Sailfish Cove [2006] QBCCMCmr 688 (21 December 2006)

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

I hereby order that the application for an order

"that the Sailfish Cove body corporate committee be empowered to recover the outstanding accounts for the external painting of lots 133, 134,135, 142, 166, 172, 174, 175, 190, 200, 202, 206, 208, 209, 211, 212 and 222 Sailfish Cove as per motions 9 and 10 as passed at the Annual General Meeting conducted on May 3, 2006 " is dismissed.

I further order that the application for orders -

"(i) That those owners not having entered into agreements with the body corporate within 30 days of being requested to do so, be required to reimburse the body corporate for the costs of carrying out the necessary painting works, and
(ii) that expenses incurred by the body corporate shall be recoverable as a debt in accordance with section 120 of the Body Corporate and Community Management Act (Accommodation Module) Regulation 1997
(C) that the committee be given approval if necessary;
(i) to appeal to the District Court: or
(ii) to defend any appeal to the District Court on the issue.
As per the motion carried at the Annual General Meeting conducted May 3, 2006."

is dismissed.

And I further order that Wayne Mowll owner of Lot 172 and Yuri Rapoport owner of Lot 175 have no obligation to pay the body corporate for any painting effected to their respective lots without their respective consents.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0731-2006

"Sailfish Cove" CTS 20394

APPLICATION

This is an application dated 8^th September 2006 by the body corporate for Sailfish Cove community title scheme 20394 (the body corporate) against the following owners of lots in the scheme, for an order that the committee " be empowered to recover the outstanding accounts for the external painting" of their lots as per motions 9 and 10 as passed at the Annual General Meeting on 3^rd May 2006.

The seventeen lot numbers listed in the application were as follows : 133, 134, 135, 142, 166, 172, 174, 175, 190, 200, 202, 206, 208 ,209, 211, 212 and 222, hereinafter named as "the Respondents."

However, during my determination of this application, and on seeking further information from lot owners and the body corporate, it appears that there remain only four lots and lot owners involved in this dispute. They are as follows –

Paul Cross, Lot 166
Wayne Mowll, Lot 172
Yuri Rapoport, Lot 175; and
Lashman and Nuragi Perera, Lot 200.

I understand all the remaining owners of the lots mentioned above, have now paid for the painting work to be done. The body corporate further submits that neither Lot 133 nor Lot 134 was intended to be listed in the original application.

The body corporate also seeks orders as follows –

"(i) That those owners not having entered into agreements with the body corporate within 30 days of being requested to do so, be required to reimburse the body corporate for the costs of carrying out the necessary painting works, and

(ii) that expenses incurred by the body corporate shall be recoverable as a debt in accordance with section 120 of the Body Corporate and Community Management Act (Accommodation Module) Regulation 1997 (sic)

As per the motion carried at the Annual General Meeting conducted May 3, 2006."

JURISDICTION

"Sailfish Cove" Community Titles Scheme 20394 is a community titles scheme governed by 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 215 lots in the scheme created under a Group Title 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)).

SUBMISSIONS

The body corporate says that at the annual general meeting of 3^rd May 2006 ( the AGM) two motions were resolved. These were as follows –

That the Body Corporate enter into agreements with individual owners to enable the Body Corporate to contract with Baker and Staff Gold Coast for the purpose of carrying out exterior painting works to units 131 through 224 and that the Secretary be authorised to issue a payment notice in accordance with the schedule provided by the contractor selected below and that this be done no later than 30 days from the date of the Annual General meeting with the date for payment being not more than 30 days after the date of issue and further that the Committee be authorised to recover any outstanding amounts as a debt, following completion of the work in accordance with section 118(3) of the Body Corporate and Community Management Act ( sic)(Accommodation Module) Regulation 1997."

This was passed 50 - 2.

"10. Ordinary Resolution Submitted by Committee
That the Body Corporate resolves to grant approval for the Committee to:

These two motions were drafted based on a formula used at the annual general meeting in 2003, apparently after seeking legal advice, for the painting of Lots 1 – 130.

