The Proprietors for Azzura Greens Group Title Plan v Hope Island Resort Principle Body Corporate
[2013] QMC 5
•28 February 2013
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
The Proprietors for Azzura Greens Group Title Plan v Hope Island Resort Principle Body Corporate [2013] QMC 5
PARTIES:
THE PROPRIETORS FOR AZZURA GREENS GROUP TITLE PLAN 107280
(appellant)
v
HOPE ISLAND RESORT PRINCIPAL BODY CORPORATE
(respondent)
FILE NO/S:
Southport Claim 1580 of 2012
DIVISION:
Magistrates Courts
PROCEEDING:
Appeal under section 106 of the Building Units and Group Titles Act 1980
ORIGINATING COURT:
Magistrates Court at Southport
DELIVERED ON:
28 February 2013
DELIVERED AT:
Southport
HEARING DATE:
16 November 2012
MAGISTRATE:
Costanzo JJ
ORDERS:
1. Appeal dismissed.
2. Order of the Referee affirmed.
CATCHWORDS:
APPEALS – Body corporate – Jurisdiction – Whether court has jurisdiction to hear and determine an appeal where body corporate instituted appeal without first obtaining approval therefore of the body corporate by special resolution, but did subsequently obtain such approval
Acts Interpretation Act 1954 s 36
Bankruptcy Act 1959 s 58, s 135
Body Corporate and Community Management Act 1997 s 259, s 312
Building Units and Group Titles Act 1980, s 7, s 106, s 107, s 121A
District Court of Queensland Act 1967, s 118
Public Trustee Act 1978, s 90, s 95
REAL PROPERTY – Strata and related titles and occupancy – Body corporate – Powers, duties and liabilities – Whether principal body corporate is permitted to enter contract for provision of services to unit holders of a subsidiary body corporate without subsidiary body corporate being a party to the agreement
Integrated Resort Development Act 1987 s 148(c)
Body Corporate and Community Management Act 1997 s 158
Building Units and Group Titles Act 1980 s 37
Body Corporate and Community Management (Accommodation Module) Regulation 1997 s 167
Cases referred to in judgment:
Banks & Anor v Body Corporate "Noosa on the Beach" Community Titles Scheme 6417 [2000] QCA 146
Body Corporate Fresh Apartments v Vecchio Property Group [2010] QCAT 363
Body Corporate Tower Mill Motor Inn v Queensland Building Services Authority & Cullinan, M.W. [2008] QCCTB 177
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297; (1981) 35 ALR 151; (1981) 55 ALJR 434; (1981) 81 ATC 4292; (1981) 11 ATR 949; [1981] HCA 26
Di Carlo v Kashani-Malaki [2012] QCA 320
Henderson & Anor v The Body Corporate for Merrimac Heights [2011] QSC 336
Humphries v Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597
Macalister v R (1990) 169 CLR 324; (1990) 92 ALR 39; (1990) 64 ALJR 279; (1990) 46 A Crim R 41; [1990] HCA 15
Oceana on Broadbeach Community Titles Scheme 24163 v Searle & Ors [2003] QCA 238
Palmos v Wilson (1955) 99 CLR 94; [1956] ALR 34; (1955) 29 ALJR 527; [1956] St R Qd 344
Re Spratt; Ex parte Wilde and Harris (1986) 10 FCR 544; 67 ALR 485
Sattel & Ors v Proprietors Be-Bees Tropical Apartments [2000] QCA 496
Veghelyi; Re Smith v Official Trustee in Bankruptcy (1993) 45 FCR 413
Warren v. Body Corporate for Buon Vista (No 2) [2006] QDC 398
COUNSEL:
Carrigan for the appellant
SOLICITORS:
Matthews Hunt Legal for the appellant
Hynes Lawyers for the respondent
What this appeal is about
This is an appeal under section 106 of the Building Units and Group Titles Act 1980 (BUGTA) from an order made by a Referee D Toohey on 17 May 2012 under part 5 of the said Act.
Under subsection 107(1)(b) BUGTA, in the determination of an appeal from an order of the referee, a tribunal may, by order, affirm, vary or revoke the order appealed against or substitute the tribunal’s order for the order appealed against. Under subsection 107(1)(c) the tribunal is prohibited from making any order as to costs.
Under subsection 107(2) BUGTA, an order made under subsection (1)(b) has effect, and the provisions of BUGTA other than section 106 apply to it, in all respects as if it were an order made under the provision of BUGTA under which the order appealed against was made.
The specific order appealed against was order number three which was “that the application is otherwise dismissed.”
This case was described by Mr Carrigan (Counsel for the Appellant) as a “test case”.
The issues which make this case ‘test case’ are:
1. Firstly, the threshold jurisdictional issue: Whether the court has jurisdiction to hear and determine this appeal given that the body corporate instituted this appeal against the respondent without first obtaining the approval therefore of the body corporate by special resolution under s 121A of the BUGTA, and
2. Secondly, the substantive issue: Whether section 148(c) of the Integrated Resort Development Act 1987 (the IRDA) permits a principal body corporate such as Hope Island Resort to enter into a contract for the provision of security services to the unit holders of a subsidiary body corporate such as Azzura Greens without the subsidiary body corporate being a party to the agreement with the security provider.
