Kalani [2006] QBCCMCmr 714 (12 September 2006)

Last Updated: 29 March 2007

REFERENCE: 0086-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10620
Name of Scheme:	Kalani
Address of Scheme:	3 Lind Avenue PALM BEACH QLD 4221

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

the Body Corporate for the Kalani Community Titles Scheme.

I hereby order that the owner of lot 9, Mr.John Rule, is to reimburse the Body Corporate for the Kalani Community Titles Scheme the sum of $718, being the expenditure incurred by the body corporate to install an awning outside lot 9.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0086-2006

"Kalani" CTS 10620

THE SCHEME

Kalani is a community titles scheme registered on a building unit plan (now described as a building format plan). The scheme comprises 14 lots and common property and is regulated by the
Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module)
APPLICATION

The applicant has lodged a dispute resolution application under the Body Corporate and Community Management Act 1997 (the Act) seeking the following outcome:

To have John Rule reimburse committee funds to the value of $1436 being the amount paid for an awning fixed above units 9 & 10 without the written approval at a general meeting by the committee, paid for using body corporate funds.

BACKGROUND

In support of the application the applicant states that suspicions were raised by owners upon receipt of their body corporate levy notices in which the levies for the current year had doubled. On reviewing body corporate records it became apparent that the additional expense related to an awning installed outside units 9 & 10.

It is alleged that other committee members were not informed of the expenditure, and therefore did not have the opportunity to consider its approval either in committee or general meeting. This awning is located outside unit 10 and the unit owned by the former committee Chairman, Mr Rule. When questioned about the expenditure, it is alleged that Mr Rule, said that this was a body corporate expense "because the design of the building does not suit his standards".
JURISDICTION
The application evidences a dispute between the owners of a lot included in a community titles scheme and the body corporate for the scheme (section 227(1)(b) of the Act).

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.

SUBMISSIONS

The Commissioner issued the Body Corporate with formal notice of the application in
accordance with section 243 (1) of the Act and in accordance with section 243(2) of the Act, the Commissioner also invited the Body Corporate Committee, and all owners of a lot included in the
scheme, to make written submissions about the application.

Four submissions were received from various owners including the former Chairman of the Body Corporate Committee who advised as follows:

• He is no longer a member of the Body Corporate Committee;
• At the 2003 AGM, discussions took place about rain entering the two top floor units- units 9 & 10 and the then Secretary suggested that quotes be obtained for awnings;
• The then body corporate manager told him that the body corporate was able to pay for the awning as by-law 17 of the scheme by-laws provides as follows:

The Body Corporate shall cause to be constructed and maintained canvas awnings

on the external walls of units numbered 9 and 10 nearest to the street alignment.

• As the owner of unit 10 was an absentee owner, Mr Rule contacted him to ensure that he did not object to installation of the awning. In response the owner of unit 10 advised that he would welcome installation of the awning as rain was coming through the lounge room sliding door;
• He chose the company which quoted him and the Secretary $718 per unit and also advised Mr. Gurry, the other active committee member. The Secretary authorised the payment;
• He made all necessary enquiries in good faith as to the most appropriate method of proceeding with the awning.

Another lot owner made the following submissions:

• She supports the application requesting an order that Mr. Rule reimburse the body corporate for monies spent on the awning outside his unit;
• She does not believe that this expenditure was formally approved by a meeting of the body corporate;

A third lot owner made the following submissions:

• The former chairperson of the body corporate should reimburse the body corporate the $1436 cost of the awning.
• It was never mentioned that the body corporate would pay for the awning nor was it put to a committee vote that the body corporate pay for the awning;
• If it had gone to the vote she would have voted "no" as it is a private awning and should be paid for by the individual owners who benefit from the awning.

A fourth lot owner submitted that the money spent on the awning should be reimbursed to the body corporate as the expenditure was not approved by her or other lot owners.

DETERMINATION

This community titles scheme is registered on a building unit plan, now described as a building format plan, and as such, the exterior walls of the building are deemed to be common property.
It often happens that lot owners request permission to install improvements, such as awnings, on common property for the lot owners’ benefit. In such circumstances the body corporate is able to authorise the lot owner to make such improvements by way of a special resolution. In this regard section 159 of the Act provides as follows:

159 Improvements to common property
(1) The regulation module applying to a community titles scheme may provide for making improvements to the common property, including making improvements for the benefit of
the owner of a lot included in the scheme.
(2) Without limiting subsection (1), the regulation module may include provisions about--
(a) who may make improvements; and
(b) the circumstances under which the improvements may be made; and
(c) the way the improvements may be made.

In addition, section 114 of the Body Corporate and Community Management (Standard Module) Regulation 1997 provides as follows:

Improvements to common property by lot owner (s 159 Act)
(1) The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot.
(2) The improvement must be authorised by special resolution of the body corporate unless--
(a) the improvement is a minor improvement (i.e. which costs $250 or less); and
(b) the improvement does not detract from the appearance of any lot included in, or common property for, the scheme; and
(c) the body corporate is satisfied that use and enjoyment of the authorised improvement is not likely to promote a breach of the owner’s duties as an occupier.
(3) An authorisation may be given under this section on conditions the body corporate considers appropriate.
(4) The owner of a lot who is given an authority under this section
(a) must comply with conditions of the authority; and
(b) must maintain the improvement made under the authority in good condition, unless excused by the body corporate.

As outlined above, this dispute involves the payment by the body corporate for the installation of an awning outside units 9 & 10. A perusal of correspondence submitted with this office by the former committee Chairman, Mr Rule, supports his contention that the then body corporate manager advised him that having regard to by-law 17, this installation of the awning was a body corporate expense. Further, I note that the then owner of lot 10 agreed to installation of the awning after being advised by Mr Rule that the cost would be met by the body corporate.

Notwithstanding the contents of purported by-law 17, I do not believe it is appropriate for the body corporate to expend funds on improvements which benefit particular lots. Rather, the purpose of body corporate by-laws is to regulate the administration, management and control of common property and the use and enjoyment of lots and common property. As a result I believe that the by-law is invalid. In any event, it would appear that the expenditure was not properly authorised by a resolution of the committee.

Having said that however, the next matter for consideration is how to make an order that is just and equitable in the circumstances in accordance with section 276(1) of the Act. While it is usual procedure for lot owners to obtain body corporate approval for the making of improvements to common property, and for the lot owners to pay for such improvements, the circumstances of this case are somewhat unique. Firstly, it is probable that Mr Rule believed by-law 17 was a valid scheme by-law. Secondly, an appreciable period of time has expired since the awning was installed on 13 April 2004. Thirdly, although the installation of the awning also benefited lot 10, it would appear that ownership of lot 10 has since changed.

Having regard to the above, I believe it is just and equitable for me to order that the owner of lot 9, Mr. Rule, reimburse the body corporate the amount of $718 i.e. the cost of the awning installed outside his lot.