BODY CORPORATE 172108 V MEADER AND ORS HC AK CIV 2009-404-6868

BODY CORPORATE 172108 V MEADER AND ORS HC AK CIV 2009-404-6868 3 March 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-6868BETWEEN BODY CORPORATE 172108 Applicant AND JOANNE MONICA MEADER AND ORS Respondents Hearing: 23 and 24 February 2010 Counsel: M A Muir for Applicant N Khouri for Manchester Securities Ltd (37th Respondent) No appearance by, or on behalf of remaining 47 Respondents Judgment: 3 March 2010JUDGMENT OF HEATH JThis judgment was delivered by me on 3March 2010 at 4.30pm pursuant to Rule 11.5 of the High Court Rules Registrar/Deputy RegistrarSolicitors: Grove Darlow, PO Box 2882, Auckland Gilbert Walker, PO Box 1595, Shortland Street, Auckland Counsel: M A Muir, PO Box 4234, Shortland Street, AucklandIntroduction[1] Body Corporate 172108 (the Body Corporate) seeks an order under s 48 of the Unit Titles Act 1972 (the Act), approving a scheme designed to facilitate remediation of damage caused to an apartment complex by severe water ingress. The apartment complex is situated at 196 Hobson Street, Auckland (Hobson Apartments). [2] Hobson Apartments is a high-rise unit title development, with one unusual feature. The Body Corporate owns the exterior of Levels 1-11 of the building. Level 12 was constructed separately. The exterior of Level 12 is owned by the individual proprietor, Manchester Securities Ltd (MSL). Unit 12A is the penthouse unit and covers the entire twelfth floor. It is clad substantially in a sandstone-based cladding, distinguishing it visually from the remainder of the building. [3] The Body Corporate and individual proprietors (but not MSL) have issued proceedings against the Auckland City Council (the Council), as the territorial authority responsible for issuing the building consent and carrying out inspections. A mediation has been scheduled for 23 March 2010. That has brought some urgency to the resolution of the present application. [4] The Body Corporate promotes a scheme that has been approved in a general meeting by all individual owners represented at it, save for MSL. MSL's grounds of opposition reduced to the following, during the course of the hearing: a) MSL does not consider that the Body Corporate should have any decision-making role in respect of remediation to Unit 12A. b) Remedial works have not been defined in sufficient detail and too broad a discretion is conferred upon the Body Corporate in relation to management of the proposed construction work.c) A more equitable apportionment of cost is required. MSL considers that the work to be undertaken on its own property is "relatively minor", as opposed to "the major re-cladding work apparently required on the remainder of the building".The procedure adopted at the hearing[5] With the consent of counsel for both the Body Corporate and MSL, the hearing of oral evidence was undertaken on an unorthodox basis. It became clear that it was necessary to hear expert witnesses give evidence contemporaneously in order to understand better the competing views on issues such as the extent of work required and its management. [6] Following adjournment to a conference room, two experts, Mr Morrison and Mr Alvey, were sworn. They answered questions from counsel and myself as the hearing progressed. Once most of the critical issues had been explored in that way, I provided counsel with an opportunity to examine on any further issues, with cross- examination and re-examination of each witness, in turn, following. A transcript was taken of the evidence given and that has been made available to counsel. [7] I thank counsel for agreeing to this course of action. It proved of great value to me in understanding the issues with which I was being asked to deal.Matters of context[8] As required by ss 48(4) and 50 of the Act, the present application was served on all individual proprietors, mortgagees and insurers of the land and buildings comprised in the complex. MSL is the only one of 48 respondents to oppose the application. Given the complex dynamics involving private and common interests raised by the ownership structure for the exterior of Hobson Apartments, MSL's opposition is unsurprising.[9] The Act draws a sharp distinction between individual units (for which each registered proprietor takes responsibility) and common property (the domain of the Body Corporate). That distinction is logical because, while individual registered proprietors can deal only with individual property, "common property" is owned by all proprietors and must be managed by the body corporate for the common good. The Body Corporate is the vehicle through which efficient management of common property is undertaken. 1[10] Although MSL owns the exterior of Level 12, the Body Corporate's position is that it must take full responsibility for repair work, so that all unit owners are protected from potential water ingress and a single code compliance certificate can be obtained from the Council.2 In the absence of an order sanctioning a scheme, there would be no power for the Body Corporate to undertake repairs on individual property. [11] It is unnecessary to rehearse the positions taken before the hearing on the extent of works required to remedy weathertightness problems. These issues were narrowed by affidavits from Mr Templeman and Mr Morrison (a chartered building surveyor and a registered architect respectively, engaged by the Body Corporate) and Mr Alvey (a registered building surveyor engaged by MSL). Both Mr Morrison and Mr Alvey gave oral evidence before me. [12] During the course of the hearing, two options to the proposed scheme emerged: a) Mr Morrison suggested a "half-way house". This solution was designed to limit the work to be undertaken on Level 12, while ensuring that units on Level 11 were adequately protected from water ingress from above. This proposal was subject to Council confirmation that the work would, if completed satisfactorily, result in a single unqualified code compliance certificate.1 Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 479 (HC) at [97] and [98].2 As to the nature and purpose of a code compliance certificate, see Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 479 (HC) at [260]-[265].b) Mr Alvey's proposal was to undertake a "flood test" on Level 12, in order to ascertain whether any water seeped through to units on Level 11. If the flood testing were to reveal water ingress into the units on Level 11 from areas other than directly beneath planter boxes (previously identified as a source of ingress), it would be necessary to lift all tiles and to complete re-cladding of the deck. Otherwise, Mr Alvey suggested "grafting" a new liquid membrane strip to an area under the planter boxes. The cost of the "grafting" proposal is significantly less