Chateau Beachside Management Pty Ltd v Body Corporate for “Surfers Chateau” [2009] QDC 7

DISTRICT COURT OF QUEENSLAND CITATION: Chateau Beachside Management Pty Ltd v Body Corporate for “Surfers Chateau” Community Title Scheme 14382 [2009] QDC 7 PARTIES: CHATEAU BEACHSIDE MANAGEMENT PTY LTD (Plaintiff) V BODY CORPORATE FOR “SURFERS CHATEAU” COMMUNITY TITLE SCHEME 14382 (Defendant) FILE NO/S: 572 of 2007 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Southport DELIVERED ON: 30 January 2009 DELIVERED AT: Brisbane HEARING DATE: 13 January 2009 JUDGE: Judge Dick SC ORDER: (1) The Statement of Claim be struck out; (2) The Plaintiff’s application for summary judgement be dismissed; (3) That the Plaintiff be granted leave to amend the Statement of Claim; (4) That the Plaintiff file and serve the Amended Statement of Claim within 21 days of the Order; (5) That the Amended Notice of Defence be filed within 21 days of Service of the Statement of Claim; -- 1 of 9 -- 2 (6) That any Amended Reply be filed within 14 days of the Service of the Amended Notice of Defence; (7) That the costs of the Application be costs in the cause. CATCHWORDS: Body Corporate and Community Management Act (Qld) 1997 COUNSEL: S M McNeil for the Plaintiff G Beacham for the Defendant In this matter, I have before me an application for summary judgement and a cross- application to strike out the statement of claim. It is logical that I deal first with the cross application. Background [1] In January 1996, a company called Strand Resorts Pty Ltd became the body corporate manager for the community titles scheme known as “Surfers Chateau”. [2] In early 1998, Strand Resorts tendered for the renewal of the management rights for the scheme. The tender submission, inter alia, proposed that the management rights be granted on the basis that the manger’s duties would include an obligation to paint the building in 1998 and in 2005. [3] The agreement included a lease over the restaurant area within the community titles scheme at a significantly reduced rental. [4] In November 2001, the plaintiff and defendant entered into a Deed of Assignment and Variation of Management and Letting Agreements (“the Deed”) -- 2 of 9 -- 3 [5] Clause 5.03 of the Deed inserted an additional clause 3.1 (f) into the Management Agreement: “If the Manager shall exercise the option for the First Further Term, the Manager shall during the year 2005 paint the external surfaces of the building to a good tradesman like standard at the Manager’s expense.” [6] The Plaintiff painted the Scheme at a cost of $51,345.80. The Body Corporate and Community Management Act 1997 (“the BCCM Act”) [7] Section 113 of the BCCM Act provides: No consideration for engagement or authorisation (1) The body corporate for a community titles scheme must not seek or accept the payment of an amount, or the conferral of a benefit, for— (a) the engagement of a person as a service contractor for the scheme (including a replacement or renewal of an engagement of the person as a service contractor); or (b) the authorisation of a person as a letting agent for the scheme (including a replacement or renewal of an authorisation of the person as a letting agent); or (c) extending the term of— (i) an engagement of a person as a service contract or for the scheme; or (ii) an authorisation of a person as a letting agent for the scheme. (2) Subsection (1)(b) does not apply to the first authorisation given after the original owner control period ends if— (a) the amount or benefit sought or accepted for the authorisation represents fair market value for the authorisation; and -- 3 of 9 -- 4 (b) no authorisation was given during the original owner control period. (3) If an amount is paid to, or a benefit is accepted by, the body corporate in contravention of subsection (1), the person who paid the amount or conferred the benefit may recover the amount, or the value of the benefit, as a debt. [8] Section 114 of the BCCM Act provides: Limitation on benefit to body corporate under service contractor engagement (1) The engagement of a person as a service contractor for a community titles scheme must not include, whether directly or indirectly, a requirement for the payment of an amount to, or the conferral of a benefit (other than the services the service contractor is engaged to supply) on, the body corporate. (2) If an amount is paid to, or a benefit is accepted by, the body corporate under a requirement mentioned in subsection (1), the person who paid the amount or conferred the benefit may recover the amount, or the value of the benefit, as a debt. (3) Subsection (1) does not apply to an amount