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Body Corporate for Donnelly House CTS37465 v Shaw QDC 139
DISTRICT COURT OF QUEENSLAND
Body Corporate for Donnelly House CTS37465 v Shaw  QDC 139
BODY CORPORATE FOR DONNELLY HOUSE CTS37465
JUDITH ELIZABETH SHAW
Maroochydore Magistrates Court
5th June 2015
24th April and 15th May 2015
BODY CORPORATE ADJUDICATION where respondent was successful in obtaining and order below for the appointment of an administrator pursuant to s.287(3) of the Body Corporate and Community Management Act 1997 to implement Adjudicator Orders made 23rd October 2012; where orders were made after a disputed Adjudication which required the Body Corporate to rectify defects in the building; where respondent is the owner of one Lot which is most affected by defects; where Committee is chaired by the respondents Solicitor whose family owns 4 of the 6 Lots in the Scheme; where parties have been in extensive dispute over giving effect to the Orders; where dispute has involved multiple references to dispute resolution under the Act which have not been successful; where respondent filed orders in the lower court and then sought and obtained the appointment of an administrator; where multiple grounds of appeal are articulated; whether his Honour acted on correct “legal principles”; whether he gave adequate reasons; whether the respondent’s application was an abuse of process; whether his Honour did not act on the evidence but on his personal views; whether he erred by not dealing with a contention that there is a binding contract on foot between the Body Corporate and a builder to carry out the Adjudicators’ Orders; whether his Honour erred in exercising his discretion to appoint an administrator
Body Corporate and Community Management Act 1997
District Court of Queensland Act 1967
Magistrates Courts Act 1921
Uniform Civil Procedure Rules 1999
Baker v Arkman Pty Ltd  QDC 16
Donnelly House  QBCCMCmr 474 (23rd October 2012)
Drew v Makita (Australia) Pty Ltd  2 Qd. R. 219
Ex parte Powter; Re Powter (1945) 46 SR (NSW)
Ramzy v Body Corporate for G32 & Anor  QDC 397
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Sunland Group Ltd v Townsville City Council & Ors  QCA 30
Surace v Commisso  CCT KA002-09
Winch v Ketchell  2 Qd. R. 560
Mr Hughes QC and Mr Sinclair for the respondent
Ms Skennar for the appellant
Stratum Legal Pty Ltd for the respondent
Noel Woodall and Associates for the appellant
- This is an appeal pursuant to s45 of the Magistrates Courts Act 1921 against a decision made by Magistrate Madsen in the Maroochydore Magistrates Court on 27 March 2015 appointing an administrator of the Body Corporate for Donnelly House to perform the obligations of the Body Corporate under adjudicator’s orders in dispute resolution 0846 of 2011 made 23 October 2012 and subsequently amended on 1, 12 and 16 November 2012.
- His Honour’s order came after a hearing of two and a-half hours before him on 24 March 2015. It appears from the record of those proceedings that the application by Mrs Shaw was heard on the basis of sworn affidavits filed by both parties and no person was required for cross-examination. Written submissions were made by MrSinclair, who represented Mrs Shaw and still does as junior to MrHughes QC, and Ms Donnelly of Noel Woodall & Associates represented the Body Corporate. MsDonnelly is also the chairperson of the committee of the Body Corporate for Donnelly House and her husband has been the chairperson of the committee in the past. On the appeal her firm has instructed Ms Skennar of counsel on the appeal. The written submissions filed in the court below were supplemented by oral submissions.
The relevant law
- Section 287 of the Body Corporate and Community Management Act 1997 (“the Act”) provides relevantly as follows:
“287Enforcement of other orders
- (1)This section applies if the following are filed with the registrar of a Magistrates Court—
- (a)a copy of an adjudicator’s order, other than an order for the payment of an amount, certified by the commissioner as a copy of the adjudicator's order;
- (b)a sworn statement by a person in whose favour the order is made stating that an obligation imposed under the order has not been performed.
- (2)The registrar may register the order in the court.
- (3)The Magistrates Court may, by order, appoint an administrator, and authorise the administrator to perform obligations, under the adjudicator’s order, of the body corporate, the committee for the body corporate, a member of the committee or the owner or occupier of a lot the subject of the order.
- (4)If the Magistrates Court appoints an administrator to perform obligations of an entity mentioned in subsection (3), anything done by the administrator under the authority given under the order is taken to have been done by the entity.”
- Pursuant to s47 of the Magistrates Court Act 1921, on the hearing of an appeal, this court may do any of the acts set out in (a) to (f) of the section. Pursuant to s113 of the District Court of Queensland Act 1967, this court has, for an appeal of this nature, the same powers as the Court of Appeal to hear an appeal. Those powers are derived from r 766 of the Uniform Civil Procedure Rules 1999. On 24 April 2015 the Body Corporate made an application that his Honour’s order be stayed pending the appeal and an argument was advanced by MrSinclair on behalf of Mrs Shaw that the court did not have jurisdiction. I will deal with that later in the reasons.
- As Mr Sinclair said from the outset before his Honour, the issue in dispute between the parties relates to significant and serious water leaks in the building, and in particular leaks which affect Mr and Mrs Shaw’s unit, lot 6. Ms Donnelly and her family have an interest in four lots, and the remaining lot is owned by an independent person. As I have noted, at all material times either she or her husband was the chair of the Body Corporate committee.
- The material filed before his Honour to consider was voluminous. Ms Donnelly’s affidavit filed on 20 March 2015 extended over 425 pages. As he noted himself, he had “skim read” the material and it is clear, with respect to him, that at the hearing he was not fully cognisant with the history of the multilayered dispute between Mr and MrsShaw and the Body Corporate over performance by the Body Corporate of adjudicator’s orders, the subject of the order his Honour made. That is not meant to be a criticism of his Honour.
- He expressed concern at a very early stage about potential conflict of interest arising from the fact that Ms Donnelly was acting for the Body Corporate in all the circumstances. He returned to this theme on a number of occasions and also referred to it in his reasons despite being told by Mr Sinclair (at 1-14 line 4 of the transcript) that his client took no position in relation to Ms Donnelly’s appearance.
- At the conclusion of the hearing, he adjourned to 20 April 2015, but indicated that he would try and do the decision quickly and if he did he would notify the parties. In fact this is what he did, and he delivered his decision on 27 March 2015. The sufficiency of his reasons are a ground of appeal. The orders he made are as follows:
“1.Forthwith that Archers is appointed as the Administrator under section 278 (sic) of the Body Corporate and Community Management Act 1997 and is authorised to perform the obligations of the Body Corporate for Donnelly House CTS37465 and/or for Body Corporates Committee, under the Adjudicator’s Orders in dispute resolution application 0846 of 2011 made on the 23rd of October 2012 and as subsequently amended on 1, 12 and 16 November 2012, which authorisation extends without limitation to include:
a.to prepare, with or without the assistance of a suitably qualified person, a specification for the rectification and other works required to be undertaken under the Adjudicator’s Orders;
b.to obtain quotations from contractors for the performance of works detailed within the specification referred to;
c.to engage one or more of those contractors to perform the necessary works including by entering into the necessary contracts;
d.to administer and monitor, with or without the assistance of a suitably qualified person, the performance of the works under the contracts including so as to seek to ensure that the works are performed in compliance with the relevant contract, the specification and the Adjudicator’s Orders;
e.to procure completion of the works within the contract/s with the contractor/s to the relevant standard required under the Adjudicator’s Orders;
f.to procure confirmation of completion of the works from the contractor/s and provide that confirmation to the parties and to the Court;
g.to pay itself, the administrator, the contractor/s and any other person engaged by the administrator on behalf of the Respondent Body Corporate pursuant to these orders, including without limitation a licensed contractor, architect or consulting engineer pursuant to any special levy issued by the administrator for the purpose, or from the Body Corporate administrative fund or sinking fund as applicable;
h.if there are insufficient funds in the Body Corporate sinking fund or Body Corporate administrative fund (as the case may be) to raise the necessary contributions, whether by way of special levy or otherwise;
i.to amend the current budget of the Body Corporate, adopt a new budget or otherwise take such steps as are required on behalf of the Body Corporate to make the payments contemplated within these including the remuneration of the administrator but not restricted to that;
j.that the administrator has power to direct officers of the Body Corporate to cease conduct or action, or to take necessary action that the administrator believes necessary to secure compliance with the obligations referred to in the adjudicator’s decision;
k.that the administrator has power to direct officers of the Body Corporate to take stated action to help perform the work of the administrator, which includes but is not restricted to the provision of any relevant documentation to the administrator promptly; and
l.that there be liberty given to the administrator to apply to the court in relation to its remunerations;
- The administrator receive within seven days of this order, this decision, the affidavit of the applicant and exhibits filed 5 January 2015 and the adjudicator’s decision registered 5 January 2015;
- That there be liberty given to the administrator to apply to the court in relation to the terms of these orders, or in relation to the powers exercisable by it in respect of the adjudicator’s order;
- That the applicant file and serve such submissions in relation to costs of and in respect of these proceedings within 28 days; such submissions to address who is liable to pay those costs and how they should be paid and on what basis including but not restricted to the question of standard costs, indemnity costs, or costs payable out of a fund or by a particular person;
- That the respondent file and serve submissions in relation to costs in respect of these proceedings within 56 days; and
- Proceedings be listed before me again on 26 May 2015 at 2 pm in relation to costs.”
