L'Colonial Court [2006] QBCCMCmr 447 (11 August 2006)

Last Updated: 19 December 2006

REFERENCE: 0263-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9169
Name of Scheme:	L’Colonial Court
Address of Scheme:	167 Nineteenth Avenue PALM BEACH Q 4221

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

The Body Corporate of L’Colonial Court

I hereby order that the owner of lot 4, Elise Jennie Phelps must reimburse the Body Corporate for the amounts of: (1) $138.00, being the balance outstanding after an insurance claim for repairs that were carried out to an in wall shower combination; and (2) $657.00, being the cost of engaging a solicitor ($297.00) and a valuer ($360.00) for the purposes of lodging a Notice of Objection to a land valuation. Reimbursement should be made within 1 month of the date of this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0263-2006

"L’Colonial Court" CTS 9169

Application

The Body Corporate (the applicant) has sought orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) that the Secretary of the Committee, Mrs E Phelps, be instructed to repay to the Body Corporate account the Body Corporate funds used by her for:

• private property repairs (plumbing), and
• expenses incurred in lodging an objection to Valuation of Land (Land Tax/Rates).

Jurisdiction

L’ Colonial Court CTS 9169 is a 9 lot scheme registered under the Body Corporate and Community Management Act 1997 and is operating under the Body Corporate and Community Management (Standard Module) Regulation 1997. Typically, this module is intended for residential arrangements.

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

Plumbing

The applicant’s grounds state that the respondent has used Body Corporate funds without committee consultation or permission to pay for repairs to her unit number 4 and which do not form part of a common boundary or area. They refer to the following letters.

By letter dated 3 January 2006 the Treasurer advised the respondent that during a recent search of files and payments, it has come to light that the respondent has inadvertently paid for private repairs using Body Corporate funds. This related to $638 for repairs to a leak at the breeching piece of the shower in Unit 4. He advises that unless the pipe is contained in a boundary wall, it would not be a Body Corporate expense.

By letter dated 29 January, the respondent advises that the Body Corporate records should reveal that the cost of these repairs had been met by Suncorp under an insurance claim on 28 September 2005. She notes that Suncorp "settled the claim for the cost of the plumber to the extent permitted under the policy". She asserts that the pipes are owned by the Body Corporate.

By letter dated 2 February 2006, the Treasurer observes that due to the leak in the breeching piece, the shower combination was removed. He states that unless the combination is located in a boundary wall "which it is not", it is not a Body Corporate pipe. He further advises even though she has been successful in her insurance claim, the Body Corporate is not required to meet the excess.

The Body Corporate has included a copy of an invoice from Parker Plumbing & Maintenance which includes the following narrative:

"Returned and removed two tiles to expose leak in breaching piece of shower. Attempted to weld up but was unsuccessful as the leak was at the rear of the breaching piece. Advised you that combination would have to be removed .......... and replaced with new combination".

Land Valuation

In the letter dated 3 January above, the Treasurer also refers to payments totalling $657 made for objection to valuation of land. He states that this office has advised him that the Body Corporate cannot object to a valuation of land and that any objection must be lodged by an owner on his/her own behalf. He states that as the valuations relevance is only for land tax, the only beneficiary of the valuation was the respondent (who owns multiple lots in the scheme).

In the letter dated 29 January 2006, the respondent alleges that the objection was made by the owner of the land, which is the Body Corporate. She advises that the valuation is also reflected in rates. She outlines her understanding of the basis on which rates are calculated and says that all owners have benefited.

In the letter dated 2 February 2006, the Treasurer details his own understanding of the basis on which rates are calculated and says that there is no saving on their general rate until individual unit value increases above a particular threshold. He again states the respondent is the only beneficiary.

He attached two invoices as follows:

Linda Phelps & Co (Solicitors) $297.00
R B Farren (Valuer) $360.00

Total $657.00.

Submissions

Plumbing

The respondent advises that in July 2005 she suffered damage to the walls of her kitchen, lounge, en suite, hallway and carpets from a water leak. She arranged for Parker Plumbing to fix the problem. She alleges that they said the leak was not any of the fixtures in her lot, but rather the Body Corporate pipes.

She arranged for a Suncorp loss assessor to attend who approved payment of the plumbing bill. However, under the Body Corporate insurance policy, the insurer is only liable to an amount of $500 for a pipe claim. She advises that this $500 has been banked to the Body Corporate, leaving only $138 paid by the Body Corporate.

