Valley View [2007] QBCCMCmr 273 (11 May 2007)

Last Updated: 22 May 2007

REFERENCE: 1002-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9095
Name of Scheme:	Valley View
Address of Scheme:	77 Railway Street MUDGEERABA Q 4213

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

Judith Burgess, the Owner of lot 2

I hereby order that the body corporate shall, within 30 days of the date of this order, obtain quotations from appropriately qualified contractors to undertake the repairs and maintenance identified as being of a high priority including the following: • Repair of broken and uneven pathways and driveways; • Repair of defective walkways and handrails on common property; • Provision of adequate lighting for walkways, driveways and carports; • Repair of obstructed sewerage lines; • Unblocking/ cleaning of guttering; • Removal of overhanging tree branches that present a danger, particularly to persons on the common property. I further order that where the approval of a general meeting is required, the body corporate shall, within 3 months of the date of this order, present such quotations to a general meeting of the body corporate and ensure that expenditure is properly authorised. I further order that the body corporate develop a maintenance plan and update its sinking fund budget so that it contains a forecast of anticipated major expenditure for the present financial year and the following nine years to be met from the sinking fund.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1002-2006

"Valley View" CTS 9095

THE SCHEME

"Valley View" Community Titles Scheme is regulated 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). The scheme consists of 10 lots on a Building Unit Plan of subdivision.

APPLICATION

On 8 March 2007, the applicant filed a dispute resolution application with the Commissioner for Body Corporate and Community Management under the Body Corporate and Community Management Act 1997 (the Act) seeking the following Final Outcomes:

• To have the body corporate attend to outstanding maintenance works and rectification of listed items resolved immediately as per the Act. These items to be rectified before any others noted within engineering/ safety reports that were done at a later date;
• to have works done by committee now to maintain insurance cover (committee authorisation for works to be completed.
• not to be held responsible should future negligence claims arise and not be held responsible for committee negligence as an owner.
• to have body corporate complete works to ensure public liability insurance is maintained

BACKGROUND
The applicant states that the common property has been neglected for some time and the maintenance work required to be undertaken on the common property for this scheme.
In summary, the maintenance work that the applicant requires the body corporate to undertake includes the following:
• removal of gum trees in front of units 1 & 2;
• rejuvenate grounds to provide a satisfactory entry to the unit complex;
• provide safe entry to unit 1 & 2 carport;

• replace rotted retaining wall at the rear of unit 2 and replace 3 metres of fencing between units 1 & 2;

• maintain gutters and downpipes & unblock stormwater pipes;
• repair rotted fascia boards;
• maintain/ clean roofing gutters;
• clean carports;
• repaint exterior of unit 2;
• repaint carports for units 1 & 2.

SUBMISSIONS

Submissions were sought from the committee and other members of the body corporate pursuant to section 243 of the Act and in response, two submissions were received.

One lot owner made the following submissions:

•	a Safety Report has been commissioned regarding the condition of the whole complex and based on this report, the public liability insurers declined to cover the complex until certain repairs are carried out. Quotes are currently being sought to address the issues raised in the report;
•	there has been no significant degradation of the applicant’s unit or surrounds since it was purchased. In particular, the gum trees referred to in the application have been in that state for a number of years and are not the only trees in the complex;
•	the applicant has only sought to have remedied those items affecting her unit although there are significant items to be addressed in relation to all units in the complex and common property ;
•	based on the safety report, repairs should be undertaken in order of priority as shown on the report and not just those matters affecting the applicant’s unit;
•	maintenance issues are categorised as follows: "as soon as possible", "moderate hazard" and "minor hazard";
•	the sinking fund is currently inadequate to cover the costs of all repairs and non-payment of levies will further hinder the undertaking of any repairs;
•	the costs of undertaking the subject works will be significant and a special levy involving contribution of thousands of dollars per unit will be required;
•	the applicant’s letters were not mailed to the secretary but placed in a letterbox in the complex. As the secretary does not live on site this mail went astray and did not reach the body corporate manager;
•	the body corporate needs to be more proactive in maintenance of the units but the first issues to be addressed must be the major items identified in the safety report that are currently causing public liability issues;
•	other items should be addressed in priority as funds become available.

