Railton Villas [2007] QBCCMCmr 607 (29 October 2007)

Last Updated: 12 November 2007

REFERENCE: 0511-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	19352
Name of Scheme:	Railton Villas
Address of Scheme:	22 Railton Street, ASPLEY QLD 4034

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

The Body Corporate for Railton Villas

I hereby order that the application for the following orders: 1. Owner of lot 14 to carry out repairs to the common wall between lots 13 & 14, on lot 14’s side of the wall, costs to be borne by the owner of lot 14. 2. Repair/replacement of missing tiles from panel/façade of balcony on upper level of lot 14 to be carried out by, and at the cost of, the owner of lot 14. Is dismissed. I further order that the body corporate must send a copy of this order, including the Reasons for Decision, to the registered owners of lots 13, 14, 15 and 16, at their address for service, within 14 days.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0511-2007

"Railton Villas" CTS 19352

Application

This application is brought by the body corporate for "Railton Villas", against the owner of lot 14, Richard Barry Cossgrove (the respondent), seeking the following orders:

1. Owner of lot 14 to carry out repairs to the common wall between lots 13 & 14, on lot 14’s side of the wall, costs to be borne by the owner of lot 14.

2. Repair/replacement of missing tiles from panel/façade of balcony on upper level of lot 14 to be carried out by, and at the cost of, the owner of lot 14.

Jurisdiction

"Railton Villas" was registered as a group title (now known as standard format) plan of subdivision on 8 January 1994 comprising 19 lots and common property. The 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).

This is a dispute between the body corporate and an owner concerning alleged contraventions of the Act and comes within the dispute resolution provisions of the Act (see ss.226, 227 & 228).

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 grounds to the application were to the following effect:

• In accordance with section 120 of the Standard Module, the owner of lot 14 is required to maintain the lot in good condition;

• Despite frequent attempts by the body corporate to communicate with the respondent, he has not responded (copies of correspondence attached to the application);

• Body corporate wrote to the respondent (in accordance with resolution 13 of the minutes of the Annual General Meeting (AGM) of 14 April 2007) – there has been no response to date (deadline of May 14, 2007).

Submissions in response to the application were sought from the owners of all lots (and specifically, from the respondent). The respondent made a detailed submission to the following effect:

• The two missing tiles the subject of the second order sought by the body corporate were replaced by the respondent in or about June 2006. A photograph showing the replaced tiles is included with the submission.

• With respect to the first order sought, it is not possible for the respondent to make repairs to "his side" of the wall shared by lots 13 and 14. A building inspection carried out on 23 January 2007 at the request of the respondent noted secondary and structural defects to lot 14 and suggested that a structural engineer should further investigate the defects.

• The owners of lot 13, in May 2006 had their lot inspected by FMG Consulting. This report states that there is a fair amount of foundation movement in the building and the footings have dropped, and that any further information would need to be obtained from a more thorough structural engineering inspection. It was also suggested that the remedial work, including underpinning should be covered by the body corporate insurance.

• At the respondent’s request, FMG Consulting inspected lot 14 on 10 May 2007 and provided a report dated 13 July 2007 which found that the building had major defects because of subsidence. The report commented that the damage was not isolated to lot 14 and was impossible to correct without also underpinning lots 13, 15 and 16. Therefore, the body corporate should attend to the rectification of the faults, not the individual owners.

• Motion 13 of the AGM of 14 April 2007, states that the body corporate would write to the owners of lots 13, 14 and 16, requesting that necessary repairs be carried out to their lots. The respondent questions why lot 15 was not to be similarly advised, since the structural/foundation problems affect all four lots. He also suggests that he was the only lot owner to receive the letter contemplated by motion 13. He states that the owners of lot 13 have not received a letter and has been unable to confirm whether the owners of lot 16 have received a letter.

The owners of lot 13 made a submission stating that the outcome sought by the body corporate does not supply much information regarding the scope of work to be carried out. They asked to be kept advised of all proceedings. The owners of lot 13 also inspected the submission by the respondent and commented that they agreed with the respondent and advice from their consulting engineers that the problem cannot be handled by individual owners. A late submission from the owner of lot 8 suggested that a body corporate meeting should be held to discuss ways of fixing the problems and confirm whether body corporate insurance will cover the repair expenses.

The body corporate did not inspect any of the submissions made, nor make a reply.

Using my investigative powers under section 271(1)(a)(i) of the Act, I wrote to the body corporate on 13 September 2007, enclosing a complete copy of the respondent’s submission and requested that the body corporate consider it and respond to it in writing to this office, by 4 October 2007. I specifically requested to know the body corporate’s position regarding the following:

• Whether the body corporate concedes that the tiles the subject of the second order sought have, in fact, already been replaced.

