Portofino [2006] QBCCMCmr 60 (10 February 2006)

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

I hereby order as follows;

1. that within 21 days of the date of this order the body corporate will at its own expense engage or commission a suitably qualified builder or tradesman to repair or replace as soon as possible thereafter the defective guttering which vibrates adjacent to Unit 22 so that such vibration is stopped and if such guttering is allowing water ingress to Unit 22, so that such water ingress is prevented;
2. that within 21 days of the date of this order the body corporate will seek an inspection and report by a suitably qualified builder or tradesman on the cause for the rusted screws and rust mark above the doors of the balcony of Unit 22, and on the cause and remedy required to make good the leaky soffit and damp spot on the ceiling of the balcony of Unit 22. The defects will be remedied in accordance with the maintenance provisions of the legislation as detailed in the reasons for this order, and the costs apportioned accordingly. If the body corporate is responsible for repairs or replacement, such repairs or replacement must be effected as soon as possible thereafter;
3. that within 21 days of the date of this order, that the body corporate shall with the assistance of a qualified electrician, and by reference to any previous electrical investigation, check all the power points in Unit 22 and in the event of faulty power points being found, determine the nature of the fault. Remedial work and the cost of any investigative work or report is to be paid for in accordance with the maintenance provisions of the legislation as detailed in the reasons for this order. If the body corporate is responsible for repairs or replacement, such repairs or replacement must be effected as soon as possible thereafter.
4. The application for orders that the body corporate effect repairs or replacement of the storage door in the basement, and that the body corporate finishes the tiling in the kitchen of Unit 22 are dismissed.
5. That a copy of this order and the reasons for the decision be distributed to all lot owners at the cost of the body corporate within 21 days of the date of this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0544-2005

"Portofino" CTS 30865

APPLICATION

This is an application dated 25^th July 2005, as amended on 21^st November 2005, by Robyn Newton and Robert Furini, co-owners of Lot 22 ( the applicants) against the body corporate for the scheme ( the body corporate) for an order, that in respect of Lot 22 , the body corporate effects the following-

JURISDICTION

"Portofino" CTS 30865 is a community title scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module). There are 24 lots in the scheme created under a Building Format 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

(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)).

The applicants, who purchased Unit 22 in December 2002, a month after the building was completed, complain of a list of defects to their lot, or affecting their lot. They say that they have written to Ken Hicks and Associates Body Corporate Management Pty Ltd ( the body corporate manager) concerning the defects on 26 Feb 2004, 26 June 2004, and 16th July 2004, and to the caretaker, Leo Cristaldi ( the caretaking service contractor) and to the original builder T.F. Woollam and Son Pty Ltd ( the builder) . On 16th July 2004 they involved solicitors, although the outcome of this is not given.

In support of their application they prepared and sent a video cassette. Unfortunately the quality of the cassette did not allow me to appreciate visually all the defects complained of, although the sound of the gutter vibrating was clearly heard as a loud, unpleasant and insistent buzz, such as is made by a power tool being operated.

The applicants say that they noticed that the tiled splashback in the kitchen had not been completed when they first moved in. They soon noticed the gutter vibration in January 2003 since it commences in windy conditions. They noticed the rusty screws on the balcony light fitting and above the balcony doors in "mid 2003, " as well as exposed roofing nails on the balcony.

A leaky soffit around a steel beam on the balcony came to light in October 2003.

They noticed the basement car park storage door in April 2005. The storage doors are binding, the nails have rusted round the architrave, and the door jambs are coming away from the wall

They noticed the defective power points in April 2005. They say that the power points have been found to be faulty by an electrician who "expressed concern" about them. They say they have "received several shocks from the power points." The builder’s contracted electrician Love Electrical (Love) also checked the power points "and expressed a safety concern as he also received shocks." The caretaking service contractor advised the applicants that as the power points were within their unit, this was their problem.

