Acacia Lodge Hostel [2010] QBCCMCmr 590 (24 December 2010)

Last Updated: 27 May 2011

BETWEEN: Applicant: RITA COMMISSO ENTERPRISES PTY LTD AND: Respondent: BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755 AND: Respondent: DOMINIC SURACE

Dispute Resolution Application Ref No 0115A-2007

REASONS FOR DECISION

Delivered at Brisbane on the 24th day of December 2010

1. The issue which arises for determination is whether the Applicant has the benefit of a valid exclusive occupation licence granted under a Resident Manager’s Agreement and/or a Letting Agreement pursuant to s.89 of the Body Corporate and Community Management (Accommodation Module) Regulation (“Accommodation Module”).
2. The facts relating to this issue concern the Body Corporate for Acacia Lodge Hostel Community Titles Scheme 25755 located at Labrador on the Gold Coast.
3. The Body Corporate Scheme consists of six (6) lots, three (3) of which are owned by the Applicant and three (3) lots are owned by the Respondent.
4. In August 1998 the Body Corporate entered into a Resident Manager’s Agreement and Letting Agreement.
5. On 23 September 2002 the bundle of rights contained in the Resident Manager’s Agreement and Letting Agreement were assigned by the previous Managers/Letting Agents to the Applicant in these proceedings. The Applicant has continued as Resident Manager and Letting Agent in the Body Corporate Scheme.
6. Disputes subsequently arose between the Applicant and the Respondent.
7. On 6 February 2007 these disputes culminated in the Applicant making Application to the Commissioner for Body Corporate and Community Management to resolve those disputes. The disputes included whether the exclusive occupation authorities referred to in the Resident Manager’s Agreement and Letting Agreement were valid.
8. Decisions have already been made in respect of a number of the disputes by orders of the Specialist Adjudicator on 13 June 2007 and by the District Court in Surace v Rita Commisso Enterprises Pty Ltd and Anor[1] on 7 July 2009. Those previous decisions set out fully the facts in these proceedings.

CURRENT ISSUE IN DISPUTE

9. The issue which arises here has been remitted by the District Court for a determination as to whether in terms of s.89 of the Accommodation Module, the exclusive occupation licence pursuant to the Resident Manager’s Agreement (“RMA”) and/or the Letting Agreement (“LA”) are valid.
10. The Respondent in his Submissions in the Adjudication dated 4 May 2007 disputes the validity of the exclusive occupation authorities.
11. The grounds relied upon by the Respondent for alleging that the exclusive occupation authority provided for in the RMA and the LA are void as an occupation authority can only be granted by the Body Corporate:-
    • (a) if it is for a purpose specifically contained in the RMA and the LA;[2]
    • (b) an engagement cannot be by way of by-law;[3]
    • (c) there is no obligation, authorisation or engagement to provide laundry or catering services under the respective Agreements.[4]
12. In Surace v Rita Commisso Enterprises Pty Ltd[5] His Honour Judge Rackemann of the District Court considered s.89 of the Accommodation Module and relevant principles for its application.
13. His Honour considered that the determination of whether an occupational authority had been validly granted under s.89 of the Accommodation Module required a number of questions to be addressed. His Honour identified several questions in relation to the circumstances of these proceedings. I set out those questions as follows[6]:-

“(i) Did the body corporate engage the assignor to the first respondent as a service contractor?

(ii) Did the body corporate authorise the assignor to the first respondent as a letting agent?

(iii) If yes to (i) or (ii), did the terms of the engagement or authorisation purport to give an occupation authority for a particular part of the common property?

(iv) If yes to (iii), was the occupation authority for particular purposes necessary to enable the occupier to:

A. perform the obligations under the engagement of the occupier as a service contractor?; or

B. enable the occupier to operate as a letting agent?

(v) If yes to (iv), would the occupation under the occupation authority interfere, to an unreasonable extent, with the use and enjoyment of a lot or the common property by an occupier of a lot?”

