance. However if the replacement is something different and in the nature of an upgrade, then it is an improvement to common property and a special resolution is required. ...

Based on this advice, the committee issued a further circular to all owners dated 2 December, 2005, quote:

Legal advice sought by the committee this week confirms the advice obtained by previous committees ... and concurs with the Orders of the Referee dated 22 August 1996. ... The situation is that the timber pergola structure ... is common property ... (and is) the responsibility of the Body Corporate. Repair and maintenance (including replacement of like with like) can be approved by a majority vote on an ordinary motion but common property can be disposed of only by resolution without dissent. ...

Relying on its legal advice, the committee consider that:

Removal of the pergolas without replacement is deemed as disposal of common property and would require:

• A resolution to be passed by owners without dissent;
• An alternative structure to support existing hand railings and glass panels.

As outlined earlier, the committee did not recommend this course of action but proposed replacement of like with like. This is regarded as repair and maintenance and requires only a majority support of the resolution. Motion 11 met these requirements. Had the owners, in their wisdom, defeated motion 11, then the committee would have considered other options ... Mr Hoult’s assertion that had motion 11 been defeated that "that would be the end of any replacement structures" is not correct.

Determination

Operation of Section 111 of the Standard Module

Section 111(2) of the standard module provides:

111 Disposal of interest in and leasing or licensing of common property--Act, s 154
(1) This section sets out the way in which, and the extent to which, the body corporate is authorised--
(a) to sell or otherwise dispose of common property; and
(b) to grant or amend a lease or licence over common property.
(2) The body corporate may--
(a) if authorised by resolution without dissent--
(i) sell or otherwise dispose of part of the common property; or
(ii) grant or amend a lease or licence for more than 3 years over part of the common property; and
(b) if authorised by special resolution--grant or amend a lease or licence for 3 years or less over part of the common property. ...

Teys Legal have given advice to the committee specifically regarding the "ROOFTOP PERGOLAS". Their advice regarding section 111 is specifically directed at the pergolas, and not generally to the concept of common property. The advice states:

Removal of pergolas

Your have asked us what type of resolution is required if the pergolas were to be removed and not replaced. As stated above, the part of the pergolas above the height of 2.3 metres is common property. Section 111 of the standard module provides that common property may only be disposed of by way of resolution without dissent. ...

I consider the advice given to be incorrect. Section 111 has no possible application to this scenario. Further, the legal advice completely fails to comprehend the factual circumstances of the present scenario. The situation contemplated was the possible removal, without replacement of an architectural feature located on a building (the pergolas) which for the most part forms part of the common property.
Section 111 has a specific and limited application under the legislation. It is headed Disposal of an interest in and leasing and licensing of common property. I consider that the use of the terms and leasing and licensing in the heading have a limiting effect on the operation of the section. Similarly, the words to sell or otherwise dispose in section 111(1)(a) also limit the interpretation to be given to the section.

The applicability and operation of the section is limited to situations where there is an alienation in some form (eg. sale, lease, licence etc) of common property that is freehold land. Support for the conclusion that common property is land or real property can be found in the definitions to the Act, Schedule 6 Dictionary, Common Property is defined as "see section 10". Section 10 of the Act states:

10 Meaning of "community titles scheme"
(1) A "community titles scheme" is--
(a) a single community management statement recorded by the registrar identifying land (the "scheme land"); and
(b) the scheme land.
(2) Land may be identified as scheme land only if it consists of--
(a) 2 or more lots; and
(b) other land (the "common property" for the community titles scheme) that is not included in a lot mentioned in paragraph (a).1
(3) Land can not be common property for more than 1 community titles scheme.
(4) For each community titles scheme, there must be--
(a) at least 2 lots; and
(b) common property; and
(c) a single body corporate; and
(d) a single community management statement.
(5) A community titles scheme is a "basic scheme" if all the lots mentioned in subsection (2)(a) are lots under the Land Title Act.
1 Common property, for a community titles scheme is, effectively, freehold land forming part of the scheme land, but not forming part of a lot included in the scheme.
(6) However, under this Act, a lot may be, for its inclusion in a community titles scheme other than a basic scheme, another community titles scheme.2

Section 10(1)(b) of the Act defines "common property" as other land in a scheme that is not included in a lot. Additionally, there is the footnote which places the matter beyond doubt, if there were any:

1 Common property, for a community titles scheme is, effectively, freehold land forming part of the scheme land, but not forming part of a lot included in the scheme.

