The Cannery [2009] QBCCMCmr 328 (1 September 2009)

Last Updated: 9 October 2009

REFERENCE: 0190-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	26311
Name of Scheme:	The Cannery
Address of Scheme:	129- 139 Commercial Road TENERIFFE QLD 4006

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Robert Risson, a co-owner of Lot 128

I hereby order that the application for an order by Robert Risson, a co-owner of Lot 128 against the body corporate for The Cannery community titles scheme 26311 seeking the following outcomes: A declaratory order that Motion 7 passed at the Annual General Meeting dated 3 February 2009 and adjourned to 10 February 2009 be declared invalid. That within 30 days of the date of the order the Body Corporate engage reputable, registered and qualified engineer or engineers to carry out the resolution passed on Motion 18 at the Annual General Meeting dated 8 April 2008 (2008 AGM). This engineer should also but is not limited to: (a) Inspect and report on the common property including: plant and equipment, switchboards, drainage (in particular the flooding of Precinct C car park and its consequences including cracking of the slab and surrounds), mechanical equipment, roofing structures, pool, car parks, fences, grounds including any ground movement, condition of concrete and paving, building structures and facades (especially for cracking) and planter boxes, and the condition of the paint and render on all buildings. The report will also include identification of defects, typical and specific faults and estimates for remediation methods. (b) Take into account the report in order to: (i) Provide estimates for the current financial year. (ii) Provide estimates for raising a reasonable capital amount both to provide for necessary and reasonable spending from the sinking fund for the current financial year and also to reserve an appropriate proportional share of amounts necessary to be accumulated to meet major capital expenditure over at least the next 9 years after the current financial year having regard to the requirements of section 137 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008. (iii) Raise and maintain a maintenance schedule for The Cannery scheme as provided for in the resolution passed on Motion 18 at the 2008 AGM. (iv) Raise and maintain a documented record of all cracking with photographs of all existing cracks, their position in the relevant walls and the cause of the cracks so that this record can be referred to at a latter date if further damage occurs after repairs have been effected, and to monitor cracks that are deemed to not require repair at this time. An order that within 30 days of the receipt of the engineering report stated above that, the Body Corporate provide a draft sinking fund budget derived from the above estimates for the Body Corporate to vote on. Any other orders the adjudicator deems fit. is dismissed. I further order that the Body Corporate implement the resolution passed on Motion 18 at the Annual General Meeting dated 8 April 2008.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0190-2009

“The Cannery” CTS 26311

The scheme
“The Cannery” community titles scheme 26311 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).

Application
This application made on 2 March 2009 is by Robert Risson, a co-owner of Lot 128 (Applicant) against the Body Corporate seeking the following outcomes:

1. A declaratory order that Motion 7 passed at the Annual General Meeting dated 3 February 2009 and adjourned to 10 February 2009 (2009 AGM) be declared invalid.
2. That within 30 days of the date of the order the Body Corporate engage reputable, registered and qualified engineer or engineers to carry out the resolution passed on Motion 18 at the Annual General Meeting dated 8 April 2008 (2008 AGM). This engineer should also but is not limited to:
   • (a) Inspect and report on the common property including: plant and equipment, switchboards, drainage (in particular the flooding of Precinct C car park and its consequences including cracking of the slab and surrounds), mechanical equipment, roofing structures, pool, car parks, fences, grounds including any ground movement, condition of concrete and paving, building structures and facades (especially for cracking) and planter boxes, and the condition of the paint and render on all buildings. The report will also include identification of defects, typical and specific faults and estimates for remediation methods.
   • (b) Take into account the report in order to:
     • (i) Provide estimates for the current financial year.
     • (ii) Provide estimates for raising a reasonable capital amount both to provide for necessary and reasonable spending from the sinking fund for the current financial year and also to reserve an appropriate proportional share of amounts necessary to be accumulated to meet major capital expenditure over at least the next 9 years after the current financial year having regard to the requirements of section 137 of the Accommodation Module.
     • (iii) Raise and maintain a maintenance schedule for The Cannery scheme as provided for in the resolution passed on Motion 18 at the 2008 AGM.
     • (iv) Raise and maintain a documented record of all cracking with photographs of all existing cracks, their position in the relevant walls and the cause of the cracks so that this record can be referred to at a latter date if further damage occurs after repairs have been effected, and to monitor cracks that are deemed to not require repair at this time.
3. An order that within 30 days of the receipt of the engineering report stated above that, the Body Corporate provide a draft sinking fund budget derived from the above estimates for the Body Corporate to vote on.
4. Any other orders the adjudicator deems fit.
   

