Galileo Tower [2007] QBCCMCmr 499 (24 August 2007)

Last Updated: 3 September 2007

REFERENCE: 0334-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14193
Name of Scheme:	Galileo Tower
Address of Scheme:	12 Mullen Street HAMILTON Q 4007

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

Marie Dawson, Timothy Lowne, and Cratburn Pty Ltd, the Owner(s) of lot 5, 6, and 1 & 2, respectively

I hereby order that the application, for an order to appoint an administrator to perform repairs and maintenance to the common property, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0334-2007

"Galileo Tower" CTS 14193

Application

Galileo Tower Community Titles Scheme (Galileo Tower) is a 12 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme is designed for residential purposes.

This application is by Marie Dawson, Timothy Lowne, and Cratburn Pty Ltd, the owners of lots 5, 6, and 1 & 2, respectively (applicants) seeking orders against the body corporate (respondent). The applicants are seeking to have an administrator appointed to carry out repairs and maintenance to the scheme property.

Submissions

The applicants’ main submissions were to the effect that:

• A report in 2003 made certain repair recommendations;

• Since then, owners have been unable to reach agreement on how the necessary repairs are best remedied;

• Reports in 2005 reveal the defects still remain outstanding; and

• These defects will not be addressed unless an independent party intervenes and makes some decisions with respect to how the much needed repairs are to be effected.

The applicants refer to previous disputes about whether an upgrade should take place as opposed to mere repairs. Attached documentation indicates that the majority of owners would prefer an upgrade of certain elements of common property rather than mere repair. However, this majority is insufficient to pass special resolutions required to authorise spending on improvements.

Other owners have also provided submissions:

•	On behalf of lot 3, Jim Gorman submits that the building and general surrounds have deteriorate significantly, especially over the past two or three years whether the body corporate has become totally dysfunctional due to continuous frustration of the committee by one member who insists on their own way without compromise. This submission supports the appointment of an administrator to restore stability;
•	On behalf of units 7, 8 and 10, Peter Hollis submits that the owners of half the units support the calling of an extraordinary general meeting to appoint a new committee and a new body corporate manager. The appointment of an administrator is opposed as unjust, unreasonable and excessively expensive. Reference is made to the skills and experience of a number of the owners and it is claimed that the matters requiring work can be addressed by the owners. Some allegations of alleged mismanagement by the applicants are also made;
•	On behalf of lot 9, Bernard Canavan states that he is a new owner and therefore unable to comment on any committee activity or lack thereof. He supports the way forward proposed by Peter Hollis;
•	On behalf of lot 11, Paul Spottiswood submits that conciliation, communication, negotiation and compromise are far preferable to an administrator being appointed; and
•	On behalf of lot 12, James Dawes also supports the submission of Peter Hollis and states his belief that the owners of the twelve units are capable of carrying out the necessary upgrades in a timely manner.

McMahon Clarke Legal has provided a reply to submissions to the effect that owners have been proposing a major renovation of the premises for approximately nine years but the fundamental problem is that owners have varying opinions on what should be done. As a result, owners are unable to reach a decision and the appointment of an administrator is necessary. Reference is also made to the allegations of mismanagement made by Peter Hollis. It is submitted that these allegations are for the most part statements and opinions not supported by evidence. Further information has been provided by Marie Dawson specifically denying a number of these allegations.

Decision

Maintenance by 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. The main legislative requirement is that 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 (Standard Module, 109).

Evidence of failure to maintain

The applicants have provided evidence that common property is not being maintained in good condition. Particular items that appear to have been in poor condition for some time include the lift, some of the existing handrails, the swimming pool lining, a retaining wall, and some trip hazards.

Various reasons are provided in the submissions for failures to maintain common property in good condition. However, in determining the present application, it is not necessary for me to make any findings in relation to fault.

