M1 [2007] QBCCMCmr 59 (6 February 2007)

Last Updated: 20 February 2007

REFERENCE: 1081-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	34814
Name of Scheme:	M1
Address of Scheme:	1-7 Durporth Avenue MAROOCHYDORE QLD 4558

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

Metro Resorts Management,

I hereby order that the application for the following Interim Order Pending the final determination of this matter, Mr. Davis stand down as a member of the Committee. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1081-2006

"M1" CTS 34814

APPLICATION

The applicant is seeking the following Interim Order:

Pending the final determination of this matter, Mr. Davis stand down as a member of the Committee.

The Final Order sought is a declaration that:

1. Mr Davis has conducted a letting agent business for the Scheme while a member of the Committee in contravention of section 11(2) of the Module.
2. Mr Davis is ineligible to be on the Committee while he conducts a letting agent business for the scheme due to section 11(2) of the Module.

The applicant is the Caretaking Service Contractor and Letting Agent for the scheme pursuant to a Caretaking and Letting Agreements dated 23 December 2005.

The applicant is of the view that the Chairman of the Body Corporate Committee, Mr. Grant Davis, is conducting a letting business as defined in section 16(2) of the Act and is therefore not eligible to be a member of the committee having regard to section 11(2) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997.

THE SCHEME

M1 is a 77 lot scheme located at 1-7 Duporth Ave. Maroochydore and operating under the Body Corporate and Community Management (Accommodation Module) Regulation 1997.

BACKGROUND
The applicant states that at a committee meeting held on 4 December 2006 she informed the meeting that Mr. Davis was conducting a letting business as defined in section 16(2) of the Act and was therefore ineligible for committee membership. This allegation was denied by Mr. Davis and the position of the body corporate was confirmed in a letter from the body corporate manager for the scheme dated 5 December 2006 which states

You will be aware that Mr. Davis denied the allegation and subsequently the Body Corporate committee resolved to accept Mr. Davis’s denial of the allegation and explanation of the issues involved. Accordingly the committee further resolved not to declare Mr. Davis ineligible for committee membership as would be required under section 11(2)(c ) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997.

It is submitted that the difference of opinion as to whether Mr. Davis is conducting a letting agent business, and is therefore ineligible to be a member of the committee, evidences a dispute for the purposes of the Dispute Resolution provisions contained in Chapter 6 of the Act.

The relevant statutory provisions are set out below.

Section 11 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 provides as follows:



(1) A person is eligible to be a voting member of the committee if the person is an individual nominated for membership of the committee by a member of the body corporate (the
nominating entity) and is also--
(a) a member of the body corporate; or
(b) a person of a following category--
(i) if the nominating entity is an individual--
(A) a member of the individual’s family; or
(B) a person acting under the authority of a power of attorney given by the individual;
(ii) if the nominating entity is a corporation--a director, secretary or other nominee of the
corporation;
(iii) if the nominating entity is the body corporate for a subsidiary scheme in a layered arrangement of community titles schemes--a representative of the subsidiary scheme.
(2) However, a person who is otherwise eligible under subsection
(1) to be a voting member of the committee is not eligible to be a voting member of the committee if the person is--
(a) a body corporate manager, service contractor or letting agent; or
(b) an associate of a body corporate manager, service contractor or letting agent, other than a lot owner who is the associate of a letting agent only because the letting agent, in conducting the agent’s letting agent business, acts for the lot owner; or
(c) a person, other than a letting agent for the scheme, who conducts a letting agent business for the scheme.

Section 16(2) of the Act defines "letting agent business" and "letting agent" as follows:

(1) A person is a letting agent for a community titles scheme if the person is authorised by the body corporate to conduct a letting agent business for the scheme.
(2) A person conducts a letting agent business for a community titles scheme if the person conducts, subject to the Property Agents and Motor Dealers Act 2000, the business of acting as
the agent of owners of lots included in the scheme who choose to use the person’s services for securing, negotiating or enforcing (including collecting rents or tariffs for) leases or other occupancies of lots included in the scheme.

In support of the allegation that Mr. Davis is conducting a letting business as defined above, and therefore disqualified from committee membership under section 11(2) of the accommodation Module regulation, the following evidentiary material has been submitted:

• An application for a residential tenancy dated 21 July 2006 noting that the lessor is Graavis Property Solutions (GPS);
• ASIC search showing Graavis Property Solutions is owned by Graavis Marketing Pty. Ltd. of which Mr. Davis is the sole shareholder and director;
• Email communications which indicate that Mr. Davis, was acting on behalf of GPS;
• An advertisement for lot 1007/ 1-7 Duporth Ave. Maroochydore listed by GPS;
• The tenants of units 703 and 705 have advised the applicant that their tenancies were arranged by Mr. Davis after they responded to internet advertisements which referred to Mr Davis from GPS as the contact person;
• A search of the GPS website confirmed that a unit in the building was being let by Mr Davis of GPS.

