Paloma [2010] QBCCMCmr 57 (10 February 2010)

Last Updated: 23 March 2010

REFERENCE: 0608-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9524
Name of Scheme:	Paloma
Address of Scheme:	93 - 97 Albatross Avenue MERMAID BEACH QLD 4218

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

Orknie Pty Ltd, the Owner(s) of lot 11

I hereby order that the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0608-2009

“Paloma” CTS 9524

Application

Paloma Community Titles Scheme (Paloma) is a 12 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme is designed for residential purposes and lot boundaries are designated under a building units plan (now known as a building format plan).

This application is by Orknie Pty Ltd, owner of lot 11 (applicant) seeking orders against the body corporate for Paloma (respondent).

Decision

Investigation and Submissions

Submissions

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

• On 20 June 2008 he wrote to the secretary concerning damage to tiles on his lower balcony after the body corporate had performed concrete cancer repairs;
• When he was made aware that water was penetrating the unit below he considered the matter urgent, had repairs made, and sought reimbursement for the cost from the body corporate. The body corporate voted to approve reimbursement on 9 January 2009;
• On 14 December 2008 he sent the body corporate a copy of the invoice for the upper balcony and requested reimbursement for this cost;
• On 1 April 2009 the body corporate voted against reimbursing him for the cost of repairs to the upper balcony. This was unreasonable given factual evidence that the repairs resulted from repairs undertaken by the body corporate in fixing problems with concrete cancer; and
• He would not have challenged this decision of the body corporate but for statements made by the mother of the secretary that imply he acted improperly, possibly fraudulently.
  

All owners were given an opportunity to provide written submissions. The main submissions by owners were to the effect that:

• The applicant should have notified the body corporate immediately rather than proceeding with unauthorised repairs and notifying the body corporate manager once all work had been completed;
• The motion submitted by the applicant regarding his upper balcony did not include copies of quotations or any explanation why the amount was not included in the applicant’s first claim;
• I understand the amount relates to damage to tiles in the course of a contractor engaged by the body corporate carrying out repairs to cure concrete cancer. The applicant should have made a demand on the contractor as the contractor may have had insurance to cover the claim. By making payment the applicant has compromised any claim against the contractor and the body corporate may not be able to claim against its insurer for the same reason. While I have sympathy for the applicant’s claim I consider the decision of the body corporate was correct for these reasons;
• Allowing reimbursement at this late stage would set a wrong precedent for the body corporate administration of Paloma generally;
• As well as being a solicitor, the applicant has been a past chairperson and long time committee member. He should know that he needs to tell the committee before he undertakes work especially when he expects to be reimbursed by the body corporate;
• Apparently owners, having voted for his lower deck without documentation, decided that they did not wish to also pay for his upper deck; and
• It is surprising that lifting of tiles would have happened to both the applicant’s decks, including the top one with only a .8m overhang, when most decks had been repaired at the same time and no other tiles lifted.
  

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

• The facts relied on are a simple ‘but-for’ test on the balance of probabilities. The question is whether the actions of the body corporate were reasonable;
• The tiles on the lower deck lifted in a north-south line along the deck and then in a west-east direction. Photographs of the lower deck were provided to the body corporate;
• I deny there was undue delay on my part as I only became aware subsequently that jack-hammers had been used under the decks and I concluded that it was more probable than not that the damage had been caused by the jack-hammers.

Investigations following receipt of submissions

The above submissions were received through the legislated processes for inviting written submissions from the body corporate and any persons affected by a community titles scheme dispute (Act, 243). Even where the body corporate makes a submission, it is not unusual for a large proportion of owners to also make their own individual submission. Each person who makes a written submission is effectively joined to the proceedings and given a right of appeal (Act, 289). This overcomes any concern that the particular position advanced in the name of the body corporate only reflects the views of a couple of committee members.

The legislation does not provide for a formal hearing at which the various persons affected by the dispute can further argue their case. In some circumstances it is appropriate for an adjudicator to make a determination based solely on whatever written submissions have been provided.[1] However, an adjudicator will need to undertake appropriate investigations if there is insufficient material for the adjudicator to make an express finding on relevant matters.[2] In carrying out these investigations, the adjudicator must act as quickly and informally "as is consistent with a fair and proper consideration of the application" (Act, 269(3)(b)). Given the need to act quickly and informally these investigations may involve simply inviting a party to provide further evidence rather than the adjudicator using all powers at their disposal to fully investigate the dispute.[3] A teleconference or a further round of written submissions may also be necessary to allow relevant persons to respond to any significant information obtained in these investigations (Act, 269(3)(a)).

