Body Corporate for Hilton Park v Robertson [2018] QCATA 31

CITATION: Body Corporate for Hilton Park CTS 27490 v Robertson [2018] QCATA 31 PARTIES: BODY CORPORATE FOR HILTON PARK CTS 27490 (Applicant/Appellant) v COLIN ROBERTSON (Respondent) APPLICATION NUMBER: APL215 - 17 MATTER TYPE: Appeals HEARING DATE: 7 March 2018 HEARD AT: Brisbane DECISION OF: Member King-Scott DELIVERED ON: 8 March 2018 DELIVERED AT: Brisbane ORDERS MADE: The Tribunal makes the following orders: 1. The Respondent’s application to strike out the appeal is dismissed; 2. The Applicant has leave to amend its grounds of appeal in accordance with the Amended annexure A to its Application for Miscellaneous Matters filed on 22 November 2017; 3. The Applicant has leave to amend its written submissions in accordance with Annexure A1 to its Application for Miscellaneous Matters filed on 22 November 2017; 4. The Applicant’s application for disclosure is adjourned to a date to be fixed; 5. The Respondent’s application for an indemnity from the Body Corporate for costs incurred in prosecuting the appeal is reserved to the Tribunal hearing the Appeal; 6. The costs of and incidental to each party’s applications are reserved to the Tribunal hearing the Appeal. -- 1 of 7 -- 2 CATCHWORDS: Appeal filed against Adjudicators decision without authority and not approved by special resolution of the body corporate – breach of rule 150 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 as 2 quotes for legal costs not obtained – later ratification by body corporate "to prevent a mischief or to remedy an inconvenience” – no prejudice to respondent. McEvoy & Anor v The Body Corporate for No 9 Port Douglas Road [2013] QCA 168; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; FCT v Sara Lee Household & Body Care (2000) 201 CLR 520. APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr K Wilson QC instructed by Cleary Hoare Solicitors RESPONDENT: Mr D Keane instructed by Sykes Pearson Miller Law REASONS FOR DECISION [1] This appeal, by the Applicant, Hilton Parked Body Corporate (the Body Corporate) is brought under the Body Corporate and Community Management Act 1997 (the Act) and is against the Adjudicator’s decision made on 26 May 2017 that Motion 14 carried at the annual general meeting of the Body Corporate is invalid and of no effect. [2] Motion 14, in essence, was a motion to restrict a lot owner from letting his/her lot for periods of less than 6 months. In other words, it was designed to prohibit short term holiday letting. The Applicant, Colin Robertson, was a lot owner who wished to let his lot for short term holidays. An issue, before the Adjudicator, and one which will be agitated in the appeal, is the meaning of “commercial purposes”1 when applied to holiday letting or letting in general. [3] The parties have each filed Applications for Miscellaneous Matters which I have been asked to deal with as interlocutory applications before embarking, if necessary, on the substantive appeal. [4] The Respondent to the appeal, Mr Robertson has applied to strike out the appeal on the grounds that it has not been validly instituted. He, also, has an application to be indemnified for costs that the Body Corporate will likely 1 A term used in the Hilton Park Community Management Statement. -- 2 of 7 -- 3 incur in prosecuting the appeal. There are applications by the Body Corporate to amend the grounds of appeal and written submissions and also an applications for further disclosure. Strike out Application [5] The appeal was filed on 7 July 2017. Pursuant to section 290 of the Act an appeal must be started within six weeks after the aggrieved person receives a copy of the order appealed against. The Body Corporate admits it received the order on 26 May 2017.2 It would appear that if properly instituted the appeal is within time. [6] Mr Robertson argues that there was no special resolution by the Body Corporate as required by section 312 (1) (b) of the Act. It is appropriate that I set out the relevant subsections: 312 Proceedings (1) The body corporate for community titles scheme may start a proceeding only if the proceeding is authorised by- (a) if the scheme is a specified two-lot scheme-a lot owner agreement for the scheme; or (b) otherwise-special resolution by the body corporate. (4) In this section- prescribed proceeding, for a community title scheme, means- … (d) a proceeding, including a proceeding for the enforcement of an adjudicator's order or an appeal against an adjudicator’s order, under chapter 6. [7] What has occurred is that, as Counsel for the Body Corporate, somewhat, glibly phrased it, there was a ring around of the members and their approval was sought. In fact, it was an email sent in July 2017 to all members except Mr Robertson. It has not been exhibited or disclosed but in a subsequent email by Ms Julie Pettigrew, on behalf of Whittles, Strata and Community Title Services, the Body Corporate managers, reported the effect of the email as follows: An email vote was carried out amongst lot owners and a majority supported proceeding with the Appeal to QCAT which is not surprising, reflecting the outcome of the February 2017 AGM. No owner was opposed. Of course, as a body corporate expense, any authorised costs are the