Miami Links Two [2011] QBCCMCmr 189 (5 May 2011)

Number of Scheme:	21042
Name of Scheme:	Miami Links Two
Address of Scheme:	160 Bardon Avenue MIAMI QLD 4220

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the Body Corporate for Miami Links

I hereby order that Motion 2 Retaining wall reinstatement considered at the extraordinary general meeting of the Body Corporate for Miami Links is deemed to have been passed as an ordinary resolution and that the Body Corporate for Miami Links is authorised to implement the motion.

This application relates to a proposal to repair a collapsed retaining wall. A motion seeking approval to engage a contractor to undertake the work, and to raise a special levy to fund the work, failed to pass as a special resolution at a general meeting although a majority of owners voted in favour of the motion. The Body Corporate now seeks authorisation to proceed with the work as an emergency expenditure. The questions to determined are whether the circumstances do amount to an emergency and whether it is appropriate to approve the repair works.

Miami Links Two community titles scheme 21042 (Miami Links Two) consists of 38 lots and common property. The community management statement (CMS) for Miami Links Two shows that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme. The scheme is registered as Group Titles Plan 1659.

This application was lodged under the Body Corporate and Community Management Act 1997 (Act) by the Body Corporate for Miami Links Two (applicant) on 3 May 2011, pursuant to the resolution of 28 April 2011. The applicant sought a declaratory order in the following terms:

That an order be issued requiring the Body Corporate to reinstate the failed section of concrete crib retaining wall in accordance with the structural engineers (Taberco Pty Ltd) scope of works and specification and that the quote from ConCrib Pty Ltd of $85,250.00 incl GST be accepted, that, as recommended by the engineer a contingency of 20% $17,050.00) be provided for, and that engineering and safety costs of $15,095.00 be recovered.

And that a Special Levy of $117,395.00 at $3,089.34 per contribution schedule lot entitlement be issued providing 30 days for payment with no discount being applicable to this levy.

That this application be considered as an Emergency Expenditure Application (Section 243A)

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

An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about: a claimed or anticipated contravention of the Act or the CMS; or the exercise of rights or powers, or the performance of duties, under the Act or the CMS.[2] An order may require a person to act, or prohibit a person from acting, in a way stated in the order. An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[3]

(a) an application should be immediately referred to a dispute resolution officer because it relates to emergency circumstances; and

a burst water pipe the repair or replacement cost of which exceeds the body corporate committee’s expenditure limit under the regulation module applying to the scheme

(2) The commissioner may immediately refer the application to a dispute resolution officer without giving written notice as mentioned in section 243(1).

It appears a substantial section of a retaining wall in the scheme collapsed on 26 December 2010. A problem with the wall was initially identified in November 2010, and the Body Corporate’s insurers assessed the wall at that time. However in late March 2011 the insurers advised that they would not accept the claim for the rectification of the wall. The Body Corporate is disputing this decision with the insurer and the Financial Ombudsman.

Structural engineers, Taberco Pty Ltd, were engaged by the Body Corporate in respect to the matter and undertook a tender process for the rectification works. Only two companies lodged a tender, one for $85,250 and the second for $87,879. However the second company then withdrew its tender. On 18 March 2011 Taberco advised the quote from the remaining tenderer, ConCrib Constructions, met the scope of works. Taberco also recommended that, given the nature of the works, a contingency of 20% be allocated for the work.

On 28 April 2011 the Body Corporate held an Extraordinary General Meeting (EGM) to consider a motion to approve the repair works in accordance with the Taberco scope of works and the ConCrib quote. The amount of the works was listed as $85,250 (inc GST), plus the recommended contingency of $17,050, and engineering and safety costs of $15,095. Motion 2 also sought approval to raise a special levy for the cost of the retaining wall works (totalling $117,395[4]).

