A recent adjudication decision has clarified a seemingly unchartered issue about maintenance responsibility in exclusive use areas – and the outcome may surprise you.
Background
In the matter of Jefferson Villas [2024] QBCCMCmr 473 (Jefferson Villas), decided on 17 December 2024, the primary issue for determination by Adjudicator Miskinis was whether the body corporate or lot owner was responsible for a waterproofing membrane on a balcony terrace within an exclusive use area.
By-Law
The exclusive use by-law provided:
“The proprietor for the time being of each lot in the building shall be entitled to the exclusive use and enjoyment of part of the common property in the plan in the schedule to this by-law the identifying numbers of which are identical with the number of the lot or lots owned by such proprietor. Each proprietor will use same so as not to create a nuisance.”
Legislation
Given the by-law does not make provision for maintenance and operating costs, section 192(2) of the Body Corporate and Community Management (Standard Module) (Standard Module) makes the owner of the lot responsible for such costs by default.
However, subsection (3) goes on to provide:
“192 Conditions and obligations under exclusive use by-law
…
(3) However, if the lot was created under a building format plan of subdivision, in the absence of other specific provision in the by-law, the owner of the lot is not responsible for:
(a) maintaining in good condition roofing membranes…; or
(b) maintaining in a structurally sound condition any of the following…not constructed by or for the owner:
(i) foundation structures;
(ii) roofing structures providing protection;
(iii) essential supporting framework, including load-bearing walls.”
Arguments
The body corporate, through its lawyers, sought to establish that the balcony terrace was an improvement made by a previous owner of the lot and, accordingly, the lot owner should be responsible for its maintenance – including the waterproofing membrane installed by the previous owner.
The body corporate sought to rely on the improvement provisions of the legislation – specifically, sections 180(3) and 187(4) of the Standard Module, which provide:
“(3) …the body corporate is not responsible for maintaining fixtures or fittings installed by the occupier of a lot if they were installed for the occupier’s own benefit.”
“187 Improvements to common property by owner of a lot
…
(4) An owner…
…
(b) must maintain the improvement made under the authority in good condition, unless excused by the body corporate.
Grace Lawyers, on behalf of the owner argued that, even if the balcony terrace was a lot owner improvement (which there was some doubt about), the body corporate was responsible for the waterproofing membrane due to the operation of section 192(3)(a) of the Standard Module – given the exclusive use by-law does not make specific provision for the owner to maintain waterproofing membranes.
It was argued on behalf of the lot owner that section 180(3) of the Standard Module has no application, and section 187(4) does not override the default maintenance provisions of section 192(3) of the Standard Module. Reliance was placed on the differential wording of sections 192(3)(a) and (b) of the Standard Module, where the words “not constructed by or for the owner” do not appear in relation to waterproofing membranes.
Outcome
The Adjudicator agreed with the arguments put forward by Grace Lawyers, finding that section 180(3) of the Standard Module had no application (as the balcony terrace was not a ‘fixture or fitting’), and in relation to section 187(4), finding that ‘authorisation of a “lot owner improvement” under section 187 does not override subsection 192(3)(a).’
Accordingly, the Adjudicator found the body corporate was responsible for maintaining the waterproofing membrane, as well as all consequential costs and expenses arising from the waterproofing membrane’s failure.
The failure of the membrane has resulted in significant water ingress and damage to the balcony terrace, and internal areas of the lot. Such damage is not insignificant, and likely to be in the order of $50,000 to $100,000 to repair, so the outcome is of some importance to the lot owner and body corporate.
Analysis
The Jefferson Villas decision highlights the importance of ensuring that exclusive use grants are given under by-laws with appropriate conditions to ensure a body corporate does not unwittingly assume responsibility for maintaining parts of an exclusive use area which might be more fairly lot owner responsibility.
It is notable that the alleged improvement in Jefferson Villas was not the subject of any known body corporate resolution, and not contained in the register of authorisations affecting common property. Accordingly, a question arises whether, if there was a record of the improvement, particularly where there was a condition for the lot owner to maintain waterproofing membranes, the outcome would have been different (notwithstanding the terms of the exclusive use by-law).
Whilst it is possible a different outcome would have resulted, it is certainly not something that bodies corporate should rely upon. On the basis of the Adjudicator’s reasoning in Jefferson Villas, if an exclusive use grant is proposed, it is important for a body corporate to ensure the exclusive use by-law makes specific provision for the owner to maintain waterproofing membranes (if it wishes to make the owner responsible for same).
The same applies to foundation and roofing structures, and essential supporting framework, which are not lot owner improvements. In order to make the owner responsible for such elements, clear provision must be made in the exclusive use by-law for the lot owner to maintain these items.
Similarly, in the event of a lot owner wishing to make an improvement to an existing exclusive use area, the body corporate should insist on an amendment of the exclusive use by-law to make the owner responsible for maintaining waterproofing membranes (if the by-laws do not already do so). The amendment of an exclusive use by-law requires a resolution without dissent.
It is worth noting that the carve outs in section 192 of the Standard Module, imposing responsibility for waterproofing membranes and structural elements in exclusive use areas on bodies corporate, only apply to building format plans. If Jefferson Villas was subdivided by a standard format plan, the outcome would have been different.
Conclusion
The decision of Jefferson Villas is a good reminder that the interplay of legislative provisions in respect of exclusive use areas and common property improvements is a nuanced one, and bodies corporate should take care to ensure they consider the impact and effect of granting exclusive use to a lot owner, or allowing an owner to make changes to common property. In the absence of sound advice, a body corporate may unwittingly assume responsibility for something that it thought would be the responsibility of the owner.
Grace Lawyers has extensive experience and expertise in exclusive use, improvements, and maintenance issues, and can assist committees to ensure that the interests of all lot owners are properly protected when a lot owner is seeking to make a change to common property, or obtain a grant of exclusive use.
Written by Jarad Maher, Partner, Grace Lawyers
If you require advice regarding exclusive use areas, improvements, and maintenance issues within your body corporate, please contact our team at Grace Lawyers on 1300 144 436.
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