She points out that the original invoice from the plumbers also includes work undertaken in relation to other units she owns in the complex and she made sure it was revised so that the Body Corporate was only invoiced for what it was liable for.

She alleges that the owners of Lots 2 and 5 have had a similar experience with the pipes, and the Body Corporate paid for the repairs. She attaches a copy of an invoice from 1999 where the plumber attended in relation to a leak from unit 5 into unit 2 "from upstairs unit shower – copper waste corroded".

She states that she has always been very careful with the Body Corporate’s money and has even loaned the Body Corporate money in the past as required.

Land Valuation

She states she is surprised at this given that other owners have previously expressed concern at rapidly rising valuations. She again provides details as to history of valuations.

She attaches a copy of a letter she sent to the body corporate manager on 1 November 2004 where she advised she intended to object to the valuation. In the letter she asks if they could refer her to a valuer. She advises the body corporate manager that a copy of the valuation notice to be distributed to all owners. She says "It is intended to object to this valuation ......."

On 2 November, the body corporate manager wrote back advising that "as a Body Corporate is not involved in the land tax provisions associated with the valuation, we are not familiar with any valuers that conduct this type of work". They confirm that a copy of the valuation has been distributed and that the other owners have been told that the respondent intended to object to the valuation.

She states that she waited until 24 November before engaging a valuer. She says did not receive any objection to the objection process until January 2006.

She again repeats that the decreased valuation was to everyone’s benefit. She alleges that the Body Corporate is the owner of the land and as such only the Body Corporate could have lodged the objection.

Determination

Plumbing

To assist in making my determination in relation to the plumbing, the respondent has provided me with a floor plan of the units and an outline of the pipework in the building. It appears likely to me, that the pipework shown on these plans relates to drainage rather than supply of water. However, it is apparent that the shower where the leak occurred abuts walls which are internal to the lot.

The shower combination in the bathroom of lot 4 is located in an internal wall between the bathroom and the kitchen within the lot. Pipework is defined by the Body Corporate and Community Management Act 1997 (the Act) as utility infrastructure by which a lot is supplied with a utility service. Section 21 of the Act specifies the conditions that must exist for utility infrastructure to be included as common property. Section 21(1) provides:
"Common property for a community titles scheme includes all utility infrastructure forming part of scheme land, except utility infrastructure--

(a) solely related to supplying utility services to a lot; and
(b) within the boundaries of the lot (according to the way the boundaries of the lot are defined in the plan of subdivision under which the lot is created); and
(c) located other than within a boundary structure for the lot."

Utility infrastructure is treated as common property only if at least one of the exceptions specified in section 21(1)(a)(b) and (c) is not satisfied. With regards to this matter, the shower combination pipe satisfies each of the exceptions. For this reason, the shower combination pipe is not common property.

Section 120(4) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) applies in this instance. Section 120(4) provides:

"The owner of a lot included in the scheme must maintain the utility infrastructure within the boundaries of the lot, and not part of common property, in good condition and, if it is in need of replacement, must replace it.

It appears possible that the respondent is not entirely aware that the breeching piece described is actually a component of the shower combination. The shower combination’s purpose is solely related to the provision of water to a single lot, and in this case, a single shower within the lot. Nothing passes through the breeching piece for the benefit of other lots. Further, the breaching piece is not directly connected to the mains. The repairs in this matter were solely for the benefit of the applicant’s lot.

In these circumstances I will order that the respondent reimburse the Body Corporate the amount of $138, being the amount not met under the insurance claim.

Land Valuation

I note that the Decision on Objection issued by the Department of Natural Resources, Mines and Water on 5 April 2005 is addressed to "Body Corporate for L’ Colonial Court Community Titles". I have confirmed with that department that in the case of Bodies Corporate, they require the application to be made in the name of the Body Corporate.

Strata and Community Management believes that "a body corporate is not involved in the land tax provisions associated with the valuation". However, I am satisfied that the objection would need to have been lodged in the name of the Body Corporate.

I also note that Notices of Objection to Valuation can be lodged in 3 different capacities (rating, land tax or rental). It appears from the invoice provided by the valuer (dated 18 April 2005) that the objection in the case related to both Land Tax and Rates.

I am therefore satisfied that the respondent has incurred a debt in the name of the Body Corporate.

