Seychelles on Main Beach [2010] QBCCMCmr 12 (8 January 2010)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Stephen and Liz Lazarakis, the owner of Lot 4

I hereby order that the application for an order by Stephen and Lisa Lazarakis, the owner of Lot 4 against the body corporate for Seychelles on Main Beach community titles scheme 16978 seeking a determination on:

(a) whether the Body Corporate can recover costs from unit owners whose units are not affected by the water damage to other unit owner's property; if costs are recoverable from unit owners whose units are not affected by water damage, has the levy been struck in a fair and equitable way; and/or
(b) whether the Committee has exhausted all avenues of recovering costs prior to invoking the special levy; the Body Corporate has used its best endeavours to recover costs from any insurance policies in place; the Body Corporate has expended all other Body Corporate funds so as to minimise extra costs to individual unit owners; the Body Corporate has investigated the possibility of recovering costs from persons who have caused or contributed to the damage.

is dismissed.

The scheme
“Seychelles on Main Beach” community titles scheme 16978 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).

Application
This application dated 8 July 2009 is by Stephen and Lisa Lazarakis, the owner of Lot 4 (Applicants) against the Body Corporate seeking a determination on:

Interim order
The Applicants referred to the Extraordinary General Meeting that was, at the time of making the application, scheduled to be held on 9 July 2009 (EGM). The Applicants sought interim orders that either: the Body Corporate be prevented from voting on Motion 2 at the EGM; or alternatively, that the Body Corporate be prevented from acting upon a resolution passed on Motion 2.

Motion 2 related to building drainage, waterproofing and repairs and was stated on the voting paper as a motion with alternatives. The Motion proposed: “That the Body Corporate undertake repairs to the drainage, waterproofing and repairs to eliminate water ingress to the building”. The first alternative proposed engaging GK Consulting Engineers Pty Ltd (GK) and Ray Jennings Builders to undertake repairs to the building and proposed fixing a special contribution to fund the work. The second alternative proposed engaging GK and Bensco Builders to undertake repairs to the building and proposed fixing a special contribution to fund the work.

The committee made submissions on 13 July that Motion 2 was passed by ordinary resolution. On 15 July, I made an interim order that pending a final determination of this application the Body Corporate shall not proceed with or implement the resolution passed on Motion 2. I stated (at pages 1 to 4 of the statement of reasons):

“The voting paper references an explanatory note, an engineer’s report, tender specifications, quotes and levy breakdown.

The Explanatory Note states: “The Body Corporate committee engaged GK...for a report on the water ingress to the building and to project manage the external repairs. The Body Corporate must initially raise a special levy for the repairs to the drainage and membranes. Once this work is completed the Body Corporate will need to raise a special levy for the anticipated shortfall of internal water damage repairs to lots based on an anticipated shortfall between the costs of repairs and any money recoverable from an insurance claim.”

The Applicants included a copy of a ‘Report on Water Penetration at Seychelles on Main Beach Units 9, 11, 12, 14, 15, 16, 17 and 18’ dated March 2009 prepared by GK which was commissioned (in part) to identify the cause of water penetration to the identified lots (page 3)...

“The plan of subdivision for the scheme (BUP 102738) was registered by the registrar of titles under the then applicable Building Units and Group Titles Act 1980. When the Act commenced in 1997, a building units plan was taken to be building format plan of subdivision under the Land Title Act 1994 (LTA) (s331(2), Act). “A building format plan of survey defines land using the structural elements of a building, including, for example, floors, walls and ceilings” (s 48C(1), LTA).

Structural element includes “floors, walls and ceilings (s 48C(2), LTA). “Except to the extent permitted under a direction given by the registrar...the boundary of a lot created under the plan, and separated from another lot or common property by a floor, wall or ceiling, must be located at the centre of the floor, wall or ceiling” (s 49C(4), LTA).

