Body Corporate Fresh Apartments v Vecchio Property Group [2010] QCAT 363

CITATION: Body Corporate Fresh Apartments v Vecchio Property Group [2010] QCAT 363 PARTIES: Body Corporate Fresh Apartments v Vecchio Property Group APPLICATION NUMBER: BDL082-10 MATTER TYPE: Building matters HEARING DATE: On the papers. HEARD AT: Brisbane DECISION OF: Dr Bridget Cullen Mandikos DELIVERED ON: 9 July 2010 DELIVERED AT: Brisbane ORDERS MADE: 1. The Application of the Respondent, Vecchio Property Group, to dismiss Application BDL082-10 is granted, and Application BDL082-10 is dismissed. 2. The parties to bear their own costs of, and incidental to, this matter. CATCHWORDS : DOMESTIC BUILDING DISPUTE – APPLICATION TO DISMISS – PROCEEDINGS BY BODY CORPORATE – Where Body Corporate commenced proceedings against builder without obtaining consent to commence proceedings by special resolution. Building dispute application dismissed as QCAT lacks jurisdiction. Queensland Civil and Administrative Tribunal Act 2009, s9 Body Corporate and Community Management Act 1997 (Qld), s312 Body Corporate Tower Mill Motor Inn v Queensland Building Services Authority & Cullinan, M.W. [2008] QCCTB 177 (26 September 2008) -- 1 of 4 -- APPEARANCES and REPRESENTATION (if any): On the papers decision. REASONS FOR DECISION Parties to the dispute 1. On 25 March 2010, Mr Michael David Dickinson, on behalf of the Body Corporate for Fresh Apartments, Community Title Scheme 39189 (“Body Corporate”), filed a Domestic Building Dispute Application in the Queensland Civil and Administrative Tribunal (“QCAT”). Fresh Apartments is comprised of 92 Apartment style units, and is located at Taringa, in the State of Queensland. The Respondent to the Application is Vecchio Property Group (“Vecchio”), which was the developer and builder of Fresh Apartments. Mr Sam Vecchio (“Mr Vecchio”) is the Director of Vecchio. Building complaint - stipple coating 2. The Body Corporate’s Application relates to work performed by Vecchio in applying a stipple coating to the external walls and ceilings at Fresh Apartments. Specifically, the Body Corporate alleges that the stipple coating is flaking away from the concrete, and that spot repairs have been poorly done. The Body Corporate seeks that Vecchio be ordered to rectify the work in issue. 3. Attached to the Body Corporate’s Application is a report prepared on 22 February 2010 by Mr Angus Ross (“Mr Ross”) of the Queensland Building Services Authority (“QBSA”), following Mr Ross’s inspection of the areas of concern. Mr Ross’s report indicates that the QBSA considered the stippling issue to be a Category 2 Defect (i.e. not a structural matter, but an aesthetic issue). The QBSA’s “Rectification of Defective Building Work Policy” requires that consumers of building services who want the QBSA to issue a builder with a Direction to Rectify do not delay in notifying the QBSA of the defect. For Category 2 defects, the policy provides as follows: (2) For section (1), it may be unfair or unreasonable, for example, to issue a direction if any of the following apply: * * * (b) for category 2 defective building work, the delay exceeds: (i) 6 months after the building work was completed or left incomplete; or (ii) 7 months, if the owner notified the contractor of the defect within 6 months after the building work was completed or left incomplete. 4. Here, the QBSA declined to issue a Direction to Rectify to Mr Vecchio, the licensee, as it determined that the matter was raised out of time. 5. Although the QBSA may decline to issue a Direction to Rectify, an unsatisfied consumer of building work may then choose to make application to QCAT, which has (in general terms) jurisdiction to hear building disputes. However, in this -- 2 of 4 -- instance, the Applicant is a Body Corporate, and as such, is subject to the provisions of the Body Corporate and Community Management Act 1997 (Qld) “BCCM Act”. Vecchio alleges Body Corporate not authorised to commence QCAT Application 6. On 25 May 2010, QCAT received Vecchio’s response to the Body Corporate’s Application. Vecchio’s response consists of a counter-application to dismiss the Body Corporate’s Application, on the basis that the Body Corporate has not complied with s312 of the BCCM Act. Section 312 of the BCCM Act provides that a Body Corporate may only commence “proceedings” if it has been authorised by a special resolution of the body corporate. The term “proceedings” is not defined in the BCCM Act, but rather in s36 of the Acts Interpretation Act 1954 (Qld), as meaning “a legal or other action or proceeding”. The proceedings now before QCAT fall within these definitional parameters. 