Ocean Sound [2005] QBCCMCmr 303 (6 June 2005)

Last Updated: 2 August 2005

Office of the Commissioner for Body Corporate and Community Management SPECIALIST ADJUDICATION (Caretaking Service Contractor Dispute) Number: 0380-2005

Applicant: JANET YENDEL



Respondent: BODY CORPORATE FOR OCEAN SOUND

COMMUNITY TITLES SCHEME 14898

INTERIM ORDER
6 June 2005

ORDER that the Respondent be restrained from taking possession of – (a) the office premises occupied by the Applicant in the foyer of the building know as "Ocean Sound" at Broadbeach; and (b) any business or other property of the Applicant kept on those premises, AND that this order has effect for 3 months from 6 June 2005.

G. F. Bugden

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Caretaking Service Contractor Dispute)

Number: 0380-2005

Applicant: JANET YENDEL



Respondent: BODY CORPORATE FOR OCEAN SOUND

COMMUNITY TITLES SCHEME 14898

PRELIMINARY DETERMINATION
6 June 2005

Application

1. This is an application by a letting agent (who is also a caretaking service contractor) for an order about a contractual matter between the Applicant and the body corporate. The Applicant seeks –

(a)	an interim order restraining the body corporate in community titles scheme 14898 ("body corporate") from taking possession of the manager’s office and terminating a management agreement dated 30 June 1998;
(b)	declarations as to the validity of that management agreement and a deed of assignment to the Applicant; and
(c)	declarations that neither the management agreement nor the deed of assignment are liable to forfeiture.

2. The application has been referred to me by the Commissioner for determination by specialist adjudication under section 265 of the Body Corporate and Community Management Act 1997 ("Act"). The Commissioner has not called for nor received submissions on the application because of the request for an interim order. Instead the application has been referred immediately to me for determination, at least in relation to the interim order.
3. The application is dated 26 May 2005 and was referred to me late last week.

Jurisdiction

4. Section 265(1) of the Act provides –

"(1) The adjudication of a dispute must be specialist adjudication if -

(a) the dispute is about a claimed or anticipated contractual matter about:

(i) the engagement of a person as a body corporate manager or caretaking service contractor for a community titles scheme; or

(ii) the authorization of a person as a letting agent for a community titles scheme; or

(b) the dispute is about the transfer, under chapter 3, part 2, division 8, of a letting agent’s management rights; or

(c) another provision of this Act requires the adjudication to be specialist adjudication."

5. I am satisfied that this dispute is covered by section 265(1)(a) of the Act and that I have jurisdiction to determine the matter.
6. As regards an interim order, section 279(1) of the Act provides:

"(1) The 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."

7. I now turn to the nature or urgency of the circumstances relating to this application.

Evidence

8. The evidence before me comprises the material on the Commissioner’s file, plus a telephone conversation I had with the Applicant’s solicitor’s office earlier today. Because of the very nature of proceedings for an interim order, none of that evidence has been tested by the body corporate. I will therefore briefly outline the relevant facts as I understand them.
9. There are 21 residential apartment lots in community titles scheme 14898 known as "Ocean Sound", the common property of which is situated, according to the application, at 1 Phillip Street, Broadbeach. The scheme is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 ("Standard Module").
10. There is a copy of an agreement dated 30 June 1998 between the body corporate and Donald Cameron Parry Brown ("Management Agreement") signed by Mr Brown but not signed by the body corporate, being the agreement the subject of this application. The Applicant states in her application that a statutory declaration will be forthcoming from her former solicitor confirming that he had sighted a signed and sealed copy of the Management Agreement, which has since been lost in the archives of his practice.
11. The Management Agreement purportedly appointed Mr Brown as the manager of "Ocean Sound" which in the agreement is said to be situated on Old Burleigh Road, Broadbeach. (I assume there is a logical explanation about the conflicting addresses in the application and Management Agreement.) The Management Agreement then required Mr Brown to perform a number of duties in the nature of caretaking duties for an agreed remuneration. It also authorized Mr Brown to carry on a letting service and other commercial activities within the building. It is therefore in the nature of a combined caretaking agreement and letting agency authority.
12. The Management Agreement was for a term of 5 years commencing on 30 June 1998 with a right of renewal for a further period of 5 years. In the normal course the Management Agreement would have expired on 31 May 2003, subject to the right of renewal. The benefits and obligations under the agreement were assignable, subject to the consent in writing of the council of the body corporate and the simultaneous acquisition by the assignee of title to unit 14 in the building.
13. In the minutes of the 35^th Annual General Meeting of the body corporate held on Sunday 1 June 2003 (not 2002 as shown on the minutes themselves) the following notation appears:

