Question: Can an owner authorise body corporate expenditure for maintenance on their lot without approval from other members? Is a single quote sufficient if the owner books the works before other members can respond?
Our building format plan strata scheme consists of four concrete tilt panel office/warehouses, with the body corporate run by all four owners.
One owner authorised repair works to a rusted section of box gutter that services only their lot, based on a single quote. The other three owners were not informed of the issue, nor were they given the opportunity to provide input on the contractor, or asked to approve the expenditure. The owner went ahead and booked the works before waiting for a response from the other members. Can the owner request reimbursement for the cost of this work?
Answer: The committee needs to make a decision about whether any reimbursement is reasonable.
If an owner undertakes works to the common property at their lot without reference to the body corporate, they can apply to the body corporate for reimbursement. The body corporate is not obliged to agree to the proposal.
The question doesn’t say which module you are operating under, and that may not affect the answer to a degree. Generally, repairs to the common property are approved by the committee of each scheme or at a general meeting if the expense is beyond the committee’s spending limit.
You say that there are four owners of the complex who all play a role in running it, so I will assume that they are the committee.
Standard procedure for repairs then would be for either the committee or the lot owner to get a quote for works, and then for the committee to approve it by majority opinion.
In this case, the owner has done the right thing by obtaining the quote and sending it to the other owners, but they have overreached by booking the works before waiting for a response.
The committee needs to make a decision about whether any reimbursement is reasonable.
There could be lots of different factors that affect reasonability here. Did the owner not understand the procedure, or have they done this kind of thing before? Was there a need to get a second quote, and would it have produced a better outcome if you had done so? Were there any emergency circumstances that required the work to be done quickly?
The committee should look at the facts, make a decision and advise the owner on that basis. In any decision, clearly outline the correct process so it can be followed the next time.
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
Re FrankH’s Q&A about an owner’s offer to pay for expensive building investigations following a defects inspection…see #619 on Nov 14th 2022.
This scenario suggests to me that the initial Defects Report was of a general nature based on observable risks, and 1) it identified a number of potentially serious risk areas and 2) it recommended further, more forensic investigation by appropriate specialists.
A Q for Frank: Apart from the Q of who can, or should, pay for these investigations, do you as a lawyer think that the initial Defects Report and any subsequent Reports should be made available to the quantity surveyor commissioned to prepare the next Sinking Fund Forecast? And perhaps more importantly, does the body corporate have a duty to disclose these reports, and the identified risks, to their broker/insurer when renewing their insurance cover?
I have responded to your question in this article: QLD: What does Strata Insurance cover? What do we need to disclose?
Re Leaky Carpark Roof Causing Damage to Car #604 of 19th Sep 2022.
Regarding damage to the car. Two recent Adjdns on austlii.edu may help here, in the context of seeking s.281 Orders for compensation of pty damage caused either by the BC or by another owner who breaches their statutory duty to maintain either the common pty or their lot in good condition.
See Riva on Duporth [2015] QBCCMCmr 259 (owner against owner); Waterline on Oceanside [2021] QBCCMCmr 44 (owner against BC).
If you can link the water damage to the source of the leak eg burst flexible hoses, or leaky windows or roofs, and if you can identify who is responsible for maintaining that pipe or those roofs or windows, hopefully you are well on your way to establishing their liability to you – up to $75,000 – regardless of the insurance position…see The Nelson [2022] QBCCMCmr 268.
There is also a very informative podcast with Sedgwick on Lookup about water ingress, including into carparks.
Hi all – looking for some guidance on this one.
The Body Corporate took out insurance and due to an outstanding risk had a fire excess of $150,000 placed on the policy. The Body Corporate Manager only gave the BC 8 days notice of this position before the previous policy expired. The BC Manager was instructed to do all things necessary to reduce the excess. Three months later there was a fire in our unit and we became aware of the excess. Upon further investigation the risk items identified had been satisfied before the fire but not communicated to the insurer. The insurer post the fire inspected the property and raised another list of risk items and and reduced the excess to $25,000 which was just above the quote to repair our fire damage of $23,500 which was provided to the insurer when assessing the damage. Who is at fault here for not ensuring the unit owners are protected with appropriate insurance coverage – for the previous 7 years the excess was $1000 and there were never any risk matters raised. How/who should I best approach seeking compensation – the Body Corporate Manager who did no manage or inform the BC appropriately, the Insurance Broker who did not appropriately assess the policies or the Body Corporate for not paying due care and responsibility to the duties they are required to perform?
Hi Glen
In this instance, it may be best to seek independent advice from a qualifies professional.
We suggest you contact Tyrone Shandiman, Strata Insurance Solutions:
Tyrone Shandiman
Direct Line (07) 3185 5256 (Preferred)
Office (07) 3899 5129
Mob 0419 012 262
tshandiman@iaa.net.au
http://www.stratainsurancesolutions.com.au
All the best.
