Jade Place [2008] QBCCMCmr 202 (19 June 2008)

Last Updated: 26 June 2008

REFERENCE: 0307-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	15298
Name of Scheme:	Jade Place
Address of Scheme:	25 Loder Street Bigerra Waters QLD 4216

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

Deborah Anne Murtagh and Paul Ronald Mathiesen, the owners of lot 1

I hereby order that, within three months, the body corporate must reimburse Deborah Anne Murtagh and Paul Ronald Mathiesen, the owners of lot 1, the amount of $1,894.66. I further order that, within fourteen days, the body corporate must distribute a copy of this Order and Reasons for Decision to the owner of each lot included in the scheme.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0307-2008

“Jade Place” CTS 15298

Application

This application is brought by the owners of lot 1, Deborah Anne Murtagh and Paul Ronald Mathiesen, against the body corporate, seeking the following orders:

We are seeking reimbursement of the amount $1,987.16 being costs incurred for:

1. Termite inspections (after termites were found in unit 1) - $185.00
2. Termite treatments - $388.00 and $900.00
3. Repairs due to damage caused by termite activity in unit 1 - $457.16
4. Cost of conciliation application - $57
   

The applicants provided a detailed chronology of events from the time of the discovery of the existence of termites in lot 1, up to the time of lodgement of this dispute resolution application. The applicants’ grounds are to the following effect:

• The body corporate must maintain common property in good condition and is responsible for any pest inspection, prevention and treatment work carried out on common property.
• Based on order 0510-2001[1], the applicants wish to claim reimbursement of all costs associated with a termite infestation discovered in Februrary 2007 which the body corporate failed to prevent. Order 0510-2001 dealt with a similar situation in a block of units located at Labrador. The Adjudicator ordered that the body corporate pay the owner the costs incurred as a consequence of the termite infestation for which the body corporate was responsible to prevent. The reasons for this decision included the following:
  

It is not correct for the body corporate to state that if damage was confined to internal walls of the lot, then the repairs were the responsibility of the owner of the lot. In a building units plan (now a building format plan), it is the responsibility of the body corporate to control or prevent termite infestation both to common property, and lots. Because the termites entered the unit via common property, the body corporate was at all times responsible to prevent termite infestation via common property.

• On 14 February 2007 the then body corporate managers, Body Corporate Headquarters, were put on notice when it was discovered that termite activity was present in Unit 1. Body Corporate Headquarters failed to inform the body corporate committee or act to implement inspections of units and common property. Active termites were evident in a tree on the fence line between “Jade Place” and the accompanying property and in the car park exhaust vent attached to unit 1.
• The applicants felt obliged to expedite inspections to prevent further damage to both their property and the surrounding units. Due to termite activity, damage occurred in the living room (skirting boards) and main bedroom (wardrobe) of Unit 1.
• The body corporate failed to reply to any contact via email or fax about the termite infestation; hence the owners of unit 1 felt obliged to treat both their unit and the surrounding area to prevent further damage to both their property and the surrounding units.
• Attempts to resolve the issue at both the AGM and two EGMs were unsuccessful.
• No evidence of termite inspections and/or treatments can be found in paperwork dating back to 2004. Hence the body corporate has been negligent in their duty of care to protect the common property from termite infestation.
  

Included with the applicants’ grounds and chronology of events were colour photographs of the termite activity and damage to unit 1, copies of all correspondence to the body corporate via the body corporate managers in relation to this issue, a copy of a Visual Termite Inspection Report from Elite Maintenance Service Gold Coast, Pest Management Division, dated 14 February 2007, copies of invoices for each of the amounts claimed above, minutes of the AGM of 10 July 2007 and minutes of the EGM of 26 November 2007.

Jurisdiction

“Jade Place” was registered as a building units plan (now known as building format plan) of subdivision on 8 April 1997. The scheme comprises 8 lots and common property over three levels. 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 owners of one lot and the body corporate concerning alleged contraventions of the Act and comes within the dispute resolution provisions of the Act (see sections 226, 227 & 228).

Procedural Matters

On 11 April 2008, a copy of the application was provided to the body corporate care of Professional Body Corporate Management (the body corporate manager) for distribution to the committee and the owner/s of each lot (excluding the applicants), with an invitation to respond to the matters raised in the application. No submissions were received in response to the application.

A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Determination

The issue of the prevention and treatment of termite infestations is one of maintenance. Section 109 of the Standard Module requires a body corporate to maintain common property, and section 120 provides that the owner of a lot included in the scheme must maintain the lot in
good condition. In the case of a building format plan, the boundary of a lot with common property or another lot is the centre of the wall, floor or ceiling (Section 49C(4) Land Title Act 1994).

Maintenance extends beyond the rectification of damage, to include work that may be reasonably expected to minimise the need for future maintenance. Therefore, maintenance responsibilities would include a responsibility for reasonable pest prevention as well as rectification of damage by pests. The Visual Termite Inspection Report from Elite Maintenance Service Gold Coast, Pest Management Division, dated 14 February 2007 reveals that the termites entered lot 1 from an infestation of the common property, namely via the exhaust vent for the car park, attached to lot 1. It appears as though the source of the infestation is most likely a nest discovered in a tree on an adjoining property. The boundary between lot 1 and the common property is the centre of the floor and external wall and so the subfloor area is common property. From my reading of the building units plan, the exhaust vent for the car park is common property and not within the boundaries of lot 1. It appears therefore that termites entered lot 1 from the common property. If that is the case, the body corporate may well have failed in its responsibility to maintain the common property by not implementing effective termite protection.

