Barrine Apartments [2004] QBCCMCmr 150 (19 March 2004)

Last Updated: 30 September 2005

REFERENCE: 0124-2004

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28091
Name of Scheme:	Barrine Apartments
Address of Scheme:	2 Greenslopes Street CAIRNS NORTH QLD 4870

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

I hereby order that Jim Spencer, principal of Cairns Body Corporate Management Pty Ltd of 242 Sheridan Street, Cairns Qld 4870, must immediately deliver all records and assets of the body corporate in its possession or under its control, to Craig Armstrong of Cairns Strata Management of 42 Grafton Street, Cairns Qld 4870, or as otherwise directed by the body corporate chairperson Phillip O’Reilly. I further order that Cairns Body Corporate Management Pty Ltd must within one (1) month of the date of this order reimburse the body corporate all fees and charges obtained from the funds of the body corporate for work performed under the terminated agreement from 6 September 2003, and must provide an explanation of the fees and charges comprised in the amount reimbursed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0124-2004

"Barrine Apartments" CTS 28091

The applicant body corporate has sought orders of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") to

1. An order for the return of the Body Corporate property namely all records and documents in the possession or control of Cairns Body Corporate Management.

2. An order for the reimbursement of funds by Cairns Body Corporate Management for m,anagement fees for which they were not entitled.

The applicant has also made application for an interim order in the same terms.


JURISDICTION:
This is a dispute between the body corporate (the applicant) and its Body Corporate Manager (the respondent Cairns Body Corporate Management Pty Ltd ("CBCM")), concerning the termination of the body corporate management agreement. This is a matter falling 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: 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 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 –

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.

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:
For the reasons given under "Jurisdiction" I have determined to resolve the disputes by a teleconference between the relevant parties in lieu of formal notification of the application to the respondent with an invitation to owners to make a written submission in the matters.

On Thursday 18 March January 2004, I instructed an office member to telephone the parties, Phil O’Reilly, chairperson, representing the body corporate and Ken Hastings representing CBCM. Mr O’Reilly was willing to participate however Jim Spencer, the principal of CBCM, telephoned and advised that he refused to participate in a teleconference. He said that he had earlier forwarded a fax to this office in the matter. He said that he was willing to "hand over the books and records only when he receives orders to do so from someone with the authority to make such orders."

The brief facts of the matter, based on information contained in the application are as follows.

CBCM acquired the agreement for this scheme from Strata & Group Title Management Pty Ltd (Peter Clark). At its annual general meeting held on 5 September 2003 a motion to re-engage CBCM for a further 3 years was defeated.

Copies of emails between the body corporate committee (O’Reilly) and CMCM lodged with the application, show that the body corporate’s requests to retrieve the body corporate records was responded by CBCM saying that only the body corporate in general meeting could resolve to facilitate a change in the management of Barrine Apartments (email of 7 October 2003).

The committee sought to convene such a meeting itself but CBCM again replied that it could not release the records to enable this without a resolution of a general meeting, but that it would convene the meeting on receipt of advice and motions from the committee (email of 8 October 2003).

On 6 November 2003 an extraordinary general meeting was held and a resolution passed to engage Cairns Strata Management (principal Craig Armstrong) as its Body Corporate Manager. The next day Cairns Strata Management ("CSM") wrote to CBCM for the records.

CBCM replied later that day (7 November), "We ask that you forward to our office Minutes of the General Meeting approving the appointment before we confirm the same." It further quoted Clauses 10.1 and 11 – 11.3 of its agreement which provides that should either party wish to terminate the agreement at the end of the term, it shall give 3 months notice, otherwise the agreement continues on a month to month basis, with fees to continue as if the agreement had not ended, and the monthly appointment also needed 3 months notice of termination.

On 18 November CSM sent a copy of the minutes for the 6 November meeting and on 12 December sent a committee notice for return of the records but they have not been returned. CBCM stated it required 3 months notice.

CBCN has continued to draw its fees from body corporate accounts.

I shall refer to the respondent’s fax referred to in the second paragraph under this heading, in my determination of the application which follows.


DETERMINATION:
"Barrine Apartments" was registered as a building format plan on 24 May 2000 and comprises 14 lots. It is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1963 ("the Standard Module").

The fax from Spencer referred to previously, followed contact by this office with a Ken Hastings of CBCM (the minutes show he had attended the annual general meeting as CBCM’s representative). It apparently responds to information on the application given Hastings.

The fax concerns confidential arrangements with another Body Corporate Manager, The Community Managers regarding The Lakes complex of which this scheme is part. Spencer states that as these negotiations have been concluded, he was willing to hand over the records to the new Body Corporate Manager. He repudiates the statement that it was unwilling to handover the records to the committee, stating that "At no time have we been unwilling to do so and vehemently deny the contents of the attached facsimile".

The contents of the emails referred to under the above heading "Application and Submissions" are taken from copies supplied by the applicant and I have no reason to doubt their authenticity. The contents are at odds with the statements in the facsimile.

There are two points that determine this application.

Firstly, I have before me a copy of the original body corporate agreement entered into between Strata & Group Title Management Pty Ltd and the body corporate; it contains those clauses referred to by Hastings in his email to Armstrong of CSM on 7 November 2003 referred to under the previous heading. It is this agreement that was acquired by CBCM and under which it has managed the scheme.

The agreement was resolved to be entered into on 21 June 2000, executed on 13 July 2000 and to commence from 1 July 2000. Opposite the Ending Date for the term of the agreement (see Schedule 1) is the word Third, which may or may not be a reference to the third year- the parties apparently considered it to be a 3 year agreement.

Whether it was intended to be for a term of 3 years or less or more, is irrelevant. What is of relevance is that section 78 of the Accommodation Module in force at the date of execution and commencement, imposed a 3 year limit on the term of body corporate management agreements. That is still the maximum term under that same provision.

Accordingly, regardless of the 3 month notice to terminate and the monthly tenancy terms, the agreement was terminated by operation of statute on 13 July 2003.

Secondly, for the period between 13 July 2003 and 5 September 2003 when the body corporate in general meeting rejected a fresh agreement with CBCM, I am prepared to accept that, though the agreement had expired, CBCM was continuing to carry out its Body Corporate Manager duties. Accordingly, adopting the quantum meruit ("as much as he deserved") principle often followed by the courts in such instances of contract where parties continue to perform according to the contract although it has expired, I consider that CBCM was entitled to be paid its normal fees under the agreement for that period.

I do not consider that CBCM was entitled to claim fees for any period after this even though it may have carried on its duties. This is because the body corporate had made it clear to CBCM that it did not want it to act on its behalf and wanted all of its records returned. CBCM refused that request firstly on the basis that the body corporate in general meeting had to authorise that by engaging a new manager. That is incorrect, upon it being refused a new contract on 5 September it should have returned the records – whether Barrine Apartments wanted to self-manage itself or engage a new Body Corporate Manager was irrelevant to CBCM returning its records. The later reason for not returning the records, that no notice of termination had been given, was not necessary as the agreement had terminated on 13 July.

Accordingly, apart from ordering that CBCM must hand over all records and assets to the body corporate, it must also reimburse the body corporate for any fees charged from 5 September 2003. I have allowed CBCM 1 month to determine and reimburse these fees, following which, if unpaid, it will be a matter for the body corporate to pursue under section 286 of the Act. This will include the costs associated with the meeting convened and held on 6 November 2003 which meeting the committee (O’Reilly) notified CBCM that it wished to convene and hold itself as specified in the relevant emails referred to earlier.