Cathedral Place [2006] QBCCMCmr 359 (5 July 2006)


Name of Scheme:	Cathedral Place Community Body Corporate
Address of Scheme:	41 Gotha Street, Fortitude Valley QLD 4006

TAKE NOTICE that pursuant to an application made under the Building Units and Group Titles Act 1980 by Edward Charles Zunker and Lorraine Zunker, the owners of lot 4 in BUP 106912 (Notre Dame) and lot 64 in BUP 106905 (Oxford & Cambridge)

I hereby order that the application by Edward Charles Zunker and Lorraine Zunker, the owners of lot 4 in BUP 106912 (Notre Dame) and lot 64 in BUP 106905 (Oxford & Cambridge), for an order of a Referee under the Building Units and Group Titles Act 1980, that the Community Body Corporate is not obliged to call for tenders before granting any new agreements for contracts at the complex valued at $2000 or more, is dismissed.

STATEMENT OF REFEREE’S REASONS FOR DECISION – REF 10-2006

"Cathedral Place"

The applicants, Edward Charles Zunker and Lorraine Zunker, the owners of lot 4 in BUP 106912 (Notre Dame) and lot 64 in BUP 106905 (Oxford & Cambridge), have sought the following orders of a Referee under the Building Units and Group Titles Act 1980, that quote:

Cathedral Place is a scheme developed under the provisions of the Mixed Use Development Act 1993 (the MUD Act). Cathedral Place is the "community body corporate" and there are a number of subsidiary bodies corporate’, including the two bodies corporate of which the applicants are the owners of lots.

Section 214A of the Mixed Use Development Act 1993 provides -

214A Dealing with disputes
Unless otherwise provided in this Act, a dispute about the operation of this Act or the rights and obligations of persons under this Act may be dealt with under the Building Units and Group Titles Act 1980, part 5.

The relevant dispute resolution provisions are those under the Building Units and Group Titles Act 1980 and not the Body Corporate and Community Management Act 1997, which is the generic legislation now applying to the vast majority of community title schemes operating in Queensland. Relevantly, sections 77 and 78 of the Building Units and Group Titles Act 1980 provide as follows -

77 General powers of referee to make orders
(1) A referee may, pursuant to an application of a body corporate, a body corporate manager, a proprietor, a person having an estate or interest in a lot or an occupier of a lot in respect of a parcel, make an order on any person entitled to make an application under this subsection or on the chairperson, secretary or treasurer of the body corporate for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.
(2) Where a body corporate has a discretion as to whether or not it exercises or performs a power, authority, duty or function conferred or imposed on it by this Act, it shall be deemed to have refused or failed to exercise or perform that power, authority, duty or function only if it has decided not to exercise or perform that power, authority, duty or function.
(3) Nothing in this part authorises the referee to make an order of the kind that may be made by the Court under section 25 or 26.
(4) Nothing in this part affects the generality of subsection (1), but an order in respect of any matter dealt with in any other section of this part shall not be made under this section.

78 Further powers of referee
(1) A referee is empowered to make an order that--
(a) requires a party to the dispute before the referee to pay money not exceeding the sum of $1 000 to a person specified in the order;
(b) requires a party to the dispute before the referee to do, or refrain from doing, some specified act to which the application relates;
(c) strikes out for want of jurisdiction the dispute before the referee.
(2) An order made by a referee may direct that the order shall be complied with within a time limited in the order.
(3) An order made by a referee that requires the payment of money may be made to take effect instanter or so as to take effect upon default being made in complying with some other order made by the referee.

The resolution of disputes arising under complex and specific legislation like:

under the Building Units and Group Titles Act 1980 (BUGTA) is problematic at best for the reason alone that BUGTA is legislation which pre-dates the above Acts and which contemplated only the creation of what is now known as a "basic" or single community titles scheme. In contrast, the abovementioned Acts contemplate layered schemes, of varying degrees of complexity, but which usually contemplate at the very least, a principal body corporate and subsidiary bodies corporate. Internal structures can in reality be far more complex. Other limitations are implicit in the wording of section 77(1) of BUGTA. For example, there is no reference to disputes involving service contractors.

For these reasons alone, the BUGTA legislation is unsatisfactory for the resolution of complex disputes which might arise under the above Acts. The only saving it seems to me is that disputes dealt with under BUGTA are not exclusive in the sense that they can only be commenced before a Referee, as is the case with disputes arising under the Body Corporate and Community Management Act 1997 (the BCCM Act). Section 214A of MUD indicates as much with the use of the discretionary term "may", indicating that a party might alternatively pursue their dispute in another jurisdiction (eg the courts) if there is some basis for this (for instance, a contractual basis for the dispute).

