Booth v Body Corporate for Deb-Sha-Lea
[2010] QCAT 269
•7 June 2010
| CITATION: | Booth v Body Corporate for Deb-Sha-Lea [2010] QCAT 269 |
| PARTIES: | Mr Rodney Alan Booth |
| v | |
| Body Corporate for Deb-Sha-Lea CTS 21582 |
| APPLICATION NUMBER: | OCL015-10 |
| MATTER TYPE: | Other civil dispute matters |
| HEARD AT: | On the papers |
| DECISION OF: | Dr Bridget Cullen Mandikos |
| DELIVERED ON: | 7 June 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The contribution schedule lot entitlements for Deb-Sha-Lea be adjusted such that the lot entitlements be as follows:
2. The Body Corporate for Deb-Sha-Lea CTS 21582 must act in accordance with section 48(10) of the Body Corporate and Community Management Act 1997 (Qld) as quickly as possible, and no later than Wednesday, 30 June 2010, in lodging a request to record a new Community Management Statement reflecting the adjustments ordered. |
| CATCHWORDS : | Sections 48-49, Body Corporate and Community Management Act 1997 (Qld); lot entitlement contribution schedule adjustment |
APPEARANCES and REPRESENTATION (if any):
Hearing on the papers
REASONS FOR DECISION
Background
On 26 February 2010, Mr Rodney Alan Booth ("Mr Booth") filed an Application for the Adjustment of a Lot Entitlement in the Queensland Civil and Administrative Tribunal ("QCAT"). The application was served upon the Body Corporate for Deb-Sha-Lea CTS 21582 ("Body Corporate") on 9 March 2010, as is required by s48(2) of the BCCM Act.
Mr Booth’s application seeks that the contribution schedule for Deb-Sha-Lea be adjusted for both administrative fund and sinking fund contributions and voting, so that the respective contribution lot entitlements recorded in the community management statement be equal - 6 for each of the 5 lots, with a total of 30 entitlements.
As it presently stands, the Contribution Schedule Lot Entitlement for Deb-Sha-Lea is as follows:
Lot Number Contribution schedule lot entitlement 1 6 2 5 3 5 4 7 5 (Owned by Mr Booth) 7 Total Lots 30
In correspondence dated 26th March 2010, and received in QCAT on 30th March 2010, Mr Booth has made application for a further Order. Namely, he seeks an Order in the following terms:
“That for the period until the mandated 5 year insurance revaluation cycle requires a new valuation the premium for building insurance be apportioned between lot owners equally in accordance with the adjusted Contribution Schedule lot entitlements.”
Legal framework
The law that relates to lot entitlement schedule adjustments is clear, namely, s48(6) of the Body Corporate and Community Management Act 1997 ("the BCCM Act") mandates that:
For the contribution schedule, the respective lot entitlements should be equal, except to the extent to which it is just and equitable in the circumstances for them not to be equal.
The matters that QCAT may have regard to in determining what is just and equitable are set out in s49(4) of the BCCM Act:
(a)how the community titles scheme is structured;
(b)the nature, features and characteristics of the lots included in the community titles scheme; and
(c)the purposes for which the lots are used.
·The relevant provisions of the BCCM Act have been interpreted by the Queensland Court of Appeal in Fisher & Ors v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214 (“Centrepoint”). The Centrepoint decision has been nicely summarised by Member Dorney, QC (as he was before his appointment to the District Court) in Flanders v Aquila Bay CTS 7698 [2009] QCCTBCCM 1 at paragraph 14, as follows:
·the trial judge’s view was in error when he thought it appropriate to consider the adjustment of the contribution lot entitlements by reference to the effect of the change on the value of the lots, and the amenity of the lots: at 644 [24] – [26];
·this error arose because the preferable view is that a contribution schedule should provide for equal contributions by lot owners, except insofar as some lots can be shown to give rise to particular costs to the Body Corporate which other lots do not: at 644 [26];
·the question whether a schedule should be adjusted is to be answered with regard to the demand made on the services and amenities provided by a Body Corporate to the respective lots, or their contribution to the costs incurred by the Body Corporate: at 644 [26];
·more general considerations of amenity, value or history are to be “disregarded” because what is at issue is the “equitable” distribution of the “costs”: at 644 [26];
·the Explanatory Note which accompanied the Act which enacted the relevant provisions gave as an example (example 3) the outcome that in a basic scheme, if all the lots were residential lots ranging in size “from a small lot to a penthouse”, the contribution schedule lot entitlements “generally would be equal” and, while the contribution schedule might be different if the penthouse had its own swimming pool and private lift (with the contribution schedule recognising this type of difference), the other lots in the scheme “despite being of differing size or aspect” would be expected to have “equal contribution schedule lot entitlements”: at 644-5 [28];
·both the Explanatory Note and the Second Reading Speech make it tolerably plain that the replacement provision (which replaced legislation that formerly had the effect, upon registration, that the CTS did not have to provide for equal contribution lot entitlements) is intended to produce a contribution lot entitlement schedule which divides Body Corporate expenses “equally” except to the extent that the Lots disproportionately give rise to those expenses, or disproportionately consume services: at 645 [30];
·a determination for a proper contribution lot entitlement can only be made by reference to factors which have a “financial” impact or consequence on the body corporate and cannot be affected by factors which go to a lot’s value or amenity: at 645 [30]; and
·the starting point for determining a lot’s share of the outgoings is that the contribution lot entitlements be equal, with a departure from that principle being allowable only where it is just, or fair, to recognise “inequality”, since the focus of the inquiry is the extent to which a lot unequally causes costs to the Body Corporate: at 645 [31].
