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Acacia Lodge Hostel [2007] QBCCMCmr 360 (13 June 2007)

Last Updated: 12 March 2009


APPLICATION NO: 0115A-2007

APPLICANT: RITA COMMISSO ENTERPRISES PTY LTD

AND

RESPONDENT: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755

ORDER


Before: Specialist Adjudicator Christopher Carrigan

Date: 13 June 2007


Initiating Document: Application filed 6 February 2007



I ORDER THAT:

  1. Clause 3 of the Letting Agreement dated 21 August 1998 and the attached plan and clause 5 of the Residential Management Agreement dated 21 August 1998 and the attached plan validly confer on the Applicant exclusive possession of the kitchen and hallway, office, laundry and store, linen room and car bay of the common property.
  2. The exclusive occupation authority referred to in:-
    • (a) clause 3 of the Letting Agreement dated 21 August 1998 and the attached plan to that Agreement; and
    • (b) clause 5 of the Resident Manager’s Agreement dated 21 August 1998 and the attached plan to that Agreement,
permits the Applicant to exclude lot owners and/or occupiers from the areas specified in the exclusive occupation authority namely the kitchen and hallway, office, laundry and store, linen room and car bay.
  1. The Body Corporate is prohibited by clause 45.5 of its By-laws from authorising anyone other than the Applicant to prepare meals for or do laundry for, the occupiers or any other lot owner.
  2. The Body Corporate is prohibited pursuant to s.276(2) and is thereby restrained from putting to lot owners for the purposes of a vote motion 4 of the Agenda contained in the Notice of Meeting sent to lot owners on 1 February for an Extraordinary General Meeting to be held at the office of the Body Corporate Manager, or such other venue as it may decide, on 23 February 2007 or on any subsequent or adjourned date of the meeting, and which Notice of Meeting is Exhibit “T” to the Application of the Applicant dated 6 February 2007.
I DIRECT THAT:
  1. The Applicant, the Respondent and the Body Corporate deliver to me and to the other parties to this dispute, their Submissions, if any, in respect of the costs of the Adjudication referred to in s.280 of the Body Corporate and Community Management Act 1967 by 4:00 p.m. on Friday, 29 June 2007.

C.J. CARRIGAN
Specialist Adjudicator


BETWEEN:

Applicant: RITA COMMISSO ENTERPRISES PTY LTD

AND:

Respondent: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755

AND:

Respondent: DOMINIC SURACE


Dispute Resolution Application Ref No 0115A-2007


TABLE OF CONTENTS

BETWEEN:

Applicant: RITA COMMISSO ENTERPRISES PTY LTD

AND:

Respondent: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755

AND:

Respondent: DOMINIC SURACE


Dispute Resolution Application Ref No 0115A-2007


REASONS FOR DECISION

BACKGROUND

  1. This Body Corporate is situated at Imperial Parade, Labrador on the Gold Coast. The scheme consists of six (6) lots.
  2. The Applicant is the proprietor of Lots 1, 4 and 5. Dominic Surace is the proprietor of Lots 2, 3 and 6.
  3. Apparently for some time all lots in the scheme have been rented to people of old age or invalid pensions who need additional living assistance such as catering, assistance with serving of meals and related cleaning services. For this purpose Dominic Surace had entered into a Letting Agreement with the Applicant who was to provide a catering service and related cleaning services to his tenants in Lots 2, 3 and 6. A copy of that Agreement is not in evidence but by letter dated 30 August 2005[1] Dominic Surace terminated the service of the Applicant as his Letting Agent and appointed Raine & Horne. He informed the Applicant on that date that for the purposes of letting out of his units his new Letting Agent would require his tenants to have use of the kitchen and laundry facilities in the scheme. His, or rather his tenants’, entitlement to use those facilities, including the office located on the common property, is now the subject of the dispute in this Application.
  4. On 21 August 1998 the Body Corporate entered into:-

with Robert and Maureen Dalziel who undertook the duties as Resident Manager and Letting Agent.

  1. Clause 3 of the Letting Agreement contained the following clause[2]:-

“The Agent has the right to the exclusive occupation of the area of common property shown hatched on the attached plan for the purpose necessary to enable the Agent to perform the Agent’s obligations under this Agreement and to operate as a Managing Agent in accordance with the Resident Manager’s Agreement.”


Attached to the Letting Agreement[3] is the attached plan and the areas which are hatched on that plan are the following:-

(a) kitchen and hallway;
(b) office;
(c) laundry and store;
(d) linen room; and
(e) car bay.
  1. Neither party contests that those areas hatched on the attached plan are part of the common property. The attached plan does not appear to include any of the hatched areas within the confines of a lot. For the purposes of these proceedings I am satisfied that the areas hatched on the attached plan are part of the common property.
  2. Clause 3 of the Letting Agreement gives exclusive occupation of the areas on the attached plan for the purpose necessary to enable the Applicant to perform its obligations under the Letting Agreement and under the Resident Manager’s Agreement. The Applicant’s obligations are set out in clause 2 of the Letting Agreement in summary that authorises the conduct of:-

“... the business of a real estate agency for the letting of lots within the complex on behalf of such owners of lots in the complex as require that service together with all associated services commonly rendered in connection with such an agency.”


Apparently, the service of letting of lots in this scheme has included the rental of units for people of old age or on invalid pensions who need additional living assistance such as catering, assistance with meals and related cleaning services. It appears to be accepted by the parties that that is the intention of the letting service provided in this scheme. The Applicant contends to that effect.[4] The present dispute does not enable Dominic Surace to continue to use the services of the Applicant as a consequence of his termination of the Agreement with the Applicant. He now asserts that his Letting Agent, Raine & Horne will require the tenants to have usage of the kitchen and the laundry.[5]

  1. The Resident Manager’s Agreement contains a similar occupation authority in clause 5 of that Agreement. That clause refers to an attached plan and that can be found in a copy of the Resident Manager’s Agreement sent to McDonald Balanda Lawyers who acted for the Applicant in the purchase of the Resident Manager’s and Letting Agent’s rights in the Body Corporate scheme.[6] Clause 5 of the Resident Manager’s Agreement gives the Manager the right to exclusive occupation of hatched areas of the common property in the attached plan for the purposes of carrying out his obligations under this Agreement and also to operate as a Letting Agent in accordance with the Letting Agreement. The Manager’s obligations under the Resident Manager’s Agreement is purely to supervise staff and contractors and to arrange their engagement in respect of those matters set out in clause 3(a) to (t) of the Agreement.
  2. The rights and obligations in the Resident Manager’s Agreement and Letting Agreement were assigned to the Applicant on 23 September 2002. Thereafter the Applicant has continued in the role of Resident Manager and Letting Agent and has used the hatched areas of exclusive occupation of the common property for the preparation of tenants’ meals as well as for cleaning and other assisted activities.[7] The Applicant has, however, permitted residents to use the laundry when requested.[8]

THE DISPUTE BETWEEN THE PARTIES

  1. By letter dated 30 August 2006 the Respondent, Dominic Surace, terminated the Letting Agreement with the Applicant and appointed Raine & Horne as his Letting Agent.[9]
  2. Since then, there has been an extensive exchange of correspondence between the parties each asserting various rights but culminating in the dispute as to whether the Applicant’s occupation authority gave it exclusive occupation of the kitchen, laundry and other areas of the common property as identified in the attached plan to the Letting Agreement and if not, whether the Respondent, Dominic Surace, was authorised or allowed, along with his tenants, to use the kitchen, laundry and other facilities referred to on that attached plan. I do not propose to set out details of that exchange of correspondence between the parties.[10]
  3. On or about 6 February 2007 the Applicant lodged an Application with the Commissioner for Body Corporate and Community Management pursuant to Chapter 6 of the Body Corporate and Community Management Act 1997 (“the Act”) to resolve this dispute. The Applicant seeks various Orders including:-
  4. Apart from the Body Corporate[11], the Applicant and Mr Surace have between 6 February 2007 and 16 May 2007 participated in this Adjudication and made Submissions.
  5. The Applicant in its Submissions[12] relies on the Resident Manager’s Agreement with the attached plan identifying the areas of exclusive occupation. Similarly, the Applicant relies on the Letting Agreement and the attached plan to establish its entitlement to the exclusive occupation of the kitchen, laundry and other areas on the attached plan. The Applicant relies on the material in its Submissions. Some of the Submissions contain sworn statements and some Submissions are not sworn. An Adjudicator while observing natural justice must act as quickly, and with as little formality and technicality.[13] In addition an Adjudicator is not bound by the rules of evidence. For these reasons and also the Case Management for this Adjudication gave all parties the opportunity to respond to the other party’s Submissions, I intend to rely on all Submissions, whether sworn or not, as the record and evidence in these proceedings.
  6. The Respondent, Dominic Surace, raises a number of issues in his written Submissions[14] directed either to the invalidity of the exclusive occupation of the common property by the Applicant, or alternatively assertions that he, or his occupiers of lots, have the right to the use of those facilities on the common property. In summary each of those matters are as follows:-
  7. The Body Corporate Committee which consists of Rita Commisso and Dominic Surace is currently “deadlocked” and has not given instructions to the Body Corporate Manager to participate in this Application.
  8. It is necessary to consider separately each of the grounds raised by Mr Surace. As I have previously stated, there is evidence before me which contains the Resident Manager’s Agreement with the attached plan of the exclusive occupation areas of the common property and similarly the Letting Agreement which also has the requisite attached plan to that document. The Applicant has therefore prima facie established that it has an exclusive occupation authority with respect to the facilities referred to on the attached plan of the common property subject to the Submissions made on behalf of Mr Surace. I will now consider each of the issues raised by Mr Surace in his Submissions.