The threshold jurisdictional issue
Section 121A of the BUGTA provides:
121A Limited right of action by body corporate
A body corporate shall not institute proceedings[1] against any person other than a proprietor without first obtaining the approval therefor of the body corporate by special resolution[2].
[1] Under s 36 of the Acts Interpretation Act 1954, “proceeding means a legal or other action or proceeding.” No issue was taken with the proposition that instituting an appeal is the institution of a separate legal proceeding and not the taking of a further step in the continuation of proceedings. The Referee’s decision was always to be considered final unless overturned or altered on appeal.
[2] See s 7 BUGTA for the definition of “special resolution”:
It was common ground that when this appeal was filed there was no special resolution of the body corporate to approve the institution of this proceeding. A special resolution, ratifying the appeal, did eventuate some two months after the appeal was filed. It was conceded by Mr Carrigan on behalf of the Appellant that this appeal was commenced on 7 June 2012 without first obtaining the approval of the body corporate by special resolution.
The appellant relies on Banks & Anor v Body Corporate "Noosa on the Beach" Community Titles Scheme 6417 [2000] QCA 146 as authority for the proposition that a resolution ratifying proceedings which have already been commenced is a valid resolution. The appellant concedes the special resolution was made two months after this appeal was lodged, but submits the special resolution validly ratifies the institution of this appeal.
Mr Carrigan’s fall back position, initially, if the special resolution is held by me to be not competent, was to seek the allowance of the withdrawal of the appeal and to allow the filing of a fresh appeal on the date of the hearing, extend time, and to allow the parties to read the same material as in the appeal withdrawn. However, during the oral submissions made on the date of the hearing of this appeal Mr Corrigan conceded, quite rightly in my view, that the withdrawal of the appeal would result in the appellant being out of time to lodge a fresh appeal. That is because section 106(1) of the BUGTA provides that where a referee makes an order under part 5 (Disputes) the appellant may appeal to a tribunal[3] against the order of the referee by lodging a written notice of appeal with the referee, accompanied by the prescribed fee, “not later than 21 days after the order takes effect”. The BUGTA does not give me the power to extend time. Therefore, the appellant has abandoned its fallback position and I need not consider it any further. I am thankful to Mr Carrigan for his professional thoroughness and candour.
[3] Under section 96 of the Act every “stipendiary magistrate and acting stipendiary magistrate shall by virtue of appointment to that office and without any further or other appointment whatsoever constitute a tribunal for the purposes of this Act while he or she continues to be a stipendiary magistrate or an acting stipendiary magistrate.”
The loss of this avenue for the possible rectification of the institution of this proceeding therefore makes it even more important to the appellant to have determined the threshold issue before me, namely, whether this court has jurisdiction even though this appeal against the respondent was instituted without first obtaining the approval therefor of the body corporate by special resolution under s 121A of the BUGTA.
Bank’s case (above) involved an application for leave to appeal from a judgment of the District Court. Section 259(1) of the Body Corporate and Community Management Act 1997 (the BCCMA) (which is now s 312) provided that a body corporate for a community titles scheme may start a proceeding only if the proceeding is authorised by the special resolution of the body corporate. The appellant in Bank’s case submitted that a subsequent resolution ratified the application for leave to appeal which had already been commenced without authority. In that case the respondents made two submissions. First, that there was no valid resolution because the general meeting for it had not been duly convened, and that, in any event, the resolution did not purport to and did not ratify the proceeding already commenced. On the second of those issues the Court of Appeal held, at [7]:
“It is correct that, in form, the resolution does not authorise the ratification of the proceeding already commenced, but if it were correct that it did not do so in substance the appropriate course for this Court to take would have been, in our view, to permit the applicant to withdraw its earlier application and permit it to file one on the day of hearing of this application, to extend time accordingly and to treat the material already filed in this application as filed in that. Mr Atkinson does not contend that his clients would suffer any detriment from that course. But we think, in any event, that the resolution in substance ratifies the proceeding already commenced; that plainly must have been its intention. We would therefore reject the submission that the application and appeal are incompetent.”
The court in Bank’s case (above) was not concerned with the same issue as I am. The court did not cite any authority or provision for its decision. The parties seem to have accepted or assumed that a subsequent resolution could indeed ratify the application being made to seek leave to appeal. The only issue was whether the resolution did ratify the making of that application.
The application for leave to appeal from a decision of the District Court in Bank’s case must have been brought pursuant to section 118(3) of the District Court of Queensland Act 1967 which provided that a party who is dissatisfied with a judgment of a District Court, whether in the court’s original or appellate jurisdiction, may appeal to the Court of Appeal with the leave of that court. The Court of Appeal is in control of its own procedures for the determination of a grant of leave. It was also relevant and important to the court’s determination that it could have granted an extension of time in any event. That issue is an important one to my determination as well. I have no power to grant an extension of time in the same way a court of superior jurisdiction can in determining a leave application. I also cannot wave aside mandatory statutory preconditions.
