Lang Business Centre [2007] QBCCMCmr 559 (19 September 2007)

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

I hereby order as follows –

1. that the body corporate performs immediate work to stop water leakage affecting Unit 6 and to create a drainage or pump system to remove the water that has built up behind Unit 6;

2. that the body corporate shall take all steps to ensure that no further water ingress is caused to, or suffered by, the rear wall of Unit 6 from water from whatever source collecting in or below the concrete void, and that damage as caused is remedied to the satisfaction of the Applicant;
3. that the body corporate shall inspect the rear wall of Unit 6 with the Applicant or his representative at the convenience of the parties hereto, every three months from the date of this Order, in December 2007, March 2008, June 2008, and September 2008; and at any other times at the reasonable request of the Applicant, the whole in the next 12 months following the date of this Order;
4. that the body corporate shall perform all necessary work to remedy past damage and to remedy any future ingress if such is noted at the quarterly inspections, and that such remedial work is undertaken within six weeks of the damage being noted by the parties;

5. that should engineers or consultants be engaged by the body corporate to assist in any remedial works concerning the collection of water in the void at the rear of Lot 6, water ingress into Lot 6, or arising from this Order, that a copy of any reports or recommendations by such engineers or consultants are shown to the Applicant within 7 days of receipt by the body corporate.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0158-2007

"Lang Business Centre" CTS 5941

APPLICATION

This is an application dated 22^nd February 2007 and amended on 26^th February 2007, by Gregory Ryall, (the Applicant) owner of Lot 6 in the scheme, against the body corporate of Lang Business Centre CTS 5941 (the body corporate) for an order that the body corporate undertake immediate emergency work to prevent further leakage affecting Unit 6, such as the creation of an air gap between Unit 6 and where the water is entering, by creation of a drain or pump system to remove water which has built up behind Unit 6. Further, the Applicant seeks the "basic requirement to have the rear of Unit 6 dry and free of any moisture at all times" and that work to achieve this is completed as soon as possible.

JURISDICTION

"Lang Business Centre" CTS 5941 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 (Standard Module). There are 12 lots in the scheme created under a Building Unit Plan of subdivision. 10 of the lots are owned either by Trustees of the De la Salle Brothers, or Boystown.

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-

(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)).

SUBMISSIONS

The Applicant says that he undertook refurbishment of Lot 6 in July 2006 and noticed moisture on the rear wall at ground floor level. The wall was repainted. In August 2006, a termite inspection noted high moisture in the land behind rear of Lot. The inspector said:

On 25^th August 2006, the Applicant notified the then body corporate manager that water had leaked through the rear wall of the ground floor after rain, and he contacted the then body corporate manager again by email on 31^st August 2006. On 1^st September 2006, he was advised by committee secretary Philip Terrill (Mr Terrill) that engineers would look at it. On 6^th October 2006, the Applicant asked Mr Terrill for the results of the inspection and on 9^th October, he received voting papers for an extraordinary general meeting (EGM) which included details of the engineers’ visits and their findings.

MPN Consulting Pty Ltd (MPN) and DEB and Associates Hydraulic Consultants (DEB) advised that storm water lines had fractured behind Lot 6 because of drought conditions and the fact that the scheme was built on the site of a stream bed and filled with reactive clay. The scheme was suffering structural problems affecting Unit 11, Unit 6, and Units 1 – 3. MPN and DEB recommended repair of the stormwater lines, undermining and "replacement structure in front of rear entrance to Unit 6." Total works detailed at Motion 4 of the EGM were to cost approximately $94,000. MPN’s report was dated 26^th June 2006 and DEB’s report was dated 31^st July 2006. It appeared to the Applicant from these reports and also a report dated 17^th August 2007 from Martin Cosgrove and Associates, civil engineers, (Cosgrove) that there could be multiple points of water ingress into the rear wall of Lot 6, and that the scheme had substantial problems with the slab and foundations.

The MPN report says that erosion at the eastern end of Black Street on the corner of Milton and Castlemaine Street has been caused by water being concentrated from an awning and wall above.

The EGM was held on 27th October 2006 and Motion 4 was approved. At the meeting, Mr Terrill said that the body corporate could not guarantee that the works would cure all seepage problems but that the structural void behind Lot 6 would be filled with concrete. The Applicant was concerned that this measure had not been mentioned in any of the experts’ reports or in the explanatory notes accompanying the EGM papers. He voiced this concern at the meeting.