14. His Honour held that in these proceedings involving these parties the first three questions must be answered in the affirmative. I respectfully agree with, and adopt,
    His Honour’s determination of those three questions.
15. The issues remaining involve a determination of the fourth and fifth questions.
16. Subsequent to His Honour’s determination, these proceedings were remitted for final determination by this Specialist Adjudication. The parties were invited to make any further submissions subsequent to the orders of the District Court in Surace v Rita Commisso Enterprises Pty Ltd[7]. Consequently, further submissions were received as follows:-
    • (a) from the Applicant dated 25 January 2010; and
    • (b) from the Respondent dated 19 January 2010, 27 January 2010 and 9 February 2010.
17. The content of those submissions have been taken into account in the further determination of this current dispute.
18. As to the fourth question His Honour in Surace v Rita Commisso Enterprises Pty Ltd[8] went on to consider that there were subsidiary questions to be addressed as follows:-
    • (a) What are the obligations of the Service Contractor under the terms of the engagement?
    • (b) What is the business of the Letting Agent?
    • (c) What are the purposes for which the occupation authority has been granted?
    • (d) Are those purposes necessary to enable the service provider to perform its obligation or to enable the Letting Agent to consider the business of a Letting Agent?
19. I will consider each of these matters in respect of the fourth question by separate reference to the RMA and to the Letting Agreement.
    

WAS THE OCCUPATION AUTHORITY NECESSARY TO ENABLE THE SERVICE CONTRACTOR TO PERFORM THE OBLIGATIONS UNDER THE RMA?

20. The RMA[9] provides in the preamble that the Body Corporate is desirous of providing for the functions of caretaking, repair, maintenance, administration, control, use and enjoyment of the improvements and other property within the complex. It further provides that it has been agreed that the Body Corporate will engage the Manager who will accept such engagement for the purposes of performing certain activities as are set out in the RMA.
21. The Body Corporate engaged the Manager for a period of 25 years commencing on
    24 August 1998.[10] The activities or functions of the Caretaker under the RMA are set out in clause 3. That clause required the Manager to personally or using properly trained contractors or employees attend to and perform caretaking activities in respect of the property but only to the extent of the powers and duties of the Body Corporate. None of the caretaking activities set out in clause 3(a) to (t) require the Manager to undertake activities in the kitchen, laundry or office located on the common property other than in respect of causing those areas to be kept in good order and a clean and neat condition.[11]
22. Further, the nature of the Manager’s duties under the RMA are further described in clause 4(a) as involving the Manager in the engagement and supervision of staff or contractors on behalf of the Body Corporate to perform work involved at the expense of the Body Corporate if the work requires the services of a skilled tradesman. In that circumstance the Manager is only required to supervise and is not required to have a “hands on” activity or performance where the activities require the services of a skilled tradesman.
23. By clause 5 a right to exclusive occupation of the areas of common property shown hatched on the attached plan are for the purposes necessary to enable the Manager to perform the Manager’s obligations under this Agreement.[12]
24. In considering what are the obligations of the service contractor under the terms of the RMA, no specific obligations are identifiable which involve the Manager’s requirement for the exclusive occupation of the common area shown hatched on the attached plan to the RMA. That is, activities such as keeping those areas in good order and a clean and neat condition, including daily inspection and carrying out sweeping and hosing of those areas, so far as is required under the RMA, do not involve or require that the Manager have exclusive occupation of those areas to carry out those obligations under the RMA.
25. The exclusive occupation authority referred to in clause 5 has been granted to enable the Manager to perform the Manager’s obligations under the RMA. As already stated, the Caretaker’s activities identified in clause 3 do not of themselves require that the Manager have exclusive occupation of those common property areas to carry out those activities.
26. Accordingly, I am not satisfied that that exclusive occupation is required to enable the Manager to perform its obligations under the RMA.
27. Accordingly, in terms of s.89(1)(a) and (2) I am not satisfied that an exclusive occupation authority is necessary to enable the Manager to perform its obligations or duties under the RMA.
    

WAS THE OCCUPATION AUTHORITY NECESSARY TO ENABLE THE OCCUPIER TO OPERATE AS A LETTING AGENT?