The other authority I was referred to by the appellant, and which is referred to by the respondents in their written outline of submissions, is Sattel & Ors v Proprietors Be-Bees Tropical Apartments [2000] QCA 496. In that case the Court of Appeal granted an application for an order that an appeal be dismissed on the ground that the appellant had failed to comply with s 259 of the BCCMA. It was argued by the appellant that an appeal against a judgment by the Supreme Court at Cairns is a proceeding in the same proceeding as was before the Supreme Court, being a proceeding to which the body corporate was already a party. The respondent successfully challenged the competency of the appellant's proceedings because it did not comply with s 259(1) of the BCCMA.
At [9] to [10] in Sattel’s case (above) the Court of Appeal held:
“[9] … In our opinion the institution of the appeal was beyond the appellant's power.
[10] It was suggested on behalf of the appellant that, if we took this view, the appeal should be adjourned so that, if so advised, the appellant could attempt to obtain a special resolution ratifying what was done. It appears to us that, where a party having no right to do so purports to begin an appeal in this Court, on the deficiency being brought to the Court's attention the appeal would ordinarily be dismissed or struck out. The circumstances of the present case, so far as they appear from the record, do not suggest that this is a case where justice requires that any other course be followed.”
In Sattel’s case no resolution existed at the time the matter came before the court. Mr Carrigan submitted the present case before me is different because the special resolution has already been obtained, before the hearing of the appeal, which, he submits, ratifies the institution of the appeal already instituted.
Sattel’s case (above) was followed in Oceana on Broadbeach Community Titles Scheme 24163 v Searle & Ors [2003] QCA 238. There the respondent contended, successfully, that the application for leave to appeal against a decision of the District Court was incompetent and that it could not be remedied by retrospective authorisation and that the application should be dismissed. The applicant for leave to appeal had sought an adjournment to obtain the special resolution at an Extraordinary General Meeting of the Body Corporate which had been convened but not yet held. The Court of Appeal referred to Bank’s Case (above) at page 4 and said:
“This Court observed in Banks that, even accepting the application was originally incompetent, the appropriate course would be to permit the applicant to withdraw its earlier application and, after obtaining the necessary authorisation (which it by that stage had), apply for an extension of time within which to apply for leave to appeal and for leave to appeal.” (My emphasis)
Then the Court of Appeal in Oceana referred to Sattel’s case at [10] as quoted above, and held, at pages 4 to 5:
“This supports the striking out or dismissal of the application, rather than an adjournment, in circumstances where, as here, there are no pressing reasons in the interests of justice demanding an alternative course. If and when the applicant has the necessary authorisation of the Body Corporate, there is no reason here why it cannot then bring an application for an extension of time to apply for leave to appeal and a fresh application for leave to appeal.
In reaching this conclusion, the Court is not determining that the application is a nullity, merely that, until the necessary authorisation has been obtained, this Court does not have jurisdiction: compare Stone v ACE-IRM Insurance Broking P/L; [2003] QCA 218.”
In Body Corporate Tower Mill Motor Inn v Queensland Building Services Authority & Cullinan, M.W. [2008] QCCTB 177 at [14] to [17], K Dorney QC (as he then was) held :
“[14] Given the inapplicability of the exceptions to section 312(1) contained in section 312(2) of the BCCM, the only way the present applicant could have started this “proceeding” was by being authorised by “special resolution”.
[15] Given the above concession and given that there was no evidence at all of such a special resolution, the only conclusion that the Tribunal could reach was that there was no valid application before the Tribunal so as to give the Tribunal jurisdiction to determine the matters sought to be raised in the Application. That is, the jurisdiction of the Tribunal was not properly invoked.
[16] There is nothing in section 8 or section 9 of the CCT Act which would permit the Tribunal to ignore the “fact” that the present applicant is not “authorised” to bring the present application. Section 8(1) merely states that the Tribunal has jurisdiction to deal with matters “it is empowered to deal with” under the CCT Act or an “empowering act”. Section 9(1) states that the Tribunal may do all things necessary or convenient to be done “for” exercising its jurisdiction. No party has been able to point to anything in either of those provisions which would assist in ignoring the absence of authorisation.[17] If any authority be needed for the above conclusion, Oceana on Broadbeach Community Titles Scheme 24163 v Searle & Ors [2003] QCA 238 provides it. There it was held, by majority, that until the necessary authorisation has been obtained, that court did not have “jurisdiction”: at folios 4-5. There is nothing to suggest that it is appropriate, as considered by the Court of Appeal - even if there should be any similar power in the Tribunal to do so - that the “interests of justice” demand an alternative course. It should be noted that Fryberg J reserved his opinion about the issue of “jurisdiction” …” [4][13][4] The decision in the Tower Mill case (above) was followed and applied in relation to section 312 of the Body Corporate and Community Management Act 1997 in Body Corporate Fresh Apartments v Vecchio Property Group [2010] QCAT 363 where Dr Mandikos held:
“There is no basis upon which QCAT might waive the requirements contained in the BCCM Act for a Body Corporate to commence proceedings without firstly obtaining consent by way of a special resolution.”