BREACH OF TOWN PLANNING APPROVAL[15]

  1. The Applicant asserts that exclusive occupation areas have been used by the Applicant since 23 September 2002 for the preparation and provision of meals to the residents of the scheme.[16]
  2. Mr Surace disagrees with this assertion.[17] He relies on a decision of the Gold Coast City Council of 26 June 1998 which changes the zoning from an existing motel zone and special residential to aged care accommodation. I have the Minutes of the Council Meeting of 23 June 1998 but do not have the specific resolution of the Council of
    26 June 1998.[18] Assuming for the purposes of this decision that the Council has resolved in terms of the Material Change of Use Application and approved that Application subject to the condition now relied upon by Mr Surace[19] the issues is what effect, if any, does that have on the exclusive occupation of parts of the common property.
  3. Based on these facts it is asserted on behalf of Mr Surace that:-
  4. The Applicant disagrees with the contentions of Mr Surace.[20] The Applicant asserts that the Material Change of Use Application (“MCU Application”) was to convert the scheme from student accommodation to aged care accommodation and involved no change in intensity or scale of use of the premises. The Applicant says that the intensity or scale of the scheme has not changed since the MCU Application was approved in 1998.[21] The Applicant further asserts that the exclusive occupation authority is governed by the Act, not by the Integrated Planning Act.[22]
  5. I do not regard the grant of exclusive use to the Applicant of part of the common property as involving a modification or alteration to the plans the subject of the Council decision of 26 June 1998. There is nothing inconsistent or which adds to the plans attached to the Minutes of the Planning and Development (North) Committee of
    23 June 1998.[23] Those plans provide an east and south elevation of the building and more importantly also contain a floor plan of the areas. The plan particularly highlights areas which are lots and appear to be residential including the Manager’s residence. It also identifies the common property. The plan does not include, and I have not been referred to any reference on the plan, that contains the all important restriction or prohibition on the grant of exclusive possession of all or part of the common property. I do not consider that the Body Corporate’s subsequent grant of exclusive occupation is in any way an alteration or modification of the plan and does not constitute a breach of the terms of condition.
  6. Even if there was a breach of the town planning approval said to have been granted by the Council on 26 June 1998, I nevertheless, would not regard that matter as something which disentitled the Applicant to the exclusive occupation of part of the common property. These events occurred well before the Applicant took an assignment of the rights and obligations under the Resident Manager’s Agreement and Letting Agreement on or about 23 September 2002. It is not suggested that the Applicant took that assignment with knowledge of any alleged breach of town planning approval granted in 1998. In those circumstances, the Applicant is entitled to invoke the rule in Turquand’s case which has been formulated in these terms in Morris v Kanssen[24] and adopted in Victorian Professional Group Management Pty Ltd v The Proprietors “Surfers Aquarius” Building Units Plan No. 3881[25]:-

“The so-called rule in Turquand’s case 6E. & B. 327 is, I think, correctly stated in Halsbury’s Laws of England, 2nd ed., vol. V., at p. 423: ‘But persons contracting with a company and dealing in good faith may assume that acts within its constitution and powers have been properly and duly performed and are not bound to enquire whether acts or internal management have been regular’.”


  1. That is, this indoor management rule has application where a person dealing in good faith with a corporation, in this instance the Body Corporate, is entitled to assume due performance by the Body Corporate of its internal rules. The Applicant is entitled to rely upon the Body Corporate prior to 23 September 2002 in resolving to properly authorise the exclusive occupation of parts of the common property.
  2. For these reasons I am not prepared to make “the presumption”[26] as sought by
    Mr Surace that the Body Corporate in these circumstances did not grant an occupation authority.

THE BODY CORPORATE HAS NO RECORDS OF THE PLAN FOR EXCLUSIVE POSSESSION

  1. The Applicant relies upon clause 3 of the Letting Agreement and the plan attached to that Letting Agreement.[27]
  2. The Applicant also relies upon a further plan sent by fax on 25 August 1998 from Short Punch & Greatorix, the Solicitors who drafted the Letting Agreement and the Resident Manager’s Agreement.[28] While this plan from those Solicitors appears to be identical with the plan which is attached to the Letting Agreement, I am not convinced I can attach much weight to the existence of that plan. There is no accompanying documentation or any appropriate evidence which would support the conclusion that the document from those Solicitors was attached to either of the Letting Agreement or the Resident Manager’s Agreement.
  3. The Applicant also relies upon the Resident Manager’s Agreement, which also has an attached plan referred to in clause 5 of that Agreement.[29]
  4. Mr Surace submits that it is implied that the Body Corporate chose not to adopt a plan or grant an exclusive use/occupation authority by reason that[30]:-
  5. While the Body Corporate records may not contain the relevant plan, the evidence before me is that the Letting Agreement and the Resident Manager’s Agreement in the possession of the Applicant have the relevant attached plan to it.[31] I propose to act on that evidence. There may well be several explanations as to why the Body Corporate records do not apparently contain a plan relating to the exclusive occupation now claimed by the Applicant. The material by Mr Surace to date does not assert that the plan attached to the Letting Agreement does not constitute the true terms of that Agreement.
  6. Secondly, Mr Surace contends that the Body Corporate has not approved the adoption of the plan or any plan of either Agreement. This does appear a curious submission as clause 3 of the Letting Agreement clearly provides for an attached plan (see also clause 5 of the Resident Manager’s Agreement). There has been no amendment or deletion of clause 3 in the Letting Agreement and both the Body Corporate and the former Letting Agent have entered into that Letting Agreement without any modification or alteration to clause 3. Similar observations can be made in respect of the Resident Manager’s Agreement. That is on the face of the Agreement, it appears that the Body Corporate and the former Letting Agent have entered into the Letting Agreement and provided in that Agreement that there would be an attached plan.
  7. Even if Mr Surace was correct that there was no appropriate resolution of the Body Corporate approving the adoption of the attached plan, nevertheless, on 23 September 2002, the Applicant took an assignment of that Letting Agreement, and the Resident Manager’s Agreement, no doubt with the consent of the Body Corporate. In Coastal Style Pty Ltd v The Proprietors “Surf Regency” Building Unit Plan No. 4246[32] in the joint judgment of the Court of Appeal after referring to an assignment to the new owners being an agreement made between the Body Corporate and the proprietor of a unit, the Court said[33]:-

“In summary, the body corporate had power to enter the Deed dated 16 January 1989 with the approval of a general meeting and, for the reasons given above, the absence of a general meeting does not preclude the respondent relying upon the Deed against the appellant in the circumstances established.”


