Body Corporate for Noosa on the Beach CTS 6417 v Hollis Partners Pty Ltd [2002] QDC 86

DISTRICT COURT OF QUEENSLAND CITATION: Body Corporate for Noosa on the Beach CTS 6417 v Hollis Partners Pty Ltd [2002] QDC 086 PARTIES: BODY CORPORATE FOR NOOSA ON THE BEACH CTS 6417 (appellant) V HOLLIS PARTNERS PTY LTD (respondent) FILE NO/S: 24/01 DIVISION: District Court at Maroochydore PROCEEDING: Appeal DELIVERED ON: 9 May 2002 DELIVERED AT: Maroochydore HEARING DATE: 8 March 2002 JUDGE: Dodds DCJ ORDER: Appeal allowed. Order of the adjudicator set aside. Order the respondent be prohibited from advertising and/or conducting the leasing, letting or sale of property whatsoever other than property part of CTS 6417 from lot 21 and/or the common property of CTS 6417. Order the respondent pay the appellant’s costs of and incidental to the appeal and to the mention before the registrar. CATCHWORDS: PRACTICE – Appeal against adjudicator’s decision made pursuant to the dispute resolution provisions of Chapter 6 of the Body Corporate and Community Management Act 1997 – whether the use of a lot under a Community Titles Scheme for general real estate activities is permissible under the Scheme by-laws – whether the adjudicator’s interpretation of by-law 14 was correct - where the adjudicator dismissed the appellant’s application that the respondent be restrained from conducting a general real estate business from the lot and/or the common property of the Scheme and for costs. Body Corporate and Community Management Act 1997, ss 131(a)(i) and (ii), 237(2); 241; Uniform Civil Procedure Rules 1999, rr 452(2), 757, 789, 982(1), Hope v Bathurst City Council (1980) 144 CLR 1; Humphries v Proprietors “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597; -- 1 of 8 -- 2 Vetter v Lake Macquarie City Council (2000) 75 ALJR 578. COUNSEL: Mr C J Carrigan for the appellant Mr G W Scott for the respondent SOLICITORS: Short Punch & Greatorix for the appellant Klooger Phillips Scott for the respondent [1] This is an appeal by Body Corporate for Noosa on the Beach, Community Titles Scheme 6417 (the Body Corporate) from an adjudicator’s decision made pursuant to the dispute resolution provisions of Chapter 6 of the Body Corporate and Community Management Act 1997 (the Act). [2] On 31 July, 2001 an adjudicator dismissed the body corporate’s application that Hollis Partners Pty Ltd be restrained from conducting a business known as Accom. Noosa BN 1779400 from lot 21 and/or the common property of Community Titles Scheme 6417 and for costs. [3] Pursuant to Part 12 of Chapter 6 of the Act, the Body Corporate may appeal to the District Court “but only on a question of law”: s 237(2) of the Act. [4] The appeal before the adjudicator called up the meaning of certain by-laws of the body corporate and provisions of a caretaking agreement and a letting agreement entered into by the appellant and the respondent. [5] Community Title Scheme 6417 (the Scheme) comprises 31 lots. Lots 1 to 10 are for commercial business and/or retail use, not residential. Lots 11 to 20 and 22 to 31 are for residential purposes only. Lot 21 is for use for the purposes of the manager’s office/reception area and associated matters and not for residential. [6] The respondent owns and conducts a general real estate agency under the name of Accom. Noosa from lot 21 of the Scheme. Accom. Noosa, as part of conducting its business, arranges sales and lettings of lots in the Scheme and property elsewhere. It uses the exclusive use areas which accompany occupation of lot 21 in conducting its general real estate business. [7] In dismissing the appellant’s application, the adjudicator declined, as urged by the appellant, to construe by-law 14 of the Scheme by reference to the letting agreement and the caretaking agreement. He considered by-law 14 “should be read alone in determining the potential or permitted use of lot 21”. He rejected the appellant’s contention that the use permitted by the by-law was restricted to “commercial use limited to carrying out Hollis Partners’s obligation pursuant to the caretaking agreement, and in respect of the letting agreement a use limited to the letting of lots in the complex on behalf of those owners that require the service”. He considered: by-law 14(a) should be read subject to the more specific reference in by- law 14(b); the use of the word “may” in by-law 14(b) in describing the use to be made of lot 21 was permissive not restrictive; -- 2 of 8 -- 3 the wording of the by-law contemplated lot 21 could be used for “the activity of sale of units in addition to letting”; and the by-law did not prohibit the use of lot 21 for the letting or sale of units or real estate not in the building. Rather, it created “an exclusive right in the respondent to undertake services of the sale and letting of lots in the building (and did) not prohibit the respondent from offering sales and letting services to persons not connected to the building”. [8] The caretaking agreement referred to is between the appellant as the “Body Corporate” and the respondent as the “manager”. It recited, inter alia, “the appellant’s desire to provide for the functions of caretaking, repair, maintenance, administration, control, use and