Dummett v Gallery Vie Management Pty Ltd [2010] QCATA 128

CITATION: Dummett v Gallery Vie Management Pty Ltd [2010] QCATA 128 PARTIES: Denise Dummett (Applicant/Appellant) v Gallery Vie Management Pty Ltd (Respondent) APPLICATION NUMBER: APL018-10 MATTER TYPE: Appeals HEARING DATE: 3 August 2010 HEARD AT: Brisbane DECISION OF: Justice Alan Wilson, President DELIVERED ON: 14 December 2010 DELIVERED AT: Brisbane ORDERS MADE: Appeal dismissed. CATCHWORDS : BODY CORPORATE – CARETAKING AND LETTING AGREEMENT – REMUNERATION – Body Corporate and Community Management (Accommodation Module) Regulation 2008, s 112 – MEANING AND EFFECT – where the Body Corporate for Gallery Vie Community Titles Scheme 37760 engaged the respondent caretaker for caretaking and letting – where the caretaker sought increase in remuneration and sent a notice to the body corporate that was not disputed – where a General Annual Meeting of the body corporate defeated motion for variation of the remuneration rate – where the caretaker applied to Body Corporate Specialist Adjudicator for determination – where the appellant argued that clause 5 of the caretaking agreement offends s 112 of the Regulation – where the Adjudicator concluded that clause 5 did not offend s 112 – where appellant alleges Adjudicator erred in construction of s 112 – where appellant alleges change in variation is void as a result -- 1 of 6 -- 2 of an implied contractual condition – whether Adjudicator erred in construction of s 112 – whether variation in remuneration under clause 5 is a “change” or “amendment” under s 112(1)(c) – whether any implied contractual condition that would void change in remuneration Body Corporate and Community Management Act 1997, ss 4, 289 Body Corporate and Community Management (Accommodation Module) Regulation 2008, ss 66, 67(4), 112 Bayview Shores [2004] QBCCMCmr 541 (9 November 2004), cited Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600, cited Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, cited APPEARANCES and REPRESENTATION (if any): APPLICANT : Mr C Wilson of Counsel instructed by Reichman Lawyers for the appellant RESPONDENT: Mr B Kidston of Counsel instructed by Mahoney Lawyers for the respondent REASONS FOR DECISION [1] This proceeding concerns Gallery Vie, a residential units complex containing 46 lots in two towers at 266 Varsity Parade, Varsity Lakes. A dispute arose between the body corporate and a caretaking services contractor it had engaged, which was referred to a Specialist Adjudicator appointed under the Body Corporate and Community Management Act 1997 (BCCMA). [2] The dispute concerned the remuneration payable to the contractor under the caretaking services contract and, in particular, the method by which that remuneration might be changed. In his decision of 22 December 2009, the learned Adjudicator effectively found in favour of the caretaker. Ms Dummett owns a unit in the complex and made a submission to the Adjudicator1. She is, however, unhappy with his decision and has brought this appeal under s 289 of the BCCMA2. [3] The proceedings before the learned Adjudicator involved the entity called the Body Corporate for Gallery Vie Community Titles Scheme 37760, a body corporate created under the BCCMA and governed by and subject to 1 BCCMA s 271(1)(c). 2 As an ‘aggrieved person’ under s 289(1)(c). -- 2 of 6 -- 3 the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (BCCMR). In 2007 that body corporate entered into a caretaking agreement and letting agreement with Gallery Vie Management Pty Ltd (‘the caretaker’) under which the latter acted as caretaker and letting agent for the scheme at an agreed remuneration of $15,500.00 per annum, plus GST. [4] In late 2008 the caretaker, wishing to increase the amount of remuneration, took various steps including, in particular, writing to the body corporate enclosing a notice varying the rate. That notice went to the body corporate on 1 December 2008 and, when the latter did not dispute it within 14 days, the caretaker had its lawyers send the body corporate a motion proposing an amendment, and a deed of variation of the caretaking agreement. [5] A slightly different motion but one which, in any event, varied the rate went to the Annual General Meeting of the lot owners of the scheme on 11 February 2009, but was defeated. Notwithstanding that the caretaker took the view that because the steps it had undertaken complied with the terms of the caretaking agreement it was, therefore, entitled to be remunerated at the new rate. [6] The caretaker took the body corporate’s refusal to pay that new rate to the learned Adjudicator who, in lengthy reasons covering 44 pages, concluded that the variation notice had been validly given and the body corporate was obliged to pay the caretaker the amount of remuneration