Westwater [2007] QBCCMCmr 529 (22 August 2007)

Last Updated: 25 September 2007

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 and Mrs Mavis Boland and others ("The Applicants") and The Body Corporate for Westwater ("The Respondent")

ADJUDICATORS ORDER

Pursuant to appointment by the Commissioner for Body Corporate and Community Management, dated 25 June 2007.

DELIVERED BY:

WARREN D FISCHER

Civil Engineer, Graded 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 AND MRS MAVIS BOLAND AND OTHERS v

THE BODY CORPORATE FOR WESTWATER

ORDER OF WARREN FISCHER

Specialist Adjudicator

CONTENTS

Section Page

Order 3

Parties and representatives 5

Recital of relevant events leading to the dispute 7

Reference to specialist adjudication 9

Procedural steps 10

Findings and reasons 12

Adjudication regarding:

Adjustment of Contribution Lot Entitlement Schedule

View Date:

27 July 2007

Delivered as an adjudicators order:

To the Commissioner for Body Corporate and Community Management on the Twenty Second day of August 2007.

ORDER I, Warren Fischer, appointed specialist adjudicator, order as follows: 1. That the contribution schedule lot entitlement for each lot in the Westwater Community Titles Scheme 6750 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 No. Contribution Schedule Lot Lot No. Contribution Schedule Lot Entitlement Entitlement 1 19 27 18 2 19 28 20 3 19 29 20 4 20 30 18 5 20 31 18 6 18 32 20 7 18 33 20 8 20 34 18 9 20 35 18 10 18 36 20 11 18 37 20 12 20 38 18 13 20 39 18 14 18 40 20 15 18 41 20 16 20 42 18 17 20 43 18 18 18 44 20 19 18 45 20 20 20 46 18 21 20 47 18 22 18 48 20 23 18 49 20 24 20 50 20 25 20 51 24 26 18 52 24 AGGREGATE 1001 2. 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. 3. For the avoidance of doubt, pursuant to Section 284 of the Act, this Order is to have effect as a resolution without dissent. 4. That the Applicants are responsible for the cost of the adjudication.

Warren Fischer

Specialist Adjudicator

22 August 2007

PARTIES AND REPRESENTATIVES

Parties Representatives

Mr James and Mrs Mavis Boland Represented by Ms Kaylene Arkcoll

Registered Owner of Lot 50 BSc QS AAIQS AIMM MAppLaw

("Boland") of Leary & Partners Pty Ltd

("Arkcoll")

First Applicant Expert

Mr Ronald and Mrs Pauline Ravaillion Represented by Boland

Registered Owners of Lot 9

Second Applicant

Mr Melvyn and Mrs Rina Schwass Represented by Boland

Registered Owners of Lot 17

Third Applicant

Mr David La Hood Represented by Boland

Registered Owner of Lot 21

Fourth Applicant

Mrs Norma Bragg Represented by Boland

Registered Owner of Lot 25

Fifth Applicant

Mr Adolfo Mathews and Ms Yen Musgrove Represented by Boland

Registered Owners of Lot 29

Sixth Applicant

Mrs Afsar Vatani Represented by Boland

Registered Owner of Lot 37

Seventh Applicant

Mr Scott Dingwall Represented by Boland

Registered Owner of Lot 45

Eighth Applicant

Mr Ata and Mrs Parvin Manavi Represented by Boland

Registered Owners of Lot 49

Ninth Applicant

Mr John and Mrs Julie McDonald Represented by Boland

Registered Owners of Lots 30 and 51

Tenth Applicant

Mrs Greer May Un-represented

Registered Co-owner of Lot 41

Eleventh Applicant

Mr William Butler Un-represented

Registered Co-owner of Lot 52

Twelfth Applicant

The Body Corporate for Westwater Represented by

Community Titles Scheme 6750 Mrs Ruth Hollows

c/- The Body Corporate Manager Body Corporate Secretary

Challenge Strata Management P/L ("Hollows")

Mr Attilio Danieletto

("Danieletto")

Respondent

RECITAL OF RELEVANT EVENTS LEADING TO THE DISPUTE

1. The scheme land consists of the common property of Westwater Community Titles Scheme 6750 ("the Scheme") and lots 1 to 52 on Building Units Plan No. 8543. The Building Units Plan was registered on 26 July 1988.

