Lyndon Lodge Bilinga [2007] QBCCMCmr 27 (17 January 2007)

Last Updated: 9 February 2007

REFERENCE: 0862-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28834
Name of Scheme:	Lyndon Lodge Bilinga
Address of Scheme:	72 Pacific Parade BILINGA QLD 4225

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

Mr Martin Crowe, Attorney for Maria Crowe, the owner of Lot 3

I hereby order that the application for a "final order that the body corporate file an insurance claim for resultant damage to the area of the proposed works" ( as described in Motion 2 of the minutes of the Extraordinary General Meeting of 23rd September 2006) "such damage having been occasioned as a result of water penetration." is dismissed

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0862-2006

"Lyndon Lodge Bilinga" CTS 28834

APPLICATION

This is an application dated 19^th October 2006 by Martin Crowe (the Applicant) as attorney for Moira Crowe, owner of Lot 3, against the body corporate for the scheme (the body corporate) for an order that the body corporate file an insurance claim for water damage to the building.

The Applicant also sought an interim order that repairs to steel poles holding up the carport which repairs were approved by a resolution of the body corporate at an extraordinary general meeting on 23^rd September 2006, not proceed. The interim order sought was not made, by order dated 1^st November 2006.



JURISDICTION

"Lyndon Lodge Bilinga" CTS 28834 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module). There are five lots in the scheme created under a Building Format 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

(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.

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 Applicant wants the body corporate to file an insurance claim for resultant damage from water ingress, affecting his mother’s unit. The Applicant has provided two quotations for the work to be done, but the secretary/treasurer and the chairperson, who the Applicant says also said that they had damage to their respective units, sought a third quotation which "indicated that there was no damage to the roof." The Applicant says this is not correct. He says the Applicant’s unit remains water-damaged, and that it is "encumbent upon the body corporate to rectify this damage."

Instead, the body corporate resolved at an extraordinary general meeting on 23^rd September 2006, to get repairs done to certain steel poles supporting the carport which is on common property.

The Applicant, in a teleconference on 1^st November 2006, said that it is very short-sighted of the body corporate getting the poles repaired because the cause of the problem is water penetration through the balconies and the rust on the poles is merely the result. He believes that the body corporate should look at quotations for repairing the membranes to the balconies above the carport and should tackle the larger issue which should be submitted as an insurance claim.

The two quotations obtained by the Applicant in July 2006, each proposed to rectify water penetration on the front balconies and to repair all resultant damage including repairing or replacing the rusty poles and brackets on the carports.

The Applicant further said that he attempted to propose an alternative motion to the extraordinary general meeting on 23^rd September 2006, about the repairs to be effected to the balconies and the membranes, but the chairperson and the secretary, Mrs Cuskelly, refused to put his motion or his quotations on the agenda. He says that Strata Title Management (the body corporate manager) also refused his motion because it was submitted too late. The extraordinary general meeting was "sprung on him."

In accordance with section 243(2)(b) Act, submissions on the final outcome sought were invited from all lot owners.

There was only one submission from the body corporate through Pamela Schindler, (Ms Schindler) who is chairperson for the scheme and the daughter of the owner of Lot 1.

On behalf of the body corporate, Ms Schindler says that she does not believe that the body corporate insurance would support a claim for deterioration of the carports. She has contacted the insurers, CGU and has studied the insurance policy. "Rust, corrosion, gradual deterioration, wear or tear, wet or dry rot" are not included in the cover. There is no identifiable event which the body corporate can point to, to say that event caused the water ingress. The carport steel poles are on a beachfront property and badly rusted.

She says that the question of repairs to the roof is separate from the question of the rusting steel carport poles. At the annual general meeting on 10^th February 2006 (the AGM of 2006) the Applicant brought quotations to the meeting and said he intended to make an insurance claim for water damage inside Unit 3. Other owners also reported that they had suffered leaks following a recent heavy storm. They asked for the roofs of all five units to be inspected, and the Applicant was "willing to follow up on this." It was arranged that the Applicant was going to liaise with the body corporate manager. The Applicant did not wish to liaise with Ms Schindler in future after she contacted him after the meeting to check he was " Ok with obtaining quotes."

