O'Keefe v Body Corporate for Breakwater Villas Ii CTS 25808
[2014] QCAT 266
| CITATION: | O’Keefe v Body Corporate for Breakwater Villas II CTS 25808 [2014] QCAT 266 |
| PARTIES: | Kevin John O’Keefe Joanne Marie O’Keefe Janice Isobel Leonard Short (Applicants) |
| v | |
| Body Corporate for Breakwater Villas II CTS 25808 (Respondent) |
| APPLICATION NUMBER: | OCL013-14 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Hughes |
| DELIVERED ON: | 11 June 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Application is dismissed; and 2. Each party bears its own costs of the Application. |
| CATCHWORDS: | CONTRIBUTION SCHEDULE LOT ENTITLEMENTS – whether basis for application – where limited power in Tribunal to order adjustment – whether material change – where change part of scheme developed progressively – whether equity principle is basis for application – where equity principle provides test to be applied – whether report is necessary evidence – where focus of adjustment is differing maintenance requirements – COSTS – interests of justice Body Corporate and Community Management Act 1997, ss 46A, 47AA, 47B, 379, 381, 382, 383, 384, 385, Schedule 6 Buist Investments Pty Ltd v Body Corporate “Sonata” [2010] QCAT 407 Thompson v Capricorn Pacific Apartments CTS 5587 [2013] QCAT 227 |
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
What is this Application about?
Kevin John O’Keefe and Joanne Marie O’Keefe as the owners of Lot 5 and Janice Isabel Leonard Short as the owner of Lot 6 wants the Tribunal to adjust the contribution schedule lot entitlements for Breakwater Villas II CTS 25808 - an 18 lot residential complex.
Breakwater opposes the proposed adjustment.[1]
[1]Submissions dated 8 April 2014. The applicants claimed not to accept these as an objection as they were submitted three weeks after the date required by Directions dated 27 February 2014 and not copied to the Applicants. However, it is clear from the Applicants’ response to those submissions that they have had an opportunity to consider the submissions and were able to file their own submissions later. The Applicants have therefore failed to demonstrate any prejudice from the short delay. It is also clear that the submissions do not accept the proposed adjustment.
What is the purported basis for the Application?
The application itself does not refer to any basis. Instead, the application attaches a covering letter and many attachments from which the Tribunal was to deduce a basis for the application.
These attachments include a Quantity Surveyor report commissioned by Mr and Mrs O’Keefe and Ms Short “to assess the justice and equity”[2] of the contribution schedule lot entitlements. The report avers that:
· The scheme has two Standard Format Plan townhouses and 16 Building Format Plan units constructed as two separate double level buildings;[3]
· The original development was intended to comprise four townhouses in a first stage and 11 townhouses in a second stage. The authors of the report claim to have been informed by an unidentified source that instead, the developer constructed only two townhouses in the second stage due to financial difficulties.[4] Another developer then completed 16 Building Format Plan lots and registered these in December 2000;[5] and
· It is not possible to “establish authoritatively” the basis for setting the contribution entitlements, although it “appears likely” that the entitlements for Lots 5 and 6 were those that would have applied if the development had been completed in its original form.[6]
[2]Contribution Lot Entitlement Analysis For Breakwater Villas Stage II CTS 25808 of Leary & Partners Pty Ltd dated 26 April 2013.
[3]Ibid 3.
[4]Ibid 4.
[5]Ibid 4 - 5.
[6]Ibid 5.
Is there a basis in law for the Application?
As the Tribunal has noted in prior decisions, its power to order an adjustment to contribution entitlements is limited to prescribed circumstances.[7] I will address each.
[7]See for example, Thompson v Capricorn Pacific Apartments CTS 5587 [2013] QCAT 227 and Higham v The Body Corporate for the Palms No. 3 Warana CTS20039 [2013] QCAT 228.
The Body Corporate passes a motion without dissent to change the entitlements[8]
[8]Body Corporate and Community Management Act 1997 s 47AA.
On 4 November 2013, Mr and Mrs O’Keefe and Ms Short moved a motion at an Extraordinary General Meeting of the Body Corporate. That motion was to adjust the contribution lot entitlements as recommended by the Quantity Surveyor report.
The motion was defeated by a vote of nine against and two in favour. Had the motion passed without dissent, a lot owner could have applied for an Order that the changed entitlements are not consistent with the relevant principle.[9] Clearly, this would not form the basis for the current application as it would have been contrary to the interests of Mr and Mrs O’Keefe and Ms Short to have applied for an Order to override their own motion.
[9]Ibid s 47AA(2) and (3).
In any event, there is no evidence of any motion passed without dissent to change the entitlements.
