Maintenance of exclusive use areas

A feature article by Michael Kleinschmidt of MacGillivrays Solicitors

The Body Corporate has the general obligation of maintaining common property; see s152 of the Body Corporate and Community Management Act 1997 and, for example, s159 of the Standard Module. This position can be altered when exclusive use of common property is granted.

Owners Obligation
Particularly, an exclusive use by-law may specify that the owner having the benefit of an exclusive use area has certain obligations, usually about maintenance; for example see s173 of the Standard Module.

It is common to see in exclusive use by-laws that the owner/occupier has to keep the exclusive use area “clean and tidy”. That may seem straightforward enough, but an issue arises when work needs to be done inside the exclusive use area, whether to fixtures or building structure.

In the absence of a specific provision to the contrary any grant of exclusive use is taken to include an obligation on the owner having the benefit of exclusive use to pay for all of the maintenance and operating costs of the exclusive use area; for example see s173(2) of the Standard Module.

Structural Maintenance
Maintenance’ is not separately defined in the Act or modules and it often occurs that maintenance can be of a capital or structural nature, rather than merely cosmetic. Are lot owners responsible for maintenance of structural elements inside exclusive use areas?

Prior to the 2003 amendments of the Act and regulation modules there had been a number of decisions which concluded that the grant of exclusive use, without a specific obligation to the contrary within the relevant by-law, would effectively transfer the obligation to maintain the common property from the Body Corporate to the owner taking the benefit of the exclusive use.

See for example Parkview Lodge [1999] QBCCMCmr 0442-1999 (26 October 1999) and Hillside Gardens [2001] QBCCMCmr 357 (3 July 2001). Exclusive use owners at that time could well have been responsible for structural repairs inside their exclusive use areas.

The 2003 amendments introduced the equivalent of s173(3) of the Standard Module. The effect of this provision was that, for building format plan schemes at least, only where an exclusive use by-law clearly stated that the lot owner had to undertake maintenance of structural elements would that owner be so obligated. For example if the by-law granting exclusive use was silent (it did not say anything about maintenance at all), then the owner:

1. would be responsible for maintenance and operating costs; and
2. would not be responsible for maintaining:

roofing membranes in the exclusive use area and which protected other lots or common property; or
structural elements of the building, in the exclusive use area (in whole or in part), not constructed by or for the owner, which are foundations, roofs or supporting framework (e.g. load bearing walls).

An Example…
That then is the current legislative position, but how is it applied in real life? Consider for one moment a glass sliding door at the boundary of an owner’s lot and their exclusive use balcony. The door is corroded and needs to be replaced. The exclusive use by-law simply says that the owner is ‘responsible for the maintenance and operating costs’ of the exclusive use area. At first blush the Body Corporate would be responsible to replace the door; see s159(2)(a)(ii) of the Standard Module. The adjudicator in this case determined, and I think correctly, otherwise; see Sailport [2007] QBCCM Cmr 609 (30 October 2007). Why?

1.    the door was in the boundary between the lot and the exclusive use area. Therefore the lot owner had the sole and exclusive use of both areas in which the door was, or could be, located;
2.    while the Body Corporate would have been responsible under s159(2)(a)(ii) if the door was part of the boundary between the lot and common property, that common property was also exclusive use to the lot owner;
3.    accordingly, the adjudicator had to examine the exclusive use by-law, which made the lot owner responsible for the maintenance and opening costs of the exclusive use area;
4.    replacing the door was maintenance work, and thus the lot owner ought to pay unless the door was covered by the exclusion in s173(3) of the Standard Module; and
5.    for that exclusion to apply the exclusive use by-law must not require the owner to pay for structural works (it was silent and so did not) and the works must have been structural (they were not).

Operating costs?
Sailport shows that the replacement of a fixture can be ‘maintenance’ for the Act. While ‘operating costs’ would seem pretty straightforward, consider for one moment that they too can include the costs of replacing a fixture. In the decision of Jadran Court [2009] QBCCM-Cmr 74 (27 February 2009) the adjudicator determined that a fence which had been erected on the boundary of an exclusive use area and the balance of common property was to help ‘establish’ the exclusive use area. The exclusive use area was extensive, intended to be used for commercial purposes as part of a motel and contained a pool. The adjudicator determined, amongst other things, that the fence having been erected to help establish the exclusive use area, replacing it would be an ‘operating cost’ of the exclusive use area. In other words, the exclusive use area could not be “operated” without the fence being in place. Operating the area was for the primary benefit of the exclusive use area lot owner. Replacing the fence was held to be at the sole cost of the exclusive use lot owner.

