Melville & Anor v Body Corporate For Santorini By The Sea CTS 16829 [2021] QCAT 37

• [12] By s 229 BCCM the only remedy for a complex dispute as defined under the BCCM is an order of a specialist adjudicator or the Tribunal exercising original jurisdiction.
• [13] A complex dispute is defined in Schedule 6 BCCM as to include a dispute mentioned in s 149B.
• [14] Section 149B includes 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.
• [15] A caretaking service contractor for a community titles scheme is defined to mean:

a service contractor for the scheme who is also -

(a) a letting agent for the scheme; or

(b) an associate of the letting agent.[1]

• [16] By s 16(1) BCCM a letting agent is defined as a person authorised by the body corporate to conduct a letting agent business for the scheme.

• [17] BC's general contention is that, as a matter of construction of the contractual documents, there has been no valid grant of letting authority to the applicants; therefore the applicants are not a caretaking service contractor; therefore the dispute between the parties is not a complex dispute as defined under the BCCM and therefore the Tribunal has no jurisdiction to determine matter OCL065-19.
• [18] BC's submissions lack precision. As best able to be understood, there are four arguments raised about the invalidity of an assigned letting authority.
• [19] First BC takes issue with the efficacy of the original appointment of A Leary and P and T Davis by the deed of 28 August 1995 ('the original appointment'). That appointment is challenged as a valid letting authority for the purposes of the BCCM.
• [20] Second, BC submits that the assignment of letting authority to Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust was flawed because Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust did not own manager's unit lot 9 and there was no deed between the owner of the manager's unit (Raymond George Jennings) and BC as required by s 116(2)(b) BCCM.
• [21] Third, BC challenges the claim that an authorisation to act as letting agent was given by the Deed of Engagement of 30 July 2002 to Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust. BC says, rather, it was given to Raymond George Jennings as an individual and he never assigned that letting authority.
• [22] Fourth and finally BC says s 116(2)(b) also operates to invalidate the assignment of any authorisation to act as letting agent to the applicants by the Deed of Assignment of 2009.

• [23] BC claims the original appointment of A Leary and P and T Davis by the deed of 28 August 1995 ('the original appointment') is invalid as a letting authority under the BCCM.
• [24] BC's submission about this is short but unclear and is therefore set out verbatim as follows:

The 1995 Agreement, which pre-dates the operation of the BCCM Act, relevantly provided:

(a) Clause 1 - The Body Corporate engaged the Manager for an initial term of 5 years commencing on 1 September 1995.

(b) Clause 3 and Schedule B - The Manager was obliged to perform caretaking activities as therein specified personally (or by its employees or agents).

(c) Clause 5(a) - The manager was at liberty to carry on from the unit the business of a real estate agency for the letting of residential units within the building on behalf of such owners of units in the building that require that service.

This is not a letting agent authorisation under the BCCM Act (which was not yet operational).[2]

• [25] The underlining emphasis is that given by BC.
• [26] Then, when discussing the Deed of Engagement of Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust, BC draws attention to the relevance of the date of this document with respect to commencement of the BCCM, again using underlining for emphasis:

The Deed of Engagement, which is the first agreement executed since the operation of the BCCM Act, relevantly provided ...[3]

• [27] Though the basis of objection is generally unexplained, I understand BC contends that the original appointment was ineffective because it did not comply with new BCCM requirements.
• [28] If that be the contention (BC was responsible for making its position clear and has not done so in the submissions of 7 October 2020) the contention is plainly wrong.
• [29] On commencement of the BCCM, then s 289, a transitional provision, provided:

289 Letting agent authorisation

(1) The body corporate for an existing 1980 Act plan is taken to have had power on and from 4 May 1994 to give an authorisation to a person as a letting agent.

• [30] The Explanatory Notes for the BCCM clarify:

There are two retrospective provisions in the Bill. The first deals with term limitation provisions applying to body corporate management agreements, letting authorisations and service contracts. ...

The second retrospective provision relates to the High Court's 4 May 1994 decision in the Surfers Palms North case which found that under the Building Units and Group Titles Act 1980 a body corporate does not have the power to enter into a letting agreement. This has been addressed in Bill by providing that a body corporate is taken to have the power to enter a letting agreement from 4 May 1994. Agreements entered into prior to this date will not be validated by the legislation.[4]

• [31] Further, by s 288 and s 290 of the BCCM as at commencement, such validated service contracts and authorisations were exempt from the requirements as to form set by either the provisions of the BCCM[5] or any regulation module applying to a scheme.
• [32] The original appointment was executed on 28 August 1995. Subject to its terms it continued as a valid caretaking service contract for the purposes of the BCCM on the passing of the BCCM.
• [33] It is appropriate to consider the terms of the original appointment.