responsibility of all owners in accordance with their lot entitlement. [8] It is clear that the email did not comply with the requirements of s 312. However, that was not the end of the matter. An extraordinary general meeting was convened on 18 August 2017. However, there were insufficient numbers in attendance to form a quorum and the meeting was adjourned to 25 August 2017. On that date the meeting proceeded and the following resolution was passed as Motion 2: 2 See Application for Leave to Appeal and Appeal Part B -- 3 of 7 -- 4 THAT the Body Corporate ratified the decision made by a majority of owners on 17 July 2017 to support and financially contribute towards appealing the QCAT decision as detailed on the attached request form with copy of the QCAT Application.3 [9] It was passed by 7 votes to 1 with 1 abstention which would satisfy the requirements of a special resolution. However, there are a number of deficiencies in the resolution. Firstly, there is no evidence before the Tribunal as to what in effect was being ratified. As stated earlier, the email that went to members on 17 July 2017 has not been produced. Secondly, the appeal was filed on 7 July 2017 within time but the decision being ratified mistakenly refers to a decision being made on 17 July 2017. If the decision to appeal can be retrospectively ratified then that decision should be the filing of the appeal on 7 July 2017. Thirdly, no attached request form with copy of QCAT Application is attached to the minutes. The Tribunal can only guess what the request form dealt with. Presumably, it dealt with the costs of the appeal. [10] In his written submissions, Counsel for Mr Robertson, submitted that at the extraordinary general meeting of 25 August 2017 the Applicant passed a motion authorising the expenditure of $20,000 in legal fees for the appeal. That expenditure is not referred to in the body of the motion, or elsewhere in the minutes. He argued that such a motion was not supported by two quotes and was in breach of rule 150 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008. Accordingly, he submits that the appeal has been commenced irregularly and without proper authority and should be dismissed. [11] As authority for that proposition he relies upon the decision of the High Court of David Grant & Co Pty Ltd v Westpac Banking Corporation4. That case considered a provision of the Corporations Law (Vic) which permitted a company that had been served with a statutory demand to apply to the court to set the demand aside. The provision required the company to make an application to the court but the ‘application may only be made within 21 days of the demand being served’. Gummow J (with whom the other members of the Court agreed) explained that the presumption of insolvency is an important element of the scheme established by the legislation. It starts with service of the statutory demand which if not set aside during the period of compliance will lead to the presumption that the company is insolvent. Allowing, the period to be extended outside the period would not modify the period of compliance. In my opinion, for this reason, the case is distinguishable from the appeal provisions of the Act. [12] Counsel for the Body Corporate submitted that the members of the body corporate had decided to appeal and that the meeting of 25 August 2017 ratified that decision. He did not contend that the email of 27 July 2017 constituted a resolution of the Body Corporate. 3 Exhibit 1 in the Appeal 4 (1995) 184 CLR 265 -- 4 of 7 -- 5 [13] He referred the Tribunal to FCT v Sara Lee Household & Body Care5 where the plurality said: … The general rule that, where a principal ratifies the earlier act of a person acting as agent without authority, the ratification relates back to the date of the unauthorised act, and the principal is bound as if the agent had authority at the earlier time. (citations omitted) [14] Interestingly, this is not the first time this problem has arisen. The Court of Appeal in McEvoy & Anor v The Body Corporate for No 9 Port Douglas Road6 considered the unusual situation where a QCAT Member had heard an appeal under the Act and had delivered a decision overlooking an objection by the respondent that the decision to appeal the adjudicator’s decision had not been authorised by the body corporate. [15] Holmes JA (as she then was) observed that the question of whether the bringing of a proceeding can be ratified after its conclusion was a question for which she could not find any contemporary or direct authority.7 [16] Her Honour referred to Davison v Vickery’s Motors Ltd (In liq)8 and the decision of Isaacs J which: … emphasised that a principal's ratification was not an adoption of the agent's act but of the relationship of agency which had been assumed by the latter. If the agency relationship had been adopted, the further question was whether the law would regard the adoption as relating back to the beginning of the transaction. The purpose of the fiction by which the principal's ratification was allowed to operate as if antecedent authority had been given was "to prevent a mischief or to remedy an inconvenience that might result from the general rule of law"; but such a fiction could not be allowed to work an injury on a third party. 