No. 9 Port Douglas Road [2006] QBCCMCmr 539 (24 October 2006)

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

Stainlay, Tecelec Qld Pty Ltd, Forsyth, & Ewing, the Owner(s) of lots 17, 10, 5 and 14 respectively

I hereby order that, pending a final determination, the body corporate for No. 9 Port Douglas Road must not allow any floor space to be built on level "C" directly above the existing balconies of lots 9 and 11 on level "B" and must not allow the building of any block work to create any additional balconies above these level "B" balconies.

I further order that, pending a final determination, the body corporate must not take any action pursuant to a proposal from Mossman Refrigeration Services to reposition seven air conditioning units onto the proposed new roof.

This is an interim order and will remain in effect for a period of not longer than six months. It is the responsibility of the applicants to apply to extend this order if no final determination has been made within that period. This order will automatically lapse upon a final order being made or this application being withdrawn.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0798-2006

"No. 9 Port Douglas Road" CTS 24368

No. 9 Port Douglas Road Community Titles Scheme (Port Douglas Road) is an 18 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). The scheme is described as a warehouse/office/residence converted to an 18 unit complex. Lot boundaries are designated under a building units plan (now known as a building format plan).

This is an application for interim orders seeking to put on hold proposed works pursuant to a number of resolutions of the body corporate. It arises out of an application by Maxwell Stainlay, Tecelec (Qld) Pty Ltd, Myles Forsyth, and Timothy Ewing, owners of lots 17, 10, 5 and 14 respectively (applicants) seeking final orders to overturn these resolutions and seeking to have an administrator appointed.

At an extraordinary general meeting on 15 September 2006 the majority of owners voted in favour of a number of resolutions to engage in works to install a roof over the eastern side of the building, paint the building, repair the roof on the western side of the building, replace an area of laser light roofing, and repair air conditioning to prevent leaks.

The applicants also enclose a copy of a plan of the proposed new roof structure prepared by Greg Skyring Design and Drafting Pty Ltd (Skyring Plan). The applicants object to this plan on the basis that it was not distributed until two days before the meeting and that it includes newly constructed balconies as additions for the exclusive benefit of lot 16 without notification or consent of grant.

It is also submitted that the above resolutions are not reasonably necessary for the health, safety or security of persons as a more viable option is available as submitted by the previous committee for the extraordinary general meeting of 28 April 2006. Further, the ability of the present committee to act honestly, fairly and equally represent all owners is questioned and the appointment of an administrator to perform the functions of the committee is requested.

The committee has made submissions to the effect that:

One owner has made a submission supporting the application. A group of twelve other owners has made a submission to the effect that a number of applications including the present application are seemingly repetitive and vexatious. This submission states that they are considering making application to recover some of the costs incurred by the body corporate in distributing and answering the dispute.

In a letter dated 16 October 2006, one of the applicants has requested that this application be referred to an adjudicator other than myself. The letter refers to an earlier order I made in relation to the scheme that the applicant is appealing to the District Court.^[1] It is submitted that the decision to appoint me to adjudicate on applications that have a direct influence on a District Court appeal of my previous order "lacks impartiality and raises the perception of a conflict of interest". The letter also refers to my "apparent failure to reveal a possible conflict of interest".

To the best of my knowledge, I have no interest or relationship with Port Douglas Road or any owners in that scheme that could raise any possible conflict of interest in any decision affecting the scheme, including a decision made by the District Court. The applicant is possibly concerned that I have prejudged the present application as a result of my determination of the earlier application. The issue in the earlier determination was whether a resolution that the body corporate repair/replace the roof by "Installing a roof over the front section only, incorporating the open area of unit 16, the open area above units 7, 8, 9 and 10. Plus carrying out repair works on the remaining roof section and wall capping above units 16, 17 and 18 as recommended by ARUP engineers" was maintenance or an improvement. This issue is now properly determinable before the District Court and is not an issue that can be re-litigated now before me or any other adjudicator.

I have not made any determinations about the credibility of any relevant person providing evidence, nor have I determined a question of fact that constitutes a live and significant issue on any new issues for determination in the present application.

