Bayview Shores [2006] QBCCMCmr 57 (10 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0483-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	4078
Name of Scheme:	Bayview Shores
Address of Scheme:	5 Bayview Street RUNAWAY BAY QLD 4216

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

OJG Services Pty Ltd, the (former) owner of lot 1 and former Letting Agent and Caretaking Service Contractor

I hereby order that the application by OJG Services Pty Ltd, the (former) owner of lot 1 and former Letting Agent and Caretaking Service Contractor for an order that the file of the Body Corporate be cost assessed in accordance with the Queensland Law Society Act and that the Applicant be required to pay the amount of the assessment, is dismissed under section 270(1)(b) of the Body Corporate and Community Management Act 1997 for the reason that I am satisfied that the dispute should be dealt with in a court or tribunal of competent jurisdiction. I further order that within six (6) weeks of the date of this order the body corporate for Bayview Shores shall reimburse OJG Services Pty Ltd, the (former) owner of lot 1 and former Letting Agent and Caretaking Service Contractor the amount of $267.97 representing the telephone usage fee which the committee imposed as a "fee or other consideration" for the granting of its approval of the assignment, contrary to the requirements of section 84(6)(b) of the standard module.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0483-2005

"Bayview Shores" CTS 4078

The applicant, OJG Services Pty Ltd, the (former) owner of lot 1 and former Letting Agent and Caretaking Service Contractor, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote:

I. That the applicant be reimbursed the amount of $267.97 representing the telephone usage fee;
II. The file of the Body Corporate be cost assessed in accordance with the Queensland Law Society Act and that the Applicant be required to pay the amount of the assessment;
III. Any other orders as the Adjudicator may deem fit.

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 101 lots recorded under a building unit plan of subdivision. The regulation module applying to the scheme is the Standard Module.

The dispute relates to a transfer of the applicant’s management rights in the scheme. In dispute are two issues, namely:

• The body corporate required a fee for approving the transfer which, contrary to section 84(6)(b) of the standard module, was other than a reimbursement of expenses reasonably incurred by it; and
• The body corporate’s solicitors fee of $3238.95 was unreasonable.

I intend to deal with each of these two issues in turn.

One preliminary issue however is whether the application was made out of time; that is, after the applicant had transferred its management rights and was no longer a party within the requirements of the legislation. The body corporate alleges that the application was not made whilst the applicant was either an owner or current service contractor. Further, the body corporate alleges that on this basis the application is "misconceived and without substance and should be dismissed" and costs of $1600 of the body corporate in answering the application awarded to it.

This preliminary issue can be disposed of quickly. I am satisfied on the basis of evidence provided to me, including written email confirmation from the solicitor acting on behalf of the purchaser of the applicant’s management rights, that settlement of the transaction was effected on 7 July 2005, specifically at 4.35pm. The original application is dated 7 July 2005, was received by this office 11 July, 2005, but importantly, a copy of the application was received by this office by facsimile at 4:21 pm on the afternoon of 7 July 2005. I am satisfied that the applicant was a "party" to the dispute at the time this application was made.
That the body corporate required a fee for approving the transfer

The applicant states:

Pursuant to section 84(6)(b) the body corporate required and received a fee for approving the transfer which was other than a reimbursement for the expenses reasonably incurred by the body corporate. ...

... the body corporate, as a condition of its consent to the assignment, required payment of an outstanding telephone fee, which the manager disputed it’s indebtedness to.

The applicant attached a copy of the "tax invoice" in question. The amount of the invoice is $267.97. The invoice is dated 23 June 2005.

The applicant’s principle evidence in support of its contention is the actual terms of the committee resolution approving the assignment. That resolution provided relevantly that:

... subject to:

a) The body coporate’s costs including reasonable legal costs ... reasonable costs of the body corporate manager, payment of invoice 0505 dated 23 June 2005 for telephone and facsimile charges incurred ... and (my highlighting)
b) The deed of Assignment being in a form acceptable to the solicitors for the Body Corporate,

That the body corporate consents to the assignment of the C&E Agreement dated 7 October, 1999 ...

The body corporate has responded in its submission that:

It is correct to say that we required the telephone account to be settled before transfer could take place. This was not a "fee" but a simple invoice relating to Mr Hoey’s person use of the body corporate telephone system during the period 1 Sept 2004 to 31 May 2005. ...

... What we did require was that outstanding bills be paid before the deed of assignment would be passed. It is normal practice in any business transaction for outstanding debts to be settled at the time of handover in order to avoid expensive litigation in the future. Our passed experience told us that Mr Hoey was reluctant to pay bills, particularly for his telephone usage, so we prudently insisted that all bills be settled before the transfer to Andrews.