or benefit representing fair market value for an entitlement conferred (not including the actual engagement as service contractor) by the body corporate under the engagement. [9] The Statement of Claim relevantly pleads: (2). “On or about 25 November 2001 the Plaintiff entered into a Deed of Assignment and Variation of Management and Letting Agreements (hereinafter referred to as “the Deed”) with the Defendant and Strand Resorts Pty Ltd ACN 008 498 315 (hereinafter referred to as “Strand Resorts”). (3). The effect of the Deed was to assign pre-existing Management and Letting Rights held by Strand Resorts to the Plaintiff and to vary certain provisions of those previous Agreements. -- 4 of 9 -- 5 (4). Clause 5.03 of the Deed inserted and (sic) additional clause 3.1 (f) into the Management Agreement. Clause 3.1 (f) provided as follows: “If the Manager shall exercise the option for the First Further Term, the Manager shall during the year 2005 paint the external surfaces of the building to a good tradesman like standard at the Manager’s expense.” (5). The plaintiff, pursuant to the new clause 3.1 (f) of the Management Agreement, commenced painting of the Scheme on 19 September, 2005. (6). The Plaintiff incurred costs in the amount of $51,345.80 in attending to the painting of the Scheme. Particulars Service Provider Invoice Number Date Date Paid by Plaintiff Amount (a) ANP Painting Contractors 001178 31.10.2005 31.10.2005 $11,607.20 (b) ANP Painting Contractors 001190 28.11.2005 01.12.2005 $11,607.20 (c) ANP Painting Contractors 001197 12.12.2005 12.12.2005 $24,156.00 (d) ANP Painting Contractors 001203 18.01.2006 18.01.2006 $3,975.40 TOTAL $51,345.80 (7). By virtue of Section 113 of the Act a Body Corporate for a Community Title Scheme is not entitled to seek or accept of an amount, or conferral of the benefit for the engagement of a person as a service contractor or the authorisation of a person as a Letting Agent for the Scheme. (8). Section 113 (3) of the Act entitles a party who paid the amount or conferred the benefit to the Body Corporate to recover the amount of the debt. (9). By virtue of Section 114 of the Act a Body Corporate for a Community Title Scheme is not entitled to seek or accept of an amount, or conferral of the benefit for the engagement of a person as a service contractor (sic) the Scheme, including the extension or renewal of an existing engagement. (10). Section 114 (2) of the Act entitles a party who paid the amount or conferred the benefit to the Body Corporate to recover the amount of the debt. (11). By virtue of Section 115 of the Act a Body Corporate for a Community Title Scheme is not entitled to seek or accept of an amount, or conferral of the benefit for the authorisation of a person as a Letting Agent for the Scheme, including the extension or renewal of an existing engagement. (12). Section 115 (2) of the Act entitles a party who paid the amount or conferred the benefit to the Body Corporate to recover the amount of the debt. -- 5 of 9 -- 6 (13). The Body Corporate received the benefit of the painting of the Scheme to the value particularised in paragraph 6 above from the defendant. (14). The Defendant was not entitled to receive the benefit from the Plaintiff of the costs (sic) the painting in the amount of $51,345.80 and has been unjustly enriched by the receipt of this benefit”. [10] It is submitted that the Statement of Claim does not allege the matters required to engage the relevant sections of the BCCM Act namely: (a) that the Body Corporate sought or accepted a benefit for the engagement of a person as a service contractor (s 113 (1) (a)); (b) that the engagement included a requirement for the conferral of the benefit on the Body Corporate (s 114 (1)) [11] In relation to S 113 (1) (a), the defendant submits that the pleading simply alleges that the defendant received or accepted a benefit but that it fails to allege that the benefit was accepted for the engagement. [12] In relation to S 114, it is submitted that the pleading fails to identify the benefit that the agreement required the plaintiff to confer on the defendant. It is submitted that clause 3.1 (f) of the Deed did no more than restate an existing agreement to perform the painting and that the pleading fails to state how clause 3.1 (f) conferred a benefit as distinct from a continuation of a commercial arrangement. [13] It is further submitted that the restitution claim simply alleges unjust enrichment/restitution on behalf of the defendant and that unjust enrichment or restitution is not a cause of action in and of itself. [14] The Uniform Civil Procedure Rules (“UCPR”) provide