Melksham & Burger v Body Corporate for Aqua (No 2)

[2010] QCAT 264

CITATION: Melksham & Burger v Body Corporate for Aqua (No 2) [2010] QCAT 264

PARTIES:	Mr Sydney Albert Melksham & Mrs Angela Kay Burger
v
Body Corporate for Aqua CTS 32590

APPLICATION NUMBER:   KL067-09      

MATTER TYPE: Other civil dispute matters

HEARING DATE:     On the papers

HEARD AT:  BRISBANE

DECISION OF: A Forbes – Member

DELIVERED ON: 15 June 2010

DELIVERED AT:      BRISBANE

ORDERS MADE:

1.  That the contribution schedule lot entitlements for the Body Corporate of Aqua CTS 32590 be adjusted in accordance with the recommendations in the joint report of Linkhorn and Simpson and Don Pitt dated 7 April 2010.

2.  There will be no order for costs.

CATCHWORDS :  Community titles scheme under the Body Corporate and Community Management Act 1997 – application for adjustment of contribution lot entitlements – experts’ joint reports recommending adjustments –adjustments made.

APPEARANCES and REPRESENTATION (if any):

Decision on the papers.

REASONS FOR DECISION

1. The Applicants are the owners of lot 1901 in a high-rise residential apartment building known as “Aqua”, Community Titles Scheme 32590, situated in Marine Parade, Labrador.  In November 2009 they lodged an application in the former Consumer and Commercial Tribunal seeking orders under the Body Corporate  and Community Management Act 1997 (“the BCCM”) for adjustment of the contribution schedule lot entitlements (“CSLEs”) for the 109 units. The Queensland Civil and Administrative Tribunal (“QCAT”) has now replaced the former body, and the application, as a pending proceeding under section 256 of the Queensland Civil and Administrative Tribunal Act 2009 (“the Act”), falls to be decided in this tribunal.

1. The Respondent Body Corporate in March 2009 initiated an enquiry into the present CSLE Scheme by commissioning a report from Messrs Linkhorn and Simpson, persons who have an expertise in the body corporate industry in assessing these claims.  Their report was delivered on 10 March 2009.  Subsequently, more than twenty owners expressed concerns as to the accuracy of the method of determination in the report.  In response, the Body Corporate commissioned a second report from Don Pitt of Queensland Building Management dated 28 January 2010 (“the Pitt report”).

1. There were substantial differences in the findings of each report, the most significant of which was a difference in the experts’ view as to the appropriate treatment of a sinking fund budget on an annualised basis. The experts were directed to meet in conclave to try to reach a consensus and produce a combined report.

1. Accordingly, the experts met and having resolved their differences, produced a joint report on 8 March 2010.  A compulsory conference convened by a Member was held on 6 April 2010. The parties and a representative of the experts attended and the parties agreed that the experts be asked to amend their joint report to take into account some additional maintenance costs that benefit all owners of lots in Aqua.

1. The final joint report prepared after the conference and dated 6 April 2010 includes a single table showing a recalculated contribution schedule of lot entitlements as agreed and recommended by the experts. They recognise, by explicit reference to the BCCM Act, the basis for lots to contribute to Body Corporate costs:

“in a proportion equivalent to the share of the costs that are :

(a)  incurred by the Body Corporate because of their particular lot, or

(b)  benefiting the lot.”

1. The finally determined contribution schedule recommends a reduction in the current number of CSLEs from 10,203 to 9909. The majority of proposed contributions fall within the range of 89 to 111; four fall between 117 and 128 and there is one substantial anomaly: namely the Applicants at 1901.

Legislation and Principles

1. The BCCM Act 1997 provides principles by which the maintenance costs of a building such as Aqua 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:

(a)how the community titles scheme is structured; and

(b)the nature, features and characteristics of the lots included in the scheme

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.

1. The Body Corporate and the Applicants rely on the final amended report (subject to the issue of costs – see below) and do not oppose an adjustment according to the revised schedule.  Several owners have indicated their support for the Application.

1. The lot entitlements in the existing schedule are not equal. I accept the careful calculations of the two teams of experts which analyse the impact of each lot expressed as a percentage of the total costs of operating the scheme. The recommended schedule does not make radical adjustments.  In my view justice and equity would not be served by adjusting the present contribution schedules to distribute the operating costs equally between the lot holders, but by adjusting the schedules to reflect the schedule proposed by Messrs Linkhorn, Simpson and Pitt. That table is appended to this decision as Schedule A.

Schedule A

Costs

1. The Applicants complain that the Respondent was dilatory in circulating the original Linkhorn Simpson report to unit holders.  They say that had they received it earlier they would have taken immediate action to implement the recommendations, thus avoiding further levies in excess of the adjusted contributions.  They complain too that the Respondent sought two unwarranted extensions of time to prepare its materials.

1. Examination of the material suggests, and I find, that the Respondent acted properly within its powers and responsibilities. The expectation in the QCAT Act section 100 is that each party bears its own costs. There is nothing in the materials nor in the Applicants’ submissions that should disturb that position. (The enabling Act has nothing to say on who should meet the costs the costs of a determination by QCAT as distinct from an adjudication outside QCAT). I dismiss the application for costs.

Orders

1. That the contribution schedule lot entitlements for the Body Corporate of Aqua CTRS 32590 be adjusted in accordance with the recommendations in the joint report of Linkhorn and Simpson and Don Pitt dated 7 April 2010.

1. There will be no order for costs.