Marista [2009] QBCCMCmr 66 (26 February 2009)

Last Updated: 9 March 2009

REFERENCE: 0044-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	34606
Name of Scheme:	Marista
Address of Scheme:	78 The Esplanade, Burleigh Heads

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

Mr Glen Knuth, a service contractor for the scheme

I hereby order that the application for an order that the body corporate consent to the transfer of a Caretaking Agreement dated 27 October 2005 between the body corporate and Glen Knuth, to Rhoades Property Pty Ltd, is dismissed under section 270(1)(a) of the Body Corporate and Community Management Act 1997.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0044-2009

“Marista” CTS 34606

APPLICATION

This is an application made on 19 January 2009 by Glen Knuth (the applicant), a service contractor for the scheme, against the body corporate of Marista CTS 34606 (the body corporate) for an order that the body corporate consent to the transfer of a Caretaking Agreement dated 27 October 2005 between the body corporate and the applicant (the caretaking agreement), to Rhoades Property Pty Ltd (the transferee).

The grounds to the application are to the following effect:

• The Applicant sought consent to the transfer of the caretaking agreement to the transferee, by letter dated 10 December 2008 from his lawyers, McLaughlin Ivey, to the body corporate. The letter included as attachments the resumes of Nick Jones and Linda Blatch.
• The body corporate responded by letter dated 11 December 2008 acknowledging receipt of the letter dated 10 December 2008 and advising that the committee could give consent to the assignment without the need of a full body corporate meeting. It was noted that a committee meeting would be held on Friday, 19 December 2008 and Mr Jones and Ms Blatch were requested to attend for an interview.
• A committee meeting was held on 19 December 2008, at which owners of six of the eight lots in the scheme were represented.
• On Friday 2 January 2009, the body corporate manager emailed the applicant’s lawyer and advised as follows:

“The Committee for Marista CTS 34606 interview Mr Jones & Ms Blath on 19th December 2008 and advised them that whilst not withholding approval for this sale to proceed, it wished to negotiate variations to the list of duties with Mr Knuth, and that this process would need to be completed prior to sale.

Would you kindly advise the purchaser that this is in process at the moment and is in no way a reflection on his credentials or abilities but more in line with his request that the body corporate arrange the variations to the Work Schedule with Mr Knuth.

Would you also kindly obtain and forward references for Mr Jones and Ms Blath as early as possible.”

• On 6 January 2009, McLaughlin Ivey emailed the body corporate manager as follows:

“My instructions are that neither my client or the buyer require any amendment to the existing caretaking agreement. In those circumstances would you kindly confirm by return that the body corporate will consent to the assignment of the caretaking agreement.”

• Proposed amendments to the caretaking agreement were emailed to the applicant’s lawyers on 7 January 2009 from the body corporate manager, on behalf of the body corporate.
• The applicant reviewed the proposed amendments and found them to be unreasonable as they varied greatly from the original agreement with a large increase in duties and attendance from twice weekly to 7 days per week and with no increase in remuneration thus making the caretaking agreement unviable.
  

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to the body corporate manager, with an invitation to the committee to respond to the matters raised in the application. A joint submission from Pat McNeven and Robert McFeat was received. It was to the following effect:

