ESSENTIAL MAINTENANCE: BETTER TO SPEND $10K TODAY THAN $1M TOMORROW

For bodies corporate established by the Body Corporate and Community Management Act 1997 (Qld), the proper maintenance of lots and common property is extremely important. As with repairs and defects, acting promptly is essential. As we often tell bodies corporate, better to spend $10,000.00 today than $1M tomorrow.

Who Is Responsible for Maintenance?

The general rule is that bodies corporate will be responsible for maintaining common property and lot owners will be responsible for maintaining their lot.

As with most rules, however, there are exceptions. Bodies corporate can be responsible maintaining lots in certain circumstances. This most commonly arises if the body corporate is a building format plan of subdivision or a ‘BFP’.  Similarly, a lot owner can be responsible for maintaining common property or improvements they make to their lot or common property.

If in doubt, obtain advice from body corporate law experts.

Risks Arising from Inadequate Maintenance

When bodies corporate or lot owners fail to comply with their maintenance obligations, the consequences can be severe.

Over the last 15 years or so, we have advised bodies corporate and lot owners in relation to disputes arising from inadequate maintenance. We have encountered almost every scenario imaginable.

In extreme cases, inadequate maintenance can lead to:

• lots become uninhabitable
• serious structural damage to rooves, foundation structures and load-bearing walls
• personal injuries
• significant financial liability for which insurance may not respond

The Moroccan Case

There is a famous (or infamous) case that provides a great cautionary tale for bodies corporate that neglect their essential maintenance obligations, being MAGOG (No 15) Pty Ltd v The Body Corporate for the Moroccan [2010] QDC 70.

In this case, a water-proofing membrane failed and caused water to leak into a lot owned by the Plaintiff. Because the Body Corporate was a BFP, it was responsible for maintaining the water-proofing membrane.

In the early stages of the dispute, the Body Corporate could have repaired the water-proofing membrane for as little as $3,000.00. It failed to do so.  

The Plaintiff eventually sued the Body Corporate and won.

The Body Corporate was ordered to pay the Plaintiff about $325,000.00 plus costs. The total award received by the Plaintiff, including the costs order, was probably around $650,000.00. Allowing for the Body Corporate’s own costs, it likely spent about $1M for a water-proofing membrane it could have repaired for $3,000.00.

The Moroccan is still a feature of the Gold Coast skyline, but it is showing its age. Imagine what state the scheme could be in now had it not spent $1M on proceedings it ultimately lost.

Final Comments

As we often tell bodies corporate and lot owners, you do not want to be the next Moroccan case.

To ensure this does not occur, bodies corporate and lot owners must ensure that they closely monitor any maintenance issues and deal with them promptly. In the Moroccan case, the failed water-proofing membrane was identified in June 1999 but not repaired until March 2007. In other words, the Body Corporate took almost 8 years to fix the water-proofing membrane and paid the price for their inaction.

When it doubt, just fix it. After all, it’s better to spend $10,000.00 today than $1M tomorrow.

Article Contributed by Mario Esera, Partner, HWLE Lawyers.