18 Brighton Street [2007] QBCCMCmr 484 (13 August 2007)

Last Updated: 30 August 2007

REFERENCE: 0438-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24516
Name of Scheme:	18 Brighton Street
Address of Scheme:	18 Brighton Street BIGGERA WATERS QLD 4216

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

Helga Steele, the Owner of lot 6

I hereby declare that the body corporate for 18 Brighton Street is required to meet the cost of replacing the defective waterproofing membrane on the lot 6 balcony area, and is also required to meet the cost of replacing the existing tiles and bedding material. I hereby order that within 3 months of the date of this order, the body corporate is required to call a general meeting of the body corporate, and the secretary of the body corporate must include on the agenda of that general meeting, the following motions: • A motion with alternatives to engage one of the various contractors who have supplied quotes for undertaking the required waterproofing and tiling work; • A motion with alternatives regarding purchase of tiles or reimbursement of the owner of lot 6 for tiles purchased; and • A motion for the approval of a special levy to cover the cost of waterproofing and tiling work, including purchase of tiles.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0438-2007

"18 Brighton Street" CTS 24516

THE SCHEME

18 Brighton Street is a 6 lot scheme registered as a building units plan (now known as a building format plan) and operating under the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

APPLICATION

The applicant is Ms Helga Steele who is the owner of lot 6 and also the Chairperson and Secretary of the Body Corporate Committee.
The final outcome sought by the applicant is:

To rectify the water seepage (rainwater) from tiled terrace in lot 6 which is the roof to unit 4 as per Engineer’s report.

BACKGROUND

The suspended concrete floor within lot 6 forms the roof and ceiling of lot 4 and includes a 40 square metre balcony area, through which water is seeping to lot 4 below.

At an Extraordinary General Meeting held on 4 April 2007, lot owners voted against the following motion:

Waterproofing and Tiling of Balcony of Unit 6

That the body corporate approves expenditure for waterproofing and tiling of the balcony of unit 6.

It was also resolved that any works on the balcony of lot 6 be deferred until after 2 May 2007 to enable the body corporate to obtain and consider the report and recommendations from the consultants / engineers.

At the time of inspection by the structural engineer on 2 May 2007, it was noted that a five square metre area of a bedroom ceiling in lot 4 has suffered water damage.

The Engineer’s report contains the following information:

• The balcony of lot 6 consists of approximately 40 square metres and is encompassed by a planter box approximately 600mm wide and 600mm high;

• The balcony is tiled and drained by means of "spitter pipes" which extend through the planter boxes to the edge of the concrete slab;

• Some tiles are "drummy" and grouting between the tiles is cracked in places;

• Although the balcony is able to drain effectively the engineer was advised that in periods of extended rainfall, the bedding under the tiles becomes saturated;

• It is believed that moisture accumulates under the tiles until such time as it evaporates or drains away because the "spitters" are level with the top of the tiles and therefore located above the tile bed;

• once a leak develops in the waterproof membrane under the tile bed, moisture will permeate at any weakness in the concrete slab and seep through to the unit below;

• Installation of a new waterproofing membrane should alleviate the current problem;

• It is recommended that the tiles be removed and additional outlets be installed to provide drainage to the tile bed and balcony;

• After additional outlets are installed, the waterproofing membrane can be applied, bedding material placed on top and new tiles can be laid;

• It is also recommended that the planters be waterproofed as any water penetration through the base of the planter will track to any weakness in the concrete slab.

Pursuant to section 243 of the Act, submissions were sought from all lot owners.

The owners of lot 4 made the following submissions:

• They entered into a contract to purchase lot 4 from Ms Steele in May 2006;

• At that time no mention was made that water was leaking from the lot 6 terrace into the main bedroom of lot 4 and the vendor was reluctant to allow a building inspection;

• prior to settlement, repairs of previous water damage were undertaken and an insurance claim was made by the applicant without informing the purchasers;

• they do not believe that they should have to meet the cost of replacing the terrace tiles on lot 6.