Given all this, section 111 has no applicability whatsoever to the present circumstances for two clear reasons. Firstly, there is no proposed sale; rather what is contemplated is removal due to the present state of repair. Secondly, even if, on the widest possible argument, you find there has been a "sale or other disposal", of the pergola structure, the section still has no application because it is not "land" that forms part of the common property of the parcel. Put simply, there is nothing in the present circumstances which involves the sale or other disposal of land which is common property, in respect of which section 111 of the Standard Module would apply. The legal advice is completely incorrect on this aspect, and I suggest that the conclusion on this aspect taints most of the remainder of the advice given. If the applicability of section 111 had been properly considered, and dismissed, I conclude that perhaps the remainder of the advice given being more apposite to the scenario at hand.

The nature of the proposal

After dismissing the operation of section 111, the lawyer should then have sought to properly categorise the nature of the proposal, and thereafter considered the applicability of other relevant sections. What then is the true nature of the transaction proposed here. As previously stated, what is contemplated in the motion is the removal of the pergola structure due to its present state of repair or maintenance, and its replacement with another similar structure.

The question arises: is this a dealing with a body corporate asset. Section 117 provides:

117 Dealing with (including disposal of) body corporate assets--Act, s 157
The body corporate may--
(a) sell or otherwise dispose of a body corporate asset that is freehold land, or a leasehold interest in freehold land, only if authorised by resolution without dissent; or
(b) grant or amend a lease over a body corporate asset that is freehold land, or another body corporate asset capable of being leased, only if authorised by--
(i) if the term of the lease, as granted or as amended, is more than 3 years--resolution without dissent; or
(ii) if subparagraph (i) does not apply--special resolution; or
(c) sell or otherwise dispose of a body corporate asset that is personal property (not including personal property mentioned in paragraph (a) or (b), but including a licence or concession related
to freehold land) only if authorised by special resolution, if the market value of the asset is more than the greater of the following amounts--
(i) $1 000;
(ii) an amount worked out by multiplying the number of lots included in the scheme by $200.

Section 11 of the Act defines Body Corporate Assets, quote:

11 Meaning of "body corporate assets"
(1) "Body corporate assets", for a community titles scheme, are items of real or personal property acquired by the body corporate, other than property that is incorporated into and becomes part of the common property.
Examples for subsection (1)--
1. An airconditioning unit might be bought by a body corporate as a body corporate asset, but become common property when it is installed as a fixture.
2. A lot acquired by the body corporate under section 40.
(2) Body corporate assets may consist of any property an individual is capable of acquiring.
Examples for subsection (2)--
Freehold land, a lease, a licence to use land for a particular purpose, a billiard table, gardening equipment.

Clearly, a body corporate asset can include both land (real property) and other item or objects (personal property). However, it does not include property that is incorporated into and becomes part of the common property. Given that pergola structure, thought initially timber, has been incorporated into the common property of the scheme as an architectural feature, it cannot be a body corporate asset.

In contrast, examples of a body corporate asset might be a ride on mower, or as existed in the case of one up market scheme, a motor cruiser owned by and available for the use of owners.

Section 117 is further not applicable for the reason that, as discussed above, there is no "sell or otherwise dispose of ... ".

Maintenance or improvement

Having now discounted the applicability of both sections 111 and 117 of the standard module, this leaves two other concepts which might be applicable to the present scenario: maintenance or improvement. These concepts are reasonably well understood under the legislation.

The duty of the body corporate to "maintenance" the common property can include replacement, if repair of the common property is no longer possible or economically viable. Most items, at some point, reach the end of their life cycle, and repair by replacement of the item is the only viable alternative. Maintenance is often distinguished from improvement by the reference to the expression "like with like". However, this is only a yardstick or general rule, and cannot be applied universally. Rather, one has to consider the nature of the proposal involved.

Practically, given that there appears consensus that the state of the existing pergola structure is such that it cannot be repaired, the body corporate here had two options regarding the existing structure. These were:

• To remove the structure and not replace it; or
• To remove the structure and to replace it with another.

