Tennyson Reach [2011] QBCCMCmr 18 (21 January 2011)

Tennyson Reach [2011] QBCCMCmr 18 (21 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0038-2011

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the body corporate for Tennyson Reach community titles scheme 39925

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0038-2011

“Tennyson Reach” CTS 39925

This application was made to the commissioner on 20 January 2011 (amended 21 January) seeking:

1. Declaratory orders that:
   • (a) emergency circumstances exist at the scheme following the flood inundation; and
   • (b) exceptional reasons exist that prevent multiple quotations from being obtained for the rectification and clean up works that will need to be urgently carried out at the scheme to make the building and its lots habitable.

Further

2. An order that the committee is authorised to engage Mirvac Constructions (Qld) Pty Ltd (Mirvac) to undertake rectification works necessary to restore the building for occupancy following flood inundation at a cost not to exceed $2,950,000.00, pursuant to the letter from Mirvac dated 18 January 2011; and
3. The body corporate may convene an extraordinary general meeting on at least 7 days notice for the purpose of considering a motion to raise a special levy to fund any rectification and clean up works undertaken as a result of the flood inundation.

Alternatively

4. An order that the committee is authorised to engage Mirvac to undertake rectification works necessary to restore the building for occupancy following flood inundation at a cost not to exceed $1,000,000.00, pursuant to the letter from Mirvac dated 18 January 2011; and
5. The body corporate may convene an extraordinary general meeting on at least 7 days notice for the purpose of considering motions relating to undertaking the necessary rectification and clean up works as a result of the flood inundation and to raise a special levy to fund any such works.

Alternatively

6. The body corporate may convene an extraordinary general meeting on at least 7 days notice for the purpose of considering motions relating to undertaking the necessary rectification and clean up works as a result of the flood inundation, and to raise a special levy to fund any such works.
   
   

Section 243A of the Body Corporate and Community Management Act 1997 (Act) applies if the commissioner reasonably considers an application should be immediately referred to a dispute resolution officer because it relates to emergency circumstances and it is not appropriate to deal with the application under section 247 of the Act. The commissioner may immediately refer the application to an adjudicator without giving written notice pursuant to section 243(1) (s 243A(2), Act). In this instance, the commissioner has referred the application to an adjudicator pursuant to section 243A.

This application has been made as a consequence of the recent Brisbane flood. The body corporate submits the scheme has been severely affected by the flood; both basement levels and the ground floor (plus 9 apartments) of the building were totally inundated with water. It states essential service infrastructure (including electricity, lift cars, fire service equipment, telephone communications and sprinkler pumps) in the basement levels have been damaged and rendered inoperable. The body corporate submits that all occupants of the building have been evacuated, hundreds of occupiers are currently displaced and the building will remain inhabitable until essential service infrastructure is restored and necessary clean up works are completed to alleviate any health and safety risks. It states if Mirvac is not engaged then available contractors and resources may be lost to other projects which may delay the time and increase the cost to reinstate the building. This is confirmed by Graham Upton of P.E.P Pty Ltd, a consultant appointed by the committee to work with Mirvac to rectify infrastructure.

On the basis of these submissions, I am satisfied an emergency situation has arisen in the scheme.

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 (s 152(1), Act). It must maintain common property in good condition, including to the extent that common property is structural in nature, in a structurally sound condition (s 157(1), Accommodation Module). The body corporate has demonstrated that since the flood, Mirvac has started recovery work, the committee has appointed a fire engineer to assess measures that can be taken to ensure the building is fire safe and it has appointed P.E.P Pty Ltd to work with Mirvac to rectify infrastructure. It is apparent from the material that further extensive work is necessary to maintain common property in good condition.

On 18 January 2011, Matthew Wallace of Mirvac provided preliminary estimates on an open book basis that the cost to clean up common property trafficable areas is estimated to be $300,000 and the estimated cost of works for the rectification of common property to provide a habitable environment is $2,650,000, with the works estimated to take 6 to 8 weeks.

It has been demonstrated a number of other builders have been contacted. In an email to the body corporate manager dated 20 January 2011, Graham Upton stated Adco Constructions, Hutchinson Builders and Watpac were contacted to gauge their interest in competing for the work, and they replied they would not be interested in presenting a competing offer as they were not willing to carry out the work at cost.

On 20 January 2011, Mirvac stated it will not charge any margin or for its time in relation to the rectification works. Its estimate includes prospective costs of up to $1,000,000 for priority works (completion of clean up works currently underway, preliminary electrical works to enable restoration of power and preliminary fire control equipment), and costs of $2,950,000 (including priority works) to complete clean up works, to rectify damage to ground floor lobbies, lifts and the completion of works including electrical, fire and hydraulic works.

It would seem from submissions the estimated amount of spending is above the relevant limits for committee spending and for major spending for the scheme. Section 149(1) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module) provides a committee may only give effect to a proposal involving spending above its relevant limit in specific instances. Relevantly, it may do so if an adjudicator is satisfied the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions (s 149(1)(c), Accommodation Module). An order made by an adjudicator is not subject to the requirements of section 150 of the Accommodation Module about proposed spending above the relevant limit for major spending (s 149(3), Accommodation Module). An adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act).

In the circumstances, I am satisfied it is appropriate to authorise emergency spending in the terms of the fourth order sought. Given the body corporate submissions that its total net assets are $1,138,163.90, it has funds available to meet this cost. The authorisation of this amount will enable Mirvac to carry out works pending the body corporate holding an extraordinary general meeting to consider motions about authorising other work.

The body corporate has also sought authorisation to reduce the regulated time for giving notice of a general meeting. It asks that an order be made reducing the notice of general meeting period to 7 days. The body corporate refers to the adjudication in London Woolstore Apartments [2010] QBCCMCmr 245 (1 June 2010). I says if this order is made, the body corporate manager intends to effect service of the notice electronically (if possible), place a copy of the notice on an internet portal for the scheme and send a SMS text message to owners to ensure owners have prompt and reliable access to the notice upon its circulation. The body corporate submits it has been working closely with owners on this issue and they will not be taken by surprise by the orders sought.

Section 72 of the Accommodation Module provides that a general meeting must be held at least 21 days after notice of the meeting is given to the lot owners. As stated by the adjudicator in London Woolstore Apartments, a shortened time for giving notice “will provide very little time for owners to consider the specific motions and make arrangements to attend the meeting, appoint a proxy or return a voting paper. Such a short notice period has the potential to disenfranchise voters”. While these are important considerations, on balance I am satisfied there is a just and equitable basis for allowing the reduced notice period. While owners should have opportunity to participate in the determination of the rectification program, including how it is to be funded, I do not consider it is appropriate in the circumstances that owners have 21 days notice of the motions to be considered. For the reasons given by the body corporate, the matters relating to repairing damage to scheme land need to be dealt with as quickly as possible. I also note the body corporate has proposed various methods to quickly communicate with owners.

The body corporate has also sought a declaration about obtaining multiple quotations. Given the statements made by Mr Upton, it would seem it is not practicable to obtain two quotations for the work (s 150(6), Accommodation Module). However, I do not consider it is necessary that a declaration to this effect is made by me. An explanation of the nature included in this application can be given to owners in the notice of the meeting for their consideration.

In making this order, I have also noted that seventeen owners have indicated support for the application.