Watermark Residences [2010] QBCCMCmr 4 (4 February 2010)

Last Updated: 23 March 2010

REFERENCE: 0670-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24536
Name of Scheme:	Watermark Residences
Address of Scheme:	21 Pixley Street KANGAROO POINT QLD 4169

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

the owner of lot 3, Sandra Mackiehan, against the Body Corporate

I hereby order that the application for the following orders: To be assured that the Body Corporate Committee members “right of entry” is restricted to that as set out in the Body Corporate and Community Management Act. That the motions passed at the Body Corporate Committee meeting of the 9th December 2008 regarding Lot 3 re removal of tiles recently laid on the balcony be withdrawn, and that written advice be forwarded on the letterhead of Watermark Residences. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0670-2009

“Watermark Residences” CTS 24536

APPLICATION

This is an application by the owner of Lot 3, Sandra Mackiehan (the Applicant), against the Body Corporate for “Watermark Residences” (the Respondent), seeking the following orders:

1. To be assured that the Body Corporate Committee members “right of entry” is restricted to that as set out in the Body Corporate and Community Management Act.
2. That the motions passed at the Body Corporate Committee meeting of the 9th December 2008 regarding Lot 3 re removal of tiles recently laid on the balcony be withdrawn, and that written advice be forwarded on the letterhead of Watermark Residences.
   

It appears that at a committee meeting of 9 December 2008, a motion was passed to make application with this office to seek an order for the removal of tiles recently laid on the balcony of lot 3. A Notice of Continuing Contravention of a body corporate by-law dated 23 December 2008 was received by the Applicant on 25 December 2008. That notice alleged a breach of by-law 12 which provides that “No person is to undertake any major renovation or alteration in any lot unless that renovation or alteration is approved in writing by the Body Corporate.” The notice also stated as follows:

“As owner of Lot 3 you have commenced major renovations to Lot 3 without the authority in writing of the Body Corporate. These renovations are to the interior of Lot 3 as well as to the balcony floor tiling. This tiling has been laid over existing floor tiling, increasing the surface height of the tiles on your balcony, which will affect rain and other water flow off your balcony.

By-law 12 requires you to have the authority in writing of the Body Corporate before work can commence. Letters have been written to you on 5 December 2008 directing you to stop laying the balcony tiles and 8 December 2008, requesting that you supply a scope of works to the Committee.

You have not complied with either of these directions.”

The grounds to the application are to the following effect:

• Unlawful entry to lot 3 occurred on 5th December 2008 at 1:54pm.
• By-law 21 is relied upon by the committee to enter lots, contrary to the Act.
• The work carried out on the balcony of lot 3 met building guidelines and water does not fall from units above onto lot 3’s balcony, nor does rain water fall on to lot 3’s balcony or overflow on the balcony below.
• Before laying the new tiles, at four key points a channel was cut from the balcony edge to the drain in the balcony floor to ensure water would flow freely from the concrete beam inside edge into the drains, thereby ensuring the original design intent was preserved.
• The Applicant believed she had the body corporate’s permission to renovate lot 3, based on the committee’s non response to her original letter of 8 September 2008, her payment of a $5,000 bond to be held by the body corporate for the term of the renovation and no response to her letter of 13 October 2008 to all residents of the North House advising of her intent to paint, carpet and tile.
  

JURISDICTION

“Watermark Residences” was registered as a building units plan of subdivision on 6 January 1998 comprising 30 lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module).

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

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to the body corporate manager, Barard Management Pty Ltd, for distribution to all owners of lots (excluding the Applicant) and the committee, with an invitation to respond to the matters raised in the application. Only one submission, on behalf of the body corporate, was received. It was to the following effect:

In relation to the first order sought (Right of Entry):

• The Applicant is not seeking an order as such.
• The body corporate notes that section 163 of the Act outlines clear requirements and rights for the power of a person authorised by the Body Corporate to enter onto a lot for certain purposes and has every intention of complying with the provisions of the legislation relating to its right to enter a lot.
• The body corporate denies that unlawful entry was made to lot 3.
  