On 18th January 2003, at the invitation of the developer Port Binnli, (Port Binnli) the applicants sent a "further updated defect list for Unit 22". On that list, the splash back tiles are mentioned as being unfinished. There is no mention of the gutter, perhaps not thought to be a defect in "unit 22" as such, or the other defects now complained of, which is understandable if they did not come to light by 18th January 2003.

On 26th June 2004, the applicants advised that they were only going to pay part of their body corporate fees until the building issues were resolved.

The builder subsequently inspected the gutter and did some remedial work by fitting rubber stoppers. This worked for a while but then the original noise returned.

The applicants have not spoken to the Building Services Authority (BSA) and say that this is the
"caretaker’s job." They do not know if the body corporate has spoken to BSA, and they say that the body corporate manager and the "caretaker/manager" have not performed their duties "as per the original contract presented on moving into the complex".

Submissions were invited from all 24 lot owners in accordance with section 243(2)(b) of the Act. No submissions were received from lot owners.

The body corporate made a submission through its body corporate manager. The body corporate manager says that all letters from the applicants " were forwarded to the caretaker for appropriate action." The original owner was Portofino Place Pty Ltd and " some lack of action in a desirable time frame had initially occurred due to lack of communication between original owner .....and the builder T Woolum and Sons. (sic) There was also some disagreement as to whose responsibility it was to rectify some defect items, which was subsequently resolved..."

The body corporate manager submits that many of the matters raised by the applicants are "private rather than Body Corporate."

Re: the gutter
On 21st May 2003 the caretaking service contractor wrote to Port Binnli about a number of defects in the building including "gutter flaps on Unit 22." On 2nd August 2004 the caretaking service contractor asked the body corporate manager to help as the builder was "very difficult in dealing with these issues." After many visits by the plumber, the gutter still had not been fixed. On 16th August 2004, the body corporate manager sent the builder a Notice to Rectify by 18th September 2004, inter alia the noise in the gutter, the rusted screws in exterior lights and the exposed roofing nails on balconies, although the defects did not refer specifically to Unit 22, despite being copied to Mr Furini, one of the applicants.

Whilst the gutter was repaired once, it became bad again so the caretaker again asked the builder to fix it on 29 Aug 2005, a date after this application was made, but before it was amended to its final format. Whilst there has been no action as yet by the builder, the body corporate is pursuing this matter and on 21st December 2005, the caretaking service contractor wrote to the applicants, and the builder has assured the body corporate that it will repair the problem "in the new year" ie in 2006. On 30th January 2006, the builder advised the caretaking service contractor that it wished to attend on site with a roofing contractor.

Re: the balcony’s rusted screws
The body corporate says " the majority of unit balconies have rusted screws in light fittings" and it sees this as the individual lot owner’s responsibility, even though it mentioned this defect on the Notice to Rectify sent to the builder on 16th August 2004. It says other owners have replaced the screws, and the complaint refers only to "three minor steel screws." Love was asked by the builder to respond to the body corporate manager’s Notice to Rectify concerning the rusted screws in the light fittings. On 2nd September 2004, Love reports that it has "replaced all exterior lights with a different fitting excepting 2 of which were in back order" and were expected to be received on the following day.

Re: power points and kitchen splashback
The body corporate is of the opinion that since the power points are on private property they are also the owner’s responsibility, as is the kitchen splashback.

Re: leaky soffit and storage door
It further says that the leaky soffit and the defective storage door were only reported to the body corporate on 10th October 2005, when the applicants wrote to the secretary of the body corporate. It has asked the caretaking service contractor to investigate, but advises that the storage door is an exclusive use area which would be the responsibility of the lot owner.

General submissions
It says the applicant Mr Furini is "well aware that his private building defects should have been referred to the builder, in writing, in the appropriate timeframe. This was recommended to Mr Furini in correspondence from the body corporate manager dated 1^st July 2004. ... Mr Furini is also very aware of the services provided by the Building Services Authority should the builder does not respond...."

