Sanctuary Gardens [2008] QBCCMCmr 169 (13 May 2008)

Last Updated: 19 May 2008

REFERENCE: 0327-2008

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	22798
Name of Scheme:	Sanctuary Gardens
Address of Scheme:	60 Caseys Road, HOPE ISLAND QLD 4212

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

Jose Teixeira, a co-owner of lot 30

I hereby order that the application for an interim order stopping work on replacement of balconies within lots 59, 61, 66, 70, and 97 is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0327-2008

“Sanctuary Gardens” CTS 22798

THE SCHEME

Sanctuary Gardens Community Titles Scheme 22798 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module). There are 100 lots in the scheme created under two Group Title Plans of subdivision, GTP 104325 and GTP105954 and four Building Format Plans of subdivision, SP114229, SP114517, SP114511 and SP114510.

APPLICATION

This is an application dated 14th April 2008 by Mr. Jose Teixeira, a co-owner of lot 30, (the Applicant) against the body corporate for Sanctuary Gardens. The applicant complains of the actions of the committee chairperson following the issue of adjudicators’ orders 212/ 07, 213/07,214/07, 215/07 and 534/07 which directed the body corporate to engage contractors to undertake repairs to balconies in lots 59, 61, 66, 70, and 97 which are located on building format plans within the scheme.

The applicant states that “the interim order requested is very urgent due to the strong belief that the Chairperson wants to carry out work that includes replacement of balconies, work that has not been approved by the elected committee with costs to be supported by all owners. Also the balconies in question belong to the Chairperson, David Hale (Lot 70); Alison Collett (lot 59); Susan Chang (lot 61), all members of the BCC and new nominated member Jean Marc Moutin (lot 66).
Hence these members are in breach of section 32(1), Conflict of Interest and Schedule 1A Code of Conduct 2(1), (3), (4) & 6”.

The applicant also seeks the following final outcomes:

• an order to suspend the nominations made by the Chairperson once the requirements of section 23C were breached;
• to advise the chairperson to call an EGM to replace the 4 committee members who resigned on 28/3/08, 31/3/08 & 2/4/08 once the new members have been replaced by nomination without a quorum on 4/4/08;
• to void all the decisions and deliberations of the chairperson and committee since the resignation of the 4 committee members.
  

SUBMISSIONS

Pursuant to section 243 of the Act, submissions were sought from the body corporate and lot owners. The submission by the body corporate and the four submissions from individual lot owners opposed the application.

On 28 April 2008, the body corporate manager made the following submissions on behalf of the committee:

• the interim order appears to ask that the implementation of 5 previous adjudications regarding balcony repairs not proceed;
• implementation of the above orders, made in October 2007, has already been significantly delayed;
• a report was commissioned from Jeffrey Hills & Associates, structural engineers, as soon as possible after the above orders were made (a copy of the report from Jeffrey Hills & Associates, structural engineers, dated 2 November 2007 was attached);
• the structural engineers concluded that the failure to properly waterproof the sheeting material and apply a sealing compound to joints and screw holes has allowed water to seep through into untreated timber which has now rotted;
• at the request of the Chairman, a flying minute was distributed on 27/11/07 to all committee members to select one of two quotations obtained for the repair of the 5 balconies;
• the applicant, who was appointed as treasurer at the last AGM, and Mr Schmidt who was appointed as secretary, opposed the works and demanded that a formal committee meeting be held. The chairman provided a number of dates when he would be available for a meeting but received no reply from the applicant and Mr Schmidt. As a result, the first committee meeting was held on 11/01/08 and on that date the applicant proposed that legal advice be sought regarding an appeal from those orders notwithstanding the effluxion of time since the Adjudicator’s orders were made;
• nothing further was done to implement the orders until advice was received from Hynes lawyers on 28/2/08 that there was no prospect of a successful appeal;
• a further committee meeting was held on 14/3/08 at which the applicant and Mr. Schmidt continued to oppose implementation of the orders despite receipt of the original engineer’s report, legal advice about appeal merits and a further engineer’s report;
• despite voluminous correspondence between committee members, the applicant and Mr. Schmidt were unable to indicate which tender they preferred regarding rectification work on the 5 balconies;
• the applicant then resigned from the committee as did 3 other committee members, but were replaced with 4 new appointees in accordance with the regulations. In this regard the body corporate manager states that circumstances surrounding the 4 resignations will be addressed in submissions relating to the final order sought in the application;
• 7 members of the current committee unanimously decided to engage Elite Building Contractors on 17/4/08 to undertake rectification work on the 5 subject balconies and that work has commenced;
• there is no conflict of interest that would prevent the rectification work from being undertaken as neither the committee nor any individual lot owner made a decision that the balconies should be repaired. That decision was made by an adjudicator within the Office of the Commissioner for Body Corporate and Community Management;
• 4 of the 7 committee members are owners of lots in which the balconies are in need of repair. However given that the work was ordered by an adjudicator, tenders were called and the lower tender was accepted, there is little scope to argue that there is a conflict of interest;
• in any case even if those 4 committee members were excluded, there would still be 3 committee members who made the same decision notwithstanding that their balconies do not require rectification work.
• The committee therefore submits that the application should be dismissed.
  

