Oasis [2004] QBCCMCmr 613 (3 December 2004)

Last Updated: 30 September 2005

Office of the Commissioner for Body Corporate and Community Management SPECIALIST ADJUDICATION (Adjustment of Lot Entitlements) Number: 0241-2004

Applicant: BRIAN SHULZ


Respondent: BODY CORPORATE FOR OASIS

COMMUNITY TITLES SCHEME 20870

ORDER

I ORDER that the contribution lot entitlement schedule for community titles scheme 20870 be adjusted so that the allocation of entitlements among the lots is 1 for each lot with an aggregate lot entitlement of 76.

Dated: 3 December 2004




Gary Bugden
Specialist Adjudicator

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Adjustment of Lot Entitlements)

Number: 0241-2004

Applicant: BRIAN SHULZ


Respondent: BODY CORPORATE FOR OASIS

COMMUNITY TITLES SCHEME 20870

DETERMINATION
3 December 2004

1. This is an application under section 48 of the Body Corporate and Community Management Act 1997 ("Act") to adjust the contribution schedule lot entitlements in community titles scheme 20870. The scheme comprises 76 horizontally subdivided lots and was built in 4 stages, as follows:

• Stage 1 comprising 13 lots (excluding the development lot) on Group Titles Plan 1920 registered on 8 November 1988
• Stage 2 comprising 18 lots (excluding the development lot) on Group Titles Plan of Re-subdivision 2046 registered on 7 June 1989
• Stage 3 comprising 16 lots (excluding the development lot) on Group Titles Plan of Re-subdivision 2116 registered on 23 October 1989
• Stage 4 comprising 29 lots on Group Titles Plan of Re-subdivision 101705 registered on 6 February 1995

2. Some 34 of these lots front a water filled canal and are considerably more valuable than the other 42 lots. Because the original plans were registered under the Building Units and Group Titles Act 1980, section 19(2) of that Act required the lot entitlement of each lot in the group titles plan to bear in relation to the aggregate lot entitlement the same proportion as the unimproved value of that lot bears to the sum of the unimproved values of the lots contained in the plan. In other words, the lot entitlements were allocated in direct proportion to the unimproved values of the respective lots.
3. When the Act commenced group titles scheme 1920, as subsequently subdivided, became community titles scheme 20870 (section 331) and the schedule of lot entitlements was replaced by 2 new schedules (an interest schedule and a contribution schedule) each containing the same allocation of lot entitlements as the allocation in the earlier schedule (section 337(2)).
4. Section 48(4) of the Act requires an order of a court or specialist adjudicator made on this type of application to be consistent with the principle stated in section 48(5), which is in the following terms:

"(5) 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."

5. Section 49 then sets out the criteria for deciding just and equitable circumstances. It provides:

"49(1) This section applies if an application is made for an order of the District Court or a specialist adjudicator for the adjustment of a lot entitlement schedule.

(2) This section sets out matters to which the court or specialist adjudicator 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

(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 court or specialist adjudicator may have regard to for deciding a matter mentioned in subsection (2) are not limited to the matters stated in this section.

(4) The court or specialist adjudicator 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 court or specialist adjudicator 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."

6. The issue for me to determine is whether, in the case of this particular scheme, it is just and equitable in the circumstances for the respective lot entitlements of the lots not to be equal. If I determine that in the affirmative, then I need to determine how the lot entitlement schedule should be adjusted so that the respective lot entitlements are just and equitable. There are some things I may have regard to and others that I may not have regard to – section 49(5) being the critical provision in relation to the latter. However, section 49(3) makes it clear that the matters I may have regard to are not limited to the matters stated in that section.
7. In the past the District Court and specialist adjudicators have had regard to a wide range of matters when determining this type of application. However, since the decision of the Court of Appeal in Fischer & Ors v. Body Corporate for Centrepoint community titles scheme 7779 [2004] QCA 214 the field of matters to be considered has been narrowed somewhat. In that case it was held that the relevant factor to consider is the demand made by the respective lots on the services and amenities provided by the body corporate. Chesterman J (with whom McPherson JA and Atkinson J agreed) said [at 25 and 26]:

"The submission for the applicants is that this Part of the Act is concerned with the just and equitable distribution of body corporate expenses among apartment owners and that in making an adjustment of a lot entitlement schedule the court must pay regard only to the origin and allocation of body corporate expenditure.

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."

8. In this matter I have before me a report by Cambridge Management Services Pty Ltd dated 16 December 2003. That report recommends equal contribution schedule lot entitlements for the Scheme.
9. I was not entirely comfortable relying entirely on that report and the material in the Commissioner’s file, so I allowed lot owners a further opportunity to place relevant information before me and I also convened a meeting of interested persons to receive yet further information, as well as final submissions. Some 20 people attended that meeting and when I combined all the information that I gathered I had a much clearer understanding of how the various lots in this scheme draw upon the financial resources of the body corporate.
10. I am satisfied that the waterfront lots do not draw on those financial resources to any greater extent than the non- waterfront lots and indeed, if anything, some of the non-waterfront lots may derive a greater benefit from some of the facilities and services (e.g. the emergency generator and basement water pumps) than other lots. However, any greater benefit is not, in my view, sufficient to influence the allocation of lot entitlements.
11. There does not appear to be any other circumstances relevant to this scheme that I should take into account in determining this application and there is certainly no justification for any lot to have any greater voting power than another lot.
12. I am therefore satisfied that, in the case of this scheme, the contribution schedule lot entitlements should be equal and I propose to order accordingly.

Dated: 3 December 2004

Gary Bugden
Specialist Adjudicator