The tribunal in the Tower Mill case (above) also referred to Warren v. Body Corporate for Buon Vista (No 2) [2006] QDC 398. It was a case involving an appeal from a decision of an adjudicator under the BCCMA. At [35] to [37] McGill DCJ held:
[35] The principle of ratification is an incident of the law of agency, rather than the law of companies or corporations. Accordingly, one would expect it to apply in any situation where there can be a relationship of principal and agent, and such a situation can certainly arise under the Act. There is nothing … in the Act which would prevent the general principle of ratification from applying to the operation of a body corporate under the Act, and in my opinion, it does apply under the Act. … .
[36] … there is authority in the Court of Appeal in Queensland that a body corporate can ratify a step that was taken by a person purporting to act as agent for the body corporate without proper authority of the body corporate. In Banks v Body Corporate "Noosa on the Beach" CTS 6417 [2000] QCA 146, …(t)he court held on a subsequent objection to the competency of the appeal that the resolution in substance ratified the proceedings already commenced, so that the application (for leave to appeal) was competent: [7].
[37] That decision was followed in Hollis Holdings Pty Ltd v PJ Handley and Ors [2002] QDC 1 at [29]. In Sattell v The Proprietors Be-Bees Tropical Apartments BUP No 71593 [2001] 2 Qd R 331 the court struck out an appeal because of a failure to comply with the then s 259, and at [10] refused to adjourn the appeal to enable a special resolution to be passed ratifying what had been done. Nevertheless, there was nothing in the comments of the court about that point to suggest that that resolution, had it been allowed, would have been ineffectual; the court simply was not prepared to allow an adjournment for that purpose in the circumstances of that case. A similar approach was adopted by the Court of Appeal in Oceana on Broadbeach CTS 24163 v Searle [2003] QCA 238, where the court referred to the decision in Banks without suggesting that that decision was wrong. The position seems to be that if by the time the matter comes on for hearing in the Court of Appeal the deficiency has not been remedied, the court will as a matter of practice strike out the appeal rather than adjourn it to enable that step to be taken; but there is nothing in the decision in Searle to suggest that the ratification of proceedings initially commenced in breach of s 259 is ineffectual, and the contrary was directly decided in Banks.”
Mr Carrigan for the appellant conceded that if, before the respondent obtained the special resolution, the respondent had filed an application to strike out the appeal, they would have probably succeeded on the basis of the above three authorities in Sattel, Oceana and Tower Mill. Indeed, with respect, the position taken by Mr Corrigan for the appellant seems to be that which is last quoted above by His Honour McGill DCJ in Warren v. Body Corporate for Buon Vista (No 2) [2006] QDC 398 [37] namely, that if by the time the matter comes on for hearing the deficiency has not been remedied, the court will as a matter of practice strike out the appeal rather than adjourn it to enable that step to be taken, but if the deficiency has been remedied by the time the appeal is heard then the ratification of proceedings initially commenced in the absence of compliance with s 259 is effectual.
None of the cases I been referred to, which are very relevant and persuasive, involve a consideration of s 121A of the BUGTA which is worded quite differently to section 259 of the BCCMA. Each of the cases referred to above involved section 259 of the BCCMA.
The appellant maintains that the same interpretation should be given to section 121A of the Act as the interpretation given by the above authorities to former 259 of the BCCMA.
It is necessary for me to decide whether the same principle of ratification applies under s 121A of the BUGTA.
Section 121A was inserted into the BUGTA by the Building Units and Group Titles Act Amendment Bill 1988, s 75. During the second reading speech[5], and the debate which followed in Parliament on 15 March 1988, no mention is made of s 121A. Section 75 of the Bill was read and agreed to in-Committee without further debate.
[5] See Parliamentary Debates [Hansard] Legislative Assembly, Tuesday, 15March 1988, p 5124.
In a different context, in Veghelyi; Re Smith v Official Trustee in Bankruptcy (1993) 45 FCR 413 Sweeney J considered section 58(3) of the Bankruptcy Act 1966 (Cth) which provided, in part:
"Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor …
(b) except with the leave of the Court and on such terms as the Court thinks fit,
to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding."In the Federal Court of Australia Sweeney J held :
“The power of this court, in my opinion, includes the power to make a nunc pro tunc[6] order, a familiar order in leave applications.
As is illustrated by this case, and the experience of other similar cases, including claims for workers compensation, it can easily happen that a plaintiff may sue a defendant in ignorance of the fact of his bankruptcy. Sitting in bankruptcy I have heard applications by creditors for leave to commence and continue proceedings already on foot and have made orders in such cases nunc pro tunc, without anyone contending that the court lacked jurisdiction to do so. If the subparagraph were to be construed in the manner sought by the respondent, a plaintiff who had commenced proceedings in ignorance of the dependants bankruptcy would be obliged to discontinue his action, accept any costs penalty, and commence a fresh action, although this court thought that the circumstances justified the grant of leave. Such a result would be wasteful and undesirable. If the Parliament had intended to produce it, it would have said so in plain terms and I do not consider that it has done so.”
[6] Nunc pro tunc: means "now for then.": The CCH Macquarie Dictionary of Law (rev ed, CCH, 1996) p 120.
