Trojan Resorts Pty Ltd v Body Corporate for the Reserve
[2015] QCAT 337
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- Unreported Judgment
- Appeal Determined (QCA)
- Trojan Resorts Pty Ltd v Body Corporate for the Reserve[2015] QCAT 337
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Trojan Resorts Pty Ltd v Body Corporate for the Reserve[2015] QCAT 337
Trojan Resorts Pty Ltd v Body Corporate for the Reserve[2015] QCAT 337
CITATION: | Trojan Resorts Pty Ltd v Body Corporate for the Reserve [2015] QCAT 337 |
PARTIES: | Trojan Resorts Pty Ltd (Applicant) |
v | |
Body Corporate for the Reserve CTS 31561 (Respondent) | |
APPLICATION NUMBER: | OCL067-14 |
MATTER TYPE: | Other civil dispute matters |
HEARING DATE: | 13 and 14 August 2015 |
HEARD AT: | Brisbane |
DECISION OF: | Member Browne |
DELIVERED ON: | 1 September 2015 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
|
CATCHWORDS: | BODY CORPORATE – COMPLEX DISPUTE – where management and letting agreements assigned – where resignation of director recorded by the Australian Security and Investment Commission – whether there was a resignation of director – whether resignation of director was an event that entitled the body corporate to terminate – whether body corporate acted reasonably under s 94 of the Body Corporate and Community management Act 1997 (Qld) – whether relief sought should be granted Body Corporate and Community Management Act 1997 (Qld), s 94, s 126, s 149 Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld), s 129 Corporations Act 2001 (Cth), s 1274B, s 198A ANZ Executors & Trustee Company Limited v Qintex Australia Limited (receivers and managers appointed) [1991] 2 Qd R 360; cited Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; cited Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89; cited Luadaka v Body Corporate for The Cove Emerald Lakes [2013] QCATA 183; cited Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 80 FCR 78; cited |
APPEARANCES: | |
APPLICANT: | Mr S Couper of Queens’s Counsel with Mr G Handran of Counsel instructed by Mahoneys |
RESPONDENT: | Mr M Bland of Counsel instructed by Reichman Lawyers |
REASONS FOR DECISION
- [1]This dispute is about whether the Body Corporate for the Reserve CTS 31561 (the Reserve) has properly terminated management and letting agreements assigned to Trojan Resorts Pty Ltd (Trojan).
- [2]This raises the following questions that I have to decide:
- Was there a resignation by Robyn Cole as director of Trojan Resorts Pty Ltd?
- Was the resignation of director (by Ms Cole) an event under clause 7.1(d) and 6.1(d) of the management and letting agreements (respectively) entitling the Reserve to terminate under clause 11.1(b) and 9.1(b) (respectively)?
- Has the Reserve acted ‘reasonably’ for the purposes of s 94 of the Body Corporate and Community Management Act 1997 (Qld) (BC&CM Act) in respect of any termination?
- Should the Tribunal grant the relief sought by Trojan Resorts Pty Ltd?
Was there a resignation by Robyn Cole as director of Trojan Resorts Pty Ltd?
- [3]It is common ground that the Australian Security and Investment Commission (ASIC) received notification of changes to the directors of Trojan. ASIC recorded:
- Ms Cole as ‘ceased/former director’ on 12 February 2013; and
- Ms Cole as ‘current director’ with ‘appointment’ on 30 July 2014.
- [4]Trojan submits that Ms Cole remained a director at all times and her subsequent reappointment was ‘unnecessary, mistaken and ineffective’.[1] Trojan submits that the form lodged with ASIC was not accompanied by any letter of resignation from Ms Cole.[2] Trojan relies on s 1274B of the Corporations Act 2001 (Cth) (the Corporations Act) that effectively says the ASIC information is only ‘proof of such a matter [in this case resignation] in the absence of evidence to the contrary’. Trojan says there is evidence ‘to the contrary’ and relies on the evidence of Ms Cole, Aimee Bendall, who maintained the company register and Leslie Charles John Knipe, director of Trojan.