9 (Citations omitted) [17] However, more importantly, she observed: In my view… Accepting the principle that the effect of ratification is to clothe the agent with authority for the purposes of the unauthorised act, the body corporate was able retrospectively to give the committee authority to mount the QCAT appeal. That conclusion would be in keeping with the notion that ratification is designed to “remedy an inconvenience”; it seems clear enough that the body corporate wished to appeal, and that its failure to do so was the product of simple oversight as to the level of authorisation required. The applicants would not be deprived of any right by that result.10 [18] Her Honour further observed that: Had the tribunal member addressed the question of authority, it would have been open to him, and, in view of the object in the Queensland Civil and Administrative Tribunal Act of dealing with matters in an "accessible, fair, just, economical, informal and quick" way, would have been appropriate exercise of power, to adjourn the hearing of the appeal to allow the necessary vote of the body corporate and general meeting to be taken.11 5 (2000) 201 CLR 520 [20] 6 [2013] QCA 168 7 [2013] QCA 168 [33] 8 (1925) 37 CLR 1 9 [2013] QCA 168 [38] 10 [2013] QCA 168 [40] 11 [2013] QCA 168 [42] -- 5 of 7 -- 6 [19] Douglas J, who agreed with the reasons of Homes JA said in relation to prejudice: Here the situation is analogous to the unauthorised issuing of a writ. The failure to authorise the appeal appears to have been a simple oversight. There is no evidence for example, that it reflected a division of opinion on the body corporate during the period of six weeks allowed for an appeal by s 290 of the Body Corporate and Community Management Act 1997. That time limit may, in any case, be extended by order of the Queensland Civil and Administrative Tribunal, a course which would have been likely to occur in the case of this nature had the appeal been ratified before it was heard. Giving effect to the ratification such a case does not obviously contravene the purpose of the time limit established for the bringing of the appeal, that there be finality to litigation. Accordingly, there is no reason to refuse to give effect to the ratification. There is no evidence of any unfairness to a third party involved and no deprivation of any accrued right held by the applicants …12 [20] His Honour when referring to the time limit being extended by order of QCAT was referring to section 61(1) of the Queensland Civil and Administrative Tribunal Act 2009 a provision which provided relief from procedural requirements. [21] A similar provision was held by the New South Wales Court of Appeal not to deny or curtail the body corporate’s powers or capacity to commence legal proceedings in 2 Elizabeth Bay Road Pty Ltd v The Owners — Strata Plan No 73943.13 There the Court refused to strike out the proceedings. [22] In the instant case, it is clear that the majority of lot owners (7 out of 10) wished to appeal the Adjudicator’s decision. There was no division of opinion, the only opponent, understandably, being Mr Robertson. The majority have ratified the earlier decision of 17 July 2017. However, as I have already noted the appeal had to be commenced by 7 July 2017 and was commenced on that date. If necessary, I am prepared to find that the ratification by the Body Corporate is of that decision and action. The Respondent has not referred to any prejudice he is likely to suffer other than the loss of an opportunity to strike out the appeal. I, therefore, dismiss Mr Robertson’s application to strike out the appeal. [23] That leaves the issue whether rule 150 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 should be complied with. In the circumstances, bearing in mind the significant majority of members who wished to appeal, the fact that legal costs and the financing of same was discussed at the meeting or was contained in documents provided for the meeting, that a lot owner is a member of the firm acting for the body corporate and the nature of the expense incurred and likely to be incurred being legal costs, I would waive compliance of the rule. So far as the respondent is concerned, his application, for an indemnity in respect of costs incurred by the Body 12 [2013] QCA 168 [62] 13 (2014) 88 NSWLR 488 -- 6 of 7 -- 7 Corporate in prosecuting the appeal, remains on foot and will be determined at the conclusion of the appeal. Other applications [24] The Body Corporate has applied to amend the grounds of appeal. As the appeal can only be on questions of law14there can be no prejudice and none is alleged. I allow the amendments. I give leave to the Body Corporate to amend its grounds of appeal in accordance with the Amended annexure A and to amend its written submissions in accordance with Annexure A1 to its Application for Miscellaneous Matters filed on 22 November 2017. [25] The Body Corporate also has an application for disclosure of documents. It appeared to be accepted by both parties that this would be better dealt with at a later time. [26] Costs of and incidental to each party’s applications are reserved to the Tribunal hearing the Appeal. 14 S 289 (2) Body Corporate and Community Management Act 1997 -- 7 of 7 --