In these circumstances, there is no evidence that the Applicant was ever placed on notice that the Body Corporate had not approved the adoption of the plan (even if this is the case) and is entitled to rely on the indoor management rule and assume the due performance of the Body Corporate’s own internal procedures and resolutions at meetings prior to 23 September 2002.[34]

  1. The Applicant disagrees with these Submissions of Mr Surace.[35] The Applicant asserts that s.139 of the Accommodation Module regulates the information required on the Body Corporate roll. I am not sure that that is the current position with the Accommodation Module as:-
  2. In any event the Applicant asserts that any oversight to attach the plan to the Letting Agreement cannot be seen to imply that the Body Corporate chose not to grant the exclusive use.[36] The Applicant asserts that the Body Corporate would have been aware of the exclusive use areas and had Gold Coast Solicitors, Short Punch & Greatorix, acting for the Body Corporate when the exclusive use areas were determined in or around 1998.[37] Significantly, however, the Applicant asserts that in 2002 when the Applicant purchased the Resident Manager and letting rights the plan detailing the exclusive occupation authority was annexed to the Management and Letting Agreements at that time. Apparently the Applicant’s Solicitors, McDonald Balanda & Associates, have retained their file. The Resident Manager’s Agreement exhibited to the Applicant’s Submissions in Reply dated 4 April 2007 has the Resident Manager’s Agreement and pursuant to clause 5 of that Agreement has an attached plan to that Agreement which sets out the same areas of exclusive use as that already referred to in the Letting Agreement.[38]
  3. On 30 March 2007 the Applicant’s Solicitors went to the premises of McDonald Balanda & Associates, who acted for the Applicant in the purchase of the Management and Letting rights for the scheme in 2002 and copied the following documents:-
  4. In summary, the only evidence before me of the area of exclusive occupation of the part of the common property is that contained in the attached plan to the Letting Agreement[42] and the Resident Manager’s Agreement[43].
  5. The third issue relied upon is the allegation that the Letting Agreement provided to
    Mr Surace does not contain an attached plan. That may well be the case. However, there is evidence before me provided by the Applicant of the Letting Agreement with an attached plan.[44] In those circumstances, I propose to act on that evidence.
  6. In a somewhat contradictory submission, in the final Submissions on behalf of
    Mr Surace delivered on 8 May 2007, it is now submitted on his behalf that the Resident Manager’s Agreement and Letting Agreement do not confer the exclusive occupation authority on the Applicant as:-

and accordingly Mr Surace submits that the purported exclusive occupation authority is void.

  1. The difficulty for Mr Surace with these Final Submissions delivered 8 May 2007 is that:-
  2. In the circumstances, I find against the Submission made by Mr Surace that the absence of a plan on the Body Corporate roll implies the Body Corporate chose not to adopt a plan or grant an exclusive use/occupation authority.[53]

ALLEGED INVALID RESOLUTION

  1. Mr Surace in his Submissions[54] asserts that a resolution by the Body Corporate granting the alleged occupation authority is invalid by virtue of s.89(4) of the Accommodation Module.
  2. He asserts that the grant of an exclusive occupation in favour of the Applicant contravenes s.89(4) of the Module for these reasons[55]:-
  3. The Applicant responds to these assertions and states that Mr Surace is not an occupier of a lot and therefore is unable to claim that s.89(4) of the Accommodation Module applies to him.[56] The Applicant further states that there is no evidence of any current or previous occupier of the lot who claims that their use and enjoyment of the common property is being unreasonably interfered with by the exclusive occupation of common areas by the Applicant.[57]
  4. Mr Surace in his Final Submissions delivered 8 May 2007 contends that the purported granting of the exclusive occupation authority for the purposes of “catering” and “laundry” under each of the Agreements is void as an occupation authority can only be granted by the Body Corporate[58]:-
  5. The first of these alleged grounds for invalidity fails. The occupation authority is granted by clause 3 of the Letting Agreement “for the purposes necessary to enable the agent to perform the agent’s obligations under this agreement ...”. A similar provision is contained in clause 5 of the Resident Manager’s Agreement. The exclusive occupation areas are directly related to the duties of the Manager and Letting Agent under the respective Agreements.
  6. The second submission of Mr Surace should be accepted in that he submits an engagement cannot be by way of a by-law. Section 76(3) of the Accommodation Module provides in those terms. However, the Applicant here does not rely upon a
    by-law. The Applicant relies upon an agreement between it and the Body Corporate. The evidence establishes that the Body Corporate had previously authorised the entry into those Agreements. The existence of each of those Agreements and the attached plan has nothing whatsoever to do with a by-law and is in no way dependent upon them for their operation or validity.
  7. The third submission is that the occupation authority is void as it can only be granted by the Body Corporate and there is no obligation or authorisation to provide laundry or catering services under the respective Agreements. With respect, that submission misses the point. The exclusive occupation areas under the Resident Manager’s Agreement are for the purpose necessary to enable the Manager to perform the Manager’s obligations under clauses 3 and 5 of the respective Agreements. That is far wider than the narrow basis on which Mr Surace relies on this submission by limiting matters to the laundry and catering services. Similarly, the exclusive occupation for the purposes of the Letting Agreement is to enable the Letting Agent to perform the Agent’s obligations under that Agreement. That is, the grant of the occupation licence is for a wide range of activities and is not limited to the carrying out of laundry or catering services as is submitted on behalf of Mr Surace. Laundry or catering services if not expressly authorised by each of the agreements with the Applicant are at least reasonably incidental to the activities of the Resident Manager and Letting Agent. It is also noted that under the By-laws, the Resident Manager is authorised by those
    By-laws, separately from the Agreements, to[59]:-

These activities are either expressly authorised by or are reasonably incidental to the By-laws and the duties under the respective Agreements.

  1. These activities of catering and also providing a letting service obviously envisaged the use of catering and laundry facilities.[60]
  2. Accordingly, the exclusive occupation authority under the Resident Manager’s Agreement and the Letting Agreement is not void for the reasons or the grounds as submitted on behalf of Mr Surace in the Final Submissions delivered 8 May 2007.
  3. The difficulty for Mr Surace in maintaining this submission is highlighted by paragraph 5.8 of his Submissions in reliance upon By-law 45.3.1 in which he asserts it provides in essence that residents of lots have an election as to whether to use the Resident Manager’s catering services and/or other services. That is, the By-laws for the Scheme specifically provide for the Resident Manager to provide a service to the lots and if lot owners do not choose to have that service provided, they can engage other outside means for the provision of those services to the lot. That is, the By-laws themselves envisage that there is to be no diminution in the use and enjoyment of a lot by the provision of the Resident Manager’s catering services. Further, I do not regard the existence of the exclusive occupation of the common property as being an interference with the lot owner’s or occupier’s use and enjoyment of a lot and the common property. Clearly the lots in this scheme are for residential purposes, but do not include kitchen and laundry facilities. That is, the use of the lot is limited to those activities which do not include cooking and general washing and cleaning. Those activities can nevertheless be substituted by the owner or occupier of a lot and are not interfered with by the Resident Manager and Letting Agent having exclusive occupation of those additional features of kitchen and laundry facilities which are not part of a lot.
  4. In those circumstances, I do not accept the submission of Mr Surace that the exclusive possession interferes to an unreasonable extent with the use and enjoyment of lots and the common property.[61] I also reject the submission that it is to be inferred that if owners or occupiers do not make an election to use the Resident Manager’s services, they will then have access to the common property to undertake those services. Owners and occupiers can make an “election” whether to use the services from the common property or engage services from outside of the Body Corporate. That is, if they do not accept the Resident Manager’s catering services, they are free to use other services which do not involve the use of the common property. The use of the common property for “other services” is prohibited by clause 4 of the Letting Agreement[62] and by the By-laws of the Body Corporate.[63]
  5. I do not accept that the grant by the Body Corporate of the exclusive occupation of part of the common property is contrary to s.89(4) of the Accommodation Module. Further, I also reject the submission of Mr Surace[64] that a presumption must be made that the Body Corporate did not adopt the Applicant’s alleged occupation authority as any resolution to that effect would have been invalid and contrary to the By-laws. The basis of this objection to the validity or operation of the exclusive occupation of part of the common property is not made out. Additionally, there is no evidence that within the relevant time limits that an application was made to set-aside or declare void any resolution of the Body Corporate to grant the exclusive occupation rights.[65]

