Body Corporate No. 1 CTS 5908 v Di Marco Investments Pty Ltd [2010] QCATA 66

CITATION: Body Corporate No. 1 CTS 5908 v Di Marco Investments Pty Ltd [2010] QCATA 66 PARTIES: Body Corporate No. 1 CTS 5908 v Di Marco Investments Pty Ltd APPEAL NUMBER: APL089-10 MATTER TYPE: Other civil dispute matters HEARING DATE: Determined on the papers HEARD AT: Brisbane DECISION OF: Alan Wilson J - President Kenneth Barlow - Member DELIVERED ON: 3 November 2010 DELIVERED AT: Brisbane ORDERS MADE: The appeal is dismissed CATCHWORDS : BODY CORPORATE AND COMMUNITY MANAGEMENT – LOT ENTITLEMENT CONTRIBUTION – Body Corporate and Community Management Act 1997, ss 48, 49 – MEANING AND EFFECT – where lot owner applied for an adjustment of contribution lot entitlement concerning an inclinator – where lot owner argued it was not just and equitable for lots not using the inclinator to contribute equally to the costs of its operation – whether adjustments just and equitable – whether any matters make it just and equitable that lot entitlements not be equal – whether error of law Body Corporate and Community Management Act 1997, ss 48, 49, 289 Battin & Battin v Body Corporate for Amity Community Titles scheme 17543 [2006] QDC 278, cited Fischer v Body Corporate for Centre Point Community Titles scheme 7779 [2004] 2 Qd R 638, applied Gardenia Homes Pty Ltd v The Body Corporate -- 1 of 7 -- APL089-10 / Page 2 of 7 for Williams Retreat CTS 23581 [2009] CCT KA006-09, applied Lidster v Body Corporate Parkhaven No. 3 CTS 22556 [2007] QCCTBCCM 003, applied Owners Strata Plan No. 50411 v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5, applied Woodley & Anor v the Proprietors of Quay West Community Titles scheme 16610 [2006] QDC 277, cited APPEARANCES and REPRESENTATION (if any): Decision heard on the papers in the absence of the parties. REASONS FOR DECISION THE PRESIDENT 1. I have had the advantage of reading the reasons prepared by Mr Barlow. I agree with those reasons, and the order he proposes. MR BARLOW Introduction 2. This is an appeal, pursuant to s.142(1) of the Queensland Civil and Administrative Tribunal Act 2009 (the “QCAT Act”), from the decision of a member of the tribunal. The member’s decision concerned an application pursuant to s.48 if the Body Corporate and Community Management Act 1997 (the “BCCM Act”), for the adjustment of a contribution lot entitlement schedule. 3. The appellant is the body corporate of a community titles scheme situated in Hastings Street, Noosa. The scheme constitutes an 11 storey single structure that is stepped up Noosa Hill. Access to upper levels is obtained, presumably, by stairs, as well as by a lifting device that is called an “inclinator”. The respondent to this appeal is the owner of lot 23. The community titles scheme comprises a total of 24 lots. 4. Section 142(3)(b) of the QCAT Act provides that an appeal under subsection (1) on a question of fact, or a question of mixed law and fact, may be made only if the party has obtained the appeal tribunal’s leave to appeal. No such leave has been sought or obtained in this case and therefore the appeal may only be brought on a question of law. 5. The appellant submits that this appeal is on a question of law1 because the provisions of s.48(6) of the BCCM Act were not properly applied by the member. 6. The limitation of the appeal tribunal’s jurisdiction to the resolution of questions of law imposes a significant constraint on the role of the appeal tribunal in reviewing decisions of members. The appellable error of law must arise on facts found by the member or must vitiate the findings made or must have led the member to omit to make a finding she or he was legally required to make. A wrong finding of fact is not sufficient to demonstrate error of law. Where 1 BCCM Act, s 289(2) -- 2 of 7 -- APL089-10 / Page 3 of 7 the decision of the member involves matters of fact and degree, then provided she or he applies correct principles of law, no appeal will lie. 2 The law 7. Section 48 of the BCCM Act provides that the owner of a lot in a community titles scheme may apply for an order for the adjustment of a lot entitlement schedule. Subs.48(5) relevantly provides that an order about the contribution schedule must be consistent with the principle stated in subs.(6). Subsection (6) provides that, 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. 8. The principle stated in subs.48(6) is consistent with the principle stated in subs.46(7), which applies to schemes for which development approval is given after the commencement of that subsection: namely, that the respective lot entitlements must be equal except to the extent to which it is just and equitable in the circumstances for them not to be equal. Section 48 in effect allows the owner of a lot in a community titles scheme that was established before the commencement of subs.46(7) to apply for adjustment of a lot entitlement schedule so that it is consistent with the principle applying to more recently created schemes (this scheme was presumably created before the commencement of subs.46(7)). 9. Section 49 of the BCCM Act relevantly provides that the Tribunal, in deciding whether it is just and equitable in the circumstances for the respective lot entitlements not to be equal, 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, but the Tribunal is not limited to considering those matters. 3 10. The construction of section 48 was considered by the Court of Appeal in Fischer v Body Corporate for Centre Point Community Titles scheme 7779. 4 Chesterman J (with whom McPherson JA and Atkinson J agreed) relevantly said the following: “[26] Although the Act gives no clear indication one way or the other, the preferable view is that a contribution schedule should provide for equal contributions by apartment owners, except insofar as some apartments can be shown to give rise to particular costs to the Body Corporate which other apartments do not. 