On 10th November 2005, the caretaking service contractor sent a fax to the body corporate manager that "all defects have been fixed except for the gutter and water leak on ceiling Unit 22."

DETERMINATION

This dispute concerns a number of defects to Unit 22, some of which the applicants have suffered over several years. The problem in getting the defects repaired has been exacerbated by the fact that those involved in this dispute have not known whose responsibility it was to remedy defects. The applicants have since 2003, written to the builder, the body corporate manager, and the caretaking service contractor asking for specific defects to be rectified, and respectively been advised that it is either their problem or some one else’s responsibility to rectify.
In frustration, the applicants have ceased making full payments of their body corporate levies, and incurred action by the body corporate for debt against them.

The confusion arises in that the defects, some of which are small but no doubt very annoying, must be categorised differently, according to what they are and where they are situated.

The tiling in the kitchen
One matter complained of, which I shall deal with first, is not a "defect" at all. The untiled area in the kitchen is part of the cosmetic work to the kitchen which has never been finished by the builders. The matter has been reported to the developer and builder by the applicants from the first moment they moved in. Whilst it clearly should be rectified, this is not a matter which the body corporate is duty-bound to fix. The applicants’ remedy is against the builder and developer. In view of the time now elapsed and the apparently small nature of the unfinished work, it might benefit the applicants to complete the tiling themselves. However this is entirely a matter for them. I have no jurisdiction to order that the body corporate finish off unfinished building work.

The guttering
The duty of the body corporate for property maintenance is set out largely at section 108 of the Accommodation Module, and relates to common property, and to property which under a building unit plan of subdivision, such as is Portfino, is taken to be common property.

1. An airconditioning plant is installed on the common property, but relates only to

2. A hot-water system is installed on the common property, but supplies water only to

a particular lot. The owner of the lot would be responsible for maintaining the

(c) the owner of the lot is responsible for maintaining the tray of a shower that services the lot, whether or not the tray forms part of the lot.

Section 20 of the Act extends the definition of common property to include ‘utility infrastructure’, which, unless falling within the exceptions detailed in section 20(1)(a), (b) and (c), is also required to be maintained by the body corporate. Utility infrastructure is defined in the Act as -

(a) cables, wires, pipes, sewers, drains, ducts, plant and equipment by which lots or common property are supplied with utility services; and

enhance the enjoyment, of lots or common property.

The " exceptions", which make such utility infrastructure the responsibility of a lot-owner are as follows -

Accordingly, in normal circumstances, the body corporate would be responsible for the defective guttering, as part of the common property. It seems to be accepted by the body corporate, albeit somewhat grudgingly, that this is a matter which it must be put right, and it has taken some steps to bring back the builder to effect repairs. Whilst the building was only completed in November 2002, and the fault has been there from the beginning, once the building was completed, and the scheme had been established upon registration of the plan, the body corporate assumes its responsibility notwithstanding that there might be some redress against the builder for a certain period of time.
This is a matter which the body corporate must pursue and repair properly. It may well be that the body corporate decides to take action with, or subsequently against, the builder but it cannot keep passing the responsibility back on to the builder, or waiting for the builder to act. I will make an order that the gutter is investigated within a specific period of time and fixed as soon as possible thereafter.

Power points
I am not satisfied that the problem with the power points, which only occurred in April 2005, is a defect resulting from the original building work, but that again, is entirely a matter for the body corporate or for the applicants to pursue if necessary. The body corporate should be concerned about allegations of faulty wiring or sockets that are "unsafe." It is not conclusive that because the power point is within the applicants’ lot, then it is the applicants’ responsibility. As the applicants request, all power points need to be checked, and the cause of any faults located.

