Ebe Court [2011] QBCCMCmr 10 (11 January 2011)

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

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Ebe Court [2011] QBCCMCmr 10 (11 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0885-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	2903
Name of Scheme:	Ebe Court
Address of Scheme:	14 Ada Street WINDSOR QLD 4030

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

George Sencariuc & Julie Benfer, the Owners of lot 4

I hereby declare that the body corporate for Ebe Court was entitled to resolve to meet the cost of replacing the windows and associated fittings situated in a boundary wall separating lot 1 from common property. I hereby order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0885-2010

“Ebe Court” CTS 2903

The Scheme

The Ebe Court community titles scheme consists of 4 lots and common property. The Community Management Statement (CMS) for Ebe Court indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme.

Application

This application dated 28 September 2010 was lodged by George Sencariuc & Julie Benfer, the Owners of lot 4 (applicants) seeking the following final outcomes:

1. Confirmation that section 159 of the Body Corporate and Community Management (Standard Module) Regulation 2008 provides (inter alia) that the duties of the body corporate about common property are to:

i. maintain common property in good condition, including in a structurally sound condition;&

ii. maintain in good condition doors, windows and associated fittings situated in a boundary wall separating a lot from common property;

2. Whether repairs and maintenance would have been sufficient to maintain the windows and associated fittings situated in a boundary wall separating lot 1 from common property in good condition or whether replacement was the necessary action;

3. Based on the outcome of 2. above, the amount which should be paid by the body corporate of Ebe Court to the owner of unit 1 in reimbursement of costs to maintain in good condition the windows and associated fittings.

The applicants previously sought an interim order directing the body corporate to put the action to reimburse the owner of unit 1 on hold until the substantive dispute which is the subject of the application can be investigated and resolved.

On 6 October 2010 I declined to make the requested interim order as there was a possibility that the cost of replacing the windows in lot 1 was properly borne by the body corporate and I did not believe that the balance of convenience favoured the granting of the interim order sought by the applicant.

Background

This scheme consists of 4 lots in a building which is approximately 33 years old. The applicants state that they purchased lot 4 in June 2006 and a prior building inspection of their unit determined that the windows and doors of unit 4 had no visible defects.

At the AGM held on 22 April 2008, the owner of lot 1 made representations concerning the replacement of windows in her lot. It was agreed by all owners that they had no issue with the replacement, provided the style and appearance remained unchanged and that she met the costs herself. The applicants state that at the time, the owner of lot 1 accepted that decision. Subsequently however, on 13 June 2008, owners received a letter from the body corporate advising that an EGM was to be held at unit 1, 14 Ada St. Windsor on Saturday 5 July 2008 at 8.00am. Attached to the letter was a quote dated 7 May 2008 form GJ Glass for $7,000 for replacement of windows and a quote dated 23 May 2008 from Window Exchange Service for $7,400 for replacement of windows and security screens for lot 1. According to the letter, the EGM was to provide owners with an opportunity to review and discuss the options with respect to the replacement of windows.

The owner of lot 1 invited the other owners into lot 1 to inspect the windows and stated that the lot 1 windows sometimes leak, that some of the windows and door are difficult to close, some of the windows rattled in the wind and the anodising on the lounge room window was coming off. For these reasons she was looking to replace all the windows and doors and insisted that they were in urgent need of replacement. The owner of lot 3 stated that the windows in lot 3 were in the same condition and should also be replaced. However the applicants suggested that the windows could be repaired by replacement of certain components such as seals and rollers.

The following motions were put to the EGM held on 5 July 2008:

Item 2 – Replace windows U1 – G James Glass
Proposed by the owner of lot 1
That the body corporate undertake work based on a quote from G James Glass & Aluminium at a cost of $700 (including GST) and that a special levy of $1,750 be determined per unit and payable upon completion of work. OUTCOME : Voted against

Item 3 – Replace windows U1 – Window exchange
Proposed by the owner of lot 1
That the body corporate undertake work based on a quote from Window Exchange Service at a cost of $7,480 (including GST) and that a special levy of $1,870 be determined per unit and payable upon completion of work. OUTCOME Voted against

Item 4 – Replace all windows
Proposed by the owner of lot 1
That the body corporate undertake work based on a quote from G James Glass & Aluminium at an approximate cost of $28,000 (Inc GST) and that a special levy of $7,000 be determined per unit and payable upon completion of the work. OUTCOME: Voted against

According to the applicants, it was also agreed that:

• Rather than contribute to the costs for the replacement of the windows and doors for lot 1 it was agreed that the owner of lot 1 could replace her doors and windows at her own cost and in her own timeframe;
• Each of the owners would be responsible for replacement of windows and doors at their own cost and in their own timeframes as long as any changes were still in keeping with the current appearance of the units;
• No owner would ask any of the other owners to contribute to the cost of the replacement.
  