The applicant submits that the above material demonstrates that Mr Davis is retained as an agent to secure occupancies for lot owners and is therefore not eligible to be a voting member of the committee.

SUBMISSIONS
Pursuant to section 243 of the Act, this office sought submissions in respect of the application from Mr. Davis and the committee.

The committee stated that it did not wish to make a formal submission, but confirmed its strong support for Mr. Davis.

Mr. Davis made the following submissions:

-	Graavis Property Solutions (GPS) does not conduct property management services but only conducts property sales;
-	GPS has not received any property management fees and there are no tenancy agreements in place to support the applicant’s case;
-	When M1 was first occupied in December 2005, there were 35 apartments for sale with 13 owners planning to move in and around 20 apartments available for rental;
-	he assisted the applicant with advertising apartments for lease and in cases where he sold apartments that the owners preferred to manage themselves, he assisted the owners via enquiries directed to him;
-	the application dated 21 July 2006, which referred to GPS as the "lessor" was filled in by the tenants and faxed to GPS for forwarding to the new owners to whom he had recently sold the unit. The new owners manage the unit themselves but the application was sent via GPS as the new owners did not have a fax machine. In support of the submission, Mr. Davis has forwarded Email communications with the lot owner;
-	lot 308 is listed for sale by a friend who manages the rental himself but has provided him with a key. He showed the unit to a prospective tenant as he lives in the complex while the owner lives some 30 minutes away;
-	In relation to lots 1007 and 703, he is the listing agent for the sale of the properties but also assisted the applicant by advertising that the property was available for rent and forwarding any replies to the applicant.

JURISDICTION

As this is a dispute between a lot owner and the body corporate, it is a dispute which may be resolved under the dispute resolution provisions of the Act.

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)).
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)).


DETERMINATION

At this point in time I am primarily concerned with the issue of whether an Interim Order should be granted. This involves a consideration of the matters in dispute and whether the circumstances are such as to justify urgent intervention by an adjudicator.

The primary issue for consideration in this instance is the applicant’s contention that the respondent is carrying on a "Letting Agent Business" it is firstly necessary to consider the wording of section 16 of the Act which provides as follows:

(1) A person is a letting agent for a community titles scheme if the person is authorised by the body corporate to conduct a letting agent business for the scheme.
(2) A person conducts a letting agent business for a community titles scheme if the person conducts, subject to the Property Agents and Motor Dealers Act 2000, the business of acting as
the agent of owners of lots included in the scheme who choose to use the person’s services for securing, negotiating or enforcing (including collecting rents or tariffs for) leases or other occupancies of lots included in the scheme.

It is clear that the respondent is not a "letting agent" as defined, and further, the respondent denies carrying on the business of letting agent. Rather Mr Davies claims that he has merely assisted the applicant with advertising apartments for lease and where he sold apartments that the owners preferred to manage themselves, he assisted the owners via enquiries directed to him. He states that he has not received any property management fees and there are no tenancy agreements in place to support the applicant’s case.

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to all lot owners. This is because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a reasonable period for preparation and lodgement of submissions prior to the consideration of the application. It is also relevant that generally the purpose of an interim order is simply to maintain the "status quo" of a situation, and not finally to resolve the matters in dispute.

Section 279 (1) of the Act allows an adjudicator to issue an interim order in response to an application "if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates."

I have looked carefully at the balance of convenience to the parties to this dispute if the Interim Order is granted. On one hand I note that if I were to grant the requested interim order, the body corporate committee would lose an experienced chairman and would need to appoint a new chairman. On the other hand, the material received to date does not indicate the applicant will suffer a serious detriment at this point in time so as to warrant granting of an Interim Order.
I am of the view that the nature of the matters raised are not such that they can be effectively addressed or dealt with by way of an interim order. Rather, they require full investigation, including giving all lot owners an opportunity to make submissions. Accordingly, I propose to dismiss the application for an Interim Order.

This matter will now be investigated in accordance with the usual processes undertaken by this office. Submissions will be sought from all lot owners when the applicant advises this office that his grounds are complete. A final order regarding the application will be made in due course.