Therefore, again in circumstances where the proceeding could not be commenced or continued without obtaining the leave of the court, the court held that it could make an order retrospectively, i.e. nunc pro tunc, or “now for then”, which had the effect of granting leave retrospectively from the date that the proceeding was commenced or the step was taken, so that the party bringing the application was not forced to discontinue the proceedings, pay costs and to then start fresh proceedings. However, as I outlined above, in the case before me that course would not be open because of the time limitation imposed by statute. Furthermore, this is not an application which requires leave of the court.
It has also been held that if a proceeding has been commenced or a fresh step taken without complying with section 58(3)(b) of the Bankruptcy Act, that action or step is rendered unlawful. See Re Spratt; Ex parte Wilde and Harris (1986) 10 FCR 544; 67 ALR 485, where at 545 (FCR) Pincus J held:
“The critical expression in s 58(3) of our Act (“it is not competent”) may be contrasted with the corresponding provision of the English Bankruptcy Act 1914, s 7(1): “no creditor … shall have any remedy … or shall commence any action or other legal proceedings ….” It does not appear to me, however, that the difference in wording is of any present significance. The effect of our s 58(3) is that if, as here, a creditor takes a fresh step against a bankrupt, in circumstances within the sub-section, he does something which the Act says he may not do and thereby renders unlawful.”
Pincus J went on to hold that a compromise reached in the absence of the leave required by section 58(3)(b) of the Bankruptcy Act1959 could still be made in good faith and be valid. But that was a different issue to the one under consideration here and the result was made possible by the explicit provision in section 135(4) of the Bankruptcy Act that the failure by a Trustee to obtain the permission or leave required by sub-section (1) in relation to a transaction by the Trustee did not affect the validity of the transaction if certain stated conditions were met. No such section has been referred to under the BUGTA.
The situation was different, however, in Palmos v Wilson (1955) 99 CLR 94; [1956] ALR 34; (1955) 29 ALJR 527; [1956] St R Qd 344. There was an appeal from a decision of the Supreme Court of Queensland dismissing an application for interlocutory injunction. There the articles of association of a company, which had been formed to acquire and let a city building, gave the directors power to sell any of the company's property but provided that the building "shall not be sold without first obtaining the consent of the members expressed by extraordinary resolution". In 1950 the shareholders passed an extraordinary resolution stating that "the directors be and are hereby authorised to sell the company's freehold property described in clause 3 of the company's memorandum of association" (which included the land on which the building was situated). A contract to sell the building was made in 1955. The High Court of Australia held that the articles did not require consent to a particular sale and therefore the 1950 resolution sufficed to give effect to the sale in 1955.
By way of contrast, section 121A of the BUGTA provides that a body corporate shall not institute proceedings against any person other than a proprietor without first obtaining the approval therefor of the body corporate by special resolution. The use of the word “therfor” plainly refers back to the institution of the proceeding contemplated by the body corporate.
The mandatory terms of a statute may also carry more force than the articles of a company.
Some limited assistance may also be derived by contrasting section 95 of the Public Trustee Act 1978 which was considered recently by the Queensland Court of Appeal in Di Carlo v Kashani-Malaki [2012] QCA 320. Section 95 of the Public Trustee Act 1978 provides:
95 Restrictions on property dealings or proceedings
(1) During the time when the public trustee is manager of the prisoner’s estate under this part, a prisoner shall be incapable, except with the consent in writing of the public trustee—
(a)of alienating or charging any property or of making any contract; and
(b)of bringing or defending any action of a property nature or for the recovery of any debt or damage.
(2) If the court becomes aware that an action has been brought or defended in contravention of subsection (1)(b), the prisoner can take no further steps in the action without the written consent of the public trustee, in the approved form, filed in the court.
(3) The consent of the public trustee is then taken to have been given when the action was brought or defended. (my emphasis).
In Di Carlo v Kashani-Malaki (above) the main issue was whether on the proper construction of Pt 7 of the Public Trustee Act 1978 a prisoner convicted of an indictable offence, and falling within the ambit of s 90(a) of the said Act, may continue civil proceedings instituted by him before his term of imprisonment was imposed. Muir JA (Fraser and Gotterson JJA agreeing) held at [13], [15]:
[13] The expression “bringing … any action” is not, in everyday language, apt to encompass “prosecuting” or “maintaining” an action. As counsel for the Public Trustee submitted the words “bring” and “brought” are commonly used to signify the commencement of proceedings. See e.g. Barnes v St Helens Metropolitan Borough Council [2007] 3 All ER 525 at [16]. … .
[15] Subsection (2) refers to an action which “has been brought or defended in contravention of subs (1)(b)”. It prevents the prisoner taking “further steps in the action without the written consent of the public trustee”. It is plain enough that this provision is referring to the commencement of a proceeding, or the instituting of a defence of a proceeding, rather than the prosecution of a claim or a defence. … This construction is fortified by subs (3) which deems the Public Trustee’s consent to have been given “when the action was brought or defended”. Plainly, the date at which the Public Trustee’s consent is deemed to have been given is the date on which the action was commenced.
A few observations can be made from a legislative comparison between s 121A of the BUGTA and s 95 of the Public Trustee Act 1978.
Firstly, the language in s 121A is clearer. It refers to instituting proceedings as opposed to the bringing of an action.