specified in it. Ms Dummett then appealed. [7] This QCAT Appeal Tribunal directed an exchange of written submissions, and allowed the parties to be legally represented. At the hearing, the parties were each represented by Counsel, who also made oral submissions. [8] Ms Dummett’s primary argument involves an assertion that the clause in the caretaking services contract which was used in the variation procedure described earlier is at odds with the relevant legislation, which prevails so that the caretaker’s attempt to vary the rate of remuneration should have failed and the body corporate is not obliged to pay the caretaker the amount of remuneration specified in the variation notice. In the alternative it is argued that the change was void for failure of an implied contractual condition arising between the parties, or was outside the power and scope of the Community Titles Scheme. [9] Under clause 5 of the caretaking agreement the caretaker was permitted, annually after the second year of the agreement, to deliver to the body corporate a variation notice containing an amended list of duties to be undertaken during the year to which the notice applied, and, if any variation in remuneration was proposed, specifying the amount of remuneration for those amended duties. If the caretaker did not deliver a variation notice for any particular year, the duties remained unchanged. However, if the caretaker did deliver such a notice, the body corporate was -- 3 of 6 -- 4 obliged (‘must’) to give a dispute notice to the caretaker within 14 days if it wished to dispute anything in it. [10] If a dispute of that kind arose and the parties could not resolve it then, under clause 16, the dispute was to be determined by a person agreed between the parties or, failing agreement, a person nominated by the President of the Law Society. Under clause 16(e) disputes of that kind are said, specifically, to include disputes relating to the amount of remuneration payable to the caretaker. [11] Ms Dummett says, however, that clause 5 and mechanism under it is void because it offends s 112 of the BCCMR which provides, relevantly: 112 Authority to make engagement or give authorisation, or amend engagement or authorisation [SM, s 114] (1) The body corporate may – a. Engage a person as a body corporate manager or service contractor; or b. Authorise a person as a letting agent; or c. Agree to an amendment of an engagement or authorisation mentioned in paragraph (a) or (b). (2) The body corporate may act under subsection (1) only if- a. The body corporate passes an ordinary resolution approving the engagement, authorisation or amendment and, for the passing of the resolution, no votes are exercised by proxy; and b. The motion approving the engagement, authorisation or amendment is, for any of the following, decided by secret ballot – i. An authorisation of a person as a letting agent; ii. An engagement of a person as a service contractor if the person is to be a caretaking service contractor; iii. An agreement to amend a person’s engagement as a service contractor, or a person’s authorisation as a letting agent, to include a right or option of extension or renewal; and c. The material forwarded to members of the body corporate for the general meeting that considers the motion approving the engagement, authorisation or amendment includes – i. For an engagement or authorisation – the terms of the engagement or authorisation, including – (A) When the term of the engagement or authorisation begins and ends; and (B) The term of any right or option of extension or renewal of the engagement or authorisation; and ii. For an agreement to amend a person’s engagement as a service contractor, or a person’s authorisation as a letting agent, to include a right or option of extension or renewal – an explanatory note in the approved form explaining the nature of the amendment; and iii. For another agreement to amend an engagement or authorisation – the terms and effect of the amendment. . -- 4 of 6 -- 5 [12] The learned Adjudicator came to the view that clause 5 does not offend s 112 and is, in the phrase he used, a ‘valid contractual mechanism’. His reasons are, with respect, terse but because of what follows I agree with his conclusion. [13] The critical question is whether or not the variation to the remuneration payable under the original agreement, affected using the mechanism under clauses 5 and 6, is an ‘amendment’ of the agreement which is caught by s 112(1)(c). [14] The apparent purpose of that provision is to ensure that lot owners in a Community Titles Scheme are consulted, and able to vote about, the terms by which their body corporate engages, on their behalf, a services contractor and that the terms of that engagement are not changed or amended without reference to them (relevantly, here, there