Body Corporate for Mango Tree v Gwilliams Investments Pty Ltd ATF the Gwilliams Investment Trust [2024] QCAT 129

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Body Corporate for Mango Tree v Gwilliams Investments Pty Ltd ATF the Gwilliams Investment Trust [2024] QCAT 129 PARTIES: BODY CORPORATE FOR MANGO TREE CTS 1031 (applicant) v GWILLIAMS INVESTMENTS PTY LTD ATF THE GWILLIAMS INVESTMENT TRUST (respondent) APPLICATION NO/S: OCL059-22 MATTER TYPE: Occupational regulation matters DELIVERED ON: 26 March 2024 HEARING DATE: 23 January 2024 HEARD AT: Brisbane DECISION OF: Member Bertelsen ORDERS: The term “registered proprietor” is defined in the Body Corporate and Community Management Act 1997 (Qld) and properly applied in the caretaker’s agreement entered into between the parties. A registered valuer is an appropriate person for the purposes of the caretaker’s agreement. The inclusion of the term “registered valuer” in the caretaker’s agreement does not amount to an error or inconsistency requiring correction. The mechanism for calculating contractor’s services is made clear enough in the caretaker’s agreement. Irrespective of the above findings the remuneration review carried out by Leary & Partners Pty Ltd is of no force or effect for the reason that it was never agreed to. CATCHWORDS: BODY CORPORATE COMMITTEE – CARETAKER AGREEMENT REMUNERATION REVIEW – dispute as to whether appointed reviewer was properly qualified – where reviewer recommended reduced remuneration – where validity of remuneration in doubt – where latterly Body Corporate Committee ultimately resolved to take no -- 1 of 8 -- 2 further action on review – whether latter committee’s resolution was unreasonable. Body Corporate and Community Management Act 1997 (Qld), s 132, s 134, s 143, s 149B Body Corporate and Community Management (Accommodation Module) Regulation 2020 (Qld), s 127 APPEARANCES & REPRESENTATION: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) REASONS FOR DECISION [1] By application filed 19 October 2022 the Applicant, Body Corporate for Mango Tree CTS 1031 (‘the Body Corporate’), sought orders with respect to its current caretaking agreement with Gwilliams Investments Pty Ltd as follows: That pursuant to section 149B (2) of the Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’), and upon its proper construction, the Caretaking Agreement: (a) does not contain a definition of “registered valuer” and in the absence of such definition the term “registered valuer” means a person appropriately qualified to determine a fair and reasonable caretaker’s remuneration, including but not limited to one of the following persons: (1) BMCS Turner (Barry Turner). (2) Leary and Partners Pty Ltd (David Leary); and (3) MRAS Consultants (Danny Little), or in the alternative (b) does contain a definition of “registered valuer” being the definition of that term in the BCCM Act and as such, clause 3.3 of Schedule B must be implied to refer to “registered valuer or appropriate person” which, includes one of the following persons: (1) BMCS Turner (Barry Turner). (2) Leary and Partners Pty Ltd (David Leary); and (3) MRAS Consultants (Danny Little), or in the alternative (c) contains an error or inconsistency from the intent of the parties by the inclusion of the term “registered valuer” which term must be corrected to read “appropriate person” to give effect to the intention of the parties, or in the alternative (d) does not provide the basis for working out payment for the Respondents services and is therefore declared void pursuant section 127(1) of the Accommodation Module. BACKGROUND AND EVIDENCE [2] On 20 November 1998 the Body Corporate entered into a caretaking agreement with Denis Neil Batkin and Patricia Anne Batkin (‘the manager’) (‘the original agreement’). By Deed of Assignment Termination and Engagement dated 24 August 2006 (‘the assignment document’) the then manager/s David Pace and Racheal Sandra -- 2 of 8 -- 3 Pace assigned their interest in the caretaking agreement to Gwilliams Investments Pty Ltd as trustee for the Gwilliams Investment Trust (‘Gwilliams’). [3] The original agreement had been for five years from 8 October 1998 to 7 October 2003 to be renewed automatically for a further two terms of five years through to the 7 October 2013 unless notified to the contrary. There was a remuneration review applicable to the first year of each of the five-year renewal periods. In the assignment document the Body Corporate and Gwilliams agreed that following assignment they would terminate the existing agreement and enter into a new agreement. The new agreement adopted the terms of the original agreement with variations. The assignment document replaced clause 2.2 of the original