Surace v Rita Commisso Enterprises Pty Ltd
[2009] QDC 198
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- Unreported Judgment
- Surace v Rita Commisso Enterprises Pty Ltd[2009] QDC 198
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Surace v Rita Commisso Enterprises Pty Ltd[2009] QDC 198
Surace v Rita Commisso Enterprises Pty Ltd[2009] QDC 198
DISTRICT COURT OF QUEENSLAND
CITATION: | Surace v Rita Commisso Enterprises Pty Ltd & Anor [2009] QDC 198 |
PARTIES: | DOMINIC SURACE (Appellant) V RITA COMMISSO ENTERPRISES PTY LTD (First Respondent) And BODY CORPORATE FOR ACACIA LODGE HOSTEL COMMUNITY TITLES SCHEME 25755 |
FILE NO/S: | Southport 356 of 2007 |
DIVISION: | Appellate |
PROCEEDING: | Appeal |
ORIGINATING COURT: | Adjudicator under Body Corporate and Community Management Act 1997 (Qld) |
DELIVERED ON: | 7 July 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 26 September 2008; 26 May 2009 |
JUDGE: | Rackemann DCJ |
ORDER: | The appeal is allowed and the matter remitted to the specialist adjudicator to determine according to law |
CATCHWORDS: | REAL PROPERTY – STRATA TITLE – MANAGEMENT AND CONTROL – whether exclusive occupation authority validly granted Body Corporate and Community Management Act 1997 (Qld), s 289 Body Corporate and Community (Accommodation Module) Regulation 1997 (Qld) (repealed), s 76, s 77, s 89, s 144 |
COUNSEL: | Mr T Matthews for the Appellant Miss C Heyworth-Smith for the First Respondent |
SOLICITORS: | Stacks Gray Lawyers for the Appellant Hynes Lawyers for the First Respondent |
- [1]This appeal is against the decision of a specialist adjudicator as to whether the first respondent, as manager and letting agent for the Acacia Lodge Hostel, situated at Imperial Parade, Labrador, has exclusive occupation rights for the area of the kitchen and laundry, which are within the common property. The argument focussed more on the kitchen, since the applicant/first respondent has, when requested, permitted residents to use the laundry.
- [2]The appellant is the owner of three of the six lots within the relevant scheme. The first respondent owns the balance of the lots and is also the assignee of rights under a resident manager’s agreement (RMA) and a letting agreement (LA), each of which were entered into, on 21 August 1998, between the Body Corporate and the first respondent’s predecessor. Each of those agreements purport, on their face, to give a right of exclusive occupation for the common property, as hatched on an attached plan. That includes the kitchen and laundry, as well as other areas. There is a dispute as to whether exclusive occupation of those areas was validly granted.
- [3]Both the first respondent and its predecessor have, in fact, operated an on-site catering business from the kitchen in the common property. In August of 2005 the appellant, as he was entitled to, decided to engage an external letting agent, rather than continue to use the services of the first respondent. Thereafter, a dispute arose as to whether any of the appellant’s tenants would be permitted to use the kitchen to prepare their own meals. The matter was due to be debated at an extraordinary general meeting of the Body Corporate, at which the appellant was to move a motion that the first respondent be served with a Remedial Action Notice. This prompted the first respondent to successfully seek interim relief, preventing the Body Corporate from voting on that motion. Subsequently the specialist adjudicator made final orders including, relevantly, as follows:
“1.Clause 3 of the Letting Agreement dated 21 August 1998 and the attached plan and clause 5 of the Residential Management Agreement dated 21 August 1998 and the attached plan validly confer on the Applicant exclusive possession of the kitchen and hallway, office, laundry and store, linen room and car bay of the common property;
- The exclusive occupation authority referred to in:-
- (a)clause 3 of the Letting Agreement dated 21 August 1998 and the attached plan to that Agreement; and
- (b)clause 5 of the Resident Manager’s Agreement dated 21 August 1998 and the attached plan to that Agreement,
permits the Applicant to exclude lot owners and/or occupiers from the areas specified in the exclusive occupation authority namely the kitchen and hallway, office, laundry and store, linen room and car bay;