Submissions to the Commissioner
On 13 March 2009, the Commissioner provided a copy of the application to Archers Body Corporate Management (Body Corporate Manager) for distribution to the owner of each lot (excluding the Applicant) and the committee, with an invitation to respond to the matters raised in the application (s 243, Act). Submissions were made by the committee and a number of lot owners. The Applicant made a written reply to submissions (s 244, Act).

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

Jurisdiction
An adjudicator may make an order to resolve a dispute, in the context of a community titles scheme, about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act). An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s 276(2), Act). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (s 284(1), Act). The application was made within 3 months of the 2009 AGM satisfying the time limit for an application of this nature (s 242, Act).

Submissions

The Applicant
As a resident since 2001, he has become aware of the deteriorating condition of the scheme (Annexure I photographs depict the current condition of the scheme). For instance:

• Membranes in planter boxes have failed. Deterioration is foreseeable as the original membranes have been shown to be inadequate.
• In 2006, the Body Corporate had to maintain roof trusses in the Precinct B building. The cause of the problem was a combination of a design fault and a lack of preventative maintenance. It was financed by special contribution by lot owners which emphasises the need for preventative maintenance being included in a maintenance schedule.
• Given the age of the buildings and the current state of paintwork, the buildings will need to be painted within the next 10 years.
• A preliminary building report dated 4 April 2006 by Ray Griffiths, building and homebuyer services (Annexure M) relating to detaching render recommended immediate work because of the danger of falling render. Given this report, a survey is required of Precincts A and C to estimate the extent of the problem and there is no evidence that this has been done.
• In 2007 and 2008, the Precinct C underground car park flooded due to a break in a main drainage pipe and clogged sump pumps. Continued flooding may cause damage to the building. A lack of a planned and systematic approach to maintenance has contributed to this potentially costly situation.
  

During 2008, the committee attempted to develop a maintenance schedule without professional advice or assistance. On 24 October 2008, the Body Corporate Manager provided the maintenance schedule and record to be presented to an upcoming committee meeting. On 26 October 2008 he responded stating the schedule is not complete as the motion covers “buildings, grounds and associated equipment and facilities”, and the schedule does not seem to have been developed by a “competent engineer” when the resolution on Motion 18 at the 2008 AGM required the committee “engage a competent engineering firm to establish and maintain a documented maintenance schedule” (Annexure D).

He advised the committee at its January 2009 meeting that he had serious concerns with the budgeting process as it seemed that items were added or omitted on an ad hoc basis and without knowledge of current commitments. On 7 January 2009, he wrote to the Body Corporate about the condition of C block (Annexure F) outlining (in part) concerns about cracks in the car park slab; peeling paint, a broken/missing tile, a crack in brick work, and the condition of lawns. The committee disregarded this advice and 7 pages of various tables were included in the notice of the 2009 AGM without explanation and were not referenced to the budget motions or any other motions. There is no sign of an audit by a “competent engineer”.