• The body corporate received notification on 10 December 2008 that Glen Knuth proposed to sell his interest in the caretaking agreement.
• A committee meeting was held on 19 December 2008 where the prospective purchasers were interviewed. At the meeting, it was indicated to the purchasers that the body corporate was wishing to exercise its rights to vary the “Work Schedule” in accordance with clause 14 of the caretaking agreement. The purchaser informed the meeting he was purchasing the current agreement and any suggested variations would best be negotiated with Mr Knuth and he would consider those changes with Mr Knuth at the appropriate time.
• On 2 January 2009 the body corporate manager advised the applicant’s lawyers of the outcome of the meeting of 19 December 2008, including that, whilst not withholding approval for the sale to proceed, the body corporate wished to negotiate variations to the list of duties with Mr Knuth as suggested by the purchaser. The variations would need to be negotiated and finalised prior to sale taking place. Additionally, the lawyers were requested to inform the purchasers that this process was in no way a reflection on their credentials or abilities but more in line with his request that the body corporate arrange any variations with Mr Knuth.
• Following the meeting, Mr Knuth was informed verbally of the body corporate’s desire to review the Work Schedule and written advice would be forwarded as soon as possible as the Christmas period was a difficult time to arrange to co-ordinate all owners.
• On 5 January 2009 the secretary spoke to Mr Knuth to obtain his email address to forward the amended Work Schedule. On 6 January 2009 the Varied Work Schedule was forwarded as a basis for further discussion so that a desirable outcome could be achieved by all parties.
• On 19 January 2009, Mr Knuth lodged this application.
• No response to the proposed variations to the Work Schedule was received from Mr Knuth until 2 February 2009, at which time he indicated that he was prepared to acknowledge that a variation was acceptable.
• On 5 February 2009, a response to his correspondence was forwarded to his email address, but it was not accepted. A copy of the correspondence was handed to him on Friday 6 February 2009. In the correspondence, Mr Knuth was requested to provide clarification of the scheduled work to enable the body corporate to evaluate how the variations can be introduced in a satisfactory manner. The committee is awaiting his reply.
• The body corporate has not in any way wished that this transaction should not proceed, it has merely exercised its rights in terms of section 14 of the existing caretaking agreement.
• With respect to section 9.3 of the caretaking agreement, the body corporate manager has made written and verbal requests for written references from the purchasers through their lawyers. To date these have not been received. It is acknowledged that the applicant, in his advice of proposed sale did provide information including resumes and a number of referees. Owners considered written references were required.
  

In a facsimile of 17 February 2009, the chairperson advised, amongst other things, that the requested references were submitted by the lawyers for the transferee on 16 February 2009 and that it was the intention of the body corporate, once the information sought from Mr Knuth and the Deed of Variation are received, an EGM will be called to finalise this matter.

JURISDICTION

“Marista” CTS 34606 is a community title scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module). There are 8 lots in the scheme created under a Building Format Plan of subdivision.

The current Standard Module commenced on 30th August 2008, replacing the previous Standard Module that operated from July 1997 (Previous Module). A number of provisions of the Standard Module are the same, or substantially the same as provisions in the Previous Module despite the provisions having different section numbers. These provisions are generally to be dealt with as replacements of the similar provisions of the repealed legislation and anything done under the Previous Module will not generally be affected by the commencement of the present Standard Module (sections 209 -216, section 20 Acts Interpretation Act.). Where relevant, references will be made to the Previous Module in parentheses after the current module reference.

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

a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorization 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)).

This is a dispute between a service contractor and the body corporate concerning alleged contraventions of the legislation, but does not come within the dispute resolution provisions of the Act. Section 227 of the Act defines the allowable parties to a dispute under the dispute resolution provisions. The applicant is a “service contractor” for the scheme, by virtue of the definition in section 15 of the Act. Although the applicant also identified himself as a caretaking service contractor on page one of the application form, a perusal of a copy of the caretaking agreement (provided to the office on 24 February 2009 after it had been requested) and further inquiries of the applicant made today by phone by administrative staff have confirmed that he is not a “caretaking service contractor” within the definition of Schedule 6 of the Act.

A service contractor is not a party identified in section 227 of the Act, unless the relevant dispute between the service contractor and the body corporate arises out of a review carried out, or required to be carried out, under chapter 3, part 2, division 7 of the Act. The current dispute has not arisen out of any such review. As such, the applicant is not within a category of persons entitled to make an application and I am compelled to dismiss the application under section 270(1)(a) because I have no jurisdiction to deal with the application. The Applicant is at liberty to commence proceedings in a court or tribunal of competent jurisdiction.

