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

APPLICATION FOR INTERIM ORDER - where the applicant is seeking to challenge two motions passed at an extraordinary general meeting - whether an interim order is warranted in the circumstances.

1. The application for an interim order is dismissed.

• [1] Toowong Centrus CTS 4712 is located in Toowong, Queensland. It is comprised of 12 lots and common property and is governed by the Commercial Module.
• [2] The applicant, Earlborough Pty Ltd, is the owner of Lot 18. Mr McIntyre, the director of Earlborough Pty Ltd, has brought this application on its behalf.
• [3] On 25 February 2025, the Body Corporate for Toowong Centrus held an extraordinary general meeting (EGM) and considered various motions about replacing the air-conditioning system at the scheme. The applicant is seeking to challenge two motions passed at the EGM, motion 2A and motion 3A. These motions read respectively:

1. That the Body Corporate enter into and execute a loan contract with Lannock Capital 2 Pty Limited (ACN153 391 283) to fund the Body Corporate's obligations to meet working capital requirements, fund remediation works and to comply with its obligations under law (Loan Contract).
2. That the Body Corporate's seal be affixed to the loan contract in the presence of (strike out those which do not apply):
   1. Any two members of the executive Committee; or
   2. The Strata Manager and one member of the Committee; or
   3. The Strata Manager alone
3. That the Body Corporate acknowledges the following things:
   1. a copy of the proposed Loan Contract, the terms and conditions, the information memorandum and a prescribed notice, was tabled at the meeting;
      1. the maximum amount of credit available under the Loan Contract is $500,000.00 or such

increased amount as approved by a subsequent General Meeting;

1. the term of the loan be set at a maximum of five (5) years; and

1. Members of the Body Corporate has the authority to approve the raising of additional levies to ensure the Owners Corporation can perform its obligations in relation to each advance under the Loan Contract;
2. the Body Corporate acknowledges that it has sought such advice (including legal advice) as it believes appropriate prior to entering into the loan contract; and
   1. a drawdown instruction may be signed by (strike out those which do not apply):
      1. Any two members of the executive Committee; or
         1. The Strata Manager and one member of the Committee; or
      2. The Strata Manager alone

Air Conditioning Replacement Works I $500,000 Loan + Sinking Fund + $500,000 Special Levy

THAT subject to the approval of motion 2a, that the Body Corporate resolves to carry out air conditioning replacement to the building by engaging the following contractors:

• 'Coolmaster' to carry out the air conditioning replacement works as per the quote marked 'A' at a cost of $1,013,067.00 incl. GST
• 'Le Luxe' to carry out the associated building works as per the quote marked 'B' at a cost of $547,536.00 incl. GST
• 'Gimpel Electrics' to carry out the required electrical works as per the quote marked 'C' at a cost of $101,189.02 incl. GST,

AND THAT the committee be authorised to engage a suitably qualified professional consultant to assist with project management and contract drafting up to an amount of $20,000 incl. GST.

The total costs of the works is to be $1,681,792.02 incl. GST and that a 20% contingency of the total works be allowed for if required.

The funding of these works is to be arranged by $500,000 from the loan as approved in Motion 2a, $681,792.02 be funded from the Sinking Fund, and a special levy of $500,000 levied over two payments as outlined below:

• [4] Both motions were passed with six votes in favour and three against.
• [5] Mr McIntyre disputes that the motions were properly passed. On behalf of the applicant, he seeks the following final orders:
  1. An order that motions #2A and #3A of the EGM held on 25/2/25 be overturned.
  2. An order that the air-conditioning replacement and ongoing servicing of units serving the different lots is the responsibility of the individual owners unless the individual owners have provided a specific approval for the body corporate to administer the works on their particular lots which complies with the requirements of Section 157 of the BCCMA.
  3. An order that the Body Corporate reimburse the extraordinary special levies already imposed upon each lot back to owners so that the owners can arrange for their own replacement and maintenance of air-conditioning to the standard and program of their choice.
• [6] He also seeks an interim order that prevents final works and actions as per motions 2A and 3A proceeding until a decision is made on the final orders sought.
• [7] This is my consideration of the request for an interim order. The applicant bears the onus to establish that the interim order it seeks is warranted in the circumstances.