28. The Letting Agreement[13] provides for an exclusive occupation authority in clause 3.
29. It provides that the Letting Agent has exclusive occupation of the common area shown hatched in the attached plan for the purpose necessary to enable the agent to perform the agent’s obligations under this Agreement.
30. It should be noted that pursuant to clause 3 the exclusive occupation authority is to enable the Letting Agent to carry out obligations under “this Agreement” (viz. the Letting Agreement) and does not expressly refer to or identify any agreement between the Letting Agent and a lot owner entered into for the purposes of the Letting Agent managing that lot for reward or otherwise.
31. The preamble for the Letting Agreement provides that it has been agreed between the Body Corporate and the Letting Agent to grant to the Letting Agent the right to let lots in the complex for and on behalf of lot owners as shall request that service. The performance of duties under the Letting Agreement is dependent upon what lot owners request the service.
32. The term of the Agreement was for 25 years from 25 August 1998.
33. Clause 2 of the Letting Agreement provides that the Letting Agent is entitled to carry on the business of a real estate agency for the letting of lots within the complex on behalf of such owners of lots in the complex as require that service with all associated services commonly rendered in connection with such agency.
34. The issue arising from clause 2(a) of the Letting Agreement is what obligations or business activity for the Letting Agent is envisaged by the authorisation that the Letting Agent can conduct “all associated services commonly rendered in connection with such an agency”. There are no other terms in the Letting Agreement which shed any explanation of or assistance with the meaning of the requirement of “all associated services commonly rendered in connection with such an agency”. Clause 3 provides the exclusive occupation authority with respect to the kitchen, laundry, linen and office areas but that by itself does not assist with the interpretation of clause 2(a) of the Agreement. It may well indicate an intention by the Body Corporate for the Letting Agent to have exclusive occupation of those areas, but clause 3 does not explain what are the “associated services” referred to in clause 2(a).
35. As to the meaning of “associated services” in clause 2(a) there is uncertainty as to what those services encompass. For the meaning of “associated services”, regard can be had in these circumstances to extrinsic evidence to translate this document.[14] The relevant background facts in this Application establish that the lots in the Scheme are offered for people of old age or on invalid pensions who need additional living assistance. That living assistance relates to catering, assistance with serving of meals and related cleaning services. The Applicant has historically used the areas the subject of the disputed exclusive occupation authority for preparation and provision of meals. It is also said that the Applicant has had the exclusive use of the office, laundry and linen store although the factual circumstances relating to this use is not clearly established.[15]
36. It appears having regard to the extrinsic evidence that the intention of clause 2(a) was that the Letting Agent would provide to lot owners meals from the kitchen in the Scheme and to that extent clause 2(a) included in associated services the provision of those meals from the kitchen in the Scheme. The evidence in relation to the use of the laundry and other common property areas is not as clear. It is noted that the Application states that the Applicant permits residents to use the laundry when requested.[16]
37. Accordingly, I construe clause 2(a) of the Letting Agreement as requiring the Letting Agent to conduct its business as a real estate agent for the letting of lots and to provide all associated services which in this Agreement would include the provision of meals for lot owners who require that service.
38. However, that construction does not necessarily deal with the final issue raised in the District Court decision of Surace v Rita Commisso Enterprises Pty Ltd[17] as to whether or not those purposes in clause 2(a) are necessary to enable the Letting Agent to conduct the business of a Letting Agent. For instance, if the occupiers of all six lots required the Letting Agent to provide meals, then arguably, there would be no dispute as to the exclusive occupation by the Letting Agent of the kitchen facilities. However, if that was not the case and the occupiers of any of the lots undertook the preparation of their own meals, rather than the supply through the Letting Agent, then the question is whether or not it is necessary for the Letting Agent to have exclusive occupation of the kitchen facilities to enable the Letting Agent to conduct the business of the Letting Agent.
39. The evidence in these proceedings does not establish that it is necessary. While, the obvious inconvenience of a number of lot owners and the Letting Agent having combined or multiple use of the kitchen area at the same time would be inconvenient, the evidence however does not extend so far as to establish that it is necessary for the Letting Agent to have exclusive occupation of the kitchen so as to conduct the business of the Letting Agent as I have interpreted clause 2(a) of the Letting Agreement.
40. The evidence does not go so far as to establish that if the Letting Agent had the use of the kitchen area in conjunction with one or more of the lot owners or occupiers of lots in the Scheme that the Letting Agent would not be able to conduct the business of a Letting Agent in the terms set out in the Letting Agreement.
41. Consequently, I am not satisfied that the occupation authority in clause 3 is necessary to enable the Agent to perform the Agent’s obligations under the Letting Agreement and there is now compliance with s.89(1)(b) and (3).
    

