Palm Springs Residences [2009] QBCCMCmr 245 (2 July 2009)

Last Updated: 8 July 2009

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Application References: 0135-2007 and 0309-2007

Applicant: J PATTERSON HOLDINGS PTY LTD and Respondent: BODY CORPORATE FOR PALM SPRINGS RESIDENCES CTS 29467

ORDER

Before: Specialist Adjudicator, Kiernan Dorney Q.C.

Date: 2 July 2009

Initiating Document: Applications filed 13 February 2007 and 13 April 2007

IT IS ORDERED that: The Dispute Resolution Application No. 0135-2007, as amended, is dismissed. The Dispute Resolution Application No. 0309-2007, as amended, is dismissed. The applicant pay the Specialist Adjudicator’s costs of the Dispute Resolution Application No. 0135-2007, as amended, fixed in the sum of $17,187.50 (including GST), within 30 days from the date of this order. The applicant pay the Specialist Adjudicator’s costs of the Dispute Resolution Application No. 0309-2007, as amended, within 30 days from the date of this order.

KIERNAN DORNEY Q.C.
Specialist Adjudicator

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Application References: 0135-2007 and 0309-2007

Applicant: J PATTERSON HOLDINGS PTY LTD

and

Respondent: BODY CORPORATE FOR PALM SPRINGS RESIDENCES

CTS 29467

REASONS FOR FINAL DECISION IN
SPECIALIST ADJUDICATION

INTRODUCTION

1. This specialist adjudication concerns two applications bearing reference numbers 0135-2007 and 0309-2007. I was appointed as a specialist adjudicator for the disputes arising between the parties as alleged in those applications in a letter dated 23 February 2009 by the Commissioner for Body Corporate and Community Management (“Commissioner”) under the hand of Ms Kate Stuchbury, as Assistant Commissioner.
2. Those applications have been the subject of an earlier specialist adjudication in which final orders were made on 23 June 2007, with accompanying reasons. Those orders were appealed to the District Court and on 18 December 2008, McGill DCJ ordered that the appeal be allowed and that the orders of the adjudicator of 23 June 2007 be set aside and that, through the Commissioner, the applications be referred back to a specialist adjudicator other than the adjudicator who made the orders of 23 June 2007 to resolve the disputes “according to law”.
3. Further, McGill DCJ ordered that the costs of the adjudication which produced the orders which were set aside abide the final outcome of the adjudication.

NATURE OF APPLICATIONS

4. Dispute Resolution Application bearing reference number 0135-2007 has also been referred to as bearing reference number 0135A-2007. Likewise, for Dispute Resolution Application 0309-2007, there has been an additional reference number given of 0309A-2007. Given the way in which the disputes have been conducted before me, and given the fact that the “A” appears to refer to amendments purportedly made pursuant to section 245 of the Body Corporate and Community Management Act 1997 (“BCCM Act”) – which does not require a further numbering of the reference – I have proceeded on the basis that the two dispute resolution applications given to me dated respectively 13 February 2007 and 13 April 2007 are the relevant applications, as amended.
5. Regarding the second of those applications, no evidence was led before me concerning the issues arising from that application and no written, or oral, submissions were made to me about those issues either. Since the second application refers to the second dispute, along with the first, as “both” relating “to common contractual obligations”, and since it would appear that any disputed fees have now been paid, whatever the outcome is with respect to the first application will govern the way in which the second application is resolved by me on the issue of costs.
6. Before I leave this particular matter, I note that the orders made by the original specialist adjudicator on 23 June 2007 refer to the second application being dismissed “as an order on that application is no longer required”. But since all orders of that adjudicator made 23 June 2007 were set aside, I will have to order a dismissal of the second application again.

NATURE OF DISPUTE

7. Because the relevant facts leading up to the holding of the Extraordinary General Meeting (“EGM”) of the respondent Body Corporate of 11 February 2007 have been set out in considerable detail in Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300 and, more importantly, because the issues disputed before me were narrowed to, first, whether there was, in fact, an event which satisfied Clause 8.1.2 of the relevant Caretaking Agreement and, secondly, whether there was any breach of any fiduciary duty cast upon the Committee of the Body Corporate when it issued the relevant circular for the purposes of the EGM in relation to the cost of works, it will be unnecessary to refer to much of the background to the dispute and much of the detailed circumstances that surrounded the EGM itself.
8. For those reasons, since there was no dispute about the existence of the Caretaking Agreement, or its terms, and no continuing dispute about other issues that had been agitated both before the original Specialist Adjudicator and before the District Court, the background facts to the two remaining issues will be dealt with discretely rather than as a general summation of relevant facts.

MATERIAL CONSIDERED

9. When I was appointed as Specialist Adjudicator I was given what was termed by the Commission as “our original files”. These consisted of a one volume folder comprising: the Interim Order made 28 February 2007, the Preliminary Order made 10 May 2007 and the Final Orders made 23 June 2007 (together with the reasons for each of those earlier orders and the reasons for the Final Orders); a copy of the “Service Contract (Caretaking Agreement)” made 6 September 2001 together with material relating to the second application; relevant correspondence concerning the original adjudication and this adjudication; and title searches. I was also given two bundles of documents which appear to have been prepared by both the appellant and the respondent, respectively, for the purposes of the District Court appeal. The material that I have caused to be put before me consists of declarations which were prepared by the parties as a result of orders made by me that “all” witness statements to be relied upon be given in that form (comprising, originally, 10 declarations from the applicant and 6 declarations from the respondent). At a meeting that I called, which was held at “Palm Springs Residences” on 27 May 2009, I heard evidence from Mr Gregory James Carroll, who was questioned both by me and by the applicant’s representative, and I was given copies of the 7 coloured photographs which were provided to lot owners before the EGM in conjunction with the circular and 3 documents concerning fire doors (which will be referred to in detail later) dated 9 February 2005, 19 January 2006 and 7 February 2006, respectively; and I accepted, with some reluctance given my earlier orders as to evidence, further declarations [being 3 from the applicant – although one was an original of a copy declaration included in the original 10 - and 1 from the respondent (which was a retraction of 1 of the applicant’s original 10)]. At that meeting I informed the representatives of both parties that I would be undertaking no further investigations and asked those representatives to indicate persons and, or alternatively, areas of expertise who or which they might contend would assist. Both representatives submitted that the existing material would be sufficient. Following that meeting, I had a brief inspection of the “Palm Springs Residences” property, although assuring both parties that anything specific that I saw on that day could only be of general relevance because of the requirement to consider the relevant 14 day period in late 2006 and early 2007 concerning Clause 8.1.2.
10. Lastly, the reason that Mr Carroll only was questioned on my visit follows from the fact that both parties had been ordered to give to the other side a list of the witness statements that were in dispute. For its part, the applicant, by fax of 28 April 2009 advised that the only witness statement that was in dispute was that of Mr Carroll. On the respondent’s side, by email dated 28 April 2009, it advised that each and every one of the 10 declarants were persons whose statements were in dispute.
11. The relevant order that I made on 8 May 2009 concerning the meeting to be held at “Palm Springs Residences” was that such a meeting was to be held by me “with all relevant witnesses whose statements have been put in dispute by the other party”. As already noted, the only “witness” who attended that meeting was Mr Carroll. The representatives of both parties attended.
12. In terms of procedure, I ordered, and with the compliance of both parties I was presented with, written submissions and then on 25 June 2009 both parties attended at which time they were given an opportunity to make oral submissions and answer certain concerns that I had regarding both fact and law. The applicant’s written submissions, both internally and by the attachment of copy documents, attempted to present further material. I ruled that, since ample opportunity had been given, and since it would be unfair to the respondent to allow its late introduction, I would ignore such “additional evidence”, save where it was already in the material before me.

BREACH OF CLAUSE 8.1.2 OF THE CARETAKING AGREEMENT?

13. Since neither party contended that the relevant Caretaking Agreement was not a contractual document that bound both parties even though the applicant was not an actual party to it, it has been unnecessary to consider such issues as assignment or exercise of options granted.
14. It is also not in dispute that the notice in writing, entitled Notice of Default and dated 20 December 2006, for the purposes of the purported application of Clause 8.1.2, was given by the respondent to the applicant that day and that it specified 17 matters in respect of which it was alleged that the applicant had failed to carry out its duty pursuant to the Caretaking Agreement. Furthermore, it is not in dispute that there was a EGM held on 11 February 2007 and that a letter dated 19 February 2007 addressed to the applicant was sent under the hand of the respondent’s solicitors and received by the applicant. It purported to terminate the Caretaking Agreement pursuant to Clause 8.1.
15. For reasons which will be canvassed next, I find that the applicant, in breach of Clause 8.1.2, neglected to carry out its duty pursuant to the Caretaking Agreement and did not take all reasonable steps to remedy such neglect within the period of 14 days after the notice in writing of 20 December 2006 which specified the duty which the applicant was neglecting to carry out. Although not all items specified in that notice were proved, or if proved established such neglect, there were, for the reasons to be stated, sufficient of them to constitute relevant neglect which remained unremedied at the end of the relevant period.
16. It will be necessary to consider aspects of such failure under several headings.

