It's a balancing act - interim injunctions to restrain termination of body corporate management rights - 28 March 2017

Management and letting rights within a body corporate are often an expensive but fruitful investment.  The premise is that a person or company purchases the management and letting rights agreements in a scheme, and under those agreements they are required to undertake certain duties which may include; the management of the scheme, caretaker obligations and letting of lots within the scheme.  In return, they obtain a right to remuneration under those agreements and/or a percentage of the rental return from the letting pool.

The rights and obligations of the manager or letting agent are governed by the agreements entered into between the body corporate and the manager/letting agent, the Body Corporate and Community Management Act 1997 (Act) and the applicable regulation module.

The Act and the applicable regulation module set out the process that a body corporate must follow to seek to terminate the management/letting agreement.  The process outlined in the regulation module provides some protection to managers and letting agents, by allowing the opportunity to remedy any breach of the agreements. In general, a fairly strict approach has been taken with respect to compliance by bodies corporate with the requirements outlined in the Act and the regulation modules before termination can be effective.

If a body corporate seeks to terminate management/letting rights but the manager/letting agent disputes the grounds for termination, or the Body Corporate’s compliance with the requirements of the Act or the regulation module, an interim injunction restraining a body corporate from terminating the agreements (pending the determination of the dispute) may be required. In a recent decision by the Queensland Civil and Administrative Tribunal in Siu and Anor v Body Corporate for Coniston CTS 23339 [2017] QCAT, an interim injunction was successfully obtained for our client, a manager and letting agent, the Tribunal confirmed that:

“It will be just and equitable to grant an interim injunction [restricting termination] if the Tribunal is satisfied that:

  • There is a serious issue to be tried; and
  • The balance of convenience favours the granting of the injunction; and
  • Damages are otherwise not an adequate remedy.”

In that decision, the Tribunal found that there were serious questions to be determined. While the body corporate had raised some concerns about the performance of the duties under the agreements, the Tribunal held that they were not sufficient to outweigh the factors in favour of granting the interim injunction.

HopgoodGanim Lawyers have extensive expertise in the purchase and sale of body corporate management/letting rights as well as disputes regarding rights and responsibilities under management/letting agreements, the termination and attempted termination of such agreements and interim injunction orders. For more information or discussion, please contact HopgoodGanim Lawyers’ Associate Hayley Schindler or our Litigation & Dispute Resolution team.

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