- The Body Corporate is prohibited by clause 45.5 of its By-laws from authorising anyone other than the Applicant to prepare meals for or do laundry for, the occupiers of any other lot owner;
- The Body Corporate is prohibited pursuant to s.276(2) and is thereby restrained from putting to lot owners for the purposes of a vote motion 4 of the Agenda contained in the Notice of Meeting sent to lot owners on 1 February for an Extraordinary General Meeting to be held at the office of the Body Corporate Manager, or such other venue as it may decide, on 23 February 2007 or on any subsequent or adjourned date of the meeting, and which Notice of Meeting is Exhibit “T” to the Application of the Applicant dated 6 February 2007;
…”
- [4]This appeal is pursuant to s 289 of the Body Corporate and Community Management Act 1997 (Qld) (BCCMA) and is limited to questions of law. The adjudicator’s orders were accompanied by a statement of reasons, as required by s 274(2)(b)(i) of the BCCMA. Counsel for the first respondent rightly conceded that a failure to give adequate reasons would be an error of law[1].
- [5]The specialist adjudicator, who was not bound by the rules of evidence, determined the matter on the papers, relying on all submissions, whether sworn or not, as the record and evidence in the proceeding. The adjudicator’s reasons dealt with a multiplicity of arguments, which were summarised in paragraph 15 of the reasons, not all of which were pursued on the hearing of this appeal[2].
- [6]The occupation of common property was regulated under the Body Corporate and Community (Accommodation Module) Regulation 1997 (Qld) (AM)[3]. Pursuant to the AM, a service contractor or letting agent could acquire rights to occupy part of the common property, for the purpose of the service contractor’s engagement or the letting agent’s authorisation, only under s 89 of the AM[4]. A service contractor is defined in the BCCMA as a person engaged by the Body Corporate, for at least one year, to supply services (other than administrative services) to the Body Corporate for the benefit of the common property or lots included in the scheme. A letting agent is defined to mean the person authorised by the Body Corporate to conduct a letting agent business for the scheme. The first respondent was both engaged as a service contractor under the RMA and authorised to be a letting agent under the LA.
- [7]Section 89 of the AM otherwise provided, relevantly, as follows:-
“…
- (2)The body corporate may include in the terms of the engagement of a person (also a “property occupier”) as a service contractor, authority (also an “occupation authority”) to occupy a particular part of the common property for particular purposes necessary to enable the property occupier to perform obligations under the property occupier’s engagement as a service contractor.
- (3)The body corporate may include in the terms of the authorisation of a person (also a “property occupier”) as a letting agent, authority (also an “occupation authority”) to occupy a particular part of the common property for particular purposes necessary to enable the property occupier to operate as a letting agent.
- (4)The body corporate may give an occupation authority only if the occupation of the part of the common property under the occupation authority would not interfere to an unreasonable extent with the use and enjoyment of a lot or the common property by an occupier of a lot.
- (5)…
- (c)may give the property occupier a right to exclusiveoccupation of the part of the common property the occupation authority relates to;
…”
- [8]There was no dispute that the Body Corporate had the power to grant, to a service contractor or letting agent, a right to exclusive occupation of a particular part of the common property for particular purposes necessary to enable the person to perform the obligations as a service contractor, or to operate the business of a letting agent. The dispute was as to whether the exclusive occupancy of the kitchen and laundry in particular, was granted for such purposes and whether the grant of an exclusive use occupation authority extending to those areas infringed s 89(4) in any event. Counsel for the first respondent conceded that s 89 was the only relevant source of power for the occupation authority[5].
