1 Holman Street [2007] QBCCMCmr 464 (3 August 2007)

Last Updated: 8 August 2007

REFERENCE: 0569-2007

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	31236
Name of Scheme:	1 Holman Street
Address of Scheme:	1 Holman Street KANGAROO POINT QLD 4169

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

John Raby and Deirdre Raby, the co-owners of lot 110

I hereby order that the application for an order overturning motions 3 and 4 resolved at the annual general meeting held on 27 June 2007 is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0569-2007

"1 Holman Street" CTS 31236

ORDER SOUGHT

The applicants have sought an interim order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

That applicants seek the overturning of the outcome of motion number 3 and motion number 4 of the annual general meeting of the body corporate for 1 Holman Street CTS 31236 held on 27 June 2007 pending the final resolution of the outcome sought in section 5 of the application.

The applicants have also sought a final order of an adjudicator under the Act as follows:

The body corporate for 1 Holman Street be directed to engage a reputable independent firm of quantity surveyors to carry out a full lot entitlement analysis for 1 Holman Street.

Such analysis to be carried out without delay and include:

a)	A detailed analysis of all body corporate administrative and sinking fund expenses
b)	Quantitative measurement of lot specific expense items
c)	Calculation of a new contribution schedule and
d)	Presentation of the information and data in a comprehensive and formal format.

Further the body corporate for 1 Holman Street be directed to take the necessary steps to implement without delay the new contribution schedule.

JURISDICTION

The application discloses a dispute between the owners of a lot included in a community titles scheme and the body corporate for the scheme (Act s227(1)(b)).

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

SCHEME DETAILS

1 Holman Street is a community titles scheme comprising 50 lots and common property. The scheme was established upon registration of the building format plan on 3 April 2003, and is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

BACKGROUND

The applicants contend that 1 Holman Street is a scheme for which development approval was given after the commencement on 4 March 2003 of section 46(7) of the Act on the basis that the developer lodged an application to register the first community management statement for the scheme on 2 April 2003, and the request was stamped on 3 April 2003.

The applicants stated "at the time of establishment of the scheme lot entitlements were determined by the developer on the basis of the initial sale price of the individual units, town houses and villas." This method of calculating the lot entitlements which is still in effect is wrong in that it does not comply with the Act and does not ensure an equitable sharing of costs."

The applicants outlined the steps taken by them to address the situation, and concluded their supporting grounds as follows:

"The applicants assert that the only reasonable and fair way of establishing an equitable distribution of costs is for there to be an independent analysis conducted by a reputable quantity surveyor and for that analysis to be given effect."

The body corporate committee was invited to respond to the application. In its submission, the committee stated that the administrative fund budget and levies and the sinking fund budget and levies were correctly formulated and proposed for owners’ consideration, and duly approved by owners at the annual general meeting.

The committee further stated that the question of a re-draw of lot entitlements is unrelated to those budgets and levies and would only bear some relevance to them if at some future time the contribution schedule lot entitlements are varied.

DETERMINATION

Section 46(7) provides:

46 Lot entitlements

(1) ...

(2) ...

(3) ...

(4) ...

(5) ...

(6) ...

(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.

Development approval is defined in the Act as a development approval given under the Integrated Planning Act 1997 (IPA).

Under the IPA, development approval is defined in Schedule 10 as follows:

development approval means a decision notice or a negotiated

decision notice that--

(a) approves, wholly or partially, development applied for

in a development application (whether or not the

approval has conditions attached to it); and

(b) is in the form of a preliminary approval, a development

permit or an approval combining both a preliminary

approval and a development permit in the one

approval.164

164 Under section 3.5.11(3), conditions attached to a development approval are part of

the approval.

On 1 August 2007 I spoke by telephone with Mr Joe McShane, Customer Liaison Officer in the Development and Assessment division of the Brisbane City Council. Mr McShane advised me that the development approval for this scheme was given in 2000. Mr McShane was unable to pinpoint the exact date from the screen data to which he was referring, and advised me that he would have to obtain the actual file from archives in order to do so.

