No. 9 Port Douglas Road [2002] QBCCMCmr 166 (28 March 2002)

DJ ReardonREFERENCE: 0168-2002

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24368
Name of Scheme:	No. 9 Port Douglas Road
Address of Scheme:	9 Port Douglas Road PORT DOUGLAS QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Famestock Pty Ltd, the Owner of Lots 1, 16, 18 and a purported service contractor and letting agent for the “No. 9 Port Douglas Road” Body Corporate

I hereby order that the Body Corporate must not negotiate, or enter into any further caretaking agreements, or authorisations of letting agents for the “No. 9 Port Douglas Road” community titles scheme, until this application is determined by final order.

I further order that the Body Corporate must not nominate, or appoint a person as the transferee of Lot 1 pursuant to clause 11 of the Caretaking and Letting agreement dated 9 February 1998 between the Proprietors “No.9 Port Douglas Road” Building Units Plan No. 106455 and Famestock Pty Ltd ACN 010 499 989 (“the Caretaking and Letting Agreement”), or pursuant to, or on the basis of, any other clause of said agreement, or any other agreement, until this application is determined by final order.

I further order that the Owner of Lot 1 must not transfer, dispose of, or otherwise deal with Lot 1 until at least 14 days after this application is determined by final order.

I further order that Famestock Pty Ltd ACN 010 499 989 must not transfer, assign or otherwise purport to deal with the Caretaking and Letting Agreement, until at least 14 days after this application is determined by final order.

I further order that pursuant to the agreement of the Body Corporate and Famestock Pty Ltd ACN 010 499 989, the nomination date referred to in clause 11.1 of the Caretaking and Letting Agreement, is extended until the date 14 days after this application is determined by final order.

I further order that the Body Corporate must not consider motions relating to the Caretaking and Letting Agreement, at any general meeting or committee meeting until this application is determined by final order.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0168-2002

“No. 9 Port Douglas Road” CMS 24368

1.	Orders sought

The applicant, the Owner of Lots 1, 16 and 18, and a purported service contractor and letting agent for the scheme, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote-

“An order:

(a) That the purported termination of the caretaking and letting agreement made between the Applicant and the Body Corporate was invalid and void.

(b) That the caretaking and letting agreement made between the Applicant and the Body Corporate is still valid and existing.”

The applicant has also sought the following interim orders, quote-

“An interim order that the Body Corporate be restrained from taking steps to negotiate or enter into a new Caretaking and Letting Agreement with any person other than the Applicant until this application is heard and determined.

An interim order that the Body Corporate be restrained from taking steps to negotiate or appoint a person as transferee of the Manager’s Lot”

The community management statement for the “No. 9 Port Douglas Road” community titles scheme indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 applies to the scheme.

2.	Interim Orders

Section 225(1) of the Act provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

In this particular decision, I am solely concerned with the application for interim orders. In any consideration of an application that seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 225(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances.

3.	Teleconference and Submissions

Section 197(3) of the Act allows the Commissioner to refer a matter to an adjudicator for consideration for an interim order, even though affected parties have not been given notice of the application, and have not had an opportunity to make a written submission about the application. In my view, this position highlights the urgent nature of matters that are generally the subject of applications for interim orders.

However, I am also of the view that if practicable, it is preferable to allow affected parties an opportunity to make a written submission about the application before an interim order is made. To this end, on 22 March 2002 I conducted a teleconference between the solicitor for the applicant, the solicitor for the Body Corporate, and myself, with a view to establishing whether the parties were prepared to undertake not to act on the matters raised in the application, while I allowed the Body Corporate a period of time to make a written submission in response to the application for interim orders.

In the course of the teleconference the solicitor for the Body Corporate indicated that the Body Corporate would be prepared to consent to the interim orders sought by the applicant, provided the applicant consented to an additional 3 interim orders (outlined below). The solicitor for the applicant indicated that he believed the applicant would be agreeable to 2 out of the 3 interim orders proposed by the Body Corporate. I requested that the solicitor for the Body Corporate provide the applicant’s solicitor, and myself with a written statement of the Body Corporate’s proposed interim orders. I further requested that the applicant consider the interim orders proposed by the Body Corporate, and provide a response.

On 25 March 2002, the solicitor for the Body Corporate duly provided the applicant’s solicitor and myself with a written statement of the proposed further interim orders. Specifically, the further interim orders suggested by the Body Corporate are as follows:

1. That by consent the Applicant and the Body Corporate agree that the nomination date referred to in clause 11.1 of the subject Caretaking and Letting Agreement be extended until the date that is 14 days after the application is heard or determined.

2. That the Applicant and the directors of the Applicant company be restrained from transferring, disposing of or otherwise dealing with or purporting to deal with the manager’s unit being lot 1 and/or the Caretaking and Letting Agreement in any way which would prejudice the Body Corporate’s rights on termination under the subject Caretaking and Letting Agreement without the prior written consent of the Body Corporate until 14 days after the application is heard and determined.

3. That the Applicant and the directors of the Applicant, withdraw their request for the holding of an extraordinary general meeting of the Body Corporate forwarded to the secretary of the Body Corporate by Freestone & Kumnick Solicitors under letter dated 19 March 2002 and that they be restrained from further requesting the holding of an extraordinary general meeting to consider motions on the same or substantially similar grounds as those in the request of 19 March 2002 until this application is heard and determined.

Also on 25 March 2002, the applicant’s solicitor provided a written confirmation that while the applicant would consent to the first and second further interim orders proposed by the Body Corporate, the applicant was not agreeable to the third proposed order relating to the requested extraordinary general meeting. The applicant’s solicitor also provided reasons for the applicant’s disagreement with the third interim order proposed by the Body Corporate.