- [5]Ms Cole said in her statement that she did not recall being asked by ‘anyone’ to sign documents for lodgement with ASIC.[3] Ms Cole’s statement attaches a copy of a document addressed to ‘The Partners, Trojan Resorts Pty Ltd’ dated 27 December 2012 titled ‘Irrevocable resignation as managing partner the Cape CTS 35261 and the Retreat…’. Ms Cole was cross-examined about the document dated 27 December 2012.
- [6]Ms Cole gave evidence that she resigned as managing partner not as a director (of Trojan). Ms Cole said that she signed the document on 27 December 2012 that she thought was a ‘letter’. When cross-examined about paragraph 4 of ‘the letter’ that refers to ‘resignation as a director of Trojan Resorts Pty Ltd’, Ms Cole said she thought it (the letter) was resignation as managing partner (not director).
- [7]Ms Cole said that after 27 December 2012, she stayed on as a silent partner and was attending meetings. Ms Cole said that she did sign the reappointment documents (for director) because she did not know she was no longer a director of Trojan.
- [8]Mr Knipe said in his statement that he signed forms on or about 13 February 2013 given to him by Aimee Bendall because of Ms Cole’s ‘letter’ (dated 27 December 2012) and ‘because Ms Bendall asked [him] to sign them’.[4] The documents signed by Mr Knipe were ASIC form 484 (change to company details) and memorandum of resolution of directors (of Trojan).
- [9]Mr Knipe said that Ms Bendall provided him with further documents (to reappoint Ms Cole as director) in July 2014.[5] Mr Knipe said he signed them because he had received a letter dated 8 July 2014 (from the Reserve’s solicitors) stating Ms Cole had resigned as director and this was a deemed assignment under the management and letting agreements (without consent).[6] Mr Knipe said he signed the documents ‘because of [his] belief…and because Ms Bendall asked [him] to sign them’.[7]
- [10]Mr Knipe was cross-examined about ‘the letter’. Mr Knipe said that he did not know who had prepared it and what discussions took place about paragraph 4 (resignation as a director). Mr Knipe was questioned about whether Ms Cole continued to act as a director after 27 December 2012. He said that Ms Cole participated in meetings and was given instructions to do things. Mr Knipe said before 27 December 2012, there was never separate meetings of partners and directors. Mr Knipe said that he did not recall ‘initiating’ the process to reappoint Ms Cole as director but did ‘participate’ in it.
- [11]Ms Bendall maintains the company register for Trojan. Ms Bendall said in her statement that she received an email from Mr Knipe in 2012 attaching ‘the letter’. Ms Bendall said she believed Ms Cole had resigned as a director of Trojan and it was necessary to update ASIC of that change.[8] Ms Bendall said she prepared forms (lodged with ASIC) that were signed by Mr Knipe but not Ms Cole. Ms Bendall said she never received a letter of resignation from Ms Cole. Ms Bendall said she prepared documents to reappoint Ms Cole as director of Trojan.[9]
- [12]In this case, ‘the letter’ referred to by Ms Cole, Mr Knipe and Ms Bendall was signed by ‘Robyn Cole’ as ‘Kiwichick Pty Ltd’[10] and witnessed by ‘M Hume’ and Mr Knipe. The ‘letter’ specifically refers to resignation as a director of Trojan in paragraph 4 as follows:
I agree to sign any documentation necessary to give effect to this resignation, including resignation as a director of Trojan Resorts…
- [13]The evidence before me is that Ms Bendall sent documents to ASIC to record the resignation of Ms Cole as director (of Trojan). It is open to the Tribunal to draw the reasonable inference that ASIC recorded the change because it received forms (lodged by Ms Bendall). Mr Knipe (as director) signed the ASIC form 484 and memorandum of resolutions (of Trojan) that Ms Bendall said she prepared and lodged with ASIC. Ms Cole did not sign any documents prepared by Ms Bendall but Ms Cole did sign ‘the letter’ (dated 27 December 2012). The letter clearly specifies in paragraph 4 the words ‘to give effect to this resignation’ (emphasis added). It is Ms Cole’s evidence that she thought she was resigning as managing partner not as director. Ms Cole does not dispute the fact she signed ‘the letter’.
