Bahia [2006] QBCCMCmr 759 (27 September 2006)

Last Updated: 2 April 2007

REFERENCE: 0465-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13693
Name of Scheme:	Bahia
Address of Scheme:	154 The Esplanade SURFERS PARADISE QLD 4217

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

the body corporate

I hereby order that, within one month, Rachael MacLeod, owner of lot 9 (respondent) must enter into the deed of indemnity requested by the body corporate under cover of a letter dated 14 October 2005 as a condition of approving alterations to her lot. I further order that, within three months, the respondent must remove the air conditioner compressor from her balcony or relocate it so that the top of the compressor is at least 900 millimetres away from the top of the balcony railing. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0465-2006

"Bahia" CTS 13693

Application

Bahia Community Titles Scheme (Bahia) is a 39 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). This module is commonly adopted by schemes in which most owners rent out the units for holiday or other accommodation.

This application is by the body corporate for Bahia (applicant) seeking orders against Rachael MacLeod, owner of lot 9 (respondent). The body corporate is seeking orders in relation to alterations made by the respondent to her lot, being the removal of part of an internal wall and the installation of an air conditioner.

In relation to the removal of part of a wall, the body corporate seeks an indemnity for the body corporate, an indemnity for other owners and occupiers, and the reasonable legal costs associated with obtaining and enforcing these indemnities.

In relation to the air conditioner, the body corporate seeks that the compressor unit be repositioned to comply with a Workplace Health and Safety recommendation.

Submissions

The body corporate’s main submissions were to the effect that:

• The respondent requested body corporate permission to renovate her apartment. The proposed renovations included removal of an internal wall and an engineer’s report provided stated "that partition may be accepting load from the floor slab over and its removal may allow the slab to deflect slightly which in turn may result in minor cracking in the corresponding partition in the unit above";
• The body corporate sought an indemnity, and says in the submissions that this was reasonable based on an existing precedent and a subsequent majority vote to change the by-laws to require this indemnity;
• After numerous discussions and an independent engineer’s report the committee agreed to approve the works subject to a deed of indemnity being provided by the respondent. However, the respondent refused to provide the indemnity on the requested terms;
• The respondent then performed the works without any permission from the body corporate; and
• The respondent had also installed an air conditioner without permission and a Workplace Health and Safety report recommends that the compressor be moved so that it is at least 900mm from the top of the balcony railing.

The respondent’s main submissions were to the effect that:

• She was forced to engage legal representation because the committee representative was dealing with her in an aggressive manner;
• She feels there has been a deliberate attempt to find problems with her actions;
• The whole matter is over the removal of 2 metres of a 4.2 metre, non load bearing, internal partition wall;
• She is prepared to deal with any actual damage but not provide an indemnity that gives an open cheque book for an unsubstantiated claim; and
• She does not feel she should be liable to pay any legal costs when this could have been easily resolved before legal representation was engaged.

Decision

By-law regarding alterations

At the relevant time, Bahia’s by-laws provided:

13. Structural Alterations
No structural alteration shall be made to any Lot (including any alteration to gas, water, electrical installations) or work for the purpose of enclosing in any manner whatsoever the veranda of any Lot and including the installation of any air conditioning system without the prior permission in writing of the Body Corporate Committee.

The body corporate has a duty to enforce the by-laws (Act, 94(1)). Rights of individuals are protected to the extent that the body corporate is required to act reasonably in enforcing the by-laws and carrying out its functions (Act, 94(2)).

Consent to alter walls

The respondent does not dispute that she required consent of the body corporate to perform the renovations, including the partial removal of a wall. The real substance of the dispute appears to have arisen from communication issues, difficulties in the parties agreeing on appropriate wording for an indemnity, and from a belief of the respondent that she should not be liable for the body corporate’s associated legal fees.

While the respondent may consider the changes to the wall to be minor, I am satisfied that it is reasonable in the circumstances for the body corporate to require a deed of indemnity on the same terms as provided by another owner when removing an internal wall. It is not unreasonable to require entry into the deed merely because there is no evidence that actual damage has been caused by the alterations and it therefore seems unlikely that the body corporate will ever need to rely upon the deed.

The respondent appears genuine in her concern that the body corporate’s requirements in relation to the part removal of a partition wall were excessive and that she should not be required to provide an indemnity that gives an open cheque book for an unsubstantiated claim. However, the proposed indemnity is limited to claims and damage "arising in any way...from the removal of the unit wall". It is similar to an indemnity granted by the owner of lot 27 after a previous adjudication concerning the scheme^[1] and reasonable in the context of an engineers report that raised the possibility of minor cracking of the internal wall of the unit above.

The respondent also expresses concerns about the manner in which the body corporate dealt with her application and questions the fairness of her having to pay the body corporate’s legal costs. However, the proposed indemnity relates only to the reasonable costs of the body corporate in considering the respondent’s application for approval to make the alterations and the negotiation and preparation of the deed of indemnity. If the respondent can show that some of these costs were not incurred reasonably then she will not have to pay them. I also note that the making of a dispute resolution application to this office would seem to relate to the respondent performing works without permission rather than be connected with the respondent making an application for approval or relate to the preparation of the deed. The Act establishes low cost and informal dispute resolution procedures and there is no provision for the person making an application to recover any legal costs associated with the application from the respondent. Therefore, if the respondent enters into the deed then she can request an itemisation of the body corporate’s claimed costs and refuse to pay costs that are not reasonable or do not fall within the terms of the deed.

The resolution of this dispute is therefore relatively simple. The respondent was asked to enter into a deed as a condition of consent of the body corporate to the making of structural changes to her lot. The applicant proceeded with the alterations in breach of the by-laws. The body corporate therefore took action against the respondent as outlined to the respondent in a letter sent by the body corporate dated 29 March 2006. Subject to the body corporate’s conditions of approval being reasonable, it does not seem just and equitable for the respondent to deny she should comply with those conditions of approval once she has elected to proceed with the alterations with knowledge of those conditions.

I am satisfied that the body corporate seeking that the respondent enter into the proposed deed of indemnity is reasonable in the circumstances and I will therefore make an order requiring the respondent to enter into the deed that was a condition of the body corporate’s consent to those alterations.

Consent to install air conditioner

The submissions, including an extract of a Workplace Health and Safety Report dated 21 September 2005, satisfy me that the respondent has installed an air conditioner without consent of the body corporate and that this may unacceptably increase the risk of someone climbing on the air conditioner compressor and falling over the balcony railing.

The body corporate referred to the requirement in by-law 13 for body corporate consent to install air conditioning and raised these concerns in a letter to the respondent dated 29 March 2006. I am satisfied that it is reasonable for the body corporate to require the respondent to address these concerns before the body corporate consents to this installation.

In the circumstances, I am satisfied that it is just and equitable to require the respondent to remove the air conditioning compressor or relocate it to address the concern raised in the Workplace Health and Safety Report.

Order

For these reasons, I make the orders above.

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^[1] Bahia, Order 310-2002, RA Meek, 9 August 2002.