It would seem from the information on the plan that there are balconies included in Lots 9, 11, 12, 14, 15, 16, 17 and 18. Given the requirements of the LTA, the vertical boundary between a balcony on a lot and another lot or common property is the centre of the floor. In this circumstance, the floor of a balcony shown on the plan as part of a lot is within that lot. A lot owner must maintain the lot in good condition (s 170(2), Standard Module). While a body corporate is primarily obligated to maintain common property in good condition (s 159(1), Standard Module), in the case of lots created under a building format plan of subdivision, a body corporate has specific maintenance obligations about certain parts of scheme land that are not common property.

In making the decision to approve work, it would seem the Body Corporate relied on one such provision; section 159(2)(a)(iii) of the Standard Module which provides: “To the extent that lots included in the community titles scheme are created under a building format plan of subdivision, the body corporate must maintain in good condition roofing membranes that are not common property but that provide protection for lots or common property.”

The Applicants have questioned the application of section 159(2)(a)(iii) in the event that a membrane had not been applied on a balcony of a lot. GK has commented on the possibility that membranes were not laid on balconies of the abovementioned lots. However, there does not appear to be conclusive evidence on this point, including from GK. I note the GK “inspection carried out was visual and non-destructive”: page 4. Whether the extent of the inspection limited the ability of the engineer to make a finding is uncertain. It may be that more extensive investigation, such as doing excavation work, was not appropriate given the scope of the inspection.

It would seem the Body Corporate approved work in the absence of any finding about the existence of membranes on balconies. It may be the Body Corporate considers the existence of a membrane to be irrelevant in determining its obligations under section 159(2)(a)(iii)...

In Klinger & Anor v Body Corporate for Costa D’Ora Apartments [2007] QDC 300, Searles DCJ gave consideration to the question of roofing membranes, roofing structures and essential supporting framework applying section 109(2)(a) and (b) of the now repealed Body Corporate and Community Management (Standard Module) Regulation 1997. These provisions are equivalent to section 159(2)(a)(iii) and (b). Under section 159(2)(b) of the Standard Module: “the body corporate must maintain the following elements of scheme land that are not common property in a structurally sound condition—foundation structures; roofing structures providing protection; essential supporting framework, including load-bearing walls.” In Klinger, the subject building comprised five storeys, with the relevant lot being on the top two storeys, having one upper balcony which formed “part of the roof of the downstairs living area and balcony” [3 and 4]. In this appeal against an order made by an adjudicator (Costa D'Ora Apartments [2006] QBCCMCmr 621 (27 November 2006)) it was not disputed that waterproofing membranes on the owner’s balconies were roofing membranes, that the balconies were roofing structures providing protection or alternatively, essential supporting framework [28 and 29].”

Submissions to the Commissioner
On 20 July, the Commissioner provided a copy of the application to the Body Corporate for distribution to the owner of each lot (excluding the Applicants) and the committee, with an invitation to respond to the matters raised in the application (s 243, Act).

The Applicants subsequently provided further material regarding the application. On 4 August, the Commissioner informed McCullough Robertson Lawyers (solicitors for the Applicants) the Applicants had the onus of distributing this material and extended the time for making written submissions. On 6 August, the Commissioner was given a statutory declaration stating that the material had been sent to all lot owners.

Adjudication
On 18 September, a dispute resolution recommendation was made under section 248 of the Act referring the dispute to departmental adjudication.

Jurisdiction
An adjudicator may make an order to resolve a dispute 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).

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, on 9 December, I asked Active Bodycorp Management (Body Corporate Manager) to provide a copy of the minutes of the EGM. The requested document provided on the same day confirms that Motion 2 was passed by ordinary resolution and that Option A was the preferred alternative.

They provided copies of minutes of meetings and correspondence between 1996 and 1999 which they say relates to building defects from the original construction. The Applicants also provided a copy of minutes of meetings, reports, correspondence and financial statements they say highlight that water penetration issues and damage have been evident for a number of years; that there have been ongoing renovations carried out; numerous reports have been commissioned in relation to the water penetration issues; and a spa bath and extra layer of tiles installed in Lot 16 may have caused leaking of water onto levels below.

