Beard & Patterson v Body Corporate for Boca Raton East [2010] QCAT 590

CITATION: Beard & Patterson v Body Corporate for Boca Raton East [2010] QCAT 590 PARTIES: Ms Deborah Beard Mrs Jennifer Patterson v Body Corporate for Boca Raton East Community Tiles Scheme 22486 APPLICATION NUMBER: OCL156-10 MATTER TYPE: Other civil dispute matters HEARING DATE: 18 November 2010 HEARD AT: Brisbane DECISION OF: Ms Anne Forbes DELIVERED ON: 22 November 2010 DELIVERED AT: Brisbane ORDERS MADE: 1. That Contribution Lot Entitlements for the Body Corporate of Boca Raton East Community Titles Scheme 22486 be adjusted in accordance with the recommendations in the report of Leary & Partners Pty Ltd of 26 July 2010. CATCHWORDS : Body Corporate and Community Management Act 1997 ss 46,47 - Community titles scheme –– application for adjustment of contribution schedule lot entitlements – townhouse development with both GTP and BFP lots – contribution schedule having equal entitlements – cost impact on body corporate - budget of body corporate having substantially greater maintenance responsibilities to BFP lots - just and equitable for contributions to be unequal – adjustment of contribution schedule ordered APPEARANCES and REPRESENTATION (if any): No appearances decision on the papers. -- 1 of 5 -- REASONS FOR DECISION [1] The Applicants are owners of lots 5 and 29 respectively in the Boca Raton East Community Titles Scheme 22486 [“the Scheme”], a townhouse development situated at Reedy Creek. On 5 October 2010 they lodged an application for the adjustment of the contribution schedule lot entitlements [“the CSLE”] of the 87 lots in the scheme. The application is brought under the Body Corporate and Community Management Act 1997 (“the BCCMA”). [2] The Respondent Body Corporate commissioned a report into the present CSLE Scheme from Leary & Partners Pty Ltd, a company having a particular expertise in assessing costs incurred by bodies corporate, and the allocation of costs between owners in community title schemes. The report of Ms Kaylene Arcoll, for Leary and Partners, is dated 26 July 2010. [3] The Respondent’s administrator has informed the Tribunal that it does not intend to make a submission, and no submissions have been received from owners other than the Applicants. The Applicants seek orders that a new contribution lot schedule be prepared and registered according to a schedule recommended by Ms Arcoll. The Arcoll Report. [4] Baca Raton East is a townhouse development containing, apart from the dwellings, two swimming pools with associated structures, roads, landscaping and fences. There are 51 Group Title Plan [“GTP”] townhouse lots and 36 Building Format Plan [“BFP”] lots. Such an arrangement is uncommon, and Ms Arcoll has carefully explained its history and its implications for the benefit of lot owners unfamiliar with the contribution entitlement system. [5] Her explanation may be summarised as follows: The lots in the Scheme were registered in six stages, the first of which coincided with the coming into force of the BCCMA in 1997. The developer took advantage of a transitional provision which allowed it to register the survey plan used for off-the-plan sales prior to the new Act. [6] Before the BCCMA a strata scheme had only a single entitlement schedule. The first four stages of the Scheme were registered using the GTP format plans and using the entitlement schedule for each lot devised under those plans as the basis for both the contribution and interest entitlement schedules introduced by the BCCMA. The entitlement schedules were based on land values as originally calculated by the developer. [7] The GTP format was replaced under the BCCMA regime by the Standard Format Plan [“the SFP”] but for reasons unknown, the developer registered the last two stages of the Scheme as BFP style lots rather than SFP lots. [8] The difference between BFP lots on one hand, and GTP lots on the other, affects the contribution entitlement schedules of the lots in the Scheme. The body corporate of Boca Raton has a far more extensive maintenance responsibility for BFP lots than for the GTP lots, resulting in significantly OCL156-10 / Page 2 of 5 -- 2 of 5 -- OCL156-10 / Page 3 of 5 different expenditures on those respective categories in the body corporate budget. [9] For example, the body corporate must maintain the infrastructure of a utility such as water reticulation, electricity lines and guttering within the boundary of a GTP lot if the service is carried across that lot to another lot or lots. The body corporate has no responsibility for maintaining any other aspect of a dwelling on a GTP lot. [10] In contrast, the body corporate has to maintain