"Mrs Yanet Yendle will be taking over the sole management of ‘Ocean Sound’ owners to be advised as to her contract after legal advise (sic) is sought. Mrs Yendle was accepted at the 30^th Annual General Meeting with Mr D Brown. Mr Brown no longer has an interest in the business. Mr Jack French requested that a letter of thank you be sent to Mr Brown as he still prepares the financial statements and for the work he has done."

14. I am satisfied that the date "Sunday 1 June 2002" appearing on the copy minutes of the 35^th Annual General Meeting is a mistake and should be "Sunday 1 June 2003" because:

(a)	1 June 2002 was a Saturday whereas 1 June 2003 was a Sunday;
(b)	the minutes themselves refer to a financial statement for the "year end 30th April 2003" which post dates 1 June 2002; and
(c)	there is a hand written notation on the copy minutes that suggests the year should be "2003".

15. There is a copy of a written instrument on "Ocean Sound" letterhead dated 3 July 2003 signed by "S Johnson", stating:

"I Sandira Johnson as an Executive of Ocean Sound Body Corp.

Hereby do agree that the Management rights that are currently in the name of Donald Cameron Parry Brown and Janet Yendle to be assigned solely to Janet Yendle."

16. There is a copy of a deed of assignment ("Assignment Deed") between the body corporate, Mr Brown (as assignor) and the Applicant (as assignee). It purportedly bears the signatures of all 3 parties, although the body corporate seal does not appear to have been affixed. The signature on behalf of the body corporate is that of a "David Schupp", who is described as the "Chairman". The Assignment Deed is not dated, although it does bear the year 2003.
17. There is also a copy of a letter from Mr Schupp, as body corporate Chairman, that is very difficult to read. It appears to be dated in early July 2003 (probably the 2^nd or 3^rd) and appears to confirm transfer of the management rights.
18. Under the Assignment Deed:

(a)	the agreement being assigned is the Management Agreement (i.e. the agreement having a term of 5 years commencing on 30 June 1998);
(b)	the Management Agreement is assigned;
(c)	the assignee agrees to perform the Management Agreement and indemnify the assignor; and
(d)	the assignor warranted the effectiveness of the Management Agreement, as well as its performance.

19. In addition, the following clauses appear in the Assignment Deed:

"6.1 The Body Corporate:

(a) consents to the assignment;
(b) agrees with the Assignee that to the best of its knowledge:

(i) that it was empowered to enter into the Agreement;

(ii) there is no existing breach by the Assignor of the Agreement;

(iii)	the interest of the Assignor under the Agreement is not liable to forfeiture or surrender; and
(c)	agrees to be bound by the provisions of the Agreement as if the Assignee were the manager originally named in it; and
(d)	in every respect confirms the provisions of the Agreement for the balance of its term including the right of the Assignee to exercise the remaining options (if any) in the Agreement."

"7.1 The Body Corporate and the Assignee:

(a) ratify and confirm all of the terms and conditions of the Agreement whether or not the Agreement has been valid and enforceable in the past and agree that henceforth it shall have full force and effect; and

(b) agree to be bound by the terms and conditions of the Agreement."

