BODY CORPORATE DISPUTE - application to dismiss or strike out - power of Tribunal to strike out parts of a response - power of Tribunal to require amendment

Acts Interpretation Act 1954 (Qld), s 7

Body Corporate and Community Management Act 1997 (Qld), s 122, s 318

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 4, s 47, s 48, s 64, Schedule 3

Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld), s 121, s 129, s 131

Uniform Civil Procedure Rules 1999 (Qld), r 171

Boost Foods Pty Ltd v Blu Oak Pty Ltd & Ors [2014] QSC 171

Clarke v Japan Machines (Australia) Pty Ltd 1 Qd R 404

Dey v Victorian Railways Commissioners (1949) 78 CLR 62

Fox v Jolly [1916] 1 AC 1

Peterson Management Services Pty Ltd v Body Corporate for The Rocks Resort [2015] QCAT 255

[1] The Sands is a residential unit complex on the Gold Coast. The body corporate for The Sands (the body corporate) contracted with The Sands Gold Coast Pty Ltd (The Sands) for the latter to provide maintenance and management services at the complex pursuant to two agreements: a Deed of Engagement of Ground Maintenance Contract (the GMC) and a Deed of Engagement (the management agreement).

[2] The parties have fallen into dispute. The Sands has filed an application to resolve a complex dispute. The hearing of the dispute is listed for 5 days in May 2016. The Sands has filed an application in the Tribunal for the determination of a number of issues prior to the hearing. The application essentially seeks a summary determination of those issues which, says The Sands, will reduce the time required for the hearing if resolved in its favour. The body corporate opposes the application.

[3] Pursuant to the GMC and the management agreement, The Sands provides caretaker and management services to the body corporate and for the complex. The GMC and management agreement were entered into between the body corporate and The Sands in April 2012.

[4] The relevant legislative framework is the Body Corporate and Community Management Act 1997 (the BCCMA) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module).

[5] Between January 2014 and May 2014, the body corporate issued a total of eight (8) remedial action notices to The Sands pursuant to s 131(3) of the Standard Module. The notices can be summarised as follows:

[6] RAN2 to RAN8 (inclusive) are collectively referred to in these reasons as "the RANs". They are otherwise referred to by the identification in the table.

[7] In its amended Application, and relevantly to this application, The Sands says that: it had, after receiving the RANs, done those things required to address the RANs;[1] the RANs failed to provide a reasonable or adequate period for the remediation of the complaints set out therein;[2] none of the RANs was a valid 'remedial action notice' for the purpose of s 131 of the Standard Module;[3] the body corporate is not entitled to rely upon the RANs to terminate the GMC and management agreement.[4]

[8] The final relief sought by The Sands is declaratory: that the RANs are invalid; that if the RANs are valid then The Sands has complied with the notices; that the body corporate is not entitled to act upon the RANs to terminate the GMC or management agreement.

[9] The body corporate, in its further amended response, refers to RAN2 to RAN8 inclusive as 'the Further Seven Notices'.[5] The body corporate relies upon the issuing of the Further Seven Notices as grounds for terminating the GMC notwithstanding whether the breaches identified in the RANs were remedied or unremedied.[6] The body corporate says that its right to terminate arose by virtue of the operation of clause 8.1 of the GMC and the issuing of three (3) RANs in a six month period.[7]

[10] It is appropriate here to pause briefly and outline the relevant clauses of the GMC. Clause 8.1 sets out circumstances in which the body corporate may terminate the GMC. Clause 8.1(b) provides a ground of termination if the Ground Maintenance Person (The Sands) defaults in the performance of its duties and such failure or default continues for a further period of fourteen (14) days after notice is given specifying the default and clearly stating how such default is to be remedied. A further ground for termination is to be found in clause 8.1(c), namely the Ground Maintenance Person receiving three (3) valid notices under clause 8.1(b) in any 6 month period. The GMC does not define or otherwise clarify the meaning of a 'valid notice'.

[11] The body corporate says that the period allowed to remediate a breach provided for in the RANs was reasonable and adequate[8] and that The Sands is not entitled to the final relief sought.