INTERFERENCE WITH MR SURACE’S RIGHT TO APPOINT AN INDEPENDENT LETTING AGENT

  1. Mr Surace in his Submissions[66] asserts that the exclusive occupation authority is contrary to:-
  2. Clause 2(b) and (c) are set out in Mr Surace’s Submissions and it is not necessary to repeat those clauses in these Reasons. A breach of clause 2(b) and (c) is said to be a telephone conversation which Ms Rita Commisso had with Patricia Evatt on some unspecified date prior to Patricia Evatt accepting Mr Surace’s offer to act as Letting Agent. In effect that conversation asserts a statement by Rita Commisso that Patricia Evatt and any other outside real estate agents will not have access to the kitchen or laundry in the common area of the Body Corporate’s scheme.
  3. The Applicant disagrees that with the Respondent’s Submissions.[67] That disagreement is based on the following:-
  4. I do not regard that statement referred to by Patricia Evatt in her discussions with
    Rita Commisso as a breach of either clause 2(b) or (c) of the Letting Agreement. Clearly, the evidence establishes that Mr Surace, or indeed any other owner, can appoint an outside agent other than the Applicant for the purposes of having an occupier of a lot in the scheme. This right is acknowledged by the Applicant in clause 2(b) of the Letting Agreement. The words in that Agreement which provide that the Applicant “will not hinder any person so engaged” relates to the function of letting of the lot including, collection of rent from the occupier, inspection of the lot and other activities performed by that outside letting agent. None of these activities are hindered by the Applicant in its exclusive possession of part of the common property in the scheme. Further, By-law 45.3.1 relied on by Mr Surace[70] provides for residents of lots to then elect to whether they want to use the Resident Manager’s catering services and/or other services. Clearly it is up to the resident of a lot to decide whether to use the onsite catering services provided by the Applicant or to engage others to provide those catering services from outside of the Body Corporate. The operation of the Applicant in those circumstances in no way hinders either the resident or the letting agent engaged by the owner of the lot. In those circumstances there is no breach of clause 2(b) of the Letting Agreement. Similarly, there is no breach of clause 2(c) as the By-laws on which Mr Surace relies[71] clearly gives a resident the option of using the onsite catering services or engaging outside catering services.
  5. The grant of the exclusive occupation of the kitchen and laundry facilities on the common property is clearly intended to be additional facilities to those provided for by the Resident Manager’s unit. By-law 45.4 relied upon by Mr Surace[72] provides for the activities, that can be undertaken in the Resident Manager’s unit. Normally the activities in lots is restricted to residential purposes but in this case the Resident Manager can use its lot in accordance with the authorisation in By-law 45.4. That
    By-law lacks the all important prohibition which Mr Surace seems to imply or infer from his Submissions to the effect that catering can only be undertaken in the Resident Manager’s unit. By-law 45.4 does not say that, rather, it only authorises an activity in the Resident Manager’s unit which otherwise would not be permissible. By-law 45.4 has no operation over that part of the common property in which the kitchen is located. For these reasons, there is no breach of By-law 45.4 and the Resident Manager, or more importantly in this case the Letting Agent, can carry out catering facilities in the common area designated by the kitchen in the complex.
  6. In the final Submissions of Mr Surace[73], issue is taken with whether or not there is interference to an unreasonable extent with lots owned by Mr Surace. The Applicant sets out in its Submissions a number of facts why it asserts that there is no interference to an unreasonable extent.[74] On behalf of Mr Surace it is submitted that the proper test for unreasonable interference is not the subjective complaints of occupiers, but whether on an objective standing the use of the kitchen facilities is unreasonable. In support of that submission a number of matters are then set out in his Submissions.[75] By-law 45.5 restricts or prohibits the Body Corporate from allowing any other person to use any part of the lots or common property as specified in an agreement with the Resident Manager; nor will it allow any person other than the Resident Manager, to provide from any part of the lots or common property matters specified in the Agreement with the Resident Manager; and will not allow any person in its employ to carry on the business of Resident Manager of lots in the common property specified in the Resident Manager’s Agreement.[76] These By-laws control not only lot owners but also occupiers. The clear intention of the By-laws is that the Applicant will provide from the kitchen facilities on the common property meals for occupiers who wish to use the service and in the event that they do not do so, there is no authorisation for those occupiers to themselves use the kitchen facilities. They are permitted to make other arrangements as they so wish. I do not regard the use of kitchen facilities and other areas of the common property as being an interference with the rights of enjoyment by lot owners and occupiers of their lots when considered in the context of the election to use outside service contractors, the By-laws, Resident Manager’s Agreement, Letting Agreement and the attached plans to those Agreements.
  7. In these circumstances, the Applicant can state a declared intention not to allow occupiers the use of the kitchen or any of the other facilities which are on the attached plan to the Resident Manager’s Agreement and the Letting Agreement. In the circumstances, I do not see that it is necessary to resolve any of the credibility issues relating to the disputed conversations between Pat Keen of Raine & Horne and
    Rita Commisso. Also, in the circumstances that the display of a sign outside the kitchen facilities excluding entry by any party other than the Applicant and her staff, on the evidence provided by the parties in this Adjudication to date, does not infringe the
    By-laws or any other provision in the Act or the Module.[77]
  8. For these reasons, I conclude that there is no breach of clause 2(b) and/or (c) of the Letting Agreement. The exclusive occupation of the common property provided by clause 3 of the Letting Agreement[78] is not contrary to By-law 45.4 and does not operate so as to prevent the Applicant from undertaking catering services from the kitchen area of the common property.

IS THE ASSIGNMENT OF THE AGREEMENTS TO THE APPLICANT OF ANY LEGAL EFFECT?

  1. In the Final Submissions[79] delivered on behalf of Mr Surace it is submitted that the assignment of the Resident Manager’s Agreement and Letting Agreement to the Applicant is of no effect.
  2. The grounds of that submission are that the Committee resolution to approve the assignment was void as the voting members of the Committee were the vendors for the sale of the rights and obligations under both of those Agreements to the Applicant. It is submitted on behalf of Mr Surace that[80]:-
  3. The evidence is that there was a “resolution passed outside a Committee meeting” for the Body Corporate on 9 May 2002.[81] That motion resolved to consent to the assignment of both Agreements from Mr and Mrs Dalziel to Rita Commisso Enterprises Pty Ltd. The evidence also shows that the motion was carried by two votes with no votes against the motion and no votes abstaining from the motion. If it is the case that the persons voting for the motion were Mr and Mrs Dalziel, which the evidence does not establish so far, then as is submitted on behalf of Mr Surace they would be ineligible to vote by reason of s.32(2) of the Accommodation Module.
  4. The difficulty with the Submissions of Mr Surace that the Committee resolution of
    9 May 2002[82] was void is that there is no evidence of compliance with s.242 of the Act. That is, on or before 9 August 2002 an Application could have been made for an Order declaring that the motion of 9 May 2002 was void. On the evidence before me no such Application was made and the time limit for challenging that motion has now expired. Further, no Application is made to me for waiving compliance with the time limit in s.242 and no evidence is adduced of any “good reason” as provided for in s.242(3)(b) of the Act. Mr Surace has not exercised his rights under the Act for a Declaration declaring the resolution of the Committee to approve the assignment on 9 May 2002, and accordingly, I do not propose in these circumstances to proceed on the basis that the motion is void.
  5. However, it is not sufficient for Mr Surace in these circumstances to prove that the assignment of both Agreements to the Applicant is of no effect. The Applicant was not at that time a lot owner in the scheme. It was a stranger to the scheme and had no working knowledge of the day to day activities of the scheme. It appears at that stage that of the six lots there were only two owners Mr and Mrs Dalziel and Mr Surace. However, nothing has been provided in the Submissions on behalf of Mr Surace to indicate that the Applicant had any knowledge of any purported invalidity of any resolution of the Body Corporate to consent to the assignment. The Applicant is entitled to rely upon the “indoor management rule” or the “rule in Turquand’s case” and assume due performance by the Body Corporate of its own internal rules relating to all relevant actions leading up to the time when the Applicant settled on the purchase of the rights and obligations in both Agreements.[83]
  6. In the circumstances, as the Applicant’s took the management and letting rights with no notice of any alleged invalidity of the assignment of both Agreements, they are not “tainted” by any alleged invalidity and are entitled to assume that the Body Corporate has properly passed all resolutions and properly entered into the Agreements which were the subject of the assignment. For these Reasons I do not accept the Submissions on behalf of Mr Surace that the assignment of the Resident Manager’s Agreement and the Letting Agreement to the Applicant is of no effect.

