The Residences [2007] QBCCMCmr 22 (16 January 2007)

Number of Scheme:	27131
Name of Scheme:	The Residences
Address of Scheme:	208 Adelaide Street BRISBANE QLD 4000

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

I hereby order that the Body Corporate for The Residences not take any steps to implement resolutions 2 and 3 as passed at the Extraordinary General Meeting on 3 January 2007 until a final order is issued in respect of this dispute resolution application.

I further order that this interim order has effect for a period of three (3) months from the date of this order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0005-2007

"The Residences" CTS 27131

The Residences community titles scheme (The Residences) consists of 47 lots and common property. The community management statement for The Residences indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme. Department of Natural Resources Mines and Water records show the scheme is registered as Survey Plan 106888.

INTERIM APPLICATION

This is an application for interim orders lodged by Douglas Robbins, owner of Lota 20 and 21 (applicant) on 2 January 2007 under the Body Corporate and Community Management Act 1997 (Act). The applicants sought interim orders against the Body Corporate for The Residences (respondent) in the following terms:

That (1) the resolution that was carried in respect of motion number 2 - Roof Paving and Laying as contained in the Agenda in the attached Notice of Extraordinary General Meeting of the Body Corporate for The Residences – CTS 27131 that was held at 10:00 on Wednesday, 3 January 2006 (sic) not be implemented pending the outcome of the final determination in the matter; and (2), as a result thereof, the resolution in respect of the motion number 3 - Special Levy Roof Paving and Laying also not be implemented pending the outcome of the final determination in the matter.

The application also seeks the following final order:

That (1) the resolution that was carried in respect of motion number 2 - Roof Paving and Laying as contained in the Agenda in the attached Notice of Extraordinary General Meeting of the Body Corporate for The Residences - CTS 27131 that was held at 10:00 on Wednesday 3 January 2006 (sic) be declared invalid; and (2), as a result thereof, the resolution in respect of the motion number 3 - Special Levy Roof Paving and Laying also be declared void.

PROCEDURAL MATTERS

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order. The Commissioner has referred the application notwithstanding that affected persons have not been given notice of the application or afforded an opportunity to make submissions about the application (section 247(3)).

On the basis of a verbal undertaking that the Body Corporate would not proceed with the disputed motions pending determination of the interim order, the Committee was given a limited opportunity to comment on the interim order application and duly lodged a written submission.

JURISDICTION

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

I am satisfied that this is a matter which falls within the dispute resolution provisions of the legislation (see sections 227, 228, 276 and Schedule 5 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

(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)).

MATTERS IN DISPUTE

This application relates to motions passed at an Extraordinary General Meeting (EGM) on 3 January 2007 regarding paving on the roof of the scheme.

The Residences is part of the Anzac Square Building (Towers 3 and 4 of the six Towers in the building). It is Lot 2 of the four volumetric lots which comprise the Anzac Square Building Management Group (BMG) which has responsibility for the entire building under a building management statement (BMS). The BMG is progressing repairs to the roof (including the roof membrane and plinths under services). The BMG Committee meeting held on 10 January 2007 appointed a contract manager for the entire roof project, with work apparently to commence as soon as possible. The total project is estimated to take 24 weeks, weather permitting.

The Residences has a ‘roof garden’ on Tower 3 which must be removed once work on the repairs commence. The original tiles in this area were laid directly onto the roof which caused water ponding and the deterioration of the membrane. In June 2005 this was accepted as a defect by the developer who undertook to remove the tiled area. However the tiles could not be removed until a new membrane could be laid. The developer has since withdrawn their offer because the defect liability period has expired. The BMG decided the legal cost of pursuing the developer would cost more than the work itself, and does not intend to take this further.

The Residences EGM held on 3 January 2007 considered two motions relating to the roof. Motion 2 sought approval for the purchase of tiles at $50 per square metre and the engagement of T F Woollam and Son to lay the tiles at a cost of $45 per square metre, at a total cost of $65,998.35 including GST. Motion 3 then sought to raise Special Levy of $267.16 per lot entitlement to undertake the tiling work. Although there is a detailed explanatory schedule, no quotes are attached. Both motions were carried by 12 votes in favour and 4 votes against. I have verbal confirmation that the motions have not yet been implemented.

