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  4. Sunrise Creek Pty Ltd v Body Corporate for Glades Easthill South Community Titles Scheme 30074 - [2024] QCAT 362

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Sunrise Creek Pty Ltd v Body Corporate for Glades Easthill South Community Titles Scheme 30074[2024] QCAT 362

Sunrise Creek Pty Ltd v Body Corporate for Glades Easthill South Community Titles Scheme 30074[2024] QCAT 362

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Sunrise Creek Pty Ltd v Body Corporate for Glades Easthill South Community Titles Scheme 30074 [2024] QCAT 362

PARTIES:

SUNRISE CREEK PTY LTD t/as GLADES EASTHILL RESIDENCES

(applicant)

v

BODY CORPORATE FOR GLADES EASTHILL SOUTH COMMUNITY TITLES SCHEME 30074

(respondent)

APPLICATION NO/S:

OCL006-23

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

20 August 2024

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member King-Scott

ORDERS:

  1. Application filed on 9 February 2023 is stayed until the matters the subject of the application are determined by a court or the receivers and managers are discharged.
  2. Costs reserved.

CATCHWORDS:

REAL PROPERTY – STRATA AND RELATED TITLES – MANAGEMENT AND CONTROL – BODY CORPORATE: POWERS DUTIES AND LIABILITIES – GENERALLY – where Body Corporate asserted a right to terminate a caretaking agreement – Receivers and Managers appointed by financier – standing of director to bring application in Tribunal.

Body Corporate and Community Management Act 1997 (Qld)

Corporations Act 2001 (Cth)

Queensland Civil and Administrative Tribunal Act 2009 (Qld)

ASIC v Lanepoint Enterprises Pty Ltd [2006] FCA 1163

Bidjara Aboriginal Housing & Land Company Limited (receivers and managers appointed) v Commonwealth of Australia [2005] 2 Qd R 468

Capital Globe Investments Pty Ltd v Parker Investments Australia Pty Ltd [2011] 2 Qd R 565

APPEARANCES &

REPRESENTATION:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

Introduction

  1. [1]
    Sunrise Creek Pty Ltd (‘Sunrise’) was the caretaking service contractor as defined  by Schedule 6 of the Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’) for the Body Corporate for Glades Easthill South Community Titles Scheme 30074 (‘the Body Corporate’).
  2. [2]
    Sunrise was incorporated on 7 May 2020. Its sole director is Jing Liu.
  3. [3]
    Sunrise entered into a caretaking agreement with the Body Corporate on 14 November 2019.
  4. [4]
    Disputes arose between it and the Body Corporate. Following an extraordinary general meeting (‘EGM’) held on 9 February 2023 the Body Corporate resolved to terminate the caretaking agreement.

Background

  1. [5]
    On 13 January 2023 the Body Corporate gave notice to Sunrise’s financier the Bank of Queensland (‘BOQ’) pursuant to s 126 of the BCCM Act.
  2. [6]
    On 8 February 2023 Helen Newman and Andrew Peter Fielding were appointed by BOQ as Receivers and Managers.
  3. [7]
    On 9 February 2023 Sunrise filed an application to resolve a complex dispute (excluding lot entitlements) (‘the substantive application’) and an application for an interim injunction.
  4. [8]
    Pursuant to s 149B of the BCCM Act the Tribunal has original jurisdiction to resolve a dispute about a claimed or anticipated matter about the engagement of a person as a body corporate manager or caretaking service contractor. Schedule 6 of the BCCM Act defines such a dispute as a complex dispute.
  5. [9]
    A dispute as defined in s 227 of the BCCM Act includes a dispute between the body corporate for a community titles scheme and a caretaking service contractor for the scheme.
  6. [10]
    The Commissioner for Body Corporate and Community management referred Sunrise’s application for interim orders to a specialist Adjudicator on 31 January 2023. On 7 February 2023 the Specialist Adjudicator dismissed Sunrise’s application for interim orders that the Body Corporate not act on the committee’s resolution or proceed with the EGM or other meetings considering the committee’s resolution.
  7. [11]
    Following  the EGM on 9 February 2023, Sunrise in a 600 page document alleges that motion 2 passed at the EGM was invalid because of irregularities.
  8. [12]
    Sunrise sought the following interim orders from the Tribunal:
    1. Glades Easthill South should be restrained from terminating or attempting to terminate the caretaking agreement dated 14 November 2019 until the final orders are determined;
    2. Glades Easthill South should be restrained to implement the motion 2 in EGM on 9 February 2023 (if passed) until the final orders are determined (sic);
    3. Glades Easthill South should be restrained from giving any notice to Sunrise’s financier until the final orders are determined;
    4. Glades Easthill South must allow Sunrise Creek Pty Ltd to perform its caretaking services under the caretaking agreement without hindrance and pay monthly remuneration due pursuant to the caretaking agreement until the final orders are determined (sic);
    5. Any other interim orders necessary in the circumstances to prevent Glades Easthill South to terminate the caretaking agreement dated 14 November 2019 until the final orders are determined (sic).
  9. [13]
    The application first came before QCAT on 13 February 2023. Member Deane made the following orders:

