Humphries & Anor v The Proprietors Surfers Palms North Group Titles Plan 1955

[1993] HCATrans 178

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry No B7 of 1993

Brisbane

B e t w e e n -

DAVID JOHN HUMPHRIES and

VALERIE HUMPHRIES

Appellants

and

THE PROPRIETORS "SURFERS PALMS NORTH" GROUP TITLE

PLAN 1955

Respondents

BRENNAN ACJ

DEANE J

TOOHEY J
GAUDRON J

MCHUGH J

Humphries 1 29/6/93

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON TUESDAY, 29 JUNE 1993, AT 10.44 AM

Copyright in the High Court of Australia

MR C.J.L. BRABAZON, OC: If the Court pleases, I appear with

MR J.C. BELL, of counsel, for the appellants,

Mr and Mrs Humphries. (instructed by Kinneally Teys) ·

MR P.A. KEANE, OC:  May it please the Court, I appear with

my learned friend, MR D.A. SAVAGE, of counsel, for

the respondent to the appeal which also seeks

special leave to cross appeal. (instructed by

Fitz-Walter Cull & Walker)

BRENNAN ACJ: Yes, Mr Keane. Mr Brabazon.

MR BRABAZON:  I understand Your Honours have some materials

in a bundle which the parties have collaborated about - in the folders - the bulky one, I mean.

BRENNAN ACJ: That is the list of authorities, Mr Brabazon?

MR BRABAZON: That is so, Your Honour, yes. And I think

Your Honours have been handed our outline of

submissions as well.

BRENNAN ACJ: Yes.

MR BRABAZON:  Could we add to that by handing up a

chronology which we have in addition?

BRENNAN ACJ: Thank you. Yes, Mr Brabazon.

MR BRABAZON:  We believe we have set out the issues in a

helpful and comprehensive way because the central

feature of this appeal, and one which has troubled

practitioners and judges in other cases, is the

extent of some general powers of bodies corporate
with regard to the management of units or town

houses. That then descends to the particular case

in issue (e) of the particular agreement in

question here, to see whether or not certain

clauses of it are ultra vires the statutory powers

and void. If so, can they be severed; and then, if

the agreement is at least partly valid, but not

otherwise, how should the question of damages be

dealt with? If it is wholly void, of course, no

question under (g) can arise at all. And we have

noted, (h), the special leave matter which our

learned friend, Mr Keane, mentioned a moment ago.

Your Honours, we feel it the most convenient

course to tell Your Honours something quickly about

the shape of the litigation and then go to issue

(g), because it will perhaps be a short point that

can be determined, first, because it involves in

large part the way the litigation has been

conducted up until the present time.

Humphries 2 29/6/93

If I could take Your Honours to the chronology without at all looking at the law for a moment, the creation of the group title from the body corporate

was on 31 January 1989 and the necessary meeting

followed and in (b) Your Honours will see the

resolution to enter into a management agreement

with Bartlett Research Securities, and that is the

agreement in issue here, because it has been

assigned to Mr and Mrs Humphries, the present

holders of it.

They started their duties, as we see over the

page, following the assignment on 10 January 1991.

But difficulties almost immediately arose and, at

an annual general meeting on 26 February, the

validity of the agreements was challenged and

shortly afterwards - or at the date of that

meeting - payment was stopped to them. Then, on

the same day, at the middle of the page, they were

given notice with regard to some failure to

perform, but that is now not an issue here; it

being disposed of at the trial. On 31 March they

were literally locked out of a large part of their

duties, that is, doing the gardening and, since

that time, they have effectively not been allowed
to manage the physical structures.

They issued a summons for a declaration, rather than a writ, but it was tried on pleadings

before Mr Justice Derrington, which may explain why

it is not, at least in form, a claim for specific

performance, but rather a declaration that the

agreement is in force, in effect, and on foot.	To
complete the chronology, they gave notice of an option under the agreement, extending it until
January 1995, at the end of our second page, and
that explains their interest in attempting, in
every court, to keep the agreement on foot.

In February 1992· the body corporate voted to

give a notice to them pursuant to section 50(9) of
the Act and that was done about then. And the

learned trial judge thought that that notice was

effective because he thought that section 50(9) of

the Act applied to this situation. The Court of

Appeal, as it happened, disagreed with that, so our

clients survived that aspect of the attack on their

tenure. And that is the subject, if Your Honours

are going to entertain it, of this special leave

application.

But none the less, the trial judge having

found that from 1 February the agreement had been

terminated under that section, the matter then went

on for trial before him, thence to the Court of

Appeal and thence to this Court. Now, to come

immediately to issue (g); it was said to the Court

Humphries 3 29/6/93

of Appeal, and it was said to this Court, that if

the agreement is on foot, at least partly, then the

managers recover nothing by way of damages under

it, because they did not prove their damages at the

trial. And we have been at pains to set out at

some length, the course of this matter to

demonstrate, we hope, that that is really an

unmeritorious suggestion, because the issue was not

raised at the appropriate time, and it is now

sought to be raised in a way which would really

inflict an injustice on the applicants before the

trial judge.

Perhaps if I could ask Your Honours to look at

the amended statement of claim, which raised the

issues, at page 123 of the record. Having set up

the agreement in the early parts of the pleading,
that is the management agreement, paragraph 11 says

that:

since 10th February 1991 -

the body corporate -

failed and refused to pay to the Applicants

the remuneration - ·

There is no contest about that; it was admitted.

Then, in 12:

There is now due and owing to the Applicants

by the Respondent the remuneration -

under the agreement -

and the liability of the Respondent to pay

such ••... continues to accrue.

So, at all times, the claim has been for a debt of

accruing salary under the agreement. Paragraph 13

said they are:

ready willing and able to perform -

not denied in the relevant sense, and they asked

for a declaration that the Management Agreement

subsists between them and the body corporate, and

th~ body corporate is bound by it. And they still

ask for that declaration in this Court.

Over the page, the prayer for relief, they do

ask for, in 3:

an accounting of the moneys due to the

Applicants pursuant to the Management

Agreement -

Humphries 29/6/93

and I should observe that in 2 there was a claim

for damages but, as it happened, the accounting was

what they pursued at the trial because - and we

have listed out, we think, in a comprehensive way,

all the relevant parts on the second page of our

outline. Mitigation, or a failure to mitigate was

never pleaded. A claim was in debt, as I have

said, and at page 165 of the record there was some

agreed issues handed to the learned trial judge

which counsel had settled to tell him what the

issues were, and it may be even helpful to say here

immediately, that issues there, 4, 5, 6 and 10 are

now not in issue here, but 9 was the question about

the salary, "Pursuant to the said agreement", that

is the Management Agreement, "how much is due to

the" managers by the body corporate, if any.

TOOHEY J:	Mr Brabazon, is the accounting, referred to on page 125 of the appeal book, or does that
accounting, seek any more than the schedule of sums
attached to the synopsis?
MR BRABAZON:	No, that was sought at the trial. That was

the extent of it. The word "accounting" is perhaps
to extravagant. It was simply a payment of a

calculated sum. The only reason for the

calculation, Your Honour, was the CPI cost

increases from time to time. So that was the

claim. There was no question of damages or

litigation, and we simply give the references to

passages involving the judge at the trial, pages 38

and 45 of the record, where so much appears to be

clear.

The outline, Your Honour Justice Toohey just

mentioned, was handed up, part of exhibit 2.

Mr Humphries was not cross-examined about that

claim, or an issue of litigation, and the cases

handed to the trial judge did not include any issue

about repudiation or recision or damages following,

but that was raised by counsel for the body

corporate when he addressed second, and there was

then a protest about it, the evidence being

different, said counsel, for Mr and Mrs Humphries,

if those issues had been raised before. And that

protest was maintained to the trial judge. To the

Court of Appeal - that is our reference (k) at the

bottom of the page - and, indeed, to this

Court - - -

BRENNAN ACJ:  Where do we find the events referred to in (g)

and (h)?

MR BRABAZON:  Your Honour will not, I think, really find

that. That is a matter which I understand counsel

over there have discussed, and that seems to be an

agreed matter.

Humphries	29/6/93
BRENNAN ACJ: This is in final address before

Justice Derrington.

MR BRABAZON:  That is so, Your Honour, yes. The addresses

at the trial have not been reproduced in the record, though they were largely in writing. The reference to the Court of Appeal protest does

appear in the record at page 213, paragraph 7.

Your Honours, then to complete what I am

submitting, the learned trial judge did deal with

this question at pages 82 and 83 though, we have to

submit, really not paying attention to the

evidence, the course of the pleadings and the

protest of counsel. He recounted the fact that

they sought full payment; said that they could not

recover that - at the bottom of 82 really:

manifestly dependent upon the performance of
the services and in those circumstances unless

the applicants could have obtained specific

performance the claim cannot succeed in this

form. Of course they did not obtain and could

not have obtained such a remedy.

With respect, that may or may not prove to be correct. Over the page:

They are therefore entitled only to

damages -

and so on, down to the middle -

On the material available it is not possible

to assess damages.

That is, opposed to loss of salary - should be

remitted and as he ordered, to the district court

for that purpose.

BRENNAN ACJ:  Part of the bottom of page 82 is designed to

meet the claim, is it not, and to assign the reason

for not according the relief which the present

appellants sought.

MR BRABAZON: Yes, he assigned those reasons to it,

Your Honour. The difficulty about it is - - -

BRENNAN ACJ: And do you challenge the correctness of those

reasons?

MR BRABAZON:  The correctness was not something that was

debated before him and, with respect, it is open to

debate as to whether or not it was the right

conclusion. And to come immediately to the problem

our learned friends, we apprehend, wish to raise,

this is not merely a case of a servant or employee,

Humphries 6 29/6/93

under a simple service agreement, being told to go

and then having to go and not being able to keep

his position open against the wishes of his

employer. This was a case of a business that had

been bought for a considerable sum of money. It

was one of three businesses in the same complex of

townhouses, where our clients own, and still own, a

unit in the building and also earned remuneration

from other things they did, which was letting the

units. So, it is not just a simple dismissed

employee case, which His Honour seemed to have had

in mind.

BRENNAN ACJ: That may be so, but there are two problems

raised, are there not, in pages 82 and 83. The

first is the proposition of law, which is advanced

at the bottom of 82, and then the consequence of

His Honour's view on that is expressed at 83.	Now
I understand an argument which says His Honour's relief as granted to the appellants was not the
relief that was sought.

MR BRABAZON: Yes.

BRENNAN ACJ:  Now, that may be so, but the relief which was

sought is dealt with by His Honour as being not

available, at the bottom of 82. So there is a

question, both of the conduct of the trial and of

the legal principles applicable. My question is

directed to discovering whether you are challenging

the applicability of the legal principles.

MR BRABAZON:	Yes, that is so, we do.
BRENNAN ACJ:	You do?

MR BRABAZON: Yes. And this, we apprehend, is not the place

to debate the full extent of that, except to

say

BRENNAN ACJ:  Why is it not?

MR BRABAZON: Because it was not raised before. It was not

raised and the facts were not elucidated in the

light of whatever was said to be the principles.

There was neither, it seems, a proper discussion of

the law, nor of the facts in evidence.

BRENNAN ACJ: What should follow from that?

MR BRABAZON:  What would follow from that, in the end

result, is our submission that the matter goes back

to the supreme court. We do not seek to trouble

this Court further about it. All we wish to do is

resist the notion that there was such a gap in the

managers' case that they are disentitled, if

otherwise having a good agreement, to ask for any

Humphries 29/6/93

damages at all, when their case was so deliberately

conducted on one footing, about which no issue was

raised at the trial, that it really now cannot be

said that there is a gap in their case.

So we do not wish to achieve, really, a final

result about all those matters here today, because

we cannot. We are simply here to resist what is in

the notice of contention.

TOOHEY J: Is it the position, Mr Brabazon, that by

reference to the chronology your clients did no

work after March 1991, and therefore any claim they

have in respect the period since that time must

arise from the agreement, either by way of claim

for damages or claim under the agreement for the

money they were entitled to receive.

MR BRABAZON:  It must arise under the agreement in some way,

Your Honour.

TOOHEY J: Yes. For the period up until then, other

considerations might arise.

MR BRABAZON:  Yes, of course, because - - -

TOOHEY J: But it is a very short period.

MR BRABAZON: Yes. But, as I have explained, the case for

them at the trial was that they could receive what

was at least due to them up to that stage, having

their staff in place, and so on, at the time. That

was their case.

DEANE J:	If it goes back, what would you be doing?
MR BRABAZON:	No doubt addressing the trial judge, we would

expect, as to whether or not he would reopen the

evidence and the debate about the correct

principles; first of all, about the correct

principles, as to the correct propositions of law

DEANE J: would your first thing be the claim that the trial	what -to be applied, and then, having established that,	judge has said is misconceived?
MR BRABAZON:	Yes, Your Honour, that is so.	We would

attempt to say that, yes.	We would seek to say
that.

DEANE J: This case will never end. What, you will then

appeal from that when you lose, and then apply for

leave to bring it up here again?

MR BRABAZON: Well, Your Honour, with respect, we would not

think that would happen. But secondly, it was not

Humphries 29/6/93

the fault of the managers or their counsel that the

position was achieved. Every effort was made to

make it perfectly plain to the judge and to the
other side what the agreed issues were; even during

the course of argument during the trial, but

that - - -

DEANE J:  By the time the trial judge dealt with it, the

fact that the other side had raised the question of

mitigation made clear that they were not accepting

your right to be paid forever without doing

anything.

MR BRABAZON: That is so, Your Honour. But if that be

right, the consequence had followed then, to deal

with it properly, that the evidence would have had

to be reopened to see how they should have behaved.

DEANE J: Well, we are at cross purposes. I can fully

follow your saying, "In the light of the way things

have gone, the question of damages should go back

so that evidence can be led." I cannot follow why

you say that the question whether you are entitled

to be paid in full while doing nothing for the six

years of the agreement should go back for

reargument.

MR BRABAZON:  We rather hope that it does not go back,

Your Honour, because of the way the matter was

conducted. But we perhaps are optimistic in hoping

to preclude argument about it altogether.

DEANE J: Well, I would think you are the ones who are

trying to argue it, because what you want to do is

have it go back to first instance so that you can

argue that the trial judge was wrong when he said

that the way you put your claim was misconceived.

