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Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders |
Last Updated: 19 December 2006
|
Office of the Commissioner for Body Corporate and
Community Management SPECIALIST ADJUDICATION (Adjustment of Lot Entitlements) Number: 0222A-2006 |
Applicant: BARRY KNIGHT HOLDINGS PTY
LTD
Respondent: BODY CORPORATE FOR WATKINS MEDICAL
CENTRE
COMMUNITY TITLES SCHEME 11436
O R D E R
24 July 2006
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In this matter I order that the contribution lot entitlement schedule in
community titles scheme 11436 be adjusted in accordance with
the annexed new
schedule.
WATKINS MEDICAL CENTRE CTS 11436
Lot no. Proposed contribution schedule lot Entitlements Lot 16 in BUP 3733 10 Lot 60 in BUP 3733 10 Lot 61 in BUP 3733 10 Lot 62 in BUP 3733 10 Lot 63 in BUP 3733 10 Lot 64 in BUP 3733 10 Lot 65 in BUP 3733 10 Lot 66 in BUP 3733 10 Lot 67 in BUP 3733 10 Lot 68 in BUP 3733 10 Lot 69 in BUP 3733 10 Lot 70 in BUP 3733 10 Lot 71 in BUP 3733 10 Lot 72 in BUP 3733 10 Lot 73 in BUP 3733 10 Lot 74 in BUP 3733 10 Lot 75 in BUP 3733 10 Lot 76 in BUP 3733 10 Lot 77 in BUP 3733 10 Lot 78 in BUP 3733 10 Lot 116 in BUP 3733 113 Lot 117 in BUP 3733 102 Lot 118 in BUP 3733 96 Lot 119 in BUP 3733 122 Lot 120 in BUP 3733 100 Lot 121 in BUP 3733 91 Lot 122 in BUP 3733 10 Lot 123 in BUP 3733 10 Lot 124 in BUP 3733 10 Lot 125 in BUP 3733 10 Lot 126 in BUP 3733 10 Lot 127 in BUP 3733 10 Lot 128 in BUP 3733 10 Lot 129 in BUP 3733 10 Lot 130 in BUP 3733 10 Lot 131 in BUP 3733 10 Lot 132 in BUP 3733 10 Lot 133 in BUP 3733 10 Lot 134 in BUP 3733 10 Lot 135 in BUP 3733 10 Lot 136 in BUP 3733 10 Lot 137 in BUP 3733 10 Lot 138 in BUP 3733 10 Lot 139 in BUP 3733 10 Lot 140 in BUP 3733 10 Lot 141 in BUP 3733 10 Lot 142 in BUP 3733 10 Lot 143 in BUP 3733 10 Lot 144 in BUP 3733 10 Lot 145 in BUP 3733 10 Lot 146 in BUP3733 10 Lot 147 in BUP 3733 10 Lot 148 in BUP 3733 10 Lot 149 in BUP 3733 10 Lot 150 in BUP 3733 10 Lot 151 in BUP 3733 10 Lot 152 in BUP 3733 10 Lot 153 in BUP 3733 10 Lot 154 in BUP 3733 10 Lot 155 in BUP 3733 10 Lot 156 in BUP 3733 10 Lot 157 in BUP 3733 10 Lot 158 in BUP 3733 10 Lot 159 in BUP 3733 10 Lot 160 in BUP 3733 10 Lot 161 in BUP 3733 10 Lot 162 in BUP 3733 10 Lot 163 in BUP 3733 10 Lot 164 in BUP 3733 10 Lot 165 in BUP 3733 10 Lot 166 in BUP 3733 10 Lot 167 in BUP 3733 10 Lot 168 in BUP 3733 10 Lot 169 in BUP 3733 10 Lot 170 in BUP 3733 10 Lot 171 in BUP 3733 10 Lot 172 in BUP 3733 10 Lot 173 in BUP 3733 10 Lot 174 in BUP 3733 10 Lot 175 in BUP 