Maple v Body Corporate for Rutherford Apartments CTS 1240
[2010] QCAT 520
•21 October 2010
| CITATION: | Maple v Body Corporate for Rutherford Apartments CTS 1240 [2010] QCAT 520 |
| PARTIES: | Pamela Maples (Applicant) |
| v | |
| Body Corporate for Rutherford Apartments CTS 1240 (Respondent) |
| APPLICATION NUMBER: | OCL 100-10 |
| MATTER TYPE: | Other civil list |
| HEARING DATE: | On the papers |
| DECISION ON THE PAPERS OF: | Ms Sharon Christensen | |
| DELIVERED ON: | 21 October 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The contribution schedule lot entitlement for Rutherford Apartments CTS 1240 be adjusted so that the respective contribution schedule lot entitlements for each lot are the number allocated o the lot in the table annexed to this order. 2. The body corporate for Rutherford Apartments CTS 1240 shall as soon as practicable lodge a request to record a new Community Management Statement reflecting the adjustments ordered. |
| CATCHWORDS : | Application for adjustment of Contribution Schedule Lot Entitlement –Body Corporate and 49(4). |
APPEARANCES and REPRESENTATION (if any):
The application was determined on the papers.
REASONS FOR DECISION
Introduction
This is an application pursuant to s 48 of the Body Corporate and Community Management Act 1997 (BCCM Act) for the adjustment of the contribution lot entitlement schedule.
The Rutherford Apartments CTS 1240 is situated at 22-24 Rutherford St, Yorkeys Knob, Queensland and consists of 12 residential lots over 3 levels. The carparking for each lot is included in the title for the lot. The scheme was created under the Building Units and Group Titles Act 1980 by registration of BUP 70380 on 23 July 1984. The scheme includes an outdoor swimming pool, letter boxes and an intercom system.
By an Application filed on 27 July 2010, the Applicant sought an adjustment to the contribution lot entitlement schedule for the Body Corporate for Rutherford Apartments CTS 1240 pursuant to section 48 of the BCCM Act on the basis proposed in a report from Stewart Silver King and Burns dated 19 July 2010 (SSKB Report).
The SSKB Report proposes a fair and equitable adjustment of the contribution schedule lot entitlements, other than on an equal basis.
The current contribution schedule lot entitlements for the scheme are not equal. It is clear from the table on page 34 of the SSKB Report that the lot entitlements were originally calculated on the basis of the relative areas of the lots.
The Respondent filed a response to the application on 28 September 2010, requesting that:
a. The Application be amended to correctly identify the body corporate for the scheme as the Respondent rather than the body corporate manager;
b. The lot entitlements be adjusted in accordance with the provisions of s 48(6) of the BCCM Act and the criteria in s 49 of the BCCM Act;
c. The body corporate be required to lodge a request to record a new community management statement as soon as practicable in accordance with s 48(1) of the BCCM Act.
An order was made on 8 September 2010, by the Tribunal that the Application be determined on the papers.
On 29 September 2010, the Applicant filed an amended Application naming the Body Corporate as the Respondent.
Legislation
Section 47 of the Body Corporate and Community Management Act 1997 (“the Act”) provides the general principles for the application of lot entitlements to a community titles scheme. According to s 47(2) the contribution schedule lot entitlement is the basis for calculating:
a. 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; and
b. the value of the lot owner’s vote for voting on an ordinary resolution if a poll is conducted.
10. According to 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.
11. 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).
12. Sections 48 and 49 provide for adjustment of a lot entitlement schedule by application to the Tribunal under the Queensland Civil and Administrative Tribunal Act.
13. An application may be made by an owner of a lot to the Tribunal and by section 48(2) of the BCCM Act, the Body Corporate must be the Respondent to the application.
14. By section 48(5) an order for adjustment of the contribution schedule lot entitlement must be consistent with section 48(6), which provides:
“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.”
15. 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 sections 49(4) and (5) provide:
“49(4) The specialist adjudicator or the CCT 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 the CCT 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.”
16. By section 49(6) the “relevant time” means the time the Applicant entered into a contract to buy the subject lot.
17. These provisions where considered by the Court of Appeal in Fischer v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214. Chesterman J said, at [26]:
“That 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 apartments or their contribution to the costs incurred by the body corporate. A more general consideration of amenities, value or history are to be disregarded. What is at issue is the “equitable” distribution of the costs.”