To fully consider these two possibilities:

To remove the structure and not replace it

This is not maintenance. Maintenance, per section 109 of the standard module contemplates maintenance of common property in good condition. There is no aspect of maintaining the common property in good condition in the removal of it. In my view, it might only be categorised as a change from the existing or present: or an improvement to the common property. Whilst "improvement" is usually considered to be some positive change or installation, I have no doubt in concluding that it might also contemplate a negative change in the sense of the removal or deletion from the common property of some item or object. An architectural feature included in a scheme lends itself easily to such possibility. What might be fashionable or cutting edge when a building is originally developed, might not be considered so 25 years later. It might in fact be regarded by some as a liability, devaluing the lots or the scheme generally. Removal might be considered a real option. The issue is subjective however, but I consider that by reasonable analysis of a proposal, proper distinctions between what is maintenance and what is improvement can be drawn.

To remove the structure and to replace it with another

On the face of it, a proposal to this effect suggests maintenance. In particular, I consider that it is maintenance where the replacement is due to factors associated with the end of the useful life of the item or object, or where it is in such a state of disrepair that the existing object cannot be viably repaired or maintained.

However, there are also many circumstances which might be contemplated where a proposal to this effect should, on balance, be regarded as improvement. For example:

• If the item or object is not at the end of its life cycle, and its replacement is due more to aesthetics;
• If the proposed item or object is considerably different in nature to what presently exists.

Example

Perhaps a factual scenario might best serve to illustrate the distinctions: A body corporate has a concrete swimming pool as part of the common property. It is now some 25 years old and has significant cracking causing significant loss of water. The body corporate has a duty to maintain the pool as part of the common property and after seeking quotes for repair, considers various alternative proposals including:

• Sealing of the existing cracks with waterproofing agents;
• The insertion of a liner within the pool so as to prevent further water loss;
• The pebble creteing over of the pool surface so as to form a new waterproof surface.

You will notice that these different options propose quite different solutions or methods of repair. All though might be categorised as "maintenance" in my view if the principal intention of the proposal is to return the pool to a useable condition or state of repair. This is why the "like for like" rule can be somewhat misleading. In my view, a body corporate should not be compelled to use a product simply because this product was used originally. For example timber with timber. This might lead to a body corporate having only limited, and potentially expensive, options for maintenance, which might not be in the best interests of the body corporate. This is particularly so in light of changing and improving technologies.

In my view, provided that the principal or foremost intent of the proposal is the repair or maintenance of the item, object or aspect of common property, then the body corporate should be allowed a reasonably wide discretion in the means by which this is achieved, including, potentially the use of products or materials different from the original, and potentially, even a somewhat different or updated design. This is particularly applicable in the case of an architectural feature: both the materials and the design might be different, provided that the intent is to "maintain" by replacement the previous architectural feature.

If however the cost of "like with like" varies considerably from the cost of a somewhat different proposal, then it might be that the first proposal is properly regarded as maintenance, whereas, the latter is better categorised as improvement. It is somewhat subjective and a matter for determination on the specific facts of each situation.

However, if the proposal is:

• To remove an existing pool by filling it in and planting a garden; or
• To "modify" the pool by not only the repair of the cracking, but as well, the inclusion of a new adjacent pooling entertaining or deck area, incorporating entertaining facilities etc.;

then almost undoubtedly, the proposal is and will be regarded as improvement.

Finally, to take the example a step further, if the proposal was rather than to maintain the pool but rather to annex the pool area from common property and sell it off for development, then this would be neither maintenance or improvement, but rather section 111 of the standard module would apply and the proposal would require a resolution without dissent in order to be carried.

Alternatively, in the case of the second proposed improvement above, after improving the pool area, if the proposal was to then lease the pool area for a three (3) year term for use as part of an adjacent restaurant, then section 111 would also apply, but the lesser requirement of a special resolution would apply.

Type of resolution required

The purpose of all this has been to categorise the nature of the proposal. Once the proposal has been categorised, the type of resolution required can be determined. In the case of a proposal which is categorised as maintenance of common property, then irrespective of the cost of the proposal, only an ordinary resolution is required. However, the cost of the proposal is still relevant to determining whether the proposal can be approved by the committee or is required to be approved in general meeting, and if the latter, whether section 104 applies and requires the body corporate to consider a minimum of two quotes in respect of the proposal.