In September 2008 the owner of lot 1 arranged for replacement of windows and doors by G James Glass and Aluminium and subsequently asked the body corporate to meet the cost of replacing the windows but not the patio door and security screens. More recently, an EGM was held at the office of Strata Vision Group on 20 September 2010 to consider the following motions:

2. that the body corporate reimburse $5,865.97 for the replacement of windows in lot 1 and should there be insufficient monies in the sinking fund, that a special levy be raised.

3. That the body corporate resolves to decline the request for a proportionate refund of expenses incurred in replacing all existing windows and security screens in unit 1 as submitted in the letter dated 28 June 2010 from Ms Korenza as it is outside the duties of the body corporate as prescribed by section 159 of the Body Corporate and Community Management (Standard Module) Regulation 2008.

4. the body corporate resolves to approve Strata Vision Group Pty. Ltd. as the body corporate administrators for the scheme, engaging appropriately qualified parties for the purposes of reporting on and providing recommendations with respect to

- the current condition of windows and associated fittings situated in a boundary wall separating a lot from common property for units 2, 3 and 4;

- remediation required to maintain the windows and associated fittings situated in a boundary wall separating a lot from common property in good condition as required by section 159 of the Body Corporate and Community Management (Standard Module) Regulation 2008; and

- whether it is required to replace the windows situated in a boundary wall separating a lot from common property in units 2,3 and 4 in order to maintain them in good condition as required by section 159.

The outcome of voting was:

Motion 2 – approved 3 votes for & 1 vote against;
Motion 3 – no longer relevant;
Motion 4 – approved 4 votes for

Prior to considering the application for interim orders, I sought a submission from the body corporate committee pursuant to section 271 of the Act. Submissions made by the secretary of the body corporate, who is also the owner of lot 1, included the following:

• At the EGM held on 20 September 2010, the following motion was carried with 3 votes in favour and 1 vote against: that the body corporate reimburse $5,865.97 for the replacement of windows in lot 1 and should there be insufficient monies in the sinking fund, that a special levy be raised.
• The owners of lots 1,2 and 3 refer to the EGM held on 20 September at which motion 2 (that the body corporate reimburse $5,865.97 for the replacement of windows in lot 1) was passed by 3 yes votes to 1 no vote. The owners of units 1,2 & 3 believe that the body corporate fulfilled its duty to ensure the structural integrity of the building by adopting the above motion;
• The owners of lots 2 & 3 are happy for the monies to be paid to the owner of lot 1;
• Motions submitted to the EGM were based on advice given by the body corporate manage, and as the owners of lots 1,2 & 3 voted in favour of motions 2 & 4 they do not believe it was an ill-founded decision;
• As there has been a disagreement in relation to repair & maintenance vs. replacement of windows and fittings by the owner of lot 4, the owners of lots 1, 2 & 3 voted in favour of motion 4 at the last EGM and this provides as follows:
  

4. the body corporate resolves to approve Strata Vision Group Pty. Ltd. as the body corporate administrators for the scheme, engaging appropriately qualified parties for the purposes of reporting on and providing recommendations with respect to

- the current condition of windows and associated fittings situated in a boundary wall separating a lot from common property for units 2, 3 and 4;

- remediation required to maintain the windows and associated fittings situated in a boundary wall separating a lot from common property in good condition as required by section 159 of the Body Corporate and Community Management (Standard Module) Regulation 2008; and

- whether it is required to replace the windows situated in a boundary wall separating a lot from common property in units 2,3 and 4 in order to maintain them in good condition as required by section 159.

• The owner of lot 1 denies that there is an agreement signed by lot owners to the effect that “No owner would ask any of the other owners to contribute to the cost of replacement”;
• Replacement of windows has been a matter of discussion since 2008 and since that time, 3 of the 4 owners have agreed that windows require replacement. Unit 3 has outlaid considerable expense to repair and maintain windows for that lot to a point where the cost of replacement is considered a more viable option;
• Given the age of the building the owners of lots 1 to 3 consider it sound practice to replace windows and sliding doors which would also ensure that they are consistent in style and appearance.
  