The Chairperson and an ordinary committee member jointly made the following submissions:

• some of the necessary works have been undertaken and completed, quotes have been obtained for other works and the committee intends to attend to all required maintenance work in the future;
• TEYS Body Corporate Managers have prepared a list of works that have been completed to date;
• An engineering and safety report was commissioned from IE Solutions as a result of discussions at the last AGM. However the applicant interfered with the initial inspection by the engineer and safety inspector resulting in the necessity for a repeat inspection thus causing further delays to having the work done;
• In March 2007 two committee members were incapacitated with medical problems while a third was overseas attending to personal commitments;
• The body corporate has insufficient monies in the sinking fund to undertake the required works which has been exacerbated by the applicant being some $2,446.46 in arrears.;
• Many lot owners are reluctant to contribute further funds when there are lot owners such as the applicant who have failed to pay any contributions;

More specifically, the committee members made the following responses to the application:

• The gum trees in front of lots 1 & 2 are not an immediate safety concern and there are many such trees throughout the grounds;
• Landscaping outside lots 1 & 2 is not a high priority and is not a safety issue;
• The committee would have concerns about establishing new gardens and laying turf during the current drought with very limited water available for outside watering;
• Quotes have been submitted for repair of damaged concrete and pavers adjoining lots 1 & 2 but there are damaged concrete edges and pavers throughout the complex and accordingly quotes are being sought for rectification of these problems throughout the whole complex;
• Quotes have been submitted for repair to retaining walls in proximity to units 2 & 4 but as the repair costs exceed $1,250 these quotes need to be approved at a committee meeting (I assume what is meant is that these quotes need to be considered and expenditure approved at a general meeting);
• The gate between units 1 & 2, requested by the applicant is not a body corporate issue but rather a matter for negotiation between the owners of units 1 & 2;
• Gutters and downpipes throughout the complex require repair rather than just units 1 & 2;
• Washing of gutters with water is not recommended in light of current water restrictions. Rather, the committee has requested TEYS to engage a tradesperson to clean out gutters on a bi-monthly basis;
• Repainting of unit 2 is not a safety issue and should be attended to when the whole complex is painted;
• The committee will continue to undertake works that to remove any safety risks and cosmetic maintenance will be attended to when all safety issues are dealt with and funds are available;
• The applicant has unrealistic expectations regarding timeframes, funds and the role of the body corporate.

In response the applicant made the following submissions:

• The relevant report was requested by the committee and not by her;
• No one took an interest in undertaking the works recommended in the report until insurance was refused;
• Trees adjacent to her unit present dangers;
• Committee members should not have nominated if they knew they would be indisposed;
• She is putting "fees on hold until a plan for works is in place";
• She obtained a quote for repair of retaining wall prior to AGM and has since obtained another quote;
• The gate is required to access the rear of unit 2 as the only other means of access is to scale a sleeper wall;
• Her front stormwater pipes are blocked;
• Gutters have not been cleaned in the past 12 months;

JURISDICTION

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)).









DETERMINATION
The number of outstanding maintenance issues in this scheme indicates insufficient budgeting for sinking fund expenditure which is often driven by a desire to keep contributions low. In my experience this practice amounts to false economy, evidenced by reduced resale values and the eventual need to raise monies by way of special levies to meet the cost of deferred maintenance.
Attention to outstanding maintenance issues is now of critical importance as the insurer has advised that they "are not prepared to offer renewal unless they receive confirmation from the body corporate that they have exercised their Duty of Care by implementing and completing rectification work relative to the insurers concerns".

It is therefore evident that the body corporate is unable to meet its statutory obligation to maintain public risk insurance to indemnify the body corporate for amounts the body corporate becomes liable to pay by way of compensation for death, illness and bodily injury and damage to property to the value of at least $10 million. I would also point out that in the absence of appropriate insurance coverage, members have unlimited liability in the event of a successful claim against the body corporate.

It is the responsibility of owners, as members of the body corporate, to ensure that the body corporate meets its maintenance responsibilities. In particular, section 109 of the Standard Module imposes a statutory obligation on the body corporate to maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition.

Section 109 of the Standard module provides as follows:

Duties of body corporate about common property
(1) The body corporate must maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition.
(2) To the extent that lots included in the scheme are created under a building format plan of subdivision, the body corporate must--
(a) 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; and
(b) 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.
(3) Despite anything in subsections (1) and (2)--
(a) the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier’s own benefit; and
(b) the owner of the lot is responsible for maintaining utility infrastructure, including utility infrastructure situated on common property, in good order and condition, to the extent that the utility infrastructure--
(i) relates only to supplying utility services to a particular lot; and
(ii) is 1 of the following types--
• hot-water systems, • washing machines,• clothes dryers
• another device providing a utility service to a lot;
..............................