The explanatory schedule to Motion 2 says the Committee want to install the tiles immediately after the roof repairs are completed to:

The applicant objects to the motions on the basis that the Committee have not provided two written quotations as required by section 104(2) of the Standard Module. In addition, the applicant claims that the laying of the paving forms part of the Committee’s plan for a new roof garden but no details of the costs of establishing this garden or its annual maintenance has been provided.

The applicant emailed the Body Corporate on 11 December 2006 outlining these concerns. The Body Corporate Manager (BCM) responded the same day that "I am not sure the Committee know the total costs of the planned further development other than what they have documented in the Explanatory Note." The applicant again wrote on 14 December stating two quotes are required which the Committee must supply, the fact that the Committee does not know the total cost of the garden development is no excuse, and if a party lays tiles over the membrane laid by another party could result in the warranty not being enforceable. Apparently no response was received.

In an amendment to his application, the applicant adds the Committee has denied members the opportunity to adopt a less expensive plan for the roof garden and has not given members the alternative of voting to have the existing roof garden reinstated. He says the explanatory schedule comments show the Committee’s intention to develop a more elaborate roof garden. He argues the tiles ‘obviously’ form part of this plan and are otherwise not required. Accordingly the application argues members should not be required to decide on the laying of tiles separately from considering the development of the roof garden as a single project. The application also argues that if members later decide that the costs of developing and maintaining the proposed new roof garden is not warranted the expenditure they have now voted on will have been unnecessary.

In regard to the absence of quotes, the Committee indicates that the builder investigated available tiles and that it was agreed (presumably by the BMG Roof Committee) that the selected tiles would be best suited to the long term use and aesthetics of the area. The architect recommended bleached concrete tiles on poly pads over the entire membrane of Tower 3 and apparently advised there was "...no other material as practical in this instance...". In accordance with heritage regulations (as the building is a registered heritage site) the proposed work and tiles have been approved by the Environmental Protection Agency. Warranties and guarantees have been issued by the manufacturers and installation contractors to meet necessary maintenance schedules. The BMG has also approved the tiles. The proposed tiles will take four weeks to manufacture and it is proposed that they be loaded onto the roof with the first crane lift and then stored across the tower roofs until the roof repairs are completed. It is suggested that this would allow all work on Tower 3 to be completed first so that there is no damage to the new membrane.

The Committee says the tiles selected are only available from one supplier and so only one quote is available for the tiles themselves. Two quotes for laying the tile were sought and presented to the BMG. These two quotes are attached to the Committee’s submission. The second quote is for a total of $80,751 but appears to include work in addition to paving. The architect recommended the selected quote. The Committee argues that if alternative tiles were used, against the recommendation of the architect and builder, they could cause defects and moreover new approvals would be required.

In regard to the broader roof garden development, the Committee says this idea has been raised, and generally supported, for several years. The Annual General Meeting on 7 October 2005 approved a motion to investigate the development of the roof garden, with final concepts and costs to be put to a general meeting. The Committee has since invited student designs for a redeveloped roof garden. It says all owners have been fully informed that the proposal was being investigated and they have received no comments against the concept. The Committee says any improvements will ultimately be a decision for the Body Corporate as a whole. It submits that the proposed new roof garden has no bearing on the fact that a roof garden currently exists and there is a need to protect the new roof membrane once the BMG works are completed.

DETERMINATION

At this time, I am concerned with the application for an interim order. An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, section 279). Any orders granted must be just and equitable in the circumstances (Act, section 276).

It is not appropriate for me to consider the substantive issues in this application in detail at this time. But to determine whether it is just and equitable to grant interim relief, it is relevant to briefly consider whether the application raises any serious questions for final determination. It is also relevant to consider whether any inconvenience likely to result from the interim order is outweighed by the potential detriment alleged in the application. Of particular relevance is evidence that an interim order is necessary to prevent serious or irreparable harm.

