Admiral North [2004] QBCCMCmr 50 (27 January 2004)

Last Updated: 30 September 2005

REFERENCE: 0509-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10927
Name of Scheme:	Admiral North
Address of Scheme:	14 Macarthur Parade MAIN BEACH QLD 4217

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

Max Tunnicliffe & Anne-Marie Caulton, the former caretaking service contractors of the scheme

I hereby order that, within 30 days, the body corporate is to refund to Max Tunnicliffe and Anne-Marie Caulton (applicants) the transfer fee (3% of market value) paid by the applicants on the transfer of their engagement as caretaking service contractors. This refund is required as the transfer was on the basis of genuine hardship not reasonably foreseeable by the applicants at the time they entered into their engagement as caretaking service contractors. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0509-2003

"Admiral North" CTS 10927

Application

Admiral North Community Titles Scheme (Admiral North) is a 49 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Standard Module Regulation (Standard Module).

This application is by Max Tunnicliffe and Anne-Marie Caulton, the former caretaking service contractors for the scheme (applicants) seeking orders against the body corporate (respondent). The dispute arose when the applicants were caretaking service contractors for the scheme and the body corporate imposed a transfer fee on the applicants’ sale of their engagement to another caretaker. The applicants paid the transfer fee under protest and lodged this application. The dispute has been ongoing since that time.

Background

The applicants became caretaking service contractors for Admiral North on 17 November 2002. On 17 July 2003, at the request of the applicants, the body corporate approved a transfer of the applicants’ engagement to another party. The body corporate required the applicants to pay a transfer fee of 3% of the market value of the transfer (Standard Module, 85(2)).

The applicants claim that the body corporate is not entitled to require a transfer fee as the transfer was due to hardship (Standard Module, 85(6)). The applicants are seeking a refund of the transfer fee and payment of all costs and expenses incurred by the applicants.

Submissions

The applicants’ main submissions were to the effect that:

• One of the applicants has been obtaining medical attention for tenosynovitis and suffers pain in her wrists and arms. Treatment involved rest from activities such as cleaning required by her engagement as a caretaking service contractor and the transfer was brought about by this hardship. The body corporate is therefore not entitled to charge a transfer fee; and
• As a matter of interpretation, a transfer fee should not be payable by the applicants, but only by the original caretaker of the scheme.

The body corporate’s main submissions were to the effect that:

• The applicants had stated they were in excellent health when becoming caretaking service contractors for Admiral North;
• The medical letter provided by the applicants cannot be depended on as conclusive evidence of genuine hardship as there are questions as to why the medical condition did not arise in a similar previous position as a building manager;
• The body corporate questions the development of the medical condition in a relatively short period of four months; and
• The applicants did not initially provide evidence of the medical condition to the body corporate but only provided this evidence as a reaction to the imposition of the transfer fee.

Decision

Applicable law

The relevant provisions of the legislation are:

• The body corporate may require, as a condition of approving the transfer, that the transferor under the transfer pay the body corporate an amount (the "relevant amount") (Standard Module, 85(2)); and
• The body corporate may not require the payment of the relevant amount if the transferor is seeking approval to the transfer on the basis of genuine hardship not reasonably foreseeable by the transferor at the contract date (Standard Module, 85(6)(b)).

Hardship

The applicants have provided a letter from Dr Kirsty Dunhill, dated 21 July 2003, stating that she has been treating one of the applicants since March 2003 for tenosynovitis. This letter states that rest from repetitive activities such as cleaning is the recommended management for this type of condition. A letter from Dr Leigh Cooper, dated 7 August 2003, is also provided. This letter states that the applicant in question attended the Helensvale Surgery from 16 December 2000 until 15 February 2003, no indication was given that she suffered any joint or ligamentous problems and this condition was not foreseeable in the future. Dr Kirsty Dunhill also advises that, while the applicant did give a history of suffering from ‘tennis elbow’ a few years earlier she did not consider that this made her present condition reasonably foreseeable.

The applicants also stated that their previous engagement as caretaking service contractors at another scheme did not involve the applicant performing any cleaning duties.

I am prepared to accept this evidence and conclude that the applicant has a medical condition which makes it advisable that she not carry out cleaning duties involved in her role as a caretaking service contractor. I also accept that this medical condition was not reasonably foreseeable at the date on which the applicants’ engagement was entered into.

The body corporate is correct in submitting that this evidence does not provide conclusive evidence of the applicants’ claims. However, I consider the applicants provided sufficient medical evidence to discharge their onus of proof in this regard. Further, the body corporate has not provided any medical evidence supporting their claim that it is unlikely the condition could develop in a relatively short period of four months.

Finally, there is some suggestion that the applicants were unhappy with their engagement and would have used any excuse to transfer their engagement. However, given one of the applicants had a medical condition that limited her ability to perform cleaning obligations under the engagement I am willing to accept that this medical condition was at least a substantial basis on which the applicants sought the transfer.

Therefore, the body corporate cannot require payment of the transfer fee, the transfer being sought on the basis of genuine hardship not reasonably foreseeable at the date they were engaged as caretaking service providers (Standard Module, 85(6)).

Interpretation

The applicants’ solicitors make a further argument that a transfer fee is not payable as, by a matter of interpretation, the applicants would not be considered to be the "transferor".

This argument appears to be based on the applicants themselves being transferees at the time they were engaged as caretaking service contractors. However, in respect of the present transaction, the applicants are acting as transferors. This term is used throughout the section to refer to someone in the applicants’ position so I do not accept the applicants’ interpretation of the section. However, as stated above, I consider the transfer fee is not payable due to genuine hardship that was not reasonably foreseeable.

Payment of the body corporate’s legal costs

The applicants also seek reimbursement of at least part of the $2,077.90 paid for the body corporate’s legal expenses in relation to the transfer. The applicants claim that these expenses were too high due to protracted negotiations resulting from the body corporate unlawfully seeking to require payment of the transfer fee.

While the body corporate was not entitled to require payment of the transfer fee due to medical hardship, the applicants have not satisfied me that there was anything improper with the body corporate requiring payment of their legal fees in relation to the transfer (Standard Module, 84(6)(b)). It does not seem unusual that these legal fees would have included costs of protracted negotiations over whether a transfer fee was payable. The correspondence and medical statements support the body corporate’s claim that the applicants failed to provide the body corporate with satisfactory evidence of the medical condition until after the body corporate had resolved to impose the transfer fee. In these circumstances, negotiations over the transfer fee would be expected.

Costs and payment of interest

The applicants are also seeking payment of their costs and expenses. In particular, the applicants seek payment of interest on the transfer fee from the date they paid it to the body corporate.

The Act establishes low cost and informal dispute resolution procedures. There are very limited circumstances in which adjudicators are authorised to make costs orders (Act, 270(3)). There is no specific authorisation for orders to include payment for interest on amounts owing and there is no prescribed interest rate in the Act.

I am not persuaded that it is appropriate for me to order costs or payment of interest as requested by the applicants.

Order

For these reasons, I make the order above.