In relation to the second order sought (Withdrawal of Motions passed at Committee Meeting of 9 December 2008 regarding removal of tiles on balcony of lot 3):

• The body corporate does not see what it is the Applicant is trying to achieve by this outcome.
• If it is the case that the Applicant seeks an order that the motions passed at the meeting of 9 December 2008 be declared void, section 242 of the Act requires that an application for an order to declare a motion void must be made within 3 months of the meeting at which the resolution was made. The Applicant is out of time to seek such an order.
• The body corporate committee is not convinced that it has the ability to “withdraw” the motion nor what would be achieved by doing same.
• The Committee maintains that when it made the resolution on 9 December 2008 regarding the removal of tiles that it did so in good faith, honestly and in the interests of the Body Corporate with a view to upholding the by-laws and enforcing the “Guidelines for Managing Your Renovation” document. Further, the motions were passed after the Applicant had been given a letter asking her to cease tiling the balcony and a second letter requesting her to provide a scope of works, to which the Applicant responded with a short 1 page letter of limited detail.
• The purpose of the motions was to enable the body corporate to commence dispute resolution proceedings and to retain a law firm to facilitate the dispute resolution for this matter. As such, they are an important part of the body corporate’s records and the body corporate does not see why they should be removed from the body corporate records.
• The committee maintains that the Applicant carried out her refurbishment works without obtaining the necessary prior written approval of the Body corporate, as required by by-law 12.
• The Committee was not in a position to grant approval because it did not receive adequate material, plans, drawings or other documents to indicate that tiling proposed to the balcony (which has the potential to affect the waterproofing membrane of the balcony and in turn the balcony slab and the lot below the Applicant’s lot) would be compliant and would not pose any sort of compromise to the structure or fabric of the building (for which the body corporate understands it is responsible).
• The body corporate Committee was denied access to the Applicant’s lot to inspect the tiling.
• The Committee believes it has an obligation to investigate when owners are undertaking works that could potentially affect the structural integrity of the balcony slab of the building.
• The Body Corporate made reasonable requests of the Applicant to provide a detailed scope of works and material to enable the Body Corporate to understand the full extent and details of the work and to satisfy itself as to whether works proposed and in fact carried out did or did not compromise the waterproofing, drainage or structural integrity of the slab of the balcony. The Applicant did not provide any such material to the Body Corporate despite these requests, nor did she indicate that she would, at some future time, provide such advice, despite these requests.
• The Body Corporate denies receiving a copy of the letter from Peter and Lea Burt dated 23 April 2009, the Report from Building Certificate Consultants dated 23 March 2009, the letter from Kenlynn Properties Australia Pty Ltd dated 29 January 2009 and the Waterproofing Certificate Form 16 dated 9 February 2009 prior to this adjudication application being sent to them.
• On 7 July 2009 the Committee approved expenditure to obtain an expert report on the balcony tiling from a qualified and independent engineer.
• The body corporate obtained the Applicant’s consent to have its engineer attend her lot on 14 August 2009 to carry out this inspection. The resulting report, dated 18 August 2009, forms part of the body corporate’s submission.
  

The Applicant exercised her right to inspect the submissions, and replied to them, to the following effect:

• Denies responsibility for any delay in the resolution of the dispute.
• Maintains that entry to lot 3 was unlawfully made on 5 December 2008.
• If she wanted to sell her unit, believes that at this point in time, a check of minutes would show a motion for the balcony tiles to be removed, which would reduce the value of her unit or the prospective buyer would walk away.
• Does not believe her refurbishment constitutes a “major renovation”. Therefore by-law 12 is not applicable.
  

DETERMINATION

Applicable Law

A person authorised by the body corporate may enter a lot and remain on the lot while it is reasonably necessary to inspect the lot and find out whether work the body corporate is authorised or required to carry out is necessary or to carry out work the body corporate is authorised or required to carry out (Section 163(1), Act). In an emergency, the power of entry may be exercised at any time, with or without notice and in other cases, at a reasonable time after at least 7 days written notice of the intended entry has been given to the occupier of the lot (Section 163(2), Act).