He is concerned about the allowance of $200,000 for painting in the adopted sinking fund budget as the committee has not indicated that major painting works would take place in the 2008/09 financial year, and if this amount is spent it would deplete the sinking fund to such an extent that painting of the remaining blocks would be put off unless a special levy was raised. Painting should be planned rather than dealt with on an exceptional basis. By email dated 5 February 2009 to the Body Corporate Manager (Annexure G) he outlined his concerns about the painting allocation including: that if the $200,000 is to be spent, a motion should have been put to the 2009 AGM about the committee’s proposal (which block will be painted and when); it is unknown how much painting will cost and this should have been known before the budget was framed; and that his concerns are the prime reason he put the maintenance schedule motion to the 2008 AGM so that owners would know the true financial situation by this year and be aware of the anticipated costs so that a realistic budget could be framed. He did not obtain any clear answers to the concerns at the 2009 AGM.

The adopted sinking fund budget does not comply with section 137 of the Accommodation Module as it should cover 2008/09 and the following 9 years which cannot be substantiated as: the major expense of painting buildings will credibly fall within this time period; the committee does not have an accurate estimate of the painting cost and the cost of building repairs even though the need for this maintenance is substantial, expected and foreseeable; the evidence of building cracks and damage to rendering suggests there will need to be repair work carried out prior to painting; and the $200,000 reserve is unrealistic and will unacceptably deplete the sinking fund as there is no cost and time estimate to complete the repair and painting of all buildings. The committee has had ample time to raise a maintenance schedule that includes an accurate and audited estimate for painting all the buildings and repairs to structural cracking and render.

The committee
The 2009 committee has reviewed the sinking fund forecast and following receipt of the updated forecast, the committee will review the 2009 budget to determine whether a special levy is required, the budget is sufficient or the resolved levies require amendment. Until this time, funds will continue to come into the sinking fund. The committee is determining how best to implement a painting program, including doing painting in stages and costings.

The committee will resolve to engage an engineer to inspect and report on building cracking. The application goes further than the resolution passed on Motion 18; it requires engineers to inspect and report on other areas including drainage and electrical, and inspection of all parts of all buildings and without evidence of problems throughout the complex this appears to be more than required. A building inspection by a qualified person would appear to be sufficient to identify areas requiring attention and an engineer could then be engaged on specific items. The committee will resolve to appoint an engineer to audit the maintenance schedule. Maintaining the schedule will be addressed after the schedule is complete and it is resolved whether the same person will audit the schedule. Funds have been allowed for in the budget. An engineer is required to audit the schedule, not to raise the schedule. Once the committee has received both the engineering report and the updated sinking fund forecast, the committee will review the 2009 budget, which may or may not require calling an extraordinary general meeting.

The committee requests that costs be awarded against the Applicant.

Owners
Dr McGiffin, the owner of Lot 20 opposes the application.

Dr B and Mrs S McConkey, the owner of Lot 166 submits the committee should be instructed to carry out the resolutions passed at the 2008 AGM and the 2009 AGM and to establish a proper maintenance and inspection record. The owner states it appears the sinking fund forecast is out of date and if the maintenance program is inadequate, a replacement sinking fund budget should be prepared with professional input.

T and K Shearn for Lakeside Parts & Accessories Pty Ltd, the owner of Lot 207 submits that a special levy for additional unforeseen maintenance has been accepted by owners previously, individual opinions are not necessarily adopted by committees, and the resolutions at the 2009 AGM reflect the wishes of the majority of owners.

Reply to submissions
The committee’s submissions substantiate his claim the committee did not have an accurate estimate for painting and repairs at the time the 2008/09 budget was proposed. The committee has not provided any evidence they have established an accurate estimate of the sinking fund requirements. The application contains photographic evidence of substantial building defects that need to be inspected and repaired. Expert reports and quotes indicate that a thorough condition report on which to base future estimates for maintenance and associated costs is required.
The committee refer to “a qualified person”, yet do not provide any criteria about the professional discipline of the person which is not concise enough when dealing with issues and indicates an imprecise approach to managing the scheme and a potentially costly way of mitigating owners’ financial risk. The committee has had adequate time to address the issues regarding painting and building repairs and there is still not an adequate maintenance schedule that is professionally raised, implemented and audited as well as a complete and accurate maintenance record.

In response to T and K Shearn’s submissions; the previous special levy was due to unforeseen circumstances whereas the maintenance at issue is reasonably foreseen and should be accurately scheduled and estimated. Special levies should not be condoned as a substitute for poorly prepared budgets.