Until further order, upon Sunrise Creek Pty Ltd giving the usual undertaking as to damages and costs, Glades Easthill South CTS 30074 is restrained from taking any further actions to terminate or to attempt to terminate the caretaking agreement dated 14 November 2019 or take any further actions relying upon Remedial Action Notices (RAN) dated 23 February 2022, 19 May 2022 and 20 October 2022, pending determination of the Application for interim order filed 9 February 2023.

  1. [14]
    On 15 February 2023 the application for interim order was dismissed. On that date Member Deane made directions that the issue as to Mr Liu’s standing to bring the application be determined by a member of the Tribunal on the papers following the written submissions of the parties without an oral hearing.
  2. [15]
    I have been directed to make that determination.
  3. [16]
    Member Deane also directed that Mr Liu file submissions and evidence as to his standing to bring the application.
  4. [17]
    Mr Liu has authorised Yaping (Amy) Yang to respond on his behalf.
  5. [18]
    Member Deane gave Mr Liu leave to be legally represented.
  6. [19]
    Ms Yang is not a lawyer. Nevertheless, Ms Yang has filed material comprising 600 pages, but the material, although critical of the validity of procedures leading to the EGM, does not adequately address Mr Liu’s right to bring the application in the name of the company when Receivers and Managers have been appointed. The document is prolix, rambling, repetitive, non sensical and appears to be the product of an artificial intelligence application. The authorities relied upon do not correlate with their citations.
  7. [20]
    The appointment of the Receivers and Managers arises under s 126 of the BCCM Act.

126Limitation on termination of financed contract

  1. The body corporate under a financed contract may terminate the contract if—
  1. the body corporate has given the financier for the contract written notice, addressed to the financier at the financier’s address for service, that the body corporate has the right to terminate the contract; and
  2. when the notice was given, circumstances existed under which the body corporate had the right to terminate the contract; and
  3. at least 21 days have passed since the notice was given.
  1. However, the body corporate cannot terminate the contract if, under arrangements between the financier and the contractor for the contract, the financier—
  1. is acting under the contract in place of the contractor; or
  1. has appointed a person as a receiver or receiver and manager for the contract.
  1. A financier may take the action mentioned in subsection (2)(a) or (b) only if the financier has previously given written notice to the body corporate of the financier’s intention to take the action.
  1. The financier may authorise a person to act for the financier for subsection (2)(a) if—
  1. the person is not the contractor or an associate of the contractor; and
  1. the body corporate has first approved the person.
  1. For deciding whether to approve a person under subsection (4), the body corporate—
  1. must act reasonably in the circumstances and as quickly as practicable; and
  1. may have regard only to—
  1. the character of the person; and
  1. the competence, qualifications and experience of the person.
  1. However, the body corporate must not—
  1. unreasonably withhold approval of the person; or
  1. require or receive a fee or other consideration for approving the person, other than reimbursement for legal or administrative expenses reasonably incurred by the body corporate for the application for its approval.
  1. Subsection (2) does not operate to stop the body corporate from terminating the contract for something done or not done after the financier started to act under the subsection.
  1. Nothing in this section stops the ending of a financed contract by the mutual agreement of the body corporate, the contractor and the financier.
  1. In this section—

address for service, for a financier, means the financier’s address for service—

  1. for notices given by the body corporate under this division; and
  1. stated in a notice given to the body corporate under section 123 or 124.
  1. [21]
    These proceedings were commenced by Sunrise on 9 February 2023 at a time when Receivers and Manager had been appointed by BOQ.
  2. [22]
    Sunrise sought the following orders in its substantive application:
    1. Motion 2 in EGM of 9 February is invalid and of no effect;
    2. RAN* dated 23 February 2022 invalid;
    3. RAN dated 19 May 2022 invalid;
    4. RAN dated 20 October 2022 invalid.

