Canning Place [2007] QBCCMCmr 679 (28 September 2007)

Last Updated: 19 September 2008

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Adjustment of Lot Entitlements)

Number: 0271A-2007

Applicant: GRANT REDFORD FOR EAGLE HOLDINGS PTY LTD Respondent: BODY CORPORATE FOR CANNING PLACE COMMUNITY TITLES SCHEME 22074

O R D E R
28 September 2007

I order that the contribution schedule lot entitlements of Community Title Scheme 22074 be adjusted so that each lot is equal to one (1) lot entitlement, to be effective from 1 November 2007.

B. Pickard
Specialist Adjudicator

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Adjustment of Lot Entitlements )

Number: 0271A-2007

Applicant: GRANT REDFORD FOR EAGLE HOLDINGS PTY LTD

Respondent: BODY CORPORATE FOR CANNING PLACE COMMUNITY TITLES SCHEME 22074

DETERMINATION
28 September 2007

Nature of the Application

1. This is an application under section 48(1) of the Body Corporate and Community Management Act 1997 (‘Act’) for an order of a specialist adjudicator for the adjustment of the contribution schedule lot entitlements of Community Title Scheme 22074 (‘the Scheme’),
2. The Scheme is situated at 47 Wises Road Maroochydore. The applicant is the owner of Lot 4 in the Scheme. Pursuant to 48(2)(a) of the Act the Body Corporate is the respondent. Submissions have been made by the owners of lots 1, 2, 3, 5, 6 and 8. The Body Corporate has advised that it will not be making a submission.
3. The application seeks an order adjusting the contribution schedule lot entitlements so that each lot in the Scheme will have equal entitlements.
   

The Scheme

4. The Scheme was established under the Building Unit and Group Title Act 1980 which is the predecessor of the current Act. A New Community Management Statement was registered on 15 July 2000. No subsequent dealings had been registered at the time of the Application.
5. The Scheme consists of a single building containing eight industrial units on one level. The units are arranged length wise on the land in two groups of 4 units back to back and in mirror reverse. There is car park and driveway an either side of the land and some parking at the front. There is an area on the eastern side of the land that is grassed. Each unit has a separate toilet and wash basin.
6. The common property in the Scheme consists of car parks, driveways, other ground around the building and the normal building components such as external walls, roof etc. There is no air-conditioning or mechanical apparatus. The units are separately metered for electricity. There is a common water meter and the lots are charged separately on the basis of their contribution entitlement.
7. The present contribution schedule entitlements are as follows:

Lot 1 - 2

Lot 2 - 1

Lot 3 - 1

Lot 4 - 4

Lot 5 - 2

Lot 6 - 1

Lot 7 - 1

Lot 8 - 4_

Total - 16

The units are of unequal sizes and presently the lot contribution entitlements are in approximate proportion to that of each lot in relation to the total area of the lots.

8. The Body Corporate has provided a copy of its budget for the period 1 August 2007 to 31 July 2008. The administrative fund provides as follows:

Bank fees $20

Fire Control $150

Gardens and grounds $350

Insurance $7,500

Miscellaneous $58

Postage and stationery $500

Secretarial fees $1,650

Tax fee/GST returns $250

Telephone/fax/email $80

Electrical repairs $100

General repairs $200

Plumbing repairs $150

Total Expenditure $11,008

The contribution per lot entitlement is $688. The sinking fund is not itemized and provides for a lot contribution of $260 with a total of $4,160.

The Application

9. The Applicant is seeking an order that the contribution of each lot be equal. In support of the Application the Applicant puts forward the following:
   • Units 4 and 8 bear half the cost of the body corporate and this is not equitable;
   • Each lot has the one toilet and basin and so should bear water rates equally.
   • Lots 4 and 8 carry an equal burden with the remaining lots for the cost of maintenance, public liability insurance and body corporate management fees
   • As a result of parking problems exclusive use of car parks was resolved by the Body Corporate. The number of car parks being proportional to each lot’s contribution entitlement. However this has been largely ignored by the occupiers. If the lot contributions are equal then exclusive use car parks for each lot should be equal.

The Applicant raised issues about car parking but has further submitted to the Commissioner’s Office that he does not require any determination on this issue.

Submissions

10. There is one submission in support of the Applicant that is from the owner of the other large lot, and is much the same as the Applicant.

The other submissions against the Applicant can be summarised as follows:

• Body corporate administration should be equal but rates and insurance should be paid according to lot size;
• Equal contributions would be unfair because the larger lots have a higher valuation;
• While the larger lots may have one sink and toilet they have more people working in them. The smaller lots only have one or two people using them.
• One lot has been vacant for seven months;
• One lot is only used storage
• Unit 4 occupies five to six car parks and makes more use of the driveways;
• The problem with one of the tenants causing parking problems has been resolved;
• The larger lots have a greater probability of having an incident that would involve public liability;
• There is more common property immediately attached to the larger lots;
• The larger lots have more people and use more water
• Other schemes use proportional contribution based on lot size;

The Evidence

11. Little in the way of evidence has been provided. A copy of the current Body Corporate budget was obtained from the Body Corporate Manager. I have had a view of the site. A title search has been provided by the Commissioner’s Office. I not aware of any registered exclusive use by-laws. A copy of the Community Managements Statement has been obtained from the Land Title Registry.