the outside of buildings on BFP lots, namely, painting the exterior walls, and maintaining the roofing, gutters and downpipes.1 Ms Arcoll says, and I accept, that this difference was not taken into account when the original entitlements were calculated. [11] Table 5 of the Arcoll Report is a cost assessment contrasting the impact of BFP lots and GTP lots respectively on the body corporate budget under the current lot entitlement schedule which allocates all costs equally. Lots 56 to 91 are BFP lots. The table shows that in a given period BFP lots cost the body corporate budget between $908 and $1,112 (rounded off) more to maintain than GTP lots. [12] Table 5 also shows a recalculated contribution schedule of lot entitlements recommended by Ms Arcoll. She recognises by reference to the BCCM Act the basis for lots to contribute to Body Corporate costs: “in a proportion equivalent to the share of the costs that are : (a) incurred by the Body Corporate because of their particular lot, or (b) benefitting the lot.” [13] The recommended contribution schedule proposes an increase in the current number of contribution lot entitlements from 8,700 to 9991. The proposed lot entitlements for Lots 2 to 55 (GTP) are 94. It is proposed that lots 56 to 91 (BFP) have entitlements between 139 and 149. Legislation and Principles [14] The BCCMA provides principles by which the maintenance costs of a development with a community title scheme, such as Bota Raton, are met by contributions of the owners of the lots. Their proportionate contributions are to be set out in a document known as a lot entitlement schedule: s 47. Lot owners may apply to this Tribunal for an adjustment of a lot entitlement schedule: section 48. The governing principle is that 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”: s 48(6). Criteria are provided for determining just and equitable circumstances: s 49(4). These include but are not limited to: "(a) how the community titles scheme is structured; and (b) the nature, features and characteristics of the lots included in the scheme” 1 See Arcoll Report at 6.2.1 and 6.2.2 and Part G, fact sheet from Dept of Justice & Attorney General. -- 3 of 5 -- [15] Guidance in the interpretation of section 49(4) is afforded by the Full Court of the Supreme Court in Fischer & Ors v Body Corporate for Centrepoint Community title Scheme 7779 [2004] QCA 214: • The starting point is that the entitlements should be equal; • A departure from the principle is allowable where it is just or fair to recognise inequality; • The allocation of lot entitlements is to be made on the basis of the impact that individual apartments make upon the cost of operating a community titles scheme; and • The matters referred to above to which the tribunal may have regard may be regarded only to the extent that they affect the cost of operating the community titles scheme. [16] The lot entitlements in the current contribution schedule are equal. Unusually this Application asks for orders to replace a schedule in which body corporate costs are allocated equally, with one in which costs are allocated unequally. The current scheme does not reflect what Ms Arcoll calls “the ‘cost impact’ based principle of section 46(7)” and therefore does not do justice to the owners of the 51 GTP lots. [17] I accept the very detailed and careful calculations of Ms Arcoll which analyse the impact of each lot expressed as a percentage of the total costs of operating the scheme. In my view justice and equity would not be served by preserving the current schedule which distributes the operating costs equally between the lot holders, but by adjusting the schedules to reflect the Table 5 recommendations in the Arcoll report. The relevant part of that table is appended to this decision as Schedule A. ORDER [18] That Contribution Lot Entitlements for the Body Corporate of Boca Raton East Community Titles Scheme 22486 be adjusted in accordance with the recommendations in the report of Leary & Partners Pty Ltd of 26 July 2010. OCL156-10 / Page 4 of 5 -- 4 of 5 -- SCHEDULE A Lot number Contribution lot entitlement 2 94 3 94 4 94 5 94 6 94 7 94 8 94 9 94 10 94 11 94 12 94 13 94 14 94 15 94 16 94 17 94 18 94 19 94 20 94 21 94 22 94 23 94 24 94 25 94 26 94 27 94 28 94 29 94 30 94 32 94 33 94 34 94 35 94 36 94 37 94 38 94 39 94 40 94 41 94 42 94 43 94 44 94 45 94 46 94 47 94 48 94 49 94 50 94 51 94 52 94 53 94 54 94 55 94 56 139 57 147 58 139 59 149 60 146 61 139 62 149 63 143 64 149 65 139 66 143 67 143 68 139 69 149 70 146 71 149 72 139 73 139 74 139 75 139 76 139 77 146 78 149 79 136 80 146 81 146 82 149 83 149 84 149 85 149 86 146 87 149 88 149 89 146 90 146 91 139 -- 5 of 5 --