MR BRABAZON: Yes, Your Honour, I apprehend we would seek to

do that. And for the reasons I briefly outlined,

it may be a good argument about that, it not being

a mere employee case, there being many other

matter. But, at any rate, all we seek to trouble features which were not explored at trial about the	this Court about is to deny the issue that has been
raised here by our opponents that there is simply a
complete gap in our clients' case which cannot be remedied, and we say that would be an unjust result because of the way the matter was dealt with below.

DEANE J: What if one thinks that enforcement of the

contract against your clients would obviously

involve the sort of supervision that an equity

court will not get involved in? Would that not

mean that the paragraph in question is right for a

slightly varied reason?

Humphries	9	29/6/93
MR BRABAZON:	Yes, Your Honour.	That had occurred to us,

but it was an argument that has never been advanced

in this litigation about this particular contract.

So we have not paid any particular attention to it.

GAUDRON J:	Was that point the subject of a cross appeal in the court below, or a notice of contention?
MR BRABAZON:	I cannot answer that immediately, Your Honour.

We will find that out. Certainly it was raised

before the Court of Appeal, because our side

submissions sought to avoid it happening.	We will
inform Your Honour of that shortly.	It may be,

Your Honours, at page 208 of the record - yes, there
is a cross appeal, as Your Honour anticipated;

page 208, ground 3.

GAUDRON J: That is your cross appeal?

MR BRABAZON:	No, that is the body corporate's cross appeal.
GAUDRON J:	I see. Did you take a point about this finding

then?

MR BRABAZON:  No, because the parties were content that it

be assessed somewhere. They did not trouble about

that, I think.

GAUDRON J: Did not trouble whether it was damages or debt

in the Court of Appeal, as such?

MR BRABAZON:	They did not trouble, Your Honour, with the order that it go to the district court for
assessment.  The parties were apparently content
that the matter should be debated at the
appropriate place, which was there, for fixing the
amount. And the other side, the body corporate's
representatives, attacked that notion that it could
go anywhere, saying there really was not any
evidence to have anyone deal with it, and that it
was improper to remit the matter to the district
court for assessment, there being a complete gap in
the evidence. And that is why there was a protest
about it; because of the way it had happened. So,
Your Honours, that is the shape of that dispute
between the parties.

Can I now turn to matters of legal substance.

It may be convenient, I would think, to take the

Court to the several important features of the

statute which bear on this appeal. Your Honours

have, I think, copies of the Building Units and

Group Titles Act, supplied to you. It is, we

apprehend, really, the 1988 version of the Act in
the pamphlet copy because the trial took place, and

all these events took place, a little after those

amendments came into effect in 1988.

Humphries 10 29/6/93

And if, Your Honours, I might just look at

these matters very quickly, in the definition

section, which is section 7 at page 17, we will be

referring to the definition of "prescribed

arrangement" at the middle of the page, because - I

should say this is in the context of some

prospectus-type provisions, whereby certain

information has to be given to purc":1asers of new

units on the market, and certain documents have to

be given to them, and they have to get prescribed

arrangements, and it includes, agreements, et

cetera, between the:

body corporate ..... being an agreement or

arrangement -

(a) by instrument in writing appointing,

pursuant to section SO .....

(b)for the carrying out of any of the

duties .....

(e) for the conduct of a business upon the
parcel (whether upon a lot or the common
property) of letting of lots on behalf of any

proprietors of lots -

We mention that because it is contended, as we

understand, that there is no power in a body

corporate to enter into an agreement of that kind,

and:

(f) under which the rights of the proprietor
of a lot are or are likely to be affected to a
material extent.

And so we are going to·refer to the definition of "prescribed arrangement" when we come to the construction of the general powers of the body corporate.

On the left page is a definition of "common

so much of a parcel as from time to time is

not comprised in any lot.

property":

So that the "common property" and the lots together

make up the whole of a development. And that will

be relevant to some things that Your Honours will

be asked to observe when we come to the agreement.

At section 20, page 27, it is provided that:

The common property shall be held by the proprietors as tenants in common -

Humphries 11 29/6/93

which is a relevant Queensland provision, not

always the same in the rest of the country.

Section 27 is one of two general powers with which

the Court will be concerned, and the constitution

of the body corporate. It is a body corporate

under section 27(1), page 39 of the pamphlet.

Subsection (2):

The Companies Act 1961-1978 does not apply -

The body corporate is constituted under 27 and, under (2), in effect, the corporations rules about

ultra vires doctrines being abolished do not apply.
So that we have to be concerned with the common law

of ultra vires activities of a corporation:

(3) Subject to this Act the body corporate

shall have the powers, authorities, duties and

functions conferred or imposed on it by or

under this Act or the by-laws -

so there are two sources of power -

and shall do all things reasonably necessary

for the enforcement of the by-laws and the

control, management and administration of the

common property.

That is one of the basic powers on which we rely in

this case, and Your Honours will note the attention

to the "common property" .

Your Honours, the next relevant section to

proceed through the Act is section - I might go

immediately to 37 because it is another power

provision of a general ambit, page 49:

A body corporate shall -

(a) control, manage and administer the common

property for the benefit of the

proprietors -

and then it goes on to a number of particular

features, such as the "lawns and gardens" and so

on. So they are the essential powers on which we

rely in this case.

To go back a little to section 30, we see

provisions about the enactment of by-laws, and the

full meaning and ambit of this section is something

that has - as you will see from the cases to which

we are about to refer - had a considerable impact

on the thinking as to how bodies corporate can

manage their affairs. They can enact a by-law

under subsection (2):

Humphries 12 29/6/93

for the purpose of the control, management,

administration, use or enjoyment of the lots

and common property -

by-laws which add to the standard form. Now, in

this case here, there are no relevant by-laws under section 30. But Your Honours may notice that under

(3) the alteration has no effect until notified on

the registered plan. Over the page to (5); they

are really like the articles of memorandum of a

company, because they amount to mutual

covenants -

BRENNAN ACJ:	Do the by-laws bind anybody except the proprietors of lots?
MR BRABAZON:	The answer, Your Honour, is, yes under

subsection (S); it says who is bound.

BRENNAN ACJ:	Thank you.
MR BRABAZON:	Then subsection (7) is at the centre of some

of the difficulties in this sort of case because it

refers to exclusive use or special privileges over

common property. Your Honours, it is very

protective of the rights of the owners at large,
because there has to be a resolution without

dissent before certain things can be done to the

enjoyment of the common property.

Secondly, we would observe these things: the

by-law must be, in the fourth line, at the left, in

"respect of that lot', that is, in respect of a lot

or lots, and not, at it were, just at large:

conferring on that proprietor the exclusive
use ..... of the common property.

And it can only be undone in like manner; that is

by resolution without dissent. And then, under

subsection (8), such a by-law:

while it remains in force, enure as

appurtenant to, and for the benefit of, the

lot in respect of which it was made.

So we would submit that it is really very much a

species of property which is entrenched for the

benefit of that lot and that proprietor, and can

only be undone if that person wishes to agree to

it, because one vote can destroy any attempt to

alter it. A familiar example, of course, is the

use of a balcony, the use of a private garden,

particular rights to facilities, a penthouse having

a right to a roof space, things of that sort.

Humphries 13 29/6/93

We will come to it later, but the essence of

our case here is that it has quite a narrow
operation, as we have described, of a property kind

and entrenching rights, and it does nothing to

impact upon contractual arrangements which the body

corporate may wish to make with a proprietor or any

person personally.

Now, we might just notice very quickly sections 38 and 38A, because they simply give the

power of a body corporate to collect and spend

money on its lawful activities. Section 38A(l)

they establish an -

administrative fund -

and under section 38(3):

shall not disburse any moneys from its

administrative fund otherwise than for the

purpose of -

(a)	meeting its liabilities referred to in
section 38A(l); or
(b)	carrying out its powers, authorities,

duties or functions under this Act.

And section 38A says that contributions may be

determined. In particular, section 38A(l)(c), it

can determine contributions for its liabilities -

in carrying out its powers.

The reason we mention that is this, that one of the

reasons why parts of the agreement were found to be

ultra vires with the Court of Appeal, it was said that there was no power to spend money, in short,

on a letting arrangement, and the first thing we

wish to say is there plainly was power; the real	question is, was it ultra vires or not. So that is
why we mention those sections. Can we add, in that
context, at page 125 of my pamphlet, clause 1 of the Fourth Schedule, its like effect.
Your Honours, they are the sections we wish to draw
particular attention to.

GAUDRON J:	I am sorry, what clause in the Fourth Schedule?
MR BRABAZON:	The first one, Your Honour, of the

Fourth Schedule - I think at page 125 of my copy.

Yes, it is the -

power to employ agents and servants.

Humphries 14 29/6/93

GAUDRON J:	Thank you.
MR BRABAZON:	And this is simply of importance because of a

reason assigned by the Court of Appeal, to which we

will shortly come.

Your Honours, we now think it convenient to

turn to the agreement in question, at least to
introduce the Court to it, before going to what the

Court of Appeal said about it. It appears at

page 99 of the record. Heading, "Village

Co-Ordinator" seems rather a misnomer. The

resolution called for the appointment of a
"building manager", a much more apt description.
In the interpretation, "The Property", at the

middle of page 99, is the whole of the development.

In other words, it is both common property and

private lots, it must be, because the "common

property" has a separate definition:

That part of the Property not being lots -

And Your Honours will see the distinction or, as we would say, a confusion, when we go further down the

agreement. Recital B indicates the intention of

the body corporate:

desirous of the better management,
administration and control of the Property,
and the better exercise and performance of its
powers and duties pursuant to the provisions
of the Act of appointing a manager -

It should perhaps be said immediately that the draftsman seems to have mistaken the expression

"property", when "common property" should always

have been written, because the absence of control

over the private lots really makes that quite

clear. What the body corporate must have been

trying to achieve was the better management,

administration and control of the common property,

because that is what it can do. The Manager -

over the page on 100 -

for the consideration referred to in this

Agreement -

we will come to it later - a salary of $60,000; the

company in this case agrees to do that, and then

the "scope" is important. So once again there is

an emphasis on the maintenance, administration and

good repair of the property and some secretarial

requirements at the owner's direction.

Humphries 15 29/6/93

There is a long list of specific duties: the

first two are of a bookkeeping kind; (c), and from

there on, are of a practical building-manager type duty to attend to the building and its structures,

faults and so on. And then at the top of page 102

is the first clause which brings us here,

clause 2(r). So, the features of it are that:

The Manager shall conduct, from his unit -

as opposed, for example, from some place on the

common property -

a letting agency for the letting of townhouses

on the Property for such owners of the

townhouses, as shall require that service -

it is a voluntary matter for them -

or with prior written approval of the Owner
arrange with a licensed real estate agent or

agents to provide a -

service, and he must -

ensure that at all times he is properly

licensed -

under -

the Auctioneers and Agents Act 1971 - - -

TOOHEY J:  Is that provision at the top of. page 102,

Mr Brabazon, the first indication that the manager will be the occupier of a unit?

MR BRABAZON:  I believe it is, Your Honour. There is no

address, for example, on the front page of the

Manager. I believe that is the first reference -

in this agreement, Your Honour means, of course?

TOOHEY J: Yes.

MR BRABAZON: Yes, in this agreement, yes.

TOOHEY J: It is just a little curious. One might have

thought that it would be spelt out with clarity

that the person to be appointed a manager must be

the proprietor of a unit within the complex.

MR BRABAZON:  There is a later clause to which we are about

to come which may answer Your Honour's query.

Then the agreement returns, as it were, to

general managerial duties, and at 4:
The Manager shall comply with -

Humphries 16 29/6/93

the directions of -

the Owner -

about the work. 5: It is a permitted assignment

with agreement of the body corporate. At page 8 is

the remuneration, not apportioned between any

particular activity.

BRENNAN ACJ:  Do I take it, assignment was approved in this

case?

MR BRABAZON:  It was. deed and, in terms, consented to it in the deed The body corporate was a party to the

BRENNAN ACJ: Yes.

MR BRABAZON:  I could give Your Honour the reference

Your Honour wished to that document. It is at page

107 of the record - the deed of assignment.

BRENNAN ACJ:	Thank you.
MR BRABAZON:	The remuneration on page 103 is a lump sum of

$60,000 per year payable monthly in arrears

adjusted for CPI increases. We say "lump sum"

because the Court of Appeal had its attention drawn

to the fact that it could not be divided between
the activities and that was apparently a reason for
thinking, when they came to the question of

severance, that that was not possible. They also

concluded, while we are talking about that point,

that the manager had to provide the service under

clause 2(r) as part of that general salary and not,

as it were, outside the salary for commission. The

Court of Appeal thought that on balance, though it

was not entirely clear, the better construction of

the agreement was that the duties under clause 2(r)

were part of the obligations in return for the

$60,000, and not just commission. Then follows clause 6 at the bottom of

page 102, which is mentioned in this context.

"6. Facilities."

Our submission is that it is merely meaningless because it seems to depend on some

false notion that the manager had been given some

of those powers and could grant them back to the

owners which, of course, is not right at all. So

we simply ignore clause 6, in our submissions. But

clause 9, at the bottom of the next page, page 103,

is more relevant, and could we observe this about

it: once again, in the last line, it refers to
"Property", which means all the property is

defined. There can be no doubt but that is wrong

in the sense that there cannot be any right in the

Humphries 17 29/6/93

body corporate to deal with lawful activities

within individual units or lots or townhouses.

There is no way that the body corporate could

purport to restrict competition in such a way.	It
only makes sense if one understands that it means
and must mean, on the common property, over which
the body corporate does have power.

TOOHEY J:  I am not sure why you say that, Mr Brabazon. mean, could not the body corporate control
activities within each unit subject, of course, to
it being part of the rules of the body corporate? I

MR BRABAZON:  Your Honour, that perhaps is the answer.

Section 30, dealing with by-laws, refers to the control of lots, as well as the common property, by the enactment of an appropriate by-law, and there

is no doubt, therefore, that to some extent

activities within a lot can be controlled by a

by-law. For example, no noise after midnight; no

coloured curtains unlike the rest of the building,

things of that sort, which -

TOOHEY J: Well, a prohibition on any use other than

residential use.

MR BRABAZON:  That may be so if it is consistent with the

town plan, but beyond that, we would think, that

the body corporate could not venture. For example,

if one of the owners were a solicitor, it could not

compel him not to, in a way, do his work there or

something of that sort.

