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QNA OCs on Actual Consumption

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Question: We purchased off the plan. We feel that our lot entitlement is too high compared to other lot owners that have larger lot areas on the plan of subdivision. What can be done to address this?

Answer: I think it’s a matter of getting an expert opinion about what the actual consumption is.

If it’s wrong, it’s wrong.

As it stands, we’re pretty clear that entitlement is based on value and liability is based on adjusted and equitable contribution to the Owners Corporation’s expenses.

I noted they question about size, and I think size is not directly relevant to value, or consumption, it’s indirectly relevant to both. Obviously, when value is calculated, value size is one of the many things they’ll take into account but it’s not the only determinative. In terms of the relationship between size and consumption, the bigger the lot, the more people that it might accommodate and the more people there are, the more consumption there may be.

You could give extreme examples where this just goes the completely wrong way. You might have a hole in the wall coffee shop at ground level as compared to a penthouse that takes up a whole floor plate at the top. The penthouse might be rarely occupied and all the waste and the services, water and utilities of these sorts of things are going to be disproportionately highly consumed by that retail enterprise at the bottom. So you’ve got to be very careful looking at size. I’ve just extrapolated the size quotient of that question because I thought those comments were important to make.

I should also say that evaluations are going to be subjective to valuations by valuers. In these cases, whether you’re going to VCAT, or you’re seeking a robust and maximising the prospect of unanimous resolution passing, you’re probably going to need some pretty good evidence. For an entitlement based on value, it’s an evaluation. That’s pretty clear. For liability based on consumption, it’s something that typically surveys do. I have used surveyors as experts in all those cases we’ve (discussed in the Webinar) [https://youtu.be/t9BSjV7SXBo], and their evidence has largely been accepted.

What can be done? I think it’s a matter of getting an expert opinion about what the actual consumption is. Obviously, there’s a little bit of forensic arithmetical exercise in that, but at the end of the day, what you want to do is get an opinion as to what the consumption is. If the opinion agrees with your own, that you’re paying an unequal amount, you’ve got robust evidence. Then you apply to VCAT for an order that the plans change and the schedule of liabilities are amended to reflect proper consumption.

Tim Graham
Bugden Allen Graham Lawyers

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