- Prior to making those orders, his Honour wrote:
“My original intention was to deliver this decision on 11 May 2015.
Quite frankly I was horrified by what I have read since and I have sought to publish these reasons … as soon as I possibly could … without reference to a transcript of the proceedings.”
- One of the complaints on appeal is that his Honour did not act on the evidence and instead acted on his own personal views and failed to give adequate reasons.
- A notice of appeal was filed 16 April 2015. The grounds as articulated are as follows:
“1.The learned Magistrate erred in not accepting the submission of the respondent that the application was an abuse of process in circumstances where there were extant applications before an adjudicator in relation to the issues the subject of the application.
- The decision of the learned Magistrate failed to have any regard to the proper legal principles for to (sic) the appointment of an administrator pursuant to s 287 of the Body Corporate and Community Management Act 1997.
- Having regard to the proper legal principles as to the appointment of an administrator pursuant to s 287 of the Body Corporate and Community Management Act 1997, the learned Magistrate ought to have refused the application.
- The learned Magistrate erred in not accepting the uncontested evidence of the respondent that a binding contract for the rectification works had been entered into.
- The learned Magistrate erred in making the orders in that the orders were incapable of implementation in circumstances where a contract for the rectification works had already been entered into.
- The decision of the learned Magistrate was against the evidence and the weight of the evidence.
- The learned Magistrate erred in finding that the Appellant was not ready, willing and able to complete the works when the uncontested evidence before him was that a contract had been entered into for such works and the works had been scheduled for completion.
- The learned Magistrate failed to have any or any proper regard to the material filed by the appellant.
- The learned Magistrate failed to hear and determine the application according to law, instead according to his own personal views about the matters the subject of the application.
- The Learned Magistrate failed to give adequate or proper reasons for his decision.”
On 24 April 2015 the Body Corporate sought a stay of his Honour’s order pending the outcome of the appeal. At the outset Mr Sinclair argued that leave to appeal was necessary because the “amount” in dispute was less than the “minor civil dispute limit” i.e. $25,000 referred to in s45(2) (a) of the Magistrates Courts Act 1921. He submitted correctly that if this submission was correct, the court could not exercise the power to stay until leave was given. Ms Skennar was taken somewhat by surprise by this point but was able to refer me to an authority: Winch v Ketchell  2 Qd.R.560 (although she did not have a copy for me). Essentially, Mr Sinclair’s argument was predicated on acceptance of his submission that in the case of an appeal against a non-money order, reference should be had to whether the dispute involves, directly or indirectly, any claim in relation to any property right with an equal value to or more than the minor civil dispute limit. This is a reference to the analysis of his Honour Judge McGill SC’s decision in Ramzy v Body Corporate for G32 & Anor  QDC 397, to which I referred with approval in Baker v Arkman Pty Ltd  QDC 16. His argument was that the claim here related to the adjudicator’s fees, which were less than $25,000. Ms Skennar’s argument was that the relevant value should be derived from the quantum of the contract entered into by the Body Corporate to, it says, comply with the adjudicator’s orders and the amounts estimated by contractors who provided quotes to MrsShaw, all of which greatly exceed the minor civil dispute limit.
- It was conceded that there was no authority that could be located that deals with the exercise of the discretionary power under s287(3) of the Act, and I indicated for that reason alone I was prepared to proceed on the basis that leave was not required as there was at least an argument that “some important principle of law or justice is involved”. I granted the stay, and the parties agreed to a truncated process for the filing of outlines and other material if required leading to a full hearing on 15 May 2015, which took place. Mr Sinclair did not require me to give reasons for granting leave, on the basis that I indicated that I would expose my reasons in my final judgment. Given my conclusions as to the merits of the appeal, I do not intend to say anything more about the leave issue.
- The adjudicator’s orders were made following a disputed adjudication before Adjudicator D Toohey in application number 0846-2011 and are cited as Donnelly House  QBCCMCmr 474.
- The orders made by Mr Toohey were in the following terms:
“1.I hereby order that, as soon as practicable, the body corporate must ensure the following work as referred to in the Saint report or Schwabe report respectively, is performed by Queensland Building Services Authority licensed contractors to relevant Building Code of Australia requirements:
- (a)Re-install the southern curved window.
- (b)Waterproof the southern wall by removing the relevant screens and waterproofing the wall (including sealing cracks in the wall and the holes used to attach the screens) before reattaching the screens. The detached skirting board within unit 6 should then be reattached.
- (c)Ensure the unit 6 balcony railings are in good condition by checking joints for depth and effectiveness, re-cutting joints as necessary, cleaning and resealing cracks and joints (using approved sealant with backing rod to manufacturer’s specifications), and repainting as necessary.
- (d)Rectify the upper floor metal roof by having new flashing installed under the roof sheeting to protect the soffit lining, improving the flashing fixity, resealing the flashing, reinstalling the sump, and repairing the soffits.
- (e)Re-install the unit 6 upper deck waterproofing membrane, grout layer and tiles ensuring:
a.the membrane extends to waterproof the sliding door (costs of removal and reinstallation of this door to be paid by the unit 6 owners);
b.the membrane has an appropriate bond breaking system and an adequate upturn and, where necessary, the waterproofing membrane extends to the outer edge and down over the wall.
c.spitters are installed and points of discharge increased in capacity where practicable with drainage collection points increased in capacity (cost of new drainage grates to be paid by the unit 6 owners);
d.similar tiles are re-laid.
- (f)install spitters to allow drainage of the lower deck of unit 6 through or under the planter boxes.
- (g)repair damage to the ceiling of the lower floor of unit 6 and remove mould.
- (h)fix water damage to the unit 6 dining room window sill and surrounding areas (costs of removal and reinstallation of this window to be paid by the unit 6 owners).
- I further declare that it would be unreasonable for the unit 6 owners to be liable to pay any insurance excess regarding any claims for insurance recovery for damage caused by failures of the body corporate to perform the above work within a reasonable time.
- I further order that the body corporate must regularly clean common property drains, including the drain on the front awning.
- I further order that the application is otherwise dismissed.”
- Attached to that order was a 13-page set of reasons for decision. The adjudicator’s order and his reasons are Exhibit JES1 to Mrs Shaw’s affidavit filed on 5 January 2015.
The evidence below
- The Body Corporate filed two affidavits of Ms Donnelly which were in support of the stay application in this court. It is not suggested that the material the subject of these affidavits was not before his Honour. Neither party filed any new material with their outline. It follows that on appeal this court should review the impugned decision in the light of all the evidence before the lower court.
- The material before his Honour was as follows.