MOTION 4 OF THE PROPOSED EGM

  1. The Applicant seeks an Order that the Body Corporate is prohibited from voting in respect of motion 4 at a proposed Extraordinary General Meeting (“EGM”).
  2. On 28 November 2006 Mr Surace’s Solicitors wrote to the Body Corporate Manager requesting an Extraordinary General Meeting be called to consider two (2) motions set out in that letter.[84]
  3. The Applicant asserts that on 1 February (presumably 2007) Mr Surace called an EGM for the Body Corporate seeking the service of Remedial Action Notices upon the Applicant, alleging as Motion 4[85]:-

“You have interfered unreasonably with the use and enjoyment of a lot included in the scheme in breach of the code of conduct by not allowing lot owners access to the kitchen and laundry comprising part of the common property and have behaved in a way that unreasonably affects the lot owner’s lawful use and enjoyment of a lot or common property ... .”


  1. I find the Notice of the EGM sent to lot owners confusing. Firstly, the passage quoted above by the Applicant’s in their Submissions as motion 4 is a quote from each of the two Remedial Action Notices attached to the Committee’s explanatory material in the Notice of Meeting. Secondly, the quote is not set out as motion 4 in the Notice of Meeting as evidenced at Exhibit “T” to the Application. Thirdly, the Notice of Meeting (on page 1 of Exhibit “T”) says that the EGM is being called to consider “the three motions” supplied by Mr Dominic Surace and in the Agenda provides for four motions.
  2. On the second page of Exhibit “T” it sets out that there are four motions to be considered, with the additional motion apparently being the first motion which is confirmation of Minutes of the last General Meeting.
  3. Fourthly, there is no voting of paper included in Exhibit “T” and the only explanation of the motions which appear is contained in the Notice of Meeting is that which is set out in the document headed “Committee Explanatory Material”. That document sets out motions 1, 2 and 3 but does not include, or the relevant page is missing from the Exhibit, which sets out motion 4.
  4. In the circumstances, the only evidence before me as to what are the terms of motion 4 is that Remedial Action Notices be served on Rita Commisso Enterprises Pty Ltd in relation to the Management and Letting Agreements.[86] These Notices are the Remedial Action Notices attached to the Notice of Meeting and which it is intended the Body Corporate is to resolve, for or against, the giving of those Notices to Rita Commisso Enterprises Pty Ltd.
  5. Further, Mr Surace in his Submissions disputes the allegation that the Body Corporate Manager has requested further information from Mr Surace apparently about these motions.[87]
  6. I have already granted an Interim Order on 22 February 2007 restraining the Body Corporate, pending the resolution of this Application, from voting on motion 4 at the forthcoming EGM or adjourned date for that meeting.[88] The power to grant the injunction, or an Order to like effect, under the Act is set out in s.276(1) and particularly at s.276(2) of the Act. An injunction restraining the Body Corporate is in effect an order in terms of s.276(2) of the Act. Each Remedial Action Notice attached to the Notice of Meeting alleges a breach of the relevant Code of Conduct but incorrectly identifies the Code as being in Schedule 3 of the Accommodation Module. The Body Corporate Manager’s Code of Conduct is in Schedule 2 to the Act and the Letting Agents Code of Conduct is in Schedule 3 to the Act. Putting aside that misdescription, the details of conduct on which each Remedial Action Notice relies is the allegation that the Applicant has[89]:-

“Interfered unreasonably with the use or enjoyment of a lot included in the scheme in bread of the Code of Conduct by not allowing lot owners access to the kitchen and laundry comprising part of the common property and have behaved in a way that unreasonably affects lot owners’ lawful use and enjoyment of a lot or common property.”


  1. The above description relating to owners’ access to the kitchen and laundry, or rather the lack of owners’ access as a consequence of the occupation authority, has already been discussed fully in these Reasons for Decision. Based on these Reasons for Decision there is obviously no basis for a breach of the relevant Code of Conduct in respect of alleged owners’ access to the kitchen and laundry.
  2. What is not particularised in each Remedial Action Notice is the additional allegation that the Applicant has:-

“behaved in a way that unreasonably affects lot owners’ lawful use and enjoyment of a lot or common property.”


What is not known is whether that is repetitive of the general allegation of lot owners failing to gain access to the kitchen and laundry or whether or not it comprises some other conduct which the notice has yet to detail. I am uncertain what is the behaviour referred to in the Notice. In that case, the Remedial Action Notice could arguably be, although I do not decide that point, an invalid Notice (Clarke v Japan Machines (Australia) Pty Ltd[90]).

  1. In any event, at least part of the details of the grounds on which each Remedial Action Notice is given is not, for the reasons set out in this decision, a valid basis for asserting that the Applicant has interfered unreasonably with the use and enjoyment of a lot by not allowing lot owners access to the kitchen and the laundry comprising part of the common property. If the Body Corporate has other grounds on which it wishes to proceed, then the Remedial Action Notice in respect of both Agreements should be redrawn to set out reliance upon those other grounds. However, the current Remedial Action Notices are in terms which should prohibit the Body Corporate or the Committee, as the case may be, from relying on and voting on a motion to serve the Remedial Action Notices attached to the Notice of the EGM to lot owners on 23 February 2007 or any other adjourned date. The balance of convenience favours the Applicant and the proposed motions if passed at an EGM would interfere with the rights of the Applicant.
  2. For these reasons, I propose to grant an injunction restraining the Body Corporate in terms of the Orders sought by the Applicant pursuant to s.276(2) of the Act.

COSTS OF THE ADJUDICATION (S.280)

  1. On 21 February 2007 the Commissioner appointed me as a Specialist Adjudicator for the purposes of this dispute pursuant to s.265 of the Act.
  2. The general rule as provided by s.280 of the Act is that in these circumstances, the Applicant is responsible for the costs of the Adjudication, unless the Adjudicator otherwise orders.
  3. The issue arises whether the Applicant should pay the costs of the Adjudication or whether some other form of Order should, in the circumstances be made.
  4. None of the parties, including the Body Corporate, have to date had an opportunity to make Submissions about costs pursuant to s.280 of the Act. Accordingly, I propose in the Orders which are delivered with these Reasons, to give those parties, and the Body Corporate, if it is so advised, a period of fourteen (14) days in which to make any further Submissions they may wish as to whether the general rule in s.280 should apply or whether or not I should order some other person or party to be responsible for the costs of the Adjudication.

ORDERS

  1. For the reasons set out above I propose to make the following Orders to resolve this dispute:-

permits the Applicant to exclude lot owners and/or occupiers from the areas specified in the exclusive occupation authority namely the kitchen and hallway, office, laundry and store, linen room and car bay;

(c) The Body Corporate is prohibited by clause 45.5 of its By-laws from authorising anyone other than the Applicant to prepare meals for or do laundry for, the occupiers or any other lot owner;
(d) The Body Corporate is prohibited pursuant to s.276(2) and is thereby restrained from putting to lot owners for the purposes of a vote motion 4 of the Agenda contained in the Notice of Meeting sent to lot owners on 1 February for an Extraordinary General Meeting to be held at the office of the Body Corporate Manager, or such other venue as it may decide, on 23 February 2007 or on any subsequent or adjourned date of the meeting, and which Notice of Meeting is Exhibit “T” to the Application of the Applicant dated 6 February 2007;
(e) The Applicant, the Respondent and the Body Corporate deliver to me and to the other parties to this dispute, their Submissions, if any, in respect of the costs of the Adjudication referred to in s.280 of the Body Corporate and Community Management Act 1967 by 4:00 p.m. on Friday, 29 June 2007.

Dated: 13 June 2007


_____________________________
Christopher John Carrigan
Specialist Adjudicator

SCHEDULE “A”


Applicant’s material:-


(a) Application and Annexures 06.02.07


(b) Applicant’s Response 05.04.07


(c) Additional Submissions 12.04.07


(d) Letter from Carolyn Sargeant 15.05.07


SCHEDULE “B”


Respondent’s material:-


(a) Submissions 22.02.07


(b) Submissions 21.03.07


(c) Statement of Angus Carlyle Gordon 21.03.07


(d) Statement of Patricia Evatt 21.03.07


(e) Statement of Dominic Surace 23.03.07


(f) Final Submissions 08.05.07


(g) Statement of Angus Carlyle Gordon 16.05.07


BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997


APPLICATION NO: 0115A-2007



APPLICANT: RITA COMMISSO ENTERPRISES PTY LTD
AND

RESPONDENT: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755
AND

RESPONDENT: DOMINIC SURACE

ORDER

Before: Specialist Adjudicator Christopher Carrigan

Date: 27 November 2007

Initiating Document: Application filed 6 February 2007 and Respondent’s Application made 28 June 2007

I ORDER THAT:
  1. The Respondent’s Application made on 28 June 2007, pursuant to s.291 of the Body Corporate and Community Management Act 1997 for a stay of the costs orders is dismissed.
  2. The Respondent Body Corporate for “Acacia Lodge Hostel” CTS 25755 is to pay on or before 4:00 p.m. on 7 January 2008, the costs of the Adjudication pursuant to s.280 of the Body Corporate and Community Management Act 1997 fixed in the sum of $13,848.68 to the Adjudicator in accordance with the tax invoice dated 27 November 2007 delivered to the Respondent Body Corporate Manager at Sargeant Strata of 5A Ashmore Professional Centre, 115 Currumburra Road, Ashmore, Gold Coast in the State of Queensland.
  3. Liberty to all parties to apply on five (5) days’ written notice.

