Delaney & Ors v Body Corporate for Leeward Tower [2010] QCAT 48

1 CITATION: Delaney & Ors v Body Corporate for Leeward Tower [2010] QCAT 48 PARTIES: Nancy Patricia Delaney, Bruce Hood and Janet Hood, Killoran Properties Pty Ltd, Barrie and Jasmine Le Fevre, Robert and Judith Pidcock, and Darrell and Merry Summerville v Body Corporate for Leeward Tower Community Titles Scheme 6260 APPLICATION NUMBER: KL047-09 MATTER TYPE: Other Civil Dispute matters HEARING DATE: Applications determined on the papers HEARD AT: Brisbane DECISION OF: Catherine Heyworth-Smith DELIVERED ON: 23 February 2010 DELIVERED AT: Brisbane ORDERS MADE: 1. The Contribution Lot Entitlement Schedule for the Leeward Tower Community Titles Scheme 6260 be altered such that it is as follows: Lot Entitlement Lot Entitlement Lot Entitlement 1 173 25 167 49 170 2 174 26 172 50 173 3 172 27 173 51 170 4 167 28 167 52 171 5 172 29 173 53 177 6 173 30 183 54 179 7 167 31 170 55 175 -- 1 of 7 -- 2 8 173 32 173 56 179 9 172 33 169 57 191 10 167 34 170 58 193 11 173 35 173 12 172 36 170 13 167 37 170 14 173 38 173 15 173 39 170 16 167 40 171 17 173 41 174 18 173 42 170 19 167 43 170 20 173 44 173 21 172 45 170 22 167 46 170 23 173 47 172 24 173 48 170 2. The parties will file and serve any submissions with respect to payment of costs and the amount of costs, including any material in support thereof, by 4 pm on 2 March 2010. If no submission or material is received by that date, there will be no order as to costs. CATCHWORDS: Body Corporate and Community Management – Adjustment of Contribution Lot Entitlement Schedule APPEARANCES and REPRESENTATION (if any): The applications were determined on the papers. -- 2 of 7 -- 3 REASONS FOR DECISION 1. By an applications filed on 17 August 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 order sought is that the schedule be adjusted so that it reflects the amended schedule recommended in the report of Mr Martin Walsh of Stewart Silver King and Burns, Body Corporate Consultants, of 5 October 2009. 2. The Respondent Body Corporate filed a defence on 9 October 2009. Filed with the defence was a report prepared by Mr Craig Brennan of QBS Strata Management Pty Ltd dated September 2009. 1 Mr Brennan’s report appears to have been commissioned by O’Keefe Mahoney Bennett, Solicitors for the Respondent, to consider and critique an earlier report prepared by Mr Walsh and dated 30 July 2009. Mr Brennan was largely in agreement with Mr Walsh, save on some few matters, and Mr Walsh ultimately altered his opinion in line with Mr Brennan’s comments, thus producing the amended schedule of 5 October 2009. The report has been filed under the cover of a letter from Hynes Lawyers, solicitors for the Applicants, dated 5 October 2009 in which they note, “We enclose for filing an updated report from our clients’ expert, which has been discussed and agreed by the expert for the Respondent Body Corporate.” 3. The parties have agreed to having the matter determined on the papers. I note that the Respondent has pleaded in its defence as follows: 18. Whilst the committee, after receiving confirmation from Mr Walsh that he has adopted all of the recommended changes proposed by Mr Brennan, does not believe that it can sensibly resist the application of the Applicants, it does not believe that it has the authority to consent to the application. 19. Therefore, the committee requests that the CCT considers all of the material before it and make such orders as it deems appropriate in the circumstances. Material before the Tribunal 4. The Applicants have filed the following material: (a) Applications – Lot Entitlement Adjustment, each dated 17 August 2009 2009, attaching (by Annexure A) a submission dated 14 August 2009; (b) in the case of each Applicant, a current title search of their lot, respectively, in the scheme; (c) a Contribution Schedule Lot Entitlement Report dated 30 July 2009 prepared by Mr Martin Walsh of Stewart Silver King and Burns, Community Managers; (d) additional correspondence marked “Exhibit B”; and (e) a further report of Mr Walsh dated 1 October 2009. 5. I accept these documents as the evidence of the Applicant and have them marked as a bundle, “Exhibit 1”. 6. The Respondent has filed the following material: 1 No precise date in September was given for the report. -- 3 of 7 -- 4 (a) a Defence filed 9 October 2009; (b) a further attachment to that document entitled “Defence of the Respondent” dated 9 October 2009; and (c) a Contribution Schedule Lot Entitlement Review by Mr Craig Brennan of QBS Strata Management Pty Ltd dated September 2009. 7. I accept these documents as evidence of the Respondent and will have them marked as a bundle “Exhibit 2”. The Legislation 8. 