In a judgment published this week, the Supreme Court has ruled the dismissal of the company managing Noosa’s iconic Bay Village shopping centre was unlawful.
Breeze MR Pty Ltd – a company controlled by Duncan Manderson – acquired the management rights in April 2018 with the intention of putting his stamp on the retail centre and entertainment precinct in the heart of Hastings Street to improve its performance.
The company’s succession to the role was by way of an assignment of the management agreement struck with an earlier manager in 2005.
Breeze does not hold letting rights for tenancies in the centre and is thus not a “caretaker” and as manager, falls within the definition of “service contractor” referred to in BCCMA s 15.
In April 2021, the Bay Village committee purported to resolve on behalf of the body corporate to terminate the management agreement for “gross negligence” or “gross misconduct” contrary to clause 6.1 (b) for the alleged misappropriation of body corporate moneys by the company .
In a letter signed by the chairman, treasurer and secretary- without any authority from the lot owners – it notified Breeze of the termination.
Manderson promptly applied to the Supreme Court for a declaration that the termination by the committee was invalid.
When the matter came before Justice Martin Daubney in Brisbane, Bay Village contended the Supreme Court had no jurisdiction by operation of BCCMA section 229 which confers exclusive jurisdiction on QCAT for body corporate disputes with owners or occupiers.
Justice Daubney reasoned though that QCAT’s exclusive jurisdiction in relation to such disputes did not extend to owners operating in a third-party capacity, for example as manager or service contractor.
In His Honour’s view – given the dispute had nothing to do with Breeze’s capacity as a lot owner – it did not come within the s 227 definition of “dispute” thus negating the s 229 QCAT exclusive jurisdiction argument.
Having disposed of the jurisdiction issue, the court turned its attention as to whether the termination by Bay Village of the company’s management rights was valid.
Breeze contended a decision to terminate a manager or service contractor fell within the “restricted issue” exception in BCCMA s 100 (2) – ie one requiring an ordinary resolution of members – such that the general rule in s 100(1) that a decision of the committee is to be treated as a decision of the body corporate, did not apply.
To demonstrate a decision of that nature was indeed a “restricted issue” for the committee, Manderson directed His Honour to regulation 100 of the Body Corporate and Community Management (Commercial Module) Regulation 2020 (the Commercial Module) that clearly specifies “a body corporate may may terminate a person’s engagement as a body corporate manager or service contractor only if the
termination is approved by ordinary resolution of the body corporate”.
Justice Daubney needed no more convincing and gave his ruling on the spot.
“The meaning and effect of these words could not be more clear,” he wrote. “The decision to terminate a service contractor can only be made if the termination is approved by an ordinary resolution of the body corporate”.
Because the decision was not one that could be made by the committee, the court declared that Bay Village’s purported termination had no force or effect.
As a consequence, Breeze is deemed to have been the manager thru the period of purported termination.
It is unclear whether this is the final chapter in the dispute. The order that Bay Village pay 80% of Breeze’s indemnity costs of the court proceedings so far, could be expected to temper the committee’s enthusiasm for further unilateral action.