3733 10 Lot 176 in BUP 3733 10 Lot 177 in BUP 3733 10 Lot 178 in BUP 3733 10 Lot 179 in BUP 3733 10 Lot 180 in BUP 3733 10 Lot 181 in BUP 3733 10 Lot 182 in BUP 3733 10 Lot 183 in BUP 3733 10 Lot 184 in BUP 3733 10 Lot 185 in BUP 3733 10 Lot 186 in BUP 3733 10 Lot 187 in BUP 3733 10 Lot 188 in BUP 3733 10 Lot 189 in BUP 3733 10 Lot 190 in BUP 3733 10 Lot 191 in BUP 3733 10 Lot 192 in BUP 3733 10 Lot 193 in BUP 3733 10 Lot 194 in BUP 3733 10 Lot 195 in BUP 3733 10 Lot 196 in BUP 3733 98 Lot 197 in BUP 3733 93 Lot 198 in BUP 3733 91 Lot 199 in BUP 3733 98 Lot 200 in BUP 3733 94 Lot 201 in BUP 3733 96 Lot 202 in BUP 3733 93 Lot 203 in BUP 3733 92 Lot 204 in BUP 3733 10 Lot 205 in BUP3733 10 Lot 206 in BUP 3733 10 Lot 207 in BUP 3733 10 Lot 208 in BUP 3733 10 Lot 209 in BUP 3733 10 Lot 210 in BUP 3733 10 Lot 211 in BUP 3733 10 Lot 212 in BUP 3733 10 Lot 213 in BUP 3733 10 Lot 214 in BUP 3733 10 Lot 215 in BUP 3733 10 Lot 216 in BUP 3733 10 Lot 217 in BUP 3733 10 Lot 218 in BUP 3733 10 Lot 219 in BUP 3733 10 Lot 220 in BUP 3733 10 Lot 221 in BUP 3733 10 Lot 222 in BUP 3733 10 Lot 223 in BUP 3733 10 Lot 224 in BUP 3733 10 Lot 225 in BUP 3733 10 Lot 226 in BUP 3733 10 Lot 227 in BUP 3733 10 Lot 228 in BUP 3733 10 Lot 229 in BUP 3733 10 Lot 230 in BUP 3733 10 Lot 231 in BUP 3733 10 Lot 232 in BUP 3733 10 Lot 233 in BUP 3733 10 Lot 234 in BUP 3733 10 Lot 235 in BUP 3733 10 Lot 236 in BUP 3733 10 Lot 237 in BUP 3733 10 Lot 238 in BUP 3733 10 Lot 239 in BUP 3733 10 Lot 240 in BUP 3733 10 Lot 241 in BUP 3733 94 Lot 242 in BUP 3733 93 Lot 243 in BUP 3733 90 Lot 244 in BUP 3733 98 Lot 245 in BUP 3733 94 Lot 246 in BUP 3733 96 Lot 247 in BUP 3733 93 Lot 248 in BUP 3733 92 THIS and the preceding 7 pages are the annexure to my Order in
the matter of Barry Knight Holdings Pty Ltd and Body corporate for
Watkins
Medical Centre community titles scheme 11436 (Commissioner’s Reference No.
0222A-2006) dated 24 July 2006.
|
Gary Bugden OAM
Specialist Adjudicator
Office of the Commissioner for Body Corporate and
Community Management
SPECIALIST
ADJUDICATION
(Adjustment of Lot Entitlements)
Number: 0222A-2006
Applicant: BARRY KNIGHT HOLDINGS PTY
LTD
Respondent: BODY CORPORATE FOR WATKINS MEDICAL
CENTRE
COMMUNITY TITLES SCHEME 11436
DETERMINATION
24 July 2006
Application
1. In this matter the applicant seeks an order under section 48 of the Body Corporate and Community Management Act 1997 ("Act") adjusting the contribution schedule lot entitlements in community titles scheme 11436 ("Scheme") which is situated at 225 Wickham Terrace, Spring Hill.
