Kara [2008] QBCCMCmr 167 (13 May 2008)

Last Updated: 19 May 2008

REFERENCE: 0037-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13760
Name of Scheme:	Kara
Address of Scheme:	62 Bonney Avenue CLAYFIELD QLD 4011

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

Gary and Suzanne Corbett, the Owners of Lot 5

I hereby order that the application for an order: We are seeking compensation for the costs not covered in our insurance claim. The whole bathroom had to be pulled out after the body corporate sent us a letter saying that it was our problem and we had to get it fixed. This is what we did. Once the plumbers pulled the bathroom out, it was found that there was a leak coming from the roof - not our bathroom. The hole in the roof caused the damage to our bathroom and then in to the unit below. So we feel we should be compensated for the costs we have outlayed to fix what was not our fault. We are seeking restitution of $4609 + 2 weeks portable bath hire of $594. The $4609 is the difference between the actual cost & what insurance paid. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0037-2008

“Kara” CTS 13760

Kara community titles scheme 13760 (Kara) consists of six lots and common property. The community management statement (CMS) for Kara indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Building Units Plan 1346.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Gary and Suzanne Corbett, Owners of Lot 5 (applicants) on 17 January 2008. The applicants sought orders against the Body Corporate for Kara (respondent) in the following terms:

We are seeking compensation for the costs not covered in our insurance claim. The whole bathroom had to be pulled out after the body corporate sent us a letter saying that it was our problem and we had to get it fixed. This is what we did. Once the plumbers pulled the bathroom out, it was found that there was a leak coming from the roof - not our bathroom. The hole in the roof caused the damage to our bathroom and then in to the unit below. So we feel we should be compensated for the costs we have outlayed to fix what was not our fault.

We are seeking restitution of $4609 + 2 weeks portable bath hire of $594. The $4609 is the difference between the actual cost & what insurance paid.

PROCEDURAL MATTERS

Initially the applicants lodged an application for conciliation and I understand the Commissioner’s Office conducted a conciliation session on 10 January 2008 to assist in the resolution of this dispute. Unfortunately it seems that the parties were unable to reach agreement at conciliation. Subsequently, this application was lodged.

Under section 243 of the Act, a copy of the application was provided to the Body Corporate, with an invitation to the Committee and all owners to respond to the matters raised by the application. Submissions were made by the owners of all of the other five lots in the scheme. The applicants did not avail themselves of the opportunity to inspect and respond to the submissions received.[1]

A dispute resolution recommendation was made referring the dispute to departmental adjudication.

Following a review of the application and submissions I determined that certain further information would be necessary to clarify the circumstances arising in this dispute and to make a determination. First, further documentation was sought and received from the Body Corporate.

Then, at my direction and in accordance with my investigative powers under section 271 of the Act, a case manager from the Commissioner’s Office wrote to the applicants to request clarification of various matters. In light of the very different scenario presented in the submissions, a copy of the submissions and the information provided by the Body Corporate was forwarded to the applicants with an invitation to comment on the issues raised. The letter sought a full chronology of events leading to the dispute and certain other information. The letter also noted that adjudicators are not privy to the conciliation application, or any material presented at conciliation, or the discussions at conciliation, and so any relevant material raised in that forum must be resubmitted.

The applicants did not respond to the request. Members of the Commissioner’s Office staff called Gary Corbett on several occasions (17, 22, 29 and 30 April, and 6 May) seeking the information requested in the letter. Copies of the letter were resent on 29 April and (with the original attachments) on 30 April. The applicants at one point forwarded some documentation, much of which had previously been supplied. However, most of the information requested was not supplied. Gary Corbett repeatedly indicated that he had already provided all of the information that he could and that he had no further information.

MATTERS IN DISPUTE

The application relates to repairs to the bathroom in Lot 5. In the absence of a response from the applicant to requests for clarification of the circumstances of this dispute, it is difficult to conclusively ascertain the background to this dispute.

The applicants say that on 3 August 2007 they received a letter from FutureProfit Property Services Pty Ltd, the then Body Corporate Manager (BCM) for the scheme. The letter advised that the property manager for Lot 2, which is below Lot 5, had reported a continuing problem with water coming from Lot 5. A report had been obtained by contractor Munters Pty Limited (Munters), who had previously repaired water damage in Lot 2. This report advised that there was a crack in wall tiles recess which goes through into the services duct between the shower/toilet, resulting in water leaking into the services duct. The letter advised that this maintenance work was not claimable under the Body Corporate’s insurance policy. Accordingly the letter requested that the applicants attend to the matter and advise when the repairs were completed.

The applicants say they engaged plumbers to undertake the repairs. However, when the plumbers pulled out the bathroom they discovered the leak was coming from a hole in the roof. The application includes a letter from the plumber, Fika Pty Ltd (Fika), dated 3 September 2007. This letter says that when the shower hob in Lot 5 was removed a very bad leak was noticed coming down the service duct between the bathroom and toilet of Lot 5. Investigations determined that the leak was the result of a roof leak which was caused by a broken seal on the pipe flashing. The roof leak was repaired. The letter expressed the opinion that the leak had over time caused the weakening of the shower area internally within the service duct, with the fibrous cement sheeting and associated framing having disintegrated. This weakening then caused movement in the tiles and grouting in the shower recess, causing leaking when the shower was used.