RELEVANT EVIDENCE

17. One of the real problems that occurred as a result of the applicant not making any of its original and further declarants available for a meeting with me at the “Palm Springs Residences” was that I was then faced with bald, unparticularised statements which were never given relevant life. The first lot of declarants, numbering 2, were existing owners and the declarations were in a standard form that simply stated, with respect to this issue, that “since I have been an owner, the Caretaker has kept the premises in clean and tidy conditions, and I have no complaints in relation to the carrying out of the caretaking duties”. But they were declarations by owners who purchased lots after the EGM was held in 2007. Therefore, they can be of no relevance whatsoever for any arising issue here. The second lot of declarations, again by 6 existing owners, merely stated, all in exactly the same pro forma wording, that “the matters listed (in the relevant default notice) were in my opinion not in default or were either frivolous or of a minor nature or had already been done and not continuing”, adding that “the appearance of the units and surrounds has always been kept clean and tidy and all things I would expect a Caretaker to do have always been done (and) I can see no fault in the Caretaker”. As for the next 3 declarations relevant to this issue, the first was from Mr John Burns who attached a report dated 17 April 2007, stated that it was “true and correct” and stated that he was a contract gardener and handyman and had carried out the gardening duties and other matters that require a handyman at “Palm Springs Residences”. The “report” merely specified his duties and stated that they were carried out on a weekly basis in summer, spring and autumn and that, in winter, “season (sic!) duties are carried out as the need occurs to ensure gardens are in top condition”. The second was from Mr Rick Gabain to the effect that he was the owner of the “Pool Centre Palm Beach” and that he gave a report dated 19 March 2007 which was “true and correct”. The “report” stated that since the “pumps/chlorinator are going for most of the day you can expect that the cells will wear out that much quicker” and that the “replacement of the cells was due to normal fair wear and tear with a replacement of the cooling fan this had seized up due to corrosion”. As to the surface of the pool, he stated that since coming in April 2005 the chemistry has “generally been within the Langleir index criteria and I would say that any change in the pool surface has not been caused by chemical imbalance” with the “quartz surface which is on your pool (being) renowned for discolouring giving a blotchy effect”. The third was from Mr Granville Cardoza. It stated that he and his wife were the contract cleaners at “Palm Springs Residences” and were so from 2006 to the present time. Attached was a statement which was stated to be “true and correct” dated 1 March 2007. This stated that they had been employed by the applicant since August 2004 stated what their duties were – but nothing more.
18. The one statement that broke the pro forma mould was by Mr Geoffrey Paul Booth. It, quite interestingly, stated that, with respect to the matters listed in the relevant “Default Notice”, they were, in his opinion, “not only disputable, but in many cases trivial”, adding that “however I cannot comment personally on the validity of individual allegations”. Mr Booth also added that “in my opinion there is a significant lack of effective communication between” the Committee and the applicant and “that (it) is the basis for many issues”. Finally, with respect to the issues in contention, he says that in his visits to the complex, 4 to 5 times per year since February 2005, “the building interior, exterior, surrounds and garden have been in good condition”.
19. With respect to Mr Les Jones who completed a pro forma declaration of the second type mentioned, he attached a copy of a statement that had been given in the previous adjudication. The statement in fact was by both Mr Jones and his wife. While it had the advantage of not being in some standard form, it was very general in its statements and did not descend to particularity regarding the actual default period beginning 20 December 2006. And with respect to the declaration that I accepted from the respondent at the meeting on 27 May 2009, it was one provided by Mr Peter Dickinson. He stated that the new declaration superseded and replaced the declaration that he had given on behalf of the applicant. He stated, in particular, that, on reflection, and having now read the 6 paragraphs of the declaration with time to understand their content, he wished to withdraw the contents of the paragraphs numbered 4, 5 and 6, stating that the information contained in those paragraphs “does not accurately reflect” his recollection of his opinion of the events, in that the defaults were not frivolous, or of a minor nature, and were continuing. But because his declaration was in the form of the second lot of declarants anyway, very little relevant matter could have been extracted from it even if not withdrawn.
20. Perhaps the most important aspect of the witness statements given to me by the applicant is the absence of any statement by a director of, or any other authorised person on behalf of, the applicant company. It should be noted that the father of the male director of the applicant company, Mr Warren Patterson, attended both the meeting at “Palm Springs Residences” on 27 May 2009 and the making of the oral submissions on 25 June 2009. According to the ASIC extract given to me by the applicant’s representative, and joint secretary of the company, the male director and other joint secretary is, and has been since 30 April 2004, Jason Brook Patterson. Given that the applicant is facing a second adjudication on this issue of default in the relevant period specified by Clause 8.1.2 and given, as will be discussed next, that Mr Carroll, on behalf of the Body Corporate, did attend my meeting as requested by my order, did make himself available for questioning and did give both written and oral evidence concerning what happened during the relevant 14 day period, while I am not bound by the rules of evidence [see section 269(3)(c) of the BCCM Act], since natural justice has been given to the applicant to present evidence about identified issues, I am left in the position that should I, as I do, generally accept the evidence as given by Mr Carroll, it is partly because there has been no real contest by any person on behalf of the applicant as to what occurred in that 14 day period, at least insofar as those breaches that I have accepted as being relevant to the duty required of the Caretaker under the Caretaking Agreement. Although it is doubtful whether any Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 principle is applicable in an adjudication of this kind, and although it has been necessary to draw a few inferences only (being those matters to which the principle applies), the absence of a direct contradictor to Mr Carroll about the very specific evidence that he gave often meant that the requisite standard of proof was not attained by the applicant in those aspects of the evidence that it sought to establish. Both parties were appropriately represented before me and chose to follow the evidentiary path that I have detailed.
21. Before moving to consider the evidence given by Mr Carroll, and the other evidence led by the respondent, the 7 photographs which were presented to the lot owners for the purposes of the EGM in 2007 were the subject of questions by me and comments by the representative of the applicant to Mr Carroll at the meeting we held at “Palm Springs Residences”. In particular, I find that, apart from the photographs that related to matters that I find not to be in breach, the photographs graphically illustrate the specific breaches for which they were a visual recording.
22. Apart from the declaration of Mr Carroll, the respondent had 4 declarations which were, again, in a pro forma format. They each recited that the person was a current owner and resident, referred to the declaration of Mr Carroll and the fact that the person had read it in its entirety, and stated that the person agreed with its contents which to the best of their knowledge were “true and correct”. For the reasons that I found the similar pro forma declarations of the applicant to be of little use, I found these also to be of little use. The sixth declaration, more accurately described as an affidavit, was given by Ms Ruth Edna Gall. She is a retired professor of chemistry from the University of Sydney and moved to “Palm Springs Residences” as a lot owner in September 2001. She did some chemical testing of the pool but did not depose to anything occurring in the period of 14 days following the default notice of 20 December 2006. She did however refer to chemical test records that had been prepared on behalf of the applicant, giving the opinion that the results stated “were not possible due to the nature of the test as decimal points are impossible to discern”. Although I was not otherwise presented with evidence that was given before the original earlier specialist adjudicator, Ms Gall made the statement that, at the meeting with that person on 8 June 2007, Mr Warren Patterson admitted that he had “faked” such results. The reason why that particular fact is mentioned is that it does reinforce my view, which formed during the meeting with Mr Carroll and during the questioning of him by the applicant’s representative, that the attitude displayed by the representatives of the applicant, particularly with respect to the items in dispute in the Notice of Default was one of contemptuous dismissal of almost everything raised by the Committee of the respondent. While understanding that this, in part, may have been fed by the fractured nature of the relationship between the parties which was remarked upon both in the District Court Reasons for Decision and in the material regarding that relationship presented to me, I was left with the strong impression that the Committee of the Body Corporate had good reason to assert that there was an ongoing, difficult relationship, which was sometimes acrimonious, with the representatives of the applicant/Caretaker.
23. Turning, then, to the crucial declaration of Mr Carroll and the evidence he gave. The first thing that struck me was that the questions that he was asked by the applicant’s representative did not generally go in any specific way to addressing matters occurring in the default period of 14 days. The questions were essentially directed to the issue of the potential breach of fiduciary obligations that were alleged to be owed by the Committee of the Body Corporate to the Caretaker.
24. To the extent that the questions were directed to the issue currently being considered, I find that they were of little use and then only to the extent that they confirmed views that I formed regarding the potential non-breaches of several items.
25. The best way to address the breaches in the Notice of Default of 20 December, 2006 is to take them item by item, noting that the written submissions given on behalf of the applicant contain attempts to give evidence at a stage when evidence had been concluded and otherwise refer to matters that were not independently the subject of actual evidence. I give such references some regard for the purpose only of testing the evidence proffered by Mr Carroll against the ordinary experience of human nature – a task inevitably undertaken by the trier of fact.