enjoyment of the improvements and other property within the complex in respect of which the Body Corporate has a power or duty to carry out such functions under the supervision of the manager”. It provided for the engagement of the respondent “as the manager of the property for the term of seven years to commence on and from the 1st day of July, 1999 - - - -”. It set out the caretaking activities required of the manager. It had nothing to say about the conducting by the manager of a real estate office from the Scheme. [9] The letting agreement was between the appellant as the “Body Corporate” and the respondent as the “agent”. It recited that the respondent as “the agent” would be granted “the right to let lots in the complex for and on behalf of such lot owners as shall request that service” for a period of seven years to commence on and from the 1st day of July, 1999. Clause 2 provided: “(a) The agent is entitled to carry on from within the building a 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 together with all associated services commonly rendered in connection with such an agency; (b) The agency hereby acknowledges and agrees that any lot owner may use the services of any similar business or businesses at the election of any such lot owner and the agent warrants that it will not hinder any person so engaged.” By-law 14(a) and (b) so far as it relevant to the matter before the adjudicator provides as follows: “(a) - - unit number 21 shall be used for the purposes of the manager’s office/reception area and associated matters only and unit number 21 shall not be used for residential use. (b) During such times the proprietor of lot 21 of the building has any necessary governmental, semi-governmental or local authority consents and approvals then that unit and any areas of common property with exclusive use to the proprietor of lot 21 from time to time may be used for the purposes of management of the building, reception and associated services to guests and proprietors of lots and for the sale and letting of units in the building on behalf of the proprietors and the rendering of such services to occupants of units -- 3 of 8 -- 4 in the building and may display signs and notices for the purposes of offering for sale or for the lease or for letting of any unit in the building such signs to be erected subject to the provisions of by-law 17 hereof. For the purposes aforesaid no other lot or any part of the building or of the common property thereof may be or shall be used for the purposes of or for the business of management of the building, reception, sale and letting of units in the building”. [10] Part 5 of Chapter 3 of the Act provides power to the Scheme to provide for by-laws for the Scheme. The purposes for which by-laws may be provided are limited. See s 131 of the Act. One such purpose is for regulation of, including conditions applying to, the use and enjoyment of lots included in the Scheme (s 131(a)(i)) and common property (s 131(a)(ii)). [11] The respondent is the manager of the Scheme pursuant to the caretaking agreement. It is the agent referred to in the letting agreement. It is not the owner of lot 21 as that term is used in the Act. That appears to be Hollis Holdings Pty Ltd an associated entity. It is the occupier of the lot as that term is used in the Act. Reference to “proprietor” in the by-laws appears to be a leftover from previous legislation (Building Units and Group Titles Act 1980) where “proprietor” was defined in similar terms as is “owner” in the Act. [12] By-law 14(a) specifically restricts the use of lot 21 to “for the purposes of the manager’s office/reception area and associated matters”. In my opinion the use of lot 21 as premises from which is operated the type of business conducted by a general real estate office is outside the use there described. The caretaking agreement provides for the duties of the manager. [13] By-law 14(b) in my opinion then enlarges the use which may be made of lot 21 and any common property with exclusive use to the proprietor of lot 21 beyond that which otherwise would be permitted under by-law 14(a); for instance, the sale and letting of units (which is provided for in the letting agreement but not the caretaking agreement). Under by-law 14(b) so long as the proprietor of lot 21 has any necessary governmental, semi-governmental or local authority consents or approvals, lot 21 and any areas of common property with exclusive use to the proprietor of lot 21 may be used for the purposes of: management of the building, reception and associated services to guests and proprietors of lots; sale and letting of units in the building on behalf of the proprietors; the rendering of such services to occupants of units in the building; and erection and display of signs and notices for the purposes of offering for sale or lease or letting of any unit in the building provided they comply with by-law 17. [14] Putting to one side the question of the proprietor of lot 21 having the consents or approvals required by by-law 14(b), by-law 14 regulates the use which may be made of lot 21 and exclusive use areas of the common property associated with it. Both by-law 14(a) and 14(b) need to be read together. Read