The submission of the applicants is that there is no evidence of any current or prior maintenance plan with respect to termites. The report of Elite Maintenance Service substantiates this by finding no evidence of any prior treatments having been carried out. Further, the body corporate has not refuted the claim, nor even commented on it. It appears that the body corporate has never and has not currently, any maintenance plan with respect to termites.

In circumstances where a report from a qualified professional indicates that the source of the termite infestation to lot 1 is common property and where the body corporate has no maintenance plan with respect to termites, it appears to me that the body corporate has failed in its legislative responsibility to maintain common property in good condition. I am satisfied that the applicants have done what was required of them in terms of alerting the body corporate to the existence of the problem and accept that them going ahead with the treatment and repairs without body corporate approval was reasonable in circumstances where the body corporate had failed to respond to their numerous notifications of the problem and where the risk of subterranean termite infestation to the overall property was considered to be “extremely high”. In fact, the applicants should be commended for doing their best to mitigate their loss. While I accept that the lack of response on the part of the body corporate and subsequent inability to resolve the issue at general meetings (including by incorrectly ruling motions out of order) appears to be, to a large extent, the fault of the body corporate manager at the relevant time, the body corporate manager was engaged by the body corporate and ultimately the responsibility for the repair lies with it.

This gives rise to a claim by the applicants for reimbursement of amounts paid for carrying out repairs, under section 281 of the Act. Section 281(1)(b) relevantly provides that if the adjudicator is satisfied that the applicant has suffered damage to property because of a contravention of Act, the adjudicator may order the person who the adjudicator believes, on reasonable grounds, to be responsible for the contravention to pay the applicant an amount fixed by the adjudicator as reimbursement for repairs carried out to the property by the applicant. In this regard, I consider the amount of $1,837.66, should be reimbursed by the body corporate to the applicants. This amount includes the cost of both termite treatments and repairs to damage caused by termites. It also includes half of the $185 paid by the applicants for the termite inspection by Elite Maintenance Service after the existence of termites in lot 1 was discovered by the painter. I have not ordered the full cost to be reimbursed because owners are responsible for inspecting their individual lots themselves; however, the body corporate is responsible for inspecting common property. As it is evident from the report that both lot 1 and common property were inspected, I consider it just and equitable that the applicants and the body corporate should share the cost of this inspection equally.

The amount of $57 claimed by the applicants for the cost of the conciliation application is not claimable under section 281 as it does not relate to repairs. However, I consider this amount is claimable under section 280 of the Act. Section 280 provides as follows:

280 Order for payment of application fees

(1) This section applies if—

(a) the applicant for an adjudication application made a

conciliation application for the same dispute; and

(b) the respondent to the adjudication application was the

respondent to the conciliation application; and

(c) the commissioner ended the conciliation application

under section 252K because the respondent failed,

without reasonable excuse, to participate in the

department conciliation.

(2) If asked by the applicant, the adjudicator may order the

respondent to pay to the applicant the amount paid by the

applicant under section 239(1)(c) as fees for the conciliation

application and adjudication application.

The applicants did make a conciliation application in relation to this matter prior to lodging this application for adjudication[2], the respondent to this adjudication application is the same as the respondent to the conciliation application (the body corporate) and the Commissioner ended the conciliation application under section 252K of the Act because the respondent failed, without reasonable excuse, to participate in the department conciliation. In the circumstances, I consider it appropriate to order the body corporate to pay to the applicants $57, being the fees for the conciliation and adjudication application.

It is most likely that the total amount I have ordered the body corporate to pay to the applicants ($1,894.66) will be a liability for which no provision has been made in the budget of the body corporate. Section 95(2) of the Standard Module provides that, if a liability arises for which no provision, or inadequate provision, has been made in the budget, the body corporate must, by ordinary resolution, fix a special contribution to be levied on the owner of each lot towards the liability. This will necessitate the convening of a general meeting to raise the funds necessary to pay the applicants the amount I have ordered. I consider that the convening of an EGM is necessary to not only raise the necessary funds to satisfy the requirements of this order, but also to put in place a maintenance plan with respect to termites in relation to the common property, as a matter of some urgency. In a building format plan where lots share walls, having only one lot protected, in effect, leaves all lots unprotected. It appears to me that a preventative treatment would have to be applied to the entire perimeter of the building for it to be effective and for regular inspections of the common property to be carried out. In addition, owners would be wise to arrange for inspections of their individual lots (at their own expense) to ensure the damage caused to date is confined to lot 1 and has not spread further.

I have given the body corporate a period of three months within which to reimburse the applicants the amount above. This is to enable the body corporate sufficient time to convene an EGM to strike and collect a special levy to cover the amount ordered to be paid to the applicants and also consider implementation of a maintenance plan with respect to termites. I have also ordered that a copy of this decision, including the reasons for decision, be distributed to the owner of each lot within the scheme, so that all owners (including the applicants) are aware of their obligation to contribute their share (in proportion to their contribution schedule lot entitlements) of the body corporate’s liability to the applicants and also to implement a maintenance plan with respect to termites.

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[1] Ayers Rock [2002] QBCCMCmr 35
[2] See application 0204-2008