18. 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.”
Evidence – Expert Report
19. The Tribunal has been provided with a copy of the SSKB Report from Mr Martin Walsh. The report claims to be an expert report. Mr Martin Walsh the author of the report claims expertise in the preparation of reports for lot entitlement adjustments. There is no challenge to the expertise of Mr Walsh and I will accept that he has the appropriate expertise for this matter.
20. Mr Walsh has purported to engage in an assessment of whether it is just and equitable for the lot entitlements for the scheme to be other than equal. This was undertaken by examining the expenses for the administrative and sinking funds and allocating a just and equitable portion of each expense to each of the lots within the scheme. Mr Walsh states on page 7 of the report that his analysis accords with the law as stated by Chesterman J in Fischer v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214 by examining “each item of expenditure by the Body Corporate and consider whether the costs can be distributed equally or if the cost is one that is disproportionately consumed (ie benefits) or caused by some lots in comparison to others.”
21. Two methods of allocation are used. Method 1 is applied where the costs should be shared equally on the basis that no particular lot places any greater or lesser demand on the expense. Method 2 is applied where there are support and shelter costs that should be shared on the basis of the area of the lot. It is notable that Method 2 is only attributed to the expense of “Repaint building exterior surface”.
22. The result of this analysis is that the majority of expenses are shared equally resulting in a suggested distribution of contribution schedule lot entitlements that are similar although not equal.
Proper Applicant
23. Section 48(2) of the BCCM Act clearly states that:
“(2) Despite any other law or statutory instrument, the respondent to an application mentioned in subsection (1) is the body corporate”.
24. The original Application lodged by the Applicant incorrectly indicated the body corporate managers, ‘Archers Body Corporate Management’ as the Respondent. This was rectified by lodgement of an amended Application on 29 September 2010.
25. I will therefore determine the Applicant’s claim on the basis of the amended Application, containing the correct Respondent.
Findings – Expert Report
26. The Applicant proposes a change to the contribution schedule lot entitlements for the scheme in accordance with the SSKB report. The proposed allocation is not challenged by the Respondent.
27. Having considered the methodology applied in the SSKB report above, I am satisfied that it accords with the decision of Chesterman J in Fischer v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214 and with section 48 of the BCCM Act. The report proposes that the majority of body corporate expenses be shared equally, except the repainting of the building, which is proposed to be shared on the basis of the area of each lot. This is referred to as “method 2” which makes an assumption that ‘support and shelter’ costs should be shared in proportion to the area of the lot because ‘intuitively if lot A has twice as much area as lot B then it requires twice the support and shelter”. This statement is simplistic (Burgess v Body Corporate for La Sabbia [2010] QCAT 337, [28]) and in my view will not in all circumstances result in a just and equitable distribution.
28. Whilst aspects of ‘support and shelter’ may appropriately be allocated on the basis of area, such as repairs to a common roof, there are other aspects, such as painting where the expense attributable to the lot is not accurately reflected by the area. For example in this case, there is no evidence in the report about whether the lots that are larger in area are also the lots with a greater area of external wall, or whether there are smaller lots with more external walls than others. The external wall exposure of each lot, independently of area, is a more accurate gauge of the expense for painting the walls of that lot. This type of information will be relevant to and should ultimately inform the actual percentage difference in contribution to the painting. It is apparent from the building units plan provided with the SSKB report that each of the lots with similar areas (lots 1-8, 10 and 11) have a similar number of external wall exposure. Lots 9 and 12 which are nearly twice the size of the other lots clearly have a significantly greater external wall area. Therefore, despite no reference to this factor in the report, in my view, it is just and equitable in the circumstances for the cost of painting external walls to be borne by each of the lots in proportion to the size of the lot.
29. At this point I note, with agreement, the comments of Member Barlow in Buist Investments Pty Ltd v Body Corporate “Sonata” CTS 30905 [2010] QCAT 407 that expert reports concerning lot entitlement adjustments would be of more assistance to the Tribunal if the report clearly identified the expenses that should not be shared equally and explain why they should not be equal and the basis for allocation. Merely stating alternative methods for allocation and then assigning these methods to budget items does little to assist the Tribunal in determining a just an equitable outcome, particularly if faced with conflicting expert reports.