The owners of lot 3 made the following submissions:

• An EGM was called for 14 March 2007 where the following motions were placed on the agenda

- Waterproofing and tiling of the lot 6 balcony

- A Special levy to pay for the above

- Reimbursement of lot 6 for tiles purchased

• The 4 members present decided to defer voting on the above motions until they were in receipt of further information;

• A deferred meeting was held on 4 April but no decision was made regarding the above and instead, an engineer’s report was sought to enable lot owners to determine the source of the water leakage into lot 4;

• She is concerned that the owner of lot 6 had previous knowledge of the water leakage from lot 6 to lot 4 and may be seeking to renovate her balcony at the expense of the body corporate;

• She is now aware that according to section 109 of the Standard Regulation Module, the body corporate is responsible for ensuring that all structural elements of the building are in sound condition and is also responsible for maintenance of roofing membranes that provide protection to lots;

• she is unclear as to two matters- whether the body corporate remains responsible where the tiles are not as originally laid by the builder, and whether seepage could have occurred owing to actions of the previous owners such as over-watering of plants or blockage of drainage points.

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 question for consideration is whether the Body Corporate is responsible for rectifying water seepage (rainwater) from the tiled terrace in lot 6 which is the roof to unit 4 as per Engineer’s report.

Problems of this nature are commonly the subject of dispute resolution applications lodged with this office and are often the subject of investigation by structural engineers. In the present case I have perused the Report prepared by Ken Brown & Associates, Structural Engineers, and accept his findings which include the following:

•	Although the balcony is able to drain effectively in periods of extended rainfall, the bedding under the tiles becomes saturated;
•	moisture accumulates under the tiles until such time as it evaporates or drains away because the "spitters" are located above the and therefore do not drain moisture from the tile bed;
•	once a leak develops in the waterproof membrane under the tile bed, moisture will permeate at any weakness in the concrete slab and permeate to the unit below.

Accordingly, I believe that the cause of the leak is deterioration of the waterproofing membrane below the ceramic tiles and that the leakage has been exacerbated by location of the spitters above the tile bed.

The next question for consideration is whether remedial work to prevent the seepage of water from lot 6 to lot 4 is the responsibility of the body corporate or a particular lot owner. In this regard, section 109 of the Standard Regulation Module provides as follows:

109 Duties of body corporate about common property--Act, s 152
(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.
Examples for subsection (3)(b)--
1. An air-conditioning plant is installed on the common property, but relates only to supplying utility services to a particular lot. The owner of the lot would be responsible for maintaining the air-conditioning equipment.
2. A hot-water system is installed on the common property, but supplies water only to a particular lot. The owner of the lot would be responsible for maintaining the hot-water system and the associated pipes and wiring.
(c) the owner of the lot is responsible for maintaining the tray of a shower that services the lot, whether or not the tray forms part of the lot.
(4) To avoid doubt, it is declared that, despite an obligation the body corporate may have under subsection (2) to maintain a part of a lot in good condition or in a structurally sound condition, the body corporate may recover the prescribed costs, as a debt, from a person (whether or not
the owner of the lot) whose actions cause or contribute to damage or deterioration of the part of the lot.
(5) In this section – "prescribed costs" means the proportion of the reasonable cost to the body corporate of carrying out the maintenance that can, in the body corporate’s reasonably opinion, be fairly attributed to the person’s action.

It should be noted that common property is defined at section 10(2)(b) of the Act as effectively, freehold land forming part of the scheme land, but not forming part of a lot.
On the other hand, pursuant to section 49C(4) of the Land Titles Act 1994, the boundaries of a lot in a building format plan of subdivision is the centre of the wall, floor or ceiling.

In a building format scheme section 109(2)(a)(iii) provides that the Body Corporate is responsible to maintain roofing membranes that are not part of common property but that provide protection for lots or common property. In the circumstances I believe that the waterproof membrane on the lot 6 balcony area can be regarded as a roofing membrane providing protection to lot 4 and is therefore the responsibility of the Body Corporate. The Body Corporate is responsible for the cost of repairing or replacing the membrane, including any costs directly incurred in achieving the repair or replacement. For example, where repairing the membrane necessitates the replacement of balcony tiles, this would be at the Body Corporate’s expense, notwithstanding that the owner of the balcony would have the benefit of the new tiles. I believe that the replacement tiles should be of the same quality as the tiles that have been removed to effect the repairs.

Approval for expenditure

Sections 103 and 104 of the Standard Module (as outlined below) provide controls on a body corporate spending. Here the Committee can authorise expenditure of up to $750 (6 x $125) on a single project. Unless an exception in section 103(1) applies, the Body Corporate must approve all Body Corporate expenditure in a general meeting. Where expenditure is more than $1,500 (6 x $250) a general meeting must usually consider two quotes before approving the expenditure.

