Atlantis West [2006] QBCCMCmr 259 (23 May 2006)

Last Updated: 19 December 2006

IN THE MATTER of the Body Corporate and Community Management Act 1997 ("the Act")

and

IN THE MATTER of a Specialist Adjudication


BETWEEN:

Mr James Skenderis

("The Applicant")
and

The Body Corporate for Atlantis West

("The Respondent")





ADJUDICATORS ORDER
Pursuant to appointment by the Commissioner for Body Corporate and Community Management, dated 15 March 2006.


DELIVERED BY:
WARREN D FISCHER
Civil Engineer, Grade 2 Arbitrator, Registered Adjudicator and Accredited Mediator
30/69 Leichhardt Street,
SPRING HILL, QLD, 4000
Phone: [phone]
Facsimile: [phone]
Email: [e-mail]
Web: www.adrs.com.au

IN THE MATTER of a Specialist Adjudication MR JAMES SKENDERIS v THE BODY CORPORATE FOR ATLANTIS WEST ORDER OF WARREN FISCHER Specialist Adjudicator

CONTENTS

Section Page
Order 3
Parties and representatives 4
Recital of relevant events leading to the dispute 5
Reference to specialist adjudication 8
Procedural steps 9
Findings and reasons 11



Adjudication regarding:
Adjustment of Contribution Lot Entitlement Schedule


Expert Conclave Date:
12 May 2006


Delivered as an adjudicators order:
To the Commissioner for Body Corporate and Community Management on the Twenty Third day of May 2006.
ORDER

I, Warren Fischer, appointed specialist adjudicator, order as follows: That the contribution schedule lot entitlement for each lot in the Atlantis West Community Titles Scheme 8790 be adjusted to be equal except to the extent that is just and equitable in the circumstances, such that the contribution schedule of lot entitlements is as follows: Lot Contribution Lot Contribution Lot Contribution Lot Contribution No Schedule Lot No Schedule Lot No Schedule Lot No Schedule Lot Entitlement Entitlement Entitlement Entitlement 1 55 52 61 107 58 150 58 2 55 53 60 108 61 151 56 3 56 54 58 109 60 152 58 4 58 55 56 110 58 153 61 5 56 56 58 111 56 154 60 6 58 57 61 112 58 155 58 7 60 58 60 113 61 156 56 8 60 59 58 114 60 157 58 9 58 60 56 115 58 158 61 12 58 61 58 116 56 159 60 13 60 62 61 117 58 160 58 14 60 63 60 118 61 161 56 15 58 64 58 119 60 162 58 16 56 65 56 120 58 163 61 17 56 66 58 121 56 164 60 18 58 67 61 122 58 165 58 19 60 68 60 123 61 166 56 20 60 69 58 124 60 167 58 21 58 72 58 125 58 168 61 24 58 73 60 126 56 171 56 25 60 74 60 127 58 172 58 26 60 75 58 128 61 173 61 27 58 78 58 129 60 174 65 30 58 79 60 130 58 175 57 31 60 80 60 131 56 176 65 32 60 81 58 132 58 177 65 33 58 84 58 133 61 178 57 36 58 85 60 134 60 179 65 37 60 86 60 135 58 180 69 38 60 87 58 136 56 181 69 39 58 92 60 137 58 182 58 40 56 93 58 138 61 183 58 41 58 96 58 139 60 184 58 42 61 97 60 140 58 185 58 43 60 98 60 141 56 186 58 44 58 99 58 142 58 187 58 45 56 100 56 143 61 188 58 46 58 101 56 144 60 189 58 47 61 102 58 145 58 190 58 48 60 103 60 146 56 191 65 49 58 104 60 147 58 192 65 50 56 105 58 148 61 AGGREGATE 51 58 106 56 149 60 10006 That in accordance with the provisions of Section 48(9) of the Act the body corporate as quickly as practicable lodge a request to record a new community management statement reflecting the adjustment ordered. For the avoidance of doubt, pursuant to Section 284 of the Act, this Order is to have effect as a resolution without dissent. That in accordance with the provisions of Section 63(3) of the Act the body corporate is responsible for the costs of preparing and recording the new community management statement. That pursuant to Section 280(2) of the Act the Applicant and Respondent are jointly and severally liable for the cost of the adjudication. As between themselves the Applicant and Respondent are liable to pay the cost of the adjudication excluding the abandoned conference in equal shares, the cost of the abandoned conference to be paid by the Applicant.

Signed Witnessed






Warren Fischer Ann Winzar
Specialist Adjudicator
23 May 2006
PARTIES AND REPRESENTATIVES


Parties Representatives


Mr James Skenderis Represented by Mr Eric Muir Solicitor
Registered Co-owner of Lot 177 ("Muir")
("Skenderis") and by Mr Kent O’Brien B.Bldg (Q.S.)
Applicant of K&G Strata Consultants Pty Ltd
("O’Brien")
Expert



The Body Corporate for Represented by Mr Clyde Maddock
Atlantis West Body Corporate Treasurer
Community Titles Scheme 8790 ("Maddock")
c/- The Body Corporate Headquarters and by Ms Kaylene Arkcoll
Mr Conrad Beal BSc QS AAIQS AIMM MAppLaw
("Beal") of Leary & Partners Pty Ltd
Respondent ("Arkcoll")
Expert