• [8] Mr McIntyre submitted this application for adjudication on 25 March 2025.
• [9] The commissioner referred the interim order request to department adjudication under section 247(2)(b) of the Act.
• [10] There is no statutory requirement to obtain comments from a respondent or affected party before an interim order is decided. However, in the circumstances of this case, comments were invited from the body corporate committee and all other owners in the scheme.
• [11] The body corporate and the owner of Lot 14 made submissions on the dispute. The owner of Lot 14 is the current committee chairperson.
• [12] I have reviewed and considered all the submissions and materials submitted on this dispute before making my decision.

• [13] 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 to which the application relates.[1]
• [14] In deciding whether an interim order is warranted in the circumstances, adjudicators often adopt the approach taken by courts to considering interim injunction applications. Accordingly, to determine if it is just and equitable to make the interim order sought by the applicant, I must consider the substantive issues in dispute, the nature and urgency of the matter, as well as the balance of convenience between the parties. I will explain each consideration in more detail below.
• [15] Firstly, I must consider the substantive issues in dispute and be satisfied there is a serious legal question to be answered. At this stage, the applicant does not need to satisfy me that, on the balance of probabilities, its legal position is the correct one to take in the case. However, I must be satisfied the applicant's case has a sufficient likelihood of success or that there is a 'live' legal issue to justify the making of an interim order prior to a full investigation into the matter being concluded.
• [16] Secondly, an adjudicator may make an interim order only if satisfied, on reasonable grounds, that it is necessary because of the nature or urgency of the circumstances.3 The applicant must therefore establish that the circumstances warrant an interim order. This may be where, for example, the order is necessary to prevent serious or irreparable harm from taking place or to stop something that cannot be undone. I must also 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.

• [17] Firstly, I will consider whether a serious legal issue has been raised on behalf of the applicant. Mr McIntyre has submitted four broad grounds for why an interim order should be granted. I will consider each of these in turn along with the submissions made by the body corporate and the owner of Lot 14.

• [18] Mr McIntyre says many owners were not made fully aware of the serious costs and ramifications of the approved works proceeding. He provides no other details in relation to this ground. However, in the 'background statement' of his submissions he explains that the body corporate did not seek legal advice on the issues despite stating in its voting paper that it had done so.
• [19] The body corporate says the motions themselves are plain and the notice of EGM attached all the documents referred to in the motions. It says Mr McIntyre has failed to provide any evidence that unspecified owners did not understand the effect of the motions passing. In addition, the body corporate says it addressed Mr McIntyre's concern about legal advice. It says the committee, given the knowledge and expertise of its members, did not consider it necessary to obtain legal advice about the loan contract.
• [20] The owner of Lot 14 further explains that motion 2A contained a list of standard acknowledgements associated with the loan approval. This included a statement that the body corporate acknowledges it had "sought such advice (including legal advice) as it believes appropriate prior to entering into the loan contract". He says the body corporate manager has explained to Mr McIntyre that this was not a statement that the body corporate had sought legal advice, but rather that it had sought all advice it believed was reasonably necessary. He explains that Toowong Centrus is a commercial scheme and owners are experienced business people. He says they did not consider legal advice necessary in the circumstances.
• [21] The owner of Lot 14 says a full copy of the loan contract and loan documents, including the financial warning statements, were attached to the EGM papers and the proposed scope of works was widely discussed. He says he is confident lot owners were fully aware of the costs and consequences associated with passing motions 2A and 3A.
• [22] Mr McIntyre has not provided much detail to substantiate this ground. On their face, both motions 2A and 3A appear clear and there is no evidence owners were not provided with sufficient information to decide the motions. In addition, having considered the wording of motion 2A and the submissions made by all parties, it does not appear that the statement referring to legal advice was misleading to owners.
• [23] Based on the evidence currently before me, I am not yet persuaded that owners in the scheme were not fully informed before voting on the motions.

• [24] Mr McIntyre says the actions proposed by the motions contravene section 157 of the Commercial Module. He says this section requires agreement with a person for whom services are required and that the costs incurred are recovered by the users of the service. He also says the air-conditioning systems in the scheme are fit-out works and should be the responsibility of the individual lot owners.
• [25] Section 157 of the Commercial Module provides as follows:
  1. Supply of services by body corporate

(1) The body corporate may supply, or engage another person to supply, utility services and other services for the benefit of owners and occupiers of lots, if the services consist of 1 or more of the following types of services -

(a) maintenance services including, for example, cleaning, repairing, painting, pest prevention or extermination and mowing;

(b) communication services including, for example, the installation and supply of telephone, intercom, computer data and television;

(c) domestic services including, for example, electricity, gas, water, garbage removal, air conditioning and heating.