• Why the application is brought against the owner of lot 14 only, when the material submitted suggests that lots 13, 14, 15, and 16 are all affected and motion 13 of the AGM of 14 April 2007 contemplates action against the owners of lots 13, 14 and 16.

• Whether subsidence is covered by the building insurance policy held by the body corporate.

• Whether the body corporate has contemplated co-ordinating the necessary repair work by utilising agreements with affected owners, under section 119 of the Standard Module.

On 2 October 2007, an email from the body corporate manager (BCM), Mr Terry Jose, on behalf of the committee, was sent to the office stating that, "At this stage, the committee is still preparing a response to the submission by the owner of lot 14, and more specifically a response to the points you have raised in your letter." An extension of time until 15 October 2007, to more properly consider the matters, was requested. On 4 October 2007, the body corporate manager was advised that the request for an extension until 15 October 2007 had been granted.

On 16 October 2007, having not heard further from the BCM, the committee or the body corporate, this office contacted the BCM in relation to the outstanding information. Mr Jose stated that he was "really struggling" with the committee; they had indicated that they would be responding, it’s just that they are taking their time. He said that they may need another week and would send a request for further time. Later that afternoon, Mr Jose emailed a request for a further extension of one week, to Tuesday 23 October 2007, within which to respond to my letter of 13 September 2007.

On 18 October 2007, Mr Jose was informed that I had allowed the committee until 8am on Monday 22 October 2007 to respond to my letter of 13 September 2007. On 24 October 2007, this office received a letter dated 21 October 2007 from Mr Jose, on behalf of the committee, responding to my correspondence of 13 September 2007 as follows:

• The tiles mentioned as the subject of the second order sought have in fact since been replaced by the respondent and therefore can be deleted from the dispute resolution application.

• The action was brought against the respondent only, by the body corporate, notwithstanding the resolution of the AGM of 14 April 2007 due essentially to the long history of requests (dating back to 2004) from the body corporate for the respondent to maintain his lot in good condition. These requests from the body corporate have been substantially ignored by the respondent, as evidenced by the extensive correspondence sent by the committee to the respondent and included with the application. The committee acknowledge that the owners of lots 13 and 15 are also involved and will be kept "in the loop" regarding any rectification works to be carried out. Those owners have received copies of all agendas and minutes relating to the site.

• The committee instructed the BCM to ascertain whether the body corporate insurers will extend cover under the policy for subsidence and they report that this is not the case. In fact, further advice received indicates that generally speaking, subsidence is not covered under a strata-title insurance policy.

• To date, the committee have not contemplated coordinating the necessary repair work by utilizing agreements with affected owners, under section 119 of the Standard Module, essentially due to the long history of non-compliance with body corporate requests by the owner of lot 14. In the interests of a satisfactory resolution of this matter, the committee acknowledge that the formation of such agreements with the owners involved, would be an effective strategy, however, due to the non-cooperation to date of the respondent, the committee is reluctant to incur costs that could prove difficult to recover from non-cooperative owners. Due to the extensive nature of the work and the complexity of the work required, and as this is a standard format plan, the best course of action would be for the relevant owners to arrange all work required. The work will be of a costly and extensive nature. The body corporate and the committee do not wish to be exposed to litigation by unco-operative owners and are reluctant to take on the responsibility of coordinating such large works.

Technically, I could have dismissed the application under section 270(1)(d) of the Act for the body corporate’s failure to comply with a requirement of an Adjudicator under section 270(1) of the Act (being the request for information of 13 September 2007) within the time stipulated. The letter of 21 October 2007 states that some difficulty has been experienced in getting the body corporate members together to prepare a response due to their absence from the scheme, in one or two cases overseas, making coordinated communication very difficult. I accept this as a "reasonable excuse" (although it would have been appreciated if this information could have been communicated to the office before the timeframe for response expired). In the circumstances, I intend to consider the body corporate’s reply and proceed to a determination of this matter.


Determination

Because the body corporate has conceded that the tiles the subject of the second order sought have been replaced, I have dismissed this aspect of the application without further consideration. The remainder of these reasons deal with the first order sought by the body corporate.

Applicable Law

• The owner of a lot must maintain the lot in good condition (Section 120(2) Standard Module);

• 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 (Section 109(1) Standard Module);

• The body corporate is required to maintain building insurance covering damage and costs incidental to the reinstatement or replacement of the buildings (Section 129 Standard Module). "Damage" in this context means –

•	Earthquake, explosion, fire, lightning, storm, tempest and water damage; and
•	Glass breakage; and
•	Damage from impact, malicious act, and riot.