- [9]It is apparent that the by-laws for the relevant scheme contemplated that a proprietor might be appointed as a resident manager and also be authorised to use its common property to provide on-site catering and letting services. By-Law 45 provided, in part, as follows (my underlining):
“45.3 The Body Corporate is empowered to appoint the proprietor of a resident manager’s unit (or any company of which the proprietor of a Resident Manager’s unit is a principal share holder):
45.3.1 The Resident Manager of so many of the lots and so much of the common property as it shall think fit; and
(a) to provide meals to residents of lots, the proprietors of which wish to avail themselves of that catering service; and
(b) to provide a letting and rent collection service to proprietors who wish to avail themselves of that letting service
Pursuant to a Resident Manager’s agreement in the form annexed to these by-laws or in any other form approved by Body Corporate.
...
45.5 The Body Corporate will not:
45.5.1 Allow any person or corporation other than the duly appointed Resident Manager to use any part of the Lots or Common Property specified in such Agreement;
45.5.2 Nor allow any person or corporation, other than the duly appointed Resident Manager, to provide from any part of the Lots or Common Property specified in such Agreement;
45.5.3 Directly or indirectly carry on, or be concerned in, nor allow any person or corporation in its employ to carry on, or be concerned in;
the business of the Resident Manager of the Lots and Common Property specified in the Resident Manager’s Agreement”.
- [10]By-law 45.3 is an empowering provision. The appellant contends that although the Body Corporate appointed a resident manager under the RMA and also authorised the manager to be a letting agent under the LA, it failed to also appoint the manager to conduct a catering business, as contemplated by by-law 45.3.1(a). That by-law makes no reference to laundry services.
- [11]The determination of whether an occupation authority had been validly granted under s 89 of the AM required the following questions to be answered:
- (i)Did the body corporate engage the assignor to the first respondent as a service contractor?
- (ii)Did the body corporate authorise the assignor to the first respondent as a letting agent?
- (iii)If yes to (i) or (ii), did the terms of the engagement or authorisation purport to give an occupation authority for a particular part of the common property?
- (iv)If yes to (iii), was the occupation authority for particular purposes necessary to enable the occupier to:
A.perform the obligations under the engagement of the occupier as a service contractor?; or
B.enable the occupier to operate as a letting agent?
- (v)If yes to (iv), would the occupation under the occupation authority interfere, to an unreasonable extent, with the use and enjoyment of a lot or the common property by an occupier of a lot?
- [12]The answer to the first three of those questions is “yes”. The issues are whether the adjudicator determined, or properly determined, the fourth and fifth of those questions, or whether he fell into appellable error.
- [13]In order properly to address the fourth question it is also necessary to answer the following further questions (the further questions):
- What are the obligations of the service contractor under the terms of the engagement?
- What is the business of a letting agent?
- What are the purposes for which the occupation authority has been granted?
- Are those purposes necessary to enable the service provider to perform its obligations or to enable the letting agent to conduct the business of a letting agent?
Those questions raise issues of both law and of fact.
- [14]The engagement of a service contractor is different from the authorisation of a letting agent. They are subject to different provisions of the AM. As the name suggests, a service contractor is engaged by the body corporate to supply certain services in return for payment. The engagement of a service contractor is void unless it complies with the requirements in s 76(2) of the AM[6]. The engagement must not be in the form of a by-law[7]. The requirements are that the engagement must[8]:
- (a)be in writing; and
- (b)state the term of the engagement; and
- (c)state the functions required or authorised to be carried out; and
- (d)state the basis on which payment for services is to be worked out.
- [15]The authorisation of a letting agent is quite different. Rather than an engagement, by the body corporate, to provide stated services for payment, it involves the authorisation of a person to carry on a business, namely the business of a letting agent, for those who choose to avail themselves of the services offered by that business. The requirements for such an authorisation are contained in s 77(2) of the AM and are simply that the authorisation be in writing and state the term of the authorisation.