Individual lot owners made similar submissions and also advised as follows:

• Vacant committee positions were filled in accordance with section 23C of the Body Corporate and Community Management (Accommodation Module) Regulation 1997;
• Repairs to the balconies were ordered by an adjudicator and there is no conflict of interest involved in complying with an adjudicator’s order;
• A number of lot owners were frustrated by the delay in complying with the orders and took steps to enforce the orders in the Magistrates Court;
• Legal advice confirmed it was unlikely that an appeal would succeed, and in any event an appeal would have been out of time;
• The delay in attending to repairs has caused further cost to the body corporate due to continuing deterioration of the balconies.
  

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

A final outcome sought by the applicant is to void all the decisions of the committee since 4 committee members resigned and were replaced. At this point in time I am considering the application for an Interim Order to overturn a committee resolution to the engage a builder to undertake certain repairs as directed by an Adjudicator from this Office.

This application follows five previous dispute resolution applications lodged with this Office in 2007 regarding responsibility for the repair of individual balconies. The five applications concerned lots 59, 61, 66, 70 and 97 which, the Adjudicator found, were each registered on a building format plan.

In October 2007 an adjudicator from this Office determined that in accordance with section 108 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997, the body corporate was liable for repairs to the supporting framework and waterproofing membrane.

Orders 212/07, 213/07, 214/07, 215/07 and 534/07 were made in the following terms:

I order that the body corporate immediately and at its expense, seeks an independent civil engineer’s report into the current state of the Applicants’ balcony, as has been suggested in the past, and the reason for the damage. ...... Rectification work should be undertaken as suggested by the independent engineer, and the payment for the works shall be in accordance with section 108 Accommodation Module, that is if essential supporting framework or the membrane is to be repaired, the body corporate must pay for this part of the repair

Subsequently, in a report dated 2 November 2007, Jeffrey Hills & Associates, structural engineers, made the following findings:

• Within each of the subject lots, is a patio constructed with pine timber framing suspended between the rear wall of the unit and two 350 x 350 rendered brick pillars;
• decking material (sheeting) has been fixed to the timber and 300mm x 300mm quarry tiles have been laid on the decking material;
• the failure to properly waterproof the sheeting material and apply a sealing compound to joints and screw holes has allowed water to seep through into untreated timber which has now rotted;
• the timber appears to be untreated softwood (pine).
  

In February 2008, a further report was obtained from Censeo Pty. Ltd., Engineers and Building Consultants whose employee, Mr. Brunner, inspected lots 61, 66, 70 and 97. The report from Censeo Pty. Ltd. contains the following passage:

Each individual patio has a section of the soffit lining removed which has allowed an inspection of the timber framework of the patio. We have noted that in each case the lower hanging battens to the front edge of these soffit framings is exhibiting varying degrees of rot. We believe that this has occurred as a result of the water proofing membrane along the leading edges of the patio deteriorating to a point where moisture has caused the leading edge tiles to delaminate and allow weathering into the leading edges of the framework. We would recommend that each patio will require the damaged timber framework to be replaced and that the floor tiles should be stripped and replaced as a result of the delamination which is occurring.....We would estimate that repair costs should fall in the bounds of $4,800 for the three smaller patios and $5,500 for the larger unit 61 patio.

Clearly the requirement to undertake the building work on the various patios arises as a result of a direction from an adjudicator within the Office of the Commissioner for Body Corporate and Community Management who has directed that substantial rectification work be undertaken on the balconies forming parts of lots 61, 66, 70 and 97 because pursuant to section 108 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997, the body corporate is liable for the cost of the repairs.

I am not persuaded that I should intervene to overturn the decision made by the committee on 17 April 2008 to engage Elite Building Contractors to undertake the repair work.

Firstly, the decision that the balconies should be repaired was made by an adjudicator within the Office of the Commissioner for Body Corporate and Community Management rather than the committee. In my view, the applicant’s argument that that the actions of the committee involve a conflict of interest cannot be substantiated as the direction to undertake rectification work as recommended by a structural engineer, was made by an adjudicator.

Secondly, I believe that in their current state of disrepair, there is very real danger of injury to persons using defective balconies.

Thirdly, having regard to section 310 of the Act, the body corporate would nevertheless by bound by the contract with the builder even if I were to make an order invalidating the committee resolution. Section 310 of the Act provides as follows:

310 Protection of persons dealing with body corporate
If a person, honestly and without notice of an irregularity, enters into a transaction with a member of the committee for the body corporate for a community titles scheme or a person who has apparent authority to bind the body corporate, the transaction is valid and binding on the body corporate.

Other Relief sought

I note that the applicant also seeks the following final outcomes:

• an order to suspend the nominations made by the Chairperson once the requirements of section 23C were breached;
• advise the chairperson to call an EGM to replace the 4 committee members who resigned on 28/3/08, 31/3/08 & 2/4/08 once the new members have been replaced by nomination without a quorum on 4/4/08;
• void all the decisions and deliberations of the chairperson and committee since the resignation of the 4 committee members.
  

These matters will be dealt with in due course and I would point out that I have some concerns regarding the manner in which the 4 resigning committee members were replaced, purportedly in accordance with section 23C. In particular I have concerns as to whether the committee was able to form a quorum[1] prior to filling the 4 vacant committee positions. However, I would also point out that prior to making final orders the committee and other lot owners will be given the opportunity to make further submissions and the applicant will be afforded a right of reply.

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[1] See section 30 of Body Corporate and Community Management (Accommodation Module) Regulation