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CITE

Notable Unreported Decision

Henderson v The Body Corporate for Merrimac Heights[2011] QSC 336McMurdo J
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Henderson v The Body Corporate for Merrimac Heights[2011] QSC 336

SUPREME COURT OF QUEENSLAND

CITATION:	Henderson & Anor v The Body Corporate for Merrimac Heights [2011] QSC 336
PARTIES:	PETER GARTH HENDERSON AND KEIREN DEBORAH HENDERSON AS TRUSTEES FOR THE HENDERSON FAMILY TRUST AND ROBYN DAVIES AS TRUSTEE FOR THE PEARL FAMILY TRUST (plaintiffs) v THE BODY CORPORATE FOR MERRIMAC HEIGHTS CTS 19563 (defendant)
FILE NOS:	BS 1792 of 2010 and BS 14479 of 2009
DIVISION:	Trial Division
PROCEEDING:	Claims
ORIGINATING COURT:	Supreme Court of Queensland
DELIVERED ON:	11 November 2011
DELIVERED AT:	Brisbane
HEARING DATE:	20-23 September 2010, 30-31 May, 1, 3 June and 21 October 2011
JUDGE:	McMurdo J
ORDER:	It is declared that the document described as the Landscape Maintenance Agreement, originally made in writing and dated 26 October 2005, is valid and enforceable as a contract between the plaintiffs and the defendant for a term expiring on 14 April 2022. It is declared that the document described as a Caretaking Agreement, originally made in writing and dated 24 October 2001, is valid and enforceable as a contract between the plaintiffs and the defendant for a term expiring on 14 April 2022. Judgment for the plaintiffs against the defendant in the sum of $59,200.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – where the defendant is the body corporate of a housing complex subject to a community titles scheme – where the defendant entered into a caretaking agreement and a landscape maintenance agreement with other parties – where the agreements were assigned to the plaintiffs and their duration extended until 14 April 2022 – whether the plaintiffs breached or repudiated the agreements – whether each agreement is enforceable against the defendant – whether the plaintiffs should be awarded damages for breach of contract for their lost profits from the performance of the landscape maintenance agreement CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – DISCHARGE BY AGREEMENT – GENERALLY – whether the landscape maintenance agreement was terminated by the agreement of the parties REAL PROPERTY – STRATA AND RELATED TITLES – MANAGEMENT AND CONTROL – BODY CORPORATE: POWERS, DUTIES AND LIABILITIES – GENERALLY – whether the landscape maintenance agreement was made beyond the defendant’s powers as a body corporate – whether it is beyond the power of a body corporate to supply, or engage another person to supply, services for the benefit of owners and occupiers of lots without having secured the recoverability of the costs of the provision of that service by having made an agreement with the relevant lot owners PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – ATTEMPT TO OUST JURISDICTION OF COURT – where the parties made an adjudication application to QCAT in relation to the dispute the subject of proceedings BS 14479/09 which was dismissed by the Commissioner – where the dispute the subject of proceedings BS 1792/10 was transferred by the President of QCAT to the Supreme Court – where the dispute the subject of proceedings BS 1792/10 was a complex dispute within the meaning of Schedule 6 of the Body Corporate and Community Management Act 1997 (Qld) – where s 229(2) of the Act provided that the only remedy for a complex dispute is its resolution by an order of a specialist adjudicator under Chapter 6 or an order of QCAT exercising the Tribunal’s original jurisdiction under the QCAT Act (or an order on appeal from the adjudicator or the Tribunal) – whether the Supreme Court has jurisdiction in relation to proceedings BS 1792/10 Body Corporate and Community Management Act 1997 (Qld), s 149B, s 158, s 229 Body Corporate and Community Management (Accommodation Module) Regulation (Qld) 1997, s 118 Body Corporate and Community Management (Accommodation Module) Regulation (Qld) 2008, s 163, s 167, s 168, s 169 Building Units and Group Titles Act 1980 (Qld), s 37, s 38 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 52 Fencott v Muller (1983) 152 CLR 570, applied Fitzgerald v Masters (1956) 95 CLR 420, cited Humphries v Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597, distinguished James v Body Corporate Aarons Community Titles Scheme 11476 [2002] QSC 386, considered James v Body Corporate for Aarons Community Titles Scheme 11476 [2004] 1 Qd R 386, considered Marminta Pty Ltd v French [2003] QCA 541, cited Re Wakim; Ex parte McNally (1999) 198 CLR 511, applied Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261, cited Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279, cited
COUNSEL:	20-23 September 2010: CJ Carrigan with PK O'Higgins for the plaintiffs D Hogan-Doran with PA Ahern for the defendant 30-31 May and 1 and 3 June 2011: JA Griffin QC with CJ Carrigan for the plaintiffs D Hogan-Doran with PA Ahern for the defendant 21 October 2011: JA Griffin QC with CJ Carrigan for the plaintiffs PA Ahern for the defendant
SOLICITORS:	Short Punch & Greatorix for the plaintiffs Teys Lawyers for the defendant

At Merrimac on the Gold Coast there is a housing complex consisting of 150 dwellings situated on about six hectares of land.^[1] It is the subject of a community titles scheme and the defendant is the body corporate.

The defendant entered into two agreements, originally made with other parties, but which were assigned to the plaintiffs in 2007. Each agreement was in writing and was varied so that it would expire in 2022. One agreement, described as a Caretaking Agreement, was for the provision of services described as “caretaking, repair, maintenance, administration, control, use and enjoyment of the improvements and other property within the complex”.^[2] It also permitted the managers to conduct a letting agency from within the complex. The other agreement, described as a Landscape Maintenance Agreement (‘LMA’), was for the provision of gardening services.^[3] Each was assignable.

Immediately prior to the assignments to the plaintiffs, the Caretaking Agreement was to have expired in October 2011 and the LMA was to have expired in October 2008. As was ultimately conceded by the defendant, the agreed duration of each agreement was extended coincidentally with the assignment to the plaintiffs. Each agreement became one which was to exist until 14 April 2022.^[4] The agreements were valuable, the plaintiffs paying their predecessors a price of $1,280,000 for the assignments of the agreements as extended.^[5]

The issues here are whether each agreement is enforceable against the defendant. It says that it has terminated, or is entitled to terminate, the Caretaking Agreement for alleged breaches or a repudiation of that contract. To a large extent, its complaints about the plaintiffs’ performance as caretakers are related to its complaints about the LMA. The defendant claims to have also terminated the LMA for alleged breaches or repudiation by the plaintiffs. Alternatively, it argues that the LMA was terminated by the agreement of the parties, with effect from October 2009. And it contends, in any event, that the LMA was made beyond its powers as a body corporate under the relevant legislation so that it has never been of any effect.

The plaintiffs claim that each agreement is enforceable and they seek declarations to that effect. They continue to act under the Caretaking Agreement with the benefit of an injunction, granted with the defendant’s consent, by the Queensland Civil and Administrative Tribunal (‘QCAT’), which restrains the defendant from terminating or attempting to terminate the Caretaking Agreement pending the outcome of proceedings commenced in that jurisdiction. Those proceedings were transferred to this Court by an order of the President of QCAT and became BS 1792 of 2010. However, as I will discuss, this Court’s jurisdiction to determine the dispute the subject of those transferred proceedings is not clear.

As for the LMA, the plaintiffs were replaced by other gardeners from October 2009. They intend to resume their duties under the LMA if they are successful here. They claim damages for breach of contract for their lost profits from the performance of the LMA since October 2009 until they are able to resume its performance. Their claims in respect of the LMA are the subject of BS 14479 of 2009, for which this Court does have jurisdiction.

The LMA case

The LMA, dated 26 October 2005, was originally made by the defendant with Berry Management Pty Ltd.^[6] The services to be supplied included the mowing of “[a]ll grass areas including front and back yards of units, common ground, back paddock and road frontage.”^[7] At least in that way, the LMA required work to be done not only upon common property but also upon individual lots. The agreed consideration was $35,000 per year subject to increases according to movements in “the index”, an expression which was not defined but which was apparently intended to refer to the Consumer Price Index.^[8]

In January 2007 the plaintiffs contracted with Berry Management Pty Ltd to purchase its rights according to the LMA and the Caretaking Agreement.^[9] The contract of sale was conditional upon the defendant agreeing to extend the Caretaking Agreement for at least 15 years.^[10]

On 28 February 2007 there was an extraordinary general meeting of the defendant at which it was resolved to agree to the variation in the duration of both contracts to April 2022 and, in effect, to the assignment of the contracts as varied to the plaintiffs.^[11] On the same day the plaintiffs and the defendant executed a deed, by which the duration of the two agreements was extended to 14 April 2022.^[12]

A further deed was executed on 27 March 2007, described as a deed of assignment of the Caretaking Agreement and the LMA.^[13] The parties to it were the plaintiffs, the defendant and Berry Management Pty Ltd. The evident purpose of this deed was to record the consent of the defendant to the assignments to the plaintiffs and to have them covenant to perform the agreements. Within this deed, the duration of the LMA was recorded as being the (originally agreed) term to expire on 31 October 2008 and the duration of the Caretaking Agreement was recorded as expiring on 16 October 2011 (with an option for a further five years).^[14]

As is now accepted by the defendant, this deed of assignment wrongly recorded the duration of each of the contracts being assigned. It was not until late in the trial that the defendant made that concession, until then maintaining that the duration of the agreements had not been extended. Those extensions had been the subject of the deed dated 28 February 2007. But the defendant had alleged that this deed had not varied the LMA and Caretaking Agreement because Berry Management Pty Ltd was not a party to it. The defendant’s ultimate concession that each agreement was extended to 2022 was rightly made.

In January 2009 the defendant received legal advice that the LMA may be invalid as having been made by the defendant ultra vires. The defendant’s solicitors advised the defendant’s committee that:

“The body corporate may only engage the gardener to perform services which it has a power or duty to carry out. The requirement for the gardener to mow the front and back yards of units would be invalid because the body corporate does not have the power to maintain those areas.

The body corporate may engage a gardener to provide services to lot owners (eg mowing the front and back yards of their lots) provided the body corporate has an agreement with each lot owner who requires the service. The agreement is made pursuant to s 167 of the Accommodation Module.

If it is not possible to separate the remuneration for services to lot owners and services to the body corporate, then the landscape maintenance agreement may be invalid in its entirety.”^[15]

As I have said, there are other issues about the performance of this agreement which are relevant to the defendant’s alternative grounds for denying that the LMA is now enforceable. But it is convenient at this point to consider the validity of the contract.

The LMA – was it valid?

The plaintiffs say that the LMA was validly made pursuant to s 158 of the Body Corporate and Community Management Act 1997 (Qld) (‘the Act’) and what is now s 167 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) (‘the 2008 Accommodation Module’).

