Ti-Tree [2000] QBCCMCmr 81 (17 February 2000)

P J HANLYREFERENCE: 0550-1998

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	848
Name of Scheme:	TI-TREE
Address of Scheme:	1-5 Barrier Street Port Douglas QLD 4871

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Ellimount Pty Ltd, the owner of lot 48, and the resident manager of the scheme.

P J HANLYI hereby order that, within 1 month of the date of this order, the body corporate shall pay to the applicant, Ellimount Pty Ltd, the sum of $8,522.90.

I further order that the application for an order that the applicant be reimbursed by the body corporate for performing work at the resort known as “Ti-Tree” which falls outside the duties of the appointed manager as prescribed in the management agreement, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0550-1998

“TI-TREE” CTS 848

The applicant, Ellimount Pty Ltd, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1.	The applicant be reimbursed by the body corporate in the sum of $17,105.67 pursuant to the Management Agreement dated 9 June 1995:

(a) For various outlays personally incurred by the applicant in the course of discharging his duties as a manager of the units known as “Ti-Tree”;

(b) For performing work at the resort known as “Ti-Tree” which falls outside of the duties of the appointed manager as prescribed in the Management Agreement.

By consent of the parties, the applicant’s claim was subsequently increased to $30,422.82.

Section 223(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a) a claimed or anticipated contravention of the Act or the community management statement; or

b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

In the supporting grounds, the applicant provided details of the management agreement, a summary of the duties of the manager, details of the applicant’s claim and a brief explanation as to the foundation for that claim. I do not propose to set out this information in detail. Suffice to say, it is material which has been supplied to the body corporate, and to which the body corporate has had the opportunity to respond.

The response of the body corporate to the application is dated 1 July 1999. The applicant’s reply to that response, and the amended claim, is dated 15 September 1999. The further response of the body corporate is dated 15 October 1999. This last response included affidavits from the following persons:

♦	Garth David Dickson, a former on-site manager, and the applicant’s immediate predecessor
♦	Samantha Matthews, licensed structural landscaper
♦	Denis Broad, the manager of Body Corporate Services Pty Ltd, the body corporate manager for Ti-Tree
♦	Richard Godfrey, chairperson of the body corporate
♦	Heinz Denner, committee member
♦	Robert Baker committee member
♦	Keith Murray Schirmer, a former on-site manager and the predecessor to Garth David Dickson

Although the applicant was afforded the opportunity of presenting its own affidavit material, no such material was forthcoming.

In addition, I have conducted several teleconferences with the solicitors for both parties. During the course of these teleconferences, discussion took place as to the most appropriate means by which this dispute might be resolved. Specialist adjudication was one option discussed, but only the applicant was agreeable to such a course. Section 215 of the Act only allows for specialist adjudication if both parties agree. Section 216 of the Act allows for specialist adjudication without agreement, but only if the commissioner undertakes to pay the cost of the specialist adjudicator. This office does not have the financial resources to give such an undertaking. The applicant’s solicitors also raised the possibility of specialist mediation, but that matter was not further pursued by either party. Accordingly, a case management recommendation was made that departmental adjudication was the most appropriate means by which the matter might be resolved.

The material before me comprises over two hundred pages, the details of which I do not propose to set out in this document. It is comprised of submissions from the parties, copies of the relevant agreement and deed of assignment, invoices and receipts. I have, of course, had regard to the whole of the material in reaching my decision.

The arrangements between the applicant and the body corporate are governed by a Management Agreement dated 9 June 1995, between the body corporate and Meralock Pty Ltd, which was assigned to the applicant by a Deed of Covenant and Assignment of the same date. The agreement provides for the applicant to be paid a management fee in exchange for which it is required to perform certain duties as set out in the agreement. This dispute has arisen over precisely what those duties are. Essentially, the applicant contends that it only has to act in a supervisory role, and that if it undertakes any additional work in and around the scheme, it is entitled to charge the body corporate for that work on an hourly basis. The applicant’s rationale for personally undertaking the additional work is that it is required to keep the property in first class condition order and repair. The applicant contends that it could not be satisfied that any other contractor could be trusted to perform work to such a standard. The body corporate, on the other hand, is of the view that to interpret the agreement in that fashion would be to fly in the face of the language and clear intention of the agreement.

