Admiralty Towers II [2008] QBCCMCmr 96 (14 March 2008)

Number of Scheme:	15344
Name of Scheme:	Admiralty Towers II
Address of Scheme:	501 Queen Street, Brisbane

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

Various Owners being the Owners of Lots 92, 175, 88, 85, 89, 49, 187, 168, 171, 141, 148, 47, 102, 113, 56, 6, 23, 165, 193, 180, 192, 189 and 18

I hereby order as follows
1. that the exterior of the building shall not be painted with a coloured top-coat or any preparatory materials which could dictate the colour of the top coat or coatings;
2. that the body corporate shall not order paint colours for top coatings.

I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

APPLICATION
This is an application dated 10th March 2008 and amended on 11th March 2008, by Ruth Bonnett and Richard Beardsley, co-owners of Lot 92, Gillian Musson, co-owner of Lot 175, Donna Pekol, owner of Lot 88, Mabs Hall, owner of Lot 85, Maree and Henry Sue co-owners of Lot 89, Peter and Sandy Cooper, co-owners of Lot 49, Fran Quinn, owner of Lot 187, Lai Sheung Leung, co-owner of Lot 168, Paul and Gillian Croft, co owners of Lot 171, Ian McKenzie, co-owner of Lot 141, Liu Yin-Shing Teng owner of Lot 148, Honorah Pinnock, co-owner if Lot 47, Paul Keran, co-owner of Lot 102, Huan Fraser owner of Lot 113, Selena Pearce owner of Lot 56, Frederick and Noi Grasby, co-owners of Lot 6, David Walker owner of Lot 23, John Campbell, co-owner if Lot 165, Pat and Russell Savage, co-owners of Lot 193, Dudley James Parfitt owner of Lot 180, Helen Newnes, owner of Lot 192, Carol and Ian Clark, co-owners of lot 189 and Patricia Dawson, owner of Lot 18 (the Applicants) against the body corporate (the body corporate) for an order that the building be painted by Higgins Coatings (Higgins) in the existing colours in accordance with a motion at an annual general meeting held on 21st January 2008;
In the alternative, the Applicants seek that the body corporate calls an extraordinary general meeting to determine 4 motions including a motion to seek quotations for the painting of the area from the ground level to the first level; or if not carried, then a motion authorising the body corporate to accept a quotation dated 9th November 2007 for painting from Higgins Coatings for $336,723 plus GST; and motions in the alternative to allow the committee to authorise Higgins to use the existing colour scheme, or to allow the committee to authorise Higgins to use the proposed colour scheme using Dulux Knapsack, Linseed and Grand Piano in accordance with a colour consultant’s report.

The Applicants also seek an interim order to stop the painting of the building until such time as the final outcomes sought have been determined, stressing that the committee does not have a mandate to change the colour; that the body corporate has already instructed Higgins to order paint; and that a colour change might be considered an improvement and not merely maintenance thereby requiring the passing of a special resolution at a general meeting. The Applicants also request that a deposit is not paid to Higgins until the colour is confirmed, and that the paint is not ordered.

“Admiralty Towers II” Community Title Scheme 15344 is a community title 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 193 lots in the scheme created under a Building Unit Plan of subdivision.

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

(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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order.

I held a teleconference with Applicants Ruth Bonnett and Richard Beardsley for the Applicants, and chairman Mike Jones and secretary Robert Dillion for the body corporate, on 14th March 2007, and invited the body corporate to submit any documents it wished me to consider as soon as practicable. Copies of the Applicants’ attachments and further copies of letters sent by the Applicants on 13th March 2007 were also provided to the body corporate.

The Applicants say that at the annual general meeting on 21st January 2008, the body corporate by Motion 9, resolved by 74 – 6 votes to authorise the incoming committee to obtain quotations for “the complete exterior painting of the building and grounds, provided that the cost does not exceed $467,500 inclusive of GST.” There was no mention in that motion of what colour the building was to be painted.

On 15th February 2008 the committee sent an open letter to all apartment owners, saying that it had sought professional advice on the colour scheme. The committee commissioned the construction of two models one painted in the existing colours, and one painted in a new colour scheme showing Dulux colours Knapsack, Grand Piano and Kahlua Milk. The models were to be displayed in the foyer until 22nd February 2008 and a digitally coloured photograph of the building in the new colours was also available on the scheme’s web-page for owners who were not resident. The committee asked lot-owners to circle Option 1 for the existing colour scheme, and Option 2 for the new colour scheme, to put the “apartment number” on the open letter, and return it to the committee by 3rd March 2008. There was no requirement that the letter be signed by lot-owners.

On 5th March 2008, the committee posted a notice on the scheme notice board saying that the votes had been counted and that the choice of the majority was for Option 2, the new colour scheme.

The Applicants say that Motion 9 only allowed the committee to seek quotations for the painting of the scheme in the existing colours and that the informal procedure adopted for voting for a colour scheme via the open letters was incorrect. The votes taken included telephone votes, and the system devised was insecure and open to abuse. They cite a case of an already marked photocopy being delivered to a lot-owner; the ease with which letterheads could be copied; the availability of a number of printed open letters; the fact that Applicant Ruth Bonnet was not allowed to act as scrutineer on the votes when she asked to perform this role; and that the secretary has refused to allow lot owners to see the completed open letters. The Applicants are also surprised that the new colour scheme is the wish of the majority, since by their own unofficial canvassing they had understood there to be a majority in favour of the existing colour scheme which carries some history and reflects the iconic status of the building.