- [14]It is open to the Tribunal to draw the reasonable inference based on all of the evidence that ‘the letter’ signed by Ms Cole was accepted and acted upon as an intention to resign as director, by Mr Knipe and Ms Bendall.
- [15]It is Mr Knipe’s evidence that he signed the documents prepared by Ms Bendall for lodgement with ASIC because of ‘the letter’ and Ms Bendall asked him to sign. It is Ms Bendall’s evidence that she received an email from Mr Knipe in 2012 attaching a copy of ‘the letter’. Ms Bendall said she believed Ms Cole had resigned as a director and it was necessary to update ASIC.[11]
- [16]Mr Knipe has certified on the ASIC form 484 that ‘the information in this cover sheet and the attached sections of this form are true and complete’. The form 484 identifies Ms Cole’s cessation as director effective from 12 February 2013. The memorandum of resolutions of directors of Trojan (signed by Mr Knipe) also refers to Ms Cole’s resignation as director.
- [17]Mr Knipe does not dispute the fact that he signed documents to reappoint Ms Cole as director. It is Mr Knipe’s evidence that he signed the documents lodged by Ms Bendall (with ASIC) to reappoint Ms Cole as director because he received a letter from the Reserve about Ms Cole’s purported resignation and Ms Bendall asked him to sign (the documents).
- [18]I make the following findings of fact:
- Ms Cole signed a letter on 27 December 2012 that provided (in paragraph 4) ‘…this resignation, including resignation as a director of Trojan…’.
- Mr Knipe, director of Trojan and ‘M Hume’ witnessed ‘the letter’ (for Ms Cole).
- The letter signed by Ms Cole was accepted by Mr Knipe, director of Trojan and Ms Bendall, who maintains the company register for Trojan, as Ms Cole’s resignation as director of Trojan.
- Mr Knipe signed the ASIC form 484 and certified on the form 484 that the ‘sections’ (in the form) are ‘true and complete’. Mr Knipe also signed the memorandum of resolutions of the directors of Trojan in relation to the resignation of Ms Cole as director.
- Ms Bendall acted on ‘the letter’ by taking steps to prepare the forms (signed by Mr Knipe) for lodgement with ASIC because she believed Ms Cole had resigned as director.
- ASIC updated the database to record Ms Cole’s resignation as director of Trojan.
- ASIC updated the database to record Ms Cole’s reappointment as director of Trojan.
- [19]I am satisfied based on all of the evidence before me that Ms Cole resigned as director and ASIC correctly recorded the resignation of Ms Cole as director of Trojan on 12 February 2013.
Was the resignation of director (by Ms Cole) an event under clause 7.1(d) and 6.1(d) of the management and letting agreements (respectively) entitling the Reserve to terminate under clause 11.1(b) and 9.1(b) (respectively)?
