No. 9 Port Douglas Road [2006] QBCCMCmr 672 (18 December 2006)

Last Updated: 27 March 2007

REFERENCE: 0780-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

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

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

Tecelec (QLD) Pty Ltd, the Owner(s) of lot 4

I hereby order that resolution 8 of the extraordinary general meeting of 15 September 2006 be amended to the effect that the body corporate authorises the owner of lot 16 to perform the tiling of the penthouse outdoor area instead of the body corporate itself accepting quotations to perform this tiling. The minutes of meeting should be amended to include a statement that the resolution has been amended by an order of an adjudicator to this effect. I further order that the special levy proposed for the tiling of lot 16 is void. The body corporate must, as soon as practicable, issue new contribution statements to owners excluding any levy for this tiling and refund any owners who have already paid this levy. For the avoidance of doubt, the body corporate need not give owners any additional time for payment as a result of this adjustment to the contribution statements. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0780-2006

"No. 9 Port Douglas Road" CTS 24368

Application

No. 9 Port Douglas Road Community Titles Scheme (PDR) 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.

Applications 0780-2006 and 0781-2006 both concern the same subject matter. The applications are respectively by Tecelec (Qld) Pty Ltd, owner of lot 4 and Maxwell Stainlay, owner of lot 17 (applicants) seeking orders against the body corporate for PDR (body corporate) to invalidate a resolution proposing the retiling of the lot 16 balcony and appoint an administrator to carry out the obligations of the committee.

All owners have had the opportunity to, on request, inspect the material for both of these applications and all owners have been given the opportunity to make submissions in respect of these applications. This order is to resolve the disputes in both related applications and these reasons for decision apply to both applications.

Background

Vote by owners

At an extraordinary general meeting on 15 September 2006 the majority of owners voted that the body corporate should replace the tiling on the balcony of lot 16. I understand from the submissions that lot 16 is the penthouse unit and the balcony area of this unit is uncovered so waterproofing for the units below consists of a waterproofing membrane underneath the tiles.

Submissions

The applicants make submissions to the effect that the owner of lot 16, Famestock Pty Ltd (respondent) should pay for the tiling itself. It is submitted that the tiles form part of lot 16 and the repair is not body corporate responsibility, particularly as the body corporate has decided not to repair the waterproofing membrane under the tiles but to install new roofing over the scheme instead.

Submissions have been received from the respondent to the effect that the membrane is the responsibility of the body corporate even when it is part of a lot and that an owner is not normally responsible for replacing tiles above a damaged membrane. It is submitted that the tilers report states that the original laying of the tiles and membrane was always faulty due to poor workmanship and the body corporate has approved the tiling to help alleviate the leaking through the slab with the upcoming wet season approaching and prior to the new roof being completed.

The body corporate has also provided submissions and has included photographs showing cracked tiles and evidence of water damage to other parts of the building.

Other owners have also provided submissions. All submissions are available for the parties to inspect upon request and it is unnecessary for me to summarise these submissions here.

Decision

Applicable law

The legislation includes provisions to the effect that:

• The body corporate must maintain common property in good condition (Accommodation Module, 108(1));
• For buildings under a building format plan of subdivision, the body corporate must maintain roofing membranes even if they form part of a lot instead of common property (Accommodation Module, 108(2)(a)(iii));
• The owner of a lot included in the scheme must maintain the lot in good condition (Accommodation Module, 119(2));

Normally this would mean that a lot owner is responsible for retiling their own balcony. It is no excuse to say that the developer never tiled it properly in the first place. Rather the owner must normally fix the problem and seek any financial redress from the developer.

On the other hand, the body corporate has a responsibility to maintain the roofing membrane in good condition. If damage to tiling was caused by the body corporate performing work on the membrane or the failure of the tiling was caused by a failure of the waterproofing membrane then it might be just and equitable that the body corporate pay for the cost of retiling.

Cause of problems with tiles

I provided the applicants and the owner of lot 16 the opportunity to provide a report from a person with expertise in tiling to estimate, as a percentage, the extent to which the problems with the tile were caused by a failure of the waterproofing membrane or by remedial works to fix the waterproofing membrane as opposed to having resulted merely from the passing of time or from the tiles themselves being laid poorly initially.