The Applicants provided a copy of a report prepared by GK and dated January 2008: to identify the cause of water penetration to the Lots 11, 14, 15 and 16; to determine the degree and extent of water penetration to these lots; and to determine the most appropriate method of repair for the observed defects (page 3). Relevantly, GK observed (at page 6) that the balcony of Unit 16 had been retiled, the perimeter of the second tile layer had not been sealed allowing water to seep and penetrate to the unit below, and the second layer has blocked a part of the balcony spitter. GK stated (at page 9): “The sealant to the tiling on the inspected balconies is either in a poor condition or has not been applied. Over a period of ten years it can be expected that sealants will deteriorate...Deterioration of the sealant to tiles and windows is likely to be a condition common to all balconies, particularly those on the south-eastern facades, and will be an ongoing maintenance issue.”

The Applicants provided a copy of the notice of the EGM. As I indicated in the interim order, the voting paper accompanying the notice referred to an explanatory note, an engineer’s report, tender specifications, quotes and levy breakdown. I referred to the Explanatory Note in the statement of reasons for making the interim order (see page 1). The Note referred to the chairman’s report. The report to owners from Sue Curtis (Chair) stated the meeting was called “to deal with water penetration issues...a consulting engineer completed a thorough investigation and report on methods to alleviate the problems...I urge you to take this matter seriously, and respond to the motions put forward for the EGM.”

The notice of meeting included a copy of the March 2009 report prepared by GK. With respect to Lot 14, GK stated the main areas of water penetration are below the balcony of Unit 16. GK observed: ponding, partially blocked spitters and deterioration of sealant on balconies of Lot 16; ponding and one spitter set above top of tiles on a balcony of Lot 17; and ponding, mould growth and deterioration of sealant on balconies of Lot 18. GK found at page 20 that: “Water is penetrating mainly along the perimeter areas of the building. Balconies...over an enclosed area must have a waterproof membrane below the tile bed. It is possible that a membrane was not laid to the balconies of Units 18 and 16 that sit over the lounge of Unit 18 and study areas of Units 14 and 15. If a membrane was laid, it is clear that it is no longer effective in preventing water penetration along the joins of the concrete slab....Many of the balconies are not graded to encourage water to flow readily to the spitters. The north west balcony of Unit 16 is concave and water ponds...before it drains from the spitters. All other balconies inspected had areas of ponding along the wall and/or upstand joint. Several balconies had areas of ponding close to the drain grates or spitters. Many spitters are either raised above the level of tiling or are partially blocked by tiling...preventing water from draining quickly from the balconies. The spitters on the balconies of the upper six floors drain onto the balconies of units below. This increases the amount of water which each balcony has to drain and places pressure on the tiles where the water falls, deteriorating the grout and sealant...The sealant to windows has deteriorated and is allowing water to penetrate.” At page 21, GK recommended: applying a waterproof membrane on balconies; the Body Corporate ascertaining if appropriate building permits were obtained for the enclosures on Lot 16; altering spitters to avoid water flow onto balconies below; and that the gradient of the tile bed must direct water to the spitters without ponding.

In the specification for works, GK said: “The roofs/balconies outside Units 18, 17, 16, 13 and 12 have enclosed rooms below and therefore are deemed to be roofs...The roof areas have a tile bed that is laid to the completely wrong levels causing severe flooding and ponding on the roofs leading to slow drainage and water ponding until it reaches spitter height. The resultant ponding remains until it evaporates or leaks into the unit below. As all units below balcony roofs show substantial water entry and damage and it must be assumed that the waterproof membrane has failed or was inadequate in the first place.”

The Applicants provided a copy of a letter dated 2 July 2009 from the Body Corporate Manager stating “The committee has referred to section 159(2)(iii) of the...Standard Module.” This letter would appear to be in response to a letter dated 25 June 2009 from McCullough Robertson acting for the Applicants stating the balconies are not common property and should be the responsibility of the lot owners affected, not the Body Corporate.