We have serious maintenance problems and a great deal of repair and replacement is requires including a replacement roof for 200 plus lots. The committee is focused on increasing the Sinking fund to upgrade a large pool with waterslides for the benefit of increased short term rental. 14 commercial lots pay for 10% of all BC funds by lot entitlement but are not permitted to use the pool. What can we do to make sure necessary maintenance has to be done and 35 unauthorized air cons are identified and disconnected from common power. We have a group of 7 lot owners
for a class action if possible. Help please.
Hi Susan, not sure if your ‘help please’ comment means you’re looking for more parties to join your action or if you’re seeking some advice. If it is the latter, I would be happy to discuss options with you.
I have a question i had a leak from a garden bed in common area which was never maintained in 14yrs i have been here. The damage it caused to my fixtures and fitting is 7,000 i am talking walls have to come down i have mould in the walls. Body corporate has 5,000 excess which i have to pay stating 184 subsection 3. Lets not forget the leak came from Common area that was never maintained by body corporate. Why am i having to pay 5,000 excess. Damage is only on my lot.
I response to the First Question:
From a NSW perspective (and without familiarity with the Queensland legislation), it appears to me that the starting point is that a body corporate has a duty to maintain common property (I cannot immediately locate it but assume that it s there).
Under section 184, the test for who pays the excess is one of reasonableness and the Standard Module says ‘For an event affecting only 1 lot, the owner of the lot is liable to pay the excess unless the body corporate decides it is unreasonable in all the circumstances for the owner to bear the liability’. I assume that, in making that decision, the body corporate must act reasonably.
If the body corporate has a general duty to repair and maintain common property, here the damage appears to have occurred as a result of a failure by the owners corporation to repair of the roof and guttering which, as between owners corporation and lot owner would mean that it resulted from a failure by the owners corporation to comply with its statutory duty. I would assume that the pwners corporation should be liable to reimburse the lot owner for the full extent of the damage which has been caused by that breach. It in turn may be able to obtain indemnity for that amount (less the excess) from its insurer.
The Standard module also says in several places ‘The body corporate is liable to pay any contribution that has to be made to the cost of reinstatement or repair because the reinstatement insurance is not for the full replacement value of the insured property.’ I would have thought that the existance of an excess provision in its insurance policy means that ‘the reinstatement insurance is not for the full replacement value of the insured property.’ so that the body corporate would be liable to pay the excess as a ‘contribution that has to be made to the cost of reinstatement or repair.’
In addition the Act says:
281 Order to repair damage or reimburse amount paid for
carrying out repairs
(1) If the adjudicator is satisfied that the applicant has suffered
damage to property because of a contravention of this Act or
the community management statement, the adjudicator may
order the person who the adjudicator believes, on reasonable
grounds, to be responsible for the contravention—
(a) to carry out stated repairs, or have stated repairs carried
out, to the damaged property; or
(b) to pay the applicant an amount fixed by the adjudicator
as reimbursement for repairs carried out to the property
by the applicant.
Example—
A waterproofing membrane in the roof of a building in the scheme
leaks and there is damage to wallpaper and carpets in a lot included in
the scheme. The membrane is part of the common property and the leak
results from a failure on the part of the body corporate to maintain it in
good order and condition. The adjudicator could order the body
corporate to have the damage repaired or to pay an appropriate amount
as reimbursement for amounts incurred by the owner in repairing the
property.
I cannot see what defence the owners corporation has to the lot owners claim for full reimbursment, if only in terms of reasonableness (but I say this as a foreigner without familiarity with the legislation).
This response from Chris Irons, Hynes Legal:
Thanks for your comment Richard. Water ingress issues are always challenging, regardless of which State legislation we’re talking about, as the source of the ingress is often unclear. You can sometimes have different experts, such as engineers or plumbers, give two opposing views on source and therefore responsibility. Which is why each dispute about it must always be resolved on its merits.
The body corpora enters into the insurance policy with an understanding on an agreed excess. If the excess is nil then an increased premium is laid but all members of the bc are covered.
Because the bc takes the risk of excess based on the premium to be paid why should bc members be penalised by forcing them to pay excess
I believe that the excess should be paid by bc. The excess agreed on when entering the policy will reduce the premium when compared to no excess so by agreeing the excess the bc is saving all bc members an increased premium and the bc paying the excess would be considered reasonable in my opinion
Hi Chris
Great article – thank you for sharing. I thought in this instance if the leak is coming from a roof that is maintained by the body corporate, the event affects only 1 & common property and thus meaning section 184 (4) could apply and the body corporate would be responsible for the excess.
I would be interested to hear your thoughts?
Tyrone Shandiman
Strata Insurance Solutions
http://www.stratainsurancesolutions.com.au
Thanks Tyrone and Robert
We’ve received this response from Chris Irons, Hynes Legal:
Thanks for your comments. While the legislation provides for particular circumstances, this should always be read in the context of each individual case. Each case, and indeed each building, is different as is the cause of any leak. The legislation is there to provide guidance to the body corporate and owner to make a decision about payment responsibilities. If the parties dispute each other’s interpretations of that, that’s when further steps have to be taken to resolve, based upon expert advice.