- [20]Contractual arrangements exist between Trojan and the Reserve. The Reserve gave consent to an assignment (by deed dated 5 December 2012)[12] of the Reserve’s management and letting rights (the rights) to Trojan. Trojan became the caretaking service contractor and letting agent for the Reserve from the date of assignment.[13]
- [21]
- [22]Separate to the contractual arrangements that exist as between Trojan and the Reserve, is a partnership of trusts.[16] Trojan is the agent for the partnership. The partnership of trusts carries on a management and letting business for three community titles schemes one of which is the Reserve.[17] Mr Knipe (as trustee)[18] is the appointed managing partner of the Reserve.[19] Ms Cole is the appointed managing partner for two community title schemes (unrelated to the Reserve) known as the Retreat and the Cape.[20]
- [23]In this case, it is necessary to consider the relevant clauses of each of the management and letting agreements because the contractual rights assigned to Trojan are contained in the deed (dated 5 December 2012) and the agreements.[21]
- [24]The clauses in the management agreement are effectively mirrored in the letting agreements. The clauses refer to ‘events’ that constitute a default by the ‘manager under the agreement’. If there is a ‘default’ under the agreement the body corporate (the Reserve) ‘may’ by notice in writing terminate the agreement. The relevant clause 11 (clause 9 of the letting agreement) provides:
11. TERMINATION
11.1 Any of the following events constitute a default by the Manager under this Agreement:
- (a)…
- (b)if the Manager transfers or assigns or attempts to transfer or assign its interest in this Agreement in breach of the terms of clause 9.2;
…
11.2 If the manager has made a default under this Agreement the Body Corporate may, at its option, but without prejudice to any other right which the Body Corporate may have against the Manager, do all or any of the following:
- (a)if such default occurs by reason of any of the circumstances described in clause 11.1(b) to 11.1(e), by notice in writing to the Manager terminate this Agreement; or
…
11.3 Any right of termination afforded to the Body Corporate under this Agreement is exercisable subject to any restrictions, modifications or requirements imposed upon the Body Corporate under the Act or the Regulation Module.
…
- [25]Clause 9.2 of the management agreement (clause 7.1 of the letting agreement) provides that ‘the manager’ must not transfer or assign the agreement or any interest without obtaining the prior consent in writing from the Reserve (as the body corporate). Clause 7.1(d) of the management agreement (clause 6.1(d) of the letting agreement), refers to circumstances that are ‘deemed to be an assignment or proposed assignment’ of the agreement and would therefore be an ‘event’ for the purposes of clause 11 of the management agreement (clause 9 of the letting agreement) by reason of there being no prior consent (to the deemed assignment).
- [26]Clause 7.1(d) of the management agreement (clause 6.1(d) of the letting agreement) refers to (where the manager is a corporation) ‘any alteration to the board of directors’ (or other changes) which ‘alters the effective control’ of the manager from the ‘control at the date of commencement’. The relevant clauses 7 and 9 (clauses 6 and 7 of the letting agreement) provides:
7. CORPORATE MANAGER
7.1 Where the Manager is a corporation:
- (a)…
…
- (d)If there is any alteration to the board of directors, or any alteration to the beneficial ownership of (or issue of further shares in) or increase in the shares capital of the Manager or any proposal relating to the same which alters the effective control of the Manager from the control at the Date of Commencement, such change or proposed change in the control of the Manager is deemed to be an assignment or proposed assignment of this Agreement and the provisions of clause 9 apply.[22]
…
9. ASSIGNMENT
9.1 The Manager must not transfer or assign this Agreement or any interest in it except in accordance with this clause 9.
9.2 The Manager may transfer or assign this Agreement or any interest in it with the prior consent in writing or the Body Corporate. Such consent must not be unreasonably withheld if that consent is sought on the following basis:
- (a)…
…
- (d)The Manager must prove to the reasonable satisfaction of the Body Corporate that the proposed transferee or assignee is a respectable, responsible and financially sound person capable of adequately performing and observing the duties and provisions of this Agreement.
…
- [27]The effect of clause 7.1(d) (and 6.1(d)) is that if there is an ‘event’ for the purposes of the clause, then there is a deemed assignment which requires consent from the body corporate. If there is no prior consent then the ‘event’ will give the Reserve (as body corporate) certain ‘rights’ by reason of the ‘default’ for the purposes of clause 11 (clause 9) of the agreements. In this case, the Reserve relied on the resignation by Ms Cole as director of Trojan and that ‘assumption’ or resignation was adopted by the Reserve as the ground for passing its resolution to terminate the agreements.[23]
- [28]Trojan submits that if there was an ‘event’ under clause 7.1(d) (and 6.1(d)) of the agreements that entitled the Reserve to terminate, there was no change in the ‘control’ of Trojan (from the control at the date of commencement) and therefore no ‘event’ giving rise to a termination. Trojan’s submission relies on the existence of the partnership of trusts that it says effectively had the ‘control’ of the ‘affairs of [Trojan] pursuant to the partnership agreement’.[24]
- [29]I accept Trojan’s submission that for the purposes of clause 7.1(d) (and 6.1(d)), the question of whether an alteration (to the board of directors or otherwise) ‘alters the effective control’ is a question of fact and law.[25] I also accept Trojan’s submission that the management and letting agreements are to be ‘construed’ objectively.[26]
- [30]I have considered the agreements objectively. I find that resignation (of a director) would alter the board of directors. This is because when the deed of assignment commenced there were two directors of Trojan (Ms Cole and Mr Knipe). After the resignation (of Ms Cole) there is only one director. The result being a change or alteration to the board of directors because there is after resignation, only one director (Mr Knipe).
