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  4. Parkview Management Pty Ltd v Body Corporate for Boca Raton East Community Titles Scheme 22486 - [2018] QCAT 6

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Parkview Management Pty Ltd v Body Corporate for Boca Raton East Community Titles Scheme 22486[2018] QCAT 6

Parkview Management Pty Ltd v Body Corporate for Boca Raton East Community Titles Scheme 22486[2018] QCAT 6

CITATION:

Parkview Management Pty Ltd v Body Corporate for Boca Raton East Community Titles Scheme 22486 [2018] QCAT 6

PARTIES:

Parkview Management Pty Ltd

(Applicant)

v

Body Corporate for Boca Raton East Community Titles Scheme 22486

(Respondent)

APPLICATION NUMBER:

OCL076-17

MATTER TYPE:

Other civil dispute matters

HEARING DATE:

12 December 2017

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

DELIVERED ON:

5 January 2018

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The parties must file in the Tribunal two (2) copies and exchange with the other party one (1) copy of their submissions on the final form of the orders to be made, and a timetable progressing the matter to a hearing, by 4:00pm on 22 January 2018.

CATCHWORDS:

REAL PROPERTY – STRATA AND RELATED TITLES – MANAGEMENT AND CONTROL – BODY CORPORATE: POWERS, DUTIES, AND LIABILITIES – where parties entered into management and letting agreements – where agreements contained options to renew – where caretaker asserted option to renew management agreement validly exercised – where body corporate denied option to renew validly exercised by caretaker

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – MOTIONS, INTERLOCUTORY APPLICATIONS AND OTHER PRE-TRIAL MATTERS – interim injunction – where there is a serious question to be tried – where the balance of convenience favours the granting of an interim order – where damages are not an adequate remedy 

Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld),  s 127, s 128, s 129, s 129(4)(c)

Body Corporate and Community Management Act 1997 (Qld),  s 94(2), s 100(5), s 149B(1)

Queensland Civil and Administrative Tribunal Act 2009 (Qld),  s 59

Active Leisure (Sports) Pty Ltd v Sportsman’s Australia Limited [1991] 1 Qd R 301

Austrak Pty Ltd v John Holland Pty Ltd [2006] QSC 103

Australian Broadcasting Corporation v O'Neill [2006] HCA 46

Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1

Bressan v Squires [1974] 2 NSWLR 460

Kratzmann (Toowong) Pty Ltd v Marjorie’s Investments Pty Ltd and Anor [1986] QSC 249.

Luxottica Retail Australia Pty Ltd v 136 Queen Street Pty Ltd trustee under instrument No 04350946 [2011] QSC 162

McLaren on behalf of the Edgewater Village Home Owners Committee v Capital Four Edgewater Pty Ltd [2012] QCAT 93

Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216

Re Green Global Technologies Ltd [2009] QSC 262

Siu and Anor v Body Corporate for Coniston CTS 23339 [2017] QCAT 113.

Smoothseas Pty Ltd v Lawloan Mortgages Pty Ltd [2007] QSC 82

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.

APPEARANCES:

 

APPLICANT:

Mr B Kidston of Counsel instructed by Mahoneys Lawyers

RESPONDENT:

Mr B Strangman of Counsel instructed by MBA Lawyers

REASONS FOR DECISION

  1. [1]
    Parkview Management Pty Ltd was, pursuant to a Management Agreement and a Letting Agreement, appointed the caretaking service contractor and letting agent for the Boca Raton East Community Titles Scheme 26177.  Parkview says that it exercised an option to renew the Management Agreement for a period of five years from 1 October 2017. The body corporate disputes this and says that the option was not exercised and that the Management and Letting Agreements are at an end.
  2. [2]
    Parkview seeks an interim order restraining or preventing the body corporate from asserting that the Management Agreement is at an end and refusing to perform its obligations under the agreement. Parkview also seeks orders restraining or preventing the body corporate from terminating or attempting to terminate the Management Agreement. The body corporate opposes the application for an interim order.

The legislative framework

  1. [3]
    The relevant enabling Act governing the dispute between the parties is the Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’).
  2. [4]
    A body corporate may terminate a person’s engagement as body corporate manager or service contractor, or authorisation as a letting agent: under the BCCM Act; by agreement; under the engagement or authorisation.[1] The termination must be approved by ordinary resolution of the body corporate.[2] The body corporate may also terminate an engagement or authorisation if the manager or service contractor is convicted of particular offences, carries on a business contrary to law, transfers an interest in the engagement or authorisation without body corporate approval, or fails to comply with a remedial action notice.[3]
  3. [5]
    A body corporate must act reasonably in carrying out its functions.[4] The body corporate committee must act reasonably in making a decision.[5]
  4. [6]
    A party may apply to the Tribunal about a claimed or anticipated contractual matter about the engagement of a person as caretaking service contractor or the authorisation of a person as a letting agent.[6]
  5. [7]
    The Tribunal may grant an interim injunction if it is just and convenient to do so.[7] An undertaking in an appropriate form may be required by the Tribunal.[8]
  6. [8]
    As a general statement of principle, it will be just and equitable to grant an interim injunction if the Tribunal is satisfied that:
    1. a)
      There is a serious issue to be tried; and
    2. b)
      The balance of convenience favours the granting of the injunction which includes a consideration of whether damages are otherwise not an adequate remedy.

