James & Carroll v The Body Corporate for Palm Springs Residences
[2010] QCAT 231
•16 June 2010
CITATION: James & Carroll v The Body Corporate for Palm Springs Residences [2010] QCAT 231
PARTIES: Mr & Mrs Gregory James & Pamela Rose Carroll v The Body Corporate for Palm Springs Residences CTS 29467
APPLICATION NUMBER: KL020-09
MATTER TYPE: Other civil dispute matters
HEARD AT: Determined on the Papers
DECISION OF: Ms Catherine Heyworth-Smith
DELIVERED ON: 16 June 2010
DELIVERED AT: Brisbane
ORDERS MADE:
1. The contribution lot entitlements schedule for Palm Springs Residences Community Titles Scheme 29467 be adjusted such that the entitlements be as follows:
Unit No.
Entitlement
101 31 102 31 103 30 104 30 105 30 106 30 201 31 202 31 203 31 204 31 205 31 206 31 207 31 301 31 302 31 303 31 304 31 305 31 306 31 307 31 401 31 402 31 403 31 404 31 405 31 406 31 407 31 501 31 502 31 503 31 504 31 505 31 506 31 507 31 601 31 602 31 603 31 604 31 605 31 606 31 607 31 701 33 702 33 703 33 704 33 705 33 706 33 707 33 Total 1467 2. The Respondent pay the Applicants’ costs of this application in the amount of $240.00.
CATCHWORDS : Body Corporate and Community Management Adjustment of Contribution Schedule Lot Entitlements - Role of “expert” as “representative” for a party to the proceeding.
APPEARANCES and REPRESENTATION (if any):
No appearances. Application determined on the papers.
REASONS FOR DECISION - Amended
1.By an application filed on 9 April 2009 the first-named Applicant sought an adjustment to the contribution lot entitlement schedule for the Respondent Body Corporate pursuant to section 48 of the Body Corporate and Community Management Act 1997. By a consent order made on 19 August 2009, the second-named Applicant was joined as an applicant in the proceeding.
2.The Respondent is the body corporate for the Palms Springs Residences community titles scheme at 1 Twenty First Avenue, Palm Beach in Queensland.
3.The Applicants are the joint tenants of lot 701 (which is unit 701) of the scheme.
4.The Applicants advised the Tribunal on 19 August 2009 that they consented to the Application being determined on the papers.
5.On 13 September 2009, the Respondent advised the Tribunal that Mr Martin Walsh of Stewart Silver King and Burns would “prepare and lodge submissions and act generally on our behalf in this matter.”
6.On 9 December 2009, Mr Walsh advised the Tribunal that “[a]s the representative of the Body Corporate, being the respondent, I request that this matter be heard on the material submitted and without need for appearances by either party nor witnesses.”
7.The Tribunal has received the following material:
(a)the statement of facts annexed to the Application filed on 9 April 2009 and the seven (7) attachments thereto;
(b)the preliminary report prepared for the Respondent by Mr Walsh dated 8 September 2009;
(c)the contribution schedule lot entitlement report prepared for the Respondent by Mr Walsh dated 22 September 2009;
(d)a document headed “Applicants [sic.] Response to Submissions by Respondent” dated 28 September 2009;[1]
(e)a “statement” from Mr Walsh dated 28 October 2009; and
(f)a document listing four (4) “comments” made by the Respondent in relation to the “Applicants Response to Submissions by the Respondent”.
These will be exhibits 1 to 6, respectively.
[1] As there were no submissions, per se, from the Respondent prior to this document, I take it that this is the Applicants’ response to Mr Walsh’s report of 22 September 2009.
The Role of the Respondent’s “Representative”
8.It is worth considering Mr Walsh’s role in this proceeding and, more importantly, the status of his reports of 8 and 22 September 2009.
9.The correspondence mentioned above and his own statement indicates that he is acting as the “representative” of the Respondent.
10.Mr Walsh has executed his report having stated on page 15:
1.The factual matters stated in this report are, as far as I know, true;
2.I am not aware of any possible or perceived conflict of interest;
3.I have made all inquiries I consider appropriate;
4.The opinions stated in this report are genuinely held by me;
5.The report contains reference to all matters that I consider significant;
6.I understand my duty to the CT and have complied with that duty.
11.Whilst I have no reason to believe that Mr Walsh has acted with intentional impropriety, I cannot accept that he has turned his mind to the ramifications of the statement he has given to the Tribunal on page 15 of his report. He is acting as the representative of one party to litigation. It is difficult to ascertain how he can assert, in any meaningful way, that he is not aware of any possible or perceived conflict of interest.