- [31]I do not accept Trojan’s submission that there will only be an alteration in the ‘effective control’ if the alteration has the effect or is the product of a change having the effect, that a different entity has taken over the power to conduct the affairs of the company.[27]
- [32]Trojan has failed to address the issue of the surrounding circumstances known to the parties that is a relevant consideration in determining the rights and liabilities of parties to commercial contracts. In Electricity Generation Corporation v Woodside Energy Ltd[28] the High Court said that a commercial contract will require ‘consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract’.[29]
- [33]
- [34]The current deed of assignment dated 5 December 2012 does not define ‘manager’ for the purposes of the management and letting agreements. When the deed is read in its entirety it is apparent there has been an intention by the Assignor to assign its interests in the management and letting agreements to Trojan. Clause 5 of the current deed provides:
5 Assignee’s obligations
5.1 The Assignee:
- (a)agrees to perform all of the caretaker’s and letting agent’s obligations in the Agreements from the Assignment Date as if the Assignee was the original caretaker and letting agent in the Agreements; and
- (b)indemnifies the Assignor against any loss suffered by it caused by a breach of the Agreements by the Assignee after the Assignment Date.[32]
- [35]I find that Trojan as the Assignee is the deemed ‘manager’ and ‘letting agent’ of the management and letting agreements for the purposes of clause 7.1(d) (and clause 6.1(d)) of the agreements.[33] Because of my finding that Ms Cole has resigned as director, I am satisfied for the purposes of the agreements there has been an ‘alteration to the board of directors’ because Ms Cole resigned as director.
- [36]There is no evidence before me that the Reserve and Trojan as the parties to the current deed of assignment (dated 5 December 2012) contemplated the partnership (of trusts) to control the affairs of Trojan pursuant to the partnership agreement. The deed of assignment dated 5 October 2012 specifically provides that Trojan (as Assignee) is to perform all ‘caretaker’s and letting agent’s obligations in the agreement’.[34]
- [37]Trojan says there was no change to the ‘control’ of Trojan because the membership of the partnership (by written agreement dated 6 October 2012[35]) remained unchanged. This submission relies on the contractual arrangements that exist independent to the Reserve because Trojan says the partnership continued to ‘control the affairs’ of Trojan pursuant to the partnership agreement.[36]
- [38]There is no evidence before me that as at the date of resignation (of Ms Cole as director) there was a change in the contractual relationship between Trojan and the Reserve. I find that by reason of the deed of assignment, Trojan was a company with directors namely Ms Cole and Mr Knipe as at the date of commencement (being the date of the deed of assignment) and Trojan (as Assignee) was the caretaking service contractor and letting agent. Because of my findings, I am satisfied that the resignation by Ms Cole (as director) did alter the board of directors of Trojan because there was a change in the directors (from the date of commencement) from Ms Cole and Mr Knipe (as directors) to Mr Knipe (as director).
- [39]I find that the alteration to the board of directors does alter the control of ‘manager’ from the control at the date of commencement for the purposes of clause 7.1. I do not accept Trojan’s submission that there has been no change in the control of Trojan because of the partnership of trusts that it says controlled the company. This is because the directors of the company exercise the powers of the company, in this case Trojan. As provided under s 198A of the Corporations Act, a company is ‘managed’ by or under the direction of the directors. Subject to the Corporations Act and the company’s constitution, the directors ‘may exercise’ all the powers of the company. This includes, for example, as provided in s 198A, issuing shares and borrowing money.