Clearly, the obligation of the body corporate to "maintain common property in good condition" has not been complied with when parts of the common property are in such a dilapidated state that public liability insurance cover is refused. It is essential that the body corporate attend to such repairs and maintenance to the common property as a matter of priority to ensure that the body corporate is able to obtain public liability insurance cover.

To gain an appreciation of the work which is required to be undertaken by the body corporate, I have perused the Safety Report prepared by Solutions IE Pty. Ltd. and also the "Health and Safety Inspection" Report and "Hazard/ Risk Assessment" Report prepared by Teys Body Corporate Management.

The Health and Safety inspection Report prepared by Teys notes that the following matters require attention:

• Vehicle access for visitors;
• Rubbish in carports;
• Driveways, footpaths and kerbing require repair/ replacement;
• Handrails require attention;
• Carport and security lighting out of order;
• General appearance and paintwork unsatisfactory;
• Electric switchboard not recently inspected;
• Overhanging trees require lopping and roots interfering with sewer lines.

The Hazard/ Risk Assessment Report prepared by Teys states that the following works are a high priority:

• Provision of lighting for walkways, driveways and carports;
• Repair of broken and uneven pathways and driveways;
• Repair of Obstructed sewerage lines;
• Repair of Damaged and slippery walkways on common property;
• Unblocking/ cleaning of guttering;

The Hazard/ Risk Assessment Report states that the following works are a medium priority:

• trimming overgrown trees on common property;
• overgrown grass, weeds and vermin;
• redesign/ repair of driveways;
• access for emergency vehicles.

Having regard to the above, I propose to order that to the extent that it has not already done so, the body corporate shall, within 30 days of the date of this order, obtain quotations from appropriately qualified contractors to undertake the repairs and maintenance identified as being of a high priority including the following:

• Repair of broken and uneven pathways and driveways;
• Repair of defective walkways and handrails on common property;
• Provision of adequate lighting for walkways, driveways and carports;
• Repair of obstructed sewerage lines;
• Unblocking/ cleaning of guttering;
• Removal of overhanging tree branches that present a danger, particularly to persons on the common property.

Where an item of expenditure exceeds the relevant limit for committee spending, i.e. $1,250, the decision of the body corporate must be made in general meeting. Any motion proposing maintenance should provide details of the maintenance to be performed and specify the amount of body corporate funds authorised to be spent. If the likely expenditure will exceed the relevant limit for major spending (i.e. 10 X $250) then two alternative quotations should be presented (see section 104 of the standard Module).


I also propose to order that the body corporate is to ensure that where necessary, such quotations are to be presented to a general meeting of the body corporate and necessary expenditure
authorised within 3 months of the date of this Order. Obviously, given the absence of insurance cover, it would be preferable that this meeting be held sooner, but I recognise the practicalities of holding a general meeting in a scheme where most of the lots are owned by investors who live elsewhere.

I note that the current committee is in the process of undertaking works to remove safety risks, and in the future, intend to undertake cosmetic and preventative maintenance as funds become available. While their willingness to arrange this work is to be welcomed, I believe that further planning is required regarding maintenance work that is of a non-urgent nature, such as painting.
While I note that a "Planned Expenditure Report" was prepared by Solutions in engineering Pty. Ltd. in the year 2000, it is necessary that such reports and sinking fund budgets be updated from time to time to take into account cost overruns, and other contingencies. In this regard I propose to order that the body corporate develop a maintenance plan and update its sinking fund budget so that it contains a forecast of anticipated major expenditure for the present financial year and the following nine years to be met from the sinking fund.

As previously mentioned, it seems highly likely that a special levy will be required to cover the cost of urgent maintenance and repair work referred to above.

Finally, I would point out that no lot owner is entitled to withhold payment of body corporate levies and the body corporate is legally entitled to seek recovery of outstanding levies and penalty interest from owners who are in default. The legislation, particularly section 99 of the Standard Module Regulation, allows the body corporate to bring an action in the Magistrates Court to recover, as a debt, any outstanding levies and also any costs reasonably incurred by the body corporate in recovering outstanding contributions.