Section 159(2)(a)(iii) of the Standard Module provides that, to the extent that lots included in a 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 body corporate must maintain in a structurally sound condition, foundation structures, roofing structures providing protection and essential supporting framework, including load-bearing walls(Section 159)2)(b) Standard Module).

The body corporate must administer the common property and body corporate assets for the benefit of the owners of lots included in the scheme and enforce the CMS (including any by-laws) reasonably (Section 94, Act). A decision of the committee is a decision of the body corporate (Section 100(1), Act).

Findings

Right of Entry

The body corporate correctly points out that the Applicant is not seeking an order as such. Section 163 of the Act outlines clear requirements and rights for the power of a person authorised by the Body Corporate to enter onto a lot for certain purposes. The body corporate states in its submission that it has every intention of complying with the provisions of the legislation relating to its right to enter a lot.

Much of the lengthy material submitted in relation to this application relates to the parties’ views on whether or not entry made to lot 3 by representatives of the body corporate was lawful. I have not found it necessary to determine this question in light of the “order” sought by the Applicant.

It goes without saying that the body corporate (and all owners for that matter) is bound by the legislation, including section 163 of the Act which regulates the power of entry. In the circumstances, I do not consider it necessary to make an order in this regard and I have dismissed this aspect of the application.

Resolutions of Committee Meeting of 9 December 2008 regarding removal of tiles

The following resolutions were passed at the committee meeting of 9 December 2008 in relation to the renovation of the balcony of lot 3:

1. An application be made to the Commissioner for Body Corporate and Community Management for an Interim or other order to order that the owner of lot 3 remove the recently laid tiles on the balcony of Lot 3 and to comply with the refurbishment procedures adopted by the Body Corporate; and
2. Maunsell Pennington, Solicitors be engaged to act for the Body Corporate and to prepare and lodge an application to the Commissioner for Body Corporate and Community Management for an interim or other order that the owner of Lot 3 remove the recently laid tile on their balcony and to follow the procedures on refurbishment of lots in the building.
   

It is important to note that the resolutions authorise the body corporate to make application to this office for an order that the Applicant remove the recently laid tiles on the balcony of lot 3 and to engage legal representation in that regard. The resolutions do not, of themselves, request or require the removal of the tiles from the balcony of lot 3. It appears as though the Applicant has misunderstood the resolutions passed at the Committee meeting of 9 December 2008, referring to them throughout her application as “the motion/s to remove the tiles”.

Compliance with Section 242 Time Limit

As a preliminary issue, the body corporate raises section 242 of the Act, which requires an application for an order declaring void a resolution of the committee[1] to be made within three months of the meeting. In this case, the committee meeting the subject of the second order sought occurred on 9 December 2008 and this adjudication application was lodged by the Applicant on 21 July 2009.

In such circumstances, section 242 of the Act provides that the Commissioner must deal with the application as if the making of the application complied with the section and an adjudicator to whom the application is referred may, for good reason, waive the non-compliance.

Any examination of whether the time limit should be waived involves consideration of the following statement made by Judge Dodds in the appeal of Weeks v. Commissioner for Body Corporate (Maroochydore District Court Appeal 13/99), at pages 4 and 5 of the judgment, “... the objects of the Act, for instance section 5(a) and (h) militate against too strict or legalistic a view about good reason for waiving non-compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the
adjudicator that the time limit should be waived in all the circumstances.”

The applicant explains the delay in lodging the adjudication application in a letter to this office dated 27 July 2009, as follows:

• At the commencement of the dispute she had no knowledge of the services available through the Justice Department. Even in late December 2008, when she engaged Cooper Grace Ward, it was their understanding that before they could proceed to adjudication, it was necessary to first demonstrate that they had tried to resolve the issue by conciliation.
• The Applicant was not able to provide a Building Certification Certificate until 23 March 2009, as it was necessary to co-ordinate the tiler, waterproofer, and shutter specialist to complete the work. The certifier required all work to be complete before issuing a certificate stating the work undertaken met the Building Code of Australia.
  