- [40]It is settled law that shareholders or the members in general meeting have no authority to interfere with the powers of directors.[37] Buckley LJ said in Gramophone and Typewriter Ltd v Stanley[38] the directors are ‘not servants to obey directions given by the shareholders as individuals; they are not agents appointed by and bound to serve the shareholders as their principals… [they are not] bound to comply with the directions even of all corporations acting as individuals’.[39]
- [41]I find that the resignation of Ms Cole as director was an ‘event’ for the purposes of clauses 7.1(d) of the management agreement (clause 6.1(d) of the letting agreement). This is by reason of clause 7.1(d) that specifically refers to ‘any alteration to the board of directors’. I have found that on 12 February 2013 Ms Cole resigned and ASIC correctly recorded Ms Cole’s resignation as director of Trojan. Because of my findings, there has been an event namely a deemed assignment without consent, for the purposes of clause 7.1(d) (and 6.1(d)). The Reserve was therefore entitled to take steps under clause 11 (and 9) of the agreements subject to the BC&CM Act by virtue of clause 11.3 (and 9.3) of the agreements.
Has the Reserve acted ‘reasonably’ for the purposes of s 94 of the Body Corporate and Community Management Act 1997 (Qld) (BC&CM Act) in respect of any termination?
- [42]It is common ground that any decision to terminate (by the Reserve) under the management and letting agreements is subject to s 94 of the BC&CM Act.[40]
- [43]Trojan says that the Reserve has not acted reasonably because Ms Cole had no role in the caretaking of the Reserve, Ms Cole was reinstated by the time the Reserve made the decision to terminate and there is no evidence of prejudice to the Reserve during the period that Ms Cole ceased being a director and her reinstatement.
- [44]Section 94 of the BC&CM Act requires the Reserve as body corporate to act ‘reasonably’ when performing its obligation to administer and enforce by-laws and in carrying out other functions under the Act and the community management statement.[41]
- [45]It was determined in Luadaka v Body Corporate for the Cove Emerald Lakes[42] that the test for reasonableness is an objective one that requires a balancing of factors in all of the circumstances. In Luadaka’s case the Tribunal referred to the meaning of reasonable considered by the full court of the Federal Court in Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission.[43] The Tribunal in Luadaka’s case cites the relevant findings made by Sackville J that includes reference to a number of authorities. Sackville J said the test is objective and requires the decision maker to take into account all of the circumstances. Sackville J said:
First the starting point in determining whether a requirement or condition is ‘not reasonable having regard to the circumstances of the case’ are the observation of Bowen CJ and Gummow J…that:
the test of reasonableness is less demanding than one of necessity, but more demanding than a test of convenience… The criterion is an objective one, which requires the Court to weigh the nature and extent of the effect of the relevant conduct, on the one hand, against the reasons advanced in favour of it. All of the circumstances of the case must be taken into account.[44]
- [46]I have considered all of the circumstances in this case after the resignation of Ms Cole was recorded by ASIC:
- On 8 July 2014 the Reserve (through its solicitors) wrote to Trojan’s legal representatives stating that there had been a resignation that was a deemed assignment ‘invoking the provisions of clauses 9 and 11 [7 and 9]’ of the agreements. The Reserve states that it ‘reserves its rights under clause 11.2 [and 9.2]’ of the agreements and s 120 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (the Accommodation Module).
- On 6 August 2014 the Reserve issued a notice to the financier of the agreements under s 126(1) of the BC&CM Act. In essence, the notice refers to the appointment of a new director on 30 July 2014 as being a change to the board of directors that is a breach of the agreements.[45]
- On 30 September 2014, the Reserve passed a resolution at the annual general meeting (AGM) to terminate the agreements.
