Mahoneys wins again for resident managers

19 September 2018

Mahoneys has secured yet another win for resident managers in the Queensland Civil and Administrative Tribunal.

The trial was hard fought over 10 days of hearing. There were over 2,000 pages of affidavit evidence and 1,000 transcript pages of oral evidence and submissions.

Five remedial action notices (RANs) issued to the resident manager by the body corporate were declared invalid. Consequently, two resolutions to terminate the caretaking agreement were permanently restrained.

Our victory in TLL Investment Pty Ltd v Body Corporate for the Grange represents yet another strong victory for resident managers by Mahoneys in recent years following our successes in other significant and ground breaking decisions for the management rights industry.

Five RANs declared invalid

The body corporate issued three RANs for alleged failures to perform duties. The RANs each attached a copy of report by a well-known consultant. The body corporate asserted in the RAN that the resident manager “failed to carry out [its] duties under the Caretaking Agreement as identified, more particularly, in [the attached report].”

However, the body corporate’s consultant made it clear at the trial that his reports were not a list of breaches of the caretaking agreement but merely a list of items that, in his opinion, should be attended to by the resident manager.

The reports were also found not to contain, for the purposes of a RAN, sufficient particulars of the location of the photographs set out therein. The body corporate’s consultant advised that the photographs were intended to be ‘examples’ of items to be addressed as a whole, not a request to remedy a particular item in a particular location.

In short the body corporate used its consultant’s report for a purpose (issuing a RAN) which was different from the purpose for which the consultant had prepared that report (to review the resident manager’s performance).

Accordingly, the tribunal found that each of the three RANs did not comply with the statutory requirements for two primary reasons:

  • By issuing the RANs in the way that it did, the body corporate did not provide sufficient details to identify the duties the body corporate reasonably believed had not been carried out. It was not up to the resident manager (as the recipient of the RANs) to deduce which of the items requiring attention were breaches of the caretaking agreement and which were not.
  • The reports (and by extension, the RANs) failed to identify meaningful particulars of the location of the photographs in the report. By this failure, the alleged breaches did not identify and there was no way for the resident manager to know for sure which breach related to which duty under the relevant caretaking agreement (there were two agreements, one for each stage of the scheme).

The body corporate also issued two RANs for an alleged failure to comply with directions and requests for information. The tribunal found that there was no such obligation to comply with the purported directions and requests for information. These RANs were also set aside.

Experience is worth every cent

The victory was won on highly technical legal grounds, expertly navigated by Mahoneys through a mountain of evidence.

This demonstrates the unparalleled benefit that Mahoneys’ market leading technical expertise and experience in management rights litigation delivers to our clients.

Mahoneys has gone to trial for resident managers to prevent termination of their management rights, and succeeded in:

  • The Aegean – the body corporate attempted to terminate management rights based on five RANs. We successfully had three RANs declared invalid because they were unreasonable in their terms and proved compliance with two further RANs.
  • The Rocks Resort – the body corporate issued eight RANs. We had all eight set aside on technical grounds. Additionally, at The Rocks Resort – Mahoneys won in the Court of Appeal against the Office of Fair Trading prosecuting a resident manager over profit on cleaning and other charges.
  • The Reserve – the body corporate attempted to terminate due to a change of directors which constituted a deemed assignment without the body corporate’s consent. Mahoneys successfully had the termination declared invalid because it was unreasonable. The body corporate appealed and Mahoneys won again on the appeal.
  • Pivotal Point Residential – the body corporate issued three RANs and resolved to terminate. Mahoneys successfully had two RANs declared invalid and proved compliance with the third RAN. The termination resolution was also set aside.

Additionally, Mahoneys has assisted countless resident managers resolve litigious or contentious matters against their bodies corporate which were resolved without the need for protracted litigation.