- [16]Unsurprisingly, there is no requirement to state the functions of a letting agent. It is the BCCMA which defines the functions of a letting agent, as a person authorised by the body corporate to conduct a letting agent business for the scheme. That is, a “letting agent” for the purposes of s 89(3) of the AM is a “letting agent” as defined in the BCCMA[9]. The BCCMA also defines a letting agent business, as:
“the business of acting as the agent of owners of lots included in the scheme who choose to use the person’s services for securing, negotiating or enforcing (including collecting rents or tariffs for) leases or other occupancies of lots included in the scheme”.
- [17]Similarly, there is no requirement for the authorisation of a letting agent to state the basis on which payment will be worked out, since what is being authorised is the conduct of a business, rather than the engagement of a person by the body corporate to provide services in return for payment.
- [18]The answer to the first of the further questions, in paragraph 13 of the reasons, involves identifying the obligations of the service contractor in performing the functions stated in the terms of engagement. The answer to the second of the further questions is found in the meaning of letting agent and letting agent business, as provided for in the BCCMA. The next issue is whether the occupation authority, to the extent it included the kitchen and laundry areas, could be said to be for a particular purpose necessary to enable performance of the obligations under the terms of engagement as a service contractor or for a particular purpose necessary to enable the conduct of a letting agent business as defined by the BCCMA. If so, then the final question is whether the occupation under the occupation authority would contravene s 89(4).
- [19]The argument on the appeal focussed particularly on the following part of the reasons of the specialist adjudicator:
“…
- Mr Surace in his Final Submissions delivered 8 May 2007 contends that the purported granting of the exclusive occupation authority for the purposes of ‘catering’ and ‘laundry’ under each of the Agreements is void as an occupation authority can only be granted by the Body Corporate:-
- (a)if it is for a purpose specifically contained in the Agreements;
- (b)the engagement cannot be by way of a by-law;
- (c)there is no obligation, authorisation or engagement to provide laundry or catering services under the respective Agreements.
- The first of these alleged grounds for invalidity fails. The occupation authority is granted by clause 3 of the Letting Agreement “for the purposes necessary to enable the agent to perform the agent’s obligations under this agreement …”. A similar provision is contained in clause 5 of the Resident Manager’s Agreement. The exclusive occupation areas are directly related to the duties of the Manager and Letting Agent under the respective Agreements.
- The second submission of Mr Surace should be accepted in that he submits an engagement cannot be by way of a by-law. Section 76(3) of the Accommodation Module provides in those terms. However, the Applicant here does not rely upon a by-law. The Applicant relies upon an agreement between it and the Body Corporate. The evidence establishes that the Body Corporate had previously authorised the entry into those Agreements. The existence of each of those Agreements and the attached plan has nothing whatsoever to do with a by-law and is in no way dependent upon them for their operation or validity.
- The third submission is that the occupation authority is void as it can only be granted by the Body Corporate and there is no obligation or authorisation to provide laundry or catering services under the respective Agreements. With respect, that submission misses the point. The exclusive occupation areas under the Resident Manager’s Agreement are for the purpose necessary to enable the Manager to perform the Manager’s obligations under clauses 3 and 5 of the respective Agreements. That is far wider than the narrow basis on which Mr Surace relies on this submission by limiting matters to the laundry and catering services. Similarly, the exclusive occupation for the purposes of the Letting Agreement is to enable the Letting Agent to perform the Agent’s obligations under that Agreement. That is, the grant of the occupation licence is for a wide range of activities and is not limited to the carrying out of laundry or catering services as is submitted on behalf of Mr Surace. Laundry or catering services if not expressly authorised by each of the agreements with the Applicants are at least reasonably incidental to the activities of the Resident Manager and Letting Agent. It is also noted that under the By-laws, the Resident Manager is authorised by those By-laws, separately from the Agreements, to:-
(a)provide meals to residents of lots, the proprietors who wish to avail themselves of that catering service; and
(b)provide a letting and rent collection service to proprietors who wish to avail themselves of that letting service.
These activities are either expressly authorised by or are reasonably incidental to the By-laws and the duties under the respective Agreements.
- These activities of catering and also providing a letting service obviously envisage the use of catering and laundry facilities.