- In the AGM notice the committee ‘strongly recommends’ the Body corporate terminate the agreements. The notice refers to the resignation by Ms Cole on 12 February 2013 that amounted to an alteration to the board of directors, a change in control of Trojan and an assignment (without consent). The notice also refers to the reappointment of Ms Cole as a ‘new director’ on 30 July 2014 and this was an alteration to the board of directors, a change in control of Trojan and an assignment (without consent).[46]
- [47]In written submissions the Reserve argues that it had a right to terminate because of the breach (by Trojan) and when the s 126 notice was issued a resolution had not been passed to terminate the agreements and no remedial action notice (under s 129 of the Accommodation Module) was served. The Reserve argues that the notice under s 126 was a valid notice because s 126(1)(a) does not require the notice to state the ground on which the right to terminate is asserted.[47]
- [48]I am not satisfied having considered all of the circumstances and evidence before me that the Reserve has acted reasonably for the purposes of s 94 by issuing the s 126 notice and passing a resolution to terminate the agreements.
- [49]Section 126 of the BC&CM Act provides the body corporate may terminate the contract (the agreements) if it has given notice to the financier; and when the notice was given, circumstances existed under which the body corporate had the right to terminate. The body corporate must however as provided under s 94 ‘act reasonably’.
- [50]In this case, the state of affairs was restored because Ms Cole was reappointed as director of Trojan on 30 July 2014.[48]
- [51]There is no evidence before me of any loss or damage to the Reserve by reason of any breach by Trojan and there is no evidence before me that the breach altered or affected the Reserve’s rights or interests in any material way.
- [52]There is evidence before me that the management of Trojan and the Reserve’s affairs effectively remained unchanged after Ms Cole signed ‘the letter’ on 27 December 2012. It is Ms Cole’s evidence that after she signed ‘the letter’ nothing changed. Ms Cole’s evidence that she continued to attend meetings as a silent partner is supported by the evidence of Mr Knipe. It is Mr Knipe’s evidence that there were never separate partnership and directors’ meetings and that after 27 December 2012 Ms Cole continued to attend meetings.
- [53]There is also evidence before me that Trojan is an agent for a group of partnerships. Mr Knipe was responsible for managing the Reserve and Ms Cole was responsible for managing other bodies corporate (not the Reserve). In the absence of any evidence to the contrary, I accept the evidence of Mr Knipe and Ms Cole that after 27 December 2012 there was no change in the daily management of the Reserve because Ms Cole continued to attend meetings and Mr Knipe continued to manage the affairs of the Reserve. This evidence and my findings are relevant to the issue of loss or damage to the Reserve by reason of the breach by Trojan. It is also relevant, in determining ‘reasonableness,’ to the question of whether if consent had been requested by Trojan (because the resignation is an alteration to the board of directors and therefore a deemed assignment), would it be unreasonable for the Reserve to refuse consent (to the deemed assignment) in the absence of any prejudice, loss or damage (to the Reserve) by reason of the proposed deemed assignment. I accept Trojan’s oral submission that in this case it would be unreasonable for the Reserve to refuse such consent in those circumstances.
- [54]The parties agree that the reappointment of Ms Cole restored the state of affairs ‘as at commencement’ (as at 5 December 2012).[49] In the absence of any evidence to the contrary (as to loss or damage to the Reserve because of the breach), I find that any breach of the agreements due to Ms Cole’s resignation and the deemed assignment (without consent) has been remedied as at 30 July 2014, prior to the s 126 notice being issued by the Reserve and the resolution to terminate passed at the AGM on 30 September 2014.
Should the Tribunal grant the relief sought by Trojan?
- [55]In this case, there was a resignation by Ms Cole as director but the state of affairs was restored because Ms Cole was reappointed as director of Trojan on 30 July 2014.[50]
- [56]The s 126 notice was issued and the resolution passed after the state of affairs had been restored. The Reserve must act reasonably and in the absence of any evidence before me as to any loss, damage or that the breach altered or affected the Reserve’s interests, I have found that the Reserve did not act reasonably in issuing the s 126 notice and later passing a resolution at the AGM to terminate the management and letting agreements. This is because for the purposes of issuing the s 126 notice as at 6 August 2014 and resolving to terminate the agreements at the AGM on 30 September 2014 the circumstances were that the state of affairs had been restored and any breach therefore remediated.