• [34] By the deed of 28 August 1995, which was entitled Management and Letting Agreement, the original owner engaged A Leary and P and T Davis to act as caretaker and letting agent for the scheme. Clauses 3 and 4 dealt with the provision of caretaking services and clauses 5 and 6 letting services.
• [35] Clause 5 provided:

LETTING OF UNITS

5(a) in relation to lettings of residential units within the building the manager shall be at liberty to carry on from the unit the business of a real estate agency for the letting of units within the building on behalf of such owners of units in the building as require that service together with all associated services commonly rendered in connection therewith provided that it shall be the manager's responsibility at the manager's own expense to:

(i) Obtain all necessary permits or consents or licences required by any lawful authority to enable it to conduct such business; and

(ii) Conduct such business in a manner so as not to unduly interfere with the quiet enjoyment and occupation of units in the said building and in compliance with every By-Law of the Body Corporate.

(iii) Erect or procure the erection of signs in or about the building (of a size type and design and in locations approved of by the Committee of the Body Corporate) for the purpose of promoting and fostering the said letting business.

(5b) The manager hereby acknowledges and agrees that any unit owner may use the services of any similar business or businesses at the election of any such unit owner and the Manager hereby warrants that it will not hinder any person so engaged.

COVENANT BY THE BODY CORPORATE

1. The Body Corporate to the extent of its powers under the Building Units and Group Titles Act 1980 (as amended) and the Buildings By-Laws covenants that with respect to the letting of any residential units in the building it shall not consent to any person or corporation other than the Manager acting as agent with respect to any such letting nor allow any part of the common property to be used for such purpose except by the Manager.[6]

• [36] Clause 5(a) authorised A Leary and P and T Davis to carry on the business of real estate agent to let units in the scheme. The words used in clause 5(a) "...the manager shall be at liberty to carry on from the unit the business of a real estate agency for the letting of units within the building..." very clearly amount to a letting authorisation given A Leary and P and T Davis.
• [37] By clause 6 that authority was made exclusive to them and additionally excluded use of the common property of the scheme for such purpose other than by A Leary and P and T Davis.
• [38] I conclude the document is clear on its face. The original appointment constituted a grant of service contract and letting authorisation in favour of A Leary and P and T Davis which continued in force and effect under the BCCM as a caretaking service contract.

• [39] BC's next contention is that the assignment of letting authority to Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust was flawed because Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust did not own the manager's unit in the scheme, lot 9, and there was no deed as required by s 116(2)(b) BCCM between the owner of that lot, Raymond George Jennings, and BC.
• [40] Clause 9 of the Deed of Engagement provided:

Raymond George Jennings is authorised as owner to use Lot 9 ... for the purposes of management of the community titles scheme and for the letting of lots in the community titles scheme on behalf of the proprietors and the rendering of authorised services to occupants in the community titles scheme.

• [41] The chain of assignments leading up to execution of the Deed of Engagement are described in the recitals to the Deed. They disclose that the management and letting rights granted A Leary and P and T Davis under the original appointment were assigned to Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust.
• [42] Recital C explained the purpose of the Deed of Engagement as follows:

To extend the term of the Management and Letting Agreement the parties have agreed to terminate the existing Management and Letting Agreement and enter into this deed to reengage the Manager as the Manager under the Management and Letting agreement on the terms hereinafter set out.

2 The Body Corporate hereby engages and appoints the Manager as Manager on the same terms and conditions as set out in the Management and Letting Agreement save and except for the following amendments:

(a)Clause 1 of the Management and Letting Agreement is deleted and the following inserted in lieu thereof:

"The Body Corporate hereby engages the Manager as Manager of the said building for a term of five years to commence on and from the 14th of July 2002 and expiring on the 13th day of July 2007 and the Manager hereby accepts the engagement on the terms and conditions hereinafter appearing".

...

(c) A new clause 24 shall be inserted in the Management and Letting Agreement as follows:

"The parties agree that no part of the remuneration paid to the Manager under this Agreement shall be for carrying on any letting business or the provision of any related services which the Manager may elect to carry on or provide pursuant to the provisions of clause 5(a) of this agreement."

• [44] The Deed of Engagement adopted clauses 1 - 25 of the original appointment save for minor amendments.
• [45] Clause 4 of the Deed of Engagement bound BC to observe and perform the covenants and agreements in the Management and Letting Agreement:

...contained and implied and on the part of Body Corporate to be observed and performed and in particular shall be bound by and observe and perform any option or options for renewal or extension referred to in the Management and Letting Agreement.