On 5^th November 2006, water again leaked into Unit 6 after rain and caused damage to the newly installed carpet, underlay and repainted walls. The Applicant reported the ingress to the then body corporate manager who agreed it was an emergency situation and instructed plumbers to report back in writing. On 9th November 2006, the Applicant, the then body corporate manager and a hydraulic engineer inspected the area and observed a cut-off pipe, damaged drainpipe and very wet soil/sand in the structural void behind Lot 6. On 10^th November 2006, the Applicant sent an email to the then body corporate manager and to the committee expressing concern about filling the structural void with concrete, and supporting the consultant engineers’ recommendation of an air- gap and drainage system behind the rear wall of Lot 6, but on 30^th November, he received an email from Mr Terrill saying that the first stage of concrete filling would start within a week.

On 3rd January 2007, water again leaked into Lot 6, again causing damage to the carpet, underlay and walls. The Applicant again reported this to the then body corporate manager who again agreed it was an emergency and sent out a plumber to report. On 18^th January 2007, the Applicant complained to Mr Terrill about the delay in finalising the pouring of the concrete since it had started.

On 25th January, the Applicant had a meeting with Mr Terrill, and other committee members. They confirmed that the work would be finished by 5^th February 20007 and that the situation which they all agreed was unacceptable for the Applicant and his business tenants, would be monitored, and that the body corporate would act quickly if it re-occurred, reviewing the funds available from the EGM for the work.

On 15^th February 207, water again entered Lot 6. The Applicant reported it as an emergency to committee members. The then body corporate manager advised that the body corporate’s insurance would not cover expenses, since the fault had not been rectified previously. The Applicant’s phone calls to committee member Jane Bennet, who is the property manager for the majority lot-owner Boystown, were not returned.

At the time of lodging his application "significant water leakage" continued. The Applicant says that the leak has damaged the structural integrity of the rear wall which is of block and cement construction; damaged a carpet and underlay, built-in storage areas and equipment; interrupted the Applicant’s business; caused an unpleasant odour; and attracted termites. It appears that Lot 6 is the only Lot to suffer water leakage and all the other lots but one are owned by Boystown.

He summarises from the MPN, the DEB and the Cosgrove reports obtained by the body corporate that the water was building up in a "structural void" behind the Applicant’s unit and then seeping in as there is no other way for it to escape. The reports suggest that the cause is overland flow; groundwater from adjacent buildings; unsealed flashing; gutter holes; a broken stormwater pipe and open unsealed pipes; and also that rainwater is coming from the awning and wall above. The awning over the atrium was installed by Boystown over common property in 2006 and required extensive excavation to install its water pipes and drainage.

In accordance with section 243(2)(b) Act, submissions were invited from all lot owners.

A submission from the then body corporate manager was made on behalf of the body corporate but was later withdrawn by the body corporate after the Applicant had made a Reply to it. On 13^th June 2007, on chasing a response from the former body corporate managers who made the submission, this Office was advised that Silver Stewart King and Burns (SSKB) had become the body corporate managers for the scheme. A copy of the body corporate’s submission, the Applicant’s Reply and my letter of 28^th May 2007 were sent to SSKB for response by 28^th June 2007. SSKB on behalf of the body corporate made a replacement submission. The body corporate now agrees to pay for "waterproofing the wall separating unit 6 from the common property" and to effect repairs when quotations have been obtained and a special levy raised.

SSKB went though all prior body corporate records looking for incidences about flooding and leaks referring to Unit 6. They say that the seepage issue "is reported to be due to the subsidence of slab work on common property and the absence of a "waterproof membrane" on the wall separating Unit 6 from common property." They say that there are defects with the building, and the Committee has been cautious in investigating rectification options because it will be expensive. "Drainage issues" have been known about since 1995 and mentioned in the minutes of the annual general meeting for that year, although it is not clear that such issues relate to or affect Lot 6.

The minutes of a committee meeting on 25th May 2004 first make note of problem with slab at back of unit 6. Engineers Saunders and Partners had prepared a specification to rectify the entry/path slab at back of unit 6. Quotes for the work were obtained for $19,345 and $19,624, but the committee required further quotations, and this was to be followed up. However the work was not done until mid -2005 with the committee continuing to look for cost-effective solutions that would guarantee the desired result. It was not until 27th October 2006 that the body corporate "resolved finally to approve structural repairs." On 16th March 2007, after this application was lodged, the committee approved the appointment of a structural engineer to provide a report and possible remedy to the structural issues pertaining to Lots 6 and 12.