[12] The Sands seeks orders striking out those parts of the body corporate's further amended response which rely upon the validity of clause 8.1(c) of the GMC. It also seeks to strike out those parts of the further amended response which rely upon the validity of the RANs.[9]

[13] At a directions hearing on 8 December 2015, the parties were invited to submit draft directions in relation to the separate determination, prior to the hearing, of the validity of the RANs. The parties did not agree on a separate determination. The matter was subsequently listed for a five (5) day hearing in May 2016.

[14] The Sands says that s 318 of the BCCMA prohibits a party waiving, limiting the exercise of rights under, or contracting out of the BCCMA. It says that this prohibition extends to the operation of the Standard Module.[10]

[15] The Sands relies upon s 122 BCCMA which provides that the regulation module may prescribe the particular circumstances under which a management or caretaking or letting agreement may be terminated.[11]

[16] The Standard Module sets out the grounds for, and process for, the termination of the engagement of the services of a body corporate manager or service provider if the person, among other things, engages in misconduct or is grossly negligent in carrying out their functions[12] or fails to carry out duties under the engagement.[13] A remedial action notice must first be given.[14] The remedial action notice must, among other things, state that the person must within a period stated in the notice but not less than 14 days after the notice is given remedy the breach or contravention or carry out the duties.[15]

[17] The Sands says that the RANs do not comply with s 131 of the Standard Module by failing to allow sufficient time as required under s 131(c) to remedy the breaches identified in the RANs. In this regard The Sands relies upon the decision of the Tribunal in Peterson Management Services Pty Ltd v Body Corporate for The Rocks Resort[16] ("The Rocks").

[18] The Rocks concerned a number of RANs in which the required remediation period was '...within 14 days of being served with a copy of this Notice.' The tribunal held that under s 129(4) of the Accommodation Module[17] a person cannot be required to rectify a breach identified in a RAN until 14 days have expired. The tribunal held that a RAN requiring rectification "within" 14 days is a requirement for rectification in a period "less than 14 days", that is, it requires rectification before 14 days have passed.[18]

[19] Section 129(4)(c) of the Accommodation Module is in identical terms to s 131(4)(c) of the Standard Module.

[20] The Sands says that five of the RANs (RAN4 to RAN8 inclusive) fail to comply with s 131 of the module by requiring remedial action within fourteen (14) days of the date of this notice. In each of those five (5) RANs, the wording of the remediation period is also within 14 days after today and fourteen (14) days after today. The wording of the RANs is, in these respects, internally inconsistent.

[21] In respect of RAN2 and RAN3, the wording of the required remediation period is within fourteen (14) days after today and fourteen (14) days after today. Again, the wording of the RANs is internally inconsistent.

[22] The body corporate concedes that the RANs are invalid if they do not provide for a period of not less than 14 days after the notice is given to remedy the breach.[19] The body corporate says that RAN2 and RAN3 comply with the Standard Module. The body corporate says that RAN4 to RAN8 (inclusive) are 'less straightforward', that the wording used within each of the RANs is inconsistent and that whilst certain of the wording in the RANs relating to the remediation period complies with s 131(4)(c) of the module, the reference to the period being within fourteen (14) days of the date of this notice does not, without more, comply with s 131(4)(c) having regard to the decision in The Rocks.[20]

[23] The body corporate says that looking at 'the entirety of the words' in RAN4 to RAN8 (inclusive) the notices comply with the module. It says that the wording of the RANs was unlikely to cause any misunderstanding or prejudice and that this has not been raised by The Sands.

[24] In its application to dismiss The Sands relies upon s 47(1) of the QCAT Act:

47 Dismissing, striking out or deciding if unjustified

(1) This section applies if the tribunal considers a proceeding or a part of a proceeding is -

(a) if the party who brought the proceeding or part before the tribunal is the applicant for the proceeding, order the proceeding or part be dismissed or struck out; or

(b) for a part of a proceeding brought before the tribunal by a party other than the applicant for the proceeding -

(i) make its final decision in the proceeding in the applicant's favour; or

(ii) order that the party who brought the part before the tribunal be removed from the proceeding; or

(c) make a costs order against the party who brought the proceeding or part before the tribunal to compensate another party for any reasonable costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding or part.