20. The Assignment Deed also contains a "further assurance" clause.
21. There is a copy of a letter dated 18 October 2004 from the Chairperson of the body corporate to the Applicant alleging certain deficiencies in the Management Agreement and Assignment Deed and advising that an extraordinary general meeting will be convened to consider and approve a new "Deed of Engagement and Authorization". I have nothing before me to indicate whether such a meeting was ever held, although the Commissioner’s file makes mention of an Extraordinary General Meeting to be held on 4 July 2005, which was last Saturday.
22. The next copy letter before me is a letter on behalf of the body corporate from Hickey Lawyers dated 20 May 2005 to the Applicant giving notice that "to the extent that there is any engagement of you as a service contractor and authorization of you as a letting agent for the body corporate under the Body Corporate and Community Management Act, such engagement and authorization is formally terminated as at 28 May 2005". The letter went on to preserve, in the alternative, the right of the body corporate to argue that the agreement the Applicant has with the body corporate is invalid and, even if valid, was not transferred with the consent of the body corporate.
23. There also appears to have been a demand by the body corporate for the Applicant to hand over possession of the manager’s office and certain records, which the Applicant refused to do.
24. The final copy letter that is before me is from McDonald Balanda & Associates on behalf of the Applicant to Hickey Lawyers dated 25 May 2005 that, inter alia, refutes the allegations made in the letters dated 18 October 2004 and 20 May 2005 and asserts their client’s rights.
25. According to the Commissioner’s file the body corporate recovered possession of the manager’s office after 28 May 2005, changed the locks and employed a security guard to prevent the Applicant from entering. I am informed by the Applicant’s solicitors that possession was then given to a new manager who vacated the premises a short time later, thus allowing the Applicant to regain possession. I therefore understand that the Applicant is currently in possession of the manager’s office.

Findings

26. The Applicant seeks to maintain the validity of and enforce any rights she has under the Management Agreement. She has not treated the purported termination of that agreement as a repudiation of it. She appears willing to continue performing it.
27. There is no direct evidence before me that the option in the Management Agreement was exercised and that a new agreement was entered into, or that the term of the Management Agreement was extended by the body corporate, as commonly occurs. However, I note the recording in the minutes of the Annual General Meeting on 1 June 2003 and the acknowledgment by Sandira Johnson dated 3 July 2003. Both of those documents post date the expiry date of the Management Agreement and they suggest that "a" management agreement is in place. There is also the fact that the body corporate continued to perform "that" agreement until very recently.
28. It seems to me that there is merit in the current application in that there is an arguable case that some form of management agreement is or was in place as at 28 May 2005.
29. That agreement was purportedly terminated on 28 May 2005. If that termination was effective, then there is no point making an interim order restraining the body corporate from terminating the agreement. If there was no agreement in the first place because of invalidity of the agreement or its assignment, then, again there is no point making an interim order restraining termination. There is nothing to suggest that the body corporate will do anything else to try to terminate the agreement, particularly given the action it has already taken and its assertion that it does not exist in any event.
30. However, in light of what has transpired since 28 May 2005 there is a risk that the body corporate may again recover possession of the manager’s office and thereby prevent the Applicant from continuing to perform any agreement she may still have. That would effectively defeat the purpose of this application and leave the Applicant with recourse to a damages claim.
31. On the one hand I am inclined to refuse the request for an interim order because:

(a)	given the relationship that currently exists between the Applicant and the body corporate it may not be possible for the Applicant to continue to perform the Management Agreement and damages may be a more appropriate remedy; and
(b)	in the absence of stronger evidence of renewal or extension of the Management Agreement the Applicant’s case may be substantially weakened.

32. However, I am mindful that:

(a)	this application was made urgently and the Applicant has had limited time to prepare her case;
(b)	the evidence before me is incomplete;
(c)	as I have already indicated, I am satisfied on the evidence before me (albeit it untested and incomplete) that the Applicant has an arguable case; and
(d)	if the body corporate recovers possession of the manager’s office this will:

(i) prevent the Applicant from continuing to perform the Management Agreement;
(ii) effectively defeat the purpose of this application; and
(iii) leave the Applicant with recourse only to a claim for damages.
33. On balance, I am therefore satisfied that, because of the nature of the circumstances relating to this application, an interim order should be made restraining the body corporate from taking possession of the manager’s office and the Applicant’s property in that office pending determination of the application. I propose to make such an order.
34. As regards the substantive aspects of the application, I propose to ask the Commissioner to formally seek submissions from persons likely to be affected by the application, including the body corporate, before I proceed to consider it further.

G. F. Bugden