With regard to the first two factors mentioned by Judge Dodds, in my view, the period of delay in the Applicant lodging her application (over seven months since the Committee Meeting of 9 December 2008) is significant and fatal for an application of this nature, which seeks to “withdraw” or declare void, resolutions, especially in circumstances where those resolutions have already been implemented. The body corporate has retained solicitors and made a conciliation application with this office and expended body corporate funds in doing so. Further, I regard the Applicant’s lack of knowledge of the services provided by this office as irrelevant. While the desire to obtain a Building Certification Certificate and delay in obtaining same may be relevant, that Certificate was obtained on 23 March 2009 and the adjudication application was not lodged until 21 July 2009, almost four months later.

Considering the final two factors Judge Dodds mentions, namely, the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought, I again note that the body corporate has implemented both of the resolutions complained of – it has retained Maunsell Pennington Solicitors to act for the body corporate and to prepare and lodge a conciliation application to this office and body corporate funds have been expended in doing so. The conciliation application has been finalised, although it was unresolved, with no agreement between the parties being reached. Given this, I cannot see how I could possibly make the second order sought by the Applicant.

In the circumstances, I am compelled to dismiss the application in its entirety.

Further Observations

Although compelled to dismiss the application for the reasons above, I consider that the substance of this dispute remains unresolved. It is unfortunate that the application, in particular, the orders sought, were framed in such a way that precluded me making orders to resolve the substance of the dispute. Nevertheless, for the benefit of any future consideration of this issue by the parties, I provide the following observations.

Tiles on Balcony of Lot 3

By-law 12, as recorded in the current CMS, provides as follows:

12 No Improvements Without Consent

12.1 No person is to undertake any major renovation or alteration in any lot unless that renovation or alteration is approved in writing by the Body Corporate.

The body corporate submits that the Applicant carried out her refurbishment works without obtaining the necessary prior written approval of the Body corporate, as required by by-law 12. The Applicant states that she believed she had the body corporate’s permission to renovate lot 3, based on the committee’s non response to her original letter of 8 September 2008, her payment of a $5,000 bond to be held by the body corporate for the term of the renovation and no response to her letter of 13 October 2008 to all residents of the North House advising of her intent to paint, carpet and tile. In any event, she argues that by-law 12 is not applicable, as her refurbishment was not a major renovation.

Was Body Corporate Approval Required?

I have reviewed the plan for the Applicant’s lot. The balcony in question forms part of the Applicant’s lot. Body corporate approval was therefore only required if there was an applicable by-law that required it. By law 12 applies to “any major renovation or alteration in any lot”. The body corporate argues that the Applicant’s renovation was major, while the Applicant argues that it was minor.

The by-laws determined by owners from time to time are delegated legislation[2]. The interpretation that will best achieve the purpose of the by-law is to be preferred to any other interpretation[3]. However, relevant persons may ordinarily have no access to the circumstances surrounding the making of by-laws in the context of a community management statement resulting in the meaning needing to be understood from their statutory context and language. As a result,
community titles scheme by-laws would appear to need to be interpreted objectively by the meaning they would convey to a reasonable person and caution should be exercised in going beyond the language of the by-law and its statutory context[4].

There is no guidance given in the by-law itself as to what constitutes a “major” renovation, although the heading suggests that any “improvement” to a lot would require approval. However such an interpretation could lead to the by-law being considered oppressive or unreasonable and consequently, invalid. The Concise Oxford Dictionary defines “major” as unusually important or serious or significant. I believe there is some merit in the Applicant’s argument that her renovation was not a “major” renovation and that by-law 12 therefore did not apply. I find the by-law too vague to form any definitive view about whether it was breached or not. I recommend that the body corporate amend by-law 12 to include some definition of what a “major” renovation or alteration is.

I have not formed a view as to whether the Applicant’s renovation was “major” or not and therefore whether by-law 12 applied or not. This is because even if body corporate consent was required, I am of the view that, in light of information that has come to light since the committee meeting of 9 December 2008, it would be unreasonable for the body corporate to now withhold it.

