Body Corporate and Community Management (Standard Module) Regulation 2020 (Standard Module)

INTERIM ORDER - whether an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

ADJUDICATOR POWERS - whether Adjudicator can be satisfied that an application raises a serious legal question and the balance of convenience between the parties justifies injunctive relief.

SDW2 Pty Ltd v JLF Corporation Pty Ltd [2017] QSC 001

Australian Broadcasting Corporation v O'Neill [2006] HCA 46

1. Pending the making of final orders in relation to this application, the body corporate is not to spend any further monies on concrete repairs unless quotes have been obtained from suitably licensed contractors and voted upon at a general meeting of the body corporate.
2. Order 1 above, does not apply to the body corporate approved and contracted foyer refurbishments or to emergency repair work by an appropriately licensed contractor.

• [1] La Porte D'Or was established on 30 March 1977 with the registration of building units plan 2457. It contains 184 lots in a high-rise building in Surfers Paradise on the Gold Coast.
• [2] The applicant is the owner of lot 187 and seeks an interim order that:

The body corporate not spend any further funds from the sinking fund (aside from the BC approved and contracted foyer refurbishments) until quotes from a suitably licensed company (concreting or open building license as per QBCC's confirmation) have been voted on, and accepted by the body corporate at either an AGM or EGM. Emergency work on essential infrastructure to be allowed- but a communication about the contractors being used and a quotation for the works must be sent to all owners along with confirmation of the licences held.

• [3] The applicant also seeks the following final outcomes:
  1. That the body corporate notify all owners that an unlicensed contractor was engaged to complete these works, confirming that the insurer has been notified and the remediation plan.
  2. That the body corporate notify the insurer that an unlicensed contractor was used to complete these works.
  3. That all members of the body corporate committee must complete the Online Body Corporate Training to ensure that they understand the obligations of their position to ensure compliance within the scheme moving forward and provide evidence back to all owners that each member has completed this training.

• [4] La Porte D'Or was established in March 1977 and consequently the building is now around 47 years old. It is constructed from steel reinforced concrete and requires periodic maintenance such as painting and repairs to any spalling of concrete surfaces.
• [5] The applicant says that an "emergency adjudication order" is required to stop the committee from spending any further monies from the sinking fund (aside from the BC approved and contracted foyer refurbishments).
• [6] The applicant is concerned that concrete repair work undertaken by a painting contractor over a number of years, has mainly been of a cosmetic nature although she also believes that the contractor may have undertaken some concrete repair work which it is not licensed to undertake. The applicant says this has been an ongoing issue for a number of years and when a thorough examination of the building structure was last undertaken, the extent of deterioration was identified, resulted in a large bill of around $600,000 for concrete repairs .
• [7] The painting contractor holds a Painting and Decorating licence from the QBCC. In addition to the application of paint and protective coatings, the contractor is licensed to apply cement render up to a certain thickness and undertake incidental works. However the applicant believes that more extensive concrete repair work is usually required, for which a different class of QBCC licence is required i.e. a concreting or open building license.
• [8] She is concerned that despite the age of the building and the scale of repairs required, the committee has not kept lot owners informed and has not presented quotes to owners for the work done, or to be undertaken in the future. She says owners are not aware of what work has been undertaken and have not had an opportunity to vote on whether to accept quotes.
• [9] The applicant also says there was an amount of $85,000 set aside for building works in the budget considered at the 2024 AGM, but there were no quotes attached for this work for the owners to vote on. She believes that owners were denied the right to look into the proposed contractor and understand the scope of work that was being undertaken. She is concerned that the committee can spend over $20,000 at a time without needing approval from the wider body corporate and do not openly disclose information about contractors to the wider body corporate for transparency.
• [10] The applicant is also concerned that the 10 year capital works budget, completed in 2024, is deficient and does not include a number of capital expenditure items for which significant special levies will be needed in the future.
• [11] The applicant believes that the committee is currently looking at engaging contractors who do not hold a concreting or open building licences, despite a clear communication from QBCC to the body corporate that such licenses are required to undertake concrete cancer repairs. The applicant is concerned that allowing them to engage another contractor without the necessary license, could result in serious harm to the building and result in further expense to the body corporate to have defective work inspected and remediated.
• [12] The applicant also refers to the Chairman's Report to the 2024 AGM which noted that the previous committee had recommended the engagement of Building Rectification Services (BRS) to re-paint the complex. The Chairman said this project included an expense of $600,000 for concrete cancer repairs. However he also noted that concrete cancer repairs had previously been undertaken from time to time over a number of years previously, at a total cost of only $70,000.
• [13] The applicant believes that previous committees have engaged a contractor to undertake cosmetic patching of concrete spalling rather than more extensive and permanent repairs. They say the chairperson highlighted the "substantial savings of using this contractor in the past" and asserted via multiple email confirmations and at committee meetings, that the contractor held the appropriate QBCC licenses, despite it being clear that they do not.
• [14] Over a number of years the body corporate paid the contractor around $70,000 for concrete cancer repairs but when a project manager was engaged to administer the building repaint and subsequent concrete cancer repair work, it was discovered that extensive repair works were required. These works were undertaken by BRS at a cost of around $600k.
• [15] Although the need to engage licensed contractors has been brought to the attention of the chairperson, the applicant says the committee have obtained quotes from another contractor who also does not hold the appropriate license to complete concrete cancer works.
• [16] In conclusion the applicant says it is important that work be undertaken by licensed contractors so that proper warranties can be obtained. She believes that warranty of work in a building of this size is critical, and that "using cheap quick fixes in an ageing building only costs owners more in the long run". For example, she says that some of the works that have been done in the concrete slab under newly renovated apartments may need to be removed in order to determine whether the repairs were carried out properly.