The body corporate submission failed to address specifically the terms of the resolution resolved by the committee in approving the transfer.

Section 84(6) of the standard module provides:

(6) The body corporate must not--
(a) unreasonably withhold approval to the transfer; or
(b) require or receive a fee or other consideration for approving the transfer (other than reimbursement for expenses reasonably incurred by the body corporate in relation to the application for its approval).

In its reply, the applicant has interpreted the body corporate’s responses as evidence of a "fee" for approving the transfer.

I agree with the body corporate submission that any prudent person seeks or requires payments of all amounts they consider owning prior to completion of a transaction. This is standard and prudent business or commercial practice. However, there are ways of doing this which practically do not offend the legislation.
I would have been prepared to accept the body corporate’s arguments that the requirement of the payment of the charges was not a "fee or other consideration" if this requirement to pay the charges had not been included specifically in the resolution of the committee approving the assignment. If this had not been the case with the committee resolution, I would have dismissed this aspect of the application.

However the fact that it was so included specifically in the resolution is fatal to the body corporate’s argument of a commercially practical solution. In order to have succeeded in its argument, the committee resolution should not have referred to payment of the telephone charges. Rather, the committee should simply have made the handing over of the necessary documents subject to the finalization of outstanding debts alleged to have been owed. This could easily have been mentioned in separate written correspondence. Whilst the distinction might appear artificial, I consider it is correct. The legislation is written in wide terms: "fee or other consideration for approving the transfer". To avoid a connection between the approval and any alleged consideration for it, I consider that at the very least, this condition should not have been included in the resolution approving the transfer.

That the body corporate’s solicitors fee of $3238.95 was unreasonable.

The applicant states:

... the body corporate’s solicitor’s fee of $3238.95 is unreasonable. Such amount is above industry practices, and is unreasonable given that minor changes were only requested by the body corporate.

This is the extent of the applicant’s grounds on this aspect. On the basis of this, the applicant sought an order that the file of the Body Corporate be cost assessed in accordance with the Queensland Law Society Act and that the Applicant be required to pay the amount of the assessment.

I wrote to the applicant suggesting that the information provided was in, in my view, insufficient to support the order sought. That the allegations were not "sufficiently substantiated or evidenced", and I invited the applicant to "substantiate your allegation, or to provide any other information which ... might substantiate a conclusion that the solicitor’s fee is unreasonable".

The applicant replied that:

Whilst we acknowledge that some details may be insufficient, this is in part due to the fact that the applicant has no knowledge of the Body Corporate’s file ...

Subsequently, the applicant states:

In relation to the Applicant’s submissions that the amount charged by the body corporate is "above industry practices and is unreasonable given that minor changes were only required by the body corporate we are unable to expand further on this as discussed above, our client has not been given an itemised bill of costs in order to determine the rate of fees charged, nor the items charged by the Body Corporate’s solicitors.

It seem to me that the applicant has made allegations which he is completely unable to substantiate. Perhaps he considered that those allegations might simply be accepted at face value. To suggest that something is unreasonable implies that there is an objective or reasonable standard by which something might be measured, or at the very least, the person making the allegation is able to elaborate some basis for the allegation. I am not satisfied that any reasonable basis has been so elaborated.

Similarly, to refer to "industry practices" implies that there is an industry standard, and that the applicant will be able to adduce some evidence of this. However, even when asked to substantiate these aspects, the applicant is completely unable to. In the circumstances, this aspect of the application is dismissed.

I further note that it appears to be within the applicant’s own power to seek redress on this aspect directly from the Tribunal Cost Assessor. Relevantly I note that the Queensland Law Society Act defines client to include a person who has paid, or is liable to pay, the account of a client. I suggest that the applicant has a right to seek redress directly against the body corporate’s solicitor in respect of the legal fees in dispute.

If the reason the applicant first approached this office on this aspect was on the basis of the "exclusive jurisdiction" then I am prepared to dismiss this aspect of the dispute under section 270(1)(b) of the Act: namely that I am satisfied that the dispute should be dealt with in a court or tribunal of competent jurisdiction. I consider that it is now for the applicant to apply directly to the Tribunal Cost Assessor regarding this aspect if it so chooses. The only stipulation I have to add is that if the Assessor make a determination requiring reimbursement to the applicant, and if there is a refusal on the part of the body corporate to so reimburse the applicant the amount stipulated, then I specifically reserve the right of the applicant to make further application to this office for an order against the body corporate requiring the reimbursement or such other order as might be within the jurisdiction of an adjudicator to make. However, the applicant should note that this office has no jurisdiction in disputes specifically between a party under the Act and a solicitor for another party. Rather, a dispute can only exist between parties the combinations of which are set out in section 227(1)(a-j) of the Act.