Submissions
Applicants’ submissions
The Applicants submit section 159(2)(a)(iii) presupposes the existence of a roofing membrane; given the GK report it is possible that a roofing membrane was not laid; and the Body Corporate’s obligation should be limited to instances where roofing membranes are installed. In referring to section 159(4) of the Standard Module, the Applicants state that in the event there is a finding that the Body Corporate should incur costs in relation to the repair and/or installation of the roofing membrane, the Body Corporate should provide evidence that it has investigated the possibility of recovering costs from owners or third parties who have caused or contributed to the water damage. The Applicants argue the special contribution should not be acted upon until the Body Corporate provides evidence it has done this. In this regard, the Applicants refer to statements made by GK at pages 15 and 21 of the March 2009 report about the enclosure on Unit 16. The Applicants say they are concerned that works may have been undertaken by owners which have contributed to or caused the damage. The Applicants state it is understood water penetration issues have been apparent for a number of years. They say if this is the case, it is not understood why the issues have not been resolved previously. The Applicants are concerned that anticipated future levies may be raised as a consequence of the first special levy which is not an appropriate Body Corporate expense.

In the further material, the Applicants stated they would like consideration to be as to whether there has been any negligence on the part of the Body Corporate or the Body Corporate Manager in relation to the expenditure of funds. The Applicants express concern about damage caused to the building evident to the Body Corporate and the Body Corporate Manager for a number of years; ongoing renovations have occurred at a substantial cost to the Body Corporate; and despite some renovations, water penetration issues are still existent. The Applicants believe the Body Corporate should, prior to fixing a special contribution, exhaust all avenues against the original builder and also against any defective work that has resulted from the renovations works conducted by Boutique Renovations Pty Ltd and any other contractors that were engaged by the Body Corporate. The Applicants make reference to the statements in page 6 of the March 2009 report that Unit 16’s balcony has been retiled over the existing tile layer, the perimeter of the second layer has not been sealed, and the second layer of tiles has blocked the lower section of the balcony spitter. The Applicants are concerned the owner of Lot 16 may have installed a spa and an additional level of tiles without the appropriate approvals.

Owner’s submissions
The owner of Lot 6 opposes the proposed levy submitting the balconies are not common property and some of the affected units may have had renovations done (such as retiling, the installation of spa tubs, balconies made into rooms and downpipes redirected) which aggravated or created the leaking issue.

The owner of Lot 11 submitted his expertise and qualifications to make comment stating there are specific Australian Standards for external waterproofing, and he does not believe a membrane was not laid on balconies given the professional liability of the scheme’s designers, the investment of the scheme’s developer and the possible costs to the builder to rectify defects. The owner stated the Body Corporate Manager has confirmed that prior to this problem developing there were no records in the minutes of previous general meetings of any balconies leaking. He submitted it is more than likely the case that the leaking balconies are a result of the deterioration of the waterproof membrane; the fact many spitters are either raised above the level of the tiling or partially blocked by tiling; if the spitters of the upper floors balconies drain onto the balconies of the units below, this would only compound the problem; and ponding of water would ultimately cause water penetration to occur. The owner said section 159(2)(a)(iii) of the Standard Module is a fair reason for approving the works.

The owner of Lot 14 submitted almost the entire living area of the Lot is located under the balcony of Lot 16; leaks in the study and lounge area first occurred in 2006; the committee had an engineer identify the probable area of the deck above the study where the water was coming from and repairs were undertaken; and the leaks in the study/bedroom returned in November 2008. The owner says they are entitled to a waterproof roof and it is the Body Corporate’s responsibility to maintain its waterproof status; what element is more integral to the structural soundness of a roof providing protection than its ability to protect against water ingress; section 159(2)(iii) and (2)(b) make the Body Corporate’s responsibility to maintain a waterproof roof abundantly clear and the existence or non-existence of a waterproof membrane or coating beneath the tile bed is irrelevant. They submit it will not be known whether a waterproof membrane has been applied until the tiles are lifted; arguments about the existence of a membrane are irrelevant as the issue is about a waterproof roof, not just a waterproof membrane. The owner objects to the use of sinking fund monies on this maintenance item saying this fund is for long term programmable replacements and major repair items.