RECITAL OF RELEVANT EVENTS LEADING TO THE DISPUTE

1. The scheme consists of the common property of Atlantis West Community Titles Scheme 8790 and lots 1 to 9, 12 to 21, 24 to 27, 30 to 33, 36 to 69, 72 to 75, 78 to 81, 84 to 87, 92, 93, 96 to 168 and 171 to 181 on Building Unit Plan No. 6435, lot 182 on Building Unit Plan No. 7492, lot 183 on Building Unit Plan No. 7466, lot 184 on Building Unit Plan No. 7453, lot 185 to 190 on Building Unit Plan No. 7485, lot 191 on Building Unit Plan No. 11226 and lot 192 on Building Unit Plan No. 11638 ("the Scheme"). Building Unit Plan 6435 was registered on 27 November 1984.
2. The Scheme is located at 2 Admiralty Drive, Paradise Waters, Queensland.
3. The Scheme common property includes facilities shared with Atlantis East such as the driveway and set down areas, tennis court facilities, recreation facility containing pool, sauna, gym, entertainment room and security office, external visitors parking area, extensive lawns, landscaping and paving as well as non-shared facilities such as lawns, gardens, entrance and lift lobbies, plant rooms, emergency stairs, a further swimming pool, etc.
4. There are one hundred and seventy (170) lots in the Scheme, all residential, the lot titled areas vary from 102 sqm (lots 16, 17, 100 and 101) to 530 sqm (lot 180). All lots have some attaching exclusive use rights over common property, typically for car parking, though some also for entry foyers (lots 72, 73, 117, 118, 164 & 165). There are four (4) one bedroom lots, one hundred and sixteen (116) two bedroom lots, forty eight (48) three bedroom lots, one (1) four bedroom lot and one (1) five bedroom lot.
5. With the exception of an apparent typographical error in respect of lot 55, the contribution and interest lot entitlement schedules contained in the current Community Management Statement ("CMS") executed on 30 June 2004 are identical. Those schedules provide variations in lot entitlements between 124 (lot 16) and 688 (lot 180) with an aggregate of 37,000.
6. An annual general meeting of the Body Corporate for the Scheme was held on 28 February 2005. At that meeting a motion, proposed by Skenderis, was considered to record a new CMS that altered the contribution schedule lot entitlements such that the contribution schedule lot entitlements reflected in the expert report of O’Brien. That motion failed.
7. Section 227(1)(b) of the Act provides:

"227 Meaning of dispute
(1) A dispute is a dispute between--
(b) the body corporate for a community titles scheme and the owner or occupier of a lot included in the scheme"

8. The failure of Skenderis’s motion at the annual general meeting of the Body Corporate for the Scheme, held on 28 February 2005, gives rise to a dispute as defined in Section 227(1)(b) of the Act between the owner of lot 177 and the body corporate for the Scheme.
9. Section 238(1) of the Act provides:

"238 Who may make an application
(1) A person, including, if appropriate, the body corporate for a community titles scheme, may make an application if the person is a party to, or is directly concerned with, a dispute to which this chapter applies."

10. From 28 February 2005, an application could be made by Skenderis pursuant to Section 238 of the Act.
11. Section 48(1)(b) of the Act provides:

"48 Adjustment of lot entitlement schedule
(1) The owner of a lot in a community titles scheme may apply [my underlining] --
(b) under chapter 6, for an order of a specialist adjudicator for the adjustment of a lot entitlement schedule."

12. Pursuant to Section 48(1)(b), any owner in a scheme is entitled to make an application for the adjustment of a lot entitlement schedule. I consider that the reference in Section 48(1)(b) to "under chapter 6" is only a reference to the provisions set out in that chapter as to the method and form of application and procedures to be adopted by the Commissioner and Specialist Adjudicator and not a reference to any specific requirement for the existence of a "dispute" as defined in Section 227 of the Act. I consider that the right to make an application for the adjustment of a lot entitlement schedule is provided by Section 48(1).
13. On 25 May 2005, Skenderis lodged a Dispute Resolution Application ("the Application") for the adjustment of the contribution lot entitlement schedule for the Scheme with the Commissioner pursuant to the provisions of Section 48(1) and Chapter 6 of the Act.
14. These circumstances gave rise to the issue which I was required to consider, namely, "Record a new Contribution Schedule in accordance with the report of K & G Strata Consultants Pty Ltd dated August 2004.... The proposed new Contribution Schedule of Lot Entitlements is attached to this document and marked "B""
REFERENCE TO SPECIALIST ADJUDICATION

15. Section 48(1)(b) of the Act provides:

"48 Adjustment of lot entitlement schedule
(1) The owner of a lot in a community titles scheme may apply--
(b) under chapter 6, for an order of a specialist adjudicator for the adjustment of a lot entitlement schedule."

16. Section 265(1)(c) of the Act provides:

"265 Specialist adjudication of particular disputes
(1) The adjudication of a dispute must be specialist adjudication if--
(c) another provision of this Act requires the adjudication to be specialist adjudication."

17. Section 239(2)(d) of the Act provides:

"239 How to make an application
(2) The approved form for the application must provide for each of the following matters to be stated in the form--
(d) for an order about a dispute mentioned in section 265--the name and address of 1 or more persons--

(i) considered by the applicant as having the appropriate qualifications, experience or standing for acting as a specialist adjudicator for the application; and
(ii) nominated by the applicant for appointment as the specialist adjudicator."

18. The Application, lodged on 25 May 2005, provided my name as nominee for appointment as the specialist adjudicator.
19. Section 265(2) of the Act provides:

"265 Specialist adjudication of particular disputes
(2) The specialist adjudicator must be the person chosen by the commissioner, and need not be a person nominated by a party to the application."

20. I was nominated as specialist adjudicator by the Commissioner in a letter, copied to the parties, dated 15 March 2006.
PROCEDURAL STEPS

21. Skenderis lodged the Application with the Commissioner, dated 25 May 2005, relying on a report produced by K&G Strata Consultants Pty Ltd. Subsequent amendments were made to the Application, on 27 July 2005 and 30 August 2005, pursuant to Section 245 of the Act.
22. By correspondence, dated 30 August 2005, the Commissioner notified all lot owners in the Scheme of receipt of the application and invited all lot owners to make submissions on the Application, which was attached to that notice, by 20 September 2005.
23. Included in correspondence from the Body Corporate Manager dated 6 September 2005 was a request for an extension of the closing date for submissions. On 13 September 2005, the Commissioner extended the closing date for submissions to 21 November 2005.
24. On 16 November 2005, by facsimile, the Body Corporate Chairman, Mr Ronald Kilner, requested a further extension of the closing date for submissions. On 17 November 2005, the Commissioner further extended the closing date for submissions to 15 December 2005.
25. On 14 December 2005, by facsimile, the Body Corporate Chairman requested a further extension of the closing date for submissions. By telephone on 14 December 2005, the Commissioner advised that the request for a further extension was refused and that the closing date for submissions remained 15 December 2005.
26. On 15 December 2005, by facsimile to the Minister for Tourism Fair Trading and Wine Industry Development, and 19 December 2005, by facsimile to the Commissioner, the Body Corporate Chairman requested that the Commissioner review the Commissioner’s refusal to grant a further extension. On 4 January 2006, the Commissioner further extended the closing date for submissions to 28 February 2006.
27. Twenty (20) submissions were made including a submission by the Body Corporate Chairman on behalf of the Body Corporate. The Body Corporate submission enclosed a copy of an expert report produced by Leary & Partners Pty Ltd but provided no additional written submissions.
28. Section 48(2)(a) of the Act provides:

"48 Adjustment of lot entitlement schedule
(2) Despite any other law or statutory instrument--
(a) the respondent for an application mentioned in subsection (1) is the body corporate"

29. By correspondence, dated 10 April 2006, Beal advised that "at the recent Committee meeting it was resolved that ‘It was agreed that no person be given the task of representing the Body Corporate, and that the matter be left in the adjudicator’s hands’".
30. By subsequent correspondence, dated 13 April 2006, Beal advised that the "Body Corporate have advised that Clyde Maddock will attend". Beal reconfirmed that advice in further correspondence, dated 27 April 2006.
31. Section 48(2)(b) of the Act provides:

"48 Adjustment of lot entitlement schedule
(2) Despite any other law or statutory instrument--
(b) at the election of another owner of a lot in the scheme, the other owner may be joined as a respondent for the application"

32. Section 48(3) of the Act provides:

"48 Adjustment of lot entitlement schedule
(3) An owner who elects, under subsection (2)(b), to become a respondent for the application must give written notice [my underlining] of the election to the body corporate."

33. Following my instructions dated 21 March 2006, Beal, on 30 March 2006, confirmed that a copy of my process notes and directions for the further conduct of the matter had been forwarded to all lot owners in the scheme. Those notes and directions advised all owners that, if wishing to be joined as a Respondent for the application, a written notice of that election was to be provided in accordance with the provisions of Section 48(3) of the Act and that without such notice their submissions could not be considered. Furthermore, I also required that a copy of that notice was provided to me by 5 April 2006.
34. No notices were provided to me by 5 April 2006 in accordance with my directions and it was evident in correspondence, dated 10 April 2006, from Beal that the Body Corporate Manager was also not in the possession of any "lot joinder notices".
35. By correspondence, dated 21 March 2006, the parties were advised that a conference would provisionally be conducted in conjunction with a view of the Scheme at 10:00 am on 28 April 2006 and that any experts should attend that conference.
36. On 28 April 2006 I duly attended the Scheme. The Respondent’s representative, Maddock, and expert, Arkcoll, also attended. Neither the Applicant nor their expert appeared. Following a telephone conversation with the Applicant, during which they advised that their expert was unable to attend the conference, the conference was adjourned.
37. Following subsequent correspondence the conference was reconvened on 12 May 2006. Maddock in correspondence, dated 1 May 2006, advised "we will authorise Kaylene, the "expert" from Leary and Partners to be our Representative". Similarly, Muir in correspondence, dated 11 May 2006, advised "that my client will not be personally appearing. He has authorised Mr Kent O'Brien to appear on his behalf." Both party’s experts attended the conference.
38. That conference became an expert conclave during which each of the experts reports were discussed and ultimately agreement was reached as to the correct method of assessment for the contribution lot entitlements at Admiralty West when considering the various features of the lots and the scheme.
FINDINGS AND REASONS

39. The documents considered in this adjudication include the relevant documentation included within the file forwarded to me by the commissioner and those documents subsequently supplied by Beal upon my request and bearing on the issues, namely:

a.	The Dispute Resolution Application including all attachments thereto;
b.	The Body Corporate Submission including all attachments thereto;
c.	The Statement of income and expenditure for the Administration Fund for the period ended 31/12/05;
d.	The Statement of income and expenditure for the Sinking Fund for the period ended 31/12/05;
e.	The Administration Fund budget for the period ending 31/12/06;
f.	The Sinking Fund budget for the period ended 31/12/06;
g.	The Letting Agreement, dated 4 January 1995;
h.	The (Property) Management Agreement, dated 4 January 1995; and
i.	The (Body Corporate Management) Management Agreement, undated.

40. O’Brien’s report identifies that in producing that report the following documents were used as reference material:

a.	Statement of accounts for the Administration and Sinking Funds for the periods to 31/12/01, 31/12/02 and 31/12/03 and the budget to 31/12/04;
b.	The sinking fund forecast prepared by Star Building Management Services in January 2004;
c.	Extracts from Building Unit Plans 6435, 7485, 7492, 11226 and 11638;
d.	Community Management Statement Schedule A, C – Bylaws, D and E – Allocated exclusive use areas; and
e.	Sketch plans A1 to A3, B1 to B3, C, D and EB relating to the car parking spaces and exclusive use areas on several levels.

41. Arkcoll’s report identifies that in producing that report the following documents were relied upon:

a.	Community Management Statement 8790;
b.	Building Unit Plans 6435, 7453, 7466, 7485, 7492, 11226 and 11638;
c.	Administrative Fund Expenditure for the periods to 31/12/02, 31/12/03 and 31/12/04 and the anticipated budget to 31/12/05;
d.	The sinking fund forecast prepared by Star Building Management Services in January 2004;
e.	The architectural plans for the development; and
f.	Information collected during a site inspection of the development.

42. Following my instructions, dated 21 March 2006, Beal, on 30 March 2006, confirmed that my process notes and directions for the further conduct of the matter had been forwarded to all lot owners in the scheme. Those notes and directions advised all owners that I could not consider any submissions made without an election by that owner to be joined as a Respondent and provided directions for owners wishing to be joined as a Respondent for the application and their subsequent delivery of submissions in respect to the application by 21 April 2006. No election notices or submissions were received.
43. The parties experts attended a conference which became an expert conclave, at which I remained present, to consider their respective reports and resolve the most appropriate method of assessment for the contribution lot entitlements at Admiralty West when considering the various features of the lots and the scheme in accordance with the requirements of Sections 48 and 49 of the Act. The most appropriate method of assessment and all of the various elements to be considered in that assessment were resolved during that conclave.
44. The outcome sought in the Application is:
"Record a new Contribution Schedule in accordance with the report of K & G Strata Consultants Pty Ltd dated August 2004.... The proposed new Contribution Schedule of Lot Entitlements is attached to this document and marked "B""

Findings on the application for adjustment:

i. The existing contribution lot entitlement schedule is not equal.
ii. The existing contribution lot entitlement schedule is not just and equitable in the circumstances.
iii. An equal contribution lot entitlement schedule would not be just and equitable in the circumstances.
iv. That contribution schedule lot entitlements that are equal, except to the extent that it is just and equitable in the circumstances, are as follows:

Lot Contribution Lot Contribution Lot Contribution Lot Contribution

No Schedule Lot No Schedule Lot No Schedule Lot No Schedule Lot

Entitlement Entitlement Entitlement Entitlement

1 55 52 61 107 58 150 58

2 55 53 60 108 61 151 56

3 56 54 58 109 60 152 58

4 58 55 56 110 58 153 61

5 56 56 58 111 56 154 60

6 58 57 61 112 58 155 58

7 60 58 60 113 61 156 56

8 60 59 58 114 60 157 58

9 58 60 56 115 58 158 61

12 58 61 58 116 56 159 60

13 60 62 61 117 58 160 58

14 60 63 60 118 61 161 56

15 58 64 58 119 60 162 58

16 56 65 56 120 58 163 61

17 56 66 58 121 56 164 60

18 58 67 61 122 58 165 58

19 60 68 60 123 61 166 56

20 60 69 58 124 60 167 58

21 58 72 58 125 58 168 61

24 58 73 60 126 56 171 56

25 60 74 60 127 58 172 58

26 60 75 58 128 61 173 61

27 58 78 58 129 60 174 65

30 58 79 60 130 58 175 57

31 60 80 60 131 56 176 65

32 60 81 58 132 58 177 65

33 58 84 58 133 61 178 57

36 58 85 60 134 60 179 65

37 60 86 60 135 58 180 69

38 60 87 58 136 56 181 69

39 58 92 60 137 58 182 58

40 56 93 58 138 61 183 58

41 58 96 58 139 60 184 58

42 61 97 60 140 58 185 58

43 60 98 60 141 56 186 58

44 58 99 58 142 58 187 58

45 56 100 56 143 61 188 58

46 58 101 56 144 60 189 58

47 61 102 58 145 58 190 58

48 60 103 60 146 56 191 65

49 58 104 60 147 58 192 65
50 56 105 58 148 61 AGGREGATE
51 58 106 56 149 60 10006

Reasons

Legislative Considerations

45. Section 47(2) of the Act provides:

"47 Application of lot entitlements
(2) The contribution schedule lot entitlement for a lot is the basis for calculating--
(a) the lot owner’s share of amounts levied by the body corporate, [my underlining] unless the extent of the lot owner’s obligation to contribute to a levy for a particular purpose is specifically otherwise provided for in this Act;¹ and
(b) the value of the lot owner’s vote for voting on an ordinary resolution if a poll is conducted for voting on the resolution.
¹ The regulation module applying to a community titles scheme might provide that a lot owner’s contribution to some or all of the insurance required to be put in place by the body corporate is to be calculated on the basis of the lot’s interest schedule lot entitlement.

46. Consideration of Section 47(2) would suggest that, of those provisions set out, the only provision capable of quantitative assessment, rather than on some idiosyncratic basis, is that regarding a lot owner’s share of amounts levied by the body corporate.
47. It also makes some commercial sense for the value of a lot owner’s vote (if polled) to be proportional to that lot owner’s share of amounts levied by the body corporate.
48. On that basis, the proper determination of a lot owner’s share of amounts levied by the body corporate, in satisfaction of Section 47(2)(a), would also satisfy Section 47(2)(b).
49. Accordingly, I consider that Section 47(2) requires that when determining a contribution lot entitlement, unless specifically otherwise provided for in the Act (such as some components of insurance premiums), regard should only be had to relevant amounts for which the body corporate is liable.
50. Section 48 of the Act provides that, for the contribution schedule, the order of a specialist adjudicator must be consistent with the principle that 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. Section 48 of the Act provides:
51. Section 48(4)(a) of the Act provides:

"48 Adjustment of lot entitlement schedule
(4) The order of the court or specialist adjudicator must be consistent [my underlining] with--
(a) if the order is about the contribution schedule--the principle stated in subsection (5)"

52. Section 48(4)(a) of the Act limits an adjudicators discretion as it requires that an adjudicators order must be consistent with the stated principles. It also implies that an adjudicator has a duty to ensure that any order made is consistent with the stated principles. For this reason an adjudicator may not, for example, make a consent order.
53. Section 48(5) of the Act provides:

"48 Adjustment of lot entitlement schedule
(5) For the contribution schedule, the respective lot entitlements should be equal [my underlining], except to the extent to which it is just and equitable in the circumstances for them not to be equal."

54. Given the provision in Section 48(5) of the Act, once an Applicant has established a prima facie’ case that the existing schedule is unjust and unequal the onus then is on the Respondent to place material before me to prove that any departure from equal is just and equitable in the circumstances.
55. Section 49 of the Act provides, inter alia:

"49 Criteria for deciding just and equitable circumstances
(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
(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."

56. Section 49 provides some criteria for deciding just and equitable circumstances for contribution schedule lot entitlements not to be equal. It enables an adjudicator to have regard to how the community titles scheme is structured, the nature features and characteristics of the lots included in the scheme and the purposes for which the lots are used, but does not limit an adjudicator to have regard to only those matters. However, when considering the earlier analysis of Section 47(2) of the Act, those considerations set out in Section 49 can only be in respect of the impact of those criteria on relevant body corporate expenditure.
57. Section 49(5) specifically prevents an adjudicator from having regard to any knowledge or understanding that the Applicant’s had with respect to lot entitlements when they contracted to buy their lot.
58. Consistent with these conclusions, Fischer & Ors v Body Corporate for Centrepoint Community Title Scheme 7779 [2005] QCA 214 relevantly provides the following at paras 26 to 33:

"[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. [my underlining] More general considerations of amenity, value or history are to be disregarded. What is at issue is the ‘equitable’ distribution of the costs.
[27] There are a number of reasons for this conclusion. The first is to be found in the terms of the Explanatory Notes which accompanied the 2003 Act and the content of the second reading speech when the Bill for it was debated. Because the meaning of the Act is unclear it is permissible to consult these materials.
[28] Section 10 of the 2003 Act inserted s 46(7) which is in these terms:

‘(7) For the contribution schedule for a scheme for which development approval is given after the commencement of this subsection, 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.’

This replaced an earlier provision, which was repealed by the 2003 Act, to the effect that upon registration a community titles scheme did not have to provide for equal contribution lot entitlements. Explaining the change 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 this 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.’