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, on 13 July 2009 I requested the Body Corporate Manager provide a copy of: the notice of the 2008 AGM; the minutes of the 2009 AGM; and the minutes of any committee meetings held since the 2009 AGM and a record of any committee resolution passed outside a committee meeting since the 2009 AGM. The Manager provided the requested documents on 14 July 2009, including the record of voting outside a committee meeting dated 1 April 2009, and the minutes of the committee meetings dated 29 April 2009 and 24 June 2009.

Decision
Overview
Given the outcomes sought, the Applicant argues the sinking fund budget adopted at the 2009 AGM should be discarded and that before another budget is considered, an engineer should: carry out the resolution passed on Motion 18 at the 2008 AGM; inspect and report on the condition of common property; make estimates on the basis of section 137 of the Accommodation Module; and establish a record of cracking. The Applicant believes the Body Corporate should consider another sinking fund budget based on the engineering report.

Applicable law
The Applicant has provided material which suggests the Body Corporate is not maintaining a part/s of common property in good condition. A body corporate must administer, manage and control the common property reasonably and for the benefit of lot owners (s 152(1)(a), Act). A body corporate must maintain common property in good condition (s 157(1), Accommodation Module).

To meet its obligations, a body corporate fixes contributions to be levied on lot owners. For each financial year, the body corporate must adopt an administrative fund budget and a sinking fund budget (s 137(1), Accommodation Module). “The administrative fund budget must contain estimates for the financial year of necessary and reasonable spending from the administrative fund to cover the cost of maintaining common property and body corporate assets; and the cost of insurance; and other expenditure of a recurrent nature” (s 137(2)(a), Accommodation Module). “The sinking fund budget must allow for raising a reasonable capital amount both to provide for necessary and reasonable spending from the sinking fund for the financial year, and also to reserve an appropriate proportional share of amounts necessary to be accumulated to meet anticipated major expenditure over at least the next 9 years after the financial year, having regard to anticipated expenditure of a capital or non-recurrent nature; and the periodic replacement of items of a major capital nature; and other expenditure that should reasonably be met from capital” (s 137(3)(a), Accommodation Module). If a liability arises for which no provision or inadequate provision has been made in a budget, the body corporate must resolve to fix a special contribution to be levied on each lot owner (s 139(2), Accommodation Module).

Motion 18 – 2008 AGM
The minutes of the 2008 AGM (Annexure B) indicate the Body Corporate passed Motion 18 by ordinary resolution: “That the Body Corporate committee...establish and maintain a documented maintenance schedule for the building, grounds, and associated equipment and facilities (including gymnasium and swimming pool). This schedule is to include, but not be restricted to:

• details all statutory and preventative maintenance and inspections
• details the item being maintained/inspected
• details the planned date of the maintenance/inspection
• details the expected cost of the maintenance/inspection
• details the current budgeted amount for the maintenance/inspection
• be audited and updated annually by a competent engineer, and

be tabled with the budget papers for each Annual General Meeting”.

The “committee must put into effect the lawful decisions of the body corporate” (s 101(2), Act). The result of voting on Motion 18 (61 to 11) signifies there was overwhelming support from owners for the proposition stated in the Motion. There is nothing to suggest the resolution passed on the Motion has been amended or revoked by a subsequent resolution (s 93, Accommodation Module), or that it been disputed under the dispute resolution provisions of the Act. Material has been presented demonstrating the action taken by the committee as a consequence of the resolution passed on Motion 18. For example, the committee considered the schedule at its meeting dated 6 January 2009 and various documents were included in the notice of the 2009 AGM.

While a timeframe is not stated in the resolution, I consider it was reasonable to expect it to be implemented by the 2009 AGM. No submissions have been made to indicate otherwise. While there is a difference of opinion about the scope of the documentation provided to owners at the 2009 AGM, it is evident a schedule was not tabled that had been audited or updated by an engineer. To this extent, I am satisfied the resolution on the Motion has not been implemented.