• [46] It is clear the Management and Letting Agreement referred to throughout the Deed of Engagement is a reference to the original appointment despite the typographical error in Recital A which said:

By a certain Management and Letting Agreement dated the 28 day of August 1995 annexed hereto marked 'A' (hereinafter called the 'Management and Agreement') (sic)....

• [47] The document annexed 'A' is a copy of the original appointment.
• [48] The Deed of Engagement was clearly an engagement of Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust as both service contractor and letting agent for the scheme by BC.
• [49] What of the missing deed?
• [50] Section 116 BCCM provides:

116 Letting agent's obligations for letting agent lot

(1) This section applies to a person who becomes a letting agent for a community titles scheme after the commencement of this section.

(2) If the letting agent business is conducted from a lot, other than lessee common property, included in the scheme, at all times, either -

(a) the letting agent must be the registered owner or lessee of the lot; or

(b) a deed must be in place between the body corporate and the person (the lot holder) who is the registered owner or lessee of the lot, under which the lot holder agrees to transfer the lot holder's interest in the lot, in accordance with the arrangements provided for in the deed, if the letting agent is required to transfer the letting agent's management rights under division 8.

(3) The rights and obligations of the body corporate and the lot holder under the deed must correspond as far as practicable with the rights and obligations the body corporate and the letting agent would have under division 8 were the letting agent the registered owner or lessee of the lot.

(4) The arrangements provided for in the deed may include -

(a) arrangements for ensuring, to the greatest practicable extent, that the transfer of the lot holder's interest in the lot happens at the same time as the transfer of the letting agent's management rights under division 8; and

(b) authority, whether or not supported by a power of attorney, for the body corporate to act in the place of the lot holder if the lot holder does not comply with the lot holder's obligations under the deed for the transfer of the lot holder's interest in the lot.

(5) If the lot holder does not enter into the deed mentioned in subsection (2)(b), the letting agent's authorisation as letting agent has no effect.

• [51] BC submits, in so far as the Deed of Engagement authorised Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust to act as letting agent, that authorisation was rendered void[7] in the absence of the requisite deed necessary between Raymond George Jennings and BC pursuant to s 116(2)(b).
• [52] I reject that submission.
• [53] Prior to 4 March 2003 there was no requirement for any such deed. The obligation for a deed only arose on the passing of s 104A BCCM introduced by s 42 of the Body Corporate and Community Management and Other Legislation Amendment Act 2003 (Qld), on 4 March 2003.
• [54] Again the explanatory notes to that amendment Act are enlightening. The Explanatory Notes for the third reading of the Body Corporate and Community Management and Other Legislation Amendment Bill 2003 say this:

ACHIEVEMENT OF THE OBJECTIVES

The Bill provides the body corporate with the power to require the transfer of the letting agent's management rights where there is a breach of the codes of conduct (also included in the Bill). Those provisions require the letting agent to sell the management rights in the scheme together with the lot from which the agent letting business is conducted. To ensure that the sale of the complete management business package occurs, Clause 42 (the proposed section 104A) requires that the letting agent must hold the lot in the letting agent's name.

The provision did not however cover the situation where those people buying management rights structure their business arrangements, for various financial reasons, in such a way that the legal entity that is the registered proprietor of the lot from which the letting business is conducted is different from the entity that obtains the authorisation form the body corporate to conduct the letting business in the community titles scheme.

To ensure the policy objective of the transfer of management rights is still properly supported, the amendment to clause 42 will, in addition to the present provision, require both the letting agent and the owner of the lot from which the letting business is run, if different people, to be bound by the transfer provisions. The mechanism to achieve this will be a deed between the body corporate and the owner or lessee of the lot, under which the owner acknowledges and agrees to be bound by the transfer of management rights provisions of the Act.[8]

• [55] Section 116(1) limited the application of the provision to the engagement of a person as letting agent after commencement of the section. As at date of commencement of

s 116, 4 March 2003, lot 9 had already been sold to Mr and Mrs Tyson. That sale occurred on 22 March 2002. Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust assigned its letting authority to Mr and Mrs Tyson on 30 July 2002.

• [56] There was no requirement for a deed pursuant to s 116(2)(b) during the currency of the caretaking and letting authority arrangements with Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust.

