A voting machine

Electronic voting is easier for owners

At the 2017 AGM the body corporate voted overwhelmingly in favour of electronic voting
‘when the technology became available’. Compliant electronic voting systems became available in 2019 and in 2020 Body Corporate legislation was amended in 2020 to simplify the introduction of electronic voting to ‘allow voters to cast a vote using a computer, smartphone or computer tablet.

However, at the 2021 AGM, the committee, rather than encouraging owners to vote and engage in body corporate decision making, proposed a motion without explanation to revoke the 2017 motion, which unfortunately passed. This intentionally limits the opportunity for owners to vote where they cannot attend meetings. Instead, they must download, complete, scan and email their voting papers (which is not always possible) or rely on postal services which are expensive and unreliable – especially for owners living or travelling interstate or overseas.

This complicated process is eliminated entirely when an owner can ‘cast a vote using a computer, smartphone or computer tablet’.

Southport Central Residential is languishing behind many other bodies corporate. Electronic voting is convenient, cost-effective and improves transparency and accuracy in vote counting. It will enable YOU to vote from anywhere. It is not compulsory, and you can still vote by traditional means or vote in person at the AGM, if that is your preference.

VOTE YES to introduce electronic voting and let owners vote online at all body corporate general meetings.

Flooding in Tower 1 at Southport Central Residential

Replacing Aquatherm pipes could cost a fortune

Catastrophe struck tower 1 on 20 February 2023 when a polypropylene Aquatherm water pipe on level 10 burst and unleashed a torrent of hot water that collapsed the level 10 foyer ceiling, and flooded apartments, stairwells, lift shafts and common areas on levels 10 and 9. Lifts, electrical boards, security systems and lighting were taken out and one lift took months to return to service.

Residents on upper floors unable to navigate dozens of staircases were initially stranded. The volunteers who brought them supplies/assisted those who could navigate the stairs deserve our gratitude.

Eight months on, and the body corporate committee has offered only limited information about the progress of repairs and the estimated cost of repairs. Two building managers reports in March and April 2023 describe action to be taken and provide a schedule for reparation works. But that’s it. That’s not good enough.

The body corporate manager, who maintains all the body corporate records, when requested to provide a copy of the ‘expert reports’ obtained by the committee replied: “We are not aware of the documents you refer to.”

The Chairman of the Committee has ignored a similar request for information. Why the secrecy?

We still don’t know whether the damage to common and personal property will be covered by the body corporate insurance or to what extent. We don’t know what steps have been taken to prevent or minimise the prospect of a second pipe failure. We don’t know if insurance would cover a second event, particularly if we’re slow to replace the Aquatherm system.

We do know that in 2019, US$23.5 million was needed to repair a US jail’s extensive Aquatherm system which was under a decade old.

We do know that in February 2016 a Brisbane body corporate made application for an adjudicator’s order to authorise spending to replace the Aquatherm hot water line at a cost
above the committee’s spending limit and that numerous bodies corporate including Watermark Kangaroo Point, Marquis On Main Beach,  Signature Park Apartment
Merrimac, Regatta Riverside Toowong, Ocean Pacific Broadbeach, Metropolis On Ann Brisbane CBD, Tempo Apartments West End, and Quest Riverpark Central Brisbane CBD have all replaced their Aquatherm piping.

We do know that Aquatherm, a German plumbing invention of the 1980s, is expected to fail if the pipes are NOT PROPERLY clamped, became prone to failure if certain
chemicals are in the water such as chlorine, and if the water is particularly hot, as is common in Australian installations.

There had been problems with the hot water pipes at Southport Central in the year before the pipe burst. The Mantra Building Manager’s report of 31 August 2022 advised of significant leaks in the Aquatherm hot water feed pipes in Tower 1, and noted it had been suggested that a secondary hot water feed line be installed using copper pipes to do away with the Aquatherm (polypropylene) pipes to avoid a potential major flooding incident.

At the AGM in late 2022, owners approved a committee motion to set aside $600,000 of sinking fund money to urgently replace “the failing Aquatherm pipes”.