At all relevant times, s 158 has provided as follows:

“158Supply of services by body corporate

The body corporate for a community titles scheme may supply, or engage another person to supply, services for the benefit of owners and occupiers of lots in the way, and to the extent, authorised under the regulation module applying to the scheme.”

As at October 2005, the regulation module applying to the scheme was the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Qld), of which s 118 was in these terms:

“118Supply of services by body corporate – Act, s 158 [SM, s 119]

(1)The body corporate may supply, or engage another person to supply, utility services and other services for the benefit of owners and occupiers of lots, if the services consist of 1 or more of the following –

(a)maintenance services, which may include cleaning, repair, painting, pest prevention or extermination or mowing;

(b)communication services, which may include the installation and supply of telephone, intercom, computer data or television;

(c)domestic services, which may include electricity, gas, water, garbage removal, airconditioning or heating.

Example –

The body corporate might engage a corporation to supply PABX services for the benefit of the owners and occupiers of lots.

(2)The body corporate may, by agreement with a person for whom services are supplied, charge for the services (including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services), but only to the extent necessary for reimbursing the body corporate for supplying the services.

(3)In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate (other than body corporate administrative costs) for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service.”

As and from 30 August 2008, this regulation was remade, in relevantly identical terms, as s 167 of the 2008 Accommodation Module.

As to s 158 of the Act, the defendant’s argument accepts that the services provided under the LMA are services of a kind which may be provided pursuant to s 167 of the 2008 Accommodation Module. As to the regulation, the defendant says that it must be interpreted in the light of other provisions of the same regulation module, particularly what are now s 168 and s 169 of the 2008 Accommodation Module. Section 168 requires an occupier of a lot to keep those parts of the lot which are readily observable from another lot in a clean and tidy condition and to maintain the lot in good condition save for a part of the lot which the body corporate is required to maintain. Section 169 applies if the owner or occupier of a lot does not do work which it is obliged to do under, for example, s 168. In that event the body corporate may do the work and recover the reasonable cost of it from the owner. The defendant’s argument also refers to s 163 of the Act, by which a person authorised by the body corporate may enter a lot in order to, amongst other things, carry out work which the body corporate is authorised or required to carry out.

In the context of those provisions, the defendant submits that it is beyond the power of the body corporate to supply, or in this case engage another person to supply, the services of lawn mowing to areas within lots without having secured the recoverability of the costs of the provision of that service by having made an agreement with the relevant lot owners. This is said to result from the evident intent of ss 167-169 which is to employ a “user pays” principle. There was no agreement between the defendant and any lot owner, who required the service of lawn mowing and gardening upon his or her lot, for that work to be done.

Section 167(2) is in permissive terms. It is not in terms which qualify the power under s 167(1). In other words, it does not require the body corporate to have an existing agreement with the user of the service as a condition of the exercise of the power to supply that service or to engage another person to supply it. Yet that is the defendant’s argument as to the effect of s 167 as a whole. The defendant argues that “a body corporate cannot supply services without ensuring (as far as practicable) that the costs are recovered from the users of the service, and it cannot ensure that the costs are recovered from a user of the service without an agreement with that user. Accordingly, a body corporate cannot supply services without some sort of agreement in place”.^[16]

The defendant’s argument suggests that the legislative intention was to limit the powers of a body corporate, in a similar way to that found to exist under a previous statute in Humphries v Proprietors of “Surfers Palms North” Group Titles Plan 1955.^[17] The provision there considered by the High Court was s 37 of the Building Units and Group Titles Act 1980 (Qld). It empowered a body corporate to manage and maintain the common property for the benefit of proprietors. Section 37(2)(a) empowered a body corporate to “enter into an agreement, upon such terms and conditions (including terms for the payment of consideration) as may be agreed upon by the parties thereto, with a proprietor or occupier of a lot for the provision of amenities or services by it to the lot or to the proprietor or occupier thereof”. By s 38(3), a body corporate was prohibited from disbursing its funds other than for the purpose of carrying out its powers and duties under the Act. The body corporate there entered into a management agreement, under which one of the manager’s duties was to conduct a letting agency for such of the lot owners who required the service. It was held that the body corporate had no power to enter into the contract to procure the provision of that letting service and that as the letting service provision was not severable from the remainder of the agreement, the contract was wholly void. As Brennan and Toohey JJ said, the agreement which a body corporate was expressly authorised to make was one with a proprietor or occupier of a lot, rather than one between the body corporate and a person who was to provide lot owners or occupiers with a service.^[18] Their Honours said:

“The body corporate did not enter into an agreement with the proprietor or occupier of any lot to provide the services of a letting agency for the benefit of that proprietor or occupier. Had it done so, it would have had authority to perform that agreement by employing an agent or servant (such as the appellants) to provide the services contracted for … . However, if an agreement had been made with particular proprietors or occupiers, it would not have been a proper exercise of the body corporate’s powers to require the funds raised by contribution from all proprietors to bear the cost of provision of the service for particular proprietors or occupiers. In any event, cl. 2(r) of the management agreement was not made in implementation of any agreement made under s. 37(2)(a) between the body corporate and an individual lot proprietor or occupier. None of the other powers conferred by s. 37(2) authorizes the making of an agreement for the conduct of the letting agency for the benefit of those proprietors of individual lots who might require such a service.”^[19]

Section 167 of the 2008 Accommodation Module differs from the provision considered in Humphries. In Humphries, the power of a body corporate to engage a person to provide services existed only by an implication, as incidental to the express power to agree with persons to whom the services were to be provided. That provision was comparable to the present s 167(2). But s 167(1) expressly authorises a body corporate to engage the service provider and, as I have said, is in terms of a distinct authority from that conferred by s 167(2). This case is not governed by Humphries.

The defendant’s argument, if accepted, would cause considerable difficulty in practice. The validity of an agreement between a body corporate and the service provider would depend, in many cases, upon facts and circumstances of which the latter could be unaware. In particular, it would depend upon whether the body corporate had made an agreement, with each and every relevant owner, upon terms by which the costs of servicing a certain lot would be assured of recovery from its owner.

The body corporate’s duty under s 167(3) is expressed in relative terms: it is to ensure “to the greatest practicable extent” that the user pays. In many instances, there would be a need for estimation and approximation in assessing the costs of providing the service to users. That would provide a potential for controversy as to whether the amount being charged was as much as the total cost of supplying the service. In turn, this makes it less likely that the validity of the engagement of the service provider should depend upon the merits within that controversy.

The defendant’s argument is that the power to engage another person to supply the services is conditional upon the existence, at that point in time, of an agreement with the relevant lot owners. Yet there could be a significant difference in time between the engagement of the service provider and the provision of the relevant services. For example, there may be an engagement for a person to provide services only once, but not immediately. Upon the defendant’s argument it would not matter that, after the engagement of the service provider, the body corporate made an agreement with the lot owner but before the service was supplied and the cost was incurred by the body corporate: the defendant says that the agreement with the lot owner must be in place before the agreement with the service provider is made.

The engagement of the service provider would often be upon terms that the service would be supplied continuously or regularly over a period of time (as here). During that period, the identity of the users of the service might change. For example, lots might be sold. The consequences of the defendant’s interpretation of s 167 in those circumstances are far from clear. On one view, the engagement of the contractor would remain valid, if at the time of its engagement, agreements had been in place with the then lot owners. On another view, the continuing engagement to service all lots would be unlawful unless and until the body corporate agreed with each new owner under s 167(2), an impracticable situation in many cases. This potential for invalidity of the contractor’s engagement is but one example of the difficulties for a contractor in having the existence of its business subject to circumstances beyond his control or knowledge.

The duty imposed by s 167(3) is not so much to make the cost recoverable, but to ensure (to the greatest practicable extent) that the total cost is recovered from users. It is a duty which requires more of the body corporate than the making of an agreement with the relevant owners. It would involve the ongoing task of getting in the money from them. Much of what a body corporate is bound to do pursuant to s 167(3) would necessarily occur after the supply of the services. This makes it yet more difficult to qualify the exercise of the power under s 167(1) by a precondition of the performance of the duty under s 167(3).

To accept the plaintiffs’ argument is not to deprive s 167(3) of any effect. The duty of the body corporate under s 167(3) would still exist, although the engagement of a person under s 167(1) has occurred in a circumstance of non-compliance with that duty. It could be said that the likelihood of full compliance with the duty could be enhanced by accepting the interpretation of s 167 for which the defendant contends. But against that, there could be many circumstances in which the interests of lot owners could be disadvantaged by placing this impediment upon the body corporate. As I have endeavoured to stress, there is the commercial impracticality of making the engagement of the service provider susceptible to challenge by factual contests about of whether the body corporate had gone far enough to ensure that its costs were recovered. And most importantly, the defendant’s argument is at odds with the terms of s 167, under which s 167(2) permits, rather than requires, an agreement with the users of the service where the body corporate acts under s 167(1).

Accordingly, I am unpersuaded that the LMA was made beyond the authority given to the body corporate under what was then s 118 of the repealed module (now s 167 of the 2008 Accommodation Module).

The history

Before going to the other arguments about the LMA, I will set out the relevant history, much of which is relevant also to the Caretaking Agreement.

The advice from the defendant’s lawyers, as to the potential validity of the LMA, was tabled at a meeting of the committee of the defendant on 6 February 2009.^[20] Two of the plaintiffs, Mr and Mrs Henderson, were present. It was in that context (the possibility that the LMA was ineffective) that the plaintiffs were then exploring an alternative arrangement. However, the plaintiffs were not motivated only by the legal question of the validity of the agreement. They were interested in an alternative arrangement which would be more profitable. In those circumstances, the plaintiff Mrs Henderson wrote to the committee on 26 February 2009, suggesting in general terms that there be some change to the arrangements for mowing and gardening services.^[21]

On 21 March 2009, Mrs Henderson again wrote to the committee in terms which included the following:

“Following many hours of careful deliberation and lengthy consultation with accounting & legal firms we have now compiled an account on the entire complex to enable an accurate assessment on its maintenance.

Merrimac Heights total size – 14.683 acres (59,420m²)

Area of Common Property – 6.178 acres (25,001m²)

Contributions through levies can only cover Common Property, by law. Any Body Corporate responsibility on private property must be charged to the owner separately. It must be clearly defined in the By-Laws. This is the only legal way to perform such activities.

While our [LMA] outlines mowing & whipper snipping all grass areas … it has not taken into account the many changes since this contract was implemented: including higher than average rainfall & temperatures. Please also consider that the original development partitioned back yards to hold the clothes line only. There are now fenced/gated yards to 75 units, hindering physical & legal access to 99 units. …

Our proposal to the Body Corporate = $10 + GST/lot/week on top of existing remuneration. …

The existing remuneration should be carried as we will continue to perform the basic duties + continuing weed control, which is not currently contracted.