The body corporate will be responsible for a wiring fault if it can be traced to common property, (eg. the switchboard) or if the electricity supply to Unit 22 has "shared" cabling and the fault is in that cabling, or if the fault is situated within the ‘boundary structure’ of the lot, as set out above. I have no details as to what is wrong with the power points, or as to why they are "faulty". There has been no evidence supplied that they are ‘unsafe" although the applicants say that they have "received several shocks". However, if the fault lies within the lot, is not within the boundary structure and relates only to the supply of electricity to Unit 22, then, it is the responsibility of the lot owner.

I note that a report from Love is expected by the applicants. I order that the fault is determined by a qualified electrician, and that the remedial work is paid for in accordance with section 20 of the Act as set out above. That is, depending on the place where the fault arises, whoever is responsible as determined by the legislation, shall pay for the remedial work and any investigatory work and report.

The rust and damp on balcony
Under normal circumstances, the lot owner is responsible for maintaining his own lot in a good state of repair (section 119 Accommodation Module). To this end, the rusted screws on the balcony light fitting and an area above the balcony doors would be up to the lot owner to fix. Love says that all the light fittings were replaced in September 2004 following the Notice To Rectify sent by the body corporate manager. Either this did not happen or the screws have once again rusted. I also note that other owners have dealt with this problem which seems to have been widespread. Whilst the body corporate has intervened in this matter to recall the builder’s contracted electrician (Love), it does not make this a body corporate responsibility.

If, however, the screws are rusting, or the rust spot above the door is caused, by water ingress from outside, the body corporate will be responsible for making common property impermeable and protecting the property of the lot owner. The caretaking service contractor believes that a damp spot on balcony ceiling about 300mm in from the balcony guttering, is caused by water ingress from the defective guttering. The leaky soffit on the balcony is within the applicants’
lot but the caretaking service contractor has inspected it and thinks that the water may be coming from the guttering in strong winds.

In the circumstances, I order that the body corporate shall inspect and report on the reason for the rusted screws, the rust mark on the area above the balcony doors, the leaky soffit and the damp spot on the balcony ceiling of Unit 22. Where the damage is found to be caused by water ingress through a protective surface ( other than by say, rainwater weather blowing in through an open balcony) then the body corporate shall make proper and effective repair to the balcony (and any exterior coating or fitting which is allowing such ingress). If the screws are merely rusted because they are of poor grade steel, for example, and the rusting is not caused by water permeating through from outside, then they shall be replaced at the cost of the applicants.

I would comment that the matters involving alleged defects in building are beyond the jurisdiction of an adjudicator under the Act. These are matters that must be pursued by the owners with the Building Services Authority (BSA) or the Courts (either individually or see section 162 of the Act for a body corporate course of action).
The Accommodation Module envisages the body corporate bringing a proceeding on the part of an owner, either under the Queensland Building Services Authority Act 1991 or another law, if the owner has suffered defective building work. (Section 121 Accommodation Module). There is however, no duty on the body corporate to bring a proceeding on behalf of an owner. The owner may of course bring start such a proceeding himself or herself. There is no evidence to show that the applicants have requested that the body corporate commence proceedings on their behalf against the builder.

The storage door
It seems that the storage door has deteriorated lately, being noticed first in April 2005. The storage door is on common property in the basement car park, but in an area over which the applicants have exclusive use. Section 122(2) of the Accommodation Module makes the owner responsible for maintenance and operating costs for the part of the common property for which the exclusive use applies if there are no other conditions recorded in the Community Management Statement (CMS) lodged in the Titles Office of the Land Registry. There are no other conditions recorded in the CMS.

Whilst such deterioration would not be expected in a new building, it may now be too late for this defect to be taken up with the builder. However, this is entirely a matter for the applicants. Such maintenance or repair is not the responsibility of the body corporate.

There seems to be a general lack of communication and understanding of the roles of body corporate manager and the caretaking service contractor, and the way in which a lot owner may have an effective ‘voice’ in this scheme.