than for a complete re-cladding. [13] As the hearing progressed, the issue became more refined. Ms Khouri, for MSL, (after taking instructions from its director, Mr Cummins) confirmed that if MSL were permitted to lay a wooden deck, it would both allow the sandstone tiles to be removed and meet the cost of all repairs on Level 12, including repairs involving common property. [14] The question of contribution towards costs of repair remains at large. Mr Muir, for the Body Corporate, contended that MSL was required, as a matter of law, to meet the costs associated with repair of its private property and, further, to meet 11.88% (being its unit entitlement 3 ) of all repairs undertaken with respect to common property. Ms Khouri submitted that, because damage to Level 12 was far less than other areas of the building, it would be inequitable to require MSL to meet contributions to costs of repairing common property, if it were to also meet the cost of repairs to its private property.The nature of the scheme[15] The proposed scheme is set out in the Schedule to this judgment. Without getting into the minutiae of the particular clauses, the broad thrust of the scheme can be summarised as follows:3 Unit Titles Act 1972, s 6a) The Preamble sets out the background against which the scheme comes to be approved. b) Duties and powers of the Body Corporate, in relation to the identification of and responsibility for undertaking repairs, are dealt with in cls 1, 2, 4 and 5. c) Concomitant obligations on individual owners, to facilitate repairs undertaken through the Body Corporate, are set out in cls 16, 17 and 18. d) The Body Corporate's ability to levy for costs of repairs authorised by the scheme are set out in cls 3, 6, 7, 8, 9, 10 and 19. [16] There are a number of other provisions of a mechanical nature involving such issues as accounting, reporting, insurance, indemnities and changes in ownership during the course of the scheme. [17] A dispute resolution clause is included to deal with disputes between individual owners and the Body Corporate, in relation to "matters arising under [the] scheme". Clause 13 provides:13 Dispute resolution13.1 The Body Corporate's decision shall be final in all respect all matters arising under this scheme, except where 5 or more Owners whose objection in monetary value cumulatively exceeds $30,000, or where one unit holder has an objection which in monetary terms exceeds $10,000, in which case on the Body Corporate receiving notice of such objection the matter shall be referred to arbitration. 13.2 The Owners must give notice to the Body Corporate of their objection within 10 working days of receiving an assessment as to Costs or other notice from the Body Corporate which is the subject of the objection outlining the grounds on which such objection is made. On receipt of the notice the Body Corporate will refer the matter to an arbitrator (to be appointed by the President of the Quantity Surveyors Association) and the arbitrator shall determine the issue under the provisions of the Arbitration Act 1996. The arbitrator's decision shall be final and the costs of the arbitration shall be borne as between the objecting owners and the unit holders generally as the arbitrator shall decide.13.3 For clarity no Owner shall withhold payment of a Levy on the basis that the matter is in the process of dispute resolution. It is acknowledged that while repairs are carried out money must continue to be available to pay for those repairs. Any adjustment in Levies resulting from dispute resolution shall be made subsequent to the decision when cash flow allows and subject always to the need to the prime matter of being able to pay the contractors for work carried out.Jurisdiction[18] Section 48 is an exception to the general rule that a body corporate may only undertake tasks associated with common property. 4 The section contemplates damage to or destruction of "any building or other improvement comprised in any unit or on any land to which a unit plan relates", in circumstances where the unit plan has not been cancelled. 5 Among others, both a body corporate and an individual proprietor have standing to bring an application. Because the "building or other improvement" might be either private or common property, the section provides a basis on which (in an appropriate case) the whole building may be remediated or reinstated for the benefit of all. [19] If the Court decides that a scheme is required, it has a wide discretion to grant or refuse an application. Section 48(5) provides:48 Scheme following destruction or damage... (5) In the exercise of its powers under subsection (1) of this section, the Court may make such orders as it considers expedient or necessary for giving effect to the scheme, including orders— (a) Directing the application of any insurance money; (b) Directing payment of money by or to the body corporate or by or to any person; (c) Directing the deposit of an appropriate new unit plan; or (d) Imposing such terms and conditions as it thinks fit. ....4 Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 479 (HC) at [87]-[98].5 Unit Titles Act 1972, s 48(1).[20] The words "expedient or necessary" focus attention on pragmatic considerations. While a balancing of private and common needs is inherent in the exercise, the focus, in doing so, is on pragmatic considerations. [21] It will be relatively easy to determine whether a scheme is "necessary". That concept is clearly directed to the need for remediation to protect the economic and other interests of the individual proprietors who make up the body corporate. In context, "expediency" might encompass the desirability of proceeding in a particular way; accepting that rights otherwise conferred on an individual proprietor to deal with his or her own property might be compromised. In my view, s 48 requires questions of reinstatement or repair to be determined by reference to the common good, while having regard to the rights otherwise enjoyed by individual proprietors. [22] Once approved, a scheme is not set in concrete. Changes in circumstances can lead the Court, from time to time, to cancel, vary, modify or discharge any order. 6[23] A number of authorities are helpful in identifying the Court's approach to the s 48 jurisdiction. In Body Corporate 173457 v Dunn,7 Courtney J emphasised the need, in cases involving a close connection between work required to common and private areas, for all work to be "undertaken at the same time and to the same standard". 