We hope this proposal will meet your expectation.”^[22]

The defendant pleads that each of these letters constituted conduct by way of an abandonment of the LMA. This letter of 21 March is also relied upon as a repudiation. But neither letter evinced an intention to abandon the contract or to refuse to perform it. Each suggested that the parties make a different agreement and the second letter made a more specific proposal to that end.

On 3 July 2009, the committee considered an opinion from its solicitors that the LMA was not enforceable. The minutes of its meeting also recorded that it had sought advice from a consultant, Mr Turner, to “report on the current remuneration of the gardening agreement” so as to be presented to owners at the upcoming annual general meeting.^[23] Mr and Mrs Henderson were present at this meeting of the committee.

On 31 July 2009, the plaintiffs made a written request, addressed to the secretary of the defendant, for a motion to be included in the agenda for the AGM. The motion was in these terms:

“That in the event a resolution is not reached on review of the contract (including remuneration) for Henderson & Pearl Family Trusts [the plaintiffs] the Body Corporate shall increase the current Landscape remuneration to $7.10 cents per lot per week and continue the CPI increases that exist for duties defined ONLY to common property and allowing review annually.”^[24]

In the same document they wrote this under the word “memorandum”:

“Under this agreement all contracted duties for private property will cease from October 2009 as no authorisation has been made to enter private lots. Refer BCCM regulations 2008.”^[25]

The defendant pleads that this document constituted an abandonment of the LMA or, alternatively, a repudiation of it. I do not accept that it was either of those things. Firstly, it was premised upon a resolution not being reached “on review of the contract”, which was an apparent reference to the work being done by Mr Turner. It was not an unequivocal statement that the contract would not be performed from that point or from October 2009. Rather, it was a proposal for consideration at the annual general meeting and an element of the proposal was that the LMA would cease to operate from October 2009.

On 14 August 2009, the committee of the defendant met in the presence of Mr and Mrs Henderson. The minutes record that the committee had notified the plaintiffs that the LMA would “cease as at the 1st of October 2009”.^[26] It further recorded that the plaintiffs had requested an increase in remuneration and that “irrespective if the report comes back from Barry Turner advising the increase is justifiable the committee is unanimous in the decision to have an increase would be unfair to lot owners; therefore the committee will not be submitting a motion from the Body Corporate to continue with the [LMA]… but give the lot owners their own means to mow their gardens …”.^[27]

On the same day, Ms Hunter, the so-called general manager and strata manager for the defendant, wrote on behalf of the committee to Mr and Mrs Henderson as follows:

“The committee requested we send you this email in relation to the last point raised at today’s meeting;

The committee has agreed with the point you raised in ceasing the [LMA] as of the 1st of October 2009.

They will advise in the minutes of meeting that as at the 1st of October lot owners have 3 options; being

(a)Liaise directly with [the plaintiffs] to mow their gardens and payment will be sort directly between you.

(b)Use an outside contractor of their choice

(c)Or mow their property themselves.

We will be forwarding a letter of explanation with the minutes explaining that the current [LMA] is not valid and explain how your complex is governed by the Standard Format Plan …”^[28]

The committee had misinterpreted the stated position of the plaintiffs. The plaintiffs had not said that, in any event, they would cease work under the LMA in October 2009.

Not surprisingly, the plaintiffs responded, by an email from Mrs Henderson on the same day, rejecting that statement of their position. Mrs Henderson wrote:

“NO … NO … NO!

Please note the following and pass to committee members as you deem necessary.

Our motion DOES NOT suggest ceasing the [LMA].

It states that we request to only cease performing services on private lots at the increased remuneration rate documented.

We signed for a 15 year contract & the committee of the day agreed and endorsed with the Body Corp common seal.

This has been presented ‘IN THE EVENT’ that the other considerations toward resolving our contract concerns were not resolved.

The committee have agreed to recruit Barry Turner and that should stand until he completes his task. He has not yet finished his work.

As we agreed to pay half his cost we would like his service completed in full before any decision is made.

You may need to revisit before minutes are sent to owners. …”^[29]

On 27 August 2009, the defendant’s solicitors wrote to the plaintiffs as follows:

“The committee wishes to formally advise that the [LMA] will cease as at 1st October 2009 and your last payment should be submitted at the end of September after the gardens of the lots have been mowed for that month.

As stipulated in the minutes of meeting the Committee are contacting (4) four gardening companies to submit quotes for the common property gardens and the committee also invites you to submit your proposal for consideration. This would be required by 14th September 2009 to discuss at the next committee meeting.

As your [Caretaking] Agreement does not require gardening equipment all of the gardening equipment will be sold and specific details of each item and expected sale prices will be disclosed to owners in the minutes of the next committee meeting. As at 1st October 2009 the Committee requests that all items be placed in the shed and the keys be given to a Committee Member. The golf buggy will also be sold as it’s not an item required to carry out duties under the [Caretaking] Agreement.

The Committee is taking these measures to resolve the unenforceable [LMA] in accordance with the Standard Format Plan regulations, which Merrimac Heights is governed under.”^[30]

On 3 September 2009, the plaintiffs emailed committee members as follows:

“Following recent discussions with some committee members & realising there are different opinions I wish to clear the misconception arrived at, from a motion we submitted for the upcoming AGM.

The motion will be put forward for owner vote and may or may not be accepted, therefore possibility of no change.

This was submitted as an alternative to results reached from Barry Turner’s report on our contract/tasks/expectation with the Body Corporate. …”^[31]

On 7 September, the plaintiffs emailed committee members in these terms:

“We hereby advise that we intend to honour the [LMA] and expect to be paid as usual.”^[32]

On 9 September 2009, solicitors for the plaintiffs wrote to the body corporate manager (Teys Strata (Gold Coast) Pty Ltd), contending that the LMA was binding and stating that the plaintiffs would continue to perform it. They wrote that the committee was acting “…unilaterally to bring a [c]ontract to an end unlawfully…”.^[33] A similar letter was sent by the plaintiffs’ solicitors to the managers on 11 September 2009.^[34]

On 30 September 2009, the body corporate manager wrote to the plaintiffs advising that the firm called Executive Property Maintenance Services had been selected by the defendant’s committee, at its meeting on 25 September, “…to carry out the gardening of common property”.^[35]

On 1 October 2009, the plaintiffs replied to that letter through their solicitors, who wrote:

“… Our clients agree to participate under protest and without prejudice to our clients’ assertion that our clients hold a valid and enforceable Gardening Agreement, which we note is more properly described as a Landscape Maintenance Agreement. …”^[36]

Until October 2009 the plaintiffs continued to perform the LMA and to charge and (for the most part) to receive payment according to it. Consistently with that last-mentioned letter, the plaintiffs did not attempt to provide the services under the LMA as and from October 2009. They continued to send accounts for payment under that agreement. But they have been effectively prevented from performing the LMA since the engagement of the alternative contractor.

On 23 October 2009, the plaintiffs’ solicitors wrote two letters to Teys (Gold Coast) Pty Ltd.^[37] They wrote that the conduct of the defendant was an unlawful repudiation of the LMA but that the plaintiffs elected to affirm the contract. They foreshadowed proceedings involving a claim for specific performance of the LMA or, in the alternative, a claim for damages.

The plaintiffs made an adjudication application against the defendant pursuant to the Act on 27 October 2009, seeking orders that the LMA be declared valid and enforceable and for its specific performance. Alternatively, they sought damages in the sum of $400,000.^[38]

The annual general meeting occurred on 30 October 2009. The minutes record that the motion put forward by the plaintiffs was ruled out of order, upon the basis that what was proposed required spending beyond a limit of $37,500, such that it could not be considered by the owners in the absence of “an alternative quote to be presented and voted on”.^[39]

On 26 November 2009, the secretary of the defendant emailed the plaintiffs as follows:

“We wish to advise that a Managers Report and your attendance will not be required at the meeting this coming Friday. …”^[40]

None of the plaintiffs attended that committee meeting held on 27 November 2009. The minutes of the meeting record that the first item of business involved the plaintiffs.^[41] They record the committee’s concern that accounts totalling $3,971.87 had been submitted by the plaintiffs, over and above their annual remuneration when it was the committee which believed that this was for work required of the plaintiffs under the Caretaking Agreement. They also record that the committee then telephoned the defendant’s solicitor, Mr Teys, who advised them to forward a “Caretaking Remedial Action Notice”.

In consequence, a remedial action notice, purportedly given pursuant to s 129 of the 2008 Accommodation Module was sent to the plaintiffs.^[42] It alleged that there had been four types of contravention of the Caretaking Agreement, although in each case the point was related to the LMA. I will return to the terms of the notice when I discuss the case involving the Caretaking Agreement.

On the same day, 27 November 2009, the Commissioner for Body Corporate and Community Management dismissed the adjudication application upon the basis that it should be dealt with in a court.^[43]

On 11 December 2009, the plaintiffs delivered their response to the remedial action notice, disputing each of the matters put forward by the defendant.^[44]

They commenced proceedings BS 14479 of 2009 on 22 December 2009 in this Court against the defendant, claiming specific performance and other relief in relation to the LMA.

On 6 January 2010, the plaintiffs made an application to the QCAT against the defendant, seeking both interlocutory and final orders in relation to the Caretaking Agreement.^[45] In some places, the application shows the applicant as Mrs Henderson alone. In others, it shows all three plaintiffs. Properly understood, it was an application by the three. They sought declarations that the remedial action notice was void and of no effect and that the Caretaking Agreement remained in full force and effect. They sought interim orders to restrain the body corporate from putting a motion to terminate the Caretaking Agreement to the extraordinary general meeting of lot owners which had been scheduled for 19 January 2010. They also sought an order that their application to the QCAT be remitted to this court to be dealt with the proceedings which had been commenced in respect of the LMA.

The EGM took place on 19 January 2010. The minutes record that by a secret ballot, it was resolved (46 votes to 40, with four abstentions) that the Caretaking Agreement be terminated.^[46] They also record that the defendant through its solicitor had agreed to “a limited injunction that restrains the implementation of the termination of the caretaking agreement…whilst the courts determine if the [determination] is valid”.^[47]

A consent order was made by the QCAT restraining the defendant from terminating or attempting to terminate the Caretaking agreement pending the resolution and determination of these proceedings. By an order made in the QCAT on 8 February 2010, the proceedings there “were transferred to the Supreme Court of Queensland to be dealt with in conjunction with proceeding number 14479 of 2009 in that Court”.^[48]

The LMA – other arguments

According to the defendant’s pleading, the plaintiffs abandoned the LMA by their letters of 26 February and 21 March 2009 and their proposed motion for the AGM which they sent on 31 July 2009. As I have discussed, that conduct did not manifest an intention to abandon the contract.^[49] However, in the final submissions for the defendant, additional conduct was relied upon. The defendant’s counsel referred to what they said was an unchallenged statement of an employee of body corporate manager, a Ms Hunter, that “the plaintiffs communicated to the body corporate that the current agreement is invalid and unenforceable …”.^[50] Ms Hunter was called as a witness in the defendant’s case, but she gave no evidence that the plaintiffs had made such a communication.