1. Affidavit of Mrs Shaw filed 5 January 2015 to which was annexed the relevant adjudicator’s decision of Mr Toohey dated 23 October 2012.
- That order was appropriately certified to comply with the requirements of s287(1)(a) and (b) of the Act. The decision was amended on three occasions, namely 1, 12 and 16 November 2012. The original decision dated 23 October 2012 is on the court file, but the three exhibits reflecting changes which MrsShaw notes were under the “slip rule” were not. However, all exhibits are provided in volume 2 of the material annexed to Mr Hughes QC and MrSinclair’s submission in this court and clearly the adjudicator amended his reasons for his decision (as opposed to the orders) under the slip rule and his original decision is read accordingly.
- As I have noted the order was made after a contested hearing of a dispute referred under the Act to the Commissioner for Body Corporate and Community Management, which officer is appointed under Part 2 of Chapter 6. Chapter 6 of the Act deals with dispute resolution and provides for a multilayered system for resolutions of disputes between lot owners and body corporates in a timely and inexpensive manner. Section 277(4) provides authority for an adjudicator to order the appointment of an administrator but otherwise does not provide guidance as to the way in which that discretion is to be exercised. Part 10 of Chapter 6 deals with enforcements of adjudicators’ orders, and s287 is contained in that part.
- At the time the dispute was referred to the Commissioner for appointment of an adjudicator, the Donnelly interests owned all the lots in the scheme except for lot 6. As I have noted, an independent person has since purchased one of the lots but the Donnellys still control the voting in the Body Corporate committee.
- Mrs Shaw’s affidavit and the other evidence before his Honour established that all parties had an opportunity to lodge submissions before Mr Toohey, which they did. Attempts at conciliation failed. As can be seen from Mr Toohey’s detailed decision which is annexed to Mrs Shaw’s affidavit, the parties to the dispute were given many opportunities to provide expert reports and responses and did so.
- The issue in dispute was (and remains) whether the actions taken by the Body Corporate since the orders were made comply with the orders. It is common ground that the orders were designed to rectify defects in the structure of Donnelly House which have led to significant water penetration predominantly affecting lot 6 owned by Mr and Mrs Shaw. To give some flavour to the extent to which the adjudicator went to inform himself of the nature of the problem, it is instructive to quote from paragraphs - of his decision:
“I reviewed the application, the registered plan and the community management statement. On 5 March 2012 I informed the body corporate of a provisional view that the body corporate was responsible for maintaining balustrades, external windows, and the waterproofing membrane and requested reports and quotations for works to address cracking within the building and to address waterproofing issues. On 24 May I received a report from Roy Saint. On 29 May the applicant’s solicitors made submissions claiming this draft report was inadequate and raising a number of questions about the report. On 1 June 2012 I granted an extension until 6 June 2012 for the finalisation of the report and 15 June 2012 for the provision of quotes.
On 12 June Roy Saint provided a report that included a response to the issues raised by the applicant’s solicitor (Saint report).
On 15 June 2012 I granted an extension of time until 29 June 2012 for provision of quotations to perform the necessary work. Both parties had difficulty obtaining quotations based on the Saint report with quotations variously stating some items were ‘inconclusive for the purposes of a quotation’, ‘it is advisable that further investigation be undertaken’, ‘to be read in conjunction with the … report … based primarily on visual non evasive evaluation’, or ‘quotation amounts may need to be adjusted … once necessary invasive inspections have been carried out’. Subsequently, on 5 July 2012, I granted the applicant’s request to allow time for a further engineering report referring to specific deficiencies or inadequacies in the Saint report.
On 24 July 2012 the applicant provided a report from John Schwabe (Schwabe report). This report was based partly on moisture readings and investigations carried out by John Groom (Groom report). The Schwabe report disputed a number of recommendations made in the Saint report. Given these significant areas of dispute it was no longer feasible to expect the parties to provide full quotations for agreed works.
On 30 July 2012 I provided the parties with some provisional views and proposed orders based on the expert reports and invited a response by the end of August. The parties provided further submissions and reports by letters of 27 August 2012 and 31 August 2012.
On 3 September 2012 I held a teleconference between Ms Shaw and Ms Donnelly regarding the issues in dispute. At the request of Ms Donnelly I gave the body corporate until 17 September 2012 to provide a further expert report in response to the alleged defects with the waterproofing of the upper deck.
On 5 September 2012 Ms Shaw and Ms Donnelly provided further correspondence evidencing some dispute over the body corporate’s proposed course of action and whether access to unit 6 would be granted for this purpose. It also became apparent the body corporate for Donnelly House did not have a functioning committee. On 7 September 2012 I made a further order authorising BCP Strata Pty Ltd to act for the body corporate for Donnelly House to arrange an extraordinary general meeting and, in the meantime, obtain a further expert report. I extended the period for provision of this further expert report by further order of 17 September 2012.
On 25 September 2012 the body corporate provided me with the further report from A.D.A Waterproofing (ADA report). In the meantime, Ms Donnelly had provided me with an affidavit containing some history of water ingress to Donnelly House. On 3 October 2012 the applicant and respondent made further submissions in response to this additional information.”
- Paragraph 18 of his decision is also instructive of the attitude of MsDonnelly and presumably the Body Corporate at that time:
“I note that, on 7 September 2012, Ms Donnelly requested I disqualify myself from further involvement with this dispute if I was ‘not going to allow the body corporate procedural fairness’. While it is difficult to respond to this request without any alleged bias or misconduct being particularised, I note that I do not have any financial or other relevant interest in the outcome of this dispute and I am not aware of any significant failings to afford procedural fairness to any party.”
- In relation to each of the disputed areas, in his reasons, Mr Toohey refers at length to the expert reports before him, namely the Saint, Schwabe and Groom reports.
- Again, the attitude of the Body Corporate to one of the disputed issues is instructive. The position of Ms Donnelly on behalf of the Body Corporate was that the problems with the upper floor waterproofing membrane were insignificant and would involve minimal work to correct. Mr Toohey found otherwise by his analysis of the expert material before him. After he had expressed a provisional view that it would be unreasonable for the Body Corporate to patch the membrane, Ms Donnelly “strongly protested” and sought, and was given, leave for a further report to be obtained. This is a report referred to in  above at a time when BCP Strata was acting for the Body Corporate. At  of his reasons, Mr Toohey refers to the conclusions of that report which strongly supported his provisional view based on his analysis of the other expert evidence.
- Despite Ms Donnelly’s apparently unjustified, unsupported and unsuccessful attempt to have Mr Toohey recuse himself, it is clear from his reasons that he did not find completely for Mrs Shaw. Relevantly to the present issues, it is instructive to set out his conclusions from paragraphs -:
“The legislation requires the body corporate to maintain certain parts of the building in good condition and requires owners to maintain other parts of the building in good condition. If a building has defects then this duty to maintain requires those defects to be rectified. In this instance there is evidence of a number of failures to comply with Building Code of Australia requirements. These failures have resulted in significant water and moisture ingress into unit 6 and these failures must be promptly rectified.
It is not possible for the body corporate or individual owners to simply avoid responsibility by arguing they are not responsible for pre-existing defects. Rather, if the relevant builder or tradesperson does not fix the defect within a reasonable time then the body corporate or the owner who is responsible for maintaining the relevant area in good condition must fix those defects.
The applicant has sought a number of orders against the body corporate. The application has been partially successful but I note that a number of the alleged defects are the responsibility of the applicant. I have not made orders binding the applicant in relation to these remaining defects because no orders were sought against the applicant. However, if the applicant does not rectify these defects in a timely manner then the body corporate or another owner should be able to relatively quickly obtain such orders based on the findings made in this application.
The most contentious issue in dispute was whether the waterproofing membranes should be replaced. There is evidence of a number of defects in the installation of the membrane on the upper deck. It is likely these defects are the primary cause of moisture and mould issues related to the ceiling of the lower floor of unit 6. I have ordered this entire upper deck membrane be replaced given the impossibility of inspecting the entire membrane for defects, the likelihood of parts of the membrane being too thin to bridge cracks in the concrete, and the likely difficulties in effectively just replacing parts of this membrane.