The Fika letter goes on to advise the applicants that to repair the bathroom would require the complete removal of the bathroom and associated fixtures, with waterproofing applied to the entire area. Also, the inability to source the original wall and floor tiles required a full retrofit of tiles.

The applicants seek the costs which they say were not their fault: being the $4,609 difference between the actual cost and the insurance payout, and $594 for two weeks hire of a portable bath.

Submissions from the owners of five lots oppose the application, and present a quite different picture of how the dispute arose. The submissions (and the further information requested from the Body Corporate) suggest the following chronology of events:

• On 5 March 2007 the BCM made a claim to the Body Corporate insurers for water damage to Lot 5 caused by a leaking pipe. The covering letter said that the applicants had been instructed to fix a leaking pipe and obtain two quotes for the repairs.
• In mid March 2007 the applicants supplied two quotes for the demolition of the existing bathroom and toilet and refitting (for $11,400 and $13,650).
• The quotes were forwarded to the insurers on 23 March 2007 with a note that water damage had also been reported in the Lot 2 bathroom and quotes for this work were being obtained.
• Correspondence from the insurers on 21 May 2007 accepted a Munters quote for repairs to Lot 2 (for $1,197.63) but said that the owners of Lot 5 (the applicants) had elected to undertake a full renovation of the bathroom and toilet areas on their own authority. The document notes that Munters had advised that similar works were required in both units.
• On 20 July 2007 the property manager for Lot 2 wrote to the BCM indicating that the repairs initially undertaken by Munters had not been effective, with new paint blistering and a continuing leak. They told Munters who subsequently advised the Body Corporate on 25 July 2007 that their further inspection indicated a leak coming from Lot 5 which had not been obvious at their first inspection on 14 May 2007.
• On 3 August 2007 the BCM advised the applicants of the continuing problem with water coming from their lot to Lot 2 below and requesting rectification.
• Fika then inspected the problem and at some point repairs to the roof were undertaken.
• On 24 September 2007 the Owners of Lot 2 wrote to the BCM outlining the continuing problem and seeking action on the matter. Further correspondence in October and November sought clarification on whether the matter had been rectified.
• The insurers settled the Lot 5 claim on 8 November 2007, giving total settlement of $6,730.
• The applicants sent the Body Corporate the invoice dated 30 June 2007 from Fika for the total bathroom works being $10,358.50. The facsimile date stamp indicates the invoice was sent to the Body Corporate on 8 November 2007.
  

The key point in the submissions is that the applicants have already been compensated by the Body Corporate insurers for the incident. They say the applicants chose to undertake extensive additional improvements which, according to the insurers, were not necessary to return the Lot to its original condition. They say renovation of the more than 30 year old Lot 5 bathroom and toilet included items not affected by the leak. These additional works were not claimable under the insurance policy and are not the responsibility of the Body Corporate. They say improvements of this nature are the responsibility of the applicants.

Other comments in the submissions include the following:

• The applicants’ claim that the work was undertaken because of a threat of compensation for damages from the unit below is disputed, as there was no such threat in the BCM’s letter.
• Any suggestion that the applicants were deliberately misled as to the cause of the problem is refuted, as the applicants’ own plumbers didn’t know where the problem was until it rained.
• The applicants should have only undertaken the repairs requested and if that didn’t address the problem they should have contacted the Body Corporate.
• The applicants were never advised or authorised by the Body Corporate or its authorised representatives to undertake any additional work at the expense of the Body Corporate, and should have known not to act without authorisation.
• The date of the Fika invoice is queried, noting that the work was invoiced on 30 June 2007 but is claimed to have been undertaken in response to the BCM’s letter which was dated 3 August 2007. The invoice shows that the work was planned prior to the problems which were identified in July 2007, with the initial quotes obtained indicating that a full bathroom renovation was contemplated as early as March 2007.
• As the applicants’ property was on the market at the time the applicants’ may have decided to undertake a complete renovation to secure a better price.
• Owners only have Fika’s word that the work was carried out and the replacements were necessary. The Body Corporate was unable to challenge by obtaining a second opinion.
  

At my request, the Body Corporate provided its records relating to the dispute, including correspondence, the Munter’s inspection report and the various quotes.

The request to the applicants for further information included copies of the submissions and the documentation provided by the Body Corporate and sought:

• A full chronology of events leading up to the dispute, referencing relevant documentation and including but not limited to when issues with water damage in Lot 2 and 5 first arose, through to the insurance claims, obtaining of quotes and the undertaking of the repairs;
• When Fika were engaged, and when the repairs were commenced, completed and paid for;
• A full explanation of the amounts claimed, including all invoices and receipts;
• Copies of all documentation held by them and details of verbal communications; and
• Comment on the assertions that the claim includes improvements rather than just repairs.
  