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. More general considerations of amenity, value or history are to be disregarded. What is at issue is the ‘equitable’ distribution of the costs. … [30] 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 2 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 286. 3 This is a summary, in particular, of subsections 49(2), (3) and (4). 4 [2004] 2 Qd R 638. -- 3 of 7 -- APL089-10 / Page 4 of 7 have a financial impact or consequence on the body corporate. It cannot be affected by factors which go to an apartment’s value or amenity. [31] Secondly, the nature of a contribution lot entitlement schedule itself suggests that the allocation of lot entitlements is to be made on the basis of the impact that individual apartments make upon the costs of operating and running a community titles scheme. Contribution lot entitlements determine the apartment’s share of the outgoings. The starting point is that the entitlements should be equal. A departure from that principle is allowable only where it is just, or fair, to recognise inequality. The departure must take as its reference point the proposition, from which it departs, that apartment owners should contribute equally to the costs of the building. The focus of the enquiry is the extent to which an apartment unequally causes costs to the body corporate. … [33] Accordingly I would construe S 49 of the Act, and in particular subsection (4), as meaning that those identified matters to which a court may have regard are to be regarded only to the extent, if any, that they affect the cost of operating a community titles scheme.” 11. Also relevant to the issues in this appeal is the following discussion, from a decision of Mr K D Dorney QC (as his Honour then was) in the Commercial and Consumer Tribunal:5 “[25] In Woodley,6 it was held that, where there is access by all owners to the common property, the costs should be shared equally, since the costs are equally beneficial to all of the lots in the scheme: at [16]. Also in Woodley, after considering Fischer, it was held that the question must be answered as to what extent that the nature, feature or characteristic of an apartment does affect the costs of operating the community titles scheme (that is, what demands are made on the services and amenities provided by the body corporate): at [34]. The answer provided was that such expenses should be divided equally except to the extent that the lot in question disproportionately gives rise to those expenses or disproportionately consumes services, since those matters must have a financial impact for the body corporate which can be measured: also at [34]. As remarked in the decision, the respondent failed to produce such figures: also at [34]. [26] In Battin, 7 illustrations were given of where there might be an argument for ‘inequality’. Examples that were given were: if there was provision under the scheme for exclusive use, such as of a lift or a pool; or, possibly, where members of the public used common areas seldom used by residents, including, for example, accessing a restaurant and using a car park which was part of a high rise building and which some residents might never use: at [22]. As for equality, the examples given were: the costs of maintaining common areas surrounded by landscaping or where there is wear and tear on a car park, road or garden (even though a particular party may get little or no benefit from the condition of such items): also at [22].” 12. Perhaps most relevantly to this appeal, it should be noted from the discussion of the authorities above that, on a proper construction of ss 48(6) and 49 of the BCCM Act, contribution lot entitlements are required to be equal except to the extent that any lots give 5 Lidster v Body Corporate Parkhaven No. 3 CTS 22556 [2007] QCCTBCCM 003. 6 Woodley & Anor v the Proprietors of Quay West Community Titles scheme 16610 [2006] QDC 277. 7 Battin & Battin v Body Corporate for Amity Community Titles scheme 17543 [2006] QDC 278. -- 4 of 7 -- APL089-10 / Page 5 of 7 rise disproportionately to expenses or disproportionately consume the body corporate’s services.8 The parties’ submissions 13. The appellant referred to ss 48(6) and 49 of the BCCM Act and to paragraphs [26], [30] and [31] of the reasons of Chesterman J in Fischer v Centrepoint. It submitted that the test to be applied in determining whether or not contribution lot entitlements are to be equal or unequal and the extent of inequality is principally the demand that the respective lots make on the services and amenities that the body corporate provides. 14. The appellant referred to an expert’s report upon which it had relied before the member and, in particular, to the costs of running and maintaining the inclinator. The appellant submitted that, although the inclinator is available to the lots on the lower levels of the scheme, it is not used by them. Because of the unique nature of the inclinator the costs associated with its maintenance and repair are significantly greater than would be the case in a scheme of similar size where the design allowed for a more normal lift to be used. As a proportion of total annual levies, amounts associated with the inclinator accounted for approximately 20% of the levy amounts and approximately 11.5% of the annual administrative fund budget, second only to the on-site manager’s annual remuneration (19.36%). 15. The appellant concluded that, given the unusual nature of the inclinator and the unusually high proportion of total costs associated with its operation, it was not just and equitable for those lots not using the inclinator or using it to a lesser degree than others to contribute equally to the costs of its operation, maintenance and repair. 16. The respondent submits that, in the report relied upon by the appellant, the expert, who recommended inequality of contribution lot entitlements, did not rely for that recommendation upon the costs associated with the inclinator. Rather, the expert relied upon repainting and maintaining the external areas and allocated those costs differently between the lots by reference to their respective areas. 