Quay West Brisbane [2015] QBCCMCmr 60 (12 February 2015)

Last Updated: 19 February 2015

ADJUDICATOR’S ORDER

Office of the Commissioner

for Body Corporate and Community Management

ORDERS MADE:

REASONS FOR DECISION

Introduction

[1] Quay West Brisbane Community Titles Scheme 16610 consists of 136 lots and community property. It is a residential scheme located in the Brisbane CBD.

[2] The community management statement for Quay West Brisbane indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 applies to the scheme. Department of Natural Resources and Mines records show the scheme is registered as Building Units Plan 103388.

[3] Pursuant to the Body Corporate and Community Management Act 1997 (the “Act”), this application was made by AAPC Properties Pty Limited (“AAPC”), owners of lots 1 and 2. They seek the following orders:

(1) An order declaring that the decision by the Body Corporate to reject motion 2 included on the agenda of the general meeting held on 11 July 2014 was an unreasonable decision and an order requiring the Body Corporate to:

(a) agree to the proposal on the terms stated in the motion, or, alternatively,

(b) agree to the proposal on such reasonable terms and conditions as may be considered just and equitable in the circumstances.

(2) An order declaring that the decision by the Body Corporate to reject motion 3 included on the agenda of the general meeting held on 11 July 2014 was an unreasonable decision and an order requiring the Body Corporate to:

(a) agree to the proposal on the terms stated in the motion, or, alternatively,

(b) agree to the proposal on such reasonable terms and conditions as may be considered just and equitable in the circumstances.

(3) An order declaring that the decision by the Body Corporate to reject motion 4 included on the agenda of the general meeting held on 11 July 2014 was an unreasonable decision and an order requiring the Body Corporate to:

(a) agree to the proposal on the terms stated in the motion, or, alternatively,

(b) agree to the proposal on such reasonable terms and conditions as may be considered just and equitable in the circumstances.

(4) Such other orders as the Adjudicator considers appropriate.

[4] AAPC Properties seek to have the rejection of motion 2 and 3 at the General Meeting on 11 July 2014 deemed unreasonable. The issue for me to determine is whether the opposition to the Motions were unreasonable in the circumstances.

Overview

The lead up to the dispute

[5] AAPC own lots 1 and 2 and has caretaking and letting rights to the scheme. They manage approximately 48 of the residual 134 residential lots.

[6] The dispute arose as a result of AAPC requesting that the Body Corporate include two motions at a general meeting of the Body Corporate to address matters of lighting and fire safety issues at the property.

[7] The motions submitted to the Body Corporate were:

Motion 2 - Improvements to Common Property

(Ordinary Resolution) Proposed by AAPC Properties Pty Ltd (the owner of lots 1 and 2 in Building Unit Plan 103388)

THAT the Body Corporate:

1. Grant to AAPC Properties Pty Ltd, the owner of lots 1 and 2 in Building Unit Plan 103388(Accor) authorisation to carry out, at its cost, an improvement to common property being the installation of illuminated exit signage in the lift lobbies on all accommodation levels of the Building;
2. Excuse Accor from the obligations contained in section 164, Body Corporate and Community Management (Standard Module) Regulation 2008 to maintain the improvements noted in paragraph 1 will be carried out by the Body Corporate.

Motion 3 – Improvements to Common Property

(Ordinary Resolution) Proposed by AAPC Properties Pty Ltd (the owner of lots 1 and 2 in Building Unit Plan 103388)

THAT the Body Corporate:

1. Grant to AAPC Properties Pty Ltd, the owner of lots 1 and 2 in Building Unit Plan 103388(Accor) authorisation to carry out, at its cost, an improvement to common property being the upgrade of the Fire Control Panel including direct connection to the Fire Brigade in the event of an alarm inactivation in individual units with addressable detectors;
2. Subject to paragraph 3 below, that the Body Corporate excuse Accor from the obligations contained in section 164, Body Corporate and Community Management (Standard Module) Regulation 2008 to maintain the improvements noted in paragraph 1 and the maintenance of the improvements noted in paragraph 1 will be carried out by the Body Corporate;
3. During such times as the only lots within the strata scheme that have addressable fire detectors are those that Accor has a lease over, Accor will service and maintain (at its own cost) that part of the fire panel that relates to the addressable detectors.

Procedure

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

[9] 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 Community Management Statement (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]

[10] The Commissioner invited the Body Corporate and each owner to make a written submission regarding this application. Submissions were received from the Body Corporate and a number of owners.

[11] I have decided the application based on the written material provided. The most relevant material is referred to below.

Jurisdiction

[12] A Body Corporate must administer the common property and body corporate assets for the benefit of all owners of the lots included in the scheme[4], enforce the community management statement (including enforcing any by-laws for the scheme and carry out the other functions given to the body corporate. The body corporate must act reasonably. [5]

[13] A Body Corporate for a community titles scheme must administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners while ensuring compliance with the obligations with regard to common property and body corporate assets. [6]

[14] 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. [7]

[15] Section 164 of the Module regarding improvements to common property by an owner of a lot, requires the body corporate, if asked by an owner of a lot, to authorise the owner to make an improvement to the common property for the benefit of the owner's lot.

