Roscho Investments Pty Ltd v The Body Corporate for the Residences CTS 27131
[2010] QCAT 117
•7 April 2010
| CITATION: | Roscho Investments Pty Ltd & Ors v The Body Corporate for the Residences CTS 27131 [2010] QCAT 117 |
| PARTIES: | |
| First applicant: | Roscho Investments Pty Ltd |
| Second applicant: | Mr & Mrs Robert & Alicia Wilson |
| V | |
| Respondent: | The Body Corporate for the Residences CTS 27131 |
| APPLICATION NUMBER: | KL025-09 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | Decision on the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Peta Stilgoe |
| DELIVERED ON: | 7 April 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The body corporate file and serve an amended schedule reflecting paragraph 20 of these reasons by 4.00 pm on 21 April 2010. 2. The contribution schedule lot entitlements for the Body Corporate for the Residences CTS 27131 be adjusted in accordance with the amended schedule. |
| CATCHWORDS : | Body Corporate and Community Schedule Lot Entitlements |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: |
| RESPONDENT: |
REASONS FOR DECISION
By an application dated 5 May 2009, the applicants sought an adjustment to the contribution lot entitlement schedule for the Body Corporate for the Residences CTS 27131 (“the body corporate”) pursuant to section 48 of the Body Corporate and Community Management Act 1997 (“the Act”).
The applicants are the owners of lot 42. They feel that the current lot entitlement distribution is patently unfair as they make a high contribution to the running of the building while other owners, who have the same benefits, pay lower fees.
Section 48(6) of the Act provides, for the contribution schedule, that 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.
The matters that the tribunal may consider when determining an application to adjust lot entitlement are set out in section 49(4):
a)how the community titles scheme is structured;
b)the nature, features and characteristics of the lots included in the scheme;
c)the purposes for which the lots are used.
Section 49(5) of the Act states that the tribunal may not have regard to any knowledge or understanding the Applicant had, or any lack of knowledge or misunderstanding 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.
“Relevant time” is defined as “the time the applicant entered into a contract to buy the subject lot”.
The leading decision on the adjustment of lot entitlements is Fischer & Ors v Body Corporate for Centrepoint CTS 7779[1]. 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.”
And at [30] ”…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.”
[1] [2004] QCA 214
The Residences is a multi-storey mixed-use commercial and residential apartment complex located in a heritage listed building at 208 Adelaide Street, Brisbane. There are 6 commercial tenancies and 41 residential lots.
The tribunal has been provided with the following reports:
a)Linkhorn & Simpson dated 23 March 2009 (“Linkhorn”);
b)Stewart Silver King & Burns dated 30 July 2009 (“SSKB”); and
c)Comparison of allocation methods prepared jointly by the experts dated 17 September 2009.
Both Linkhorn and SSKB come to the view that the current contribution schedule is not just and equitable. Both experts are of the view that the schedule should be altered so that the contributions are close to equal, but not equal. SSKB is of the view that 95.67% of the costs should be distributed equally. Linkhorn suggests 66.68% should be shared equally.
SSKB sets out a useful table of the suggested changes:
Lot no Current entitlement (expressed on an aggregate scale of 10000) SSKB suggestion Linkhorn suggestion 1 40 206 152 2 40 205 151 3 40 205 151 4 40 205 151 5 40 205 152 6 162 211 183 7 243 217 237 8 121 208 192 9 121 208 192 10 202 212 215 11 243 217 239 12 121 208 191 13 121 208 191 14 243 214 222 15 243 214 222 16 243 213 219 17 243 217 239 18 162 210 200 19 283 216 231 20 283 216 231 21 243 213 218 22 243 213 220 23 243 214 222 24 243 213 218 25 243 213 220 26 162 210 201 27 283 216 231 28 283 216 231 29 243 213 219 30 243 213 218 31 243 214 223 32 243 213 219 33 243 213 219 34 162 210 200 35 283 216 231 36 283 216 231 37 243 213 218 38 243 213 220 39 243 214 222 40 243 213 219 41 243 213 218 42 364 222 266 43 364 226 284 44 243 213 218 45 243 213 220 46 243 213 218 47 202 212 210
The differences between the two suggested adjustments are summarised in the joint report. Linkhorn says that things such as the pool, billiard room, BBQ, sauna, TV aerial, lifts, roof deck and “residential” foyers should be allocated to the residential lots only as they are primarily for the benefit of the residential occupants. SSKB says that commercial lot owners have access to these areas/facilities and do, in fact, use some of them. That commercial owners choose not to use these facilities does not mean they should be excused from contributing to their maintenance.
