La Porte D'or [2006] QBCCMCmr 487 (30 August 2006)

Last Updated: 19 December 2006

REFERENCE: 0611-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12681
Name of Scheme:	La Porte D’Or
Address of Scheme:	3422 Surfers Paradise Boulevard SURFERS PARADISE QLD 4217

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

Vito Giorgio, the Co-Owner of lots 153 and 167

I hereby order as follows – 1. that the body corporate does not act on Motion 4 passed at an extraordinary general meeting of the body corporate on 27th July 2006 until further order; 2. that the Applicant shall provide to this Office and to the body corporate in pursuit of this application a quotation or quotations from suitable suppliers for works on Lifts 1 and 2 on a "like for like" basis with the quotations from KONE, within 21 days of the date of this order; 3. that the Applicant , his engineers or consultants shall be permitted access to any part of the common property for the purposes of obtaining such quotation or quotations. I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earlier.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0611-2006

"La Porte D’Or" CTS 12681

APPLICATION

This is an application made on 1^st August 2006 and amended 3^rd August 2006 by Vito Giorgio, (the Applicant) co-owner of Lots 153 and 167 in the scheme, against the body corporate for La Porte D’Or CTS 12681 (the body corporate) for orders as follows –

o That motion 4 ( carried at EGM) be declared invalid;
o That at least 2 quotes be obtained from alternative suppliers before a similar motion is considered at a general meeting;
o That such a motion be considered by special resolution;
o That the body corporate allow access for lift contractors of the Applicant’s choosing (at his expense) to inspect the lift motor rooms and associated machinery on order to obtain quotations for consideration at a general meeting.

The Applicant also seeks an interim order that the body corporate not act on Motion 4 until a final order is determined.


JURISDICTION

"La Porte D’Or" Community Titles Scheme 12681 is a community titles 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 182 lots in the scheme created under 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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is to simply maintain the "status quo" of a situation, and not finally to resolve the matters in dispute.
Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application "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". Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order.

I therefore sent a copy of the application to the body corporate committee and sought submissions which closed on 21^st August 2006.

SUBMISSIONS

The Applicant provides material to show that Motion 4 of the Extraordinary General Meeting of 27^th July 2006 was headed "Lift Upgrade" and showed three alternative quotations for upgrading Lifts 1 and 2, the most expensive being $537,900 and the least expensive being $405,900, all being from the same lift contractors KONE. The difference in price reflected various standards of upgrade and ‘add-ons.’ The motion was stated to be one that required an Ordinary Resolution.

The Applicant says that there are four lifts in the scheme altogether and the upgrade is in respect only of the "high rise" lifts. All lifts were installed 30 years ago. He says the proposed upgrade with electronic microprocessors and digital drive technology is actually an "improvement" to common property and therefore requires a special resolution in order for the motion to be passed.

He says that the lifts are in a safe condition and that there is no need to act hurriedly. He says there is a comprehensive maintenance agreement. He says further quotations could be obtained and put to the AGM which is coming up within 3 months of the end of 30^th September 2006, so that work would not be unduly delayed.

At the meeting, the Applicant sought for the motion to be ruled out of order on the ground that a quotation from only one company was obtained. He failed in this respect. The Applicant is concerned that for such major capital expenditure, only one quotation was obtained which he believes is contrary to section 104 Standard Module (Quotes for Major Spending).

Despite his doubts, the Applicant voted in favour of the motion. He believes that an upgrade is necessary but that lot owners should be presented with some choice. After the meeting, he discussed the legal issue with the chairman and sent an email to the body corporate manager Silver Stewart King and Burns (the body corporate manager), quoting various adjudicators orders relating to lift upgrades, and asking the body corporate manager to consider these, and to allow his own contractors to provide alternative quotes following access to the lift motor room. The chairman telephoned the Applicant on 1^st August 2006 to tell him that the committee would not allow any consultants access to the lift motor room which is on common property. The chairman advised the Applicant that the committee would proceed to put Motion 4 into effect.

The chairman Michael Goode entered the submission for the Committee. That only one company KONE was asked to quote is accepted, and this was done because KONE is the installer of the original lifts. The vote was 66 in favour and 8 against. The body corporate has received independent advice that the offer from KONE to use some of the old DC motors is quite competitive.

