Eleanor v The Body Corporate for Montego Court [2010] QCAT 24

1 CITATION: Eleanor v The Body Corporate for Montego Court [2010] QCAT 24 PARTIES: Judith Eleanor v The Body Corporate for Montego Court CTS 13733 APPLICATION NUMBER: KL049-09 MATTER TYPE: Other civil disputes HEARING DATE: 9 February 2010 HEARD AT: Brisbane DECISION OF: C Endicott, senior member DELIVERED ON: 9 February 2010 DELIVERED AT: Brisbane ORDERS MADE: Adjustment to equal contribution lot entitlements CATCHWORDS: Body Corporate and Community Management – Adjustment of contribution – Lot entitlement APPEARANCES and REPRESENTATION (if any): The hearing took place on the papers in the absence of the parties. -- 1 of 6 -- 2 REASONS FOR DECISION Introduction 1. The Montego Court units at Surfers Paradise comprise 4 residential units. Three of the units are of similar size and one unit is significantly larger in area than the others. 2. The owner of the largest unit filed an application with the Commercial and Consumer Tribunal seeking an adjustment of the contribution lot entitlement from unequal contributions based primarily on the area of each lot to equal contributions for most of the Body Corporate expenditure. Issues and legislation 3. From 1 December 2009 the Queensland Civil and Administrative Tribunal (the Tribunal) has replaced the Commercial and Consumer Tribunal on the commencement of the Queensland Civil and Administrative Tribunal Act 2009 (the Act). 4. Under section 256 of the Act, a pending proceeding (being a proceeding commenced in one of the Tribunals replaced by the 2009 Act but not heard by the replaced Tribunal prior to 1 December 2009) is taken to be a proceeding before the Queensland Civil and Administrative Tribunal. According to section 271 of the Act, the Tribunal must deal with the matter the subject of the pending proceeding under the Queensland Civil and Administrative Tribunal Act 2009 or an enabling Act. 5. The enabling Act in this case, the Body Corporate and Community Management Act 1997, provides in section 48: (1) The owner of a lot in a community titles scheme may apply— (a) under chapter 6, for an order of a specialist adjudicator for the adjustment of a lot entitlement schedule; or (b) as provided under the QCAT Act, for an order of QCAT exercising the tribunal’s original jurisdiction for the adjustment of a lot entitlement schedule. (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. 6. The Body Corporate and Community Management Act 1997 provides in section 49 matters that the Tribunal must have regard when considering an adjustment of lot entitlements: (2) This section sets out matters to which the specialist adjudicator or QCAT may, and may not, have regard for deciding— (a) for a contribution schedule—if it is just and equitable in the circumstances for the respective lot entitlements not to be equal; and -- 2 of 6 -- 3 (b) for an interest schedule—if it is just and equitable in the circumstances for the individual lot entitlements to reflect other than the respective market values of the lots. (3) However, the matters the specialist adjudicator or QCAT may have regard to for deciding a matter mentioned in subsection (2) are not limited to the matters stated in this section. (4) The specialist adjudicator or QCAT 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 QCAT may not have regard to any knowledge or understanding the applicant had, or any lack of knowledge or misunderstanding 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. (6) In this section— relevant time means the time the applicant entered into a contract to buy the subject lot. subject lot means the lot owned by the applicant. Submissions 7. In her statement of claim, Ms Eleanor had sought an adjustment of both the contribution schedule and the interest schedule. Subsequently Ms Eleanor clarified in writing that she was seeking an adjustment to the contribution schedule and not to the interest schedule. 8. Ms Eleanor submitted that the only shared facility in the unit complex was the clothes line. Ms Eleanor identified the only shared expenses as the lawn mowing and security lighting. Ms Eleanor contended that as she had installed her own security lighting the shared security lighting asset was not for her benefit. 9. Ms Eleanor submitted in her statement of claim that the stairs to her unit were within her lot and were her responsibility as was her verandah enclosure. She contended that she derived no visual benefit from the garden and all owners were responsible for window cleaning and pest control. She contended that the public liability insurance covered all owners and the workload of the Body Corporate manager was the same for all owners. -- 3 of 6 -- 4 10. Ms Eleanor contended that the unit complex had a single water meter for the complex and she was paying for water at a rate according to her lot contribution schedule. 11. In further submissions made in writing on 21 October 2009, Ms Eleanor submitted that general maintenance costs of each unit are the responsibility of the lot owner but maintenance of the building, including painting work, is of benefit for all the lot owners. Ms Eleanor had obtained quotes for the installation of a water meter for the Body Corporate and contended that the only need for Body Corporate water usage would be in the case of fire. 12. Ms Eleanor conceded in her submissions that the costs of building insurance should not be borne equally by the lot owners but she contended that the costs of sensor lighting, maintenance of common property stairs and the garden should be borne equally by the lot owners. Ms Eleanor contended that the cost of cleaning the exterior surfaces of windows had never been assumed by the Body Corporate. 13. The Body Corporate of Montego Court responded to the application by indicating opposition to equal lot contributions between the lot owners. Submissions were made to the effect that the original community management arrangements were based on contributions calculated on the respective area of each lot in relation to the whole area of the complex. 14. It was contended that Ms Eleanor’s unit has a greater area compared to the other units and as such gave rise to higher general maintenance costs including higher costs of exterior painting. It was submitted that the discrepancy in area placed a greater demand on Body Corporate maintenance services. 