Prior to the making of final order all lot were invited to make submissions

The owner of lot 1 made further submissions which included the following:

• The owner of lot 1 never received a request from the committee to obtain a quote for repairs and maintenance of the windows;
• At the EGM held on 5 July 2008 the body corporate agreed to replacement of the windows and the committee requested her to provide 2 quotes for the replacement of the windows;
• Given the age of the windows, it was considered the best course of action was to replace all windows to ensure that they were consistent in style and appearance;
• The glass in two of the windows was cracked;
• It was established at the AGM on 30 October 2009 that the previous body corporate manager had given incorrect advice to the committee regarding the obligations of the body corporate regarding windows etc. situated in a boundary wall separating a lot from common property;
• The building inspection report refers to the condition of the windows for units 2, 3 and 4. It does not refer to the condition of the lot 1 windows because those windows had already been replaced;
• She has not sought to be reimbursed for the cost of the sliding door and security door as this is the lot owner’s responsibility;
• Replacement of the remaining common property windows would be more cost effective in the long term given the age of the windows and the expense which may be incurred with future ongoing repairs and maintenance until such time as they are replaced.
  

Submissions made in response by the applicants included the following:

• The submission by the secretary, who is the owner of lot 1, refers to the opinions and beliefs of the owners of lots 2 and 3, but there is no evidence to indicate that the owners of lots 2 and 3 support or endorse her submission. Therefore the submission should be regarded as a submission by the owner of lot 1 and any reference to the views, opinions or beliefs of the owners of lots 2 & 3 should be disregarded;
• The owner of lot 1 has taken the view that the majority vote on motion 2 at the EGM involves a consensus but consensus is an opinion or position reached by a group as a whole;
• Their opinions were confirmed by the building inspection report dated 15 October 2010 and obtained by the body corporate manager from BDS Inspections.

This report stated that:

- the windows do not need replacing but need to be cleaned and serviced by replacement of wheels, mohairs if required and slide guides;
- Rattling of windows within the brick cavity could be addressed by external application of sealant;
- the aluminium doors do not need replacing but need to be cleaned and serviced by replacement of wheels, mohairs if required and slide guides; and
- The glass installed in the existing doors and windows may not meet today’s safety standards due to changes made over time to the safety standard requirements.

• It is probable that the lot 1 windows were in a similar condition to the lot 2, 3 and 4 windows;
• The owner of lot 1 initiated replacement of the windows and doors of her own volition and it would be improper for the body corporate to resolve to commit funds earmarked for repairs and maintenance to undertake unnecessary replacement;
  
• The owner of lot 1 is only entitled to reimbursement of such costs as would be necessary to cover
  • - replacement of wheels, mohairs, slide guides;
  • - application of sealant where required; and
  • - replacement of glass to meet current standards.
    

Jurisdiction

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[1] 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 CMS; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or

(c) a claimed or anticipated contractual matter about -

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

(ii) the authorisation of a person as a letting agent.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[2] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[3]

Decision

This dispute concerns the replacement of windows and fittings situated in a boundary wall separating lot 1 from common property. More specifically, the applicants dispute that it was necessary to replace the lot 1 windows because they believe those windows were serviceable and could have been repaired, rather than replaced.

Section 159 of the Standard Module sets out the body corporate’s obligations regarding the maintenance of common property in a building format scheme and provides as follows:

159 Duties of body corporate about common property—Act, s 152

(1) 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.

Note— For utility infrastructure included in the common property, see section 20 of the Act (Utility infrastructure as common property).

(2) To the extent that lots included in the community titles scheme are created under a building format plan of subdivision, the body corporate must—

(a) maintain in good condition—

(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—

(i) foundation structures;

(ii) roofing structures providing protection;

(iii) essential supporting framework, including load-bearing walls.

(3) Despite anything in subsections (1) and (2)—

(a) the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier’s own benefit; and

(b) the owner of the lot is responsible for maintaining utility infrastructure, including utility infrastructure situated on common property, in good order and condition, to the extent that the utility infrastructure—

(i) relates only to supplying utility services to the owner’s lot; and

(ii) is 1 of the following types—

• hot-water systems

• washing machines

• clothes dryers

• another device providing a utility service to a lot; and

Examples for paragraph (b)—

1. An air conditioning plant is installed on the common property, but relates only to supplying utility services to a particular lot. The owner of the lot would be responsible for maintaining the air conditioning equipment.
2. A hot-water system is installed on the common property, but supplies water only to a particular lot. The owner of the lot would be responsible for maintaining the hot-water system and the associated pipes and wiring.
   