agreement to the effect that two automatic renewals of five years each were added for the period 8 October 2013 to 7 October 2023. The assignment document went on to provide that on and from the assignment date the caretaker’s annual remuneration for the purpose of review under the original agreement was $36,740.16. [4] Other amendments and additions were made to the original agreement including the manager’s role in assisting the Body Corporate to secure observance of by-laws, a clause confirming the manager was not required to carry out professional skilled work, a manager credit spend limit of $1,000.00, deletion of a power of attorney clause, clarification of GST liability and finally a director’s guarantee. [5] Subsequently, in 2013 the Body Corporate and Gwilliams entered into a deed of Variation of Assignment Termination and Engagement and a Deed of Assignment Termination and Authorisation. In so far as the Deed of Assignment Termination and Engagement was concerned clause 6.2(4) of that document was varied to provide for a further renewal of caretaker’s appointment for the period 8 October 2023 to 7 October 2028. [6] The original agreement provided at clause 2 that there was no requirement for the parties to execute a new agreement for each five-year renewal. Clause 3.3 of schedule B of the original agreement provided for market review of caretaker’s remuneration. If not agreed: the parties shall appoint a registered valuer for the purpose of determining the fair and reasonable current market remuneration. If the parties are unable to reach agreement as to the appointment of the valuer, then the valuer shall be nominated by the President for the time being of the Queensland Law Society. The original agreement did not define the term registered valuer. However, the Body Corporate and Community Management Act 1997 (Qld) (‘the BCCM Act’) does define a registered valuer as a “valuer registered under the Valuers Registration Act 1992”. [7] Clause 1.1 of the original agreement states that words used in the original agreement which are defined in the BCCM Act shall have the meaning so defined “except where inconsistent with the context”. The Body Corporate argues the term ‘registered valuer’ as defined is inconsistent with the expertise required to carry out a market remuneration review of the manager’s salary. [8] The Body Corporate further argues: (a) Reference to the term registered valuer in the BCCM Act is about valuations of lots, lot entitlement adjustments and building valuations. -- 3 of 8 -- 4 (b) Registered valuers hold expertise in valuing real estate and are neither trained nor experienced in assessing a manager’s salary. (c) Confirmation from four registered valuers that they do not have the expertise to review a manager’s salary. (d) Section 132(1)(a) of the BCCM Act providing for review of the terms of a service contract requires independent written advice from an “appropriate person” who is defined as a “person, who in the ordinary course of the persons business has knowledge of the functions and powers of service contractors and of the remuneration for performing the functions and powers”. [9] The names of three persons or entities were proffered as suitable appropriate persons. Essentially, the Body Corporate argues a reasonable person would have understood that the term registered valuer must have meant a person qualified to determine the manager’s remuneration. Alternatively, the original agreement impliedly refers to a registered valuer or appropriate person. In the further alternative, the original agreement contains an error in that the term registered valuer ought to be corrected to refer to appropriate person. If the term registered valuer is adopted, there is no provision to determine remuneration pursuant to clause 3.3 of Schedule B and the original agreement becomes void pursuant to section 127(1) of the Body Corporate and Community Management Accommodation Module 2020 (Qld) (‘the Accommodation Module’). Arguably that ought not be the case as the original agreement has been partly performed. [10] The Body Corporate produced a remuneration table for the period 8 October 2006 yearly through to 8 October 2023 indicating that although market reviews were to take place on 8 October 2008, 8 October 2013 and 8 October 2018 none were ever implemented. Rather CPI increases in all years 8 October 2006 through to 8 October 2022 were implemented. That resulted in an increase from $38,347.08 ex GST post review 8 October 2006 to $51,646.93 ex GST post review 8 October 2022. [11] In 2018 a market remuneration review was carried out by Leary & Partners Pty Ltd, assertedly recognised experts in assessing caretaker (manager) remuneration. Leary’s report