ITEM 1

26. This item asserts a refusal by the applicant’s representative to have any effective communication with the Committee. No contest was raised by the applicant that, at least legally, Mr Carroll (as Chairman) was the appropriate person to communicate with on behalf of the Committee, there being no evidence, for instance, that any specific person had been nominated as a designated person for contact between the Committee and the Caretaker. Mr Carroll stated that although there were no Committee meetings during the relevant 14 day period, the representatives of the applicant refused to have any communication with himself as Chairman, with the (not identified) designated representative of the Committee or with any other Committee member. This was done in the context of a history of applicant’s representative persistently refusing to attend Committee meetings and provide reports to the Committee. Mr Carroll further noted that, when the applicant did eventually respond to the Notice of Default on 19 January 2007, the response was directed to the secretary of the Committee, Mr David Redfern, who does not live at “Palm Springs Residences” and who was constantly away overseas. Incidentally, the response was also outside the 14 day period. Mr Carroll further asserts that during the 14 day period, the applicant, despite the Committee’s demand, failed to provide copies of the Caretaker’s Log or any reports to himself, as Chairman or to any other Committee member.
27. What is important though is that Mr Carroll asserts, and this was in no way contradicted, that on 31 January 2007 the applicant wrote to selected owners within the scheme and admitted that the applicant would not communicate with most of the members of the elected Committee. As for the Secretary, Mr Redfern, the most that the communication would concede was that the applicant “never refused any interaction” with him, although Mr Redfern did depose in his declaration that he fully supported Mr Carroll’s version of events. That is consistent with the written submissions filed on behalf of the applicant which assert that “the Caretaker chose not to converse with” Mr Carroll - allegedly because of the abusive, derogatory and often coarse language used by Mr Carroll, and because he acted like a bully (although there was no sworn evidence of any such behaviour). The “accepted” form of communication was, according to the applicant, by email. This, according to the applicant’s written submissions, meant that “communication had not broken down, it was merely in another form” and therefore at the time of the Notice of Default “it was not a continuing default”. Yet the written submissions do not demonstrate in any way that any relevant emails were sent by anybody other than the Chairman or other Committee member. As for the allegations directed in those written submissions against the Chairman, they were not put at all to Mr Carroll in the applicant’s representative’s questioning at the meeting held at the “Palm Springs Residences” and Mr Redfern’s witness statement was not put in dispute by the applicant. And importantly for this item is the assertion by Mr Carroll, again not put in contest, that the last date that the Caretaker provided a copy of the Caretaker’s Log was 10 June 2006 and that, for the Log provided up to that date, an examination showed that the applicant was not attending to the duties at the required frequency specified in the Caretaking Agreement. Specifically with respect to occurrences within the 14 day period, Mr Carroll asserts that the Caretaker failed to report to him or to any member of the Committee a hazard on the common property which the spa tests results had shown arose from some person defecating in the spa. It was only at the instigation of Mr Carroll that the spa was closed down immediately, the water pumped out and the spa disinfected with a chlorine solution, together with the replacement of the old by new water. This was after Mr Carroll delivered by hand an email directing the applicant to take those steps. As stated by Mr Carroll, on 4 January 2007, he inspected the spa again, noted the applicant had not complied with that direction of 31 December 2006, noted that the spa filter was also blocked with dirt and required cleaning and that, although a further email was hand delivered to the applicant directing further compliance, the Caretaker did not attend to the direction and Swimart were subsequently engaged to clean the spa on 5 January 2007. But given the explicit terms of Clause 8.1.2, such an occurrence cannot be used other than to fortify the view that the applicant treated its duty under the Caretaking Agreement as one which was adhered to only as and when it decided to do so.
28. I therefore find that with respect to Item 1, there was a failure by the applicant to comply with Clauses 3.1.3 and 3.1.30.1 (concerning reporting to, and advising the Body Corporate at the request of, the Body Corporate concerning the performance of the duties of the Caretaker and provide other advices which the Body Corporate should request relevant to the maintenance and care of the common property), Clause 3.1.23 (requiring the keeping, and producing, of a log) and Clause 3.1 (requiring the Caretaker to perform or procure the performance of the tasks and duties consistent with the position of Caretaker). As was clearly demonstrated by Yedway Pty Ltd v Owners Corporation of Strata Plan 62871 [2009] NSWSC 8, a refusal to act reasonably and constructively in the manner of conferral and communication with representatives of a Body Corporate is a failure to live up to the standards of professional conduct adopted or approved by property managers or Caretakers of good repute: at [97]. Although that particular decision was concerned with breaches that went to the existence or otherwise of “misconduct”, it necessarily was a breach of a specific obligation to confer as reasonably required with a relevant appointee of the Committee: see Clause 6.2(a) of the relevant contract being considered.
29. Therefore, to the extent of the identified clauses in the Caretaking Agreement, this important failure detailed by Mr Carroll has been established as an unremedied breach during the default period.

ITEM 2

30. This default allegation concerns the swimming pool and spa. Because the focus is on the period from 20 December 2006 as the beginning of the relevant 14 day period, the evidence given by the retired Professor of Chemistry, Ms Gall, does not directly impinge on the determination of this item.
31. Rather, this concerns an alleged failure by the applicant to attend to providing twice daily readings of the chemical levels in the pool and failing to attend to the daily vacuuming of the pool and spa and removal of sand.
32. The difficulty that arises in the determination of whether any default occurred is that on 18 December 2006 the Caretaker was advised that Swimart had been given the task of maintaining the chemical control and equipment maintenance of the swimming pool and spa. According to Mr Carroll, the Caretaker was informed that it remained responsible for the physical cleanliness of the pool and spa. That information was contained in an email dated 18 December 2006. But, according to a further email concerning that earlier email (Attachment 29 to Mr Carroll’s declaration), when the relevant email was handed to Mr Warren Patterson on behalf of the applicant he, without reading it, screwed it up. The concern that I then have is whether, if the Caretaker did not receive actual notice of the limitation upon the duties concerning the swimming pool and spa, it could be in breach.
33. The attitude of screwing the written communication up without looking at it appears to be typical of the approach that the Caretaker has taken to its dealings with the Committee generally. Considering that all that the Committee of the Body Corporate was attempting to do was to take one aspect of the duties that were otherwise cast upon the Caretaker away from the Caretaker because of problems identified by Ms Gall, while leaving the other duties intact, it must be that the failure of the Caretaker to even consider what the Committee was attempting to achieve would not relieve it of those obligations that were still placed on it by the Caretaking Agreement. In any event, during oral submissions the applicant’s representative admitted that the notification was given and that the remaining obligations continued.
34. As to whether there was a breach during the relevant 14 day period, the applicant’s written submissions do not really address the alleged failure to continue with the duties left to the Caretaker. Rather, they deal with matters before 20 December 2006 and, for the rest, assert that “control was taken from” the Caretaker with the contended consequence that the default was not continuing and therefore the Committee could not say that it was “not rectified” within the period of 14 days.
35. But, as the photographs which are Attachment 30 show (comprising 4 photographs of the relevant parts of the sand filter and the pump pre-filter basket) there was a lack of attention to the ongoing duties placed on the Caretaker. The photos were taken after Mr Carroll states that he inspected those things on 5 January 2007. The lack of action by the applicant is implicitly supported by the selective disclosure by it of relevant Log entries, which include post 18 December 2006 entries. These were part of material given to the original Specialist Adjudicator with respect to the second application. Given the lack of any specific evidence from the applicant, and given the terms of the written submissions, I find that there was default under the obligations cast by Clause 3.1.25 and no that remediation of the defaults occurred for Item 2 in the relevant period.

ITEMS 3 AND 10

36. Mr Carroll, in his declaration, concedes that any alleged default on these two Items was remedied by the end of the 14 day period.