Accordingly, this does not provide a basis for the application.
The scheme is affected by a material change since the last time entitlements were decided[10]
[10]Body Corporate and Community Management Act 1997 s 47B(1).
The report asserts:
The change in the plan format used to register the lots… has significant implications for the justice and equity of the contribution entitlement schedule. The body corporate’s maintenance responsibility for BFP lots is far more extensive than it is for SFP lots. This in turn creates a substantial difference between the BFP and SFP lot’s (sic) cost impact on the body corporate budget. The contribution entitlements were not set in a manner that reflects this difference…[11]
[11]Contribution Lot Entitlement Analysis For Breakwater Villas Stage II CTS 25808 of Leary & Partners Pty Ltd dated 26 April 2013 at page 5.
There is scant evidence to support there being a “change in the plan format”. Any change in the plan format appears to have arisen due to the development progressing in stages. If a scheme is intended to be developed progressively, a change arising from development is specifically excluded from being a ‘material change’[12]:
It seems based on the limited evidence before the Tribunal that the development was intended to be developed progressively. The definition of material change expressly excludes a change arising from such a development, which would include the subdivisions and re-subdivisions sought to be relied upon.[13]
[12]Body Corporate and Community Management Act 1997 Schedule 6 definition of ‘material change’.
[13]Moses v Body Corporate for Rhode Island Community Title Scheme 20573 [2012] QCAT 322 at [36].
The definition therefore excludes a change arising from a progressively staged development, including any change to the plan.
Accordingly, there is no material change to provide a basis for the application.
The scheme is established after the commencement of section 47B(2) of the Body Corporate and Community Management Act 1997 and there has been no prescribed change to contribution entitlements[14]
[14]Body Corporate and Community Management Act 1997, s 47B(2).
Section 47B commenced on 14 April 2011. It appears that the scheme was established in 2000[15], well before then.
[15]Community Management Statement 25808 executed 31 July 2007 with Certified Plan dated 31 October 2000.
Accordingly, this does not provide a basis for the application.
A change to contribution entitlements because of a formal acquisition affecting the scheme[16]
[16]Body Corporate and Community Management Act 1997 s 47B(2A).
A formal acquisition means an acquisition made of a lot included in, or common property for, the scheme.[17]
[17]Ibid Schedule 6 definition of ‘formal acquisition’.
There is no evidence of this. Moreover, there is no change to any entitlements because the entitlements have remained the same since registration of the scheme.
Accordingly, this does not provide a basis for the application.
To reflect pre-Adjustment Order entitlements following a motion proposing adjustment[18]; a decision of the Body Corporate or committee about the adjustment[19]; and a subdivision[20], amalgamation[21], lot boundary change[22] or material change[23] since the Adjustment Order
[18]Ibid s 379.
[19]Ibid s 385.
[20]Ibid s 381.
[21]Ibid s 382.
[22]Ibid s 383.
[23]Ibid s 384.
The Tribunal has no evidence of any Adjustment Order.
Consequently, there can be no pre-Adjustment Order entitlements.
Accordingly, this does not provide a basis for the application.
What is the relevance of the report and other material?
The report commissioned by Mr and Mrs O’Keefe and Ms Short refers extensively to the ‘equity principle’:
In our analysis of expense items we have used the equity method’s default position of ‘all costs shared equally’ unless compelling evidence is present to prove that for a specific cost item a more just and equitable allocation can be calculated and should be applied. This requires both proof that a significant variation in cost impact exists and that there is an appropriate method to establish its monetary value over a reasonable future time period.
Having analysed each of the expense items, we will recommend the equity method’s default of ‘all contribution entitlements equal’ unless, in our opinion, the total cost allocated to each lot varies sufficiently for justice and equity to demand a non-equal entitlement schedule.[24]
[24]Contribution Lot Entitlement Analysis For Breakwater Villas Stage II CTS 25808 of Leary & Partners Pty Ltd dated 26 April 2013 at 5 and 6.
However, the equity principle enshrined in the Act[25] does not of itself provide a basis to apply to the Tribunal to adjust contribution entitlements:
[Section] 46A is not in itself a ground of application, but a test to be applied if, and only if, one of the two grounds in s47B is established. (Similarly, if an adjustment of an interest schedule lot entitlement were sought, the test in s46B could only be applied if the ground in s48 were first shown to exist.) In other words, s47B must provide a “trigger” before s46A can come to the aid of the Applicants.[26]
[25]Ibid s 46A.
[26]McGahey and Anor v Body Corporate for Ambience on Burleigh CTS 37449 [2012] QCAT 61 at [14].