was, according to the Body Corporate, agreed to. By agreement, each of the parties were to pay half the cost of the report. This was later withdrawn by Gwilliams. The report recommended the manager’s remuneration be reduced from $50,146.32 (2018 remuneration) to $40,606.65, a reduction of 19.02%. [12] In January 2019 the Body Corporate committee sought to apply the review remuneration. However, a lot owner sought conciliation through the Office of the Commissioner for Body Corporate and Community Management. The parties then reached agreement for a motion to be put to a general Body Corporate meeting for adoption of the review remuneration. Subsequently, on 19 March 2019 a new Body Corporate committee resolved to take no action to reduce the manager’s remuneration. Thereafter, a lot owner sought a declaration from the Office of the Commissioner for Body Corporate and Community Management that the resolution to take no action to reduce the manager’s agreement remuneration was invalid on the ground such resolution was unreasonable. [13] In his decision of 3 September 2019, the Commissioner’s Adjudicator considered it reasonable for the committee to take the view that the review may not have complied with the caretaker agreement because the reviewer was not a registered valuer. But he also considered there was some weight in the applicants’ (lot owners) argument that -- 4 of 8 -- 5 regardless of whether the reviewer was a registered valuer, they were well qualified to undertake the review and their appointment was agreed to by the caretaker. Hence the spirit, if not the letter, of the agreement was followed. However, he found the question of whether the remuneration review was of the type contemplated by the caretaker agreement and ought to have been applied was contractual in nature and that he therefore did not have jurisdiction to determine it. He was not satisfied the Body Corporate committee resolution to take no action to reduce the manager’s remuneration was unreasonable. [14] In its response Gwilliams, in the person of Michael Gwilliams, stated the dispute with the Body Corporate arose in 2018 when the committee issued a Body Corporate Review Notice proposing zero change in caretaking duties and responsibilities but a 30% reduction in caretaking remuneration. He considered it unnecessary, unfair, and unreasonable. [15] It was asserted firstly the Body Corporate Review Notice was itself always a requirement of the original agreement, per clause 3.1 of schedule B, whereby the Body Corporate reviewed caretaker’s (manager’s) remuneration to the fair and reasonable current market remuneration. Secondly, if the caretaker (manager) did not agree with the Review Notice remuneration then notice disputing the sum could be given within 28 days with 14 days then being allowed for each to agree on remuneration. Thirdly, if both could not agree then a registered valuer was to be appointed to determine remuneration. Fourthly, if the parties were unable to agree on the appointment of a valuer, then such was to be nominated by the President of the Queensland Law Society. Finally, if the President of the Queensland Law Society was not able to nominate a willing valuer, then section 132(1)(a) of the BCCM Act required the party requesting the review to obtain from an appropriate person independent written advice based on the review criteria. It was the case therefore that the original agreement and the BCCM Act themselves provided the basis for determining the caretaker’s remuneration. [16] Mr Gwilliams put forward the following two scenarios: [17] If both parties fail to agree on remuneration and the orders here sought by the Body Corporate are not granted, both parties are to agree on the appointment of a registered valuer to determine a fair and reasonable current market remuneration. If the parties cannot agree on appointment of a registered valuer, then a valuer nominated by the Queensland Law Society President. If the Queensland Law Society President is not able to nominate a valuer, then the Body Corporate is to appoint an appropriate person in compliance with section 132 of the BCCM Act. [18] Alternatively, if both parties fail to agree on remuneration and the orders here sought by the Body Corporate were to be granted, both parties are required to agree on the appointment of an appropriate person to determine a fair and reasonable current market remuneration. If the parties cannot agree on appointment of an appropriate person, then an appropriate person is to be nominated by the Queensland Law Society President. If the Queensland Law Society President is not able to nominate an appropriate person, then the Body Corporate is to appoint an appropriate person in compliance with