Relevance of Exclusive Use Allocations
30. The Applicant raises in her amended Application as an additional reason for adjustment, the fact that lots 1 and 2 have acquired exclusive use areas over courtyards adjacent to their lots. A copy of the minutes from the body corporate meeting on 20 January 2009 considering these motions was forwarded to the Tribunal. The minutes indicate that the purpose of these resolutions was to formalise (including registration of) previous grants of exclusive use areas by ‘former committees’ to these lots. The minutes indicate that the resolution for lot 1 was passed 5 votes to 1 vote against and in relation to lot 2, 6 votes in favour. The proposed exclusive use bylaws for each lot were not included with the minutes.
31. These motions are valid only if the provisions of the Body Corporate and Community management Act 1997 were satisfied. This requires:
a. The lot owner to agree in writing to the grant of the exclusive use area or vote personally on the motion: s 171(2);
b. The exclusive use by-law specifically identifies the area of exclusive use: s171(1)(a);
c. The by-law to be passed by resolution without dissent: s 62(2). This requires no vote to be cast against the motion;
d. The new community management statement containing the by-laws must be lodged for recording within 3 months of the meeting.
32. There are a number of inadequacies with the motions evident in the minutes. First a dissenting vote was cast in the case of lot 1. Therefore, it was not a resolution without dissent. Secondly, it is not evident that the grant of exclusive use was agreed to in writing by lots 1 and 2. The owner of lot 1 was not present at the meeting and the owner of lot 2 was un-financial and therefore, neither have voted personally in favour of the motions. Thirdly, the actual by-laws were not attached and there is no evidence that they were circulated with the agenda. Finally, no evidence has been provided to the Tribunal that the new community management statement containing the by-laws was lodged within the relevant time.
33. Even if the purported exclusive use by-laws were validly passed, the fact a certain area of common property is under the exclusive use of one lot will not be a factor relevant to whether the lot disproportionately impacts on the expenses of the body corporate, unless there is provision for the body corporate to maintain that area in the exclusive use by-law. According to the Body Corporate and Community Management (Standard Module) Regulation 2008, s 173(2):
“(2) An exclusive use by-law is taken, in the absence of other specific provision in the by-law for maintenance and operating costs, to make the owner of the lot to whom exclusive use or other rights are given responsible for the maintenance of and operating costs for the part of the common property to which the exclusive use by-law applies”.
34. As no submission has been made that the relevant exclusive use by-laws require the body corporate to maintain those areas of the common property, this fact was not relevant to a consideration of whether those lots should bear a greater proportion of costs in relation to that area. In the absence of provision in the by-law to that effect, the owner of each lot with exclusive use will be responsible for the maintenance of that area.
Conclusions
35. Having regard to the conclusions reached above, I am of the view that it is just and equitable in the circumstances of this case and taking into account how the community titles scheme is structured, the nature, features and characteristics of the building and the purpose for which the lots are and have been used, that the contribution lot entitlements should not be equal.
36. I also accept that the level of inequality as between the lots as currently reflected in the contribution schedule is not just and equitable.
37. I find that the apportionment given in the SSKB Report is just and equitable.
Orders
38. I order that the contribution schedule lot entitlement for Rutherford Apartments CTS 1240 be adjusted such that the contribution schedule lot entitlements are as set out in the table in Annexure A to these reasons.
39. As required by section 48 of the Body Corporate and Community Management Act 1997, the body corporate for Rutherford Apartments CTS 1240 must as quickly as practicable lodge a request to record a new Community Management Statement reflecting the adjustment ordered.
40. I make no order as to costs.
Annexure A
| Lot No. | Entitlement |
| 1 | 80 |
| 2 | 80 |
| 3 | 81 |
| 4 | 82 |
| 5 | 83 |
| 6 | 83 |
| 7 | 82 |
| 8 | 81 |
| 9 | 93 |
| 10 | 82 |
| 11 | 83 |
| 12 | 91 |
| Total | 1001 |
1
0
0