2. The Scheme is located at 56 Hooker Boulevard, Mermaid Waters, Queensland.

3. The Scheme common property includes driveways, lawns, gardens, entrance and lift lobbies, plant rooms, emergency stairs, etc. There are fifty two (52) lots in the Scheme, all residential, the lot titled areas vary from 109 sqm (lot 2) to 489 sqm (lot 51). Every lot has attaching exclusive use rights over common property for car parking. There is one (1) one bedroom, thirty five (35) two bedroom, fourteen (14) three bedroom and two (2) four bedroom units.

4. The contribution and interest lot entitlement schedules contained in the current Community Management Statement ("CMS") are identical and provide variations in lot entitlements between 82 (lot 2) and 280 (lot 51) with an aggregate of 6,518. These entitlements are as set out in the original Building Units Plan registered in 1988. When the Building Units Plan was registered there was legislative provision only for a single lot entitlement schedule.

5. When the Act commenced in 1997 it introduced two schedules, a contribution and an interest lot entitlement schedule. It also provided some guidance as to the consideration to be given in determining the lot entitlement schedules and introduced provisions for the adjustment of lot entitlement schedules by the District Court.

6. The Act was further amended on 4 March 2003, this further amendment included further guidance as to the matters to be considered in determining the lot entitlement schedules and also widened the jurisdiction for adjustment of lot entitlement schedules to include specialist adjudicators.

7. An extraordinary general meeting of the body corporate for the Scheme was held on 30 March 2007. At that meeting a motion, proposed by the owners of lots 9, 17, 21, 25, 27, 29, 30, 37, 39, 41, 45, 49, 50 (Boland), 51 and 52, was considered to amend the contribution lot entitlement schedule such that the contribution schedule lot entitlements were in accordance with the recommendation from Leary and Partners. That motion failed.

8. 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"

9. The failure of the motion at the extraordinary general meeting of the body corporate for the Scheme, held on 30 March 2007, gives rise to a dispute as defined in Section 227(1)(b) of the Act between the owners of lots 9, 17, 21, 25, 27, 29, 30, 37, 39, 41, 45, 49, 50 (Boland), 51 and 52 and the body corporate for the Scheme.

10. 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."

11. Section 238(1), contained in Chapter 6 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."

12. On 30 April 2007, Boland, on behalf of the owners of lots 9, 17, 21, 25, 29, 30, 37, 41, 45, 49, 50, 51 and 52, 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.

13. These circumstances gave rise to the issue which I was required to consider, namely, "(t)hat the body corporate be ordered to amend the contribution lot entitlement schedule to make it fair and equitable for all lots as per the Leary and Partners report."

REFERENCE TO SPECIALIST ADJUDICATION

14. 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."

15. Section 265(1)(c), contained in Chapter 6 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."

16. Section 239(2)(d), contained in Chapter 6 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."

17. The Application, dated 27 April 2007 but lodged on 30 April 2007, provided my name and address as the nominee for appointment as the specialist adjudicator.

18. 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."

19. I was nominated as specialist adjudicator by the Commissioner in a letter, copied to the parties, dated 25 June 2007.

PROCEDURAL STEPS

20. On 8 May 2007, the Commissioner invited all lot owners in the Scheme to make submissions on the Application by 29 May 2007.

21. On 22 May 2007, Boland advised the Commissioner that they wished to respond to any submissions made.

22. Fifteen (15) submissions were made in response to the Commissioner’s invitation. Nine (9) in support of the Application and six (6) opposing the Application.

23. On 4 June 2007, the Commissioner provided Boland a copy of the submissions made and granted until 18 June 2007 to provide any response.