* Remedial action notice

  1. [23]
    The powers of a receiver under an instrument or by court order are set out in s 420(2) of the Corporations Act 2001 (Cth). Those powers are extensive and include the power to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation.
  2. [24]
    Section 418A of the Corporations Act 2001 (Cth) provides:

Court may declare whether controller is validly acting

  1. Where there is doubt, on a specific ground, about:
  1. whether a purported appointment of a person, after 23 June 1993, as receiver of property of a corporation is valid; or
  1. whether a person who has entered into possession, or assumed control, of property of a corporation after 23 June 1993 did so validly under the terms of a security interest in that property;

the person, the corporation or any of the corporation's creditors may apply to the Court for an order under subsection (2).

  1. On an application, the Court may make an order declaring whether or not:
  1. the purported appointment was valid; or
  1. the person entered into possession, or assumed control, validly under the terms of the security interest;

as the case may be, on the ground specified in the application or on some other ground.

  1. [25]
    The term “controller’ is defined in s 9 of the Corporations Act 2001 (Cth) as “receiver  or receiver and manager”.
  2. [26]
    Under s 434A of the Corporations Act 2001 (Cth) a court may remove a receiver and manager for misconduct in connection with performing their functions and powers.
  3. [27]
    The Body Corporate submits that Sunrise needs the leave of the Court under s 237 of the Corporations Act 2001 (Cth) to bring an application on behalf of Sunrise.
  4. [28]
    Section 236 of the Corporations Act 2001 (Cth) provides:

Bringing, or intervening in, proceedings on behalf of a company

  1. A person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if:
  1. (a)
    the person is:
  1. (i)
    a member, former member, or person entitled to be registered as a member, of the company or of a related body corporate; or
  1. (ii)
    an officer or former officer of the company; and
  1. (b)
    the person is acting with leave granted under section 237.
  1. Proceedings brought on behalf of a company must be brought in the company's name.
  2. The right of a person at general law to bring, or intervene in, proceedings on behalf of a company is abolished.
  1. [29]
    Generally, the right to bring proceedings in the name of the company can only be brought in accordance with section 236. A person who wishes to intervene or bring a proceeding in the company’s name must seek leave of a court under s 237 of the Corporations Act 2001 (Cth).  The Body Corporate submits that Mr Liu’s application would have to be made to the Federal Court, Federal Circuit and Family Court or the Supreme Court of a State or Territory. The Tribunal does not have jurisdiction to grant leave.
  2. [30]
    There is clear authority that a director can oppose a winding up application without obtaining leave under s 237 of the Corporations Act 2001 (Cth). French J (as he then was) in ASIC v Lanepoint Enterprises Pty Ltd[1] said:

The appointment of a receiver under a charge over its property does not end the life of the company to which the receiver has been appointed. It has been said that the company in such a case is “anaesthetised” but may be restored to “full conscious activity when the anaesthetic is no longer applied after the debts owing to the debenture holders have been paid”: George Barker (Transport) Ltd v Eynon [1973] 3 All ER 374 at 380 (Mocatta J). Moreover, while receivers may effectively control a company’s dealings with the outside world, receivership does not change the company’s internal structure: Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782 (Street J). Street J there said (at 790):

That structure continues to exist notwithstanding that the directors no longer have authority to exercise their ordinary business management functions. A valid receivership and management will ordinarily supersede, but not destroy, the company’s own organs through which it conducts its affairs. The capacity of those organs to function bears a direct inverse relationship to the validity and scope of the receivership and management.

  1. [31]
    At paragraph [20] His Honour said further:

There may be a question whether the power conferred upon a receiver can displace all of a director’s powers and functions for the duration of the receivership. Given that a receiver’s powers must be exercised for the purposes of the appointment and the enforcement of the security under which appointment is made, it may be doubtful whether such a situation could arise even in theory. In Deangrove Pty Ltd v Commonwealth Bank of Australia (2001) 108 FCR 77; 37 ACSR 465; [2001] FCA 173, Sackville J said (at [30]):

  1. [30]
    The general principle, at least so far as the usual form of debenture or charge is concerned, is that the appointment of receivers does not entirely displace the powers and authority of the directors.
  1. [32]
    Further at paragraph [21]:

The practical concern must be whether the exercise by a director of any power in the name of the company would interfere with the legitimate exercise by the receivers of their powers. As Owen J said in Re Geneva Finance (at WAR 511; ACSR 430):

The real question is whether the directors, wishing to exercise a power which they would otherwise have, can do so without prejudicing the legitimate interests of the receiver and the secured creditor in the realisation of the asset.