There is not the same evidence of defects in the installation of the lower deck membrane. However, there are still concerns with the tiling and drainage from the lower deck that have resulted in the recommendation of alternative solutions to water issues involving the installation of spitters and some additional works to waterproof the adjacent doorways. I am satisfied the body corporate is responsible for the installation of spitters as these will form part of the common property utility infrastructure allowing overflow of excess water from this area. Conversely, the owners of unit 6 are responsible for the waterproofing of their own doorway as this work would be solely within their own lot boundaries.
The body corporate should act as soon as practicable to install a new waterproofing membrane on the upper deck. Acting quickly to address this problem is of special importance due to the likelihood failures in this membrane are contributing to significant mould growth within the ceiling void below. This has resulted in a recommendation the air conditioning system remain switched off until mould issues are addressed and the unit be vacated subject to occupiers gaining a medical clearance regarding possible respiratory issues that might result from these mould issues.”
- In an affidavit filed 5 January 2015 in the lower court by reference to MrToohey’s orders, Mrs Shaw swore that:
“6.Order 1(a) has not been complied with in that the southern curved window has not yet been reinstalled.
- Order 1(b) has not been complied with in that the southern wall, southern screen and lounge skirting board has not yet been rectified.
- Order 1(b) has not been complied with in that the western wall, western screen and skirting board in the office have not yet been rectified.
- As required by Order 1(c) the balcony railings have not yet been rectified.
- As to Order 1(d) rectification work was done to the roof in October 2014. I do not know if that work resulted in the obligation of the Respondent Body Corporate under this part of the Order being discharged.
- Order 1(e)a. & b. have not been complied with in that the upper deck waterproofing has not yet been rectified.
- Order 1(e)c. has not been complied with in that the spitters in the upper deck have not yet been installed.
- Order 1(e)d. has not been complied with in that similar tiles have not been installed.
- Order 1(f) has not been complied with in that the spitters on the lower deck have not yet been installed.
- Order 1(g) has not been complied with in that the ceiling of the lower floor of lot 6 has not yet been rectified.
- Order 1(h) has not been complied with in that the dining room window sill and surrounding areas has not yet been rectified.”
- She noted in her affidavits that order 1 was required to be performed in accordance with the terms of the order itself”as soon as practicable”.
- As I have noted she was not required for cross-examination in the hearing before his Honour. Mr Toohey’s decision was never challenged on appeal.
2. Affidavit of Mrs Shaw filed 11 March 2015
- In her second affidavit she refers to and exhibits a decision of Adjudicator M A Schmidt dated 30 July 2013.
- This decision was a result of an application to the Commissioner for Adjudication made by the Body Corporate alleging that the Shaws had failed to maintain lot 6 in good condition. The Body Corporate asserted by reference to paragraph  of MrToohey’s reasons that the failure of the Shaws to keep their lot in good repair was preventing it from complying with the orders made by Mr Toohey. Again, after careful analysis, Mr Schmidt dismissed the Body Corporate’s application as “misconceived and without substance”. That decision was not appealed.
- In this affidavit, Mrs Shaw swore that the failure to carry out the orders of MrToohey remained and that as a result of severe rain in late February 2015, she removed 75 litres “of water that entered my unit through the areas to be repaired under the orders”. Again, this statement of fact was not challenged.
- Annexed to her affidavit is an email to her and her husband dated 9 January 2015 from Ms Donnelly attaching a letter of the same date signed by her as chairperson of the Body Corporate. It refers to a number of as yet unresolved dispute applications filed by the Shaws with the Commissioner which, before his Honour and before me, are referred to in support of the Body Corporate’s argument that the proceedings in the Magistrates Court by Mrs Shaw amounted to an abuse of process.
- The letter can only be described as an extraordinary piece of correspondence. It acknowledges the Shaws’ longstanding views that the Body Corporate should comply with the adjudicator’s orders. It asserts however that it is impossible for the Body Corporate to comply with the orders because to do so would compromise its statutory obligations under the Act. It threatens to make an application to the Supreme Court “to seek Declarations regarding the impossibility of compliance with the adjudicator’s orders”. No Supreme Court application has been made. This letter was sent at a time when the Body Corporate had not been served (I infer) with the material filed on 5 January 2014. The application to appoint an administrator pursuant to s287(3) of the Act was filed on 11 March 2015, along with the affidavit of MrsShaw filed that day. Also at that time, Mrs Shaw’s lawyer, Mr Michael Kleinschmidt, filed an affidavit sworn by him on 11 March 2015. To that affidavit are exhibited letters from him to three professional Body Corporate Managers including Archers Body Corporate Management. The response from Archers includes their quote for undertaking the services described by Mr Kleinschmidt in his letter from points 1-9 as $5,000 with $220 per hour for additional services. There is no suggestion that there was a misdescription in the services required to give effect to the adjudicator’s orders and no suggestion that the fees quoted are excessive. Mr Kleinschmidt was not required for cross-examination.
- Finally, Mrs Shaw relied on an affidavit of Frank George Groom filed 17 March 2015. One of the issues raised in Ms Donnelly’s letter of 9 January 2015, and in the material filed on behalf of the Body Corporate, is the contention that the Body Corporate cannot comply with the adjudicator’s orders unless hobs are installed to the upper level of lot 6. Mr Groom was one of the experts who provided a report to MrToohey. At paragraphs 4-5 of his affidavit he states:
“4.In my opinion the order Donnelly House  QBCCMCmr 474 (23rd October 2012) ‘the order’ can be reasonably complied with in its current form. This is on the basis that after the tiles were uplifted to the upper level deck of lot 6 the depth of the bed under the tiles was determined to be of sufficient depth to comply with AS 3958.1 and provided a sufficient threshold at the sliding door. This is detailed in my report annexed as Exhibit FJG-4.
- Subject only to confirmation of the tile bed depth in paragraph 4 above, I confirm that the order can be complied with, without the need to install a hob nor the need to replace the existing sliding doors.”
- Again, he was not cross-examined by Ms Donnelly on behalf of the Body Corporate in the hearing before his Honour.
- The following material was filed on behalf of the Body Corporate.
1. Affidavit of Jennifer Donnelly filed 20 March 2015.
- Ms Donnelly annexes to her affidavit, as Exhibit A, part of the adjudication application made by Mrs Shaw on 30 April 2013. It is said that the material filed ran to 938 pages. In summary, it seeks to restrain the Body Corporate from proceeding with motion 18 passed at the EGM conducted on 24 April 2013, which was to appoint a contractor “Megasealed” to perform the works in compliance with MrToohey’s order. As Ms Donnelly notes, the Body Corporate through its then solicitors provided a response on 23 May 2013. Again, as a demonstration of the degree of animus between the parties, the respondent argues that the Shaws’ application was “vexatious, misleading and an abuse of process”, and should be dismissed with costs and “the maximum penalty under section 297(1) of the Act should be imposed against the applicant”. This is a reference to an offence of stating “anything to the Commissioner or an Adjudicator the person knows to be false or misleading in a material way”. Perhaps as a reflection of a lack of understanding of the law of the Body Corporate’s then lawyers, obviously a penalty like that would only follow after due process. In fact, Mrs Shaw was partially successful as the adjudicator’s order dated 28 May 2013 exhibited to Ms Donnelly’s affidavit and marked C confirms, in that interim orders were made.
- A further EGM was then called on 25 July 2013. Motions proposed included revocations of the motions effectively temporarily invalidated by the 28 May 2013 interim orders, but also proposed a motion to which was attached three quotes for “all the work necessary to fully comply with the orders (of MrToohey)”. The quotes ranged from $104,250 (the Boss quote) to $258,981 (J Hutchinson Pty Ltd). Mrs Shaw then made another adjudicator application under the Act.