[29] In the Second Reading Speech it was said:

‘The issue of the nature of the contributions schedule for a body corporate scheme has created some discussion. The guiding principle for both setting and adjusting the contributions schedule is that it involves the equitable sharing of the costs of operating and maintaining the common property. [my underlining and emphasis] These costs should be borne in proportion to the benefit, not in proportion to the unit’s value. It is not a contribution linked to an ability to pay, but as a payment for services. [my underlining] ... There is not an argument ... against the fact that, in terms of costs related to a property’s value – costs such as rates and insurance – owners whose properties are worth more should pay more. But when we are talking about those parts of a property where the benefits are shared more or less equally, we cannot apply the same formula.’

[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. [my underlining] 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 inquiry is the extent to which an apartment unequally causes costs to the body corporate. [my underlining]
[32] The third consideration is that if this principle not be the applicable one then there is no basis on which applications for adjustment of a contribution lot entitlement schedules can consistently be made. As the evidence in this application shows, if the inquiry is limited to the extent to which an apartment creates costs, or consumes services, above or below the average, one can readily determine what the contribution lot entitlement should be. The high degree of similarity in the reports of Mr Sheehan and Mr Linkhorn demonstrates this. If the inquiry be wider and include such nebulous criteria as the structure of the scheme, or the nature, features and characteristics of the apartments in the scheme, and the purposes for which they are used, there is no intelligible basis on which there could be a consistent and coherent determination of applications for adjustment of lot entitlements. Each case would be determined idiosyncratically and a vast variety of circumstances might be relied upon to depart from, and therefore erode, the principle said to be paramount, that there should be an equality of entitlements.
[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 title scheme. [my underlining]"

59. The Court of Appeal has stated that the Act is intended to produce a contribution lot entitlement schedule which divides body corporate expenses equally except to the extent that lots 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, this judgment is binding not only on me, but on any adjudicator or single judge in Queensland.

Scheme Considerations

60. I now turn to consideration of the matters the legislation requires to be considered in respect of the Scheme.
61. The Applicant’s grounds for the Application are set out as follows:
"Grounds are set out in report of K & G Strata Consultants Pty Ltd dated August 2004.
I attach the following documents:-
"A" Report of K & G Strata Consultants Pty Ltd dated August 2004
"B" Notice of Motion
"C" Minutes of Annualk General Meeting dated 28 February 2005."
62. As set out earlier, the Applicant had confirmed by his agent, Muir, that he relied upon O’Brien as his agent at the conference. The Applicant by his agent, Muir, also provided advice, dated 4 May 2006, that he would accept the Arkcoll Report.
63. O’Brien, the author of the O’Brien Report, has tertiary qualifications in building (quantity surveying) and some experience with aspects of body corporate management. The Respondents did not in any submissions, including at conference through Arkcoll, make any submission as to why O’Brien should not be accepted as an expert.
64. I accept the O’Brien Report as that of an expert within their area of expertise for this application and therefore find that it is admissible as expert evidence. The O’Brien Report considers the cost burden of the lots within the scheme on the body corporate expenditure and concludes with a recommended contribution lot entitlement schedule which varies from the existing contribution lot entitlement schedule.
65. The Respondent Body Corporate, as set out earlier, confirmed by its agent, Maddock, that it relied upon Arkcoll as its agent at the conference.
66. Arkcoll, the author of the Arkcoll Report, has tertiary qualifications in quantity surveying and law along with significant experience with numerous aspects of body corporate planning and expenditure. The Applicant did not in his written submissions, or at hearing through O’Brien, make any submission as to why Arkcoll should not be accepted as an expert.
67. I accept the Arkcoll Report as that of an expert within their area of expertise for this application and therefore find that it is admissible as expert evidence. The Arkcoll Report considers the cost burden of the lots within the scheme on the body corporate expenditure and concludes with a recommended contribution lot entitlement schedule which varies from the existing contribution lot entitlement schedule.
68. Both the O’Brien and the Arkcoll Report consider the cost burden that the nature, features and characteristics of the lots within the Scheme place on the body corporate expenditure in extensive detail.
69. Both expert reports provide that the existing contribution lot entitlement schedule is not just and equitable in the circumstances and conclude with a recommended contribution lot entitlement schedule which varies from the existing contribution lot entitlement schedule.
70. For the purposes of determining the relevant body corporate expenditure, I reviewed the following information regarding the scheme;

a.	The sinking fund forecast, dated January 2004;
b.	Statement of accounts for the Sinking Fund for the periods to 31/12/01, 31/12/02, 31/12/03, 31/12/04 and 31/12/05;
c.	The current Sinking Fund Budget (to 31/12/06);
d.	Statement of accounts for the Administration Fund for the periods to 31/12/01, 31/12/02, 31/12/03, 31/12/04 and 31/12/05;
e.	The current Administrative Fund Budget (to 31/12/06); and
f.	The O’Brien and Arkcoll reports.

71. For the purposes of determining the impact of the various criteria, for deciding just and equitable circumstances, I reviewed the following information regarding the scheme;

a.	The Community Management Statement;
b.	The Building Unit Plans;
c.	The Body Corporate Management, Building Management and Letting Agreements; and
d.	The O’Brien and Arkcoll reports.

72. Section 49(4) of the Act provides:

"49 Criteria for deciding just and equitable circumstances
(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."

73. The CMS for the Scheme confirms that the Regulation Module applying to the Scheme is the Body Corporate and Community Management (Standard Module) Regulation 1997.
74. The Scheme is not part of a layered arrangement, neither body corporate has a lot allocation within the other, however the Scheme does share significant of the grounds and facilities with the adjoining Body Corporate for Atlantis East.
75. The by-laws for the scheme are set out in the CMS. By-law 25 provides that all lots shall only be used for residential purposes except lot 1 which may conduct the business of management of the building and for the sale and letting of lots in the building.
76. By-laws 32, 33, 34 and 36 set out various exclusive use entitlements attaching to lots in the Scheme.
77. The first matter addressed by the experts was which report to use as a base document. O’Brien disclosed that, in working for the applicant (as a lot owner), he had not had the same level of information access or opportunity to have queries answered as had Arkcoll, in working for the Body Corporate and having full access to the Body Corporate records. This was considered to have led to a better understanding and approach to numerous of the items in the Arkcoll report.
78. Furthermore it was identified that the Arkcoll Report (December 2005) was prepared sixteen (16) months after the O’Brien report (August 2004), thereby having the benefit of access to an additional year of financial reports and likely to be more accurate at the present time due to the more recent preparation. At the time of preparation of the O’Brien report the 2004 administration fund budget was $602,500.00, the allowances made in the O’Brien report would have some basis in that budget. The 2004 administration fund actual expenditure was $679,437.77 an increase of over 10% on the budget figures considered in the O’Brien report. At the time of preparation of the Arkcoll report the 2005 administration fund budget was $637,320.00, the allowances made in the Arkcoll report would have some basis in that budget. The 2005 administration fund actual expenditure was $626,629.10 a variation of only 1.7% on the budget figures considered in the Arkcoll report.
79. Therefore it was agreed between the experts, and I concur, that the better report to adopt as a base report was the Arkcoll report ("the Base Report").
80. Prior to the conference I had provided both parties with a list of issues which I wished to have addressed at the conference, that list included the following primary issues:

•	Principles to be adopted in determining the apportionment of the ‘lot owner’ shares of the various costs
•	The basis of determination of each of the various cost to be considered
•	The basis of measurement of each of the items to be considered

81. The experts then turned to consider these issues, in regard to the first, "the Principles", I had identified in my list the following sub-topics:

Administration Fund, administrative items
Administration Fund, non-administrative items
Sinking Fund items

82. Both expert reports provided that all administrative items (such as body corporate administration fees and property management fees) should be proportioned equally amongst all lot owners.
83. I have reviewed the expert reports and additionally the management, caretaking and letting agreements and find nothing in those agreements to conclude differently to the experts that all administrative expenses should be proportioned equally amongst all lots. Neither expert brought to my attention, nor could I locate, any provisions which would suggest that any lot owner(s) received any additional benefit to any other lot owner(s) in regard to the administrative items in the body corporate budget. I therefore concur with the apportionment of these costs equally between all lots.
84. Non administrative items in the "administration fund" (such as repair and maintenance of lifts, buildings and grounds) were treated differently by each expert. Arkcoll had considered each of these items and determined that they should each be apportioned equally between all lot owners, whereas O’Brien having considered these items determined that: Common Power, Fire Control, Contribution Shared Facilities, Repairs and Maintenance to the lifts, building, electrical and plant and equipment should all be apportioned on the basis of the lot area (including its exclusive use car park area) for each lot. Each of these items was discussed in isolation. Following further advice from Arkcoll, particularly in respect of the ‘contribution shared facilities’, O’Brien agreed with Arkcoll that each of these costs should be apportioned equally.
85. All of the items in question relate to common areas of the scheme (including in the instance of ‘Contribution Shared Facilities’ those shared with the adjoining scheme ‘Atlantis East’). O’Brien had apportioned on the basis of lot area considering that the occupancy of each lot would be a factor in the incursion of each of the costs considered. I am of the view that area (including its exclusive use car park area) is not an accurate measure of the occupancy of each lot. I am also of the view that the occupancy of a lot is not a relevant consideration to the cost of running common property lights, plant and equipment, or the servicing thereof, when those items operate for fixed periods irrespective of the occupancy of the building. Furthermore, where the incursion of a cost for the repair of an item is related to use of that item it is equally arguable that factors such of the treatment of those items by the user would be a factor in the incursion of the cost. Clearly, the manner and level of care with which a person treats common property is not related to the occupancy of a lot but rather individual factors which cannot be properly measured for consideration in circumstances such as these. I therefore concur with the apportionment of these costs equally between all lots.
86. With regard to items in the sinking fund, when each of the experts had considered that they should be apportioned other than equally they had typically apportioned them in a different manner. Arkcoll had done so in a quantitive manner (by measuring the quantities of each item) whereas O’Brien had done so by application of the lot area (including its exclusive use car park area) for each lot. O’Brien accepted that Arkcoll’s approach would be more accurate and accepted that was the more appropriate approach.
87. I am of the view that were a cost is incurred that is readily identified as being incurred in proportion to the size, or length or area or number of items, then if available, the most appropriate method of apportionment is in accordance with the measurement of that size, or length or area or number of items. Accordingly, I concur with the apportionment of such cost items in accordance with the measurement of each of those items beneficially to each lot (or where not beneficial to a lot then equally). These items will be considered further when turning to the third issue "the basis of measurement".
88. In regard to the second issue, "the basis of cost", I had identified in my list the following sub-topics:

Adjustments to the Sinking Fund Forecast
Averaging of Amounts
Introduced / amended allowances