7. In its response, Vecchio alleges that the resolution sought by the Body Corporate was not a special resolution as defined by the BCCM Act, and was not obtained until 13 April 2010, which is after the date of the filing of the Body Corporate’s Application. Body Corporate’s “Special Circumstances” 8. In response to Vecchio’s counter-application to dismiss, the Body Corporate has filed submissions in response. The Body Corporate acknowledges that it has not obtained consent following a special resolution of a general meeting, and admits that it had obtained consent to commence proceedings in QCAT by way of a committee resolution only. 9. The Body Corporate’s concerns stem from a period during which Mr Vecchio acted as the Body Corporate Manager and Chairperson of the Body Corporate Committee. The Body Corporate alleges that Mr Vecchio was derelict in his duties under the BCCM Act in not advising the Body Corporate Committee that the stippling issue should be referred to the QBSA, resulting in the QBSA complaint being made out-of-time. The Body Corporate alleges that a special resolution is not possible, as Mr Vecchio owns sufficient apartments at Fresh Apartments to make obtaining consent by way of special resolution numerically impossible. 10. Mr Vecchio, in a further response delivered to QCAT via email on 9 June 2010, states that he does not, in his individual capacity, own any apartments at Fresh Apartments. Rather, his investment company, S&A Vecchio Investments owns 11 of the 92 apartments at Fresh Apartments. For reasons that are addressed below, I find that it is not necessary for me to consider the submissions made by the parties about whether Vecchio would actually have the ability to, by majority vote, prevent the Body Corporate from making its Application to QCAT. Decision 11. There is no basis upon which QCAT might waive the requirements contained in the BCCM Act for a Body Corporate to commence proceedings without firstly obtaining consent by way of a special resolution. The exceptions where a Body Corporate -- 3 of 4 -- does not need a special resolution, as contained in s312(2) of the BCCM Act, do not apply here. The Body Corporate admits that it has not obtained consent by way of a special resolution, but for the reasons outlined above. 12. The legislative intent to require a Body Corporate to obtain consent prior to commencing proceedings is to, at least in part, ensure the litigation costs are not imparted to lot holders without their informed consent. It is possible that one owner, having purchased a majority of the lots in any particular apartment block, could conceivably control the voting process. There is nothing unlawful or improper about this, nor is there anything to be made of the fact that Vecchio was the developer of the complex, and that a related but legally separate identity, S&A Vecchio Investments owns apartments at Fresh Apartments. 13. This issue has been determined previously, in the former Commercial and Consumer Tribunal (“CCT”), by Member Dorney, QC (as he was then, prior to his appointment to the District Court), in Body Corporate Tower Mill Motor Inn v Queensland Building Services Authority & Cullinan, M.W. [2008] QCCTB 177 (26 September 2008) (“Tower Mill”). On 1 December 2009, the CCT was amalgamated into QCAT. In Tower Mill, Member Dorney found that: “…given that there was no evidence at all of such a special resolution, the only conclusion that the Tribunal could reach was that there was no valid application before the Tribunal so as to give the Tribunal jurisdiction to determine the matters sought to be raised in the Application. That is, the jurisdiction of the Tribunal was not properly invoked.” 14. Section 9(1) of the QCAT Act provides QCAT with jurisdiction to “deal with matters it is empowered to deal with under this Act or an enabling Act.” Section 9(4) provides that QCAT may do all things necessary or convenient to be done “for” exercising its jurisdiction. I agree with Member Dorney’s views in Tower Mill that ignoring the absence of authorisation by the Body Corporate to commence these proceedings is not something that is necessary or convenient to enable QCAT to exercise its jurisdiction. 15. The appropriate course of conduct here is for the Body Corporate to proceed with a special resolution, and commence proceedings only after authorisation has been obtained. Orders 1. The Application of the Respondent, Vecchio Property Group, to dismiss Application BDL082-10 is granted, and Application BDL082-10 is dismissed; 2. The parties to bear their own costs of, and incidental to, this matter. -- 4 of 4 --