15. It was submitted that the larger area of Ms Eleanor’s unit results in the ability of that unit to accommodate more people than the other units and to consume more water leading to above average water usage in that unit. It was submitted that the greater unit area of Ms Eleanor’s unit should result in Ms Eleanor contributing more to Body Corporate insurance levies. 16. It was submitted that the exterior sensor lighting on common property was for the benefit of all lot owners and that the electricity costs incurred by the sensor lighting was negligible. It was contended that the stairs to Ms Eleanor’s unit are part of the common property and that her view of the garden was obscured by the work done by the lot owner to enclose the unit verandah. It was submitted that cleaning the exterior surfaces of the windows was the responsibility of the Body Corporate and Ms Eleanor’s unit has some windows that would require the use of scaffolding to clean. 17. The Body Corporate supported the lot contributions remaining unequal and as set by the original community management arrangements. Conclusion 18. It is not in dispute that Ms Eleanor’s unit is significantly larger in area than the other three units in Montego Court nor is it disputed that the current -- 4 of 6 -- 5 contribution schedule is based on the respective size of the units. What is in dispute is whether it is just and equitable to require lot owners to contribute equally to the Body Corporate costs in relation to the complex. 19. Under the provisions of section 48(6) of the Body Corporate and Community Management Act 1997 when an application for adjustment of lot contributions is made, the Tribunal is required to adjust the respective lot entitlements so that all lots equally contribute to the costs of the Body Corporate unless it is just and equitable for the entitlements not to be equal. 20. The Supreme Court of Queensland in Fischer v Body Corporate for Centrepoint CTS 77791 has given consideration to the statutory requirement for equality of lot entitlements. In that case Chesterman J noted that the preferable view is that a contribution schedule should provide for equal contributions by lot owners except insofar as some lots can be shown to give rise to particular costs to the Body Corporate which other lots do not. 21. That case confirmed that the question as to 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 lots or to their contribution to the costs incurred by the Body Corporate. When the starting point is equality, any departure from that position is allowable only where it is just and equitable to recognise inequality. 22. A determination that adjusts entitlements away from an equal contribution position can only be made by reference to factors that have a financial impact or consequence on the Body Corporate. According to Chesterman J, the Tribunal, when considering an adjustment of lot entitlements away from equality, may have regard to the matters specified in section 49(4) of the Body Corporate and Community Management Act 1997 only to the extent that those matters may affect the cost of operating a community title scheme. 2 23. Applying the interpretation of the legislation as articulated in Fischer’s case, the Tribunal must look to the demands made on the services and amenities provided by the Body Corporate of Montego Court by the respective lots or to the contribution of the respective lots to the costs incurred by the Body Corporate. 24. The evidence about these matters is not extensive. The parties referred to the following services as being provided by the Body Corporate or as costs incurred by the Body Corporate: building insurance, public liability insurance, building and common property maintenance and painting, security sensors, gardens, exterior window cleaning, clothes line, lawn mowing and the Body Corporate manager. The provision of insurance of the building and common property areas by the Body Corporate is 1 [2004] QCA214 2 As above at paragraph 33 -- 5 of 6 -- 6 excluded from the adjustment considerations by virtue of the regulations made under the Body Corporate and Community Management Act 1997. 3 25. In the opinion of the Tribunal, the argument that the demands on the other services, listed in paragraph 24 and provided by the Body Corporate, can be differentiated by the size of the individual units in the complex is not substantiated by evidence. The costs incurred by the Body Corporate to maintain the exterior building structure, including painting, may well be dependent on the surface area to maintain but could just as logically be dependent on other factors not associated with Ms Eleanor’s unit such as the existence of defects requiring special attention or details requiring close and time consuming work at places quite separate from Ms Eleanor’s unit. 26. In the absence of evidence that the cost of maintenance or painting on the exterior structure immediately supporting Ms Eleanor’s unit was more than one quarter of the cost of the whole work, the Tribunal is not satisfied that Ms Eleanor’s unit demands more services or costs for building maintenance than the other units in the complex. 27. None of the other services such as public liability insurance, security sensors, gardens and the clothes line have been provided for the benefit of an individual unit owner but for the common benefit of the unit owners. 28. The Tribunal is satisfied that the starting point in the present case must be to vary the current contribution lot entitlements to reach a position of equality. The Tribunal can then consider whether a departure from that position is justified. 29. In this case neither Ms Eleanor nor the respondent provided any expert evidence that could have analysed the cost contribution by the respective unit owners. No analysis was provided of evidence about the proportions of water usage between the respective units. In the absence of evidence that could reveal material inequities in the contribution by the respective units to the costs incurred by the Body Corporate, the Tribunal is satisfied that a departure from the position of equal contribution from all unit owners cannot be justified. 30. The Tribunal determines that the lot entitlement schedule relating to the contribution schedule for Montego Court must be adjusted so that the respective lot entitlements are equal. 3 Sections 75 and 112(4) of the Body Corporate and Community Management (Small Schemes Module) regulation 2008 -- 6 of 6 --