- An adjudicator was not prepared to make interim orders, and it is clear from the reasons (Exhibit D to Ms Donnelly’s affidavit) that the adjudicator did not deal with the substance of Mrs Shaw’s complaints at that point. Mrs Shaw proceeded with her application for final orders which included the appointment of an administrator of the Act. As can be seen from the adjudicator’s reasons for refusing to appoint an administrator (Exhibit F), Mrs Shaw had sought appointment well beyond compliance with Mr Toohey’s orders and included orders that sought to extend the administrators’ powers to “records and financial affairs of the Body Corporate be brought into compliance with the Act”.
- One of the issues raised before his Honour and on appeal is whether or not the Body Corporate has entered into a binding contract with Boss on 10 September 2013, and whether or not that contract does address the works required to comply with the adjudicator’s orders.
- The issue of the hobs to the sliding glass doors to the upper level is raised by MsDonnelly in her affidavit at -. She annexes a number of expert reports to her affidavit including a report of Mr Saint dated 6 June 2012 and a report of MrSchwabe dated 20 July 2012.
- In her affidavit she describes this as the “main issue in dispute”. Certainly, Mr Saint said hobs were necessary, but Ms Donnelly’s sworn statement at  that “all engineers have either agreed with Roy Saint or dropped out of the equation”, does not stand up under scrutiny even on the basis of her own material. At  she annexes a report of engineer Karl Aldridge dated 17 July 2014. It is clear from that report that as well as undertaking two inspections, Mr Aldridge had access to other reports At 7.3 he states:
“7.3. INSTALLATION OF A HOB
Previous reports have advised that the installation of a hob is the only way to prevent water entry occurring in this location in the future. We onsider this information as incorrect and based on extremely limited investigation by the parties involved.
We are of the opinion that there is no requirement to install a hob to prevent water entry and in fact, the installation of a hob would create unnecessary expenses to be incurred due to the necessity to completely replace the existing doors to facilitate this. A hob would also create a potential, unnecessary tripping hazard to the door opening. Furthermore we consider it most likely that the waterproofing to the hobs would likely fail over time as the movement between the hob and slab (cold joint) would put stress on the water proofing.
A sufficient step down is available to be incorporated into the retiling of the external deck area. We are strongly of the opinion that the installation of a hob would have no additional or beneficial effects on the waterproofing performance of this area if the step down mentioned above is incorporated.”
- When considered with the sworn, unchallenged evidence on oath by Mr Groom and Mr Aldridge’s report the statement made by Ms Donnelly in her affidavit at paragraph  affirmed before Mr Woodall is clearly incorrect.
- The rest of her affidavit establishes conclusively in my view, that the dispute over compliance with Mr Tooheys’ orders will never be settled by discussion between the parties. Further adjudication applications have been made and are pending. The last adjudication application concerns the Body Corporate’s decision (opposed by MrsShaw) to appoint yet another engineer Mr Steve Waite to review the “hob” solution. A motion was passed which had the effect of imposing on Mr and Mrs Shaw the responsibility for the cost of Mr Waite’s report if it confirmed that the Body Corporate’s preferred solution of hobs was confirmed by him. The Shaws were successful in having that part of the motion, transferring liability to them, restrained by an interim order made 18 December 2014. In the submission to the Body Corporate to the adjudicator in relation to final orders sought by the Shaws in relation to that application, inferentially drafted by Ms Donnelly, it still alleges a miscellany of alleged false and misleading statements by the Shaws. It demonstrates once again, from the Body Corporate’s own material the extent of animus between the committee, which is controlled by the Donnellys, and the Shaws. Consistently with some of the statements made by Ms Donnelly in her affidavits filed in support of the stay application, it contains highly critical and inflammatory statements e.g. at page 368 of her affidavits.
- In her affidavit paragraphs - she raises once again the prospect of an application to the Supreme Court for declaratory relief, even exhibiting a draft application (p424) seeking to set aside a number of Mr Tooheys’ orders against which the Body Corporate did not choose to appeal under the Act.
- Ms Donnelly filed another affidavit sworn on 23 March 2015. Relevantly, and annexed to the affidavit was a draft affidavit of Mr Waite and his report in which he recommends hobs. She also refers to an EGM on 30 July 2014 in which motions to raise funds and strike a levy to pay for rectification works totalling $131,250 gross were proposed. The first was not passed, because all six lot owners were required to vote yes, but the second motion was passed but the Body Corporate has not yet acted on the motion “because of the risk to the lot owners that they would have committed funds… and would have been unable to be used because of the constant disputing by the Lot 6 owners”.
- She also referred to a payment of an invoice from Boss dated 15 October 2014 for $13,274.80 for repairs to the roof and soffits. Mrs Shaw refers to this in her 5.1.15 affidavit and says she cannot say if these works complied with 1(d) of the adjudicator’s orders. Given the uncontested evidence of Mrs Shaw about the amount of water that entered her unit in February it could hardly be contended that whatever work has been done has gone anywhere near satisfying Mr Toohey’s orders.
The position of the parties below
- As I have noted, written submissions were handed to his Honour and these were supplemented by oral submissions. The first issue raised by the Body Corporate is the same issue raised in Ground 1 on appeal; that is, because there were two extant adjudications in train under the Act initiated by Mrs Shaw, the proceedings before his Honour were an abuse of process, as the applicant Mrs Shaw, was “maintaining several proceedings at the same time for an improper purpose”. In her written submission, and consistently with many statements in her affidavit, Ms Donnelly submitted on behalf of the Body Corporate that “strict compliance with the adjudicator’s orders is impossible in light of evidence now available: expert report of Steven Waite”.
- Then there was an argument to the effect that his Honour lacked jurisdiction to make the orders, despite reference being made to s 287(3) of the Act. This argument is not advanced on appeal, but has morphed into a submission that the Magistrate did not have regard to “proper legal principles” for the appointment of an administrator pursuant to s287(3). This argument extended to a challenge to some of the orders made as being beyond power. In this part of the submission, Ms Donnelly referred to the Boss contract; asserting that the contract complied with Mr Tooheys’ orders. This issue is taken up in paragraphs 4 and 5 and 7 of the Grounds and was really the main focus of the Body Corporate’s argument on appeal.
- In relation to the “legal principles” point, reference is made to a decision of the now disbanded Consumer Credit Tribunal at  of the written outline. Ms Donnelly made a submission to the effect that placing a Body Corporate into administration is used sparingly in particular circumstances: Surace v Commisso  CCT KA002-09 at paragraph 44:
“An applicant must therefore demonstrate to the required standard that such a step is appropriate. Typically, without attempting to be exhaustive, there will be evidence that the body corporate is so dysfunctional that it cannot operate properly within the statutory framework that governs it, or that there is a well founded suspicion, on the part of an applicant for appointment of an administrator of financial malpractice within the body corporate, or that there is conduct that amounts to undue oppression in the conduct of its affairs. Without more, mere disagreements between the members, especially when the disputes are due to reasonably held differences of view and there are means available to resolve them by reference to external processes (will not usually support the exercise of the discretion)”( I have inserted these words as the quote in the submissions seemed to be missing the conclusion and I was not given the case by the appellant).
- Mrs Shaw’s case below was that despite the passage of 883 days since Mr Toohey’s order and 602 days since the failure of the Body Corporate to obtain orders that she and her husband keep their lot in good repair, the orders have not complied with, and Lot 6 was still leaking badly. Her submission made by Mr Sinclair pointed out that the main item in dispute and the most expensive is order 1(e). She referred to Ms Donnelly’s affidavit filed on 23 March 2015 and Exhibit D to the affidavit, the minutes of the EGM on 30 July 2014. Motions 4 and 5 proposed by Mrs Shaw were to investigate the differences alleged by her between Mr Tooheys’ orders and the Boss contract, and to request written confirmation from Boss “that all works quoted within the contract are completely in accordance with the adjudication order”, were lost four against two in favour. Not surprisingly, her submission was that the Body Corporate was not willing and not ready to implement Mr Tooheys’ orders. The submission referred to the adjudication order sought by the Body Corporate which was dealt with on 30 July 2013 – this was the adjudication to which the Body Corporate sought to have hobs installed described by the adjudicator as misconceived and without substance.