17. The respondent also notes that the appellant did not make any submission to the member below that equal contribution lot entitlements were not just and equitable based upon the costs associated with the inclinator. 18. The respondent submits that there has been no error of law by the member. The member’s reasons 19. The member referred to, and took into account, the relevant sections of the BCCM Act and the relevant authorities. She noted that the then existing contribution schedule provided for lot entitlements that were not equal and said that, since the legislation requires that contributions should be equal except to the extent to which it is just and equitable for them not to be equal, she must consider any points of difference presented by the parties. 20. The only point of difference between the parties, before the member, was that the appellant’s expert’s report indicated that the expenses of repairs, cleaning, waterproofing and maintenance of the buildings had (in the member’s words) “benefited individual lots rather than all.” She considered that those items were not exclusively to the benefit of any individual lot and that matters of exterior general maintenance should not give rise to unequal treatment between lots. 8 See Fischer at [30]. -- 5 of 7 -- APL089-10 / Page 6 of 7 Discussion 21. In my opinion, for the reasons that follow, the appeal should be dismissed. 22. First, the ground of appeal relied upon by the appellant was not raised below. Parties are usually bound by the course they adopt at trial. 9 Before the member below, the appellant relied solely on the expert’s report filed by it, which specifically expressed the view that the costs of the inclinator were “of equal benefit to all lots.” The respondent’s expert expressed the same view. Before the member, the appellant took no issue with those opinions. 23. Given that the parties agreed, before the member, that costs associated with the inclinator should be shared equally between all lots, the member was not in error in failing to hold that they should give rise to unequal contribution lot entitlements. 10 24. But secondly, apart from these obstacles, the ground now relied on has no substance. Even if it had been taken before, and dismissed by, the member, it would not demonstrate any error of law by the member. 25. As I have noted above, in Woodley it was held that, where there is access by all owners to the common property, the costs should be shared equally, since the costs are equally beneficial to all of the lots in the scheme. 26. In Fischer, Chesterman J referred to the explanatory notes which accompanied the 2003 Act by which these sections were inserted (at [27]). Explaining the change with reference to subs.46(7), the note said: “The change is intended to reinforce the concept that usually all lot owners are equally responsible for the cost of upkeep of common property and for the running costs of the community titles scheme. However, it is recognised that there are many valid instances where the contribution schedules do not have to be equal. The amendment provides that usually the numbers in the schedule are equal, unless it can be demonstrated that it is just and equitable for there to be inequality. The need for difference is best shown by examples… Example 3. In a basic scheme, if all the lots are residential lots ranging in size from a small lot to a penthouse, the contribution schedule lot entitlements generally would be equal. However, the contribution schedule may be different if the penthouse has its own swimming pool and private lift. The contribution schedule should recognise this type of difference. The other lots in the scheme despite being of differing size or aspect would be expected to have equal contribution schedule lot entitlements.” 27. The principle and the examples which I have set out demonstrate that, where the inclinator is accessible to all lot owners, even though it may not be used by all lot owners in equal proportions, the costs of maintaining it ought be shared equally between all lot owners. The evidence did not indicate that the inclinator gives private access to any particular lot or lots, to the exclusion of the other lots in the scheme. 28. I should add that, in my opinion, the member has, with respect, misdescribed the effect of the evidence before her, in that it was not so much that the building maintenance costs benefited 9 Owners Strata Plan No. 50411 v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5. See also Water Board v Moustakas (1988) 180 CLR 491 at 497, Multicon Engineering Pty Ltd v Federal Airports Corporation (2000) 41 NSWLR 631 at 645-6 and University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 at 483. All these cases were discussed by Mr Dorney QC (as his Honour then was) in Gardenia Homes Pty Ltd v The Body Corporate for Williams Retreat CTS 23581 [2009] CCT KA006-09, at [33]. 10 See Owners Strata Plan No. 50411 v Cameron North Sydney Investments Pty Ltd, at [33]. -- 6 of 7 -- APL089-10 / Page 7 of 7 individual lots rather than all, but rather, that it benefited all lots, but in different proportions based on their respective areas. The basis upon which the member was asked to determine that contribution lot entitlements should not be equal was, as stated, that the costs of maintaining the external services of the building ought be allocated by reference to the internal areas of the respective lots. But, despite that misdescription of the evidence, the member made no error of law in determining that those costs ought properly be shared equally between all lots. That finding is not challenged in this appeal. The member therefore made no error of law in concluding that all the lot entitlements should be equal. 29. Accordingly, in my opinion the appeal ought be dismissed. -- 7 of 7 --