Palm Springs Residences [2007] QBCCMCmr 94 (21 February 2007)

Last Updated: 6 March 2007

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Adjustment of Lot Entitlements)

Number: 0907A-2006

Applicant: GREGORY J CARROLL Respondent: BODY CORPORATE FOR PALM SPRINGS RESIDENCES COMMUNITY TITLES SCHEME 29467

O R D E R
21 February 2007

The application is dismissed.

G F Bugden OAM
Specialist Adjudicator

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Adjustment of Lot Entitlements)

Number: 0907A-2006

Applicant: GREGORY J CARROLL



Respondent: BODY CORPORATE FOR PALM SPRINGS RESIDENCES

COMMUNITY TITLES SCHEME 29467

DETERMINATION
21 February 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 a contribution lot entitlement schedule.
2. The applicant is the owner of lot 701 in Community Title Scheme 29467 (‘Scheme’), the common property for which is situated at 1 Twenty-First Avenue, Palm Beach.
3. The respondent to the application is the Body Corporate. This is by virtue of section 48(2)(a) of the Act. An owner may elect to also become a respondent to the application but in the case of this matter, no such election has been made. Furthermore, the Body Corporate has not sought to take an active part in relation to the application.
4. The application seeks an order adjusting the contribution lot entitlement schedule so that forty lots in the Scheme will each have thirty-one lot entitlements and eight lots in the Scheme will each have thirty-two lot entitlements. This would lead to an aggregate of one thousand, four hundred and ninety-six. The eight lots that will have the additional entitlement comprise seven lots that have a rooftop deck area and one lot (Lot 106) which is owned by or on behalf of the building manager and used for the purpose of conducting the management and letting operation for the building.
5. It is therefore significant to note that this application does not seek an equal allocation of the contribution schedule lot entitlements, but rather a differential allocation.

The Scheme

6. The Scheme involves a building containing forty-eight units that have been constructed in several vertical stacks. There are seven units in each of six stacks and in the remaining stack there are six units, as well as the entrance foyer, reception area and front office. Two of the stacks house three bedroom units and the remaining stacks all house two bedroom units. Each unit has two bathrooms and two toilets, with the exception of units in one of the stacks that have three toilets each.
7. The common property in the Scheme comprises a swimming pool, spa, gymnasium, barbecue area, hobby room as well as the normal building components (such as lifts, stairwells, hallways, driveways, etc).
8. There is a basement under the building that contains car spaces and storage cages, as well as a workshop for the caretaker and various other facilities. The grounds of the building are extensively landscaped and have a frontage direct to the ocean.
9. As I have said, on the roof of the building there are seven private roof areas that are attached to the seven top floor units. Two of these areas are accessed directly from the units below while the other five are accessed indirectly via common property. Situated among those private roof areas are other roof areas that house various common property equipment, as well as air conditioning units for the various units below. The air conditioning units are maintained by the owners of the lots that they serve.
10. The ground floor units also have access to an external courtyard area that adjoins the landscaped gardens. The roof areas and ground floor courtyard areas are the subject of grants of exclusive use and enjoyment.
11. According to the applicant, each unit is metered for electricity consumption and hot water consumption; cooking gas consumption being bulk billed to the Body Corporate. The common property is metered for electricity consumption, cold water consumption and swimming pool and spa water heating gas consumption. Each unit in the building is separately billed for electricity consumption and for hot water consumption (the hot water being presented as a gas account). The cost of cold water is distributed to the various units according to the contribution schedule lot entitlement. This comes in the form of a charge from the Gold Coast City Council for water rates. The common property electricity supply is obviously billed to the Body Corporate, as are the costs for gas heating to the pool and spa and cooking gas consumption in the units themselves. In turn, these costs are distributed to the unit owners according to the contribution schedule lot entitlements.
12. The applicant lists the following expenses as being paid by the Body Corporate from its administrative fund:

 Management fees for caretaking of the common property;
 Body Corporate management fees;
 Printing, postage and stationery;
 Legal fees;
 Fire control expenses;
 Insurance;
 Building maintenance;
 Pest control;
 Garden and grounds maintenance;
 Pool and spa maintenance;
 Lift maintenance; and
 Security.

