RECOVERING COSTS FROM AN OWNER WHO FAILS TO MAINTAIN THEIR LOT IN GOOD CONDITION

Some features of the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act) that have stood the test of time are the “self-help” remedies to deal with common problems that arise when large numbers of people live together in a dense environment.

It may seem pessimistic, but the drafters of this legislation did not expect people to do the right thing all the time.  They expected people to be fallible and, for example, to allow their property to fall into a state of disrepair.  When that happened, the drafters put in clear and cost-effective remedies to allow a body corporate to “get the job done” ultimately at the owner’s expense or for those who suffered damage from a neighbour’s neglect to receive compensation without having to join the long line of litigants in front of Queensland’s Courts.

These provisions complimented the stated objectives of the BCCM Act of promoting self-management and establishing an effective dispute resolution process.  If you would like to know how you can make a fallible neighbour accountable for the poor condition or their lot or the property damage they have caused, please read on.

There are two key remedies we will explore:

  1. Bodies corporate were given the power to stop the problem at its source by entering a lot, performing work that is required of an owner and then recovering the reasonable costs of the repair works as a debt.
  2. Bodies corporate and owners / occupiers who suffer property damage because of the fault of a neighbour were then given the ability to ask an adjudicator to order compensation or for repairs to be carried out.

The power to enter and perform work in the lot

 A lot owner must maintain their lot in good condition and an occupier must keep parts of the lot readily observable from another lot or the common property in a clean and tidy condition.[1]  If an owner or occupier does not carry out work required to maintain the lot in good condition, then the body corporate is empowered carry out the work and may recover the reasonable costs from the owner as a debt.

For example, if the tray of a shower in a lot begins to leak and the owner fails to repair it, then the body corporate may step in to carry out that work.

You will see that this power also applies to work required of an occupier (to keep the external appearance of a lot clean and tidy), but it allows the body corporate to recover the costs of the cleaning work from the owner (even if they are different people).

Why would the legislation allow the body corporate to hold an owner accountable for the sins of the tenant?  In my view, it is because this makes the costs a body corporate debt[2], which offers significant advantages to the body corporate.

A liability to pay a body corporate debt is enforceable against a person (including a mortgagee in possession) who becomes an owner of the lot before the debt is paid.  So in practice, a patient body corporate does not need to take recovery action in a court or tribunal for these costs – it could simply wait until the current owner wants to sell.[3]  The buyer will make sure the costs are paid at settlement so they do not inherit liability for that debt.

An owner held liable for the sins of the tenant in this way should in turn look to recover those costs from the occupier under the tenancy agreement.

The costs recovered by the body corporate must be “reasonable”.  To reduce the room for argument on this point, the body corporate should source at least two quotations from third parties who are appropriately qualified or licenced to perform the work.

The body corporate is empowered[4] to authorise a person to enter and remain on a lot while it is reasonably necessary to:

  • inspect the lot and find out whether work the body corporate is authorised or required to carry out is necessary; or
  • carry out work the body corporate is authorised or required to carry out.

Even though the body corporate is not required to carry out work required of an owner or occupier, the regulation module authorises it to carry out this work.  That is why the power of entry applies.

This is an invasive power.  It allows persons unknown to an occupier to enter their home.  There are rules that must be strictly followed when exercising that power:

  • at least seven days’ notice must be given to the occupier – this notice period can only be shortened or dispensed with in an emergency; and
  • entry must be in compliance with the security or other arrangement or requirements ordinarily apply to persons entering the lot.

Repairs or compensation for damage caused

 A significant feature of the BCCM Act is the dispute resolution process established under chapter 6.  It built upon the role of referees resolving disputes that arose under the BCCM Act’s predecessor, the Building Units and Group Titles Act 1980 (Qld) (BUGTA), and expanded that system to include an information service, departmental conciliation and adjudications.

A helpful improvement introduced in the BCCM Act is that it empowered adjudicators to give remedies to those who had suffered property damage caused by someone else’s contravention.

If the adjudicator is satisfied that the applicant[5] has suffered damage to property because of a contravention of the BCCM Act or the scheme’s community management statement, the adjudicator may order the person response for the contravention to:

  • carry out repairs, or have repairs carried out, to the damaged property – the repairs cannot cost more than $75,000; or
  • pay the applicant up to $10,000 as reimbursement for repairs already carried out by the applicant.[6]

If the repairs are likely to cost more than $75,000 or the applicant wants to pursue compensation of more than $10,000, then the legal action must be brought in a court of competent jurisdiction so long as a certificate of dismissal is obtained.[7]

This provides a limited remedy where, for example, an owner fails to maintain their lot in good condition, and it causes damage to another lot or the common property that needs to be repaired.  It is also of assistance if an owner or occupier suffers property damage because a body corporate failed to maintain common property in good condition or contravened a provision of the BCCM Act.

The remedy is limited to repairs to damaged property.  The aggrieved party may have suffered other types of damages (ie loss of rent if their unit was wholly or partially uninhabitable because of the damage), but adjudicators do not have the power to order compensation for other types of damages.[8]

Putting it all together

To put all of that into practice:

  • the body corporate may discover water ingress from an internal part of the building that is affecting another lot or common property;
  • if there are reasonable grounds to suspect that the water leak is coming from another lot – for example, a qualified or licensed person inspecting damage gives their opinion as to the likely source/s of the leak – the body corporate may authorise a person to enter the lot to inspect whether it is necessary to carry out any work;
  • that first inspection may reveal that the water ingress is being caused by a shower tray having fallen into a state of disrepair;
  • ideally, the owner of that lot should be notified of the defect and given a reasonable opportunity to repair the shower tray;
  • if that opportunity is not taken up, the body corporate can authorise a person to enter the lot again the carry out the necessary repairs;
  • the body corporate may then recover from that owner the reasonable costs of the repairs to the damaged lot as a debt – this recovery action can be taken in a court or tribunal of competent jurisdiction;
  • if the common property has been damaged (a common property wall may be water stained or the carpet could be damaged from the leak), then the body corporate:
    • must first attempt to resolve the dispute internally, such as by writing to the owner to give notice of the damage and an opportunity to pay for the repairs or pay compensation for the repairs carried out to the water-stained wall / damaged carpet; and
    • may, if the dispute is not resolved internally, apply to an adjudicator for an order that the repairs be carried out at the expense of the owner at a cost of up to $75,000 or for compensation of up to $10,000; and
  • if another lot has been damaged, then the owner or occupier of that lot:
    • must similarly attempt to resolve the dispute internally; and
    • may, if the dispute is not resolved internally, apply to an adjudicator for an order that the repairs be carried out at the expense of the owner at a cost of up to $75,000 or for compensation of up to $10,000.

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

[1] Section 170 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld) (SM 2008).  When the new regulation modules commence on 1 March 2021, this reference will be section 211 of the Body Corporate and Community Management (Standard Module) 2020 (Qld) (SM 2020).  There are mirror provisions in the Accommodation Module, but only the Standard Module will be referenced in this article.

[2] The definition of “body corporate debt” includes an amount associated with the ownership of a lot that is owed by an owner of a lot to the body corporate.

[3] However, a limitation period of six years will apply, so there must be a limit to the body corporate’s patience.

[4] Section 163 of the BCCM Act.

[5] The applicant could be a body corporate, an owner or an occupier.

[6] Section 281 of the BCCM Act.

[7] Sections 250 and 270 of the BCCM Act.

[8] See Beatrice Gardens [2012] QBCCMCmr 383 at [9] and Top of the Mark [2014] QBCCMCmr 136 at [68].