relevantly: Rule 149 UCPR Statements in pleadings (1) Each pleading must— (a) be as brief as the nature of the case permits; and (b) contain a statement of all the material facts on which the party relies but not the evidence by which the facts are to be proved; and -- 6 of 9 -- 7 (c) state specifically any matter that if not stated specifically may take another party by surprise; and (d) subject to rule 156, state specifically any relief the party claims; and (e) if a claim or defence under an Act is relied on—identify the specific provision under the Act. (2) In a pleading, a party may plead a conclusion of law or raise a point of law if the party also pleads the material facts in support of the conclusion or point. Rule 150 UCPR Matters to be specifically pleaded (2) Also, any fact from which any of the matters mentioned in subrule (1) is claimed to be an inference must be specifically pleaded. [15] McGill DCJ in Kev Leamon Earthmovers Pty Ltd v Hammond Villages Pty Ltd (1998) 19 Qld Lawyer Reps 10 at 11 said, in relation to the principles applicable to strike out a pleading, the following: “…. The general approach to the discretion to strike out a pleading is that is should only be exercised where the claim or defence is obviously untenable1 : General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129. Matters going to the merits of the claim should not be decided in a summary way prior to trial, and this includes questions of law unless they are quite clear, or unless an order has been made under the rules for the determination in advance of the trial of a separate question of law. There is no procedure for demurrer under the District Court Rules, and the hearing of an application under r109 should not be treated as the equivalent of the determination in advance of the trial of a separate question of law. Questions of law should therefore not be decided adversely to the plaintiff on the hearing of this application unless a view of the law favourable to the plaintiff is clearly wrong. There is however one aspect of the law which does not have to be decided on such application, and is appropriately enforced by it, and that is the law in relation to the sufficiency of pleading: NRNQ v MEQ Nickel Pty Ltd [1991] 2 QdR 592 at 297. The party opposite is entitled to a proper pleading as an incident of the requirement of procedural fairness: Banque Commerciale SA (In Liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286. A claim or defence which is bad in point of pleading should be struck out, but on the basis that the 1 Emphasis added -- 7 of 9 -- 8 party delivering it should be given leave to replead. As to the significance of striking out a pleading with leave to replead on the ground that is was defective in point of pleading, see Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69 AT 74 PER Barwick CJ; 97 – 98 per Jacobs J.” [16] Rule 171 UCPR provides: (1) This rule applies if a pleading or part of a pleading – (a) discloses no reasonable cause of action or defence; or (b) has a tendency to prejudice the fair trial of the proceeding; or (c) is unnecessary or scandalous; or (d) is frivolous or vexatious; or (e) is otherwise an abuse of the process of the court. (2) The court, at any stage of the proceeding, may strike out all of part of the pleading and order the costs of the application to be paid by a party calculated on the indemnity basis. (3) On the hearing of an application under subrule (2), the court is not limited to receiving evidence about the pleading. [17] I am of the view that the Statement of Claim as presently pleaded discloses no reasonable cause of action or has a tendency to prejudice the fair trial of the proceeding. [18] It ought to be struck out. The Application for Summary Judgement It is conceded that it would be wrong for me to make orders in respect of this application in light of my ruling. It is further conceded that I should allow time to amend the pleadings. Further, in light of the circumstances in which the matter was raised I will reserve the costs of the applications. -- 8 of 9 -- 9 Orders: (1) The Statement of Claim be struck out; (2) The Plaintiff’s application for summary judgement be dismissed; (3) That the Plaintiff be granted leave to amend the Statement of Claim; (4) That the Plaintiff file and serve the Amended Statement of Claim within 21 days of the Order; (5) That the Amended Notice of Defence be filed within 21 days of Service of the Statement of Claim; (6) That any Amended Reply be filed within 14 days of the Service of the Amended Notice of Defence; (7) That the costs of the Application be costs in the cause. -- 9 of 9 --