89. Both expert reports made adjustments to the Sinking Fund Report and both experts had indexed the sinking fund allowances to the date of their respective reports.
90. Although the sinking fund forecast made allowance for the capital cost of lift replacement, the Arkcoll report did not make any capital cost allowance for the future lift replacement. O’Brien argued that such an allowance should properly be included, Arkcoll conceded that such an allowance would be prudent. The amount to allow was then ventilated and it was concluded that an appropriate sinking fund allowance for lift replacement would be $25,000 per annum. I concurred with and participated in those discussions and upon reaching the above conclusion I instructed Arkcoll to make that amendment to the Base Report.
91. The Arkcoll report made capital cost allowances for future lift carriage refurbishment and window frame replacement. The sinking fund forecast had made no allowance for these costs, O’Brien agreed that such allowances should properly be included in the sinking fund forecast. The amount to allow was then ventilated and it was concluded that the allowances made by Arkcoll in her report were appropriate. I accept the expert opinion as to the adjustments made.
92. The Arkcoll report adjusted the capital cost allowances in the sinking fund forecast for the entrance, foyer and lift lobby refurbishment as the existing areas were considered of such high quality that it was considered that wear and tear would only be a minor factor in any refurbishment and that refurbishment would more likely be voluntary rather than necessary. The adjustment amended the bulk allowances made for the three items to eleven more specific items that were identified would require refurbishment. The financial affect of that adjustment was to reduce the allowances from $459,712 for the three bulk items to $188,917 for the eleven specific items. O’Brien agreed that the adjustment was reasonable and the allowances made appropriate and more realistic then those in the sinking fund forecast. I accept the expert opinion as to the adjustments made.
93. Both expert reports, with the Administration fund items, used a combination of either averaged or budget allowances for the purposes of their assessments.
94. The use of appropriate allowances was discussed and it was concluded that where there is a cost item which has shown a progressive increase from year to year then the budget amount should be adopted for analysis where that budget amount is in line with the progressive year to year increase. Typically these costs are associated with contract increases in service contracts with the Body Corporate.
95. The one notable exception was "Repair and Maintenance – Lifts", this item had shown continued increase but the budget item was significantly below that progressive increase. Arkcoll advised that the reason for that change was that the Body Corporate had recently renegotiated that service contract and that the reduced budget allowance reflected the new contract terms, for this item the budget amount was therefore still adopted.
96. It was also concluded that where expenditure was sporadic in nature, the most accurate assessment that could be made would be to average the historical spending. To add to the correctness of an ‘averaging’ analysis it is necessary to ensure that all historical information considered has been appropriately indexed such that when averaging a truer reflection of the current day cost average is obtained. A review of the items which would require such adjustment made evident that in the majority of instances those items were minor expenses and therefore any adjustment would be insignificant and of negligible impact on the assessment. Due to commercial considerations those items were not pursued, however there remained one item which was significant enough to index and for which the index itself was also not insignificant. That item was "Repair and Maintenance – Building and General" which, without indexing, averaged $22,240.56 per annum. It was considered, and agreed by both Arkcoll and O’Brien, that the applicable index for this item would be the Building Price Index. I therefore instructed Arkcoll to make that further amendment to the Base Report. Having reviewed the amended Base Report, I make the observation that the averaged allowance used for "Repair and Maintenance – Building and General" item increased to $27,003.01 per annum.
97. Although the Arkcoll report identifies that the Act provides that insurance, other than building replacement insurance, is to be shared on the basis of the contribution lot entitlement schedule it does not make any allowance for that insurance when undertaking the assessment. O’Brien had made an allowance of $5,000 for Public Liability insurance when undertaking his assessment. This matter was discussed further, that discussion brought to light that while the Body Corporate do have public liability insurance the cost of that insurance is not itemised separately to the building replacement insurance on its renewal notice. It was agreed that the building replacement insurance would constitute the bulk of the $70,000 insurance budget ($63,051.06 cost year ending 31 December 2004). O’Brien advised that the allowance made in his report of $5,000 did not take into account the advice from Arkcoll that the ‘Contribution Shared Facilities’ included the insurance costs for those shared facilities. The shared facilities, on Arkcoll’s advice, are shared with ‘Atlantis East’ and include part of; the driveway and set down areas, tennis court facilities, recreation facility containing pool, sauna, gym, entertainment room and security office, external visitors parking area, extensive lawns, landscaping and paving. Arkcoll suggested that in her experience a more appropriate allowance would be $1500, O’Brien concurred with this view. I accepted this as an estimate within their expertise and therefore instructed Arkcoll to make that further amendment to the Base Report.
98. In regard to the third issue, "the basis of measurement", I had identified in my list the following sub-topics:

Lift Capital Cost
Tennis Court / Lobby Refurbishment / Facilities
Waterproofing / Balustrade / Concrete Repairs, Paint and Maintenance / Door Locks
Window Frames
Booster Pump / Jacking Pumps
A/C Pumps
CW Pumps
Smoke Detectors

99. These were all items which were not shared equally in at least one of the expert reports. The prima facie position set out in the Act is that all costs be equal, it is important therefore that recommended deviation from that position is reviewed.
100. The Lift Capital Cost, which had initially only appeared in the O’Brien Report (as discussed in the basis of cost above), was a cost which had been apportioned by O’Brien on a lot area basis. When this item was discussed it became evident that the most likely reason for this cost to be incurred was obsolescence of existing plant which ultimately prevents the ability to simply maintain and repair such plant as the parts become no longer available. Such an occurrence is not an event triggered by use but rather by age and changing technology. On this basis it was agreed by both experts that this cost should properly be equally apportioned, a view with which I concur.
101. O’Brien, in his report, had apportioned the Sinking Fund; Tennis Court, Lobby Refurbishment and Facilities, allowances on the basis of lot area considering that the occupancy of each lot would be a factor in the incursion of each of the costs considered. Arkcoll, in her report, had apportioned each of these allowances equally between all lots. At the conclave these items were discussed in further detail and agreement was reached that the driver for the incurrence of these expenses was more likely to be optional upgrading rather then necessary upgrading. In such circumstances, lot occupancy, is unlikely to be a significant factor (and I would note not a factor the consequence of which could be quantitively determined in any event) in the incurrence of the expense and therefore the expense should be equally apportioned as it there is no readily established basis for alternative apportionment.
102. O’Brien, in his report, had apportioned the Sinking Fund; Waterproofing, Balustrade, Door Locks and Concrete Repairs, Paint and Maintenance, allowances on the basis of lot area considering that best represented the benefit obtained by each of the lots from those expenditure items. Arkcoll, in her report, had apportioned each of these allowances equally between all lots where they were in common areas providing no benefit to a lot and quantitive in accordance with the measured benefit to each lot where benefit was provided. At the conclave these items were discussed in further detail and agreement was reached (as discussed in the Principles earlier) that the Arkcoll approach to apportionment was to be preferred as it provided the more accurate reflection of the benefit provided to each lot. Therefore it was confirmed that the method of apportionment of these items in the Arkcoll report was correct.
103. As discussed in the basis of cost above, Arkcoll introduced an additional item for the replacement of Window Frames. Arkcoll had apportioned that item on the basis of quantitive measurement. O’Brien concurred that this was an appropriate method of apportionment. I concurred that, as a quantitive determination of the benefit to each lot could be made, this was the most appropriate method of apportionment for this item.
104. O’Brien, in his report, had apportioned the Sinking Fund; Booster Pump and Jacking Pump, allowances on the basis of lot area considering that best represented the benefit obtained by each of the lots from those expenditure items. Arkcoll, in her report, had apportioned each of these allowances equally between all lots. These items were discussed in further detail at the conclave. It was agreed by all present that the pumps which service the fire hoses etc located in the common areas were of equal benefit to all lots and that no lots obtained any specific benefit over any other lot from these pumps. It was agreed that these allowances should therefore properly be apportioned on an equal basis between all lots and that on that basis that the method of apportionment of these items in the Arkcoll report was the most appropriate.
105. O’Brien, in his report, had apportioned the sinking fund item allowance for the air conditioning pumps on the basis of lot area considering that best represented the benefit obtained by each of the lots from that expenditure items. Arkcoll, in her report, had apportioned this allowance equally between all lots. This item was discussed in further detail at the conclave. All lots have an entitlement to connect to the system and the reticulation system runs irrespective of the number of systems connected or in operation. The replacement life of the pump would therefore be unaffected by the individual lot usage of any air conditioning system that may have connected and as the system infrastructure was available to all lots it was therefore considered equally beneficial to all lots. It was agreed that these allowances should therefore properly be apportioned on an equal basis between all lots and that on that basis that the method of apportionment of these items in the Arkcoll report was the most appropriate.
106. O’Brien, in his report, had apportioned the sinking fund item allowance for the cold water pressure pumps on the basis of lot area considering that best represented the benefit obtained by each of the lots from that expenditure items. Arkcoll, in her report, had apportioned this allowance equally between all lots. This item was discussed in further detail at the conclave. This discussion established that one of the pumps serviced only the upper three levels of the building, however it could not be ascertained which areas the other pump serviced. This discussion also established that each pump included one pressure cylinder but the function of the third cylinder, in respect of either of the pumps was unknown. It was agreed by all present that the pumps should therefore be apportioned such that the allowances for one pump should be apportioned equally among the upper three levels which it was known to exclusively service. The second pump to be apportioned equally between the remaining lots. With regard to the cylinder costs, it was agreed that the most appropriate apportionment in the circumstances was to equally apportion the costs to each of the pumps. I therefore instructed Arkcoll to make that further amendment to the Base Report.
107. The O’Brien and Arkcoll reports had both apportioned the sinking fund item allowance for smoke detectors on the basis of lot area considering that best represented the benefit obtained by each of the lots from that expenditure item. This item was discussed in further detail at the conclave. It was agreed by all present that the smoke detector allowance represented a significant number of detectors which were located on common property and equally beneficial to all lots. It was also agreed by all present that while the number of smoke detectors located within each unit might vary, that variation was not proportional to the area of each lot. Indeed it was agreed that variation between the (non-amalgamated) unit types was in the order of approximately four detectors, with the minimum number of detectors in a lot in the order of approximately eight. No detailed drawing were available to accurately determine these numbers. While it was accepted that there was a differing benefit for some units arising from this allowance it was considered to be marginal and it was agreed that an equal apportionment of these costs was at least as accurate as apportionment on an area basis. Considering the provisions of the Act that, prima facie, all costs be equally apportioned and the considering the cost of accurately determining the precise number of smoke detectors in each lot, it was agreed that the appropriate option in the circumstances was to adopt an equal apportionment for this item. I therefore instructed Arkcoll to make that further amendment to the Base Report such that the smoke detector replacement allowance was apportioned equally.
108. The amended pages of the Arkcoll Report are appended to this order. O’Brien has review the amendments and has provided advice that the amendments made reflect the agreements reached at the conclave.
109. Having given due consideration to the relevant matters pursuant to Section 49 of the Act, I consider that an adjustment to the contribution schedule lot entitlements that would reflect the just and equitable contribution of each lot to the ongoing administration and maintenance of the Scheme is set out in my findings on the application for adjustment above.