12.The fact that an expert may be employed or engaged by a party, or that he or she may not be truly independent of a party, does not render his or her evidence inadmissible. It affects, however, the weight to be attributed to his or her opinions: R on the Application of Factortame Ltd v Secretary of State for Transport (No. 8) [2002] WLR 1104; FGT Custodians Pty Ltd (formerly Feingold Partners Pty Ltd) v Fagenblat [2003] VSCA 33.
13.This case goes further, however, than cases where an expert has a relationship with a party or is an employee of a party[2] as, here, Mr Walsh has been appointed their representative for the purposes of conducting the proceeding. A legal practitioner appearing as such for a party would not be permitted to assume the role of expert witness; he or she would not suddenly divest himself or herself of their role as advocate and step into the witness box to give opinion evidence. Being the advocate for the instructions of a client and giving independent expert evidence in relation to such instructions are tasks which are at odds. This is recognised by paragraph 4 of the QCAT Practice Direction No 4 of 2009 on Expert Evidence which provides:
[2] See, for example, R. v Gallagher [2001] NSWSC 462, where a DNA expert had been called to give opinion evidence in relation to a DNA profiling system, where he had been responsible for installing and maintaining the system and had used it on a daily basis; also Reid v Leeds City Council [2001] CPLR 833 where the expert was employed by the Council.
An expert’s primary duty is to the tribunal
4.An expert owes a duty to assist the tribunal which overrides any obligation to any party to the proceeding or any person who is liable for their fee or expenses. The expert’s role is to assist and advise the tribunal on issues in dispute within the expert’s area of expertise. A person must not give, and an expert must not accept, instructions to adopt or reject a particular opinion in relation to an issue in dispute in a proceeding.
[Underlining added for emphasis.]
14.It is of concern, in this case, that Mr Walsh’s final conclusion in his report of 22 September 2009 (exhibit 3) is identical to the terms of the defence filed by the Respondent.
15.As mentioned above, I have admitted Mr Walsh’s reports into evidence as the question of independence, or lack thereof, does not bear on admissibility but rather on weight. I have addressed infra the weight to be accorded to the reports. The adoption of the practice of body corporate managers purporting to act both as “experts” and “representatives” in the same case is not one which should be encouraged.
The legislation and principles governing this application
16.Section 47 of the Body Corporate and Community Management Act 1997 establishes the general principles for the application of lot entitlements to a community titles scheme. A contribution schedule lot entitlement is the basis for calculating the lot owner’s share of amounts levied by the Body Corporate unless the extent of the lot owners’ obligation to contribute to a levy for a particular purpose is specifically otherwise provided for in the Act: section 47(2)(a). It is also the basis for calculating the value of the lot owner’s vote for voting on an ordinary resolution if a poll is conducted: section 47(2)(b).
17.By section 47(3), the interest schedule lot entitlement is the basis for calculating the lot owner’s share of common property, the lot owner’s interest on termination of the scheme including the lot owner’s share of body corporate assets on termination of the scheme, and the unimproved value of the lot for the purposes of a charge, levy, rate or tax that is payable directly to a local government, the commissioner of land tax or other authority and that is calculated and imposed on the basis of unimproved value.
18.Neither schedule is used to calculate liability of the owner for the supply of a utility service to the lot if the amount of the utility service is capable of separate measurement and the owner is billed directly: section 47(4).
19.Sections 48 and 49 establish the mechanism for the adjustment of a lot entitlement schedule. An application may be made by an owner of a lot. By section 48(2) of the Body Corporate and Community Management Act 1997, the Body Corporate must be the Respondent to the application. By section 48(5) the order that may be made by the Tribunal must be consistent with section 48(6) if the order is about the contribution schedule or section 48(7) if the order is about the interest schedule. It is worth setting out sub-section (6) in full:
“48(6) For the contribution schedule, the respective lot entitlements should be equal, except the extent to which it is just and equitable in the circumstances for them not to be equal.”
20.Section 49 provides guidance in terms of the criteria to be used by the Tribunal for deciding what is just and equitable in the circumstances of each case. Without limiting the matters to which the Tribunal may have regard[3] sections 49(4) and (5) provide as follows:
[3] Section 49(3).
“49 (4) The specialist adjudicator or QCAT may have regard to –
(a)how the community titles 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.
(5)The specialist adjudicator or QCAT may not have regard to any knowledge or understanding the Applicant had, or any lack of knowledge or understanding on the part of the Applicant, at the relevant time, about –
(a)the lot entitlement for the subject lot or other lots included in the community titles scheme; or
(b) the purpose for which a lot entitlement is used.”
21.By section 49(6) the “relevant time” means the time the Applicant entered into a contract to buy the subject lot.
