St Sobraon [2007] QBCCMCmr 459 (1 August 2007)

Last Updated: 8 August 2007

Ref: 0314-2007

ORDER OF AN ADJUDICATOR Made under Part 9 of Clause 6 Body Corporate and Community Management Act 1997 Number of Scheme: 20685 Name of Scheme: St Sobraon Address of Scheme: 14 Sobraon Street, Sunshine Beach TAKE NOTICE that pursuant to an application made under the abovementioned Act by: Mr Peter and Mrs Judith Kling, the owners of Lot 6; and Mr Marcello and Mrs Fay Tellan, the owners of Lot 1

I hereby order that the Lot Entitlement Contribution Scheme for "St Sobraon" CTS 20685 be adjusted so that the respective contribution lot entitlements recorded in the Community Management Statement show one (1) contribution entitlement for each of the nine (9) lots within the scheme. I further order that the respondent be responsible for the costs of the adjudication.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION: REF 0314-2007

ST SOBRAON "CTS 20685"


BACKGROUND

"St Sobraon" is a subdivision consisting of nine lots together with common property on Group Title Plan 2203. The common property consists of, relevantly, one pool, driveways and two visitor parking lots. Each lot (herein after referred to as a villa) owner is entitled to equal use of the common property.

The villas vary in size from 83 m2 to 132 m2. The applicants are seeking the following order:

1. "That the contribution lot entitlement be changed to one".

The applicants are the owners of Lots 6 and 1 respectively. Lot 6 has an area of 131 m2 and Lot 1 has an area of 132 m2; these are the largest villas within the complex.

The body corporate was originally set up pursuant to the Building Units and Group Titles Act 1980 (QLD). The titles to the lots in the villas were granted pursuant to that Act. Under this Act owners of the villas had an entitlement to lots which in turn determined the proportionate share of the villa owners to the common property and to the contributions to be paid for the costs of maintaining and providing services to the complex.

The Building Units and Group Titles Act was repealed in 1997 and replaced by the Body Corporate and Community Management Act 1997 (QLD) ("the Act"). The Act was amended by the Body Corporate and Community and Other Legislation Amendments Act 2003 (QLD). This Act came into effect on 4 March 2003. It is the amended Act which contains the relevant law when it comes to decide this application.


JURISDICTION

S 265(1) of the Act provides:

(1) The adjudication of a dispute must be a specialist adjudication if:-

(a)	The dispute is about a claim or contractual matter about -
(i)	The engagement of a person as a body corporate manager or caretaking service contractor for a community titles scheme; or
(ii)	The authorisation of a person as a letting agent for a community titles scheme; or
(b)	The dispute is about a transfer, under chapter 3, part 2, division 8 of a letting agent’s management rights; or
(c)	Another provision of this Act requires the adjudication to be a specialist adjudication.

(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.

The note to subsection 1(c) specifically refers to s 48 of the Act. S 48(1)(b) provides:

(1) The owner of a lot in a community title scheme may apply:-

(a)

...;

(b)	Under chapter 6, for an order of a specialist adjudicator for the adjustment of a lot entitlement scheme.

S 48(4)(a) provides "if the order is about the contribution schedule the principle stated in subsection (5)".

S 48(5) provides "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."

S 47(4) provides "neither the contribution schedule lot entitlement nor the interest schedule lot entitlement for a lot is used for the calculation of the liability of the owner or occupier of the lot for the supply of a utility service to the lot if the amount of the utility service supplied to each lot is capable of separate measurement and the owner of that lot is billed separately."

S 49 sets out the criteria for deciding just and equitable circumstances.

Relevantly;

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

(2) This section sets out matters 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) ...

(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 title 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.

S 280 (2) provides "unless the adjudicator otherwise orders, the applicant is responsible for the costs of the adjudication".


CASE LAW

Fischer & Ors v Body Corporate for Centrepoint Community Title Scheme 779 [2004] QCA 214


REASONS FOR DETERMINATION

The Act provides that there be two sets of lot entitlements – contribution schedule lots and interest schedule lots.

Contribution schedule lots determine the respective contribution of the villa owners to the maintenance and service costs of the complex. In order to determine what amount each villa owner should contribute towards expenses the total body corporate expense is divided by the total number of contribution lots. The resultant figure is then multiplied by the number of contribution lots in respect of each villa to arrive at the amount to be paid by each villa owner.

The information provided to me reveals:

(1) That there are presently 20 contribution lot entitlements;

(2) That units 1 and 6 each have three contribution lot entitlements;

(3) That all other units have two contribution lot entitlements;

(4) That the common property consists of, relevantly, a swimming pool, two visitor car parks and driveways;

(5) Each villa is used as a domestic dwelling;

(6) No villa has a greater entitlement to the use of any equipment or service provided for or maintained by the body corporate.

The Act specifically states at s48 (5)

"For the contribution schedule, the respective lot entitlements should be equal, except to the extent to which is just and equitable in the circumstances for them not to be equal"

It is plainly obvious that the Act intended contribution lot entitlements schedules to divide body corporate expenses equally between the owners of villas except to the extent that the villas disproportionately incur those expenses or disproportionately use the services.

His Honour Chesterman J^[1] said,

"That determination can only be made by reference to factors which have a financial input or consequence on the body corporate. It cannot be affected by factors which go to the apartment’s value or amenity."

The starting point, in my view, is that the entitlement should be equal and that the enquiry should then be made as to whether it is just and equitable for there to be departure from this.

S 49 sets out the matters which may and may not be taken into account when deciding what is just and equitable. Subsection (4) provides further guidance by setting out three specific matters a court or special adjudicator may have regard to.

In considering those matters I make the following remarks:

(1) The scheme consists of nine villas.

(2) Each villa is a single level dwelling.

(3) Each villa shares driveway access to its car space and/or garage.

(4) There is one pool for the use of all villa occupiers.

(5) There are two visitor carparks for the use of all villa occupiers on a "first come, first serve" basis.

(6) No services are provided to any villa by the body corporate disproportionately to other villas.

The matters identified in s 49 of the Act are matters to which I should have regard to, only to the extent, if any, that they affect the cost of operating a community titles scheme^[2].

There is nothing in the material provided to me or resulting for the enquiry made of the body corporate manager, which satisfies me that any villa disproportionately causes cost to the body corporate. It follows therefore that I believe that the lot entitlement contribution scheme be adjusted.

Turning to the issue of cost, it is my view that the body corporate, that is the respondent, should pay the costs of this application. This application is brought on the basis of conformity with the amended Act and is necessary to give effect to the provisions of the Act. The order I propose to make in relation to the adjustment of the lot entitlement contribution scheme is in keeping with the Act. I note that when the proposed change to contribution lot entitlements was brought before the annual general meeting held on 3 March 2007 the motion was lost on the vote of six to one in favour of the adjustment. I believe it will be to the benefit of the body corporate to make the proposed amendments to the lot entitlement contribution scheme.

Accordingly I order:

1. That the lot entitlement contribution for "St Sobraon" CTS 20685 be adjusted so that the respective lot entitlements recorded in the community management statement show one (1) contribution entitlement for each of the nine (9) lots within the scheme; and

2. That the respondent be responsible for the costs of the adjudication.

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^[1] Fischer & Ors v Body Corporate for Centrepoint Community Titles Scheme 7779 [2004] QCA 214 at para 30
^[2] Ibid Chesterman J para 33