Although it is important that justice must be seen to be done, it is equally important that officers discharge their duty to sit and do not, by acceding too readily to suggestions of the appearance of bias, encourage parties to believe that they can have their case determined by someone more likely to decide the case in their favour.^[2]

One of the objects of the legislation is to provide an efficient and effective dispute resolution process (Act, 4(h)). There have been nearly thirty applications concerning Port Douglas Road over the last few years with numerous recent applications related to water ingress into apartments and attempts to rectify these problems. There are obvious efficiencies in a single adjudicator deciding a number of applications related to the same scheme and, in fact, there are less adjudicators currently appointed then there have been related applications. This is not any excuse for an adjudicator to determine an application if there is in fact a reasonable apprehension of bias by prejudgement, except perhaps if an adjudicator is required to re-determine an application if the application has been referred back to the adjudicator by the District Court after an appeal (Act, 294(1)(c)). However, I should not accede to the suggestion of appearance of bias merely because one of the applicants alleges that a decision being on appeal raises a perception of a conflict of interest. Objectively speaking, an adjudicator is not a person who is directly affected by the relief sought in an appeal of the adjudicator’s order and is not a person who has any interest in maintaining the decision under appeal.^[3]

A reasonable apprehension of bias by prejudgment must be firmly established on an objective test and a subjective apprehension of bias by a litigant is not sufficient to warrant disqualification.^[4] Given that neither the previous nor the present applications contain any significant differences on relevant questions of fact and no findings relating to credit are necessary, it does not seem appropriate that I accede to any suggestion of an appearance of bias.

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

In determining whether it is just and equitable to grant interim relief it is relevant to briefly consider whether the application raises any serious questions for final determination.

It is also relevant to consider whether any inconvenience likely to result from the interim order is outweighed by the potential detriment alleged in the application. Any evidence that an interim order is necessary to prevent serious or irreparable harm will be significant.

As stated above, I will not reconsider the issue of whether a decision by owners that the body corporate repair/replace the roof by "Installing a roof over the front section only, incorporating the open area of unit 16, the open area above units 7, 8, 9 and 10. Plus carrying out repair works on the remaining roof section and wall capping above units 16, 17 and 18 as recommended by ARUP engineers" was maintenance or an improvement. This issue is now properly determinable before the District Court and is not an issue that can be re-litigated now before me.

However, despite submissions by the committee to the effect that the application is a complete duplication of the application before the District Court, it appears that some new issues are raised in the present application.

The applicants refer to motion 3 that purports to allow for the engagement of a contractor to build a new roof over the front of the building. A new issue that relates to this particular motion is the applicants’ objection that plans of the proposed work were not distributed to owners until two days before the meeting at which owners were voting to accept a quotation. This may raise questions about the distribution of information generally between owners. However, provided proper notice of the meeting was given with copies of the quotations attached, the late distribution of some extra information does not raise any serious questions about the validity of the resolution itself. Individual owners could have asked for copes of additional information or simply voted against the motion if they were not satisfied they were properly informed about the proposal.

However, there are other new issues that do raise questions about whether aspects of the proposed work have been properly authorised. Firstly, a quotation associated with the motion refers to the re-location of seven air conditioning units. Secondly, the copies of plans that were ultimately provided show the proposed creation of new walls and additional balconies to be constructed on the top floor of the building, being level "C" as shown on the plan.

The view has been expressed that the body corporate should be allowed a reasonably wide discretion in the means by which it performs its maintenance obligations.^[5] An example of an old leaky concrete pool has been used to illustrate the appropriateness of the body corporate considering different options to perform maintenance of the pool. The view has been taken that quite different solutions or methods of repair might be categorised as "maintenance" if the principal intention of the proposal is to return the pool to a useable condition or state of repair.^[6] Various alternative maintenance proposals suggested including sealing cracks in the pool, the insertion of a liner within the pool, or alternatively, pebblecreting over the pool surface so as to form a new waterproof surface.

However, the view has also been expressed that the replacement of a safety balustrade with a safer type of balustrade constitutes "maintenance" but the erection of balustrades on an area where none previously existed would be considered to be an "improvement".^[7]

The present application therefore raises a serious question to be determined regarding whether the proposed relocation of air conditioners is for the purpose of preventing water ingress into the building, particularly if other aspects of the proposed works would in fact result in a metal roof being installed over this air conditioning plant. A serious question is also raised regarding whether the proposed work would result in the creating a new balconies on the top floor that could be seen to be an "improvement".