- Accordingly, the exclusive occupation authority under the Resident Manager’s Agreement and the Letting Agreement is not void for the reasons or the grounds as submitted on behalf of Mr Surace in the Final Submissions delivered 8 May 2007.”
- [20]In paragraphs 45 and 47 of his reasons the specialist adjudicator points out, correctly, that the RMA and LA do not state that exclusive occupation is granted to the kitchen area for the purposes of providing catering services or the laundry area for the purposes of providing laundry services. Rather, the kitchen and laundry form part of the greater common area (as cross-hatched on the plan annexed to the agreements) for which exclusive occupation is said to have been granted for the purposes necessary to enable performance of the obligations under the RMA and the operation of the letting agency. That begs the question however, as to whether the grant of exclusive occupation, in so far as it extended to the kitchen and laundry, could properly be said to have been granted for such purposes. The specialist adjudicator did not identify any particular activities (other than the conduct of laundry and catering businesses) for which the kitchen and laundry areas were to be used to enable performance of the service contractor’s obligations or to enable the operation of a letting agency. As the first respondent’s further written submissions acknowledged, if the occupation of a particular part of the common property for particular purposes is not necessary to enable either the service contractor to perform obligations under the engagement, or the letting agent to operate as a letting agent, then the body corporate did not have the authority to grant an occupation authority in respect to those areas[10].
- [21]In paragraphs 47 and 48 of his reasons the specialist adjudicator says that:
- Laundry or catering services are at least reasonably incidental to the activities of the resident manager and letting agent.
- The resident manager is authorised by the by-laws to provide a catering service and a letting and collection service, and those activities are either expressly authorised by, or are reasonably incidental, to the by-laws.
- The activities of providing a catering service and also providing a letting service envisage the use of catering and laundry facilities.
- [22]The specialist adjudicator’s reasons deal with the RMA and the LA together. It has already been observed that there is a marked difference between the engagement of a service contractor and the authorisation of a letting agent. The RMA is the agreement pursuant to which the respondent’s predecessor was engaged as a service contractor. That agreement states, as it was required to do, the functions which the service contractor was required or authorised to carry out. None require or authorise the conduct of on-site laundry or catering businesses. Counsel for the respondent ultimately did not place any reliance on the RMA as requiring or authorising laundry and catering services[11]. The specialist adjudicator fell into error to the extent that he relied upon the RMA in this respect.
- [23]The statement that “under the by-laws the resident manager is authorised by those by-laws, separately from the agreements, to …” provide catering services and a letting agency is wrong. The by-laws empower the Body Corporate to appoint someone to be the resident manager and also to provide a catering service and also to provide a letting and rent collection service. The question was whether the Body Corporate had validly done so (and if that supported a valid occupation authority). The by-law does not amount to an authorisation of a resident manager to conduct a catering service from the common property in the absence of a relevant engagement or appointment any more than it could have been said to have authorised the resident manager to conduct a letting business had there been no letting agreement. Further, s 76(3) of the AM provides that the engagement of a service contractor must not be in the form of a by-law.
- [24]Counsel for the first respondent properly and candidly drew attention to the fact that the introductory part of by-law 45.3 appears at the foot of the page preceding that on which 45.3.1 appears, suggesting that the specialist adjudicator might have relied on the latter, without regard to the former[12]. Whatever be the explanation, the specialist adjudicator erred in this respect.
- [25]The specialist adjudicator’s conclusion, that the provision of meals and the operation of a letting agency are “reasonably incidental to the by-laws” is, with respect, troubling. Those activities are not “reasonably incidental” to the by-laws. They are activities which are referred to in them. In any event, the question of whether the activities are “reasonably incidental to the by-laws” is not relevant. The specialist adjudicator also erred in this respect.
- [26]For those reasons, the specialist adjudicator’s reliance on the RMA and the by-laws was misplaced. The focus of the argument on the appeal was whether his decision could be supported by reference to the letting agency.
