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TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993[2018] QCAT 318

TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993[2018] QCAT 318

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993 [2018] QCAT 318

PARTIES:

TLL INVESTMENT PTY LTD

(applicant)

v

THE BODY CORPORATE FOR THE GRANGE CTS 30993

(respondent)

APPLICATION NO/S:

OCL038-17

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

13 September 2018

HEARING DATE:

20, 21, 22, 23, 24, 27, 28, 29, 30 and 31 August 2018

HEARD AT:

Brisbane

DECISION OF:

Member Cranwell

ORDERS:

  1. It is declared that each of the remedial action notices given by the Body Corporate for the Grange CTS 30993 to TLL Investment Pty Ltd dated 9 February 2017, 16 March 2017, 31 March 2017, 29 August 2017 and 29 September 2017 are invalid and of no effect.
  2. The Body Corporate for the Grange CTS 30993 is permanently restrained from giving effect to the resolutions to terminate the caretaking agreements passed at the extraordinary general meeting on 26 June 2017 and the annual general meeting on 19 March 2018.
  3. Any applications on the question of costs shall be made within 28 days of the date of this order.  In the event a costs application is made, the party seeking costs shall file in the Tribunal and serve on the other party written submissions within 14 days of filing and serving the costs application. The other party may file and serve any written submissions in response within 14 days of being served with the written costs submissions. Unless either party requests an oral hearing, the costs application will then be determined on the papers.

CATCHWORDS:

REAL PROPERTY – STRATA AND RELATED TITLES – MANAGEMENT AND CONTROL – BODY CORPORATE: POWERS, DUTIES AND LIABILITIES – where body corporate wishing to terminate caretaking service contractor contract – where body corporate issued remedial action notices under s 129 of the Accommodation Module – where remedial action notices also purportedly issued under contract – whether notices issued were valid – whether body corporate could rely on ground of misconduct or gross negligence not included in remedial action notices – whether body corporate entitled to terminate

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

Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld), s 127, s 129

Henderson & Anor v The Body Corporate for Merrimac Heights [2011] QSC 336

Norman v Federal Commissioner of Taxation (1963) 109 CLR 9

The Sands Gold Coast Pty Ltd v Body Corporate for the Sands [No 2] [2016] QCAT 365

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52

APPEARANCES & REPRESENTATION:

 

Applicant:

B Kidston, instructed by Mahoneys

Respondent:

N Shaw, instructed by Macpherson Kelley

REASONS FOR DECISION

  1. [1]
    In his notes for a law lecture dated 1 July 1850, Abraham Lincoln wrote:[1]

Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser - in fees, expenses, and waste of time. 

  1. [2]
    The evidence before me was that the Body Corporate for the Grange (‘the Body Corporate’) allocated funds in the amount of approximately $130,000 to engage a specialist legal firm to provide advice on terminating the caretaking agreements the subject of these proceedings.[2] TLL Investment Pty Ltd (‘TLL’) has spent over $100,000 in defending itself against the purported termination.[3] The hearing before me lasted for 10 days.
  2. [3]
    The effect of this decision, in short, is to leave the parties in the same contractual position as they were in prior to this dispute arising.

The Grange

  1. [4]
    This dispute before me relates to a residential community title scheme known as ‘The Grange’.
  2. [5]
    The Grange is a residential development consisting of some 302 townhouses. They are spread over 29 acres, which includes:[4]
    1. (a)
      four outdoor swimming pools;
    2. (b)
      six electric barbeques;
    3. (c)
      a BMX track;
    4. (d)
      three basketball courts;
    5. (e)
      nine gazebos;
    6. (f)
      two tennis courts;
    7. (g)
      178 car parks;
    8. (h)
      landscaped gardens; and
    9. (i)
      pathways, walkways and an internal road system.
  3. [6]
    The chairperson of the Body Corporate is Stephen O'Pray.
  4. [7]
    TLL is a caretaking service contractor and letting agent at the Grange. The director of TLL is Lin (Katherine) Lu.

An overview of the dispute between the parties

  1. [8]
    The Body Corporate issued remedial action notices (RANs) to TLL dated 9 February 2017, 16 March 2017, 31 March 2017, 29 August 2017 and 29 September 2017. I will refer to these as RAN-1, RAN-2, RAN-3, RAN-4 and RAN-5, respectively.
  2. [9]
    The Body Corporate resolved to terminate the caretaking agreements at an extraordinary general meeting on 26 June 2017, and again at an annual general meeting on 19 March 2018.
  3. [10]
    Proceedings were commenced by TLL in the Tribunal on 8 June 2017. As set out in the Second Further Amended Application to Resolve a Complex Dispute filed on 20 August 2018, TLL seeks:
    1. (a)
      declarations that each of the RANs are invalid; and
    2. (b)
      orders permanently restraining the Body Corporate from terminating the caretaking agreements in reliance on the RANs and the terminating resolutions.
  4. [11]
    The Body Corporate filed a counter-application on 13 April 2018, however this was withdrawn at the commencement of the hearing.

The contractual arrangements between the parties

  1. [12]
    On 16 January 2003, the Body Corporate entered into two caretaking agreements with Grange Unit Management Pty Ltd. One agreement related to stages 4, 5, 6, 7 and 8, known as the Grange West. The other agreement related to stages 1, 2, 3, 9 and 10, known as the Grange East. I will refer to these as the East and West Agreements, respectively.[5]
  2. [13]
    On 10 May 2006, the Grange Unit Management Pty Ltd assigned its interests under the East and West Agreements to Dynaball Pty Ltd.[6] It is relevant to note that the agreements which were assigned, as defined in clause 1.1, included:
  • a certain Caretaking Agreement for The Grange East dated 16 January, 2003;
  • a certain Letting agreement for The Grange East dated 16 January, 2003;
  • a certain Caretaking Agreement for The Grange West dated 16 January, 2003;
  • a certain Letting Agreement for The Grange West dated 16 January, 2003; …
  1. [14]
    On 8 November 2011, Dynaball Pty Ltd assigned its interests under the East and West Agreements to Zhao Wu Song and Man Jiang as trustee for the SJL Family Trust.[7] Again, it is important to note that the agreements which were assigned, as defined in schedule 1, included:

collectively the Caretaking Agreement for the Grange East, the Letting Agreement for the Grange East, the Caretaking Agreement for the Grand West and the Letting Agreement for the Grange West all dated 16 January 2003 …

  1. [15]
    On 4 July 2014, Zhao Wu Song and Man Jiang as trustees for the SJL Family Trust assigned its interest in ‘the Agreements’ to TLL. The operative provision of the deed is clause 2.1, which provided:

On the Assignment Date:

  1. (a)
    The Vendor assigns to the Purchaser the Vendor’s interest as Manager under the Agreements; and
  2. (b)
    The Purchaser accepts the assignment from the Vendor.
  1. [16]
    Clause 3.1 relevantly provided:

The Body Corporate:

  1. (a)
    Consents to the assignment;

…

  1. (c)
    Agrees to be bound by the Agreements as if the Purchaser was the original party to the Agreements.
  1. [17]
    The ‘Agreements’ are defined in schedule 1 to mean:

the Caretaking Agreement and the Letting Agreement.

