By Mario Esera, Special Counsel – Litigation HWL Ebsworth Lawyers
Don’t be undone by a typo. Disputes between Bodies Corporate and their caretakers are not uncommon. Typically they are resolved promptly and inexpensively. Unfortunately, that was not the case for the Body Corporate for The Rocks Resort.
Their dispute with their caretaker started in 2010 and continued over several years, culminating in a trial heard over ten days between 19 June 2014 and 30 October 2014. The result? The
Body Corporate lost. Why? They used the word “within” when they should have used the words “not less than”. I explain how this typo cost this Body Corporate hundreds of thousands of dollars.
Since about 12 September 2003, Peterson Management Services Pty Ltd (Peterson Management) has been the caretaker for the Body Corporate for The Rocks Resort Community Titles Scheme 9435 (Body Corporate).
Between 18 June 2010 and 7 October 2010, the Body Corporate issued eight (8) remedial action notices to Peterson Management claiming that they had (amongst other things) failed to maintain the common property, failed to remove rubbish, failed to attend Committee Meetings and breached the Code of Conduct for caretakers (Notices).
On 22 December 2010, Peterson Management applied to the Queensland Civil and Administrative Tribunal seeking (amongst other things) declarations that each of the Notices were invalid.
Many years later, the Application went to trial and was heard over ten days between 19 June 2014 and 30 October 2014.
On 21 May 2015, the Tribunal delivered its decision. It declared that each of the Notices were invalid and of no effect because they did not comply with the mandatory requirements of section 129(4)(c) of the Body Corporate And Community Management (Accommodation Module) Regulation 2008.
Remedial action notices must comply with certain mandatory requirements. One of the mandatory requirements is that:
1. the person given the notice must carry out the duties or remedy the contraventions identified in the notice within the period stated (Deadline); and
2. the Deadline must be “not less than” 14 days after the notice is given to the person.
Unfortunately, in this case the Deadline contained in the Notices was “within” 14 days of being given to Peterson Management – rather than “not less than” 14 days. The Body Corporate argued that the expression “within 14 days” was the same as “not less than 14 days”.
The Tribunal rejected this argument, declaring instead that:
1. a requirement to rectify the matters in the Notices “within 14 days” was contrary to the requirements of section 129(4)(c) of the Accommodation Module;
2. none of the Notices were remedial action notices within the meaning of section 129 of the Accommodation Module; and
3. each of the Notices were invalid and of no effect.
LESSONS FOR OTHER BODIES CORPORATE
The first and simplest lesson for Bodies Corporate is that, when issuing remedial action notices, make sure that they comply with all formal requirements. Had that occurred here, the Body
Corporate may have been spared the embarrassment of being struck down because of a typo.
The second and more significant lesson, however, is the importance of acting reasonably.
All Bodies Corporate have a statutory duty to act reasonably – which includes making or not making a decision.Here, the Body Corporate made two critical decisions.
First, they decided to defend Peterson Management’s Application. During the years between when the Application was made and when the trial started, it is estimated that the Body Corporate incurred costs of at least $500,000.
The second decision the Body Corporate made was to represent itself at trial. That decision was just as important as it may explain why the trial meandered over so many days, increasing the costs for both the Body Corporate and Petersen Management as a result.
In the end, this dispute may have cost the Body Corporate up to $800,000. What does the Body Corporate have to show for it? Nothing.
So were the decisions of the Body Corporate reasonable?
It is clear that the relationship between Peterson Management and the Committee for the Body Corporate had deteriorated significantly over the years. One of the Notices alleged that Peterson
Management had defamed the Committee. Another alleged that Peterson Management had acted in an abusive or aggressive manner to the Committee. During the course of the proceedings, there were numerous applications and the Tribunal mentioned that “no complaint has been left unturned”. Reading between the lines, it seems that the Committee wanted to get rid of Peterson
Management and were prepared to spend whatever it took to achieve that goal.
Unfortunately, it wasn’t only the Committee who paid for those decisions – rather it was every lot owner at The Rocks Resort. So whilst one could speculate that the Committee allowed a personal dislike of Peterson Management to cloud their better judgment, if they had simply reminded themselves of their duty to act reasonably, they may have spared themselves and their members a lot of unnecessary spending and embarrassment.
A recent decision of the Tribunal in The Sands Gold Coast Pty Ltd v Body Corporate for the Sands (No 2)  QCAT 365 (22 September 2016) takes a different view on whether the term “within 14 days” differs from “not less than 14 days”.
In summary, it finds that those terms may be used interchangeably, which is effectively the opposite of what was found in the Rocks Resort case.
However, that decision is under appeal. It was also decided against section 131 of the Body Corporate and Community Management (Standard Module) Regulation 2008 rather than section 129 of the Accommodation Module (even though the wording of those sections is largely identical).
The appeal should be decided later in 2017. Until then, Bodies Corporate should ensure they avoid using the term “within 14 days”, lest they end up in the same situation as the Body Corporate for The Rocks Resort.
Reproduced by kind permission.
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