TOOHEY J:	I must say I do not see why ·· t.
MR BRABAZON:	Well, it would seem to be 0 uch an intrusion,

we would have thought,. upon the rights of a

freehold owner, as not to be permitted. Perhaps we

can shorten the question by saying in this case

there is no by-law which purports to do so; that

might be a sufficient answer. Also, to some

extent, the clause does give a privileged position

to the managers because it promises an absence of

competition. That then, so it is said - -

BRENNAN ACJ:  It does not promise that, it promises that the

owner will not give its permission to competition.

MR BRABAZON:  Yes, that is right. Yes, that is so,

Your Honour. Well, it is said then by the

body corporate that that attracts necessarily the

need to have a by-law under section 30, to come to

the immediate point, because that is a special

privilege conferred by clause 9. So, it would be

said, there is no by-law, admittedly, and therefore

it is void; a void exercise of the body corporate's

power.

Humphries 18 29/6/93

DEANE J: That is clause 9?

MR BRABAZON:  Yes, Your Honour, yes.

DEANE J: But, really, as a matter of construction of this

document, when you read clause 9 in the context of

clause 2(r), it is really not arguable, is it, that
as a matter of construction of the document,
"property" does not mean the whole of the building?

I mean, it approaches the absurd to say that that

means that they will not be permitted to carry on a

business on the common property.

MR BRABAZON: Yes, Your Honour. Yes, that is so.

TOOHEY J: Equally, would it not be reasonable to regard

cleause 1 on page 100, which identifies the

manager's responsibility as extending to ensuring

that the whole of the property, both common

property and units, are properly maintained and

administered? Otherwise you wonder quite what the

manager would have to do in regard to ensuring
maintenance and the keeping of the property in good

repair?

MR BRABAZON: Well, what he of course does not do and, we

would suggest, does not have a right to do under

this general power, to enter a lot and to do

something within it, because that would be - but of

course he can do all things involving its public

aspect, which is the common property.

BRENNAN ACJ:  Can he do anything about patching a hole in

the wall?

MR BRABAZON: There are special provisions in the Act,

Your Honour, where there are, as it were, emergencies or certain maintenance is not kept up

by some necessary things by a lot owner, but they

are special provisions dealing with special

problems.

BRENNAN ACJ:  They may, but are they covered by clause 1?

DEANE J: Say, for example, somebody leaves the tap on and

the plug in the bath. Surely the manager under

this has responsibilities in terms of when the

person underneath goes to him and says, "Do

something about it."

MR BRABAZON: Yes, that is so, Your Honour. Yes, he could

do that, yes. Your Honour, the next clause which

is relevant, is clause 12. So, as Your Honour

Justice Toohey perhaps was thinking before, there

is there an expressed link between unit 1 and these

activities. I should say, it is clear from the

Humphries 19 29/6/93

evidence, that unit 1 is occupied by the present

appellants.

TOOHEY J: But there is nothing there, Mr Brabazon, is

there, that requires the manager to be the holder

of the unit?

MR BRABAZON:  It does not, no, it is simply a question of

occupation.

TOOHEY J:  The holder then presumably let the unit to

someone who thereafter acts as manager, subject to

whatever consent of the body corporate is required.

MR BRABAZON:  Yes, that is so, Your Honour, yes, indeed.

Once again, as Your Honours would have read, there

is reference to the two activities for the purpose,

in the middle of the clause -

of management and letting pursuant to this

Agreement ..... the said lots shall be the only

lots in the property -

or said lot -

from which management of the property and

letting of units in the property takes place.

And it is said that that creates such a restriction

on the other proprietors that it is a special

privilege or an exclusive use, and has to be dealt

with by section 30, otherwise it is void.

DEANE J:  Do you read "management and letting" there as the

business of management and letting?

MR BRABAZON:	Yes, Your Honour, we do, because
DEANE J:	It could not be aimed at stopping somebody letting

his own unit?

MR BRABAZON:  No, indeed not, Your Honour, and we should say

at that point, that it is. perfectly lawful - at

least according to the evidence in this case, as

the Court of Appeal observed, it is perfectly

lawful for any proprietor to carry out a letting

business in his or her unit - "townhouse", I should

say, in this case. Of course, it was lawful for

the appellants to do so. All clause 2(r) does, in

addition to that, is to seek to oblige them to

carry out something for the benefit of the

proprietors which they could already lawfully do. Your Honours, we then suggest it is convenient

to say why we submit that the bodies corporate's

general powers are wide enough to sustain

agreements of this kind.

Humphries 20 29/6/93

GAUDRON J: Could I go back to clause 12. Does that bind

the owner so much as the, I will call it the

manager, in the event that the manager might own

more than one unit or occupy more than one unit?

MR BRABAZON: It binds the manager, we would apprehend.

GAUDRON J:  When the agreement was initially entered into, I

take it, the one owner owned several lots, or

thereabouts?

MR BRABAZON: Yes, they are called, in the jargon of the

Act, the "original proprietor" who, at the moment of formation of the plan by registration, owns everything; that is the original proprietor, and then sales progressively take place to lot owners.

Perhaps it did assume that because as I think

Your Honour understands, Bartlett Researched

Securities was the developer and the first holder

of this agreement.	It was later assigned to Mr and
Mrs Humphries.

BRENNAN ACJ:	Where is the option clause?
MR BRABAZON:	To extend, Your Honour?

BRENNAN ACJ: Yes. 14.

MR BRABAZON: At the top of page 105. Your Honours, the

first step in sustaining a letting agreement of

this kind is to say that it itself is intra vires

the body corporate, putting aside for the moment

whether or not the holder is proprietor or whether

there are questions of exclusive use or special

occupancy and so on, which may raise issues as

between owners. Can we say, and I believe we can

submit it quickly, that sections 27 and 37, which

we have noticed, are wide general powers to the

management and control of the common property and,

unless restricted by some necessary provision

elsewhere, would take as an aspect of general

management the power to create agreements of this

been contested in this case or any other that we	kind, that is, a letting agreement. It has never
are aware that, what I might call, the management
agreement itself, is beyond power; it is only the letting aspect of it that is challenged and our
submission is that the general power over the body
corporate, and to create a management agreement for
its management, would carry, as incidentally valid,
the granting of letting rights to the manager, for two reasons: first of all because it is incidental
to what we might say is a good management
agreement, that is, an agreement under which the
manager has wide control and knowledge of the
building, its tenants and so on; and secondly, it necessarily involves aspects of common property.

Humphries 21 29/6/93

It is impossible, of course, to have a letting

business without intruding upon the common
property, whether by tenants coming and going, by

visiting them or opening the door for them, by

doing things, by going to their units and so on.

The common property is necessarily involved and we

would suggest that it is incidental to that.

Also, the practice in Queensland seems to have become imbedded in the legislation by recognition

and Your Honours will recall the definition of

"prescribed arrangement", which document has to be

given to respect of purchases and it itself

anticipates, or in fact commands, under section 7

at page 17, I think, the original proprietor to

give a variety of things, including:

an agreement or arrangement -

(e) for the conduct of a business upon the parcel (whether upon a lot or the common property) of letting of lots on behalf of

any proprietors of lots;

Definition of "prescribed arrangement".

Secondly - and for this, Your Honours, we need

to turn to the large bundle for the first time - the Auctioneers and Agents Act recognizes such a

practice. Just behind the index there are some

copies of the Auctioneers and Agents Act,

section 42. The effect of all this is - it is

before the pagination, Your Honours, it is the

first document. It is immediately after the index,

I understand, Your Honours.

DEANE J: No, it is after the first two Acts; it is the

third Act.

MR BRABAZON:  Thank you, Your Honour, yes. It is

Auctioneers and Agents Act, section 42, the effect

of which is that someone carrying on a letting

business in buildings of this kind, strata tile

buildings, must be licensed as, indeed, clause 2(r)

itself anticipated and, it is subsection (2) -

there is a restricted license under the Act:

wishes to carry on business as a real estate

agent restricted to the letting of lots in a

building in which the applicant resides -

et cetera, exempted from educational requirements.

And then, Your Honours, over the page is the critical bit. The licensee must have - I am sorry,

at the beginning of the first page -

has an office in that building -

Humphries 22 29/6/93

must have an office -

from which the applicant will carry on

business if granted a licence -

and -

(c) has entered into an agreement in writing

with the body corporate ..... authorising the applicant to carry on the business.

So our submission is shortly this: in place of

those two statutory recognitions, it is really

impossible to say that under the general powers a

body corporate lacks authority to enter into a

plain letting agreement.

Your Honours, we will come in a moment to

Mr Justice Thomas' decision in a case called colloquially, Coastal Style, being the name of a building, and when we do we will see that he sets

out adequately, in our submission, for our

purposes, I mean, the cases at common law which say

that powers, incidental upon the statutory powers,

should not be narrowly construed.

BRENNAN ACJ:  Mr Brabazon, that section you just referred us

to refers to a managing agent within the meaning of

The Building, Units and Group Titles Act?

MR BRABAZON:  Yes. Your Honour, what happened was, up until

1988, that is, these amendments before us, an

appointment under section 50, which may become the

subject of special leave, was called "a managing

agent", now called "Body Corporate Manager" -

section 50. The reason that the Auctioneers and

Agents Act is a step behind is that certain amendments were passed by the Parliament but never

proclaimed. So that is why the definition is some

years out of date.

BRENNAN ACJ:  It is only in the old section 50 that one

finds a "managing agent" within the meaning of The

Building, Units and Group Titles Act.

MR BRABAZON: That is so, and I think also in the form of

section 7, the definition section, it would have

had, I suspect, "managing agent".

BRENNAN ACJ:	It does not seem to be in it now.
MR BRABAZON:	No, the definition now, which is its analog,

is "Body Corporate Manager".

BRENNAN ACJ:  Yes, thank you.

Humphries 23 29/6/93

MR BRABAZON:	Your Honours, with regard to the Queensland views about this question of general power, can we
quickly deal with the question this way: the first
case which, in a very short way, touched on the question, was that of the Full Court in a case
called - it is No 3, Your Honour, in the bundle -
Victorian Professional Group Management Pty Ltd v The Proprietors "Surfers Aquarius" Building units,
page 22, the Surfers Aquarius case, and Your Honours, the relevant parts, rather shortly
expressed, are these - and I may say that it is apparent that that was a case where the use of
common property was necessarily involved because of
the physical conduct of the business. So much appears at the bottom of page 489 of the report,
under the heading "Letting agreement",
Mr Justice Connolly's decision.  Now, the reason we
are mentioning this decision is, it is at the base of some difficulties which have bedeviled later discussion of the topic:

The letting agreement gave to -

the letting agent -

the sole right to carry on the business of

letting and selling agents in relation to the

premises in the building.

Further on:

a reception desk either in its own premises

(Lot 2) or within the common area -

which is a critical feature of the case, "and
contained a covenant" and so on. At the bottom of

the page, with regard to the common property:

It thus conferred special privileges on the agent.

That is the expression in the by-law power,

section 30, because it was part of the common
property.	On the next page:

and obviously contemplated the exclusive use

of part of the common property by the

proprietor of Lot 2.

He then points out there was no effective or

relevant by-law, and then at the bottom of the page

the by-law does not:

authorise the all important covenant by the
body corporate not to grant a lease or licence

in respect of any part of the common property

to a competitor of the proprietor of Lot 2.

Humphries 24 29/6/93

So the assumption in the case, and in the addresses

of counsel was, that such a covenant would need to

be sustained by a by-law under section 30, or it

would be void. And so it is really a case about

special privileges on common property, and whether

or not a by-law is needed. And at the bottom,

Your Honours, of page 491, about line 40:

Moreover one asks oneself how was -

the letting agent -

entitled to ... a right of exclusive use and

enjoyment of, or special privileges in respect

of any of the former common property.

And he could not find any source of power, and

therefore it was void. And that is really the

extent of the decision. Mr Justice Thomas,

Your Honours will see, was a member of that court,

and agreed with what was said there but, as we will

see in a moment, in the Coastal Style decision, of

which he was the trial judge, he retreated from his

agreement in the decision. And I might come
immediately to that, which is at the back of the

large bundle. It is at page 297, where I wish to

refer to it.

Coastal Style was a case where a feature

should be mentioned; that is, the letting agent was

not a proprietor, the letting agent was an outside

company, and that was seen to make a difference.

And there was also no relevant or effective by-law,

which is like this case. At page 11 of his

reasons, page 297 of the bundle, he considered the

case of the letting agent, that a special by-law

under section 30 was not necessary, and we wish to,

in effect, ask this Court to accept that the

general line of reasoning which he now embarks upon

is the correct one. He looks at the general power

in section 27, at the bottom of page 297; discusses

page:  page and other general power. At the middle of the the general power; looks at section 30 on the next I have no doubt that -

the body corporate -

has the power, for purposes of the good

management of the building and the common

property, to grant licenses and make contracts
with respect to the common property, subject
of course to express or implied provisions in
the Act that preserve the common property for

the benefit of the proprietors.

Humphries 29/6/93

And then he says why he reaches that conclusion.

The first limb, Your Honours, was some evidence in

the case about conveyancing practices, the effect

of which was that before this basic Act was adopted

in 1980 practitioners never thought that by-laws

were necessary to confer power on bodies corporate,

and that the Act was passed in the light of that

practice, and he discusses that at the bottom of
page 12 of his reasons and on to the top of

page 13.

Your Honours, in this case an analogous agreed

finding of fact was settled between counsel and it

appears at page 119 of the record. That is, it is

very much like what Mr Justice Thomas had to say,

though somewhat shorter.

So, Your Honours, in this case, as in Coastal

Style, the appellants rely on that practice as an aid to construction, in the case of ambiguity at

least, as one of the limbs in extending and

supporting the general power. His Honour then went

on on page 13 that there was no attack upon the

management agreement itself. Just above the middle

of the page:

it is difficult to see why the provision of
the further service of a letting agent within

the building should be regarded as being on a

different footing -

that is of management generally - A letting facility on the premises may be

regarded as a service for the benefit of the

unit holders.

Your Honours, could we then deal with the top of

page 15 this way - - -

BRENNAN ACJ:  Does that case of Adelaide City Council v

Altinorm throw any light upon the debate?