22.These provisions where considered by the Court of Appeal in Fischer & Ors v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214. Chesterman J said, at [26]:
23.After considering the explanatory notes to the legislation and to the second reading speech, his Honour continued, at [30]:
“These materials make it tolerably plain that the Act is intended to produce a contribution lot entitlement schedule which divides body corporate expenses equally except to the extent that the apartments disproportionately give rise to those expenses or disproportionately consume services. That determination can only be made by reference to factors which have a financial impact or consequence on the body corporate. It cannot be affected by factors which go to an apartment’s value or amenities.”
The Applicants’ Material
24.In their initial statement of facts (exhibit 1), the Applicants have described, in some detail, the structure of the scheme and the elements bearing on a consideration of the distribution of the costs relating to the various components. The Respondent has accepted the Applicants’ description and it is convenient to repeat it:
8.The Scheme involves a building containing forty-eight units that have been constructed in seven vertical stacks. There are seven identical units in each of six stacks and in the remaining stack there are six units, as well as the entrance foyer, reception area and front office. (For clarity, the units in each stack are of identical design but each stack is of different design). Two of the stacks house three bedroom units and the remaining stacks all house two bedroom units. Each unit has two bathrooms and two toilets, with the exception of units in the three stack that have three toilets each.
9.The common property in the Scheme comprises a swimming pool, spa, gymnasium, barbecue area, hobby room as well as the normal building components (such as lifts, stairwells, hallways, driveways, etc).
10.There is a basement under the building that contains car spaces and storage cages, as well as a workshop for the caretaker and various other facilities. The grounds of the building are extensively landscaped and have a frontage direct to the ocean.
11.A previously stated, on the roof of the building there are seven private roof areas that are attached to the seven top floor units. Two of these areas are accessed directly from the units below while the other five are accessed indirectly via common property. Situated among those private roof areas are other roof areas that house various common property equipment, as well as air conditioning units for the various units below. The air conditioning units are maintained by the owners of the lots that they serve.
12.The ground floor units also have access to an external courtyard area that adjoins the landscaped gardens. The roof areas and ground floor courtyard areas are on title to each unit and included in the rateable area of the units.
25.The remainder of exhibit 1 is a detailed and thorough categorisation of the costs pertaining to different structural elements of the scheme.
26.As a result of their consideration of the report of Mr Walsh, dated 22 September 2009 (exhibit 3), the Applicants reviewed their treatment of the three items referred to in that report which, according to the Respondent, merit unequal treatment, viz. window replacement costs, balustrade replacement costs and external painting costs.
27.In relation to the window replacement costs, I understand the Applicants, in their submissions in response (exhibit 4), submit that the minimal difference between the allocated costs and the unknown variables weigh in favour of treating contributions in respect of the same as equal. I accept that this is a correct treatment of this element.
28.As a result of their further investigations in relation to the balustrade replacement costs, the Applicants have revised their proposed contribution lot entitlement schedule and the amended schedule is in attachment 3 to exhibit 4.
29.The Applicants’ approach with respect to the external painting costs has not been altered as a result of their further consideration of this issue. They have identified a number of factors which bear in favour of an equal treatment of this cost. Taking those factors into account and having reference to sec. 49(4)(b) of the Body Corporate and Community Management Act 1997, I am of the view that equal treatment is appropriate.
The Respondent’s Material
30.The Respondent relied initially on the report of Mr Walsh dated 22 September 2009 (exhibit 3).
31.In that report Mr Walsh set out the applicable legislation and made reference to some of the case law applicable to such claims.[4]
[4] These sections of his report are common to all such reports emanating from Stewart Silver King & Burns. It may be that his clients find these recitations helpful.
32.The more relevant part of his report is his treatment of the categorisation of the Respondent’s costs centres. In this case, he has treated all administrative costs and some sinking fund items as costs to borne equally between the lot owners. These administration costs include the body corporate administration contract. In contrast to this, he treats the window costs as being divisible in accordance with the actual number of each lot’s windows as a percentage of the total number of windows less common area; balustrade costs as divisible based on the actual area of each lot’s balustrade as a percentage of the total; and external paint area as divisible in accordance with each lot’s external area as a percentage of the total.
33.On this basis, 92.91% of the costs would be shared equally between the lots and 7.09% of the costs would be determined on the basis of the methods referred to above.
34.Mr Walsh concludes as follows:
The Body Corporate has recently altered a major contractual amount significantly, being the caretaker manager fee. This alters the percentage of difference between the lots by several percentiles and therefore any proposed changes to the contribution entitlements should be based on projected figures of future agreements which are not yet available.
