Sunset Sails Apartments [2009] QBCCMCmr 4 (8 January 2009)

Last Updated: 19 February 2009

REFERENCE: 0441-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	29114
Name of Scheme:	Sunset Sails Apartments
Address of Scheme:	81 Marine Parade REDCLIFFE QLD 4020

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

Lachlan MacKenzie, a co-owner of lot 10

I hereby order that the application for orders that: The result of item 11 Painting and Replacement Awnings at the AGM of Sunset Sails Apartments to be overturned; and The result of item 12 Special Sinking Fund Levy at the AGM of Sunset Sails Apartments held on 16 May 2008 to be overturned; The quote from Marrvale Painting Contractors to be accepted by the Sunset Sails Apartments body corporate and work to commence immediately, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0441-2008

“Sunset Sails Apartments” CTS 29114

Application

This application is brought by Lachlan MacKenzie (applicant), a co-owner of lot 10, against the body corporate, seeking orders to have the results of voting on motions 11 (Painting and Replacement Awnings) and 12 (Special Sinking Fund Levy) at the AGM of 16 May 2008 overturned. He also seeks an order that Marrvale Painting Contractors be engaged by the body corporate to paint the building and that work in this regard commence immediately.

Motions 11 and 12 are recorded in the minutes of the AGM of 16 May 2008, as follows:

11. PAINTING AND REPLACEMENT AWNINGS: Resolved that the Body Corporate Committee be authorised to obtain quotations:
    1. To repaint the building with acrylic paint or with waterproof membrane in the period from June to August 2009, and
    2. For replacement awnings (or better quality/powder coated metal construction) for the building.

(ORDINARY RESOLUTION) Proposed by Mr R and Ms M Wood – Owners of Lot 4

5 YES 1 NO 0 ABSTAIN

12. SINKING FUND SPECIAL LEVY: Moved that a sinking fund special levy of $3,000.00 per lot be made in order to expedite any repairs and maintenance that are needed on the main building and other common areas. (ORDINARY RESOLUTION) Proposed by Mr S and Ms N Mackenzie – Owners of Lot 10.
    

Motion Failed 3 YES 3 NO 0 ABSTAIN

In his grounds, the applicant states that there have been problems with cracks and leaks to the building since it was first built, but very little has been done to rectify the problems. He notes that no action was taken soon enough for the Building Services Authority to intervene. He further states that no insurance company except the current one will offer any insurance on the building. The current building insurance policy no longer covers flooring and large excesses ($1,000 for all claims except water damage, where the excess is $5,000) are imposed on any claims made. The applicant has obtained five quotations for the repair and repainting of the building. Copies of quotations from Opat, Higgins, Ray Cox Painting Pty Ltd, Baker & Staff Pty Ltd and Marrvale (Qld) Pty Ltd were included with the application. He claims that the passing of motion 11 is a delaying tactic by the chairperson; that it is unnecessary to obtain any more quotes. The applicant wants the quotation supplied by Marrvale (dated 14 May 2008 in the amount of $49,864.00 excluding GST) accepted as they are the cheapest quote and their specifications, he states, are equal to the specifications of the more expensive quotes of the other companies who have tendered for the work. The applicant believes motion 12 should be declared passed to ensure that there are sufficient funds available to carry out the painting and repair work as per the Marrvale quotation. He also wants to make sure that there are sufficient funds available for any other work that may arise in the near future. By failing to repaint the building, the applicant, in effect, argues that the body corporate is failing to maintain the common property in good condition, at least in a timely fashion.

Jurisdiction

Sunset Sails Apartments Community Titles Scheme 29114 was registered as a building format plan of subdivision on 7 March 2001 comprising 10 lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Standard Module) Regulation 2008.

This is a dispute between an owner and the body corporate concerning an alleged contravention of the Act and comes within the dispute resolution provisions of the Act (see sections 226, 227 & 228).

Decision

Investigation and Submissions

Submissions

The committee and owners were given the opportunity to provide written submissions. The owner of lot 9 made submission to the effect that:

• There has been significant rainwater penetration through the outside walls, into the concrete block work, and ultimately to the inside of the building. The problem has been aggravated by removal of some of the external window awnings by the body corporate.
• The repairs (both replacing the awnings and waterproofing the outside of the building) should proceed as soon as possible and an appropriate levy should be raised.
  