The body corporate manager organised the inspection of the roofs, and " patching" for all 5 units on 22^nd February 2006 was done by AS and LJ Price. This company reported that there were some holes in the fibro roof which they sealed, but that "otherwise ... this roof is in good condition....." and the "carport roof was OK considering the age of the building." The body corporate manager advised the Applicant that the work had been done. The paid invoice was sent to all owners " in case they wished to make an insurance claim for water damage resulting from the leaks..." The Applicant did make a successful claim in respect of Unit 3 and a cheque for $660 was sent to the body corporate by CGU on 26^th April 2006. Ms Schindler says that this cheque was paid to the Applicant.

She therefore finds it surprising that the Applicant claims that Unit 3 " is still water damaged." The body corporate has not been advised by the Applicant of any further damage.

The repairs to the steel poles were proposed at the annual general meeting as far back as 13^th February 2004, but the meeting wanted new quotations and the work never eventuated. The carport poles were not on the agenda at the AGM of 2006 but came up in discussion and Ms Schindler agreed to get current quotations. In July 2006, she posted quotations to all lot owners, and asked whether they wished to discuss the poles at a forthcoming extraordinary general meeting, or were happy with a postal vote. Four owners voted " yes" by post, and a "no" vote was received from the Applicant. He sent an email stating that he had obtained two quotations. She replied that the body corporate would be interested to see them.

In an email dated 23^rd July 2006 from the Applicant to Ms Schindler, a copy of which the body corporate attaches to its submission, the Applicant refuses to show the body corporate his quotations since he wanted to put the work out to tender and believed that " the correct procedure is for tenders obtained by interested owners prior to a date yet to be agreed to be appraised firstly by the committee then referred to management for submission to the building insurers and thus enable experts... to determine the matter."

He found that releasing his quotations might " taint the tendering procedure." He had resigned as a member of the committee and required the body corporate to call an extraordinary general meeting within one month in accordance with "statutory regulations." He says that at that meeting, all quotes could be discussed after a closing date for tenders.

The extraordinary general meeting was convened with three weeks notice being given to all owners. No alternative motions were received from the Applicant as far as Ms Schindler is aware. The body corporate manager did not advise her of any at the time and she has checked with the body corporate manager since that none were received. The Applicant did not attend the extraordinary general meeting. The body corporate denies that it prevented the Applicant from placing an alternative motion on the agenda for the extraordinary general meeting.

The extraordinary general meeting was held on site, and the resolution to repair the poles passed. The Applicant tried to obstruct the workmen form commencing the repairs. The body corporate gave the Applicant 7 days notice that it needed to come onto the premises of Unit 3 to do work in accordance with section 163 Act. The day before work was to commence, the Applicant lodged this dispute application.

The work was completed on 2^nd November 2006, but the cost was an additional $130 to the body corporate from the quoted price because the workmen had to hire grinding equipment and then cancel. The body corporate " think it would be fair for (the Applicant) to pay this extra charge."

The body corporate feels that the Applicant has impeded the tackling of one minor maintenance job. He particularly requested the extraordinary general meeting to discuss quotes and then did not attend, and he does not respect the majority vote.

The Applicant did not wish to exercise his right to Reply.


DETERMINATION

The Applicant seeks an order that the body corporate file an insurance claim for resultant damage from water coming through a waterproof membrane on the balconies of all units and causing damage to balcony floors, ceilings, and timber and steel supports of the carports.

He sought two quotations for this work in July 2006, the costings given being $7,260 and $19,662.50 respectively.

Repairs to 5 of the steel supports have now been made by the body corporate, against the Applicant’s wishes, but following a resolution of the body corporate on 23^rd September 2006. The work was completed on 2^nd November 2006.

The Applicant feels that since the work has been done, that he has "had his say." He indicated at the teleconference that if he was not successful in seeking the interim order to stop the works, then it would be too late to make an insurance claim, or the insurance claim would be blighted from the start.

The Applicant has not indicated to me that there has been any insurable event against which the body corporate could claim. However, this is a matter for the insurers. It appears that a claim was met by CGU in respect of water damage to a bedroom in the Applicant’s mother’s unit (Unit 3) in March 2006, when the body corporate says that $660 was paid to the Applicant in respect of painting ceilings. Water at that time came through the fibro roof.

