South Pacific Plaza [2004] QBCCMCmr 149 (19 March 2004)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by John Arthur TAYLOR, as a co-owner of Lot 67,

I hereby order that the application for the following orders -

1. That the appointment of Complete Body Corporate Services Pty Ltd, and any other or all entities using this name, be declared invalid as the agreement executed by the Chairman and Committee is, in its present form, unworkable.

2. That the sole director and shareholder of Complete Body Corporate Services Pty Ltd be restrained from acting in any capacity in respect of the business of the Body Corporate for South Pacific Plaza CTS 10922.

3. That the Chairman and Committee be severely reprimanded for its continual breach of legislation and disregard for the orders of an Adjudicator.

4. That the committee be required to call an Extraordinary General Meeting of Members to appoint a new Body Corporate Manager and that Complete Body Corporate Services Pty Ltd, Kim Elliott and any other person or entity connected with these persons/company be precluded in tendering for the appointment.

5. That Complete Body Corporate Services Pty Ltd and Kim Elliott be jointly and severally responsible for the costs incurred in the calling of the Extraordinary General Meeting,

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0094-2004

"South Pacific Plaza" CTS 10922

The applicant has also made application for interim orders of an adjudicator in the same terms as those sought as final orders.

JURISDICTION:
This is a dispute between an owner (the applicant Taylor) and the body corporate (the respondent), concerning: alleged errors and inconsistencies with the relevant legislation contained in the body corporate management agreement entered into between the body corporate and Complete Body Corporate Services Pty Ltd; and alleged breaches and disregard of orders by the committee and chairperson. These are generally matters that fall within the disputes resolution provisions of the legislation (see sections 227, 228 and 276 of the Act).

While section 279(1) of the Act provides that an adjudicator may make an interim order if satisfied on reasonable grounds that an interim order is warranted because of the nature or urgency of the circumstances, there is nothing in the legislation to prevent an adjudicator, in appropriate circumstances, from making a final determination of the dispute by proceeding directly to a final order.

I consider this course is appropriate in this instance because: though multiple orders are sought they largely rely on a single issue; the facts of the matter are relatively simple and clear; the relevant parties (see later under heading "Application and Submissions" following) have been given the opportunity to speak to the disputed matter; sufficient information is available to determine the matter; and, in particular, a prompt resolution of the dispute is in the interests of all parties.

Accordingly, this order will be the only order made in respect of the application. The parties, of course, retain their appeal rights against the order made, and my having dispensed with the making of an interim order does not diminish those rights.

General powers of an Adjudicator in making an order:
Section 276(1) 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 –

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1) of the Act).

APPLICATION AND SUBMISSIONS:
In accordance with section 243 of the Act, a copy of the application was provided to the respondent body corporate (committee) and to Complete Body Corporate Services Pty Ltd as a person who would be affected by the orders sought.

The instruction by this Office in its letter of 18 February 2004 to the secretary, Elizabeth Cook of Forresters Beach, was for copies of the notice and application to be forwarded to body corporate committee members and for the committee to make a single submission on behalf of the body corporate. This was the case management decision for the application. There was no instruction to forward copies to all owners (see section 243(4) of the Act). The only other notice to Complete Body Corporate Services Pty Ltd ("CBCS") was on the basis it was an affected party, however it subsequently notified this office of having provided a copy of the notice and application to all owners. No such instruction was given either to it or the secretary. In consideration of the likely charges for postage, copying and administration costs in forwarding the material to 83 (other) owners, I would suggest to CBCS that this is not properly a cost of the body corporate and it should bear the cost of its own error.

As a consequence of the above, individual submissions were unexpectedly received from 12 owners. I have read each of these submissions which variously support and oppose the application, in which owners generally give their subjective view of the behaviour and competence of CBCS, the chairperson and the committee. There is nothing in them that adds materially to the facts of the disputed matters such that would alter my determination of the application. Accordingly, I do not have to consider whether I should restart the submission process.

The submissions of consequence are those lodged by the committee, through its solicitors McDonald, Balanda & Associates (Clayton Glenister), and by CBCS through its solicitors Corrs Chambers Westgarth Lawyers (Richard Holt).

Briefly, the information supplied by the parties in their submissions is as follows.

The applicant’s core complaint is that the body corporate management agreement entered into with CBCS upon the passing of a motion to that effect at the annual general meeting held on 19 November 2003, contains references to various outdated sections of the Act. A number of these incorrect references are listed out by the applicant, all of which were relevant to the legislation as it stood prior to major amendments commenced on 4 March 2003. The applicant contends that the agreement is invalid because the incorrect references render it meaningless and in the delegation of powers it purports to give powers to CBCS that are in contravention of the Act and which have been exercised by it.