A significant issue in dispute in the present application was the cause of any lifting of tiles on the applicant’s upper balcony. I therefore requested the applicant provide an expert report regarding the tiles that were alleged to have lifted. The applicant provided a report in this respect from the tiler who had replaced the tiles, being Chris Burridge of Burridge and Associates Pty Ltd. I subsequently provided a copy of this report to the body corporate. By letter of 13 January 2010 I also provided some provisional views to the parties and invited the applicant to provide any further evidence it relied upon. Specific further evidence sought from the applicant related to the extent of damage to the upper balcony, the cost of repair rather than complete replacement of tiles, and details of any specific alleged contravention of the Act or community management statement by the body corporate.

By letter of 28 January 2010 the applicant provided further evidence including assertions that the uplifting and cracking of tiles was substantial, that the tiles could not be matched, that there had been substantial leakage through the slab along the hob leading onto the balcony, and that the work involving complete replacement of all the tiles was performed on the expert advice of the tiler.

Requirement to act reasonably

Applicable law

A body corporate is required to act reasonably in carrying out its functions, including in making or not making a decision (Act 94(2), 100(5)). Further, an adjudicator may make an order that is just and equitable to resolve a dispute, including to decide whether or not to declare a resolution purportedly passed to be void or to give effect to a motion that was not passed (Act 276, Schedule 5 – Items 8, 10).

Individual owners who vote at a general meeting are not under any statutory obligation to act reasonably or to provide any reasons why they voted in a particular manner. However, section 94 provides a statutory obligation that the body corporate act reasonably in making a decision. This statutory requirement is only satisfied if the ultimate decision is objectively reasonable.[4]

Reasonableness is a question of fact. The objective test requires a balancing of factors in all the circumstances according to the ordinary meaning of the term ‘reasonable’.[5] The question is not whether the decision was the "correct" one but whether it is objectively reasonable.[6]

Findings

At an extraordinary general meeting on 1 April 2009 the majority of votes were against a motion "That the Body Corporate reimburse the owner of Lot 11, the sum of $2,509.10 for the removal of the tiles, application of the membrane and relaying new tiles plus the cost of $350 for the tiles, a total of $2,859.10".

The applicant’s lower balcony is not particularly relevant to the present dispute as owners voted to reimburse the applicant in respect of waterproofing and retiling of that balcony. However, to the extent that the applicant’s submissions compare the damage to the upper and lower balcony, I note that I have reviewed photographs of the applicant’s lower balcony that show one cracked tile, two rows of lifted tiles, and three missing tiles.

Regarding the applicant’s upper balcony, it is unfortunate no photographs showing the alleged damage have been provided. I accept submissions from the applicant to the effect that some lifting and cracking occurred on the upper balcony within some weeks of the damage to the lower balcony, even if the damage to the upper balcony was not as extensive as for the lower balcony. Based on the submissions, the report of Chris Burridge, and a comparison with damage to the lower balcony, it seems likely that the damage to the upper balcony consisted of the northern half of two rows of tiles being dislodged. It can be inferred that a small number of these tiles cracked in the process of being dislodged.

The report of Chris Burridge satisfies me that the tiles were laid without an expansion joint and that it is more likely than not that expansion and contraction over time would have been a cause of the tiles lifting. I also accept a submission to the effect that the majority of balconies were treated for concrete cancer and the only tile damage was to the applicant’s balconies. I therefore consider it more likely than not that the applicant’s tiles were not affixed as strongly as they should have been even prior to the body corporate undertaking the concrete cancer repairs.

The report of Chris Burridge does also satisfy me that another cause of the tiles lifting was the jack hammering performed by a contractor at the request of the body corporate. The applicant appears to place great weight on the ‘but-for’ test of causation to argue that the body corporate is therefore responsible for replacing the tiles. However, the applicant’s submissions fall a long way short of establishing negligence by the body corporate, or even the body corporate’s contractor, in this respect. There is no evidence that satisfies me that the contractor failed to act in the manner of a reasonable professional in performing the concrete cancer repairs. In particular, there is no evidence that the body corporate failed to act in a reasonable manner in commissioning or supervising concrete cancer repairs.[7]

The report of Chris Burridge also satisfies me that the work performed went beyond the minimum work necessary to repair lifted tiles or replace cracked tiles. The applicant adopted the recommendation from Chris Burridge that "an apoxy coating and an acrylic membrane be applied.” This meant that "the layer of tiles which were laid directly to the existing tiles had to be removed" and required a complete replacement of all tiles on the balcony.

The applicant has failed to demonstrate that he properly investigated options to set these tiles back in place or affix closely matching tiles. I accept a submission to the effect that the tiles were approximately fifteen years old and I can infer from this that no exact tile match could be obtained. However, there is no evidence of efforts made by the applicant to attempt to locate a closely matching tile and I cannot infer that it would have been impossible to find a closely matching tile.[8]

There is also no evidence of failures in the original waterproofing created by wet bedding the original layer of tiles in the slab. There is evidence that waterproofing was required along the hob leading onto the balcony but no evidence that this would have required the complete removal of all tiles on the balcony.

