Delmason Pty Ltd ATF Libby Mason Trust v Body Corporate for The Crest on Bonney [2015] QCAT 209

CITATION: Delmason Pty Ltd ATF Libby Mason Trust v Body Corporate for The Crest on Bonney CTS 30617 [2015] QCAT 209 PARTIES: Delmason Pty Ltd ATF Libby Mason Trust (Applicant) v Body Corporate for The Crest on Bonney CTS 30617 (Respondent) APPLICATION NUMBER: OCL085-14 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers; oral hearing 2 June 2015 HEARD AT: Brisbane DECISION OF: Member Deane DELIVERED ON: 10 June 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. The Body Corporate for The Crest on Bonney CTS 30617 is restrained from acting upon any resolution to terminate the Building Management Agreement dated 4 October 2002 relying upon the Remedial Action Notice dated 2 October 2014. CATCHWORDS: BODY CORPORATE – COMPLEX DISPUTE – whether remedial action notice is valid – whether declaratory relief appropriate where no other final relief sought – whether final injunction ought be ordered – whether ancillary declarations ought to be ordered Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 15, s 28, s 59, s 60, s 100 Body Corporate and Community Management Act 1997 (Qld), s 118, s 149B, Schedule 2 Supreme Court Act 1995 (Qld), s 128 Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld), s 72, s 129 -- 1 of 8 -- 2 Randall v Body Corporate for Runaway Cove Bayside CTS 25498 [2011] QCATA 10 Northbuild Construction Pty Ltd v Body Corporate for Harmony Broadwater [2015] QCAT 33 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 SCV Group Limited v Body Corporate for Parkview Gardens [2011] QCAT 299 APPEARANCES: APPLICANT: Delmason Pty Ltd ATF Libby Mason Trust RESPONDENT: Body Corporate for The Crest on Bonney CTS 30617 REPRESENTATIVES: APPLICANT: Delmason Pty Ltd ATF Libby Mason Trust represented by Ms J Graham of Hynes Legal RESPONDENT: Body Corporate for The Crest on Bonney CTS 30617 represented by Mr D M Favell of Counsel instructed by Gill & Lane Solicitors REASONS FOR DECISION [1] This matter was ordered to be heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).1 Upon consideration of the documents filed I convened a short oral hearing confined to the following: a) the final orders sought; b) the power to make such orders to the extent the final orders are solely declaratory. [2] Delmason Pty Ltd is the caretaking service contractor for the Body Corporate. A dispute has arisen between the parties regarding a settlement agreement to resolve an earlier dispute. The Body Corporate issued a remedial action notice dated 2 October 2014 (‘RAN’).2 It called a General Meeting to be held on 28 November 2014 and proposed a motion to terminate the Building Management Agreement with Delmason dated 4 1 Direction dated 9 December 2014. 2 In some of the documents, including the interim injunction ordered on 28 November 2014, the RAN is described as being dated 3 October 2014. -- 2 of 8 -- 3 October 2002 (‘Agreement’) consequent upon the failure to remedy the breaches alleged in the RAN.3 [3] The Tribunal granted an interim order restraining the Body Corporate from acting upon any resolution of motion 12 (‘the Motion’) of the General Meeting to be held on 28 November 2014 to terminate the Agreement until determination of the validity of the RAN and the General Meeting and Motion. [4] Delmason seeks declarations that each of the RAN, the General Meeting and the Motion are invalid. [5] A dispute about the validity of the RAN falls within the Tribunal’s original jurisdiction4 as a complex dispute because it is a dispute about a claimed or anticipated contractual matter about the engagement of a person as a caretaking service contractor for a community titles scheme.5 [6] The terms of the settlement are recorded in correspondence between the parties’ lawyers dated 8 January 2014.6 Relevantly the parties agreed: At the conclusion of the Conference, the parties will act reasonably and in good faith to negotiate a deed of variation to incorporate the detailed schedule of duties into the BMA. [7] Delmason contends that the settlement was an agreement to negotiate and does not oblige it to enter into a deed of variation if agreement cannot be reached and denies that it failed to negotiate in good faith. The Body Corporate contends that Delmason failed to participate in good faith in the negotiations and failed to execute a deed of variation in circumstances where all of Delmason’s concerns had been reasonably addressed.7 [8] The facts are largely agreed. After the