Sheppard v Body Corporate for Shafston Towers CTS 5660

[2010] QCAT 494

CITATION: Sheppard v Body Corporate for Shafston Towers CTS 5660 [2010] QCAT 494

PARTIES:	Linda Sheppard and Gregory James Sheppard (1st Applicant) Ian McCormick and Gillian McCormick (2nd Applicant) Jocelyn Cooney (3rd Applicant) Colette Chester (4th Applicant)
v
Body Corporate for Shafston Towers CTS 5660 (Respondent)

APPLICATION NUMBER:   OCL 103-10

MATTER TYPE: Other civil dispute matters

DECISION ON THE PAPERS OF: Ms Sharon Christensen

DELIVERED ON: 7 October 2010

DELIVERED AT:      Brisbane

ORDERS MADE:

1. The contribution schedule lot entitlement for Shafston Towers CTS 5660 be adjusted so that the respective contribution schedule lot entitlement for each lot are as set out in Annexure A.

2. The body corporate for Shafston Towers shall act as quickly as possible to 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
Community Management Act 1997-section 48,

49(4).

APPEARANCES and REPRESENTATION (if any):

The application was determined on the papers.

REASONS FOR DECISION

Introduction

1. 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.

2. The Shafston Towers CTS 5660 is situated at Kangaroo Point in Brisbane and consists of 33 residential lots over 11 levels and one level of basement carparking. The scheme was created under the Building Units and Group Titles Act 1980 by registration of BUP 9671 on 4 December 1989.

3. The scheme includes on the ground level an outdoor swimming pool, a full size tennis court, outdoor spa, BBQ areas and the main entrance foyer. Each lot is allocated at least 1 parking bay by an exclusive use bylaw in the basement of the building.

4. In June 2010, the Applicants requested the Respondent to adjust the contribution schedule lot entitlements for the scheme in accordance with a report prepared by Stewart Silver King & Burns (SSKB report).

5. In July 2010, the Respondent provided a report by Leary & Partners Pty Ltd (Leary Report) in response to the SSKB report.

6. By an application filed on 3 August 2010, the Applicants sought an adjustment to the contribution lot entitlement schedule for the Respondent body corporate pursuant to section 48 of the Body Corporate and Community Management Act 1997 on the basis proposed in the Leary Report.

7. The Leary Report proposes a fair and equitable adjustment of the contribution schedule lot entitlements, other than on an equal basis.

8. The current contribution schedule lot entitlements for the scheme are not equal. In the opinion of Ms Arkcoll, the author of the Leary Report the current contribution schedule lot entitlements appear to be affected by market value related factors such as area of the lot and its height in the building.

9. The Respondent filed a response to the application on 21 September 2010 also seeking a readjustment of the contribution lot entitlement schedule for the scheme on the basis of the Leary Report.

10. An order was made on 7 September 2010 by the Tribunal that the Application be determined on the papers.

Legislation

11. 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.

12. 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.

13. 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).

14. 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.

15. An application may be made by an owner of a lot to the Tribunal and by section 48(2) of the Body Corporate and Community Management Act 1997, the Body Corporate must be the Respondent to the application.

16. 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.”

17. 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.”

18. By section 49(6) the “relevant time” means the time the Applicant entered into a contract to buy the subject lot.

19. 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.”

20.  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

21. The Tribunal has been provided with a copy of the Leary Report dated 22 July 2010 from Ms Kaylene Arkcoll of Leary & Partners Pty Ltd and the SSKB report from Mr Martin Walsh dated 3 June 2010.

22. Both reports claim to be expert reports. Ms Arkcoll who prepared the Leary Report claims expertise in the preparation of reports for body corporate lot entitlement adjustment applications. Mr Martin Walsh the author of the SSKB report also claims expertise in the preparation of reports for lot entitlement adjustments. I accept that both Ms Arkcoll and Mr Walsh have appropriate expertise for this matter.

23. Despite some differences in approach both reports conclude that the current contribution schedule lot entitlements are not fair and equitable and recommend the adjustment of the existing contribution lot entitlements. The differences highlighted in the Leary Report give rise to only minimal differences in the suggested lot entitlements for the scheme. Neither report recommends that the contribution schedule lot entitlements be equal.

24. The differences between the reports are:

a.    Repair and maintenance of fire equipment on common property and smoke detectors within lots where allocated on the basis of the area of the lot by the SSKB report but equally under the Leary Report;

b.    Replacement of ventilation fans and ductwork in the basement is allocated on an area of the lot basis by the SSKB report but equally under the Leary Report;

c.    External painting was allocated by the SSKB report on the basis of the area of the lot and exclusive use area. The Leary Report argues that the area of the lot is inappropriate as the measure of the cost burden to the body corporate of the painting of the building, which includes common areas as well as the individual lots. A quantity based allocation is more appropriate in order to distinguish between the painting of the lots (shared differentially according to quantity) and the common areas (to be shared equally). The Leary Report ultimately concludes that ‘in their experience’ given the cost of the painting and the small differences in contribution calculated on the basis of area of the lot (at the most a difference of $640), an audit on the basis of quantity is not warranted and the allocation on the basis of area was ultimately adopted.

d.    Repair and replacement of balustrades was allocated by the SSKB report on the basis of the area of the lot. The Leary Report argues on the same basis as the external painting that a quantity based allocation was the preferred method.

Findings

25. The Applicants and the Respondent have both proposed a lot entitlement adjustment on the basis of the Leary Report.

26. I have considered the points raised in the Leary Report concerning the allocations of costs and the factors bearing on the same. I am of the view that the methodology accords with the decision of Chesterman J in Fischer & Ors v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214 and with section 48 of the BCCM Act.

27. The differences between the Leary and SSKB reports do not result in any material differences in the just and equitable adjustment of the contribution lot entitlements. In light of the parties agreement and there being no discernible mistake in the methodology employed, the adjustment proposed by the Leary Report should be accepted.

Conclusions

28. 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.

29. I also accept that the level of inequality as between the lots as currently reflected in the contribution schedule is not just and equitable.

30. I find that the apportionment given in the Leary Report is just and equitable.

Orders

31. I order that the contribution schedule lot entitlement for Shafston Towers CTS 5660 be adjusted such that the contribution schedule lot entitlements are as set out in the table in Annexure A to these reasons.

32. As required by section 48 of the Body Corporate and Community Management Act 1997, the body corporate for Shafston Towers must as quickly as practicable lodge a request to record a new Community Management Statement reflecting the adjustment ordered.

33. I make no order as to costs.

Annexure A

Lot No.	Entitlement
1	29
2	29
3	28
4	29
5	28
6	28
7	28
8	28
9	28
10	28
11	28
12	28
13	28
14	28
15	28
16	28
17	29
18	29
19	29
20	29
21	29
22	29
23	29
24	53
25	29
26	31
27	29
28	31
29	29
30	31
31	29
32	56
33	32
Total	1004