(3) The tribunal may act under subsection (2) on the application of a party to the proceeding or on the tribunal's own initiative.

(4) The tribunal's power to act under subsection (2) is exercisable only by -

(a) the tribunal as constituted for the proceeding; or

(b) if the tribunal has not been constituted for the proceeding - a legally qualified member or an adjudicator.

[25] A proceeding means a proceeding before the Tribunal.[21] A final decision of the Tribunal in a proceeding means the Tribunal's decision that finally decides the matters the subject of the proceeding.[22]

[26] Section 47(2)(b)(i), upon which The Sands relies, is in quite different terms to s 47(2)(a). The latter section empowers the Tribunal to strike out or dismiss a proceeding or part of a proceeding (emphasis added) brought by an applicant.

[27] Section 47(2)(b)(i) deals with proceedings before the Tribunal by a party other than the applicant. The power under s 47(2)(b)(i), insofar as it is relevant to this application, is specifically limited to the Tribunal making its final decision in the proceeding in the applicant's favour.

[28] The proceeding in the matter is the originating application brought by The Sands. For the purposes of the present application the 'part of the proceeding brought before the Tribunal by a party other than the applicant for the proceeding'[23] is a reference to the further amended response filed by the body corporate. The power under s 47(2)(b)(i) is specifically limited to making a final decision in the proceeding in favour of The Sands. The Sands does not seek this relief. The relief sought is limited to striking out parts of the further amended response.

[29] It is clear that a final decision is one that finally decides all of the matters the subject of a proceeding. Accordingly I find that s 47(2)(b)(i) does not empower the Tribunal to strike out or dismiss part of a response. The power under the section is limited to a decision that finally decides the proceeding in favour of the applicant. In this respect s 47(2)(b)(i) is a summary judgment power. The Sands cannot rely upon s 47(2)(b)(i) in seeking to strike parts of the further amended response.

[30] Any similar application brought under s 48 of the QCAT Act would encounter the same difficulties as those I have identified. The Tribunal's powers are limited to making its final decision in the proceeding in the applicant's favour[24] or removing the party causing the disadvantage from the proceeding.[25] As I have found in relation to s 47(2)(b)(i), the power under s 48(2)(b)(i) does not extend to striking out part of a response.

[31] The Tribunal may, at any time in a proceeding, make an order requiring that a relevant document be amended.[26] This power may be exercised on application or on the Tribunal's own initiative.[27] A relevant document includes a response.[28] The Tribunal may give a direction at any time in a proceeding (upon application or on its own initiative) and do whatever is necessary for the speedy and fair conduct of the proceeding.[29]

[32] The Sands seeks to prevent the body corporate at the hearing of the matter from submitting the specified grounds contained in the further amended response relating to the RANs and the reliance upon clause 8.1 of the GMC.[30] The relief is therefore analogous to the relief sought on an application under r 171 UCPR.[31]

[33] The Tribunal is a creature of statute. As such it has no inherent jurisdiction. Such jurisdiction and powers as the Tribunal has come from the QCAT Act, the rules and the various enabling Acts. The power conferred by s 64(1) is limited to making an order to amend an initiating document or a document responding to an initiating document.[32] An order or direction is a decision of the Tribunal.[33]

[34] The Tribunal is required to deal with matters in a way that is accessible, fair, just, economical, informal and quick.[34] To achieve this object the Tribunal must, among other things, encourage the early and economical resolution of disputes before the Tribunal[35] and ensure that proceedings are conducted in an informal way that minimises costs to parties, and is as quick as is consistent with achieving justice.[36]

[35] The power conferred upon the Tribunal to order the amendment of a document and to make directions is a broad one and is to be exercised consistently with the objects of the QCAT Act.[37]

[36] In my view, the power to order an amendment found in s 64 of the QCAT Act extends, in appropriate circumstances, to striking out all or part of a relevant document. In exercising the power to require the amendment of a document which involves striking out all or part of an application or response, those matters the subject of consideration in an application under UCPR r 171 are, in my view, relevant. Ensuring that relevant documents filed in the Tribunal disclose a reasonable cause of action or defence, do not prejudice or delay the fair trial of the proceeding, are not unnecessary or scandalous, frivolous or vexatious or otherwise an abuse of process are all considerations consistent with the objects and functions of the Tribunal.

