QLD Q&A Alarm Bells: Doctoring BC Records to Hide Building Defects

A Qld lot owner is concerned due to committee discussions about doctoring records to hide building defects.

Table of Contents:

• QUESTION: When we purchase, the strata manager led us to believe all known water ingress defects had been remedied. We now have wet carpets and black mould and are required to relocate for a year for remediation. What rights do we have against the negligent conduct of the strata manager?


• QUESTION: What is the requirement for disclosure of building defects in meeting minutes?


• QUESTION: Some members of our Body Corporate want to doctor records to hide building defects they believe might affect the value of their properties. Can they do this? If not how can it be prevented?

Question: When we purchase, the strata manager led us to believe all known water ingress defects had been remedied. We now have wet carpets and black mould and are required to relocate for a year for remediation. What rights do we have against the negligent conduct of the strata manager?

Our Strata manager commissioned 4 engineering reports within 10 years due to known building defects. On all 4 occasions, opportunities have been lost in promptly addressing issues and litigating against the building defects within the warranty claim period.

When we purchase in the building in 2019, we were led to believe by the strata manager that all water ingress defects noted in dilapidation reports had been remedied, so we purchased with confidence.

For the last 14 months we have had visible wet carpets, walls and ceilings with little to no action to remedy. With visible black mould identified on walls we requested mould experts be sent to the apartment.

Mould analysis has been completed providing 80% of samples @ extreme contamination. A reading >5000 is considered extreme contamination, our master bedroom reading was 25,250 and our linen cupboard 126,025.

What rights do we have as owners against the negligent conduct of the strata manager and their team due to their lack of professionalism, building maintenance or even basic acknowledgement for our situation which is not our fault. We are required to relocate for approx. 1 year for remediation at our own expense.

Answer: Ordinarily there would be limited (or no) rights against the body corporate manager.

There is probably an important distinction to be made here in that the body corporate manager does not:

1. have any decision making power; and


2. take on the liability or responsibility of a body corporate.

If there is a building defect at the scheme there is a responsibility on the lot owner or the body corporate to take steps to address the defect (depending on what part of scheme land is defective).

To answer the question, ordinarily there would be limited (or no) rights against the body corporate manager. There may well be rights against the builder or body corporate, but that would depend on the evidence available to prove the cause of the defect and that it is not a defect the lot owner is responsible for.

Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753

This post appears in Strata News #556.

Question: What is the requirement for disclosure of building defects in meeting minutes?

There are a lot of repairs and maintenance being undertaken in our apartment block. This includes planned and unplanned work including urgent repairs to fix water leaks.

A number of owners currently have their units for sale. The Secretary has been requested not to mention details of the repairs in official minutes of meetings and / or Vote Outside a Committee meeting (VOC or VOCM) decisions. It is suggested that mentioning these issues will make units difficult to sell. A number of owners want only generic references to maintenance mentioned in minutes.

What is the requirement for disclosure of these matters? 

Answer: Intentionally withholding information that ought to be included in minutes would not only be contrary to the body corporate’s obligations in relation to minutes but also potentially raise liability issues for committee members.

Aside from the comprehensive body corporate record-keeping obligations, the committee is obliged to ensure that “full and accurate minutes” of meetings are kept. Full and accurate records extend to include (among other things) details of correspondence, reports, notices or other documents tabled.

Intentionally withholding information that ought to be included in minutes, such as a document tabled at the meeting, would not only be contrary to the body corporate’s obligations in relation to minutes but also potentially raise liability issues for committee members as an argument could be made out that this would not be acting in good faith and without negligence.

Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753

This post appears in the February 2021 edition of The QLD Strata Magazine.

Question: Some members of our Body Corporate want to doctor records to hide building defects they believe might affect the value of their properties. Can they do this? If not how can it be prevented?

Answer: As much as I am sure this does happen it is completely unlawful.

Frank Higginson, Hynes Legal:

As much as I am sure this does happen it is completely unlawful.

There are statutory obligations to ensure body corporate records are maintained and there is absolutely no scope to sanitise or selectively include body corporate records on the formal register. Even if a record is not on the formal register it still forms part of the body corporate record and there are abilities to have it provided to the body corporate (and penalties if that does not take place).

I think if it got to the point where it could be proven that a committee member deliberately withheld information for their own purposes like that, it is probably conduct sufficient enough to erode the statutory protection from civil liability. Intentionally keeping information away from a record that it must be included on cannot be in good faith or without negligence. That would then open the door to the committee member being personally liable.

Dee Pannell, Body Corporate Matters:

What are the possible repercussions if owners in a Body Corporate decide to remove or hide details of any defects in either the common property or a unit to protect their property values?

The Body Corporate (a collective of all owners) has certain obligations under the Body Corporate Legislation. Some of these obligations are to ensure that a person intending to buy a Unit is offered some protection. Any issues will be /or should be identified in a search of the body corporate records (not limited to the minutes, correspondence and financial information).

• Maintaining the common property

  The legislation places an obligation on the Body Corporate to maintain the common property and individual owners to maintain their lot in good condition. If a building has defects, then this duty to maintain requires those defects to be rectified. If a third party suffers a loss as a result of defects on common property, the body corporate may face legal action. Defects also must be disclosed to the insurer to avoid the insurance company rejecting a claim.



• Code of Conduct

  The three Codes of Conduct under the BCCM Act for :
  
  • Committee Voting Members;
  
  
  • Body Corporate Managers and Caretaking Service Contractors; and
  
  
  • Letting Agents.
  
  

  All codes have similar requirements. For example, they all must –

  
  
  • Act honestly, fairly and professionally;
  
  
  • Act with skill, care and diligence;
  
  
  • Not engage in unconscionable conduct;
  
  
  • Not engage in fraudulent or misleading conduct.



• Sellers obligation when selling their unit

  Pursuant to section 223 of the BCCM Legislation, when offering a property for sale, a Seller must warrant (as at the date of the Contract) that to the seller’s knowledge, there are no latent or patent (obvious/not obvious) defects in the common property and their Lot or body corporate assets. A Seller risks a buyer cancelling the contract or succeeding in a claim for compensation as a consequence of non-disclosure if the Buyer has been materially prejudiced.

This post appears in Strata News #273.

Have a question about doctoring body corporate minutes to hide building defects which may affect the value of the building or something to add to the article? Leave a comment below.

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