Villa Sirene [2010] QBCCMCmr 44 (4 February 2010)

Last Updated: 23 March 2010

REFERENCE: 0943-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	26546
Name of Scheme:	Villa Sirene
Address of Scheme:	105A Albatross Avenue MERMAID BEACH QLD 4218

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

Hirochiyo Suita, the Owner(s) of lot 2

I hereby declare that the body corporate for Villa Sirene has, pursuant to the Deed of Compromise (Deed) executed by Angela Rogers and Graham Langford (respondents) on 9 April 2009 and by Hirochiyo Suita (applicant) on 17 April 2009, authorised the respondents to restore improvements (the improvements) on the common property of Villa Sirene. The improvements include a set of stairs (including walls, logs, gate, and tiling), general concreting and tiling, and shrubs and plantings. I further order that, except as otherwise specifically authorised by the body corporate in writing: The respondents must act as soon as reasonably practical to provide for the restoration of the improvements; The respondents are to ensure that the improvements are restored to as near as practicable as what they were prior to the removal of some of the improvements but so as to ensure the improvements do not encroach on the adjoining lot 107 (except as authorised in writing by the owner of lot 107); The respondents are to ensure the improvements are restored in accordance with the standards, practices, methods and procedures generally followed or approved by relevant industries, contractors and suppliers in Australia with respect to the works and with the degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced developer of such work (industry best practice). I further order that Mark Traucnieks of Mark Traucnieks Consulting Engineers Pty Ltd (administrator) is appointed as administrator and granted all powers of the body corporate for the function of supervising the restoration of the improvements and providing any written approvals on behalf of the body corporate as reasonably necessary to allow for minor changes to the proposed improvements, minor extensions to the time for completion of the improvements, or to confirm a proposed method of restoration is in accordance with industry best practice. I further order that the respondents must demolish, modify and rebuild any existing improvements as reasonably necessary to allow the administrator to confirm the improvements are restored in accordance with the above declarations and orders. The respondents must also provide the administrator with any documents reasonably necessary for this purpose. I further order that, subject to a subsequent order of an adjudicator, The appointment of the administrator commences on the date of this order and ceases in three months from the date of this order; and The administrator is entitled to a payment of $192.50 per hour for carrying out the administration; and The administrator has the power of the body corporate to fix a special contribution to be levied on the owner of each lot to pay for the costs of the administration provided that the administrator has first provided each owner with details of the amount sought and a reasonable opportunity to challenge that amount.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0943-2009

“Villa Sirene” CTS 26546

Application

Villa Sirene Community Titles Scheme (Villa Sirene) is a 2 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Small Scheme Module Regulation (Small Scheme Module). The scheme is designed for residential purposes.

Lot boundaries are designated under a building format plan. The plan shows that the scheme consists of a three storey building and common property. Each lot is spread over the three levels of the building with lot 1 comprised of the front northern quarter of the ground floor, the northern half of the second floor, and the northern half of the top floor. Lot 2 is comprised of the remainder of the building. That is, most of the ground floor including a large courtyard area, the southern side of the second floor, and the southern side of the third floor.

This application is by Hirochiyo Suita, owner of lot 2 (applicant) seeking orders against Graham Langford and Angela Rogers, owners of lot 1 (respondents).

Decision

Investigation and Submissions

Background

On 5 October 2009 the applicant lodged an application alleging that the respondents were performing work on common property without body corporate authorisation. An urgent interim order was sought to require the respondents to immediately stop work, remove an alleged encroachment, and seek body corporate approval for the proposed work.