8 She considered that consistent quality of work could not be assured if individual unit owners were permitted to undertake repairs when and as they wished.9[24] Similarly, in Young v Body Corporate 120066,10 Harrison J accepted a submission from counsel for a body corporate that "the expectation that the buildings as a whole will be kept in an adequate and functional condition, thereby maintaining the value of each apartment, is met uniformly and to a standard which protects the investment of all proprietors even where one or more benefits disproportionately to6 Unit Titles Act 1972, s 48(6).7 (2007) 8 NZCPR 668 (HC).8 At [12].9 Ibid.10 (2007) 8 NZCPR 932 (HC).the amount of his or her levy contribution". 11 Harrison J placed reliance on Simons v Body Corporate Strata Plan No 5181,12 in which Lush J said: My reasons for declining to say that the applicant's unit is the only one to benefit are that the defective exterior wall is not something which the applicant bought and which turned out to be faulty; it is something which all the unit owners bought and I think that, at any rate in relation to a problem of original construction or quality of units constructed in blocks as these are, the body corporate and, therefore, all the unit holders, has an interest in putting the property in an adequate functional condition.[25] In Fraser v Body Corporate S63621,13 I took the view that the Court was given a wide discretion to do justice among all proprietors in a manner that would best resolve the particular problem that had led to the application. I considered that there was no fetter on the Court's discretion, which was designed to meet a vast array of circumstances that could not have occurred to the drafters of s 48. The only absolute requirement is for the Court to exercise its discretion judicially, not arbitrarily or capriciously. 14[26] I adhere to my view of the purpose of s 48. I also adopt the sensible approach taken by Courtney J on the need for work to be undertaken contemporaneously and to the same standard, to ensure consistent quality of work throughout the building complex. [27] While I agree generally with Harrison J's proposition that some proprietors may need to subsidise others, even in cases where one or more benefit disproportionately to the amount of any levy contribution, it is not a principle of general application. In the present case, the unique circumstance which has led to different ownership of the exterior of the building, may require a different balancing of interests when considering apportionment of costs. To what extent is subsidisation appropriate, having regard to the competing interests of MSL and the remaining proprietors who make up the Body Corporate?11 At [34].12 [1980] VR 103 (SC) at 108.13 HC Tauranga CIV 2008-470-772, 10 September 2009.14 Ibid, at [91].A framework for remedial work[28] It is clear that some form of scheme is needed to enable the necessary remedial work to be undertaken. The way in which that work is carried out and the proportions in which particular proprietors bear the cost of undertaking it must be considered by reference to the "expedient or necessary" test. [29] Plainly, the apartment complex must be repaired. To ensure proper co- ordination of work and a consistent quality of finish, repairs must be carried out under a common work programme. Someone must have control of the works. The individual proprietors who make up the body corporate must pay for the work to be undertaken. Even though Level 12 is in private ownership, inadequate works undertaken on that level will affect other owners, as any leaking will occur from above. [30] To meet the competing needs of common and individual ownership, there are some obvious requirements for any scheme. In the context of the need to remediate Hobson Apartments: a) There must be a single contractor appointed to undertake all work. b) There must be a single work programme; all work, to both common and private areas, must be carried out as part of the same work programme, and to the same standard. c) If feasible, a single building consent should cover all work. [31] Subject to approval from the Council, I am attracted to the notion that joint project managers be appointed, one by the Body Corporate and one by MSL. My view is that the project manager appointed by the Body Corporate should have responsibility for supervising work on Levels 1 to 11, while the manager appointed by MSL would be responsible for Level 12. MSL should bear the costs of engaging its own appointee as joint project manager, while the Body Corporate shall dolikewise in respect of its. Costs will be saved if, on further reflection, the Body Corporate and MSL can agree upon a single project manager. [32] Subject to any subsequent agreement, I find that approach attractive because it provides MSL with a degree of autonomy, not presently found in the proposed scheme, over work undertaken on its property. A potential difficulty arises in relation to work that is required at the inter-storey junction of Levels 11 and 12. As I see it, the project managers will need to reach joint decisions on how that work should proceed. [33] A scheme based on those principles will enable an application to be made to amend the present building consent. If granted, the whole building may be remediated at the same time. No more work than is reasonably necessary will be carried out on MSL's private property. [34] My approach also ensures that decisions that affect both private property of MSL and the units on Level 11 will be protected by the need for joint decisions . On the assumption that the Body Corporate is likely to engage Messrs Morrison and Templeman and MSL is likely to engage Mr Alvey (through their respective companies), I have confidence that they could work together as joint project managers, having regard to the natural division of functions. I am also confident that appropriate professional indemnity arrangements can be made to govern work on Level 12, for which Mr Alvey's company is likely to have primary responsibility. [35] It is possible that the Council will not be prepared to issue an amended consent in respect of the whole building on the basis of (either) work on Level 12,15or the provision for joint project managers. Subject to hearing argument on any matters of detail, I indicate that, if an amended consent were not granted, I would be prepared to approve a scheme of the type suggested by the Body Corporate. [36] I have reached that view because there is work that needs to be done, and it is expedient, from the perspective of all proprietors, for the work to be carried out immediately. If it were necessary to revert to the Body Corporate's existing15 See para [9](b) above.proposal, I would need to hear argument on whether the existing dispute resolution clause is adequate and whether any other consultation provisions could be inserted. Both of those considerations are relevant to protection of MSL's individual interests. [37] It will be necessary for counsel to redraw the scheme in light of my indications as to its