  1. [18]
    The ‘Caretaking Agreement’ is in turn defined to mean:

the Caretaking Agreement dated 16 January 2003 between the Body Corporate and The Grange Unit Management Pty Ltd … as subsequently assigned to the Vendor.

  1. [19]
    The interpretation provision of the deed contains the statement that ‘[t]he singular includes the plural and vice versa’.
  2. [20]
    The Body Corporate contends that, ‘for all practical purposes’, there is one agreement between the parties.[8] Whether there are one or two caretaking agreements assumes some significance in the disposition of this matter.
  3. [21]
    In Norman v Federal Commissioner of Taxation, Windeyer J stated:[9]

Assignment means the immediate transfer of an existing proprietary right, vested or contingent, from the assignor to the assignee.

  1. [22]
    An assignment, therefore, does not in itself operate to alter the terms of the existing agreement.
  2. [23]
    It is clear that the East and West Agreements were expressly continued in existence until the most recent deed of assignment dated 4 July 2014. Apart from use of ‘Caretaking Agreement’ in the singular rather than the plural, there is otherwise nothing in this deed of assignment which purports to alter the East and West Agreements.
  3. [24]
    In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, the High Court set out the approach to be taken in the construction of contracts as follows:[10]

References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purposes and object of the transaction.

  1. [25]
    There is little evidence before me of the surrounding circumstances known to the parties at the time the deed of assignment was executed. Mr O'Pray was one of the signatories to the deed of assignment on behalf of the Body Corporate, and made the following comments in his evidence:

Prior to these proceedings I have only been aware of the West Agreement and in none of my dealings with John [Song], and subsequently the applicant, has there ever been a reference or distinction between the 2 agreements or has the caretaker provided or invoiced the Grange for services rendered under separate agreements. The terms of the East and West agreements are similar in all respects and I will continue to refer to them in the singular (Agreement).[11]

  1. [26]
    The issue is not addressed in Ms Lu’s evidence.
  2. [27]
    In these circumstances, I find that the reference to Caretaking Agreement in the singular arises out of an ignorance on the part of the parties as to the nature of the contractual arrangements being assigned.  In the absence of an express term, I am not prepared to find on the basis of such ignorance that the parties’ intention in executing the deed of assignment was to combine the East and West Agreements into a single agreement.
  3. [28]
    The interpretation clause in the deed of assignment provides that the singular includes the plural. In my view, a reasonable person would understand references to the ‘Caretaking Agreement’ to be references to the Caretaking Agreements in the plural.
  4. [29]
    Accordingly, I will proceed on the basis that the Body Corporate and TLL are by virtue of the deed of assignment parties to two separate agreements, namely, the East and West Agreements.

The approach of the Body Corporate committee and Mr O'Pray

  1. [30]
    On 13 February 2017, the Body Corporate committee resolved to put forward the following motion at the forthcoming annual general meeting on 27 March 2017:[12]

That the Body Corporate allocate funds in the amount of $103 per quarter per owner for one year to be used to engage a specialist legal firm to advise on legally and permanently terminating all and any caretaking or letting agency contracts or agreements currently in force at The Grange, Brendale (CTS 30993).

  1. [31]
    An explanatory schedule of the motions submitted by the committee was circulated to owners under cover of a notice dated 21 February 2017. Relevant to the above motion, the committee stated:[13]

The owners of properties at The Grange, Brendale (you) pay a caretaker nearly half a million dollars a year. This is an absolutely ridiculous amount of money when you consider that all TLL (Ms Lu) does is mow the grass (and not very well), clean the pools (even in the hottest of weather when the pools go merky (sic), nobody checks or adjusts the chlorine level), and they pay a lady $20/day to clean the 5 pool toilets. We can get individual contractors to do these jobs for far less than $100,000/year and yet we have to pay by way of a terrible contract (for another 20 years!) $500,000 a year, which will exceed $700,000 per year before this contract ends. This is very wrong and not at all beneficial to you, the owners!

Caretakers don’t buy a contract to help us or to clean our toilets or pools – they buy it because they will be assured of a massive income (your money) every year. Why should we make a caretaker a millionaire every 2 years. By the year 2038 we will have had to pay over $12 million. We could save over $300,000 every year by not having a caretaker. When TLL (Ms Lu) are dishonest, lazy and incompetent their contract ensures they can tell us to go elsewhere. Private individual contractors would do their job and do it well or we would simply get someone else. If we all spend a small amount of money now we will save a small fortune very soon. Body corporate contributions have not gone up and, in fact, will continue to go down – nearly $800 this coming year (see budget).

This caretaking contract is ludicrous and insane. We do not need, nor can we afford, an exorbitant caretaking contract – we need cost effective self-management. Support yours and our childrens’ futures … VOTE YES.

  1. [32]
    Mr O'Pray also circulated a letter on Body Corporate letterhead and signed by him as chairperson prior to the annual general meeting. Relevantly, the letter stated:[14]

We have worked very hard for the last five years and we’ve achieved more than most could possibly hope for. BUT there’s one, and only one, massive milestone we would like to achieve on behalf of owners. We need to rid ourselves of this blood-sucking dysfunctional and truly unfair caretaker’s contract. It’s bleeding us absolutely dry! We have for the past 13-14 years paid in excess of $7,000,000 and will have to pay – by contract – another $10,000,000 or more – currently to the year 2033! Yes – the year 2033! For all this, we get very little work done. The so-called caretaker won’t even deliver an entry notice for owners and we and very very many other have had enough. I have never seen such terrible work ethics in my life.

I will tell you know that I have but one major achievement that I intend to attain should you continue to vote for me as your chairman – and that is to rid ourselves and The Grange of the caretaking/letting contracts that are destroying us. I can, and I will, with your support achieve this end. Of this I am very sure. This – and I won’t lie to you – could cost a considerable amount of money, but bear in mind the end result will save us millions of dollars ultimately! Be assured that Body Corporate fees will not rise at all because of this. If you vote for me as chairman and the existing committee plus Jodie Chard, I will do whatever is necessary to terminate the caretaking and letting agency contracts. They are evil, they’re poisonous, and we as owners should not be subjected to these horrendous contracts. Investors should withdraw their support from TLL Investments and use an external another letting agent. These contracts were put in place by corrupt builders 13 years ago. No one gave a damn about the owners back then but we should ensure that current and future owners and our children are never subjected to this massive rip-off ever again. Many many complexes similar to The Grange are experiencing the same problem with such evil caretaking contracts and many of these complexes are also trying to rid themselves of these contracts too – it’s an industry wide cancer and owners are demanding and taking action!

Just remember this caretaker never bought this contract because they want to clean our pools, mow our grass or clean our toilets. TLL Investments bought it because they can collect massive amounts of our money every month of every year and do stuff all for it. And these contracts almost guarantee that! We can do something about it to help ourselves and our futures! We can and destroy this terrible industry which supports these corrupt contracts.

