San Miguel [2006] QBCCMCmr 718 (13 September 2006)

Last Updated: 29 March 2007

REFERENCE: 0281-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12076
Name of Scheme:	San Miguel
Address of Scheme:	3 Mari Street ALEXANDRA HEADLAND QLD 4572

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

Albert & Janice Wilcox, the Owners of lot 1

I hereby order that the application for an order declaring invalid the extraordinary general meeting held on 18 January 2006 and any resolutions carried at the meeting is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0281-2006

"San Miguel" CTS 12076

THE SCHEME

San Miguel is a community titles scheme registered on a building unit plan (now described as a building format plan). The scheme comprises 6 lots and common property and is regulated by the
Body Corporate and Community Management (Small Schemes Module) Regulation 1997 (Small Schemes Module)
APPLICATION

The applicants have lodged a dispute resolution application under the Body Corporate and Community Management Act 1997 (the Act) seeking an order declaring invalid the extraordinary general meeting held on 18 January 2006 and any resolutions carried at the meeting.

BACKGROUND

At the Extraordinary General Meeting of the body corporate held on 18 January 2006 it was resolved to undertake urgent repairs to the common property of the scheme. In support of the application the applicants state that they did not receive notice of the meeting until the day of the meeting. They contacted the body corporate manager, a Mr. Wham by phone and were advised that they could fax their proxy to him to take to the meeting. Unfortunately the applicants were dealing wit a family emergency at the time state that they would not have agreed to the meeting in normal circumstances.

By report dated 29July 2005, JTC Consulting Engineers advised the body corporate that the existing timber façade and soffit sheeting required immediate attention as follows:

• The existing façade and supporting timber frames should be removed from the building;
• The soffit sheeting should be removed and replaced as required;
• The existing roof sheet has deteriorated to the point where rectification of problem areas would not be viable and should therefore be replaced with a suitable sheet metal roof;
• The roof framing members should be inspected to confirm their condition and identify replacement if necessary;
• The base of the timber posts supporting the timber deck should be monitored for termite activity and fungal rot;
• In a further report dated 9 November 2005 from the same Engineers, it was noted that a large section of asbestos cement sheet soffit over the "Skate Biz" store had dislodged and fallen to the ground and it was recommended that the roof structure and attached elements were not structurally stable and presented a risk of injury should further detachment occur;
• On 8 December 2005, the body corporate received a quotation from TA Taylor (Aust) Pty. Ltd. for remedial works;
• On about 10 January 2006 the body corporate also received a quotation from a Mr. Hans Heystraten for the subject works;
• On 16 January 2006 the body corporate purported to issue a Notice of extraordinary General Meeting of the Body Corporate to be held on 18 January 2006. Despite purporting to forward a copy thereof to the applicant company, the same was not received until very shortly prior to the meeting;
• The notice was less than 2 days and the applicants believe that therefore, the body corporate failed to comply with the provisions of the Body Corporate and Community Management (Small Schemes Module) Regulation 1997;
• The applicants believe It was unlawful and unreasonable for the body corporate to proceed with the EGM in view of the short notice period;

• The applicant seeks an order declaring invalid the EGM dated 3 May 2006 and any resolutions carried at the meeting;
• It is claimed that the applicant has been prejudiced by the meeting proceeding in the applicant’s absence as they did not have an opportunity to speak against the motion and is now required to contribute $20,625 by way of a special sinking fund levy.

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.

A submission was received from the owners of lot 3 making the following points:

• Required repairs were undertaken on the building in early 2006 following a partial collapse of the structure in a public place during a spring storm;
• Following the partial collapse of the roof an Engineer was engaged to undertake an inspection and as a result of the inspection he recommended that a new roof was urgently required;
• Further, the supporting timber framework had rotted in several areas;
• The body corporate attempted to claim the expense on their insurance policy but were declined as the expense was deemed to be deferred maintenance;
• Owing to the Engineer’s advice that the roof presented a public safety risk and the possibility that a storm could cause the whole roof to become detached, a shorter than usual period of notice was given regarding the extraordinary general meeting;
• The quotation from TA Taylor (Aust) Pty. Ltd. was for around $90,000 while the quotation from Mr. Hans Heystraten for $70,167.90 was accepted;
• Mr. Hans Heystraten was able to give a lower price by using mobile scaffolding and other cost saving measures;
• They considered the body corporate to be fortunate in obtaining the lower quotation at a time when there were a limited number of contractors willing to take on the task;
• The expenditure was not welcomed by any lot owners but they recognise that certain expenses and responsibilities are a necessary incident of property investment, particularly having regard to the danger which the disintegrating roof presented to the public, and could not be further delayed;
• As far as they are aware, the notice of meeting complied with the legislation.

DETERMINATION

I have perused the minutes of the Extraordinary General Meeting held on 18 January 2006 and made the following observations:

• Pursuant to section 25 of the Small Schemes Module it was resolved by 4 votes to 2 that the body corporate approve the conduct of an EGM on less than 21 days notice to decide on essential repairs to common property;
• By 4 votes to 2 it was resolved that the body corporate accept the quotation from Mr Heystraten in the sum of $70,167.90 to complete the repairs in accordance with the quotation dated 10/01/2006.
• It was resolved that to raise funds to meet expenses referred to at the EGM, including the $70,167.90, a special levy of $16,000 per contribution lot entitlement would be imposed.

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 and the roof are deemed to be common property. I am of the view that under section 70 of the Small Schemes Module, the body corporate is obliged to ensure that the roof is in good condition, waterproof and structurally sound. As the body corporate engaged a professional Engineer to assess the extent of required repairs and obtained two quotations from experienced contractors, I do not believe there was any real alternative other than to undertake the necessary repairs. Given the location of the building and the potential danger to the public, I believe that the body corporate acted reasonably in attending to the repairs sooner rather than later.

Indeed, the body corporate committee could have elected not to call an EGM, but rather, could have sought an order of an adjudicator to approve the expenditure pursuant to section 64(1) of the Small Schemes Module. Having regard to the serious public danger presented by the building, I believe that such an application would have been successful.

The next matter for consideration is whether notice of the EGM was given in accordance with the Body Corporate and Community Management (Small Schemes Module) Regulation 1997. In this regard section 25 of the Small Schemes Module provides as follows:

25 Time of general meetings
(1) Unless the body corporate otherwise decides, a general meeting must be held at least 21 days after notice of the meeting is given to lot owners.
(2) A decision made by the body corporate under subsection (1) must be fair and reasonable in the circumstances of the scheme.

The applicants’ solicitors contend that in view of the time elapsed between the time of obtaining the Engineer’s report dated 29 July 2005, and the quantum of the repair cost, reasonable grounds to shorten the notice period did not exist. However I note that after that date, part of the building collapsed on a public footpath and a further Engineers report was obtained on 9 November 2005.

While I am concerned that a very short period of notice was given, I note that other lot owners subsequently resolved to approve the conduct of an EGM on less than 21 days notice. I also note that the decision to call the meeting was motivated by concerns that the roof presented a public safety risk and the possibility that a storm could cause the whole roof to become detached. Having regard to these circumstances, and the potential liability of the body corporate for any loss, injury or death caused by a disintegrating building, I believe that it was fair and reasonable for the body corporate to call the Extraordinary General Meeting for the purpose of approving essential repairs, by giving less than 21 days notice.