Reliance was also placed upon evidence of the plaintiff Ms Davies that sometime prior to August 2009, she learnt that the defendant had indicated that the LMA would end from 1 October 2009, and that she thought from her then discussions with Mr and Mrs Henderson that they understood that the LMA would no longer be on foot from that date. I accept that it may have been the expectation, common to all of the plaintiffs, that they would not be performing the LMA from 1 October 2009. But that is not the way in which they acted towards the defendant. Moreover, it is one thing to say that they expected that the agreement would not be on foot because the defendant would not perform it; it is another to say that they consented to that course in the sense that they agreed to discharge the contract: Fitzgerald v Masters.^[51] An abandonment of a contract is a matter which must appear upon an objective assessment of the conduct of the parties.^[52]

The defendant also relied upon an email from Mrs Henderson of 20 August 2009, apparently addressed to members of the committee of the defendant. The passage relied upon is where Mrs Henderson wrote:

“Your best chance to present for the AGM is to [a]llow Barry to complete his report that you asked for & take the care & attention when you take it the next step to rectify contract(s)”.^[53]

The defendant submits that this was a concession that the contract had to be “rectified”, in the sense that it could not be performed upon its present terms. However, what Mrs Henderson there wrote need not be interpreted in that way. Undoubtedly, she was suggesting an amendment to the LMA or perhaps an entirely new LMA. But she was not agreeing to discharge the LMA without something being agreed in its place.

The defendant’s argument even extended to reliance upon conduct in 2008 (which again was unpleaded). This included the plaintiffs’ attendance at a committee meeting in August 2008, in which the committee resolved to retain solicitors to advise on the validity of the LMA. The plaintiffs thereby knew of the committee’s resolution. But the plaintiffs were not themselves members of the committee. Then the defendant argues that Mrs Henderson acknowledged in November 2008 “that it was illegal for the plaintiffs to enter into individual lots” to perform their work under the LMA. Nevertheless, the plaintiffs continued to perform that work. Importantly, prior to being effectively locked out from October 2009, the defendant did not argue that it became entitled to terminate the LMA because the plaintiffs had failed to perform it.

The balance of the matters identified by counsel for the defendants, in their extensive written submissions on this question, need not be discussed paragraph by paragraph. The conduct relied upon falls into categories such as the plaintiffs’ presence at meetings at which the suggested invalidity of the LMA was discussed, the plaintiffs’ knowledge of and participation in the process by which Mr Turner was engaged and the plaintiffs’ awareness of the defendant’s intention to engage someone else to do work upon the common property (which the plaintiffs were required to do under the LMA). As to all of this, some matters should be restated. The first is that it is the apparent intention of the plaintiffs, that which objectively appears, which is relevant. Upon an objective view, their intention as demonstrated by their correspondence, strongly and consistently protested the defendant’s proposal to put an end to the LMA. Secondly, throughout these events of 2008 and 2009, until October in that year, the plaintiffs continued to perform the LMA^[54] and were paid for their services. Thus any abandonment of the contract could have occurred only from October 2009. But at that point, clearly the plaintiffs were strongly insisting upon the enforcement of the contract. In my conclusion, there was no abandonment of the LMA.

Nor was there any repudiation by the plaintiffs, entitling the defendant to terminate the LMA. The repudiation alleged by the defendant appears to be what was described, in the joint judgment in Koompahtoo Local Aboriginal Land Council v Sanpine^[55] as a renunciation. The defendant must prove that there was conduct by the plaintiffs which evinced an unwillingness or an inability to render substantial performance of the contract, or in other words which evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with their obligations.^[56]

In the defendant’s final argument, the conduct which was relied upon as a renunciation was the lodgement of the proposed motion for the AGM.^[57] It was submitted that this was accepted by the defendant on 14 August 2009 or alternatively on 27 August 2009. But this conduct of the plaintiffs was not repudiatory. It proposed a different contractual regime and to that end, it sought the support of members at the AGM. But it is another thing to say that the plaintiffs evinced an intention not to be bound by the LMA or to act inconsistently with its terms if no alternative arrangement could be agreed. The same applies to other conduct which was pleaded as repudiatory on the part of the plaintiffs, being the letters of 26 February and 21 March 2009.^[58] In the same way as the plaintiffs had not evinced an intention to abandon the contract, their conduct was not repudiatory.

I have now discussed each of the matters pleaded by the defendant in response to the plaintiffs’ claim for relief in respect of the LMA. In particular, I have discussed the matters pleaded in response to paragraph 16(b) of the Consolidated Statement of Claim, which alleges that the plaintiffs have duly performed their duties pursuant to the LMA, and pursuant to the schedule to that agreement. However, within the conduct upon which the defendant relies as grounds for terminating the Caretaking Agreement, the defendant has alleged certain breaches of the LMA. In paragraph 39 of its Defence, it pleads facts upon which it made the four allegations within the remedial action notice to which I referred at [49].^[59]

In particular, it pleads breaches of the LMA as part of the plaintiffs’ conduct which it describes within that notice as “Allegation 1” and “Allegation 4”. Allegation 1 was not pursued at the trial. Within Allegation 4 is a contention that the plaintiffs were unable to obtain access to some lots in order to perform the work required by the LMA. The defendant’s case as there stated was not that they were in breach of the LMA by not performing the work upon those lots. Rather, it is that they were in breach of the Caretaking Agreement, in that they charged for work which could not be and was not performed, and without telling the defendant of that matter. This case is also pleaded in paragraphs 21(c) and 23 of the defendant’s Counterclaim.

Then in the defendant’s final submissions it was argued that the plaintiffs breached the LMA by not performing some work on individual lots to which they enjoyed access. It was said that the plaintiff’s carried out mowing and ‘edging’ tasks, but not other work which the LMA required to be performed on individual lots. The subject was explored in the cross-examination of Mrs Henderson,^[60] Ms Davies^[61] and a Mr Kalina.^[62] It is clear that upon the individual lots the plaintiffs performed only mowing and edging and confined the performance of the other tasks to the common property. Notably the defendant did not make this complaint during the many months of manoeuvrings by each side which led to the unilateral suspension of the LMA in October 2009. Indeed the evidence does not reveal any complaint by the defendant, up to that point in time, that the plaintiffs were in breach of the LMA in any respect. This explains why no remedial action notice was given in relation to that contract. But what must now be considered is whether the LMA, objectively viewed, required further work to be performed upon individual lots.

It is necessary to set out in full the schedule of work required by the LMA:

“MOWING

All grass areas including front and back yards of units, common ground, back paddock and road frontage –

every 10-14 days in Summer

21-28 days in Winter

EDGING

Whippersnip all grass edgesevery 10-14 days in Summer

21-28 days in Winter

PALM FRONDS

Cocas Palms on road edgesevery 3-4 months

Palms down centre of main roadevery 3-4 months

Palms around tennis courts and poolsevery 3-4 months

Golden Palms as required

FERTILIZING & TOP DRESSING

As required

PRUNING & MULCHING

Pruning trees and shrubs in common areas and boons as required

Mulching and spreading of mulch on gardens

SUPPLEMENTARY SERVICES

Plant replacement of supplementary planting from time to time as required

Fill depression in lawns and top dressing as required

BOONS

Whippersnip boons as required including front of complex

GARDEN AT FRONT GATES

Maintain and trim garden beds at front gate entry”^[63]

As Mrs Henderson explained, the edging was incidental to the mowing work and therefore it may be accepted that this work was required upon individual lots as well as upon the common property. That is why the agreed frequency of the edging work coincided with that of the required mowing. The other items in the schedule can be distinguished from the mowing because it is only the mowing for which there was an express requirement for work to be done within individual lots. For some of the other items, the agreed work was to take place in areas clearly outside individual lots. For other items in the schedule, there was no specification next to that item as to whether it would be work confined to common property. For the defendant it is submitted that there is no basis for limiting that work to common property when it was not expressly so limited. However, the schedule must be read as a whole. Most significantly, it specifically extended the mowing task to individual lots. As I interpret the schedule, this means that the other tasks are not intended to be performed on individual lots, at least pursuant to the LMA. That intention is more likely because the body corporate has no specific responsibility for the maintenance of individual lots. As I have discussed, it has the power to engage a contractor to do work on individual lots. But by this schedule, it is clear enough that it was intending to exercise that power only for the mowing and associated edging work. Therefore, there was no breach of the LMA by the plaintiffs failing to do this other work.

I should add that had I upheld the argument for the defendant in this respect, I would not have accepted that it involved a breach of the LMA which justified the defendant’s purported termination of it. One reason for that is that no remedial action notice was given under the LMA. Another is that because this point was not pleaded, there was no investigation of whether the defendant had been precluded by an estoppel from terminating upon this basis, given the circumstance that it had made no complaint to that point that these tasks were not being performed on individual lots.

In its case for terminating the Caretaking Agreement, there is also the argument for the defendant that the plaintiffs have breached the LMA by not mowing within certain lots. According to the evidence of Mr Kalina, who assisted the plaintiffs in performing work under the LMA, mowing was not done on each and every lot. Some lots had no lawn but other landscaping such as paving. On some lots, access was difficult because of fences and gates. He also recalled that there were one or two lots where the owners did not want to have the plaintiffs mow their lawn. Similarly in her Affidavit, the plaintiff Mrs Davies identified some lots which had no lawns and therefore required no work from the plaintiffs. She also said that all of the lawns within the lots were mowed “…save for those above which either did not require work or in respect of which their owners had directed we not undertake any work”.^[64] That suggests that there was a small number of owners or occupiers who effectively refused access. But as to all of this, the LMA required certain work to be done on lots, but necessarily only as long as the owner or occupier consented and, by a fence or otherwise, did not prevent that work being done. The LMA did require the plaintiffs to trespass upon a lot. And again, this alleged breach was not the subject of a remedial action notice under the LMA.

It follows that the LMA was not terminated. The contract remains on foot and the plaintiffs should have a declaration to that effect.

The LMA – damages for breach

The plaintiffs claim damages for breach of the LMA, upon the basis that they have lost profits from being prevented from performing the contract since 1 October 2009. They have proved that breach and there is no substantial contest as to the quantum.

