Body Corporate Levy increase Magic Mountain owner loses appeal to QCAT

The implications of The Body Corporate and Community Management Amendment Bill 2012, which was passed on March 19th 2013, have started to affect many owners who now face a significant Body Corporate Levy increase.

Owners have had to cope with the changes to legislation and various QCAT challenges over the last 10 years leaving many confused and upset over Body Corporate Levy increases that they cannot afford.

When the recent legislation was passed, some angry owners vowed to fight Body Corporate Levy increases with legal challenges.

It is important to note that the new legislation is not automatically applied. There is a process that owners must follow to ensure that changes to the Lot Entitlements are implemented. The first step is for an owner to ask the Body Corporate Committee to revert the levies in accordance with the legislation.

Some owners have already commenced the process. In one case, former 60 Minutes reporter, Ian Leslie successfully applied to have the levies at Magic Mountain Two reverted in accordance with the new legislation. Although this was a formality, many owners were obviously upset that they faced a Body Corporate Levy increase.

Mr Phillip Williams, another owner at Magic Mountain, challenged the reversion in an application to QCAT. (An interesting aside is that the QCAT judgment refers to the applicant as Phillip Williams in one reference and Paul Williams in another - probably an unfortunate error but it should be corrected!).

In the QCAT decision, Dr J.R.Forbes commented:
"Naturally, the applicant strongly opposes the effective reversal of the restoration of pre-July 2003 contributions that he secured in 2012. Plainly he regards the recently amended law as arbitrary and unfair. No doubt other unit holders felt the same when the former section 379 enabled one owner (perhaps among hundreds) to upset the existing scale of contributions. But these considerations do not entitle the Tribunal to disregard the present law."

The Application from Mr Williams was dismissed and the comments that were made suggested that the Application had little merit...
"The Tribunal has no jurisdiction to entertain the application for leave to appeal filed on 15 May 2013. Furthermore, the Tribunal has no jurisdiction to give advisory opinions or answer hypothetical questions, or to substitute its own policies for those of the legislature, or to anticipate changes that may or may not be made to the Act "later this year"."
"The applicant's case is not advanced by such extravagant rhetoric as "indefensible hypocrisy", "a conflicted ambiguous Act", "Iegislative thuggery" or vague and misconceived allusions to fair trading laws. I note that the Body Corporate does not press for costs on this occasion, but that is a future possibility that the applicant could usefully bear in mind."

There are indeed many owners who are horrified at the Body Corporate Levy increase while a smaller percentage of owners are delighted at the decrease in their levies.

Owners who are aggrieved at the changes to the legislation need to understand that the changes are now Law irrespective of how unfair they are perceived to be. Any challenge in regards to the levies must be in accordance with the Law and on very specific and limited grounds.

However, one owner pointed out that when he purchased his apartment the contract specified the Lot Entitlements. He feels that the new Law has not considered that original contracts may be breached by changing the Lot Entitlements.  Although he does raise an interesting point, I doubt that anyone would be able to use that to challenge the change in the Law.

Those who feel that the levies should revert to the original levies that were set by the Developers would be better off directing their feelings to the Queensland Government rather than QCAT.

There are probably more than enough owners who have been adversly affected by the new legislation and the Body Corporate Levy increase to have a real influence on the Goverment but they will not get anywhere unless they voice their opinions in large numbers.

New Ways for Body Corporate Managers to make money

Body Corporate Managers are always looking for new ways to make money. In recent years many have started offering additional services to clients but there is growing concern that the promotion of some of these services may constitute a conflict of interest.

In an ideal world, Bodies Corporate should take steps to ensure that they are compliant with all legislation and general rules and regulations. Some Body Corporate Managers have seized the opportunity to exploit this and make money.

The way it works is quite simple. They point out to Committees that  that the Body Corporate needs to get reports on various areas of compliance. They often give veiled threats of potential liability or Committee responsibilities if the reports are not obtained.

They then recommend their own in house services to provide the reports which can include things like:

• Sinking Fund Forecasts
• Workplace Health and Safety Reports
• Fire Risk assessment reports
• Asbestos reports
• Insurance assessments

and many more.

They don't stop there. They also provide services to "assist" owners with Dispute resolution, Levy Equalisation claims and one BC Manager even has a separate department that completes insurance claims at an additional cost of course.

There are often times when BC Managers do everything they can to promote these offshoot services in an attempt to generate more income for themselves. However, the problem that I have with all of this is that I don't see them always offering alternatives.

In one case, the Chairman of a Body Corporate was convinced that he needed to get three reports done urgently on Fire Safety, Workplace Health and Safety and an Asbestos assessment. He was pressured into thinking that he might even be liable if the reports were not done.

The Body Corporate Manager then proceeded to convince him that he should use the services of companies that were subsidiaries of the BC Manager. No alternatives were offerred.

When the reports were completed, they highlighted various issues that needed to be addressed and they offerred yet more "in house" services to rectify the faults.

It is inevitable that Body Corporate Managers will be creative in developing other services for their clients but they need to be very careful indeed to offer alternatives rather than try and convince Committees to go with their own offshoot companies.

An example of the potential problems that can occurr was highlighted in the comments of a QCAT adjudication  .....

“The adoption of the practice of body corporate managers purporting to act both as “experts” and “representatives” in the same case is not one which should be encouraged.”
This case referred to a claim to equalise the levies. The Body Corporate Manager offerred the services of one of their own consultants to represent the Body Corporate.

There is nothing wrong with Body Corporate Managers developing their business and providing additional services to their clients providing that they act ethically and offer alternatives to Committees.
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The opinions expressed in this article are personal commentaries and not intended in to be legal advice in any way. I have spent many years participating on a number of different Body Corporate Committees and provide an owner’s perspective on Body Corporate issues.
If you have any concerns or comments about any of the issues that are raised in these articles please use the form below to contact me.