It appears that the third amount ($15,095) related to funds already spent by the Body Corporate from December 2010 to March 2011 in relation to the retaining wall, including the engagement of Taberco, certification works, and works to ensure the site safety. Details of these works have been provided to me, on request, but it is not clear that they have been provided to owners. However it seems that these works have already been approved by the Committee, and the purpose of their inclusion in the motion is simply in relation to the raising of the special levy relating to the work.

Motion 2 received 13 votes in favour, 12 against and two abstentions. However, because the motion was listed as requiring a special resolution, the motion was declared as lost. The application does not detail the concerns of those owners who voted against the motion, however there is no indication of any dispute that the work is required to be undertaken.

The application includes an email from the director of Taberco stressing the need for the work to progress as soon as possible. He says the embankment is currently stable but with further delay, there is risk of further damage to the surrounding area and particularly to units in close proximity to the damaged wall. He indicates this risk is increased with the current unusually wet weather.

The application says the Body Corporate require funds to enable the works to proceed within the timeframe recommended by the engineer, to ensure the safety of the wall, the common property, to enable Lot 32 to use its garage, and to ensure the structural integrity of Lot 36 and 37.

A body corporate has a duty to administer, manage and control common property and body corporate assets reasonably and for the benefit of lot owners[5]. It must maintain common property in good condition[6]. I am satisfied from the material provided that the work detailed in this application is a responsibility for the Body Corporate to undertake, and that there is a need for the Body Corporate to progress the work as soon as practical.

Section 151-153 of the Standard Module provide for the control of spending by a body corporate. Section 151 provides that the a committee is prohibited from authorising spending above the committee spending limit except in certain circumstances, including where the spending is specifically authorised by an ordinary resolution of the body corporate or an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order.

In this scheme the Committee spending limit is $7,600 and the major spending limit is $10,000.[7] The rectification works are clearly above these limits. As such, the matter required a general meeting resolution. In addition, pursuant to section 152(2) of the Standard Module, two quotes for the work required unless, in exceptional circumstances, only one quote could be obtained.

In this case the proposal has been put to a general meeting and one quote was obtained. It seems genuine attempts were made to source multiple quotes. The application does not explain whether there are other potential contractors who could also be approached to quote for the work. However, given the urgency of the work and the attempts made to date, the submission of only one quote to the EGM does not appear unreasonable. Moreover, it is noted that the withdrawn quote demonstrated to owners that the proposed ConCrib quote was competitively priced.

The motion was listed as requiring a special resolution, apparently because of a mistaken belief that a special resolution was required for spending above the major spending limit. A special resolution may well have been required for this work if it was an improvement to common property[8]. However, given that the work is clearly maintenance, an ordinary resolution was sufficient to approve the motion pursuant to section 151(1)(a) of the Standard Module.

An adjudicator can authorise expenditure if satisfied that the spending is necessary to meet an emergency. I am satisfied that the current circumstances amount to an emergency. The evidence provided by the structural engineers indicates that there is a risk if the matter is delayed further. Moreover, it seems to me that the Body Corporate has made reasonable attempts to pursue this work in accordance with the legislative process, notwithstanding the error in the listed motion type.

A majority of owners have already agreed to the spending and the special levy. Their vote would have been sufficient to approve Motion 2 had it been correctly listed as an ordinary resolution. Given the seriousness of the circumstances, I do not consider that it would be appropriate to delay the matter further by requiring the Body Corporate to call a second EGM to consider the motion as one requiring an ordinary resolution. Accordingly I intend to make an order deeming Motion 2 passed as an ordinary resolution and authorising the Body Corporate to implement the motion.

I would recommend that the Committee notify owners of this decision so that they are aware of the change of the result of EGM Motion 2.

[4] It appears that there was initially an error in the calculation of the total amount for the special levy and this was corrected down from $119,045 to $117,395.
[5] Section 152(1) of the Act
[6] Section 159 of the Standard Module

[7] See the definitions of “relevant limit for committee spending” and “relevant limit for major spending” in the Schedule to the Standard Module.
[8] Section 163

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Miami Links Two [2011] QBCCMCmr 189 (5 May 2011)