framework. The proceeding will be adjourned while that task is carried out. [38] On or before 18 June 2010, a draft amended scheme (or alternative schemes, if it is unclear, at that time, whether the Council will consent to an amended building consent on the basis proposed) shall be prepared and filed in Court. The scheme/s should be prepared after full consultation between the Body Corporate and MSL and should be submitted by joint memorandum from counsel, with disputes about any particular clauses in the scheme/s being highlighted for determination at the resumed hearing. Each party shall submit memoranda indicating why they contend for the terms set out in the draft scheme/s or for some other terms. This will enable focus on the specifics of a scheme, rather than the generalities I have, necessarily, had to consider. [39] In the event that counsel need any clarification on what is required to draft the scheme I have proposed, an appointment should be made through the Registrar to see me at 8.30am or 9am one morning, either before 31 March 2010 or after 31 May 2010. [40] During the course of the hearing, Ms Khouri drew my attention to a number of statements in the proposed scheme that she said were inconsistent. An example are statements relating to the number of apartments on each level of the building. When counsel re-draw the scheme document, inconsistencies of that type ought to be remedied.Apportionment of cost[41] Under s 48(5), the Court is given a discretion in relation to payment of money in respect of remedial work. 16 In addition, the Court has an overriding discretion to attach terms and conditions to approval of a scheme. 17 How should apportionment of cost should take place in this case? [42] The Body Corporate bases its position on the unit entitlement provisions of s 6 of the Act. It relies, by way of analogy, on s 33, a section designed to cover circumstances where money has actually been expended for repairs and other work, and one owner seeks to reduce the amount it is required to contribute, based on equitable considerations. [43] I do not consider I am constrained by the terms of s 33. The wide discretion conferred by s 48(5) enables me to determine questions of apportionment of costs to achieve an equitable solution in advance. This is a case in which such an order is necessary because of the unusual ownership structure in respect of the exterior of the building. [44] In my view, MSL, in addition to meeting all costs associated with repairs on Level 12 (whether pertaining to private or common property), ought to make a contribution to the balance of repairs to be undertaken to common property. [45] I have no doubt that MSL will gain significant advantages from the balance of the common property being repaired at the same time as work is undertaken on Level 12. Economically, if the building were to retain the stigma of a "leaky building", there would be real difficulties for MSL in developing (eg adding another floor) or selling the penthouse apartment. That should be reflected in the apportionment of cost. [46] It is only possible to give an indicative view of the amount that should be paid by MSL by way of contribution to repairs to common property, other than on16 Unit Titles Act 1972, s 48(5)(b).17 Ibid, s 48(5)(d).Level 12. The figures are far from clear. Adjustments will be required in time or, alternatively, a formula will need to be set out in the redrafted scheme. [47] I work out my figures on the following assumptions: a) The cost of repairs for Levels 1 to 11 is (say) $5,750,000. b) The cost of repairs for Level 12 (individual and common property) is (say) $500,000. c) The total cost of repairs is, therefore, (say) $6,250,000. [48] MSL's unit entitlement is 11.88%. Applying that percentage to the total estimated costs of repairs (whether individual or common property) of $6,250,000, amounts to a contribution of $742,500. [49] The indicative amount of $500,000 to be paid in respect of Level 12 work amounts to 8% of the estimated total repair cost of the building. In my view, that needs to be topped-up to equate to the sum of $742,500, which would have been the cost, based on 11.88% of the total cost of repair for the building. On that basis, in respect of common property (other than that situated on Level 12), MSL's contribution would be $242,500. [50] For the purpose of drafting the scheme it may be better for MSL's apportionment to reflect 11.88% of the total cost of remediating the building, so that the amounts involved can be fixed by reference to higher or lower costs of remediation, both in respect of Levels 1 to 11 and Level 12.Result[51] The application is adjourned for hearing before me at 2.15pm on 2 July 2010. One half day is allocated.[52] On or before 18 June 2010, a draft amended scheme shall be prepared and filed in Court, in accordance with the directions given in para [38] above. [53] Leave to apply for clarification in respect of any matter required to be addressed in the re-drafted scheme is reserved, on the basis outlined in para [39] above. [54] I thank counsel for their assistance. _______________________________ P R Heath J Delivered at 4.30pm on 3 March 2010SCHEDULESCHEME UNDER SECTION 48 OF UNIT TITLES ACT 1972In regard to Body Corporate 172108, North Auckland ("Body Corporate")Situated at 196 Hobson Street, AucklandPreambleA. This scheme governs repairs to the building comprised in Body Corporate 172108 ("Body Corporate") situated at 196 Hobson Street, Auckland ("the Building"),where repairs to the building as a whole will need to be carried out contemporaneously even though those repairs may involve the private property of the various units in the Building. B. The Building consists of 39 apartments on 12 levels above ground, and once under, including three levels of car parking and comprising six levels of six units, two levels of four units, one level of five units and a penthouse that occupies the whole of level 12 (a "Unit" or "Units"). The Building is a unit title development under the Unit Titles Act 1972 ("the Act"). C. This scheme is intended to authorise the repair to the common property and the private property by way of one contract that is managed by the Body Corporate on behalf of the proprietors of the units in the Body Corporate ("Owners") in conjunction with its responsibilities as Body Corporate. D. In so far as repairs are required to be carried out to common property, the Act and the relevant Body Corporate rules are determinative. E. This scheme authorises the repair of the damage caused by water ingress into the Building, and is intended to cover the whole process of the anticipated repair including the initial investigation into the extent of the damage, the carrying out of the repairs, ensuring the future integrity of the