Aspire Apartments [2011] QBCCMCmr 47 (14 February 2011)

Number of Scheme:	37800
Name of Scheme:	Aspire Apartments
Address of Scheme:	1 West Street IPSWICH 4305

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

I hereby order that the Committee for the Body Corporate for Aspire Apartments Community Titles Scheme 37800 is authorised to engage:

Schindler Lifts Australia Pty Ltd to undertake works to rectify flood damaged lifts, pursuant to the quotation dated 19 January 2011 for $114,400.66 (inc GST).
Wormald to undertake works to rectify flood damaged fire systems, pursuant to the quotation dated 18 January 2011 for $31,591.00 (inc GST).

I further order that the application is otherwise dismissed.

Aspire Apartments community titles scheme 37800 (Aspire Apartments) consists of 108 lots and common property. The community management statement (CMS) for Aspire Apartments indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Survey Plan 172863.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by the Body Corporate for Aspire Apartments (applicant) on 11 February 2011, pursuant to a resolution passed outside a Committee meeting on 11 February 2011. The applicant sought declaratory orders in the following terms:

The Committee urgently seeks authorisation to improve the acceptance of the quotation provided Schindler Lifts of $114,400.65 (incl GST) for the rectification of the lifts due to flood damage.

The Committee further seeks authorisation to approve the acceptance of the quotation provided by Wormald at a cost of $31,591.00 (incl GST) for the rectification of the fire systems due to flooding damage.

The Committee further seeks authorisation to pay the invoice provided by Barry Bros. at a cost of $70,928.00 (incl GST) for the pumping out of flood water from the car park of the complex.

Section 243A of the Act provides that the Commissioner may refer an application immediately to a dispute resolution officer, notwithstanding that affected persons have not been given notice of the application and invited to make submissions as would normally be required under section 243(1). This referral can occur when the Commissioner reasonably considers that the application relates to emergency circumstances and it is not appropriate to deal with the application as an interim order under section 247. The example of emergency circumstances provided in section 243A(1)(a) is when the repair or replacement of a burst water pipe exceeds the Committee’s spending limit.

The application relates to expenditure on works necessary to rectify defects caused when the scheme was inundated with flood water. There are three elements to the application.

First, the Body Corporate states that there are currently no operable lifts in the scheme. I note that the building comprises 21 levels (A-U). The application includes a quote dated 19 January 2011 from Schindler Lifts Australia Pty Ltd for $114,400.66 (inc GST), which details the rectification work necessary. The application says there is difficulty obtaining alternative quotations for this work. Schindler is the contracted supplier and maintenance company for the lifts within the scheme. The applicant says that to go outside of this contract would be more expensive and Schindler would not warrant the work of the third party.

Second, the applicant says the fire systems in the scheme are not operating correctly. They provide two quotes to rectify this work:

The applicant expresses a preference for Wormald, being cheaper, and says it is a reputable company. The Wormald quote outlines the scope of works required.

The Body Corporate says the Committee will meet on 15 February 2011 to discuss the calling of an Extraordinary General Meeting (EGM). However they say that, because of the time necessary to call the EGM and the time required to order parts for the rectification works, they wish to progress these works as soon as possible. They indicate that the Committee will look at the necessity of seeking approval for a special levy at the EGM.

Third, the Body Corporate is seeking authorisation to pay an invoice dated 31 January 2011 from Barry Bros. Specialised Services Pty Limited. The invoice, in the amount of $70,928 (inc GST) lists items dated 14 to 19 January 2011 for the pumping of water from the building carpark. The application indicates these works were arranged by the on-site manager as a matter of urgency.

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:

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

The issue for consideration in this matter is whether the circumstances existing at Aspire Apartments are such that it is appropriate to override the usual right of owners to vote on Body Corporate expenditure, and instead authorise the expenditure on the works notwithstanding that they have not been considered by owners.

Section 149-151 of the Accommodation Module provide for the control of spending by a body corporate. A committee is prohibited from authorising spending above the committee spending limit except in certain circumstances, including where an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order[4].

The relevant limit for committee spending is the amount set by ordinary resolution of a general meeting or, if no amount is set, $200 per lot. If no general meeting resolution has changed the committee spending limit in this scheme, the committee spending limit would be $21,600. The major spending limit for the scheme (again, if the default limit has not been altered by a general meeting) is $10,000[5].

