The Body Corporate for Tropical Reef Apartments (respondent)

Body Corporate and Community Management Act 1997 (Qld) (Act), sections 227(1)(b) and 229(3)(a)

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

MAINTENANCE; PROPERTY DAMAGE; COSTS - where the interior of the applicant's lot has suffered water damage over an extended period and the applicant blames the poor condition of a balcony waterproof membrane; whether the body corporate must repair the membrane and water damage and reimburse the applicant for lost rental income.

Act, ss 280, 281; Accommodation Module, ss 162, 170, 177(4)(b), 201(3).

1. Within two months, the body corporate must replace, or otherwise restore to good condition, the waterproof membrane upon the upper balcony of lot 11.
2. The application is otherwise dismissed.

• [1] The applicant holds the body corporate responsible for water ingress through a balcony on the upper level of lot 11 that it says has damaged an internal wall of a bedroom beneath. It seeks orders against the body corporate in the following terms:

1. an order declaring that the applicant was and remains entitled to:

(a) the sum of $6,380.00 to repair interior bedroom;

(b) the sum of $18,084.00 to repair the external balcony;

(c) do and sign all things necessary to enable the applicant to attend to exterior balcony and internals of the Property to a standard acceptable to the applicant in their sole discretion;

(d) do and sign all things necessary to enable the applicant have repairs done in a timely manner; and

(e) The sum of $48,500 for loss of income suffered by the applicant from 18 April 2024 to 27 June 2024 and continuing at $2,300 per week until finalisation of the matter.

2. an order that the respondent pay the amount due and owing to the applicant;

3. In the alternate, an order declaring that the respondent:

(a) engage professional tradesmen to repair the exterior balcony and internals of the Property within a reasonable timeframe and to a standard acceptable by the applicant in their sole discretion; and

(b) the respondent pay to the applicant the sum of $48,500 for loss of income suffered by the applicant from 18 April 2024 to 27 June 2024 and continuing at $2,300 per week until finalisation of the matter.

4. Statutory interest on the moneys due and owing; and

• [2] The evidence with respect to the cause of the water ingress consists of:
  1. A 10 May 2018 report by KFB Engineers. The engineer conducted a water test of the upper level balcony but found no breach of the "newly applied" waterproof membrane. He reported that the complex manager had also conducted water tests to the balcony wall and observed no ingress to the bedroom below, yet he concluded:

Despite the failure of the tests, in my opinion the most likely cause of the leak is the shape of the flashing over the shadecloth pole plate. In my opinion water can track under the flashing into and under the pole plate and it can enter the wall through the fixings into the wall.

1. A 6 February 2024 report by BL Plumbing and Maintenance. The plumber conducted a leak test on the balcony and found water was entering behind skirting tiles. He sealed the top of the skirting tiles, but warned the balcony waterproof membrane may need to be replaced if water continued to damage the ceiling below.
2. An 8 February 2024 roof inspection report by JMB Building Group that suggested water may enter the interior of lot 11 via the balcony roof or under the balcony sliding door and window frames, which lack a hob.
3. A 16 May 2024 report by forensic engineers from CRD Building Consultants & Engineers, seemingly on behalf of the body corporate's insurer, that found water damage to the ceilings of lots 11 and 12 that it attributed to long-term degradation of the waterproof membranes on the balconies above.
4. A 2 January 2025 report by Capstone Building Inspections that blamed the water ingress on:

(i) a failed or non-existent waterproof membrane

(ii) calcification of the balcony tiles and grout, and

(iii) a lack of expansion joints or the use of an incorrect adhesive, resulting in poorly adhered ("drummy") tiles.

Capstone recommended stripping back the balcony and reinstalling a waterproof membrane, screed, and tiles with suitable drainage and correct expansion joints and drainage.