ITEM 4

37. This specifically concerns the Caretaker’s Log Book. Mr Carroll asserts that on 10 November 2006, the Caretaker was requested to place copies of the Log in the Chairman’s letterbox, as well as produce the Log Book for inspection by the Committee. He then states that the applicant did not do so by 5 January 2007 and did not do so at any time prior to 11 February 2007.
38. The written submissions by the applicant state that the Log Books “have always been kept and available for inspection by the Committee”. It further states they are computer generated and were available for inspection at the Caretaker’s office “but the Committee failed to inspect them”. Consequently, it is contended by the applicant that there was no continuing default.
39. Of course, as remarked earlier, there was no actual evidence which would support the applicant’s written contentions.
40. It is helpful for the respondent’s case that the letter of the applicant dated 31 January 2007 (referred to earlier) states with respect to the alleged default concerning the Log Books that the applicant “ceased providing the Committee with copies” of them “in mid June 2006”. Although that document then goes on to state that an up to date and accurate log of activities in relation to the caretaking contract has been kept, it states that such keeping is “for future use in any dispute process that may arise as a result of these matters”. The problem that that statement causes for the applicant is that it implicitly concedes that the Log Books have not been produced to the Committee and have not been made available for inspection. Clause 3.1.23 states that the Caretaker shall keep a log of all relevant matters arising under Clause 3 and “produce” the log “to the Body Corporate representative or the Management Committee upon request”. It cannot be up to the applicant to itself solely determine how that clause is complied with, regardless of what it feels about any use by the Committee of the Body Corporate of those entries.
41. Accordingly, I find that there has been a breach of Clause 3.1.23 and that it was not remedied within the 14 day period.

ITEM 5

42. This alleged default concerns cleaning the car park and parking spaces. Mr Carroll asserts that the car park and parking spaces had not been cleaned between 20 December 2006 and 5 January 2007. He then states that he inspected the car park and parking spaces again on 21 January 2007 and took photographs showing accumulated dirt, oil and grease on “common property”. The photographs are contained in Attachment 31.
43. The problem for the respondent is that photograph No. 4 of the photographs provided before the EGM shows the same accumulated dirt, oil and grease in the same place. It has been asserted by the applicant, and not denied by the respondent, that the photograph actually shows the exclusive use car parking space that the Caretaker itself was granted. Since the two other photographs in Attachment 31 are not readily identified as being “common property”, and since the other 2 photographs do not show substantial accumulated dirt, oil and grease, I find that there has been no established default with respect to cleaning the car park and parking spaces.

ITEM 6

44. This particular item concerns preventative maintenance. Mr Carroll asserts that inspection of the common property on 5 January 2007 revealed that the “roof top gate locks” and the garage roller door had not been lubricated, that the lawn sprinklers had not been cleared of grass and, or alternatively, had not been repaired and that the front entrance fountain water had not been treated and the fountain was green with slime.
45. The applicant’s written submissions concentrate on the “beach gate lock”. But Mr Carroll did not put that in issue. In the absence of photographs in Mr Carroll’s declaration, the nature of the remaining alleged defaults, in the context where the lawn sprinklers are a separate item of complaint, do not appear to be significant matters, apart from the untreated water in the front entrance fountain. But the problem with that alleged default is that in the Notice of Default dated 20 December 2006 the particulars of failing to carry out routine maintenance does not allege anything concerning the front entrance fountain water.
46. In all these circumstances, I find that there was no relevant default, particularly of Clause 3.1.9 which requires the Caretaker to report promptly on all things requiring repair and on matters creating a hazard or danger at the cost and expense of the Body Corporate and “to take remedial action where practicable, to safeguard the Building against unlawful entry or accident”.

ITEM 7

47. This item concerns the alleged failure to obtain a quote for the installation of the beach shower and failure to arrange acceptable quotations for the repair of the driveway expansion joint bricks.
48. In his declaration, Mr Carroll asserts that as at 5 January 2007 the applicant had still so failed.
49. The written submissions of the applicant state that it conceded that the foot control for the beach shower needed replacement, that the Committee was aware of this, that a quote had been obtained for the Committee but that the work had not been done as parts were not available. Since this was very similar to the assertions made by the applicant in its letter of 31 January 2007 and since Mr Carroll has not really addressed the issue that the applicant has raised concerning problems in obtaining relevant quotations, I am not satisfied to the requisite degree that there was a remedy that could have been implemented prior to the end of the limited 14 day period. Consequently, I do not find there has been a relevant breach concerning Item 7 and involving Clause 3.1.24.

ITEM 8

50. This particular item concerns the beach foot wash. The Notice of Default states that a token attempt had been made to clean sand from under the foot wash boards.
51. The written submissions by the applicant assert that the boards were regularly cleaned but needed reconstruction to effectively remove the sand since the boards could not be lifted due to being secured by the water plumbing pipes. The applicant further asserts in those written submissions that the Caretaker, within the 14 day default period, did dig a sump pit beside the boards and remove the sand.
52. The declaration by Mr Carroll asserts that on 5 January 2007 he inspected the item and observed that there had been a failure to clean away the sand “to allow free drainage” and the grass was growing over the side of the duck board. Mr Carroll made a second inspection on 21 January 2007 and Attachment 32 is a photograph taken at that time. The photograph does show that the spaces between the boards have been cleaned to some extent. But the problem for the respondent is that it has not really answered the problem thrown up by the boards not being able to be lifted. It can easily be seen from the photograph that is Attachment 32 that if the boards could not be lifted it would exceedingly difficult to clear the boards other than in the way that they have been partial cleared. Furthermore, the declaration by Mr Carroll does not directly address the issue of the sump pit. The letter of 31 January 2007 raises both issues of the impossibility of lifting the boards and of the 2 hours digging out of the perimeter of the area. It might well be expected that Mr Carroll would address these issues in his declaration; but he has not.
53. Thus, I find that I cannot be satisfied to the requisite standard that a default has occurred with respect to this particular item.

ITEM 9

54. This item concerns an alleged failure to report damage and defects to the Committee. The Notice of Default raised the failure to report with respect to damage to the garage door and an engagement of an outside contractor on the following day to effect the repair without consulting the Committee.
55. The applicant’s written submissions unsurprisingly assert that the repairs were completed.
56. Therefore, the fact that Mr Carroll asserts that on his inspection of the common property on 5 January 2007 he observed that one of the sun lounges had been damaged on account of the lock being seized for lack of maintenance, and that the applicant had not reported that to the Committee, is not to the point. Clause 8.1.2 requires, at the very least, that the notice in writing must specify the duty which has been neglected to be carried out, carrying with it, at least implicitly, particularisation of the way in which that duty has been neglected. It is therefore highly difficult, if not impossible, for a Caretaker to anticipate what might occur by reason of a breach of Clause 3.1.9 (referred to earlier), particularly in circumstances where the Notice of Default refers to something quite different and no further notification is provided for remedying a “new” breach during the default period which is capable of remedy before the end of the period, even if Clause 8.1.2 could be interpreted so widely.
57. Thus, I find that there has been no breach concerning this item.

ITEM 11

58. This item concerns what is stated in the Notice of Default to be a “specific health matter”. That Notice of Default refers simply to the swimming pool and spa deficiencies that were the triggers for the notification on 18 December 2006 (which has been addressed earlier).
59. Apart from what has been considered earlier, there is no way that this particular default was capable of remedy after 20 December 2006, at least with respect to the additional matters that are identified as a “specific health matter”.
60. Thus, when Mr Carroll in his declaration refers to a direction given on 31 December 2006 (also dealt with earlier concerning the contamination of the spa), it cannot be a thing that was the proper subject of a notice given pursuant to Clause 8.1.2 for this item.
61. Hence, except to the extent to which it is dealt with earlier, this item does not lead to a finding that a breach occurred. With respect to the remaining paragraphs in Mr Carroll’s declaration concerning Item 11, they were not raised in the Notice of Default and therefore, again, must be disregarded.

ITEM 12

62. This particular item concerns directions given on 4 August 2006 and 30 October 2006 to the applicant to cause persons to desist from smoking in the letting agent’s office.
63. The Notice of Default identifies By-Law 32 and the directions of the Body Corporate. The reference to the directions is a reference to Committee Directions of 4 August 2006 and 30 October 2006.
64. Before turning to what Mr Carroll says about this matter, the applicant’s written submissions admit that both Mr Jason Patterson and Mr Warren Patterson smoke but assert that it has never taken place in the office.
65. Nevertheless, the only evidence proffered by Mr Carroll is that, throughout the period of the breach notice, the stench of cigarette smoke was clearly evident “in the entrance foyer”.
66. Given the lack of eyewitness evidence of the smoking of cigarettes, given that the stench of cigarette smoke was detected in the entrance foyer and not in the letting agent’s office and given the fact that it is rather speculative to infer that the only cigarette smoking from which such stench originated was specifically a breach that could be sheeted home to the applicant, I am not satisfied to the requisite standard that a relevant breach has occurred concerning this item.

