Emanuele v Body Corporate for Riverscape Central

[2010] QCAT 500

CITATION: Emanuele v Body Corporate for Riverscape Central [2010] QCAT 500

PARTIES:	Mrs Christine Emanuele
v
Body Corporate for Riverscape Central

APPLICATION NUMBER:   OCL002-09  

MATTER TYPE: Other civil dispute matters

HEARING DATE:     Decision on the papers

HEARD AT:  Brisbane

DECISION OF: Ms Peta Stilgoe

DELIVERED ON: 12 October 2010

DELIVERED AT:      Brisbane

ORDERS MADE: The contribution lot entitlement schedule be adjusted so that the respective contribution schedule lot entitlement for each lot  is the number allocated to the lot in the column headed “Estimated annual levy based on SSKB proposed entitlement” in the table at paragraph 7 of the decision.

CATCHWORDS :  ADJUSTMENT OF CONTRIBUTION LOT ENTITLEMENT – Whether any matters make it just and equitable that lot entitlements not be equal - What adjustments are just and equitable - Body Corporate and Community Management Act 1997 (Qld), subsection 49 Buist Investments Pty Ltd v Body Corporate"Sonata" [2010] QCAT 407

APPEARANCES and REPRESENTATION (if any):

This matter was heard on the papers in accordance with section 32 of the

Queensland Civil and Administrative Tribunal Act 2009

REASONS FOR DECISION

1. Ms Emanuele has applied for an adjustment to the contribution lot entitlement schedule for the Body Corporate for Riverscape Central. Riverscape Central is a 17 lot multi-level residential complex that is part of a larger scheme. The larger scheme is not relevant in this application.

2. Section 48 of the Body Corporate and Community Management Act (“BCCM”) provides that the owner of a lot in a community title scheme may apply for an order for the adjustment of a lot entitlement schedule. Section 48(6) of BCCM provides 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.

3. Section 49(3) of BCCM relevantly provides that the Tribunal, in deciding whether it is just and equitable in the circumstances for the respective lot entitlements not to be equal, may have regard to:

a)how the community title scheme is structured; and

b)the nature, features and characteristics of the lots included in the scheme; and

c)the purposes for which the lots are used.

1. Mrs Emanuele has provided the Tribunal with a report from Leary & Partners. The Body Corporate has provided the tribunal with a report from Stewart Silver King and Burns. Both report writers have undertaken a detailed, “line-by-line” analysis of body corporate expenses. As Mr Barlow has already pointed out[1], that exercise is not of much assistance to the Tribunal:

   “The BCCM Act prescribes that the starting point for contributions is that they be equal between all lots. Having regard to that starting point, there seems little point in expending considerable sums of money, quite possibly once every several years, to try to make minimal adjustments to annual contribution levies. Indeed, this exercise disregards the proper construction of the BCCM Act, which requires equality except to the extent that any lots give rise disproportionately to expenses or disproportionately consume the body corporate’s services.7 A minute analysis of expenses and the use of services to which they relate ignores the requirement of disproportionate expense or consumption.

   In my opinion, the more appropriate and useful method of determining whether it is just and equitable, in such cases, that contributions be other than equal, would be to identify the largest expenses of a body corporate (both recurring, and of a sinking fund) and, in respect of those expenses, to identify whether any particular lots disproportionately give rise to those expenses or disproportionately consume the services to which those expenses relate. If there is a disproportionate level of expense or consumption, giving rise to a substantial expense incurred by the body corporate which it would be just and equitable to be shared solely by one or some of the lots, then it might be appropriate to adjust the contributions so that they are other than equal.”

   [1] Buist Investments Pty Ltd v Body Corporate "Sonata" [2010] QCAT 407 at paragraphs 22 and 23

2. The futility and artificiality of the current approach is exemplified in the findings of Stewart Silver King and Burns at page 14 of its report; the report writers used the same methodology and the suggested outcomes are almost identical. Stewart Silver King and Burns have identified that differences occur because its figures are more up to date than those used by Leary & Partners. If the methodology is the same, and the factors that make equal contributions not just and equitable are also the same then the contribution schedule should not be affected by different sets of financial material.

3. The report writers agree that the existing contribution lot entitlement schedule is not just and equitable, but that a contribution lot entitlement schedule that was equal would also fail the test of “just and equitable”. Both authors take the view that the cost of external painting and repairs and maintenance to balustrades, courtyard fencing and privacy screens should be apportioned according to the area of those features which exist in each unit. Although I am not persuaded that this is the correct test, given the considerable work already conducted by the parties, I am prepared to accept the methodology for the purpose of adjusting these entitlements.

4. Stewart Silver King and Burns provided this comparative table at page 15 of its report:

1. The differences between the two are negligible. The differences between an equal contribution and the proposed contribution are, in each case, a matter of a few percentage points either way. That the parties engaged two separate experts to undertake the analysis is disappointing and, as Mr Barlow pointed out, inconsistent with the functions and objects of the Tribunal.  I urge parties who are in a position to influence the conduct of such matters – body corporate managers and those engaged in writing such reports – to exercise judgment and restraint. It seems to me that the continuation of the practice of obtaining separate, minutely detailed reports may, in future applications, give rise to a successful application for costs.

2. I prefer the solution adopted by Stewart Silver King and Burns only because a total lot contribution of 10,000 seems more elegant. I therefore order that the contribution lot entitlements for the scheme be adjusted in accordance with the Stewart Silver King and Burns’ proposal.