Rather than seek an outcome that the resolution on Motion 18 be implemented, the Applicant seeks the engagement of an engineer to (amongst other things) raise and maintain a schedule. The Applicant considers the schedule should have been professionally established. There is nothing in the resolution requiring the setting up of the schedule by an engineer. The resolution obligated the committee to establish and maintain the schedule; it did not direct the committee to engage an engineer. It was a matter for the committee to decide how the schedule was formulated and maintained provided the schedule contained (at least) details about the five matters listed in the resolution.

The question appears to be whether, in the circumstances, the schedule should now be established by an engineer. Given the context of the outcomes sought, it would seem the Applicant views the schedule as being relevant to the preparation of a sinking fund budget. I am not persuaded by material that this is the case.

The explanatory schedule accompanying the voting paper included an explanatory note for Motion 18 given by the Applicant stating: “To ensure that there is an explicit record of maintenance and inspections for statutory, cost control, insurance and other like purposes there needs to be a distinct record of the maintenance and inspections that have been carried out on The Cannery property, including buildings, grounds, equipment and associated facilities (including swimming pool and gymnasium). The Management, Caretaking and Letting Agreement details maintenance that is carried out by the on-site manager as well as assigning responsibility to the on-site manager for supervision of contractors undertaking maintenance and inspections. The Body Corporate Committee has also at times independently caused to have maintenance carried out under their direct supervision. Consequently, a proper and consolidated record of maintenance and inspections needs to be in place to assure the Body Corporate that the maintenance has been carried out by competent persons at a reasonable cost. Additionally, that the records can be reconciled with the planned maintenance schedule for The Cannery, and this planned schedule can be updated accordingly.”

Given the terms of the explanatory note and the resolution, I am not convinced the Body Corporate was obliged to do what is proposed in Outcome 2(a). While it would seem the schedule would record maintenance and inspections carried out, it does not necessarily require that scheme land, either generally or specifically, be inspected to the extent stated in the Outcome to determine maintenance requirements. The context of the explanatory note is that the schedule would record maintenance and inspections carried out.
In this regard, owners would be informed about the actual work completed. A schedule completed in the terms of the resolution may be a useful tool for considering past and future expenditure, and in this regard, it may be relevant to budget considerations. However, I do not consider any such use would be limited to preparing a sinking fund budget. It would seem the schedule would record periodic or recurrent maintenance more than non-recurrent maintenance. Periodic or recurrent maintenance would ordinarily be budgeted for in the administrative fund. The adopted budget for this fund is not being disputed.

I do not consider any material has been provided to suggest it was reasonable to expect the committee should have engaged an engineer to produce the documentation stated in the resolution. Neither do I consider it is now necessary in the circumstances that a person such as an engineer establish and maintain a schedule. Further, while a proper schedule may inform a committee preparing a budget and owners voting on budget motions, I do not consider it would have the argued significance to sinking fund budget preparation.

It has been submitted that funds have been allocated to contract an engineer to audit the schedule. The administrative budget for the 2008/09 year adopted at the 2009 AGM (Motion 5) would seem to have included provision for expenditure of $5,500 on ‘Maint Inspection Schedule/Records’. The minutes of the 29 April 2009 committee meeting note under: ‘Maintenance & Inspection Records’: “Maintenance and inspection reports have all been distributed to the committee”. While the resolution on Motion 18 has effect, the Body Corporate committee must make decisions to ensure the schedule contains the details stated in the resolution, is audited and updated by an engineer and tabled at each annual general meeting. Even though it would seem the committee is making decisions related to implementing the resolution, given the time which has lapsed since the 2008 AGM, I consider it appropriate to make an ancillary order requiring the implementation of the resolution passed on Motion 18.

The condition of common property and the resolution on Motion 7 at 2009 AGM
The Applicant refers to past incidents and existing maintenance concerns when explaining his doubts about the adequacy of the sinking fund budget adopted by the resolution passed on Motion 7 at the 2009 AGM. He has argued persuasively about foreseeable spending.