Thus, the equity principle does not provide the requisite “trigger” for the application and therefore cannot provide a proper basis for the application.
The report also includes an “Administrative Budget Expense Inclusions”[27], “Allocation Methodology for Administrative Fund Expense Items”[28], “Allocation Methodology for Sinking Fund Expense Items”[29], “Additional Apportionment Calculations”[30] and a “Cost Impact Assessment & Recommended Entitlement Schedule”[31].
[27]Contribution Lot Entitlement Analysis For Breakwater Villas Stage II CTS 25808 of Leary & Partners Pty Ltd dated 26 April 2013, Table 1.
[28]Ibid Table 2.
[29]Ibid Table 3.
[30]Ibid Table 4.
[31]Ibid Table 5.
Mr and Mrs O’Keefe and Ms Short also attached further material to their application including a “Sinking Fund Forecast Report” containing a “Sinking Fund Forecast Movement”, “Itemised Expenditure By Year”, “Proposed Annual Budgets”, “Detailed Income and Expenditure Statements”, “Balance Sheets” and “Topics 2, 3 and 4 from the Office of the Commissioner for Body Corporate and Community Management’s online training course notes”.[32]
[32]Sinking Fund Forecast Report of QIA Group Pty Ltd dated 21 September 2012.
The Tribunal has previously admonished parties and those who prepare reports about unnecessarily incurring expenditure in these types of applications:
Unfortunately, the process of detailed analysis of the expenses and budget of the body corporate, that has been undertaken by each of the experts, is not ultimately of much assistance to the Tribunal.
This process seems to be common to many applications of this nature, particularly those involving high rise community title schemes. It seems to me that it is also likely to be of little assistance to the Tribunal in many other cases. That should be of concern to parties and the Tribunal, as it simply adds to the expense and delay of proceedings, contrary to the philosophy of the Queensland Civil and Administrative Tribunal Act 2009.
The BCCM Act prescribes that the starting point for contributions is that they be equal between all lots. Having regard to that starting point, there seems little point in expending considerable sums of money, quite possibly once every several years, to try to make minimal adjustments to annual contribution levies. Indeed, this exercise disregards the proper construction of the BCCM Act, which requires equality except to the extent that any lots give rise disproportionately to expenses or disproportionately consume the body corporate’s services. A minute analysis of expenses and the use of services to which they relate ignores the requirement of disproportionate expense or consumption.[33]
[33]Buist Investments Pty Ltd v Body Corporate “Sonata” [2010] QCAT 407 at [20] to [22].
And further:
I urge parties who are in a position to influence the conduct of such matters – body corporate managers and those engaged in writing such reports – to exercise judgment and restraint. It seems to me that the continuation of the practice of obtaining separate, minutely detailed reports may, in future applications, give rise to a successful application for costs.[34]
[34]Emanuele v Body Corporate for Riverscape Central [2010] QCAT 500 at [8].
Even if the Application had a proper basis, the focus of any adjustment was the differing maintenance requirements for standard format plan townhouses and building format plan units. This is adumbrated as:
All maintenance of the townhouse lots is the private responsibility of the townhouse lot owners. By contrast, the body corporate is responsible for maintaining the exterior of the BFP unit buildings, the common areas such as the stairs within the BFP unit buildings and certain sections of utility service infrastructure within the unit buildings.[35]
[35]Contribution Lot Entitlement Analysis For Breakwater Villas Stage II CTS 25808 of Leary & Partners Pty Ltd dated 26 April 2013 at page 10.
This does not warrant the volume and minutiae of the Applicant’s report and other material.
Does the Tribunal have jurisdiction?
Because the Application fails to establish any of the prescribed grounds, the application falls outside the Tribunal’s limited jurisdiction.
The Tribunal therefore does not have jurisdiction to determine the application and it must therefore fail.
What are the appropriate Orders?
Because there is no basis in law for the Application, it is appropriate to dismiss the Application.
Costs in the Tribunal are not awarded as a matter of course. Each party must bear their own costs[36], unless the interests of justice require the Tribunal to order a party to pay the costs of another party.[37]
[36]Queensland Civil and Administrative Tribunal Act 2009 s 100.
[37]Ibid s 102.
There is therefore a strong indicator against awarding costs:
Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s.100.[38]
[38]Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No. 2) [2010] QCAT 412 at [29].
Despite the dismissal of the Application and much unnecessary supporting material, Breakwater did not seek its costs and from its submissions, it appears they would have been minimal.
Therefore, the interests of justice do not dictate a departure from the indicator against awarding costs.
The appropriate Orders are therefore:
1. The Application is dismissed; and
2. Each party bears its own costs of the Application.
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