settlement agreement was reached, the parties engaged an independent consultant and drafts of the schedule of duties were provided and comments made. [9] Delmason claims agreement on the terms of the variation had not been reached when the Body Corporate held a General Meeting to approve the terms of a deed of variation, approval was given and the Body Corporate called upon Delmason to execute the deed of variation. Subsequently Delmason’s director requested a meeting with the Chairman of the Body Corporate to discuss the terms of the variation. The request was declined and the RAN was issued. [10] The RAN relevantly claims that Delmason: a) has breached clause 19.3 of the Agreement; 3 Identified as Motion 12. 4 Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) s 15. 5 Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’) s 149B. 6 Affidavit Tuicolo exhibit KT5 filed 21 January 2015. 7 Submissions filed 21 January 2015 at [14]. -- 3 of 8 -- 4 b) has contravened clauses 2, 4 and 8 of the Code of Conduct:8 c) contravened s 129(1)(a), s 129(1)(b) and s 129(1)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) as a result of the above breaches. [11] I find that the RAN is invalid because I am not satisfied that the allegations of breach and contravention made against Delmason in the RAN, which are relied upon in these proceedings, have been made out. [12] Clause 19.3 of the Agreement is the ‘further assurances’ clause which requires a party to the Agreement to do all things and sign all documents reasonably required to give effect to the terms of ‘this Agreement’. [13] The Body Corporate contends that failing to properly participate in the negotiations and then failing to execute the deed of variation is a breach of clause 19.3 because clause 19.3 is consistent with acting in good faith and Delmason has not acted in good faith. [14] I find that failing to properly participate in negotiations to amend the Agreement and failing to sign the deed of variation presented by the Body Corporate are not matters which can constitute a breach of clause 19.3 of the Agreement. [15] In order for them to constitute a breach of clause 19.3 the settlement agreement would need to be categorised as a binding agreement to vary the Agreement. [16] The Body Corporate required a resolution of a General Meeting to accept the terms of the deed of variation to vary the Agreement and authorise execution. There is no evidence before the Tribunal that the Body Corporate had the authority of a General Meeting resolution to settle the dispute such that it was a binding agreement to vary the Agreement. In these circumstances, I find that the settlement agreement was not an agreement to vary the Agreement so that Delmason was obliged by the further assurances clause to ‘properly participate’ in the negotiations to amend and to sign the deed of variation to perfect the ‘Agreement as varied’. [17] There is nothing in the terms of settlement which indicate that the ‘Agreement to vary’ was binding upon Delmason but would not be binding upon the Body Corporate unless and until it approved the variation by General Meeting resolution. [18] Clauses 2 and 8 of the Code of Conduct require specified conduct:9 in performing the person’s functions under the person’s engagement. 8 The Code of Conduct is contained in Schedule 2 of the BCCM Act. The Body Corporate’s RAN originally also contended a contravention of clauses 3 and 7 of the Code of Conduct but the Body Corporate did not pursue those allegations during this proceeding. 9 Clause 2 – act honestly, fairly and professionally; Clause 8 – must not engage in unconscionable conduct. -- 4 of 8 -- 5 [19] In circumstances where the settlement agreement was not a binding agreement to vary the Agreement, I am not satisfied that undertaking negotiations to amend the Agreement are ‘functions under the engagement’. [20] The code of conduct applies to: a caretaking service contractor in performing obligations under the person’s engagement as a service contractor.10 [21] Undertaking negotiations to amend the Agreement is not an obligation required by the terms of the Agreement for the same reasons as set out in respect of the ‘further assurances clause’. [22] It therefore follows that I am not satisfied that Delmason has contravened those parts of the Code of Conduct. [23] Clause 4 of the Code of Conduct provides: A body corporate manager or caretaking service contractor must act in the best interests of the body corporate unless it is unlawful to do so. [24] As