The committee must prepare proposed budgets for adoption at each annual general meeting (s 137(5), Accommodation Module). While the 6 January 2009 committee meeting comments on budget considerations, the committee has not provided any material to explain the analysis applied to prepare the sinking fund budget. It would seem the adopted budget provided for spending for the financial year. It is unclear if the budget also reserved amounts to be accumulated over at least the next 9 years. The objective basis for the preparation of the budget is uncertain.

There does not appear to be any correlation between the budgeted information in the statement of income and expenditure for the sinking fund included in the notice of the 2009 AGM and the information stated in the sinking fund forecast for the scheme dated 8 February 2006 prepared by Leary & Partners Pty Ltd (Annexure K). For example, for the 2008/09 year, the Body Corporate proposed to fix contributions totalling $204,930, expenditure of $324,444 and a closing balance of $499,943.50. In the year 2008/09, it would seem Leahy forecast contributions of $103,673, expected requirements of $487,160 and a fund balance of $61,865. Leahy forecast expenditure of $418,499 in the year to November 2009 to “Paint building façade”.

With respect to painting, I do not consider the committee has provided any explanation with the notice of the 2009 AGM or in this application for the inclusion of $220,000 as painting expenditure in the 2008/09 sinking fund budget. While the inclusion of this “item of expenditure in a budget adopted by the body corporate is not, of itself, authority for the expenditure” (s 137(7), Accommodation Module), an owner is entitled to note an unexplained budget item comprising over 60% of the financial year’s budgeted expenditure. Even though Leahy forecast painting in the current financial year, there would seem to be no indication that the proposal was included as a consequence of this recommendation.
The Applicant has rightly questioned the basis for the inclusion of this spending and given the subsequent considerations of the committee, it does not seem that the committee had a particular plan in mind when this item was included in the budget.

For these reasons, I tend to agree with the Applicant. He has outlined maintenance requirements within the time horizon of the 2008/09 sinking fund budget and has correctly referred to anticipated major expenditure which it would be reasonable to expect to be contemplated in a sinking fund budget. While I do not necessarily agree that all the maintenance issues mentioned by the Applicant would be met from the sinking fund, there would seem to be no basis for the adopted sinking fund budget being able to endure scrutiny. In this circumstance, the Body Corporate is open to claims the budget was prepared on an ad hoc basis. Given the absence of any evidence that the disputed budget was prepared in accordance with section 137(3)(a) of the Accommodation Module and given the Applicant’s submissions on this point, I consider there are questions about the adopted budget However, for the following reasons, I do not consider an order in the terms sought is warranted.

Firstly, as I have stated, I do not consider the resolution on Motion 18 at the 2008 AGM is relevant in the circumstances. Even if the audit aspect of the resolution had been satisfied, there is nothing in the resolution or the circumstances to suggest that any audit or update would have had an impact on the adopted sinking fund budget.

Secondly, I have considered the question of the maintenance of common property. The Applicant has provided material suggesting there are parts of common property not being maintained in good condition, and that a body corporate acting pursuant to section 137 would make allowances in budgets to proportion the costs to owners over time. As I have stated, I am not satisfied that each of the maintenance issues raised by the Applicant would ordinarily be met from the sinking fund. In addition, it is not apparent that maintenance is being unnecessarily delayed or not being completed as a consequence of inappropriate or inadequate budgeting. There is also a question as to whether an argued lack of maintenance warrants an order voiding the resolution to adopt the sinking fund budget. Further, it has not been shown that it is necessary or appropriate that the particular elements of scheme land stated in Outcome 2(a) be inspected by an engineer, that the Body Corporate has decided not to have such an inspection carried out, or that the expense is appropriate or necessary.