COSTS

Findings:

i. That the Applicant is responsible for the cost of the abandoned conference.
ii. Excluding the abandoned conference, that the Applicant and Respondent are equally responsible for the cost of the adjudication.

Reasons:

Legislative Considerations

110. Section 265(1)(c) of the Act provides:

"265 Specialist adjudication of particular disputes
(1) The adjudication of a dispute must be specialist adjudication if--
(c) another provision of this Act requires the adjudication to be specialist adjudication."

111. Section 48(1)(b) of the Act provides:

"48 Adjustment of lot entitlement schedule
(1) The owner of a lot in a community titles scheme may apply--
(b) under chapter 6, for an order of a specialist adjudicator for the adjustment of a lot entitlement schedule."

112. Section 280 of the Act provides:

"280 Costs of specialist adjudication
(1) This section applies to an application dealt with by specialist adjudication mentioned in section 265.
(2) Unless the adjudicator otherwise orders, the applicant is responsible for the costs of the adjudication."

113. Thus the prima facie’ position is that the applicant is responsible for the cost of the adjudication. There must exist some reason for the adjudicator to exercise their discretion to otherwise order.

Application Considerations

114. Section 48(2)(a) of the Act provides:

"48 Adjustment of lot entitlement schedule
(2) Despite any other law or statutory instrument--
(a) the respondent for an application mentioned in subsection (1) is the body corporate"

115. No submission was been made that the Applicant had any involvement in or responsibility for the determination of the existing contribution lot entitlement schedule.
116. No submission was made that the Applicant had made any changes to the structure of the scheme which would give rise to a change in body corporate expenditure liabilities or benefits which were the cause of any basis for adjustment.
117. It is apparent that the scheme is a well established Scheme which was established prior to the introduction of the Act in 1997 and which was created under earlier legislation which had differing provisions for the determination of lot entitlement schedules.
118. When the Act was introduced in 1997, no adjustment was made to the schedules by the Body Corporate to bring them in line with the provisions contained in the Act when registering the new CMS following the introduction of the Act.
119. This appears to be a case where the Applicant has now sought to require adjustment to bring the Scheme in line with the provisions of the Act, a position that the Applicant could have potentially achieved at no cost to himself, but at Body Corporate expense, at the time the new CMS was proposed for adoption following the introduction of the Act.
120. While the amendment of the schedule in accordance with the Act might be viewed by some as beneficial to the Applicant and similarly effected lots, such a view would not be one which would properly consider the position of the Applicant and similarly effected lots since the commencement of the Scheme or those lots for which the converse position has applied. The same can be said for all lots in the scheme, the adjustment of the balance between lots is simply a reflection of the cost impost of each of those lots upon the scheme, the scheme as a whole maintains its status quo.
121. It is apparent that the disparity stems from an inherent departure in the CMS schedules from the current legislative provisions, rather than from any act or omission of the Applicant.
122. In this instance a submission was made by the Body Corporate upon which significant time was spent in consideration and which report was ultimately largely adopted. Therefore it would be reasonable that the Body Corporate equally share in the cost of the adjudication with the exception of those costs thrown away and I exercise my discretion accordingly.

PLEASE NOTE: The amended pages of the Arkcoll Report referred to in paragraph 108 can be obtained from the Commissioner’s Office upon request.