• [3] That paints a confusing picture, as the body corporate committee points out.
• [4] On the one hand, there have been several suggestions that the waterproof membrane on the upper balcony is not in good condition. The body corporate has a statutory duty to maintain in good condition "roofing membranes that are not common property but that provide protection for lots or common property", like the balcony membrane.[1] But it is not clear that the membrane is the sole or primary cause of the water damage to the interior of the lot.
• [5] Water ingress was occurring in 2018, but at that time the membrane was newly installed and did not admit water when tested by KFB. KFB suggested the "flashing over the shadecloth pole plate" was to blame, referring to a shade cloth roofing structure that covered the balcony at the time but has since been replaced with a polycarbonate roof. The defective flashing was thought to be directing water toward penetrations in the balcony wall, though water testing of the wall did not substantiate that hypothesis.
• [6] If true, that may also have engaged the body corporate's maintenance obligations. The body corporate must maintain common property in good condition,[2] which includes any elements of the building above the upper boundary of lot 11 (which is on the top floor). Registered plan BUP 70612 says "the height of the uncovered Roof Terraces attached to Units 10-17 is restricted to the height of those units". The defective flashing looks to have been above that, placing it on common property.
• [7] However, the old roof may have been an owner's improvement to the common property, making it the owner's responsibility to maintain in good condition.[3] The plan indicates the balcony was originally uncovered. KFB's report showed that the covering over lot 11's balcony was different to that above the neighbouring lot's balcony, indicating that each owner may have independently installed their own covering post-construction.
• [8] BL Plumbing blamed skirting tiles on the balcony for the water ingress in 2024 and corroborated that with a water test. The skirting tiles are within the boundaries of the lot and should generally be maintained in good condition by the lot owner.[4]
• [9] JMB suggested the balcony roof or the absence of a hob beneath the balcony sliding door may be allowing water to enter the interior of the lot. Both of those elements would be the applicant's responsibility, as the current polycarbonate roof that replaced the old shade cloth version was installed by the applicant, and the sliding door is within the lot. However, JMB was conducting a roof condition report, not investigating causes of water ingress to lot 11, and neither hypothesis seems to have been tested.
• [10] CRD also did not carry out any testing, yet the fact that similar water damage was observed in both lots 11 and 12 beneath the balconies suggests there may have been a common cause (namely, degradation of the balcony membranes).
• [11] Capstone did not carry out any testing either. Nevertheless, it identified three possible causes of the water ingress. The first is clearly the body corporate's responsibility, while at face value the other two would come within the applicant's obligation to maintain the lot in good condition.

Responsibility for the balcony waterproof membrane

• [12] Leaving aside the question of whether it caused the water damage to the interior of the lot, there is good reason to question the integrity of the waterproof membrane on the balcony of lot 11. While it was found to be sound in 2018, it has since been identified as potentially defective by BL Plumbing, CRD, and Capstone. The committee resolved on 27 March 2024 to "contribute to Lot 11 the sum of $9,350 (GST inclusive) to the membrane repair of Lot 11", which seems a tacit acknowledgement that the membrane is likely to be defective ($9,350 is the "relevant limit for committee spending" at Tropical Reef Apartments).[5]
• [13] The obligation to maintain something in good condition has been held to include "an obligation to keep the thing in proper order by acts of maintenance before it falls out of condition", and requires "the body corporate not only to attend to cases where there is a malfunction, but also to take preventative measures to ensure that there not be a malfunction".[6] Where the body corporate has been given ample reason to question whether the waterproof membrane on lot 11's upper balcony remains in good condition, it ought to take steps to answer that question.
• [14] With that in mind, I wrote to the committee and asked whether it had doubts about the integrity of the membrane and whether it intended to investigate further. The committee said "it accepts that the waterproofing membrane has deteriorated", but it does not accept that it is responsible for repairing it as it was "incorrectly installed, or damaged, by the owner of Lot 11". In support of that contention, the committee pointed out:
  1. the former owner of the lot retiled the balcony in 2017
  2. the Capstone report said the membrane had been compromised or is non-existent
  3. the CRD report said "construction of the roof/waterproofing system has failed to comply with the general provision of the Building Code (NCC), whereby a roof "must prevent the penetration of water that could cause - (a) unhealthy or dangerous conditions, or loss of amenity for occupants; and (b) undue dampness or deterioration of building elements"
  4. section 170(3) of the Accommodation Module states that "despite anything in subsections (1) and (2), the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier's own benefit", and
  5. section 170(5) of the Accommodation Module says that "to avoid any doubt, it is declared that, despite an obligation the body corporate may have under subsection (2), the body corporate may recover the prescribed costs, as a debt, from a person, whether or not the owner of the lot, whose actions cause or contribute to the damage or deterioration of the part of the lot."
• [15] But the committee submitted minutes of an extraordinary general meeting held on 27 February 2017 that include resolutions to waterproof the balcony of lot 11 using money from the sinking fund (motion 4), and to pay owners $150 per square metre to retile their balconies (motion 5). That indicates the membrane was installed by the body corporate, consistent with its statutory obligations.
• [16] Capstone said the membrane was compromised or non-existent but did not suggest the owner of lot 11 was responsible in some way. "Compromised" in this context could simply mean that it was defective and admitting water.
• [17] Similarly, I take CRD's comment to mean nothing more than that water was entering the interior of the lots through the roof contrary to the cited provision of the National Construction Code. CRD thought that was due to the long-term degradation of the waterproof membrane on the balconies above. It did not suggest the lot owners had caused the degradation in some way.
• [18] I am not satisfied that section 170(3) of the Accommodation Module applies as it is not evident that the owner of lot 11 installed the membrane.
• [19] Section 170(5) does not relieve the body corporate of its obligation to restore the membrane. It only allows the body corporate to seek to recover the cost of repairs from someone else who caused or contributed to the damage.
• [20] As the body corporate is satisfied that the membrane has deteriorated, I will order it to replace it or otherwise restore it to good condition.