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). 9. 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. 10. 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. 11. 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. 12. In Fischer & Ors v Body Corporate for Centrepoint CTS 7779 [2004] QCA 214 Chesterman J. said, at [26]: -- 4 of 7 -- 5 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. 13. 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. 14. Finally, sec. 46(6) provides that “A lot entitlement must be a whole number, but must not be 0.” 15. It is against this legislative background that one turns to the case at hand. Application of the legislation and principles 16. Mr Walsh describes the scheme in his report of 30 July 2009 as “a single twenty-four storey tower building positioned on the centre of the scheme land.” It has a basement car park with storage areas and internal access to the building, the ground level contains an outdoor heated swimming pool, an indoor gymnasium, an outdoor tennis court, an outdoor spa, an indoor spa, 2 a sauna and 3 BBQ areas. Levels B contains the entrance foyer, part of lot 1 and two residential lots. The remaining levels C to W contain two or three residential lots each, a well appointed elevator foyer and a garbage chute and fire stair access. 17. Mr Walsh’s description of the residential lots suggests that they are of high quality and he notes that security is “paramount” with CCTV surveillance and regular security patrols. 18. I have considered the methodology that Mr Walsh has adopted in his report and I can find no logical flaw in the same. Further, I am of the view that it accords with the reasons of Chesterman J. in Fischer & Anor v. Body Corporate for Centrepoint CTS 7779 [2004] QCA 214. 19. Mr Walsh has concluded that, on the basis of his analysis, “the contribution schedule should be close to but not equal for each lot because it is just and equitable for the contributions not to be equal for each lot.” He noted, and I accept for the reasons he has given, that the current schedule is not just and equitable. 2 It appears from the correspondence in “exhibit B” (part of Exhibit 1) that the indoor spa was decommissioned. -- 5 of 7 -- 6 20. Turning to the report filed by the Respondent, 3 I note that Mr Brennan is also in agreement with Mr Walsh’s methodology. He is also largely in agreement with Mr Walsh’s analysis of the allocation of costs save for in relation to a few items. I have considered these items and agree that an alteration should be made to ensure that account is taken of them. I note that Mr Walsh is also in agreement with this approach and has prepared a schedule to this end and it is dated 1 October 2009. 21. For the reasons given in the two reports, I am of the view that it is just and equitable for the contribution lot entitlements to be other than equal in this case. Having considered the methodology and analysis in Mr Walsh’s report and Mr Brennan’s critique of the same, I am also of the view that it is just and equitable for the contribution lot entitlements to be as per Mr Walsh’s amended schedule of 1 October 2009. 22. I order that the Contribution Lot Entitlement Schedule for the Leeward Tower Community Titles Scheme 6260 be altered such that it is as follows: Lot Entitlement Lot Entitlement Lot Entitlement 1 173 25 167 49 170 2 174 26 172 50 173 3 172 27 173 51 170 4 167 28 167 52 171 5 172 29 173 53 177 6 173 30 183 54 179 7 167 31 170 55 175 8 173 32 173 56 179 9 172 33 169 57 191 10 167 34 170 58 193 11 173 35 173 12 172 36 170 13 167 37 170 14 173 38 173 15 173 39 170 16 167 40 171 17 173 41 174 18 173 42 170 19 167 43 170 20 173 44 173 21 172 45 170 22 167 46 170 23 173 47 172 24 173 48 170 23. Having considered the material I am inclined to make no order as to costs. That said, I note that the parties may have a view with respect to such matters and that the Applicants have “reserved their rights” to make a submission in relation to costs in event that the application was determined in their favour. Whilst their expert’s initial report was not accepted in its entirety, the Applicants have, overall, succeeded in their application. 24. I direct that the parties file and serve any submissions with respect to payment of costs and the amount of costs, including any material in support thereof, by 4 3 Part of Exhibit 2.173174 -- 6 of 7 -- 7 pm on 2 March 2010. If no submission or material is received by that date, there will be no order as to costs. Respondent’s Obligations 25. 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. -- 7 of 7 --