Building and compliance with building regulations. F. The Repairs required will not be fully known until work begins and cladding is removed to reveal damage to the interior of the Building. The Building may also require work not necessarily related to the water damage: e.g. in order to comply with building codes, engineering, earthquake or other safety requirements. For these reasons the term Repair, as used in this scheme must be given the widest possible interpretation. G. This scheme is intended to resolve a dispute between the objection of the level 12 proprietor and the Body Corporate as to their respective responsibilities to pay for the cost of Repairs.To achieve the objective outlined above this Scheme therefore orders:1. Appointment1.1 The owner/s of a Unit in the Building are herein referred to as an "Owner" or "Owners", (and extends to their transferees and assigns).1.2 The Body Corporate is hereby appointed the agent of each Owner, severally, with authority, from time to time, to authorise, undertake, covenant, and agree on behalf of each Owner all matters concerning, and incidental to the Repairs, and each Owner's proportion of all Costs relating to, or incidental to the carrying out the Repairs. 1.3 The Body Corporate has the authority on each Owner's behalf, to manage, approve, and commit each Owner to the Repairs and their respective proportion of the Cost of such Repairs. 1.4 The work undertaken prior to the date of this scheme, in identifying the initial damage to the Building and the Repairs required, and any initial reports, and their costs to date, are deemed part of this scheme and the costs payable for such work shall be deemed Costs within the meaning of this scheme.2. Repairs2.1 The term Repairs is to be given the widest possible meaning. "Repairs" shall include removal, replacement, alteration, reconstruction, reinstatement, modification, redesign to the Building necessitated for any reason. Except in the case of manifest error the decision of the Body Corporate as to what constitutes Repairs shall be final and binding on all Owners. Repairs shall incorporate all work the Body Corporate considers necessary or advisable to,(a) Repair or remedy the damage to the Building; and, (b) Gain code of compliance consent and any other consent from the relevant authorities for the carrying out and finalising of those Repairs, and to bring the Building up to the standard whereby all building consents and certificates are issued by the authorities when the Repairs are finalised; and, (c) Comply with all safety, engineering, earthquake, fire and other standards, and technical compliance work necessary to facilitate the undertaking and completion of the Repair and to ensure the Building is sound and compliant with all regulatory requirements, and, (d) Take such steps, and carry out such works, as are practicable in the opinion of the Body Corporate to ensure the integrity of the Building can be maintained into the future and that water damage to the Building does not recur in the foreseeable future; and, (e) Maintain consistency of the standard of the Repairs to the private and common property in the Building. For the sake of clarity Repairs shall include but not be limited to: (a) Repair of the exterior cladding of the Building; (b) Repair of structural, internal linings, decorative and other parts of the Building and Units, whether exterior or interior to the Building; (c) Repair to services and amenities provided to the Building and/or a Unit or Units;(d) Repairs that result in the Building or any part of it attaining a higher standard of finish or specification than the original standard; (e) All engineering work, and building compliance work required under current legislation and building law, even if the standard now required is different from the standard required when the Building was first completed; (f) All investigatory work into the scope of Repairs, or the process or work required to remedy any damage or to affect any Repairs, carried out at any time and from time to time. (g) All plans, drawings, diagrams, specifications, and other detail developed or prepared for the repair of any part of the Building.3. Costs3.1 The term Costs shall have the widest possible meaning with a view to including all costs involved in assessing, carrying out the Repairs, and obtaining code of compliance certificates for the Building once Repairs are complete. Except in the case of manifest error the decision of the Body Corporate as to what constitutes Costs shall be final and binding on all Owners. Costs may also include assessments, interim estimates, or provisions for anticipated costs, or increases or variations to Costs from time to time. Without limiting the foregoing, Costs will include; (a) The cost of investigation and assessment of damage and repairs required; and, (b) The commissioning of all advice or reports on all matters relating to the Repairs; and, (c) The contracting out of the Repairs and other all contracts that support or facilitate the Repairs; and, (d) From time to time reassessing the Repairs required or still outstanding and the Costs of such revised Repairs; and, (e) The cost of all work required to meet code compliance, engineering and other building regulation standards; and, (f) The costs of specific repairs to individual Units; and, (g) The cost of repairs to all parts of the Building structural or otherwise, external or internal.4. Powers4.1 The Body Corporate for each Owner, is hereby granted the general power to ensure that the Repairs are identified and the work required is undertaken and completed in good and workmanlike fashion and that the money required to meet the Cost of such Repair is collected from each Owner in such proportion as determined by the Body Corporate; and the Body Corporate is further granted such other power and authority as may be necessary to enable the Body Corporate to fully and properly carry out its obligations under the scheme.4.2 In recognition that some work has already been undertaken in identifying the initial Repairs it is hereby ordered that the Costs of such initial investigations be deemed part of this scheme and that the Costs payable be apportioned in the same manner as costs subsequently incurred under this scheme are apportionable between the Body Corporate and the Owners. 