Developments Since Committee Meeting of 9 December 2008

Since the committee meeting of 9 December 2008, at which the body corporate’s stated concerns were that “It appeared that new tiles were being laid over the water channel at the edge of the balcony. This channel is designed to stop rain water falling over the balcony”, the following documents have been produced and provided, during the processing of this application, to the body corporate:

• The letter from Peter and Lea Burt dated 23 April 2009 in which they advise that the tiling works undertaken on the balcony of lot 3 have in no way affected their unit, which is directly below lot 3. In particular, the letter states, there has been no inundation of water to their unit since the work on the balcony of lot 3 was completed;
• The Report from Building Certification Consultants dated 23 March 2009 confirming conformance of the works completed;
• The letter from Kenlynn Properties Australia Pty Ltd dated 29 January 2009 stating that all work carried out was done in a measured and workmanlike manner and confirming water drainage was satisfactory;
• The Waterproofing Certificate Form 16 dated 9 February 2009 confirming that the waterproofing work was compliant; and
• The report from Chilton Woodward & Associates, commissioned by the body corporate, dated 18 August 2009 which concludes that a no worsening affect exists between pre and post conditions re draining of the balcony nor has the original drainage system been compromised with the new work.
  

Given the information that has come to light since the committee resolution of 9 December 2008, in particular, the report from Chilton Woodward & Associates dated 18 August 2009, the body corporate was asked (by email dated 8 January 2010) to advise whether it still sought the removal of the tiles and if so, on what grounds. If the body corporate did not still seek the removal of the tiles, it was asked whether it had any objection to an Adjudicator making an order deeming that aspect of the resolution which sought the removal of the tiles to be of no force or effect.

After requesting two extensions of time within which to reply to the email dated 8 January 2010, the body corporate replied on 29 January 2010 stating that it has taken no further action regarding removal of the tiles from the Applicant’s balcony as it is awaiting the decision of the Adjudicator on this application. The body corporate would not consent to the order proposed on the grounds that it may prejudice its position in seeking at some later stage to argue that section 159(4) of the Standard Module obliges the Applicant to pay prescribed costs where the conduct of the Applicant can be shown to have given rise to maintenance costs under that section being incurred that would not have occurred had the unapproved works not taken place. The body corporate concluded that its primary concern remains the structural integrity and waterproofing of the balcony.

On the material before me, I have formed a view that the concerns the body corporate states it has with the structural integrity and waterproofing of the balcony are unfounded. None of the material before me supports such a view, in fact, it refutes such a view. The body corporate has not provided me with any material that supports its view that the structural integrity or waterproofing of the balcony has been compromised by the Applicant’s actions.

The body corporate alludes to a document titled “Watermark Residences CTS 24536 Apartment Renovation Guidelines for Managing Your Renovation”, stating in its minutes of the committee meeting of 9 December 2008 that there was concern that the guidelines for renovations were not being complied with. However, this document is not legally binding. It is not part of the CMS binding on all owners and occupiers and any alleged non-compliance with it cannot be relied upon by the body corporate in an adjudication proceeding.

In the circumstances, I am of the view that even if body corporate approval was required for the renovation of the balcony of lot 3, that approval, in light of information which has since become available, has been unreasonably refused. It would be unreasonable for the body corporate to pursue the removal of the tiles in light of the information which it now possesses. However, I accept that the Committee was not in a position to grant approval at the time of the committee meeting on 9 December 2008 because it did not possess, at that stage, adequate material, plans, drawings or other documents to indicate that tiling proposed to the balcony would be compliant and would not pose any sort of compromise to the structure or fabric of the building (for which the body corporate is responsible). Seeking further information, rather than the removal of the tiles, at that stage, would perhaps have been more appropriate. In any event, it appears that this is the course the body corporate adopted, deciding, after the failed conciliation, to engage an independent contractor to inspect the balcony of lot 3 and provide a report.

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[1] I accept that this is what the Applicant, in effect, is trying to achieve, despite her wording seeking a “withdrawal” of motions. A motion cannot be “withdrawn”; once a motion is passed, it becomes a resolution.
[2] Dainford Ltd v Smith [1985] HCA 23. See also Statutory Instruments Act 1992 section 7.
[3] Refer Statutory Instruments Act 1992 section 14 and Schedule 1; Acts Interpretation Act 1954, section 14A.
[4] The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207, Mason P McColl JA Harrison J, 16 August 2007 at paragraph 71.