- [27]The relevant question, in this regard, is whether the occupation authority, to the extent it extended to the kitchen and laundry, could be said to have been granted for particular purposes necessary to enable the occupier to operate the business of acting as the agent of those owners of lots in the scheme who choose to use the person’s services for securing, negotiating or enforcing leases or other occupancies of lots included in the scheme. That is not a question which was specifically posed or answered in the specialist adjudicator’s reasons. Indeed it was specifically addressed in the submissions before him.
- [28]Counsel for the first respondent contended that positive findings on the relevant question are to be found in paragraphs 45 and 47 of the reasons where it was said:
“45 …
The exclusive occupation areas are directly related to the duties of the Manager and Letting Agent under the respective Agreements.”
“47 …
The exclusive occupation areas under the Resident Manager’s Agreement are for the purpose necessary to enable the Manager to perform the Manager’s obligations under clauses 3 and 5 of the respective Agreements. That is far wider than the narrow basis on which Mr Surace relies on this submission by limiting matters to the laundry and catering services. Similarly, the exclusive occupation for the purposes of the Letting Agreement is to enable the Letting Agent to perform the Agent’s obligations under that Agreement….”
- [29]The passage quoted from paragraph 45 immediately follows reference to clause 3 of the LA and clause 5 of the RMA. Similarly, the passages for paragraph 47 also refer to those clauses. They are the clauses which, in terms, state that the occupation authorities are granted for the “purpose necessary” to enable performance under the agreements.
- [30]Read in context, the passages relied on simply draw on the words of these clauses. The passages are not reasoned findings of fact on the relevant question. The reasons do not deal with the content of the obligations under the RMA or what is involved in the conduct of the business of a letting agent or how occupancy of the laundry or kitchen could properly be said to be for particular purposes necessary to enable performance of the obligations under the RMA or the conduct of a letting agent business. To the extent they are findings, they are not supported by adequate reasons.
- [31]The specialist adjudicator also said that “these activities of catering and also providing a letting agency obviously envisage the use of catering and laundry facilities”. That was however, said in paragraph 48 of the reasons, in the context of the specialist adjudicator’s misplaced reliance on the by laws. It is not a considered or reasoned finding on the relevant question.
- [32]Counsel for the respondent referred to paragraph 7 as the source of reasons for a positive finding on the relevant question. In that paragraph the specialist adjudicator said:
“…
Apparently, the service of letting of lots in this scheme has included the rental of units for people of old age or on invalid pensions who need additional living assistance such as catering, assistance with meals and related cleaning services. It appears to be accepted by the parties that this is the intention of the letting service provided in this scheme. The Applicant contends to that effect.”
- [33]In that regard however:
- (a)the adjudicator did not go so far as to find that the conduct of an on-site catering and laundry business was necessary in order to enable the occupier to operate as a letting agent as defined in the BCCMA;
- (b)more specifically, the conduct of a letting agent business, as defined, relates to the provision of services for “securing, negotiating or enforcing” leases or other occupancies. The specialist adjudicator did not find that the conduct of an on-site catering and laundry businesses was necessary in order to enable the occupier to conduct the business of securing, negotiation or enforcing leases or other occupancies;
- (c)that the letting agent has, in fact, also conducted an on-site catering and laundry service, in reliance upon the occupation authority, does answer the relevant question. It is the validity of the occupation authority at the time it was granted, which is in issue;
- (d)the statement that “it appears to be accepted by the parties” that the letting of lots has included the rental of units for people who need additional living assistance, seems to be wrong. The assertion to that effect, in paragraph 12 of the application, was denied in paragraph 3 of the submissions in reply. My attention was not directed to any part of the record where the assertion had been accepted. It was common ground that the scheme offers rental units for people on old age or on invalid pensions or an equivalent benefit, but it does not necessarily follow that such person require additional living assistance, by way of catering and laundry services. That was one of the points made in the submissions in reply. I am conscious however, that this appeal is limited to questions of law;
- (e)it might perhaps be that the parties to the agreements contemplated also entering into an agreement to authorise the manager to conduct a catering business, as contemplated by the by-laws, but that does not mean that the manager was in fact so authorised, that the conduct of a catering service became part of the business of the occupier as a letting agent or that such an authorisation would have supported a valid occupation authority under s 89 of the AM;
- (f)even if the letting service includes letting units to people in need of assistance, it does not necessarily follow that the provision of that assistance, by the conduct of a laundry and catering business, is something which is necessary to be done by the letting agent in order to conduct the business of securing, negotiating or enforcing leases or other tenancies. The specialist adjudicator did not find that it was necessary for that purpose. Catering and laundry services, if required to attract tenants to the particular kind of facility, might, for example, be provided by others or even by the person who is also the letting agent, but as part of some other business.