Secondly, section 121A does not contain any provision similar to s 95(2) or s 95(3) which would have allowed the body corporate to institute proceedings in the absence of a special resolution and to then to continue the proceeding only if a special resolution was subsequently obtained.
Thirdly, section 121A dictates that the “body corporate shall not institute proceedings against any person other than a proprietor without first obtaining the approval therefor … .” This appeal is plainly a proceeding against a person other than a proprietor. The plain English meaning to be given to the expressions quoted, with emphasis, is that there is a condition precedent for the body corporate to first obtain approval, by special resolution, to institute proceedings without which the body corporate shall not institute the proceeding. The use of the word “therfor” plainly refers back to the institution of the proceeding.
Section 121A of the BUGTA and section 259 of the BCCMA were enacted only nine years apart, in two Acts which are each about bodies corporate and which are meant to be read together in some parts, yet the two sections are expressed in significantly different language. One can safely assume that if the Parliament (or the drafters) had meant to say the same thing in each Act then the two sections would have expressed in the same or almost the same language. Alternatively, the appeal provision in the later Act (section 259 of the BCCMA) could have been expressed so as to apply the appeal provision in the earlier Act already in existence. Neither course was taken, presumably because something different was contemplated in the later Act.
Here, the body corporate has done something which the Act says it shall not do and it is thereby rendered unlawful.
This is not a case where the court is asked to find there was a drafting error in the Act which would require the court to implement a realistic solution to its interpretation. As Gibbs CJ said, in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297; (1981) 35 ALR 151; (1981) 55 ALJR 434; (1981) 81 ATC 4292; (1981) 11 ATR 949; [1981] HCA 26; CLR at 304, where the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, it must be given its ordinary and grammatical meaning.
Nor is this a case in which a literal construction of s 121A will subvert an obvious legislative intention and produce an obviously unreasonable result. Contrast Macalister v R (1990) 169 CLR 324; (1990) 92 ALR 39; (1990) 64 ALJR 279; (1990) 46 A Crim R 41; [1990] HCA 15; CLR at 330 where a literal reading of the section in question there would have denied the appellant in that case a common right of appeal. The Appellant in the case before me clearly has a right of appeal and to institute such proceedings. However, section 121A provides that the right shall not be exercised, by instituting a proceeding, without first obtaining the approval therefor.
Consequently, this court has no jurisdiction to hear and determine this appeal.
On that basis the appeal must be dismissed.
However, as this case is a ‘test case’ and quite likely to generate more litigation, I should endeavour to provide my considered view about the substantive issue raised.
The substantive issue
The substantive issue is whether section 148(c) of the Integrated Resort Development Act 1987 (the IRDA) permits a principal body corporate to enter into a contract for the provision of security services to the unit holders of a subsidiary body corporate without the subsidiary body corporate being a party to the agreement with the security provider.
While a number of grounds of appeal are stated, the appellant submitted that they are not appealing against all of the referee’s decisions, and that the grounds each depend on the interpretation of s 148(c) of the IRDA.
In the decision appealed against, the Referee stated that the dispute was “about whether the Principal Body Corporate must provide all occupiers in Azzura Greens with the new security access cards and whether Azzura Greens must accept security services engaged by the body corporate. This is a dispute about rights and obligations under IRDA that is properly dealt with under part 5 of BUGTA (IRDA, 179A).”
The orders made by the Referee were as follows:
“1. I hereby order that, as soon as possible and unless agreed otherwise with the owner, the Hope Island Resort principal Body Corporate must ensure that each owner of a lot in Azzura greens provided has two activated security cards for the new security system. These cards must provide access to the principal body corporate thoroughfares as under the old system and must be provided without any restriction upon the owners providing those cards to their letting agent or to legitimate occupiers of their lot.
I further declare that owners within Assure Greens may resolve that Azzura Greens not accept security services offered by Hope Island Resort Principal Body Corporate. However, this does not mean that Azzura Greens is exempted from contributing to the costs of the security services.
I further order that the application is otherwise dismissed.”
It is only the third order against which the appellant appeals.
The appellant takes no issue with the Referee’s description of how the dispute about security arrangements arose:
“In July 2011 Hope Island Principal Body Corporate resolved:
That the Hope Island Resort Principal Body Corporate engages Converge Pty Ltd at a cost of $125,782 excluding GST to install the new access control system to all Residential Access Gates and purchase the required proximity cards to access the new system with monies to be paid from accumulated funds from the Sinking Fund.
The letting agent for Azzura Greens was subsequently notified that names of occupiers and the term of their stay would need to be provided to the security company before the security company would issue security access cards. In November 2011 the letting agent wrote to the principal Body Corporate arguing the unique operation of Azzura Greens as a resort and hotel where the occupiers constantly change means the names of occupiers should not need to be provided to the security company.
On December 2011 the Hope Island Principal Body Corporate wrote to the Azzura Greens Body Corporate saying security access cards would only be activated upon certain information being provided to Hope Island Resort Security. This letter said that for holiday letting the security access cards would only be activated for the period of the stay and after the following information was provided:
Full names of all occupiers.