Lack of public understanding about the BCCM Act
In my decision in Lips vBody Corporate for Villa Florida [2010] QCAT 200, I outlined the public misunderstanding that surrounds body corporate law as it applies to applications for lot entitlement adjustments:
“Despite the clarity of the law, as it presently stands, relating to lot entitlement schedule adjustments, there is a lack of understanding amongst the public about this issue. This problem is exacerbated by the fact that in order to avoid making an application to QCAT, an owner wishing to adjust the current schedule of lot entitlement allocation for a scheme may propose a change to the existing community management statement to adjust the schedule, which must then be put to a body corporate resolution. Any resulting change requires a body corporate resolution without dissent. As the end result will almost always negatively impact on at least one, and oftentimes several owners, and significantly in some cases, achieving consensus on a resolution vote is virtually impossible.”
In this case, the response filed by the Body Corporate reflects the lack of understanding by lot owners at Deb-Sha-Lea about the matters that are taken into account in determining whether lot entitlements should be equal.
Response of the Body Corporate
Through Mr Ian Witheyman, the Body Corporate filed a response to Mr Booth’s application, on 30th April 2010. The response outlines several arguments raised by owners in response to Mr Booth’s application. With respect, the arguments raised demonstrate a lack of understanding about the matters that can be taken into account by QCAT in making decisions relating to the adjustment of lot entitlement schedules. This is understandable, as many lot owners will have purchased their properties understanding that their contributions would be of a particular level, and in some cases, the contributions have remained unchanged for many years. Indeed, that seems to be the case for the objecting residents of Deb-Sha-Lea, who assert that they are “happy with the current Contribution Schedule” and do not “understand why it should be changed after 20 years”. For this reason, I think it is worth explaining the reasons that the arguments raised lack merit, in the legislative context within which they must be viewed.
Historic arrangements not relevant
Under the BCCM Act, it is clear that what has happened in the past is not relevant to an application for adjustment of lot entitlement schedules. It is specifically irrelevant, by virtue of s49(5) BCCM Act, that Mr Booth had, or did not have, any particular knowledge or understanding of such things as lot entitlements at the time he entered into the contract to buy the particular lot he now owns. Equally, the knowledge or understanding, or lack of knowledge or misunderstanding, by any other owners must also be seen as irrelevant. It is in this light that the Body Corporate’s statements about Mr David Swails views about rentability and contribution schedule at the time of his purchase must be seen; namely, that such matters are not relevant.
Layout of Deb-Sha-Lea
There is evidence before me, which is not disputed, which indicates that all 5 units at Deb-Sha-Lea are residential units of a similar layout consisting of a ground floor, upper floor with 2-bedrooms and balcony, single car garage and fenced courtyard.[1] Mr Booth has provided QCAT with a cost impact analysis conducted over 4-years, which he asserts demonstrates that there is no lot at Deb-Sha-Lea that disproportionately gives rise to particular costs or disproportionately draws upon Body Corporate financial resources. The figures contained in this analysis are not disputed by the Body Corporate, although there is a dispute between the parties about the costs of maintaining the driveway.
[1] Group Titles Plan No. 987, Sheet 2.
Driveway
The Body Corporate raises an argument that there are disproportionate costs associated with the maintenance of the driveway:
“[l]ot 1 uses 20% percent of the driveway to gain access to their unit therefore why should that owner pay an equal share of the driveway maintenance. Lot 2 uses 40% and lot 3 uses 60% of the driveway. Lots 4 and 5 use 80% of the driveway equally. The driveway is by far the most expensive item of the common property.”
A similar argument relating to driveways was rejected by Member Dorney, as he was then, in Lidster, J. & P. v Body Corporate Parkhaven 3 No. 3 CTS 22556 [2007] QCCTBCCM 3 (16 October 2007)(“Lidster”). There is no information indicating that there is any actual disproportionate cost arising out of driveway usage. Further, given that the driveway is common area, it is also possible that the driveway is used by guests of lot owners, for purposes of parking. I do not have any information about this, nor has the Body Corporate submitted any information about the actual costs of maintaining the driveway. On this basis, and accepting the logic applied by Member Dorney in Lidster, I conclude that there is no basis to depart from the provisions of s48(6) of the BCCM Act, that the respective lot entitlements should be equal.