A year on from that, and some extensively water damaged apartments and infrastructure on levels 9 and 10 are still being repaired. It appears a secondary hot water feed line will need to be installed to replace on all residential levels. The
installation includes cutting core holes in the concrete fire stair landings to reroute the hot water feed line.

Insurance usually covers only replacing like-with-like, but it seems the proposal is to not only reroute the hot water feed line but replace all Aquatherm pipes with copper
pipes from the rooftop down through residential levels 39 to 9, and through the foyer ceiling spaces in each level.

Aquatherm pipes are installed in Tower 1 only, but ultimately all owners contribute to the sinking fund and cost of repairs beyond that covered by insurance.

Beyond what insurance will cover, all owners in Southport Central Residential will bear the cost of this work and must be provided with access to all relevant reports, which can be simply posted on the Portal maintained by the Body Corporate Manager) detailing the scope of works, estimated cost and timeframe for this work to be carried out.

We know it is not possible to predict when and if further failure of the existing Aquatherm pipes will occur, but all Tower 1 owners and their tenants must be told what steps, if any, have been taken pending replacement of the existing Aquatherm pipes to minimise the prospect of a further flooding event. Their safety is at stake.

Should an Aquathern pipe burst on a much higher level, it could have an even more widespread, catastrophic effect and send water cascading down dozens of floors with massive cost consequences.

Image of a secret meeting

LPE power deal isn’t transparent

In 2023 the body corporate committee sought to enter into a 60-month agreement with Locality Planning Energy Pty Ltd (LPE) to be the designated power provider at the complex from January 1, 2024 until December 31, 2028.

Our view was that this is lengthy agreement, especially given the lack of transparency on aspects of this would operate.

For example, the then proposal made no mention of the ‘offset’ arrangement it had negotiated with LPE for common property electricity.

We were told in official Newsletter No.27 that “the body corporate is expecting to receive an annual offset of approximately $291,155 including GST to be applied against common property electricity charges . . . which is expected to cover all future common area electricity charges.”

A one-year initial agreement would have been wiser, especially considering possible electricity charges that we could be locked into paying.

Nevertheless, the committee’s motion passed at the 2023 Annual General Meeting unamended. The motion said:

That the body corporate agrees:

  1. to enter into a 60-month Agreement with Locality Planning Energy Pty Ltd ACN 148 958 061 (LPE), for a term commencing on 1 January 2024 and expiring on 31 December 2028, in the terms and conditions of the attached Agreement and Schedules, to continue as the retailer for the scheme’s existing embedded network for the supply and billing of electricity, water heating and cooker gas to the common property and all lots;
  2. that LPE will operate a tender for the energy supply through an independent third Party;
  3. that the committee has the authority to do all things necessary to provide relevant information to LPE and to sign any documentation to allow the tender to be conducted by LPE;
  4. that LPE will endeavour to achieve agreement for all parent meter NMIs to be included in one contract to ensure that the best wholesale rate is secured and all NMIs align with the same contract end date;
  5. that LPE will endeavour to ensure the electricity rate applied will be same across all Community Titles Schemes on the site;
  6. that the committee has the authority to accept the best available wholesale offer received through the tender process;
  7. that the committee has the authority to agree to the wholesale energy rate within 7 days of receiving the results of the tender process;
  8. that LPE will bill electricity at Passthrough (cost price) plus the recovery cost of the tender process and the billing fee;
  9. that all residential customers will have access to consumer rights, protections, and financial support in accordance with current legislation;
  10. that the seal of the body corporate is to be affixed to the Agreement and two members of the committee be authorised to sign it.
Contracts

$1.4m of owners’ funds used for questionable investment

THE BODY CORPORATE CONTROVERSIALLY BUYS FOUR APARTMENTS IN OUR COMPLEX WITH OWNERS’ MONEY.

In 2020, the body corporate committee decided to invest owners’ funds in property. However, instead of investing in a property trust managed by experts, or apartments at another location, unbeknown to owners, an ‘investment scheme’ was devised to circumvent body corporate law which does not allow a body corporate to buy apartments within its own complex.