The chairperson and co-owner of lot 4 made submission on behalf of the body corporate (the submission is signed by the owners of lots 1, 2, 3, 5, 7 and 8) to the following effect:

• The Marrvale Contract specifications are not equal to the specifications of the more expensive quotes. The data sheets provided with the Marrvale quote specify that the walls will be painted with two coats of Taubmans Armawall Armashield which the technical specifications indicate will dry at “80 – 100 micrometers (160-200 for the two coats), depending on profile”. By way of comparison, the quote received from Opat provides for one primer/sealer coat and two coats of Emerclad liquid applied membrane the final two coats of which dry to a total dry film thickness of approximately 350 microns.
• A simple paint job (as specified by Marrvale) will not necessarily assure an effective remedy for the water penetration problems.
• The decision as to which quote to repaint the building should be accepted is a decision that should be left to the majority of lot owners and not have the cheap or any particular option forced upon them through a dispute resolution process.
• In relation to the timing of the repainting, that too is a decision for the body corporate as a whole. The current damage does not fall into a significant structural category or represent any safety issue or danger. That is not to say that it doesn’t cause some inconvenience to some lot owners during rain events or that temporary repairs to particular problem areas couldn’t be arranged.
  

The chairperson later advised that on 8 August 2008 an EGM was held at which it was agreed that advice from a structural engineer would be sought in regard to the water ingress problems and that the majority of owners believed that that was an essential step in preparing the building for painting. Upon receipt of the engineer’s report and recommendations and based on their advice, a suitably qualified repairer will be engaged to attend to the necessary repair work and then it will be possible to accept a painting quote and raise the necessary levy to pay for the work.

The applicant exercised his right to inspect the submissions and replied to the submissions to the following effect:

• He disputes that the specifications of the products depicted in the Marrvale quote are inferior to that of other companies.
• In relation to obtaining an engineer’s report, the applicant states that “we have been down this road before”. An engineer’s report has previously been obtained and it would still be relevant today as most of the faults have been in existence since the complex was first built in 2001 including the paintwork, which was classed as too thin at the time. The cracks in the building occurred in the first year as the building settled according to building inspection reports that were done at the time.
• Various committee’s over the past 7 years have discussed the painting constantly and have always failed to reach agreement on getting it done. If the body corporate is told to accept the Marrvale Painting Contractor’s quote he is sure that the other problems will be sorted out at the same time. It just needs something to get the ball rolling.
  

Investigation

On 18 September 2008, I asked an administration officer to request from the chairperson a copy of the minutes of the EGM of 8 August 2008 and a copy of the Structural Engineer’s report pursuant to the inspection which was scheduled to take place on 15 August 2008. This information was requested by phone on 19 September 2008. The chairperson responded by email dated 19 September 2008, attaching a copy of the minutes requested and advising that an engineer’s report had not yet been obtained, but providing a copy of his “Engineering Report Update” dated 13 September 2008, and given to all owners. He further advised that no “waterproofing” maintenance work had been undertaken in the meantime.

Given that the body corporate was in the process of arranging for an engineering report in relation to the water penetration issues, I considered it prudent to await the report results before proceeding to determine the dispute. I was interested to know whether the Engineering Report might identify any repairs that should be undertaken before the building is repainted, in order for the repainting to be of any value. Both parties were notified, on 22 September 2008, that I had requested that the chairperson keep me informed of progress in relation to the matter, including by sending to the office the minutes of any committee or general meetings.

Since then, various correspondence has been sent to the office, including the following which I considered to be pertinent to the dispute:

• A copy of an email dated 25 September 2008 sent to all owners advising them of the current position in relation to the waterproofing problems/repainting/awning replacement and suggesting a number of motions to be put to an EGM with a view to arranging an Engineering Inspection and Report to progress the matter. A document containing a unit by unit list of water problems was attached and owners were asked to check the list to ensure that any problems associated with their unit appeared on the list as the list would form the basis for any discussions with any engineer engaged by the body corporate.
• A copy of a Notice of an EGM, scheduled for 24 October 2008, containing a motion with three alternatives to engage an Engineer to inspect and report on the water penetration problems with the building.
• A copy of the minutes of the EGM held on 24 October 2008, where 8 of the 10 owners (including the applicant) voted to engage Strata Engineering Solutions for a maximum amount of $2,640 including GST to inspect the building and provide a report on the water penetration problems.
• A copy of the Engineering Report dated 24 November 2008, detailing the results of an inspection undertaken on 18 November 2008.
• An email dated 30 November 2008 from the chairperson that stated that the report did not identify any major structural defects which would require urgent and immediate remedial action and has recommended further invasive investigation to accessible areas in the short term and to inaccessible areas at the time of repainting the building. He stated that lot owners would consider the report and where to go from here. He also stated that the body corporate was still seeking information about replacement awnings from potential suppliers.
• An email dated 7 December 2008 from the applicant stating that it was his belief that “it is more than time that some decision was made”; that the Engineer’s Report was a total waste of money; that he has no objections to having new awnings but that has nothing to do with his dispute application which is simply to have Marrvale Painting Contractors paint the building and raise a levy to help pay for same; that he has no objections if the body corporate as a whole wishes to employ some other painting contractor like Opat, or if they have new awnings at the same time; and that he would like me to order that the body corporate sign a contract on or before 14 January 2009 to have the building painted by any contractor of their choice.
  

I regarded the information contained in the applicant’s email of 7 December 2008, as new information, particularly in so far as it related to his willingness for the body corporate to engage a contractor other than Marrvale. For this reason, I requested that a copy of the applicant’s email be sent to the body corporate and asked for its submission in response to it, by 24 December 2008.

The chairperson responded by email on 16 December 2008 to the following effect:

• The body corporate has been seeking quotes for replacement awnings for the building. In the past couple of weeks, four individual quotes have been obtained. At this stage, the preferred position of owners is to remove all of the awnings prior to painting the building, although the formal decision is one for a properly convened meeting.
• The body corporate has been seeking quotes to repair water damage which will not be addressed as part of the building repainting process. One quote has been sourced to date. When some options have been assembled, some options will be put to an EGM for a decision on which course of action to implement.
• Some work has been carried out to remedy some water leaking problems in the building (focussing on the more urgent and accessible problems which will not be addressed as part of the painting process) and at this time, the work seems to have been successful.
• It has always been the intention of the body corporate to have the building painted as soon as all the necessary preparation work had been carried out. Painting quotes were initially sought in mid 2007. The purpose of doing so was to assemble information on costs rather than an intention to immediately repaint the building. In March 2008, the body corporate became aware of the “waterproof membrane” option and the earlier quotes were updated to cover this product. At that time, a tentative target date for the painting was advised as May – August 2009 and all lot owners were aware of this. Since that time (EGM 8 August 2008) lot owners decided that repair work (replacement of awnings and waterproofing the outside of the building) should commence, if possible, in 2008, before the next summer rains. This hasn’t happened because of the time it took to obtain the Engineer’s Report.
• In informal discussions with the Engineer while he was on site, he was told that high temperatures, wet conditions and/or periods of high winds were less than optimal conditions for repainting the building – which they interpreted as April/May 2009 being the next favourable time for the job.
• On 16 December 2008, Opat Painting representatives attended the building to discuss the recent Engineer’s Report and other issues of concern with owners. They confirmed that high temperatures, wet conditions and/or periods of high winds were less than optimal conditions for repainting the building and suggested April/May as a better than average time for the work. They also advised that the earliest that they could commence work is March 2009.
  

Two owners wrote separately in support of the chairperson’s response to the applicant’s email of 7 December 2008.

The applicant replied to the chairperson’s email of 16 December 2008, by email on 17 December 2008, wondering why Marrvale Painting Contractors and Higgins couldn’t also be asked to quote, using Emerclad, or a similar product. The applicant set out to do this. Higgins have emailed the office with a quote.

Just before Christmas, Opat representatives were on site to answer any questions owners had about the work now proposed. On 3 January 2009, the chairperson emailed the office with four proposed motions to be considered at an EGM in late January 2009. Those four motions deal with expenditure approval for repairs to the building, removal of the building awnings, expenditure approval for repairs to and repainting of the building, and the raising of a special sinking fund levy.

Issues for determination

Applicable law

The present Standard Module commenced on 30 August 2008, replacing the previous Standard Module Regulation that operated from August 1997 (Previous Module) and references will be made to the present Standard Module or the Previous Module as relevant.

Anything done under the Previous Module will not generally be affected by the commencement of the present Standard Module (Acts Interpretation Act, 20). Further, a number of provisions of the Standard Module are the same, or substantially the same as provisions in the Previous Module despite the provisions having different section numbers and these provisions are generally to be dealt with as replacements of the similar provisions of the repealed legislation (Standard Module 209-216).