Potential for 'improvement' instead of maintenance

The obligation to maintain common property in good condition could be met by owners deciding to improve the common property instead of maintain it. For example, if the lift is not currently kept in good repair this could be fixed by an upgrade instead of mere maintenance. However, any project to improve the common property that would cost more than $300 per lot needs to be approved by a special resolution (Standard Module, 113). This requires at least two-thirds of votes cast to be in favour of the improvements and not more than one quarter of lots or lot entitlements opposing the improvements.

In fact, there is some evidence that all owners do want at least some improvements made to common property areas but different views of owners about alternate ways of improving the common property have resulted in a lack of desire to spend money on the maintenance of the common property in its existing form and deadlock in terms of adopting any single project for improvement of the common areas.

Possible appointment of an administrator

Any owner is entitled to insist that the common property be maintained in good condition. The applicant has also provided evidence that the common property is not currently being maintained in good condition. This does provide some basis upon which to seek the appointment of an administrator to perform maintenance of the common property.

Having said this, appointment of an administrator to maintain common property is a serious step that deprives owners of their ability to make their own decisions about their property. It is not clear on the material provided that appointment of an administrator is necessary or appropriate at this particular time. This is primarily because there is no evidence that owners have recently refused to perform maintenance work without good reason. It is simply the case that no owner has recently put forward any quotations for maintenance work at a general meeting for other owners to vote on.

In the circumstances, I will refrain from appointing an administrator for the time being and give owners an opportunity to put forward their own proposals for maintenance of and improvements to the common property.

Obtaining quotations

Information provided by one of the owners is to the effect that owners will shortly be having an extraordinary general meeting at which owners will vote on a new committee and on the appointment of a body corporate manager.

This may result in a functioning committee that is able to obtain appropriate quotations for maintenance and improvements, or instruct a body corporate manager to obtain the quotations. Alternatively, any owner can obtain their own quotations and submit them to the secretary for consideration at a subsequent extraordinary general meeting or annual general meeting.

Avoiding deadlock in adopting quotations

The applicants may have genuine concerns that there will be deadlock if owners have two different ideas for an upgrade of the common property and neither project obtains support of a special resolution. There may also be deadlock if the majority of owners favour an upgrade and other owners only want the common property to be maintained in its existing form.

The legislative framework does, however, provide mechanisms for breaking any deadlock. A special resolution is required for any significant project to upgrade the common property. If sufficient owners support an upgrade but there is conflict about the type of upgrade then the different upgrade proposals should be listed as alternative motions. Owners will then vote for or against an upgrade and for their preferred alternative. The qualifying alternative with the greater support will be adopted by the body corporate (Standard Module, 42B(4)).

If voters for more than a quarter of lots oppose any upgrade at all then it is possible for that group of owners to prevent improvements to the common property. In that case, the body corporate would remain under its legislative obligation to maintain the common property in good condition. If necessary, orders could be sought to require the body corporate to undertake this maintenance.

Presumably the reason for the legislation allowing a minority to veto proposed improvements to the common property is based on a view that owners buy into a scheme that has a certain appearance or facilities and it is fair to require a special majority to approve any significant changes to the scheme. However, it is possible that professional advice could indicate that some form of upgrade was necessary and it was not sensible try to repair common property in its existing form. For example, common property might be obsolete or structurally flawed. In those circumstances an order could be sought from an adjudicator to overturn any opposition to the proposed improvement on the basis that opposition is unreasonable (Act 276, Schedule 5).

Order

I am not satisfied that it is just and equitable at the present time to appoint an administrator to preform repairs and maintenance to the common property.

Owners should be given an opportunity to formulate their own proposals and obtain quotations for all owners to consider in general meeting. If the matter cannot be resolved in a reasonable time then orders can be sought in relation to specific works and specific quotations or ultimately an administrator can be appointed if necessary.

Of course, for a scheme of only 12 lots, it would be beneficial if owners are able to informally discuss any proposed improvements and attempt to reach some form of informal agreement before obtaining quotations and proposing formal motions to adopt those quotations.