Responsibility for the water damage and related losses

• [21] I can order the body corporate to repair the water damage to lot 11, or pay reimbursement for repairs, if satisfied that the damage was caused by the body corporate's failure to meet its statutory maintenance obligations.[7] But the water damage might equally have been caused, in whole or part, by the present or former lot owner's failure to maintain the lot (balcony skirting tiles) or improvements to common property (roofing structure) in good condition, or by the unfortunate circumstance that the balcony door was constructed without a hob.
• [22] While the poor condition of the membrane on the upper balcony has likely contributed to the damage to lot 11, the body corporate argues that I should either accept or reject the applicant's claim that the body corporate is responsible for the entirety of the damage and not apportion partial responsibility. I would not accept that as a general limitation upon adjudicators, but I accept it in the present circumstances. The application was only lodged because the applicant insisted the body corporate was entirely responsible for the damage to the lot. Until that happened, the parties were negotiating about engaging an expert to determine the extent of their respective responsibilities. Those negotiations might have borne fruit had the applicant not concluded that the body corporate was entirely responsible after learning of CRD's conclusions with respect to the membrane. But, as discussed above, water was entering the lot in 2018 when the membrane was new and seemingly in good condition. It was later found to be entering behind skirting tiles, and potentially via the balcony roof or under the sliding doors. The defective membrane is not (or at least not obviously) the complete picture. I suggest the parties return to the negotiating table.
• [23] I will not order the body corporate to reimburse the applicant's lost income or any interest upon it for two reasons. Firstly, the extent of the body corporate's responsibility for the water damage is presently unknown. Secondly, I do not believe an adjudicator has the power to award costs of that nature except as set out at section 281 of the Act.[8]
• [24] With respect to "costs if applicable", I could order the reimbursement of conciliation and adjudication application fees if the body corporate had failed to participate in conciliation without reasonable excuse.[9] But conciliation was not attempted in this case.

• [25] For these reasons, the body corporate must restore the waterproof membrane on the upper balcony of lot 11, but the application is otherwise dismissed. The body corporate may also bear some responsibility for the water damage to the interior of the lot, but it is premature to make orders on that question before the parties have properly attempted to resolve it themselves.

[1] Accommodation Module, s 170(2)(a)(iii).

[6] MAGOG (NO. 15) Pty Ltd v The Body Corporate for the Moroccan [2010] QDC 70 at [83], referring to Seiwa Pty Ltd v The Owner's Strata Plan 35042 [2006] NSWSC 1157.

[8] See Degree Apartments [2024] QBCCMCmr 61 at [5]- [11].