4.3 While not limiting the generality of the foregoing the powers hereby given the Body Corporate shall include the following. The power: (a) To engage suitably qualified persons, from time to time, to identify and quantify the damage and the form of Repairs necessary to ensure the damage is remedied properly and professionally and that code of compliance is issued for the Building on completion. (b) To instruct suitably qualified advisors to develop plans and specifications for the work required to affect Repairs, together with such variations or additions as from time to time may be determined. (c) To instruct suitably qualified advisors to manage the tender process and recommend the contractors and/or tradespersons to be involved in the Repairs. (d) To let the contract to such contractor/s and tradespersons as the Body Corporate determines and to sign all necessary building contracts, trade contracts and other documents to give full efficacy to proceeding with the Repairs. (e) To employ suitably qualified manager/s to oversee the Repairs carried out by contractors, to certify progress payments and to attend to payments of Costs as required. (f) To authorise or commission such reports as the Body Corporate deems necessary or advisable, and obtain such consents and local body approvals and certificates of compliance as the law requires and to carry out such work as may be necessary to meet those requirements. (g) To authorise advisors to inspect and re-evaluate the Repairs from time to time, and to alter or vary the specifications of the Repairs to accommodate further work, or modify existing work on repairing the Building as the Body Corporate thinks fit. (h) To levy and charge Owners for the Cost of Repairs as Unit owners. (i) To employ suitably qualified advisors to assess and determine the interim and final Costs and to determine the allocation of those Costs between Owners. (j) To generally employ such advisors, managers, agents or assistants as the Body Corporate in its absolute discretion thinks fit for successfully proceeding with and completing the Repairs, and for collecting Levies, prosecuting or defending claims, and all incidental matters connected with the business of undertaking the Repairs.(k) To delegate to advisors or individuals such powers and authorities hereby given the Body Corporate as it from time to time, and for such period of time, determines. (l) To pay the secretary to the Body Corporate such remuneration as the Body Corporate determines for the secretary's involvement in the scheme as agent of the Body Corporate. (m) To carry out all ancillary matters and things necessary to enable the Body Corporate to progress and properly finalise the Repairs. (n) Except as specifically varied by this order, all powers granted the Body Corporate in relation to common property by virtue of the Unit Titles Act 1972 or the rules of the Body Corporate shall be deemed to be powers hereby granted to the Body Corporate in relation to this scheme modified where necessary to relate the common and exterior repairs or private repairs and the respective Owners.5. Body Corporate Duties5.1 The Body Corporate must, in a proper and professional manner: (a) Identify the extent to which the Cost of Repairs applies to common property and that which applies to private property. (b) Negotiate all contracts and other arrangements for the carrying out of the Repairs; (c) Proceed, to have the Repairs made diligently and completed as expeditiously as practical; (d) Apply due care and attention to the making of all decisions of the Body Corporate on matters relating to this scheme; (e) Seek advice from suitably qualified advisors where necessary in carrying out or managing the Repairs. (f) Manage and assess the extent and cost of Repairs at all stages as the work progresses to ensure the appropriateness, quality of workmanship, and compliance with the contract documents; (g) Properly call and hold meetings of the Body Corporate as appropriate to keep all Owners advised of progress in undertaking the Repairs; (h) Keep minutes of all meetings and decisions of the Body Corporate in connection with this scheme; (i) In the calling and holding of meetings of the Body Corporate to observe the procedures laid down in the Body Corporate rules for the holding of meetings of the Body Corporate; (j) Advise Owners on a regular basis of the decisions of the Body Corporate and progress of Repairs, and make available to Owners minutes of meetings of the Body Corporate on request by an Owner;(k) Account to the Owners for all money that the Body Corporate or its agent receives and expends on behalf of the Owners under this scheme and on the Repairs; (l) Ensure that all moneys received from each Owner for Repairs are only allocated and paid out for the Repairs; (m) Upon receipt of reasonable notice from any Owner supply to that Owner such oral or written information relating to funds received for Repairs and associated costs both for common property repairs and private property repairs. If an Owner requires information other than the records the Body Corporate has on hand, the Owner shall pay the reasonable cost of the Body Corporate gathering such additional information so requested; and (n) Where repairs to private property involves finishing work or accessories to the interior of a Unit, the Body Corporate shall if practicable accommodate the wishes of the Owner of that Unit as to the standard and finish required by that Owner as advised to the Body Corporate in writing prior to any such work being undertaken. 5.2 While the Body Corporate is hereby charged with making the final decisions with regard issues involving the operation of this scheme, the Body Corporate is to have regard to the advice of, and consult with, its advisors in making decisions relating to the operation of this scheme, and shall record the reasoning by which decisions of the Body Corporate were reached.6. Levies6.1 The Body Corporate is hereby authorised to levy ("Levy"), and collect from each Owner from time to time such money as the Body Corporate deems necessary for undertaking, progressing or completing the Repairs, in such proportions as between each Owner as the Body Corporate shall from time to time decide. For clarity the right to levy includes levies based on interim or estimated costings, the issue of several progressive levies, or to reassess and vary levies in light of changing circumstances, and may include estimates and allowances or provisions for then unknown factors or anticipated Costs. 