Fleger v Body Corporate for Villa Santai CTS 31528
[2014] QCAT 493
•1 October 2014
| CITATION: | Fleger and Anor v Body Corporate for Villa Santai CTS 31528 [2014] QCAT 493 |
| PARTIES: | Gwendoline Karen Fleger Anna Maria Magee (Applicants) |
| v | |
| Body Corporate for Villa Santai CTS 31528 (Respondent) |
| APPLICATION NUMBER: | OCL056-14 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Deane |
| DELIVERED ON: | 1 October 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. There be an adjustment of the interest schedule for the scheme so that the respective interest schedule lot entitlements recorded in the community management statement for the scheme reflect the market value principle and are in accordance with the schedule to this order. 2. The body corporate, within 45 days of this order, lodge a new community management statement incorporating changes to the interest schedule lot entitlements for the lots included in the scheme in accordance with these orders. |
| CATCHWORDS: | BODY CORPORATE – interest schedule adjustment – market value principle Body Corporate and Community Management Act 1997 (Qld), s 46, s 46A, s 46B, s 47, s 48, s 49 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
This is an application under the Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’) for adjustment of the interest schedule lot entitlement (ISLE).
The Applicants between them own 2[1] out of 6 lots and seek to adjust the ISLE based upon the equality principle.
[1]Lots 1 and 2.
The equality principle is one of the principles for deciding contribution schedule lot entitlements. It is the principle that the lot entitlements must be equal except to the extent to which it is just and equitable for them not to be.[2] The equality principle is not specifically referenced in the BCCM Act as being relevant to deciding the ISLE.
[2]BCCM Act s 46A.
The ISLE is the basis for calculating the lot owner’s share of common property, interest on termination of the scheme and the value of the lot for the purpose of local government rates and charges imposed on the basis of value.[3] The notes to s 47(2)(a) of the BCCM Act states that
The regulation module applying to a community titles scheme might provide that a lot owner’s contribution of some or all of the insurance required to be put in place by the body corporate is to be calculated on the basis of the lot’s interest schedule lot entitlement.
[3]Ibid s 47(3).
The current ISLE provides that the lot entitlement for lot 1 is 2 and for lots 2 – 5 is 1 each, so that the total is 6.
The body corporate and the lot owners have in the past operated as if the ISLE were equal. When the inequality was brought to their attention they attempted to resolve at an AGM[4] to continue to strike the levy for insurances as if the ISLE were equal on an undertaking by the owner of lot 1 to not claim a greater share of any insurance payout.
[4]29 August 2013.
A prospective purchaser of lot 2 was not comfortable with that arrangement and declined to proceed with the purchase. All of the lot owners have indicated their agreement for the ISLE to be equal.
The BCCM Act[5] sets out that in a CTS established after the commencement of s 46(7) and s 46(8) of the BCCM Act[6] ISLE must be consistent with the market value principle.
[5]BCCM Act s 46.
[6]14 April 2011.
The CTS was established before the commencement of s 46(7) and s 46(8) of the BCCM Act as it was established in 2003.
The market value principle[7] is the principle that lot entitlements must reflect the respective market values of the lots except to the extent to which it is just and equitable for them not to reflect respective market values.
[7]BCCM Act s 46B(1).
Buildings and improvements on a lot are to be disregarded when establishing the market value created under a standard format plan of subdivision or volumetric format plan.[8]
[8]Ibid s 46B(2).
It is necessary to consider the adjustment provisions.
Section 48 of the BCCM Act provides that an owner of a lot may apply for an adjustment of an interest schedule and that the order must be consistent with the market value principle.
In deciding that it is just and equitable for the individual lot entitlements not to reflect the market values of the lots the Tribunal may have regard to but is not limited to considering:
a) how the community titles scheme is structured;
b) the nature, features and characteristics of the lots included in the scheme;
c) the purpose for which the lots are used.[9]
[9]Ibid s 49(4).
The Tribunal may not have regard to any knowledge or understanding the applicants had or any lack of knowledge or misunderstanding the applicants had at the time the applicants entered into a contract to buy their lot about the lot entitlements or the purpose for which a lot entitlement is used.[10]
[10]Ibid s 49(5).
Solutions Engineering were retained by the body corporate to recommend a new ISLE. Andrew De Clara of Solutions Engineering has provided a report.[11] He is a certified practicing valuer. He describes the methodology used to recommend a new ISLE. This was to establish the market value of each lot and the aggregate market value of all of the lots having regard to recent comparable sales, adjusted with respect to size, elevation, aspect and car spaces. Whilst direct evidence of the market values are not stated in the report Mr De Clara provides a valuer’s certificate certifying the lot entitlements based upon valuations made by him.
[11]Dated 27 August 2014.
In the absence of any contrary market value evidence I accept Solutions Engineering’s report as evidence of the relative market value of the lots. It shows that lot 1’s market value is slightly more than the market value of lots 4 and 5 which are slightly more than the market value of lots 2 and 3.
The ISLE is not currently consistent with the market value principle as lot 1 is not 2 times the market value of each of the other lots.
On the evidence there is no relevant difference in the purpose for which the lots are used which would justify a departure from the market value principle.
There are no matters as to how the community titles scheme is structured which have been brought to my attention which would justify a departure from the market value principle.
Having regard to how the community title scheme is structured, the nature, features and characteristics of the building and the purpose for which the lots are and have been used I find that the ISLE ought to be adjusted to reflect the market value principle in accordance with s 48 of the BCCM Act in accordance with the schedule set out below.
Schedule of Lot Entitlements
Lot on Plan
Interest
Lot 1
2,046
Lot 2
1,969
Lot 3
1,969
Lot 4
2,008
Lot 5
2,008
Total
10,000
0
1