C.J. CARRIGAN
Specialist Adjudicator

BETWEEN:

Applicant: RITA COMMISSO ENTERPRISES PTY LTD

AND:

Respondent: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755

AND:

Respondent: DOMINIC SURACE


Dispute Resolution Application Ref No 0115A-2007


TABLE OF CONTENTS

BETWEEN:

Applicant: RITA COMMISSO ENTERPRISES PTY LTD

AND:

Respondent: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755

AND:

Respondent: DOMINIC SURACE


Dispute Resolution Application Ref No 0115A-2007


REASONS FOR DECISION ON APPLICATION FOR A STAY AND
FOR COSTS PURSUANT TO SECTION 280 OF THE ACT


INTRODUCTION

  1. On 13 June 2007 I made Orders with respect to the dispute between these parties and directed that the Applicant, the Respondent and the Body Corporate deliver their Submissions, if any, in respect of the costs of that Adjudication by 4:00 p.m. on Friday, 29 June 2007.
  2. On 28 June 2007 the Respondent’s Solicitors delivered by email Submissions on costs and also applied for a stay of the costs orders pending the outcome of an appeal.
  3. On Friday, 29 June 2007 the Applicant delivered its Submissions on costs and attached Exhibit 1 to those Submissions being a facsimile dated 12 March 2007 from the Applicant’s Solicitors to the Respondent’s Solicitors. The Applicant was unaware until about 14 November 2007, that the Respondent had applied for an order for a stay of the costs orders. The Applicant then made further submissions on 14 November 2007.
  4. The Body Corporate did not deliver any Submissions on costs. This is hardly surprising as the Applicant and the Respondent are the only two lot holders in the scheme between whom this dispute had been generated.
  5. As a result of those Submissions, it is necessary for me to now decide:-

APPLICATION FOR A STAY OF THE COSTS ORDER?

  1. The Respondent applies for a stay of the costs Order pursuant to s.291 of the
    Body Corporate and Community Management Act 1997 (“the Act”).[91]
  2. Section 291 gives an Adjudicator or the District Court the power to stay an Order appealed against to secure the effectiveness of the Appeal. This power under s.291 is to be exercised on a discretionary basis. As the Applicant points out in its submissions, s.291 now provides as follows:-

“The appeal body may stay the order appealed against to secure the effectiveness of the appeal.”


This provision came into force on 1 July 2007, as a result of the repeal of s.290 and s.291 by the 2007 Amendments to the Act. The provision in force prior to 1 July 2007, provided for the Adjudicator or the District Court to grant the stay. The Respondent’s application was made on 28 June 2007, and accordingly the provisions of the Act in force prior to 1 July 2007, will be applied by me. That is the Adjudicator or the District Court had the power prior to 1 July 2007, to grant a stay.

  1. However, the Respondent does not make out an appropriate case for the stay as Section 291 permits the stay of “the order appealed against”. There has been no Order made to date relating to costs. This is a submission made by the Applicant on
    14 November 2007. I am in agreement with the submission. The only Order made has been with respect to the principal dispute between the parties. As no costs Order has yet been made, I do not regard s.291 as having any application to this part of the proceedings. The costs under s.280 of the Act are now under consideration.
  2. Secondly, the power under s.291 is to grant a stay “to secure the effectiveness of the appeal”. Staying a “costs order” does not, on the limited material provided to date by the Respondent, demonstrate that the effectiveness of any Appeal by the Respondent to the District Court would be impaired in its effectiveness in any way by the costs Order or in this case the making of the costs Order.
  3. Thirdly, several months have now elapsed since the Orders were made in respect of the principal dispute between the parties. In that time the Respondent has not articulated in his Submissions of 28 June 2007 or by subsequent material why he should have a stay of any “costs order” as sought in those Submissions.[92] The Respondent does not explain on what basis any stay should be granted other than that he is filing an Appeal against the decision made in the Orders of 13 June 2007. The Respondent has not in these Submissions, or subsequently, delivered any further material setting out in any way why a costs Order should be stayed to secure the effectiveness of the proposed Appeal. The Respondent has put forward no basis on which the effectiveness of the Appeal would be impaired by a costs Order, or this proposed Order.
  4. The Applicant in its submissions of 14 November 2007, asserts no steps have been undertaken by the Respondent to prosecute his Appeal since the filing of the Notice of Appeal on 25 July 2007.
  5. The Applicant further submits no outline of argument has been filed in the District Court and no explanation has been given for the Respondent’s failure to prosecute the Appeal. None of these submissions have been contradicted by the Respondent.
  6. I am not persuaded that there is a valid reason to exercise the power under s.291 of the Act, in these circumstances, for the grant of a stay of the costs Order. Secondly, even if there were, this is no discretionary factors demonstrated by the Respondent for the grant of such a stay. In these circumstances, I refuse the Respondent’s Application for a stay of the costs Order as articulated in the Respondent’s Submissions dated 28 June 2007. The Application for a stay of any costs Order pending the outcome of the Appeal is dismissed.

COSTS AND SECTION 280 OF THE ACT

  1. The Applicant in its Submissions dated 29 June 2007 seeks an Order that the Respondent pay all costs of the Specialist Adjudication. The Applicant’s Solicitors refer to the decision in Woodrange Pty Ltd v Le Grande Broadwater Body Corporate[93] in which His Honour McGill D.C.J. confirmed that an Adjudicator’s power to award costs under s.280 of the Act is limited to the Adjudicator’s costs only and does not include legal costs incurred by either party in relation to the Application.
  2. Accordingly, the Applicant seeks an Order that the Respondent pay the Adjudicator’s costs of the proceedings.
  3. The Respondent delivered concise Submissions on the Adjudicator’s costs on 28 June 2007.
  4. The Body Corporate, for the reasons already outlined earlier, has not provided any Submissions with respect to costs.

THE APPLICANT’S SUBMISSIONS

  1. The Applicant’s Solicitors have delivered detailed and extensive Submissions seeking that the Respondent pay all the costs of the Specialist Adjudication. I do not propose to set out in detail those Submissions but refer to several aspects in those Submissions.
  2. The Applicant provides an interpretation of s.280 by reference to previous Adjudicators’ decisions in “Points North”[94] and in “Botanical Park”[95]. The Applicant then submits that the general principle that the Applicant pays the full costs of the Adjudication can be departed from “as long as there is sufficient reason to do so”.[96]
  3. Section 280 only applies to Applications to resolve a dispute that are dealt with by a Specialist Adjudicator mentioned in s.265. In those cases, the Applicant is responsible for the costs of the Adjudication unless the Adjudicator otherwise orders.
  4. The Applicant refers to several decisions relating to the apportionment of costs of the Adjudication.[97] However, it is the submission of the Applicant that the Order of 13 June 2007 ruled in favour of the Applicant and agreed with the assertion that Applicant’s exclusive occupation authority was legitimate.[98] It is asserted that the Respondent did not achieve success on any of the arguments or the claim.[99] The Applicant then submits that there was no relevant fault on the part of the Applicant in this matter that would require splitting of the costs between the parties.[100]
  5. The Applicant submits that it should not pay any of the costs of the Adjudication which should be borne solely by the Respondent.
  6. However, the Applicant’s Submissions proceed further and examine relevant matters for consideration and refer to an Adjudicator’s decision in “Harbourside Resort”[101]. The Applicant examines matters leading up to the Adjudication which was largely contained in correspondence between the parties[102], the conduct of the parties in relation to the Adjudication[103] and finally the success or otherwise of each party in attaining the relief sought.[104]
  7. The Applicant concludes its Submissions by the submission that unless it obtains an Order that the Respondent pay the costs of the Adjudication the decision would send a message that wealthy people with baseless claims can seek to financially ruin another party. While in certain factual circumstances that may be a very relevant submission, here, none of the parties have sought to identify their relative financial strength or weakness, as the case may be, other than that the Applicant and the Respondent are each the owners of an identical number of lots in the scheme. They are the only lot owners.