- Mr Sinclair and Ms Donnelly made further oral submissions. Her submission expanded on the written submission, asserting the application was an abuse of process, that the Body Corporate was acting reasonably and endeavouring to comply with the orders; and was being unreasonably prevented from doing so by the actions of Mr and Mrs Shaw. She referred in some detail to the Boss contract, but agreed with his Honour that the repair of the upper level deck of unit 6 had not been completed. I take that to be a reference to order 1(e).
The Magistrate’s decision
- I have referred above to the circumstances in which his Honour gave his decision at a time earlier than he had anticipated. His reasons are brief, and it is alleged are inadequate. His Honour referred to the extensive material filed by the Body Corporate and he said he had considered it carefully.
“As I indicated on the day this matter was argued my instinct was to appoint at (sic) administrator because relations between the lot owner and the respondent were so bad that it could not be expected that they could attend to the issues raised in the adjudicator’s decision.”
- He referred to the authority raised by Ms Donnelly without actually citing it and wrote:
“An administrator is a person who directs or manages the affairs of another. An administration allows the management of a business or other organisation. The application before the Court is not to replace all of the obligations and duties of the Body Corporate. The application seeks orders directly related to the enforcement of the order of the adjudicator. The test that law in relation to Body Corporate administration needs to be considered in the light of the fact that this is an enforcement proceeding. Although extensive powers are sought to be given to the administrator it is intended that those powers are given to them to allow them to effectively discharge the terms of the order of the adjudicator, without interference and with an open mind to the topic.
Much was written in affidavits about why things had not been done and why it was one party’s fault and not another’s.
In terms of decision to appoint an administrator I don’t think I need to reach a concluded view in relation to whose fault it is.
It was submitted that I should consider whether or not the respondent was ready, willing and able to comply with the adjudicator’s decision and that on a balanced consideration of that submission I should conclude that the respondent was not ready, not willing, and not able to comply with the decision.
In reaching my decision I would like to clearly state that I have considered all of the matters raised in that respect. Although I have not referred to all the matters raised in this written decision, it is not because I have ignored those other matters. The matters to which I intend to refer are things which I think are relevant to the decision that I have reached in relation to the appointment of an administrator.
- The applicant holds minority interest within the community title scheme;
- The scheme is not managed by a professional Body Corporate manager;
- The chairman of the Body Corporate committee holds and interest in four of the six total lots;
- It would appear that the chairman also sold to the applicant the unit which it seems is perhaps been most effected by the water membrane problem;
- There has been extensive correspondence sent and received by the parties in relation to the determination which readily allows the conclusion to be reached that the parties’ positions are relatively entrenched;
- There have been a number of meetings to try and resolve the apparent impasse without success;
- It has been approximately two and a half years since the adjudicator’s decision was made;
- Other legal proceedings have been contemplated or threatened or taken without the position being advanced; the respondent it seems delivered an ultimatum which included an application to the Supreme Court to appoint an administrator yet has not advanced that in any way.
- Although some work has been done it seems conceded that the most expensive and the most significant component of the work remains to be done;
- The adjudicator’s decision has not been challenged by an appeal – and it would appear to me at least that the decision was given careful consideration to the competing positions and the obligations under the Act. (sic)
- An adjudicator in another decision considered the operations of the Body Corporate under the Act and found there was no need for an administrator. There was a cave (sic) used expressed (sic)
‘However the Body Corporate needs to be aware that factionalism or hostility between owners may be grounds for appointing an administrator, particularly if circumstances create an atmosphere which leads to endemic disputation or it is established circumstances are not conducive to a balance (sic) consideration of issues and the result (sic) decisions are not in the best interest of owners.’”
- Later in his reasons he wrote:
“All of the material filed by both parties demonstrate (sic) palpably that there is little or no real prospect that the adjudicator’s decision will be complied (sic) ‘as soon as practicable’ with without (sic) the appointment of administrator…
The attraction of an administrator being appointed is that the administrator is a professional administrator – has statutory obligations – and as I understand fiduciary obligations that it needs to discharge. It appears to be that an independent administrator charged with the responsibility of achieving compliance with the adjudicator’s decision is the best alternative to a negotiated outcome which seems impossible. The professional administrator would certainly not have any problems with any suggestion of partiality in terms of the dispute and would hopefully look at what needs to be done with open eyes and with a clear objective, namely to ensure that the adjudicator’s decision is complied with.
It has been 883 days since the adjudicator made his decision.
Clearly the problems need prompt attention…”
- He appeared to reject Mrs Shaw’s contention of an issue of estoppel in relation to the hobs without referring to the extensive evidence about that issue, and he rejected without specific reasons that the application was an abuse of process. Apart from an oblique reference in 9. above, he did not refer to the Body Corporate’s contention, advanced more forcibly on appeal that there is in existence a binding contract to perform the works the subject of the orders, and that is a factor that strongly militates against exercising the discretion to appoint an administrator.
- I will deal with the grounds of appeal seriatim.
Ground 1 – abuse of process
- This was a ground not forcibly advanced on appeal. Clearly Mrs Shaw was entitled to file the orders and seek the appointment of an administrator. The previous attempt to have an administrator appointed under the Act did not succeed, but in any event the orders sought by the Shaws were intended to invest much more power in the administrator on that occasion than is provided for in his Honour’s orders. It could not be seriously argued that the dispute over the implementation of the orders, which has extended over years, had, by the end of 2014, reached a complete impasse. The attitude of the body corporate to the orders is demonstrated vividly by its threat to seek the vacation of many of the adjudicator’s orders including 1(e) by way of equitable relief in the Supreme Court. In passing the delay in making such an application would in all the circumstances militate strongly against its success. It does however demonstrate the attitude of the Body Corporate to the adjudicator’s orders.
- The two unresolved adjudicator’s references referred to by Ms Donnelly in her written submission below made by Mrs Shaw clearly relate to the central issue in dispute i.e.the extent to which the Body Corporate has complied with the orders, and the extent to which the Boss contract addresses the orders. It is telling that when Mrs Shaw sought this information (effectively) at the EGM on 30 July 2014, her two motions were defeated four to two – I infer the Donnellys voted as a bloc and the other independent owner voted with Mrs Shaw. There is no merit in this ground.
Ground 2 – disregard for proper legal principles and failure to properly exercise the discretion
- As I have noted his Honour specifically referred to the case relied upon below by the Body Corporate without referring to its name. The same case is referred to in MsDonnelly’s submission below is referred to by the Body Corporate on appeal at paragraphs 26 to 28 of its written outline.
- Clearly the decision to appoint an administrator under s 287(3) of the Act involves the exercise of judicial discretion. Otherwise s 287 provides no guidance as to how that discretion is to be exercised, nor does the section in the Act dealing with an adjudicator’s power to appoint an administrator. I agree with Mrs Shaw that because the order sought here was for the appointment of an administrator for a limited purpose, it is not necessary to find that the Body Corporate has become dysfunctional, or was engaging in financial malpractice. As I have noted on a number of occasions, it cannot be seriously argued that the impasse between the owners of Lot 6, the lot most significantly affected by significant and serious water leaks to the building, and the body corporate itself, is in a state of irretrievable stalemate. I agree that the financial implications for the Body Corporate, particularly in relation to the Boss contract, are a relevant factor; as is the uncontested evidence that despite the Body Corporate expending monies to (as it says) comply with the orders, as recently as February 2015, Lot 6 was severely inundated.
- I agree with the submission made by Mr Hughes QC and Mr Sinclair in their written outline on behalf of Mrs Shaw:
“(1)First, the power is a discretionary power which ought to be exercised:
- (i)judicially; and
- (ii)having regard to available evidence and inferences able to be drawn from that evidence when the issues will no doubt vary with respect to the nature of the administration sought, and the particular facts of the case;
- (iii)with reference to the specific purpose of the appointment.”
