Palm Springs Residences [2007] QBCCMCmr 262 (10 May 2007)

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Service Contractor Dispute)

Number: 0309A-2007

Applicant: J PATTERSON HOLDINGS PTY LTD

Respondents: BODY CORPORATE FOR PALM SPRINGS RESIDENCES

ORDERS that –

(a) the application for an interim order be refused; and

(b) this matter be joined with Matter No 0135A-2007 so that both matters can be determined together; and

(c) by consent of the parties, the calling for submissions and other preliminary matters relating to the application be dispensed with.

Office of the Commissioner for Body Corporate and
Community Management

SPECIALIST ADJUDICATION
(Service Contractor Dispute)

Applicant: J PATTERSON HOLDINGS PTY LTD

Respondents: BODY CORPORATE FOR PALM SPRINGS RESIDENCES

This is a further application by the caretaker and letting agent for Palm Springs Residences community titles scheme 29467 in relation to a dispute with the body corporate over the body corporate’s efforts to terminate the caretaker’s service contract and letting authority dated 6 September 2001 ("Agreement").

The earlier application seeks to overturn a decision by the body corporate to terminate the Agreement. On that application I made an interim order restraining the body corporate from proceeding until that application is determined. It appears that, since then, the body corporate has with-held certain funds from the applicant otherwise due under the Agreement and the applicant is seeking an order for reimbursement in relation to those funds. The applicant is also seeking an interim order that "the deductions of monies from our Body Corporate Salary cease until the Adjudicator has made his order".

On 2 May 2007, at a meeting of the parties, I declined to make an interim order for reimbursement of the moneys already deducted on the basis that I was not satisfied, on reasonable grounds, that an interim order was necessary because of the nature or urgency of the circumstances to which the application relates, as required of me by section 279(1) of the Body Corporate and Community Management Act 1997 ("Act"). I indicated at the time that I was mindful that the applicant had a remedy available under the Agreement, namely the ability to serve a default notice on the body corporate. However, on that occasion I did not address the question of an interim order to prevent further deductions from moneys due under the agreement.

On that issue I note that there is nothing in the Agreement that gives the body corporate the right to make deductions from funds due. The proper remedy for the body corporate is to serve its own default notice on the applicant. However, the body corporate complains that the applicant is not discharging its duties under the Agreement and it has to engage others to discharge those duties. The applicant claims that the deduction of funds is putting it under financial pressure and making it more difficult for it to discharge its duties.

While these circumstances do not constitute urgency, they do raise the question whether they in themselves justify the making of an interim order to prevent any further deductions being made. Under section 279(1) of the Act I can make an interim order if I am satisfied on reasonable grounds that an interim order is necessary having regard to either:

An adjudicator should not make an interim order lightly, particularly in view of the fact that, unlike say an interim injunction in the Supreme Court, no undertaking for damages is required to be given by the applicant and the respondent, if ultimately successful, may be left with no remedy for loss arising out of the making of the interim order. Furthermore, the adjudicator must have regard to what other remedies may be available to the applicant. In this matter, if the body corporate wrongly with-holds funds under the Agreement, then the applicant can serve a default notice on the body corporate and that will put the body corporate at risk of very substantial damages if it refuses or fails to comply with the notice.

To my mind this should be an adequate remedy for the applicant. This combined with the need to be cautious about making interim orders lightly and the lack of urgent circumstances, leads me to the conclusion that, on balance, an interim order should not be made in the current circumstances.

Although the resolution of this dispute is in its early stages and I have not yet formed any final view on the merits of the arguments of either party, I am left wondering why the body corporate, or at least some of its office bearers, is so passionately against the applicant. This passion is generating so much heat that I suspect it has become difficult, if not impossible, for the applicant to satisfy the body corporate in relation to its performance under the Agreement.

It seems to me that while the deduction of funds may give the body corporate certain tactical advantages in relation to the dispute, it does little to ensure that things continue as normal pending resolution of the dispute. There is a benefit to be gained by preserving the status quo while the application is determined, thus allowing the applicant the opportunity to perform under the Agreement and be paid for that performance. If the applicant has not performed, or does not perform in the future, then it will face the consequences of a possible determination of the Agreement.

The body corporate might like to carefully consider the consequences of with-holding further funds from the applicant, both in terms of the negative impact that may have on everyone’s efforts to resolve this dispute and also having regard to the potential for exposing its owners to a substantial liability for damages.

Finally, on the question of joining both applications, it seems appropriate to me that the applications should be joined and determined together. I propose to make an order to that effect. I also note that both parties agree that application No 0309A-2007 will not benefit from the normal submissions being invited by the Commissioner and that process will only serve to delay both applications. Therefore with the consent of both parties I propose to order that application No 0309A-2007 be proceeded with without being referred back to the Commissioner.

G F Bugden OAM
Specialist Adjudicator

(a)	the urgency of the circumstances to which the application relates; or
(b)	the nature of the circumstances to which the application relates.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Palm Springs Residences [2007] QBCCMCmr 262 (10 May 2007)