Davis v Body Corporate for the Docks Apartments [2010] QCAT 266

CITATION: Davis v Body Corporate for the Docks Apartments [2010] QCAT 266 PARTIES: Mrs Marilyn Davis v Body Corporate for the Docks Apartments CTS 16485 APPLICATION NUMBER: OCL004-10 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Ms Sharon Christensen DELIVERED ON: 16 June 2010 DELIVERED AT: Brisbane ORDERS MADE: 1. That the contribution schedule lot entitlements for The Docks Apartments CTS 16485 be adjusted such that the entitlements be as follows: Lot No. Entitlement 1 62 2 63 3 63 4 62 5 63 6 63 7 62 8 62 9 62 10 63 11 61 12 61 13 64 14 64 15 63 16 63 1001 2. There are no orders as to costs. -- 1 of 8 -- 2 CATCHWORDS : Body Corporate and Community Management – adjustment of Contribution Schedule Lot Entitlements APPEARANCES and REPRESENTATION (if any): The application was determined on the papers. -- 2 of 8 -- 3 REASONS FOR DECISION Introduction 1. The Docks Apartments CTS 16485 consists of 16 residential lots over 5 levels and one level of carparking. The scheme was created under the Building Units and Group Titles Act 1980 by registration of BUP 103593 on 4 December 1995. 2. By an application filed on 14 January 2010 the Applicant 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. 3. The Applicant who is the owner of lot 14 at The Docks Apartments disputes that the contribution schedule lot entitlements for the scheme are just and equitable. 4. A response to the Application was received from the owners of lots 3 and 7 disputing the validity of the proposed contribution schedule lot entitlement changes. No defence was filed by the body corporate. 5. An order was made on 13 April 2010 by the Tribunal that the Application be determined on the papers. Legislation 6. 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. 7. 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. -- 3 of 8 -- 4 8. 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). 9. 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. 10. 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. 11. 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.” 12. 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.” 13. By section 49(6) the “relevant time” means the time the Applicant entered into a contract to buy the subject lot. 14. These provisions where considered by the Court of Appeal 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 -- 4 of 8 -- 5 history are to be disregarded. What is at issue is the “equitable” distribution of the costs.” 15. 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 16. The Tribunal has been provided with a copy of a report dated 16 December 2009 from Ms Kaylene Arkcoll of Leary & Partners Pty Ltd. The report claims to be an expert report and Ms Arkcoll claims expertise in the preparation of reports for body corporate lot entitlement adjustment applications. The report provides the following description of The Docks Apartments: “The scheme includes the following infrastructure: Level A (basement): The basement contains on-title use car spaces for each of the lots, lift landings, a refuse room, store rooms and plan rooms. Level B (ground): The level contains the main foyer and stair/lift lobby as well as four lots. Lots 1 to 4 are located on this level. Level C & D: Each of these levels contains a common lift lobby as well as 4 lots. Lots 5 to 12 are located on these levels. Level E: This level contains a common lift lobby, lots 15 and 16 as well as the lower level of lots 13 and 14. Level F: The level contains the upper level of lots 13 and 14. The external common property facilities for The Docks Apartments include: an external driveway and parking area, an outdoor swimming pool area and extensive pathways and landscaping.” 17. The report also explains the history of the scheme. The report notes that the scheme was created under the Building Units and Group Titles Act 1980. Lot entitlements under the legislation were totally within the discretion of the developer and were commonly influenced by market factors such as area of the unit, the number of bedrooms in the lot or the height of the lot from the ground. The current contribution schedule lot entitlements for the scheme are not equal. Ms Arkcoll was of the view that -- 5 of 8 -- 6 the lot entitlements for The Docks Apartments appeared to be influenced at least partly by floor area and bedroom number. 18. Ms Arkcoll formed the view after consideration of the allocation of costs associated with administering the body corporate and the allocation of costs associated with the services provided to the lots and factors bearing on the same, there ought be a variation to the contribution lot entitlement schedule in accordance with Part B of Table 5 to her report. 19. The Respondent did not file a defence to the application or provide evidence to contradict the report of Ms Arkcoll. 20. The owner of lot 3, Ms Kathleen Moon and the owners of lot 7, Mr Daryl Dalton and Mrs Michelle Dalton provided a response to the Body Corporate Manager, Strata Care Australia Pty Ltd which was forwarded to the Tribunal on 6 May 2010. This response disputes the Application for adjustment of the contribution schedule lot entitlements on the following bases: a. No proper evidentiary basis has been provided to the tribunal for an adjustment of the contribution schedule lot entitlements; b. No decision should be made by the Tribunal until after proposed legislative changes have been made; and c. The decision of the Tribunal should be adjourned until the applicant as body corporate secretary, causes a meeting of the body corporate to consider the matter further. 21. The owners of lots 3 and 7 did not purport to respond on behalf of the Respondent and did not seek to be joined as respondents to the Application. Findings 22. I have considered the points raised in Ms Arkcoll’s report concerning the allocations of costs and the factors bearing on the same. I am of the view that her 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 Act. Further, I am unable to discern any logical or analytical defects in Ms Arkcoll’s report. 23. I am not required under the Act to consider the matters put forward by the owners of lots 3 and 7, but if the matters were raised by the Respondent I would find the following: a. The Ms Arkcoll’s report provides a basis for the adjustment of the current contribution schedule lot entitlements in accordance with the decision in Fischer & Ors v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214; b. The owners of lots 3 and 7 failed to provide any evidence related to the factors in s 49(3) of the Act that would indicate the lot entitlements proposed by the Applicant are not just and equitable; -- 6 of 8 -- 7 c. The understanding of the lot owners at the time of purchase of the lots about the lot entitlements for the scheme and their purpose is not relevant to this Application (section 49(5)); and d. There was no valid reason put forward for the Tribunal’s decision to be postponed until the passing of proposed legislation or until the body corporate considers the matter further. Adequate time was given for other members of the body corporate to consider their position and provide alternative evidence. Conclusions 24. 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. 25. I also accept that the level of inequality as between the lots as currently reflected in the contribution schedule is not just and equitable. 26. I find that the apportionment given in Ms Arkcoll’s report is just and equitable. Orders 27. I order that the contribution schedule lot entitlement for The Docks Apartments CTS 16485 be adjusted such that the entitlements be as follows: Lot No. Entitlement 1 62 2 63 3 63 4 62 5 63 6 63 7 62 8 62 9 62 10 63 11 61 12 61 13 64 14 64 15 63 16 63 28. I make no order as to costs -- 7 of 8 -- 8 Respondent’s Obligations 29. As required by section 48(1) of the Body Corporate and Community Management Act 1997, 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. -- 8 of 8 --