  1. [33]
    In Capital Globe Investments Pty Ltd v Parker Investments Australia Pty Ltd[2] Applegarth J considered the case where the applicant company’s sole director sought to continue the company’s application to set aside a statutory demand, notwithstanding the appointment of receivers to property of the company. The respondent contended that leave was required under s 237 of the Corporations Act 2001 (Cth). Applegarth J followed the decision of Lanepoint. However, His Honour indicated that had leave been required he would have granted it on terms but as the director had provided an indemnity for any costs that may be incurred no further orders were required.
  2. [34]
    Those cases can be distinguished as the actions of the director did not prejudice nor were they detrimental to the functions of the receivers and managers. In this case the very substance of the claim by Mr Liu is to effectively to terminate the appointment of the receivers and managers. That was the effect of the claim by the directors in Bidjara Aboriginal Housing & Land Company Limited (receivers and managers appointed) v Commonwealth of Australia.[3] Mullins J (as she then was) considered the case where the directors of a company in receivership proposed to exercise their residual power to bring a proceeding on behalf of the company against the chargee and the receivers and managers. As the costs of the potential action could adversely affect the capacity of the company to repay the secured debt, Her Honour stayed the claim until the directors could satisfactorily indemnify the company against costs it incurred and might be ordered to pay to other parties.
  3. [35]
    It follows that Mr Liu may have standing to bring the substantive application. I note that the Receivers and Managers have indicated to the Tribunal that they would not be retired by BOQ.
  4. [36]
    In addition to criticising the validity of the appointment because of procedural irregularities the  application by Mr Liu and the submissions by Ms Yang raise several other matters. They being:
    1. There was no breach or default of the mortgage with BOQ to justify the appointment of a receiver;
    2. There was no contractual basis for BOQ to appoint receivers;
    3. There was no evidence to justify the need for receivership;
    4. BOQ illegally took over Sunrise’s funds;
    5. The appointment of receivers is unjustified and proceeds from bad faith;
    6. The appointment of receivers is an abuse of process and oppressive;
    7. Sunrise has not been served with notice of the receiver’s appointment.
  5. [37]
    The submissions contain many other allegations.
  6. [38]
    In my opinion the Tribunal does not have jurisdiction to remove the receivers and managers. Only a court as defined in the Corporations Act 2001 (Cth) could remove the receivers and managers or make appropriate orders for the provision of an indemnity and security for costs.
  7. [39]
    In view of the comments by French J that the life of a company is not ended by the appointment of receivers and managers I will stay the Application filed on 9 February 2023 until the matters are determined by a court or the receivers and managers are discharged. I reserve the issue of costs.

Footnotes

[1][2006] FCA 1163 at [18] (‘Lanepoint’).

[2][2011] 2 Qd R 565.

[3][2005] 2 Qd R 468.

Close

Editorial Notes

  • Published Case Name:

    Sunrise Creek Pty Ltd v Body Corporate for Glades Easthill South Community Titles Scheme 30074

  • Shortened Case Name:

    Sunrise Creek Pty Ltd v Body Corporate for Glades Easthill South Community Titles Scheme 30074

  • MNC:

    [2024] QCAT 362

  • Court:

    QCAT

  • Judge(s):

    Member King-Scott

  • Date:

    20 Aug 2024

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
ASIC v Lanepoint Enterprises Pty Ltd [2006] FCA 1163
2 citations
Jump To
Cite 1 - [2006] FCA 1163
Cite 2 - [2006] FCA 1163
Bidjara Aboriginal Housing & Land Company Ltd (Receiver & Manager appointed) v Aboriginal and Torres Strait Islander Commission[2005] 2 Qd R 468; [2005] QSC 123
2 citations
Jump To
Cite 1 - [2005] 2 Qd R 468
Cite 2 - [2005] 2 Qd R 468
Capital Globe Investments Pty Ltd v Parker Investments Australia Pty Ltd[2011] 2 Qd R 565; [2011] QSC 31
2 citations
Jump To
Cite 1 - [2011] 2 Qd R 565
Cite 2 - [2011] 2 Qd R 565
Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia [2001] FCA 173
1 citation
Jump To
Cite 1 - [2001] FCA 173
Deangrove Pty Ltd v Commonwealth Bank of Australia (2001) 108 FCR 77
1 citation
Jump To
Cite 1 - (2001) 108 FCR 77
George Barker (Transport) Ltd v Eynon [1973] 3 All ER 374
1 citation
Jump To
Cite 1 - [1973] 3 All ER 374
Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782
1 citation
Jump To
Cite 1 - [1969] 2 NSWR 782

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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