The Law

12. Section 48(5) of the Act states

(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) ...

(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.

This means that the contribution schedule lot entitlements should be equal, unless it is just and equitable in the circumstances for them not to be equal. Section 49 sets out the criteria for deciding what is just and equitable circumstances:

Criteria for deciding just and equitable circumstances

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

(2) This section sets out matters to which the specialist adjudicator or the CCT 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) for an interest schedule—if it is just and equitable in the circumstances for the individual lot entitlements to reflect other than the respective market values of the lots.

(3) However, the matters the specialist adjudicator or the CCT may have regard to for deciding a matter mentioned in subsection (2) are not limited to the matters stated in this section.

(4) The specialist adjudicator or the CCT 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 specialist adjudicator or the CCT 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.

13. In Fisher & Ors v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 214 the Queensland Court of Appeal considered the meaning of this section. It was relevantly stated [at paras. 25 and 26]:

"The submission for the applicants is that this Part of the Act is concerned with the just and equitable distribution of body corporate expenses among apartment owners and that in making an adjustment of a lot entitlement  schedule the court must pay regard only to the origin and allocation of body corporate expenditure.

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."

In summary, the law requires the contribution schedule to be equal except where particular lots give rise to particular demands on the services and amenities provided by a body corporate to those units, or the contribution to the costs incurred by the Body Corporate. General considerations of amenity value or history are to be ignored. The issue is ‘equitable’ distribution of costs.

Findings

14. In order to satisfy section 49 of the Act, it is necessary to examine the expenses of the Body Corporate and to assess each expense item to determine the extent to which each of the lot owners contribute to that expense. I note that several of the submissions make reference to water usage. The Body Corporate does not pay for water, rather each of the lot owners are levied along with their rates for water usage. Each lot owner also pays a waste water charge calculated as a percentage of their water charge. The Scheme has one water meter through which water to all the units is metered. In Maroochy Shire the total water usage is divided among all the lot owners in the same proportion as their contribution schedule entitlements. Those opposed to the application argue that the larger lots use more water then the smaller lots because they may have more people as employees or customers. This is not a logical argument. It is the use to which the premises are put that will determine water usage. The fact that an owner chooses to use the lot for storage, or is vacant is not relevant. If the Body Corporate is of the opinion that a particular lot owner or tenant is a heavy water user then it can request the installation of a separate meter for that lot. As far as use of water by the Body Corporate on its own account, it appears to be minimal for use in the maintenance of the grounds.
15. Examination of the budget does not reveal any particular expense that is related to a service or an amenity provided to a particular lot. It has been submitted that the public liability risk is greater for the larger lots. This is not a logical argument. It is the use to which the lot is put that increases the risk. The size of the lot bears no relation to its use by members of the public or the activities undertaken. All the premises are within an industrial precinct and use is regulated by the local authority. I have not been made aware of any particular risk loading for a particular lot arising from the activities conducted on the lot. The expense associated with the body corporate management is not one that in the ordinary course of activities would generate a cost in relation to lot size. The other costs in the budget are minimal.
16. In various submissions reference has been made to car parking and the allocation of exclusive use spaces. While a resolution to that effect may have been passed, the change in the by-laws does not appear to have been registered. I am aware that car parking has been a source of problems generated by one tenant who has vacated the premises. The number of allocated car parks does not appear to generate any additional cost to the Body Corporate. As far as amenity is concerned it appears that the use is limited because the occupiers and public largely ignore the allocation. Any additional amenity derived by an owner of the car parks appears to be minimal. I also note in some of the submissions that there is support for changing the allocation to two car parks for each lot.
17. I note that various submissions that oppose the application refer to valuation and general amenity issues. These are matters that by law cannot be taken into consideration.
18. Having carefully considered all the submissions and the available evidence I cannot find any particular service or amenity derived by a lot owner that would justify a determination that it would be equitable to maintain the current contribution schedule entitlements. In the circumstances I find that within the meaning of the Act that it is ‘just and equitable’ that the Scheme’s contribution schedule entitlements be equal so that the contribution schedule shows that each lot entitlement be equal to one (1). I have been informed by the Body Corporate manager’s office that the contributions are paid quarterly the next instalment due on 1 November 2007. Accordingly the change in the contribution schedule is to take effect from 1 November 2007.
    

B. Pickard

Specialist Adjudicator