Full contact details of occupiers
Vehicle Registration
Term of Occupiers stay and the anticipated expire date.”
The Referee concluded:
“I am satisfied that the Principal Body Corporate has the power to enter into a contract for the provision of security services to any lot or parcel within Hope Island. Individual occupiers or residential bodies corporate may refuse to accept these services. However, this would not excuse them from having to contribute to the costs of those services.”
To arrive at this conclusion, the analysis by the Referee was stated as follows:
“Azzura Greens also says the Principal Body Corporate spends a lot of money on security covering its own grounds and the grounds of the various residential bodies corporate. It is argued that funds of individual residential bodies corporate should not be going towards these general security costs. Rather, that separate agreements should be offered to each residential body corporate for each body corporate to accept or refuse at its option.
The principal Body Corporate says it has the power to enter into contracts for security services. I accept this argument based upon the principal Body Corporate power to enter into an agreement for the provision of amenities or services to any lot or parcel (IRDA, 148). Even if individual residential bodies corporate refuse to allow security personal to enter their particular parcel, the Principal Body Corporate will be bound by this contract and need to make the necessary payments. Each individual residential body corporate will therefore still need to contribute to the costs of this contract through their levies. (IRDA 145, 151 (h))
I do not accept the argument by Azzura Greens that this provision of services can only be with consent of the residential body corporate concerned. Unlike in the High Court decision referred to (Humphries v Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597), section 148(c) of IRDA provides a specific power that allows the Principal Body Corporate to enter into the contract with a service provider. The Principal Body Corporate is bound by that contract even if the services are never provided because nobody wants the services (Henderson & Anor v The Body Corporate for Merrimac Heights [2011] QSC 336). Also, section 148 of IRDA is different from section 158 of the BCCMA and the associated regulation modules. Section 148 of IRDA does not contain any wording that would allow the Principal Body Corporate to only recover the cost of providing the services from those residential bodies corporate that freely accepted the services.
In short, Azzura Greens can refuse to accept any security services from the principal body corporate (Henderson & Anor v The Body Corporate for Merrimac Heights [2011] QSC 336 at paragraph 69). However the principal Body Corporate still has contract (sic) for the provision of security services and there is nothing in the legislation that would excuse Azzura Greens from contributing to amounts paid by the principal Body Corporate under that contract. I will make a declaration to this effect.”
Section 158 of the BCCMA considered in Henderson & Anor v The Body Corporate for Merrimac Heights [2011] QSC 336, provided as follows:
“158 Supply of services by body corporate
The body corporate for a community titles scheme may supply, or engage another person to supply, services for the benefit of owners and occupiers of lots in the way, and to the extent, authorised under the regulation module applying to the scheme.”
In contrast, section 148(c) of the IRDA, the relevant section in this appeal, which provides:
“148 Miscellaneous powers of principal body corporate
The principal body corporate may do any of the following—
…
(c) enter into an agreement for the provision of amenities or services by it or any other person to any lot or to the proprietor or occupier thereof or to any parcel comprised in a building units plan or a group titles plan;”
While the wording differs somewhat, the intent would seem to be the same, except in one important way. Section 158 of the BCCMA namely, that the way, and the extent to which, services are provided must be authorised under the regulation module applying to the scheme. For the purposes of the decision in Henderson (above) the regulation module applying to the scheme was the Body Corporate and Community Management (Accommodation Module) Regulation 1997, of which s 118 was in the following terms:
“118 Supply of services by body corporate – Act, s 158 [SM, s 119]
The body corporate may supply, or engage another person to supply, utility services and other services for the benefit of owners and occupiers of lots, if the services consist of 1 or more of the following –
maintenance services, which may include cleaning, repair, painting, pest prevention or extermination or mowing;
communication services, which may include the installation and supply of telephone, intercom, computer data or television;
domestic services, which may include electricity, gas, water, garbage removal, airconditioning or heating.
Example –
The body corporate might engage a corporation to supply PABX services for the benefit of the owners and occupiers of lots.
The body corporate may, by agreement with a person for whom services are supplied, charge for the services (including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services), but only to the extent necessary for reimbursing the body corporate for supplying the services.
In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate (other than body corporate administrative costs) for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service.”
From 30 August 2008, that regulation was remade, in mostly identical terms and remains to this day, as section 167 of the 2008 Accommodation Module.
Of particular note is subsection 167(2) which still remains in identical terms as the former subsection. Under that scheme the body corporate may charge for the services, it would seem, only by agreement with a person for whom services are supplied. There is no requirement for the owners and occupiers of lots who may benefit from the provision of services to be parties to the agreement entered between the body corporate and the service provider. However, the body corporate needs to have an agreement with the person for whom services are supplied before the body corporate can apportion charges to that person.
No such section has been brought to my attention which would apply such a predicate condition to the scheme under section 148(c) of the IRDA.
In Henderson’s case (above) the Supreme Court (per McMurdo J) rejected an argument that it was beyond the power of the body corporate to supply, or engage another person to supply, the services of lawn mowing to areas within lots without having secured the recoverability of the costs of the provision of that service by having made a prior agreement with the relevant lot owners.