in this way, the use of -- 4 of 8 -- 5 lot 21 is restricted to those activities described in by-law 14(b) which does not include letting and sale of real estate outside the Scheme. [15] The question for the adjudicator was whether the use of the lot for general real estate activities was permitted or prevented by the Scheme by-laws. In Humphries v Proprietors “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597 the High Court was concerned with whether a management agreement was valid. It provided a lump sum remuneration for the manager which was not apportioned to the various duties of the manager under the agreement. One of the duties was acting as a letting agent for property, part of the plan. The High Court determined that the whole agreement was invalid because there was no power in the body corporate to expend its funds on remuneration for the manager providing a service as a letting agent and the lump sum remuneration was not and could not be apportioned. In the course of the judgment of Brennan and Toohey JJ at page 601, their Honours said, “To ascertain the relevant limit on the powers of a body corporate the provisions of the Act conferring powers must be construed in context - - . The powers, authorities, duties and functions of the body corporate are prescribed by or under the Act or the by-laws of the body corporate - - ”. McHugh J at page 612 said, “- - in the absence of an authorising by-law, a body corporate formed under the Act has (no) power to enter into an agreement by which it pays money to a person in consideration of that person conducting a letting agency for the benefit of those owners of lots in the complex who require that service”. [16] The adjudicator was required to interpret the meaning of by-law 14. No other by- law is relevant to the question. The appellant contended the adjudicator’s interpretation was incorrect and I have found it to be so. That involves a question of law: Hope v Bathhurst City Council (1980) 144 CLR 1 at 7; Vetter v Lake Macquarie City Council (2001) 75 ALJR 578 at 583-4. The by-law did not permit the use of lot 21 and its common property for general real estate activities. [17] In its submissions the respondent included a submission that “the appellant is estopped from denying the conduct by the respondent of a general real estate business in the building”. This appears to be based upon the respondent’s assertion that its purchase of the real estate business already operating from lot 21 was with the approval of the appellant. [18] In his reasons, the adjudicator said “the respondent Hollis Partners Pty Ltd has concluded its submission as follows – ‘the issues raised by the application concern rights and obligations of the respondent of significant economic value. The issue raises significant issues of law or mixed fact and law. The application is suitable for dismissal by the commissioner under s 201 of the Act’. I consider there is some validity to this statement. The respondent raised aspects including the interpretation of relevant agreements between the parties and the doctrine of estoppel as being relevant to the resolution of this dispute. It is not within the expertise of, or reasonable expectation, that a departmental adjudicator be called upon to consider and determine such aspects. In the circumstances I intend to narrow my determination of what I consider to be the crux of the applicant’s argument.” [19] He then proceeded to deal with by-law 14. Later in his reasons he said, “In my view the (appellant’s) application must fail. This view is based on my interpretation of by-law 14 and not the terms of the agreements or any other material which might be relevant or indeed other factors which might be relevant considerations in the -- 5 of 8 -- 6 determination of this dispute (eg. Estoppel) - - any consideration of this application in the wider context should be by a court of competent jurisdiction and not this office”. [20] Section 241 of the Act provides that the procedure at the hearing for an appeal to the District Court is (to the extent it is not dealt with in this Part) to be in accordance with the rules under the District Court Act 1967 or in the absence of relevant rules, directions of the court. [21] Rule 757 of the Uniform Civil Procedure Rules 1999 (UCPR) provides: “(i) If a respondent intends to contend a decision should be affirmed on a ground other than a ground relied on by the court that made the decision the respondent must file a notice of contention stating briefly and specifically the grounds of the contention; (ii) The notice of contention must be in the approved form; (iii) The respondent must – (a) File the notice of contention within 14 days after the day of service of the notice of appeal on the respondents; and (b) As soon as practicable serve a copy of the notice of contention on all other parties to the appeal”. [22] I do not intend to engage in any consideration of estoppel. Firstly, rule 757 UCPR has not been complied with. Secondly, the material before the adjudicator was quite inadequate upon which to attempt to determine such an issue. I acknowledge the adjudicator has investigative powers. See Part 9 of Chapter 6 of the Act. Thirdly, although a deal of