Each of the three items of works are above the committee and major spending limits. This means that, pursuant to section 150 of the Accommodation Module, the spending must normally be approved by an ordinary resolution at a general meeting at which owners have been given at least two quotes for the work with the notice of meeting. If, for exceptional reasons, it is not practicable to obtain two quotes, a single quote may accompany the notice of meeting.

Only one quote has been obtained for the lift repairs. In the circumstances, this is entirely appropriate. The Body Corporate has a contracted lift company and it is entirely reasonable in the circumstances to use this contractor.

It is not apparent that quotes were obtained for the work to pump out the carpark levels. However in a genuine emergency such as the recent flooding, it is not necessarily unreasonable to simply proceed with any appropriately qualified contractor who is available to undertake urgently required works as quickly as possible.

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[6]. It must maintain common property in good condition, and, to the extent that common property is structural in nature, in a structurally sound condition[7]. The three elements of this application are clearly works that the Body Corporate is obliged under its legislative responsibilities to undertake.

The requirement in section 149(1)(c) of the Accommodation Module is that an adjudicator may authorise the Committee to give effect to a spending proposal if it is required to meet an ‘emergency’. Therefore I will consider the circumstances of each element.

In regard to the lift and fire systems repairs, I note that quotes were obtained some 3-4 weeks ago. Unfortunately, there is no explanation in the application as to why no action was taken at that time to either call an EGM to approve those quotes or to lodge an application seeking approval for the spending. The application does not shed any light on what has been occurring in the scheme over the last 3-4 weeks. Given the circumstances, however, I do not intend to delay this matter further by investigating that matter. The building has apparently been without operating lifts for a month, which at the very least would be a significant inconvenience to occupants. Moreover, the fire systems are not functioning properly, which generates a serious safety risk. Therefore, while it is not clear whether the Body Corporate has acted with adequate haste, I am satisfied that emergency circumstances warrant the urgent rectification of the lifts and fire systems.

However a different situation arises in regard to the works to pump out water from the scheme. I do not doubt that there was a genuine emergency and that these works were necessary. But the work has already been undertaken. The Body Corporate cannot seek authorisation to spend these funds, as it has in effect already done so itself. Having engaged Barry Bros. to undertake the works, and Barry Bros having undertaken the works presumably in good faith, the Body Corporate would seem to have no alternative but to pay the invoice. I draw owners’ attention to section 310 of the Act in this regard.

In regard to the invoice, it would appear that what the Body Corporate is effectively seeking is a ratification of the decision to engage Barry Bros. As the work was done some four weeks ago and the invoice was presented two weeks ago, the urgency is unclear. The application does not outline any emergency in this matter. Therefore there would seem to be no reason why this matter cannot simply be put to owners at the EGM.

On balance I am satisfied that the circumstances as described in the application regarding the lift and fire systems repairs amount to an emergency that warrant an adjudicator overriding the normal decision-making processes of the Body Corporate. Accordingly I intend to authorise the Committee to engage the relevant contractors to undertake the required rectification works, notwithstanding that this spending has not been authorised by owners at a general meeting.

I am not satisfied that emergency circumstances exist with regard to the Barry Bros invoice, given that it relates to work that has already been undertaken. Therefore I intend to dismiss that aspect of the application. This issue can be considered by all owners at the EGM.

The application makes reference to the potential need to raise a special levy. As I would assume that the budgets for the scheme passed at the last annual general meeting did not include provision for these particular works, I anticipate that a special levy would be necessary[8]. However, if the Committee intend to proceed with the works before the EGM based on the authorisation in this order, they should consider whether the Body Corporate has sufficient current financial reserves to cover the cost of the three projects in the event that a special levy is not passed by owners.

[5] The definition of the major spending limit set the limit (where no amount has been set by a general meeting) as the lesser of $1,100 x the number of lots (which in this case would be $22,00) or $10,000, whichever is less
[6] Section 152(1) of the Act
[7] Section 157(1) of the Accommodation Module
[8] Note section 137 and section 139(2) of the Accommodation Module.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Aspire Apartments [2011] QBCCMCmr 47 (14 February 2011)