Defining Common Property and Property within the Boundaries of a Lot

"Railton Villas" is registered as a group title plan (now known as standard format plan) of subdivision. A standard format plan defines land horizontally with references to marks on the ground or a structural element (for example, survey pegs in the ground or the corner of a dwelling). A standard format plan may include a townhouse complex, where the individual lots would comprise a building and land (front and/or back courtyards), as with Railton Villas. The boundaries of lots are defined by dimensions and bearings shown on the survey plan along with marks placed on the ground at the time of the survey. The survey plan for Railton Villas shows the boundaries of each of the lots and common property. Significantly, the lot boundaries for lot 14 include the townhouse situated on it, as well as land to the front and rear of it. Lot 14 shares walls with lots 13 and 15.

This situation should be contrasted with that of a scheme registered as a building format plan of subdivision. A building format plan is a form of subdivision that usually occurs within a building. A building format plan defines land using the structural elements of a building, including, for example, floors, walls and ceilings. Where a lot is separated from another lot or common property by a floor, wall or ceiling, the boundary of the lot is the centre of the floor, wall or ceiling (Sections 48C and 49C (4) of the Land Title Act 1994). An example of a community titles scheme established as a building format plan is a multi-storey block of residential units.

Maintenance Responsibilities Under a Standard Format Plan of Subdivision

The body corporate is usually responsible for:

• The common property, including roads, gardens and lawns on common property; and

• Some elements of utility infrastructure that are common property (for example, roof guttering).

The lot owner is generally responsible for:

• Their lot, including all lawns and gardens within the lot boundaries;

• The maintenance of the building including the exterior walls, doors, windows and roof with the exception of some elements of utility infrastructure that are common property (for example, roof guttering);

• The building foundations;

• The painting of the lot.

Insurance Responsibilities of the Body Corporate

In a standard format plan where one or more lots within the scheme share walls, the body corporate is required to maintain building insurance. The damage required to be covered by the policy does not include subsidence. Any suggestion that the body corporate’s insurance policy should cover the damage in this instance is incorrect. There is no legislative requirement for it to do so. The body corporate has confirmed that its building insurance policy does not extend cover for subsidence.

Responsibility of Respondent

The respondent’s submission reveals the following views:

• That the state of repair of the building is the responsibility of the body corporate.

• That all matters on the inside of the building are an owner’s responsibility and all matters on the outside are a body corporate responsibility.

• If the item is on the outside and only involved one unit then it was the owner’s responsibility.

The respondent is clearly mistaken in each of these views (although the last statement is substantially correct), as were the Consulting Engineers when they stated that the subsidence claim should be covered by the body corporate. Based on the respondent’s allegations that the body corporate has previously paid for painting of lot owners’ pergolas and driveway maintenance, it appears as though owners, generally, may also be mistaken in their views of maintenance responsibilities under the legislation.

The owners have an obligation to maintain the interior and exterior of the buildings on their lots in good condition. As lots 13 and 14 share a wall, lots 14 and 15 share a wall and lots 15 and 16 share a wall, all of which appear to be the subject of damage, then the maintenance and repair of those walls should be shared between the owners of lots 13 and 14, lots 14 and 15 and lots 15 and 16, respectively. The body corporate, prima facie, has no responsibility to repair any of the walls or any part of the building within lots 13, 14, 15 and 16. An exception to this would be if it could be shown that the subsidence is attributable to a failure of the body corporate to maintain common property in good condition and that this failure has contributed to the damage sustained to individual lots. The fact that more than one lot is affected is irrelevant, except perhaps to the extent that the body corporate, if it wished to do so, may have offered to undertake the work on the affected owners’ behalf and then sought to recover the cost of the service from the affected owners under an agreement within the terms of section 119 of the Standard Module. I consider the body corporate’s reasons for not wanting to approach this matter by using section 119 agreements valid and reasonable. The body corporate is not under any legislative obligation to co-ordinate the repair work on behalf of the owners concerned.

The respondent states that the subsidence and state of the building has been a matter of concern to him for some time, but that he was unable to do anything while his property was tenanted. His lot has been vacant since December 2006. It appears as though he has been actively seeking to progress the matter of maintaining his lot, at least so far as the problem of subsidence is concerned, since January 2007 and even more so since this application was lodged by the body corporate in June 2007, by commissioning reports and communicating with the owners of lot 13.