  1. [33]
    The motion was passed at the annual general meeting on 27 March 2017, and Mr O'Pray was re-elected as chairperson.
  2. [34]
    I had the following exchange with Mr O'Pray during the course of his cross-examination, which he conceded this was the case:[15]

MEMBER: If I can just ask you a couple of questions, Mr O'Pray. So the resolution number 10 that Mr Kidston is taking you to, which was that:

The body corporate –

I’ll read it to you:

allocate funds in the amount of $103 per quarter per owner for one year to be used to engage a specialist legal firm to advise on legally and permanently terminating all and any caretaking or letting agency contracts or agreements currently in force at The Grange.

I take it from that that what the committee wanted was not only for Ms [Lu] to be terminated but for there to be no replacement to Ms [Lu], so the entire caretaking agreement to come to an end. Is that a correct understanding?‑‑‑Yeah, probably, yeah.

Okay. And I take it, given that that motion was passed – or agreed to by the Committee on the 13th of February 2017 that that was the view that the committee had then on the 13th of February 2017?‑‑‑Yeah, yes.

  1. [35]
    On the basis of the motion and supporting circulars set out above, as well as Mr O'Pray’s oral evidence, I find that the Body Corporate committee’s objective by at least 13 February 2017 was to terminate the East and West Agreements on the basis that they perceived a financial advantage in doing so.
  2. [36]
    For completeness, I also had the following exchanges with Mr O'Pray during the course of his re-examination:[16]

MEMBER: If you formed the view that the [RAN] had been complied with, what would you have done, I think’s the question?‑‑‑We’d have been very happy.

Yes, but what would you have done?‑‑‑Well, that would’ve been the end of it as far as we were concerned. The work would’ve been done and we would’ve been happy. What else could we do? That’s what we were trying to do in the first place. We didn’t know the first one was a RAN 1. We just thought it was a letter to say, “Hey, we got some problems.”

…

MEMBER: All right. Look, I just do have one more question that I should have asked earlier when we raised it. I will give each of you an opportunity to respond. So I referred earlier to this motion number 10 that the committee decided to put forward to the general meeting on the 13th of February about the fund for getting advice on legally and permanently terminating all or any caretaking agreements. Mr Shaw asked you what would have happened if the first RAN notice had been complied with. You said that would have been the end of it, you would have been happy?‑‑‑We would have had nowhere else to go.

Yes. What would have happened with the $130,000? What hadn’t been collected would go into the sinking fund eventually. I suppose my question is when you said you would have been happy, would you have been – the – the compliance with the RAN notice would not have led you to accomplish your objective of terminating the caretaking agreement. So is it accurate to say you would be happy or ‑ ‑ ‑?‑‑‑Yes. We would have been.

  1. [37]
    These answers are plainly inconsistent with the terms of the motion and explanatory schedule put forward by the Body Corporate committee, as well as the objective set out in Mr O'Pray’s supporting circular.  That objective, or as Mr O'Pray put it the ‘one major achievement’ that he intended to attain as chairperson, was ‘ridding ourselves and The Grange of the caretaking/letting contracts’. 
  2. [38]
    In the circumstances, I do not accept that Mr O'Pray’s answers on re-examination represent anything more than a recognition by him that the Body Corporate committee would not have been able to proceed with termination had it formed the view that RAN-1 had been complied with.  This is reflected in his answer that ‘[w]e would have had no where else to go’.
  3. [39]
    In other words, Mr O'Pray obviously understood that escaping what he considered to be a bad bargain required an available ground for terminating the East and West Agreements.

Available grounds for terminating the caretaking agreements

  1. [40]
    The East and West Agreements each contain the following clause in identical terms:

8. This Agreement may be terminated by the Body Corporate by notice in writing to the Manager in the event that the Manager:-

  1. (a)
    assigns or attempts to assign the rights and liabilities contained in this Agreement except in accordance with the provisions herein set out;
  1. (b)
    fails or neglects to carry out the duties pursuant to this Agreement without good reason and such failure or neglect shall continue for a further period of twenty-eight (28) days after notice in writing shall have been given to the Manager specifying the duty which the Manager has failed or neglected to carry out and calling upon the Manager to perform such duty;
  1. (c)
    shall be guilty of gross misconduct or gross negligence in the performance of the duties hereunder; or
  1. (d)
    shall be adjudicated bankrupt or be liquidated or wound up or convicted on indictment of any criminal charge.
  1. [41]
    The Body Corporate relies on cl 8(b) and (c).
  2. [42]
    The Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) (‘the Accommodation Module’) also contains provisions for the termination of caretaker agreements.
  3. [43]
    Section 127(1) of the Accommodation Module provides:[17]

The body corporate may terminate a person’s engagement as a body corporate manager or service contractor, or authorisation as a letting agent—

(a) under the Act; or

(b) by agreement; or

(c) under the engagement or authorisation.

  1. [44]
    Section 129 of the Accommodation Module is headed ‘Termination for failure to comply with remedial action notice’. Sub-section (1) sets out a number of grounds under which a caretaking agreement can be terminated, including:

The body corporate may terminate a person’s engagement as a body corporate manager or service contractor if the person (including, if the person is a corporation, a director of the corporation)—

  1. (a)
    engages in misconduct, or is grossly negligent, in carrying out functions required under the engagement; or
  2. (b)
    fails to carry out duties under the engagement; …
  1. [45]
    A procedure for terminating under these grounds is then set out in subsections (3) and (4):

(3) The body corporate may act under subsection (1) or (2) only if—

  1. (a)
    the body corporate has given the person a remedial action notice in accordance with subsection (4); and
  2. (b)
    the person fails to comply with the remedial action notice within the period stated in the notice; and
  3. (c)
    the termination is approved by ordinary resolution of the body corporate; and
  4. (d)
    for the termination of a person’s engagement as a service contractor if the person is a caretaking service contractor, or the termination of a person’s authorisation as a letting agent—the motion to approve the termination is decided by secret ballot.

(4) For subsection (3), a remedial action notice is a written notice stating each of the following—

(a) that the body corporate believes the person has acted—

  1. (i)
    for a body corporate manager or a service contractor—in a way mentioned in subsection (1)(a) to (e); or
  2. (ii)
    for a letting agent—in a way mentioned in subsection (2)(a) to (d);

(b) details of the action sufficient to identify—

  1. (i)
    the misconduct or gross negligence the body corporate believes has happened; or
  2. (ii)
    the duties the body corporate believes have not been carried out; or
  3. (ii)
    the provision of the code of conduct or this regulation the body corporate believes has been contravened;

(c) that the person must, within the period stated in the notice but not less than 14 days after the notice is given to the person—

(i) remedy the misconduct or gross negligence; or

(ii) carry out the duties; or

(iii) remedy the contravention;

(d) that if the person does not comply with the notice in the period stated, the body corporate may terminate the engagement or authorisation.