Applicants’ reply to submissions
With respect to the submissions by the owner of Lot 11, the Applicants replied: assertions as to standard building practices are not evidence of the application of those practices; and it is the responsibility of each owner to keep and clear any blocked spitters and part of the Body Corporate inspection procedure which furthers the claim that some owners of the affected units have caused or contributed to the water damage to the affected units and should be pursued for payment of costs rather than implementing a special levy. The Applicants submitted the ability to maintain the membrane presupposes a roofing membrane exists which may not be the case. They say section 159(2)(b)(ii) of the Standard Module is of no application to the facts as the issue relates to a roofing membrane and not a structure, the distinction is made evident by 159(2)(a)(iii); a substantial portion of the proposed works is not maintenance and does not fall within the scope of the Body Corporate’s obligation under 159(2)(a)(iii); and this provision does not apply to the facts which are distinguished from Klinger as the existence of the membrane was not in question and there were no owner’s works contributing to the problem.

In response to the submissions by the owner of Lot 14, the Applicants submitted the works to enclose the balcony of Lot 16 may have caused or contributed to the damage; avenues of recourse against contractors should be investigated and there is no evidence from the Body Corporate that this has occurred; the position is settled under case law as to the difference between maintenance and improvements (Fox Nineteen [2008] QBCCMCmr and Figtree [2007] QBCCMCmr 167); and section 148(1) of the Standard Module provides the sinking fund may be properly used for this purpose.

Applicable law
“The regulation module...may impose obligations about the condition in which lots...must be maintained” (s 160, Act). “The owner of a lot...must maintain the lot in good condition” (s 170(2), Standard Module). This obligation “does not apply to a part of the lot the body corporate is required under this regulation to maintain in good condition” (s 170(3), Standard Module).

“The body corporate...must administer, manage and control the common property...reasonably and for the benefit of lot owners” (s 152(1)(a), Act). “The body corporate must maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition” (s 159(1), Standard Module). Section 159(2) provides that “To the extent that lots included in the community titles scheme are created under a building format plan of subdivision, the body corporate must—

(i) railings, parapets and balustrades on (whether precisely, or for all practical purposes) the boundary of a lot and common property; and

(ii) doors, windows and associated fittings situated in a boundary wall separating a lot from common property; and

(iii) roofing membranes that are not common property but that provide protection for lots or common property; and

(b) maintain the following elements of scheme land that are not common property in a structurally sound condition—

Decision
Motion 2 at the EGM
While the Applicants did not seek a specific final outcome with respect to the resolution passed on Motion 2 at the EGM, given the outcomes sought and the interim order sought, I consider the resolution passed is significant in the determination of this application against the Body Corporate.

The Applicants have expressed concern about damage which they claim has been evident for a number of years. In my view, the minutes of meetings and correspondence between 1996 and 1999 are not relevant to this dispute. There is nothing to suggest that the issues referenced in the minutes of meetings in the early 2000s have been identified by GK in 2009 as still to be resolved or that these issues are relevant to the consideration of Motion 2. I also note the statements made at page 9 of the January 2008 report prepared by GK with respect to the deterioration of sealants over time (see page 4). It is noted that the chairperson’s February 2008 letter post-dated this report and that work was carried out in early 2008. While it would seem this work was ineffective, there is nothing to suggest the Body Corporate did not respond in a proper manner to the problems identified by GK. The Body Corporate noted continuing problems at the 2008 AGM. It is evident that GK was engaged in 2009 because of water penetration to Lots 9, 11, 12 and 14 to 18, and that the EGM was held for the specific purpose of considering approving work recommended by GK.