WOULD THE OCCUPATION AUTHORITY INTERFERE, TO UNREASONABLE EXTENT WITH THE USE AND ENJOYMENT OF A LOT OR COMMON PROPERTY BY AN OCCUPIER OF A LOT

42. I have already determined that the occupation authority under the RMA and the Letting Agreement is not necessary for the Manager and the Letting Agent pursuant to their respective Agreements.
43. In the event that those conclusions were to be incorrect, I propose to now proceed to consider the further issue in s.89 of the Accommodation Module as to whether the Body Corporate was authorised to give an occupation authority subject to whether exclusive occupation of part of the common property under an occupation authority would not interfere to an unreasonable extent with the use and enjoyment of a lot or the common property by an occupier of a lot.
44. The issue raised here is whether or not the occupation authority referred to in the RMA and also in the LA contravenes s.89(4) of the Accommodation Module.
45. First of all, in respect of the RMA, the terms of that Agreement require the caretaking of the common area of the Body Corporate Scheme. This includes the kitchen, laundry and other areas referred to in the occupation authority.
46. It is difficult to see that the occupation authority would interfere to a reasonable extent with the use by an occupier of a lot in that context. However, insofar as an owner or occupier’s use of the common property, it can be seen that a caretaker under an RMA claiming an exclusive occupation authority over the kitchen, laundry and other parts, would hardly require those areas exclusively to carry out the activities under clause 3 of the RMA. That is, to exclude owners or occupiers of lots from those areas of the common area so as to enable the Caretaker under the RMA to carry out its duties under clause 3 would in the circumstances:-
    • (a) interfere with the use and enjoyment of those parts of the common property; and
    • (b) would not be reasonable in the circumstances.

It would not be reasonable as it is difficult to see that any of the activities under clause 3 could only be carried out with the exclusion of lot owners or occupiers. There is nothing in the RMA to suggest that those activities can only be carried out with such exclusivity. There is nothing in the Agreement that suggests that there cannot be a shared use of the common area by the Manager and lot owners and/or occupiers. To exclude lot owners or occupiers on this basis would in the circumstances be unreasonable.

47. Accordingly, in terms of s.89(4) I am satisfied that the Body Corporate would not be authorised to give an occupation authority in the RMA as it would interfere to an unreasonable extent with the use and enjoyment of the common property by an occupier of a lot.
48. Secondly, the Letting Agreement also provides for an exclusive occupation authority in clause 3.
49. As is set out in the Application[18], the Applicant permits residents to use the laundry when requested. That is a practical demonstration of what actually occurs.
50. However, in terms of s.89(4) so far as the issue as to whether or not the Body Corporate is authorised to give the occupation authority, the issue remains as to whether or not that authority would not interfere to an unreasonable extent with the use and enjoyment of a lot or the common property by an occupier of the lot.
51. If the Letting Agent did have an exclusive occupation authority then that would mean so far as an occupier of a lot was concerned:-
    • (a) there would be no opportunity for the occupier to use the kitchen, laundry or other relevant areas of the authority;
    • (b) the use by an occupier of a lot, may well mean that meals are taken in that lot, but can only be prepared from the kitchen;
    • (c) for an occupier to enjoy a lot, tends to their own cleaning of linen, clothes and other items, would be an obvious requirement for the use of the laundry facilities on the common property.
52. To prevent a lot owner from using the kitchen and laundry in such circumstances would be an interference with the use and enjoyment of the lot and also of the common property containing the kitchen and laundry facilities.
53. However, the issue is whether that interference is to an unreasonable extent. The Letting Agreement specifically provides in the preamble that the grant of the authorisation is the right to let lots in the complex for and on behalf of such owners as shall request that service.[19] The Letting Agreement itself envisages that it will apply only to those lot owners who shall request that service. The Letting Agreement leaves open the fact that there may be owners who do not request that service and in which case the Letting Agent will not have the right to let that owner’s lot in the complex. Such owners will need to make their own arrangements which include the use of kitchen facilities and laundry facilities in the common property.
54. For these reasons I am satisfied that the occupation authority referred to in clause 3 of the Letting Agreement would be an interference to an unreasonable extent with the use and enjoyment of a lot or the common property by an occupier of the lot. That is, I am satisfied that the occupation authority in clause 3 of the Letting Agreement contravenes s.89(4).

