Royal Palm [2011] QBCCMCmr 489 (4 November 2011)

Last Updated: 8 December 2011

ADJUDICATOR’S ORDER
Office of the Commissioner
for Body Corporate and Community Management

CITATION:	Royal Palm [2011] QBCCMCmr 489
PARTIES:	The body corporate for Royal Palm (applicant)
SCHEME:	Royal Palm CTS 9098
JURISDICTION:	Sections 227(2) and 229(3)(a) of the Body Corporate and Community Management Act 1997 (Qld) (Act), applying the Act and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).
APPLICATION NO:	0997-2011
DECISION DATE:	4 November 2011
DECISION OF:	P Dowling, Adjudicator
CATCHWORDS:	COMMITTEE SPENDING AND GENERAL MEETING PROCEDURES – whether spending is necessary to meet an emergency; whether the committee should be authorised to approve work expected to cost more than its spending limit; whether the body corporate should be able to hold an extraordinary general meeting without giving owners 21 days notice of the meeting. Act, s 243A; Accommodation Module, s 72.

ORDER MADE:

I hereby order that an extraordinary general meeting of the body corporate for Royal Palm community titles scheme 9098 convened for the purpose of considering a motion or motions relating to maintaining the building’s emergency lighting system will not be invalid simply because the requirement for 21 days notice in section 72 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 is not complied with, provided that the meeting is not held until at least 10 days after notice of the meeting is given to the lot owners.

REASONS FOR DECISION
Introduction

[1] The body corporate seeks an urgent determination by an adjudicator to either:

1. Increase the committee’s spending limit to $50,000 plus GST for emergency spending on the building’s emergency lighting system (ELS); or
2. Permit an extraordinary general meeting to be held 10 days after notice of the meeting has been issued to owners to consider spending relating to the ELS.

[2] The application was made to the commissioner as a consequence of a committee resolution under section 54 of the Accommodation Module. On 25 October 2011, David Fox (chairperson) emailed all committee members about making the application. On 27 October, four of the six other voting members of the committee agreed. The committee has power to decide to make a dispute resolution application (s 100(1) and (2), Act and s 42(1)(e), Accommodation Module).
[3] The commissioner has immediately referred the application to me under section 243A of the Act. The commissioner may make the referral if he reasonably considers the application relates to emergency circumstances. The commissioner may immediately refer the application to an adjudicator without giving written notice under section 243(1) (s 243A(2), Act).

Analysis
The ELS

[4] The body corporate submits the building’s ELS is supported by a generator in case of loss of supply of electricity and an uninterruptible power supply (UPS) and battery bank in case of failure of electricity and the generator. It states the system controlling the battery back-up has failed and needs replacement.
[5] The body corporate says it is urgent that the UPS be replaced or that the entire ELS be replaced because it is understood that as the UPS is not operational, the building is not in compliance with the relevant fire safety legislation and protection to the body corporate from its insurance policy may not be available.

Is the body corporate responsible to maintain the ELS?

[6] The ELS would seem to be utility infrastructure by which lots and/or common property are supplied with a utility service (utility infrastructure and utility service defined schedule 6, Act). Mr Fox’s email described proposed work to infrastructure in the common property basement. The quotation from Jemstar Electrical Services Pty Ltd dated 27 October (Jemstar) refers to work to infrastructure in stairwells, to exit lights and in a common property basement. On the basis of this material, I am satisfied the infrastructure is common property (s 20, Act).
[7] The body corporate has a duty to administer, manage and control common property reasonably and for the benefit of lot owners (s 152(1), Act). It must maintain common property in good condition (s 157(1), Accommodation Module).

Is the ELS in good condition?

[8] I am satisfied from the following material that elements of the ELS are not in good condition:

1. In an email dated 18 October to Adam and Kim Turner (the building manager), Merv Swanson (Queensland State Manager of CPS National) (CPS) said that the UPS has had recent issues which CPS has not been able to rectify. He said it leaves two options. The first involves trying to identify the cause of the issues which will mean no emergency lighting back-up for about two weeks and the possibility of other issues being identified. The second involves replacing the UPS system and upgrading the ELS because existing systems are no longer available. CPS recommended the second option because of ongoing issues with the existing UPS system and the uncertainty for ongoing reliable operation if the first option is taken.
2. In an email dated 24 October to the building manager, Mr Swanson referred to a callout on 21 October and said there is no emergency lighting back-up if a power failure occurs. He stated CPS “strongly recommends replacing the UPS system as a matter of priority”.