  1. [46]
    The Body Corporate contends that cl 8(b) and (c) of the East and West Agreements operate as grounds for termination independent of s 129(1)(a) and (b) of the Accommodation Module.
  2. [47]
    I do not cavil with the proposition that s 127(1)(c) of the Accommodation Module permits the parties to agree to additional grounds for termination and related processes.[18] An example of this might be cl 8(a) of the East and West Agreements, which is a ground in addition to that contained in s 129(1) of the Accommodation Module.
  3. [48]
    However, in the present case the ground in cl 8(b) of the East and West Agreements is substantially the same as that set out in s 129(1)(b) of the Accommodation Module. Similarly, the ground in cl 8(c) is substantially the same set out in s 129(1)(a). The question then becomes whether s 129 covers the field in respect of the grounds and processes for termination set out in that section.
  4. [49]
    In considering this issue, it is necessary to have regards to provisions of the Body Corporate and Community Management Act 1997 (Qld) (‘the Act’). Section 318 of the Act is titled ‘Prevention of contracting out’. It provides:

A person cannot waive, or limit the exercise of, rights under this Act or contract out of the provisions of this Act.

  1. [50]
    In relation to the regulation modules, s 122(1) of the Act relevantly provides:

The regulation module applying to a community titles scheme may prescribe all or any of the following things about the engagement of a person as a body corporate manager or service contractor, or the authorisation of a person as a letting agent, for the scheme—

…

(d) particular circumstances under which the engagement or authorisation may or may not be terminated or transferred, despite anything in the engagement or authorisation or in another agreement or arrangement;

  1. [51]
    Having regard to the provisions of s 122 and s 318 of the Act, I am of the view that the Act does not permit the parties under s 127(1)(c) of the Accommodation Module to contract out of the grounds and processes for termination set out in s 129 of the Accommodation Module. As a corollary to this, I am of the view that it follows that the parties cannot agree to grounds and processes for termination which have the effect of modifying or excluding the grounds and processes set out in s 129.
  2. [52]
    I note that support for this view can be found in the judgment of McMurdo J in Henderson & Anor v The Body Corporate for Merrimac Heights:[19]

The plaintiffs submit that any termination of the Caretaking Agreement had to be according to s 129. The defendant submits that s 129 provided one way of terminating the Caretaking Agreement, but that it did not affect the defendant’s right under the general law to terminate for repudiatory conduct or for a breach of contract.

…

As already noted, the defendant contends that it can justify its termination of the Caretaking Agreement upon grounds which were not alleged in the remedial action notice. I reject that submission. To the extent that there are other alleged grounds, they are allegations that the plaintiffs breached the Caretaking Agreement, so that the plaintiffs either failed “to carry out duties under the engagement” (s 129(1)(b)) or contravened the Code (s 129(1)(c)(ii)). A termination for conduct of the kind which is within s 129(1) must be made as prescribed by s 129, because otherwise s 129 would have little or no effect. In particular, an important purpose of s 129, which is to provide the manager or contractor with an opportunity to remedy its default, would be defeated.

  1. [53]
    In the present case, cl 8(b) and (c) of the East and West Agreements are therefore of no effect as they purport to deal with substantially the same grounds for termination as set out in s 129(1)(a) and (b) of the Accommodation Module, and the related processes in s 129(3) and (4).

The remedial action notices

  1. [54]
    The five RANs can be conveniently divided into two categories:
    1. (a)
      RAN-1, RAN-3 and RAN-4 deal with issues relating to the performance of duties by TLL; and
    2. (b)
      RAN-2 and RAN-5 deal with issues relating to the provision of information by TLL.
  2. [55]
    I will consider each category separately.

The ‘Performance RANs’

  1. [56]
    RAN-1, RAN-3 and RAN-4, which I will refer to as the performance RANs, are in identical format. They contain what is styled as a one page ‘Remedial Action Notice’, and attached to each notice is a report by Danny Little of Management Rights Advice and Service Consultants Pty Ltd.
  2. [57]
    In this manner, RAN-1 is dated 9 February 2017 and attaches a report of Mr Little dated 30 January 2017. RAN-3 is dated 31 March 2017 and attaches a report of Mr Little dated 21 March 2017. RAN-4 is dated 29 August 2017 and attaches a report of Mr Little dated 28 August 2017.
  3. [58]
    It is sufficient for present purposes to consider RAN-1 in detail:[20]

TO: TLL Investment Pty Ltd …

the Manager of The Grange Community Titles Scheme 30993, pursuant to the appointment contained in a Caretaking Agreement dated 16 January 2003 assigned by Zhao Wu Song & Man Jiang as trustee for the SJL Family Trust to TLL Investment Pty Ltd ACN 167614 780 by Deed of Assignment dated 4 July 2014 with the consent of the Body Corporate (Caretaking Agreement).

You have failed to carry out your duties under the Caretaking Agreement as identified, more particularly, in a report prepared by Mr Danny Little of Management Rights Advice and Service Consultants dated 30 January 2017 and a true copy of which is attached as Annexure “A” (Report).

The Report particularises your breaches and the remedial action you are required to perform under the following headings:

1. Swimming Pool and Surrounding Areas;

2. Security and By laws;

3. Common Area Toilets;

4. Gardens;

5. Roadways, Pathways and Entrances;

6. General Areas;

7. Tennis Court; and

8. Barbeque and Associated Areas.

The Body Corporate gives you notice and requires you to remedy those breaches by performing the remedial action required in relation to each such breach and summarised on pages 48 to 50 of the Report.

The Body Corporate requires you to remedy each of those breaches within 28 days after the service of this Notice on you. In the event that you fail to comply with this Notice within the stipulated time, the Body Corporate may, without prejudice to any of its other rights or remedies, terminate the Caretaking Agreement.

  1. [59]
    RAN-3 and RAN-4 were in materially identical terms, save for the references to the respective reports of Mr Little.
  2. [60]
    It will be immediately apparent that the author of the performance RANs was either unaware that there were two caretaking agreements, or simply made no attempt to distinguish between the East and West Agreements.
  3. [61]
    The report from Mr Little attached to RAN-1 contains 122 photographs and 49 items which are said to require action by TLL. His later reports attached to RAN-3 and RAN-4 are in a similar format.
  4. [62]
    In the course of his cross-examination in relation to RAN-1, Mr Little provided the following answers in relation to his methodology:[21]

The instructions from Mr O'Pray to you was oral?‑‑‑It was a phone call.

And he requested you to prepare a written report?‑‑‑That’s correct.

All right. And, in that instructions, it’s the case, isn’t it, that he asked you to record every possible thing that you could identify?‑‑‑He asked me to identify what the issues were that I saw in the building he had, in the scheme. There were issues that he had raised with me that I said I can’t report because they weren’t present at the time I did the inspection.

Now, I just want to be clear about this. Issues? This report, what you’ve identified throughout this report, is items of work that, on that day, you say need to be undertaken?‑‑‑Items that needed to be either discussed, or addressed or ‑ ‑ ‑

Yep?‑‑‑ ‑ ‑ ‑ attended to.