ADJUDICATOR VIEWS

Despite the fact that I do not have jurisdiction to determine this dispute, I make the following comments for the benefit of both parties to this dispute.

The law relevant to this dispute is clearly laid out in section 122 (section 84) of the Standard Module, which provides as follows:

122 Transferring engagements and authorisations

(1) A person’s rights under an engagement as a body corporate

manager or service contractor, or under an authorisation as a

letting agent, may be transferred only if the body corporate

under the engagement or authorisation approves the transfer.

(2) To avoid any doubt, it is declared that the approval may be

given by resolution of the committee (unless the decision on

the approval is a decision on a restricted issue for the

committee) or by ordinary resolution of the body corporate.

(3) In deciding whether to approve a proposed transfer, the body

corporate may have regard to—

(a) the character of the proposed transferee and related

persons of the proposed transferee; and

(b) the financial standing of the proposed transferee; and

(c) the proposed terms of the transfer; and

(d) the competence, qualifications and experience of the

proposed transferee and any related persons of the

proposed transferee, and the extent to which the

transferee and any related persons have received or are

likely to receive training; and

(e) matters to which, under the engagement or

authorisation, the body corporate may have regard.

(4) The body corporate must decide whether to approve a

proposed transfer within 30 days after it receives the

information reasonably necessary to decide the application for

approval.

(5) The approval may be given on condition that the transferee

enters into a deed of covenant to comply with the terms of the

engagement or authorisation.

(6) The body corporate must not—

(a) unreasonably withhold approval to the transfer; or

(b) require or receive a fee or other consideration for

approving the transfer (other than reimbursement for

expenses reasonably incurred by the body corporate in

relation to the application for its approval).

(7) Subsection (6) applies subject to division 2.

(8) In this section—

related persons, of a proposed transferee, means—

(a) if the proposed transferee is a corporation—the

corporation’s directors, substantial shareholders and

principal staff; or

(b) if the proposed transferee is in partnership—the partners

and principal staff of the partnership.

On the basis of the information presented to me, it appears to me that, despite its assertions to the contrary, the decision of the committee at its committee meeting of 19 December 2008, may have amounted to an unreasonable withholding of approval to the transfer. This is because a proposed variation to the caretaking agreement is not a matter to which the body corporate may have regard in deciding whether to approve a proposed transfer.

Contrary to the assertions of the chairperson, the body corporate does not have any “right” to vary the Work Schedule (or any other part of the caretaking agreement for that matter) by virtue of clause 14 of the caretaking agreement. Clause 14 of the caretaking agreement provides that “A variation of this Agreement must be in writing and signed by each of the parties.” The committee seems to have overlooked the fact that each of the parties to the caretaking agreement is required to consent to any variation to it. No party can dictate terms to the other. Further, the committee’s dissatisfaction with the terms of the existing caretaking agreement and expressed reason for not approving the transfer at the committee meeting on 19 December 2008, is a matter that in my view should have been addressed and resolved previously, and not in the course of considering the transfer of the agreement.

I consider that the body corporate, under section 122(3)(a) (section 84(3)(a)) of the Standard Module and clause 9.3 of the caretaking agreement, were entitled to request written references from the transferee. The chairperson has acknowledged receipt of those references on 16 February 2009. In my view the body corporate must now decide whether to approve the proposed transfer (of the existing caretaking agreement dated 27 October 2005) within 30 days of 16 February 2009. The information presented to me makes it clear that the committee was not withholding approval to the transfer on the basis of anything other than their desire to vary the caretaking agreement first, and were awaiting receipt of requested written references. The body corporate is not permitted to require a variation to the caretaking agreement prior to, or as a condition of, approving the transfer. Now that the requested references have been provided, the body corporate should be mindful of its legislative obligation to decide whether to approve the transfer within 30 days after it receives the information reasonably necessary to decide the application for approval and that it is legislatively prohibited from unreasonably withholding approval.