ITEM 13

67. This item concerns garden maintenance and general maintenance. The Notice of Default, referring to Clauses 3.1.25 and 3.1.11, required as a remedy to maintain all common property garden areas, prune scrubs as necessary, complete tasks requested by the Committee in a timely manner and comply with the Caretaking Agreement and directions of the Committee.
68. In its written submissions, the applicant states that it employs a gardener who has regularly attended to the gardens and lawns and that the lawns were in fact cut within the 14 day default period. As already noted, the declaration provided by the persons doing gardening work was very unspecific and certainly did not refer to doing any work in the 14 day default period.
69. Mr Carroll’s declaration asserts that on 5 January 2007 no steps “whatsoever” to maintain the garden in a clean, tidy and pruned condition had been taken. Attachment 33 showed various photographs. The significance of at least some of the photographs is that they show unattended plants, demonstrating quite a quantity of dead or unpruned plants.
70. Even though the evidence is not strong, I am satisfied that a breach of the specific requirement to prune scrubs and trees was not completed as requested within the default period. Consequently, I find that there was a default which was not remedied in the default period.

ITEM 14

71. This item concerns an alleged default under Clause 3.1.2 which requires the Caretaker to monitor the observance of By-Laws. In the Notice of Default, a number of specific alleged failures were identified.
72. The applicant’s written submissions assert that the existence of washing on unit balconies was not observed by the Caretaker and was not a default existing at the time of the service of the Notice of Default. With respect to the storing of goods in the car parking space of Lot 103, the applicant’s written submissions state that they were removed by the Caretaker on behalf of the owners prior to the Notice of Default.
73. Mr Carroll’s declaration does indeed refer to the storage of goods in the parking space of Lot 103.
74. The problem that the respondent has is that its Notice of Default did not refer to goods being stored in any car parking space and did not refer to the additional matter referred to by Mr Carroll of the Caretaker unilaterally changing gymnasium opening times contrary to By-Law 8.6. Instead, it referred to consistently and persistently failing to enforce By-Laws in relation to washing outside units and to control conduct in the pool area, as well as refusing to advise real estate agents of correct By-Law requirements in relation to the display of advertising signs.
75. Thus, although the remedy designated was that the By-Laws be monitored, given the dispute concerning the storage of goods in the parking space of Lot 103 and given that no specific lot balconies were identified for which washing was hung on such balconies, there is fundamentally a problem with my making a finding to the requisite standard that the specific issues joined between the parties are either a breach of what is particularised, or a breach at all.
76. However what does concern me immensely is the assertion in Mr Carroll’s declaration that the gymnasium opening and closing time were unilaterally and materially altered on 26 December 2006 contrary to By-Law 8.6.
77. Although this could not be particularised in the Notice of Default, it is important, at least with respect to this Item, that it was an ongoing obligation under Clause 3.1.2 to monitor the observance of the By-Laws and that the remedy suggested was to continue to do so. The applicant has not taken the opportunity to contest the assertion that it did change the opening and closing times. Clearly, on the evidence presented, I find that such did occur. The concern is whether that is a breach of Clause 3.1.2 (containing the obligation to monitor the observance). Though a strict interpretation of Clause 3.1.2 might suggest that it is limited to monitoring, it would present an impossible inherent contradiction to hold that the Caretaker could unilaterally change the substance of the By-Laws and not, at the same time, monitor the observance of such a By-Law.
78. Consequently, even though I find that there has been a breach of Clause 3.1.2 to the extent to which the gymnasium opening and closing times were unilaterally changed, it cannot be treated other than as supporting evidence for the applicant’s cavalier attitude towards adhering to its duty.

ITEM 15

79. This concerns the keeping of a cat without Body Corporate approval, contrary to By-Law 16. Given the terms of the approval made by the Committee of the Body Corporate on 6 July 2004 to the effect that the Committee consented “to the owner or occupier of Lot 106 keeping their domestic Siamese cat upon their lot in accordance with the By-Laws and Special Conditions” (emphasis added), despite Mr Carroll’s declaration asserting that the applicant has failed to remove the cat and failed to submit an application for approval, I find that there has been no breach of the relevant By-Law concerning animals.

ITEM 16

80. The Notice of Default referred to a letter from the Body Corporate Manager dated 6 November 2006 instructing the Caretaker to ensure correct operation of the spear pump system with particular attention to the sprinkler heads and spray patterns. The suggested remedy was to carry out regular inspections and maintenance of the spear pump and sprinkler systems to ensure correct operation.
81. The applicant’s written submissions assert that the attention to the non-working sprinklers required an expertise outside that of the Caretaker and that the Committee obtained a quotation and that the sprinklers were fixed prior to the EGM.
82. Mr Carroll’s declaration states that an inspection on 19 December 2006 showed that the defective sprinkler heads had not been repaired or replaced. It also states that the Caretaker had not attended to the repair of the defective sprinkler heads by 5 January 2007 or at any time thereafter, while accepting that the Body Corporate then employed outside contractors to repair the system on 5 February 2007 (which was prior to the EGM).
83. Especially considering that Mr Carroll was not contradicted, and considering that the Notice of Default did not necessarily require the Caretaker to carry out the repairs itself but merely to “ensure” correct operation of the system, the fact that the Body Corporate had itself to undertake the necessary repairs on 5 February 2007 justifies a finding that there was an unremedied breached during the default period with respect to this item, in breach of Clause 3.1.11.

ITEM 17

84. In the Notice of Default, reference is made to a written job list concerning certain maintenance jobs being given to the representatives of the Caretaker on 3 December 2006. The suggested remedy was to comply with all requests, directions and instructions; and the list specifically identifies 6 particular matters that needed attention.
85. In its written submissions, the Caretaker concedes that not all matters on that list were able to be done “in the midst of the Christmas rush”. But there was no evidence proffered by anyone to contradict what was asserted by Mr Carroll in his declaration. There, he states that on 5 January 2007 he conducted an inspection accompanied by Ms Cheryl Finlayson (whose witness statement was not put in dispute) and noted that, in particular, the Caretaker had failed to: repair the sprinkler system; purchase or spread additional mulch; cut the ginger plants; mow the lawn to a height of 6mm; clean the perimeter drains in the garage or clean the fire door steps; and clean the fire doors. Some of the photographs comprising the 7 photographs which were given prior to the holding of the EGM demonstrate clearly that some particular tasks have not been done. It is sufficient, for present purposes, to refer to photographs 1, 2, 5, 6 and 7. What is shown in those photographs could easily have been done within the 14 day period. What is especially obvious is the unmown grass, shown in photograph 7, which had been neglected for some considerable period of time, much less mown to a height of 6mm.
86. It is thus concluded that it is appropriate to find, at least to the extent shown in the photographs identified, that the Caretaker did not carry out the directions that it concedes were given on 3 December 2006, in breach of Clause 3.1.11.