On the material before me I am satisfied that there is a serious legal question to be considered. The expenditure of some $66,000 is a significant outlay for a body corporate of 47 owners. There is a prima facie requirement that motions moved at a general meeting to carry out work which will cost more than the major spending limit for the scheme must be accompanied by two quotes^[1]. The relevant major spending limit for this scheme is $11,750 ($250 x 47). Even if there are exceptional reasons why two quotes cannot practicably be obtained, a single quote should still be included with the notice of meeting.^[2] The provisions regarding approval for expenditure are in place to ensure that owners are given reasonable information about their options and the costs of proposals before being called upon to decide whether to agree to those proposals or not. Accordingly, there is a justifiable query to be investigated about the validity of Motion 2.

The applicant also argues the laying of the tiles is part of a larger project which should be costed and approved. However on a preliminary review of the material provided I am less concerned about this aspect. The motions are simply seeking to have tiles laid to protect the soon to be installed roof membrane. Something must be installed to protect the membrane and so the issue for owners to consider at this time is what and by whom. I am not yet convinced that there is a necessity for the Body Corporate to decide on all possible future developments on the roof at this time. It is appropriate for the Body Corporate to bear in mind the potential development when selecting tiles at this time, so that they don’t choose something that will later need to be replaced.

Although specifically invited to comment on the interim order, the detailed submission from the Committee does not comment on the interim order as such. In particular the Committee does not raise concerns about any adverse impacts to the Body Corporate from the granting of the interim order sought until the application is finally determined.

The cost efficiencies from loading the tiles onto the roof at the commencement of the roofing works are appreciated, and it is noted that there is a four week lead time to order the proposed tiles. However it appears that it will be at least six months until the roofing works are completed. While it is not clear when the re-tiling is scheduled within this timeframe, it seems there is some time before the new membrane needs to be covered.

More importantly, as the basis for approving this expenditure is seriously in doubt, I am concerned about the prospect of the Body Corporate commencing implementation of the motions and incurring any financial liability for the Body Corporate, or seeking funds from owners for the expenditure. If Motion 2 were ultimately invalidated after the tiles had been ordered and even loaded significant expenditure would not be recoverable. Alternatively there could be further delays and possibly additional costs while compliant motions were resubmitted to owners for consideration.

Conclusion

This application seeks an interim order. It is not appropriate to finally determine the substantive issues in this application until all affected parties have been provided with an opportunity to comment on the application. Therefore, to preserve the integrity of the final order application, I consider it is necessary to grant an interim order putting motions 2 and 3 on hold until the determination of the final order.

However this order does not prevent the actions purportedly approved by these motions being progressed if, prior to a final order, the Body Corporate passes similar motions at a general meeting that are clearly in compliance with section 104 of the Standard Module. Therefore, if the Body Corporate is concerned about the delay to the proposed works arising from this interim order and the likelihood that the motions will be invalidated for the failure to comply with section 104, it is open to the Committee to call another EGM to consider the issues again. Any further consideration should include two quotes for the purchase and the laying of the pavers. If the Committee considers there are exceptional reasons why it is not practicable to provide two quotes, at least one quote should be provided and the reasons for the absence of a second quote explained. The Committee should consider presenting viable and available alternatives to owners, giving detailed explanations why they recommend owners vote for the proposed alternatives, and then trust that owners will be persuaded by the same reasoning that led them to reach the conclusions they have reached about the preferred alternatives.

Effect of an Interim Order

This matter will now be investigated in accordance with the usual processes undertaken by this Office, including calling of submissions from all affected parties. A final order to the application will be made in due course. Consideration will be given to expediting the determination of the final order if necessary to assist the Body Corporate in minimising the costs of any works to be undertaken.

All parties should note the provisions of section 279(2) of the Act, which provides that:

(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and

(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or

(iii) a final order is made by an adjudicator to whom the application is referred.

I have provided that this interim order has effect for a period of not longer than three months. It is the responsibility of the applicant to apply to extend this order if no final determination has been made within that period. This Office will not automatically renew an interim order and the order will automatically lapse upon a final order being made or this application being withdrawn.

^[1] See section 104 of the Standard Module
^[2] See section 104(6) of the Standard Module

	protect the membrane, enabling immediate use, and prolong its life,
	extend the use of the entire roof area of Tower 3, and
	utilise the crane that will be hired by the BMG for the roof repairs to load materials onto the roof. It is suggested that this will save The Residences in the order of $6-7,000.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

The Residences [2007] QBCCMCmr 22 (16 January 2007)