6.2 Without limiting the generality of the above the Body Corporate has the authority to: (a) Seek advice from suitably qualified advisors on the basis to be adopted for any apportionment of Costs. (b) To demand payment of such Levies from each Owner in amounts and at times that the Body Corporate may from time to time determine. (c) To sue for and take such other steps as the Body Corporate deems advisable to recover from any Owner who fails to pay their Levies in the amount and at the time determined by the Body Corporate. (d) Where possible to attach the amount due under any such Levy to the Unit of which the Owner is the Registered Proprietor, to the intent that such Levy, shall until satisfied in full, remain a charge against such Unitnotwithstanding that a change of Owner or charge holder may subsequently occur. (e) To generally have the same powers with regard the collection and recovery of Levies in respect of each unit, including the right to charge interest and any collection costs, (including full solicitor-client costs), from each Owner that the Body Corporate has under the Act for the recovery of levies for repairs and maintenance to common property. (f) To determine any refunds that may be payable to an Owner or Owners and to determine when such refunds should be made. 6.3 Any levy raised under this Scheme shall have the same legal status as a levy validly raised under s15 of the Act.7. Levy defaults and refunds7.1 If for whatever reason, insufficient funds are received to make the Repairs within the time planned, then the Body Corporate may Levy each Owner in order to meet the shortfall, in such proportions as is determined from time to time by the Body Corporate. Levies can involve short term advances by Owners to cover cash flow requirements as the Repairs progress. Such a situation could arise when there is a need to provide funds that a defaulting Owner has failed to make. A Levy on other Owners to cover unpaid Levies of defaulting Owner will be calculated pro rata on the basis of excluding that defaulting Owner from calculation of the apportionment. 7.2 Where Owners are required to pay a Levy to cover the amount of a Levy a defaulting Owner has failed to pay; once the defaulting Owner pays that Levy the Body Corporate shall use the funds so received to refund to the non defaulting Owners their proportionate share either by paying the funds to the Owner or by transferring the funds into the account of that non defaulting Owner to set off against all or part of Levies made on that non defaulting Owner. 7.3 If an Owner fails to pay its Levy in the amount and at the time required by the Body Corporate that Owner is liable for any loses and for all associated and additional costs, expenses and disbursements resulting from such non-payment (including all costs incurred by the Body Corporate in attempting to recover the outstand Levy and associated costs including legal costs on a solicitor/client basis). 7.4 The Body Corporate shall determine the amount each Owner must contribute to any shortfall and when each Owner must make such payment or payments, and its decision shall be final and binding on all Owners except in the case of a matter raised as a dispute under clause 13.8. FinancingThe Body Corporate is authorised to borrow money from third parties to enable it to fund Repairs on such terms as the Body Corporate determines. If the BodyCorporate does borrow money, the interest and any other fees and expenses whatsoever payable pursuant to any loan or security document for such borrowing shall be treated as a Cost of the Repairs and as such will be included in and form part of any Levy. If a reason for the Body Corporate borrowing money is to cover defaulting Owner's unpaid levies, then so much of the principal, fees, interest, costs and expenses as relate to that defaulting Owner may be re-charged to that Owner.9. Use of Funds9.1 Any funds received pursuant to Levies for Repairs shall be used to pay for Costs of Repairs incurred, which includes but is not limited to: (a) Payment of fees, charges, costs and expenses in respect of advice undertaken from time to time to progress the Repairs and this scheme; (b) Payment of all contractors, tradespersons and others engaged in the Repairs; (c) Payment for all reports, consents, permits insurance and other matters required by local and government authority; (d) Payment of such other fees and charges interest or other outgoing incurred in operating this scheme. For clarity, while all moneys received shall be used to pay the Costs of Repair, the moneys received pursuant to a particular Levy need not be disbursed in payment of the Costs on which that Levy was assessed.10. Allocation of Costs10.1 Where Repairs can be identified with specific property, those Cost of Repairs shall be borne by the Owner/s of that private property. 10.2 Where Repairs are carried out to Common Property the provisions of the Act shall apply. 10.3 Where Repairs involve both Private Property and Common Property and/or several separate entitlements of Private Property, the Cost of those Repairs shall to the extent possible be apportioned to each Owner on the basis of that Owner's legal title to part of the Building. 10.4 Costs will be allocated from time to time to individual Owners after the Body Corporate receives advice in accordance with the provisions of 4.3(i).11. Accounting11.1 The Body Corporate shall keep payments by each Owner of Levies under this scheme in a separate account identifiable to an Owner and shall hold those funds in the name of the individual Owner until such time as those moneys are paid out by the Body Corporate pursuant to this scheme. The Owner shall have no right to demand a return of moneys credited to that Owners account until such time as the Repairs are completed in full and the Body Corporate decides to distribute surplus funds.11.2 The Body Corporate will keep a permanent record, current at all times, of payments received and payments made pursuant to this scheme, and in relation to Repairs to both common and private property. 11.3 The Body Corporate is authorised to pay from the various Owner accounts, that Owner's proportion of any moneys payable pursuant to this scheme from time to time as determined by the Body Corporate. 11.4 The Body Corporate is authorised to adjust the various Owner accounts from time to time in the case of corrections or reassessments to payments made.12. Reporting12.1 The Body Corporate will keep each Owner fully appraised of details of the Repairs and progress of same over the period of the scheme by reporting not less than every six months. 12.2 Reports to the individual account holder shall include: (a) A report on the overall position both in progress of Repairs and financial terms, details of costs and apportionments; (b) A statement of the position of each Owner's account detailing any arrears, money received and money paid out. (c) A final report on the Repairs eventually undertaken as part of the scheme, the cost and how it is apportioned. For the purpose of this clause each Owner authorises disclosure of information regarding their particular apportionment and Levy to other members of the group.13. Dispute resolution13.1 The Body Corporate's decision shall be final in all respect all matters arising under this scheme, except where 5 or more Owners whose objection in monetary value cumulatively exceeds $30,000, or where one unit holder has an objection which in monetary terms exceeds $10,000, in which case on the Body Corporate receiving notice of such objection the matter shall be referred to arbitration. 