Legislation relevant to the present dispute has provisions to the effect that:

• The body corporate must maintain common property in good condition (Section 159 Standard Module; 109, Previous Module);
• In a building format plan, the body corporate must maintain in good condition (Section 159(2), Standard Module; 109(2) Previous Module):
  • Railings, parapets, and balustrades on the boundary of a lot and common property; and
  • Doors, windows and associated fittings situated in a boundary wall separating a lot from common property; and
  • Roofing membranes that are not common property but that provide protection for lots or common property.
• The owner of a lot must maintain his or her lot in good condition (Section 170 Standard Module; 120, Previous Module).
• If a motion to be moved at a general meeting of the body corporate proposes the carrying out of work, the cost of which is more than the relevant limit for major spending, the owner of each lot must be given copies of at least two quotations for carrying out the work. Such a motion must be stated as a motion with alternatives (Section 152 Standard Module; 104 Previous Module).
• The relevant limit for major spending in this scheme is $11,000 (Dictionary Standard Module).
• If a liability arises for which inadequate provision has been made in the budget, the body corporate must, by ordinary resolution, fix a special contribution (Section 141 Standard Module; 95 Previous Module).
  

Maintenance Obligation

As a matter of law, the applicant’s grounds appear to me to be somewhat misconceived. The basis of the application would seem to be that the body corporate is failing in its legislative obligation to maintain common property and various other elements of the scheme, in good condition, at least in a timely fashion. However, I do not believe this is the case.

The body corporate did pass motion 11 at the EGM of 16 May 2008, which authorised the obtaining of quotes for the repainting of the building and the replacement of awnings. The applicant seeks an order to overturn that resolution and presumably prevent the body corporate from obtaining any quotes in relation to these matters. Instead, the applicant seeks an order that a particular contractor be appointed to repaint the building, without having ever had that quotation considered in the forum of a general meeting, and for the funds necessary to undertake work pursuant to that quote, to be raised and that this should all happen now (or back in May when the application was first lodged). In his email of 7 December 2008, the applicant relinquishes his request for a particular contractor, stating that he has no objections if the body corporate as a whole wishes to employ some other painting contractor like Opat, or if they have new awnings at the same time but that he would like me to order that the body corporate sign a contract on or before 14 January 2009 to have the building painted by any contractor of their choice.

I am not prepared to order in the terms sought by the applicant. Since this application was lodged in late May 2008, the body corporate has been working towards the very outcome the applicant now seeks. I see no reason, at this late stage with an EGM planned within the next three weeks, to order the body corporate to engage a contractor to do the repainting by some artificially imposed time frame. As the owner of lot 5 commented when supporting the chairperson’s response to the applicant’s email of 7 December 2008, “We most certainly do not want to rush into a decision that will be costly to us all and does not resolve all three areas (repair work, repainting and awning removal/replacement), which need access with scaffolding to be effected.”

The decisions as to which painting contractor to engage, the scope of work to be undertaken, and funding the work are ones which should be made in general meeting. The applicant is free to submit his own motions to a general meeting, if he wishes owners to vote on options other than those the committee is now considering.

I had asked an administrative officer to call the chairperson to ask that the calling of the EGM be deferred until after this order was issued. I had wanted the body corporate to be aware of this decision and the reasons for it prior to the Notice of Meeting going out. I have just been made aware that an EGM has been scheduled for 29 January 2009 and that the Notice of Meeting has been prepared and issued. If this EGM does not result in an outcome satisfactory to the applicant, he is at liberty to make further application to this office in due course.

Order

The applicant has not satisfied me that it would be just and equitable in the circumstances to grant any of the orders sought. In particular, the applicant has not provided me with evidence that satisfies me that the body corporate is failing in its legislative obligation to maintain the common property or other elements of the scheme for which it is responsible, in good condition in a timely way.

For these reasons, the application is dismissed.

Other Information

I am aware that a few emails have been received from owners within the scheme regarding the respective obligations of the body corporate and owners with respect to maintenance of certain specific areas of the building. I have included a copy of the office’s “Maintenance” Fact Sheet which should clear up any confusion in relation to this issue. I draw owners’ attention to the information under “Building format plans”, especially on page 2 in relation to Diagram 2.