MR BRABAZON: It is actually Altmann, Your Honour. It was a

case which did two things. First of all, it
adopted the general proposition set out on page 14

of his reasons from Ashbury Railway Carriage and Iron Co v Riche about incidental powers. He was

also interested in it because, acting under the

general power of management of a waterway or a

river, the authority granted an exclusive right to
the owners of a certain tourist boat to carry on
business there; it was an exclusive right. That
was the effect of it.

Then if I could take Your Honours to page 14. Your Honours will have seen the general proposition

Humphries 26 29/6/93

at the middle of the page. All those cases really

deal with that general idea, that is:

"whatever may fairly be regarded as incidental

to, or consequential upon -

statutory powers -

ought not (unless expressly prohibited) to be

vires". held by judicial construction to be ultra

He mentions the Crayford case at the bottom where

the council had the duty of managing some council

housing, and it was held to be intra vires to

arrange a blanket insurance policy over the

personal effects - not just the house, the personal

effects of the owners, because that was incidental

to their task. It was also a case where the

construction of the legislation was held to be

helped or fixed by the previous practice which had

gone on for a long time. He mentions that over the

page. His Honour having found, as it were, those

wide powers, had to deal with the question of the

"Surfers Aquarius" case of which he had been a

member. He does that from page 15 onwards. About

a third of the way down:

Prima facie I consider the above

submissions to be correct -

that is the wide general powers. He said the

opposition came from the "Surfers· Aquarius"

decision. Two-thirds of the way down:

There is no discussion in that case of the

need for a by-law to empower the Body

Corporate to make a sole letting agreement,

but the judgment assumes that a by-law was

necessary.

He discusses that case, section 30 itself, which I
will pass over very quickly.	He comes to his

conclusion at the middle of page 17:

I prefer the view that a letting

agreement such as that in the present case is

within the general management powers ..... and

that the assumption in the Surfers Aquarius

case (in which I concurred) is incorrect.

The reason he thought that was because he thought

that section 30 and 30(7) dealing with special

by-laws and by-laws without dissent were, as he put

it on page 18, about a third of the way down:

Humphries 27 29/6/93

My preferred view is that the correct construction of s 30(7) confines it to special

arrangements in favour of proprietors,

generally of the kind referred to in the words

in brackets in that subsection. However it is

not a matter upon which I feel free to depart

from a Full Court decision.

So that, in essence, is our position before this

Court, that that is a correct approach that he is

taking there.

Your Honours, when the matter then went in

that decision, as it were, the Coastal Style

decision, it went to the Court of Appeal, it then

having replaced the Full Court in "Surfers

Aquarius".	The Court of Appeal essentially reached
the same view.	One can see it ~t page 282 of
Your Honours' bundles.	It is:-: page 10 of a

judgment; I might just start there, I think. The

Court of Appeal considered the same issues in the

Coastal Style case. A third of the way down:

Issue (i) substantially turns on

sub-s 30(7) of the ..... Act - which is then set out.

By-law 60 ..... did not authorise such a

grant - So it was a no by-law case like this one.	Over the
page the body corporate:

assertion that the Deed was invalid did not
turn on the absence of a by-law ..... the

appellant's essential point on this aspect was

that, on its proper construction, sub-s 30(7)

prevents the grant of exclusive use or

enjoyment, or special privileges, in respect

of common property to a person who is not the

proprietor of the lot.

So Your Honours can see introduced now for the

first time not just the question of a mere letting

agreement, but one which has with it this feature

that there is exclusive use or enjoyment or special

privileges over the common property. The attack,

as it were, has been widened upon it. They dealt

with the general powers at the top of page 12 of

their reasons, looking at the general powers: These are extensive powers and, except where

the Act otherwise expressly provides, there

seems no reason to exclude from their ambit a

power in the body corporate to grant exclusive

use or enjoyment, or special privileges, in

Humphries 28 29/6/93

respect of the common property for the purpose

of a business -

Further down, about two-thirds of the way down,

beginning "Other considerations aside", they

conclude by saying:

Other considerations aside -

there can be a grant of these things over -

common property to a proprietor of a lot as

well as other persons.

Because a non-proprietor was the Coastal Style

letting agent. On page 13 they considered

section 30(7). So, Your Honours, the effect was

that certainly in the case of a non-proprietor,

there was certainly no need for a by-law. They

rather thought there was no need in the case of a
proprietor, but they stopped short of dealing

conclusively with the "Surfers Aquarius" case

because that was made with a proprietor:

it is unnecessary to consider the correctness

of that decision.

Your Honours, can we conclude what we are

saying here by asking Your Honours to recall

section 30 which has been at the centre of so much

discussion. Our submissions about it are really

set out at length at page 4 of our outline in

paragraph 8. Our submission is really this, that

section 30 deals with a special case and especially

with regard to subsection (7), that is where an

owner wishes to entrench on the register a certain

privilege or whatever over the common property,

that may be done.

But we say in our submission that short of

that situation, there is no conflict between the

general management power under 30. Provided that

the general power does not purport to do precisely

what is set out in subsection (7), there is no
restriction upon it. When I say "precisely", to

have the effect, that is, that it is entrenched

within the register. What we submit is that

otherwise there is no reason why it cannot enter

into personal contractual arrangements with anybody

dealing with the common property as part of its

management power. Those arrangements of course

will not have the entrenched force which the by-law
might give to certain arrangements.
If one thinks of a simple example for a moment, many contractors and worlanen who come onto

bodies corporate have rights of special privileges

Humphries 29 29/6/93

,or exclusive use, at least for a short time, in

respect of their jobs and so on, and it would not

be suggested, we feel, that they were all void

because there was no by-law about it - for example,

the builder who has some privilege or right for six

months to renovate the property or whatever. we

say in our submission that that would extend to a

proprietor who has a personal arrangement such as

this proprietor did.	Your Honours, they are our
submissions about that.

The question which remains is to decide,

having said all of that, whether or not this

agreement is void. If we could ask Your Honours to

turn once again to page 102 of the record, our

submission is simply this, that clause 2(r) can be

maintained as a simple letting agreement

uncomplicated by these other ideas sustained by the

general power. It does not even have the

complication which the "Surfers Aquarius" case had

that the manager was obliged to do something
necessarily in the sense of an office or whatever

on the common property. So, in our submission, there is no vice at all in section 2(r); it has

nothing to do with the constraints of section 30 on

any view, and therefore is not ultra vires.

We have submitted that section 6 could be

skipped over as being meaningless. The question

then is whether 9 or 9 and 12 together have such a

vice in them with regard to the link with Lot 1,

that they are ultra vires. Our submission is

really essentially the same, that they are simply a

personal contractual arrangement which does not

offend on the very narrow operation of

section 30(7).

At the most, if it were thought that our submissions could not be accepted, especially with

regard to clause 12, the over-ambitious part of

that would be, we would submit, the references to a

letting or letting of units. That is, there is

nothing wrong with the management aspect of it, as

we understand it; it is the letting which was

attacked. Your Honours might recall - and I will

come to the Court of Appeal here - that the trial

judge thought that clauses 2(r), 9 and 12 were all

offensive but could be severed. The Court of

Appeal thought that 9 and 12 were offensive and

were clearly severable but that the agreement fell

because of 2 ( r).

It would be convenient now to turn to the

reasons of the Court of Appeal which start at

page 221. Your Honours, there is a short and

useful, if we may say so, summary of the parties'

cases at the beginning of the reasons, saying what

Humphries 30 29/6/93

the trial judge declared, that with the exception of clauses 2(r), 9 and 12, the agreement was good but it was terminated under section 50(9) from

1 February 1992. Over the page:

The appellants -

the managers -

seek to have the orders made by the trial

judge varied to delete the reference to

clause 2(r) of the Management Agreement -

to restore that -

and to have the further declaration that the

Management Agreement was

terminated ..... removed.

As Your Honours know, they were successful in that

further declaration, the Court of Appeal finding
that section 30(9) did not apply, so it was not
terminated. We will come in a moment to how they
fared on the invalidity points about ultra vires.

Further down in the middle of the page:

By its cross-appeal

BRENNAN ACJ:  I do not think you need read the judgment to us, Mr Brabazon.

MR BRABAZON:  Thank you, Your Honour. Their Honours dealt

with it this way.	I will pass over dealing with
section 50 which is not presently relevant.	They

then deal with the question of ultra vires from the

first large paragraph down on 232 beginning "In

these circumstances". -At about line 20:

It therefore becomes necessary to consider the respondent's contention that the Management

Agreement was ultra vires and void. Reference

was made by the trial judge only to

clauses 2(r), 9 and 12 -

and they set them out, Your Honours.

At page 8 of those reasons, about line 40:

It is unnecessary to consider the clauses

in categories (ii) and (iii) -

that is 9 and 6 -

because, if objectionable, they are plainly

severable.

Humphries 31 29/6/93

It was clause 2(r) over which the managers came to

grief before the Court of Appeal. The reasons were

these - perhaps I should take Your Honours with

some little more care to the next page. They set

out their understanding of the agreement. At

page 9, about line 35:

So far as is shown by the material available,

it is quite permissible to use any unit in the

property for the purposes specified -

that is the letting -

However, the respondent's other objection

in relation to clause 2(r) is entitled to

succeed. That is the question, Your Honours, of having to do

all the work for one indivisible fee. At the top

of page 10:

Whether or not a body corporate has power to

appoint a letting agent to provide a service

to individual proprietors ..... no power to

expend the body corporate's funds in payment
of the letting agent ..... has been identified.

Your Honours, that is why I drew attention to those

sections in the Act: 38, 38A and the Fourth

Schedule. With the greatest respect, that reason

is plainly incorrect. If it is intra vires, there
is a power to pay. The question is whether it was
intra vires or not. Secondly, the Court of Appeal

said at about line 20:

There can be no question of severability

and, since clause 8

that is the remuneration clause -

forms the very basis of the appellants' claim

to damages, their action must fail.

Those conclusions are challenged in this way:

first of all, as I have submitted, clause 2(r) is

not ultra vires. Secondly, there is a power to

pay, as I have submitted, so there is no

difficulty. However, we should briefly deal with

the question of severability on the basis that

Your Honours are persuaded that 2(r) is ultra vires

or even, indeed, some of the other clauses, because

we would submit that looking at the correct test,

what His Honour Mr Justice Derrington did at trial
would then prove to be correct, that is to allow

the agreement to stand generally, shorn of, at the

most, 2(r), 9 and 12.

Humphries 32 29/6/93

The reasons we say that are because of the

authorities, including this Court. Can we go

immediately to what appears to be the leading case,
it being accepted in this Court and the Privy
Council. It is case No 8 in the list, page 70,

McFarlane v Daniel, it being approved - perhaps if

I could just refer to the index - in the sense we

are about to refer to it by the Privy Council in

Carney v Herbert, (1985), the reference is there,

and by this Court in the Queensland case of Thomas

Brown & Sons Limited v Fazal Deen & Anor, cases

Nos 9 and 10.

That was a case like this where an employment

agreement was challenged as being void but not

illegal; it was a restraint of trade clause. That

is at page 70, Your Honours. Just immediately

looking at the headnote:

A promise in consideration of a number of

promises, some only of which are void,
although not illegal, is inherently capable of

being enforced. Tests of severability

considered.

This is a case, Your Honours, where an employer

promised salary to an actor in return for a number

of things - acting and so on - and also in return for a restraint of trade clause. Page 338 of the

report is the case in the first paragraph.

Admittedly, the restraint of trade clause was too wide and was bad; the question was whether he could

recover his salary. The Chief Justice set out the

defendant's case at page 344, just from the

beginning, about the sixth or seventh line:

the defendant can escape his obligation to pay

anything for any services which may have been

rendered by the plaintiff under the contract.

He went on to consider illegality at the top of

page 345:  When, however, the promises made by one

of the parties are some of them illegal, or void, and some of them valid, the questions arise whether the valid are severable from the

invalid, and if so whether they are

enforceable.

Then he follows a test, Your Honours, which has

been adopted in those other cases, and at least

elsewhere, beginning "When valid promises" down to

"would be inseverable". The critical bit here

would seem to be, after Horwood v Millar's Timber:

Humphries 33 29/6/93

If the elimination of the invalid promises

changes the extent only but not the kind of

the contract, the valid promises are

severable.

He then discusses illegality, about which of course

a more severe view is often taken. At page 347,

Your Honours, about a third of the way down, he

says this:

Where a promise is void but not illegal,

somewhat different considerations arise. A

valid promise is none the worse for being

associated with a void promise from which it

is severable ..... a promise which is wholly

void ..... a promise in consideration of a

number of promises some only of which are

void, although not illegal, is inherently

capable of being enforced.

He discusses the question of it being conditional,

which does not seem to arise here. The next page,
Your Honours, the reference to Joseph Evans v
Heathcote, a third of the way down, in that case:

But the agreement to pay the arinuity might be regarded as made in consideration not only of

the restraint but also of the sale of the
business •.... the vendor was entitled to

recover because there had been no total

failure of consideration.

In that case, therefore, the actor recovered. Even

though he could not provide all the consideration,

he had a promise.

Your Honours, to conclude our discussion of

severability, we felt it useful to refer to a text

book, because it collects together some things we
would seek to show to the Court. Your Honours

should have copies of a part of Messrs Chesire and

Fifoot's book, chapter 13. It is at the back of

the bundle, page 383. These are the parts we would

wish to refer the Court to in what, if we may say

so, is a helpful short discussion of the topic. At

the middle of para 1302 it is pointed out that void
contracts or parts of void contracts have been

treated differently compared to illegal contracts.

Right in the middle of the page:

whereas in the case of contracts statutorily

void, or void as being contrary to public
policy, the tendency of the courts was rather

to permit severance where it was appropriate

or just to do so.

Humphries 34 29/6/93

If we could turn over to page 538 of the text, para 1305, the Privy Council rejected the idea in

Carney v Herbert that the question of severability

had to be judged as at the time of the conclusion

of the contract. They refused to do that .....

later events. At 1307 the distinction is made

between taking out the whole of a clause or part of a contract and taking out part of one provision but where it contains divisible ideas. It is the

bottom:  second illustration in 1307, just before the

Second, severance may operate to cut down an

objectionable promise in extent -

and we would refer that to the Court. The test

which the authors put forward at para 1308, if I

could perhaps ask the Court to read those

provisions beginning "Elimination of a promise".