All right. But you don’t contend, do you, that these items constitute a breach of – the existence of these items – constitute a breach of the remedial action notice, do you?‑‑‑I – I didn’t have anything to do with forming the breach notice. My instructions were to provide a report based on ‑ ‑ ‑

All right?‑‑‑ ‑ ‑ ‑ what my observations were on the day.

Okay. But what I’m asking you is you don’t contend – this report isn’t a list of, I guess, things you observed which you say constitute breaches of the obligations under the caretaking agreement? You don’t contend that, do you?‑‑‑No, this – this – my report was not based on creating a RAN notice.

Yes?‑‑‑My report was based on what was being observed of the caretakers ‑ ‑ ‑

Yeah. All right?‑‑‑ ‑ ‑ ‑ at that point in time.

So it’s properly understood it’s not a list of the things which you contend are obligations which the caretaker has failed to perform? It’s just a list of things that, at that point in time, required attention?‑‑‑Yes, and I – I guess the formalising of the report was that if I put something in there and there was a referencing document or clause, at least, I indicated this would be the clause that ‑ ‑ ‑

Yes?‑‑‑But it wasn’t designed on the basis of forming a RAN notice.

Yes. Because you’d do a different report if it was for a RAN notice, wouldn’t you?‑‑‑I don’t do them for RAN notices.

All right. But you’ve identified clauses in your report?‑‑‑Yes.

But that’s what you say is the obligation which is relevant to thing that you’ve observed?‑‑‑That’s correct. Yes.

But you don’t contend, do you, that the existence of the thing you observed constitutes a breach or means that that clause hasn’t been complied with or isn’t being complied with?‑‑‑All it meant was this was an item that needed to be attended to.

Yes?‑‑‑That was the relevant clause. s

  1. [63]
    Given the significance of Mr Little’s answers, I felt it necessary to clarify that it was not possible to deduce from the terms of his report which items were breaches and which items he merely thought needed to be done:[22]

MEMBER: It’s probably also true to say there’s no way [of] deducing from your [report] – from the terms of your report which items you consider constitute a breach of the caretaker contract and which items ‑ ‑ ‑?‑‑‑Yeah.

‑ ‑ ‑ don’t?‑‑‑My role is normally not to determine what items are breachable; that’s normally done by the committee or – or through that process. And, as I mentioned, my report was done on the basis of what I felt the scheme needed to be done.

  1. [64]
    I also felt it necessary to ask Mr Little a similar question in relation to his report attached to RAN-3:[23]

MEMBER: And it might be – I did ask you in relation to the previous agreements. I’ll ask you – sorry, the previous report that you’ve done. There’s no way – you indicated in relation to the previous report that a mere reading of the report was insufficient to identify whether the points that you’d raised were a breach of one or other care taking agreement or not. Is that a similar comment you’ve made in relation to this report?‑‑‑That’s correct, yes. My role was not to determine whether or not it was a breached item; it was purely just to report and I was asked to review the items that were presented from my first report, were they completed or rectified, were they partially completed or were they not finished.

  1. [65]
    Mr Little’s report attached to RAN-4 contained the following disclaimer:[24]

MRAS Consulting do not determine what items are considered to be a breach. The brief of each review is to identify what caretaking issues require attention on the given day of the inspection. MRAS Consulting has no spent over 8 hours inspecting the common property across all reports.

  1. [66]
    Mr Little was asked in cross-examination to explain why he included the above disclaimer in his report attached to RAN-4:[25]

Is that something which usually appears as part of your pro forma report and had been taken out of the report for number 3?‑‑‑No.

Why isn’t that notation – sorry. That notation applies equally to report 3, doesn’t it?‑‑‑That’s correct. The reason I put that notation in there is that my reports are not normally just sent through as a breach notice.

Yes?‑‑‑My reports are a report on common property. I’m not – I’m not a lawyer who can issue breach notices or make that determination.

And when you’d found out that that was occurring, you wanted to make it clear that you weren’t contending by your reports that breaches existed. That’s why you included that notation ‑ ‑ ‑?‑‑‑That’s correct. Just to make this clear exactly that my role was not to issue breach notices or determine them. My role is to assess the common property.

Yes. Sorry. We know you don’t issue breach notices or remediation notices?‑‑‑Yes.

My question to you is: you included that notation, once you found out how your reports were being used, because you wished to make it clear that you weren’t contending, by your reports that breaches existed of the care taking agreement; all you were contending was that items of work that you observed on that day needed to be done?‑‑‑That’s correct.

  1. [67]
    The other aspect of Mr Little’s report that struck me was his failure in many instances to provide meaningful particulars of the location of the photographs in his reports. This was an issue which had been raised by Ms Lu in her evidence:[26]

9. When I read the remedial action notices, I noted that some photographs:

  1. (a)
    are particularised by the wording “common property” with no reference individual lot numbers, street names, or even a more specific area;
  2. (b)
    depict a lot comprising a house and lawn, but often with no distinguishing features as to which lot the photo relates to;
  3. (c)
    are flipped horizontally or not in the photograph’s natural orientation;
  4. (d)
    are so focussed in on an alleged breach that it is almost impossible to determine which lot it relates to; and/or
  5. (e)
    are of poor quality.

10. The Photo Deficiency Issue had two core consequences:

  1. (a)
    First, when I instructed employees of the Applicant to take action in relation to the alleged breaches (including, taking photos), it was burdensome, arduous, incredibly time consuming and, in some cases, impossible to identify with precision the individual alleged breaches.
  2. (b)
    Second, it took hours to identify an individual breach. Even where the Applicant has taken steps to identify individual alleged breaches, even then, the Applicant cannot be certain that it had addressed the exact alleged breach, owing to the size of the Grange and the poorly detailed photos provided by the Respondent.
  1. [68]
    For completeness, I note that Ms Lu was cross-examined in relation to this evidence:[27]

So it’s your evidence that when you first instructed the employees to take action it was burdensome, arduous and incredibly time consuming and in some cases impossible to identify with precision the individual alleged breaches. That’s right.

But isn’t it your evidence that Mr Asiata or one of his team conducted daily inspections of the common properly?‑‑‑Yes.

And, for instance, to identify by law breaches?‑‑‑Yes.

So, for instance, if the complaints in a remedial action notice is that hedges need trimming and you can’t tell from the photo where the particular hedge is, Mr Asiata would have been able to look at all the hedges during his daily inspections, wouldn’t he?‑‑‑Well, for the hedging, as I said, that’s a larger scale of the complex. So you – we have a schedule in particular for that summer, for that summer-time. That’s – the plants grow. So if you go – finish – we have to finish one side and then we go to another side and we have to come to this side straight away. Because it’s already grow. So that – we did the inspection [indistinct] doing the – doing the hedging but it’s the one – you finish this side, we go to another side and we need to come back and then do this side and go to another side again. Even for – that’s a – the plant grows. So that’s why we have been engaged – we, as a caretaker, engaged to do mowing and hedging every day.