The body corporate might engage a corporation to supply PABX services for the benefit of the owners and occupiers of lots.

(2) The body corporate may, by agreement with a person for whom services are supplied, charge for the services, including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services, but only to the extent necessary for reimbursing the body corporate for supplying the services.

See also section 96 of the Act.

(3) In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate (other than body corporate administrative costs) for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service.

• [26] While Mr McIntyre has referred to section 157 and asserted that the actions of the body corporate contravenes both subsections (2) and (3) of that section, he has not explained how this relates to the two motions he is seeking to challenge. The motions he is disputing relate to the body corporate entering into a loan contract to fund remediation works on the air- conditioning system and to resolving to engage contractors to undertake specified works on the air-conditioning system. Based on the material currently before me, I am not yet persuaded there is a live issue in relation to a breach of section 157 of the Commercial Module.
• [27] In relation to Mr McIntyre's contention that the air conditioning systems are fit-out works and should be the responsibility of the individual lot owners, the body corporate submits that the air conditioning system is utility infrastructure the body corporate is responsible for maintaining. It has provided a report from Coolmaster[2] which explains, in summary, that the system supplies and returns cooled air to each unit through a central system.
• [28] The body corporate says the scheme's common property includes utility infrastructure unless, relevantly here, it is solely related to supplying services to a lot and is one of the types specified at section 127(4)(a) of the Commercial Module. It says this section provides the specifical example of air-conditioning plant installed on the common property which relates only to supplying services to a particular lot. The body corporate says that neither the current air-conditioning system nor the replacement system falls within section 127(4)(a) of the Commercial Module.
• [29] Generally, a body corporate is responsible for maintaining common property and an owner is responsible for maintaining their lot.[3]
• [30] A body corporate has a duty to maintain common property in good condition, and this includes all utility infrastructure except where the utility infrastructure relates only to supplying utility services to a particular lot and is one of the types listed at section 127(4)(a)(ii). The list includes air-conditioning systems.
• [31] Mr McIntyre has not pointed to anything specific about the works which he says should be an owner's responsibility. Based on the reports from Coolmaster, it appears that generally, the air-conditioning infrastructure does not only relate to supplying utility services to any specific lot. At this stage, Mr McIntyre has failed to persuade me that the works proposed under motion 3A are works that are an owner's responsibility to carry out. I am not yet satisfied there is a serious legal question in this regard.

Costs of individual lots do not relate to the scope of works to be undertaken on those lots