On 6 October 2009 I held a teleconference with Charles Hamilton on behalf of the applicant by power of attorney and with Graham Langford as a respondent. Graham Langford indicated that the work had been agreed by a deed entered into by the body corporate, the owners and the developer. I was subsequently provided with a copy of a Deed of Compromise signed by the applicant and the respondents (the Deed). On 6 October 2009 I made an interim order restraining the respondents from making any improvements apart from improvements authorised by the Deed. In the reasons for decision I stated that I did not see any merit in submissions for the applicant that work authorised in the Deed needed to be further approved by the body corporate at an extraordinary general meeting and that the only merit in the applicant’s submissions would be if the respondents performed work different from that agreed in the Deed or otherwise than in accordance with the standards required by the Deed. I further indicated that the respondents could choose to proceed with the work, however, at the risk that the work would have to be removed or rectified if the applicant could show a contravention of the Act or other legislation. Due to a concern that the work would not be of the same appearance as what was there previously I noted that the applicant had provided a photograph of the area as it formally existed and indicated that it may avoid further problems if the respondents ensured that their builder had a copy of the photograph.

On 7 October 2009 the applicant sought a further interim order based on a copy of an email from the owner of the adjacent property alleging that the footings built by the respondents on 6 October 2009 encroached upon her property. On 9 October 2009 the applicants provided a letter from Westera Partners Pty Ltd, Consulting Structural & Civil Engineers. This letter raised questions about whether the high level footing was supported on piles, whether soil testing had occurred, and whether an engineer had certified the construction. A concern was expressed regarding a risk of the footings and slab settling in time as occurred for the original construction.

On 14 October 2009, in the absence of the respondents providing evidence disputing the encroachment or the structural concerns raised, I made a further interim order prohibiting the respondents from making or allowing any alterations to the common property except to the extent necessary to make the area safe or rectify any encroachment.

On 16 October 2009 the applicant alleged that the respondents were continuing to have work done on the stairs contrary to the interim order of 14 October 2009.

On 27 October 2009, the Commissioner invited submissions from the parties in relation to the final orders sought. A submission was received from the respondents and a reply was received from the applicant prior to the application being referred back to me for the making of a final order.

Submissions

The main grounds in support of the application, provided on behalf of the applicant, were to the effect that:

• The respondents, acting without permission from the body corporate, demolished their stairs and the wall between the scheme and the adjoining property; and
• The respondents subsequently commenced building work in the associated area of the common property without requesting permission from the body corporate to perform this work.
  

The main submissions by the respondents were to the effect that:

• The works being performed by the respondents are clearly prescribed in the Deed and have been agreed to by both the applicant and the body corporate; and
• It is denied that the footings are set back less than 25mm at any point. However, if this is the case then it is due to the adjoining owner constructing the wall between the properties in the wrong position and due to the physical impracticalities of setting the footings back 25mm. Further, footings from the adjoining lot encroach onto common property of the scheme by up to 300mm.
  

The respondents have provided a statement from their builder, Lance Hayward, to the effect that he “constructed the footings as much as possible 25mm back from that wall with plastic spacers inserted”, he considers “the job at 105A Albatross Avenue to be of a very high standard with construction exceeding the normal standards required in nearly every respect”, and “the footings for the wall on 107 Albatross Avenue actually encroached up to 300mm into the property of 105A Albatross Avenue”.

The applicant exercised the right to inspect the submissions and then replied to those submissions to the effect that:

• By signing the Deed the applicant intended that all matters should still pass by the body corporate for approval, particularly relating to liability and insurance. Clause 3.1(a) of the Deed specifically requires the obtaining of all necessary consents, permits and approvals necessary for carrying out the remedial works. Further, the respondents have ignored an undertaking to ratify the Deed;
• Lance Hayward was told by the adjoining owner’s builder, Vitto Ulliana; that the boundary wall was between 30mm and 40mm inside lot 107. Photographs show the footings are separated from the wall with core-flute material. This core-flute material is of a minimal thickness and is not a suitable expansion material for between the footings and the wall; and
• Two walls constructed by the respondents were filled with hand mixed concrete slurry that seems unlikely to adequately core fill the walls or achieve the required legislative standard.
  