There is a test of divisibility at para 1310, and

that is all we wish to refer the Court to.

Can we conclude our submissions by

saying -

BRENNAN ACJ:	What is the effect of severance on the consideration passing from the other party where
that consideration is entire?
MR BRABAZON:	The point that we wish to submit is that

severance will be allowed in many cases where there

is merely a void provision, as may be the case

here. Simply because some provision is void does

not automatically mean the whole contract falls.

One rather has to look at - and depending on the

precise test Your Honour takes, because it has been
put in more than one way - is the nature of the

agreement changed and not just merely the extent;

is the substantial part of it crossed out?

BRENNAN ACJ:  I am not making myself clear. I am assuming

in your favour that though clause 2(r) might be
held to be ultra vires, it is severable.	The

question then is: what effect does that have upon

the promise to pay the consideration of 60,000 a

year?

MR BRABAZON: It has no effect.

BRENNAN ACJ: 

Is there any authority to say that?

Sir Frederick Jordan was saying in HcFarlane v
Daniel, that even though the actor there was

MR BRABAZON: 

That is what we would apprehend to be what

promised his salary in return for several promises,

the fact that one was taken out because it was void

- that is the restraint of trade - he none the less

Humphries 35 29/6/93

recovered because while the extent of what was

promised by him changed somewhat, the general

nature of the engagement did not. That would seem

to be the consequence of that. Otherwise,

Your Honours - and that was in a way why we looked

at that little part of the headnote, that when

there is simply one promise coming from one side -
that is the salary; it is indivisible - and part of the other side is bad, it will not necessarily mean

the agreement fails.

BRENNAN ACJ:  Does this then turn on a question of fact as

to the extent to which the void promise constitutes

a substantial part of the work to be done?

MR BRABAZON:  No, Your Honour, we would say that the first

thing it depends upon is the construction of a

written agreement.

BRENNAN ACJ:	Of course.
MR BRABAZON:	What does one gain by looking at the

management agreement? Might we say in that regard

two things: first of all, by finding 2(r) as one

of the later subparts of a multiplicity of duties,

one would not really be encouraged to think that

the parties thought it was important, bearing in

mind that the general description of the duties

says nothing about letting as well as it might have

done so.

Secondly, of course, the difference in the

factual situation if clause 2(r) is struck out is
not to prevent these things happening, because they

are perfectly lawful in any event, and the evidence

showed the Humphries were carrying on their

business anyway, as the judge said, dehors the

contract. The only difference is that it would

make voluntary what under the agreement was sought

to be compulsory. The factual evidence showed that

in fact they were getting conunissions as they were

entitled to do under their general status as

proprietors in any event.

DEANE J: But if the Court of Appeal's construction is

correct, was it not to the effect they had to let

everybody's unit without charging any conunission?

MR BRABAZON: That was the Court of Appeal's view,

Your Honour.

DEANE J:  On that construction, I have trouble seeing the

force in what you say.

MR BRABAZON: Because, Your Honour, perhaps they are doing

less work for the same salary would be the

conclusion perhaps that - - -

Humphries 36 29/6/93

DEANE J: But if they were required - and this is on the

Court of Appeal's construction - to carry on a free letting service for any unit holder who wanted to let his or her unit, it is rather difficult to say

that it was a subsidiary or supplementary activity

to the management of the units.

MR BRABAZON:  It was certainly one of the functions. question is whether or not what is left could still The

be described fairly as a management agreement and,

in our submission, it could be. That is, the

extent would certainly be altered, we have to say,

but whether the kind of agreement is destroyed,

that is where we suggest it would not be. There is

still, as the trial judge thought, a worthwhile

management agreement on foot.

BRENNAN ACJ:  It would seem a curious thing though, would it

not, if the - how many units are there in this

building?

MR BRABAZON:  Your Honour, I have searched that in the

evidence.	The best estimate one can give is not
less than	50 because - well we have looked at the
evidence,	and that is, I think, about right.

BRENNAN J: Just let me take a hypothetical case, an extreme

case, where it is a multi-storey high rise and

there might be hundreds of units in it, there is a

pocket handkerchief of grass in the front and an

entrance hall that has to be swept once a day and

the price is $60,000 a year and clause 2(r) is void

MR BRABAZON:  Yes, I perfectly understand what Your Honour

is suggesting to me. Can I respond this way by

saying, as best as one can work out from the

evidence there are about 50 units in this townhouse development. Being townhouses and not towers, they

are geographically spread across the land and, in

the evidence, Mr Humphries said how he had to

manage several acres of gardens - I think four or

five was the evidence. So, the evidence in fact is

really to the contrary of the hypothetical example

that Your Honour just put to me. The evidence was
that this was in a complex of three developments.

The total number of units was 144, according to the

evidence. Mr Love, who gave evidence about this

situation, lived in unit 48 in this set of

buildings. That is why we suggest that probably
about 50 was about the number of units, as best one

can estimate. So to answer Your Honour's question,

it really was, rather than being the tall series of

letting properties, it was a geographically spread

out system of townhouses, with bushes and gardens between them. Perhaps we should give Your Honour

Humphries 37 29/6/93

the reference to that. It is in the brief evidence
that he gave.

Your Honours, he talked about the things he had to do at page 12, the pool and all those sorts

of things, about mowing the gardens and so on. The

management functions took him 80 hours a week in

the summer and 40 or 50 in the winter, because the

gardens did not grow so much. At the middle of

page 12 of the record and 12 of the transcript:

I would say the complete gardens, outside

gardens, outside gardens in North -

that is this development, Your Honour, north, the

particular one -

would be between four an	i half to six acres
of gardens, and that did_	- take into account
any of the back gardens

et cetera -

the pool was quite large with a waterfall.

So I have endeavoured to answer Your Honour's query by responding to those things. And perhaps, since

Your Honour asked, we should look at the evidence

where he did say what was taken up with the letting

function. He was asked about that. At the top of

page 11, I should say, Your Honour, with regard to

these physical things:

The North is much bigger -

than the other two parts of the complex.

BRENNAN ACJ: Perhaps that can be looked for later, Mr Brabazon, and you can proceed with your argument.

MR BRABAZON:

question of the indivisible consideration coming Yes. To conclude though, with regard to the

from the employer, of course, if one thinks of any

of the cases where a clause is void and goes, say a

maintenance settlement between husband and wife

where some part is invalid, as some of the cases

say, the consequence of all those cases is that

even though a part goes because it is void, the

other, as it were, bulk consideration all remains

in every case, as indeed it must.	They are our
submissions.

BRENNAN ACJ: Yes, Mr Keane.

MR KEANE:  We hand up copies of our outline of argument.

Can we call Your Honours' attention to the fact

Humphries 38 29/6/93

that that outline also contains an outline of the

argument on the cross appeal if the leave were to

be granted.

BRENNAN ACJ: Yes. Yes, Mr Keane.

MR KEANE:  Your Honours, may we say firstly, with reference

to paragraph 5 of our outline on page 3,

Your Honours may be somewhat baffled by the

presence of that paragraph. It does not address

the question as to damages which our learned

friends have raised. It is directed to paragraph 5

of a notice of appeal which is as page 250.	we
apprehend that it is not really necessary for

Your Honours to concern yourselves further with that paragraph.

Your Honours, we wish to say some things

generally about the effect and scope of the Act,
but before we move on to do that, having regard to
the time, can we mention a number of matters that

we can deal with shortly although, perhaps,

miscellaneously.

The first of those matters is in relation to

the decision of the Court of Appeal in

Coastal Style. We think we should mention to

Your Honours that that decision was delivered 17

days before the decision of the Court of Appeal in

this case, and on that court was the learned

President and Mr Justice Davies, both of whom were

on the court in this case, and may we suggest that

whatever one may say or do with the dicta in the

lengthy passages to which our learned friends took

Your Honours in the Coastal Style case in the

Court of Appeal, one respect in which that case is
clearly distinguishable from this is that in the

Coastal Style case as appears at the bottom of

page 274 of Your Honours' booklet, where the terms

of the agreements in question in that case were set

out, it appears that the management agreement and

the letting agreement were separate agreements. It

appears that the management agreement provided for

the manager's remuneration. That appears from

page 275 in the first couple of lines on that page,

and it appears that there was no such provision for

payment by the body corporate for the letting

services performed pursuant to the quite separate

letting agreement.

That, we apprehend, though it is not said to

be so, constitutes the clear point of distinction

between the Coastal Style decision in the

Court of Appeal, and this case as appears from

page 236 of the record in this case in the

judgment, really, lines 1 to 25 where the kernel of

Their Honours' decision is contained. The point

Humphries 39 29/6/93

being, Your Honours, that Their Honours were

focusing attention upon the fact that in this case

the body corporate had engaged itself in respect of

a monetary liability, that is to say, it had

committed the funds of the body corporate, and in

that regard may we mention sections 32 - would

Your Honours prefer I mention these matters later?

BRENNAN ACJ:	No, Mr Keane.
MR KEANE:	May I mention sections 32, section 38A and

section 38B of the Act, the effect of which is to

expose individual proprietors to what amounts to an

unlimited personal liability in respect of the body

corporate's actions, if the body corporate acts in

accordance with its statutory authority. The Act

creates a statutory corporation - our learned

friends have taken you to section 27(1) - it

invests that corporation with various functions -

our learned friends have taken you to

section 27(3), section 30 and section 37 - and our

submission is that it endeavours to strike a

balance between protecting individual proprietors

as members of the body corporate and enabling the

body corporate to function for the general benefit

of members.

It strikes that balance by limiting the powers

of the body corporate and by observing a

distinction between the management of the common

property, which is the essential function of the

body corporate, and the management of lots in

relation to which by-laws are necessary. Our

submission is that an agreement that provides for

the conduct of a letting agency in respect of
individual lots for reward is not a matter
concerned with the management of the common
property, and nor is it a matter reasonably
necessary for the management of the common

property. It is therefore not within the general

powers contained in sections 27(3) and 37(1), and

we would like to elaborate upon that submission

after lunch, if Your Honours please.

BRENNAN ACJ:  Thank you, Mr Keane. How much longer do you

expect the remainder of your argument to take?

MR KEANE:  Your Honour, I will think I would be a little

more than an hour.

BRENNAN ACJ:	I see.
MR KEANE:	That would hopefully include what we wish to say about the application for leave.

Humphries 40 29/6/93

BRENNAN ACJ:  In that event, we will not proceed to the next

case before 3 pm.	The Court will adjourn until
2.1:-S.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.19 PM:

BRENNAN ACJ: Yes, Mr Keane.

MR KEANE:  Thank you, Your Honours. Your Honours, before

lunch we submitted that the Act observes a

distinction between the management of lots and the

management of the common property. If we can take

Your Honours to section 37(1) of the Act,

Your Honours will see that it provides that a body

corporate shall:

control, manage and administer the common

property for the benefit of the proprietors - Your Honours, we apprehend our learned friends'

submission to be that the making of an agreement to

create a letting agency is a matter of management

of the common property. We submit that it is not

to the extent that it is a matter of management of

all, it is a matter of management of the lots. We

submit that the broad implication that our learned

friends seek to draw from the obligation to manage

is one which does not carry with it, as an incident

of that obligation, a power to enter into

agreements for the letting of individual lots.

That such a power is implicit in 37(1) is

unlikely, having regard to a number of provisions

Act makes provision empowering a body corporate to:	of the Act. For example, section 37(2)(a) of the	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 -

and Your Honours will see 37(2)(c) in the pamphlet

copies Your Honours have it is italicized for the

purposes - you will see that it provides a body

corporate may:

Humphries 41 29/6/93

for the purpose of a company providing
services to the proprietors of the lots or to
the body corporate, participate in the
formation of that company or acquire an

interest therein - Your Honours will see that it is italicized and

that, at the footnote, that provision had not yet

come into force in 1988.

In fact, Your Honours, in the 1990 amendment, which is the next piece of legislation in the

bundle and we do not need to take Your Honours to

it, but in fact, that provision was deleted by

section 14 of the 1990 amendment, that is to say,

37(2)(c), and in relation to that we would submit,

as we would submit in relation to 37(2)(a), that

express provision of that kind is unlikely to have

been thought necessary by the legislature should

the power, which our learned friends argue is

implicit in the creation of the obligation of

management in 37(1), be so.

TOOHEY J:  Mr Keane, is there a section that empowers the

body corporate to give directions to unit holders

to carry out repairs or remove excrescences from

the building?

MR KEANE:	Yes, Your Honour, there is. Section 33 of the Act provides that, in effect, the body corporate
may carry out work on a lot if notice is given.
TOOHEY J:	I was really thinking of a situation where

perhaps one of the units is falling into a state of

disrepair which has not reached the stage where

there is a notice from the local authority, but
nevertheless the body corporate feels that is not

in the interest of everyone that it should remain

in that condition.

MR KEANE:  That may be dealt with under section 51 I think,

Your Honour.

BRENNAN ACJ:	Who paints the building?
MR KEANE:	The body corporate, Your Honour.
BRENNAN ACJ:	Under what power?

MR KEANE: 37(l)(c). And, of course, Your Honour, that is

consistent with the notion that the outside of the
building, the skin, would be part of the common

property.

BRENNAN ACJ:  And that is so, is it?

Humphries 42 29/6/93

MR KEANE:  The common property is any part of the building other than a lot.

BRENNAN ACJ:  Yes. Does a lot stop short of the external

wall?

MR KEANE:  I think that is so, Your Honour. The lot is

defined as the lot shown on a plan. I do not know

that we are in a position to show Your Honour a

plan as it works.

McHUGH J: That is the common practice, at least in

New South Wales, that the external walls are part

of the common property.

MR KEANE:  The external walls are part of the common

property. But in any event, Your Honour, it would

seem, with respect, 37(l)(c) addresses the question

in terms.

Your Honours, section 30(2) demonstrates that

the making of by-laws is contemplated by the Act as

an integral part of the regulation of the operation

of these developments. It provides that:

Save where otherwise provided in subsections

(7) and (11), a body corporate, pursuant to a

special resolution, may, for the purpose of

the control, management, administration, use

or enjoyment of the lots and common property

the subject of the plan, make by-laws

amending, adding to or repealing the by-laws

set forth in the Third Schedule or any by-laws

made under this subsection.