103 Spending by committee
(1) The committee may only carry out a proposal involving spending above
the relevant limit for committee spending for the scheme if--
(a) the spending is specifically authorised by ordinary resolution of the body corporate; or
(b) the owners of all lots included in the scheme have given written consent; or
(c) an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions; or





(d) the spending is necessary to comply with--
(i) a statutory order or notice given to the body corporate; or
(ii) the order of an adjudicator; or
(iii) the judgment or order of a court.
(2) For this section, if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for committee spending if the cost of the project, as a whole, is more than the relevant limit.
(3) Section 104 applies to the proposal in addition to this section if--
(a) subsection (1)(a) or (b) applies in relation to the proposal; and
(b) the proposal involves spending above the relevant limit for major spending; and
(c) the proposal does not involve spending mentioned in subsection (1)(c) or (d).

104 Quotes for major spending
(1) This section applies if--
(a) a motion to be moved at a general meeting of the body corporate proposes the carrying out of work or the acquisition of personal property or services, including the engagement of a body corporate manager or service contractor, but not including the engagement of a service
contractor who also is, or is to be, a letting agent; and
(b) the cost of carrying the proposal into effect is more than the relevant limit for major spending for the scheme.
(2) The lot owners must be given copies of at least 2 quotations for carrying out the work or supplying the personal property or services.
(3) If the motion is proposed by the committee, the committee must obtain the quotations.
(4) If the motion is not proposed by the committee, the person proposing the motion must obtain the quotations and give them to the secretary.
(5) Copies of the quotations or, if voluminous, summaries of the quotations and advice about where the complete documents may be inspected, must accompany the notice of the meeting at which the motion is to be considered.
(6) If, for exceptional reasons, it is not practicable to obtain 2 quotations, a single quotation must be obtained and must accompany the notice of meeting.
Example--
If goods to be acquired by the body corporate are obtainable from only 1 source, a quotation for supplying the goods must be obtained from the source and circulated with the notice of meeting. The fact that goods with the necessary characteristics are only obtainable from a single source
would be an exceptional reason for not obtaining 2 quotations for the supply of the goods.
(7) Unless subsection (6) applies, the motion must be stated as a motion with alternatives in the agenda and on a voting paper for the meeting.
(8) Each quotation obtained under this section must be retained as an attachment to the minutes of the meeting at which the quotation is considered.
(9) For this section--
(a) the cost of engaging a body corporate manager or a service contractor includes any payment for the body corporate manager’s or the service contractor’s services, provided for under the engagement, for the term of any right or option of extension or renewal of the engagement; and
(b) if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for major spending for the scheme if the cost of the project, as a whole, is more than the relevant limit.

From the above, it can be concluded that the Body Corporate is responsible for the rectification work as detailed by the Structural Engineer, and that at least two quotes need to be considered by a general meeting of the Body Corporate. The cost of these works should be met from the sinking fund and if there are insufficient monies in the sinking fund, it will be necessary for the Body Corporate to raise a special levy.





In answer to the queries raised by the owner of lot 3, I would point out that subsection 109(4) of the Standard Regulation Module provides that despite an obligation the body corporate may have under subsection (2) to maintain a part of a lot in good condition or in a structurally sound condition, the body corporate may recover the prescribed costs, as a debt, from a person (whether or not the owner of the lot) whose actions cause or contribute to damage or deterioration of the part of the lot. Consequently, in the hypothetical example provided by the owner of lot 3, where
tiles have been incorrectly laid by the current owner, it is possible that the lot owner would be responsible for some, if not all of the repair costs. However, there is nothing to indicate that this is the case in the present circumstances.

Having regard to the above, I propose to make the following orders:

That the body corporate is required to meet the cost of replacing the defective waterproofing membrane on the lot 6 balcony area, and is also required to meet the cost of replacing the existing tiles and bedding material.

Within 3 months of the date of this order the body corporate is required to call an annual general meeting and the secretary of the body corporate must include on the agenda of that general meeting, the following motions:

1. A motion with alternatives to engage one of the various contractors who have supplied quotes for undertaking the required waterproofing and tiling work.

2. A motion for the approval of a special levy for the waterproofing and tiling work, including purchase of tiles.

3. A motion with alternatives to purchase new tiles or to reimburse the owner of lot 6 for tiles purchased.

As mentioned previously, I believe that the replacement tiles should be comparable to, and of similar quality to, the tiles that have been removed to effect the repairs. I therefore believe that members of the body corporate should be able to decide whether to reimburse the owner of lot 6 for tiles that she has already acquired, or to acquire new tiles from another source if they do not consider these tiles to be suitable.