- The Body Corporate’s written outline, as with its approach before his Honour, was to contend that it has acted reasonably at all times to comply with the orders and that Mrs Shaw has deliberately hindered it in carrying out its duties. The evidence of MsDonnelly on its own, referred to above, does not support that contention but, in my opinion, it was not necessary for his Honour to determine ultimately who was at fault. I accept the submission made at paragraph 26 of Mrs Shaw’s submission on appeal:
“in this regard, particularly where the disagreement stretches over many months, even years; involves numerous applications by the parties with attendant legal costs and delays; burdens the courts and tribunals; involves constant inability to agree with respect to the manner of complying with an outstanding order; where the parties are clearly at odds, the appointment of an administrator is likely to be proper exercise of discretion.”
- The evidence clearly establishes that the parties will not agree as to whether the adjudicator’s orders have been or will be complied with without the intervention of an independent administrator. There is no merit in this ground.
Grounds 4, 5 and 7 – the BOSS contract issue
- It is the Body Corporate’s contention that there exists a binding contract between it and BOSS to perform the works required by the adjudicator’s orders. The contract was before his Honour as an annexure to one of Ms Donnelly’s affidavits and he certainly referred to it in the hearing, but not in his reasons. The Body Corporate submits that this is a factor that is strongly against the exercise of a discretion pursuant to s287(3) of the Act, and his Honour’s failure to deal with it in his reasons constitutes appellable error.
- For convenience I will refer to the copy of the contract which is Exhibit JAD1 to MsDonnelly’s affidavit filed in these proceedings on 23 April 2015.
- The contract is in a standard form Master Builders Commercial Building Contract. Clause 1(a) refers to the “Works”; and the works are described (“a brief description”) on p3 of the contract thus:
“As per BOSS Building Maintenance (Australia) Pty Ltd attached QUOTATION 1651/41594-1 $98,406 including GST dated 30 May 2013 including our General Terms and Conditions and as per Scope of Works requested in correspondence dated 11 February 2013 from Ray Donnelly and additional Scope of Works requested in correspondence dated 29 May 2013 from Jennifer Donnelly updated quotation with additional items raised after Adjudication Application. Excludes any works not stated in our quotation and excludes any works associated with removal, manufacture and installation of windows and doors. This is by others as per the scope of works requested in correspondence dated 11 February 2013 from Ray Donnelly. Excludes any building certification, council application or engineers fees.”
- There is also a special condition at p5 which may be relevant to the scope of the works covered by the contract:
“As per BOSS Building Maintenance (Australia) Pty Ltd QUOTATION 1651/41594-1 $98,406 including GST dated 30 May 2013 including BOSS Building Maintenance General Terms and Conditions, Master Buildings General Conditions LS32-07/2013 and as per Scope of Works requested in correspondence dated 11 February 2013 from Ray Donnelly and additional Scope of Works requested in correspondence dated 29 May 2013 from Jennifer Donnelly updated quotation with additional items raised after Adjudication Application. All the above documents are attached and form part of this contract. Excludes any works not stated in our quotation and excludes any works associated with removal, manufacture and installation of windows and doors (sic) this is by others as per the scope of works requested by correspondence dated 11 February 2014 from Ray Donnelly. Excludes any building certification, council application, Qleave or engineers fees or any other costs not included in our quotation. Access to unit 6 and Common Areas and any other part of the building where we need access to complete the works is the responsibility of the Body Corporate. Should we commence works and any areas of access is denied or delayed access (sic) and we have to leave site additional costs will be incurred by the Body Corporate for reestablishment of site work. BOSS will only take instructions from the Body Corporate representative, please advise us in writing of this representative.”
- There is no date inserted for commencement of the contract or a date for practical completion. As indicated there purports to be attachments, the most significant of which is the quotation dated 30 May 2013 which is said to be valid for 45 days. The contract is dated 10 September 2013 and signed on behalf of the Body Corporate by MrDonnelly.
- The adjudicator’s orders are set out above. Apart from the reference above, there is no reference anywhere to the actual particulars of the adjudicator’s orders in the Boss contract. The most comprehensive description of the works covered by the contract is that set out in the quotation dated 30 May 2013. The correspondence allegedly from Ray and Jennifer Donnelly referred to in the contract is not annexed to the contract.
- The Boss quotation and contract can be contrasted with the quote from Pandanus Constructions. This quotation dated February 2013 forms part of Exhibit JAD3 to the affidavit of Ms Donnelly filed on 23 April 2015 in these proceedings. In her affidavit MsDonnelly states that Mrs Shaw organised two quotes from Pandanus and J Hutchinson Pty Ltd. These quotes were certainly considered by the Body Corporate but not accepted. The Pandanus Constructions quote dated 6 February 2013, (unlike the Boss quote attached to the contract) specifically refers to the adjudicator’s orders and the items listed by reference to the orders and quotes amounts by reference to order numbers. For example, the Pandanus Constructions quote quotes an amount of $84,275.60 to comply with orders 1(e)a., b. and d. and $6,285 to comply with order 1(e)c., and refers to other matters set out in the adjudicator’s orders.
- As I have noted, the quotation from Boss, which was for less than half of the other two quotations, does not in terms address the orders. The Body Corporate has not relied upon any affidavit from the principal of Boss or any correspondence from him to the effect that the quotation does address the orders. This has to be considered in light of the undoubted animus between the Shaws and the Donnellys, who control the committee, and the reality that it is the Shaw’s unit that is most substantially affected by the water leaks. As indicated before, one of the significant issues now in dispute between the parties is whether or not hobs need to be installed. Certainly the Boss quote refers to it but quotes only for a modest sum. The orders do no mention hobs, and a fair reading of Mr Toohey’s decision (particularly paragraphs -) suggests he did not agree with Mr Saint’s opinion about construction of a hob inside the doors of unit 6. Without any evidence from the principal of Boss, it is difficult for me to undertake a meaningful comparison of the Boss quote with the orders to ascertain if in fact the works address adequately the adjudicator’s orders. As I have noted, the Pandanus quote specifically refers to the orders.
- I do not accept MsSkennar’s submission that Mrs Shaw has either directly or inferentially accepted that the Boss contract addresses the adjudicator’s orders. She referred me in argument to correspondence at pp281 and 287 of Volume 2, but not to Mrs Shaw’s letter to Ms Donnelly at p279 dated 20 June 2014. The letter refers to the Boss contract. It seems to seek that information be obtained from Mr Kemp (apparently the principal of Boss) and proposes that he visit the site to “quote according to the adjudicator’s orders 0846-2011. This order has all rectifications clearly stated that the Body Corporate is responsible for. This will invariably avoid his company’s position (and the position of the Body Corporate) being compromised if there are indeed unforeseen variations in the works or further costs”. The letter in response from Ms Donnelly dated 21 June 2014 did not address that issue and in effect stated that the contract was in force.
- This is not the forum to decide if the Boss contract is binding. It has features (lack of a commencement and practical completion date, and the fact that a fundamental term, the costs of the works referred to in a quotation was valid for only 45 days) that tend to undermine the submission that it is a valid and binding contract.
- As I have noted, the hobs issue has become significant, so significant that Boss would not guarantee the works unless hobs were installed. As I have noted, MrGroom was the only engineer who provided an affidavit in the proceedings below, and his opinion unchallenged by cross-examination was that hobs were not necessary to comply with the adjudicator’s orders. Mr Waite’s report which contains a contrary opinion was annexed only in draft form to one of Ms Donelly’s affidavits, so necessarily he could not have been cross-examined. As I have noted, a fair reading of MrToohey’s reasons suggests he did not agree with MrSaint’s opinion that problems with the upper level waterproofing membrane, to the effect that the membrane would be repaired in three places and a hob installed on the floor inside the doors of unit 6, was sufficient. Ms Donnelly’s response is to engage another engineer, Mr Waite, whose, unsworn report was attached to one of her affidavits below.