I note the following comments from the reports by FMG Consulting. In respect of lot 13, the report dated 18 May 2006, on page 2, under Findings and Recommendations:

"It is fairly evident from the visible evidence that the unit has been subjected to a fair amount of foundation movement. The worst point is clearly the wing wall at the rear which acts as a party wall extension and divider between two unit where the footing has dropped significantly and caused structural damage.

A lot of the internal damage is towards the rear of the unit and is related to this movement at the rear. It is also likely that the unit has been undergoing lesser movements elsewhere caused by seasonal moisture variation in the foundation soils which are typically highly reactive in this area. The effects on the foundation soils of the row of trees at the RH end of the building are also a consideration, however these are not the cause of the significant movement of the wing wall at the rear.

The degree of movement evident signals the need for a thorough investigation of the root cause of the movement, the degree of movement that has occurred and a design for rectification of the problem, most likely requiring the following scope of works:

•	Investigation of the founding conditions and footing type used.
•	Pressure testing and/or video camera checking of services for breakages and damage.
•	Counter levels of the floor and brickwork to ascertain the degree and pattern of movement that has occurred.
•	Design of appropriate rectification measures for the footings.
•	Remedial work to the brickwork and structure following underpinning."

In respect of lot 14, the report dated 13 July 2007, on page 2, under Findings and Recommendations:

"Based on our observations, the levels taken outside the house and the pattern of defects that have occurred, there appears to have been some localised subsidence of the Southern side of the unit. This will have been caused by differential settlement of the subsoil and/or subsidence of the fill material due to excessive moisture decrease in the reactive clay soils.

In our opinion the most likely cause of this drop and consequent crack defects to the Southern side of the unit is some subsidence due to tree effects in conjunction with the drought period that we are going through, which is causing shrinkage of the foundation soil. The sewer line that is located parallel to the building may have contributed to the subsidence effect.

The shrinkage of the clay has allowed the footing of the building to subside and consequently crack defects are developing on the Southern walls of the unit."

Then, on page 3, it continues "The degree of movement evident signals the need for a thorough investigation of the root cause of the movement, the degree of movement that has occurred and a design for rectification of the problem."

I am not persuaded, on the material available to me at this point in time, that the body corporate should be required to assume the cost of repair simply because there is a suggestion that "tree effects" and the sewer line (or, according to the respondent, reduction in frequency of sprinkling since 2001-2002, pool drainage and stormwater drainage) may have some bearing on the instability in the soil moisture regime. Firstly, there has been no specific identification of the trees which may be implicated and therefore no evidence that those trees, if any, are located on common property. (The trees photographed by FMG Consulting do not appear to be located on common property and, in any event, are stated in one report to not be a significant cause.) The respondent has submitted no evidence to substantiate his claims that a reduction in the frequency of sprinkling in 2001- 2002, pool drainage or stormwater drainage have contributed to the subsidence problem. Most importantly, based on the reports prepared by both FMG Consulting and Queensland Building & Pest Reports Pty Ltd, it appears as though further investigation is necessary in order to determine the "root cause of the movement, the degree of movement that has occurred and a design for rectification of the problem".

In these circumstances, I consider this application by the body corporate to be somewhat premature. While I appreciate that the respondent appears to have been somewhat reluctant to take action in relation to rectifying the faults within his lot, at least prior to it being vacated and prior to lodgement of this application and that his view of whose responsibility it is to repair the problem is clearly mistaken, the material suggests that further investigation is necessary in order to determine "the root cause of the movement, the degree of the movement that has occurred, and a design for rectification of the problem". Further, the material suggests that the subsidence problem affects the owners of lots 13, 14, 15 and 16. The responsibility for further investigation and rectification of the problem must be shared between these owners. I cannot, in these circumstances, make an order compelling the respondent to attend to repairs.

If, after further investigation of the problem and a design for rectification is developed (by a relevantly qualified professional), the owners of lots 13, 14, 15 and 16 (and the body corporate, if it can be shown that it should accept some responsibility) cannot agree on a way forward, then I consider that any one or more of those owners (or the body corporate) could make application with this office seeking an order that certain work (which would have to be detailed and costed) be carried out and each owner’s contribution towards it determined.

Just and Equitable Order

In the circumstances, I have ordered that the application be dismissed. I have further ordered that a copy of the order, including the reasons for the decision, must be sent to the owners of lots 13, 14, 15 and 16, within 14 days. I have done this in an attempt to educate those owners concerning their responsibilities in relation to this matter and to alert them that they will have to progress the matter from this point on. The owners of lots 13, 14, 15 and 16 are responsible for repairing the damage to their lots caused by subsidence, unless they can establish that some other party should accept some responsibility. Based on the material before me at this stage, I do not consider that the body corporate has any responsibility in relation to the matter.