Varsity Mews [2005] QBCCMCmr 495 (1 September 2005)

Last Updated: 19 July 2006

REFERENCE: 0343-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30957
Name of Scheme:	Varsity Mews
Address of Scheme:	1 Assembly Drive , Varsity Lakes

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

Roger Cooke and Julia Lovett-Cameron, the former on-site managers and Letting Agents.

I hereby declare that the body corporate is not entitled to require the payment of an amount pursuant to section 83 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 in respect of the transfer of the interest of Roger Cooke and Julia Lovett-Cameron in the Management and Letting Agreement dated 17 January 2003 to Roxby Investments Pty. Ltd. (as trustee for the Rawlings Family trust). I hereby order that any sum paid by the applicants to the body corporate in respect of the transfer fee pursuant to section 83 of the Accommodation Module, shall be refunded to the applicants.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0343-2005

"Varsity Mews" CTS 30957

APPLICATION

The applicants, Roger Cooke and Julia Lovett-Cameron seek the following orders of an adjudicator:

1. A declaration that the body corporate is not entitled to require the payment of an amount pursuant to section 83 of the Accommodation Module of the Body Corporate and Community Management Act 1997 in respect of the transfer of the interest of Roger Cooke and Julia Lovett-Cameron in the Management and Letting Agreement dated 17 January 2003 to Rawlings & Roxby Investments Pty. Ltd.

2. In the event that the Applicant has paid any sum in respect of the transfer fee pursuant to section 83 of the Accommodation Module at the time any order is made by an adjudicator then an order that the transfer fee paid to the body corporate be refunded to the applicant.

3. that the respondent pays the applicants’ costs of and incidental to this application.
4. Such further or other orders as the Commissioner or Adjudicator thinks fit.

BACKGROUND

Management and letting agreements for this scheme were originally entered into between the body corporate and Wildrige Pty. Ltd. on 17 January 2003 and subsequently assigned to the applicants.

On 27 February 2005 the applicants entered into an agreement to assign the management and letting rights to Roxby Investments Pty. Ltd. as trustee for the Rawlings Family Trust for $230,000. At a meeting of the Committee convened on 29 April 2005, it was resolved that the assignment be consented to subject to the payment of a 1% transfer fee to the body corporate (i.e. $2,300) pursuant to section 83 of the Accommodation Module. It is my understanding that settlement of the "management rights" was effected on 3 May 2005.

The applicants seek relief from payment of a transfer fee pursuant to subsection 83(6) of the Accommodation Module which provides:

The body corporate may not require payment of the relevant amount if-

...
(b) the transferor is seeking approval to the transfer on the basis of genuine hardship not reasonably foreseeable to the transferor at the contract date.

The applicants’ solicitor advises that the transfer was caused by genuine hardship as Mr Cooke suffered a heart attack while working in the pool area on 19 March 2004 and has subsequently been assessed as medically unfit for managing the complex. I note from the material provided in support of the application that subsequent cardiac examination revealed that Mr Cooke has serious heart disease and has been prescribed a number of medications for his condition.

JURISDICTION

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)).

Section 227 of the Act defines the parties to a dispute. When the application was lodged, the applicants were service contractors and letting agents for the scheme and were therefore within a category of persons entitled to make an application. At the time that the application was made, the applicants were parties to a dispute for which an adjudicator could make an order. Although the applicants have since sold the management and letting rights, they are still parties to a dispute in that the amount of the transfer fee to which the body corporate claims it is entitled, is still disputed by the applicants. This situation is distinguishable from a dispute involving, for example, a by-law contravention, where, upon the sale of the respondent’s lot, an order regarding a by-law contravention would be irrelevant. I am therefore satisfied that I have jurisdiction to determine this application.

DETERMINATION

It is the applicants’ contention that section 83(6) of the Accommodation Module is applicable to their circumstances, in that they have been forced to sell the management rights, the letting rights and their unit following Mr Cooke’s diagnosis of heart disease, which diagnosis was not reasonably foreseeable at the time that the applicants entered into the management and letting agreements.

In spite of being given the opportunity to do so, neither the committee nor any of the owners responded to the application.

Hardship

The term "hardship" has appeared in a number of decisions. In Re Kabalan [1993] FCA 76; (1993) 113 ALR 330, Gummow J, when reviewing the Bankruptcy Rules (Cth), defined "hardship" as "...any condition which presses with particular asperity upon a person..." This was also considered an appropriate definition by the Full Tribunal of the A.A.T. in Re Dorevitch Pathology and Minister for Health [1993] AATA 377; (1993) 32 ALD 170 at 177 ( paragraph 17).

In Re Qld Medical Lab. and Dept. of H.H.C.S. (1994)33ALD 159 at 167 (paragraph 32) the Full Tribunal of the A.A.T., when considering the word "hardship" as it appeared in the Health Insurance Act 1973 (Cth) ruled that "the term ‘hardship’ can potentially cover a broad spectrum of connotations including meaning an appreciable detriment whether it be financial, personal or otherwise."

Each case must depend on its own particular facts and circumstances. In some cases it can be a particularly difficult to determine whether the transfer has been precipitated by genuine hardship. For example, it is not uncommon for resident managers to claim that a transfer was the result of work related stress and that this amounts to hardship.

However, in this case I am satisfied that the transferor is seeking approval to the transfer on the basis of genuine hardship, not reasonably foreseeable to the transferor at the contract date. The applicants have provided credible evidence from a medical specialist that Mr. Cooke suffers from serious heart disease. Further, given the relatively modest remuneration payable under the agreements, it would not have been viable to employ someone to undertake the tasks previously undertaken by Mr. Cooke.

I have therefore ordered that the transfer fee imposed by the body corporate shall be refunded to the applicants. However I have no power to order that the respondent pays the applicants’ costs of and incidental to this application.