section 132 of the BCCM Act. Such being the case the Body Corporate’s application has no merit and is unnecessary because regardless of the outcome the process defined in the original agreement and the BCCM Act remains the same. -- 5 of 8 -- 6 [19] Mr Gwilliams referred to irregularities, discrepancies and perhaps some manipulation occurring with respect to the Body Corporate meetings in 2022 to the effect that while the Body Corporate is the current applicant, the latterly changed Body Corporate does not support the present application and that withdrawal of the application is the preferred course of the current Body Corporate. In particular, the application would have been withdrawn had the motion to do so at the November 2022 extraordinary general meeting not been unlawfully stopped. [20] Mr Gwilliams asserted the words “registered valuer” when applied to clause 3.3 of Schedule B of the original agreement are consistent with the context because a registered valuer as defined in the BCCM Act is the appropriate person to determine a fair and reasonable current market remuneration as required by clause 3.1 of schedule B of the original agreement. He went on to point out that section 143(2)(a) of the BCCM Act refers to the value of management rights as determined by a registered valuer and that such was consistent with clause 3.3 of schedule B of the original agreement. [21] Mr Gwilliams did not agree that David Leary of Leary & Partners was an appropriate person to carry out a market remuneration review of a caretaker’s salary. He did not address the fair and reasonable current market remuneration for a service contractor, pointing to the original agreement at clause 3.3 which stated that the obligations of the caretaker (manager) were those of a contractor. Rather, he said Mr Leary based his calculations on an employer/employee relationship. But the original agreement was between the Body Corporate and contractor not the Body Corporate and employee. Additionally, he said Mr Leary’s report contained little evidence of what the current market remuneration would be for a contractor. He added the current market was a market in which management rights are traded as opposed to an employment market. He said the original agreement did not seek what Mr Leary provided, thus demonstrating Mr Leary was not an appropriate person to conduct the review. [22] It was argued that the BCCM Act definition of registered valuer refers to an appropriate person; that such in itself provided for the original agreement to specify a registered valuer in clause 3.3 of schedule B because a registered valuer is an appropriate person. However, an appropriate person who is not a registered valuer does not comply with the specific requirement of clause 3.3 of schedule B of the original agreement. The fact that clause 3.3 of schedule B specifies a registered valuer does not implicitly mean an appropriate person who is not a registered valuer complies with that clause. With respect to David Leary’s appointment for the review, Mr Gwilliams said he never agreed to the appointment of a non-registered valuer. [23] Mr Gwilliams stated the proposed reduction of some 30% in the caretaker’s remuneration in 2018 seemed to coincide with a reduction in the caretaker’s remuneration for the next-door property “Lychee Tree”. The reduction there, however, was on account of reduced duties. Even so, had Mr Leary’s remuneration been fair and reasonable Mr Gwilliams probably would have accepted it. In the event, however, because the review was not conducted by a registered valuer, it was in order for Gwilliams to dispute and stop Mr Leary’s recommendation. [24] Mr Gwilliams argued that the Body Corporate was seeking to amend the meaning of a term ‘registered valuer’ used in the original agreement, which is defined in the BCCM Act, by adding additional meaning not specified in the definition in the BCCM Act. He said the meaning in the BCCM Act was precise and unambiguous and had -- 6 of 8 -- 7 neither need nor scope for addition, and that what the Body Corporate was seeking was an order to determine that the original agreement contained an error or inconsistency from the intent of the parties. He said the natural meaning of the language was clear and the application of commercial common sense should not be used to reject the natural meaning of a provision simply because it may appear to be an erroneous or inconsistent term for the parties to have agreed to. [25] Finally, he asserted that the alternate position of the Body Corporate to declare the original agreement void because it did not provide the basis for working out payment for services was nonsensical. The original agreement complied with section 127 of the