Body Corporate and Community Management (Accommodation Module) Regulation 2020 (Accommodation Module)

APPLICATION FOR INTERIM ORDERS - whether the body corporate unreasonably approved a variation to the caretaking service contractor's management agreements to prevent their termination without first allowing a financier to step in and perform them; whether the body corporate should be prevented from executing the amendment or approving a transfer of the management agreements before that question can be answered.

Act, ss 94(2), 279(1), 309; Accommodation Module, ss 11(2)(b), 133(2).

• [1] Motion 2 of an extraordinary general meeting (EGM) held on 26 August 2025 proposed varying the caretaking service contractor's engagement as caretaker and authorisation as letting agent (the management rights/agreements) to ensure they could not be terminated without first allowing the contractor's financier "to step in to rectify any breach or take control of the business".[1] The body corporate committee's explanatory note said the change was to facilitate the sale of the management rights:

...Pacific Paradise Resort Qld Pty Ltd ACN 101 692 442 (your Caretaker/Agent) has contracted to sell their management rights business to an incoming buyer. As part of the sale, the buyer's financier requires the insertion of a new clause 8.5 into the Caretaking Agreement and a new clause 3.5 into the Letting Agreement, to ensure the financier is protected in the event that a receiver is appointed following a default scenario.

• [2] The motion passed by ordinary resolution with 47 votes in favour and 25 against.
• [3] Mr and Ms Wessels say the body corporate acted unreasonably by supporting the motion given:
  1. motion 12 of the 2022 AGM approved new 25 year agreements with the caretaker despite owner opposition, without obtaining legal advice, and without considering two quotations
  2. legal advice received by the body corporate in 2024 questioned the validity of 2022's motion 12 and recommended using that as a basis for attempting to renegotiate the caretaker's agreements on terms more favourable to the body corporate
  3. the caretaker made unauthorised modifications to lot 125, which will be sold along with the management rights, and the committee has refused to enforce the by-laws in response
  4. the committee has refused to obtain legal advice in relation to the caretaker's performance, governance issues, motion 2 of the 26 August 2025 EGM, or the assignment of the management rights more generally
  5. owners have called an EGM due to be held on 4 September 2025 to vote on changes to the membership of the committee
  6. lot 5 is not owned by the caretaker contrary to by-law 41, and
  7. there is an ongoing failure to perform duties under the caretaking agreement.
• [4] Mr and Ms Wessels seek orders in the following terms:
  1. Declare 26th August 2025 EGM Motion 2 approving variations to the Caretaking and Letting Agreements void. Direct the body corporate to obtain independent legal advice to review and renegotiate the Caretaking and Letting Agreements in the best interests of all owners.
  2. Direct the Body Corporate to enforce by-laws to address and rectify unauthorized modifications and violations committed by the caretaking contractor Pacific Paradise Resort on Lots 60,125, and 126.
  3. Declare Sandy-Vee Pty Ltd directors ineligible for committee membership as associates of the Caretaking Contractor, John Volpe, of Pacific Paradise Resort Pty Ltd.

4.1 Direct the Body Corporate to recover costs for unauthorized expenditures, including private lot services and maintenance, and caretaker reimbursements for items covered under the caretaking agreement as identified in the Forensic Audit Report.

4.2. Direct the Body Corporate to ratify past expenditures and formally approve those deemed lawful and compliant with legislative requirements adhering to legislative spending limits and procurement protocols.

1. Direct the Body Corporate to secure body corporate records pertaining to the development and operation of the scheme, including infrastructure drawings and engineering certifications from the Developer, and building certificates and warranties for work conducted at the scheme.

• [5] They are concerned that motion 2 may be given effect and the amended management rights transferred to a new caretaking service contractor before their application can be decided, claiming:

...the execution of flawed agreements and the transfer of Management Rights (including Lot 125) will cause irreparable harm to the scheme's governance, compliance, and financial stability.

• [6] To guard against that risk, they seek interim orders in the following terms:

Direct the Body Corporate for Twin Waters Garden Villas to immediately halt:

1. The execution of any variations to the Caretaking and Letting Agreements.

2. The transfer or assignment of Management Rights (specifically relating to Lot 125).

This halt should remain in effect until all substantive orders in the accompanying Final Order application are resolved, including rectification of by-law breaches relating to Lot 125, which is part of the Management Rights sale.