THE RESPONDENT’S SUBMISSIONS

  1. As previously stated, the Respondent’s Submissions of 28 June 2007 are concise.
  2. The Respondent points out that prima facie the Applicant is responsible for the costs of the Adjudication. He asserts there must be some reason for the Adjudicator to exercise their discretion to otherwise order.
  3. The Respondent relies on the allegation that the Applicant has been aware that the Body Corporate records do not contain a copy of the occupation authorities and has not prior to this Application made any attempt to rectify the Resident Manager’s Agreement or the Letting Agreement by bringing a motion to the Body Corporate for their rectification. I am not sure of the basis on which this assertion is made. No basis is laid for alleging the onus on the Applicant to perform what seems to me to be a Body Corporate responsibility.
  4. If the Body Corporate records are not complete, that primarily is the responsibility of the Body Corporate, particularly where it has entered into a Resident Manager’s Agreement and a Letting Agreement by which it expressly provided the right to exclusive occupation of the area of common property which is the subject of this dispute.[105] It rather seems, as a result of this submission, that had the Body Corporate kept proper records this dispute may very well not have eventuated, or if it did, may well have been brought to an abrupt end prior to an Application to the Commissioner to resolve the dispute.
  5. The Respondent asserts a breach of the Code of Conduct for Body Corporate Managers in not rectifying or keeping the Body Corporate records in proper order. Leaving aside for the moment whether there was any relevant Code of Conduct for Body Corporate Managers, this issue was not the subject of the Application to the Commissioner by either party and there has been no investigation of that allegation now raised by the Respondent. Further, there has been no determination in respect of that allegation. The Body Corporate has not been put on notice that any such allegation requires investigation and it accordingly has not been addressed in these proceedings. I do not propose to make any finding in the Application for costs on this issue.
  6. The Respondent also makes submissions that the power to deal with costs under s.280 does not involve orders for one party to pay the legal costs of another party as set out in Woodrange Pty Ltd v Le Grange Broadwater Body Corporate[106].

THE DECISION

  1. Section 280 of the Act applies to Applications dealt with by Specialist Adjudicators pursuant to an appointment under s.265 of the Act made by the Commissioner.
  2. On 21 February 2007 the Commissioner for Body Corporate and Community Management appointed me the Specialist Adjudicator in respect of this dispute between the parties. In the letter of appointment the Commissioner refers to s.265 and to the definition of a “contractual matter” and says:-

“Accordingly, it has been determined that the attached Application is one that must be determined by Specialist Adjudication.”


  1. It is clear that the Commissioner’s appointment took effect pursuant to s.265. Further, the Commissioner noted that s.280 of the Act, in regard to the costs of the Specialist Adjudication under s.265, refers to the prima facie obligation of the Applicant to be responsible for costs of the Adjudication. This is a further reason indicating to me that my appointment was made pursuant to s.265 of the Act.
  2. Accordingly, s.280 applies to this Application.
  3. The factual background to this dispute has already been set out in the Reasons for Decision dated 13 June 2007. One particular relevant matter here is that the Applicant is the proprietor of Lots 1, 4 and 5 while the Respondent, Dominic Surace, is the proprietor of Lots 2, 3 and 6. They are the only lot owners in the scheme.
  4. The dispute dealt with by the Application appears to have commenced as early as
    30 August 2006. It has then been the subject of significant correspondence between the Solicitors of the Applicant and the Respondent. The dispute gave rise to a number of issues which are summarised in the Reasons for Decision as follows:-

The Reasons for Decision set out the discussion with respect to each of those issues. The Applicant succeeded on these issues.

  1. While the Applicant has been successful in seeking the Orders sought in the Application, the Applicant’s Solicitors in their Outline of Submissions rely upon the decision in “Points North”[107] where it stated that the general rule that “costs follow the event” had no application in that Adjudication.
  2. In this case the Applicant and the Respondent as the two lot owners were arguing about a matter which was precipitated by the Body Corporate records not containing the relevant plan.[108] The Applicant had in its possession a relevant plan attached to the Letting Agreement.[109] Various arguments were then developed on the scenario that the Body Corporate records did not contain the relevant plan.
  3. In these circumstances, I think that based upon the lack of the Body Corporate’s records, I think there is a proper basis for relieving the Applicant of some part of the responsibility imposed by s.280(2) that the Applicant is responsible for the costs of the Adjudication. The Applicant should not be responsible for all of the costs of the Adjudication.
  4. The issue then is to what extent should the Applicant be relieved of the costs of the Adjudication and who should bear any of the costs.
  5. The Respondent has also pursued other issues in the Application that have been unsuccessful. That is there are other issues raised separate from the lack of records kept by the Body Corporate. Some of these issues were maintained even though there was strong evidence to the contrary and which would have been apparent to the Respondent prior to the Application being made to the Commissioner. For instance, both the Resident Manager’s Agreement by clause 5 and the Letting Agreement by clause 3 each provided that the Body Corporate had granted to the Applicant the right of exclusive occupation of areas of common property. The Respondent, although denying the existence of alleged occupation authorities, sought to assert that the resolution by the Body Corporate granting the alleged occupation authority was invalid.[110] Other examples exist in the Reasons for Decision demonstrating that the Respondent generated additional issues which added to the cost of the Adjudication and required a more detailed examination of the Applicant’s position. In these circumstances, I think that the Respondent should bear some of the costs of the Adjudication.
  6. As previously stated, the Applicant and the Respondent are the only lot holders in the scheme and each owns three of the six lots. The Respondent apparently has a greater lot entitlement than the Applicant. The Body Corporate records, have been a significant contributor to the source of the dispute set out in the Application. The resolution of that dispute has, clarified a number of Body Corporate issues not only relating to its records, but also as to previous meetings, resolutions and assignment of the relevant Agreements. The overall position is that the decision in this dispute has for the purposes of the Body Corporate clarified issues dealing with a number of relevant matters in the preceding years. The overall decision is of the benefit to the Body Corporate as a whole and also to the parties. The Body Corporate should bear some of the costs of the Adjudication.
  7. The Applicant should be relieved of some of the responsibility imposed by s.280(2) of the Act for the costs of the Adjudication. It would be unfair to let the general rule apply so as to require the Applicant to pay all of the costs of the Adjudication. This is an appropriate case in which the Applicant should be relieved of paying some of the costs of the Adjudication. The Respondent should bear some of the costs of the Adjudication. Similarly, the Body Corporate should contribute to the costs of the Adjudication. The Applicant and the Respondent are the only members of the Body Corporate. Accordingly, the purpose in directing costs to the Applicant, the Respondent and the Body Corporate, is best achieved if an Order is made that the Body Corporate pay the costs of the Adjudication.
  8. In the circumstances, I think it appropriate that I make an Order pursuant to s.280 of the Body Corporate and Community Management Act 1997 that the Body Corporate pay the costs of the Adjudication fixed in the sum in accordance with a tax invoice to be sent by me to the Body Corporate Manager.

ORDERS

  1. Accordingly I order that:-

Dated: 27 November 2007


_____________________________
Christopher John Carrigan


[1] Exhibit “D” to the Application

[2] Exhibit “B” to the Application

[3] Exhibit “B” to the Application

[4] See paragraph 12 of the Application.

[5] See the letter (dated 30 August 2006) at Exhibit “D” to the Application.

[6] See Applicant’s Submissions in Reply dated 4 April 2007, at para. 6.3 and Exhibit “M”.

[7] See paragraph 14 of the Application.

[8] See paragraph 17 of the Application.

[9] This letter is at Exhibit “D” to the Application.

[10] That exchange of correspondence is at Exhibit “D” to Exhibit “T” to the Application and appears to cover the period from August/December 2005 to 1 February 2007.

[11] On 22 February 2007, Carolyn Sargeant, the Body Corporate Manager for the Scheme advised that the Application had been served on the Body Corporate and the Committee consists of Rita Commisso and Dominic Surace and the Committee is “deadlocked” and has not passed any resolutions in relation to this dispute. Accordingly, the Body Corporate would not be taking part in the hearing of the Application. See email to and from Carolyn Sargeant and to the other parties dated 22 February 2007, in the correspondence section of the Adjudicator’s papers.