In pursuant of Motion 9, Strata Solutions, the body corporate manager ( the body corporate manager) sent invoices and a blank document headed " simple agreement" to the lot owners of lots 131 – 224, and organised an expert report from Buildcheck about the paint condition of lots 131-224. These lots represent Stage 2 of the buildings in the scheme. The report was dated 4^th August 2006. Buildcheck concluded that there was a sharp contrast between the exterior appearance of the buildings of Stage 1 ( Lots 1 – 130) and the buildings of Stage 2. Generally the exterior of the State 2 lots looked " unpleasant, tired and downgraded" and should have been painted at the same time as Stage 1. The report contained photographs of buildings including numbers 62, 69 and 72. It is not clear if these are Unit numbers or Lot numbers.

The body corporate manager advises that a copy of the "simple agreement" and a quotation for individual lots was distributed with the agenda for the AGM. A letter dated 9^th June 2006 advised owners that the invoice had to be paid by 6^th July 2006. The simple agreement carried blank spaces for the owners to put their names and lot number, and authorised the body corporate to enter into a contract with painters for the painting of the owners’ respective lots. It needed to be signed, dated and witnessed. It also stated that lot owners would pay the body corporate for the painting work and that the committee could recover any amounts outstanding as a body corporate debt.

Painting work is still not completed on some lots, but the payment date of 6^th July 2006 has passed. The body corporate therefore makes this application.

Submissions were invited from all lot owners in accordance with section 243(2)(b) Act.

Lot owners of Stage 1 who paid up last year say it would be unfair if the owners of Stage 2 lots did not now have to pay for painting as they had to. Neil and Judith Harden (Lot 147) agree with the application, as does Thomas Watts (Lot 197), Maxine Lynch (Lot 54) and Dan O’Connor (Lot 82.) Steven and Melissa Brandson (Lot 75) , Barry and Marilyn Atkins (Lot 123), Randall and Susan Cameron ( Lot 185), and Adrienne and Timothy Clark (Lot 46) also support the body corporate.

Gary and Vivian Klibbe (Lot 193) say that the exterior painting of each unit is essential and that owners should meet their obligations. Michael Kizis (Lot 91) says presentation is very important and that the lots should all be of a uniform standard. Judith Rutledge-Smith and Sara Smith (Lots 38 and 214) support the application. Paul Smith (Lot 9) supports the body corporate but says that the body corporate should be able to recover a debt anyway whether or not the debtor has entered into the agreement.

Ross Baker (Mr Baker) (Lot 179), who is the chairman of the body corporate says that the body corporate has a job to do, and that they " lost a legal challenge over Stage 1 some years ago," although he does not elaborate on that. The body corporate is obliged to keep the building up to A1 condition in order to gain maximum returns for investors. A minority of owners are in this way prejudicing the majority and adding substantially to the costs of the body corporate, when the body corporate has to chase them for " unpaid painting levies". He wants to see an order for the recovery of all costs.

Wayne Mowll (Mr Mowll), one of the Respondents, of lot 172 says that his lot was one of the last lots built and it still looks like new. He voted against Motion 9 at the AGM and has not entered into an agreement. He believes the body corporate has no authority to act and is exceeding its powers, because the lots are created under a group title plan.

He says that the Buildcheck report only inspected buildings in Stage 1, which is borne out by the photographs of units 62 and 69 – 72. Since he has professional painting skills, he has offered to paint his own unit but has been told by the body corporate that he cannot do this. He also believes the quoted price of $1900 per unit is " excessive by 100%" because most townhouses are two storey and have big windows in the front. He was preparing to look for a comparable quotation to forward to this Office. On 6^th November 2006 however, Mr Mowll sent an email to this Office to say that the body corporate had since this application had been lodged, painted his unit against his will and authority.

