Body Corporate for Anchorage One CTS 35311 v Huang [2025] QCA 84

SUPREME COURT OF QUEENSLAND CITATION: Body Corporate for Anchorage One CTS 35311 v Huang [2025] QCA 84 PARTIES: BODY CORPORATE FOR ANCHORAGE ONE CTS 35311 (applicant) v YUE HUANG (respondent) FILE NO/S: Appeal No 15261 of 2024 QCAT No 35 of 2022 DIVISION: Court of Appeal PROCEEDING: Application for Leave Queensland Civil and Administrative Tribunal Act ORIGINATING COURT: Queensland Civil and Administrative Tribunal at Brisbane – [2024] QCAT 381 (Judicial Member McGill SC) DELIVERED ON: 27 May 2025 DELIVERED AT: Brisbane HEARING DATE: 3 April 2025 JUDGES: Flanagan and Bradley JJA and Freeburn J ORDERS: 1. Leave to appeal is granted limited to grounds 1 and 8 of the Notice of Appeal. 2. Appeal dismissed with costs. CATCHWORDS: REAL PROPERTY – STRATA AND RELATED TITLES – VARIATION, TERMINATION AND RENEWAL – OTHER MATTERS – where the applicant is a body corporate – where the respondent is the owner of the only commercial lot in the scheme – where the respondent commenced proceedings in QCAT for an adjustment of the lot entitlements under Body Corporate and Community Management Act 1997 – where the judicial member held the respondent’s application to adjust the lot entitlements could proceed – where the body corporate appeals that decision – where the applicant alleges the judicial member made errors of law and fact – whether the applicant’s appeal and leave to appeal should be allowed Body Corporate and Community Management Act 1997 (Qld), s 47B, sch 6 Blatch v Archer (1774) 1 Cowp 63; [1774] EngR 2, applied Robertson v Airstrike Industrial Pty Ltd [2016] QCA 104, cited -- 1 of 8 -- 2 COUNSEL: J P Hastie for the applicant The respondent appeared on her own behalf SOLICITORS: Kennedys Law for the applicant The respondent appeared on her own behalf [1] FLANAGAN JA: I agree with Freeburn J. [2] BRADLEY JA: I agree with the reasons of Freeburn J and with the orders his Honour proposes. [3] FREEBURN J: The respondent, Ms Huang, owns Lot 17 on the Anchorage One community title scheme at Palmer Street in Townsville. Lot 17 is the only commercial lot. A restaurant operates from Lot 17. The remaining 16 lots are residential units, most of which are leased to a company that operates an apartment hotel on the site. The appellant is the body corporate for the scheme. [4] The scheme was registered in 2006. Ms Huang did not purchase Lot 17 until 2014. [5] When the scheme was registered, each lot was allocated 12 ‘lot entitlements’ except for lot 17 which was allocated 10 ‘lot entitlements’. The effect of that is that Lot 17’s contributions to the expenses of the body corporate are slightly less than the 16 residential units. The explanation for that is, because Lot 17 operates as a restaurant, it ought not to have to contribute to the expenses of the lift and pool facilities. [6] In 2011, the Body Corporate and Community Management Act 1997 (Qld) (the Act) was amended to add principles designed to be applied when deciding the contribution schedule lot entitlements for lots in a community title scheme.1 But that change to the legislation was not made retrospective. [7] In 2022, Ms Huang commenced proceedings in QCAT. She sought an adjustment of the lot entitlements for Lot 17 under s 47B of the Act. On 11 October 2024, a judicial member of QCAT decided that Ms Huang satisfied the threshold requirements of s 47B(1) of the Act and that her application to adjust the lot entitlements could proceed.2 [8] The body corporate appeals that decision. Appeals to this court against the decisions of judicial members of QCAT may only be made on a question of law. Questions of fact, or mixed law and fact, are only possible with the court’s leave.3 [9] The appeal consists of nine grounds. The appellant does not press grounds 2 and 6. The remaining grounds can be categorised as follows: (a) grounds 1 and 8 concern alleged errors of law; and (b) grounds 3 to 5, 7 and 9 concern alleged errors of fact. Section 47B(1) [10] This appeal turns on the proper interpretation and application of s 47B(1) of the Act. That section is in these terms: 1 See s 46A of the Body Corporate and Community Management Act 1997 (Qld). 2 Huang v Body Corporate for Anchorage One CTS 35311 [2024] QCAT 381 (Judicial Member D J McGill SC). 