24. On 19 June 2007, by telephone, Boland confirmed to the Commissioner that they would not be responding to the submissions made.

25. 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"

26. The Body Corporate did not make any submission on the Application.

27. 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"

28. 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."

29. Following my instructions of 28 June 2007, Danieletto, on 2 July 2007, forwarded by post to all lot owners in the scheme my process notes and directions for the further conduct of the matter. Those notes and directions advised all owners that:

a. 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

b. I was prevented from considering submissions made unless the party making the submission provided a written notice of their election to be joined as a Respondent in accordance with the provisions of Section 48(3) of the Act; and

c. any election to be joined as a Respondent in accordance with the provisions of Section 48(3) of the Act was to be provided to Danieletto, with a copy to me, by midday Friday 6 July 2007.

30. By correspondence, dated 9 July 2007, Danieletto provided me with advice that no written notices of election to be joined as a Respondent for the application had been provided to the body corporate in accordance with the provisions of Section 48(3) of the Act.

31. I have also not been provided with any written notice of an election to be joined in the Application.

32. By correspondence, dated 24 July 2007, the parties were advised that, as there were no submissions made against the Application which I was able to consider, no hearing would be required. That correspondence also advised that a view of the Scheme would be conducted with the expert, Arkcoll, on 27 July 2007 and any of the parties to the Application that wished to attend were invited to do so.

33. On 27 July 2007, a view of the Scheme was conducted which was attended by Arkcoll and Hollows. During the view frequent discussion took place in the presence of those parties about the various features of the different lots and the scheme.

FINDINGS AND REASONS

34. In addition to the documents submitted prior to my appointment as specialist adjudicator, I also directed the Respondent to deliver to me copies of documents bearing on the issues, namely:

a.	the current sinking fund analysis/forecast (if different to the August 2002 forecast);
b.	the sinking fund financial statements for the periods to 31/8/04, 31/8/05 and 31/8/06;
c.	the sinking fund budget for the period to 31/8/07;
d.	the administration fund financial statements for the periods to 31/8/04, 31/8/05 and 31/8/06;
e.	the administrative fund budget for the period to 31/8/07; and
f.	a copy of any management, caretaking or letting agreements.

35. There was no sinking fund forecast more current than the August 2002 forecast. I was provided with the balance of the information requested including a "Deed of Renewal and Variation" for the caretaking and letting agreements.

APPLICATION FOR ADJUSTMENT

Findings:

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 No. Contribution Schedule Lot No. Contribution Schedule

Lot Entitlement Lot Entitlement

1 19 27 18

2 19 28 20

3 19 29 20

4 20 30 18

5 20 31 18

6 18 32 20

7 18 33 20

8 20 34 18

9 20 35 18

10 18 36 20

11 18 37 20

12 20 38 18

13 20 39 18

14 18 40 20

15 18 41 20

16 20 42 18

17 20 43 18

18 18 44 20

19 18 45 20

20 20 46 18

21 20 47 18

22 18 48 20

23 18 49 20

24 20 50 20

25 20 51 24

26 18 52 24

AGGREGATE 1001

Reasons:

Legislative Considerations

36. 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.

37. 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.

38. 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.

39. 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).

40. 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.

41. 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:

42. 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)"

43. 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.

44. 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."

45. 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 in the existing schedule is just and equitable in the circumstances.

46. 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."

47. 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 limited an adjudicators regard to only those matters. However, as determined in my 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.

48. Section 49(5) specifically prevents an adjudicator from having regard to any knowledge or understanding that the Applicants had with respect to lot entitlements when they contracted to buy their lot.

49. Consistent with these conclusions, Fischer & Ors v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 214 relevantly provides the following at [26] and [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. More general considerations of amenity, value or history are to be disregarded. What is at issue is the ‘equitable’ distribution of the costs.

...

[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."

50. The Court of Appeal has clearly 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

51. I now turn to consideration of the matters the legislation requires to be considered in respect of the Scheme.

52. The Applicant’s primary grounds for the Application are set out as follows:

"The attached report from Leary & Partners P/L establishes that the prevailing contribution schedule lot entitlements are not just and equitable, therefore the contribution schedule lot entitlements should be adjusted to fair and equitable within the provisions of the Act.

Request specialist adjudicator order that contribution lot entitlements be changed to match recommended schedule in Table 5 of Leary & Partners P/L report."

The Applicants therefore primarily rely upon the report from Leary & Partners P/L ("the Arkcoll Report") in support of their application.

53. 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 Respondent did not make any submission that Arkcoll should not be accepted as an expert.

54. 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 although it does not bind me even in the absence of conflicting 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.

55. For the purposes of determining the relevant body corporate expenditure, I reviewed the following information regarding the scheme;

a.	the sinking fund forecast, dated August 2002;
b.	the sinking fund financial statements for the periods to 31/8/04, 31/8/05 and 31/8/06;
c.	the sinking fund budget for the period to 31/8/07;
d.	the administration fund financial statements for the periods to 31/8/04, 31/8/05 and 31/8/06; and
e.	the administrative fund budget for the period to 31/8/07.

56. As the contribution schedule lot entitlements are required to be fair and equitable for the foreseeable future of the Scheme, for the purpose of determining appropriate contribution schedule lot entitlements, it is necessary for me to anticipate the future body corporate costs, it is clear though that it is simply not possible to determine a concise long term assessment which will provide precise cost apportionments both now and into the future. From this perspective, less exacting lot entitlements provide a more reliable long term assessment.

57. The Arkcoll Report identified several cost provisions (replace: fire detectors / fire extinguishers / motor and slide mechanism to auto door / gates to lot 1 to 4 courtyards) which should have been, but were not, included in the sinking fund forecast. Due allowance was made for those cost provisions when the benefit calculations were undertaken in by Arkcoll in the Arkcoll Report. During the view it was also identified that no allowance had been made in either the sinking fund forecast or the Arkcoll Report for the significant future expenditure necessary for the replacement / repair of the waterproofing to the podium of the Scheme. I directed Arkcoll to amend the Arkcoll Report to make allowance for this cost; the Arkcoll Report was so amended following the view.

[N.B. The amended pages of the Arkcoll Report are appended to this Order.]

58. The Respondent did not raise objection to the cost estimates in the administration or sinking funds or the life expectancies or the physical measurements for the sinking fund elements as utilised in the Arkcoll Report. I have considered those matters and I generally accept that the administration and sinking fund costs and the life expectancies and physical measurements for the various elements included in the sinking fund and as adopted in the Arkcoll Report are reasonable. The only remaining matter to consider is the apportionment of those costs to reflect the benefits obtained by each of the lots.

59. After excluding items which are specifically otherwise provided for in the Act, such as building insurance, the administration fund accounts for 66% of the total costs to the body corporate to which I have had regard ("contribution schedule costs"). The administration fund includes allowances for approximately 25 items all of which have been individually considered by Arkcoll. Those items which account for 5% or more of the contribution schedule costs are:

"Resident manager" which is self explanatory and accounts for approximately 22% of the total contribution schedule costs (apportioned equally, equal benefit to all lots);

"Pacific Keys Services" being, I understand, the community recreational facilities service providers access fee and accounts for approximately 18% of the total contribution schedule costs (apportioned equally, equal benefit to all lots);

"R & M - Elevators" being, I understand, the cost for ongoing service contracts for the lifts and accounts for approximately 8% of the total contribution schedule costs (apportioned equally, equal benefit to all lots);

"Community power" being, I understand, the electricity charges associated with the lighting and other use of the common property and accounts for approximately 6% of the total contribution schedule costs (apportioned equally, equal benefit to all lots); and

Numerous other minor, predominantly administrative, items account for the remaining 12% of the total contribution schedule costs contained in the administration fund, these items have all been apportioned equally between lots as it is not possible to distinguish any specific disproportionate benefit to any lot.

60. The sinking fund, accounts for the remaining 34% of the total contribution schedule costs. The sinking fund includes allowances for approximately 125 items which have all been individually considered by Arkcoll. Those items which account for 5% or more of the contribution schedule costs are:

"Finishes – Painting – External painting" being, I understand, the painting of the building façade and accounts for 5% of the total contribution schedule costs (apportioned on the basis of the measured external area per lot, including some common property); and

‘Superstructure – Roof – (3 items) associated with waterproofing membranes’ being, I understand, the replacement of the membranes to the roofs, pools and podium and accounting for 5% of the total contribution schedule costs (apportioned equally, predominantly common property); and

Approximately 65 other minor sinking fund items accounts for the remaining 24% of the total contribution schedule costs contained in the sinking fund, these items have all been apportioned equally between lots unless it is possible to distinguish any specific disproportionate benefit to any lot. In circumstances where there exists disproportionate quantifiable benefits, then the cost of the items has been attributed in proportion to that those benefits. There are seven (7) items which are apportioned other than equally.

61. 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."

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

a.	The Community Management Statement; and
b.	The Building Units Plan; and
c.	The Caretaking and Letting Agreement, Deed of Renewal and Variation.

63. 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.

64. The Scheme is a basic scheme, not part of a layered arrangement.

65. No submissions have been made, in regard to Section 49(4)(a), which provide any reason for depart from equal. Based on the circumstances in the Scheme and on the face of the documentation there is no apparent basis for departure from equal arising out of this provision.

66. The by-laws for the scheme are set out in the CMS. By-laws 13.1 and 27.1 provide that all lots shall only be used for residential purposes except lot 1 which may in addition be used as the management unit and conduct the business of management and letting of lots in the building and caretaking of the common property.

67. By-law 28 sets out various exclusive use entitlements attaching to all of the lots in the Scheme.

68. No submissions were made by the Respondent, in regard to Section 49(4)(c). The Arkcoll Report does specifically consider the effects of the duties of the manager / caretaker / letting agent which attach to lot 1 when considering the apportionment of costs in the Scheme. The Arkcoll Report also specifically considers the effects of the exclusive use entitlements attaching to all of the lots when considering the apportionment of costs in the Scheme.

69. The Arkcoll Report considers the cost burden that the nature, features and characteristics of the lots within the Scheme place on the body corporate expenditure in extensive detail.

70. The Respondent did not raise any objection to any of the costs apportionments made by Arkcoll in respect of the administrative fund items. It is a cogent argument that these costs are equally beneficial to all of the lots within the scheme. I agree with Arkcoll’s apportionment of the administration fund costs on an equal basis between all lots.

71. The Respondent raised no objection to the cost apportionments made by Arkcoll in respect of the sinking fund items. The sinking fund costs are all items of expenditure relating to common property elements which can generally be identified as beneficial either; equally to all lots, or alternatively, to particular lots within the Scheme in such a manner as may be measured and the cost burden on the body corporate attributable to each lot accurately determined. Any departure from those two positions is typically not capable of quantitative determination and is anticipated to be inconsequential in the present circumstances. I agree with Arkcoll’s apportionment of the sinking fund costs in the amended Arkcoll Report.

72. 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. No costs should be ordered against the Body Corporate.

ii. That the Applicants are responsible for the cost of the adjudication.

Reasons:

Legislative Considerations

73. 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."

74. 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."

75. 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."

76. 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

77. 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"

78. The Body Corporate did not make any submission in regard to the application and appeared to take the position that it would abide the adjudicators order. It is difficult to see how in such circumstances costs might be properly ordered against the Body Corporate.

79. 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"

80. No owner(s) elected to be joined as a Respondent.

81. Given that there were no active Respondent’s in the matter, there is no basis to exercise my discretion to order costs differently than the prima facie position.

82. Therefore I leave the cost of the adjudication with the Applicants.

PLEASE NOTE: The amended pages of the Arkcoll Report referred to in paragraph 57 can be obtained from the Office of the Commissioner for Body Corporate and Community Management upon request.