Alternatively, if the proposal which is categorised as an improvement to common property, then section 113 of the standard module applies, quote:

113 Improvements to common property by body corporate--Act, s 159
(1) The body corporate may make improvements to the common property if--
(a) the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is not more than an amount (the "improvements limit") worked out by multiplying the number of lots included in the scheme by $300; or
(b) the improvements are authorised by special resolution; or
(c) an adjudicator, under an order made under the dispute resolution provisions, decides the improvements are reasonably necessary for the health, safety or security of persons who use the common property and authorises the improvements.
(2) For subsection (1)(a), if a series of associated improvements forms a single project, the cost of any 1 of the improvements is taken to be more than the improvements limit if the cost of the project, as a whole, is more than the improvements limit.
(3) This section has effect subject to part 7, division 6.41

Under section 113, there are various levels of authorisation required for proposals categorised as improvements. Specifically:

• Improvements up to $125 per lot for each lot in the scheme (up to $9625 for this scheme) might be approved by the committee (section 103) or referred to the body corporate in general meeting by ordinary resolution;
• Improvements with a cost between $125 and $300 per lot for each lot in the scheme (between $9625 and $23100 for this scheme) must be approved by the body corporate in general meeting by ordinary resolution (see section 113(1) of the standard module);
• Improvements with a cost exceeding the "improvements limit" of $300 per lot for each lot in the scheme (above $23100 for this scheme) must be approved by the body corporate in general meeting by special resolution (see section 113(2) of the standard module);
• Proposals for improvements with a cost exceeding the relevant limit for major spending ($250 per lot for each lot in the scheme / $19250 for this scheme) must be considered by the body corporate in general meeting and be supported by at least two quotations for the proposal (see section 104 of the standard module).

Application to Motion 11

I consider that the proposal the subject of motion 11 is twofold:

• By a "yes" vote, that the body corporate approves the repair the roof pergola by replacement of the same; or
• By a "no" vote, that the body corporate does not approve the repair of the roof pergola by replacement of the same.

Whilst the body corporate materials provided to owners might not have specifically highlighted the second possible outcome from voting on the motion, the fact of the matter is that owners were at liberty to vote "no" to the motion. This alternative is self evident from the motion. The applicant acknowledges in his grounds that this was a possible outcome of voting on the motion, quote:

They failed to inform owners that ... 2. A majority of owners could vote "no" to Motion 11 and that would be the end of any replacement structures.

In the event of this outcome, I consider that the body corporate would have been required to implement the "no" vote to the motion by obtaining quotes for the removal, but not replacement, of the pergola structure. Depending on the cost of this, the removal could have been authorised by either the committee (up to a cost of $9625) or the body corporate in general meeting by:

• Ordinary resolution (up to a cost not exceeding $23100);
• Special resolution (if the cost of removal exceeds $23100).

I am not aware of the cost of removal only of the pergola structures as quotes for this were not separately obtained to my knowledge. The issue is somewhat further complicated by the allegation by the committee in its submission that if replacement was not approved, then "an alternative structure to support existing hand railings and glass panels" would have been required. The removal quote or quotes would need to include all costs comprised in the project.

Contrary to the legal advice obtained by the body corporate, I conclude that at most, section 111 of the standard module has no application to the present scenario, and the level of resolution required for removal of the pergola structure would have been either a ordinary resolution or a special resolution, depending on the cost of the removal of the pergola structure.

Given however that the body corporate in general meeting resolved, by an overwhelming majority, to maintain the pergola structure, by removal of the existing structure and replacement of the same, and then considered several quotes for the work, I am satisfied that the requirement of an ordinary resolution was the correct level of resolution for the motion, and that the motion was validly considered and carried on this basis. I do not agree with the applicant’s submission that the committee has made "a deliberate attempt to mislead owners by suggesting that the present pergolas cannot be removed without unanimous approval". If anything, the committee have acted in good faith and in reliance on the advice of its lawyer. Further, I am satisfied that the motion as submitted provided owners with the opportunity to vote against replacement of the pergola structure, although I do acknowledge that this might not have been absolutely clear to owners. I don’t however consider that owners were mislead. Further, I am satisfied that on balance the requirement of an ordinary resolution was the level of resolution required for determination of the motion. From the record of voting on the motion, it is clear in my view that the overwhelming majority of owners who chose to vote on the motion, are supportive of the proposal for removal of the existing pergola and replacement of it with a similar structure.

For the above reasons, this application is dismissed.