In Australian Broadcasting Commission v. Australasian Performing Right Association Ltd (1973 [1973] HCA 36; 129 CLR 99) heard in the High Court of Australia, sitting in Sydney, by Barwick, Gibbs and Stephen, JJ, His Honour Mr Justice Gibbs stated:

“It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another.”

Clause 2 of the Management Agreement details the duties of the manager. Those duties include, amongst other things, an obligation to supervise employees or contractors of the body corporate engaged in gardening, cleaning or building repair or maintenance; an obligation to keep the property in good and substantial order and repair; an obligation to report promptly to the body corporate on all things requiring repair and on all matters creating a hazard or danger and to take remedial action where practicable; an obligation to manage the property and endeavour to ensure that it is kept in first class condition order and repair; an obligation to cause the property and equipment to be properly maintained and to keep certain specified areas in a clean and neat condition. It is clear from this clause that the duties of the manager cover a range of activities, some of which necessitate the manager actually performing those activities. The annual fee paid by the body corporate is obviously intended to remunerate the manager for such activities.

I am further assisted in this determination by the affidavit material provided by the body corporate. Mr Dickson, a director of Meralock Pty Ltd, the applicant’s immediate predecessor, stated, in part, as follows:

When Meralock acquired the management rights from Mr and Mrs Schirmer I was provided with a detailed duty statement by Mr Schirmer which identified in detail the tasks to be carried out by the managers on a periodic basis (“duty statement”).

While Meralock was the on site manager, the tasks set out in the duty statement were carried out either by myself or my wife personally, or with the assistance of third parties who were engaged at Meralock’s cost. As far as I was concerned the tasks specified on the duty statement were part of the duties required to be carried out under the Management Agreement for the management fee.

I handed the duty statement to the Schaedlers on or before settlement of the purchase of the management rights on 9 June 1995.

...

It is correct to say that I provided the Schaedlers with significant tuitioon in and about the operation of the management and letting rights business, and the duties to be performed.

...

In the course of tuition, in addition to providing the Schaedlers with the detailed list of duties, I made it quite clear to them that it was the manager’s responsibility to attend to those duties either by themselves or, if they chose to engage others at their cost. I explained to them that it was the manager’s responsibility to maintain the premises and that the labour contribution was their responsibility, but that material outlays were the responsibility of the body corporate.

Mr Dickson detailed, in paragraph 15 of his affidavit, specific duties performed by himself, or his wife. Mr Dickson stated that, with the exception of reading electricity meters, no charge was made for the labour provided by himself or his wife in carrying out those duties. Mr Dickson denied that he or his wife had asserted to the contrary to either Mr or Mrs Schaedler, and stated that the suggestion that they had done so in paragraph 8 of the applicant’s reply was false.

Mr Schirmer, who with his wife, was the manager prior to Mr Dickson, also provided an affidavit. Although Mr Schirmer’s management agreement was a separate agreement from that to which the applicant was a party, the material terms and conditions of Mr Schirmer’s agreement were in all respects identical to the applicant’s agreement. Mr Schirmer listed, in paragraph 2 of the affidavit, “a variety of garden and maintenance tasks” which were carried out personally either by him or his wife, or at their direction and at their cost. Mr Schirmer stated, in part, as follows:

... To the best of my recollection no charge was ever made to the body corporate for any labour associated with carrying out those tasks although the body corporate paid for outlays such as barbeque gas and mower fuel.

The affidavits of Messrs Denner and Baker essentially relate to the period immediately after Cyclone Rona struck the resort in early February 1999 and detail their observations of the clean-up operation. Both men state that they did not observe any clean-up being carried out by the Schaedlers, although they were both aware that a claim for labour for a clean-up at that time was presented by the Schaedlers to the body corporate. Both men also stated that an inspection of the premises had taken place with Mr Schaedler on 27 January 1999.

The affidavit of Mr Godfrey denied that an inspection of the premises had taken place after the Annual General Meeting on 20 January 1999 with Mr Schaedler.

Mesrs Denner, Baker and Godfrey all deny that they ever instructed the Schaedlers to carry out any additional works over and above those required under the management agreement, or that they authorised any expenditure in relation to such works.