The point of that, Your Honour, is that

section 30(2) contemplates that one may have

by-laws regulating the use of the common property

to amplify the powers otherwise conferred under the

Act or -and in this respect it is the exclusive

head of power - may make provision for the control,

management, administration of lots. In that respect, can we address the points

made by our learned friends in paragraph 5 of their

outline. As to the definition of "prescribed

arrangement" in section 7 of the Act and, indeed,

in relation to the licence provisions of the

Auctioneers and Agents Act to which Your Honours were referred, those provisions do not say what is

necessary for there to be a valid agreement between

the body corporate and the letting agent. They

assume that such a valid agreement has been made.

They do not provide any warrant for the conclusion

that the existence of a by-law authorizing such an

arrangement is necessary as a precursor to a

"prescribed arrangement" or to the type of letting

Humphries 43 29/6/93

arrangement contemplated in the Auctioneers and

Agents Act. They simply are not concerned with

that. They assume that everything has been rightly

done in order to make a valid one.

BRENNAN ACJ:  Is that assumption consistent with your

submissions?

MR KEANE:	The assumption that the other side make?
BRENNAN ACJ:	The assumption made by the Act.

MR KEANE:  Yes, it is, Your Honour. It is consistent with

our submissions because there is no reason to

suppose that a by-law will not exist in order to

enable a "prescribed arrangement" to come into

existence.

Your Honours, as to "prescribed arrangement",

it is section 49(2)(d) of the Act which commands

the original proprietor to provide a copy of the

"prescribed arrangement" to purchasers. Here, of

course, the original proprietor is in a position to

control the state of the by-laws of the building.

DEANE J: Could the body corporate enter into an agreement

under 37(2)(a) to provide these letting services to

proprietors - to an agreement with all the

proprietors?

MR KEANE: With the agreement of all the proprietors,

Your Honour?

DEANE J: Yes.

MR KEANE:  If the body corporate itself was providing the

services, Your Honour?

DEANE J:  If it could, why could it not enter into an

agreement with someone else to provide the services

that it had agreed to supply?

MR KEANE:  Under 37(2)(a) contemplates that the body

corporate will itself provide those services in
terms, Your Honour.

DEANE J: Well, does not 37(2)(a) presuppose the power of the body corporate to supply the services of the

kind it can enter into an agreement to provide?

MR KEANE:	Only if it is the party providing them, in our submission. It is keeping the provision of the
services within the development, as it were, within the control of the body corporate.

Humphries 44 29/6/93

DEANE J:  I follow that, but how can a body corporate itself

provide services other than through agreement with

an agent or a subcontractor or someone else?

MR KEANE:	Through its employees, Your Honour.
DEANE J:	So your answer is that (2)(a) would authorize what

is involved in a letting service through employees,

but not through a contractual arrangement with a

third party?

MR KEANE:  Yes, Your Honour. And, we would submit that view

is strengthened by what used to be there as

37(2)(c) where such express provision was made, it

being necessary, in our respectful submission, to

have such express provision, it not being otherwise

implicit.

Your Honours, as to that, can we mention

reference, and only briefly, to the decision in

Grain Elevators Board v Dunmunkle Shire. It is No

18 in Your Honour's bundle, and the relevant

passage in terms of approach to construction is in

the judgment of Mr Justice Dixon.	The particular
passage is at page 210 in Your Honour's bundle.	I

hope Your Honours' bundles are numbered the same as

mine, because at 210 Your Honour should have pages

86 and 87 of the actual judgment from the CLRs.

DEANE J: Yes.

MR KEANE:  Thank you, Your Honours. The passage is the

passage at 86. That is where the observation as to

the approach to interpretation is set out. One

really needs to read the full text of the last

paragraph on 85 to put it into context, but the

paragraph on 86 contains the point we wish to make

about the introduction of 37(2)(c).

McHUGH J:  Has not a judgment of this Court commented on

this passage in Dunmunkle in the last three or four

years? You certainly referred to it and I must say	I have been referred to it in the past. I have
never been convinced that what Mr Justice Dixon said on this occasion is correct - - -

MR KEANE:  Your Honour, I must confess that I am not able to

assist you as to - - -

McHUGH J:  - - - but just in the back of my mind I just

thought we had some case where this point was

raised in the last three or four years. It could

not have been of any real significance, but I have

just got an idea the point is mentioned somewhere.

MR KEANE:  I am afraid we cannot assist Your Honour with

that.

Humphries 45 29/6/93

Your Honours, in relation to our submission

that the Act, although it exposes proprietors of
lots to unlimited liability, so long as the

obligations of the body corporate are legitimately

engaged - and we mentioned that there are

provisions which limit, and indeed restrict the
possibility of that happening - can we mention

section 30(2) to which we have already referred,

which provides for a special resolution in relation

to by-laws, section 30(3) which provides that a

by-law "has no force or effect" until registered,

thus providing public notice of its existence to
purchasers. There is a right of appeal in respect

of a by-law passed by special resolution to a

referee. That is provided by section 88 of the

Act, and it is to the effect that if the referee,

amongst other things:

considers that, having regard to the interest

of all proprietors in the use and enjoyment of the lots -

the by-law should not have been made.	We have
referred to section 49 of the Act which

Your Honours have looked at previously in cases

such as Deming and Danford v Smith which provides

that proposed by-laws must be set out in a

statement given by the original proprietor, the

purchaser of the lot, thus preventing hidden

restrictions on lots.

Your Honours, the Act contains other

safeguards for the protection of proprietor's

interests in respect of dealings with the common

property. Section 30(7) is one; may we mention

another, and that is section 22 of the Act which
requires a resolution without dissent to lease part
of the common property. Your Honours, leasing part
of the common property, we would submit, is

evidently not regarded as an incident of the power

to manage. These express provisions take the case, in our

submission, a long way from the willingness of the

courts to construe the notion of management

broadly, as in City of Adelaide v Altmann case.

This is a case where the statutory regime makes

the management of lots and makes provision for the making of by-laws in relation to the use of lots.	express provision for limited powers in relation to arrangements as being not a matter of management,
whether it is management of lots or the common
property, but something different such as the use
of the lots, then there can be no question but that
section 30(2) contemplates the making of a by-law

Humphries 46 29/6/93

to facilitate that arrangement. Your Honours, as

to the terms of the agreement itself -

DEANE J: Except it is very hard to draw a hard and fast

line. I mean, it is difficult to conceive that it

would not be within the authority of the body

corporate to allow for garbage removal, which is a

service to the proprietors of the individual lot.

McHUGH J: Garbage is dealt with in the by-laws, is it not?

Yes, rule 10.

MR KEANE:  Your Honour, 37 - so far as the lawns are

concerned they are dealt with in 37(l)(b). we

apprehend that the provision in relation to garbage
probably is dealt with in the third schedule

by-laws.

McHUGH J: Yes, rule 10.

MR KEANE:  Yes, and 19, Your Honour. By-law 19 of the third

schedule. They are the by-laws that apply.

TOOHEY J: Ours seem to cut out before 19, Mr Keane.

MR KEANE:  I think the difference may be a difference in the

numbering of the by-laws in the different Acts.

The provision is substantially the same. I was

looking at number 19 in the original pamphlet copy

of the 1988 - it has been renumbered as number 10

in the copy Your Honours have.

DEANE J: That was the one I was looking at which begins

with "save where the body corporate provides some

other means of disposal of garbage", which seems to

assume that the body corporate does have power to

arrange for the dispo~al of garbage under its

ordinary functions.

MR KEANE: That might be a matter of the - - -

DEANE J: But it probably just takes this case into another

case, Mr Keane.

MR KEANE:  And the term of the by-law contemplates an

obligation on the part of the proprietor or

occupier so that unless the body corporate - I mean
the body corporate may get that power from another

by-law but absent that, the proprietor has the

obligation.

Your Honours, as to the agreement, we do not apprehend, though our learned friends submit, that

the construction of the agreement, in particular
the construction of the relationship between

clause 2(r) and clause 8, is sought to be contested

by the other side. We apprehend that it is

Humphries 47 29/6/93

accepted that by reason of the simple and

relatively clear language of clause 2(r) and

clause 8, the letting agent was indeed obliged to
provide letting services for inter alia the

remuneration prescribed by clause 8 and - - -

DEANE J: What, without charging any commission?

MR KEANE:  Your Honour, we would submit that it contemplates

that it shall be done for that remuneration and no

more and we submit that that is appropriate. we do

not apprehend, though, that it would alter the

nature of the case, alter the result of the case,

if the agent were also to charge commissions as

well for the proprietors who used his services,

because the fact is that everybody else is paying
for his establishment. All the individual

proprietors are paying for his establishment.

DEANE J: Except your argument, to use neutral words, is

less strong if the Court of Appeal's construction

be mistaken and all that the body corporate is
paying for is a letting service available to

everybody on the basis that individuals who use it

will pay the appropriate commission.

MR KEANE: That may be so, Your Honour. Certainly under its

terms it would appear that there is an obligation

to provide the services for the remuneration coming

from the body corporate and that is it.

DEANE J:  Do I follow you have taken the point that there is

no attack on the Court of Appeal's construction to
the effect that individuals are not required to pay

commission for letting of their units.

MR KEANE:  That is so, Your Honour. Your Honours, in that

regard, then, it is our submission that the

appellants' submission as to severance can be
correct only if it is possible to identify that

part of the appellants' remuneration payable under

clause 8 in respect of clause 2(r) and to attribute

some figure to it. That exercise is simply

impossible on the test proposed in McFarlane v

Daniel. We would submit it would clearly change

the nature of the agreement from an agreement for

letting and management to one for management.

BRENNAN ACJ:	Why is that not a matter for evidence?
MR KEANE:	Is it a matter for evidence, Your Honour?

BRENNAN ACJ:  Yes. I mean, if the character of the

contract, in this respect, is one which depends

upon the circumstances of the case, one would think

Humphries 48 29/6/93

that one would need to know the circumstances of

the case to establish it one way or the other.

MR KEANE:  To establish, indeed, what kind of contract one

had.

BRENNAN ACJ: Yes. If there were two units and six acres of

ground, it is a different thing from 100 units and

one perch of ground.

MR KEANE:  Even then though, Your Honour, there is the

difficulty of the court identifying on what basis

one effects the severance, unless the court is able

to say that those aspects of the agreement

associated with letting are really de minimis and

can be ignored. But if they are not de minimis it

is difficult to see how the court can engage in the

exercise of attribution of consideration to - - -

BRENNAN ACJ:  Would there not be some analogy, for example,

with regard to an entire contract for the building

of a house where some work was negligently done?

MR KEANE: Well, in that case, as Sir Frederick Jordan

pointed out in McFarlane v Daniel, the party

complaining would have his remedy in damages by way

of reduction of the price. Indeed, as he said in
that case, if the party required to comply with the
restrain of trade clause - sorry, the party having

the benefit of it, might be able to demonstrate

some damages if the clause were otherwise

enforceable. It is our submission, though, that

one simply cannot, as a matter of contract, and

certainly not as a matter of evidence - certainly

not as a matter of any findings - say that one can

perform an exercise of identifying that which

should be attributed in the remuneration to letting

services, as opposed to general management

services.

BRENNAN ACJ:  It may be a question of where the onus lies,

have got prima facie severability in the sense that	if it is a question of fact. In other words, you	it is one of a series of services to be rendered,
and the answer to it is, "Well, in fact the service
is of such kind that to allow that to be severed
would result in a different sort of a contract and
the party so asserting would have to prove."

MR KEANE: Well, as to that, Your Honour, if we were the

party in that position, it would be our submission

that we demonstrated by pointing to the inability

to sever as just no basis for being able to

identify how one attributes the remuneration. It

is a lump sum for all the services, really the

services provided in globe, as it were. We would

Humphries 49 29/6/93

submit that it is really a question of construction

of the contract, rather than a matter of fact.

BRENNAN ACJ:  What would be the remedy if the services had

all been provided and then an action was brought

for the price?

MR KEANE: Well, McFarlane v Daniel might suggest that the

price would be recoverable because the services

were rendered. The difference here is that this

case seeks to establish a right to contractual

rights, exercisable until 1995 and to claim

remuneration for services that were not performed.

BRENNAN ACJ:  So you draw a distinction between a claim of

contract and a claim of quasi contract, or

restitution?

MR KEANE:  It is the distinction that is exemplified by

McFarlane v Daniel itself because that is a case

where the services were performed and it was on

that footing that the actor recovered.

Your Honours, can we say very briefly in relation

to paragraph l(b) of our outline that the exclusive

nature of the rights conferred on the letting agent

by clauses 12 and 9 really are such as to involve

the creation of special privileges in respect of, firstly, the common property, because the letting

agent conducts a business in a unit on the property

and in respect of the property, and clause 12, in

the last sentence precludes or obliges the body

corporate to preclude others from doing so.

It has the negative effect on the otherwise

lawful rights of the other proprietors to conduct

lawful businesses in their own lots and our learned

friends, by frankly acknowledging that such

provisions are ultra vires, seek to invite

Your Honours to read them down because they say

they must be read down, otherwise they would be

ultra vires. With respect, that is to put the cart	before the horse on the literal construction of the	language of the agreement. The correct conclusion
is that those provisions are indeed ultra vires.

As to our learned friend's reliance on

sections 38(3) and 38(a) in paragraph 4(a) and

clause 1 of the fourth schedule, Your Honours, can

we submit this: that all those provisions are

predicated upon an obligation or liability lawfully
incurred. Our learned friends seek to rely upon

these provisions as lifting them up by their own

bootstraps, by saying that if you have a liability

then you are entitled to pay. The question is

whether a liability has been lawfully incurred.

These provisions, in our respectful submission, do

not assist them, because they assume that the

Humphries 50 29/6/93

liability has been lawfully incurred. These

provisions are intended to facilitate the discharge
of those liabilities but they do not themselves

deal with authorizing the incurring of those

liabilities.

If we may pass on then to the question of

damages and mention one or two things. Firstly, as

Your Honours appreciate, damages were claimed in

the statement of claim that was delivered and

Your Honours have been taken to page 125 of the

record and Your Honours have seen paragraph 2.

Your Honours have been told that it is desired that

the action be remitted to the court to enable a gap

in the evidence that arose because the other side

were taken by surprise to be filled. Can we draw

Your Honours' attention to what was said in

argument in the Court of Appeal on this point. At

page 223 of the record where, at about line 15,

Mr Justice Davies says:

All that indicates to me is that damages was clearly in issue at the trial, and argued, as well as evidence given on it.