Clause 31 of the Management Statement provides that every occupant has a right of access over any common property in the plan of subdivision. It is clear, therefore, that the commercial owners’ rights do extend to the recreational facilities. It is not logical to exempt the commercial owners from liability for a portion of those expenses simply because they do not use them. Some residential lot owners do not use those facilities either. A contribution schedule based on a principle of “user pays” does not, and cannot, work. I accept SSKB’s distribution of those costs on an equal allocation.
That leaves air conditioning maintenance and replacement and the building management statement contributions. As to the air conditioning, Linkhorn says it should be equal whereas SSKB says it should be determined according to the area of the lot because the physical size of the lot can be used to determine usage. It appears, however, that the common property is air conditioned continuously throughout the day. There are large areas of common property that require air conditioning. It would be unjust to require owners of the larger premises to bear a larger proportion of the air conditioning maintenance without giving consideration to the impact of the common property. There is no evidence before the tribunal to enable a consideration of that impact.
SSKB says that the building management statement contributions should be apportioned equally. Linkhorn has apportioned 50% of those costs equally and 50% distributed according to area. The justification for this appears at page 14 of the report: “(where we have found that any apartment should require or has incurred an additional costs or special items for maintaining the Scheme’ common property or services) we have apportioned those specific additional costs to the particular lot accordingly.” There is no evidence before the tribunal as to what “additional costs” or “special items” were considered but the concept does raise some concern. It could not, for example, be contemplated that roof repairs should be allocated to a lot owner on the top floor as a special item – because the roof leaked into the lot. I prefer the assessment by SSKB.
The lot owners made submissions about the proposed adjustment. One lot owner proposed that the “complexities”, practical usage, “nature, features and characteristics of the …lots including their variable usage of common assets and services” should be considered. Chesterman J has already made it clear in Fischer that the tribunal cannot consider “amenities, value or history”. That the lot entitlement scheme has existed for 20 years, what the developer may have contemplated or how people actually live in the building is not relevant to my determination. I have already commented on the practical effect of allowing a consideration of usage to influence the adjustment of the schedule.
The owners of another lot ague that they have direct access to Ann Street so do not need to use the lifts. They do not have a car space and are of the view that the maintenance and servicing costs of the air conditioning has not been taken into account. Clearly, the air conditioning maintenance costs have been taken into account, albeit imperfectly. The body corporate points out that the direct access presently enjoyed by the owners is not as of right, and could be withdrawn at any time. In any event, as I have already acknowledged, the owners have access to other areas of the building via the lifts. The owners are not excused from contributing to the costs of the lifts simply because they choose not to use those facilities. As to car parking, the body corporate points out that information in relation to the car parks was provided to both Linkhorn and SSKB. SSKB’s working papers, in fact, list those lots that have allocated car spaces. The car park entitlement for this lot is accurately recorded.
The commercial lot owners made a joint submission. Not surprisingly, they object to contributing to the “residential” aspects of the building: - the foyers, lifts, pool, sauna, gym etc. I have already determined this point.
They also object to contributing to the cost of security and car park maintenance and access because none of the commercial tenants have car parks. The body corporate points out that security is provided for the building as a whole, not just the car park and that the commercial tenants can, and do, accept deliveries, access rubbish bins and storage areas through the car park. I am satisfied that the commercial tenants should contribute equally to these facilities.
Finally, the commercial tenants say that the schedule should be adjusted to reflect the fact that they only require air conditioning during trading hours, while the residential lots have access to air conditioning at all times. This is another argument about usage. All lots have access to air conditioning. No doubt some residential lot owners will say that they hardly ever use the air conditioning because they are rarely home. Whether or not lot owners use air conditioning, and to what extent, cannot be a basis for adjusting the lot entitlement.
I find that the lot entitlement schedule should be adjusted generally in accordance with the SSKB draft except that air conditioning repairs, maintenance and replacement should be calculated equally with reference to the common property air conditioning requirements and proportionally to the lot area for the balance.
I direct that the body corporate file and serve an amended schedule reflecting paragraph 20 by 4.00 pm on 21 April 2010.
I order that the contribution schedule lot entitlements for the Body Corporate for the Residences CTS 27131 be adjusted in accordance with the amended schedule.
As required by section 48(10) of the Act, once the tribunal orders an adjustment of a lot entitlement schedule the body corporate, must “as quickly as practicable” lodge a request to record a new Community Management Statement reflecting the adjustment ordered.
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