For the purposes of this application, the applicants are owners of two lots in two separate subsidiary schemes within the community body corporate known as Cathedral Place. In their grounds, the applicants state under outcome sought:

The applicants claim that under section 78 of BUGTA, the Referee is empowered to require the body corporate "to do, or refrain from doing some specified act", in this case, the proposed calling of tenders by the community body corporate.

For the purposes of this application, the applicants are owners of two lots in two separate subsidiary schemes within the community body corporate known as Cathedral Place. The applicants are seeking an order that the Cathedral Place Community Body Corporate (the CPCBC) is not obliged to call for tenders before granting any new agreements for contracts at the complex valued at $2000 or more. Relevantly the applicants, via their company, Cathedral Place Management (CPM) are the current service contractors (caretaking and letting managers) for the scheme. CPM’s caretaking contract is due to expire in late 2008, and negotiations between CPM and the CPCBC to date on the possible renewal of these contracts have not been successful, and currently negotiations have been "terminated". In consequence, the CPCBC is apparently seeking to put the matter of future caretaking and letting services out for tender. The applicants contend that certain legal advice given to the CPCBC is incorrect. In correspondence dated 21 November 2005, the chairperson wrote to the applicants stating in part that:

The applicants dispute this advice and believe there is no obligation on the CPCBC to put the matter of the caretaking and letting services to tender.

It is not my role to make any determination of whether or not legal advice obtained by any party is or is not correct. However, to the extent that the dispute concerns the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by (BUGT) Act, then I consider that it is within the jurisdiction of a Referee to consider. The applicants are alleging, and seeking an order that, the body corporate is not obliged to call for tenders before granting any new agreements for contracts at the complex valued at $2000 or more.

In response, the respondent body corporate, being the Cathedral Place community body corporate (the CPCBC), has alleged that the application should be dismissed, for the reason that the Referee has no jurisdiction for the dispute. Alternatively, the CPCBC seeks a declaration that section 190(2) of MUD requires the committee "to obtain and submit at least two (2) tenders (to the body corporate) for determination in general meeting in respect of any proposed expenditure for work to be performed". Section 190 of the MUD Act provides:

190 Statutory restrictions on powers of executive committee
(1) The executive committee of a body corporate may undertake expenditure only if--
(a) authorised by a comprehensive resolution of the body corporate; or
(b) authorised in an emergency by the Minister.
(2) In relation to any proposed expenditure that the executive committee is unable to undertake because of subsection (1), the executive committee must--
(a) submit the proposal for determination at an extraordinary general meeting of the body corporate
convened for the purpose of, or for purposes that include, consideration of the proposal; and
(b) if the proposed expenditure is for work to be performed or the purchase of personal property--submit at least 2 tenders to the meeting with the proposal.
(3) Subsection (1) does not apply to expenditure--
(a) in payment of any premium for insurance taken out for the body corporate; or
(b) to comply with a notice or order served on the body corporate by a court, a local government, the State, the Commonwealth or a provider of a public utility service; or
(c) in discharge of a liability incurred in relation to an obligation of the body corporate authorised by the body corporate in general meeting.

The CPCBC has submitted that no jurisdiction exists for the Referee to consider and determine the applicant’s dispute application. In particular, the CPCBC allege that the application is filed in the capacity of "both the caretaking service contractor and an owner occupier". That caretakers is not included as a permissible applicant class under BUGTA and consequently, the MUD Act. The respondent body corporate concludes that the applicants have no standing in their capacity as the service contractor.

I do note that the applicants have ticked both "BC & Caretaking Service Contractor" and "BC & Owner" in their application. I agree that BUGTA does not contemplate caretakers, and other service contractors (excluding body corporate managers) as parties to a dispute. Moreover, the applicants hold the caretaking agreement in a corporate identity, whereas their application is in their individual capacity. I conclude the only basis on which the applicants might have made their application is as owners in their individual capacity. I will now consider this aspect.

The CPCBC further relies on the reasoning of the Referee in 0755 of 2005 to allege that the applicants are neither proprietors nor occupiers of a lot in the Principal Body Corporate.

The Referee in 0755 of 2005 went on to state "the applicants do not have any voting rights in decisions of the Cathedral Village Body Corporate. The applicants would only be affected by a decision of the body corporate in their capacity as caretakers rather than that in their capacity of person who has an estate or interest in a lot within Cathedral Village".

It is clear that the CPCBC has relied on these statements as disqualifying the applicants. This argument relates to the fourth category of "applicant" referred to in BUGTA. Clearly, the applicants in application 0755 of 2005 did not have standing to make an application in respect of a decision taken by the body corporate of another subsidiary body corporate within the development, given that they were not proprietors within that subsidiary body corporate and held no other estate or interest in that subsidiary body corporate.

In the circumstances of the present application, and unlike the circumstances in 0755 of 2005, the applicants are making their application as "proprietors" (and have ticked the Body Corporate and Owner basis of jurisdiction). I consider this is a different basis for jurisdiction than that considered by the Referee in 0755 of 2005.