The applicants failed to provide any report quantifying the factors above but instead refer to a letter of 9 February 2006 from Traditional Tiles Cairns to the representative of lot 16. This letter indicated that tiles had been poorly laid without good adhesion and problems arose from water being sucked into the tiles and topping, severe heat causing expansion, and not enough control joints being set out originally.

Submissions by the representative of lot 16 are to the effect that they have never laid or replaced tiles themselves and do not feel that they should have to pay to fix a body corporate problem. It is submitted that the concrete slab is cracked or porous and that this is not the responsibility of lot 16. A brief report from an architect has been provided but this report does not provide a quantification of the factors leading to the problems with the tiles. Rather, this report suggests that the bituminous membrane used to seal the slab prior to laying the tiles should not be used because of the concrete slab shrinkage and the existing tiles should be removed with a new water based screed being applied strictly in accordance with the manufacturer’s instructions prior to laying new tiles.

Other submissions from owners included a submission to the effect that a number of builders have advised that it was a basic flaw to incorporate a flat concrete slab of that size in climatic conditions where expansion and shrinkage of the slab would make it nearly impossible to ensure that the membrane and tile coverage would not fracture. It is submitted that for this reason the majority of owners have decided to roof the area and replace the existing membrane and tiles.

Against this background, it seems most likely that the tiles have failed because of an original design defect and as a result of expansion and shrinkage of the slab. There is no evidence that satisfies me that damage to the tiles has been caused by the body corporate or by any failure of the body corporate to maintain a waterproofing membrane. I therefore conclude that the owner of lot 16 should be wholly responsible for the costs of retiling his lot.

I further note that the majority of owners appear to have concluded that it is not practicable to attempt to rectify waterproofing problems with this area and a roof is to be put over the entire area. This will effectively make the tiled area in question an indoor area of lot 16 without any body corporate responsibility for waterproofing. The owner of lot 16 will need to avoid causing any water damage to other lots by hosing the tiles or over watering plants in the same way that any other owner would need to avoid any damage by performing those activities inside their own lots.

In particular, I note that the slab between unit 16 and the units beneath is not common property. The slab forms part of the respective lots with the boundary between unit 16 and the units beneath being the centre of the slab (Land Title Act, 49C). The owner of unit 16 is therefore also responsible for fixing any cosmetic cracking or similar issues in the top half of the slab.

Order

An adjudicator is required to make an order that is just and equitable to resolve a dispute (Act, 276). The applicants have disputed a resolution proposing that the body corporate accept a quotation for the tiling. In refusing to grant an interim order to stop the work proceeding I indicated that a final order may result in an apportionment of the costs of retiling on a just and equitable basis so that the owner of unit 16 pays more than just its contribution according to the special levy proposed in the motion.

After considering all submissions prior to making a final order I have concluded that the owner of unit 16 should be wholly responsible for the costs of retiling. However, I also understand that the tiling has not proceeded, presumably because of the dispute resolution applications. It may also be preferable that a roof be put over the area before retiling occurs.

I therefore propose to order that the resolution in question be deemed to be merely an authority for the owner of unit 16 to perform the work at the owner of unit 16’s own cost. That is, the resolution should merely give the owner of unit 16 any consent needed from the body corporate, for example, any consent needed under the scheme’s by-laws. The owner of unit 16 can then make his own arrangements with the tiler. Other owners will not contribute to the costs of the work and the special levy proposed is therefore unnecessary. I will order that the body corporate re-issue contribution notices to remove this levy and refund any owners who have already paid that amount. For the avoidance of doubt, I will declare that no extension to the time for payment of the levies is necessary as a result of this adjustment given the total amount of the contribution will be less than initially sought.

For these reasons, I make the orders above. The application has been partially successful and will require action by the body corporate to amend the minutes of meeting and adjust proposed contributions. However, there are no grounds that satisfy me it is appropriate to appoint an administrator for the scheme as sought. The application will therefore be dismissed in that respect.