While the applicants forwarded a few documents that they had not previously provided (although most had already been included in submissions), no other response to the request was received despite several requests from Commissioner’s Office staff.

JURISDICTION

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[2]

The applicants were clearly lot owners at the time of lodging this application, although they have since sold their lot with the change of ownership recorded on 31 March 2008. Although the applicants are no longer owners, as the application refers to a disputed monetary amount (rather than, for example, ongoing rights for owners) I am satisfied that the applicants have a genuine continuing interest in the outcome of this application.

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 CMS; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or

(c) a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager or service contractor; or the authorisation of a person as a letting agent.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[3] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[4]

DETERMINATION

The key issue for consideration in this matter is whether the applicants have incurred costs in respect to their bathroom which are properly the responsibility of the Body Corporate for Kara.

Applicable law

Pursuant to section 109 of the Standard Module a body corporate is responsible for maintaining common property. Kara is building format plan of subdivision (BUP) which means that where a lot is separated from another lot or common property by a floor, wall or ceiling, the boundary is the centre of the floor, wall or ceiling.[5] This means the roof of the scheme is part of common property. Moreover, in a BUP the body corporate is responsible for maintaining roofing membranes in good condition and maintaining roofing structures in structurally sound condition.[6] There is no suggestion that the Body Corporate has not accepted its responsibility for the maintenance and repair of the roof in this scheme.

Section 281 of the Act provides for an adjudicator to make an order to repair damage or reimburse an amount paid by an applicant for repairs. Specifically, if an adjudicator is satisfied that an applicant has suffered damage to their property because of a contravention of the body corporate legislation or the community management statement, the adjudicator may order the person responsible to pay the applicant an amount (of no more than $10,000) as reimbursement for repairs carried out by the applicant. This means that if I am satisfied that the Body Corporate failed to meet its legislative responsibilities to maintain the roof in this scheme, I could order the Body Corporate to reimburse the applicants for damage to their property arising from the failure.

If a body corporate’s insurer does not fully cover the costs of repairs which are a body corporate’s responsibility, or does not fully reimburse an owner for costs arising from body corporate maintenance responsibilities, then the body corporate would be liable to make up the shortfall.

However the fundamental questions in this dispute are the basis of the amounts claimed by the applicants and whether these amounts are for costs which arose solely because of a failure of Body Corporate maintenance rather than the applicants’ choice to renovate.

Amounts claimed

The first difficulty in this application is that the applicants have not clearly explained or substantiated all of the amounts they are claiming. The total claim appears to be for $5,203. Firstly they seek $4,609 difference between the actual cost of the bathroom works and the insurance payout. Secondly they seek $594 for two weeks hire of a portable bath.

The Fika invoice is for $10,356.50. The settlement detail provided by the insurers on 8 November 2007 specifies that reimbursement of $5,747.50 was paid by the insurer for the works carried out by Fika. The difference between these amounts is the $4,609 claimed. However the applicants have only provided an invoice dated 30 June 2007. As there is some suggestion that the work did not occur until much later and as the applicants have provided no evidence that this was the actual amount paid, the actual difference in costs incurred by the applicants is not fully substantiated.

The insurers also provided payment of $982.50 for the hire of a portable bath. No invoice, receipt or explanation of the portable bath hire is provided by the applicants, so I have no evidence of what amount the applicants actually paid for the bath hire. Accordingly the claim for $594 is wholly unsubstantiated.

Nature of the costs incurred

The more fundamental issue in this dispute is whether the applicants have provided sufficient evidence that the costs purportedly incurred by them were a direct consequence of the failure of the Body Corporate to maintain the roof, or alternatively were at least partly for improvements.

The applicants bear the onus of proving that the Body Corporate is responsible for the costs purportedly incurred by them. However in the absence of any response from the applicants to requests for clarification, I am unable to ascertain that the amounts claimed by them were necessary repairs rather than voluntary renovations. The applicants were specifically invited to comment on this issue and declined to do so.

There are inconsistencies in the material presented in this matter. In light of the partial insurance coverage, and the dates of the various quotes and invoices, it does seem at least arguable that the works undertaken included renovations above and beyond the repairs necessary to rectify the damage. The applicants have made no attempt to refute the version of events presented in the submissions.

In the circumstances I consider that I do not have sufficient evidence to conclusively determine whether the costs were for repairs rather than renovations. However the submissions from owners, documentary evidence and the absence of any contradictory evidence from the applicants do cast doubt on the veracity of the applicants’ claims.

Conclusion

In the face of the applicants’ refusal to provide clarification of the circumstances in this dispute, I am simply unable to reach any findings of fact that would support the applicants’ claim. Accordingly the applicants have not satisfied me to a requisite degree that the Body Corporate is responsible for the amounts claimed. It follows that I have dismissed the application.

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[1] See sections 246 and 244 of the Act respectively
[2] See sections 227, 228, 276 and Schedule 5 of the Act
[3] Section 276(2) of the Act
[4] Section 284(1) of the Act
[5] Sections 48C and 49C(4) of the Land Title Act 1994
[6] Section 109(2)(a)(iii) and (b)(iii) of the Standard Module