In fact, questions might even arise regarding whether creating additional balconies would require a resolution without dissent and new plan to be registered (Act 56, 62).

On the other hand, no serious questions seem to be raised about the installation of block work around existing areas. From the plans it is obvious that the roof will need to be a certain height above the existing railings to avoid the roof cutting through the middle of lot 16. The proposed additional block work would serve the obvious "waterproofing" purpose of preventing water blowing into the building under the new roof.

It is only where block work creates a new balcony area that a new question arises about whether the block work is part of a new "improvement" rather than simply part of waterproofing the building by putting a new roof over an existing area of the scheme.

Any suggestion by the applicants that painting is an improvement rather than maintenance is misconceived.^[8] Painting is a regular part of maintenance and it seems to be lacking in common sense that small amounts of additional painting of brickwork would require a separate special resolution as an improvement rather than maintenance of the building. I do not consider the applicants have raised any serious question to be determined in this respect that would justify an interim order to put the painting on hold.

Any suggestion by the applicants that the proposed works to the western roof area should be grouped as a whole project or separated into repairs and improvements seems misconceived and without substance. The applicants correctly point out that the cost of individual improvements needs to be considered with reference to the total cost of all associated improvements. However, there is no substance in the applicants’ argument that these motions actually propose improvements rather than maintenance. Rather, on the face of the application, these works simply appear to be part of basic maintenance to the western roof with the purpose of repairs and minor improvements to prevent water leaking through the roof.

In an appeal of an order of a referee under the Building Units and Group Titles Act 1980 it was stated 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".^[9] In the present circumstances, the applicants have not provided any substantive basis for an argument that any element of improvement in these proposed works takes the proposal outside the concept of "maintenance" directed at preventing water coming through the roof and into the category of an "improvement" to common property requiring approval by special resolution of owners.

The applicants have raised serious questions about whether any works that would effectively create new balconies have been properly authorised. Similarly, questions arise regarding whether works to relocate air conditioning units are part of a "maintenance" proposal or amount to "improvements".

In terms of making an interim order, I am reluctant to put on hold work that is directed at preventing water damage to units. However, it is obviously also preferable not to perform work where some owners have raised serious questions about whether the work has been properly authorised and prior to the opportunity to have that dispute finally determined. I am also aware that the appeal to the District Court may impact on whether works to waterproof the building proceed in the near future or not.

On balance, I will make an interim order to require the body corporate to put on hold any works related to the creation of new balconies or relocating air conditioners. However, if other works to waterproof the building do proceed and this interim order is significantly impacting on whether or not the building can be made waterproof then I would invite parties to make further submissions with a view to potentially varying this interim order.

For these reasons, I make the interim order above.

The application will be allowed to proceed to submissions and a final determination in the normal course.

^[1] No. 9 Port Douglas Road, Order 0327-2006, D Toohey, 1 June 2006.
^[2] Raybos Australia Pty Ltd v Tectran Corp Pty Ltd (1986) 6 NSWLR 272.
^[3] Marriner Views CTS 9252 v Jamieson & Ors, D1048/02 District Court (Southport), Wilson DCJ, 30 July 2003 at paragraph 14.
^[4] Raybos Australia Pty Ltd v Tectran Corp Pty Ltd, supra.
^[5] Body Corporate for Golden Sands Highrise v Galtos & Anor, Appeal 33 of 1999, District Court (Southport), Robin DCJ, 10 March 2000, paragraph 18. See also Surfers Aquarius, Application 0218-2005, RA Meek, 11 November 2005;
^[6] Merrimac Heights, Application 0246-2006, RA Meek, 2 May 2006.
^[7] Las Rias, Application 0063-2006, L Ex, 8 June 2006.
^[8] Spinnaker Sound Stage A, Order 0438-2002, RA Meek, 27 August 2002.
^[9] Proprietors "The Rocks Resort" v. Costi, Building Units Appeal Tribunal No 227 of 1997, O’Driscoll SM, 24 September 1997.

Number of Scheme:	24368
Name of Scheme:	No. 9 Port Douglas Road
Address of Scheme:	9 Port Douglas Road PORT DOUGLAS QLD 4871

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

No. 9 Port Douglas Road [2006] QBCCMCmr 539 (24 October 2006)