The plaintiffs rely on the evidence of two valuers, each of whom was concerned with wider questions than the present one but who offered estimates of the likely income from performing the LMA. There is little between them and it is sufficient to refer to the evidence of Mr Thynne. He adopted an income for the year ended 31 October 2010 as $40,381 from which he deducted expenses of employing one person one day a week to assist the plaintiffs in their own efforts to perform the work. He estimated the cost of that employee as $9,687 over the year providing a net income of $30,694.^[65] He referred also to the year ending 30 September 2009, in which the plaintiffs received from the defendant income of $36,314 under the LMA.^[66] He noted also that this had not included adjustments under the CPI, for which he said the plaintiffs should have been paid a further $3,301.^[67] I accept that his calculations for the 2010 year are substantially accurate. I assess the lost profit over the two years to 1 October 2011 as being at least $30,700 per year, a total of $61,400.

His report also refers to work being done by the plaintiffs for some individual lot owners. For this work, the plaintiffs have used the services of Mr Kalina. Mr Thynne recorded Mrs Henderson’s instructions that from November 2009 to October 2010 the business received income of $7,620 and incurred expenses in the form of payments to Mr Kalina of $4,910, thereby representing a profit of about $2,700 over the year.^[68] However, Ms Davies gave evidence to the effect that there was no mark-up on Mr Kalina’s invoices. On the basis of her evidence, the plaintiffs submit that nothing should be deducted for a profit for doing some of the work which was required under the LMA. However, I do not think that Mrs Henderson’s instructions to the valuer should be ignored. Accordingly, I will deduct $2,700 per year, ie an amount of $5,400, for profits earned by the plaintiffs in performing some of the work which was required under the LMA.

The result is that I am satisfied that the plaintiffs have established a loss of profits over the two years from 1 October 2009 of $56,000. Including the loss from a further six weeks to the date of this judgement, I will allow $59,200. I was also asked to include a further component, representing the loss of profits for a period after this judgment, upon the suggestion that it would take the plaintiff some time to resume performance of the LMA. I am not persuaded that there should be any significant delay in that respect and no component of that kind will be allowed. The outcome on the damages claim is that there will be judgment for the plaintiffs against the defendant in the sum of $59,200.

The Caretaking Agreement

The plaintiffs sought relief in relation to the Caretaking Agreement within the proceedings which they brought originally in the QCAT. Undoubtedly, it had jurisdiction to grant the relief which was there sought, which was declaratory relief to the effect that the Caretaking Agreement was enforceable. The QCAT’s jurisdiction was conferred by s 229 of the Act provides as follows:

“229Exclusivity of dispute resolution provisions

(1)Subsections (2) and (3) apply to a dispute if it may be resolved under this chapter by a dispute resolution process.

(2)The only remedy for a complex dispute is

(a)the resolution of the dispute by–

(i)an order of a specialist adjudicator under chapter 6; or

(ii)an order of QCAT exercising the tribunal's original jurisdiction under the QCAT Act; or

(b)an order of the appeal tribunal on appeal from a specialist adjudicator or QCAT on a question of law.

(3)Subject to section 229A, the only remedy for a dispute that is not a complex dispute is–

(a)the resolution of the dispute by a dispute resolution process; or

(b)an order of the appeal tribunal on appeal from an adjudicator on a question of law.

(4)However, subsections (2) and (3) do not apply to a dispute if–

(a)an application is made to the commissioner; and

(b)the commissioner dismisses the application under part 5.

(5)Also, subsections (2) and (3) do not limit–

(a)the powers of QCAT under the QCAT Act to–

(i)refer a question of law to the Court of Appeal; or

(ii)transfer a proceeding, or a part of a proceeding, to the Court of Appeal; or

(b)the right of a party to make an appeal from QCAT to the Court of Appeal under the QCAT Act.”

Section 229(2) appears to exclude the jurisdiction of this Court, except that of the Court of Appeal, in relation to what is defined for the purposes of the Act as a “dispute”,^[69] including a “complex dispute”.^[70] After the conclusion of the hearing, I raised with the parties the question of whether this Court could determine whether the Caretaking Agreement was enforceable and I received written and oral argument on the question. The defendant submitted that this Court does not have jurisdiction in that respect. The plaintiff argues that it does. I will return to this jurisdictional question, which is more conveniently discussed after I have referred to the evidence and made findings about this part of the case. The parties agreed that I should make those findings, even if I held that I lacked jurisdiction to grant any relief, in case a different view on the jurisdictional question was reached in the Court of Appeal.

The requirement for a remedial action notice

Section 122 of the Act provides that the regulation module applying to a scheme may prescribe certain things about the engagement of a person as a body corporate manager or service contractor, or the authorisation of a person as a letting agent. As is common ground, the plaintiffs were service contractors as well as letting agents as those terms were respectively defined for the Act within s 15 and s 16. The things which may be prescribed include the following as set out in s 122(1)(d):

“(d)particular circumstances under which the engagement or authorisation may or may not be terminated … despite anything in the engagement or authorisation or in another agreement or arrangement.”

The relevant module, which is the 2008 Accommodation Module, makes provision for these matters in Chapter 6, Part 5. In the first of those provisions, s 126 of the module provides as follows:

“126Purpose of pt 5 [SM, s 128]

This part provides for –

(a)the grounds on which the body corporate may terminate a person’s engagement as a body corporate manager or service contractor, or authorisation as a letting agent; and

(b)the steps the body corporate must follow to terminate the engagement or authorisation.”

Section 127(1) of the Module provides that a person’s engagement or authorisation may be terminated by the body corporate:

“(a)under the Act; or

(b)by agreement; or

(c)under the engagement or authorisation.”

Section 127(2) provides that “[t]he body corporate may act under subsection (1) only if the termination is approved by an ordinary resolution of the body corporate”.

Section 128 of the Module identifies certain circumstances as justifying a termination of an engagement or authorisation of a service contractor or letting agent. For the most part they involve some element of illegality on the part of the contractor/agent and they are not relevant here. What is perhaps relevant is that s 128(2) provides that the body corporate may act under this section only with the approval of an ordinary resolution of the body corporate, and for a caretaking service contractor or a letting agent, where the motion to approve the termination is decided by secret ballot. This provision is relevant because it differs from s 127(2), thereby indicating that the circumstances for termination under s 128 do not overlap with those for s 127.

Then there is s 129, which is headed “Termination for failure to comply with remedial action notice [SM, s 131]”. This section relevantly provides as follows:

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

(a)engages in misconduct, or is grossly negligent, in carrying out functions required under the engagement; or

(b)fails to carry out duties under the engagement; or

(c)contravenes–

(i)…

(ii)for a service contractor who is a caretaking service contractor–the code of conduct for body corporate managers and caretaking service contractors, or the code of conduct for letting agents; or

…

(2)Also, the body corporate may terminate a person’s authorisation as a letting agent if the person (including, if the person is a corporation, a director of the corporation)–

(a)engages in misconduct, or is grossly negligent, in carrying out obligations, if any, under the authorisation; or

(b)fails to carry out duties under the authorisation; or

(c)contravenes the code of conduct for letting agents or, for a caretaking service contractor, the code of conduct for body corporate managers and caretaking service contractors; or

…

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

(a)the body corporate has given the person a remedial action notice in accordance with subsection (4); and

(b)the person fails to comply with the remedial action notice within the period stated in the notice; and

(c)the termination is approved by ordinary resolution of the body corporate; and

(d)for the termination of a person’s engagement as a service contractor if the person is a caretaking service contractor, or the termination of a person’s authorisation as a letting agent–the motion to approve the termination is decided by secret ballot.

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

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

(i)for a body corporate manager or a service contractor–in a way mentioned in subsection (1)(a) to (e); or

(ii)for a letting agent–in a way mentioned in subsection (2)(a) to (d);

(b)details of the action sufficient to identify–

(i)the misconduct or gross negligence the body corporate believes has happened; or

(ii)the duties the body corporate believes have not been carried out; or

(iii)the provision of the code of conduct or this regulation the body corporate believes has been contravened;

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

(i)remedy the misconduct or gross negligence; or

(ii)carry out the duties; or

(iii)remedy the contravention;

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

(5)Despite subsection (3)(a), if the person is a body corporate manager acting under a chapter 3, part 5 engagement, the owners of at least one-half of the lots included in the community titles scheme may, on behalf of the body corporate, give the person a remedial action notice.”

The plaintiffs submit that any termination of the Caretaking Agreement had to be according to s 129. The defendant submits that s 129 provided one way of terminating the Caretaking Agreement, but that it did not affect the defendant’s right under the general law to terminate for repudiatory conduct or for a breach of contract. In the case of the Caretaking Agreement, a document purporting to be a remedial action notice was given and I go now to its terms.

The remedial action notice in this case

The notice began with a statement that it was given pursuant to s 129 and that the plaintiffs were required to remedy the matters which were referred to in the notice within 21 days, failing which the Caretaking Agreement might be terminated.^[71] There followed a table containing three columns, headed “Contravention”, “Details of conduct” and “Remedy required”. There were four alleged contraventions, to which the parties have referred here as allegations 1 to 4.

The first was that the plaintiffs had engaged in fraudulent or misleading conduct, in breach of the Code of Conduct as set out in Schedule 2 of the Act (‘the Code’). It was alleged that this same conduct also breached cl 5(c) of the Caretaking Agreement, which provided as follows:

“cThe Manager will check and verify accounts for goods or services payable by the Body Corporate relative to matters which are the responsibility of the Manager under this Agreement and notify the representative of the Body Corporate that they are in order for payment.”

By reference to what appeared in the second and third columns against this allegation, and in further particulars provided within the notice, it can be seen that the complaint was one of overcharging. It was said that the plaintiffs had charged separately for work and materials which were within the scope of that which they were to provide under the Caretaking Agreement for the consideration fixed by it. In addition to the remuneration payable and paid under that agreement for the year ending 31 July 2009, the plaintiffs were said to have charged, in total, a further $3,971.87. Ultimately, the defendant did not rely upon this ground at the trial.

Therefore, the relevant allegations are 2, 3 and 4. Allegation 2 was expressed in the notice as follows:

“By Section 118 [of the Act] the caretaking agreement includes a provision that the manager must take reasonable steps to ensure goods and services supplied to the body corporate are supplied at competitive prices (Schedule 2, Clause 10).”^[72]

Section 118(2) of the Act provides that the provisions of the Code in Schedule 2 of the Act are taken to be included in the terms of any contract for the engagement of a caretaking service contractor. Clause 10 of that Code provides that a caretaking service contractor “...must take reasonable steps to ensure goods and services the person obtains for or supplies to the body corporate are obtained or supplied at competitive prices”.