What is not maintenance?
There is very little guidance in these later decisions as to just what distinguishes maintenance and operating costs from other types of costs. While there are specific exclusions for some structural and waterproofing issues (as discussed above) is anything else excluded on the basis that it is not a maintenance or operating cost? To put this in another way, repainting a peeling courtyard wall in an exclusive use area is obviously a maintenance cost, but what about having it rendered?

Before the 2003 amendments the stakes were higher for lots owners; there were no statutory exclusions for structural and waterproofing works. Consequently adjudicators were called upon to give more consideration to the distinction between maintenance / operating costs and other works. The decisions of Rivieria Apartments [2000] QBCCM-Cmr 469 (15 September 2000) and Hindon [2002] QBCCM-Cmr 382 (14 June 2002) pertain.

Predictably both adjudications related to water penetration problems; in Riveria Apartments from planter boxes and in Hindon from a first level concrete courtyard above carparking spaces below.

Upgrades
In Rivieria Apartments the relevant exclusive use by-law simply provided that the owners not litter the exclusive use area. On the reasoning detailed above the Body Corporate had, via the exclusive use by-law, effectively transferred its maintenance obligations for the area to the lot owner. The adjudicator did follow this reasoning but then considered the nature of the work to be done. Fixing the problem not only required a new waterproofing membrane but also other works to correct an inadequate drainage system installed by the original builder. Adjudicator Meek determined that this amounted to more than a mere repair or replacement of an existing fixture (i.e. maintenance). It was more in the nature of an upgrade and as such the Body Corporate should pay.

The issue of upgrades, albeit outside the context of exclusive use, was considered in Paloma [2000] QBCCMCmr 186 (13 April 2000). In this case the applicant sought to set aside a decision of the Body Corporate to render the building. The applicant argued that rendering was an improvement while the Body Corporate argued it was maintenance; to preserve the external appearance of the building and, after the application of a waterproof membrane-type paint, preserve the longevity of the external walls. Adjudicator Hanly concluded that the rendering was an improvement and not nearly maintenance; the brick work was not structurally unsound and could be repaired with similar bricks.

Non-routine works
In Hindon the Body Corporate had obtained a report examining water seepage through the lot owners exclusive use courtyard, onto the ceiling of the car parks below. The seepage had caused effervescence in the concrete and deterioration of the steel reinforcing, particularly at the edges of the slab.

The report recommended that (1) the courtyard and associated garden beds be repaired and waterproofed and (2) that the deck also be re-waterproofed to prevent the further penetration of water through the slab. The relevant exclusive use by-law made no specific provision for maintenance and operating costs; the owner merely had to maintain the exclusive use area in a ‘clean and tidy condition’.

At first blush, given the decision was before the 2003 amendments, the owner would have been responsible for the work. An adjudicator was required to determine whether ‘maintenance and operating costs’, under the equivalent of s173(2) included all maintenance, or should instead be given a more restricted meaning.

Adjudicator Hanly read down ‘maintenance and operating costs’ to refer only to maintenance of a routine nature and not non-routine maintenance such as repair or replacement of roofing membranes, major repairs of structural faults, foundation structural defects or roof repairs. These types of items were described as fulfilling a “whole of building” function or providing protection to another area of the community title scheme. Accordingly the Body Corporate was ordered to effect the repairs at its cost.

Older decisions still relevant
While each of these decisions predate the 2003 amendments they are still very useful. This is because:
1.    they can be applied, by analogy, to standard format plan (for example villas and some duplexes) or volumetric format plan (for example some commercial complexes) community titles schemes: the exclusions in s173(3) of the Standard Module only apply to building format plan schemes; and
2.    they help differentiate what work is a maintenance or operating cost versus what is not: upgrades are typically not maintenance works.

Note from Capitol
This area of law is complex and each building and each problem will require specific legal advice. We recommend you always seek legal advice for your specific circumstances.

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