The background to the dispute and what the parties say

  1. [9]
    In evidence is an affidavit by the director of Parkview, Mr Tommy Shao. Mr Shao deposes to the fact that, in 2016, Parkview acquired the management rights for the Boca Raton East scheme and the Boca Raton West Scheme.[9] The total purchase price was $2.38 million of which $965,000 was for the management rights for the Boca Raton East scheme and $450,000 for the purchase of a lot in the scheme. The purchase price was financed by the Commonwealth Bank to the extent of $1.424 million and $955,000 was contributed by the applicant.[10]  On or about 9 December 2016 Parkview was assigned the management rights for the Boca Raton East scheme.[11] 
  2. [10]
    There are two agreements relevant to the present dispute: the Management Agreement (also referred to as the Caretaking Agreement) and the Letting Agreement both dated 5 March 2008.
  3. [11]
    The Management Agreement was initially for a term of five years ending on 30 September 2012. The agreement contains three options to extend the term. It is not contentious that the first option was properly exercised. It is the exercise of the second option that is the subject of the present dispute.
  4. [12]
    Clause 12 of the Management Agreement provides:

SECOND OPTION

  1. Provided the Manager shall not be in breach of this agreement at the time of exercise of this option it may extend this agreement for a further period of five (5) years from the date of expiry of the option referred to in clause 11 above by notice in writing to that effect to the Body Corporate, which notice shall be given not earlier than six (6) calendar months prior to the termination of the prior option term of this agreement but not later than three (3) calendar months prior to the date of such termination.
  1. [13]
    Clause 7 of the Management Agreement provides:

NOTICES

  1. Without prejudice to any other lawful method of serving parties, a notice given by one party to the other pursuant to this agreement shall be in writing and shall be sufficiently made, given or served, if properly addressed and either:
  1. (a)
    Left at the unit or office of the other party, as the case may be.
  1. (b)
    Posted by ordinary prepaid mail addressed to the other party at its registered office or address as shall be notified, from time to time in writing by the parties. It shall be the obligation of each party to ensure that from time to time, the other party is notified in writing of the current address at which notices are to be delivered or served or posted. Any notice so served by mail shall be deemed to be received on the day following the date of posting.
  1. [14]
    The Letting Agreement contained option provisions[12] and a notice provision mirroring those found in the Management Agreement.[13]
  2. [15]
    The second option under both the Management Agreement and the Letting Agreement was required to be exercised after 30 March 2017 but before 30 June 2017. Whether, and how, the second option under the Management Agreement was exercised by Parkview is at the heart of the dispute between the parties.
  3. [16]
    In April and May 2017, during the period within which notice of the exercise of the second option was required to be given by Parkview, the body corporate issued to Parkview two (2) Remedial Action Notices (RANs).[14] The first RAN set out what the body corporate alleged were various breaches by Parkview of its obligations under the agreements including an extended period of absence by Parkview from the scheme, a failure by Parkview to perform its duties during the period of absence, a failure to make appropriate arrangements for the duties under the Management Agreement to be performed, and a failure by Parkview to supervise the performance of its duties.  The second RAN set out what the body corporate alleged was a failure by Parkview to perform its duties as manager and was primarily concerned with what the body corporate said was the failure by Parkview to perform caretaking duties relating to the cleaning and general maintenance of the scheme.
  4. [17]
    Parkview says a number of things about the RANs including that the RANs were not authorised by the body corporate, that Parkview had not failed to carry out its duties and that Parkview had not contravened the Code of Conduct for body corporate managers. Parkview says that the body corporate did not act reasonably in issuing the RANs and that the RANs were, for a variety of reasons principally based upon non-compliance by the body corporate with the BCCM Act and the regulation module, otherwise invalid. 
  5. [18]
    Parkview says that the option to renew the Management Agreement was exercised in writing and forwarded to the body corporate manager at its post office address on 4 April 2017.[15] Parkview says that it exercised the option on or about 5 April 2017.
  6. [19]
    The body corporate says that it did not receive the written notice exercising the option to renew from Parkview. It relies upon clause 7 of the Caretaking Agreement and says that the option to renew the Management Agreement could only have been validly exercised by Parkview if notice had been posted by ordinary prepaid mail addressed to the body corporate at its registered office. Parkview did not exercise the option in this manner with the result, says the body corporate, that the purported exercise of the option by Parkview is not valid. In the alternative, the body corporate says that Parkview was in breach of the agreements at the time the option was exercised and that as a result by operation of clause 12 of the Management Agreement, Parkview was not entitled to exercise the option.

Discussion

  1. [20]
    The relief sought by Parkview in this application includes orders that the body corporate be restrained from asserting that the Management Agreement ended on 30 September 2017 and refusing to perform its obligations on that basis and that the body corporate be restrained from terminating or attempting to terminate the Management Agreement. The body corporate’s position is that the Management Agreement is at an end and on this basis it does not intend taking any steps to terminate the agreement.
  2. [21]
    The interim relief sought by Parkview is in the nature of a mandatory injunction requiring the body corporate to continue to act consistently with the terms of the Management Agreement, including the payment of remuneration under the agreement to Parkview, until further order. The Tribunal has the power to grant injunctive relief. That power is not limited to prohibitive injunctions and extends to granting mandatory injunctive relief.[16]
  3. [22]
    In Austrak Pty Ltd v John Holland Pty Ltd[17] Derrington J considered the principles relevant to the granting of a mandatory injunction. His Honour referred with approval to the judgment of Hoffmann J in Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670 at 80 where it was held:

But I think it is important … to distinguish between fundamental principles and … “guidelines”, ie useful generalisations about the way to deal with the normal run of cases falling within a particular category. The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the “wrong” decision, in the sense of granting an injunction to a party who fails to establish his right at the trial … or … in failing to grant an injunction to a party who succeeds … at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong” in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.