[16] Any improvement must be authorised by ordinary resolution of the body corporate unless the improvement is a minor improvement; and the improvement does not detract from the appearance of any lot included in, or common property for, the community titles scheme; and the body corporate is satisfied that use and enjoyment of the improvement is not likely to promote a breach of the owner's duties as an occupier[8].

[17] An authorisation may be given under this section on conditions the body corporate considers appropriate. An owner who is given an authority must comply with conditions of the authority.. The owner must maintain the improvement made under the authority in good condition, unless excused by the body corporate. [9]

SUBMISSIONS

Submissions from AAPC

[18] AAPC submitted the following facts as relevant:

• That the motions submitted were to enhance the safety of the Scheme
• That the Body Corporate committee posted to all owners a committee explanatory memorandum schedule advising that the committee recommended that lot owners vote against the motions proposed by AAPC
• That AAPC had proposed to install the emergency exit lighting in the lift lobbies and the fire indicator panel at their cost with minimal cost to the Body Corporate
• That the Body Corporate would only be liable for ongoing maintenance of the equipment
• That the improvements proposed to the common property would benefit all owners of the Scheme.
• That it was unreasonable for the Body Corporate committee to advise owners to vote against the motions for proposed improvements to common property

Submissions from the Body Corporate

[19] The Body Corporate made the following submissions:

• The residential portion of the building is a Class 2 building under the Building Code of Australia.
• The building currently meets all fire safety requirements for buildings of this class.
• External fire safety consultants are engaged for all fire safety standards are met.
• The building has compliance certification relating to the installation of sprinklers and fire rated doors in all lots.
• The proposed motions submitted by AAPC at the EGM in June 2014 was done so without prior consultation
• The motions were voted by a total of 76 valid votes at the EGM and approximately 30% voted in favour and 70% voted against.
• The Body Corporate maintains that its members acted reasonably in voting overwhelmingly against the motion 2 and 3 proposed by AAPC.
• The Body Corporate claim that they should not be forced to adopt a proposal that is not wanted by the vast majority of owners unless exceptional circumstances exist.
• That if the motions were passed, the Body Corporate would be solely liable for the costs of the maintenance and upkeep of the common property, and that unnecessary or unwanted improvements should not be imposed upon them. The Body Corporate is entitled to consider the ramifications, not just to the owners, but to the body corporate as a whole.
• That there is no suggestion or any irregularity with the meeting.
• That both AAPC and the Body Corporate offered to all owners’ explanatory notes in relation to the motions.
• That AAPC have not provided with any compelling evidence r reasons to overturn the body corporate decision.

[20] The Body Corporate submitted that the improvements were unnecessary and a burden on the Body Corporate. Their arguments against the motions were as follows:

Fire Safety

[21] The Body Corporate state that Quay West complies with all fire and safety requirements applicable to buildings of its particular class. They state that the installations are discretionary in nature and should not be forced upon the owners and body corporate.

[22] The Body Corporate allege the improvements are not necessary as there is no evidence to suggest that fire safety will be improved in the event of a fire by the completion of the works.

[23] The Body Corporate state that the majority of owners voted against the installation of the fire safety panel being installed.

[24] The installation of a fire panel with direct access to the Fire Brigade does not ensure that the building is safer and that there is increased safety to occupants of the building.

Impact on Common Property

[25] The Body Corporate state that any improvement to common property may not in fact “improve the amenity” of the common property at all.

[26] The fact that there are no conditions placed upon the proposed installations the body corporate claim they have no power to regulate the installation and that the installation may be of a poor or inferior quality.

Maintenance

[27] The Body Corporate do not accept to take on further maintenance costs for the improvements as they cannot properly ascertain the quantum of costs and to which lots the fire panel will relate to from time to time.

[28] The Body Corporate state that where a lot owner proposes to install an improvement on common property, that the lot owner must also assume responsibility for maintaining and upkeep of the improvement to maintain it in good condition.

[29] The Body corporate claim it would be powerless to prevent the lot owner from installing substandard equipment with limited warranties exposing the body corporate to significant and open ended repairs, replacement costs or maintenance charges.

Fire Call Outs

[30] The installation of the fire panel could increase the potential for unwanted false alarm call outs by the Queensland Fire and Emergency Services, resulting in false alarm fees.

[31] The Body Corporate state that should an unwanted false alarm call out fee is incurred, that it is more likely to be from tenants in short term rentals, and not residents who would be more familiar with the fire systems. On that basis, it may be difficult or impossible to recoup the call out fee from a tenant resulting in the body corporate remaining responsible for the payment. It is suggested that the fees would be in excess of $1000 per call out.