In answer to further questions, SSKB confirmed that there was no evidence that previous owners or occupiers had complained about the wet wall, although Boystown as the previous occupant was "aware of seepage to Unit 6," but no action had been taken to remedy it. The body corporate is not of the view that the building of the atrium and awning has caused or contributed to the ingress of water into Lot 6. This upgrade work was done between September and October 2005, and is yet to be given final building certification at Council level. They confirm that the body corporate was going to hold a general meeting to approve the proposed repair and a special levy.

There were no submissions from lot owners.

Since the submission from SSKB replaced the previous submission from Stratacare, a copy was sent to the Applicant for his Reply if desired. The Applicant sought two extensions of time in which to make a Reply. The Applicant’s Reply was received on 15^th August 2007. In his Reply, the Applicant says the body corporate’s submission enclosed correspondence of which he was unaware. He points to extracts of reports from experts which detail the water problem and warn of future problems if the work is not done. With regard to the water ingress being a long-standing problem he points out that the minutes provided do not state that it was the storm-water pipe leak which caused seepage into Unit 6, and also questions that if the previous tenants (Boystown) knew about the leak, why they did not take action?

In an attempt to satisfy himself of the works done and to be done, in July 2007 he sought information about the specifications of the work involved in filling in the void, in order to see if the expert’s recommendations had been implemented, and also to confirm if there was any way out for the water collecting in the void to escape other than through the Applicant’s back wall.

The Applicant and the body corporate arranged a site meeting on 19^th July 2007 at which a structural engineer for Cosgrove and a hydraulic engineer for DEB were in attendance. Rectification of the damage and future safeguards were discussed including the tanking of the internal wall of Lot 6 with fibreglass which was not an option the Applicant favoured, and drilling flow holes in the concrete mass to take water away from the Applicant’s property. This plan was to be adopted and reviewed after the next significant rainfall. The parties also noted that water run-off from the canopy over the atrium feeds into the stormwater pipe that had fractured earlier this year. The engineers were to report after this site visit and the Applicant asked for a copy of these reports.

In the light of significant rain having fallen on 21^st August 2007 and in the weeks following, I wrote to the Applicant, and to the body corporate secretary Mr Terrill on 23^rd August 2007 asking if the rain had affected the view taken at the site meeting; whether the flow holes had now been drilled; and requested that any reports by Scott Ellis-Butler (Mr Ellis-Butler), representing DEB and Stephen Moss (Mr Moss), representing Cosgrove should be shown to the Applicants. I sought a reply by 7^th September 2007.

On 30^th August 2007, the Applicant replied that he had still not seen the requested reports, and that there had been no further communication from the body corporate since the site meeting in July. He said that there was no "formal agreement" about the nature of the rectification work in the way of allocation of funds or approval by the committee. The Applicant’s wife inspected the rear wall of Lot 6 on 29^th August 2007 and noted moisture 1.2m from the ground and above on the wall although the lower part of the wall was relatively dry. The paintwork had also "foamed" since the site visit, and rust staining in the aluminium of the false ceiling was evident. The Applicant thinks that this is an improvement compared with January 2007 but remains concerned about the obvious continued ingress of water.

The Applicant wrote again on 10^th September advising that a Committee meeting was held on 5^th September 2007 when the Committee discussed the report from Mr Ellis-Butler, and agreed that the "relief ports" or flow-holes are to be drilled as recommended in his report and that the cost of such work was within the authorised spending limit of the Committee. Mr Ellis-Butler’s report was dated 25^th July 2007 and was addressed to Mr Terrill. It notes that DEB’s previous recommendations "appear to have been carried out." He recommends that the holes are drilled at the base of the wall to provide an exit point and then wait and see for if, following rain, the leak is cured.

There has been no reply to my letter to Mr Terrill, although he sought a copy of that letter from this Office on 5^th September 2007.

DETERMINATION

In this determination I have not considered any material submitted on 2^nd April 2007 by the former body corporate managers Stratacare.