I am not persuaded by the aspect of the respondent’s argument that, because members of the Body Corporate are alleged to have benefited from the lodgement of the objection, they should contribute to the cost of the objection. To take an extreme application of the same logic, if my next door neighbour paints my home without my consent, they cannot expect me to pay them on the basis it will benefit my future resale value. It is an action I need to agree to in order for me to become liable for payment.

There are certain legislative requirements that are relevant to this determination. They can be found in the Body Corporate and Community Management (Standard Module) Regulation 1997:

33 Voting at committee meetings

(1)	At a meeting of the committee--

(a) a question is decided by a majority of votes of the voting members present (either in person or by proxy) and entitled to vote on the question who are voting; and

(b) each voting member entitled to vote on a question to be decided has 1 vote on the question.

(2)	Without limiting subsection (1), if a quorum is present, a decision supported by a majority of the votes of the voting members present and entitled to vote on the decision is a decision of the committee.

(3)	To avoid doubt, it is declared that a voting member who is an executive member has only 1 vote, even if the person holds more than 1 of the positions of chairperson, secretary and treasurer.

34 Conflict of interest

(1)

A member of the committee must disclose to a meeting of the committee the member’s direct or indirect interest in an issue being considered, or about to be considered, by the committee if the interest could conflict with the appropriate performance of the member’s duties about the consideration of the issue.

(2)	If a member required under subsection (1) to disclose an issue is a voting member, the member is not entitled to vote on the issue.

35 Voting outside committee meetings

(1)	A resolution on a motion before the committee is a valid resolution of the committee, even though the motion is not passed at a meeting of the committee called and conducted under division 7, if--

(a) notice of the motion is given to all committee members or, in an emergency, as many members as it is practicable to contact; and

(b) a majority of all voting members of the committee entitled to vote on the motion agrees to the motion.

(2)	The notice must be given in writing, and the members’ agreement to the motion must be given in writing but, in an emergency, the notice may be given, and the member’s agreement expressed, orally or by another appropriate form of communication.

(3)	Advice of the motion must be given, at the time notice of the motion is given or, in an emergency, as soon as reasonably practicable, to each lot owner, other than a lot owner who--

(a) has instructed the secretary that the lot owner does not wish to be given advice of committee meetings; and

(b) has not withdrawn the instruction.

(4)	The notice and advice of the motion may be given by--

(a) the secretary; or

(b) another member of the committee who is authorised by a majority of voting members of the committee to give the notice and advice.

(5)	For the operation of sections 34(1) and (2), 36(2) to (4) and 37, the committee, in dealing with a resolution under this section, is taken to deal with the resolution at a meeting of the committee.

(6)	A motion voted on under this section must be confirmed at the next meeting of the committee held after the motion is voted on.

All parties have made it plain that the decision to object to the valuation (and what steps would be taken to object to the valuation) have not gone to a committee meeting under section 33. Nor do I think that it is arguable that the decision to lodge the objection can be classified as having been formally made outside a committee meeting. While the respondent argues that everyone was on notice as to her intention to object to the valuation, no flying minute was circulated, a majority of committee members did not vote for the objection and the availability of 42 days within which to object means that the emergency provisions cannot be invoked under Section 35(2). In any event, this "decision" has not been confirmed at the next committee meeting and is in fact opposed by this application.

I also note, that the respondent’s statement that it was her intention to object, does not necessarily mean that other members of the Body Corporate are aware that the objection would need to be made as a Body Corporate, rather than on the respondent’s own behalf.

Further, there appear to be grounds for the decision taken by the respondent to amount to a conflict of interest. The failure to declare this interest under Section 34(1) might be argued away on the grounds that all other members of the Body Corporate knew her multiple ownership, and could therefore conclude that Land Tax might be an issue. However, Section 34(2) further provides that where Section 34(1) applies, a committee member is not entitled to vote on the issue.

I have other concerns in relation to the process adopted by the respondent. For example, the following are decisions I believe would also rightly be for consideration by the committee:

• why was it necessary to engage a solicitor for the purpose of the objection?
• why that particular solicitor?
• why was a valuer necessary?
• why that particular valuer?
• did the benefit foreseen, exceed the cost?

For the above reasons, I conclude that the Body Corporate cannot be made liable for the expense incurred by the respondent without the formal authority of the committee. In these circumstances I will order that the respondent reimburse the Body Corporate the further amount of $657.00