…

… [T]he features which justify describing an injunction as “mandatory” will usually also have the consequence of creating a greater risk of injustice if it is granted rather than withheld … The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction. … If it appears to the court that, exceptionally, the case is one in which withholding a mandatory interlocutory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel a “high degree of assurance” about the plaintiff’s chances of establishing his right, there cannot be any rational basis for withholding the injunction.’

  1. [23]
    A party seeking interim injunctive relief must first establish a prima facie case. As the High Court observed in Australian Broadcasting Corporation v O'Neill[18]:

The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:

‘The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.’

By using the phrase ‘prima facie case’, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:

‘How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.’ (citations omitted)

  1. [24]
    The practical consequences referred to in Beecham Group are also relevant to balance of convenience considerations. The balance of convenience considerations were articulated by Ann Lyons J in Luxottica Retail Australia Pty Ltd v 136 Queen Street Pty Ltd trustee under instrument No 04350946[19]:

[58] It is clear that in considering the question of balance of convenience many factors are taken into account including examining the impact of the grant or refusal of the injunction on third parties and the question of the adequacy of other possible remedies available to the applicant. In this regard it is necessary to consider whether the applicant can be properly compensated in damages.

[59]  In considering whether or not to grant an interlocutory injunction pending a final hearing, the Court must weigh up all the relevant factors in order to take the course which appears to carry the lower risk of injustice. In Kellogg Brown & Root Pty Ltd v Australian Aerospace Ltd Hansen J held:

“[45] On the matter of the approach to the grant of an injunction pending the hearing and determination of a proceeding, in Bradto Pty Ltd v State of Victoria [2006] VSCA 89 at [35] the Court of Appeal in this State, constituted by Maxwell P and Charles JA, stated that: whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.” (footnotes omitted)

  1. [25]
    The adequacy of an award of damages and the availability or sufficiency of an undertaking on the part of the plaintiff must be considered as part of the totality of determining the balance of convenience and not as a step anterior thereto.[20]

Is there a prima facie case?

  1. [26]
    Turning then to the present case, there is no evidence before the Tribunal addressing the substantive issues regarding the RANs and the alleged breaches by Parkview of its obligations under the agreements. It is not contentious that the body corporate has taken no steps to act upon the RANs by placing before a general meeting of the body corporate a resolution to terminate the agreements. This is perhaps unsurprising given the body corporate’s view that the agreements are at an end and that any further action regarding termination of the agreements is unnecessary.
  2. [27]
    It is a curious feature of the present application that the focus by the parties is exclusively on the Management Agreement. The relief, both interim and final, sought by Parkview, is limited to the validity of the exercise by Parkview of the option to renew the Management Agreement.
  3. [28]
    The affidavit by Mr Shao does not address the issue of the RANs and specifically whether Mr Shao says that Parkview did not breach the agreement or that any breaches were remedied by Parkview, or addressing the general question of the reasonableness of the actions by the body corporate in issuing the RANs.
  4. [29]
    In its written submissions, the body corporate, for the purposes of the present application, responds to what it says is Parkview’s case at its highest: that there was no breach by Parkview of the agreements and that the correspondence Mr Shao says was sent giving notice of the exercise of the option to renew the Management Agreement was in fact sent.[21]
  5. [30]
    Whether Parkview was in breach of its obligations under the agreements at the time of the purported exercise of the option requires the determination of a factual dispute. Such a determination cannot generally be made on an interim application although there may be instances where such a determination can be made. This much was conceded by the body corporate during the hearing of the application. The body corporate also concedes that the Tribunal will not, in an interim application such as this, conduct an enquiry into the evidence to determine whether the letter relied upon by Parkview was in fact sent.[22] 
  6. [31]
    If the only issue in dispute was the alleged failure by Parkview to comply with its obligations under the agreement leading to the issuing of the RANs and thus placing Parkview in breach of the agreement such that it was prevented from exercising the option to renew the agreement, I would be satisfied that there is a serious issue to be tried. In disputes before the Tribunal involving allegations of failures by a caretaker/manager to perform its duties under a management agreement, there is generally extensive statement evidence filed by the parties including expert evidence. Neither party has placed before the Tribunal any such evidence however it is not contentious between the parties that the circumstances of, and basis for, the issuing of the RANs is very much in dispute. 
  7. [32]
    The body corporate says that Parkview is unable to establish that there is a serious issue to be tried on the basis that Parkview’s purported exercise of the option cannot satisfy the requirements of the relevant provisions of the Management Agreement. In considering this submission it is necessary to examine the relevant clauses of the agreement.
  8. [33]
    Clause 7 of the Management Agreement contemplates a number of ways in which a notice by one party to the other party is to be given. These include by leaving it at the unit or office of the other party as the case may be and by posting a notice, by ordinary prepaid mail, addressed to the registered office of the other party or address as shall be notified from time to time in writing by the parties. Clause 7 imposes upon the parties an obligation to give written notification to the other party, from time to time, of the current address at which notices are to be delivered or served or posted.
  9. [34]
    The methods of giving notice set out in Clause 7 of the Management Agreement are specifically stated to be without prejudice to ‘any other lawful method of serving parties.’
  10. [35]
    It is not contentious that neither the Management Agreement nor the Letting Agreement provide for an address for the service of notices. Nor is it contentious that Parkview did not deliver and leave the letter at the unit or office of the body corporate. 
  11. [36]
    The circumstances in which the notice of the exercise of the option was given are deposed to by Mr Shao: in or around April 2017 Mr Shao was admitted to hospital in China to undergo a procedure in relation to his back;[23] Mr Shao instructed Parkview’s relief manager, Laurie Sherd, and Mr Shao’s then wife, Jiaying Wu, to draft and send the exercise of the option for a further term of the caretaking agreement;[24] Mr Shao was advised by Ms Wu that Mr Sherd had drafted the option on or around 2 April 2017;[25] Ms Wu posted the option on or about 4 April 2017.[26] Exhibited to Mr Shao’s affidavit is a copy of the notice exercising the option.[27]
  12. [37]
    The body corporate says that, at Parkview’s highest case, the notice of the exercise of the option was forwarded by prepaid post to the post office box of the body corporate’s manager, Challenge Strata Management. This form of service of the notice did not comply with the Management Agreement and as such, says the body corporate, the option was never validly exercised. In support of its contention, the body corporate relies upon the decision in Kratzmann (Toowong) Pty Ltd v Marjorie’s Investments Pty Ltd and Anor.[28] In Kratzmann, Moynihan J was required to determine whether an option to renew a lease had been validly exercised. The lease provided:

The option for renewal shall be exercisable only by notice in writing delivered by the lessee to the lessors not less than three calendar months before the expiration of the term hereby granted.

  1. [38]
    The notice, posted by certified mail to the lessors’ managing agents prior to the three month period, was not received until after the three month period had expired.  Moynihan J was satisfied that, in the absence of the receipt by the lessors of the notice, and thus actual notice, within the time specified in the lease, the provisions of the option clause had not been complied with. Moynihan J also found that the lessors’ managing agent could not be equated with the lessors for the purpose of giving the required notice nor was there evidence to show that the lessors had authorised the agent to receive on their behalf the notice contemplated by the option clause. The evidence, Moynihan J found, showed that the agent was careful to respond to requests by the lessee in respect of matters other than the exercise of the option in terms of directing their requests to the lessors and relaying the lessors’ responses.
  2. [39]
    Moynihan J referred n Kratzmann to the decision of the Supreme Court of New South Wales in Bressan v Squires.[29] Bressan involved the exercise of an option to purchase land. Bowen CJ was required to determine whether an option to purchase had been exercised in accordance with the contractual stipulation that:

… this option may be exercised by you by notice in writing addressed to me at any time on or before 20 December 1972.

  1. [40]
    The notice exercising the option was posted by Bressan on 18 December but not received by Squires until 21 December.  Bowen CJ found that in the circumstances of the case and upon a true construction of the option agreement, actual notice was required to have been given by Bressan to Squires on or before 20 December in order to effect a valid exercise of the option.
  2. [41]
    Citing with approval the decision in Bressan, Mackenzie J in Smoothseas Pty Ltd v Lawloan Mortgages Pty Ltd[30] observed in terms of particular relevance to the present case:

Where an option is concerned, one issue, and the critical one in this case, is whether there is provision that it must be exercised in a particular way or whether any communication in a clear and unqualified way that it is being exercised is within the intention of the parties, objectively determined, as a sufficient means of exercising it (Ballas v Theophilos (No 2) [1958] VR 576; Traywinds Pty Ltd v Cooper [1989] 1 Qd R 222).

  1. [42]
    His Honour also observed:

As Bowen CJ in Eq said in Bressan v Squires [1974] 2 NSWLR 460 at 463, cases like this are largely ones of impression. Copious authority was cited on the exercise of options and on the postal rule. While instructive as to the approaches taken on individual facts of cases, they did not involve identical clauses to the critical one in this case.

  1. [43]
    The option in the Management Agreement must be construed as a commercial document.[31] The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean requiring a consideration of the text and the surrounding circumstances known to the parties and the purpose and object of the transaction.[32]
  2. [44]
    Clause 12 of the Management Agreement required the second option to be exercised by notice in writing ‘to the Body Corporate’. Clause 12 must however be read and considered with Clause 7 which spells out how notices are to be given by one party to the other. Clause 7, despite providing specific ways of giving notices, also provides that those specific ways are ‘without prejudice to any other lawful method of serving parties’. It is not clear from Management Agreement, nor was it the subject of submissions by the parties, of the significance, if any, to be attached to the use of the phrase ‘serving parties’ and whether ‘serving’ refers to something other than giving notices, including the notice of exercise of an option to renew.  Nor did the parties make detailed submissions as to the meaning of ‘any other lawful method’ of serving parties. Neither party made detailed submissions as to the proper construction of clause 12 and whether actual notice of the exercise of the option was required.
  3. [45]
    For Parkview, it was submitted that the giving of the notice to the body corporate manager was, in effect, the giving of notice to the authorised agent of the body corporate and that this was a lawful method of serving the body corporate within the meaning of clause 7 of the Management Agreement.
  4. [46]
    In addition to its reliance upon what it says was Parkview’s failure to comply with the requirements of clause 12 of the Management Agreement, the body corporate relies upon s 315 of the BCCM Act which deals with the service of notices which provides:

315  Service of notices etc.

  1. (1)
    A notice, legal process or other document is served personally on the body corporate for a community titles scheme if served personally on—
  1. (a)
    for the body corporate for a specified two-lot scheme—1 or more of the owners of the lots included in the scheme; or
  1. (b)
    for the body corporate for another community titles scheme—the secretary or, in the absence of the secretary, another member of the committee for the body corporate.
  1. (2)
    The address for service of the body corporate is the address that, on the advice of the body corporate given to the registrar from time to time, is recorded on the indefeasible title for the common property as the body corporate’s address for service.
  1. (3)
    However, if the body corporate has not advised the registrar of its address for service, the address for service of the body corporate is the address for service of the original owner shown on the first community management statement for the scheme.
  1. (4)
    The address for service of the owner of a lot included in the scheme (other than a lot that is a community titles scheme) is the owner’s address as recorded in the records of the body corporate or, if no address is recorded, the address of the lot.
  1. [47]
    However s 315 of the BCCM Act does not mandate the only ways in which  service of documents upon a body corporate may be effected. Section 315 identifies how a document is served personally on a body corporate, what the address for service of a body corporate is and what the address for service of a lot owner is. The section does not purport to exclude other modes of serving notices or documents nor was such an interpretation of the section contended for by the body corporate.
  2. [48]
    As Moynihan J observed in Kratzmann, the meaning and effect of a particular option clause will turn on the terms of the particular clause. Kratzmann was decided after a trial, where the evidence was heard and tested. The meaning of the relevant clauses in the Management Agreement requires a consideration of the text of the specific clauses and the agreement as a whole and the surrounding circumstances known to the parties and the purpose and object of the transaction. These are matters that cannot be tested and finally determined in an interim application such as this.
  3. [49]
    Kratzmann involved the giving of the option notice to the lessors’ managing agent. In my view, the role of a managing agent for a lessor is quite different to the role of a body corporate manager. A body corporate manager is engaged by a body corporate to supply administrative services to the body corporate.[33] Administrative services are not defined in the BCCM Act or the regulation module[34]. The nature and extent of the administrative services provided by a body corporate manager will vary from body corporate to body corporate. The functions of a body corporate manager under the relevant regulation module may include carrying out the functions of a committee and the executive members of a committee[35], administer the body corporate’s administrative or sinking fund[36], and maintain the custody of body corporate documents[37].
  4. [50]
    Neither party has filed any material addressing the role taken by the body corporate manager in dealing with Parkview on behalf of the body corporate. Counsel for Parkview submitted at the hearing that as part of the discharge of its administrative functions, the body corporate manager was required to receive notices, including the notice exercising the option to renew, rather than substantive decision making which was within the province of the body corporate. Service of the notice exercising the option to renew upon the body corporate manager was, says Parkview, consistent with its administrative role and its role as the body corporate’s agent.
  5. [51]
    Counsel for Parkview pressed for an adverse inference to be drawn against the body corporate as a result of its failure to adduce evidence as to the actual or ostensible authority of the body corporate manager. The Tribunal is not bound by the rules of evidence. I am not prepared to draw the inference contended for by Parkview. It might be said equally of Parkview that it has failed to adduce any evidence as to its dealings with the body corporate manager and the basis upon which it formed the view that it was appropriate to forward notice of the exercise of the option to renew to the body corporate manager. These are matters of evidence to be explored and tested at a hearing.
  6. [52]
    Clause 12 of the Management Agreement is in quite different terms to the relevant contractual clauses under consideration in Kratzmann and Bressan. The risk of drawing conclusions about the effect of a particular option clause by reference to decisions concerning differently worded clauses is highlighted by the comments of Mackenzie J in Smoothseas Pty Ltd v Lawloan Mortgages Pty Ltd to which I have referred. Both Kratzmann and Bressan were decided after a trial and a consideration of the totality of the evidence including the circumstances known to the parties and the object of the transaction. The risk adverted to in Mackenzie J’s comments is greater still on an interlocutory application such as this.
  7. [53]
    The body corporate says that there is not sufficient evidence before the Tribunal to prove service by post and relies upon the decision of Daubney J in Grant Thornton (Qld) Pty Ltd v Green Global Technologies Ltd.[38] In Grant Thornton the only evidence of the proof of service of a statutory demand was an affidavit by the applicant’s solicitor who deposed to having forwarded the demand by prepaid post to the registered office of Green Global. Daubney J found that there was insufficient evidence of service of the demand. His Honour referred to the decision of Brereton J in Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd[39] where it was held:

... Proof of service by post requires, at least:

· Proof that the envelope bore the correct name and address;

· Proof that the envelope contained the relevant document to be served;

· Proof that the envelope bore the correct cost of postage; and

· Proof that the envelope was placed in the post.

  1. [54]
    In Northumbrian Ice Cream Co Ltd, Brereton J was required to consider evidence of service by a solicitor in a form not dissimilar to that in Grant Thornton.  Brereton J was unpersuaded that there was sufficient evidence to establish service, finding:

While Mr Moriarty’s affidavit proves that the envelope contained the relevant document, it does not prove how the envelope was addressed (except the name of the firm of solicitors), it does not prove that it bore any postage stamp, and it does not prove that it was placed in the post: a solicitor’s statement that the envelope was placed with the outgoing mail does not prove at least on its own that it was posted.[40]

  1. [55]
    In Grant Thornton, Daubney J found:

There is no evidence before me of any of the processes within the applicant's solicitor's office which could give me any proper basis for concluding that posting of the documents in question in an envelope addressed to the registered office of the respondent company actually occurred.

