1 Holman Street [2007] QBCCMCmr 619 (5 November 2007)

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

I hereby order that the application for orders, including that the body corporate be required to seek an independent quantity surveyor's report on lot entitlements and adopt those recommendations, is dismissed.

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

"1 Holman Street" CTS 31236

1 Holman Street Community Titles Scheme (1 Holman Street) is a 52 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). This module is commonly adopted by schemes in which most owners rent out the units for holiday or other accommodation.

This application is by John and Deidre Raby, owners of lot 110 (applicants) seeking orders against the body corporate (respondent). The applicants say that the contribution schedule lot entitlements are not constituted as required by the legislation and should be adjusted.

Orders are sought to require the body corporate to engage an independent firm of quantity surveyors to carry out a full lot entitlement analysis and then require the body corporate to take the necessary steps to implement a new contribution schedule. These orders would overturn the results of a vote at the annual general meeting on 27 June 2007 where owners failed to adopt a motion that the committee undertake a review of the lot entitlements. There were only three votes in favour of the motion and there were twenty votes against it.

The basic principle for lot entitlements is that the contribution schedule lot entitlements should be equal for each lot and the interest schedule lot entitlements should reflect market value of the lots (Act, 48). However, there are circumstances where it is not just and equitable for contribution schedule lot entitlements to be equal.

If a significant number of owners are concerned about the fairness of lot entitlements then the usual process would be for those owners to obtain a quantity surveyors’ report reflecting the extent to which contributions towards costs is unjust or inequitable. If the quantity surveyor's report shows a significant disparity between expenses related to each lot and the respective contribution towards these expenses then action can be taken to adjust the lot entitlements. Usually owners would vote on whether to adopt the lot entitlements recommended in the quantity surveyor's report and register a new community management statement incorporating those changes. If this resolution is not passed then an application can be made seeking a variation of lot entitlements and an order can be made that sets new lot entitlements.

The interesting aspect of the present application is that the applicants are seeking orders of an adjudicator to require the body corporate to obtain a quantity surveyor's report and adopt those recommendations. This is instead of seeking an order of an adjudicator to consider arguments about what lot entitlements are appropriate and making an order that specifically sets those entitlements.

An adjudicator must make an order that is just and equitable in the circumstances to resolve a dispute and orders of an adjudicator can deem a motion to be passed by overturning unreasonable opposition to the motion (Act 276 & Schedule 5 Item 10).

At the annual general meeting on 27 June 2007 owners voted overwhelmingly against the body corporate committee undertaking a review of the lot entitlements. Even if the applicants are correct in their assertion that the current lot entitlements are unfair, there is little justification to overturn this decision by owners. It is within the power of persons who are dissatisfied with the current lot entitlements to obtain their own report from a quantity surveyor and lodge an application for review of lot entitlements before the Commercial and Consumer Tribunal. It is therefore not necessary or appropriate to overturn the votes of owners that are against the body corporate taking action itself to readjust the lot entitlements.

I accept the tenor of submissions that if the applicants wish to change the lot entitlements from those that were in place when they purchased their lot then it is incumbent on the applicants, not the body corporate, to expend the necessary funds on expert reports that are considered desirable by only a minority of owners. In their reply, the applicants have referred to a statement in a lot entitlement adjustment application to the effect that once an applicant has established a prima facie case that the existing schedule is unjust and unequal the onus is on the respondent to provide material showing that any departure from an equal allocation is just and equitable in the circumstances.^[1] However, this was said in the context of a dispute about the determination of appropriate lot entitlements under section 48 of the Act. I do not consider this assists the applicants in the present dispute which has more to do with overriding any opposition of owners to having the body corporate initiate a change of lot entitlements.

In the circumstances, I do not consider it just and equitable to grant any of the orders sought.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

1 Holman Street [2007] QBCCMCmr 619 (5 November 2007)