Mr McShane further advised that an appeal against the Council decision was lodged in the Planning & Environment Court of Queensland.

A search of the Austlii site revealed that the Court dismissed the appeal ((Green v Brisbane City Council & Australand Pty Ltd [2001] QPEC 75).on 11 December 2001, but found that it was appropriate to issue revised conditions to the development approval.

In the Reasons for judgment, His Honour Judge Robin QC noted that the development application was dated 16 May 2000. There is no reference to the date of Council’s decision notice. However, given that the appeal against the decision was lodged and determined in 2001, it is clear that the development approval pre-dated 4 March 2003, rather than post-dating it, as contended by the applicants.

Turning to the interim order sought by the applicant, the body corporate is obliged to adopt two budgets for each financial year (Accommodation Module s92(1)) and, based on those budgets,
fix contributions to be levied on the owner of each lot for the financial year (Accommodation Module s93(1)).

Section 93(5) of the Accommodation Module provides as follows:

The contributions levied on the owner of each lot (other than contributions payable for insurance and any other matter for which, under the Act or this regulation, the liability attaching to each lot is calculated other than on the basis of the lot’s contribution schedule lot entitlement) must be proportionate to the contribution schedule lot entitlement of the lot.

The present contribution schedule lot entitlements are those which have been in force since the establishment of the scheme. The body corporate formulated the budgets and calculated the contributions detailed in motions 3 and 4 on the agenda of the annual general meeting held on 27 June 2007 on these lot entitlements. Until the lot entitlements are otherwise adjusted, the applicants are required to pay their contributions on this basis.

If the applicants wished to do so, they could make application for an adjustment of a lot entitlement schedule. Section 48 of the Act relevantly provides:

48 Adjustment of lot entitlement schedule

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

(a) under chapter 6, for an order of a specialist adjudicator

for the adjustment of a lot entitlement schedule; or

(b) under the CCT Act, for an order of the CCT for the

adjustment of a lot entitlement schedule.

(2) Despite any other law or statutory instrument, the respondent

to an application mentioned in subsection (1) is the body

corporate.

(3) If the owner applies under chapter 6 for an order of a

specialist adjudicator--

(a) at the election of another owner of a lot in the scheme,

the other owner may be joined as a respondent to the

application; and

(b) each party to the application is responsible for the

party’s own costs of the application.

(4) An owner who elects, under subsection (3)(a), to become a

respondent to the application must give written notice of the

election to the body corporate.

(5) The order of the specialist adjudicator or the CCT must be

consistent with--

(a) if the order is about the contribution schedule--the

principle stated in subsection (6); or

(b) if the order is about the interest schedule--the principle

stated in subsection (7).

(6) 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.

(7) For the interest schedule, the respective lot entitlements

should reflect the respective market values of the lots included

in the scheme when the specialist adjudicator or the CCT

makes the order, except to the extent to which it is just and

equitable in the circumstances for the individual lot

entitlements to reflect other than the respective market values

of the lots.

(8) If a lot mentioned in subsection (7) is a subsidiary scheme, the

market value of the lot is the market value of the scheme land

for the subsidiary scheme.

(9) For establishing the market value of a lot created under a

standard format plan of subdivision, buildings and

improvements on the lot are to be disregarded.

(10) If the specialist adjudicator or the CCT orders an adjustment

of a lot entitlement schedule, the body corporate must, as

quickly as practicable, lodge a request to record a new

community management statement reflecting the adjustment

ordered.

Maximum penalty for subsection (10)--100 penalty units.

The Act also sets out the criteria for deciding just and equitable circumstances (Act s49) and the basis upon which a limited adjustment may be made with agreement of the owners of 2 or more lots included in a scheme (Act s50).

I am satisfied that there is no basis for overturning motions 3 and 4, which were both passed at the annual general meeting. The applicants have not alleged any defect in the calling and holding of the meeting. I have therefore dismissed the application for an interim order.

The application will now be processed in accordance with the usual requirements, and a final order will be made in due course.