(c) the owner of the lot is responsible for maintaining the tray of a shower that services the lot, whether or not the tray forms part of the lot.

(4) To avoid any doubt, it is declared that, despite an obligation the body corporate may have under subsection (2) to maintain a part of a lot in good condition or in a structurally sound condition, the body corporate may recover the prescribed costs, as a debt, from a person (whether or not the owner of the lot) whose actions cause or contribute to damage or deterioration of the part of the lot.

(5) In this section—

prescribed costs means the proportion of the reasonable cost to the body corporate of carrying out the maintenance that can, in the body corporate’s reasonable opinion, be fairly attributed to the person’s actions.

utility infrastructure does not include utility infrastructure that—

(a) is a device for measuring the reticulation or supply of water for a community titles scheme established after 1 January 2008; and

(b) is installed after 1 January 2008, in relation to a compliance request made under the Plumbing and Drainage Act 2002 after 31 December 2007.

Ebe Court is registered on a building unit plan of subdivision (now known as a building format plan of subdivision) and accordingly, each lot is defined using the structural elements of the building such as floors, walls and ceilings. I have perused Building Unit Plan 2409 and note that on level B, lot 1 occupies 84 square metres, with a patio forming part of the lot. In a building format plan of subdivision the body corporate is required to maintain in good condition, all doors, windows and associated fittings situated in a boundary wall separating a lot from common property, as well as foundations, roofs, and essential supporting framework. [4] Therefore, the body corporate is required to maintain those windows in the walls separating lot 1 from common property, but not windows or doors that are inside the patio area as these are within the lot. Lot owners are required to contribute to such costs in shares proportional to the contributions schedule lot entitlement.

As an adjudicator, I am aware that it is not uncommon for aluminium framed windows to be replaced in buildings of this age, although I am also aware that the useful life of aluminium windows depends on a number of factors such as the initial quality of the windows, exposure to harsh weather conditions and whether the windows have been properly maintained over the years.

The owner of lot 1 states that the windows were in a poor state of repair, that glass was cracked in at least two windows and that the windows were not weather-tight.

The applicants argue that complete replacement was unnecessary and that the body corporate is only liable for such costs as were necessary to cover

- replacement of wheels, mohairs, slide guides;
- application of sealant where required; and
- replacement of glass to meet current standards.

In various previous decisions, adjudicators and the Courts have adopted a broad view of "maintenance", which has afforded the body corporate a reasonably wide discretion in the means by which it performs its maintenance obligations.[5] Accordingly, a repair can invoke an element of improvement but still remain within the general concept of repair.[6] The view has been taken that quite different solutions or methods of repair might be categorised as "maintenance" if the principal intention of the proposal is to return something to a useable condition or state of repair.[7] For example, replacement of a balcony balustrade with a safer type of balustrade can constitute "maintenance",[8] as can redecorating common property lift landings and replacing the floor coverings.[9]

On a narrow view, replacement of the windows for the purposes of addressing the effects of normal wear and tear such as loose framing, loose handles, shrunken seals, worn locks and binding of moving parts, would not be regarded as maintenance but as an improvement.

On balance, I prefer a broad view of the term "maintenance" if the purpose of the proposal is maintenance of existing structures or things, even if the work involves some change or the replacement of something with a modern equivalent. While aluminium window systems require little regular maintenance and have a comparatively long life span, the component parts do slowly deteriorate and eventually require attention.[10] In the circumstances at hand, I do not believe it is unreasonable for the body corporate to replace the 33 year old windows in toto rather than replace various components such as the glass, seals, wheels “mohairs” and slide guides.