Mr Broad stated in his affidavit that the Schaedlers forwarded only three claims for additional payment during the period June 1995 and 24 April 1997. Mr Broad then detailed those claims, and explained why they were paid, and further explained why he ceased paying such claims, after all of the information surrounding them came to light. Mr Broad also exhibited to his affidavit a copy of a letter sent by the Schaedlers to owners in the scheme prior to the 1998 Annual General Meeting. In that letter, the Schaedlers note that garden maintenance is part of their duties, and “extra expenses are therefore unnecessary”. This statement was made in relation to motion 17 to be considered at the Annual General Meeting. The motion was subsequently lost.

Clause 3 of the Management Agreement relates to supervision by the manager. The obligation of the manager to maintain the property as a first class accommodation establishment is reiterated. It is stated that the manager must supervise the performance by the staff or contractors of the body corporate. This clause must, of course be read in conjunction with Clause 4, relating to staffing. It is further stipulated that the manager does not have to undertake any secretarial work, and specific duties for which the manager is not responsible are then listed.

Clause 4 of the management Agreement relates to staffing. It states “subject to the managers (sic) obligations under clause 2, the body corporate shall employ such specialist tradesmen or contractors as are necessary from time to time to keep the property and the common property ... in good and proper order and repair...”

Clause 5 of the Management Agreement deals with expenditure by the manager on behalf of the body corporate. Clause 5.1 specifically provides that the manager shall not incur any major or extraordinary expenditure without the prior approval of the body corporate or of its representative authorised pursuant to clause 12. The manager does not appear to have sought body corporate approval for any of the major works allegedly performed. This prevented the body corporate from assessing whether the work was even necessary. Furthermore, the manager did not submit invoices to the body corporate until some months after the dates on which work was allegedly performed, thereby preventing the body corporate from inspecting any such work to determine if it had even been carried out, satisfactorily or otherwise.

In entering into the management agreement with the manager, the body corporate was entitled to a degree of certainty, not only as to the amount for which it would be liable to pay the manager, but also as to the extent of work which was required to be performed in consideration of that payment. Clause 5 of the agreement is intended to give the body corporate some control over any additional expenditure for which it may become liable.

I am satisfied that the claims by the manager for such activities as changing the gas bottles, and replacing light bulbs should not be allowed, as they fall within the duties contemplated by the agreement, for which the annual fee is payable. I am also satisfied that general gardening, pruning and lopping of trees are activities which fall within the ambit of the manager’s duties, particularly as defined in clause 2.14. I am also satisfied that minor repairs, for which a specialist tradesman is not required, fall within the ambit of the manager’s duties. I am further satisfied that if the manager had considered that some additional major work was required, which the manager proposed to carry out personally, then it was incumbent upon the manager to obtain body corporate approval for the work before it was performed. In this way, the body corporate would be afforded the opportunity, not only of assessing whether the work was in fact required, but also whether the cost proposed for the work was reasonable. Accordingly, I do not propose to allow the applicant’s claim for labour for any work which did not receive prior approval of the body corporate. On my reading of the material, none of the work performed by the manager received prior body corporate approval.

I note that the body corporate has stated that it is prepared to pay certain of the claims made by the manager, notwithstanding that proper receipts have not been supplied. I understand the body corporate’s concern in this regard, as I have been provided with copies of numerous documents which have been supplied by the manager to the body corporate in support of claims for payment. In many instances the documents are facsimile copies, and are almost illegible. In other instances, the document is an invoice, with no detail as to the items purchased. The items for which the body corporate has stated that it is prepared to reimburse the manager are as follows:

Gas $ 512.24
Light bulbs $ 587.15
Toilet Rolls/barbeque towels $ 357.46
Cleaning Products $ 481.50
Garden Purchases $2826.26
Fuel $ 527.57
Repairs $2290.60
Meter Reading $ 790.12
Postage $ 150.00
TOTAL $8522.90

I appreciate that these concessions were made on 1 July 1999 and 15 October 1999, and that there may be further outlays for which the manager may seek reimbursement since that time. The decision as to payment of such claims will be one for the body corporate. The manager has been firmly on notice from the time that the body corporate first refused to pay claims without proper receipts that there was a deficiency in the documentation being presented to the body corporate. If the manager has not supplied proper receipts then I am satisfied that the body corporate is within its rights to refuse payment.

I have ordered that the body corporate reimburse the manager in the sum of $8522.90. I have dismissed the remainder of the applicant’s claim.2n