[12] A list of the Applicant’s Submissions is at Schedule “A” to these Reasons.

[13] s.269(2) of the Act

[14] A list of the Respondent’s Submissions is at Schedule “B” to these Reasons.

[15] See Mr Surace’s Submissions of 21 March 2007 paragraph 3.6 et seq.

[16] Para. 13 of the Submissions.

[17] Para. 4 of the Submissions dated 21 March 2007.

[18] These Minutes are Exhibit “ACG1” to the Affidavit of Angus Carlyle Gordon. The Minutes with page numbered 8 and 9 may well have been attached to the resolution of the Council of 26 June 1998, but the actual resolution of the Council is not included in that Exhibit.

[19] That condition is set out in para. 3.6 of his Submissions dated 21 March 2007.

[20] See para. 8 of the Applicant’s Submissions in Reply dated 4 April 2007.

[21] See para. 8.7 of the Applicant’s Submissions in Reply dated 4 April 2007.

[22] See para. 8.8 of the Applicant’s Submissions in Reply dated 4 April 2007.

[23] See Exhibit “ACG1” to the Affidavit of Angus Carlyle Gordon at pages 5 and 6 of that Exhibit.

[24] (1946) A.C. 459 at 474 per Lord Simonds

[25] (1991) 1 Qd.R. 487 at p. 495; see also Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1989-1990) 170 CLR 146.

[26] Para. 3.10 of Mr Surace’s Submissions dated 21 March 2007

[27] See Exhibit “B” to the Application.

[28] See paragraph 19 and Exhibit “C” to the Applicant’s Submissions.

[29] See this plan attached to the Resident Manager’s Agreement at Exhibit “M” to the Applicant’s Submissions dated 4 April 2007.

[30] See paras. 5.1 – 5.5 of Mr Surace’s Submissions dated 21 March 2007.

[31] See Exhibit “B” to the Application.

[32] (1995) 1 Qd.R. 132

[33] at p. 141

[34] Morris v Kanssen supra at note 24; Victorian Professional Group Management Pty Ltd v The Proprietors “Surfers Aquarius” Building Units Plan No. 3881 supra at note 25

[35] See para. 9.2 of the Applicant’s Submissions in Reply dated 4 April 2007.

[36] See para. 9.5 of the Applicant’s Submissions in Reply dated 4 April 2007.

[37] See paras. 9.6 and 9.7 of the Applicant’s Submissions in Reply dated 4 April 2007.

[38] See the Resident Manager’s Agreement at Exhibit “M” to the Applicant’s Submissions in reply dated 4 April 2007.

[39] See paras. 1 and 2 and Exhibit “P” of the Applicant’s Additional Submissions dated 12 April 2007.

[40] See paras. 1 and 2 and Exhibit “Q” of the Applicant’s Additional Submissions dated 12 April 2007.

[41] See paras. 1 and 2 and Exhibit “R” of the Applicant’s Additional Submissions dated 12 April 2007.

[42] See Exhibit “B” to the Application.

[43] See Exhibit “M” to the Applicant’s Submissions in Reply dated 4 April 2007.

[44] See Exhibit “B” to the Application.

[45] See para. 1(a) of Mr Surace’s Final Submissions delivered 8 May 2007.

[46] See para. 1(b) of Mr Surace’s Final Submissions delivered 8 May 2007.

[47] See para. 1(c) of Mr Surace’s Final Submissions delivered 8 May 2007.

[48] See para. 1(d) of Mr Surace’s Final Submissions delivered 8 May 2007.

[49] See Exhibit “ACG1” to the Affidavit of Angus Carlyle Gordon sworn 4 May 2007.

[50] See Exhibit “ACG1” to the Affidavit of Angus Carlyle Gordon sworn 4 May 2007.

[51] See the Submissions on behalf of Mr Surace dated 16 May 2007 and at paras. 2 – 7.

[52] See Further Submissions of the Applicant dated 15 May 2007 and the attached Statement from Carolyn Sargeant.

[53] See para. 5.4 of Mr Surace’s Submissions dated 21 March 2007.

[54] See paras. 5.6 – 5.10 of the Submissions dated 21 March 2007.

[55] See para. 5.7 of the Submissions dated 21 March 2007.

[56] See para. 10.3 of the Applicant’s Submissions in Reply dated 4 April 2007.

[57] See para. 10.4 of the Applicant’s Submissions in Reply dated 4 April 2007.

[58] See para. 2 of Mr Surace’s Final Submissions delivered 8 May 2007.

[59] See By-law 45.3.1 at Exhibit “I” to the Submissions in Reply by the Applicant dated 4 April 2007.

[60] A copy of the By-laws is included in the Community Management Statement which is at Exhibit “I” to the Submissions in Reply by the Applicant dated 4 April 2007.

[61] Paras. 5.6 and 5.7 of Mr Surace’s Submissions dated 21 March 2007

[62] See Exhibit “B” to the Application.

[63] See By-law 45.

[64] Para. 5.10 of Mr Surace’s Submissions dated 21 March 2007.

[65] s.242 of the Act

[66] Paras. 5.11 – 5.14 (inclusive) of Mr Surace’s Submissions dated 21 March 2007

[67] See para. 11.2 of the Applicant’s Submissions in Reply dated 4 April 2007.

[68] See para. 12.3 of the Applicant’s Submissions in Reply dated 4 April 2007.

[69] See para. 12.4 of the Applicant’s Submissions in Reply dated 4 April 2007.

[70] Para. 5.8 of Mr Surace’s Submissions dated 21 March 2007

[71] By-law 45.3.1 referred to in para. 5.8 of Mr Surace’s Submissions dated 21 March 2007

[72] See para. 5.13 of Mr Surace’s Submissions dated 21 March 2007

[73] dated 4 May 2007

[74] See the Applicant’s Submissions dated 4 April 2007 at para. 4.3 to 4.10 inclusive.

[75] See Mr Surace’s Final Submissions delivered 8 May 2007 at page 3, paras. 1, 2 and 3.

[76] See also By-laws 45.3.1 and 45.4 for authorisation to the Resident Manager.

[77] The current By-laws do not have a specific By-law regulating “signage” on the common property.

[78] Exhibit “B” to the Application

[79] Delivered 8 May 2007, see para. 3

[80] See para. 3(a) of Mr Surace’s Final Submissions delivered 8 May 2007.

[81] See Affidavit of Angus Carlyle Gordon at Exhibit “ACG1”.

[82] See Affidavit of Angus Carlyle Gordon and Exhibit “ACG1”.

[83] Morris v Kanssen (1946) A.C. 459 at 474 per Lord Simonds; Victorian Professional Group Management Pty Ltd v The Proprietors “Surfers Aquarius” Building Units Plan No. 3881 (1991) 1 Qd.R. 487 per Connolly J. at p. 495; see also Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1989-1990) 170 CLR 146.

[84] See Exhibit “O” to the Application.

[85] See paras. 45 and 46 of the Application and Exhibit “T” of the Application.

[86] See Exhibit “T” at page 2 to the Application.

[87] Para. 40 of the Application and paras. 6 and 6.1 of Mr Surace’s Submissions dated 21 March 2007

[88] Reasons for Decision were delivered in respect of that Order and those Reasons for Decision should be read in conjunction with these Reasons.

[89] See Exhibit “T” to the Application.

[90] (1984) 1 Qd.R. 404

[91] See Respondent’s Submissions dated 28 June 2007 at paragraph 7.

[92] See paragraph 7 of the Submissions.

[93] (2004) QDC 215

[94] See paragraph 6

[95] See paragraph 7

[96] See paragraph 8

[97] See paragraphs 9 to 16

[98] See paragraph 13

[99] See paragraph 13

[100] See paragraph 14

[101] See paragraph 19

[102] See paragraphs 22 to 27 inclusive

[103] See paragraphs 28 to 37 inclusive

[104] See paragraphs 38 to 40 inclusive

[105] See clause 5 of the Resident Manager’s Agreement and clause 3 of the Letting Agreement

[106] (2004) QDC 215 at page 225

[107] See paragraph 6 of the Applicant’s Submissions on Costs

[108] See paragraph 30 of the Reasons for Decision

[109] See paragraph 30 of the Reasons for Decision and Exhibit B to the Application

[110] See paragraphs 5.6 – 5.10 of the Respondent’s Submissions dated 21 March 2007 and paragraphs 41 – 52 of the Reasons for Decision

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