Tens of thousands in legal fees were paid to get around legislated requirements.

The scheme involved the then chairman of the body corporate committee setting up a private company, CTS 35751 Investments Pty Ltd, that would own the four apartments.

The chairman was the new company’s sole director, secretary and shareholder. The body corporate committee under the same chairman/company director then approved the buying of $1.4 million worth of shares in the company using owners’ sinking fund monies. This financed buying four apartments.

The body corporate holds shares in the company but the property is owned by the company.

 In June 2021, a concerned owner applied to the Office of the Body Corporate Commissioner to stop the body corporate from investing further funds in CTS 35751 Investments Pty Ltd.

In September 2022, a Queensland Body Corporate Adjudicator ordered that the body corporate divest itself of the shares and recover the funds invested in the company.

However the body corporate committee decided to reject the adjudication. Instead committee, which was elected in 2022, unanimously decided to appeal against the adjudicator’s orders to the Queensland Administrative and Civil Appeals Tribunal (QCAT).

This scheme involving placing owners funds in a private company operated by the body corporate chairman to buy apartments is deficient for the following reasons:

  1. The body corporate committee failed to get financial advice on the investment options available for property, it simply sought advice on implementing its own questionable plan of buying within the complex. The committee should be getting proper financial advice when investing owners’ money. The adjudicator said: “I am not satisfied on the submitted evidence that the investments made by the body corporate accorded with the IFS advice regarding more effective ways to invest the body corporate funds”;
  2. The adjudicator found that the funds to buy the apartments had been transferred from owners’ money to the company before the committee resolved to authorise the investment. The adjudicator said: “Funds were transferred to the company before the committee resolution to authorise the investment. This was not obviously an arm’s length arrangement”;
  3. The action of setting up the chairman’s company cost owners more than $54,000 in legal fees; this expense could have been avoided had the committee invested in compliance with the law, and with minimal fees, for example in a property trust;
  4. The adjudicator found that owners were not adequately informed about the plan when they voted to approve it at the 2020 AGM. The adjudicator also said record keeping had been inadequate. In the adjudicator’s words: “there appears to have been a wholesale failure of even a basic level of appropriate and transparent decision-making and record-keeping over an extended period. . . . decisions to invest in the company, would appear. . . to have occurred in a procedural vacuum. There appears to be an extraordinary lack of records. There also appears to have been very little disclosure to owners as to what was being done.”;
  5. The failure of the committee to keep records, to adequately brief owners of its actions, to incur tens of thousands of dollars of avoidable legal costs, and the fact the body corporate doesn’t directly own properties bought with $1.4 million of owners’ monies clearly demonstrates that the committee is not competently managing funds in the owners’ best interests. There is a serious lack of accountability and transparency;
  6. While the body corporate has shares in the company, it doesn’t have the absolute security of being the registered owner of the apartments;
  7. The adjudicator found that the authorisation to use owners’ money to buy the four apartments was not valid. “The resolutions of the committee of the Body Corporate for Southport Central Residential on 22 May and 16 June 2021, authorising the investment in shares in CTS 35751 Investments Pty Ltd and to enter into a subscription agreement with CTS 35751 Investments Pty Ltd, were not valid …“;
  8. The adjudicator ruled that the apartments be sold and owners’ money returned. “While the body corporate has declined to provide the legal advice that it says it relied on, I consider it is tolerably clear that the specific intention in creating the company and the structure of the company was to circumvent the statutory restriction on a body corporate owning lots in its own scheme … The Body Corporate for Southport Central Residential must, within a reasonable time, divest itself of its current shareholding CTS 35751 Investments Pty Ltd and recover the funds invested in that company”;
  9. The adjudicator said: “That if the body corporate does not have effective
    control of the company, that will mean the body corporate has given effective
    control over significant body corporate funds to a single committee member.”

THE BODY CORPORATE COMMITTEE CHOSE TO IGNORE THE ADJUDICATION AND HAS INSTEAD OPTED TO APPEAL IT.