It is recommended the current contribution schedule should not be adjusted as set out in Appendix 2 of the CCT application on the two arguments set out above. (1) Being the current schedule has been set accurately in accordance to the legislation and (2) that current administrative expenditure is currently being radically altered (a variation between 5% and 20% of total expenditure). The legislation has been designed to allow for changes to the schedule, it is my opinion that immediate change is not required at present although the situation may arrive in the future depending upon the degree that future management expenditure has upon the Body Corporate financial expenditure.
35.There are a number of problems with this conclusion:
(a)first, Mr Walsh’s opines that the contribution lot entitlement schedule as it currently stands is not appropriate and yet concludes that it should not be changed;
(b)secondly, having suggested that a different schedule would be more appropriate (section 14.2 of his report), Mr Walsh then concludes that the “current schedule has been set accurately”; and
(c)thirdly, there is no evidence before the Tribunal of the proposed new administration contract.
36.I do not accept Mr Walsh’s conclusions in his report (at section 15) nor accept his reasons, save where adopted by the Applicants.
37.In any event, it appears that the Respondent has adopted the majority of the Applicants’ reasoning in their submissions in response (exhibit 4). I derive this conclusion from exhibit 7, where the Mr Walsh says:
1.It is agreed that all items are accepted, with exception to items 3 and 34.
2.To clarify, Item 33 states agreement on the percentage of splits between expenditure that is distributed equal and unequal. The final amended table of contribution entitlements for each Lot (attachment 3 of applicant’s response) is agreed, as the additional expenditure information provided by the applicant is not disputed
3.Item 3 is disputed; as the manager fee is unknown this will have a direct impact on the actual percentage of total expenditure to be distributed equally. This percentage varies the final entitlement aggregate.
4.Item 34 is disputed as the Respondent’s position is that, although change may be required, present expenditure estimates are not accurate enough to determine a new contribution entitlement table.
Consideration of the material
38.The Respondent’s comments in exhibit 6 appear to be to the effect that, whilst the Applicants’ proposed contribution lot entitlement schedule is in fact the appropriate schedule on the basis of the information currently known, the future conduct of the Respondent in entering into an administration contract with an as-yet unknown service provider might change the underlying substratum; thus the contribution lot entitlement schedule, though inappropriate, ought be maintained until that time.
39.I note that there is no evidence before the Tribunal of the future contractual arrangement nor actual evidence, as opposed to supposition and conjecture, as to how it will bear on the treatment of the distribution of costs.
40.I do not accept the submission of the Respondent in this regard.
41.The applicant in a case such as this bears the onus of establishing that the adjustment for which he or she contends should be made. That onus remains with the applicant even though the evidential onus may shift during the course of the proceeding: Lidster v. Body Corporate Parkhaven 3 No. 3 CTS 22656 [2007] QCCTBCCM 3; Woodley v. The Proprietors of Quay West CTS 16610 [2006] QDC 277 and Battin v. Body Corporate for Amity Community Titles Scheme 17543 [2006] QDC 278,.
42.For the reasons mentioned above, I am of the view that the Applicants have satisfied the onus and that there should be an adjustment made to the contribution lot entitlements schedule.
43.Having considered the material before me I am of the view that the Schedule should be adjusted to reflect the second column of attachment 3 to the Applicants’ submissions in response to the Respondent’s submissions (exhibit 4).
44.To that end, I order that the contribution lot entitlements schedule for Palm Springs Residences Community Titles Scheme 29467 be adjusted such that the entitlements be as follows:
Unit No. Entitlement 101 31 102 31 103 30 104 30 105 30 106 30 201 31 202 31 203 31 204 31 205 31 206 31 207 31 301 31 302 31 303 31 304 31 305 31 306 31 307 31 401 31 402 31 403 31 404 31 405 31 406 31 407 31 501 31 502 31 503 31 504 31 505 31 506 31 507 31 601 31 602 31 603 31 604 31 605 31 606 31 607 31 701 33 702 33 703 33 704 33 705 33 706 33 707 33 Total 1467
45.Having considered the material in this case, the intent of the legislature expressed in sec. 100 of the Queensland Civil and Administrative Tribunal Act 2009 and the factors bearing on the question of costs in sec. 103(3) of the Act, I am inclined to make an award of costs in favour of the Applicants limited to the filing fee of $240.00.
46.I note sec. 103 of the Act. Despite my comments regarding Mr Walsh’s role in this proceeding, I do not consider this an appropriate case for the application of that provision.
Respondent’s Obligations
47.As required by section 48(10), once the Tribunal orders an adjustment of a lot entitlement schedule the Respondent, as the relevant Body Corporate, must “as quickly as practicable” lodge a request to record a new Community Management Statement reflecting the adjustment ordered.
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