- [34]The specialist adjudicator said that laundry or catering services, if not expressly authorised by each of the agreements with the appellants are at least reasonably incidental to the activities of the resident manager and letting agent, but:
- (a)the reliance on the RMA and the activities of a resident manager are, for the reasons already given, misplaced;
- (b)it is unclear whether the specialist adjudicator would have made the same finding in reliance upon the letting agency alone;
- (c)the LA contained no express authorisation of laundry or catering services;
- (d)in any event, it is the meaning of letting agent as defined in the BCCMA which is relevant for the purposes of s 89(3) of the AM;
- (e)to say that such activities are “reasonably incidental” does not answer the relevant question, as to whether the occupation authority, to the extent it extended to the areas in dispute, was for particular purposes “necessary” to enable the occupier to operate as a letting agent.
- [35]While acknowledging that it is the statutory meaning of a letting agent which is relevant for s 89(3) of the AM, counsel for the first respondent submitted that the LA could also be characterised as, in part, an engagement of a service contractor, for the purposes of supporting an occupation authority pursuant to s 89(2) of the AM. It was submitted that:
- (i)the fact that the LA is called a “letting agreement” does not prevent it from also being an agreement to engage a service contractor;
- (ii)clause 2(a) of the LA provides that the agent is entitled to carry on the business of a real estate agent for the letting of lots with the scheme “together with all associated services commonly rendered in connection with such an agency”;
- (iii)to the extent that the “associated services” went beyond the scope of a letting agent business as defined in the BCCMA, the agreement could be characterised as the engagement of a service provider;
- (iv)the associated services included catering and laundry services;
- (v)the authorisation of the agent to conduct an on-site catering and laundry service could also be an implied term, as something necessary to give business efficacy to the agreement, having regard to the fact that the exclusive occupation authority purported to extend to the kitchen and laundry.
- [36]It has already been observed that the engagement of a service contractor is quite different from the authorisation of a letting agent, and is subject to different requirements. The LA is plainly an authorisation of a person to be a letting agent and it complies with the requirements of s 77 of the AM in relation to the form of authorisation.