Decision objectively reasonable

If I was satisfied that the amount of reimbursement sought by the applicant was a fair and reasonable price for the performance of work that the body corporate was required to have done then I would be likely to conclude that it was unreasonable for the body corporate to refuse to authorise this reimbursement. This is notwithstanding the failure of the applicant to initially request that the body corporate perform the work. At the other end of the spectrum, if I was satisfied that the amount of reimbursement sought by the applicant included significant amounts in respect of work that was not the body corporate’s responsibility then I would be likely to conclude that it would be unreasonable for the body corporate to approve the requested reimbursement. Generally speaking, for circumstances between those two ends of the spectrum a decision of the body corporate is likely to be objectively reasonable regardless of whether the body corporate chose to allow the reimbursement or not.

As a matter of law, the balcony tiles are within the applicant’s lot and should be maintained in good condition by the applicant (Standard Module, 170(2)). I am satisfied from the report of Chris Burridge and the fact that no tiles on other balconies lifted despite similar concrete cancer treatment on a number of balconies that the applicant’s tiles were not affixed as strongly as they should have been even prior to the body corporate undertaking the concrete cancer repairs. I consider this to be a significant cause of the lifting of the applicant’s tiles and sufficient reason in itself for the body corporate to refuse to adopt the applicant’s motion seeking reimbursement for the work in question.

Also, even if the body corporate had some legal responsibility to contribute to the costs of repairing the tiles and assisting with waterproofing it appears more reasonable than not for the body corporate to have refused to adopt the applicant’s motion given the applicant had the work done without requesting the body corporate inspect the damage and contribute to the rectification costs. This is particularly as the applicant’s adoption of the recommendation of Chris Burridge to have the whole layer of tiles removed and an apoxy coating and acrylic membrane applied deprived the body corporate of the opportunity to seek to locate closely matching tiles or reattach the tiles that had lifted. It may have been the case that the body corporate would also have chosen to adopt the tiler’s recommendation to best address waterproofing issues. However, even so, the body corporate might have wished to negotiate some sharing of the expenditure given the damage was relatively minor and the applicant would gain the benefit of completely new tiles rather than tiles that were around fifteen years old. The failure of the applicant to give the body corporate an opportunity to inspect the damage and become involved in decisions regarding the rectification of the damage is another reason that is sufficient in itself to make the body corporate’s refusal to adopt the motion objectively reasonable. This is particularly the case where the motion seeking reimbursement failed to attach supporting quotations and photographs.

Conclusions

The applicant has failed to establish that it was objectively unreasonable for the body corporate to refuse to adopt the motion proposing reimbursement for the cost of retiling the upper balcony of lot 11. I therefore will not make any order overturning the decision of the body corporate in this respect.

I further note that, irrespective of whether the outcome of voting was reasonable, I have the power to order the body corporate reimburse the applicant an amount fixed as reimbursement for repairs if satisfied the applicant suffered damage to property because of a contravention by the body corporate of the Act or the community management statement (Act, 281). However, there is no evidence of any contravention by the body corporate in engaging a contractor to perform concrete cancer repairs. In fact, there is not even any evidence that would satisfy me that the contractor did anything wrong. Ultimately, the evidence that numerous balconies were treated with only the applicant reporting any problems indicates that the applicant’s tiles were in poor condition anyway as a result of expansion and contraction over a long period of time and it is not just and equitable to require the body corporate pay the cost of replacing those tiles.

Order

For these reasons, I make the order above.

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[1] Hablethwaite & Anor v Andrijevic & Ors [2005] QCA 336, Jerrard JA, Keane JA, Cullinane J, 9 September 2005, per Keane JA at paragraph 31.
[2] Johnston v The Body Corporate for Waterside Runaway Bay CTS 34678 [2009] CCT KA008-08, KD Dorney QC, 6 February 2009 at paragraph 25.
[3] Hablethwaite & Anor v Andrijevic & Ors [2005] QCA 336, Jerrard JA, Keane JA, Cullinane J, 9 September 2005, per Keane JA at paragraph 31.
[4] Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 at page 12.
[5] Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342; (1989) 88 ALR 621. See also McKinnon v Treasury [2006] HCA 45 per Hayne J at paragraph 61.
[6] Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 at page 34.
[7] I note that the applicant was invited to provide evidence of details of a specific contravention of the Act or community management statement by letter of 13 January 2010 but no satisfactory evidence was provided.
[8] Refer again to the letter of 13 January 2010 by which the applicant was invited to provide evidence of a reasonable amount that would have been necessary for replacement of only the cracked tiles rather than the complete replacement of all the tiles.