CONCLUSIONS CONCERNING NOTICE OF DEFAULT

87. In accordance with the contention by the applicant that the defaults under Clause 8.1.2 had to be valid, current and ongoing, in the sense that the defaults had to be established to have existed in the 14 day default period and had to have been unremedied by the end of that period, what I have found in my consideration of each and every item is that a significant number of them (being significant both in numerical quantity as well as significant in terms of breaches of the duty owed under the Caretaking Agreement) contain relevant unremedied breaches which would justify a finding that the Caretaker neglected to carry out its duty pursuant to the Caretaking Agreement and did not take all reasonable steps to remedy such neglect within the period of 14 days after the Notice in writing had been given to the Caretaker on 20 December 2006 (specifying the duty which the Caretaker had neglected to carry out to that time).
88. What perhaps is significant from the Caretaker’s point of view is that in its written submissions it asserts that the defaults listed in the Notice of Default were basically the same that were given by the Committee earlier in 2006. Although it is further contended by the applicant that the defaults were merely a history of things that had transpired while it was the Caretaker and were “certainly not continuing”, such a contention is contrary to the findings that I have made. Thus, to the extent to which it provides a context for the occurrence of the failure to remedy in the period designated by the Notice of Default, it demonstrates a continuing approach by the Caretaker to neglect of its duty and at least partly explains the disrupted relationship between the Caretaker and the Committee.
89. Hence, the Committee had proper and appropriate grounds on which to rely in framing the relevant resolution that was considered by the EGM on 11 February 2007. That is, the Body Corporate was entitled, as a matter of contract, to terminate the Caretaking Agreement on the basis of an established breach of Clause 8.1.2.
90. Because of the steps to be taken, identified by the District Court in Body Corporate for Palm Springs Residences as the necessity for the calling of an EGM pursuant to the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (which requires a decision of this kind to be made by the members of the Body Corporate in General Meeting, by ordinary resolution) to satisfy the statutory requirements, it was not necessary that any breach be found to have continued after the relevant 14 day period. As Clause 8.1 of the Caretaking Agreement states, the Caretaking Agreement “may be terminated with immediate effect” by the Body Corporate by notice in writing to the Caretaker upon the happening of the event specified in Clause 8.1.2. Necessarily, as just observed, that immediacy is tempered by the Accommodation Module requirements, although as noted by the District Court in Body Corporate for Palm Springs Residences, according to the Minutes of the EGM, the resolution was carried by majority of 27-7, with 1 abstention: at [6].
91. Subject to the consideration of whether the Committee, and therefore the Body Corporate itself, was in breach of its fiduciary obligations in submitting to the members the representations contained in the circular entitled “COMMITTEE COMMUNICATION TO ALL OWNERS”, the Body Corporate had a right to exercise its powers pursuant to Clause 8.1 as at 11 February 2007 and was, therefore, entitled to give a Notice of Termination by the above referred to letter of its solicitors of 19 February 2007.

FIDUCIARY DUTY

92. In Body Corporate for Palm Springs Residences, McGill DCJ undertook a detailed consideration of what was involved in the issue of a fiduciary duty owed by a Committee of a Body Corporate to the Body Corporate members, at least in the context of a general meeting.
93. As observed by McGill DCJ, it was submitted by the present applicant (who was the respondent on appeal) that a fiduciary duty did apply and McGill DCJ then stated that he proceeded on the basis that such was correct: at [56].
94. It has not been contended before me on this specialist adjudication that there was no such duty in the present circumstances. Hence, I also am content to proceed on the basis that such a duty exists and was owed for the purposes of EGM held on 11 February 2007.
95. The content of the duty is to provide members with material which is substantially full and true in relation to any proposal that the Committee puts before a meeting of all members. There is nothing in the material presented to me that suggests that considerations which arise from particular obligations of frankness are applicable here, in the absence of evidence that the carriage of the resolution would confer some benefit on one, or more, or all of the members of the Committee: see Body Corporate for Palm Springs Residences at [56].
96. The next aspect of the duty to be considered arises from Peters’ American Delicacy Co Ltd v Heath [1939] HCA 2; (1939) 61 CLR 457. It was considered in Body Corporate for Palm Springs Residences at [66] – [68]. It involves consideration of the effect of an inaccuracy in something stated by, in this context, members of the Committee in a circular supporting a resolution at a EGM. In summary, what is required of the members of the Committee is a description, honestly made, of the effect of what is being presented as the views of the members of the Committee about the matter under presentation. As observed in Body Corporate for Palm Springs Residences, here what was put out in the relevant circular (to be discussed later) in relation to the cost of works was not stated as a cost which had in fact been already incurred, it having been made clear in the communication that what was being spoken of were estimates of the cost of doing work which the members of the Committee assert has been made necessary by the deficiencies of the Caretaker: and, therefore, obviously put forward as the opinion of the Committee: at [69]. As further observed by McGill DCJ in the same paragraph, the view at least was open that it could reasonably be deduced by a lot owner that the Caretaker disputed the proposition put forward: also at [69]. Thus, what needs to be considered by me is whether, as to the potential expenditure of over $60,000.00 being misleading, did that position reflect the bona fide opinion of the Committee at the time, in circumstances where it was put as an expression of the Committee’s opinion in relation to the situation?
97. As to the onus, as held in Body Corporate for Palm Springs Residences, in an allegation of a breach of fiduciary duty of this kind, the person alleging the breach carries the onus of establishing how or in what manner that which was asserted involved error or how that which was left unsaid had the potential to mislead or deceive: at [71] – [72]. In order to answer those questions, it is necessary to consider various aspects of the evidence and how the facts, as found, fit within the legal principles.
    

CONTENTS OF CIRCULAR

98. The full title to the circular in question is “COMMITTEE COMMUNICATION TO ALL OWNERS”, with the annotation that it was relevant to the EGM called for 11 February 2007.
99. Immediately prior to the statement of the total sum of $62,550.00 and the 8 items that together added up to that sum, there was a single question posed and a single answer given. The question was framed as to why was the Committee was putting the owners through inconvenience and expense of another EGM and secret ballot to terminate the Caretaker. The answer provided was that the Committee “firmly believed” that termination was in the best interests of all owners and, importantly, that the “cost of unnecessary expenditure and rectifying the culminating damage to Palm Springs Residences by retaining (the Caretaker) far exceeds the cost of the EGM and secret ballot”. Immediately following that question and answer was the heading entitled “PENDING COSTS”.
100. The 8 items, together with the costing for them, that comprise the “pending costs” will be examined in more detail soon. But it should also be recognised that the communication stated that all defaults were “valid, current and on-going” and that the 7 photographs (mentioned earlier) were “enclosed”, having been taken at 10.00 am on Sunday 21 January 2007 and that they showed “some of the defaults claimed by the Caretaker to have been rectified”.
101. Before considering each of the 8 items of “pending costs” in detail, it is clear from the material in the volume presented by the Caretaker to the District Court that the relevant communication was given subsequent to the Caretaker’s “RESPONSE TO NOTICE OF DEFAULT” dated 19 January 2007. This then puts in context the fact that the enclosed photographs were taken subsequent to that (namely, on 21 January 2007) and the same context shows that there was an ongoing disputation between the Committee and the Caretaker concerning whether “some” of the defects had or had not been rectified.

ANALYSIS OF “PENDING COSTS”

102. This is one important area where there was detailed evidence led by Mr Carroll and there was a vigorous cross-questioning of him by the Caretaker’s representative.
103. Mr Carroll’s affidavit contained in Attachment 23 a detailed submission concerning these “pending costs”. Immediately following reference to that attachment it was stated by Mr Carroll that it was his “honest and genuinely held belief, and that of the Committee, that the costs detailed” were “an accurate estimation of the cost to the Body Corporate of the Caretaker’s defaults”.
104. Because the applicant placed so much emphasis on these costs and because it is necessary to examine each and every item for the purposes of determining whether that assertion by Mr Carroll is sustainable, it is necessary to consider the cost items seriatim.

ITEM 1

105. The first item deals with the repairing of fire doors, alleged to be due to inadequate or no cleaning by the Caretaker. The estimation is $12,000.00.
106. In cross-questioning, Mr Carroll readily admitted that, originally, the Body Corporate claimed the cost of repairs of these fire doors accessing individual lots was the original builder’s responsibility. But Mr Carroll then asserted that the Body Corporate received later reports that it was not the builder’s responsibility but rather resulted from a continuing failure to remove the build up of dirt, in the context of the building in which the residences were situated (namely, one that was air-conditioned in its foyer and passage areas) which led to subsequent rusting.
107. Documents (referred to earlier) relevant to that were tendered. They comprised 3 in all. The first is a quotation to Mr Warren Patterson from Gold Coast Fire Door Services P/L dated 9 February 2005. It states that the door frames “will require a wipe down to the rebate on a weekly basis to prevent dust and moisture build up which in turn caused the doors to blister”. The second document is a report from Trafalgar Building Products dated 19 January 2006. It states that an inspection found a build up of dirt in reveals where the door and the frame meet and that this “is making” the frame rust in the corner of the frame. Also found was water dripping down from the head of the frame on the lobby side due to the surrounding air conditioning, making the doors wet. The report concludes that Mr Warren Patterson was present at the inspection and “was shown the problem”. The final document is a document from Glenzell Pty Ltd, the builder, is dated 7 February 2006 and has been “received” on 13 February 2006. Relevantly, it states that the builder’s inspection into the fire rated entry doors concluded that it was “a building maintenance issue” and enclosed that Trafalgar Building Products’ document, stating that it was the one who supplied, installed and certified the product.
108. In the absence of any expert evidence from either party and, in particular, in the absence of any reason to doubt the conclusions stated in the documents just canvassed, I find that the primary problems with the fire doors were created by a failure to maintain them properly, both in terms of a build up of dirt and in terms of removing the moisture build up occurring as a result of the surrounding air conditioning.
109. In the end, the resolution of this item depends on two factors. The first is whether or not the parts of the fire doors that created the problem were in the “common property” of the relevant scheme (and were objects for which the applicant has maintenance obligations) and the second is whether or not the sum of $12,000.00 was a bona fide estimate of the cost. As to the latter, the cross-questioning of Mr Carroll did not go to suggest that the particular sum was not a cost which was honestly held to be true by the members of the Committee as at January/February 2007. In fact, the document relied upon by Mr Carroll in his declaration, although obtained subsequently, shows that the estimation of $12,000.00 was considerably lower than the total cost of rectification of all doors, and much lower than the cost of doors then currently or prospectively to be repaired/replaced.
110. Therefore, the issue simply resolves to whether or not it was in “common property” area and within the terms of what the Caretaker was required to repair under the Caretaking Agreement. Although it was the contention of the Caretaker that it had no responsibility, it is clear from Clauses 3.1 and 3.1.15 generally, and Clause 3.1.15.1 in particular, that the Caretaker had an obligation to keep in a clean and neat condition all public foyers, stairways and utility areas.
111. Relevant to the determination of this matter is the Accommodation Module. By section 108(2), it being uncontested that the lots included in this scheme were created under a building format plan of subdivision, the Body Corporate “must” maintain in good condition “doors”, windows and associated fittings “situated in a boundary wall separating a lot from common property”: see sub-paragraph (a)(ii). There can be no doubt that the fire doors fall directly within that provision. Therefore, given that the Body Corporate has the responsibility to maintain such doors and given that the Caretaking Agreement is the mechanism by which the Body Corporate discharges that particular duty, it must at least have been within the bona fide view of the members of the Committee that the Caretaker had the responsibility for the cleaning of the fire doors in question. Access to individual lots was permissible, subject to conditions, under section 163 of the BCCM Act.
112. Taking all the elements of this item into account, I find that the representations dealing with the repair and the source of, and the responsibility for, the fault, together with the estimated cost, were all made bona fide by the members of the Committee; and that nothing potentially materially misleading was omitted.