The Referee in this case referred to the distinction between sections 37(2)(a) of the Building Units and Group Titles Act 1980 (BUGTA) and 148(c) of the IRDA. It was section 37(2)(a) of the BUGTA which was the subject of consideration by the High Court in Humphries v Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597 and which the Referee also distinguished in this case.
Section 37(2)(a) of the BUGTA provides:
A body corporate may—
(a)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; …
Mc Murdo J noted that in Humphries’ case (above), the High Court held that the body corporate had no power to enter into a contract to procure the provision of a letting service and that as the letting service provision was not severable from the remainder of the agreement, the contract was wholly void. Brennan and Toohey JJ held at 602 that the agreement which that body corporate was expressly authorised to make was an agreement with a proprietor or occupier of a lot, not one between the body corporate and a service provider. Brennan and Toohey JJ held:
“The body corporate did not enter into an agreement with the proprietor or occupier of any lot to provide the services of a letting agency for the benefit of that proprietor or occupier. Had it done so, it would have had authority to perform that agreement by employing an agent or servant (such as the appellants) to provide the services contracted for … . However, if an agreement had been made with particular proprietors or occupiers, it would not have been a proper exercise of the body corporate’s powers to require the funds raised by contribution from all proprietors to bear the cost of provision of the service for particular proprietors or occupiers. In any event, cl. 2(r) of the management agreement was not made in implementation of any agreement made under s. 37(2)(a) between the body corporate and an individual lot proprietor or occupier. None of the other powers conferred by s. 37(2) authorizes the making of an agreement for the conduct of the letting agency for the benefit of those proprietors of individual lots who might require such a service.”
The entering of an agreement for the provision of security services to any lot or to the proprietor or occupier thereof under section 148(c) of the IRDA is not predicated upon there being any prior (or subsequent) agreement with the proprietor or occupier of any lot.
Nor do I see any section in the IRDA which empowers the subsidiary body corporate with the powers of a principle body corporate.
Finally, the appellant provided me with a copy of the second reading speech on 31 March 1987. When the Integrated Resort Development Bill was introduced in Parliament, the Minister for Local Government, Main Roads and Racing, the Hon RJ Hinze said the Bill was derived from existing overseas condominium resort legislation. He went on to say:
“The Bill facilitates the establishment, development, and ongoing management of what can only be described as a new generation of complete resort destinations in the true sense. The Bill recognises that, of necessity, these resorts will contain a number of different but complementary land uses which collectively provide all of the facilities and services desired by the tourist. Recognition is also given to the need to maintain security and privacy in order to achieve this. Such developments include private roads and a mix of land tenure types within the total site of development.
…
The Bill provides for the residential precincts to be subdivided into secondary lots which, amongst other things, are to provide for the creation of lots which are to be designated as secondary thoroughfares. When a plan creating secondary lots is registered the lots designated as being secondary thoroughfares are transferred immediately to a principle body corporate which is automatically established upon the registration of the first plan of survey which creates a secondary lot. The main purpose of the principal body corporate is to own and maintain all secondary thoroughfares in the perpetuity for the ongoing benefit of all residential unit-holders only, irrespective of whether such units are registered on a building units plan or a group titles plan. In terms of the Bill, all residential units have to be established on lots created by a building units plan, a group titles plan, or both.Each unit-owner will be represented on the principal body corporate by a representative of the body corporate which was created by the registration of the plan of survey which established his lot under the provisions of the Building Units and Group Titles Act. Voting entitlements and liabilities are to be assessed as being one unit per residential lot created. Both the primary thoroughfare body corporate and the principal body corporate may establish executive committees to conduct the day-to-day administration of their affairs.
The Bill also provides authority for each of the bodies corporate to make by-laws to control activities for which they are particularly responsible. To protect the interests of individual residential lot-owners, the principal body corporate is also authorised to have development control by-laws which may limit the height or bulk of a particular building so as to prevent the creation of nuisance for others.
…
As I indicated at the outset, this Bill represents pioneer legislation which effectively is a new code of subdivisions for the development of integrated resorts. I believe it is a new code of subdivision for the development of integrated resorts. I believe it is the forerunner to a new era in development which will bring substantial benefits to Queensland.”
Therefore in this test case in relation to pioneering legislation I am compelled to the view that section 148(c) of the IRDA permits a principal body corporate to enter into a contract for the provision of security services to the unit holders of a subsidiary body corporate without the subsidiary body corporate being a party to the agreement with the security provider. Such a view is consistent with the Minister’s statement that the Bill was intended to promote the establishment and operation of complete resort destinations containing a number of different but complementary land uses which collectively provide all of the facilities and services desired by the tourist including the maintenance of security for the whole resort.
For all these reasons I would hold that the appeal must fail on this ground.
ORDERS:
1. Appeal dismissed.
2. Order number three of the referee affirmed.
“special resolution means a resolution which is passed at a duly convened general meeting of a body corporate by the proprietors where the proprietors who vote against the motion proposed as a special resolution do not together—
(a) constitute more than 25% of the total number of proprietors; and
(b) hold more than 25% of the aggregate lot entitlement.
For the purpose of determining the number of proprietors pursuant to paragraph (a), each lot has 1 proprietor.”
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