I conclude the Referee’s reasoning in 0755 of 2005 was restricted to the fourth category of possible applicant. In the present application, the dispute is between a "proprietor" and "a body corporate". Prima facie, it appears that under section 77(1) of BUGTA, the Referee has jurisdiction in respect of applications by proprietors against a body corporate, unless some other limitation is found to exist. The question for determination relevantly then is whether this jurisdiction of a Referee under section 77(1) extends to an application by a proprietor in a subsidiary scheme, against the community body corporate of which the subsidiary scheme is a member.

Under section 77(1) of BUGTA, there are four stated categories of applicants, namely:

The applicants are "a proprietor" within the definition of that term under BUGTA; namely the person for the time being registered ... under the Land Titles Act 1994 as the proprietor of a lot. Further, section 77(1) provides that a referee may "make an order on any person entitled to make an application under this subsection". By way of example therefore, on the application of a proprietor, a Referee may make an order against a body corporate. This raises the question: which body corporate? Cathedral Place Community Body Corporate, or alternatively the subsidiary body corporate for Notre Dame or the subsidiary body corporate for Oxford & Cambridge. The term "body corporate" as used in the BUGTA is defined in that Act to mean "a body corporate incorporated by section 27". Section 27 provides:

27 Constitution of bodies corporate
(1) The proprietor or proprietors from time to time shall, by virtue of this Act, upon registration of the plan be a body corporate under the name ‘The Proprietors--(insert name of the building) Building Units Plan No. ’ or ‘The Proprietors--(insert name of the parcel) Group Titles Plan
No. ’, as the case may be. (The name of the building or parcel shall be the name endorsed upon the relevant plan and the plan number shall be the number allotted to that plan pursuant to section 9(14)). ...

It is noted that the term "body corporate" in the MUD Act is defined very differently: in that legislation, a "body corporate" means (a) a community body corporate; or (b) a precinct body corporate.

I consider however that, in interpreting the applicability of section 77(1) of BUGTA, I must adopt the definition in that Act of "body corporate". This definition restricts the "body corporate" against whom an order of a Referee might be made to the body corporate created by registration of the specific building unit plan, and not, the community body corporate for Cathedral Place. Consequently, the orders sought by the applicants against Cathedral Place body corporate cannot be made as BUGTA simply does not contemplate, and create jurisdiction for such a dispute.

Moreover, it is relevant to further consider the provisions of section 77(1) of BUGTA. It is clear that section 190 of the MUD Act requires that if a proposed expenditure is for work to be performed or the purchase of personal property, then the body corporate must submit at least 2 tenders to a meeting with the proposal. The heading of the section expresses this as a "statutory restriction on the power of (the) executive committee". Section 77(1) of BUGTA provides that, subject to the Referee having jurisdiction to make the order, then the order must relate to:

The applicants have referred to section 78 as providing jurisdiction. I disagree. It is section 77(1) which establishes the jurisdiction of the Referee. Section 78 is simply a statement of the powers of the Referee, consistent with the jurisdiction expressed in section 77(1). In particular, the Referee has power to order a party to "do, or refrain from doing, some specified Act".

Returning to the provisions of section 77(1), "parcel" is defined in BUGTA to mean "the land comprised in a plan". "Plan" is defined to mean "a building unit plan or a group titles plan". Whilst the requirements of section 190 of the MUD Act appear to be a duty imposed by the Act, section 77(1) further requires that that duty "must be in connection with that parcel". The parcel for relevant purposes is the building unit plan in which the applicants are the proprietors of a lot. This is consistent with the specific limitation imposed by section 77(1). I conclude that the application of the requirements of section 190 are not, at least specifically, in connection with the applicant’s parcel. Consequently, for a second, and separate reason, I conclude that the Referee does not have jurisdiction under section 77(1) to consider the application.

In any event, if I am wrong on both of these aspects, I return to the relief actually sought by the applicants; namely an order from the referee that the Community Body Corporate is not obliged to call for tenders before granting any new agreements for contracts at the complex valued at $2000 or more. Irrespective of the issue of whether or not a body corporate is "not obliged" to call for tenders, I find no prohibition in the relevant section, or elsewhere, which precludes or prohibits a body corporate from submitting 2, or for that matter, any number of tenders to a meeting in respect of "work to be performed or the purchase of personal property". In fact, I suggest that the submission of several tenders suggests that a body corporate might be acting consistent with good and prudent management practice, and in the best interests of all owners. So, to conclude, for this very practical reason, the order sought by the applicants is illusory. There is no point in making the order as sought as there is no basis for placing such a prohibition on a body corporate.

For the above several reasons, this application is dismissed.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Cathedral Place [2006] QBCCMCmr 359 (5 July 2006)