Before considering making an interim order or orders, I decided to allow the Body Corporate an opportunity to make a written response to the application for interim orders. The Body Corporate has provided me with a submission in regards to the interim order in facsimiles dated 26 March 2002 and 27 March 2002, copies of which appear to have been provided to the applicant.

In my consideration of this application for interim orders I intend to consider both the original orders sought by the applicant and the further interim orders proposed by the Body Corporate. I would point out that normally if an affected party to a dispute resolution application wanted to seek further orders than those sought by the applicant, it would be for that affected party to make a fresh application. It is not the normal practice of adjudicator’s or the Commissioner to allow affected parties to seek further orders in the course of responding to a dispute resolution application.

However in this case, I am of the view that there are definite parallels in the orders sought by the applicant and the orders sought by the Body Corporate. To my mind, all of the orders sought by both parties are aimed at maintaining the status quo until such time as the issues in dispute are determined. Given that the Act provides me with an ability to make an order that I consider is just and equitable in the circumstances, I am satisfied that it is appropriate for the Body Corporate to propose, and for me to consider the additional interim orders described by the Body Corporate. In making this determination, I am also mindful that the applicant has had notice of, and has replied to the orders proposed by the Body Corporate.

4.	Matters in dispute

This dispute resolution application raises a question of the validity of the termination of a caretaking and letting agreement. I am of the view that parties to these types of disputes often have a reasonable apprehension that their contractual rights may be fettered, or put at risk by actions of other parties to the dispute while the matter is being resolved.

In this case, concerns that have been raised include the possibility that the Body Corporate may enter into a new caretaking and letting agreement, notwithstanding the fact that the agreement in dispute may still be on foot. A further example is the Body Corporate’s concern that the applicant could transfer or otherwise deal with the management agreement, notwithstanding the Body Corporate’s position that the agreement is at an end. I accept that these types of concerns warrant interim relief that maintains the status quo and preserves parties’ positions, while the subject matter of the application is investigated and determined.

It is evident that both parties are agreeable to both interim orders sought by the applicants, and 2 of the 3 further interim orders sought by the Body Corporate. In summary form these orders sought propose that while the application is being determined:

•	The Body Corporate is not to enter into a new caretaking and letting agreement,
•	The Body Corporate is not to appoint a transferee of the so-called “manager’s lot”,
•	The parties agree that the nomination date in clause 11.1 of the agreement should be extended, and
•	The applicant is not to transfer, dispose of, or otherwise deal with either the “manager’s lot”, or the caretaking and letting agreement.

I am satisfied that these are reasonable positions on which to base interim orders in this case. As such, I intend to make interim orders in similar terms to those proposed by the parties.

The third interim order proposed by the Body Corporate, which the applicant is not in favour of, concerns a request for an extraordinary general meeting dated 19 March 2002 provided to the secretary of the Body Corporate by the applicant. The Body Corporate has provided me with a copy of the request, which proposes 5 motions to be considered by the Body Corporate. The first motion proposed by the applicant seeks a withdrawal of the purported termination of the caretaking and letting agreement. In the second motion, the applicant seeks the authority of the Body Corporate to enter into a “fresh” caretaking and letting agreement with the applicant. The third motion proposes that the Body Corporate instruct the committee to cease taking steps to sell the “management rights”. Motions 4 and 5 seek the removal of the chairperson and secretary.

The applicant appears to have two objections to this proposed order. Firstly, the applicant indicates a view that it “is entitled to pursue all possible and valid means to protect (its) interests”. Secondly, the applicant indicates that one of its main substantive arguments is that the committee does not have authority to terminate the caretaking and letting agreement, and if the proposed motions are passed it will indicate that the majority of unit owners did not agree to the termination of the agreement.

The solicitor for the Body Corporate has indicated that the Body Corporate considers that the motions proposed by the applicant directly concern the matters raised in the application, and as a result are “premature and inappropriate”. Further the Body Corporate highlights a perceived inequity that would arise if orders were made preventing the Body Corporate from taking various steps in relation to the matters raised in the application if the applicant were not similarly restrained.

To some extent, I agree with the solicitor for the Body Corporate on this issue. The basis of the interim orders I propose to make is to maintain the status quo while the issues are being determined. I do not consider that it would be equitable or in the interests of resolving the dispute to allow the applicant to raise matters at a general meeting of the Body Corporate, which I consider would inevitably complicate the issues that have been brought to the Commissioner’s Office for resolution.

As a result I intend to order that the body corporate must not consider any motions at either a committee meeting or a general meeting that concern the caretaking and letting agreement currently in dispute. However, I do not intend to prevent the Body Corporate from considering motions regarding committee positions, as I do not believe that they relate directly to this application.

5.	Expiration of interim orders

All parties should note the provisions of section 225(2) of the Act, which provides that -

An interim order -

a)	has effect for a period (not longer than 3 months) stated in the order; and
b)	may be extended, renewed or cancelled by the adjudicator until a final order is made; and
c)	may be cancelled by a later order made by the adjudicator; and
d)	if it does not lapse or is not cancelled earlier - lapses when a final order is made by the adjudicator.

All parties should be aware of this section and its effect on this interim order. If the final order is delayed for some reason, the applicant may need to request a renewal of the interim order, before a final order is made. The onus of renewing an interim order rests with the applicant. This office will not automatically renew an interim order.

This application will now be administered in the accordance with the Act and the 2nnormal processes of the Commissioner’s Office.