Bay Lodge Heights [2005] QBCCMCmr 619 (8 November 2005)

Last Updated: 16 January 2006

REFERENCE: 0414-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	18086
Name of Scheme:	Bay Lodge Heights
Address of Scheme:	35 Palm Avenue SURFERS PARADISE QLD 4217

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

• Colin Richard Johns & Rosslyn Edith Johns as trustee for The Johns Family Trust; and
• Vensom Pty Limited as trustee for The Lodge Unit Trust

I hereby order that the application by Colin Richard Johns & Rosslyn Edith Johns as trustee for The Johns Family Trust and Vensom Pty Limited as trustee for The Lodge Unit Trust for orders that: 1. That the body Corporate may not require the payment of the relevant amount on transfer on the basis that the applicant seeking approval to the transfer on the transfer on the basis of genuine hardship not reasonably foreseeable by the transfer at the date the applicant became engaged as caretaker and letting agent for the body corporate; and 2. That the body corporate refund the relevant amount paid by the applicant to the body corporate on the basis that the body corporate’s consent was sought on the basis of genuine hardship that was not reasonably foreseeable by the applicant at the date on which the applicant became engaged as the caretaking and letting agent for the body corporate, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0414-2005

"Bay Lodge Heights" CTS 18086

The applicants Colin Richard Johns & Rosslyn Edith Johns as trustee for The Johns Family Trust and Vensom Pty Limited as trustee for The Lodge Unit Trust have sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote:

1. That the body Corporate may not require the payment of the relevant amount on transfer on the basis that the applicant seeking approval to the transfer on the transfer on the basis of genuine hardship not reasonably foreseeable by the transfer at the date the applicant became engaged as caretaker and letting agent for the body corporate; and
2. That the body corporate refund the relevant amount paid by the applicant to the body corporate on the basis that the body corporate’s consent was sought on the basis of genuine hardship that was not reasonably foreseeable by the applicant at the date on which the applicant became engaged as the caretaking and letting agent for the body corporate.

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 is a subdivision of 87 lots recorded under a building unit plan (now a building format plan) of subdivision. The regulation module applying to the scheme is the Accommodation Module.

Under section 83 of the Module (Payment of amount on transfer), the body corporate may require, as a condition of approving the transfer, that the transferor pay the body corporate a transfer fee calculated in accordance with the provisions of the section.

Subsection (6) then provides:
(6) The body corporate may not require the payment of the relevant amount if--
(a) the transferor is a financier under section 12330 of the Act who is acting under the provisions of the financier’s charge over the engagement or authorisation; or
(b) 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 facts relating to this application are not in dispute. At the committee meeting held on 27 May 2005, the committee resolved (after interviewing the proposed purchasers of the management rights) to:

• Approve the assignment of management rights;
• Impose "a transfer fee of 2%".

The minutes relevantly state:

Since the agreement has been in force less than 2 years a transfer fee of 2% may be applied by the Body Corporate unless hardship can be substantiated necessitating early sale of the management rights. It was noted that a brief letter has been received by the body corporate stating that the sale is due to health reasons however no satisfactory documentation was provided to substantiate this claim.

What the applicants are disputing is, on the basis of section 83(6), the entitlement of the body corporate to impose the transfer fee. They are claiming "genuine hardship not reasonably foreseeable by the transferor at the contract date" as the reason for their sale of the management rights.

The applicant’s state in their grounds:

The applicant sought the consent of the body corporate to the assignment and advised the body corporate chairperson that they were seeking the consent of the body corporate to the assignment on the basis of a genuine hardship.
Notwithstanding the applicant seeking the body corporate’s consent for reasons of a genuine hardship, the body corporate committee resolved to impose a transfer fee on the assignment. ...

The applicant advised the chairperson of the body corporate in writing and also by a telephone conversation that the applicant was seeking the body corporate’s consent on the basis of a genuine hardship.

In evidence of the above statements, the applicants refer to attachments exhibited as 3 and 4. I suggest that these exhibits provide scant evidence or support of what is alleged. The letter (exhibit 3) dated 13 May 2005 is brief, refers to the sale of the management rights, names the new managers and concludes:

The reason for our selling is personal health reasons.

Exhibit 4 is a Statutory Declaration by Rosslyn Johns prepared presumably for the purposes of the making of this application, as it bears the same date. Relevant to the information provided to the body corporate committee, the Declarant states:

12. On 13 May 2005 I had a telephone conversation with Ms Judy Sharpe, chairperson of the body corporate.
13 The purpose of the telephone call was to advise that my husband and I were selling the management rights due to health reasons.

I note further that the medical evidence provided in exhibits 5 and 6 are both dated 2 June, 2005, 5 days prior to this application. Clearly, they were obtained for the purposes of the making of this application, and were not thought relevant or necessary to have been provided to the body corporate as part of making a case for genuine hardship. Clearly, the body corporate committee did consider this aspect important: It was noted that a brief letter has been received by the body corporate stating that the sale is due to health reasons however no satisfactory documentation was provided to substantiate this claim. (quote from committee minutes).

I conclude that the applicants were remiss in their application to the body corporate. I suggest they should have been far more explicit in their alleged basis for assignment, and at the relevant time, provided the necessary medical evidence in support of this. I consider that it is open for me to conclude that the claim of hardship was an afterthought, considered only after the committee had resolved to require payment of the transfer fee. On the basis of the information provided by the applicants to the committee at the relevant time, I conclude the committee were entitled to resolved in the way it did. This decision is not unreasonable in the circumstances.

I intend to note a further matter I consider relevant. The body corporate submission in response to the application refers to the company Vensom Pty Ltd and suggests that the caretaking duties might have been rearranged between all applicant parties.

In their reply, the applicants respond to this:

... Vensom Pty Ltd is a silent partner. Vensom Pty Ltd had no active involvement in the operation of the business. It does not equate that a silent partner is available to carry out the caretaker’s duties in the event of the active parties being unable to do so.

And subsequently, in paragraph 1.4:

... It is not practical for a silent partner to be delegated these functions. A silent partner is just that, silent. It has no active involvement in the business.

I have considered the Deed of Assignment dated 30 January 2004 whereby the applicants, as purchasers accepted as assignment of the management rights. The deed defines "the Purchaser" as the applicants to this application. In paragraph 4, it states:

The Purchaser agrees to:-
Perform all of the manager’s obligations in the agreement from the assignment date; and
Indemnify the vendor against any loss suffered by it caused by a breach of the Agreement by the Purchaser after the Assignment Date.

I further note the provisions of paragraph 9.1(c) of the Deed:

(In this Deed) any obligation on the part of or for the benefit (of) two or more persons will be deemed to bind or benefit as the case may be, any two or more of them jointly and each of them severally.

I conclude there is nothing in the Deed to support the interpretation argued by the applicants as to the persons associated with Vensom Pty Ltd being silent parties. Under the Deed, they are, together with the Johns, "purchasers", who jointly and severally are required to "preform all of the manager’s obligations in the agreement".

I conclude the applicants have not substantiated or properly evidenced a claim to relief from payment of the transfer fee based on genuine hardship not reasonably foreseeable. This application is dismissed.