The contribution lot entitlements for West End Central Commercial CTS 33391 shall be adjusted as follows:

Application for adjustment of contribution schedule lot entitlements

Body Corporate and Community Management Act 1997, ss 47, 48, 49(4)

[1] Mango Property Pty Ltd ("Mango") is the owner of Unit 12 in West End Central Commercial CTS 33391 ("the scheme") a retail and commercial development in West End, Brisbane. On 15 November 2010 Mango lodged an application for the adjustment of the contribution schedule lot entitlement ("the CSLE") of the twelve units in the scheme. The application is brought under the Body Corporate and Community Management Act 1997 ("the BCCMA").

[2] The Applicant has commissioned and relies upon a report from Stewart Silver King and Burns ("SSKB") authored by Mr Martin Walsh to determine if any, and what, adjustments are required to ensure compliance with the principles in the BCCMA.[1]

[3] The Respondent Body Corporate, after some delay, retained Leary and Partners, quantity surveyors to review the SSKB report. Ms Kaylene Arkcoll has prepared a Contribution Lot Entitlement Analysis after inspecting the scheme in February 2011.[2] The Respondent relies on the Arkcoll report.

[4] Mango now advises that it accepts the suggested lot entitlement adjustments recommended in the Arkcoll report. There are no submissions from other unit owners.

[5] Mr Walsh describes the scheme as comprising two storeys of a multi storey building made of block and concrete with a painted exterior. Units 1 to 11 on the ground floor facing the street are retail outlets. The storey above occupied by Mango is used for office/commercial purposes. There is a two-level basement car-port providing exclusive parking, storage and access to the lifts.

[6] Mr Walsh has conducted a line-by-line analysis of historical financial statements of the Body Corporate and current budgeted expenditure of the administration fund and the sinking fund forecast. He has assessed whether the unit owners are appropriately sharing, or are deriving a benefit from, costs incurred by the Body Corporate because of their lot.

[7] Walsh's method to determine the desirable distribution of CSLEs is as follows: he allocates 89.5% of the body corporate administrative budget costs equally between units, while the balance of 10.5% is allocated unequally based on the unit area.

[8] He recognises by reference to the BCCMA the basis for lots to contribute to Body Corporate costs:

"in a proportion equivalent to the share of the costs that are:

(a) incurred by the Body Corporate because of their particular lot, or

[9] The current CSLE has 1792 lots, unevenly distributed between the 12 units. Mango has an entitlement to 572 or 31.92% of the total. Walsh recommends an adjustment whereby in a new CSLE of 9998 lots, Mango will have an entitlement to 1036 lots representing 10.36% of the total and therefore a reduction of 32.46%. Units 1 to 11 will have increased entitlements of between 76% and 286%.

[10] The current scheme was prepared as recently as 2005 for the purpose of allocating exclusive use car parks.

[11] Both reports are in substantial agreement. Ms Arkcoll notes that the current uneven allocation of entitlements is based on the relative market value of the lots, which does not reliably match the cost burden that each lot places on the body corporate. She shares with Walsh the statutory default position that all costs should be equally shared subject to compelling evidence that a more just and equitable allocation is called for. Her conclusions differ from those of Mr Walsh on the following items in the Respondent's administration budget:

• Roofing related costs;

• Toilet related costs;

• Replacement of external/internal light fittings;

• Maintenance/replacement of tiles in common areas; and

• Maintenance/replacement of fire hose reels, smoke and thermal detectors.

[12] Mr Walsh has allocated the cost of these items between the units unequally and based on the unit total area. Ms Arkcoll disagrees, finding no necessary relationship between unit area and the cost impact on the Respondent's budget. She recommends that they be allocated equally.

• [13] Ms Arkcoll supports Walsh's conclusions that the following budget items should be allocated on an equal basis:

  • Cleaning the grease trap; and

• Lift maintenance and contract costs.

[14] Ms Arkcoll notes that some unit owners expect lift expenses to be allocated unequally and that owners of units higher in the building should contribute a greater proportion to operation and maintenance of lifts. She points out that all units have a basement car space and therefore a reason to use the lifts. Lift experts have advised her that running costs do not depend on the number of floors travelled by the lift and that the cost of the regular inspection required by statute is not substantially affected by the level of lift usage. Arkcoll maintains that since it is not possible to quantify how much the occupiers of each unit use the lift, it is appropriate to adopt the default position of equal sharing of lift costs.

[15] The BCCMA provides principles by which the maintenance costs of a development with a community title scheme, such as West End Central Commercial, are met by contributions of the owners of the lots. Their proportionate contributions are to be set out in a document known as a lot entitlement schedule: s 47. Lot owners may apply to this Tribunal for an adjustment of a lot entitlement schedule: section 48. The governing principle is 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": s 48(6). Criteria are provided for determining just and equitable circumstances: s 49(4). These include but are not limited to:

"(a) how the community titles scheme is structured; and

(b) the nature, features and characteristics of the lots included in the

[16] Guidance in the interpretation of section 49(4) is afforded by the Full Court of the Supreme Court in Fischer & Ors v Body Corporate for Centrepoint Community title Scheme 7779 [2004] QCA 214:

• The starting point is that the entitlements should be equal;

• A departure from the principle is allowable where it is just or fair to recognise inequality;

• The allocation of lot entitlements is to be made on the basis of the impact that individual apartments make upon the cost of operating a community titles scheme; and

• The matters referred to above to which the tribunal may have regard may be regarded only to the extent that they affect the cost of operating the community titles scheme.

[17] The Respondent body initially took issue with the Walsh report on several matters and urged the tribunal to consider changes foreshadowed in amending legislation which is not yet in force. The tribunal is obliged to apply only the legislation currently in force and is bound by authoritative interpretation of the current legislation by the Queensland courts.

[18] The Applicant and the Respondent having considered both reports have expressed themselves content with the adjustment recommended by Ms Arkcoll. She allocates a total of 10,000 lot entitlements, compared to 1,792 in the current schedule. Mango is allocated 869 or 8.69% of the total. Other units are allocated lot entitlements in the range of 8.2% - 8.5% of the total.

[19] I propose to order that the contribution lot entitlements for the scheme be adjusted to reflect the lot entitlements proposed by Ms Arkcoll. Those entitlements are set out in the following table, which will be annexed to my formal order.

[1] Report of Martin Walsh of SSKB: 11/11/10.

[2] Report of Kaylene Arkcoll of Leary & Partners: 14/3/11.