stated above the obligation to act in the best interest of the body corporate applies when performing obligations under the engagement as a caretaking service provider. [25] Undertaking negotiations to amend the Agreement is not an obligation required by the terms of the Agreement for the same reasons as set out in respect of the ‘further assurances clause’. [26] The Body Corporate contends for a broad interpretation of the application of the code of conduct and says that in ‘performing its role under an engagement, a caretaking service contractor’s role necessarily involves dealing with the body corporate’.11 The difficulty with this contention is that the ‘obligation’ the subject of the dispute is not one that is imposed on Delmason under the Agreement. [27] The Body Corporate’s contention that Delmason has breached the Accommodation Module Regulation relies upon the breach of clause 19.3 and the Code of Conduct contraventions. It follows, for the reasons set out earlier in these reasons in respect of each of these allegations, I am not satisfied that Delmason has breached the Accommodation Module Regulation. [28] The respects in which Delmason claims agreement has yet to be reached have not been clearly particularised either to the Body Corporate or to the Tribunal in these proceedings. On the evidence before the Tribunal there have been some attempts to meet with the Body Corporate Chairman to discuss residual issues but there appears to be quite some delay between these attempts. The delays have not been explained in this proceeding. In 10 BCCM Act s 118(1)(b). 11 Submissions filed 21January 2015 at [28]. -- 5 of 8 -- 6 this context the Body Corporate’s efforts to bring the outstanding matters to a conclusion are understandable although, in my view, ultimately not appropriate. [29] Delmason contends that the RAN was invalid as it was not properly served by sending it to its solicitors on 3 October 2014 by facsimile because its solicitors did not have instructions to accept service, such service was not in accordance with clause 18 of the Agreement or the relevant section of the Property Law Act 1974 (Qld). [30] In view of my findings about the invalidity of the RAN it is not necessary to make findings about service. However I note that the evidence is that Delmason’s solicitors wrote to the Body Corporate’s solicitors on 17 October 2014 disputing the validity of the RAN. In that letter it is clear that they had received instructions about the allegations contained in the RAN.12 The RAN or the substance of the allegations in the RAN came to the attention of Delmason no later than 17 October 2014. In accordance with paragraph 16 of the RAN Delmason was required to remedy within 14 days of being served. A period of 14 days from 17 October 2014 was well before the General Meeting,13 which proposed to consider the motion to terminate, so that it was possible for Delmason to avoid the consequences in s 129(4)(c) and s 129(4)(d) of the Module. [31] The Tribunal is a creature of statute and must find its powers either in the QCAT Act or in an enabling Act, such as the BCCM Act. The Tribunal’s power to make a declaration is set out in s 60 of the QCAT Act, which relevantly provides: (1) The Tribunal may make a declaration about a matter in a proceeding – (a) instead of making an order it could make about the matter; or (b) in addition to an order it could make about the matter. ..... (4) The tribunal’s power under subsection (1) is in addition to, and does not limit, any power of the tribunal under an enabling Act to make a declaration. [32] The BCCM Act does not specifically confer on the Tribunal the power to make declarations in the Tribunal’s original jurisdiction. [33] In this proceeding, the only final relief sought are declarations. During the oral hearing, Delmason confirmed that it pressed the three declarations outlined in the Application as final orders.14 [34] The Appeal Tribunal has previously held that s 60 is a more limited power to make declarations than that provided under the Supreme Court Act 1995 (Qld)15 in that s 60 does not give the Tribunal power to make declarations, 12 Paragraph 3.9 on p 76 of the Application filed 25 November 2014. 13 28 November 2014. 14 Page 18. 