3 Section 149(2) and 3(b) of the Body Corporate and Community Management Act 1997 (Qld). -- 2 of 8 -- 3 “This section applies if— (a) a community titles scheme is affected by a material change that has happened since the last time the contribution schedule lot entitlements for the lots included in the scheme were decided; and (b) the owner of a lot included in the scheme believes an adjustment of the contribution schedule for the scheme is necessary because of the material change.” [11] Section 46(4), which deals with lot entitlements, defines the term “contribution schedule lot entitlement” to mean the number allocated to the lot in the contribution schedule. Section 46(2) defines “contribution schedule” to mean the schedule in a community management statement containing each lot’s contribution schedule lot entitlement. Generally, the contribution schedule lot entitlement for a lot is the basis for calculating the lot owner’s share of amount levied by the body corporate: s 47(2)(a). [12] There was no dispute that s 47B(1)(b) was satisfied in that Ms Huang is an owner of a lot included in the scheme and she has the necessary belief. The key issue is whether under s 47B(1)(a), the scheme was affected by a material change that has happened since the last time the lot entitlements were decided – which in this case was when the scheme was registered in May 2006. [13] The phrase “material change” is defined by Schedule 6 of the Act as follows: “1. A material change, for a community titles scheme, is a change that has, or may have, a significant effect on the contribution schedule lot entitlements for the lots included in the scheme, including, for example— (a) the addition of 1 or more lots, other than by a subdivision not involving the addition of a subsidiary scheme; or (b) the removal of 1 or more lots, other than by an amalgamation. 2. However, if a community titles scheme is intended to be developed progressively, a change arising from development proposed in the community management statement for the scheme is not a material change for the scheme.” [14] There is an oddity about the expression “a significant effect on the contribution schedule lot entitlements for the lots”. On one view, to be material, the change must be a change to the contribution schedule itself.4 That argument was rightly rejected by the learned judicial member. Despite its slightly clumsy language, the evident purpose is to identify as material those changes in the effect of the contribution schedule because of changes implemented since the last time the schedule was adjusted.5 [15] As the judicial member pointed out, the intention of the legislation is to limit the ability of lot owners to adjust contribution schedule allotments to those circumstances where, since the last (or first) apportionment of lot entitlement in the contribution 4 Huang (supra) at [8]. 5 Huang (supra) at [10]. -- 3 of 8 -- 4 schedule, there have been changes which have, or will have, a significant effect on the contribution regime.6 [16] Of course, what constitutes a material change depends on the particular circumstances of the community title scheme. Changes will not be sufficient unless they have a significant effect on the contribution regime. Grounds 1 and 8: Alleged Errors of Law [17] The body corporate contended that the judicial member erred in his approach to the interpretation and application of s 47B(1) of the Act. [18] The body corporate argued that, firstly, contrary to the view taken by the judicial member, the material change must be a change that has a degree of permanence, and the change must concern: (a) the structure of the community title scheme; (b) the nature and characteristics of the lots in the scheme; or (c) the purpose for which the lot was used. [19] That argument must be rejected. It would involve, in effect, re-writing s 47B(1) so as to add three alternative requirements. Applying the ordinary and literal meaning, the subsection is not so constrained. [20] Secondly, the body corporate argued that a material change could not comprise an alteration in the body corporate’s expenditure. Again, that argument must be rejected. The definition of ‘material change’ is not limited to non-budgetary issues. The concept of a ‘material change’ is not so restricted. [21] Thirdly, the body corporate pointed out that a body corporate’s expenditures can, and do, change from year to year. That much is true. But contrary to the body corporate’s submissions, that does not produce the absurd consequence that a material change occurs every time a body corporate’s expenditures change, and the body corporate is thereby exposed to multiple attempts to alter the contribution schedule. [22] That consequence does not arise because any attempt to alter the contribution schedule must overcome the threshold requirement that it has a ‘significant effect’. Of course, for example, a dramatic increase in insurance premiums will not ordinarily overcome the threshold requirement because the pain of that increase will be shared among the lot holders rateably. [23] It is important to acknowledge that the judicial member did not approach the case on the basis that any change to the body corporate’s expenditure constituted a ‘material change’. The judicial member correctly approached the changes in expenditure by first examining whether each category of expense was itself capable of comprising a material change and then, by determining whether, in aggregate, the changes to expenditure were a material change. [24] That was a rational approach because a change in one category of expenses might be offset by a reduction in another category of expenses, or the increases might be attributable to inflation, market volatility,7 or other factors. When the Act speaks of a ‘material change’ what is required is something that has a significant effect. 