• [32] Mr McIntyre says the costs imposed on individual lots do not relate to the scope of works undertaken on the lots. He submits some of the lot owners are subsidising the cost of works to other lots. He says the air-conditioning system in Lot 18 is running efficiently and reliably and does not require replacement. He also says no justification has been provided for the additional works being included for the benefit of only some owners.
• [33] The body corporate says that where an air-conditioning system is the body corporate's responsibility, it must pay for the maintenance of the system. It says the contributions which will be sought from each lot owner for the works are required to be calculated by the contribution schedule of lot entitlements.
• [34] The body corporate says there is no support for Mr McIntyre's contention that the air-conditioning system does not require replacement. It says the report from Coolmaster states there have been 6 major failures of the system in the last 3 years and the economic life remaining on the system, based on the increasing rate of major and minor failures, is zero years.
• [35] The body corporate says Mr McIntyre has not explained which lots he says are being benefited by the works. However, it understands the allegation is that the benefited lots are those where 'their' condenser is to be relocated from the roof. In relation to this, it says where a condenser forms part of the air-conditioning system, the body corporate is responsible for the condenser. It says the report from Coolmaster notes that relocating the condensers from the roof will significantly reduce the costs for the body corporate and also avoids the potential for a requirement to carry out a structural assessment of the roof. The body corporate says moreover, the relocation of the condensers provides it with the ability to install additional solar panels to defray the cost of electricity for the common property.
• [36] Firstly, I will deal with Mr McIntyre's contention that the costs imposed on individual lots do not relate to the scope of works undertaken on particular lots. I note that where a body corporate is responsible for maintenance works, it must pay for the works to be carried out. And, if a liability arises for which there is no provision, or inadequate provision, the body corporate must fix a contribution to be levied on the owner of each lot towards the liability.[4] I further note that the legislation requires that contributions levied on the owner of each lot, (except for particular exceptions which do not appear to apply here),[5] must be proportionate to the contribution schedule lot entitlement of the lot.[6]
• [37] In light of the requirement set out above, I am not yet persuaded there is any merit to the argument that the costs imposed on individual lots in relation to the air-conditioning works do not relate to the scope of works undertaken on the particular lots. The extent of works to be undertaken on any particular lot is not a factor in calculating special contributions for maintenance works the body corporate is responsible for.
• [38] Next, I will deal with Mr McIntyre's contention that the air-conditioning in Lot 18 is running efficiently and reliably and does not require replacement. I have carefully reviewed the asset condition report provided by Coolmaster. The report concludes that its review of the system shows the assets have reached the end of their economic life. Coolmaster goes on to say that without a planned asset renewal program, the likelihood of both individual component failure and system catastrophic failure will continue to increase and, this will result in increased maintenance costs and downtime, which have the potential to occur during times of peak cooling demand. It recommends that a planned asset renewal program be implemented immediately to mitigate increased maintenance costs and achieve significant cost savings compared to a piecemeal approach.
• [39] In other documentation, Coolmaster notes that each level from 1-5 at the scheme is served by a main air conditioning unit located in a plant room on each floor in the common lift lobby. These air conditioning units supply cooled air to each tenancy via a duct. The return air path for the system comes from each tenancy via the main lift lobby back to the main air conditioning unit on each level. Outside air is provided to each floor via the outside air duct on each level in the plantroom which mixes with the return air as required by Australian Standards. From the material before me, there is no evidence that Lot 18 is served by an entirely separate system.
• [40] In light of the information from Coolmaster, it appears the air-conditioning system has reached the end of its life and requires replacement. In addition, it seems to me that Lot 18 is served by the same air-conditioning system as the rest of the scheme. Accordingly, I am not yet persuaded that the air-conditioning in Lot 18 is running efficiently and reliably and does not require replacement.
• [41] I now turn to Mr McIntyre's submission that no justification has been provided for extra building infrastructure being included in the works for the benefit of only some owners. It is unclear what infrastructure Mr McIntyre is alleging is being included for the benefit of some lot owners. From my review of the tender from Coolmaster and the other contractors, the air-conditioning system is being replaced for the benefit of all lot owners. I accept that the specific works required to each lot to achieve the best results for the new system may vary. However, the final result will be that each lot owner has functional and reliable air-conditioning.
• [42] I am not yet persuaded that Mr McIntyre has raised any serious legal issues under this ground.

Failure to provide design certifications and building approvals

• [43] Mr McIntyre says he made several requests for the body corporate to provide him with the design certification but these have been ignored. He says certification for the air conditioning system should accompany the design and is an integral part of the work being carried out in accordance with the relevant codes and the Building Act. He also says it is essential that building approval is in place prior to entering into such complicated and loosely documented works. He says none of this has been provided.
• [44] The body corporate says the only certification for the system that is required is of the completed works and this will be obtained in due course. It says the only building approval that is required is for the structure that will hold the equipment being relocated from the roof. It says this will also be obtained in due course. It says there is no documentation to provide to Mr McInyre at this time.
• [45] I note that building certification verifies that construction work meets all the relevant requirements. And, I understand building certification documents must be lodged within a set number of days after the works have taken place.[7] It appears that building certification will only be required after work has been completed to certify that it has been carried out to the required standard.
• [46] In relation to building approval being required, I can see no mention of this being a requirement in the tender documents submitted by the contractors. The body corporate acknowledges that building approval is required for the structure which will ultimately hold the equipment being relocated from the roof. It says this will be obtained in due course. Notwithstanding this acknowledgment, I am not yet satisfied that not currently having the required building approval would be a basis to invalidate either of the motions being challenged by Mr McIntyre.

• [47] Mr McIntyre has failed to persuade me that the applicant's case has a sufficient likelihood of success or that there is a 'live' issue to justify the making of the interim order sought. I have therefore dismissed the applicant's application for an interim order.
• [48] The application will now be returned to the commissioner to progress under the Act.

[3] See sections 127 and 158 of the Commercial Module

[4] Section 112(2) of the Commercial Module

[5] Exceptions include contributions payable for insurance, the promotion fund budget and any other matter for which, under the Act, the liability attaching to each lot is calculated other than on the basis of the lot's contribution schedule lot entitlement.

[6] Section 112(5) of the Commercial Module

[7] https://www.brisbane.qld.gov.au/building-and-planning/additional-approvals/building-certification