• [17] An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute about a claimed or anticipated contravention of the Act or the CMS, or the exercise of rights or powers or performance of duties under the Act or the CMS.[1]
• [18] In particular, an adjudicator may make an interim order if satisfied, on reasonable grounds, that one is necessary because of the nature or urgency of the circumstances.[2]

• [19] The Commissioner referred this application to me under section 247 of the Act to decide if the nature or urgency of the circumstances warrant an interim order. As provided for under the Act, the Commissioner made this referral despite not giving notice of the application to other parties. There is no statutory requirement to obtain comment from a respondent before an interim order is decided but the Commissioner is required to give all parties a copy of the application for comment, before final orders are made.

• [20] In order to obtain an interim order, an applicant must establish that the circumstances warrant urgent intervention and that the applicant has some prospect of success.[3] In general, the purpose of such an order is to preserve the status quo pending final determination of the dispute so as to ensure that there is some utility in the determination of the final dispute. An interim order will not be made if the only urgency is a desire to expedite resolution of a dispute.
• [21] In addition to establishing a prima facie case, the applicant needs to establish that the balance of convenience between the parties justifies injunctive relief. What this means is that an adjudicator must balance the inconvenience of granting relief now if final orders are ultimately refused, against the inconvenience of refusing relief now if final orders are ultimately granted. Of particular relevance is evidence an interim order is necessary to prevent serious or irreparable harm.

• [22] The primary issue for determination at this time is whether interim orders are warranted. However, to determine it is just and equitable to make an interim order, it is necessary to consider the substantive issue in dispute.
• [23] The interim order sought is that:

The body corporate not spend any further funds from the sinking fund (aside from the BC approved and contracted foyer refurbishments) until quotes from a suitably licensed company (concreting or open building license as per QBCC's confirmation) have been voted on, and accepted by the body corporate at either an AGM or EGM. Emergency work on essential infrastructure to be allowed- but a communication about the contractors being used and a quotation for the works must be sent to all owners along with confirmation of the licences held.

• [24] The applicant is concerned that despite the age of the building and the scale of repairs required, the committee has not kept lot owners informed and has not presented quotes to owners for the work done, or to be undertaken in the future.
• [25] The applicant says there was an amount of $85,000 allocated for building repairs in the last budget presented at the 2024 AGM. However no quotes were provided for the body corporate to vote on. She believes that owners were denied the right to understand the scope of work that was being undertaken and to choose their contractor. The applicant believes it is possible that an agreement was entered into whereby the contractor will just charge an hourly rate without quoting for the work. She is also concerned that the committee is not particularly diligent in ensuring that contractors hold the appropriate QBCC licence for the type of work that they are undertaking.

• [26] An important question for consideration is how the $85,000 allocated in the budget for building repairs, is to be spent. The applicant notes that no quotes were provided for consideration by the body corporate to enable it to determine the scope of works and to choose a contractor. While approval of a budget does not amount to authorisation of expenditure, the applicant is concerned that the committee has, or will, enter into an agreement whereby a contractor would just charge an hourly rate or conduct a number of separate repair jobs.
• [27] Usually, a committee can only incur spending that is over the committee spending limit if the spending has been approved by ordinary resolution at a general meeting.[4] It is my understanding that the committee spending limit is set at $20,000 for this scheme but the proposed expenditure is $85,000.
• [28] If a series of proposals forms a single project, the cost of carrying out any one of the proposals is taken to be more than the relevant limit for committee spending, if the cost of the project as a whole is more than the relevant limit.[5] For example, if it is proposed that a number of concrete repair jobs will be undertaken during the year at a cost of $85,000, it could well be the case that the concrete repairs form a single project.
• [29] Also, where proposed spending is above the major spending limit, there are additional restrictions which apply, including that at least 2 quotes must be included in the notice of meeting at which a motion to approve the spending is considered.[6] The relevant limit for major spending (if it has not been changed by ordinary resolution) is $10,000.[7]

• [30] I am satisfied the applicants have raised a genuine question to be decided about proposed expenditure of $8,5000 on building repairs as outlined above. On balance I am satisfied that the nature of the circumstances warrant the interim orders sought and I have made the following interim orders:
  1. Pending the making of final orders in relation to this application, the body corporate is not to spend any further monies on concrete repairs unless quotes have been obtained from suitably licensed contractors and voted upon at a general meeting of the body corporate.
  2. Order 1 above, does not apply to the previously approved foyer refurbishments or to emergency repair work by an appropriately licensed contractor.
• [31] If the issues in this application are not otherwise resolved, I anticipate the Commissioner will seek submissions from all parties about the final orders. In due course, the application is likely to be referred back to an adjudicator for investigation and determination. The parties should note section 279(2) of the Act.

[3] Which is variously described as establishing a prima facie case, an arguable case or that there is a serious question to be tried.

[4] Section 172 of the Standard Module (formerly section 151)

[5] Section 172(2) of the Standard Module (formerly section 151(2))

[6] Section 173 of the Standard Module (formerly section 152)

[7] See the definition for 'relevant limit for major spending' in Schedule 1 of the Standard Module