13. The applicant also lists the following expenses as being paid by the Body Corporate from its sinking fund:

 Roof membrane replacement;
 Toilet exhaust fan replacement (common to all units in each stack);
 Building painting;
 Electrical fittings;
 Front entrance sliding door motors;
 Carpet to passageways;
 Carpet to gymnasium;
 Reception area furniture;
 Fire protection equipment;
 Security intercom;
 Water points;
 Garage driveway door replacement.

14. The applicant contends that the only unit specific expenditure is that required for carpet grass replacement for the seven rooftop deck areas. In this regard, all of the roof of the building is covered by waterproof membrane but in the private roof areas the membrane is covered by an artificial carpet grass. The applicant maintains that the carpet grass is of benefit to the seventh level units only and that accounts, at least partly, for the additional contribution schedule lot entitlement that the applicant proposes for those units. In 2006 the replacement of the carpet grass cost $28,000. The applicant has considered the likely life of the membrane as opposed to the likely life of the carpet grass and has concluded that the carpet grass will need to be replaced more frequently and, although the cost of replacement would normally be a body corporate expense, any replacement that does not correspond with replacement of the membrane should be funded by the seven top floor unit owners rather than the Body Corporate.
15. In relation to unit 106, the applicant maintains that the office electricity and front foyer air conditioning electricity and maintenance is billed to the Body Corporate but this provides a direct benefit to the owner of lot 106. He maintains that the Body Corporate also pays for the electricity for additional aesthetic lighting provided to the building to make it attractive for the rental business conducted by the owner of lot 106. The applicant also mentions the fact that the owner of lot 106 uses common property electricity for the basement workshop.

Submissions

16. A number of unit owners have made submissions to the Commissioner. A number of those submissions support the application, although they do not go into any detail as to why the applicant’s calculations are correct.
17. On the other hand, a number of unit owners opposed the application and had commented specifically on the facts relied upon by the applicant. In relation to the carpet grass, there is disagreement between the applicant and submitting parties on whether or not it contributes to an extension of the life of the roof membrane, or whether it actually has a detrimental effect on the life of the membrane.
18. In relation to lighting and power enjoyed by lot 106, the point has been made that the foyer and office and even the workshop provide a benefit for the entire building. The point was made that the owner of lot 106 offers a service not only to the unit owners who have their units in the letting pool, but to all unit owners in the sense that caretaking services are also being provided for the building. The foyer, office and workshop are important facilities in the delivery of those caretaking services.
19. There is disagreement on whether or not the blade walls on the roof of the building should be painted at the expense of the body corporate or at the expense of the owners of the roof area in which they are situated. There are also covered pergolas on the roof and there is a suggestion that the Body Corporate may be responsible for their repair and maintenance. However, it should be pointed out that the owners of those particular structures have until now assumed that responsibility.
20. Other submissions at odds with the applicant’s contentions deal with:

 Doors, frames and locks that separate the seventh floor units from common property areas may need to be replaced by the Body Corporate.
 Units within the building have different areas of windows and different lengths of balcony railing. The top floor units in particular have substantially more balcony railing than other units in the building.
 There are disproportionate car space and storage cage allocations in that some owners have one car space while some have two and some do not have any storage cages at all.
 There is a contention that the units higher in the building should pay more for the cost of lift maintenance and operations.
 There is a suggestion that the number of bedrooms affects occupancy and that this affects the extent to which a lot draws on the resources of the Body Corporate.

Comments on Available Evidence

21. Clearly, there is disagreement between the applicant’s statements and a number of other owner’s statement in the submissions received by the Commissioner. There is no evidence before me to suggest that either the applicant or any of the other owners making submissions are experts in these matters and there is nothing that would lead me to rely on one person’s submission over another person’s submission.
22. The evidence submitted by the applicant in support of the application consisted of:

(a)	a marketing brochure setting out the plans and schedule of finishes for Palm Springs Residences;
(b)	an electrical diagram in relation to lot 106; and
(c)	a copy of the Minutes of the annual general meeting of the Body Corporate held on 15 September 2006 (being evidence that the Body Corporate has declined to voluntarily adjust the contribution schedule lot entitlement).