And Mr Lennon, who was then appearing as senior

counsel for the appellants, said: Constructively, what His Honour has done -

and he refers to the submission that is then made

that it should be sent back in relation to damages,

and then the president asks him whether that should

be done on the basis of further evidence and the

submission was that there would be no further

evidence that would be given. It is curious to

suggest, as is done, or as is being done, that

these matters are the subject of a gap in the

evidence that the other side would have sought to

have led when, certainly, so far as the Court of

Appeal was concerned, it was put to them on the

basis that no further evidence would be sought to

be adduced.

At page 213 of the record in paragraph 7 of the outline of submissions from the other side,

apart from the protest which our learned friends

referred to, suggesting the argument was not raised

below and objections taken to it, Your Honours will

see that the appellants sought to have it both ways

by making the submission that:

In any event, the evidence ..... clearly

demonstrates that the damage suffered is that

sum payable pursuant to the agreement which

remains unpaid.

Humphries 51 29/6/93

So that, Your Honours, at the very best, and

particularly bearing in mind that whatever may have
been the position before address, as it became

apparent at that stage that it was in issue, it is,

in our respectful submission, not an appropriate

case to regard it as one where there should be

further evidence obtained to address the point.

Even, Your Honours, looking at paragraph 9 of the

list of issues, page 105, "pursuant to the

agreement, how much is due", we submit that that

issue opens up the question of quantum, not simply

an issue of arithmetic. It would not have been

much of a question for the judge if it was just a
matter of adding up the weekly sums said to have

fallen due.

So that, Your Honours, we submit that the question of damages was litigated, as His Honour

mentioned in the passages at 82 and 83 to which

Your Honours were taken. Evidence was led as to the cost of providing the services, although he

found that evidence to be unsatisfactory. In our

submission, His Honour's approach in terms of

principle was correct. He referred to Lucy v The

Commonwealth and the Automatic International SA

Practitioners in Marketing.

Your Honours, could we also give you a

reference to a decision of this Court in Automatic

Fire Sprinklers Pty Ltd v Watson which is in the

bundle, it is number 28, and can we refer Your

Honours to the passage in the judgment of Mr

Justice Dixon at 465 to 466 where His Honour states

the proposition, for which Lucy v The Commonwealth
and the judgment of Mr Justice Higgins was also
authority, that the claim is one for damages for
being prevented from rendering the services, the

rendering of services being that which entitles the

party engaged to perform them, whether he be an

individual employee or a party engaged in the

provision of services under an agreement to perform

them, and thus to earn his remuneration.

DEANE J: Where does this lead, Mr Keane?

MR KEANE:  Your Honour, we submit firstly that His Honour

was correct as a matter of approach, as a matter of

principle.

DEANE J: Yes, I follow that.

MR KEANE:  We-submit further that His Honour, having

rejected the evidence which was adduced in an

endeavour to demonstrate the damages, the proper
course was not to remit it elsewhere, there being

no occasion nor, indeed, as we submit any

Humphries 52 29/6/93

particular power to do other with the claim for

damages than to dismiss it.

Subject to any questions Your Honours have for us, that is all we wish to say in relation to our

response in respect of the appeal. Would it be

convenient for Your Honours if we addressed

Your Honours now about the special leave

application or would Your Honours prefer us to do

that later?

BRENNAN ACJ:  I think you should proceed now, Mr Keane.

MR KEANE:  Thank you, Your Honours. Your Honours have an

affidavit of Wendy Anne Cull which was filed, I

think, on 23 June 1993. That affidavit shows that

the issue is of some significance, particularly in

paragraphs 25 to 34 which commence at page 7 of her

affidavit, some significance we mean in relation to

a number of building unit developments in south

east Queensland where an issue of the kind which is

sought to be agitated on the cross appeal arises.

BRENNAN ACJ:  Mr Keane, it is probably convenient for you to

present whatever argument you wish on the
application for special leave and then to proceed
to present your substantive argument as though
special leave had been given, the Court, however,

reserving to your opponents the right, of course,

to respond on both scores and the Court then

reserving its decision until finally it gives

judgment on the matter.

MR KEANE:  Thank you, Your Honours. The question which

arises in respect of the application for special

leave arises in relation to the operation of

section 50 of the Act, that Act, that provision, is

a remedial provision aimed, we would submit, at

preventing the practice of developers - who become,
in the jargon of the Act, "the original

proprietor" - from tying up the management of the

bodies corporate for periods in excess of three
years.	Mrs Cull's affidavit shows that the issue

is a live one in relation to a number of

developments and, indeed, in relation to a couple

of pieces of litigation that are already before the

courts.

Further, in relation to our application for

special leave, we would submit that the contention

we make, if successful, would defeat, or at least

substantially defeat - depending on the view

Your Honours took about the question of damages -

the claim made against the respondent in the
appeal. It is on that basis, that is to say, the

due administration of justice requiring that we not

be deprived of a good defence, if we have one, that

Humphries 53 29/6/93

we would submit that in addition to the question of

general importance, the case is a proper one to

attract the grant of special leave, if it is

otherwise arguable.

In relation to the argument, the learned judge

at first instance upheld the argument that the

agreement, which commences at page 99, is indeed an

agreement of the kind contemplated by

section 50(1), that is an agreement which appoints

a body corporate manager.	The Court of Appeal
rejected that view.	If we can ask Your Honours to

go to the Court of Appeal judgment at page 228,

Your Honours will see that at line 40 reference is

made to the first annual general meeting of the

proprietors of the building units plan on

31 January 1989. There is a resolution set out,

that is a resolution for the appointment of:

Professional Body Corporate Management Pty Ltd

be appointed pursuant to section 50(1) as Body

Corporate Manager of the Body Corporate for a

period of three years -

Over the page, there is a further resolution for

the appointment of Bartlett Research Securities

under a management agreement to act as building

manager on behalf of the body corporate. At the

bottom of the page, the text of section 50(1) is set out. Your Honours will see that it provides

that:

Subject to subsection (2), a body corporate may, in general meeting and by instrument in

writing, appoint upon such terms and

conditions as the body corporate determines a

body corporate manager and may, in like

manner, delegate to him -

(a) all of its powers, authorities, duties

and functions;

(b) any one or more of its powers,

authorities, duties and functions specified in
the instrument -

and then over the page:

and may, in like manner, revoke wholly or in

part the delegation.

We draw Your Honours' attention to the terms of

subsection (5) which appear between lines 25 and

30. Then at the bottom of the page, between

lines 50 and 55 are the terms of subsection (9)

which:

Humphries 54 29/6/93

implied in the agreement or instrument of

appointment of a body corporate manager

appointed pursuant to this section who is the

body corporate manager at the expiration of a

period of three years from the date of the

first annual general meeting of the body

corporate a term that the body corporate,
within 30 days after the expiration of that
period, may terminate his appointment as body
corporate manager.

Their Honours held, as appears from line 45 on page 231, that the agreement referred to as:

The "Agreement for the Appointment of the

Body Corporate Manager" was a plain exercise

of the power granted bys 50 of the Act. It

involved a delegation by the body corporate to

a body corporate manager, although the body

corporate retained co-extensive responsibility

by virtue of subsection 50(5).

The Management Agreement was of an

entirely different character. Although it
effected the appointment of an agent for the

body corporate and provided that agent with a

variety of functions, including some

managerial and administrative functions, it

did not delegate powers, authorities, duties

and functions, and it did not depend on, and

was not made under, section 50.

Their Honours then go on to reject the contention that there was implicit in the

agreement, which begins at page 99 of the record,

the term implied by section 50(9). It is our

submission, shortly, that section 50(1) does not
require an express delegation. There may be an
appointment of a managing agent without a
delegation in terms. Whether there has been an

appointment of a managing agent is to be

determined, in our submission, by looking at the

functions vested in it.

If we be wrong about that, then, in our submission, there was nevertheless the requisite

delegation of functions. As to the first

submission, section 50(1) does not in terms require

a delegation at all, it provides that a delegation

may be made - what it requires is an appointment of

a body corporate manager - nor does it require that

there be some explicit invocation of section 50.

What is necessary, in our submission, is that one

can identify that the agreement, pursuant to a

resolution, is one for the appointment of a body

corporate manager performing functions as such.

Humphries 55 29/6/93

The term "body corporate manager" is not defined

nevertheless, if one - - - '

McHUGH J: But it is, is it not? I thought it was. In the

Act, it is defined, is it not?

MR KEANE:  In the Act it is defined as someone appointed
pursuant to section 50(1), I think, Your Honour.

MCHUGH J: Yes.

MR KEANE:  And here, of course, there was a requisite resolution, as appears. The terms of the

agreement, in particular at page 100 - I am sorry.

If one goes first of all to the Recital Bat 99,

Recital Bis that:

The Owner is desirous of the better

management, administration and control of the

Property, and the better exercise and

performance of its powers and duties and

pursuant to the provisions of the Act of

appointing a manager for and on behalf of the

Owner in regard to the matters in this

Agreement.

Then clause 1 provides that:

The Manager shall be responsible (to the

Owner) to at all times ensure that the

Property is properly maintained and

administered and kept in good repair, and

shall attend to the secretarial requirements

of the Owner (as will be involved in the
discharge of the Owner's functions pursuant to

the Act).

That language, Your Honours, the language of

obligation to maintain and administer the property,

which is the whole of the development and includes

the common property, is language closely

reminiscent to section 37(1). It is indeed

providing for the administration and maintenance of the property. The specific duties that are set out in clause 2 are apt to address the obligations of

the body corporate in section 37(l)(b) in relation,

for example, to maintaining lawns and gardens, see

clause 2(c)(ii) on page 100. Clause 2(j), to keep

the pressurized water system functioning correctly;

clause 2(d), to take care of garden areas.

Section 37(l)(c) prescribes a duty to:

maintain and keep in a state of good and
serviceable repair ..... (i) the common

property -

Humphries 56 29/6/93

and in that regard, Your Honours, we refer to

clause (2)(c):

Care and Cleaning of Certain Areas -

clause (2)(g) -

Repairs ..... on the Property -

(2)(m), Drainage; (2)(h), Garbage Disposal.

Your Honours, section 38D of the Act imposes a duty

in respect of books of account and clause 2(a)
imposes obligations in relation to the maintenance

of:

books and records as shall be required by the

Owner in the discharge of the Owner's function pursuant to the Act -

to be kept and maintained by the manager.

Similarly, 2(b) provides that:

The Manager shall attend to all necessary

accounts both inwards and outwards and shall

attend to all necessary banking as directed by

the Owner.

Your Honours, it is our submission, then, that

the functions reposed in the manager are such as to

characterize his appointment, (1) as a body

corporate manager, if it be the case that a
delegation of those functions is required. As to
delegation, we have put some cases in our outline

which are to the effect that delegation does not

imply a parting with powers by the person who

grants the delegation, but rather points to the

conferring of an authority to do things that the

person would otherwise have to do himself.

Now, Your Honours, in this case section 50(5)

itself contemplates that there does not have to be

some absolute parting with power. As to the fact

that there is this other agreement with the other

organization, that agreement is at page 166,

Your Honours, and certainly in paragraph 1 there is

an express acceptance by the company of appointment

as the body corporate manager. The functions that

are then set out are what one might describe as

treasury functions, finance, financial and

administration, directed to the observance of the
relevant provisions of the laws applying in respect
of keeping of accounts and the operation of the

affairs of the body corporate, whereas the

agreement at page 99 might be described

compendiously as one for the on-site management of

the development.

Humphries 57 29/6/93

The point we wish to make, Your Honours, is

simply that there is no collision between the two,

that they really address different matters, and

that there is no reason why each cannot properly be

regarded as an instrument of appointment of a body

corporate manager. Your Honours, that is the

substance of the argument we wish to advance in

respect of the application for cross appeal.

McHUGH J:  Mr Keane, that reference to Grain Elevators Board

in Hepple's case - I said that I had difficulty

with the notion that the terms of an amending

enactment can throw light on the intention of an

earlier enactment and they said there is high

authority to that effect and that is all.

MR KEANE: 

Your Honour, here it is, I suppose, with respect,

the combination of 37(2)(a), then the introduction
of 37(2)(c) and then its removal. It really rather
suggests that one cannot treat the matter as one of

implication, as our learned friends would. We

would submit that the case is a little a fortiori
Dunmunkle v Grain Elevators Board.

MCHUGH J: Yes.

BRENNAN ACJ:  Thank you, Mr Keane. Mr Brabazon.

MR BRABAZON:	Your Honour Justice Brennan raised with me, and with my learned friend, the question of the
relative importance of the letting function and so
on.  I could not find a reference before lunch, but
it is at page 6 of the transcript and record, both
the same page number.

BRENNAN ACJ: Page 6.

MR BRABAZON:  Page .6 of the record, Mr Humphries' evidence,

when being examined. Page 6 from about line 30 to

a little over the next page down to line 10.

BRENNAN ACJ: Yes.
MR BRABAZON:	So Your Honour now has, I think, the complete

references to the available facts. Secondly,

because of our learned friend's insistence upon the

$60,000 being a lump sum, also in relation to what

Your Honour said before the adjournment, could I

remind the Court that, for example - and these are
all cases in the bundle - the recent Court of

Appeal decision in Queensland in Firmin v Gray, where a piece of illegality was struck out of a

loan contract - the illegality was that the company

was supporting the purchase of its own shares by

giving a mortgage to support the loan; that was

struck out, but none the less the borrowers had to

Humphries 58 29/6/93

repay all of the loan moneys, which was a single

sum.

In Carney v Herbert in the Privy Council,

there was a commercial arrangement, one term of

which was offensive, but none the less, even though

some of it was lost because of illegality,

everything else of the other side's consideration

had to be performed and, for example, as the High

Court said in dealing with some of the aspects of

McFarlane's case, the very thing that was rejected

was this submission - the Privy Council, I am

sorry, Your Honours - if any part of the contract is illegal, public policy will not allow any part of the contract to be enforced, and that was

rejected.

Likewise, and I am looking at Carney v

Herbert, (1985) 1 AC 312 where, dealing with an employment case, the men sought their wages for

coal mining but one provision of the agreement

relating to them was illegal and so that was struck

out, but none the less they recovered all their

wages.