Water usage
In his Application, Mr Booth argues that it is “inappropriate and unfair for water consumption to be charged on unimproved value of land factors”. The acknowledgement by the Body Corporate, in its response, that the current arrangements for water billing are unfair is, in itself, recognition that there is no justifiable basis for a departure from equality in the contribution lot entitlement schedule, at least on the evidence before QCAT.
Rentability and valuation
The Body Corporate also asserts that there are differences between the units relating to rentability and valuation, as a basis for justifying differing contribution schedules. These are not matters which can be considered as a basis for increased contributions to shared expenses, as explained in Centrepoint and outlined above, as rentability and valuation have no financial impact on the Body Corporate. Of course, rentability and valuation of a lot will have a financial impact on the owner of the lot, but that does not translate into increased or decreased common costs to the Body Corporate.
Payment of Insurance Premiums
Mr Booth seeks an Order requiring that the premium for building insurance at Deb-Sha-Lea be apportioned between lot owners equally in accordance with an adjusted contribution schedule. In support of his Application, Mr Booth expresses concern that, as it presently stands, the building insurance is not apportioned correctly. Namely, Mr Booth asserts that the contribution levies for building insurance are to be proportionate in figures reflecting the cost of reinstating the buildings on the lots.
The owner of each lot in a Body Corporate scheme is required to contribute funds for the proportion of the insurance policy premium that reflects the value of the building on the lot. In cases such as this one, involving a standard format plan with common walls[2], the proportion is considered to be the cost of reinstating the building on the lot (s182(1)(b) Body Corporate and Community Management (Standard Module) Regulation 2008) (“BCCM Regs”).
[2] “Standard format” is defined in the Land Title Act, s48B and schedule 2, to mean a plan of survey that defines land using a horizontal plane and references to marks on the ground. Deb-Sha-Lea Group Titles Plan No.987 is a standard format plan with common walls. Standard format plans were previously referred to as Group Titles Plans.
In order to allocate the cost of insurance proportionately, Mr Booth asserts that the Body Corporate must have information indicating what the respective replacement values of the buildings are. Section 181(2) of the BCCM Regs requires that the Body Corporate must, at least every 5 years, obtain an independent valuation stating the full replacement value of the building or buildings. I have been provided with a copy of a report prepared by A.J.Fanning & Assocs P/L Quantity Surveyors (“Fanning Report”), dated 14 February 2010, and addressed to the Body Corporate. The Fanning Report provides global figures for replacement valuation of all the buildings on all the lots, but does not provide figures referable to the individual buildings. I agree with Mr Booth that the Fanning Report does not satisfy the criteria set forth in the BCCM Regs.
I am not, however, able to make an Order in the terms sought by Mr Booth, those being:
“That for the period until the mandated 5 year insurance revaluation cycle requires a new valuation the premium for building insurance be apportioned between lot owners equally in accordance with the adjusted Contribution Schedule lot entitlements.”
There are two reasons that I cannot make this Order. The first is that it would require me set aside the legislative provisions contained in s182(1)(b) of the BCCM Regs, which set out the manner in which building insurance costs are to be apportioned. The second reason is that QCAT does not have jurisdiction over a dispute of this nature, which in my view is a dispute to which Chapter 6 of the BCCM Act applies. The dispute appears to satisfy the criteria contained in s227(1)(b) of the BCCM Act, being a dispute between Mr Booth (the owner) and the Body Corporate.
Chapter 6 of the BCCM Act establishes arrangements for the resolution of disputes about contraventions of the BCCM Act, which is the category in which I would place a dispute about the appropriate allocation of insurance premiums. The dispute resolution process that would lead to a determination of the issues raised by Mr Booth is not managed by QCAT, but rather, is managed by the Body Corporate and Community Management Commissioner’s Office, further details of which can be found at type="1">
QCAT accepts that the contribution schedule, in its present form, is not just and equitable. There is no justifiable basis for, as it presently exists and based upon the information before QCAT, for the contributions to be unequal. This position is consistent with the decision in Centrepoint.
Orders
In view of the conclusions I have reached above, I order that the contribution schedule lot entitlements for Deb-Sha-Lea CTS 21582 be adjusted such that the lot entitlements be as follows:
Lot Number Contribution schedule lot entitlement 1 6 2 6 3 6 4 6 5 6 Total Lots 30
Further, the Body Corporate for Deb-Sha-Lea CTS 21582 must act in accordance with section 48(10) of the Body Corporate and Community Management Act 1997 (Qld) as quickly as possible, and no later than Wednesday, 30 June 2010, in lodging a request to record a new Community Management Statement reflecting the adjustments ordered.
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