- [57]I find that in relation to all of the circumstances and in the absence of any evidence as to prejudice, loss or damage, the Reserve has not acted reasonably for the purposes of s 94 of the BC&CM Act and should be restrained from terminating or attempting to terminate the agreements.
- [58]The Tribunal has the power under s 149B of the BC&CM Act to make an order to ‘resolve the dispute’. Trojan says that a permanent injunction restraining the Reserve from terminating the agreements in reliance upon the resolution should be made by the Tribunal. Trojan also seeks a declaration that the resolution of the body corporate of the Reserve to terminate is invalid and of no effect.
- [59]I will make these orders.
Footnotes
[1]Applicant’s outline filed on 13 August 2015, [31].
[2]Ibid, [1].
[3]Exhibit 2, [10].
[4]Exhibit 4, [11].
[5]Ibid, [12].
[6]Ibid 4, [15]-[16], see p 38.
[7]Ibid, [18].
[8]Exhibit 3, [13]-[17].
[9]Ibid, [18]-[25].
[10]As trustee for the Kiwichick Family Trust. See Exhibit 4, p 1.
[11]Exhibit 3, [13]-[14].
[12]Exhibit 4, p 107.
[13]Further Amended Statement of Claim filed on 13 August 2015, para 1(c).
[14]Deed of agreement dated 5 December 2012, Exhibit 4, pp 107, 126.
[15]Clause 6.1(d) of the Deed, Ibid, p 5. Under clause 6.1(d) Leslie Charles John Knipe is known as John Knipe.
[16]Applicant’s outline filed on 13 August 2015, [1]. See Partnership Agreements dated 6 December 2012 and November 2013 in Exhibit 4, p 5.
[17]List of questions to be determined (by the Tribunal) prepared and filed by the parties on 13 August 2015. See agreement dated 6 December 2012, Exhibit 4, p 2.
[18]For The Knipe Family Trust.
[19]Agreement dated 6 December 2012, Item 9, Exhibit 4, p 37.
[20]Exhibit 2, [7].
[21]See management and letting agreement in Exhibit 4, pp 45, 58.
[22]Exhibit 4, p 48.
[23]Submissions for the respondent filed on 13 August 2015, [6].
[24]Applicant’s outline filed on 13 August 2015, [39].
[25]Applicant’s outline filed on 13 August 2015, [37].
[26]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640.
[27]Applicant’s outline filed on 13 August 2015, [39], see s 50AA of the Corporations Act 2001.
[28](2014) 251 CLR 640.
[29]Ibid, at 656-6 [35], see Applicant’s outline filed on 13 August 2015, [32].
[30]Exhibit 4, p 109.
[31]Ibid, p 99.
[32]Exhibit 4, p 107.
[33]Clause 6.1 of the letting agreement refers to the ‘letting agent’, see Exhibit 4, p 60.
[34]Exhibit 4, p 107.
[35]Ibid, p 7.
[36]Applicant’s outline filed on 13 August 2015, [39].
[37]ANZ Executors & Trustee Company Limited v Qintex Australia Limited (receivers and managers appointed) [1991] 2 Qd R 360, p 375.
[38][1908] 2 KB 89.
[39]Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89, [105]-[106]. See Submissions for the respondent filed on 13 August 2015, p 4.
[40]List of questions to be determined (by the Tribunal).
[41]BC&CM Act s 94.
[42][2013] QCATA 183.
[43](1997) 80 FCR 78.
[44]Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 80 FCR 78, p 110, see Foreign Affairs and Trade, Secretary, Department of v Styles (1989) 23 FCR 251 and Luadaka v Body Corporate for the Cove Emerald Lakes [2013] QCATA 183, [16].
[45]Exhibit 1, pp 150-152.
[46]Exhibit 2, p 30.
[47]Submissions for the respondent, p 5.
[48]List of questions be determined (by the Tribunal).
[49]Ibid.
[50]Ibid.