Right. And you instructed your employees in the maintenance and the gardening teams to address the problems or any problems identified in the remedial action notices as a whole, didn’t you? Rather than, for instance, saying here’s a photograph of a hedge that needs trimming you would have instructed them, wouldn’t you, to make sure that all of the hedges in the complex are up to scratch?‑‑‑Yes.

  1. [69]
    This line of cross-examination did not directly challenge Ms Lu’s evidence-in-chief relating to the difficulties in identifying the location of a number of individual photographs in Mr Little’s reports.
  2. [70]
    I asked Mr Little about the reason why he did not provide meaningful particulars of the location of many of the photographs:[28]

MEMBER: Before we move on from, just this segment of the report, Mr Little. So from pages 8 to 11, there’s a number of a photographs of things on the common property from fridges to basketball hoops to cars. I notice you haven’t actually identified what lot numbers these items are in front. Is there a reason you didn’t do

that?‑‑‑Look, we didn’t – I didn’t in the first report because it was more talking about examples. In the third – third report I did, I referred it back to exact locations because we had some instances of it being a continuing environment, but the idea here was, and if you look at the actions where I’ve asked there, it’s the caretaker to discuss with the committee – sorry, about the by-laws, the parking in general terms; these were general examples of things that were around the place. That – that – I – we could’ve taken more photographs, but once we’ve got to a point where we’ve got two or three or four examples of it, it’s really a situation where talking about a principle.

Yes. So you said earlier you don’t prepare reports for remedial action notices, did you envisage that this report you prepared would be used essentially as a remedial action notice?‑‑‑Look, I – I have no determination of how those reports could be used, but it wasn’t a situation where I was asked to prepare a report on the basis of it being a remedial action notice.

I mean, one of my concerns in relation to the report as it’s used as a remedial action notice is that there’s a lack of specificity in – so someone might not easily be able to identify where these things occur?‑‑‑Yep.

If you turn over a bit further into your report in pages 30 and 31, for example, just the bottom photo on page 30 and the top photo on page 31 just to take it, I guess, to a even further extreme, there’s a photo of a crack in a concrete with some weeds. That’d be almost impossible to identify where those ‑ ‑ ‑?‑‑‑Look, essentially ‑ ‑ ‑

‑ ‑ ‑ photos were taken ‑ ‑ ‑?‑‑‑ ‑ ‑ ‑ once again, and if you refer to the action there, it was caretaker to weed spray, common property pathways and roadways. It was an example of – and we could’ve taken several more photographs with cracks of weeds, but it was example of, we just need to check that the roadways are weed sprayed.

Okay?‑‑‑As opposed to, just do that one and that one and this one in the photograph. The action was requesting the caretaker to have a look at the area as such.

  1. [71]
    I note that Mr Little’s reference to having provided exact locations in his third report appears to be a reference to his report dated 13 May 2017, which is titled ‘Third Report’.[29]  This report was not attached to any of the performance RANs.
  2. [72]
    The relevance of Mr Little’s failure to provide meaningful particulars of the location of many of the photographs in his reports is apparent from the final two questions of his cross-examination:[30]

Now, I touched on this in respect of, I think, some of your reports, but it’s fair to say across all of them you make – there’s nothing in your reports which enables – in any of them – which enables the reader to work out whether what you complain about in respect of a particular item relates to the west agreement or the east agreement, is there?‑‑‑No, there’s no differential.

And I don’t say this critically, but it would be fair to say that those – your reports were really prepared in ignorance of the fact that there are two contracts which govern two different parts of the scheme?‑‑‑Yes. I was asked to look at The Grange’s table (sic).

  1. [73]
    Having regard to the evidence set out above, I am of the view that RAN-1, RAN-3 and RAN-4 suffer from two fatal problems:
    1. (a)
      The performance RANs each attach a report of Mr Little, which it is said in the notice particularises TLL’s breaches of the caretaking agreements. Mr Little’s evidence was clear that his reports were never intended to be used in that way, and did not in fact purport to identify breaches of the caretaking agreements. Attaching Mr Little’s reports in these circumstances fails to meet the statutory requirement set out in s 129(4)(b)(i) of the Accommodation Module that the performance RANs provide ‘details of the action sufficient to identify … the duties the body corporate believes have not been carried out’. It is not for TLL as the recipient of the notices to deduce which of the ‘caretaking issues requir[ing] attention on the given day of the inspection’ in Mr Little’s reports were breaches of the caretaking agreements and which were not.
    2. (b)
      The performance RANs do not purport to identify which items relate to the East or West Agreement, or both. Mr Little’s evidence was clear that his report was prepared in ignorance of the existence of the existence of two caretaking agreements. I find that Mr Little’s failure in many instances to provide meaningful particulars of the location of the photographs in his reports means that it was not possible to identify whether many of the items raised by him relate to the East or West Agreement, or both. In relying on the ground for termination set out in s 129(1)(b) of the Accommodation Module, namely that TLL ‘fail[ed] to carry out duties under the engagement’, it was incumbent on the Body Corporate to identify the relevant engagement or engagements in respect of which the failures to carry out duties were alleged. It is not the case that a breach which related to only one caretaking agreement would provide a basis for terminating both agreements.
  2. [74]
    I accept that the mere presence of deficiencies in a remedial action notice does not automatically invalidate the notice.[31] However, for the reasons set out above, the processes by which the performance RANs were prepared were in my view so fundamentally flawed that such that it cannot be said that they meet the statutory requirements.
  3. [75]
    Accordingly, I find that RAN-1, RAN-3 and RAN-4 cannot be relied upon as valid notices under s 129(3) and (4) of the Accommodation Module.
  4. [76]
    Although I have found that cl 8(b) of the East and West Agreements has no effect, I note in passing that the performance RANs would have also failed under that clause on the same basis.

The ‘Information RANs’

  1. [77]
    RAN-2 and RAN-5, which I will refer to as the information RANs, are in identical format. They contain what is styled as a one page ‘Remedial Action Notice’, and attached to each notice is a letter or letters from the Body Corporate’s solicitor directing the provision of information. The breach contended is a failure to provide the information sought in the attached letter or letters.
  2. [78]
    The information sought in RAN-2 is that particularised in paragraphs 14 and 15 of the letter dated 1 March 2017. The relevant passages from that letter are as follows:[32]

As you know we act for the Body Corporate of the Grange Community Title Schemes 30993.