• [7] I am only concerned with the application for interim orders at this stage, which will be made if warranted by the nature or urgency of the circumstances.[2] A central consideration is whether the applicants have raised serious legal questions with prospects of success at final orders.
• [8] I am not persuaded that they have in relation to motion 2, which is the focus of the first interim order they seek. Mr and Ms Wessels do not claim there were any procedural irregularities with respect to motion 2. Their sole argument is that the body corporate acted unreasonably in contravention of section 94(2) of the Act by supporting it given the considerations listed at paragraph 3 above.
• [9] But those issues have little direct relevance to motion 2. Motion 2 only proposed amendments to the management agreements to prevent their termination without first allowing a financier to ensure they continued to be performed. Mr and Ms Wessels have expressed no objection to that specific change.
• [10] The motion had nothing to say with respect to motion 12 of 2022, modifications to or the ownership of lots 5 and 125, the present caretaker's performance of its duties under the management agreements, the substance of the agreements beyond the specific change proposed by the motion, or potential changes to committee membership at a pending EGM. Even if all owners agreed that the caretaking service contractor has not performed adequately and has breached the by-laws, and that the engagement and authorisation could be more favourable to the body corporate, they could still rationally have supported the change proposed by motion 2. In fact, they may have been inclined to support the change to facilitate the sale of the management rights if they shared Mr and Ms Wessels' misgivings about the present caretaker's performance.
• [11] While Mr and Ms Wessels criticise the failure to obtain legal advice with respect to the motion, they have not set out why legal advice was reasonably necessary. On paper, the change proposed by motion 2 appears to have been limited and straightforward. Owners may have felt they understood it adequately without assistance. It is far from evident that the only reasonable course available to them was to obtain legal advice before deciding the motion.
• [12] Mr and Ms Wessels seem to be suggesting that the body corporate should have opposed motion 2 to obstruct the transfer of the management rights and allow their concerns to be addressed with the incumbent caretaker. I question whether that would have been a reasonable approach to the motion. It would have meant disregarding the merits of the proposal and focussing instead on how it might be turned to other ends.
• [13] But even if I accepted that as a reasonable approach, that would not be enough to support a finding that motion 2 was void. Mr and Ms Wessels must show not that their preferred approach to the motion would have been reasonable, but that the body corporate could not reasonably have supported the motion. That will be a difficult argument to carry by referring only to issues of tangential relevance while failing to engage with the specific change proposed by the motion.
• [14] I am not satisfied that a sufficient prima facie case has been made out to justify an interim order to prevent the implementation of motion 2 prior to final orders.
• [15] The second interim order sought by Mr and Ms Wessels is an order to prevent the transfer or assignment of the management rights prior to final orders. However, the committee correctly points out that no final orders are sought to prevent the body corporate from approving a transfer of the management rights. Even if all final orders were made in the applicants' favour, the body corporate would remain at liberty to approve a transfer of the management rights.
• [16] The purpose of interim orders is to ensure that final orders are not frustrated before the application can be decided. The Act gives the following examples:
  1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
  2. The adjudicator may stop a general meeting deciding or acting on a particular issue until it has been investigated and resolved.
• [17] The body corporate's ability to approve a transfer of the management rights is not at issue in the final orders and therefore cannot be impeded on an interim basis.
• [18] The only final order that might potentially have a bearing on a transfer of the management rights is order 3 concerning the eligibility of the directors of Sandy-Vee Pty Ltd to serve on the committee. A transfer of the management rights can occur with the approval of the committee.[3] Mr and Ms Wessels say the committee chairperson, a director of Sandy-Vee, is ineligible to serve on the committee because he is an associate of the caretaking service contractor.[4] If that is upheld at final orders and the chairperson is removed from the committee, the change to that single committee vote could conceivably result in a different decision on a proposed transfer.
• [19] However, that possibility does not warrant the requested interim order. At most it could be a basis for preventing the chairperson from voting on a proposed transfer prior to final orders. The eligibility of the other committee members is not in dispute and their support for a transfer would be sufficient to carry it.
• [20] But I would not even go that far. "Associates" are defined in the Act as follows:

(1) For this Act, a person is associated with someone else if -

(a) a relationship of a type to which this section applies exists between them; or

(b) a series of relationships of a type to which this section applies can be traced between them through another person or other persons.

(2) This section applies to relationships of the following types -

(a) marriage, de facto relationship or civil partnership;

(b) the relationship of ascendant and descendant (including the relationship of parent and child) or the relationship of persons who have a parent or grandparent in common;

(f) the relationship of persons, 1 of whom is accustomed, or under an obligation (whether formal or informal), to act in accordance with the directions, instructions or wishes of the other;

(g) the relationship of a corporation and executive officer of the corporation;

(h) the relationship of a corporation and a person who is in a position to control or substantially influence the corporation's conduct.

(3) Despite subsection (2)(e) and (f), the owner of a lot in a community titles scheme and a letting agent for the scheme are not associated merely because of their relationship as owner and letting agent.

executive officer, of a corporation, means a person who is concerned with, or takes part in, the corporation's management, whether or not the person is a director or the person's position is given the name of executive officer.

• [21] Mr and Ms Wessels claim the chairperson is an associate of the caretaking service contractor because:
  1. his late mother was the de facto partner of the director of the caretaker
  2. he owns a lot that the by-laws say should be owned by the caretaker
  3. Sandy-Vee once appointed the daughter of the director of the caretaker as its proxy at a general meeting
  4. Sandy-Vee and the caretaker made a coordinated development application to subdivide lot 111 into lots 5, 125, and 126, and
  5. Sandy-Vee and the caretaker voted in favour of new management rights agreements in 2022 and voted down an attempt to rule the motion out of order.
• [22] None of that amounts to an association as defined in the Act. If the chairperson's mother was still the partner of the director of the caretaker, there would be an association by a series of the relationships described at section 309(2)(a)(b) and (g), but that is no longer the case.
• [23] I am not persuaded that I should make either interim order.

[1] The body corporate committee's explanatory schedule.