Impact on Owners

[32] Where the body corporate has considered a discretionary improvement to increase the financial burden to lot owners, and owners have rejected the motion, that it is reasonable for the body corporate to reject the proposal.

[33] The installation of the improvement to the common property may only marginally improve the comfort, safety or general amenity for members.

[34] That the passing of motions 2 and 3 would have created ambiguity and uncertainty about owners rights and had a financial detrimental impact on owners.

Submissions from owners

[35] A summary of owner submissions highlighted that more owners were against than those for the motions. Submissions from owners against the motions include:

• A majority of owners voted for the status quo and there is no requirement to upgrade the fire safety systems and lift lobby lighting – such systems comply with requisite Australian Standards.
• The installation of new systems proposed by Accor will incur unnecessary future maintenance costs for owners and the Body Corporate
• The new systems increase the possibility of unnecessary and false fire alarm call outs
• The lighting proposed was ugly and unsightly, and not in keeping with the general appearance of the building
• The advantages and benefits of the proposed system are outweighed by the disadvantages

[36] Owners for the Motions submitted:

• The new systems will enhance the safety of the scheme
• The majority of costs are being paid for by the Lot owner
• The lot owner who proposed the motions is also the Onsite Manager and manages the rental pool.

ANALYSIS

[37] The question for me to determine in this matter is whether the vote by owners against the motion for improvement to common property constituted "opposition that in the circumstances is unreasonable". The appropriate test is to determine whether it is just and equitable to override the opposition because the opposition was unreasonable when viewed objectively.

[38] A body corporate must act reasonably when making or not making a decision about its functions.[10]

[39] The Body Corporate and owners voted against both motions 2 and 3. Of the 78 votes at the EGM, for Motion 2, relating to the lighting in lift lobbies, 23 voted for the installation and 52 voted against with 2 invalid votes.

[40] In relation to Motion 3 regarding the installation of the fire control panel, 21 votes were for the installation and 54 were against, with 2 votes invalid.

[41] The votes against motions 2 and 3 were approximately 70% of all of the votes, a majority in all the circumstances.

[42] The opposition to the motions included serious concerns regarding the potential increased call out fees causing expensive costs and charges to both the Body Corporate and owners for false fire alarm call-outs.

[43] Further, the Body Corporate and many owners were concerned about the future ongoing maintenance costs of maintaining the improvements to the common property, which was identified as unknown and potentially very costly.

[44] Some owners identified the additional lighting as too large, unsightly and ugly and detracting from the general amenity of the building.

[45] The most compelling motivation for opposing the motion by the Body Corporate and owners was the fact that the installation of additional lighting and the fire panels was not necessary as the building was already compliant with relevant Australian Fire Safety Standards. There was no evidence submitted by AACP that the improvements were necessary, but only desirable. There was no evidence provided by AACP to suggest the building was not fire safe.

[46] On the evidence, I find no basis to view the opposition to the improvements to common property as unreasonable. Owners are entitled to vote against a proposal that would possibly incur maintenance costs to the Body Corporate which effectively passes those costs onto individual lot owners. It is not unreasonable for owners to reject the motions for improvements to common property when those improvements are deemed not necessary or required.

[47] As the opposition to the improvements to common property was overwhelmingly voted against, it is not unreasonable in all of the circumstances. I cannot conclude that the failure to pass motions 2 and 3 were unreasonable decisions of the Body Corporate.

Conclusion

[48] In conclusion, while finding no basis to oppose the decision of the Body Corporate relating to motions 2 and 3 the substantial objections from owners and the body corporate appear to relate to the ongoing costs and expenses of maintenance and false fire alarm call out fees.

[49] On the evidence presented I can find no grounds to overturn the decision of the Body Corporate and approve motions 2 and 3 relating to improvements to common property. Accordingly, I must dismiss the application.

[50] It may be that AAPC may consider resubmitting the motions to another general meeting, and request approval from the body corporate to install the lighting and fire panel systems to the common property, conditional that they agree to pay for all ongoing maintenance costs.

[51] A Body Corporate may authorise an owner to make an improvement to common property for the benefit of the owner's lot or lots, and such improvement must be authorised by ordinary resolution of the body corporate[11]. It is usual that an owner must maintain the improvement to common property made under the authority in good condition[12].

[52] On terms and conditions that AAPC be liable for ongoing maintenance and repairs to the improvements to the common property, it may be that the Body Corporate and objecting owners may shift their position and views and support such motions.

[1] See sections 227, 228, 276 and Schedule 5 of the Act

[2] Section 276 of the Act

[3] Section 284(1) of the Act

[4] Section 94(1)(a) of the Act

[5] Section 94(2) of the Act

[6] Section 152 of the Act

[7] Section 159 of the Module

[8] Section 164(2) of the Module

[9] Section 164(4) of the Module

[10] Section 94(2) of the Act

[11] Section 164(2) of the Module

[12] Section 164(4)(b) of the Module