Cost to maintain the ELS

[9] Ordinarily, the way the body corporate would attend to a maintenance issue would be based on factors such as the proposed cost of work and how the work would be funded. Depending on the circumstances, either the committee or the body corporate in general meeting could make the necessary decisions.
[10] The committee may authorise spending that is within its spending limit (relevant limit for committee spending defined schedule, Accommodation Module). The committee cannot approve above the limit unless authorised in a way mentioned in section 149(1) of the Accommodation Module.
[11] The body corporate states the committee’s spending limit is $30,400. The first option mentioned by CPS anticipates expenditure of approximately $4,000. CPS’s preferred second option anticipates expenditure of approximately $30,000 plus GST. Jemstar quoted $45,178 for work relating to the ELS. A view expressed in the application is rather than replace the UPS, all emergency lighting should be replaced to create a system that is more common practice in similar buildings and would be more economical over time. The cost to replace all emergency lighting would be approximately $50,000 plus GST.
[12] Other than the first option mentioned by CPS, all other proposed spending is more than the committee’s spending limit. I may authorise this spending if satisfied it is required to meet an emergency (s 149(1)(c) and (3), Accommodation Module).

Is an order necessary to meet an emergency?

[13] I am satisfied from submissions that work to maintain the ELS is required to meet an emergency. An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute about the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act).
[14] The first alternative order sought is an authorisation under section 149(1)(c). This alternative was mentioned by Mr Fox in his email to committee members. Mr Fox also suggested asking the commissioner for a shorter time to hold an extraordinary general meeting.
[15] For the following reasons, I consider a proposal/s to maintain the ELS should be considered in general meeting rather than authorising the committee to authorise spending above its limit:

1. The four voting members who responded to Mr Fox’s email would seem to have agreed with his suggestion to ask for a shorter time to hold a general meeting. These members do not appear to agree with authorising the committee to spend up to $50,000 plus GST.
2. In his email, Mr Fox stated if the application is supported and some more quotes are obtained, the issue could be approved at a committee meeting scheduled for 2 December 2011. It would seem the committee is prepared to wait for about a month to decide on a course of action. A general meeting could be held in this time.
3. There would seem to be a number of options available to maintain the UPS, including one involving a small cost (which would seem to have its shortcomings). It may be appropriate that the alternative ways to maintain the ELS are explained to owners before a particular direction is decided.
4. Even though it is submitted there are funds available to do work of the nature recommended by CPS without the need for a special contribution, Mr Fox’s email stated this is unplanned expenditure. If a liability arises for which no provision or inadequate provision has been made in the budget, the body corporate must, in general meeting, fix a special contribution to be levied on lot owners (s 139(2), Accommodation Module). It may be necessary to raise money before authorising the expenditure or to vary budgets. Decisions of this nature can only be made in general meeting.

[16] A general meeting may only be held after owners are given at least 21 days notice of the meeting (s 72, Accommodation Module). The body corporate asks for a shorter notice period.
[17] On a number of occasions, adjudicators have reduced the requirement of 21 days notice, particularly in recent times with the damage caused to schemes by natural disasters (see for example, Tennyson Reach [2011] QBCCMCmr 18, Belvedere Court [2011] QBCCMCmr 74 (24 February 2011), Regatta Apartments [2011] QBCCMCmr 171 (20 April 2011)) and One Bright Point [2011] QBCCMCmr 292 (12 July 2011)).
[18] I am satisfied the circumstances demonstrated by the body corporate warrant making an order limited to permitting a reduced notice period. The maintenance of the ELS needs to be dealt with as soon as possible. While owners should have opportunity to determine the work to be carried out, I am satisfied there are urgent circumstances which warrant timely consideration of any proposals put to them. While the committee may give a longer notice period than 10 days, I am prepared to accept the body corporate’s submissions for allowing it to reduce the legislated notice period.
[19] For these reasons, I consider it is appropriate in the circumstances to make an order in terms of the nature sought.