is no suggestion by any party that the original caretaking agreement was not properly and lawfully entered into by the body corporate, or that s 112 was not complied with). [15] What occurred here, however, was not an amendment referrable to s 112 but, simply, the operation of a mechanism determining remuneration to which the parties had originally agreed. That is the conclusion reached by an earlier tribunal sitting in this jurisdiction and applying preceding, but not dissimilar, legislation: Bayview Shores [2004] QBCCMCmr 541 (9 November 2004), a decision of Mr Dorney QC (as His Honour then was) in which he described a process similar to that arising under clause 5 as one which simply implemented ‘…the process required by the agreement, and authorised by the body corporate when it consented to the terms of that agreement’. [16] That comment is apt to describe what occurred here: Clause 5 sets up a contractual mechanism which the parties have agreed upon (as part of the original agreement, properly ratified by the lot owners) and which can be implemented without further recourse to the lot owners in a general meeting. [17] Mechanisms of this kind are well known in commercial dealings3: …in the present case, the lease itself provides the entire mechanism for determining the rental for the renewed term. There is no further agreement required of the parties. It is true that if they do agree upon that rental, then there is no occasion to resort to the independent mechanism that the lease provides. But, there being no such agreement, all that is required is that the President name a person to fix a figure… [18] Construing s 112 in that way is also consistent both with ordinary principles of statutory construction, and conclusions about the proper meaning of the section which can be drawn from the legislation itself4. 3 See, eg, Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 604-5 (per Gibbs CJ, Murphy and Wilson JJ). -- 5 of 6 -- 6 [19] The construction found by the learned Adjudicator sits, firstly, comfortably with the overarching objects of the BCCMA – in particular, to provide an appropriate level of consumer protection for owners while, also, establishing ‘…sufficiently flexible administrative and management arrangements for Community Titles Schemes’: s 4(b),(g). [20] As pointed out for the caretaker in submissions (and not disputed) these caretaking services contracts often contain ‘CPI’ ratchet clauses affecting automatic increases to remuneration for caretakers calculated by reference to any increases in the consumer price index and it is highly improbable that the legislature intended to include those, effectively automatic, increases as something caught by s 112. [21] Secondly, s 67(4)(b) of the BCCMR deals with motions proposing that the remuneration payed to a particular service contractor be changed, and provides that they can only come before the body corporate once a year. Section 66 specifically uses the word ‘changed’ not ‘amendment’ suggesting a deliberate choice, in the legislation, between alterations to the subject matter of an instrument or a agreement (‘changes’ – see, also, s 92) and ‘amendments’ which relate to the original instrument or agreement itself. What occurred here is an apparent instance of a change, not an amendment referrable to s 112. [22] Finally, a particular difficulty for Ms Dummett’s contention is that, pursued to its logical end, her submission about s 112 means that even a determination by a person nominated by the President of the Law Society under the agreement itself would not be binding upon the parties, and would still have to go to a general meeting – a consequence which is inherently inappropriate, superfluous and unnecessary to achieve the goals of the legislation. [23] It is next submitted for Ms Dummett that the procedure followed by the caretaker was ultra vires the BCCMA because it did not comply with the procedure set up by s 112. This seems, with respect, to be simply a recasting of Ms Dummett’s argument that the procedure was caught, and prohibited, by s 112. For the reasons just explored, however, s 112 does not have that affect and this argument must fail. [24] Next, it is argued that the amended agreement was void for failure of an implied contractual condition, that condition being that any amendment agreement consequential upon the use of the machinery arising under clauses 5 and 6 was subject to the passing of a resolution, as required by s 112. Again, when it is appreciated that s 112 neither prohibits nor applies to the mechanism used by the parties under their agreement, no necessary implied term arises, nor any breach of any term with that effect. [25] For these reasons, the appeal is dismissed. 4 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. -- 6 of 6 --