The applicant provided a copy of a statement dated 9 November 2009 from Stewart Cameron McIntyre, registered cadastral surveyor, to the effect that the concrete footing below the stairs and visible slab encroaches between .03 and .04 metres onto lot 107 on SP220808.

The applicant also provided a copy of letter from Vitto Ulliana Constructions Pty Ltd, a builder engaged by the owner of the adjoining property. In this letter Vitto Ulliana states his professional opinion that “if the planned structure is built utilising the foundations now in place the structure will in the short to medium term subside and crack” and “that any subsidence of the structure threatens the integrity of the wall which is wholly built on and owned by 107 Albatross Avenue”.

Photographs provided by the applicant show a number of alleged defects with the new stairs including that the initial flight of steps now only consists of two steps rather than three steps.

Issues for determination

Applicable law

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

• The regulation module applying to a scheme may provide for the making of improvements to common property (Act, 159). “Improvement” includes a structural change and a non-structural change (Act, Schedule 6); and
• Improvements to common property may be authorised by the body corporate. The authorisation must be by ordinary resolution if the value is greater than $3,000 (Small Schemes 98, 174).

Summary of issues

It is obvious from the plans and photographs provided that the respondents have had significant work performed on the common property, primarily upon their exclusive use area. There are some submissions indicating that the pre-existing stairs were in poor condition. However, rather than take action to underpin or otherwise maintain these stairs the respondents completely demolished the stairs. The Act defines an "improvement" to common property to include a change by omission or substitution (Act - Schedule 6, Acts Interpretation Act – section 36). If the respondents were merely repairing or underpinning the existing stairs then there may have been an argument that they were merely performing maintenance. However, it is obvious that the actions of the respondents went beyond mere maintenance to the complete removal amounting to an improvement to common property that required the approval of the body corporate (Small Scheme Module 97, 108). Similarly, now the respondents are in the process of restoring the stairs and other features the respondents are in the process of making improvements to the common property notwithstanding they are making improvements similar to what was there before. These improvements also require the approval of the body corporate (Small Scheme Module 97, 108).

The main issues for determination can be summarised as follows:

1. Has the body corporate authorised the respondents to perform the work?
2. Has work been performed otherwise than in accordance with any body corporate approval?

Authorisation to perform work

I am satisfied that the Deed purports to be signed by the applicant both in her own capacity as owner of lot 2 and on behalf of the body corporate in her capacity as secretary. It is difficult for the applicant to argue that the body corporate has not approved works that all owners have, by way of the Deed, agreed the respondents must do.

By clause 3.2(d) of the Deed it was agreed that the respondents would commission work necessary to restore all improvements on common property for which the removal, replacement or restoration of which was rendered necessary by removal of encroaching improvements and ground anchoring works. Clauses 3.3, 3.7 and 4 of the Deed place certain obligations on GeoPol Pty Ltd and the respondents in relation to certain works under the Deed including the requirement to perform work in accordance with industry best practice and indemnification against liabilities and claims relating to the remedial works. In particular, clause 4.1(b) and clause 3.7 indicate an intention that the respondents be under similar obligations to the Developer for the works being conducted under clause 3.2(d) and an intention is also obvious that improvements be restored as nearly as practicable as what they were prior to the removal by the respondents but without encroaching on the adjoining land. Finally, in the absence of any specified completion date an intention can be inferred that the improvements be restored within a reasonable time.

In all the circumstances, I am satisfied that the execution of the Deed on the above terms amounts to an authorisation by the body corporate for the respondents to performed the agreed restoration of improvements in accordance with the terms of the Deed. In these circumstances I do not accept the argument of the applicant that clause 3.1(a) requires the respondents to obtain a further authorisation from the body corporate. Even if it did it would be unreasonable for the body corporate to refuse to authorise the respondents to perform the works in accordance with the Deed and I would make an order deeming the body corporate authorisation to be given.

However, the respondents would obviously require a further authorisation of the body corporate to perform works otherwise than in accordance with the Deed.