Charlie and Kerrie Lattuga, (Mr and Mrs Lattuga) one of the Respondents, of Lot 135 agreed that their lot needed painting and have paid a $50 deposit, but do not want to pay for the work until it has been done to their satisfaction.

Michael and Sonia Hoy,(Mr and Mrs Hoy) one of the Respondents, of Lot 208, also says that they have now paid $1,017.50 and will pay the balance once the painting has been completed to their satisfaction.

Orlene McKinlay, one of the Respondents, of Lot 190 says no one mentioned painting to her when she bought her lot on 4^th July 2006. If the vendor’s levies had shown an outstanding amount it would have been paid at settlement. She is in the dark about how much the previous owners had been billed for, and she has phoned the body corporate manager but as at 17^th October 2006 had not had a response.

Graham Raspass, one of the Respondents, of Lot 142 paid the outstanding amount due on 21st September 2006. He says that the letters sent from the body corporate manager were ambiguous in that they appeared to give owners a choice whether they opted in or opted out of the painting. Once he understood it was "compulsory", he paid in full.

There were no submissions from the remaining Respondents.

The body corporate did not exercise its right of Reply.

DETERMINATION

I sought further information from the body corporate on 29^th November 2006, with copies to the Respondent submitters, concerning the status of the painting works and the correspondence sent to lot owners on this matter.

I am advised by the body corporate manager that there are now only four lot owners with whom the body corporate appears to be in dispute as stated above. Despite no authorities being given nor payments made, by owners Mr Mowll, and Yuri Rapoport (Mr Rapoport) (Lot 175), their lots have been painted by the body corporate contractors by mistake. The body corporate provides a copy of a letter dated 11^th October 2006 to Baker and Staff, the painting contractors, telling them not to paint, inter alia, lots 172 (Mr Mowll’s lot) and Lot 175 (Mr Rapoport’s lot).

It would appear to me that this application is now something of an empty vessel, but I make the following observations in the reasons for my decision since I am of the view that this has been a dismal operation on the part of the body corporate about which owners have had every right to be upset.

Whilst it is absolutely right that an owner who has taken advantage of a painting scheme promoted by the body corporate, must pay the body corporate for such work, I find that this matter has been dealt with in a heavy-handed way, perhaps prompted by concerns about a previous legal action as mentioned by Mr. Baker. Any painting work done by the body corporate may be recovered as a debt to the body corporate without the need for orders from this Office. Costs of collection however are not recoverable beyond those ordered at the time by the court in which judgment for the debt is given. This Office has no greater powers than the Magistrates Court and the Magistrates Court is bound by a Scale of Costs. That is, the body corporate would be most unlikely to be able to be reimbursed in full, for chasing a debt, particularly if the costs included legal fees. Legal fees are not generally considered by the courts to be necessary in the Small Claims or Minor Debts Courts, where the claim is for an unpaid bill. Such costs which may be awarded are the costs of service of the summons, and witness fees. Other costs would be at the discretion of the Magistrate in accordance with the powers given to the Magistrate.

Further, and most importantly, where lots are created under a Group Title Plan, the body corporate cannot paint a lot owner’s property without his or her permission.

Unlike a Building Unit Plan of subdivision, a Group Titles Plan is a subdivision of land which gives owners title over the land comprised in their lot. In a Building Units Plan (BUP) the body corporate owns all of the land comprised in the scheme, and the boundaries of lots are defined by the mid-points of the floors, walls and ceilings. The outer half of the external walls of buildings in a BUP are therefore part of the common property and the duty of the body corporate to maintain, including
any painting required.

In a Group Title Plan of subdivision, each lot owner is responsible for the maintenance of his/her own exterior walls and roof. The owner is obliged to maintain the parts of the property readily observable from another lot or common property in a clean and tidy condition. (Section 119(1) Accommodation Module.) If the lot owner does not do so, the body corporate may carry out the work and may recover the reasonable cost of carrying out work from the owner as a debt. (Section 120(2) Accommodation Module.)