The Applicants also say that the coloured photograph generated by a computer was not an accurate representation of the new colour scheme, nor a fair way in which to demonstrate the two colour schemes. The computer-coloured image was much brighter against a blue sky, with the blue railings of the existing façade enhanced, whilst the existing colouring showed a photograph of the building with its faded paint on a dull day. The models were also inaccurate since they did not show the terracotta tiles at the base of the scheme.

At the teleconference, the body corporate through chairman Mike Jones and secretary Robert Dillon said that there was division in the committee about the colour scheme, and the committee thought the fairest thing to do would be to let owners vote on the choice of two colour schemes. The committee counted the votes during an informal meeting and some owners were waiting outside the room for the result. Some votes were made by phone but the committee was scrupulous in making sure that no lot-owner voted twice. Some owners had lost their open letters so voiced their preference. They say that the papers are now body corporate records and that anyone can see them. Copies of the open letters used in the vote have since been delivered to this Office.

The committee had taken legal advice that it did not need to put the question of colour to a formal vote at a general meeting and that the question of colour could be decided by the committee alone. However, since the committee was divided and the committee wanted to be absolute fair to everyone, they devised the two-choice scheme and invited votes.

The body corporate confirmed that Higgins had been engaged and that it hoped to start painting in mid April. There was preparatory work to undertake first. The body corporate was concerned that Higgins’ quotation is only good until end March 2008.

The Applicants said that the process was not transparent since there was no way of knowing who had voted, or of scrutinizing signatures. The forms could have been returned by any member of a lot owner’s family or anyone who had access to them. There is evidence that the committee had failed to respond to lot-owners in the scheme who had previously written to the committee expressing concern about the process adopted, and the change of colour. In summary, the Applicants’ view at the teleconference was that the vote could easily have been ‘fixed’ by the submitters or by the counters, and even if it had not been, there was concern that justice had not been seen to be done, especially since the result was surprising to them.

In this application, the Applicants are asking for the painting of the building not to go ahead until such time as the colour or colours have been decided by the body corporate in a transparent and legitimate process.

The body corporate committee has put a remarkable lot of time and energy into seeking votes from lot owners’ on a choice of two colour-schemes. What it has done in effect is conduct an opinion poll. As such, it is correct in thinking that such a poll needs no votes at a general meeting.

The legislation requires that an “improvement” to common property by the body corporate is to be voted on by special resolution at a general meeting (Section 113 Standard Module). It has been held on many occasions by this Office, in reliance on decisions of superior tribunals and courts, that an “improvement” is something more than mere maintenance. The definition in the Act is that it can include a “non structural change.” A change of colour scheme has been held to be an “improvement “ in 0327-2007 “Barakala” CTS 1865.

There are therefore at least two questions to be answered: Is painting in the new colours “an improvement” to common property? And if so, is the conduct of an opinion poll sufficient to authorise the body corporate to make an improvement to common property?

Even if the new colour scheme is not an “improvement”, has the body corporate committee the authority of the body corporate to paint the exterior of the building in any other colours?

I find that these are proper questions to be decided and that the Applicants have raised a prima facie case. If the building is painted without further consideration of these issues, the balance of convenience would weigh heavily against the Applicants in seeking a remedy. This is a proper case in which the status quo should be preserved, and I am therefore granting the interim application for the painting work not to be commenced in respect of any coloured top coats. The contractors may undertake preparatory work where that will not affect the choice of colour of the final coats.

In the circumstances the body corporate should not yet order surface paint colours.

My understanding from the teleconference, is that Higgins contractors, having been engaged, will be able to maintain their quotation, and that their price quoted does not depend on the colours of the paint to be used. It may therefore be that a deposit has been or will have to be paid to Higgins. I think this renders ineffective one of the alternative motions to an extraordinary general meeting proposed by the Applicants if this matter succeeds, that of authorising the committee to accept Higgins’ quotation. No doubt the Applicants will put me right on this if there is a point I have overlooked. I do not wish to halt the engagement of Higgins to which there is no objection, although the Applicants are correct that the manner of Higgins’ engagement was apparently left to the committee without further recourse to the body corporate. This was the wish of 74 lot owners at a general meeting, and it is not argued by the Applicants that that somewhat unusual decision was flawed.

Submissions will now be invited from all lot-owners in this matter. At the teleconference I indicated that the time for submissions from lot owners would be only 2 weeks since Higgins are about to commence preparatory work. I also said that when the period for submissions and any Reply from the Applicants had closed, that I would expedite the finalisation of this matter in the circumstances where contractors are standing by.

Happily, there seem to be no dispute as to facts in this case. The case may turn only on a question of applicable law, although the submissions from owners have of course yet to be received.

I also seek clarification from the Applicants as to the mention of the colour “Linseed” in the application since this colour has not been proposed by the body corporate in its choice of colour schemes and I am wondering at its significance.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Admiralty Towers II [2008] QBCCMCmr 96 (14 March 2008)