BCM v Client: Not a good look

A UOAQ member has drawn our attention to a recent adjudication where the application is brought by a BCM, in their capacity as BCM for a body corporate, against that body corporate.  In other words, the BCM is ‘suing’ its own client.

The applicant is Body Corporate Headquarters (BCHQ), and the body corporate is Park Breeze Luxury Apartments (Park Breeze).  Both are on the Gold Coast.

In a nutshell:

  • The committee is of the opinion they do not have a current BCM and have scheduled an extraordinary general meeting (EGM) to engage a new BCM; their previous BCM – BCHQ – wants to stop them.
  • The committee has requested BCHQ to return the books and records for the scheme; apparently this request has not been complied with.

Any BCM would be keen to have Breeze Park as a client, and it would be only natural for BCHQ to attempt to dissuade Park Breeze from switching BCMs.

But there has to be a point where the BCM should accept the inevitable, step back graciously, and wish their (now former) client well with the new BCM.

Taking a dispute with a client out into the public arena is a big step.  It is not one to be taken lightly.

This dispute has all the hallmarks of a classic Lose : Lose Dilemma for BCHQ:

  • If BCHQ wins, they must endure a non-consensual client;
  • If BCHQ loses, they will have very public ‘egg on their face’.

And if BCHQ loses badly, they will look like a ‘real goose’!

Their chosen course of action is baffling.

The inevitable result:  BCHQ loses badly.

The immediate matter before the Adjudicator concerns only a request for urgent Interim Orders against Park Breeze.

Although the Adjudicator does not determine the actual substantive issues at the time, it is still necessary to confirm that serious legal questions are raised as part of determining whether an interim order is appropriate.

Question: is BCHQ the current BCM?

It is not disputed that BCHQ was engaged at the 2017 AGM as a BCM for a one year term.That contract included the following Clause 2 “Term of Agreement”:

The Term begins on 2nd May 2017 and ends on 1 May 2018.  At the end date it will continue on a monthly basis…until a new Agreement is resolved at a general meeting.” [Emphasis added]

BCHQ was not re-appointed at the AGM held on 27 July 2018.  Neither was a proposed alternative BCM.  There was in fact no successful resolution to engage any BCM at the 2018 AGM.

The committee scheduled an EGM for 28 September 2018, including motions proposing the appointment of the previous alternative BCM – not BCHQ – as the BCM for a one year term commencing 28 September 2018.

BCHQ is apparently claiming to be the current BCM on the basis of Clause 2 of the 2017/18 BCM agreement, ie the monthly rollover provision.

The committee submitted that it had received legal advice that the reference in Clause 2 to the agreement continuing after the end date is invalid.

The Adjudicator agreed.  Refer to s.116(3) of the Accommodation Module:

To remove any doubt, it is declared that at the end of the term the engagement expires and the person cannot act again as the body corporate manager without a new engagement.”  [Emphasis added]

Return of the body corporate books and records

The Adjudicator noted that the books and records had apparently not been returned to the committee, and made the following comments:

  • Return of records by a BCM is not predicated on expiration of the engagement of the BCM. A BCM can be asked to return that property at any time.
  • The property belongs to the body corporate,  and the committee is entitled to decide who will be in the possession of the property at any time.
  • The Adjudicator could envisage no circumstances where a BCM would be entitled to withhold property from a committee following a valid advice.

Further comments by Adjudicator

“The basis for the application is extraordinarily weak…”

“… I do not consider that BCHQ has raised any serious issues, other than issues about their own conduct.” 

Comments by UOAQ

It is baffling that a BCM would take a matter like this out into the public arena, relying on such seemingly unsustainable arguments.

There is no published final determination yet.  The UOAQ does not know if this is still pending or if BCHQ has withdrawn the application.

It is understood that BCHQ is not a member of Strata Community Australia (SCA), the peak representative body for BCMs in Queensland.

It is not known yet whether that committee will pursue this matter further through legal channels.

Two more general rules for BCMs

The UOAQ’s recent Newsflash #62 “A BCM’s ‘Hotel California’ Renewal Clause” included a list of general rules for BCMs – rules which would be known and understood by all BCMs.

The Park Breeze Adjudication highlights two additional rules:

 

  • The BCM’s engagement expires on the stated end date, ie the BCM can not continue to act as the BCM without a new engagement.  Any provision in the contract that the engagement may continue after the end date on a rolling basis – even monthly – is invalid.
  • Following a valid notice from the committee, the BCM must return all body corporate property to the committee.  This demand can be made at any time – it is not predicated on expiration of the engagement.
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