The specification of works prepared by GK summarises the defects to be rectified. I am satisfied from the material that Motion 2 was proposed on the basis of the recommendations by GK, and that the Body Corporate proposed work to the lots mentioned in the report to be project managed by GK. It is not argued that the scope of the approved work is not necessary or that this work will not be effective in remedying the identified defects. Further, in the absence of submissions to the contrary, I have accepted GK as a person with the necessary qualifications and expertise to make findings about the condition of the balconies. I am also satisfied the Body Corporate provided owners with adequate material to consider Motion 2. There is nothing to suggest this material was in some way misleading, or that owners had not been appropriately informed of the scope of work being contemplated.

Is a balcony a roofing structure or essential supporting framework?
The Applicants raise a question as to whether, given GK’s findings, the Body Corporate is obliged to carry out the work the subject of the Motion.

As I indicated in the interim order, the floors of the balconies inspected by GK are part of lots. Generally, a lot owner must maintain a part of a balcony within the person’s lot in good condition and the Body Corporate must maintain that part of the balcony that is common property. As the lots included in this scheme are created under a building format plan of subdivision, the Body Corporate has additional obligations. Relevantly, the Body Corporate has obligations pursuant to section 159(2)(a)(iii) and (b) of the Standard Module.

The Body Corporate must maintain roofing structures providing protection and essential supporting framework that are not common property in a structurally sound condition (s 159(2)(b), Standard Module). Given the decision in Klinger [paragraphs 3, 4, 28 and 29], I am satisfied each balcony to which repairs were approved by the resolution passed on Motion 2 is a roofing structure providing protection or alternatively, is essential supporting framework. The Body Corporate has a duty to maintain these balconies in a structurally sound condition.

In Klinger [at 62], Searles DCJ referred to statements made to the Commissioner before the appealed adjudicator’s order was made: “That there was an existing structural defect in that the balconies sloped back towards the lot...which had the effect of allowing water flow towards the habitable areas with consequent pooling of water. This in turn caused a water bubble under the tiles, lifting and breaking them, causing further instability on the balcony...The combination in effect of the water pooling and the degradation of the membrane on both balconies was the cause of all the damage”. At paras 65-67, the Judge stated: “In the absence of any evidence to the contrary, it seems to be plain to me that...work...was necessary to...address the structural issue of the wrongly sloping balcony and the defective membrane on each balcony...The Body Corporate...was in breach of its statutory duty pursuant to Standard Module s 109(2)(a)(i) to maintain in good condition the balcony parapets, balcony railings and balustrades and the waterproofing membranes. Finally the inactivity on the part of the Body Corporate placed it in breach of its statutory duty to keep the floor of the...balconies in a structurally sound condition in breach of Standard Module s 109(2)(b). The statutory duty imposed on the Body Corporate in relation to the above matter is one which obliges it to remedy any defect as soon as any of the building parts covered by the duty fall into disrepair or were not operating properly. Failure to do so, once aware, gave rise to a breach of its duty. See Seiwa Pty Ltd v Owners, Strata Plan 35042 (2006) NSWSC 1157 at paras 4-6...”

Given these statements, I am of the view the issues identified by GK about the gradient of balconies and the spitters are structural in nature and a Body Corporate responsibility under section 159(2)(b). In this regard, I am satisfied the elements of scheme land that are not common property that are contemplated by the resolution passed on Motion 2 are not in a structurally sound condition for resisting water penetration or for efficiently draining the water collected.

GK also identified issues with deteriorating windows. If these windows are in a boundary wall between a lot and common property, the Body Corporate must maintain them in good condition (s 159(2)(a)(ii), Standard Module).

Roofing membranes
The Applicants question the Body Corporate’s obligation if it is found that membranes have not been applied to balconies. I stated in the interim order, there does not appear to be conclusive evidence on this point noting the GK “inspection carried out was visual and non-destructive”. No authoritative material has been provided subsequently on this question.