Construction otherwise than in accordance with the authorisation

I have accepted that the body corporate has authorised improvements being made by the respondents on the terms provided in the Deed. However, I have concluded that the respondents have failed to comply with the terms of the authorisation in several important respects.

Firstly, I consider that the footings for footings for the stairs encroach onto the adjoining lot 107 based on the statement and sketch dated 9 November 2009 from Stewart Cameron McIntyre. This is contrary to an intention that the restored improvements not encroach on lot 107.

Secondly, it seems more likely than not that the stairs have not been constructed in accordance with industry best practice as defined in the Deed. In this respect I consider the respondents have provided inadequate details of any soil testing or assessment of the footings necessary for the stairs. Against the background of alleged sinking and cracking of the previous structure and the concerns expressed by a builder engaged by the adjoining owner this failure leads to a conclusion that there has been a failure to comply with industry best practise.

Thirdly, I have concluded that the body corporate’s authorisation according to the terms of the Deed does not allow for alterations to the improvements being restored apart from as necessary to avoid encroaching on the adjacent lot. However, photographs indicate that the stairs are not being restored as near as practicable to what was previously there based on an obvious difference in the number of stairs in the initial flight.

Each of these failures to comply with express or implied requirements of the authorisation granted by the body corporate is significant. Therefore, despite the body corporate authorising construction of the stairs and other improvements on the terms of the Deed, the stairs constructed by the respondents are not in accordance with the terms of this authorisation. I am satisfied that the respondents have failed to carry out improvements as authorised by the body corporate while any one of these above issues remains outstanding. The improvements in their present form cannot be said to be authorised by the body corporate.

Just and equitable order

An adjudicator is required to make an order that is just and equitable in the circumstances to resolve a dispute (Act, 279). An order may require a person to act in a way stated in the order (Act, 279(2)). Further, an order appointing an administrator to act for the body corporate can be made as the only order for the application or to assist the enforcement of another order made for the application.

In light of my above findings, it would be appropriate to order that the respondents demolish, modify and rebuild all improvements in compliance with the body corporate’s authorisation as provided in the Deed. It would also be appropriate to give the respondents an opportunity to apply to the body corporate for a new authorisation that accepts minor modifications to the terms of the authorisation.[1] However, as there are only two lots within Villa Sirene of which the parties are in dispute it seems unlikely that either of these orders would provide a final resolution of the dispute. Rather, there could be further disputation between the parties requiring further expert evidence to assist in a resolution of which position is correct. This disputation may be over significant issues regarding the structure or minor issues regarding the unavailability of tiles or materials matching those on the existing structure. These are not matters that can be resolved in any practical sense given the apparent voting deadlock between the two lots comprising Villa Sirene and the obvious cost and delays of having every minor disagreement proceed to an extraordinary general meeting and through the formal dispute resolution processes under the Act.

In the circumstances, I informed the parties that I was considering appointing an administrator for the purpose of supervising the restoration of the improvements and providing any written approvals on behalf of the body corporate as reasonably necessary to allow for minor changes to the proposed improvements, minor extensions to the time for completion of the improvements, or to confirm a proposed method of restoration is in accordance with industry best practice.

Each party nominated a proposed administrator and I have decided that Mark Traucnieks is the most suitable based on his experience and qualifications, location, and comparatively low hourly rate. This appointment of this administrator allows for an independent expert to make relevant decisions on behalf of the body corporate, avoiding the need for the disputing parties to reach agreement themselves on issues relating to the construction. This will hopefully facilitate a final resolution of the dispute within a relatively short time frame.

Order

For these reasons, I make the order above.

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[1] A new authorisation granted by the body corporate would satisfy the requirements of the Body Corporate and Community Management Act. It would not mean that the respondents have also satisfied any obligations to the adjoining owners pursuant to the Deed but that is not relevant for the present dispute that is solely between the owners of Villa Sirene.