6 Huang (supra) at [28], [29]. 7 One category, plumbing, was described by the judicial member as the sort of expenditure that could easily be “lumpy”: Huang (supra) at [52]. -- 4 of 8 -- 5 [25] Fourthly, the body corporate argued that the assessment of a material change necessarily involved a ‘before and after’ comparison. The argument was that what was required was evidence of the state of affairs as at May 2006, when the scheme was registered, as against the present situation. Whilst the concept of a change necessarily involves an assessment of what has altered from one point in time to another, care must be taken not to unduly confine the comparison. Section 47B(1)(a) merely requires a material change that has happened since the last time the lot entitlements were determined. [26] This situation can be used as an example. Here, the lot entitlements were first determined in May 2006. It is conceivable that a ‘material change’ might occur gradually between 2006 and 2025 resulting in one or more lot holder bearing an unfair burden of the body corporate’s expenses. Or a ‘material change’ might equally occur because of, say, dramatic events that occurred in 2011. The section merely requires a material change some time after the last striking of the lot entitlements. [27] There is no error in the judicial member’s interpretation of s 47B(1). The Other Grounds: Errors of Fact [28] The body corporate’s other grounds of appeal challenge the judicial member’s findings of fact that four categories of expenses constitute a ‘material change’. Those categories are: (a) pest control; (b) provision of pay television services; (c) fire services; and (d) intercom/security.8 [29] The body corporate contends that those findings are unsupported by any evidence. [30] If in fact the judicial member’s findings of fact were not supported by any evidence at all, then that qualifies as a question of law.9 [31] The problem is that, in each case, the body corporate is unable to establish an absence of evidence. Indeed, the body corporate’s submissions illustrate the problem by, for example, complaining that certain evidence provides “fairly slender support” for the judicial member’s conclusion.10 Slender or slight evidence does not qualify as no evidence. Pest Control Services [32] The first category was pest control services. The evidence before the judicial member was that: (a) in 2007, a general meeting of the body corporate approved the payment of pest control costs for the whole of the property, including the residential lots, but excluding Lot 17; 8 Other categories rejected by the judicial member as not capable of constituting material changes were pool maintenance, caretaker expenses, electricity, plumbing, an extension to Lot 1, power for a restaurant sign and a reduction in the restaurant’s seating area. 9 Robertson v Airstrike Industrial Pty Ltd [2016] QCA 104 at [37]-[39] citing Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390. 10 Body corporate’s submissions at [71]. -- 5 of 8 -- 6 (b) the body corporate’s annual financial statements for the 2021/22 year showed expenditure of $4,269 for pest control services; (c) the annual financial statements for the following year showed the payment of $5,576 for pest control services;11 (d) none of the body corporate’s financial statements showed that the lot owners were reimbursing the body corporate for the pest control services; (e) an affidavit filed by the body corporate deposed that the current pest control treatment (in September 2023, after the proceedings were commenced) included Lot 17, but access to that lot was unavailable; (f) that affidavit said nothing about the pest control services prior to September 2023; (g) two of the invoices related to ‘external’ work and it could be inferred that the others (representing 64% of the costs) were for pest control within the residential units; (h) the initial budgeted cost for pest control in 2006 was $500; (i) Ms Huang deposed that she did not receive any benefit from various services, including pest control; (j) Ms Huang stated that the pest control services encompassed the residential units, and she does not benefit because Lot 17 always conducts its own pest control.12 [33] There was, therefore, a good body of evidence that supported the judicial member’s factual finding that the body corporate was paying this category of cost substantially for the benefit of the residential units, and to the exclusion of Lot 17, and that those costs were increasing. Pay Television Services [34] The judicial member found that pay television services were provided to the residential units, and not to Lot 17. His Honour was unable to determine when the provision of this service began but inferred it must have begun after May 