Woods v Body Corporate for Pharos on Kirra Hills

[2010] QCAT 45

CITATION: Woods v Body Corporate for Pharos on Kirra Hills [2010] QCAT 45

PARTIES:   Kerrin John Woods and Faye Leonie Woods

v

Body Corporate for Pharos on Kirra Hills Community Titles Scheme 37529

APPLICATION NUMBER:            KL061-09

MATTER TYPE:   Other Civil Disputes matters

HEARING DATE:   The Application was determined on the Papers

HEARD AT:   Brisbane

DECISION OF:   Catherine Heyworth-Smith

DELIVERED ON:   22 February 2010

DELIVERED AT:   Brisbane

ORDERS MADE:   The Contribution Lot Entitlement Schedule of the Pharos on Kirra Hill Community Titles Scheme 37529 be adjusted such that the contribution lot entitlement for each lot is “1”.

There are no orders as to costs.

CATCHWORDS:  Body Corporate and Community Management – Adjustment of Contribution Lot Entitlement Schedule

APPEARANCES and REPRESENTATION (if any):

The Application was determined on the papers.

REASONS FOR DECISION

1. By an application filed on 13 October 2009 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. The Applicants are the owners of lot 5.

2. The Applicants have filed with their Application a copy of the Community Management Statement for the Pharos on Kirra Hill Community Titles Scheme This reveals that there are 5 lots in the scheme and, as the contribution lot entitlement schedule currently stands, lots 1 to 4 have been allocated a value of “1” and lot 5 has a value of “2”.  The Applicants seek orders making the lot entitlements equal across the 5 lots in the community titles scheme.

3. The Respondent filed a Defence on 23 October 2009.  It does no more than annex a document headed “Resolution passed outside a Committee Meeting” dated 16 October 2009.  The Motion in that Resolution is “That the Committee on behalf of the Body Corporate not contest the application for the change to Lot Entitlements submitted by KJ & FL Woods to the Commercial and Consumer Tribunal”.  The motion was carried with 3 votes in favour and none against.

4. The motion is unsigned and appears on the letterhead of Body Corporate Services Pty Ltd.  Given this, the fact that Body Corporate Services Pty Ltd prepared the Statement of Accounts filed with the Application and the lack of any other objection to the order sought, I will assume for the purposes of this Application that Body Corporate Services Pty Ltd has been authorised by the Respondent to communicate with the Tribunal in relation to this matter.  In that regard, I note a letter from Body Corporate Services Pty Ltd dated 16 October 2009 confirming that “The Committee are not contesting the application submitted by KJ & FL Woods for a change in Lot Entitlements”.

5. Whilst I will, in the circumstances, proceed to determine this matter on the papers, I note that it is unsatisfactory for a body corporate manager to communicate with the Tribunal on behalf of a respondent body corporate where there is no signed document indicating that the manager is authorised to do so.  In this instance, Body Corporate Services Pty Ltd have gone so far as to provide a minute of a motion of the committee of the Respondent indicating that it does not intend to contest the Application; but that minute is unsigned.  As I have said, I will determine this matter on the papers for the reasons mentioned above and because there has been no dissent to that course; but it ought not be assumed that it will always be appropriate to adopt such a course.

The Applicants’ Material

1. The Applicants have filed with their Application:

   (a)a statement of claim and submission;

   (b)the Request to Record a First Community Management Statement for the Pharos on Kirra Hill CTS 37529 and the said First Community Management Statement;

   (c)a statement of accounts for the period 1 October 2008 to 31 May 2009 prepared by Body Corporate Services Pty Ltd;

   (d)a sinking fund forecast by Solutions IE Pty Ltd dated 1 November 2007; and

   (e)a bundle of photographs.

2. I understand that the Applicants intend these documents to be evidence in their case and will have them marked, as a bundle, “exhibit 1”.

Legislation

1. Section 47 of the Body Corporate and Community Management Act 1997 establishes the general principles for the application of lot entitlements to a community titles scheme. A contribution schedule lot entitlement is the basis for calculating 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: section 47(2)(a). It is also the basis for calculating the value of the lot owner’s vote for voting on an ordinary resolution if a poll is conducted: section 47(2)(b).

2. Sections 48 and 49 establish the mechanism for the adjustment of a lot entitlement schedule. The body corporate must be the respondent to an application made by an owner of a lot for the adjustment of the contribution lot entitlement schedule: sec. 48(2). By section 48(5) the order that may be made by the Tribunal must be consistent with section 48(6). It is worth setting out that sub-section in full:

   48(6)    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.

3. 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. Section 49(4) does not limit the matters to which the Tribunal may have regard, but lists in particular:

   (a)how the community titles scheme is structured;

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

   (c)the purposes for which the lots are used.

4. Sub-section 49(5) provides as follows:

   49(5)    The specialist adjudicator or the [Tribunal] may note 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 or the subject lot or other lots included in the community titles scheme; or

   (b)       the purpose for which a lot entitlement is used.

5. In Fischer & Ors 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.

6. 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.

7. Finally, sec. 46(6) provides that “A lot entitlement must be a whole number, but must not be 0.”

8. It is against this legislative background that one turns to the case at hand.

Application of the Principles to this Case

1. The Community Management Statement for Pharos on Kirra Hill CTS is dated 2 August 2007.  It does not include a plan of each of the lots, but the Services Location Diagram indicates that the scheme is a 5 storey concrete rendered block.

2. The Applicants state that all 5 lots are of identical size.  They note that lots 1 and 5 have areas of exclusive use – lot 1 a ground level podium area and lot 5 the roof – but neither gives rise to additional expenditure by the Respondent.  The Applicants have listed a number of items of expenditure which might at first blush be considered to give rise to extra expenditure in respect of lot 5 but, in each instance, have explained why that is not the case.  Their submissions in this regard accord with the views depicted in the photographs filed with their Application.  In the absence of any evidence or submissions to the contrary, I will accept that lot 5 does not give rise to any additional expenditure above and beyond the cost of the services rendered to the other lots in the scheme.

3. No evidence has been placed before the Tribunal to indicate that there are any grounds upon which a decision might be made that it is just and equitable in this case that the entitlements should be other than equal.

4. Accordingly, I order that the Contribution Lot Entitlement Schedule of the Pharos on Kirra Hill Community Titles Scheme 37529 be adjusted such that the contribution lot entitlement for each lot is “1”.

5. I make no order as to costs.

Respondent’s Obligations

1. As required by section 48(10), once the Tribunal orders an adjustment of a lot entitlement schedule the Respondent, as the relevant Body Corporate, must “as quickly as practicable” lodge a request to record a new Community Management Statement reflecting the adjustment ordered.