- [37]It may be possible to draw a single agreement such that it constitutes both the engagement of a service contractor and the authorisation of a letting agent, but the LA does not do that. The LA does not engage a person to carry out stated functions in return for payment on a stated basis. In that regard:
- (a)unlike the RMA the LA is not an engagement to supply services to the body corporate. It is the authorisation of a person to carry on the business of letting lots on behalf of those owners of lots who choose to use that service;
- (b)the “associated services” are those commonly rendered in connection with such a business. There is no separate engagement of the letting agent to supply those services to the body corporate or a service contractor;
- (c)while there was evidence as to what services were provided by the manager and letting agent after execution of the agreements:
- (i)“associated services” is not a reference to those services which might subsequently have been provided. The content of those services would depend upon what was “commonly rendered” by such an agency as at the time the agreement was entered into;
- (ii)the “associated services” are not simply those which are intended, expected or associated with hostel facilities of this kind (if catering and laundry services fall within that description), but rather those which are commonly rendered in connection with the operation of a real estate agency for the letting of lots (such an agency);
- (iii)my attention was not directed to any evidence, submission or finding as to what, at the time, was commonly rendered in connection with such an agency;
- (d)unlike the RMA, the LA does not “state the basis on which payment for the … service contractors services is to be worked out”, as would be required by s 76(2)(d) of the AM. That reflects its character as the authorisation of a letting agent, rather than the engagement of a service contractor. I do not accept that the reference in the LA to the person carrying on the “business” of a real estate agency is a statement of the basis on which payment is to be worked out;
- (e)as to the suggested implied term;
- (i)the specialist adjudicator did not imply a term into the LA;
- (ii)that the extent of the occupation authority in each of the agreements might exceed that which is necessary does not dictate the implication of a term to the effect that the LA, which is otherwise relevantly unambiguous, is also an agreement of the kind referred to in s 45.3.1(a) of the by-laws;
- (iii)in any event, to the extent that the implied term is said to give rise to the engagement of the letting agent as a service contractor, the engagement would be void, for failure to comply with the requirement in s 76(2)(c) of the AM (as well as s 76(2)(d)) for the functions of the service contractor to be stated in the written engagement. That is not to say that there can never be terms which are implied in a service contractor engagement, but the functions of the service contractor must be stated, not implied[13].
- [38]The specialist adjudicator’s conclusion that the exclusive occupation authority was valid, including with respect to the kitchen and laundry, was affected by relevant errors of law. In particular, the specialist adjudicator erred in law by:
placing reliance upon the RMA;
concluding that laundry and catering services were separately authorised by, or were reasonably incidental to, the by-laws;
failing to address, or properly to address in his reasons, whether occupation of the kitchen and laundry, could properly be said to be for purposes which fall within the description of particular purposes necessary to enable the occupier to operate as a letting agent as defined by the BCCMA.
- [39]The specialist adjudicator went on to dismiss the appellant’s further contention that the grant of an exclusive use occupancy authority over the kitchen and laundry areas constituted, in any event, an interference, to an unreasonable extent, with the use and enjoyment of a lot or the common property, contrary to s 89(4) of the AM.
- [40]What constitutes an “interference to an unreasonable extent” is a question of fact. His conclusion was at least open on the assumptions he made. The conclusion was however, affected by the specialist adjudicator’s assumption that, as a result of the first respondent’s exclusive occupation of the kitchen and laundry, occupiers would be provided with the choice between availing themselves of on-site services or making other arrangements. The challenges to that assumption are dealt with earlier in these reasons.
- [41]The appeal will be allowed and the specialist adjudicator’s decision set aside. I was invited by counsel for the appellant to make declarations to the effect that the occupation authority was not validly granted. I accept however, that such a conclusion also involves questions of fact. While there may be a strong case to suggest that the material before the specialist arbitrator fell short of establishing that the occupation authority, to the extent it included the laundry and kitchen, was for particular purposes necessary to enable performance of the obligations of the occupier as a service contractor or to enable the occupier to operate as a letting agent, that was not properly addressed at first instance. It is something which the specialist adjudicator might see fit to permit further evidence and submissions about. I will remit the matter to the specialist adjudicator to determine according to law.
Footnotes
[1] T1-28 from 26/05/2009.
[2] The regrettable delay between the initial hearing on 26 September 2008 and the further hearing on 26 May 2009 was due in part, to my extended sick leave.
[3] That module has now been superseded, but was the module in effect at all material times.
[4] Section 89(7) of the BCCMA.
[5] T1-5 from 26/05/2009.
[6] Section 76(1) of the AM.
[7] Section 76(3) of the AM.
[8] Section 76(2) of the AM.
[9] Counsel for the first respondent conceded as much – see T1-6 from 26/05/2009.
[10] See paras 3 or 4 of the first respondent’s further submissions.
[11] T1-19 from 26/05/2009.
[12] T1-26 from 26/05/2009.
[13] It may be noted that s 144 of the AM requires the body corporate to keep a register of each engagement, including a statement of the duties the contractor is required to perform.