If a membrane has been laid on a balcony that is part of a lot, the Body Corporate is obliged to maintain the membrane in good condition. Whether or not a membrane exists on each balcony, it is apparent that the application of a waterproofing membrane is part of the work specified by GK to remedy identified water entry problems. For this reason and given the findings made in Klinger with respect to structural issues, I do not consider it is necessary to conduct further investigation to determine whether a membrane was applied to the subject balconies. In my view, whether or not a waterproofing membrane was applied during construction of the building is immaterial and does not affect the Body Corporate’s obligation. I agree with the submissions by the owner the Lot 14 on this point. In the event a membrane does not exist on a balcony, the Body Corporate is obliged by section 159(2)(b) to have a membrane applied. I do not consider Fox Nineteen and Figtree are applicable to the circumstances.

Extent of the Body Corporate’s obligation with respect to the balconies
The Applicants argue work carried out on a balcony or balconies may have contributed to the existing defects. GK has referred to work which may have been carried out on a balcony of Lot 16. GK suggested a second layer of tiles contributed to water penetration into lower lot/s. The December 2008 P.A. Freeman Project Marketing correspondence refers to a spa bath on Lot 16. Even though GK sighted the spa in January 2008, there is no mention of the spa in the March 2009 report. The Applicants also refer to blocked spitters. In my view, it is not apparent that any of these issues (either individually or collectively) prevent the Body Corporate from making a decision on a proposal of the nature of Motion 2. As indicated by the Applicants, section 159(4) of the Standard Module enables the Body Corporate to recover costs. However, this provision does not lessen any obligation the Body Corporate has under section 159 to maintain a part of a lot. It is a matter for the Body Corporate to decide if there are circumstances that warrant attempting to recover costs from a person whose actions are believed to have caused or contributed to damage or deterioration of a part of a lot. I do not agree that the Body Corporate has to provide evidence that it has investigated the possibility of recovering costs from owners or third parties before considering and determining Motion 2.

The Applicants question whether the committee has exhausted all avenues of recovering costs. It is a matter for the Body Corporate to explore any possible avenues to reduce or recover its costs. The Applicants have outlined some avenues; however they have not demonstrated that these avenues are available to the Body Corporate, that there is a reasonable likelihood that the Body Corporate may recover costs in the ways stated, and that in the circumstances the Body Corporate has acted contrary to the legislation in passing Motion 2. The Applicants also refer to insurance policies. The Explanatory Note to Motion 2 contemplates an insurance claim. In my view, the Applicants have not demonstrated that the terms of the resolution on Motion 2 are subject to an insurance claim. I do not consider this matter warrants an order in the terms sought.

Body Corporate’s obligation to meet costs of work
The resolution passed on Motion 2 included provision for fixing a special contribution to be levied on the owner of each lot towards the cost of the approved work. A special contribution must be fixed if “a liability arises for which no provision, or inadequate provision, has been made in the budget” (s 141(2), Standard Module). Although the Applicants refer to applying the sinking fund, they have not demonstrated that the sinking fund budget has made allowance for work of the nature approved in the Motion. Neither have they demonstrated that it would be reasonable in the circumstances to apply the sinking fund by for example, making adjustments to the budget. There is nothing to suggest the Body Corporate has not acted in accordance with the legislation in fixing the special contribution by passing the ordinary resolution on Motion 2, or that the contributions were levied contrary to section 141(5) of the Standard Module.

The Applicants have questioned whether the Body Corporate can recover costs from unit owners whose units are not affected by the water damage to other unit owner's property. “The members of the body corporate for a community titles scheme are the owners of all lots included in the scheme” (s 31, Act). It is not relevant that a lot or lots included in the scheme did not suffer similar damage for the owners of all lots included in the scheme to, as members of the body corporate, contribute to the costs of repair.

Conclusion
In my view, the Body Corporate has obtained the advice of an appropriately qualified person and has acted on the basis of this advice appropriately and in accordance with the legislation. For these reasons, I have dismissed the application.

Number of Scheme:	16978
Name of Scheme:	Seychelles on Main Beach
Address of Scheme:	Cronin Avenue MAIN BEACH QLD 4217

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Seychelles on Main Beach [2010] QBCCMCmr 12 (8 January 2010)