Since the lodging of this dispute resolution application in February 2007, the parties have been able to make significant progress in assessing the cause of water ingress to Lot 6 and the dampness to the Applicant’s rear wall. It is no longer disputed by the body corporate either that the wall is damp or that it is the responsibility of the body corporate to "waterproof the wall" where it joins common property. However, the means by which that can be achieved, and whether or not an atrium and awning constructed last year by the body corporate are adding to the water now seeping into the Applicant’s wall, remain something of a mystery.

The body corporate has a duty by virtue of section 109 Standard Module, to maintain the common property which in a Building Unit Plan of subdivision includes the exterior walls. In a Building Unit Plan of subdivision, the boundary of an owner’s lot, separated from another lot or common property by a floor, wall or ceiling, must be located at the centre of the floor, wall or ceiling. (Section 49C(4) Land Title Act 1994.)

The body corporate also has a duty to maintain in a structurally sound condition elements of scheme land that are not common property but which are foundation structures; and also to maintain essential supporting framework, including load-bearing walls. (section 109(2) Standard Module)

Where water comes in from the exterior of a building in a Building Unit Plan however, such that it affects the property of the lot-owner, it is the duty of the body corporate not only to prevent water ingress but to repair damaged structures, décor or furnishings. Section 281 Act states as follows -

281 Order to repair damage or reimburse amount paid for carrying out repairs

(1) If the adjudicator is satisfied that the applicant has suffered damage to property because of a contravention of this Act or the community management statement, the adjudicator may order the person who the adjudicator believes, on reasonable grounds, to be responsible for the contravention--

A waterproofing membrane in the roof of a building in the scheme leaks and there is damage to wallpaper and carpets in a lot included in the scheme. The membrane is part of the common property and the leak results from a failure on the part of the body corporate to maintain it in good order and condition. The adjudicator could order the body corporate to have the damage repaired or to pay an appropriate amount as reimbursement for amounts incurred by the owner in repairing the property.

Hydraulic consultant, Mr Ellis-Butler does not believe that installing a new waterproof membrane inside Lot 6 is warranted until after it has been proved that the weep-holes, or "ports" to be drilled through the base of the wall have been shown to be inadequate. The Applicant himself says that the situation is much better than at the time he made his application despite very heavy rain in August. The committee has agreed to drill the holes as recommended by Mr Ellis-Butler, and at the body corporate’s expense.

The Applicant remains concerned as to whether the final solution has been achieved, justifiably in my view, and it seems that even Mr Ellis-Butler will not know the efficacy of his suggestion for some time. It is also disappointing, and indicative of the lack of willingness with which the body corporate has been ready to resolve this dispute, that the body corporate has chosen not to respond to my letter of 23^rd August 2007 and that this application was required in order to get some remedial action for the Applicant’s unit, which has clearly suffered significant water ingress certainly since July 2006. Whilst caution to spend body corporate finances may be applauded, when the caution is exercised to the detriment of the only lot-owner who is suffering water ingress, and the body corporate is dallying in complying with its commitments under the legislation, it is by no means praiseworthy. I find that the body corporate has not complied with the legislation in maintaining the common property, the exterior wall and the structure of the building in such a way that water is kept out of the Applicant’s lot, albeit I appreciate that the pursuit of the cause of the water ingress has not been easy, and that the scheme has, or has had, additional structural and subsidence problems. The failure to respond to the Applicant’s requests and the refusal to give him copies of consultants’ reports further demonstrates to me that the Applicant has been treated in a poor way by the body corporate.

For this reason, I shall make an order that the body corporate shall take immediate steps to undertake or complete preparatory remedial or emergency work to prevent further leakage affecting Unit 6; and further that the body corporate takes all steps to ensure that no further water ingress is caused to, or suffered by, the rear wall of Lot 6 from water from whatever source collecting in or below the concrete void, and that damage as caused is remedied to the satisfaction to the Applicant. The body corporate shall inspect the wall with the Applicant or his representative every three months from the date of this order for 12 months. The body corporate shall perform all necessary work to remedy past damage and to remedy any future ingress if such is noted at the quarterly inspections, and that such remedial work is undertaken within six weeks of the damage being noted by the parties.

Number of Scheme:	5941
Name of Scheme:	Lang Business Centre
Address of Scheme:	97 Castlemaine Street MILTON QLD 4064

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Lang Business Centre [2007] QBCCMCmr 559 (19 September 2007)