15 Section 128. -- 6 of 8 -- 7 which are not ancillary to or in lieu of another order, which it could make.16 This Appeal Tribunal decision was recently followed.17 [35] The Appeal Tribunal in Randall considered whether the seeking of interim relief was sufficient to empower the tribunal to make final declarations where no other final relief was sought. The Appeal Tribunal found that the seeking of interim relief was irrelevant.18 [36] During the oral hearing, Delmason submitted that I should exercise the power to make a declaration in addition to or instead of a final injunction, which the Tribunal may order of its own initiative.19 [37] The Body Corporate submitted that: a) the Tribunal’s power to order a declaration ought be confined to circumstances where the party seeking the declaratory relief had also sought other final relief; and b) if the Tribunal could rely upon its power to order a final injunction20 then the limitations on the power to order declaratory relief would effectively be meaningless. [38] Statutory provisions are to be interpreted in a way, which will give effect to the purpose of Parliament as expressed in the words of the statute.21 The purpose is not to be derived by a consideration of the words in isolation but by a consideration of the context.22 [39] I am not satisfied that I have power to make declarations under s 60 of the QCAT Act where Delmason has not sought other final relief. [40] In view of my finding that the RAN is invalid, I find that it is just and convenient to grant a final injunction in the terms discussed during the oral hearing to restrain the Body Corporate from relying upon an invalid RAN. [41] Delmason accepts that disputes about the validity of the General Meeting and the Motion do not ordinarily fall within the Tribunal’s jurisdiction. However contends that because they are ancillary to the issue of validity of the RAN that the Tribunal may make orders in respect of them and relies upon SCV Group Limited v Body Corporate for Parkview Gardens.23 [42] The Body Corporate says that: 16 Randall v Body Corporate for Runaway Cove Bayside CTS 25498 [2011] QCATA 10. 17 Northbuild Construction Pty Ltd v Body Corporate for Harmony Broadwater [2015] QCAT 33. 18 [2011] QCATA 10 at [33]. 19 QCAT Act s 59(3). 20 Ibid. 21 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. 22 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389. 23 [2011] QCAT 299. -- 7 of 8 -- 8 a) where matters have an obvious and practical connection with the proceedings, where appropriate orders are sought as part of the relief the applicant seeks, the Tribunal is invested with jurisdiction; b) it is unnecessary to make orders about the General Meeting and the Motion because the Motion was not pursued at the General Meeting and whilst the General Meeting did proceed there were no disputed matters addressed. [43] I accept that the issue of the validity of the Motion had an obvious and practical connection with the proceedings which sought a determination as to the validity of the RAN. I am not satisfied that the defect in the relief sought24 ought to necessarily preclude a consideration of the ancillary matter. To do so would not accord with the requirement that the Tribunal act with ‘little formality and technicality’.25 On balance I consider that it was appropriately part of the same proceedings. I also accept that if the RAN was valid a relevant consideration to the validity of the Motion was whether the General Meeting was valid and was appropriately part of the same proceedings. [44] The Body Corporate accepted that the amended notice containing the Motion was not given in sufficient time, being given on 7 November 2014 for a General Meeting on 28 November 2014.26 Delmason contends that this is not an admission that the Motion and the General Meeting were invalid. [45] The Body Corporate accepts that if the RAN is invalid then it cannot be relied upon to found a motion to terminate the Agreement.27 It follows from my finding that the RAN is invalid that I find the Motion relying upon the RAN was invalid. [46] In circumstances where: a) I am not satisfied that I have the power to make a declaration where no other final relief was sought; b) I have found the RAN is invalid; c) the Motion was not pursued at the General Meeting; d) no disputed matters were considered by the General Meeting; e) the starting position as to costs in the Tribunal is that each party bear their own costs,28 there appears little utility in making findings about the validity of the General Meeting. 24 Solely declaratory. 25 QCAT Act, s 28(3)(d). 26 Accommodation Module, s 72 requires the general meeting to be held at least 21 days after notice of meeting is given. 27 Submissions filed 21 January 2015 at [6]. 28 QCAT Act s 100. -- 8 of 8 --