The normal course of action in such circumstances would be for the body corporate to assess the required work and where the cost of such work exceeds the relevant limit for committee spending (i.e. the lesser amount of $1,100 x the no. of lots OR $10,000) the body corporate would obtain at least two quotes for submission to a general meeting.[11] However, the fact that the spending was not firstly approved by the body corporate, does not prima facie absolve the body corporate of its maintenance responsibilities under section 159 of the Standard Module. A similar view was adopted by the adjudicator in a decision involving Costa D’Ora Apartments.[12] In that matter, the issue for determination was whether the body corporate was responsible for the cost of balcony maintenance under section 109 of the Standard Module (now section 159 of the Standard Module) when the maintenance was undertaken by a lot owner without authority from the body corporate. There the adjudicator stated “the applicants have acted inappropriately and incorrectly by proceeding with work without formal Body Corporate approval. Notwithstanding this, I am of the view that it would not be just and equitable for the Body Corporate to avoid any financial outlay for work which would normally be its responsibility because the applicants failed to follow appropriate process...” On appeal, this view was further supported by District Court.”[13]

In any event, even if I were of the view that the replacement of windows went beyond maintenance and involved an improvement to common property, my decision would be the same. It is not uncommon for owners to modernise a building of this age by making certain improvements to the common property, and the body corporate is entitled to do so by way of a special resolution of the body corporate pursuant to section 163 of the Standard Module which provides as follows:

163 Improvements to common property by body corporate--Act, s 159
(1) The body corporate may make improvements to the common property if--
(a) the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is not more than the basic improvements limit for the community titles scheme; or
(b) the improvements are authorised by ordinary resolution and the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is within the ordinary resolution improvement range for the scheme; or
(c) the improvements are authorised by special resolution; or
(d) an adjudicator, under an order made under the dispute resolution provisions, decides the improvements are reasonably necessary for the health, safety or security of persons who use the common property and authorises the improvements.
(2) However, a body corporate may not pass more than 1 ordinary resolution mentioned in subsection (1)(b) in a financial year for the body corporate.
(3) For subsection (1), if a series of associated improvements forms a single project, the cost of any 1 of the improvements is taken to be more than the amount worked out under subsection (1) if the cost of the project, as a whole, is more than the amount.
(4) This section has effect subject to chapter 7, part 7.
(5) In this section--
basic improvements limit, for a community titles scheme, means an amount worked out by multiplying $300 by--
(a) for a principal scheme in a layered arrangement of community titles schemes--the number of layered lots for the scheme; or
(b) for another scheme--the number of lots included in the scheme.
ordinary resolution improvement range, for a community titles scheme, means an amount that is--
(a) more than the basic improvements limit for the scheme; and
(b) not more than the amount worked out by multiplying $2000 by--
(i) for a principal scheme in a layered arrangement of community titles schemes--the number of layered lots for the scheme; or
(ii) for another scheme--the number of lots included in the scheme.

I note that from the minutes of the EGM held on 20 September, that the owners of lots 1,2 and 3 voted to approve the replacement of the lot 1 windows. As 3 of the 4 lots voted in favour of the motion the requirements for a special resolution were satisfied. [14] While I do not dispute that the lot 1 windows could have been repaired by servicing or replacement of the various component parts, for the above reasons, I believe it was reasonably open to the body corporate to opt in favour of replacement at this point in time.

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[1] See sections 227, 228, 276 and Schedule 5 of the Act.
[2] Section 276(2) of the Act.
[3] Section 284(1) of the Act.
[4] See for example The Breakers [2001] QBCCM
[5] Body Corporate for Golden Sands Highrise v Galtos & Anor, Appeal 33 of 1999, District Court (Southport), Robin DCJ, 10 March 2000, paragraph 18. See also Surfers Aquarius, Application 0218-2005, RA Meek, 11 November 2005;
[6] Proprietors “The Rocks Resort” v. Costi, Building Units Appeal Tribunal No 227 of 1997, O’Driscoll SM, 24 September 1997.
[7] Merrimac Heights, Application 0246-2006, RA Meek, 2 May 2006.
[8] Las Rias, Order 0063-2006, L Ex, 8 June 2006.
[9] Bayview Shores, Order 0412-2004, RA Meek, 16 November 2004.
[10] Howard, Burgess & Lim, 2007,Comparative Service life assessment of Window Systems, Australian Government/ Forest and Wood Products Research and Development Corporation.
[11] Section 152 of the Body Corporate and Community Management (Standard Module) Regulation 2008.
[12] ID Rosemann in Costa D'Ora Apartments [2006] QBCCMCmr 621 (27 November 2006).
[13] Klinger & Anor v Body Corporate for Costa D’Ora Apartments [2007] QDC 300 at paragraph 67 and 68.
[14] See District Court judgement of White J in Stainlay and Tecelec (QLD) Pty Ltd v Body Corporate for No. 9 Port Douglas Road 177/2006