2006. [35] The body corporate describes the evidence supporting those conclusions as “fairly slender support”. However, that is merely because the body corporate chose not to go into evidence about it. In any event, there was sufficient evidence, including Ms Huang’s evidence, that the pay television services are provided exclusively to the residential units. Fire Protection Services [36] In relation to fire protection services, there was sufficient evidence to support the judicial member’s conclusions that fire protection services had expanded largely to cover the residential lots. The evidence was that: 11 Ms Huang’s later affidavit exhibits the body corporate’s financial statements for 2013/14 show $2,320 as spent on pest control and $2,296 for 2014/15, and $3,050 for 2015/16, $2,202 for 2016/17, $2,788 for 2017/18, $4,677 for 2018/19, $4044 for 2019/20, $4,015 for 2020/21, $4,269 for 2021/22, and $5,576 for 2022/23. 12 All but the last two of these items are referred to in the judicial member’s reasons at [38]-[40]. The last two are included in Ms Huang’s affidavits before the judicial member. -- 6 of 8 -- 7 (a) unit 17 has its own fire protection costs and so most of the body corporate’s fire service charges were of no relevance to Lot 17; (b) in 2006/07 the budgeted amount for this expense was $1,200; (c) in the 2022/23 year the expenditure was $9,176; and (d) in 2019 there was a special levy (on all unitholders) to cover the fire protection requirements of the residential lots. [37] Ms Huang’s evidence was that the fire service expense of $9,176 comprised fire services for the residential units. She said the fire protection services had increased from about $1,800 to $9,176. None of that was contradicted. [38] Again, the body corporate chose not to lead evidence on the topic. The judicial member was right to say, in effect, little evidence in support of Ms Huang’s argument outweighs no evidence in support of the body corporate’s argument. Intercom/Security [39] The judicial member found that the body corporate incurred a cost of $1,650 for ‘intercom and security’ in the 2022/23 year. That was the first time the expense had appeared in the body corporate’s financial statements. It was not in the 2006/07 budget and so, the judicial member inferred, it was something new. Again, the body corporate chose not to go into evidence. [40] It is true that Ms Huang did not lead evidence as to what this expense related to, or that she obtained no benefit from the expense. [41] But the expense appears in the body corporate’s accounts. It can be inferred that it is a body corporate expense, and it is likely that Ms Huang knows nothing about it. [42] Of course, the principle in Blatch v Archer13 is that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. [43] Did the evidence support an inference that Ms Huang derived no benefit from the expense? The expense appeared in the body corporate’s list of expenses. They chose not to explain it in circumstances where there were other expenses (such as pest and fire services) that had little relevance to Lot 17 and Ms Huang. And, of course, they chose not to explain it in circumstances where the body corporate’s current chairperson swore a substantial affidavit. That affidavit, somewhat elliptically, said: “I have reviewed the Income and Expenditure Statement for the [body corporate] for [2022/23] and … believe all expenditure is required and necessary to maintain and upkeep the Complex.” [44] That broad, sweeping statement by the chairperson makes it clear that this body corporate expense, as with all the others, is required and necessary. But they distinctly declined to explain whether the expense benefits all of the lot owners or only some of the lot owners. [45] In those circumstances, the chairperson’s evidence supports an inference that the expense was incurred, at the least, for the benefit of all the unitholders. But given the 13 (1774) 1 Cowp 63, 65; 98 ER 969, 970. -- 7 of 8 -- 8 nature of the expense, it was more likely an expenditure for the benefit of only the residential units.14 [46] In any event, this is only one of the four categories, and it is the smallest of the expenses. This particular expense, even if excluded, does not substantially affect the aggregate of the expenses which the judicial member considered constituted a material change. Conclusions [47] Importantly, the judicial member’s finding of fact was that when considered together, the four categories of additional expenditure were significant, favoured the residential lots, and amounted to a material change. That ultimate finding of fact was open on the evidence. [48] I propose the following orders: 1. Leave to appeal is granted limited to grounds 1 and 8 of the Notice of Appeal. 2. Appeal dismissed with costs. 14 The drawing of inferences can be assisted by the failure of the party against whom they might be drawn to contradict them: Heydon, Cross on Evidence, LexisNexis at [3280]. -- 8 of 8 --