ITEM 2

113. This concerns the necessity to reline the swimming pool due to the alleged default in the chemical balancing by the Caretaker. The estimated cost was $10,000.00.
114. The cross-questioning of Mr Carroll on this item showed a ready acceptance by him that some aspect of discolouration could have occurred “naturally” through the combination of chlorine and sunlight and that there may have been only a 12 month “guarantee” of the lining. But there were two parts to Mr Carroll’s assertion about the Caretaker’s responsibility. The first was that a quotation had been obtained from Swimart for $10,000.00 for relining the pool, where lining damage of the type experienced at “Palm Springs Residences” was said to have “resulted” from “incorrect chemical balance”. A subsequent quotation from Rod Cameron Pools dated 3 March 2007 came in at $12,100.00.
115. The second aspect of the discolouration from the respondent’s position was that there were two significant stains on the bottom of the pool which were claimed to have resulted from two batteries being thrown into the pool, that there was a delay of a week before it was cleaned and that the Caretaker did nothing to either remove those batteries or to clean the resulting damage.
116. From the applicant’s point of view, before dealing with the general discolouration, while no direct evidence was led to contest the assertion about the batteries, it was clear from the cross-questioning that that event was being contested.
117. As for the more general claim of discolouration, the applicant relies for its contentions upon the declaration of Mr Gabain. As noted earlier, he stated that he “would say that any change in the pool surface has not been caused by chemical imbalance” and that the “quartz surface which is on your pool is renowned for discolouring giving a blotchy effect”. But that was dated 19 March 2007 and the issue here is not the truth or falsity of discolouration but whether or not there was a bona fide belief among the members of the Body Corporate about the cause of discolouration.
118. Having looked at all the evidence and having heard the cross-questioning of Mr Carroll, I conclude that, the battery issue apart, there was a genuine belief by the members of the Committee that the discolouration in the pool had resulted from a failure by the Caretaker to maintain a correct chemical balance. While it can be suggested that more detailed investigation should have been undertaken by the Committee before committing itself to the conclusion that it did, the Committee also had as part of its consideration the investigations undertaken by the former Professor Gall which conclusively showed for the time that she was doing her chemical testing that the chemical balance was constantly out and that the salt levels were too low for the chlorinator to function correctly. Since all this material would have been in the Committee’s collective mind at the time it issued the relevant communication, I find that it was not relevantly in breach of any fiduciary duty when it made the representations concerning the replacement of the pool lining, either by inclusion or exclusion.

ITEM 3

119. This concerns whether, due to inadequate cleaning by the Caretaker, there would need to be a premature replacement of carpets.
120. In response to questions of him by the applicant’s representative, Mr Carroll acknowledged that if carpets were to be replaced every 10 years then there would be still some 5 years to run, but hastened to make the point that the Committee was alleging that there was accelerated wear to the carpets because they were not regularly cleaned or vacuumed and that the exits from the elevator were not kept sufficiently cleaned such that dirt was brought in from the car parks. With respect to questioning that reliance upon the sinking fund costing could only be a reference to an estimate, Mr Carroll’s response was that the contention was that the replacement had to be done ahead of time. When questioned on whether there had been an issue with cleaning the carpets by steam cleaning with the result that there was a stretching of the carpet because it was left too wet, Mr Carroll denied that that had occurred. But even if it had, the responsibility for ensuring good and workmanlike quality was cast on the Caretaker: see Clauses 3.1.18 and 3.1.30.3. Finally, in response to the proposition that the whole of the wear and tear could not be the Caretaker’s responsibility, Mr Carroll responded that the item was not intended to convey that the whole of the cost was the Caretaker’s personal responsibility but was, rather, an estimate of the outlay that would “now” have to be made by the Body Corporate.
121. In Attachment 23 to Mr Carroll’s declaration, it was asserted that expert opinion had been obtained by the Committee that with the pure wool carpets of the quality in question, if cleaned at least twice a week by vacuuming and once per 3 months by qualified carpet cleaners, they should be expected to last some 15 to 20 years. Since the Committee had received an estimate of the cost of replacement of $26,100.00, the Committee estimated that if the carpets were replaced at year 8 rather than lasting to year 20 the lost value to the Body Corporate would be $15,978.00.
122. Since the pending cost estimate in the circular was $26,100.00, it was contended by the applicant that it must necessarily have been misleading, particularly given the concession by Mr Carroll. The respondent’s reply was that the circular never claimed that all the wear was attributed solely to the Caretaker’s “negligence” and that the figure stated was simply the actual cost of the replacement of the carpets.
123. I find that the Committee bona fide reached the conclusion that there was a need to replace carpets prematurely and that this was due to the neglect by the Caretaker, particularly as evidenced by neglect as justified by figures extracted from the Log (insofar as they only had access to those figures up to June 2006). The problem arises from the acceptance that not all of the cost of the replacement carpets was due to “inadequate cleaning”, as allegedly represented. In the end, I find that the Committee bona fide believed that the actual cost would be some $26,100.00. That belief is, of course, now backed up by a written quotation obtained 5 June 2007 (which is part of Mr Carroll’s declaration). What needs to be considered is whether the representation that was made in the circular is so misleading by omission as to constitute a breach of the fiduciary duty owed by the Committee to all members of the Body Corporate.
124. Noting that the circular contains, before the itemisation of the pending costs, a statement that what was to be stated in the circular was the “cost of unnecessary expenditure”, as well as “rectifying the culminating damage”, it can be held that, when read in context, the cost of replacing carpets would be the designated figure of $26,100.00 and that this was “premature” and that the reason that it was premature was “due to inadequate cleaning”. Approached that way, I conclude that there was no relevant omission and, consequently, no breach of fiduciary duty.

ITEM 4

125. This item concerns the replacement of the swimming pool chlorinator due to inadequate salt. The costing was said to be $1,450.00.
126. The questioning of Mr Carroll was merely to the effect of whether he conceded that the Caretaker’s contractor said that the chlorinator was defective. His positive response to that and to the fact that the charge was $1,450.00 does not really go to the relevant point in dispute.
127. The evidence led by the applicant, which appears in the declaration of Mr Gabain, was that it was expected that the cells in the chlorinator would “wear out that much quicker” and that the “replacement” of them was due “normal fair wear and tear”, with the replacement of the cooling fan having seized up “due to corrosion”.
128. For its part, the respondent relied upon a statement by Swimart that supported the chlorinator manufacturer’s statement that low salt levels caused premature chlorinator failure. The respondent therefore argues that since the Caretaker’s own figures showed that the swimming pool had been running low on salt for some 2 years, the statement was neither untrue nor misleading. Necessarily, what has also to be taken into account for the respondent’s case is that it received confirmatory support from Ms Gall who specifically stated that the results that she obtained showed that the “salt levels were too low for the chlorinator to function correctly”.
129. Hence, since there is no dispute about the cost or the fact that it was not “pending” but incurred, it is a matter of whether the Committee held the bona fide opinion that the replacement of the chlorinator was due to inadequate salt in the pool. Given the survey just undertaken, it must be concluded that there was the necessary bona fide belief. Nothing was relevantly omitted.

