Nexus Place [2004] QBCCMCmr 572 (22 November 2004)

Last Updated: 30 September 2005

REFERENCE: 0421-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	31206
Name of Scheme:	Nexus Place
Address of Scheme:	131 Currumburra Road ASHMORE QLD 4214

TAKE NOTICE that pursuant to an application made under the abovementioned Act by
Mr Russell and Mrs Rosemary Farquhar, the former caretaking service contractors and letting agents for Nexus Place

I hereby order that the application for an order that the transfer fee paid to the body corporate be refunded on the basis that the assignment was forced by genuine hardship which was not reasonably foreseeable on the contract date, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0421-2004

"Nexus Place" CTS 31206

The applicants, Mr and Mrs Farquhar are seeking an order that the Body Corporate is not entitled to claim a transfer fee on assignment of a Caretaking and Letting Agreement as the assignment was forced by genuine hardship that was not reasonably forseeable by the Vendor at the Entry Date.

Jurisdiction

Section 227(1)(d) of the Body Corporate and Community Management Act 1997 provides that a dispute between a body corporate and a caretaking service contractor is a dispute which may be resolved under the dispute resolution provisions of the Act. Similarly, section 227(1)(f) of the Act provides that a dispute between a body corporate and a letting agent is a dispute which may be resolved under the dispute resolution provisions of the Act.

As a dispute between a body corporate and a letting agent/ caretaking service contractor, it may be resolved under the dispute resolution provisions of the Act.

Section 276(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 the 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)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The scheme

The regulation module applying to the scheme is the Accommodation Module.

The Application

The applicants are seeking an order that the Body Corporate is not entitled to claim a transfer fee on assignment of a Caretaking and Letting Agreement as the assignment was forced by hardship precipitated by stress related conditions suffered by both applicants. Attached to the application was a copy of a medical certificate from Dr. Georgina Gibson of Ashmore stating-

The couple are currently managing the Nexus Place.
They have both developed health problems and can no longer continue in the position.
It is important they cease this type of work as soon as practicable to attend to their health problems.

Subsection 84(6) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 provides as follows:

(6) 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.

The onus of proof rests with the party making the claim of unforeseeable genuine hardship. In this case, the sole basis for claiming unforeseeable genuine hardship being the cause of the assignment of the management rights, is the stress-related illness of the applicants. By letter dated 11 November I wrote to the applicants’ solicitors asking for further details and inviting them to submit additional evidence on behalf of the applicants.

In response, the applicants’ solicitors advised as follows:

The illness suffered by both applicants is stress related. The complex is essentially a student housing complex.....many of the student tenants are from overseas and appeared to rely on the applicants to provide emotional support over and above the caretaking and letting duties of the applicants. It was this summation of the duties which caused the stress of each of the applicants as verified by the medical certificates.

Genuine Hardship

While the medical certificate states that both applicants have developed health problems and that they should cease this type of work to attend to their health problems, the medical comment does not explain whether their medical conditions are disabling, temporary, or permanent, or whether their medical conditions would be responsive to treatment.

The New Shorter Oxford English Dictionary, defines ‘hardship’ as including " hardness of fate or circumstance; severe suffering or privation". Therefore, it would appear that ‘hardship’ can take many forms, but that it involves a degree of severity and seriousness. Stress in the workplace, for example, is not uncommon. It can have a detrimental health impact for many but strategies can be employed to manage it. To amount to "hardship", stress must arguably be severe and have a debilitating impact.

Conclusion

The principle of payment of a transfer fee endeavours to balance the interests of caretaking service contractors and bodies corporate. On one hand, the legislation allows caretakers the flexibility to transfer their interests. Transfers are not always prompted by necessity, but often on the basis of a profitable, commercial decision. On the other hand, bodies corporate enter into service agreements in good faith, with some expectation that the caretaking service contractor will complete the agreement. When an agreement is transferred, particularly within a short time of its commencement, bodies corporate can experience significant disruption and costs while the new caretaker settles into their role. The payment of the transfer fee recognises and compensates bodies corporate for this disruption. It also recognises that bodies corporate contribute to the value of the rights that the service contractor is transferring, and in many instances, profiting from.

To succeed, the applicants must demonstrate genuine hardship, not reasonably foreseeable, which is sufficient to outweigh the respondent body corporate’s entitlement to a transfer fee.
In my view, the evidence establishes that the applicants are suffering from a stress related condition and while this may have impacted on the original plans, I am not satisfied that the applicants have established genuine hardship as contemplated by the Act. The onus lies with the applicants to submit sufficient information to support its claim and I do not consider that it has done so. My order is therefore to dismiss the application.