Foresight Acquisitions Pty Ltd v Body Corporate for Paradise Sands
[2012] QCAT 55
•27 January 2012
| CITATION: | Foresight Acquisitions Pty Ltd v Body Corporate for Paradise Sands [2012] QCAT 55 |
| PARTIES: | Foresight Acquisitions Pty Ltd (ACN 113407408) (Applicant) |
| v | |
| Body Corporate for Paradise Sands CTS 14989 (Respondent) |
| APPLICATION NUMBER: | MCDO248-11 |
| MATTER TYPE: | Other minor civil disputes matters |
| HEARING DATE: | 1 November 2011 |
| HEARD AT: | Southport |
| DECISION OF: | William LeMass, Member |
| DELIVERED ON: | 27 January 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The respondent pay the applicant the sum of $12,553.23 within 30 days. |
| CATCHWORDS: | Body Corporate – Conveyancing |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Foresight Acquisitions Pty Ltd was represented by Mr Perry and Mr Hartnet |
| RESPONDENT: | Body Corporate for Paradise Sands CTS 14989 was represented by Mr Hall, Solicitor and Mr Arunachalam |
REASONS FOR DECISION
This matter arises out of the conveyancing for the sale of a number of units on the Gold Coast and the existence of charges by a Body Corporate care taker Manager ordinarily payable by the vendor of that property but because they were not discovered prior to settlement are now sought by the applicant to be payable by, effectively, the new owners.
Ordinarily such matters are covered by the statements and warranties contained in the usual form of REIQ contract and when later discovered, the vendor would be liable to the purchaser. However, it is understood that this contract was made either, by an administrator or a mortgagee exercising power of sale, and is of an “as is, where is” nature, without the usual included warranties and that is why the matter is before the Tribunal.
The issues to be determined in this matter are as follows:
a) Whether the applicant is validly the caretaker of the Body Corporate because of an error in the assignment documents of which the respondent says disentitles the applicant the charge fees;
b) Whether or not the applicant validly exercised its option to extend the caretaking agreement as and from 30 June 2009;
c) Was the work claimed by the caretaker ever actually done;
d) Did the applicant mislead the respondent by failing to claim or notify outstanding fees in a timely manner.
a)Valid assignment
It is common ground between the parties that the assignment of the caretaking agreement entered into on or about 21 April 2006 erroneously refers to an agreement dated 2 July as being the subject matter of the assignment when it should rightfully be referred to as the 14 September. Because of this the respondent contends that such error is fatal and the assignment is therefore void.
The consequences of the agreement being void would be severe for the applicant.
The flaw in such submission is that the date reference in the assignment is clearly a mistake made by both parties at the time. Presumably, had that mistake been noticed, the parties, in order to put form to their intention, would have rectified it themselves. Further it is not how the parties have chosen to perform their various agreements after the date of the assignment. Both parties have acted as if the assignment was effectual to give the necessary authority to the caretaker to carry out his tasks and charge the correct fees. This clerical error is, upon my view of the evidence, not one as to void the whole of the contractual relationship between the parties, so as to disentitle the applicant from any payment for work done.
b) Exercise of the option
The Deed of Agreement provides that its term was 1 July 2004 to 30 June 2009 with an option for a further five years.
The respondent says this option was never exercised by the applicant or any subsequent signee. For the applicant a Mr Perry says, in his affidavit of 1 November 2011, that he was informed by his solicitor Mr Smith that the option was in fact exercised but has provided no written corroboration of that statement. Nevertheless if this is not correct the parties have, by their conduct, continued the contract, whether formally or informally, from the date that the option should have been exercised until 30 December 2009. Whether or not the option was exercised in writing, as is required by the Deed, the respondent allowed the applicant to continue to so act in that position without notice, cancellation or dismissal of the applicant’s services. It would be improper in such circumstances if the respondent was to avoid payment for those services merely because of a technical failure in the documentation, if indeed Mr Perry is wrong in his evidence and there was in fact such a failure. On the balance of evidence I find that the option was exercised either in writing or by conduct and that such conduct was accepted by both parties.
c) Was the work done?