Consequently, unless the body corporate is able to establish that a lot owner is in breach of their obligations under section 119(1) or 119 (2) Accommodation Module to maintain the lot in good condition, the body corporate is unable to insist that a lot be painted.

This would normally be prefaced by a request to the owner to take steps to paint/tidy/clean etc and giving the lot owner notice that if he or she does not do so, then the body corporate would be able to take action in accordance with that section. Such failure to paint/tidy/maintain may also be a breach of a by-law, for which the body corporate may send a breach notice. If the body corporate is required to enter onto an owner’s lot ( that is, step over the exterior boundary of a lot, not necessarily go inside the house) to do such painting/tidying/cleaning, it must take such steps as detailed at section 163 Act (Power to enter lot.) These steps include giving at least 7 days’ notice (section 163(2)(b)) to the owner and the occupier. Anything less is a trespass upon that owner’s lot.

It should be emphasised that the passing of Motions 9 and 10 at the AGM do not carry
with it any authority for the body corporate to carry out the painting of a building on a lot without the owner’s consent. It merely decides that the body corporate can proceed to make arrangements to engage a painter whose services will then be offered to owners. That is, a lot owner is under
no obligation by these resolutions to accept the services of the selected painter.

Motion 9 of the AGM gave power to the committee to enter into agreements with Stage 2 lot –owners for a scheme promoted by the body corporate for painting exteriors. The scheme was that the secretary issue a payment notice and a quotation for each lot from Baker and Staff, painters. The wording of Motion 9 is ambiguous and clumsy. What I think it sets out to say is that the notice would explain the date for payment and that after completion of the painting work, such payment to the body corporate could be recovered as a debt. This motion does no more than recite the scheme’s by-law at By-law 10(d) which enables the body corporate to provide services ( as does the legislation) and if such services are provided, then the body corporate may recover the cost of the service from owners in the same way as it is entitled to recover contributions levied on owners.

The motion refers to section 118 Accommodation Module which deals with supplying of services by the body corporate. Section 118(3) makes it clear that administrative costs of proposing such a supply scheme are not within the contemplation of the section. What it requires is that the users of the service, including set up costs and maintenance costs (for example for a TV cable service) are the lot owners who ultimately pay for the service ( as opposed to other lot owners.)

Motion 10 of the AGM is unenforceable and in my view invalid as to section 10(b). It proposes that for those lot owners who do not voluntarily enter into agreements as proposed in Motion 9, then a written report from a painting expert be obtained on the state of those lots.

Part (b) enables the committee to lodge an application with this Office against owners who have not entered into agreements 30 days after having been requested to do so, for an order that they "be required to reimburse the Body Corporate for the costs of carrying out the necessary works..."

This wording might incline voters to the view that it is the failure to enter the agreement which triggers the application to this Office, not the failure to pay for a service received. As I have said above, there is no need for an application to this Office for an order when someone has failed to pay a body corporate debt. That can be pursued directly in the Magistrates Court.

The wording of Motion 10 omits two important steps. Firstly, the report from the painting expert would have subsequently to show that the lots belonging to those owners who have not joined the painting scheme actually need painting. Secondly, the committee would have to notify those owners who have therefore failed in their duty to maintain their lots, as detailed above, that the body corporate will do the work if they fail to do the work themselves within a certain time.

It might be that the body corporate would seek confirmation from this Office that the painting was required, that the body corporate should do the work, and that thereafter the debt would be payable, under the provisions of section 119 Accommodation Module, but section 120 (2) specifically allows the body corporate to recover the reasonable cost of carrying out such work , as a debt ie. in the Magistrates Court, without the pre-condition that an adjudicator’s order is made.

Motion 10 is also defective in that the section referring to making an application for dispute resolution is now section 238 Act since amendments made in 2003, but that is a minor fault.

The body corporate also gave consent for the committee to appeal to the District Court if necessary or to defend an appeal to the District Court. An appeal from an order of an adjudicator only lies against an error of law made by the adjudicator. Only the District Court can assess this when an appeal is lodged in the District Court.