Thirdly, the committee has initiated action towards preparing a revised sinking fund forecast, a process involving considering maintenance issues raised by the Applicant:

• The minutes of the 2009 AGM indicate:
  • − That the Motion 7 resolution to adopt a sinking fund budget for the 2008/09 year included an allocation of $3,850 for ‘Sinking fund forecast’.
  • − Under General Business: “...cracking in C Block had recently become apparent. Action being taken and required was discussed, including engineers advice sought and required. Suggested that the Incoming Committee consider C Block including expediting action, and in addition to the current investigations into cracking in A Block.”
• The minutes of the 29 April 2009 committee meeting state under:
  • − ‘Resident Manager’s Report’ and ‘Cracks in slab’: “It was agreed that the matter be deferred until the QBM quote is clarified”; and under ‘Resident Manager’s Report’ and ‘Painting’: “It was reported that there is considerable painting that needs to be undertaken at the property...Two quotes have been obtained but it was determined to put the matter on hold until the QBM report is obtained”.
  • − Quality Building Management Quote’: “...contact QBM to confirm that the quote tabled at $3,700 plus GST incorporates a defect report with photos including a maintenance schedule. Once clarified a flying minute to be forwarded to all committee members for determination”.
  • − ‘Financial Report’: “Archers to obtain 2 alternative quotes (one from QBM) to obtain a new sinking fund forecast for consideration at the next committee meeting...”
• The minutes of the 24 June 2009 committee meeting state under:
  • − ‘Basement Flooding’: “...plumber inspected the area...Brisbane City Council...inspected the area. Advised that the sewerage pipes were all completely full and was a result of ingress of storm water into the system...Council advised that the pipe needs to be cleaned out and the terminated service be capped off to alleviate any further issues...Council will undertake for the Body Corporate...concerns regarding possible erosion...resident manager contact...original structural engineers...to obtain a quote to conduct an inspection and advise what remedial action is required...”
  • − ‘Building Maintenance Report’: “Resolved to accept quote from QBM to undertake building inspection report...”
  • − ‘Sinking Fund Forecast’: “Requested for quotes to compile a sinking fund forecast from QBM and Archers be forwarded to the committee for consideration on a flying minute for consideration and resolution.”
    

In these circumstances, I do not consider it necessary or appropriate to make an order in the terms of the first outcome or to compel the Body Corporate to do what is sought in the second and third outcomes. The committee has demonstrated it is progressing many of the issues raised by the Applicant. There is nothing to suggest this process will not properly deal with the identified maintenance and financial management issues, or that it would be appropriate to involve a person of the type sought by the Applicant. In my view, it is preferable if these management matters are dealt with internally unless it is clear that there are endemic and fundamental problems; something which I do not consider is apparent in the circumstances.

However, this approach needs to be balanced with factors such as compliance with the legislation and the time being taken to do things. A significant consideration is the views of owners expressed in by the vote on Motion 18 at the 2008 AGM. The Body Corporate should be on notice that owners are concerned about maintenance and that financial management is integral to planning for maintenance. As argued by the Applicant, the Body Corporate should budget for necessary and reasonable spending and for major expenditure. The committee has shown that it is doing things towards the preparation of a sinking fund forecast. This process should produce an informed budget proposal for owners to consider. It should also provide a basis for planning maintenance, particularly maintenance of a non-recurrent nature. It should be noted that if the Body Corporate fails to prepare and adopt proper budgets and/or fails to undertake a reasonable maintenance program, there may then be reason to appoint a person/s to perform obligations of the Body Corporate in a manner sought in this application.

The committee requested that costs be awarded against the Applicant. Under section 270(1)(c) of the Act, an adjudicator may dismiss an application if satisfied it is frivolous, vexatious, misconceived or without substance. If an application is dismissed on that basis, section 270(3) empowers an adjudicator to award costs incurred by the respondent in defending an application without merit. Costs may be awarded up to $2,000 against an applicant. I do not consider there is any basis in the circumstances warranting consideration of this issue. The Applicant has raised valid points. He is concerned about the current and future maintenance of the scheme, and about the financial management arrangements in place. The onus is on the Body Corporate to ensure that justifiable decisions are made in accord with the legislation.