[37] In Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Dixon J observed:

A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.

[38] Dey involved the summary determination of a question of law, specifically the interpretation of a workers compensation statute. In circumstances not unlike the present, the parties did not agree that the court determine the preliminary point. The point was summarily determined which decision was subsequently appealed. Dixon J said:

It is in my opinion of more importance to maintain the integrity of the principle that under cover of the inherent jurisdiction to stop abuse of process litigants are not to be deprived of the right to submit real and genuine controversies to the determination of the courts by the due procedure appropriate for the purpose than for this Court to add another to the many judicial attempts that have been made to construe and apply the perplexing provisions that stand in Victoria as s. 5 (2) (b) of the Workers' Compensation Act 1928.

[39] The relevant principles in Dey extend to the summary determination of specific issues said to be misconceived.

[40] In the present application the question arises, are the grounds in the further amended response relied upon by The Sands so clearly untenable that they cannot possibly succeed?[38]

[41] Any orders made by the Tribunal requiring the amendment of the further amended response in the terms sought by The Sands will, absent leave to amend the further amended response, preclude the body corporate from arguing the validity of the RANs and the relevant provisions of the GMC.

[42] The Standard Module provides that the engagement of a manager or contractor may be terminated under the Act, by agreement or under the engagement or authorisation.[39] The body corporate argues that the Tribunal will be required to determine the scope of the right to terminate under s 129 of the Standard Module. It says that the parties agreed on a method of termination of the GMC as outlined at clause 8.1 of the GMC.

[43] The Sands says that s 129(1) of the Standard Module and specifically s 129(1)(c) must be read subject to s 131. If the argument by The Sands is correct, s 131 would effectively circumscribe the circumstances in which a body corporate could terminate a person's engagement as a manager, service contractor or letting agent provided the body corporate could establish the requisite conduct[40].

[44] The parties have not referred me to any decision in Queensland on the interpretation and application of s 318 BCCMA and ss 129 and 131 of the Standard Module.

[45] There is, in my view, a very real question to be determined, upon which the rights of the parties depend, as to the validity of the RANs. I accept the correctness of the decision in The Rocks as to the time for remediation provided for in a RAN. On their face, the RANs refers to various remediation periods some of which comply with s 131(4)(c) of the Standard Module and some of which do not comply with the Standard Module.

[46] There is clearly an argument as to whether the notices enabled The Sands to understand with reasonable certainty what it was required to do.[41] As was observed in Clarke v Japan Machines (Australia) Pty Ltd, albeit in the context of the validity of a notice of exercise of power of sale, 'a question of fact and degree is involved in every case.'[42] These are matters which are most appropriately dealt with at a hearing.

[47] In relation to the interpretation of ss 129 and 131 of the Standard Module and s 318 BCCMA, an interlocutory strike out application such as this is not, in my view, the occasion for the determination of potentially difficult questions of law that might preclude one parties' rights.[43]

[48] I am satisfied that the further amended response filed discloses a reasonable defence. I am also satisfied that, in allowing the further amended response to stand, there is no suggestion of prejudice or delay in the fair trial of the proceeding particularly in view of the fact that the matter is listed for hearing in May.

[49] The application for miscellaneous matters is refused.

[5] Further Amended Response, para [14].

[6] Further Amended Response, para [24(b)].

[7] Further Amended Response, para [24].

[10] Acts Interpretation Act 1954 (Qld), s 7.

[16] [2015] QCAT 255.

[17] Body Corporate and Community Management (Accommodation Module) Regulation 2008

[19] Respondent's supplementary submissions at [2].

[20] Respondent's submissions at [40] to [41]; op cit 15.

[30] Applicant's submissions at [33].

[31] Uniform Civil Procedure Rules 1999.

[38] Dey v Victorian Railways Commissioners (1949) 78 CLR 62.

[41] Fox v Jolly [1916] 1 A.C. 1.

[42] Clarke v Japan Machines (Australia) Pty Ltd 1 Qd R 404, at 413.

[43] Boost Foods Pty Ltd v Blu Oak Pty Ltd & Ors [2014] QSC 171.