23. The application itself was defective in a number of respects and had to be amended at the request of the Commissioner. There is nothing in the application to tell me what the existing contribution schedule lot entitlements are. There is no copy of the relevant survey plan that allows me to identify the common property and there is no detail on the exclusive use by-laws that allows me to determine responsibility for maintenance of exclusive use areas.
24. It is clear that on the basis of the application, its supporting evidence and the submissions received from unit owners, there is insufficient evidence for me to deal with the application and it would in normal circumstances have been dismissed.
25. The only thing that redeemed the application was a submission in reply made by the applicant. In that submission in reply the applicant submitted the following additional materials:

(a)	list of typical occupancies of the various units;
(b)	a copy of the special privilege by-law dealing with air conditioning plant;
(c)	plan showing air conditioner locations;
(d)	a sinking fund forecast prepared for the Body Corporate by Star Building Management Services dated 7 June 2005;
(e)	an engineer’s report on balcony lintel cracking;
(f)	recommended maintenance procedures for pedestrian deck coating system;
(g)	electrical schematic diagram for Palm Springs Residences; and
(h)	the financial statements for the 2005/2006 financial year of the Body Corporate, as presented to the 2006 annual general meeting.

26. In his submission in reply the applicant also sought to deal with a number of the submissions made earlier during the course of the application. It is clear from the applicant’s submission in reply that this additional material has been provided to me in a last minute effort to avoid the application being dismissed for lack of evidence.

The Law

27. Section 48(5) of the Act requires the respective contribution schedule lot entitlements to be equal, except to the extent to which 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. The guiding principles for the interpretation of those provisions have been clearly established by the Court of Appeal in Fisher & Ors v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 214.
28. In essence, the 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 units, or the contribution to the costs incurred by the Body Corporate. The Court has held that more general considerations of amenity, value or history are to be disregarded and what is at issue is the ‘equitable’ distribution of the costs.
29. To satisfy this test, it is necessary to examine the various expenses of the Body Corporate and to assess each expense item to determine the extent to which the individual units contribute to that expense. This exercise has not been undertaken in the case of the current application. Instead, a collection of information has been provided, presumably in the hope that I will be able to undertake that exercise and satisfy myself in relation to the allocation of costs.

Findings

30. At the outset in these applications, I need to be satisfied that the contribution schedule lot entitlements are not equal. There is no direct evidence in the application, or in the submissions, on which I can be satisfied that the current contribution schedule lot entitlements are not equal. On balance, it is possible to assume from the information provided in the application and submissions that the current allocations are not equal. On the balance of probabilities I am satisfied that the current contribution schedule lot entitlements are not equal.
31. There is also no clear evidence in the application as to the status of the private rooftop areas or the private courtyards at ground floor level. They are referred to as being ‘on title’. However, there is nothing before me to indicate whether they are actually part of the title or the subject of a grant of exclusive use and enjoyment. This can affect responsibility for maintenance of those areas.
32. In an attempt to put myself in a position to be able to decide this application I undertook an inspection of the Scheme. While that inspection was useful in a number of respects, it still left me with a lack of evidence about the following matters:

(a)	legal responsibility for maintenance of the rooftop structures;
(b)	the extent to which windows and doors and external balcony railings would affect the equity of an equal allocation of contribution schedule lot entitlements; and
(c)	the accuracy of the rationale put forward by the applicant for the differential of one contribution schedule lot entitlement for the seven top floor units and the caretaker’s unit.

33. A copy of the community management statement for the Scheme and the relevant survey plan may have gone part of the way to satisfying some of these matters. However, leaving aside the question of whether or not it is my function to actively pursue evidence to ensure that the application can be dealt with, it became clear to me that even with the benefit of those documents, I could not be satisfied that the allocation proposed by the applicant is just and equitable. Indeed, I cannot even be satisfied that an equal allocation of contribution schedule lot entitlements is not appropriate in the case of this scheme.
34. Frankly, upon a proper analysis and allocation of the various expense items among the various lots, it seems to me that it is possible that the differential among the lots in the Scheme is so minor as to warrant an equal allocation of contribution schedule lot entitlements.
35. Under the circumstances, it is with some regret that I have to conclude that it is not possible for me to make an adjustment of the contribution schedule on this application. This is despite considerable effort on my part to try and avoid the need to dismiss the application for want of evidence.
36. In conclusion, I must emphasise that orders adjusting contribution schedule lot entitlements cannot be made lightly. A specialist adjudicator and the District Court owe a duty to every unit owner in a scheme to ensure that the provisions of the relevant legislation are properly applied. This can only be done on the basis of reliable evidence. In the case of this application, I cannot be confident that an order in terms of that sought by the applicant is appropriate and I therefore have no option but to dismiss the application for lack of evidence.

G F Bugden OAM
Specialist Adjudicator