There is direct evidence given by Mr Perry at hearing that the necessary caretaker works continued to be carried out by the applicant until 3 December 2009.
He says that the complex was large, some 45 apartments, many of which were rented. The complex has facilities of car parking, pool and barbecue. He says continuing works were necessary on a day to day basis in order that the property remained clean and safe, and that tenants’ needs were met.
Further Mr Brett Sutton, the employee, outlines in his affidavit of 22 November, his usual daily routine of work on the property. I am satisfied that those duties required to be carried out by the caretaker were generally attended to up to 3 December 2009 and were the duties for which the applicant was entitled to charge the respondent as set out in the agreement.
As a result of findings above this would ordinarily determine the matter as I have found that on the face of it the Body Corporate entered into a caretaking agreement, the applicant carried out the terms of that agreement and therefore is entitled to be paid. The parties have conceded at the opening of the hearing that the respondent as a Body Corporate retains the liability for a debt notwithstanding a transfer of the effective ownership of that Body Corporate to a new owner.
d)Failure to notify
This is the most significant issue in deciding this matter. The applicant’s claim is for monies owing on a running account basis for fixed fees during a period up until 3 December 2009. However, the applicant was far from diligent in pursuing such accounts and monies outstanding. It received occasional large payments at irregular intervals i.e. in a twelve month period it received $57,209.78 on 6 October 2009 and a further $32,000 on 11 February 2010.
There was, at hearing, no satisfactory explanation of this save that the applicant says that it knew of the financial affairs of the respondent and this affected when it made its requests for payment. It is clear that this whole litigation which was commenced in early 2011 has been conducted upon the basis that the applicant, in fact, made no demand for monies until post property settlement in March 2010. Given the failure to make any demands, the respondent was unable at the date of settlement to be aware of outstanding fees despite requests for direct advice of outstanding sums. This unfortunately remained the case for almost the entire hearing until, in an almost unbelievable manner, the respondent finds in its file correspondence by way of email dated 10 March 2010. Directed to AUA who were the Body Corporate administrator making demands for the outstanding fees and asking that the administrator inform the solicitors for the purchaser of that amount.
It would appear that the administrator received the email because it says on its face that it has been read on 11 March 2010. It is apparent that they did not inform the purchaser’s solicitor and that the purchaser proceeded upon the assumption that no money was owed. The respondent in this matter had good prospects of success if the applicant had, through its own inadvertence, recklessness, or deliberate failure allowed the respondent to act in a certain way in reliance upon the silence or acquiescence of the applicant that there was no monies outstanding. The applicant may then be estopped from later making such claim when the respondent had in reliance upon that moved its position to its detriment.
However now, at this late stage, it appears that in fact the applicant had taken an opportunity prior to the date of completion to ensure that the respondent was not prejudiced and was informed of the outstanding debt by sending correspondence on the 10 March 2010. It reflects very poorly on the applicant and its conduct of this matter, that such correspondence was not disclosed in accordance with its obligation to the respondent at an earlier time.
The respondent, as a Body Corporate, entered into a binding agreement with the applicant pursuant that certain fees were paid. Such liabilities survive the transfer of ultimate ownership of the Body Corporate. The respondent knew of the liability and had complete and rigorous enquiry made, the liability could have been discovered by comparing the fixed liability pursuant to the agreement with the amounts actually paid during the course of the year and could have been established even without regard to the notice of the 10 March 2010. I say this because the liability was a fixed monthly sum and whilst forensic accounting may have been necessary (and the cost unwarranted) as this is a small sum compared with the purchase price which I understand was in excess of $80 million it could have been nevertheless ascertained. In the absence, then, of the applicant actually misleading the respondent’s solicitors, or being seen to remain silent when contrary facts were known the debt must stand.
It is in its nature, a debt that the respondent’s solicitor, absent actual notice from AUA would have never reasonably been able to ascertain, and should have reasonably warned their client as a risk it faced in entering contracts of this nature.
Given my comments as to the manner in which this matter has been conducted it is not appropriate to award the applicant any payment of interest.
I order that the respondent pay the applicant the sum of $12,553.23 within 30 days.
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