• [57] BC's third contention, that clause 9 of the Deed of Engagement authorised Raymond George Jennings rather than Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust to act as letting agent, similarly lacks merit. Effectively it concentrates on that clause to the exclusion of all other terms and conditions set out in the Deed of Engagement.
• [58] I have already found that there was clear authorisation granted Ray Jennings Builder Pty Ltd as Trustee for the Jennings Family Trust to act as letting agent by terms of the Deed of Engagement.
• [59] Clause 9 of the Deed of Engagement is to be understood in the context perhaps of addressing potential by-law restrictions against commercial activities being carried on in non-commercial schemes, not as forming a separate authorisation for the owner of the manager's unit to act as letting agent.

• [60] The final proposition put by BC is that the 2009 assignment was invalid because the Deed of Assignment assigned the rights under the caretaking service contract held then by Merrimac Number One Pty Ltd to the applicants from 1 October 2009 but the applicants had not at that time been recorded in the Titles Registry as registered proprietors of the manager's unit Lot 9. That did not occur until six days later on 7 October 2009.
• [61] BC maintains s 116(2)(b) applied in that interim period of six days and there was no deed as required between the owner of the manager's unit (Merrimac Number One Pty Ltd) and BC. BC claims that that made any authorisation of the applicants as letting agent void.[9]
• [62] Section 116(5) does not operate to declare an authorisation invalid. It merely states that where the circumstances set out in s 116(2)(b) arise and there is no deed as required, the authorisation has no effect.
• [63] In Baque v River Gum Homes Pty Ltd[10] which concerned a similarly worded provision about a contract not having effect under the former Domestic Building Contracts Act 2000 (Qld),[11] the Tribunal said this:

What then do the words "has effect only if it is signed" really mean? A common sense answer, and one that is consistent with s 92, and the balance of the provisions of the Domestic Building Contracts Act 2000 together with the aim of that Act which is to help the consumers avoid pitfalls in procuring building services, is that the signature is needed only when one party wishes the contract to have "effect". Put another way, it was only when Mr Baque failed to comply with his obligations under the contract (vis: to pay money) that River Gum Homes needed the contract to have "effect". At that point it applied a signature to the building contract and from then the regulated contract had effect consistent with s 30 of the Domestic Building Contracts Act 2000.[12]

• [64] In Baque v River Gum Homes Pty Ltd the provision concerned, s 30, provided as follows:

A regulated contract has effect only if it is signed by the building contractor and building owner (or their authorised agents).

• [65] In similar vein, whilst the scenario identified in s 115(2)(b) existed for a mere six days, on 7 October it no longer did. For six days the letting authorisation was perhaps of no "effect" but then it was effective because it satisfied the s 116(2)(a) requirements. As stated,

s 116(5) does not purport to render any authorisation void or invalid.

• [66] As in Baque v River Gum Homes Pty Ltd, there is no time requirement set by s 116 for compliance with s 116(2)(a).
• [67] This construction concurs with the purpose for the provision identified in the Explanatory Notes for the third reading of the Body Corporate and Community Management and Other Legislation Amendment Bill 2003:

The purpose of the section still remains. That purpose is to ensure that, where the body corporate exercises the transfer provisions of Chapter 3 Part 2 Division 8, the lot from which the letting business is operated is also transferred along with the rest of the letting rights business and the letting agent leaves the scheme completely.[13]

• [68] The Explanatory Notes make clear the purpose of s 116 is to ensure both caretaking and letting rights are able to be assigned together if necessary. That purpose is complemented and achieved through not setting an unnecessarily strict temporal requirement to the transfer of ownership of the manager's unit. The sanction on unreasonable delay in doing that is, rather, that the letting authorisation will be of no effect until that occurs.

• [69] None of the arguments raised by BC succeed.
• [70] I determine that the applicants are a caretaking service contractor and their dispute raised in matter OCL065-19 is a complex dispute as defined by the BCCM Schedule 6 and the Tribunal has jurisdiction to determine it.
• [71] The costs of the application to determine the preliminary issue are reserved to the trial of the action.

[1] BCCM Schedule 6 (definition of 'caretaking service contractor').

[2] Respondent's submissions 7 October 2020, [37].

[5] Eg. s 115 BCCM which is referred to by BC. But s 115 simply requires a letting authorisation to be in writing, state when it begins and ends and state whether there are options for renewal. The original appointment covered such basics.

[6] The copy deed filed is not clear as to paragraph numbering. The clause headed "Covenant by the Body Corporate" is a discrete clause and follows immediately after clause 5(b) and accordingly seems appropriately numbered 6.

[7] Respondent's submissions 7 October 2020, [42]. The claim of invalidity is addressed below in considering the final contention.

[9] Respondent's submissions 7 October 2020, [42].

[10] [2013] QCATA 24.

[11] Which is now to be found as Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld).