Hemmant Village [2006] QBCCMCmr 654 (13 December 2006)

Last Updated: 27 March 2007

Office of the Commissioner for Body Corporate and Community Management SPECIALIST ADJUDICATION (Adjustment of Lot Entitlements) Number: 0337A-2006

Applicant: NADCO PTY LTD



Respondent: BODY CORPORATE FOR HEMMANT VILLAGE

COMMUNITY TITLES SCHEME 22717 AND OTHERS

O R D E R
13 December 2006

ORDERS that:

1 The Contribution Schedule Lot Entitlements in Community Title Scheme 22717 be adjusted so that they are equal, with an aggregate contribution schedule lot entitlement of 82. 2 That the Body Corporate, within 30 days from the date this order takes effect, lodge a new Community Management Statement for the purpose of giving effect to this order. 3 That the Body Corporate pay the costs of the Specialist Adjudication within 30 days from the date of receipt of a tax invoice in respect of those costs.

G F Bugden OAM
Specialist Adjudicator

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Adjustment of Lot Entitlements)

Number: 0337A-2006

Applicant: NADCO PTY LTD



Respondent: BODY CORPORATE FOR HEMMANT VILLAGE

COMMUNITY TITLES SCHEME 22717 AND OTHERS

DETERMINATION
13 December 2006

Application

1.	The Applicant, through its Director, Mr Peter Griep, has made an application under section 48(1)(b) of the Body Corporate and Community Management Act 1997 (‘Act’) for an order for the adjustment of the Contribution Lot Entitlement Schedule in Community Titles Scheme 22717 (‘Scheme’).
2.	The Scheme comprises 82 lots within a townhouse development at 19 Doughboy Parade, Hemmant. Twenty-three of the townhouses in the development contain two bedrooms and the remaining fifty-nine townhouses contain three bedrooms. All properties are predominantly party wall townhouses (that is, townhouses sharing a wall with at least one other townhouse).
3.	The Commissioner, following the procedure specified in the Act, requested submissions from the various lot owners and some twenty owners made submissions in response.
4.	The Body Corporate is automatically the Respondent to the application by virtue of section 48(2)(b) of the Act. The lot owners have the option to become parties to the application and in this matter, two owners have elected to be joined as parties. They are Mr and Mrs Beatty, the owners of lot 11.

The Scheme

5.	As I have already indicated, the Scheme concerns a townhouse development comprising eighty-two townhouses that predominantly have common party walls. The common property infrastructure and facilities offered by the Scheme include the following:
a.	a pool and gazebo;
b.	communal lighting;
c.	extensive landscaping and gardens;
d.	roads and driveways;
e.	fencing on the boundaries between lots and common property; and
f.	fences and gates around the external perimeter of the Scheme.
6.	The Scheme was built in four stages and the Applicant was the developer of the Scheme.

Relevant Law

7.	Section 48(4) of the Act requires my Order to be consistent with the principle in section 48(5) of the Act. That subsection says ‘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.	Section 49 then sets out the criteria for deciding just and equitable circumstances. Section 49(4) says that the Court or Specialist Adjudicator may have regard to:
a.	how the Community Title Scheme is structured;
b.	the nature, features and characteristics of the lots included in the Scheme; and
c.	the purposes for which the lots are used.
9.	Section 49(5) then sets out the mattes which a Court of Specialist Adjudicator may not have regard to. These concern the 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 entitlements of the subject lot or other lots included in the Community Title Scheme; or
b.	the purpose for which the lot entitlement is used.

The relevant time is the time that the Applicant entered into a contract to buy his or her lot.

10.

However, section 49(3) makes it clear that the matters the Court or Specialist Adjudicator may have regard to for deciding just and equitable circumstances are not limited to the matters in section 49.

11.

Although section 49, upon first reading, appears to be fairly extensive in its coverage of the criteria for deciding just and equitable circumstances, the District Court and Specialist Adjudicators are constrained by a decision of the Court of Appeal in Fisher & Ors v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 214. That case lays down the principles that must be observed by the District Court or Specialist Adjudicator. In essence, the question of 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 the 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.

Evidence

12.	The Application is supported by a report by Leary & Partners Pty Ltd dated 29 August 2005 (‘Report’). That report analysis the various administrative and sinking fund expenses of the body corporate to determine the extent to which particular lots draw upon or contribute to those expenses. The methodology in the report is similar to that adopted by that firm and other experts that are regularly involved in applications of this nature. Without exception, the report allocates expenses among the lots on an equal basis. However, some items of expenditure have been excluded on the basis that, although budgeted for by the body corporate, the particular expense items are not the responsibility of the body corporate and should not properly be taken into account. The Report concludes that the Contribution Schedule Lot Entitlements should be allocated equally, with an aggregate of eighty-two.
13.	It is fair to say that the opposition to the Application has been headed by Mr and Mrs Beatty. They have resisted it at every point and, judging by the number of submissions in similar form to the Beatty submission, they have actively sought the support of other lot owners.
14.	In their submission Mr and Mrs Beatty took issue with certain statements made in the Application, claiming that they were inaccurate and misleading. They also took issue with what they said were ‘inaccuracies’ in the supporting evidence by Leary & Partners. Although those statements were not supported by tangible evidence, they did raise the question of whether the Report needed to be tested. I therefore convened a meeting of the parties and requested the attendance of the author of the Report at that meeting. Mr and Mrs Beatty were given the opportunity to bring to that meeting any further evidence they had.
15.	At the meeting they repeated and expanded upon their submissions, but still did not provide any evidence in support of them. While it is fair to say that some of the matters raised by Mr and Mrs Beatty were resolved at the meeting, it was clear that they were not satisfied as to a number of matters, including:
a.	responsibility for maintaining, plus the number of lots that benefited as a result of maintaining, a soundproof barrier that shielded the Scheme from an adjoining railway line;
b.	the extent of fencing separating lots from common property; and
c.	the extent of guttering and downpipes that are the responsibility of the Body Corporate, as distinguished from that which is the responsibility of individual lot owners.
16.	Given the fact that Mr and Mrs Beatty had still not produced evidence in support of the points that they made, I considered continuing with determination of the Application following that meeting. However, instead, I allowed a further period of one month for Mr and Mrs Beatty to come forward within tangible evidence.
17.	In response, they produced a series of calculations by Mr Robert Buntine of Napier & Blakeley, quantity surveyors. Those calculations generally followed the methodology used by experts in support of applications of this nature. The only substantial difference between the outcome produced by Mr Buntine and the outcome produced in the Report concerned the allocation of expenses associated with the sound proof barrier.
18.	During the course of the Application the ownership of this barrier has been a point of contention. Mr and Mrs Beatty maintain that it is owned by the Body Corporate and it is responsible for maintenance. The Applicant, who was the developer of the project, states that the barrier was built by Queensland Rail on its own property and that Queensland Rail is responsible for maintenance. Even leaving aside the question of responsibility for maintenance, there is the question of whether the barrier benefits the lots closest to it or whether it has a broader benefit for the entire community. Mr Buntine has assumed that it benefits the lots closest to it and has therefore allocated those costs against those lots.
19.	Mr and Mrs Beatty in their latest submission to me stated:

‘The Applicant stated that the professionally built 5m soundproof barrier is the responsibility of Queensland Rail. Research is discovering this is not the case.’

20.

In essence, Mr and Mrs Beatty have not produced any evidence to satisfy me that the barrier is not the property of Queensland Rail. On balance, I feel compelled to accept the evidence of the Applicant who, after all, was the developer of the project, as to who owns the soundproof barrier. Having reached this conclusion, I must then disregard the allocation of costs relating to this barrier against particular lots, as was done by Mr Buntine. In turn, this results in Mr Buntine’s figures being not substantially different to those in the Report. Indeed, the differences between Mr Buntine’s figures and the figures in the report are so minor as to convince me that justice and equity in this case demands that the Contribution Schedule Lot Entitlements should be equal.

Findings

21.	Mr findings on the Application are:
a.	there is a dispute between the Applicant and the Respondent because the Respondent refused the Applicant’s request to voluntarily adjust the Contribution Schedule Lot Entitlements;
b.	the Applicant is entitled to bring this Application as a lot owner;
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.	it is not just and equitable in the circumstances applying to the Scheme for the respective Contribution Schedule Lot Entitlements not to be equal and under the circumstances they should be equal;
f.	there is nothing about the Scheme, or the way that lots are used, that needs to be taken into account in respect of this Application, other than that as relating to the demand on services and resources provided by the Body Corporate, being matters that have been properly taken into account in the Report; and
g.	there is nothing about voting entitlements that would require the Contribution Schedule Lot Entitlements not to be equal.

Costs

22.

The costs of the parties in bringing and/or defending these applications are their own costs. So far as the costs of the actual adjudication are concerned, the Applicant is responsible for them unless the Adjudicator otherwise orders. In this matter, the Applicant sought Body Corporate agreement to the adjustment of the Contribution Schedule Lot Entitlements. At the time of considering the matter , the Body Corporate had the benefit of the Report. However, the Body Corporate chose to reject the proposal to adjust the entitlements. The Applicant then brought the current Application which has been strenuously opposed by Mr and Mrs Beatty. Their opposition to the Application has been supported by a substantial number of lot owners.

23.

The costs of the adjudication have been influenced substantially by Mr and Mrs Beatty’s opposition to the Application. I have considered whether it would be appropriate to make an order for costs against Mr and Mrs Beatty. On balance, I do not think that is appropriate because they have genuinely opposed the application without malice or improper motive. However, nor do I think it is appropriate that the Applicant should, in this particular matter, bear the costs of the adjudication. I therefore propose to make an order for costs against the only other party to the Application, the Body Corporate. This will provide some relief against costs in favour of the Applicant.

Orders

24.	It follows that I propose to make an Order adjusting the Contribution Schedule Lot Entitlements so that they are equal, as well as an order that the Body Corporate pay the costs of the adjudication.

G F Bugden OAM
Specialist Adjudicator