In a letter dated 25^th October 2006 to this office, the Applicant says that each of the builders which he asked to quote, "identify water penetration due to failure of the waterproof membrane on the front balconies as the primary cause of the further, or resultant damage...." ( which includes damage to the metal poles.) His quotations do not actually say this, but I accept that the two builders were of the view that to apply a waterproof membrane to the balconies would stop water penetration. Both state that the aim would be " to rectify resultant damage from water penetration."

However, the Applicant has provided no evidence of a continuing leak (or any leak) through the membrane of the balcony into his mother’s unit, or described the damage actually done because of the faulty membrane. Neither has he provided any evidence of a leak through the membrane of the balcony to other common property of the body corporate. There is also no evidence that the patch repairs to holes in the fibro roof effected in February 2006 by AS and LJ Price were unsuccessful.

In a Building Unit Plan of subdivision, by virtue of section 109 Standard Module, the body corporate is liable to maintain in good condition -

(i) railings, parapets and balustrades on (whether precisely, or for all practical purposes) the boundary of a lot and common property; and

(ii) doors, windows and associated fittings situated in a boundary wall separating a lot from common property; and

(iii) roofing membranes that are not common property but that provide protection for lots or common property;

The body corporate must also -

maintain the following elements of scheme land that are not common property in a structurally sound condition--

(i) foundation structures;

(ii) roofing structures providing protection;

(iii) essential supporting framework, including load-bearing walls.

The body corporate is therefore liable for the roof and roofing protection over the owners’ balconies. The body corporate would also be liable for any defects in the membrane of the balconies (provided such defects have not been caused or contributed to by the owner of the balcony), and provided also that the balcony membranes provide protection to the common property carports, over which owners have exclusive uses.

I understood from the teleconference that the fact that the carports were open to the elements, and that the scheme is located near the beach is thought by the body corporate to cause rust and water damage in the carports.

The Applicant does not argue that the body corporate has failed to maintain the balconies or the balcony membranes in good condition, but unusually, that the body corporate has failed to make an insurance claim for damage to the carport poles, and the carport over which his mother has use. It is not clear whether his mother’s unit continues to suffer damage to interior ceilings, or whether the reference to "ceilings" in the quotations is to the ceilings of the carports.

The fact that the body corporate has not lodged such a claim does not excuse the body corporate’s liability for water damage if caused through a failure to maintain a structure for which the body corporate is liable under section 109 Standard Module. The body corporate is of the view that it has no justification to make a claim on the insurance and/or such a claim would be rejected as not included in the cover.

I understood at the teleconference that it is generally acknowledged that repairs to balconies will be needed sometime in future. Raising of special levies for maintenance work or increasing contributions to the sinking fund will not be popular in such a small scheme.

However, from the evidence presented in this application, I fear that the body corporate is likely to have to find its own funds to maintain the balconies, and that there does not appear to be a good reason why the insurers should be involved in maintenance work. Should the Applicant’s unit be damaged by water ingress, there is nothing to stop the Applicant lodging an insurance claim on the body corporate’s insurers on his mother’s behalf.

This application fails. There is not sufficient evidence to demonstrate a failure by the body corporate of a duty required by it under the legislation. I make no order with regard to the $130 extra charge mentioned by the body corporate in its submission.

I conclude with some general remarks. There is no requirement for the body corporate to hold a general meeting if a member of the committee resigns, unless a quorum no longer exists. The remaining members of the committee may simply " appoint" an eligible person to hold over until the next annual general meeting. (Section 25C Standard Module). A quorum is two on a three-person committee. (Section 32 Standard Module).

Section 103(1)(b) Standard Module allows the Committee to spend above the relevant spending limit for the committee ($125 per lot) if all owners have given their written consent. Since the Applicant did not approve, an extraordinary general meeting was required to approve the expenditure of $1,236.40. Such a general meeting requires that 21 days notice is given to all owners. Any lot owners who have submitted motions to the secretary by the date on which the notice is sent out must have their motions included on the agenda. Lot owners may submit motions at any time throughout the year. Prior to an annual general meeting, the secretary must seek motions from lot owners at the same time as seeking nominations for committee.