13.2 The Owners must give notice to the Body Corporate of their objection within 10 working days of receiving an assessment as to Costs or other notice from the Body Corporate which is the subject of the objection outlining the grounds on which such objection is made. On receipt of the notice the Body Corporate will refer the matter to an arbitrator (to be appointed by the President of the Quantity Surveyors Association) and the arbitrator shall determine the issue under the provisions of the Arbitration Act 1996. The arbitrator's decision shall be final and the costs of the arbitration shall be borne as between the objecting owners and the unit holders generally as the arbitrator shall decide. 13.3 For clarity no Owner shall withhold payment of a Levy on the basis that the matter is in the process of dispute resolution. It is acknowledged that while repairs are carried out money must continue to be available to pay for those repairs. Any adjustment in Levies resulting from dispute resolution shall be made subsequent to the decision when cash flow allows and subject always to the need to the prime matter of being able to pay the contractors for work carried out.14. Insurance14.1 The Body Corporate will ensure that its interest as agent for the Owners is noted on the contractors all risk insurance policy and that the Body Corporate insurers are properly advised of the Repairs, and noted on the Body Corporate policies of insurance and will ensure the premiums are paid appropriately.15. Indemnity15.1 The Owners jointly and severally indemnify and hold harmless the Body Corporate, its members (jointly and severally) and the Secretary against all costs, expenses, claims and proceedings and any other liability of any sort incurred by them in the exercise or attempted exercise of the powers granted to the Body Corporate under this scheme but not against any act or omission done fraudulently or with wilful misconduct. 15.2 The Body Corporate and its members shall have no liability to any Owner or other party for the standard or extent of the Repairs or for any action they take, or any omission to take any action, in any work associated with the Repairs or this scheme nor shall they be liable for any claim as to the level, extent, or necessity of any Repair or the Cost incurred for any Repair.16. Owner's Transfer of Property16.1 If an Owner sells or transfers his or her interest in a Unit before the Repairs are completed and paid for, the vendor Owner shall remain bound by the terms of this scheme and shall remain liable to pay the Levies on that Unit, (being both current and future Levies), including without limitations the requirement to contribute to any shortfall in funds necessary to remedy the Repairs, to the extent that any purchaser Owner of that Unit fails to pay such Levies. 16.2 Any Purchaser of a Unit shall be bound by the terms of this scheme on being registered as the Owner of that Unit, and obliged to pay all Levies, (then outstanding and future Levies). 16.3 Any agreement to sell a Unit to a third party must disclose the existence of this scheme and the Repairs being undertaken pursuant to the scheme, and inform an intending purchaser of their liability under the scheme. 16.4 The Body Corporate is authorised to disclose to persons interested in purchasing a Unit, such details of the Repairs, Costs and Levies in relation to the whole scheme as well as it relates to the Unit being offered for sale.17. Joint and Several Ownership17.1 Where an Owner comprises more than one person and/or entities then: (a) All such persons are deemed one Owner; but (b) The provisions of this scheme shall jointly and severally bind the individual persons comprising any such Owner.18. Owner Obligations18.1 Each Owner shall ensure access to their particular Unit as required, by any person in the process of assessing damage or in implementing or inspecting Repairs from time to time 18.2 Each Owner is responsible for protecting their contents, pets and other personal belongings within their Unit from any harm or damage that may occur as a result of the Repairs being carried out, other than harm or damage arising as a result of any reckless or negligent act of any contractor or any authorised person carrying out the Repairs. Each Owner will comply with any reasonable request from any contractor to remove contents, pets and other personal belongings to allow the contractor to undertake any Repairs in their Unit in a timely manner.19. Common Property19.1 The liability of an Owner to contribute to the cost of the Repairs that relates to common property shall be independent from and in addition to this scheme and shall be governed by the provisions of the Unit Titles Act 1972 and the rules of the Body Corporate.20. Authority20.1 No third person dealing with the Body Corporate in relation to this scheme will be obliged to verify the Body Corporate's authority hereunder.21. Interpretation21.1 In this scheme except to the extent that the context otherwise specifies: (a) Words denoting the singular include the plural and vice versa;(b) Reference to an Owner or Owners shall include their successors, executors, administrators and permitted assigns (as the case may be); (c) Words denoting individuals or persons include bodies corporate, partnerships, trusts and other recognised legal entities and vice versa; (d) Words denoting any gender include all genders; (e) Headings are for convenience only and do not effect interpretation; (f) References to any documents or agreements include references to that document or agreement as amended novated, supplemented, varied or replaced from time to time; (g) Anything which may be done at any time may also be done from time to time; (h) Any action taken may be reviewed and varied or amended from time to time; (i) Terms defined in the body of this scheme shall bear the defined meaning throughout this scheme; (j) Any obligation not to do anything includes an obligation not to suffer, permit or cause that thing to be done;(k) "Including" and similar words do not imply any limitation; (l) Any covenant that binds any two or more persons or parties will bind each of them jointly and severally; (m) The Body Corporate shall in its absolute discretion determine who shall be engaged by them as an advisor to them and in particular shall determine in any situation what amounts to "a suitably qualified advisor"; Any obligation or deemed authority by an Owner, which is properly something to be carried out wholly or in part by a company, shall be deemed to include a covenant on the part of the shareholder of that company to procure that the company carry out its activities in accordance with such obligation or deemed authority.