2. The applicant is the owner of lot 382 in the Scheme and is entitled to bring this application by virtue of section 48(1) of the Act. The respondent is the body corporate for the Scheme. It is not the respondent by choice, but because section 48(2)(a) of the Act says that "despite any law or statutory instrument" the respondent is the body corporate.
3. An owner of a lot in the Scheme can elect to become a respondent to the application by virtue of section 48(2)(b), but in this case no such election has been made. This type of election is to be distinguished from the making of written submissions on the application. Any owner can make a written submission to the Commissioner about the application without electing to become a party to it. In this matter only one owner has chosen to do that.
The Scheme
4. The underlying plan for the Scheme is Building Units Plan No 3733 ("Plan"). The Plan was registered and the body corporate constituted under the Building Units Titles Act 1965-1972. The Plan originally had 378 lots but lot 345 was re-subdivided into lots 379, 380 and 381 by Building Re-subdivision Plan No 5471 and lots 1 to 15, lots 17 to 59 and lots 79 to 115 were amalgamated into lot 382 on Building Amalgamation Plan No 12830. Lot 382 became a Car Park lot and is the lot owned by the applicant.
5. The Plan and the body corporate were both transitioned to the Building Units and Group Titles Act 1980 under section 5 of that Act and then subsequently transitioned to the Act (i.e. the 1997 Act) under section 330 of the Act.
6. The original schedule of lot entitlements, as varied by the 2 subsequent plans, remained in tact until 13 July 1997 when the substantive provisions of the Act came into effect. At that time the single schedule of lot entitlements was replaced by 2 identical schedules of lot entitlements, the numerical allocations of which were each identical with the allocations in the original single schedule under the former Acts. These 2 new schedules are know as:
• Contribution Schedule Lot Entitlements
• Interest Schedule Lot Entitlements.
7. As previously mentioned, this application is concerned with the contribution schedule lot entitlements. These entitlements determine the –
(a) lot owner’s share of levies (unless the Act provides for some other basis of sharing particular levies – e.g. levies for insurance premiums); and (b) value of a lot owner’s vote on an ordinary resolution if a poll is demanded.
8. The Scheme comprises 2 adjoining buildings. The main building is 12 stories and comprises a medical centre. It includes 76 professional consulting rooms, 3 retail shops, a pathology laboratory and 19 basement car parking spaces. The shops and laboratory are located on the ground floor fronting Wickham Terrace and the basement car parking spaces are accessed from Bartley Street, on the western side of the main building.
9. The secondary building is a 15 story car parking station. It is located at the northern end of the main building and contains 279 car parking spaces for use in conjunction with the main building. Vehicular access to this secondary building is from the northern end further down Bartley Street. A ramp provides access from one building to another.
10. Common property in the main building consists of 2 lifts, internal stairway providing access to all floors, common area toilets on each level, air conditioning system, emergency and general lighting, intercom system, standby generator, pumping equipment, stair pressurization unit, toilet exhaust fans, fire fighting equipment, fire control system, internal garbage chute, rubbish disposal services, a front entrance courtyard and garden planters.
11. Common property in the secondary building consists of a lift servicing all levels, 2 stairways servicing all levels, lighting, parking pylon mechanisms, associated control systems and fire fighting equipment.
12. The Scheme has the services of a caretaker who is engaged as a service contractor by the body corporate. Under the terms of the service agreement the caretaker is required to perform specified daily, weekly and monthly duties relating to all of the common property (i.e. the common property in both buildings).
Contribution schedule lot entitlements
13. The current contribution schedule lot entitlements are generally 9 for a car parking lot and range between 64 and 304 for other lots, with the one exception – an entitlement of 855 for the applicant’s Car Park lot (lot 382). The aggregate is currently 11,642.
14. The new contribution schedule lot entitlements proposed by the applicant are generally 10 for a car parking lot and a range between 91 and 122 for other lots, with the Car Park lot having 90. The proposed new aggregate is 9977.
15. A comparison of the existing and proposed allocations reveals that the new allocations, although clearly not equal, are much closer to a position of equality.