And to take a final example, in a matrimonial

case, where a husband promised to pay maintenance

to his wife under an agreement, one provision of

which was unacceptable because it ousted the

jurisdiction of the court, it was struck out but

none the less, even though he did not in the end

get all he had bargained for, he had to pay all the

maintenance.

So it seems to support what we would suggest

is clearly the law, that provided the test of

severability is met then, of course, one gets the

whole of the consideration, the whole of the, as it

were, lump sum consideration, on the other side. I

should just give that reference in case

Your Honours wish it. It is Goodinson v Goodinson,

(1954) 2 QB 118. If the law were otherwise, it would mean that,

in a case like this where there was one

consideration only on one side, such as a loan of

money, payment of wages, this case, et cetera,

there could never be severance and the cases do not

show that at all.

McHUGH J:  But there could be cases where a court would not

enforce a promise, even though it could be severed,

would there not? Take, say, a contract for

assassination.

MR BRABAZON:  Yes.

Humphries 59 29/6/93

McHUGH J: And there are other terms in the contract which

are quite severable from it.	You just could not
imagine any court enforcing -

MR BRABAZON:  Yes, that is the classic illustration of the

contract, so illegal that the whole contract is

tainted, and perhaps that is why in the cases and,

for example, the text writers, distinguish between

contracts illegal, which may have that draconic

result, and contracts of which parts are merely

void, such as restraint of trade, ousting the

jurisdiction of the court, ultra vires.

McHUGH J:  I think in Hurst's case in the New South Wales

Court of Appeal I used the expression "infected".

MR BRABAZON: Yes. It is in Your Honour's list. It has not

been referred to, but in the long examination by

Mr Justice Brooking in that case, Electric

Acceptance in Victoria, the assassination case is

mentioned there in the context of pervading

illegality or infecting. But the distinction is

drawn with the merely void set of cases.

Your Honours, could we suggest, bearing in

mind the exchange about section 37 of the Act, it

was 37(2)(c) which has now been abolished, it

appears, and 37(2)(a) - Mr Justice Deane was asking

whether that might fit this case. We suggest this,

that if it were the law, as indeed it was, that the

body corporate could have an interest in a company

to provide services, that is do it in a vicarious

way under (2)(c), it would be strange if it could

not do it immediately. So, if anything, those provisions rather assist the wide general view

rather than the opposite.

Finally, concluding with the agreement,

Your Honours, section 2(r), we perhaps did not make

ourselves clear, which is entirely my fault. 2(r)

with regard to remuneration seems to have two

aspects. That is, as part of the $60,000, the

managers promise to provide an agency and it would

then follow, we would suggest, that once that is

provided, then, as we know happened, the

remuneration would come from the commissions.	So
it has a link, as it were, with both forms of remuneration.

Finally, Your Honours, with regard to this

vexed question of the damages that appears - - -

DEANE J:  By that side-swipe, are you attacking the Court of

Appeal's construction of 2(r)?

MR BRABAZON:  Yes, we must be, Your Honour, to the extent

that they say, as I recall it, that the

Humphries 60 29/6/93

remuneration for the services came from the

$60,000. It was not the remuneration for the

services, the remuneration for establishing a

facility.

DEANE J: But that does not seem to me to be just a minor

side point. It seems to me it could be of

importance on both aspects of the main argument

here.

MR BRABAZON:  Yes, that is so, Your Honour. Your Honours,

we do not wish to say anything further about the

question of the damages except, of course, to say

that under the rules of court, which we imagine

would be consistent everywhere, a matter can be

sent to assessment if that seems to be a suitable

exercise of a discretion, and one can understand

perhaps why His Honour the trial judge, faced with

a situation in which he found himself, with some

conflict between counsel and so on, thought that that was the appropriate course to adopt. It is

not a question of a gap in the evidence but rather

of an unfortunate situation that had arisen.

With regard to the question of the special

leave, can we first of all hand up our written

submissions on those arguments.

BRENNAN ACJ:  You have exhausted what you wish to say about

the construction of clause 2(r), have you,

Mr Brabazon?

MR BRABAZON:  Yes, Your Honour.

BRENNAN ACJ: Yes.

MR BRABAZON:  Your Honours, with regard to the question of

special leave, we at least formally submit that the

question, while undoubtedly of some importance, is

not attended with sufficient doubt in the reasons

of the Court of Appeal, and then we go immediately

to our submissions about that. It is strange to

observe, perhaps, the definition of body corporate

manager because it is said there is an evil here

which might be redressed, that is the original

proprietor tying up the building with an onerous

agreement. It is not defined in any functional way, such as describing the functions under the

agreement or saying, for example, that it is

onerous or something of that sort. Rather, we

would suggest that its simple definition, whereby

one looks to section 50, is really designed to

achieve certainty, so that one, as it were,

investing in this sort of business should be able

to tell quickly whether or not, and without

investigating facts which may be hidden, what the

strength of it is. So, therefore, it is very much

Humphries 61 29/6/93

a formal definition which depends, at least to some

extent, on first appearances which, of course, the
Court of Appeal was very impressed by.

Can we also say, moving from that, that the expression "body corporate manager" is no misnomer.

There is a real distinction between thinking that

the affairs of the body corporate itself, its own

internal domestic affairs, its accounts and levies

and all that sort of thing, are rather different

from what I might call the much more practical and

physical duties of a building manager. And that is

the distinction which we will see in a moment used

in the resolutions.

We would suggest that though at first glance

the idea that no delegation is necessary,

section 50(1) twice using the word "may", "the body

corporate may appoint a body corporate manager" and

"may in like manner delegate to him" and so on,

when one looks at the way in which the delegation

power is treated in the rest of that section down

the page, so much attention is paid to that and its

consequences, and the fact that it may be revoked

and so on that, in our submission, the better view

is that a delegation is really an integral part of

the notion of a body corporate manager.

It would be hard to imagine someone lacking at least some power under section 50, the delegation

of some power, being able to usefully do anything

of a managerial nature as anticipated here. And

that is why the Court of Appeal said that there was

no delegation in this case and so the section did
not apply.

In section 7, once again, the definition of "prescribed agreement", section 50 is mentioned

there as one of the documents that have to be

disclosed. It really anticipates that, as well as

a section 50 appointment, there will be many other,

as it were, lesser agreements for the management of the property which are not under section 50.

Might we just in passing - but it is not

insignificant, we say - look at section 44, which

emphasizes the concentration on the functions of the treasurer, 44(2), and how except in the most formal way those powers are not to be delegated.

It seems the treasurer under this Act is specially

restrained from giving away his or her duties to

somebody else. Section 44(2) and (3) are the

relevant parts. Under (3):

The treasurer of a body corporate may delegate the exercise or performance of any of his

powers -

Humphries 62 29/6/93

if the committee approves, et cetera. So the point of saying that to Your Honours is that the treasury

function is an important one and requires a formal

delegation.

If Your Honours take the view that there is

ambiguity here, and Your Honours may well do that,

in working out what section 50 means, it is

illuminated by the speech of the Attorney-General

in introducing the amendment. Your Honours, it is

just after the Auctioneers and Agents Act material in the bundle, just after the index and before the cases are reached. It is flagged, I am told, in

Your Honours' bundles.

BRENNAN ACJ: This is provided for, is it, in an Acts

Interpretation Act?

MR BRABAZON:  It is the Queensland Acts Interpretation Act,

section 14B(3)(f). It is the introduction of the

second reading speech, by the Attorney-General, in

this case. It is page 3960 of Hansard. He

introduces it, and the relevant part begins in

about the fourth paragraph beginning:

A constant source of difficulty -

down to the middle of the paragraph beginning -

By providing for the licensing of body

corporate managers -

and the critical one, of course, Your Honours, is

the middle paragraph beginning -

In conjunction with amendments -

pointing out the distinction just with letting

agents, which is this case.

So, so much for the Act and what we can glean ask the Court to look at the resolutions in their	from it. Might we turn to the facts, and could I
original form, which appear at page 156 and onwards
of the record. These minutes and resolutions are
clearly drawn by someone skilled in the knowledge
of this legislation and, indeed, they are appointing a company called Professional Body
Corporate Management Pty Limited as the body
corporate manager.

It is clear that someone with a complete

knowledge of the Act has done it, and then if we

turn to the resolutions at page 158, the

appointment of the body corporate manager follows

in terms almost the terminology of the Act,

Humphries 63 29/6/93

containing the widest possible delegation of

powers:

all the powers, authorities, duties and

functions of the Body Corporate -

are delegated, except those which are not capable

of delegation.

In contrast, the management agreement lacks

all of those features:  no mention of section 50, a

different description as building manager, and no

mention of any delegation. And our submission is

that because the agreements are not annexed or

adopted at the meeting, that is where one stops in

seeing whether it is an appointment under

section 50; that is, the resolution itself. It

might be different if they were annexed or adopted

there, we would concede.

We submit that, as the Court of Appeal said in

fairly brief language, it is not possible to

recognize them as an agreement made under

section 50.

However, if it is possible to go to the

agreement itself, the management agreement, which
we, in our submission, deny, merely to point out a

coincidence, as there had to be, between all the things a manager had to do and the duties of the body corporate, of course there is some overlap

because the only way the body corporate could mow

the lawns and do all the other things was to employ

somebody in some way to do it, some human person.

Rather, the recital in Band the scope of duties in clause 1 show that they are, as it were,

ministerial acts, the acts of an employee, rather

than a delegate. Because recital B says, at the

bottom of page 99:

appointing a manager for and on behalf of the

Owner -

and then clause 1, having talked about maintaining

it:

shall attend to the secretarial requirements

of the Owner (as will be involved in the
discharge of the Owner's functions pursuant to
the Act). The Manager shall be responsible to

the Owner -

and, Your Honours, elsewhere in that agreement

there are directions referred to in clause 4 which

one might not expect in the delegate - page 102.

An assignment is allowed for under clause 12. I am

sorry, Your Honours, under clause 5. There is an

Humphries 64 29/6/93

error in our written outline. It is, of course,

impossible to assign a body corporate agreement

under section 50 merely with some informal consent.

There would have to be, because of the demands of

the statute, approval or adoption of the new

person's position by a general meeting, and that is

not anticipated in that case.

Might we conclude by saying that whereas the

cases on the word "delegation" have a range of
meanings, some confining it to the simplest case to

merely an agent who simply does something for you,

and that, for example, is in the Riverstone Meat

case, which ranged between a mere agency and

someone who is a "representative" is the

expression, at page 220. We would say here the

idea of delegation is to provide a representative

for the body corporate to undertake its duties.

Your Honours, the statutory duty cases are the

most helpful because they show that that is a

higher standard of delegation than to a mere member

of staff, as it were. They are sufficiently

digested at page 177 of the record because they are

in the submissions to the Court of Appeal. There

are three cases there which we especially rely

upon:  Manwaring and Gallagher.

So, in our submission, as they say, it is not

the same thing as employment, it is	something
rather more serious and formal that	is meant by the
notion of "delegation" in this Act.	They are our
submissions.

BRENNAN ACJ: Thank you, Mr Brabazon. Mr Keane, in addition

to whatever you might wish to say in reply on the

cross appeal, you might also like to address

whatever submissions you have on the point now

raised by Mr Brabazon, namely, the construction of

clause 2(r).

MR KEANE:  Thank you, Your Honour. Your Honour, in relation

to that, clause 2(r) does not merely provide that

there shall be an office in the building, it

provides that:

The Manager shall conduct, from his unit, a

letting agency for the letting of townhouses

on the Property for such owners of the

townhouses, as shall require that service -

Now, Your Honours, once it be accepted as, in our

submission, it must that what is obliged to be

provided is a service rather than simply the

establishment of an office, once it be accepted

that it provides for the conduct, as it says:

Humphries 65 29/6/93

shall conduct, from his unit, a letting agency

for the letting of townhouses -

then it follows, in our submission, that it is that

service which is required of the agent which is

being remunerated under clause 8 and, in aid of

that construction - in aid of our submission that

clause 2(r) provides for the actual provision of
services to those proprietors who require it
pursuant to the agreement, we refer Your Honours as

well - we pray in aid the terms of clauses 9 and 12

which preclude any other person from making those

services available to proprietors on the property.

DEANE J:  So you would read it as also envisaging that if a

licensed real estate agent provides the letting

agency, it also does it for nothing?

MR KEANE:  No, he might not do it for nothing, but the

manager - - -

DEANE J:	I meant for nothing to the individual - - -
MR KEANE:	Quite, but it might cost the manager because the

manager shall ensure if he elects to use an outside

licensed agent as his subcontractor, as it were, he

shall ensure that that agent is licensed to perform

the duties which he arranges to provide.

DEANE J: Where do you get it from the words? If somebody

said, "My business is, I provide a letting agency

for the letting of town houses on this property for

such owners as require my services", how could you

possibly say he was saying, "I am doing it for

nothing", to them?

MR KEANE: Well, Your Honour, if the obligation is to

provide the services - - -

DEANE J:  No, it is to conduct the letting agency.

MR KEANE:  And we submit that that necessarily involves a

provision of services. Conducting the agency

involves something more than simply having the

doors open, with respect, because it is - - -

DEANE J: Conducting a letting agency, as a matter of

language, ordinarily involves letting things for

people who become your clients and pay you.

MR KEANE: Well, Your Honour, in our submission, the

agreement itself provides that the manager shall

conduct an agency for the letting of units for

those who require it. Now, in our submission, that

means that he must perform services for them.

Humphries 66 29/6/93

DEANE J:	But that is not the question.	The question is,
"Can he charge them?"

MR KEANE: Well, Your Honour, as we submit, once it be

accepted that the obligation is to provide the

services under the agreement, then there is

provision for his remuneration.

DEANE J:	I follow the way you put it.
MR KEANE:	Your Honours, by way of reply to our learned

friend's submissions on the cross-appeal, we would

simply make this observation, that if our learned

friends are correct in saying that one stops at the

resolution drafted by the skilled conveyances

engaged by the original proprietor, and does not

look at the the agreement that is executed, one

certainly opens the way to easy avoidance of the

provisions of the Act. Those are our submissions.

BRENNAN ACJ:  Thank you, Mr Keane. The Court will consider

its judgment in this matter.

AT 3.50 PM THE MATTER WAS ADJOURNED SINE DIE

Humphries 67 29/6/93