The applicant also contends that the ABN number quoted on the agreement is that of Kim Elliott Family Trust and not CBCS, and this may be a breach of taxation laws. He also suggests that this is "further evidence of the negligence of the Sole Director and Shareholder of Complete Body Services Pty Ltd", namely Kim Elliott.

In support of Order 3 for the chairperson and committee to be severely reprimanded for legislation breaches and disregard of adjudicators’ orders, the applicant refers to a number of recent orders, namely Orders 126, 203, 385, and 724-2003. I will not list the breaches and instances of disregard of orders given, but will address this matter in total under "Determination".

The committee submits that the references to sections of the Act (see "Grounds" paragraphs 8.1, 8.2, 8.3a, 8.3b, 8.4, 8.6 and 8.9) were incorrect, not having taken into account the amendments of some 8 months earlier. However it denies that these incorrect references render the agreement void on the basis that they are manifest errors and the intention is clear, and also the Acts Interpretation Act 1954 provides that such references are taken to refer to the equivalent provision in the amended Act. In regard to the applicant’s reference at para 8.7 of his "Grounds" to a section in the regulation module, this is not an incorrect reference as the regulation amendment referred to by the applicant was not commenced until 1 December 2003, a date after the annual general meeting date. There are other points put by the committee that I shall address as necessary in my determination of the application.

CBCS has submitted written advice from its accountant, AM Giles & Co (A Giles) that CBCS is the corporate trustee for The Kim Elliott Family Trust and it is acceptable practice for both contractual and taxation purposes, that the trustee’s name is used with the Trust’s ABN number as the trading entity is the Trust.

The committee has made a submission that the application be declared frivolous, vexatious and without substance within the meaning of section 270(1) of the Act, and that an order to compensate the committee under subsection (3) for reasonable legal costs incurred should be made.

DETERMINATION:
"South Pacific Plaza" was registered as a building units plan (now termed a building format plan) in 15 July 1981, and comprises 84 lots. The scheme is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module").

The core grounds relied on by the applicant in seeking to have the agreement declared void, solely comprise a recitation of several incorrect references to sections in the Act. The applicant is aware that the references are to relevant sections in the previous Act. All parties, then, are aware that what has obviously happened is that CBCS has continued to use its previous standard agreement designed to refer to the Act as it stood prior to the amendments of 4 March 2003.

While it is equally obvious that CBCS has been careless and unprofessional in not amending its standard agreement, especially given the time lapse, the incorrect references do not necessarily mean that the executed agreement is void. The applicant has not offered any argument as to why, for example, the intention of the parties to the agreement should not be given effect to, especially since there is no evidence that either of the parties to the agreement want to withdraw from the agreement. The applicant, and those owners whose submissions support his view, do not constitute a majority of owners nor has the applicant suggested that a majority of owners want to see the agreement terminated.

I intend to deal separately with those references to sections that still exist in the amended legislation, though identified by a different section number, and those that do not now exist. To avoid unnecessary repetition, all section references in the following two headings are to the Act.

References to sections still existing:
Clause 4 of the agreement refers to Section 162 Fees which now exists as s.205 of the amended Act.

Clause 14 of the agreement is referred to by the applicant but without any identification of what his concern is – there is no reference to a section that may be incorrect and it concerns an area, namely indemnity of CBCS, that is a matter between the parties and not legislative in nature.

Clause 16 of the agreement refers to s.262 and the service of notices on the body corporate, whereas this section now concerns specialist conciliation and mediation matters; it now exists as s.315. That completes the matters listed by the applicant that are still existing.

The question is whether these incorrect references make the agreement so unworkable, as the applicant states, to render it void.

In the interpretation of contracts, the courts^[1] look beyond the literal meaning of the contract terms and view them in context, allowing regard to be had to the circumstances surrounding the making of the contract. The "background knowledge" to this contract is simply that both parties at the time (CBCS and the body corporate, more so the committee) intended to contract to allow CBCS to continue in the same manner it had under the previous engagement agreement (it was my Order 574-2003 of 20 October 2003 that terminated the previous agreement, thereby requiring a fresh agreement being tendered). It seems certain, and the applicant has not suggested otherwise, that the parties were unaware of the incorrect references and they can properly be categorised as unintentional errors.

Any reasonable assessment of the circumstances would not conclude otherwise than that the intention of the parties in including the above terms was to reference the substance of former sections now contained in differently numbered sections of the amended Act. The agreement must be taken to refer to the current equivalents, namely sections 205 and 315.

References to sections no longer existing:
The first reference is to s.106 and Paragraph C of the Recitals to the agreement. The current s.106 concerns counting procedures for special resolutions and therefore are clearly an incorrect reference. The current equivalent of s.106 is s.119.
The applicant comments that current s.97 prevents a body corporate "delegating" its powers; although the term "delegated powers" has been now been replaced by "authorised powers" in s.119, there is no practical difference in the exercise of those powers. However, what is significant is that whereas previously under s.106 a Body Corporate Manager could exercise the powers of the committee, there is no similar provision under s.119 – it is not a power that a Body Corporate Manager can now exercise. Accordingly, this is part of a section referred to in the agreement that no longer exists.