The conduct relied upon for this allegation concerned the LMA. The notice set out the agreed remuneration under the LMA, which for the year ending 31 July 2009 was $42,996 or $3,583.03 per month. The notice then contended that “[s]ince terminating the [LMA] the body corporate has procured the same work for the year ended 31 July 2010 for $11,700 or $975 per month representing a saving to the body corporate of at least $31,296 per annum or approximately $391,200 over the alleged 12 years remaining term of the [LMA]…”.^[73] Under the hearing “Remedy required”, the defendant said that the plaintiffs should “provide the body corporate with details of what steps were taken and by whom and when to ensure landscaping maintenance goods and services provided pursuant to the landscaping agreement were provided to the body corporate at competitive prices”. It added that “the body corporate reserves its rights to recover damages for the goods and services supplied at less than competitive prices”.

As I have said, the Code including its cl 10 was part of the Caretaking Agreement. But the suggestion that cl 10 obliged the plaintiffs to surrender their contractual rights under the LMA cannot be accepted. The plaintiffs became parties to the LMA by a permitted assignment. The remuneration under the LMA had been negotiated by their predecessors. The plaintiffs had paid a substantial sum for the rights under the LMA and the Caretaking Agreement. Yet it is alleged that having done so, they were obliged to give up the benefit of the LMA. This was not what cl 10 of the Code required. The taking of reasonable steps according to cl 10 did not require the plaintiffs to surrender an existing contract. The general obligation under cl 10 of the Code was subject to the specific agreement constituted by the LMA. And it was not said in the remedial action notice that simply by becoming parties to the LMA as varied, the plaintiffs breached cl 10. It follows that the second ground set out in the notice had no foundation.

The third ground again relied upon the Code and related to the LMA. There are two complaints made under the heading “Details of conduct” in relation to this ground. The first was that the plaintiffs provided services under the LMA within individual lots “without knowing or understanding that the body corporate could not pay for work within the lots of individual members of the body corporate”.^[74] That was said to have breached cl 1 of the Code, by which a caretaking service contractor must have a good working knowledge and understanding of the Act relevant to the contractor’s functions. The allegation was that the plaintiffs did not have a good working knowledge and understanding of the Act because they believed that the LMA was valid. According to this judgment, it was valid. But if I am wrong about that, it does not follow that the plaintiffs were in breach of cl 1 of the Code. On any view, it was at least arguable that the LMA was valid, and failing to say otherwise did not demonstrate an ignorance or sufficient misunderstanding of the Act as to constitute a breach of the Code and thereby a breach of the Caretaking Agreement.

The other complaint referred to in relation to this third ground was expressed as follows:

“Further, and in the alternative, if (which is denied) the [LMA] was within the power of the body corporate, then the manager has failed to advise the body corporate that the body corporate could recover the cost of the work done within the lots from the individual owners for whom that work was done.”^[75]

In that respect, under the heading “Remedy required”, this was set out:

“The manager must advise the body corporate what work was done to which lot pursuant to the [LMA] and the reasonable cost of this work for each lot. The body corporate reserves its right to take action to recover the amount of body corporate funds paid to the manager for work outside of the power of the body corporate.”^[76]

In addition to cl 1 of the Code, the defendant referred to clauses 3(a), 3(f), 3(i) and 5(c) of the Caretaking Agreement. Clause 3(a) obliged the plaintiffs to use their best endeavours to see that the development was kept in good order and repair and maintained as a first class residential complex. The matters alleged do not seem to have involved a breach of that clause.

Clause 3(f) required the plaintiffs to “[a]rrange maintenance contracts as required by the Body Corporate and ensure that any such contracts in force are carried out in accordance with their terms”. But the relevant maintenance contract here was the LMA, which had already been “arranged”. At least in this third ground, there was no allegation that the LMA had not been performed according to its terms.

Clause 3(i) required the plaintiffs to manage the development and endeavour to ensure that it was kept in first class order and repair and “...to protect the interest in the said development of the Body Corporate and of the owners of units therein”. Again, this provision was not breached by the conduct as alleged. In particular, there was no suggestion that the grounds were not kept in a proper condition.

I have discussed cl 5(c) above in relation to (the now abandoned) first ground.^[77] The alleged breach here is that the plaintiffs should have given legal advice to the defendant, more particularly advice that the body corporate could recover the cost of work from individual lot owners. But cl 5(c) imposed a duty to check and verify accounts for payment from the defendant’s funds, rather than to advise on how funds might be collected by the defendant. The failure to provide that advice was also said to have involved a breach of cl 1 of the Code. But that clause did not require the plaintiffs, as caretakers, to be legal advisers. Rather, it required them to have a proper knowledge and understanding of the Act so as to properly discharge their duties as caretakers. It follows that there was no act or omission which provided a basis for this third ground within the remedial action notice.

Allegation number 4 was expressed as follows:

“Honesty, fairness and professionalism

By Section 118 BCCMA the caretaking agreement is taken to include a [clause] that the manager must act honestly, fairly and professionally in performing the person’s function. By clause 3(f) of the caretaking agreement the manager must arrange maintenance contracts as required by the body corporate and ensure such contracts are in force and carried out according to their terms. The caretaker undertook landscape maintenance services for the body corporate under the landscaping agreement.”^[78]

The conduct here was detailed as follows:

“The manager was required by the landscaping agreement to perform work within the lots of each of the member[s] of the body corporate. A number of the lots are fenced precluding access and the manager did not do work on those lots as required. The manager has presented accounts to the body corporate for payment that do not take account of work that could not be and was not done. The manager failed to alert the body corporate to the access problem in a timely way to enable the body corporate to secure access to enable the work to be done as required by the contract.”^[79]

As I have held, the plaintiffs’ obligations under the LMA, so far as lots were concerned, was to work on lots only as individual lot owners or occupiers permitted them to do so.^[80] The LMA did not require the gardeners to be unlawful entrants onto the lots of unwilling owners or occupiers. The consideration under the LMA was a fixed sum, rather than an amount per lot. It was not dishonest, unfair or unprofessional to charge and receive the agreed monthly consideration under the LMA although some owners or occupiers had refused access, or not to “alert” the defendant that the plaintiffs were being denied access to some lots. Accordingly, this fourth ground had no basis.

It follows that none of the allegations set out in the remedial action notice provided a basis for terminating the Caretaking Agreement.

Other grounds for terminating the Caretaking Agreement?

As already noted, the defendant contends that it can justify its termination of the Caretaking Agreement upon grounds which were not alleged in the remedial action notice. I reject that submission. To the extent that there are other alleged grounds, they are allegations that the plaintiffs breached the Caretaking Agreement, so that the plaintiffs either failed “to carry out duties under the engagement” (s 129(1)(b)) or contravened the Code (s 129(1)(c)(ii)). A termination for conduct of the kind which is within s 129(1) must be made as prescribed by s 129, because otherwise s 129 would have little or no effect. In particular, an important purpose of s 129, which is to provide the manager or contractor with an opportunity to remedy its default, would be defeated. Another important requirement, which is that the engagement be terminated only with the support of a majority of lot owners, voting by a secret ballot, could also be disregarded. But in case this argument about s 129 should ultimately prevail, it is necessary to say something about such further allegations as were not in the notice.

The identification of those allegations is not a straightforward exercise. The defendant’s argument refers to paragraphs 21 through 25 of its Counterclaim. But as it concedes, some of those allegations “overlap” with the third and fourth allegations of the remedial action notice.

It is said that paragraphs 21(c) and 23 raise a ground which was not within the notice. The former alleges that not until at least 21 March 2009 did the plaintiffs “inform, suggest to or warn” the defendant that they were not undertaking work on all individual lots pursuant to the LMA. But I have discussed that case already in relation to ground 4 of the notice.

Paragraph 23 of the Counterclaim complains that the plaintiffs accepted payment under the LMA without performing all of the work which the LMA required and that the plaintiffs failed to bring that to the defendant’s attention. Again, that case has been discussed already and I have rejected it as a breach of the Caretaking Agreement.^[81] Paragraph 23 contains further allegations that this conduct was misleading and unconscionable, contrary to what was s 38 and s 39 of the Fair Trading Act 1989 (Qld). Neither of those allegations can be accepted. There was no representation by the plaintiffs that they were in fact mowing each and every lot. To the extent that some lots (small in number) were not being mown because access was denied to the plaintiffs, there was no misleading conduct by not informing the defendant of that matter. In particular, that information would not have affected the entitlement of the plaintiffs to be paid the fixed sum under the LMA. Nor does the pleading explain how this conduct was unconscionable. Again, the plaintiffs were not overcharging for the fact that a small number of lots did not require mowing. Assuming that the defendant was unaware of that matter, it is not demonstrated how its position would have been different had it known of it.

Paragraph 24 of the Counterclaim alleges that the plaintiffs engaged in conduct from 14 August 2009 to 19 January 2010 which was dishonest, unfair and unprofessional, was not in the best interests of the defendant, and was misleading and unconscionable. The particulars of this conduct are matters involving the plaintiffs’ attempts to gain support from a sufficient number of committee members of the body corporate as well as from lot owners, in their dispute or disputes which are the subject of this litigation.

One such complaint is that they sent letters and emails to members of the committee and owners of individual lots, contrary to a purported direction from the body corporate manager that they cease communicating directly with committee members. On 4 September 2009, Ms Hunter sent an email to the plaintiffs, making a request, on behalf of the committee, that “all communication pertaining to the [LMA] be in writing and submitted to [her] office, so that it would then be forwarded to the committee”. She advised that neither the committee members nor her office would take any telephone calls. A similar email was sent by her to Mr and Mrs Henderson on 16 September 2009. But neither Ms Hunter nor the committee had some power to restrain communications of that kind. It was not in any sense wrongful for the plaintiffs to communicate by letters and emails to members of the committee or lot owners, as distinct from saying the same thing through the body corporate manager.

Then there is a complaint that the plaintiffs were “[c]anvassing the support of individual lot holders for a motion to remove the current committee of the Body Corporate” and “[c]anvassing, approaching and otherwise seeking to induce individual lot holder investors in the Scheme to seek election on a proposed new committee once the current committee had been removed”.^[82] There is the further particular that the plaintiffs served a notice to requisition an extraordinary general meeting of members of the body corporate to remove the current committee and elect a new committee. Undoubtedly, this conduct occurred and the plaintiffs were motivated by a concern for their position under their two contracts. It may be accepted that they wished to bring about a change in the membership of the committee, so that the body corporate would be controlled by persons who were less hostile to their position.

The defendant’s submissions complain that the plaintiffs sent a circular to lot owners which was “intemperate and a personal attack on the integrity of the body corporate committee”. It was there said that the committee had acted “illegally”, that they were perpetrating a “vendetta”, that they were using “unprecedented standover tactics” and were acting “unethically”. However, I am unable to accept that any of this conduct involved a breach of their duties under the Caretaking Agreement or the relevant Code. Further, although the language was colourful, it was not misleading. It was plainly the language of someone in strong disagreement with the committee, and deeply resentful of the committee’s actions in repudiating one agreement and taking steps to terminate the other. Particularly in the circumstance where the defendant had no entitlement to terminate either agreement, it is difficult to characterise this reaction by the plaintiffs as unconscionable or otherwise wrongful.