  1. [56]
    The current evidence in the present case arguably goes further than the evidence in either Northumbrian Ice Cream or Grant Thornton. Mr Shao deposes, on the basis of information and belief following a conversation with his former wife, that the notice was placed in an envelope, the envelope was then addressed to the post office box of the body corporate manager, a stamp was affixed to the envelope and the envelope was placed in the post office box outside the Australia Post branch at Robina Town Centre on 4 April 2017. The steps identified by Mr Shao might be considered analogous to the evidence of the solicitors’ office processes referred to by Daubney J and the evidence referred to by Brereton J as to how the envelope was addressed, the postage stamp borne by the envelope and the placement of the envelope in the post.  
  2. [57]
    It is enough that Parkview show a sufficient likelihood of success to justify in the circumstances the grant of the interim injunctive relief. As the High Court held in Beecham, how strong the probability needs to be depends upon the nature of the rights Parkview asserts and the practical consequences likely to flow from the order sought. On balance, I am satisfied that Parkview has demonstrated an arguable case and a sufficient likelihood of success to justify the grant of the interim order.

Balance of convenience considerations

  1. [58]
    It is not contentious that in the absence of notice of the renewal option being given, the Management and Letting Agreements came to an end on 30 September 2017. By August 2017 it was clearly in dispute as between the parties whether the option had been validly exercised.[41] On 10 October 2017 the solicitors for the body corporate advised Parkview’s solicitors that the body corporate had no ongoing obligations under the Management Agreement, the option not having been validly exercised.[42]  On 27 October 2017 the solicitors for the body corporate advised the solicitors for Parkview that Parkview was not authorised to perform any duties under the management or letting agreements and calling for the return by Parkview of the common property keys.[43] Just what has transpired in terms of the discharge of the caretaking duties at the scheme since 30 September 2017 is unclear. There is no evidence by either Parkview or the body corporate in this regard. Nor is there any evidence by the body corporate regarding what it intends to do about the caretaking and letting duties assuming the agreements are at an end and the interim relief is not granted. Whether it intends engaging another service contractor or intends undertaking the duties itself is not the subject of evidence or submissions by the parties.
  2. [59]
    Mr Shao deposes to the consequences of the body corporate ceasing to perform its obligations under the Management Agreement. He says that he and his father, who is the main investor in the management rights business for the scheme, will lose their sole source of income. Mr Shao deposes to the current balance of the loan to the financier in the amount of $1,331,872.57.[44] Mr Shao deposes to Parkview not having the necessary funds to pay out the loans with the financier if called upon to do so.[45] Mr Shao’s evidence is that, if the interim order sought is not made, the financier will take steps to appoint an administrator to Parkview rendering nugatory any ultimate success Parkview may achieve in the proceeding.[46]
  3. [60]
    I am satisfied that, on the evidence before me, one of the immediate consequences for Parkview of not granting the interim relief will be that Parkview will not receive the remuneration payable by the body corporate under the Management Agreement in the (annual) amount of $107,535 (excluding GST). I accept that the consequence of this is that Parkview will be unable to service the loan facility. The submissions by Parkview refer to the consequences of the termination of the Management Agreement or the appointment of a receiver by the financier. The position of the body corporate is that the Management Agreement is at an end. The submissions by Parkview do not specifically address the consequences to Parkview if the financier is advised that the Management Agreement and the Letting Agreement have ended. Parkview undoubtedly finds itself in a somewhat difficult situation. There is no evidence before me as to the specific arrangements between Parkview and its financier. For example, there is no evidence of what rights and obligations Parkview and the financier have in circumstances where the financed agreements come to an end and the secured loan remains outstanding. In the usual course, management rights businesses are usually sold as going concerns and issues regarding the repayment of loan facilities do not arise. The BCCM Act contemplates the consequences of the termination by a body corporate of a financed service contract.[47]  These consequences include the appointment by the financier of a receiver or a receiver and manager for the contract.[48]  Here, there can be no such appointment as the body corporate has not terminated the agreements.
  4. [61]
    It seems to me that the likely outcome if Parkview defaults under the loan facility and the entire loan becomes due and payable, and in circumstances where, as Mr Shao deposes, Parkview is unable to repay the facility, steps will be taken by the financier to enforce its security interest. This will likely result in the external administration of Parkview and the enforcement of the guarantees provided by Mr Shao and Mr Shao’s business partner, Mr Luo.[49] Any steps taken by the financier to enforce its security interest will also likely impact upon the caretaking and letting businesses associated with the other scheme of which Parkview is the caretaker and manager in light of the cross collateralised finance arrangements.[50]
  5. [62]
    The potential detriment to the body corporate of granting the interim injunction seems to me to be somewhat less significant than the detriment to Parkview if the relief is not granted. Parkview says that it will continue to provide the caretaking duties in accordance with the Management Agreement. The consequence of granting the interim relief is that the body corporate will be required to continue to pay to Parkview the remuneration under the Management Agreement in exchange for which Parkview will perform the caretaking duties. If Parkview does not perform the duties in accordance with the agreement, then the body corporate may come back to the Tribunal and seek appropriate orders.  Presumably the caretaking duties, if not performed by Parkview, would be required to be performed by another service contractor in respect of which the body corporate would be required to pay a fee. It is difficult to apprehend what loss the body corporate might suffer, if the relief is granted, that is sufficiently proportionate to the detriment Parkview will suffer if the relief is not granted that weighs the balance of convenience scales in the body corporate’s favour.
  6. [63]
    Turning to the question of whether damages would be an adequate remedy, Parkview says that damages would not be an adequate remedy. The body corporate says that the dispute is a contractual one and that in circumstances where a principal terminates a contract, without proper reason, the contractor would be entitled to damages. This submission is not entirely apposite in circumstances where, as here, the agreement has not been terminated nor does the body corporate intend taking steps to terminate the agreement.
  7. [64]
    If the interim relief is not granted and Parkview is successful in the proceeding and is found to have validly exercised the option to renew the Management Agreement, it will be entitled to enforce its rights under the agreement including the payment of remuneration by the body corporate. However the potential consequences for Parkview if it is not permitted, on an interim basis, to continue to discharge its obligations under the Management Agreement and be remunerated accordingly are significant. In the circumstances as I have outlined, where Parkview is unable to service the loan facility and where steps are taken by the financier against Parkview and the guarantors, would damages be an adequate remedy if Parkview is ultimately successful?
  8. [65]
    The Management Agreement, if the remaining option periods are exercised, will not expire until 2027. As I have previously observed when considering the adequacy of damages as a remedy in circumstances where an application for an injunction is sought by a service contractor:

Should the injunction not be granted and the agreements are terminated and in the event that the Applicant is successful in the proceeding, evidence will be required of the value of the rights at some future, and unknown, point in time. The Applicant, if successful in the proceeding, will also be required to adduce evidence of the loss of income up until any sale of the caretaking and letting rights. Again, this is all speculative and uncertain. There is no evidence before the Tribunal about whether the body corporate would be in a position, at some future point in time, to satisfy a damages award in an amount presently unknown. Whether lot owners would be required to be levied or would meet such a levy is unknown. These uncertainties lead me to conclude that damages would not be an adequate remedy.[51]

  1. [66]
    These observations are directly apposite in this dispute and I would make the same observations in the present case. The Management Agreement, with the remaining options exercised, has almost ten years to run. The management rights are undoubtedly a significant asset, the value of which at some future point in time is uncertain. Given the potential consequences for Parkview in relation to both the Boca Raton East scheme and the Boca Raton West scheme, and the personal consequences for the guarantors, if the interim relief is not granted, in my view damages would not be an adequate remedy.
  2. [67]
    In all of the circumstances, I am persuaded that the balance of convenience favours the grant of the interim relief sought by Parkview.
  3. [68]
    Finally, in relation to the question of Parkview providing an undertaking as to damages, interim orders were made by me on 12 December 2017 pending this decision. At the time those orders were made, Parkview provided an undertaking as to damages and an undertaking that it would continue to perform its obligations under the Management Agreement. Whether the second of those undertakings should form part of any final interim orders was not the subject of submissions by the parties. I will hear from the parties as to the final form of the orders, however at this time, and subject to further submissions from the parties, the proposed orders dealing with the application for interim relief are:
    1. Upon the undertaking of Parkview Management Pty Ltd to perform its obligations pursuant to the Management Agreement between Parkview Management Pty Ltd and Body Corporate for Boca Raton East Community Titles Scheme 22486 dated 5 March 2008 (as assigned),

And, upon Parkview Management Pty Ltd giving the usual undertaking as to damages,

  1. Body Corporate for Boca Raton East Community Titles Scheme 22486, whether by its servants, agents, employees, or otherwise, is restrained by injunction from asserting that the Management Agreement ended on 30 September 2017 and refusing to perform its obligations thereunder on that basis, until:
    1. the final determination of the proceeding; or
    2. further order of the Tribunal; or
    3. the agreement in writing of the parties.
  1. [69]
    In light of the fact that the proposed interim orders require the parties to continue to act consistently with the terms of the Management Agreement, the matter should proceed to a final hearing expeditiously. The submissions by the parties should also set out a timetable to hearing. That proposed timetable should, if at all possible, be agreed by the parties.

Footnotes

[1] Module, s 127(1).

[2] Module, s 127(2).

[3] Ibid, s 128, s 129.

[4] BCCM Act, s 94(1).

[5] Ibid s 100(5).

[6] Ibid, s 149B.

[7] Queensland Civil and Administrative Act 2009 (Qld) (“QCAT Act”), s 59(1).

[8] Ibid, s 59(6)(a).

[9] Affidavit of Tommy Shao sworn 7 December 2017, [6].

[10] Ibid, [7].

[11] Ibid, [8].

[12] Letting Agreement, clause 4.

[13] Ibid, clause 9.

[14] Statement of Claim attached to Application to resolve a complex dispute, [10] – [15].

[15] Affidavit of Tommy Shao, [19].

[16] McLaren on behalf of the Edgewater Village Home Owners Committee v Capital Four Edgewater Pty Ltd [2012] QCAT 93.

[17] [2006] QSC 103.

[18] (2006) 227 CLR 57.

[19] [2011] QSC 162.

[20] Active Leisure (Sports) Pty Ltd v Sportsman’s Australia Limited [1991] 1 Qd R 301 and referred to with approval in Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd & Anor [2011] QCA 334.

[21] Respondent submissions at [33].

[22] Ibid at [32].

[23] Affidavit of Tommy Shao at 18(b).

[24] Ibid at 18(d).

[25] Ibid at 19(a).

[26] Ibid at 19(d).

[27] Ibid, exhibit HTS-1 at page 67.

[28] [1986] QSC 249.

[29] [1974] 2 NSWLR 460.

[30] [2007] QSC 082.

[31] Ibid at [18].

[32] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.

[33] BCCM Act, s 14.

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

[35] Ibid, s 8, s 56.

[36] Ibid, s 145.

[37] Ibid, s 205.