The applicant states that "The Body Corporate Manager has continued to act as delegate of the Body Corporate and Committee since the execution of the engagement agreement." However, the statement that CBCS has exercised committee powers is unsupported by any instances of when that power has actually been exercised. In the absence of particulars a general allegation remains just that. In regard to acting as delegate for the body corporate, the inclusion of body corporate powers in paragraph 2 under "Delegation of Powers" at page 1 of the agreement was not even a power available to be delegated under the previous Act – the ability to delegate this power was omitted some 6 years ago! This shows further unprofessional error on the part of CBCS.

The question here is whether the incorrect reference to "committee powers" is fatal to the agreement. While the committee has relied on Clause 12 of the agreement, which allows bona fides negotiations between the parties in the event amendment is required to this Agreement arising to comply with Legislative change, I consider that severance of this part of a term is more appropriate. In my view the exercise of committee powers is of a severable nature and no other terms are dependant upon it. Severance of this part allows the balance of the term, namely the authorisation of committee members’ powers, to survive and be enforceable. Its severability also aligns with the view expressed above that where obvious errors exist the background circumstances must be considered for the proper interpretation of the contract.

In summary with respect to the above categories of incorrect references, in both instances I am not of the view that the agreement should be declared void. The committee also contends that the Acts Interpretation Act 1954 has application and, without expressly referencing section 14H, it appears to be arguing this provision applies to the amended provisions. As this applies to legislation it seems that the argument may be seeking applicability by analogy, however I do not see this applies. In any case, I have decided this on other grounds and need not take this point any further. The committee also points to Clause 12 of the agreement as a saving provision for where there are legislative changes. This clause is intended to provide for the survival of the agreement where there is legislative change during its life; I do not consider it can be used in retrospect to remedy errors involving legislation, however, again, I have no need to take this point further – though it raises the point of a benefit in the committee and CBCS formally agreeing on the meaning of the agreement in the context of the current legislation.

Accordingly, I have dismissed Order 1 seeking invalidation of the agreement. As a consequence of this decision Order 4 automatically lapses. In regard to Order 3, this appears to be partly based on the purported invalidity of the agreement and partly on the purported use of an incorrect ABN number. As I have already determined the ABN matter against the applicant, Order 2 will also be dismissed.

The remaining matter raised by the applicant is contained in Order 3 which seeks "the Chairman and Committee be severely reprimanded for its continual breach of legislation and disregard for the orders of an Adjudicator."

I cannot see the point in my issuing such an order, even if it is true and even were I able to issue such an order. Adjudicators have jurisdiction to resolve disputes concerning those matters set out in section 276 of the Act, namely –

While an adjudicator can make an order against a chairperson or a committee where, for example, they contravene the legislation or fail to perform a duty, but only in respect of a particular instance. The applicant suggests that the conduct of the chairperson and the committee has led to a number of orders being made against the body corporate. However, there is no "resolution of a dispute" within the meaning of the legislation comprised in rolling up a number of past contraventions of the legislation or failures to perform a required duty, etc., to produce a general admonition order against a party. Not only is it not a resolution of a dispute under the legislation, and therefore not a matter within jurisdiction, it is not such an order that can be prosecuted for non-compliance because the order relates to past actions and does not require a party to do something or refrain from doing something (see section 288 of the Act). In other words, even if I could make such an order and it was justified, it would in any case be to no purpose.

Accordingly, I have also dismissed Order 3. In summary, I have dismissed the application in its entirety.

In regard to the committee’s submission that the application be dismissed as frivolous, vexatious and without substance, and that an order to compensate the committee for reasonable legal costs incurred, I do not consider the matter is one where either sanction should apply. There is no doubt that the erring parties were CBCS, and the committee to a lesser extent as it relies on its Body Corporate Manager for advice and not the applicant, and the application was reasonable in the circumstances. Had the applicant sought advice on the matters first then he may not have lodged the application, however there is no requirement that an applicant must do this.

^[1] Investors Compensation Scheme Ltd v. West Bromwich Building Society [1997] UKHL 28; (1998) 1 WLR 896

Number of Scheme:	10922
Name of Scheme:	South Pacific Plaza
Address of Scheme:	157 Old Burleigh Road BROADBEACH QLD 4218

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 contractual matter about –
(i)	the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or
(ii)	the authorisation of a person as a letting agent for a community titles scheme.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

South Pacific Plaza [2004] QBCCMCmr 149 (19 March 2004)