Sotera v Body Corporate for Pepper Hill

[2010] QCAT 201

CITATION: Sotera v Body Corporate for Pepper Hill [2010] QCAT 201

PARTIES:	Mrs Wendy Sotera
v
Body Corporate for Pepper Hill CTS 19507

APPLICATION NUMBER:   KL070-09      

MATTER TYPE: Other civil disputes matters

HEARING DATE:	Determined on the papers
HEARD AT:	Brisbane
DECISION OF:	Kenneth Barlow
DELIVERED ON:	7 May 2010
DELIVERED AT:	Brisbane
ORDERS MADE:	The contribution schedule of Pepper Hill Community Title Scheme 19507 be adjusted so that the contribution schedule lot entitlement for each lot is “1”.
CATCHWORDS:	Body Corporate and Community Management – Adjustment of contribution lot entitlement schedule – Whether any matters make it just and equitable that lot entitlements not be equal - Body Corporate and Community Management Act 1997 (Qld), ss48, 49

APPEARANCES and REPRESENTATION (if any):

Decision made on the papers

REASONS FOR DECISION

1. This is an application, pursuant to section 48 of the Body Corporate and Community Management Act 1997 (Qld) (the “Act”), for an adjustment to the contribution lot entitlement schedule for the respondent, the Body Corporate for Pepper Hill CTS 19507.

1. The applicant seeks an order adjusting the contribution schedule to make the respective lot entitlements equal. 

1. Pepper Hill is a community title scheme (No 19507) in Molendinar.  It comprises 92 lots.  The applicant, Wendy Sotera, is the owner of Lot 1.

1. The only submissions to the tribunal have been made by the applicant herself.  The committee of the body corporate has informed the tribunal that the body corporate takes the position that it neither supports nor opposes the application.  No owner of any other lot in the scheme has indicated an interest in the application. 

Evidence

1. The only evidence before the Tribunal comprises the statements in the application and the documents attached to it.  Those documents and the statement demonstrate that, in the existing contribution schedule, 3 lots (including the applicant’s lot) have a lot contribution entitlement of 6, 21 lots have contribution entitlements of 5 and 68 lots have entitlements of 4. 

1. Pepper Hill is a standard format plan.  According to the applicant, the body corporate does not incur any greater expenditure in relation to the lots with contribution entitlements of 5 and 6 than it does for other lots, for any “line item” in the administrative fund budget or the sinking fund budget.  Copies of the current budgets for those funds are attached to the application. 

1. The administrative fund budget shows expenses in the following categories:  audit fees, bank charges, caretaker fees, cleaning, community power, fire protection, fees and permits, gardening, insurance, pest control, postage and stationery, secretarial fees, taxation and GST, telephone, fax and email, general meetings and other expenses and several items of repairs and maintenance, including plumbing, swimming pool, rubbish removal and plant and equipment.

1. The sinking fund budget contains provision for expenses in the following categories:  gardening and landscaping, income tax, tax instalments, water tank, driveway, paths and letterboxes, fence replacements, painting and surface finishes, major plumbing works, roofing and guttering, TV antenna replacements, plant and equipment, security grates, recreational facility and building maintenance. 

1. The application also demonstrates that the contribution schedule is used to apportion, between the lots, the charges for water and waste water services provided by the Gold Coast City Council.  There is no reason to believe that the lots with contribution entitlements of 5 and 6 consume any more of those services than the other lots.

The law

1. Section 48 of the Act provides that the owner of a lot in a community title scheme may apply for an order for the adjustment of a lot entitlement schedule. Subsection 48(5) relevantly provides that an order about the contribution schedule must be consistent with the principle stated in subsection 6. Subsection 6 provides that, for the contribution schedule, 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.

1. The principle stated in subsection 48(6) is consistent with the principle set out in subsection 46(7), which applies to schemes for which development approval is given after the commencement of that subsection: namely, that the respective lot entitlements must be equal except to the extent to which it is just and equitable in the circumstances for them not to be equal. Section 48 in effect allows the owner of a lot in a community title scheme that was established before the commencement of subsection 46(7) to apply for adjustment of a lot entitlement schedule so that it is consistent with the principle applying to more recently created schemes. (The Pepper Hill scheme was created before the commencement of subs.46(7).)

1. Section 49 of the Act relevantly provides that the Tribunal, in deciding whether it is just and equitable in the circumstances for the respective lot entitlements not to be equal, may have regard to:

(a)how the community title 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,

but the Tribunal is not limited to considering those matters.[1]

[1]         This is a summary, in particular, of subsections 49(2), (3) and (4). 

1. The construction of section 48 was considered by the Court of Appeal in Fischer v Body Corporate for Centre Point Community Title Scheme 7779.[2]  Chesterman J (with whom McPherson JA and Atkinson J agreed) relevantly said the following:

   [2] [2004] QCA 214.

“[26] Although the Act gives no clear indication one way or the other, the preferable view is that a contribution schedule should provide for equal contributions by apartment owners, except insofar as some apartments can be shown to give rise to particular costs to the Body Corporate which other apartments do not. 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. More general considerations of amenity, value or history are to be disregarded. What is at issue is the ‘equitable’ distribution of the costs.

…

[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 amenity.

[31]Secondly, the nature of a contribution lot entitlement schedule itself suggests that the allocation of lot entitlements is to be made on the basis of the impact that individual apartments make upon the costs of operating and running a community title scheme.  Contribution lot entitlements determine the apartment’s share of the outgoings.  The starting point is that the entitlements should be equal.  A departure from that principle is allowable only where it is just, or fair, to recognise inequality.  The departure must take as its reference point the proposition, from which it departs, that apartment owners should  contribute equally to the costs of the building.  The focus of the enquiry is the extent to which an apartment unequally causes costs to the body corporate. 

…

[33]Accordingly I would construe s 49 of the Act, and in particular subsection (4), as meaning that those identified matters to which a court may have regard are to be regarded only to the extent, if any, that they affect the cost of operating a community titles scheme.”

Consideration of this case

1. It is not entirely clear from the application, but I infer that each of the lots the subject of this scheme is used for residential purposes. 

1. The types of expense indicated by the administrative fund budget and the sinking fund budget attached to the application indicate that there is no unusual expense that is incurred by the body corporate in respect of any particular lot. 

1. In these circumstances, there is no evidence that would justify a finding that it is just and equitable that the respective lot entitlements not be equal.

1. In the circumstances, the appropriate order is that the contribution schedule for this scheme be adjusted so that the contribution lot entitlement for each lot is “1”.  I shall make such an order.