Accommodation Module by including schedule B in the original agreement which set out the basis for working out payment for the Body Corporate service contractor services. The original agreement also complied with section 132 of the BCCM Act regarding the provision of review advice if the original agreement’s schedule B was unable to be followed. The review criteria under section 134 of the BCCM Act seeks to strike a balance between parties resulting in a fair and reasonable outcome. CONCLUSIONS [26] The original agreement (the caretaker agreement) is valid. It has been partly performed over a number of years. Amendments and extensions to the agreement have been utilised and performed. The mechanism for adjustments to the caretaker remuneration as contained in schedule B to the original agreement were utilised over a period of some sixteen years by application of CPI increases through to 2022. In 2018 the Body Corporate sought a review. Not only were CPI increases never the subject of any dispute at least until 2018, it can be reasonably inferred that the Body Corporate acquiesced in those increases. The five yearly remuneration review process was clear. It only needed to be followed if required. [27] In 2018 a market remuneration review was carried out by Leary & Partners Pty Ltd for the Body Corporate. Whilst it appears Mr Gwilliams may have agreed to pay half the review cost, the Tribunal accepts that in the event he did not agree to Leary’s appointment because that company was not, for the purposes of a review, a registered valuer in accord with the original agreement. He only ever agreed to the appointment of a registered valuer (as referred to in the original agreement and as defined in the BCCM Act). There was no evidence that he was ever made aware that Leary was not a registered valuer. Therefore, it cannot be said that Mr Gwilliams ever agreed to Leary’s appointment in which case the review is of no effect. What needed to happen was for the President of the Queensland Law Society to appoint a valuer in accord with schedule B. [28] Even if it was to be found that Mr Gwilliams did partake of the review by Leary, then there is the issue of the reduction recommended. Leary’s report recommended a reduction from $50,146.32 (the 2018 pre review remuneration ex GST) to $40,606.65 ex GST. That is only marginally higher than the $38,347.08 remuneration post-review calculation of 8 October 2006. Given that CPI increases were implemented in the intervening twelve-odd years, and it not being disputed that the scope of duties remained unchanged, it beggars’ belief that there would be virtually only a miniscule increase in remuneration in some twelve years. [29] Leary’s calculation or perhaps miscalculation appears to have stemmed from its approach, which according to Mr Gwilliams centred around an employer/employee relationship rather than a service contractor. Despite criticism of methodology and -- 7 of 8 -- 8 opportunity to contest, no evidence was proffered to the Tribunal to validate that approach. [30] Finally, the two scenarios put to the Tribunal, concluding that the Body Corporate’s application has no merit and is unnecessary because regardless of the outcome the process as defined in the original agreement and the BCCM Act remain the same, make sense. For clarity, the Tribunal does not see any conflict or contradiction between the BCCM Act and the original agreement. Clearly the original agreement was drafted to comply with the BCCM Act particularly sections 132 and 134. [31] The term “registered proprietor” as cited in clause 3.3 of schedule B of the original agreement was most likely taken directly from the BCCM Act at the time the original agreement was drafted. Even if it was not the most suitable choice of words the intent is clear: a registered valuer capable of carrying out a remuneration review. That does not necessarily amount to an error or inconsistency with the intent of the parties entitling the intervention of a non-registered person at the outset of the remuneration review. FINDINGS (a) The term “registered proprietor” is defined in the BCCM Act and properly applied in the caretaker’s agreement entered into between the parties. (b) A registered valuer is an appropriate person for the purposes of the caretaker’s agreement. (c) The inclusion of the term registered valuer in the caretaker’s agreement does not amount to an error or inconsistency requiring correction. (d) The mechanism for calculating contractor’s services is made clear enough in the caretaker’s agreement. (e) Irrespective of the above findings the remuneration review carried out by Leary & Partners Pty Ltd is of no force or effect for the reason that it was never agreed to. -- 8 of 8 --