- In relation to this issue of whether the Boss contract covers the work specified in the orders, it is clear, consistent with its attitude throughout, particularly from its response to one of the extant adjudication applications made by Mrs Shaw (p405 of volume 2) that the Body Corporate was not prepared to provide correspondence between itself and MrKemp prior to the receipt of the quotation attached to the Boss contract. That correspondence, or as I noted a statement from Mr Kemp, might assist in deciding whether or not the works covered by the contract do cover the works contemplated by the orders. As I have noted earlier, when Mrs Shaw moved motions to compel this disclosure at the 30 July 2014 EGM the motions were defeated by the Donnellys voting as a bloc.
- At 43 of their submission Mr Hughes QC and Mr Sinclair write:
“43.Two further things need to be said:
- (a)First, if it be the fact that the Body Corporate has entered into a contract in respect of works to ameliorate water penetration to Mrs Shaw’s unit, but that contract does not provide for scope of works ordered by the adjudicator, Mr Toohey, then that is a problem for the Body Corporate (in terms of the contractual arrangements it has entered to the exclusion of Mrs Shaw). It involves conduct and consequences for which the Body Corporate is responsible irrelevant to satisfying its obligations under the adjudicator’s orders;
- (b)Second, the appellant’s submissions overlook the proposition that the administrator appointed may, in the independent discharge of his duties, choose to pursue Boss as the preferred contractor. The administrator will be in a position if so advised:
- (i)to review the terms of the contract;
- (ii)to ensure the contract addresses the order of the adjudicator and, if not, to seek the variations to ensure that it does;
- (iii)to otherwise negotiate a contemporary contract price; the commencement dates, and a date for practical completion and, if the administrator thinks appropriate;
- (iv)to engage Boss to complete the works.”
- Both propositions appear to me to be self-evident. Ms Skennar on behalf of the Body Corporate was dismissive of both propositions, arguing that the administrators’ obligations under the impugned orders are to, in effect, start the process again. I think the answer to this dispute is that the orders made appropriately do not constrain the administrator in how it undertakes its appointment. To suggest otherwise would be to speculate.
- In my view, the existence of the contract was a relevant issue for his Honour to consider in the exercise of his discretion. His failure to do so was an error. However, in undertaking the analysis above in relation to this discrete issue, I have concluded that, in conjunction with other factors, and in particular the animus between the parties; the uncertainty over the extent to which the Boss contract addresses the adjudicator’s orders, the attitude of the Body Corporate in refusing to provide information that may assist Mrs Shaw to determine if the contract does address the orders; the fact that it is her unit that is most seriously threatened by admitted serious defects in the building (the rectification of which by the orders is the responsibility of the Body Corporate); and the fact that despite saying it is ready, willing and able to comply with the orders, the actions of the Body Corporate e.g. the threatened application to the Supreme Court, strongly suggest otherwise, in exercising the discretion afresh, taking into account this discrete issue, the same orders should be made.
Remaining appeal grounds
- It is submitted that his Honour’s decision was coloured by his view of a possible conflict of interest in Ms Donnelly representing the Body Corporate. As I have noted, he was concerned about this issue and does refer to it in his reasons and referred to it frequently during the hearing, but I cannot detect any basis for inferring that he allowed his view on this discrete issue to affect the exercise of his judicial discretion. His expression that he was “horrified by what [he] read” is saying no more than it is alarming that despite the orders being made over two and a-half years ago, they have still not been complied with. I have dealt with the attribution of blame argument earlier. It is without merit to suggest that his Honour was referring only to the Body Corporate when he said this and for that reason he denied it procedural fairness.
- The substance of his Honour’s reasons are set out above. In MsSkennar’s submission 41, she refers to Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259 where Kirby J (as his Honour then was) said (in effect) that in order for reasons to be adequate they must “state generally and briefly the grounds which have led him or her to the conclusion reached concerning disputed factual questions and to list the findings on principal contested issues”. In the same case McHughJA (as his Honour then was) said:
“If an obligation to give reasons for a decision exists its discharge does not require lengthy or elaborate reasons: Ex parte Powter; Re Powter (1945) 46 SR (NSW) 1 at 5; 63 WN 34 at 36. But it is necessary that the essential ground or grounds upon which the decision rests should be articulated.”
- At 55 of their submission Mr HughesQC and Mr Sinclair referred to a more comprehensive analysis of the law in respect of this topic for this jurisdiction in the decision of the Court of Appeal in Sunland Group Ltd v Townsville City Council & Ors  QCA 30 wherein the Court adopted with approval what had been said earlier in Drew v Makita (Australia) Pty Ltd  2 Qd.R.219 (see ). Of particular relevance in this case, emerging from the principles adopted by the Court of Appeal in this State are the following:
- (a)The extent to which a trial judge must expose his or her reasoning will depend on the nature of the issues for determination and for that reason, what is required has been expressed in a variety of ways;
- (b)What is required is a basic explanation of the fundamental reasons which led the judge to his (or her) conclusion – there is no requirement for an extended intellectual dissertation upon the chain of reasoning.
- I say in passing that this approach is not common, as demonstrated by the length of these reasons. Mark Twain famously said, “I didn’t have time to write a short letter, so I wrote a long one instead.”
- As I have noted, his Honour did not deal adequately in his reasons with the contract issue. He was clearly keen to give a decision, perhaps because of the urgency engendered by the unchallenged evidence of Mrs Shaw of very significant water inundation at the end of February 2015. It would have been preferable for his Honour to undertake a somewhat more extensive analysis of the evidence, but there can be no reason to doubt that he had read it and the submissions prior to making his decision. In my view, the reasons are sufficient. In any event, as I have indicated, for the reasons I have stated if I had exercised the discretion afresh, I would have reached the same conclusion as his Honour.
- Unfortunately the Body Corporate’s submission was not written in a form that addressed the grounds of appeal. It also argues that Mrs Shaw had consistently voted in favour of payments being made in furtherance of a contract. The evidence – indeed, the evidence of Ms Donnelly – did not support that proposition. In her affidavit filed 23 April 2015 in support of the stay application, she states (by reference to the Boss contract):
“8.This contract has been commenced with some of the work undertaken. For example the roof has been repaired.
- There was a written variation to the contract to repair the roof as the Body Corporate sought to completely rectify all defects in the roof not just those items that were initially identified in the initial contract in 2013. Delay in getting the work completed meant that the problem had become significantly worse.”
- She then proceeds to exhibit a tax invoice from Boss dated 15 October 2014 for “repairs to roof and soffits” for $18,780. It is said to relate to quotation 10000232 – August 14, 2014. Mrs Shaw did vote for this sum to be paid. The quotation number dated 13 May 2013 annexed to and forming part of the contract is 1651/41594-1. The later works were described in a scope of works prepared on 10 September 2014 (i.e. a year after the contract was signed) by Plumbing Design and Drafting. The contract quote provides for only a sum of $2,650 for “repairs to roof soffit linings …”. These are clearly works not covered by the contract quote, and a strong inference can be drawn that it was a separate scope of works and not a variation of the contract. MrHughesQC and Mr Sinclair describe Ms Donnelly’s sworn statement that “the roof has been repaired” as “incredible”. It is very loose language indeed, given what occurred to lot 6 in the heavy rain in February i.e. after these works were completed.
- In my reasons above, I have referred to some of the other points made on appeal which are not attributed to a specific ground. In my opinion the appeal should be dismissed, and I so order. Both parties were given an opportunity to make submissions about costs at the conclusion of the appeal hearing. I order the appellant to pay the respondent’s costs of and incidental to the appeal on the standard basis, and I certify for two counsel. I am satisfied that the matter is of sufficient complexity to require two counsel, particularly given the importance of the matter to the respondent. The parties agree that I have power to deal with costs below, and the Body Corporate should pay those costs as well on the standard basis. It goes without saying that MrsShaw should not have to contribute to any levy struck in order to satisfy the costs orders.
- I will give the parties liberty to apply by the giving of three days’ notice in writing.
- Published Case Name:
Body Corporate for Donnelly House CTS37465 v Judith Elizabeth Shaw
- Shortened Case Name:
Body Corporate for Donnelly House CTS37465 v Shaw
 QDC 139
05 Jun 2015