Property Law Update

• Landlords entitled to recover land tax from tenants
• Adjustment to lot entitlements must follow Fischer
• New PAMDA forms 

The Act lifts the blanket prohibition under section 44A of the Land Tax Act 1915 against recovery of Land Tax by landlords and now allows landlords to recover Land Tax from tenants except in relation to the following:

1. a residential tenancy agreement as set out in the Residential Tenancies and Rooming Accommodation Act 2001;
2. a retail shop lease as set out in the Retail Shop Leases Act 1994;
3. any lease entered into before 1 July 2009 (pre-existing lease);
4. any lease entered into after 1 July 2009 but arising from:

(a) any renewal under an option to renew of a pre-existing lease even if the renewal occurs after 1 July 2009; and

(b) any assignment or transfer of a pre-existing lease even if the assignment or transfer occurs after 1 July 2009.

Developers and purchasers of lots in a community titles (strata) scheme will need to carefully consider the relevant lot entitlements for those properties after the decision of the Commercial and Consumer Tribunal in Callard v Body Corporate for the Pinnacle – Surfers Paradise CTS 31781 [2009] CCT KL049-08.

The Callard case has confirmed that an adjustment to lot entitlements will only be granted if it accords with the principles in Fischer v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] 2 Qd R 638 (Fisher) and the Body Corporate and Community Management Act 1997 (the Act).

The Law

In Queensland, a plan of subdivision and a community management statement (CMS) are required for the establishment of a community titles scheme. The CMS must, amongst other things, include a contribution schedule which sets out the proportion of each lot owners’ contribution to the common costs of the scheme.

It is a requirement of the Act that the contribution schedule lot entitlements be equal for each lot except to the extent to which it is “just and equitable” in the circumstances for them not to be equal. The criteria for deciding these circumstances are found in section 49(4) of the Act.

In the Callard case, in deciding whether an adjustment should be made to the contribution schedule, the Tribunal hearing the application relied on the principles from Fischer, namely that:

• a contribution schedule should provide for equal contributions by lot owners, unless some lots give rise to particular costs of the scheme that others do not;
• an adjustment depends on the services and amenities provided by the scheme Body Corporate to the respective lots or their contribution to the common costs of the scheme, not more general considerations of amenity, value or history;
• lots can be different sizes and aspects and still give rise to equal entitlements, however an adjustment can be made if a lot has a certain advantage such as its own private facility;
• reference should be made to factors which have a financial impact or consequence on the Body Corporate and factors regarding a lot’s value or amenity should not be considered;
• consideration should be given to the extent to which a lot unequally causes costs of the scheme; and
• the factors considered in section 49(4) of the Act are only to be regarded to the extent that they affect the cost of operating a scheme.

The Case

The respondent Body Corporate in the Callard case presented a report prepared by consultants identifying the relevant common costs, categorising them and then allocating them amongst the lot owners. Since the applicant did not dispute the content of this written report, the Tribunal accepted the report and considered it in reference to the principles from Fischer.

The Outcome

The Tribunal held that an adjustment to the lot entitlements should be made to reflect the findings of the report. Significantly, the Tribunal also noted that if an adjustment is granted, the Body Corporate must act quickly to lodge a request to record a new CMS reflecting the adjustment.

What it means for you?

In light of this decision, those wishing to bring an application for an adjustment to lot entitlements should first ensure that an analysis of the relevant common costs of the scheme and the distribution of those costs amongst lot owners has been made in line with the principles in Fischer and that this analysis supports their application. Similarly, developers of community titles schemes should ensure that they undertake a similar analysis prior to preparing the relevant contribution schedule to minimise the risk of future challenge.

Please note that with effect from 1 July 2009, the forms for contracts of sale under the Property Agents and Motor Dealers Act 2000 (PAMDA) have changed. There are now new versions on the Office of Fair Trading  website for immediate use.

There is a moratorium on the use of the previous versions of the forms which allows the previous versions of the forms to be used until 30 September 2009.