[38] [2009] QSC 262.

[39] [2006] NSWC 1216.

[40] Ibid at [14].

[41] Affidavit of Mitchell James Downs, Exh MJD-1 at page 12.

[42] Ibid at page 24.

[43] Ibid at page 26.

[44] Affidavit of Tommy Shao at [14].

[45] Ibid at [15].

[46] Ibid at [17].

[47] BCCM Act, s 123 – 126.

[48] BCCMA Act, s 126.

[49] Applicant’s submissions at [22] – [25].

[50] Applicant’s submissions at [21].

[51] Siu and Anor v Body Corporate for Coniston CTS 23339 [2017] QCAT 113.

Close

Editorial Notes

  • Published Case Name:

    Parkview Management Pty Ltd v Body Corporate for Boca Raton East Community Titles Scheme 22486

  • Shortened Case Name:

    Parkview Management Pty Ltd v Body Corporate for Boca Raton East Community Titles Scheme 22486

  • MNC:

    [2018] QCAT 6

  • Court:

    QCAT

  • Judge(s):

    Senior Member Brown

  • Date:

    05 Jan 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
Active Leisure (Sports) Pty Ltd v Sportsmans Australia Ltd[1991] 1 Qd R 301; [1990] QSCFC 38
2 citations
Jump To
Cite 1 - [1991] 1 Qd R 301
Cite 2 - [1991] 1 Qd R 301
Austrak Pty Ltd v John Holland Pty Ltd [2006] QSC 103
2 citations
Jump To
Cite 1 - [2006] QSC 103
Cite 2 - [2006] QSC 103
Australian Broadcasting Corporation v O'Neill (2006 ) 227 CLR 57
1 citation
Jump To
Cite 1 - (2006 ) 227 CLR 57
Australian Broadcasting Corporation v O'Neill (2006) HCA 46
1 citation
Jump To
Cite 1 - (2006) HCA 46
Ballas v Theophilos (No 2) (1958) VR 576
1 citation
Jump To
Cite 1 - (1958) VR 576
Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1
1 citation
Jump To
Cite 1 - [1968] HCA 1
Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd [2011] QCA 334
1 citation
Jump To
Cite 1 - [2011] QCA 334
Bradto Pty Ltd v State of Victoria [2006] VSCA 89
1 citation
Jump To
Cite 1 - [2006] VSCA 89
Bressan v Squires (1974) 2 NSWLR 460
3 citations
Jump To
Cite 1 - (1974) 2 NSWLR 460
Cite 2 - (1974) 2 NSWLR 460
Cite 3 - (1974) 2 NSWLR 460
Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670
1 citation
Jump To
Cite 1 - [1987] 1 WLR 670
Grant Thornton (Qld) Pty Ltd v Green Global Technologies Ltd [2009] QSC 262
2 citations
Jump To
Cite 1 - [2009] QSC 262
Cite 2 - [2009] QSC 262
Kratzmann (Toowong) Pty. Ltd. v Marjorie's Investments Pty. Limited [1986] QSC 249
2 citations
Jump To
Cite 1 - [1986] QSC 249
Cite 2 - [1986] QSC 249
Luxottica Retail Australia Pty Ltd v 136 Queen Street Pty Ltd [2011] QSC 162
2 citations
Jump To
Cite 1 - [2011] QSC 162
Cite 2 - [2011] QSC 162
McLaren on behalf of the Edgewater Village Home Owners Committee v Capital Four Edgewater Pty Ltd [2012] QCAT 93
2 citations
Jump To
Cite 1 - [2012] QCAT 93
Cite 2 - [2012] QCAT 93
Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216
3 citations
Jump To
Cite 1 - [2006] NSWSC 1216
Cite 2 - [2006] NSWSC 1216
Cite 3 - [2006] NSWSC 1216
Siu v Body Corporate for Coniston [2017] QCAT 113
2 citations
Jump To
Cite 1 - [2017] QCAT 113
Cite 2 - [2017] QCAT 113
Smoothseas Pty Ltd v Lawloan Mortgages Pty Ltd [2007] QSC 82
3 citations
Jump To
Cite 1 - [2007] QSC 82
Cite 2 - [2007] QSC 82
Cite 3 - [2007] QSC 82
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
2 citations
Jump To
Cite 1 - (2004) 219 CLR 165
Cite 2 - (2004) 219 CLR 165
Traywinds Pty Ltd v Cooper [1989] 1 Qd R 222
1 citation
Jump To
Cite 1 - [1989] 1 Qd R 222

Cases Citing

Case NameFull CitationFrequency
3 Keys Global Pty Ltd v Brisbane Logistics Group Pty Ltd [2021] QCAT 2803 citations
Coates v Hazelmere Village RLLC Pty Ltd [2023] QCAT 4192 citations
Gillam v Wheatley [2021] QCAT 2743 citations
Gold Coast Jet Boating Pty Ltd v Ridong (Australia) International Pty Ltd [2022] QCAT 142 citations
Gold Coast Jet Boating Pty Ltd v Ridong (Australia) International Pty Ltd [2022] QCAT 32 citations
Mackfitness 1 Pty Ltd v Salty [2021] QCAT 3183 citations
Nijalu Pty Ltd v DW Investments (QLD) Pty Ltd [2022] QCAT 3453 citations
Sunrise Creek Pty Ltd v Glades Easthill South CTS 30074 [2023] QCAT 742 citations
Valuers Registration Board of Queensland v Murphy (No. 2) [2022] QCAT 3382 citations
1

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