…

14. Pursuant to your client's obligations under clauses 3(k) and 13 of the Agreement our client requires your client to provide it with the following information within 14 days of this request:

(a) copies of your client's systems and work schedules established, implemented and maintained and setting out the duties and frequency thereof to carry out its obligations under the Agreement in relation to the following specific areas:

  1. (i)
    Outdoor Swimming Pool and Surrounding Areas
  2. (ii)
    Lawns and Gardens
  3. (iii)
    Car Parks, Driveways, Walkways and Pathways
  4. (iv)
    Tennis Court
  5. (v)
    Barbeques and Outdoor Areas;
  6. (vi)
    Common Area Toilets
  7. (vii)
    Enforcing of Bylaws
  8. (viii)
    General Areas
  9. (ix)
    Maintenance and Repairs
  10. (x)
    Rubbish removal
  1. (b)
    the directions or instructions issued by your client to its employees and contractors of the particularised and itemised tasks that those employees and contractors have to perform in relation to each of the areas, and the required frequency of performance thereof, pursuant to the regimes and systems established;
  2. (c)
    the checklists and systems maintained and followed by your client to ensure that its employees and contractors understand the extent of their duties and ensure that they are performed;
  3. (d)
    particulars of the number of employees, contractors and or casuals engaged by your client to carry out its obligations under the Agreement, and in relation to each of those employees, contractors or casuals:

(i) copies of the subcontractors' agreements;

(ii) particulars of the qualification and experience of each employee;

(iii) the work roster of each employee or contractor, identifying the following:

  1. (A)
    duties that have to be performed during each shift;
  1. (B)
    the days that each employee or contractor are on duty; and
  1. (C)
    the hours during which the employee or contractor is required to be on site.
  1. (e)
    particulars of the times (days and time) that your client's representative Ms Lu is on site to supervise performance of its obligations.

15. Pursuant to your client's obligations under clauses 3(k) and 13 of the Agreement our client requires your client to provide it with the following information in relation to the fire fighting equipment and its obligation under clause 3(g) of the Agreement within 14 days of this request:

  1. (a)
    How often is an inspection of the fire fighting equipment performed and by whom?
  2. (b)
    Particulars of when and by whom the fire fighting equipment has been serviced during the last 24 months;
  3. (c)
    Particulars of when the next service of the fire fighting equipment is due to occur;
  4. (d)
    Particulars of when the Fire Department had inspected the fire fighting equipment during the last two years;
  5. (e)
    The intervals at which the Fire Department is engaged to inspect the fire fighting equipment; and
  6. (f)
    Particulars of any repairs to the fire fighting equipment carried out during the last 2 years.
  1. [79]
    The information sought in RAN-5 is that particularised in paragraphs 6(a) and (b) of the letter dated 19 July 2017, and paragraph 21 of the letter dated 25 August 2017. The relevant passages from those letters are as follows:[33]

Pursuant to your client’s obligations under clause 3(k) and 13 of the Caretaking Agreement our client requires your client to provide it with the following information within 14 days of this request:

…

6. Please provide our client with copies of the following documents for the period 1 July to 14 July 2017:

  1. (a)
    each gardener's (1) Timesheets, (2) Work Duty Roster and (3) Work Schedule for each day; and (4) the gardener Manager's Supervisory Checklists for each gardener;
  2. (b)
    each worker's (1) Timesheets, (2) Maintenance Work Duty Roster and (3) Maintenance Works Schedule for each day; and (4) the Maintenance Manager's Supervisory Checklists for each Worker;

…

21. We request, pursuant to your client's obligations under clauses 3(k) and 3 (sic) of the agreement, that your client:

  1. (a)
    provide our client with copies of those Rosters and Schedules for each gardener and worker for each day during the period 1 July 2017 to 14 July 2017;
  2. (b)
    inform our client who prepared those Rosters and Schedules at the time; and
  3. (c)
    who is currently responsible for the daily or weekly preparation thereof.
  1. [80]
    The submission put to me on behalf of TLL in respect of the information RANs was:[34]

[T]he starting point is, under the contract, it assumes that a request for all these items is a proper – that there’s some sort of contractual obligation or obligation to provide them.  If the request was to give things which they weren’t entitled to under the contract, then it wouldn’t be a proper request fai – sorry, it wouldn’t be a breach failing to provide them.  

  1. [81]
    Accordingly, the threshold issue for me to consider is whether there was a contractual obligation for TLL to provide the information sought in the letters dated 1 March 2017, 19 July 2017 and 25 August 2017.
  2. [82]
    The information RANs and the attached letters set out the basis for directing provision of the information sought as being cl 3(k) and 13 of the ‘Caretaking Agreement’.  Again, it bears noting that the author of the information RANs was either unaware that there were two caretaking agreements, or made no attempt to distinguish between the East and West Agreements.
  3. [83]
    Clause 13 of the East and West Agreements provides:

13. (a) The Committee of the Body Corporate shall from time to time authorise one of its members to give instructions to and communicate with the Manager on behalf of the Body Corporate and not more than one (1) member of the Body Corporate at any time shall be given such authority.

(b) The Manager will confer fully and freely with the representative of the Body Corporate if so requested relative to the performance of the duties of the Manager herein set forth and shall at the request of the representative of the Committee of the Body Corporate attend by its authorised representative meetings of the Committee of members of the Body Corporate. The representative of the Manager shall be entitled to be heard on any relevant question or matter at any such meeting.

  1. [84]
    There are two important features to note in relation to cl 13:
    1. (a)
      Clause 13(a) requires the authorisation of a single member of the Body Corporate committee for the purposes of providing instructions to TLL. I infer that the purpose of this clause was to avoid the situation where duplicate or even contradictory instructions might be given to TLL. It is not in dispute that the authorised representative at all material times was Mr O'Pray.
    2. (b)
      Clause 13(b) confines TLL’s obligations to ‘confer fully and freely’ to doing so with the authorised representative, which is to say Mr O'Pray. The obligation therefore does not extend to other members of the Body Corporate, the Body Corporate committee or the Body Corporate proper. Indeed, this is the very mischief which it appears the clause was intended to avoid.
  2. [85]
    Clause 3(k) of the East and West Agreements provides:

3. In relation to the building the Manger, or in the case of a corporation, its employees or agents shall attend to the following matters:-

…

(k) Comply with and carry out all reasonable directions from time to time given in accordance with Clause 13 hereof by the Body Corporate to the Manager in and about the administration and management of the building and the performance by the Body Corporate of its lawful obligations and duties including but not limited to:-

  1. (i)
    Arrange and supervise repairs and maintenance (that are not the direct responsibility of the Caretaker to carry out himself);
  2. (ii)
    Obtain quotes for property, materials and services as instructed by the Body Corporate;
  3. (iii)
    Purchase, or arrange for the purchase, of property or materials, for and on behalf of and at the cost of the Body Corporate, as instructed by the Body Corporate;
  4. (iv)
    Engage services for and on behalf of and at the cost of the Body Corporate as instructed.
  1. [86]
    Clause 3(k) requires TLL to comply with and carry out all reasonable directions given in accordance with cl 13. Having regard to the features of cl 13 set out above, I am of the view that a valid direction under cl 3(k), being one ‘given in accordance with Clause 13’, must be issued by or on behalf of the authorised representative and not another member of the Body Corporate, the Body Corporate committee or the Body Corporate proper.
  2. [87]
    The directions the subject of RAN-2 and RAN-5 were issued by solicitors for the Body Corporate. The letter dated 1 March 2017 stated specifically that the solicitors ‘act for the Body Corporate’. Accordingly, the references to ‘our client’ in the directions can only be a reference to the Body Corporate proper.
  3. [88]
    In particular, the directions were not issued by the representative authorised under cl 13, namely Mr O'Pray. Nor do the solicitors purport to be acting on behalf of Mr O'Pray as the authorised representative.
  4. [89]
    In these circumstances, I find that the letters dated 1 March 2017, 19 July 2017 and 25 August 2017 are not valid directions under cl 3(k) and 13 of the East and West Agreements. It follows that there were no breaches of the East and West Agreement that could properly be the subject of the information RANs.
  5. [90]
    Accordingly, RAN-2 and RAN-5 cannot be relied upon as valid notices under s 129(3) and (4) of the Accommodation Module.
  6. [91]
    Although I have found that cl 8(b) of the East and West Agreements has no effect, I note in passing that the information RANs would have also failed under that clause for the same reasons.