It follows that there is nothing in these other allegations, which were not set out in the remedial action notice, which assists the defendant’s case. As should already appear, the counterclaim for relief for contraventions of s 38 and s 39 of the Fair Trading Act has no foundation.

Jurisdiction

The dispute between the parties, insofar as it involves the enforceability of the LMA, is a “dispute” as defined in s 227(1) of the Act, at least because it is a dispute between a body corporate and an owner of a lot included in the scheme: s 227(1)(b).^[83] The plaintiffs are also a “caretaking service contractor for the scheme”, because the Caretaking Agreement permits them to carry on the business of letting agents from within the complex.^[84] Schedule 6 of the Act defines “caretaking service contractor” to mean a service contractor for the scheme who is also “a letting agent for the scheme”. A “service contractor” is defined by s 15 of the Act to be a person engaged by the body corporate (other than as an employee) for a term of at least one year to supply services (other than administrative services) to the body corporate for the benefit of common property or lots included in the scheme. A “letting agent” is defined by s 16 of the Act to be a person authorised by the body corporate to conduct a business of acting as the agent of owners of lots who choose to use the person’s services for securing, negotiating or enforcing leases or other occupancies of lots. Accordingly, there is also a dispute here within s 227(1)(d), in that it is between the body corporate and a caretaking service contractor for the scheme. Further, there is a dispute within s 227(1)(f), in that the body corporate is in dispute with the letting agent from the scheme.

The term “complex dispute” is defined in Schedule 6 of the Act to include a dispute mentioned in, amongst other provisions, s 149B, which provides as follows:

“149BSpecialist adjudication or QCAT jurisdiction

(1)This section applies to a dispute a claimed or anticipated contractual matter about –

(a)the engagement of a person as a … caretaking service contractor for a community titles scheme; or

(b)the authorisation of a person as a letting agent for a community titles scheme.”

The term “contractual matter” is defined in Schedule 6 as follows:

“Contractual matter about an engagement or authorisation of a body corporate manager, service contractor or letting agent, means –

(a)a contravention of the terms of the engagement or authorisation; or

(b)the termination of the engagement or authorisation; or

(c)…

(d)the performance of duties under the terms of the engagement or authorisation.”

Section 149B provides that a party to a dispute within that provision may apply under Chapter 6 for an order of a specialist adjudicator to resolve the dispute or for an order of the QCAT exercising the tribunal’s original jurisdiction.

By s 229(2) of the Act, the only remedy for a complex dispute (including a dispute within s 149B) is by an order of a specialist adjudicator under Chapter 6 or an order of the QCAT exercising its original jurisdiction. Section 229(3) provides that the only remedy for a dispute that is not a complex dispute is through the so-called “dispute resolution process” or by an order of the appeal tribunal on appeal from the adjudicator on a question of law. The “dispute resolution process” is defined to mean one of the processes, including specialist adjudication, which are set out in Chapter 6. They do not include resolution of the dispute by a court.

As I have discussed, before commencing the first of these two proceedings in the Court (BS 14479 of 2009), the plaintiffs made an adjudication application seeking orders which were limited to the LMA. The plaintiffs then had to specify the capacity in which they were applying for an adjudication. They marked the relevant box on the application form to show that they were applying as caretaking service contractors rather than as owners.^[85] The Commissioner for Body Corporate and Community Management dismissed that application upon the basis that it should be dealt with by a court.^[86] Accordingly, s 229(2) and (3) do not apply to the dispute the subject of that application to the Commissioner: s 229(4).

Save for the operation of s 229(4), this Court does not have jurisdiction to resolve the dispute or disputes within this litigation. That is because the only remedy for that dispute or disputes is one which can be granted under subsections (2) and (3) of s 229. In James v Body Corporate Aarons Community Titles Scheme 11476,^[87] Holmes J (as she then was) construed the then equivalent provision of s 229(2), which was s 184 of the Act. Her Honour said of that provision:

“The wording of the section itself is unusual: rather than providing for exclusive jurisdiction in so many words, s 184(2) speaks in terms of ‘the only remedy’ being the order of an adjudicator or that of a District Court on appeal on a question of law. But those words ‘the only remedy’ are not ambiguous; it is difficult to see what meaning they can have other than that in the circumstances to which s 184(2) applies, the only manner in which the dispute itself can be resolved is by the means prescribed: the adjudicator’s order or that of the District Court on appeal.”^[88]

That view was confirmed on appeal, where Davies JA said:

“[11]This was plainly a dispute in respect of which an adjudicator may make an order under ch. 6 within the meaning of s. 184. It was, at the very least, both a dispute between the body corporate and the owner of a lot included in the scheme and a dispute between the body corporate and a letting agent for the scheme. In the end, the only questions in issue in this appeal are whether the order which an adjudicator may make to resolve this dispute is one pursuant to s. 223 or one pursuant to s. 227; or whether the adjudicator may make such an order under either section.

[12] Section 184 does not speak in terms, specifically, of jurisdiction to hear and decide but in terms of providing a remedy. However I think its plain intention is that the adjudicator is to have exclusive jurisdiction to make orders of the kind which the Act prescribes, relevantly in s. 223 and s. 227, in disputes of the kind to which s. 182 refers, subject to any statutory exception or limitation. Mr Savage SC, for the appellants did not argue to the contrary.”^[89]

For the plaintiffs it is argued that s 229 is a similar, but relevantly different provision. Their argument seems to be based upon the jurisdiction which s 229 now confers upon the QCAT, together with its power to transfer matters to a court. In particular, s 52 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld), provides, in part, as follows:

“52Transfer to more appropriate forum

(1)If the tribunal considers the subject matter of a proceeding or a part of a proceeding would be more appropriately dealt with by another tribunal, a court or another entity, the tribunal may, by order, transfer the matter to which the proceeding or part relates to the other tribunal, the court or the other entity.

…

(4)If the tribunal transfers a matter to another tribunal, a court or another entity (the relevant entity) under this section –

(a)a proceeding for the matter is taken to have been started before the relevant entity when it was started before the tribunal …”

I do not accept that submission of the plaintiffs. The power of the QCAT to transfer a matter to a court exists only where the Tribunal considers that the subject matter of the proceeding (or a part of that proceeding) would be more appropriately dealt with by that court. That could not be the case where the court lacked any jurisdiction to deal with the proceeding. Section 52 does not confer jurisdiction upon other courts or tribunals. Rather, it permits a transfer to a court or tribunal where that entity has jurisdiction to determine the proceeding. This is confirmed by the explanatory note to the Queensland Civil and Administrative Tribunal Bill 2009 (Qld), which said this of what is now s 52:

“This provision does not confer any additional jurisdiction on the courts or other tribunals or entities and cannot be utilised if the tribunal has exclusive jurisdiction for the matter. An example of when it may be more appropriate for a court to hear a matter and for the tribunal to make a transfer order is where a related cause of action is on foot in the court, the issues in dispute in the court and the tribunal matters are intertwined and the tribunal did not have the jurisdiction to make all the orders being sought in the matter.”^[90]

The exclusivity of the jurisdiction conferred by s 229 is confirmed by subsections (4) and (5). The latter provides for the jurisdiction of the Court of Appeal to be exercisable in any of the circumstances there specified. But it further indicates that the legislative intention was to otherwise remove a court’s jurisdiction to resolve such a dispute. A transfer under s 229(5)(a)(ii) could be made only in the context where the QCAT was exercising its appellate jurisdiction under s 144 of its statute.

Ultimately the plaintiffs’ argument recognised that s 52 could not be the source of this court’s jurisdiction. Its argument came down to a suggested interpretation of s 229, under which it would operate as if s 229(2) was in these terms:

“(2)The only remedy for a complex dispute is–

(a)the resolution of the dispute by–

(i)…

(ii)an order of QCAT exercising the Tribunal’s original jurisdiction under the QCAT Act [or by an order of a court or a tribunal to which QCAT had transferred a proceeding for the resolution of that dispute].”

That involves a substantial addition to the words of s 229 and such an interpretation cannot be accepted.

The question therefore turns upon the operation of s 229(4) in this case. In particular, it turns upon whether all of the matters presently in issue are within the dispute which was the subject of the plaintiffs’ application to the Commissioner. The plaintiffs argue that there is one dispute with many elements. The defendant argues that issues involving the enforceability of the Caretaking Agreement constitute a dispute, distinctly from that which was the subject of the application to the Commissioner.

It is possible to say that there are distinct claims, and thereby distinct disputes, in relation to, respectively, the LMA and the Caretaking Agreement. There is a considerable overlap of factual issues but they are not identical. It can be said that success for the plaintiffs in relation to one agreement need not have resulted in success for them on the other.

Commonly there are many issues or things in dispute which are to be resolved in the determination of a piece of litigation. For example, in respect of the LMA, there is (or was) a dispute as to its terms, a dispute as to its validity, a dispute or disputes as to the plaintiffs’ performance, a dispute as to whether it has been abandoned or terminated and a dispute as to the extent of the plaintiffs’ loss from not being able to perform the agreement. But each of those issues could also be fairly described as elements of the dispute between the parties which is resolved by this judgment. This illustrates that the word “dispute” can be used with varying degrees of generality, according to the context.

The question here involves the meaning of “dispute” in a particular statutory context. The evident intent of Chapter 6 of the Act is to facilitate the resolution of controversies. It would be inconsistent with that purpose if Chapter 6, and in particular s 229, promoted rather than resolved controversies, by giving rise to unproductive jurisdictional arguments. It would also be detrimental to the operation of Chapter 6 to unduly confine the boundaries of a “dispute”, because that could prevent the one body resolving the entire controversy between the parties with disadvantages of extra cost, delay and the possibility of inconsistent findings.

If the defendant’s argument is correct, the QCAT had jurisdiction to determine the proceeding concerning the Caretaking Agreement but it may not have had jurisdiction to resolve the proceeding concerning the LMA. That is because although the plaintiffs are “a caretaking service contractor”, they have that status from the Caretaking Agreement (including as it does the power to conduct a letting agency). Their claim to enforce the LMA, at least upon one view, is not made by them as a caretaking service contractor. Upon that view, what is said to be the distinct dispute concerning the LMA would not be a “complex dispute”, so that it would not be within the jurisdiction of the QCAT. Therefore, no single entity, including the QCAT, could have resolved what is now the subject of this litigation. The potential for that consequence indicates the risk in adopting too narrow an understanding of what is a “dispute”.