I question what this motion was trying to achieve, since the legislation so clearly covers the situation foreseen by the committee. I can only view this motion in the light of consequential correspondence to lot owners, as a device purportedly to empower the committee to force specific lot owners to enter into agreements for painting. As such, the motion is invalid.

The body corporate makes this application on 8^th September 2006 against 17 lot owners who have not paid, but also against some who have not signed agreements, and furthermore do not want their lots painted. On 20^th September 2006, the body corporate manager wrote to lot owners advising that painting would commence on 16^th October 2006, advising " please note that if full payment ... has not been received from Lot owners prior to the above commencement date, your Lot will not be painted."

But on 18^th August 2006, the body corporate manager had written to Lydia Kypreos referring to "your overdue account for painting" of the external walls, enclosing a copy of the Buildcheck report, and advising Ms Kypreos that documentation was being prepared for this Office to make a ruling "to enforce the painting" of her lot. If the account remains outstanding "at this time" she will " incur all legal costs pertaining to recovery (sic) this debt in the Magistrates Court.." Ms Kypreos’ lot is still not painted, although I am advised by the body corporate that she now wishes to join the painting scheme.

The letter of 18^th August 2006 and the letter of 20^th September 2006 are patently contradictory.

Motion 9 states that recovery of an outstanding debt is to be made " ... following completion of the work...." It is understandable that submitters Mr and Mrs Lattuga and Mr and Mrs Hoy do not wish to pay until after the work is completed. However, that does not seem to be main issue.

The letter to Ms Kypreos affirms the view that the lot owners of Stage 2 were to be given no choice as to whether their lots were painted, and the payment notice and agreements were merely to be used against lot-owners in any future debt-recovery process. This conflicts with Motion 9 and is contrary to the legislation. In fact, the committee prepared for a fight as far as the District Court by getting prior agreement from the body corporate in the event that an appeal might be "necessary."

The body corporate does not seek an order from this Office that such painting work be allowed to proceed because the owners of specific lots have failed in their responsibilities, whether or not this is the case. The order it seeks is to recover outstanding amounts for external painting, completed or not, done with permission or not.
.
Mr Mowll says he was told by the body corporate that he was "not allowed to paint (his) own unit." Despite that, his unit has been painted against his will, apparently in error. Mr Raspass also did not understand whether the painting scheme was compulsory or not, and at the end, thought that it was compulsory.

I find that lot owners have been confused as to the law, and bulldozed by threats of the body corporate obtaining costs in the Magistrates Court, into believing that they have to join in the painting scheme.

Whilst the zeal of the body corporate is understandable, and the ambition to have smartly painted buildings laudable, such misguided and bullying tactics as exposed in Motion 10 and in attendant correspondence, cannot be supported. This application therefore fails. This does not prevent the body corporate from recovering any money owed to it by those owners who have chosen to take part in the painting scheme, and whose lots have been painted.

It also does not prevent the body corporate from pursuing correct procedures for carrying out work required of owners in accordance with section 120 Accommodation Module, and section 163 Act.

Clearly the body corporate does not think it has done anything wrong, or it would not have made this application. However, in the making of this application further matters have come to light. How now should we deal with the issue of Mr Mowll and Mr Rapoport whose premises have regrettably been painted without their consent?

For the avoidance of doubt, and possibly further applications to this Office, I am of the view that there is no obligation on Mr Mowll or Mr Rapoport to pay for painting now effected to their respective properties, if such was done without their authorisation, whether or not those owners had, in the view of the body corporate, failed in their obligation to maintain their properties. The body corporate was in control of its contracted painters and must take the matter of their error up with them. I therefore make such ancillary order pursuant to section 284(1) Act.

Number of Scheme:	20394
Name of Scheme:	Sailfish Cove
Address of Scheme:	215 Cottesloe Drive MERMAID WATERS QLD 4218

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sailfish Cove [2006] QBCCMCmr 688 (21 December 2006)