ITEM 5

130. This concerns the digging up and cleaning of the drain to the pool podium.
131. The cross-questioning of Mr Carroll was, essentially, to the effect that the issue was not a problem that had been created by the Caretaker. To that blunt allegation, Mr Carroll replied that if the podium drain had been clean then there should not have been a build up of sand and there should not have been the blockage that occurred. Further, Mr Carroll asserted that the pool shower was never cleaned daily as it should and that this led to the problem as well. Mr Carroll was an engineer, a fact he disclosed at the meeting.
132. The cost associated with this work was $3,000.00. The Committee worked on an estimate given to it. An actual quotation obtained from West Plumbing Maintenance on 5 June 2007 was that the cost would be $2,862.75. Hence, it cannot be said that the estimate was misleading.
133. As to whether or not it was necessary and as to whether or not it was due to some defect on the part of the Caretaker under the Caretaking Agreement, the attachment referred to in Mr Carroll’s declaration stated that two plumbers had advised that it would be more economical and less disruptive to run a new drain rather than dig up the old soak pit. That was not disputed by the applicant.
134. The Committee, according to the relevant attachment, believed that the blocked drain was a direct result of the Caretaker’s refusal to clean sand from the drain. That that attitude was indeed held was confirmed by the cross-questioning of Mr Carroll. In such circumstances, it cannot be said that the Committee did not have bona fide reasons for representing the actual sum. Furthermore, I find that the relevant work was necessary, that the allocation of blame was to the Caretaker and there was no relevant omission.

ITEM 6

135. This concerns additional secretarial costs to the Body Corporate Manager (being SSKB). The estimate of $2,000.00 was an estimate made by the Committee for the time and effort that was spent by SSKB in dealing with what the Committee saw were the problems that the Caretaker had caused. It is not to the point that, as at the present time, SSKB has not actually charged the Body Corporate such additional secretarial costs. In fact, Mr Carroll gave evidence that SSKB forgave the amount at a later time.
136. Even given the limited history that was placed before me of the ongoing problems between the Caretaker and the Committee of the Body Corporate, and given the conclusions that I have reached in these Reasons, there is no basis upon which to find that the applicant has discharged its onus of establishing that there was any factor which would lead to the finding of breach of fiduciary duty concerning the secretarial costs. It did not suggest anything that was relevantly omitted.

ITEMS 7 and 8

137. This concerns an estimate of $3,000.00 to clean the grounds of “Palm Springs Residences” and $5,000.00 to restore the gardens.
138. The cross-questioning of Mr Carroll elicited the response that, at the original interview with the applicant’s representatives, it was represented to the Committee of the time that the representatives “were keen gardeners”. In the Minutes of the Committee Minute of the respondent for 6 July 2004, in a section following that headed “INTERVIEW OF PROPOSED PURCHASERS”, a note is made in the Motions for Consideration (No. 9) that there was further discussion with the proposed purchasers and that the Committee advised them that work would be carried out by the Body Corporate “to rectify the gardens” and that the Committee “requested that after this is carried out the proposed purchasers maintain the gardens and building to this standard”. The Minutes went on to state that the proposed purchasers assured the Committee “that the standard would be maintained”. It was not in dispute that the “proposed purchasers” referred to the applicant and, or alternatively, its representatives.
139. The cross-questioning of Mr Carroll also elicited the response that the sums in question, totalling some $8,000.00, were estimates to restore the grounds and gardens to the condition that they were in when the applicant took over. It needs to be understood that the cleaning of the grounds involved what was called “water pressure cleaning”. A quotation obtained from Extreme Water Blasting dated 29 May 2007 stated that the cost of such cleaning then would have been $1,452.00. The quotation obtained with respect to the restoring of the grounds, dated 29 April 2007, was in the sum of $12,731.40. That quotation was from the same company that restored the grounds at the time of the handover to the applicant.
140. In the cross-questioning, Mr Carroll, with respect to the estimate of $3,000.00 for the water pressure cleaning, stated that that particular figure had been based upon previous experience of using pressure cleaners.
141. Given that Items 7 and 8 are in total $8,000.00 and that, as noted in the circular, there was a cost of some $8,000.00 to restore the gardens when the applicant first took over, it cannot be said that the estimates of $3,000.00 and $5,000.00 were other than made bona fide. As to the reason for needing such costs to be expended, there were strong grounds for the Committee to come to the view that the ongoing cleaning difficulties experienced by the Committee in having the applicant undertake its duties with respect to these matters was the cause for such estimated costs. No relevant omission has been identified by the applicant.
142. Therefore, in conclusion, I hold that there has been no breach of any fiduciary duty concerning the costs of cleaning the grounds and restoring the gardens.

CONCLUSIONS CONCERNING FIDUCIARTY DUTY

143. Since it has been held that there has been no breach of fiduciary duty, the pro forma statements from some of the applicant’s witnesses about the effect of the circular become irrelevant.
144. On the basis that such a duty does exist in the circumstances postulated, there is no basis on which it can be held that the applicant has satisfied the relevant onus of establishing that the Committee in the existing circumstances breached that duty by failing to form bona fide views and communicate them fully and truly as the representations that were contained in the circular entitled “COMMITTEE COMMUNICATION TO ALL OWNERS”.
145. Consequently, adopting the terms used by McGill DCJ in Body Corporate for Palm Springs Residences, having made the findings that I have, the potential expenditure of over $60,000.00 was obviously put forward as a bona fide expression of the Committee’s opinion in relation to the situation, and, as such, it was covered by the principle in Peters’ American Delicacy Co Ltd v Heath: at [70].

ORDERS TO BE MADE

146. With respect to application 0135-2007 (and its amended manifestation), the conclusion reached by me is that the application should be dismissed. As amended, according to the reasons given in the Final Determination of 23 June 2007 by the former Specialist Adjudicator, the application sought to set aside the termination of the Caretaking Agreement, as an alternative to the original orders sought, on the grounds that it was unjust and unreasonable and against the rules of natural justice. The original application had sought to have the resolution (passed at the EGM held on 11 February 2007 terminating the Caretaking Agreement) set aside. Dismissal would leave both the resolution and the termination as valid acts of the Body Corporate.
147. Dealing with the original form of the application first, given the conclusions reached by me here, there is no basis for making any such declaration. As for the alternative order sought, given the conclusion with respect to the right of the Body Corporate to terminate the Caretaking Agreement and the absence of any breach of fiduciary duty by the Committee of the Body Corporate, any separate ground of setting aside the Caretaking Agreement on the basis of the termination being unjust and unreasonable cannot be maintained. As for the “rules of natural justice”, it is impossible to discern how they could be of any relevance in the circumstances found to exist.
148. Turning, then, to the second application, being 0309A-2007, again by reference to the reasons for the Final Determination by the original Specialist Adjudicator, since he held that the Body Corporate had paid the deducted fees, he came to the conclusion that the need for any order on the second application had passed: at [26]. So that ought be dismissed as well.

COSTS

149. At the conclusion of the oral submissions, I put the proposition to both parties that, given the orders made by the original Specialist Adjudicator as to costs and given the orders made by the District Court as to costs on appeal, any order that would be made with respect to this specialist adjudication would necessarily require that the original order as to costs referred back to me would of necessity follow the order for costs made here.
150. Consequently, given the outcome in this adjudication and given that there is nothing in the conduct of the parties in relation to the proceeding that would in any way detract from costs following the event, I intend to make an order that the applicant pay the specialist adjudicator’s costs of the application fixed at $17,187.50 within 30 days from the date of the order and that a similar order as to payment be made concerning the original specialist adjudicator. Even though section 280 of the BCCM Act has now been repealed (along with section 265), the amended section 264 does not appear to negative the decision by McGill DCJ in Woodrange Pty Ltd v Le Grande Broadwater Body Corporate [2004] QDC 215 that there is no power to make orders for legal professional costs between the parties. Of course, since the amending 2007 Act commenced on 20 March 2007 and section 359 of it, as a transitional provision, left the first application (as one “not disposed of” before that date) subject to the old section 280, it is only the second application which would be subject to the amending legislation.
     

Dated this 2nd day of July, 2009.

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KIERNAN DORNEY, Q.C.
(Specialist Adjudicator)