The body corporate manager is usually merely the company contracted by the body corporate ( ie all the lot owners acting through their committee) to deal with the administrative affairs of the body corporate. Usually its function is to receive levies, keep the books and call meetings, and to assist the committee in the secretarial side of running the body corporate. The caretaking service contractor usually has management rights and operates the business of letting units, and keeping the grounds and common property eg. the pool in good condition. Whilst he or she may hire persons to effect small repairs to the common property, or to do certain tasks about the scheme land, the running of the scheme should be by the committee. The body corporate manager and the caretaking service contractor are non-voting members of the committee. The committee drives the body corporate, and the lot-owners drive the committee. If something in the scheme needs to be attended to, a lot owner should write to the committee who should consider the lot owner’s request or concern at the next committee meeting. All lot owners should have an agenda of the forthcoming committee meeting sent to them in advance, and the minutes of the meeting should be sent to lot-owners within 21 days of the meeting.

The committee has a restricted spending limit. If spending of more than $125 times the number of lots is required, a general meeting ( ie a meeting of all the lot owner s) must be called. This is all written into the legislation. Information is available from the Commissioner’s Office on 1800 060 119.

There is no excuse at all to withhold payment of levies, which leads to dire consequences for the withholding payee and the body corporate. The Commissioner’s Office cannot condone withholding of contributions for any reason. The body corporate is entitled to charge a penalty (interest of up to 2.5% per month) for late payments and I understand that the body corporate has passed such a motion at a general meeting on 28th February 2004.

However, the body corporate is not without more, able to pass on the costs of debt collection. There is no general authority in the legislation to allow a body corporate to reimburse itself for legal fees or debt collection agency fees incurred in collection of the debt. Whilst "recovery costs" (section 97 Accommodation Module) are not defined in the legislation, it has been held on many occasions by this office, that solicitors’ fees and debt collection agency fees are not, without more, fees "reasonably incurred". If the body corporate wishes to employ a debt collection agency, (and the debt collection legislation is such that a creditor can proceed without legal representation or a specialist agency), then it is entirely a matter for the body corporate, and not a bill which can be passed on to the debtor unless so ordered by a court.^[1]

The applicants did not writte to the committee about their problems until 10th October 2005. The body corporate manager says that there have been no " formal committee meetings where the allegations of the applicants have been considered." Committee meetings can only be formal or they are not committee meetings.

If this scheme does not currently do so, it should commence having regular committee meetings, at which concerns of lot owners should be addressed. The committee may then decide how to respond to those concerns, and if the lot owner is not satisfied, the lot owner may put a motion to a general meeting (and 25% of owners may request that an extraordinary general meeting be held in addition to the annual general meeting which must be held each year) or make an application to this office.

In seeking further information from the applicants, I was provided with material about the security intercom. I note that the security intercom features in the documentation as having been troublesome in the past. However, this matter is not the subject of this application, and owners have not been asked for submissions on this topic. The body corporate should deal with this matter though its committee as it appears to concern common property infrastructure for which the body corporate is responsible.

The body corporate is not a nebulous entity which is required to provide good housekeeping for owners’ lots. It is a collection of lot owners with joint interests acting together. If the body corporate has to fund something or do something, the cost of that will come from the funds held by the body corporate or a special levy will have to be raised to pay for the work. In this scheme, if the body corporate feels that it should seek recompense from the builder or Binnli for works now required to be undertaken by it, the committee (or any lot owner) may put a motion to a general meeting that this avenue is pursued.

^[1] See adjudicators’ orders: Ref: 0625-2005 Tropic Gardens CTS 781; 0706-2004 Glenone CTS 2957; 0458 – 1997 Belle Maison BUP 11731

Number of Scheme:	30865
Name of Scheme:	Portofino
Address of Scheme:	9 Megan Place MACKAY HARBOUR QLD 4740

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Portofino [2006] QBCCMCmr 60 (10 February 2006)