additional affidavit material has been filed in the appeal, I am not in a position to attempt to decide whether the matters necessary to establish an estoppel (see Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428- 9); Birstar Pty Ltd v The Proprietors “Ocean Breeze” Building Units Plan Number 4745 [1997] 1 Qd R 117 at 127-8) have been established. Fourthly, whilst if established it may be a factor in what order it is just and equitable for an adjudicator to make to resolve a dispute, it is irrelevant to the question of the meaning of by– law 14 and thus whether the activity in question is permissible under the by-laws. [23] The upshot is the appeal will be allowed and the order of the adjudicator set aside. [24] I order that the respondent Hollis Partners Pty Ltd be prohibited from advertising and/or conducting the leasing, letting or sale of any property whatsoever other than property part of Community Title Scheme 6417 from lot 21 and/or the common property of Community Title Scheme 6417. [25] I order the respondent pay the appellant’s cost of and incidental to the appeal. [26] There is a question whether the costs of and incidental to the appeal include the costs of a mention arranged before the registrar pursuant to rule 452(2) of the Uniform Civil Procedure Rules on 28 February 2002 and whether any other order for the costs of that mention should be made. -- 6 of 8 -- 7 [27] It is necessary to set out some of the history of the matter. [28] The appeal was filed by the Body Corporate on 11 September 2001. On 30 November 2001 the Body Corporate filed its outline of argument in accordance with the appeal practice directions in the District Court and served that outline on the respondent on 6 December 2001. On 14 January 2002 I heard an application by Hollis Holdings Pty Ltd and Hollis Partners Pty Ltd against the Body Corporate for Noosa on the Beach Community Titles Scheme 6417 seeking that the appeal by the Body Corporate (appeal 24/01 District Court Maroochydore) be struck out or dismissed. On 24 January 2002 I dismissed that application. To that point in time the respondent had not filed its outline of argument in accordance with the appeal practice directions in the District Court. [29] A callover was held on 30 January 2002 and the appeal was set down to be heard on 4 March 2002. That was at the request of counsel for the respondent. It was noted then that the respondent had not filed its outline of argument as required by the practice direction. Counsel for the respondent told the Court that the outline would be filed either by or in the following week. Later, at the request of the respondent and with the agreement of the appellant, the date of the hearing was altered to 8 March 2002. [30] The appellant arranged for the matter to be listed before the registrar on 28 February 2002 pursuant to rule 452(2) UCPR because the respondent had not filed or delivered its outline pursuant to the practice direction. On 27 February 2002 the outline was filed. [31] On 28 February 2002 Mr Hollis, the principal of the respondent, appeared before the registrar with the solicitor on the record for the respondent. The solicitor was granted leave to withdraw as solicitor on the record. The solicitors for the appellant did not appear as the outline had been provided. However, in a letter to the registrar they sought their costs of the proceeding before the registrar. [32] Rule 452(2) UCPR provides “a registrar of the - - - District Court may constitute the Court to hear and decide – (a) - - - (b) an application of a type prescribed by practice direction.” [33] Paragraph 4 of Practice Direction No. 5 of 2001 Appeals provides: “Registrar’s Directions and Conference Unless there is a specific prohibition in an Act, Regulations or Rules or an order of the Court, the Registrar may if considered appropriate or if a party requests make a direction that: (a) a party files a document. - - - -- 7 of 8 -- 8 Under rule 452(2) (UCPR) a registrar may constitute the court for the purposes of hearing and determining an application for such direction. Any failure to comply with any part of this Practice Direction or with a direction made by the registrar under rule 789 (UCPR) may result in the appeal being listed by reference of a registrar under rule 982 (UCPR) before a judge and consequently; (i) an order for costs being made against the party at fault; and/or (ii) the appeal being struck out.” [34] Rule 982(1) UCPR provides, “If a question arises in a matter before a registrar the registrar considers is appropriate for the decision of a judge - - the registrar may refer the matter to a judge - - -”. [35] The registrar referred the application for costs of the mention before the registrar to the judge who heard the appeal. [36] I think the appellant should have its order for costs of the mention before the registrar. It only came about because of the persistent failure of the respondent to attend to its obligation to file and deliver its outline of argument pursuant to the practice direction. [37] The costs of the Body Corporate on the Beach Community Title Scheme 6417 with respect to the mention before the registrar are included as costs of and incidental to the appeal. -- 8 of 8 --