Di Marco Investments Pty Ltd v Body Corporate for "Number 1"

[2010] QCAT 154

CITATION: Di Marco Investments Pty Ltd v Body Corporate for "Number 1" [2010] QCAT 154

PARTIES:	Di Marco Investments Pty Ltd
v
Body Corporate for "Number 1" CTS 5908

APPLICATION NUMBER:   KL068-09      

MATTER TYPE: Other Civil Dispute Matters

HEARING DATE:     27 April 2010

HEARD AT:  BRISBANE

DECISION ON THE PAPERS OF: Ms Judith Reid

DELIVERED ON: 27 April 2010

DELIVERED AT:      BRISBANE

ORDERS MADE:

1.    The lot entitlement contribution schedule for “Number 1 CTS 5908 will be adjusted so that the respective lot entitlements recorded in the Community Management Statement be the figure “10” for all lots.

2.    There is no order as to costs.

CATCHWORDS :  Body Corporate and Community Management Act 1997; QCAT; Lot entitlement contribution scheme

APPEARANCES and REPRESENTATION (if any):

Decision made on the papers.

REASONS FOR DECISION

1. The application in this proceeding filed 18 November 2009 is for an adjustment of a lot entitled schedule relating to contribution schedule pursuant to section 48 of the Body Corporate and Community management Act 1997 (“the BCCM Act”) as facilitated by section 9 of the Queensland Civil and Administrative Tribunal Act 2009 (“the QCAT Act”).

1. The applicant seeks that “the lot entitlement schedule for the “Number 1” CTS 5908 be adjusted so that the respective contribution lot entitlements recorded in the community management statement be 10 for each lot, and the total be 240.” The applicant provided a report prepared by Stewart Silver king and Burns (the SSKB report).

1. The defence, filed by Number One Body Corporate (CTS 5908) and a report prepared by Solutions IE Pty Ltd which sets out a proposed new contribution lot entitlements.

Legislation

1. Section 48(1) of the BCCM Act permits an owner of a lot in the CTS to apply, under the QCAT Act for an order of the Tribunal to adjust the lot entitlement schedule.

1. Section 48(2) requires the respondent to be the Body Corporate.

Section (6) states - 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.

1. Section 49 sets out the criteria for deciding just and equitable circumstances, in particular section 49(4) states the Tribunal may have regard to:

(a)how the CTS is structured;

(b)the nature, features and characteristics of the lots included in the Scheme, and

(c)the purposes for which lots are used.

1. Furthermore, the BCCM Act states at section 49, the Tribunal may not have regard to any knowledge or understanding the applicant had, or any lack of knowledge or misunderstanding on the part of the applicant, at the relevant time, about—

(d)the lot entitlement for the subject lot or other lots included in the community titles scheme; or

(e)the purpose for which a lot entitlement is used.

Finally, section 48(10) states that if the Tribunal orders an adjustment of a lot entitlement schedule, the Body Corporate “must” as quickly a practicable and lodge a request to record a new community management statement reflecting the adjustment order.

Background

1. Both parties in this application before the Tribunal filed reports and materials for consideration of the Tribunal. The Tribunal is required to conduct proceedings with as a little formality and technicality and with as much speed as gives proper consideration of the matters before it. In this application, the Tribunal on the 8^th April 2010 directed that the application be determined on the papers.

1. Whilst the BCCM Act sets out the relevant principles of law to be applied by the Tribunal, a useful discussion of the relevant law can be found at Fischer v Body Corporate for Centrepoint Community Titles Scheme 7779 [2004] QCA214.

1. In Flanders v Aquila Bay CTS 7698 [2009] QCCTBCCM,  then Tribunal member now Judge Dornery Q.C gave at [14] a succinct summary of the Centrepoint decision by the Court of Appeal, Judge Dornery stated as follows:

a.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];

b.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];

c.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];

d.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];

e.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];

f.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];

g.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

h.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].

Consideration of evidence

1. The Tribunal having regard to the above notes that it is an agreed fact that the scheme consists of an 11 story single structure with 24 lots. It is constructed with concrete block and a painted exterior. The basement car parks are on individual title and are not allocated on exclusive use.

1. Level A is the car park and storage area; Level B compromises an outdoor swimming pool and common recreational area, part lots 1 and 2, the start of the inclinator/elevator; level C –E comprises 4 single story lots on each floor, lots 2-12, part of Lot 13 on level E, inclinator/elevator; Level F comprises 2 single story lots, lots 14 & 15, Parts of lot 13 &16, inclinator/elevator; Level G comprises 2 single story lots, lots 17 & 18, parts of lot 13 & 16, inclinator/elevator Level H comprises parts of lot 16, 19 and 20, inclinator/elevator; Level I comprises parts of lot 21,22 &25, inclinator/elevator and Level J-L comprises parts of lot 23 & 25.

1. The applicant proposes that the contribution schedule be adjusted so that contributions should be equal for all lots and suggests that a lot entitlement of 10 for each lot with a total of 240. (The SSKB report).

1. The respondent has filed a Defence including a report prepared on behalf of “Number 1 Body Corporate”. The respondent states that the current contribution schedule for each lot ranges from a minimum value of 6 through to a maximum of 14 with a total aggregate of 200.

1. The respondent has sought an order that the contribution lot entitlements for the scheme should not all be equal (except to the extent to which it is just and equitable in the circumstances for them not to be equal).

1. The present contribution schedule for lot entitlements allocates a number between 6 and 14. On this basis it is clear that the respective lot entitlements are not equal. Since the legislation requires that contributions should be equal except to the extent to which it is just and equitable for them not to be equal, the Tribunal must consider any point of differences presented by the applicant and the respondent.

1. The Body Corporate report (the Solutions IE report) illustrating the budget expenditure indicates that some spending has benefited individual lots rather than all. These include repairs, cleaning, waterproofing and maintenance.

1. The Tribunal considers that such items are not exclusively to the benefit of an individual lot and that matters of exterior general maintenance should not give rise to unequal treatment between lots.

1. The respondent report concludes that there is a 12% cost proportion between lots. However, the respondent’s report states correctly that the least adjustment should be made to give effect to the underlying principles of the BCCM Act.

1. The Tribunal on the face of the evidence before it prefers the applicants proposed adjustments to the contribution scheme as one of being equal.

1. In light of the decision in Centrepoint, the Tribunal must be satisfied that any adjustment to the scheme that is not equal must be just and equitable.

1. The Tribunal is not satisfied that the respondent has made out their argument that the contributions should not be equal.

1. Accordingly, the Tribunal accepts that the present entitlements in the contribution scheme are unequal between lots and since it has not been demonstrated, on the balance of probability by the evidence, that it is just and equitable that the lot entitlements in the contribution scheme should not be equal, the Tribunal makes an order establishing equality.

Orders

1. The lot entitlement contribution schedule for “Number 1 CTS 5908 will be adjusted so that the respective lot entitlements recorded in the Community Management Statement be the figure “10” for all lots.

1. There is no order as to costs.