The notion of a dispute in this context should be one which promotes the whole of the controversy between the parties being able to be resolved within the one process. In this respect, assistance can be found in the body of case law dealing with accrued federal jurisdiction.^[91] There are three principles affecting accrued jurisdiction which are relevant here in assessing what constitutes the “dispute”. First, the identification of the relevant controversy between the parties is not to be determined only by a consideration that there are separate proceedings which were commenced.^[92] Secondly, the identification of the controversy involves “a matter of impression and of practical judgment”.^[93] And thirdly, if proceedings were to be tried in different courts, with conflicting findings made on one or more issues common to two proceedings, this will indicate that there is but a single controversy.^[94]

As should be apparent from this judgment, the issues concerning the enforceability of the Caretaking Agreement are ones which almost entirely concern the enforceability and particular effect of the LMA. The possible exceptions are the complaints that the plaintiffs acted wrongly in endeavouring to change the membership of the committee of the body corporate, or more generally in their lobbying of owners for support against the existing committee. Yet even those matters have a connection with the enforceability and effects of the LMA, because the plaintiffs’ conduct, the subject of those complaints, has to be considered by reference to whether they had been wrongly excluded under the LMA.

In substance, this controversy concerned the respective positions of the parties under the LMA, with consequences for their respective positions under the Caretaking Agreement. All of the matters in issue in this litigation should be understood as elements of the one controversy or dispute. In consequence of s 229(4), subsections (2) and (3) do not apply in any respect to this litigation, and this court has jurisdiction in all respects.

Outcome

It will be declared that the document described as the Landscape Maintenance Agreement, originally made in writing and dated 26 October 2005, is valid and enforceable as a contract between the plaintiffs and the defendant for a term expiring on 14 April 2022.

It will be further declared that the document described as a Caretaking Agreement, originally made in writing and dated 24 October 2001, is valid and enforceable as a contract between the plaintiffs and the defendant for a term expiring on 14 April 2022.

There will be judgment for the plaintiffs against the defendant in the sum of $59,200.

I will hear the parties as to costs and any other orders.

Footnotes

[1] T 6-41 and Exhibit 1, Vol 1, p 42.

[2] Exhibit 1, Vol 1, p 44.

[3] Ibid, pp 120-123.

[4] Ibid, pp 307-314.

[5] Ibid, p 215.

[6] Ibid, pp 120-123.

[7] Ibid, p 122.

[8] There is no issue here as to the meaning of this provision.

[9] Exhibit 1, Vol 1, pp 213-233.

[10] Ibid, p 219.

[11] Ibid, pp 304-306.

[12] Ibid, p 307-304.

[13] Ibid, pp 338-344.

[14] Ibid, p 339.

[15] Exhibit 1, Vol 2, p 435.

[16] Defendant’s written submissions, p 43, para 36.

[17] (1994) 179 CLR 597.

[18] Ibid at 602.

[19] Ibid at 602-603.

[20] Exhibit 1, Vol 2, pp 439-442.

[21] Ibid, p 445.

[22] Ibid, p 448.

[23] Ibid, pp 476-481.

[24] Ibid, p 485.

[25] Ibid.

[26] Ibid, pp 497-503.

[27] Ibid, p 503.

[28] Ibid, p 504.

[29] Ibid, p 505.

[30] Ibid, p 514.

[31] Ibid, p 515.

[32] Ibid, p 518.

[33] Ibid, p 521.

[34] Ibid, p 523.

[35] Ibid, p 544.

[36] Ibid, p 545.

[37] Ibid, pp 578-581.

[38] Ibid, pp 583-606.

[39] Ibid, pp 624-633

[40] Ibid, p 638.

[41] Ibid, pp 640-644.

[42] Ibid, p 645-649.

[43] Ibid, p 673.

[44] Ibid, pp 713-725.

[45] Exhibit 1, Vol 3, pp 764-786.

[46] Ibid, pp 805-809.

[47] Ibid, p 808.

[48] Ibid, p 831.

[49] See [29]-[34] above.

[50] Defendant’s written argument, para 12(a).

[51] (1956) 95 CLR 420 at 432.

[52] Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279 at [2], [30]-[32] and [57]; Marminta Pty Ltd v French [2003] QCA 541 at [22].

[53] Exhibit 1, Vol 2, p 512.

[54] Although, so the defendant alleges, with some instances of non-performance.

[55] (2007) 233 CLR 115 at 135.

[56] Ibid per Gleeson CJ, Gummow, Heydon and Crennan JJ citing Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634.

[57] Exhibit 1, Vol 2, p 485.

[58] The defence pleads the letter of 26 February 2009 as one of “2 February 2009” but no letter of that date is in evidence and this is an apparent reference to the letter of 26 February 2009.

[59] Amended Defence filed 24 September 2010.

[60] T 2-59.

[61] T 6-63.

[62] T 6-48.

[63] Exhibit 1, Vol 1, p 122.

[64] Exhibit 16, paragraph 25.

[65] Exhibit 21, pp 9-10.

[66] Ibid, p 5.

[67] Ibid, p 6.

[68] Ibid, p 5,

[69] s 227(1).

[70] Schedule 6.

[71] Exhibit 1, Vol 2, pp 645-649.

[72] Ibid, p 646.

[73] Ibid.

[74] Ibid, p 647.

[75] Ibid.

[76] Ibid.

[77] See [84] above.

[78] Exhibit 1, Vol 2, p 649.

[79] Ibid.

[80] At [69] above.

[81] At [96] above.

[82] Sub-paragraphs 24iii and iv.

[83] The plaintiffs being the owners of the lot from which the caretaking business is conducted.

[84] s 227(1)(d).

[85] Exhibit 1, Vol 2, p 583.

[86] Ibid, p 673.

[87] [2002] QSC 386.

[88] Ibid at [14].

[89] James v Body Corporate for Aarons Community Titles Scheme 11476 [2004] 1 Qd R 386 at 390.

[90] p 41.

[91] Fencott v Muller (1983) 152 CLR 570; Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261; Re Wakim; Ex parte McNally (1999) 198 CLR 511.

[92] Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585 per Gummow and Hayne JJ.

[93] Fencott v Muller (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ.

[94] Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 586 per Gummow and Hayne JJ.

Editorial Notes

Published Case Name:
Henderson & Anor v The Body Corporate for Merrimac Heights
Shortened Case Name:
Henderson v The Body Corporate for Merrimac Heights
MNC:
[2011] QSC 336
Court:
QSC
Judge(s):
McMurdo J
Date:
11 Nov 2011
White Star Case:
Yes

Appeal Status

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

Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Ex parte McNally	View on:JADE(1999) 198 CLR 511	4 citations Jump To Cite 1 - (1999) 198 CLR 511 Cite 2 - (1999) 198 CLR 511 Cite 3 - (1999) 198 CLR 511 Cite 4 - (1999) 198 CLR 511
Fencott v Muller	View on:JADE(1983) 152 CLR 570	3 citations Jump To Cite 1 - (1983) 152 CLR 570 Cite 2 - (1983) 152 CLR 570 Cite 3 - (1983) 152 CLR 570
Fitzgerald & Anor v Masters	View on:JADE(1956) 95 CLR 420	2 citations Jump To Cite 1 - (1956) 95 CLR 420 Cite 2 - (1956) 95 CLR 420
Humphries & Anor v Proprietors 'Surfers Palms North' Group Titles Plan 1955	View on:JADE(1994) 179 CLR 597	2 citations Jump To Cite 1 - (1994) 179 CLR 597 Cite 2 - (1994) 179 CLR 597
James v Body Corporate Aarons Community Title Scheme 11476	[2002] QSC 386	2 citations Jump To Cite 1 - [2002] QSC 386 Cite 2 - [2002] QSC 386
James v The Body Corporate Aarons Community Title Scheme 11476	[2004] 1 Qd R 386; [2003] QCA 329	2 citations Jump To Cite 1 - [2004] 1 Qd R 386 Cite 2 - [2004] 1 Qd R 386
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd	View on:JADE(2007) 233 CLR 115	1 citation Jump To Cite 1 - (2007) 233 CLR 115
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd	View on:JADE(1989) 166 C.L R. 623	1 citation Jump To Cite 1 - (1989) 166 C.L R. 623
Marminta Pty Ltd v French	[2003] QCA 541	2 citations Jump To Cite 1 - [2003] QCA 541 Cite 2 - [2003] QCA 541
Stack v Coast Securities (No. 9) Pty Ltd	View on:JADE(1983) 154 CLR 261	2 citations Jump To Cite 1 - (1983) 154 CLR 261 Cite 2 - (1983) 154 CLR 261
Wallera Pty Ltd v CGM Investments Pty Ltd	View on:JADE[2003] FCAFC 279	2 citations Jump To Cite 1 - [2003] FCAFC 279 Cite 2 - [2003] FCAFC 279

Cases Citing List of cases on Queensland Judgments citing this Judgment

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Body Corporate for Bay Villas on Stephenson CTS 41090 v Stansure Strata Pty Ltd	[2017] QCAT 400	2 citations
Body Corporate for the Lakes-Cairns CTS 28090 v Sunshine Group Australia Pty Ltd	[2023] QCAT 39	3 citations
Breeze Mr Pty Ltd v Body Corporate for Bay Village Community Title Scheme 33127	(2021) 9 QR 90; [2021] QSC 263	14 citations
Breeze MR Pty Ltd v Body Corporate for Bay Village CTS 33127	[2022] QSC 195	2 citations
Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957	[2018] QDC 275	2 citations
Dream Suburbs Pty Ltd v Body Corporate for Persse Palace Community Titles Scheme	[2019] QCAT 373	3 citations
Dunlop v Body Corporate For Port Douglas Queenslander CTS 886	[2021] QSC 85	3 citations
Henderson v The Body Corporate for Merrimac Heights (No 2)	[2012] QSC 79	2 citations
Lynvale Pty Ltd v Body Corporate for Surf Edge CTS 34002	[2017] QDC 191	2 citations
O'Connell v P J Burns Buildings Pty Ltd	[2022] QCAT 155	2 citations
Russell v Queensland Building and Construction Commission	[2015] QCAT 362	3 citations
Sherwood Forest Corporation Pty Ltd v Body Corporate for Centenary Mews	[2021] QDC 166	1 citation
The Body Corporate for Liberty CTS 27241 v Batwing Resorts Pty Ltd	[2012] QSC 340	2 citations
The Body Corporate for The Grove CTS9356 v Comerford	[2019] QCATA 172	4 citations
The Proprietors for Azzura Greens Group Title Plan v Hope Island Resort Principle Body Corporate	[2013] QMC 5	4 citations
TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993	[2018] QCAT 318	2 citations
WLK Management Pty Ltd v Body Corporate for The Persse Villas CTS 27758	[2023] QCAT 458	2 citations
XMR Holdings Pty Ltd v Body Corporate for Xanadu CTS 26361	[2015] QCAT 437	1 citation

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