Gross misconduct and/or gross negligence

  1. [92]
    The Body Corporate also relies on grounds of gross misconduct and/or gross negligence as a basis for terminating the East and West Agreements.
  2. [93]
    It is not in dispute that the grounds of misconduct or gross negligence are not referred to in any of the RANs. The Body Corporate has therefore not complied with the remedial action notice procedure set out in s 129 of the Accommodation Module.
  3. [94]
    The Body Corporate instead relies on cl 8(c) of the East and West Agreements.  This clause permits termination in cases of gross misconduct or gross negligence.  However, as set out above, I have found that this clause is of no effect as it purports to deal with same grounds for termination as set out in s 129(1)(a) of the Accommodation Module, and the related processes in s 129(3) and (4).
  4. [95]
    In particular, I note that cl 8(c), unlike cl 8(b), does not provide TLL with an opportunity to remedy any breach in this regard. As McMurdo J noted in the Henderson case (above), an important purpose of s 129 of the Accommodation Module is to provide the caretaker with such an opportunity.
  5. [96]
    It follows that gross misconduct and/or gross negligence cannot be relied upon by the Body Corporate as a basis for terminating the East and West Agreements.

Conclusion

  1. [97]
    For the reasons set out above, I declare each of RAN-1, RAN-2, RAN-3, RAN-4 and RAN-5 to be invalid and of no effect. It follows that they cannot be relied upon as a basis for terminating the East and West Agreements. Nor can the Body Corporate rely on gross misconduct and/or gross negligence as a basis for terminating the East and West Agreements.
  2. [98]
    In these circumstances, the resolutions to terminate the caretaking agreements passed by the Body Corporate at the extraordinary general meeting on 26 June 2017 and the annual general meeting on 19 March 2018 are also invalid. The Body Corporate is permanently restrained from relying on these resolutions to terminate the East and West Agreements.
  3. [99]
    The parties may make written submissions on the question of costs in the event that a costs order is sought within 28 days hereof.

Footnotes

[1] Abraham Lincoln, ‘Notes for a Law Lecture’ in Roy Basler (ed), The Collected Works of Abraham Lincoln (1955), First Supplement, pp 18-20.

[2] Exhibit 26. The funds allocated were $103 per quarter per lot for one year.

[3] Affidavit of Katherine Lu sworn on 4 July 2018, para 75(b).

[4] Joint Statement of Agreed Facts and List of Issues for Determination filed on 8 August 2018, para 3.

[5] The Agreements are found in the affidavit of Mr O'Pray sworn on 14 June 2018, exhibit SOP-1, pp 58-71.

[6] Exhibit 28.

[7] Exhibit 29.

[8] Respondent’s Further Amended Response filed on 13 April 2018.

[9] (1963) 109 CLR 9, 26.

[10] [2004] HCA 52, [41].

[11] Affidavit of Mr O'Pray sworn on 14 June 2018, para 20. Emphasis in original.

[12] Exhibit 26 and affidavit of Mr O'Pray sworn on 14 June 2018, exhibit SOP-1, p 167.

[13] Affidavit of Ms Lu sworn on 6 August 2018, exhibit LKL-3, pp 68 and 71.

[14] Ibid p 62.

[15] Transcript, pp 8-48.

[16] Transcript, pp 9-137 and 9-152.  Emphasis added.

[17] Note omitted.

[18] See The Sands Gold Coast Pty Ltd v Body Corporate for the Sands [No 2] [2016] QCAT 365, [51]-[70].

[19] [2011] QSC 336, [82], [98] (‘the Henderson case’).

[20] Affidavit of Ms Lu sworn on 11 May 2018, exhibit LKL-1, p 2.  Emphasis in original.

[21] Transcript, pp 5-56 to 5-57.

[22] Transcript, pp 5-119 to 5-120.

[23] Transcript, p 6-14.

[24] Affidavit of Ms Lu sworn on 11 May 2018, exhibit LKL-1, p 272. Emphasis in original.

[25] Transcript, pp 6-48 to 6-49.

[26] Affidavit of Ms Lu sworn on 11 May 2018, paras 9-10.

[27] Transcript, pp 2-20 to 2-21.  See generally p 2-19ff.

[28] Transcript, pp 5-63 to 5-64.

[29] Affidavit of Mr O'Pray sworn on 14 June 2018, exhibit SOP-1, pp 206-288.

[30] Transcript, p 7-28.

[31] See The Sands Gold Coast Pty Ltd v Body Corporate for the Sands [No 2] [2016] QCAT 365, [90]-[111].

[32] Affidavit of Ms Lu sworn on 11 May 2018, exhibit LKL-1, pp 66-67.

[33] Affidavit of Ms Lu sworn on 11 May 2018, exhibit LKL-1, pp 341-342 and 345-346.

[34] Transcript, p 10-89.

Close

Editorial Notes

  • Published Case Name:

    TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993

  • Shortened Case Name:

    TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993

  • MNC:

    [2018] QCAT 318

  • Court:

    QCAT

  • Judge(s):

    Member Cranwell

  • Date:

    13 Sep 2018

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Henderson v The Body Corporate for Merrimac Heights [2011] QSC 336
2 citations
Jump To
Cite 1 - [2011] QSC 336
Cite 2 - [2011] QSC 336
Norman v Federal Commissioner of Taxation (1963) 109 C.L.R 9
2 citations
Jump To
Cite 1 - (1963) 109 C.L.R 9
Cite 2 - (1963) 109 C.L.R 9
The Sands Gold Coast Pty. Ltd. v Body Corporate for the Sands [No. 2] [2016] QCAT 365
3 citations
Jump To
Cite 1 - [2016] QCAT 365
Cite 2 - [2016] QCAT 365
Cite 3 - [2016] QCAT 365
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) HCA 52
2 citations
Jump To
Cite 1 - (2004) HCA 52
Cite 2 - (2004) HCA 52

Cases Citing

Case NameFull CitationFrequency
TLL Investment Pty Ltd v The Body Corporate for the Grange (No 2) [2018] QCAT 4445 citations
Zhou Lim Pty Ltd v Body Corporate for Miami Pacific [2020] QCAT 2612 citations
1

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