Krysmont Pty Ltd as Trustee for the Jameson Unit Trust v Body Corporate for La Promenade

[2011] QCAT 590

CITATION: Krysmont Pty Ltd as Trustee for the Jameson Unit Trust v Body Corporate For LA Promenade CTS 9770 [2011] QCAT 590

PARTIES:	Krysmont Pty Ltd as Trustee for the Jameson Unit Trust
v
Body Corporate For LA Promenade CTS 9770

APPLICATION NUMBER:   OCL027-11  

MATTER TYPE: Other civil dispute matters

HEARING DATE:     On the papers

HEARD AT:  Brisbane

DECISION OF: Anne Forbes, Member

DELIVERED ON: 29 November 2011

DELIVERED AT:      Brisbane

ORDERS MADE: [1]   That the interest schedule lot entitlements for La Promenade Community Title Scheme 9770 be adjusted so that the respective lot entitlements recorded in the Community Management Scheme accord with the interest schedule of lot entitlements prepared by Adam McMonigal of Solutions in Engineering, dated August 2011 and attached to this order.

CATCHWORDS:

Application for adjustment to interest schedule lot entitlement – application of the market value principle for determining entitlement

Body Corporate and Community Management Act1997, ss 46, 46B, 48

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 (QCAT Act).

REASONS FOR DECISION

1. The Applicant Krysmont Pty Ltd as Trustee for the Jameson Unit Trust [“Krysmont”] is the owner of Lot 57 in the La Promenade Community Title Scheme 9770. On 22 February 2011 Krysmont filed an application against the Body Corporate of the Scheme for adjustment of its interest schedule lot entitlement [“ISLE”] under section 48 of the Body Corporate and Community Management Act 1997 [“the BCCMA”].  The Application does not seek an adjustment of the contribution schedule lot entitlements [“CSLEs”].

2. Apparently in belated recognition of significant amendments to the BCCMA which came into force on 14 April 2011, and to take advantage of them, Krysmont filed an Amended Application on 10 May 2011.

3. Krysmont asks for orders that the ISLEs be adjusted to reflect the respective market values of the lots in the scheme, disregarding the “buildings and improvements” on the lots.[1] 

   [1]Section 48(9) of the BCCMA prior to the latest amendments, continues to apply to transitional applications.

4. La Promenade comprises two buildings in Orchid Avenue Surfers Paradise.  There are 29 apartments in one building with a restaurant on the ground floor, a mixture of one and two bedroom apartments and a two level penthouse.  The other building is a commercial tower with an arcade of retail businesses and two nightclubs on the ground floor, with five commercial floors above.  Krysmont owns one of the night clubs, which occupies the greatest floor area in the scheme at 587 square metres.

5. Krysmont retained Mr Laurie Hamilton of Taylor Byrne, Valuers and Property Consultants to prepare a market valuation of the lots in the scheme.  He has supplemented his determination of 25 November 2010 with an addendum[2] which reflects redistributed interest entitlements in an amended Community Management Statement [“CMS”] dated 4 December 2009.

   [2]        Attachments “A” and “B” to the Amended Application.

6. Mr Hamilton states that his assessment of the property was by means of a “non intrusive” and external inspection from the arcades, foyers and the street.  For valuation purposes he regards the retail and commercial units as a “bare shell.”  He assumes that the residential units have similar décor, fixtures and fittings.  He considers that their current use is the highest and best use.

7. In his New Interest Schedule of Lot Entitlements Mr Hamilton values Lot 57 at $3,522,000 and allocates 2965 entitlements to it, compared to 4065 entitlements in the previous CMS.

8. For its part the Respondent Body Corporate, after a delay, obtained a valuation dated August 2011 of the respective ISLEs of La Promenade by Mr Adam McMonigal of Solutions in Engineering.  He says that his brief was “to provide a report creating a relativity schedule for use in reassessing the Interest Lot Entitlement” of La Promenade.  He conducted a site inspection accompanied by the chairman of the Body Corporate chairman, and refers to the three building plans of the units.

9. In response to a direction of the Tribunal Mr McMonigal added to his initial report an explanation of his methodology and the principles upon which he proceeds.  He relies upon the rate per square metre of comparable sales within the area, varying his calculations and applying different rates depending on the use of the lot for commercial/retail purposes or residential, as the case may be.  He has adjusted the market value to take into account the location of each lot within La Promenade, its aspect, and the value of car spaces attached to it.  He recognises that there are significant differences in the size, usage and entitlements of the lots in the scheme and in their use of the common property.

[10]  McMonigal’s schedule differs in presentation from Hamilton’s.  McMonigal assigns entitlements in percentages instead of direct and explicit assessments of market value.  But in common with Hamilton he identifies 43 units and allocates 18,600 entitlements among them in his “Interest Lot Entitlements Table”.  In his view Lot 57 should have an entitlement of 10.46% or 1946 unit entitlements (figure rounded).

[11]  It is no surprise that Krysmont accepts the submissions of the Body Corporate and the final adjusted unit entitlement for Lot 57, as proposed by Mr McMonigal.

The Amended BCCMA

[12] Section 358 of the amended Act makes transitional arrangements for applications filed, but not disposed of, before 14 April 2011. They are to be dealt with under the 2011 amendments, so that the former section 48(9), deleted by the 2011 amendments, continues to apply.[3] 

[3]Section 48(9). For establishing the market value of a lot created under a standard format plan of subdivision, buildings and improvements on the lot are to be disregarded.

[13] Section 48 of the BCCMA is now confined to applications for adjustments to an interest schedule[4] and must be read with section 46B, which establishes the “market value principle” for deciding ISLEs. Each lot entitlement in a scheme such as La Promenade must reflect its respective market value except where circumstances suggest that the market value principle should yield to justice and equity. To establish the market value of a lot in a standard or a volumetric format plan of subdivision, buildings and improvements on the lot are to be disregarded: section 46B(2)(b).

[4]Applications for adjustments of Contribution Schedules are covered in the new section 47B.  There is a threshold test: The CTS has been affected by a material change since the last adjustment or allocation of entitlements.

Consideration

[14]  Both experts have acknowledged and applied the market value principle required by the recent amendments to the BCCMA in determining how lot entitlements for the La Promenade CTS should be allocated.  The Body Corporate speaks for all the other lot owners and there are no submissions in opposition.  There is no reason why Krysmont should not accept the more favourable CSLE determined by the valuer retained by the Body Corporate and I shall so order.

ORDER

[15]  That the interest schedule lot entitlements for La Promenade Community Title Scheme 9770 be adjusted so that the respective lot entitlements recorded in the Community Management Scheme accord with the interest schedule of lot entitlements prepared by Adam McMonigal of Solutions in Engineering, dated August 2011 and attached to this order.