He believes that the body corporate manager’s interpretation of the law at section 104, that several quotes for various standards or grades of improvement may be taken from one company, is correct and that there is nothing underhand in the way in which the committee is operating. There was also a report obtained by the body corporate in October 2004, when the Applicant was chairperson, which gave an estimate for a partial upgrade of between $300,000 and $400,000. There is some urgency in getting the work done, since the body corporate has been aware for some time that lifts 1 and 2 in particular need to be upgraded, and the glass wall of Lift 1 no longer meets today’s safety standards.


DETERMINATION ON INTERIM APPLICATION

This application concerns two issues, both of them being points of law.

1.

Where the body corporate is proposing to engage in "major spending", defined in the Standard Module to mean where the amount to be spent is in excess of $250 x the number of lots, then lot owners must be given at least two quotations for carrying out the work. If the motion is proposed by the committee, the committee must provide the quotations, and if the motion is proposed by a lot owner, the lot owner must provide the quotations and hand them to the secretary. (Section 104)

2.

The body corporate is obliged to maintain the common property in good condition. A motion about "maintenance" requires an ordinary resolution of the body corporate. However, a motion about an " improvement" to the common property is required to be authorised by a special resolution. (Section 113(1)(b) Standard Module) An "improvement" is defined in the Act to –

" include - the erection of a building; a structural change; and a non-structural change, including for example, the installation of air conditioning."

The question about the difference between "maintenance" and "an improvement" has arisen many times. In an appeal from an order of the Referee under the Building and Group Titles Act 1980 (the former body corporate legislation) the appeal court found that –

" the term repair may also be interpreted to include replacement, refurbishment and maintenance and I accept that the repairs may invoke an element of improvement, but may still remain within the general concept of repair."^[1]

However, at this stage I do not think that I have to decide whether the upgrade and refurbishment of the lifts is " maintenance" or " an improvement" and therefore requiring a special resolution, as in the circumstances it appears that the vote was 66 – 8. That clearly satisfies the requirement of a special resolution in any event.

I am concerned however, that the quotations put to lot owners were not from different sources. The fact that one company gave various quotes for different scales of upgrade, is not in the contemplation of the legislation. The quotations could not be compared as "like for like."

It is quite clear that the intent of the legislation is that at least two quotations be obtained so that the lot owners can compare quotations from two sources, as is prudent for any householder. Where the goods or services can only be obtained from one source, the exception to the rule is detailed at section 104(6).

The Explanatory Notes^[2] for section 104 explain that save for in the exceptional case as detailed above, the quotations must be presented to a meeting of the body corporate as " a motion with alternatives." (Section 42B) "This is to ensure that the process followed for making the decision does not favour any particular party."

Further, section 42B gives an example of a " motion with alternatives" as in the situation where the "body corporate receives motions from 3 lot owners proposing the engagement of a person as a body corporate manager. Each motion proposes a different person."

It is clear that the legislation intends that quotations for the same work are provided from different persons or different parties and put forward for consideration by the lot owners.

In this matter, certainly a large majority of lot owners seem happy with the work offered by KONE but the motion has not been put in accordance with the law.

In the circumstances, and in view of the fact that I am aware of the body corporate’s desire to proceed with the work, I order that the Applicant shall provide to this Office, and to the body corporate, an alternative quotation or quotations on a "like for like" basis with the quotations from KONE within 21 days of the date of this order. The Applicant or his engineers or consultants shall be permitted to access any part of the common property for the purposes of obtaining a quotation or quotations.

In the meantime, no work shall commence in pursuance of Motion 4.

After the Applicant has provided the quotation(s) or 21 days have elapsed, submissions may be invited from relevant parties in respect of the final outcomes sought, in the usual way.

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^[1] Proprietors of The Rocks Resort –v- Costi, Building Units Appeal Tribunal No 227 of 1997, O’Driscoll SM, 24 September 1997.
^[2] Explanatory Notes for SL 2003 No.263 Body Corporate and Community Management Legislation Amendment Regulation (no.1) 2003