Sanderling [2008] QBCCMCmr 99 (1 April 2008)

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

I hereby order that the body corporate takes independent legal advice concerning the proposal to vary or extend the existing contract which it has with resident managers Jennifer Mary Sheward and Gary John Spence (“the resident managers”) and the effect of such variation or extension on lot owners;

I further order that the body corporate shall not enter into or execute any variation or extension of the existing contract with the resident managers prior to the final determination of this application or further order of this Office;

I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

This is an application dated 7th March 2008 by Graham Caton (the Applicant) co-owner of Lot 1 in the scheme, against the body corporate (the body corporate) for an order that the body corporate refrains from signing any extension of the resident manager’s agreement until such time that independent legal advice is obtained regarding the effect of such an extension on unit owners.

“Sanderling” Community Titles Scheme 11382 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). There are 18 lots in the scheme created under a Building Unit Plan of subdivision.

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

(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)).

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 the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. 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”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore sought submissions from the body corporate committee. The committee sought additional time in which to make its submission, and on 28th March 2008, the chairperson Glenn Shillig was able to make a submission on behalf of the body corporate.

The Applicant’s case is that he is concerned about Motion 18 put to the annual general meeting (AGM) held on 23rd November 2007 with an explanatory note received with Motion 18 that the body corporate proposed to extend the resident managers’ contract for 5 years following its expiry date in October 2010, taking the term of the contract to October 2015.

He attaches a draft Deed of Variation (the Deed) drawn up in 2006 between the current resident managers and the body corporate. The Deed purports to exercise an option to extend the existing management agreement for five years, but there are no dates in the draft. Certain passages relating to the proviso in the original agreement entered into in 2000 have been deleted and initialled, although I am not advised by whom. The document has not been signed and executed.

The Applicant says that that the original agreement was entered into on 10th December 2000 and assigned to the current caretakers in 2003. An option to extend for five years from 2005 to 30th October 2010 has already been exercised. The caretakers are now seeking a further option to extend the original agreement from 2010 to 2015.

The Applicant’s objection to this is twofold. Firstly, he is of the view that the original agreement, already extended, did not provide for a further term after the first option was exercised in 2005. Secondly, he says that that the body corporate passed a resolution at the annual general meeting in 2003 that on the expiry of the current management agreement “in approximately seven years” the body corporate would “review the situation and if suitable replace the current management arrangements with a more appropriate and economical arrangement.”

He is concerned that the body corporate takes some legal advice about the current proposal to extend the existing agreement.

The body corporate committee writes simply that the body corporate will be seeking legal advice, and that the committee will decide what to do at its meeting on 12th May 2008.

In this matter, I am looking only at the application for interim order, although the Applicant has worded his final outcome sought in the same terms. An interim order is in the nature of an injunction, or ‘holding order’ as detailed above, the purpose being to maintain the status quo until the matter can be more thoroughly investigated, and before it is too late to make an alternative decision.

Matters discussed in the conciliation process are entirely confidential and I have no knowledge of those matters, what was said or what documents were produced, nor of any agreement which may have been reached. In the adjudication process, the Applicant must plead his case anew.

However, I am satisfied that the Applicant has made out a prima face case, and that further investigation should be conducted in this matter to determine the validity of the Motion 18 at the 2007 AGM and the resolution of the body corporate at the annual general meeting of 2003 and what that now means to the body corporate.

A departmental adjudicator has no jurisdiction to construe the terms of a contract if the dispute concerns the meaning of the words used or the validity of an option to extend or any purported option to extend. Such disputes are known as “complex disputes” and may be determined by the Commercial and Consumer Tribunal or, with the agreement of both parties, by a ‘specialist adjudicator.’

However, a departmental adjudicator has jurisdiction to determine the validity and effect of motions put to a general meeting; disputes about the effect of any contract of engagement if the construction of the terms of the contract are not in issue; and to make orders that the body corporate takes legal advice about contractual matters.

It appears in this matter that the committee is willing to take legal advice prior to entering into any options to extend (or not) the original contract with the existing caretakers, and I so order. The advice must be from an independent source. I further order that no variations to the existing agreement of engagement be executed by the body corporate prior to the final determination of this matter, or further order of this Office.

Submissions will now be sought from all lot-owners, (including the resident managers), in the usual way, and the Applicant, if he wishes shall have a right of Reply. Prior to making a final determination in this matter, I would like to be furnished with a copy of the minutes of the annual general meeting in 2003 at which the resolution stated above was made; and a copy of the minutes of the AGM (including Motion 18).

The Applicant may of course provide any further relevant information now knowing that I have no recourse to any material used in the conciliation process. Documents or information provided by the Applicant may then if appropriate, be sent to the body corporate and lot owners for its/their further submissions.

Number of Scheme:	11382
Name of Scheme:	Sanderling
Address of Scheme:	40-44 Marine Parade MIAMI QLD 4220

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sanderling [2008] QBCCMCmr 99 (1 April 2008)