McLennan v Body Corporate for Waterview Terraces

[2010] QCAT 458

CITATION: McLennan v Body Corporate for Waterview Terraces [2010] QCAT 458

PARTIES:	Mr Donald Andrew McLennan
v
Body Corporate for Waterview Terraces CTS 26977

APPLICATION NUMBER:   OCL066-10  

MATTER TYPE:	Other civil disputes matters
DECISION ON THE PAPERS OF:	Anne Forbes – Member

DELIVERED ON: 21 SEPTEMBER 2010

DELIVERED AT:      Brisbane

ORDERS MADE:

1.  The Lot Entitlement Contribution Schedule for Waterview Terraces CTS 26977 be adjusted so that the respective lot entitlements recorded in the community management scheme be as in Schedule A attached to this decision.

2.  The body Corporate for Waterview Terraces act as quickly as possible in lodging a request to record a new Community Management Statement reflecting the adjustments ordered.

CATCHWORDS :  Application for adjustment of contribution lot entitlement schedule –Body Corporate and Community Management Act 1997-section 48, 49(4).

APPEARANCES and REPRESENTATION (if any):

Decision on the papers

REASONS FOR DECISION

1. The Applicant owns Lot 42 in a residential apartment complex, Waterview Terraces [“Waterview”] in Bundock Street, Belgian Gardens, Townsville in a Community Management Scheme under the Body Corporate and Community Management Act 1997 [“the BCCM”]. He filed an Application on 6 July 2010 for an adjustment of the contribution schedule lot entitlement [“the CSLE”] applying to Waterview. He seeks orders that the CSLE be adjusted by the adoption of a proposed schedule in a report of Solutions IE Pty Ltd [“the IE report”], and that the Body Corporate for Waterview take steps to record a new Community Management Scheme [“a CMS”] to reflect the adjustment.

1. The IE report was commissioned by the Body Corporate and conducted by quantity surveyor Mr Grant Roberts. The Body Corporate as Respondent to the Application has advised that, armed with the IE report, it called an extraordinary general meeting at which a motion for the change of lot entitlements and a new CMS was put to the unit holders with the intent that a resolution without dissent might be recorded, as required by section 62(2) of the BCCM. Minutes of the meeting show that the meeting was held on 25 March 2010 and that the motion was lost 15:6.

1. The Body Corporate, accordingly, does not oppose the Application but will abide any decision of the tribunal.

Legislation and Principles

1. The Body Corporate and Community Management Act 1997 [the BCCM”] provides principles by which the maintenance costs of a building such as Waterview Terraces having a community title scheme are met by contributions of the owners of the lots. Their proportionate contributions are to be set out in a contribution schedule: section 47. Lot owners may apply for an order of QCAT for an adjustment of a lot entitlement schedule: section 48. The informing principle is that 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”: section 48(6). Criteria are provided for determining just and equitable circumstances: section 49(4). These include but are not limited to:

·     how the community titles scheme is structured; and

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

·     the purposes for which the lots are used.

1. Guidance in the interpretation of section 49(4) is afforded by the Court of Appeal in Fischer & Ors v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 21, namely that:

• The starting point is that the entitlements should be equal;
• A departure from the principle is allowable where it is just or fair to recognise inequality;
• The allocation of lot entitlements is to be made on the basis of the impact that individual apartments make upon the cost of operating a community titles scheme; and
• The matters referred to in section 49(4) to which the tribunal may have regard may be considered only to the extent that they affect the cost of operating the community titles scheme and
• “More general questions of amenity, value or history are to be disregarded”.[1]

[1] Fischer & Ors v Body Corporate for Centrepoint Community title Scheme 7779 [2004] QCA 21 at paragraph [26].

The IE Report

1. It appears that after the EGM of 25 March 2010 Mr Roberts has updated his report for the purpose of this application, as it bears the date 21 April 2010.  He records that data used in compiling the report includes the building plans of Waterview, the current CMS, the administrative fund budget, the forecast for the sinking fund, the financial statements, and an on-site survey of the scheme. He states that the report has been drawn to comply with sections 48(6) and 49(4) of the BCCM, and that he has specialist experience in building maintenance, sinking fund planning and contributions schedule reviews.

1. Mr Roberts describes Waterview as a complex of 13 buildings with a total of 80 residential apartments.  The buildings are alphabetically designated as Buildings A to M.  Buildings F to M are described as Villa Units.  Buildings B and C have exclusive use of a lift, an elevated walkway and a security gate. The common property includes a swimming pool, spa and various appurtenances, a tennis court, a putting green, driveways and landscaping.

1. Mr Roberts has analysed the Body Corporate’s existing expenses and how they are allocated between unit holders. They include, repairs, maintenance, administration services, common property insurance, electricity, gardening, pool maintenance contractor’s fees. Financial records show that 75% of the annual charges to unit holders are fixed fees for common services that are not of sole advantage to any one unit holder over another.

1. The current expenses are unevenly allocated between lots: 61.9% of expenses are equally shared, while the remaining 38.1% of expenses are allocated to specific units.  While noting the intent of the section 48(6) of the BCCM regarding equality of contribution, Mr Roberts correctly observes that as any adjustment to an existing scheme affects owners’ rights, it is essential to make the least adjustment necessary to give effect to the principles spelt out in the Centrepoint decision.

10. Accordingly at Appendix D of the report, Mr Roberts recommends a new CSLE for each lot. Recommended total lot entitlements increase from 517 to 10,004.  Proposed contribution lot entitlements for each unit are in the range of 120 to 133. Currently they vary between 4 and 12.

Consideration

11. There is a marked disparity in the current CSLE between each unit in Waterview which is not warranted by the evidence of the structure of the scheme described in the IE report.  Mr Roberts has made qualified adjustments to the allocation of entitlements to reduce the inequality between the contribution to Body Corporate expenses required from each unit owner.  In the circumstances I find that his recommendations achieve practical equality as required under the BCCM and that it is just and equitable for the respective lot entitlements not to be equal.

12. Therefore it is ordered that:

1. The Lot Entitlement Contribution Schedule for Waterview Terraces CTS 26977 be adjusted so that the respective lot entitlements recorded in the community management scheme be as in Schedule A attached to this decision

1. The body Corporate for Waterview Terraces act as quickly as possible in lodging a request to record a new Community Management Statement reflecting the adjustments ordered.

Schedule A