SECTION 89 OF THE ACCOMMODATION MODULE

55. For these reasons I am satisfied that:-
    • (a) the occupation authority in clause 5 of the RMA is not a valid occupation authority because:-
      • (i) it is not necessary to enable the Manager to perform obligations under the RMA in terms of s.89(1)(a) and (2) of the Accommodation Module; and
      • (ii) further, the Body Corporate was not authorised to give that occupation authority in the RMA as it would interfere to an unreasonable extent with the use and enjoyment of a lot or the common property by an occupier of a lot and contravene s.89(4) of the Accommodation Module;
    • (b) the occupation authority in clause 3 of the LA is not a valid occupation authority because:-
      • (i) it is not necessary to enable the Manager to perform obligations under the LA in terms of s.89(1)(a) and (2) of the Accommodation Module; and
      • (ii) further, the Body Corporate was not authorised to give that occupation authority in the LA as it would interfere to an unreasonable extent with the use and enjoyment of a lot or the common property by an occupier of a lot and contravene s.89(4) of the Accommodation Module.
        

ORDERS Accordingly, I am satisfied that each of the occupation authorities in the RMA and the LA are void for noncompliance with s.89 of the Accommodation Module. I order that:- (a) clause 5 of the Resident Manager’s Agreement dated 21 August 1991 at Exhibit “A” to the Application to the extent that it provides the right to an exclusive occupation of the area of common property hatched on the attached plan is void and of no legal effect; (b) clause 3 of the Letting Agreement dated 21 August 2008 at Exhibit “B” to the Application to the extent that it provides the right to an exclusive occupation of the area of common property hatched on the attached plan is void and of no legal effect; (c) I dismiss the claims for final relief in paragraphs (d), (e) and (f) of the Application dated 6 February 2007. The above order was appealed in the Queensland Civil and Administrative Tribunal – Appeal No APL051-11.

COSTS OF THE ADJUDICATION (SECTION 280)

58. The general rule as provided by s.280 of the Act is that in the circumstances the Applicant is responsible for the costs of the Adjudication, unless the Adjudicator otherwise orders.
59. None of the parties have had an opportunity to make any submissions with respect to costs in respect of the above order.
60. To the extent that any party wishes to make any submissions on costs, I will adjourn the further determination of this Application until 19 February 2011 so that any party who wishes to make submissions with respect to costs can do so on or before that date.
61. I direct that any further submissions with respect to costs by the parties be delivered to the Office of the Commissioner for Body Corporate and Community Management on or before 4:00 p.m. on 19 February 2011. Otherwise, I will reserve the question of costs until 19 February 2011.
    

Dated: 24 December 2010

_____________________________
Christopher John Carrigan
Specialist Adjudicator

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[1] (2009) QDC 198

[2] See paragraph 2(a)(i) of those Submissions and the footnote relying on s.89 of the Module.

[3] See Submissions para. 2(a)(ii) and reliance was placed on s.76(3) of the Module.

[4] The Respondent refers to RMA clause 3 and to the LA clause 2.

[5] (2009) QDC 198

[6] See above note 5 at para.11.

[7] Above note 5

[8] Above note 5 at para. 13.

[9] Resident Manager’s Agreement dated 21 August 1998 at Exhibit “A” to the Application.

[10] See clause 1.

[11] See clause 3(a), (b)(i).

[12] See clause 5 of the RMA.

[13] This Agreement dated 21 August 1998 is Exhibit “B” to the Application.

[14] See “Cross on Evidence 8th Edition” at paragraph 39235.

[15] See the Application paragraphs 10 to 17.

[16] Application para. 17

[17] See para. 13 question 4.

[18] See paragraph 17.

[19] See preamble B.