16. The applicant sought on 22 June 2005 to have the body corporate in general meeting agree to the proposed new contribution schedule lot entitlements but a motion to that effect was defeated. This effectively put the applicant in dispute with the body corporate.
Relevant provisions of the Act
17. Section 48(4)(a) of the Act provides in respect of this type of application:
"The order of the court or specialist adjudicator must be consistent with –
(a) if the order is about the contribution schedule – the principle stated in sub-section (5); or (b) ............"
18. Section 48(5) of the Act then provides:
"(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."
19. Section 49 of the Act then sets out the criteria for deciding just and equitable. It provides:
"(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."
20. Upon first reading, sub-sections (3) and (4) of section 49 raise the possibility of an adjudicator or the District Court taking a range of matters into consideration when determining these applications. However, the decision of the Court of Appeal in Fischer & Ors v. Body corporate for Centrepoint community titles scheme 7779 [2004] QCA 214 has substantially restricted the matters that may be taken into account. In that case Chesterman J (with whom McPherson JA and Atkinson J agreed) said [at paras. 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."
21. That is not to say that other factors are irrelevant, but rather, in the absence of other factors, the proper test is the demand the respective lots make on the services and amenities provided by the body corporate.
22. In the case of the Scheme, there is an argument that "the nature, features and characteristics of the lots included in the scheme" and "the purposes for which the lots are used" are relevant to the allocation of contribution schedule lot entitlements. However, an analysis of that relevance leads one to the conclusion that the real issue is the extent to which the respective lots make demand on the services and amenities provided by the body corporate, which is the test identified in the Centrepoint case.
The evidence
23. In support of the application the applicant has provided an expert’s report prepared by Messrs Linkhorn & Simpson dated 10 May 2005 ("Report"). The Report concludes that the current contribution lot entitlement schedule is not just and equitable to all lot owners within the buildings and recommends the new contribution schedule lot entitlements sought by this application.
24. The Report analyses the expenses of the body corporate, ascertained from the body corporate’s administrative fund budget for the 2004/2005 year and a sinking fund forecast prepared by a specialist firm for the 2004/2005 year. It then allocates those expenses to the various lots based on criteria that are considered the most appropriate for the particular type of expense. The various criteria (and lettering) used are:
a. Equal sharing of costs by lots (where each lot benefits equally from the expenditure)
b. Overall costs (i.e. for both buildings) shared on an area basis
c. Secondary building costs (i.e. the parking building) shared on an equal basis
d. Secondary building costs (i.e. the parking building) shared on an area basis
e. Main building costs (i.e. the medical centre) shared on an equal basis
f. Main building costs (i.e. the medical centre) shared on an area basis.
25. Electricity and caretaking expenses, because they related to both buildings combined, had to be first apportioned on a reasonable use basis and insurance costs were omitted because they are recovered by the body corporate based on interest schedule lot entitlements.
26. The Report then allocates each criteria (other than b. which did not receive any allocation) on a percentage basis to the various lots to come up with a recommended new list of contribution schedule lot entitlements based on the extent to which, in the opinion of the experts, the lots draw on the services and amenities provided by the body corporate. I have no reason to doubt the soundness of this methodology and the accuracy of the calculations in the Report.
Findings
27. In this matter I find:
(a) there is a dispute between the applicant and the body corporate; (b) the applicant is entitled to bring this application; (c) the contribution schedule lot entitlements in the Scheme are not equal; (d) the contribution schedule lot entitlements in the Scheme are not just and equitable within the meaning of section 49 of the Act; (e) the contribution schedule lot entitlements proposed in the application are just and equitable within the meaning of section 49 of the Act; (f) there is nothing about the Scheme or the way the lots are used that needs to be taken into account in respect of this application, other than matters relating to demand on services and resources provided by the body corporate, being matters already taken into account in the Report; and (g) there is nothing about voting entitlements that otherwise impact on the contribution schedule lot entitlements proposed by the application.
28. I therefore propose to make an order adjusting the contribution schedule lot entitlements in the Scheme in the manner requested in the application.
Gary Bugden OAM
Specialist Adjudicator
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