Carroll v Body Corporate for Palm Springs Residences [2013] QCATA 21

CITATION: Carroll and Ors v Body Corporate for Palm Springs Residences CTS 29467 [2013] QCATA 21 PARTIES: Gregory Carroll Pamela Rose Carroll Christina Louise Schoenbaechler (Applicants/Appellants) v Body Corporate for Palm Springs Residences CTS 29467 (Respondent) APPLICATION NUMBER: APL157-12 MATTER TYPE: Appeals HEARING DATE: 29 January 2013 HEARD AT: Brisbane DECISION OF: Dr J R Forbes, Member DELIVERED ON: 29 January 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. Appeal dismissed. 2. The appellants shall pay the Respondent’s costs, in the amount of six hundred dollars ($600) not later than 4pm on 8 March 2013. CATCHWORDS: Access to records of body corporate – whether body corporate entitled to legal professional privilege vis a vis unit holders – whether committee meeting valid – whether resolutions, if irregular, may be ratified – whether order for costs should be made Queensland Civil and Administrative Tribunal Act 2009, ss 32, 43, 100, 102 Body Corporate and Community Management Act 1997, ss 94, 100, 205, 270, 273, 294, 289, Schedule 6 Body Corporate and Community Management (Accommodation Module) Regulation 2008, ss 42, 54, 55 -- 1 of 9 -- 2 Body Corporate and Community Management (Standard Module) Regulation 2008, s 205 Acts Interpretation Act 1954, s 32E Evidence Act 1977, s 3, Schedule 3 Corporations Act 2001 (Cth), s 1322 Adams v Elphinstone [1993] TASSC 67 Arno v Forsyth (1986) 9 FCR 576 Baker v Campbell (1983) 153 CLR 52 Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 Bell v Body Corporate for Juanita Court CTS 3339 [2011] QCATA 94 Buttes Gas and Oil Co v Hammer [1981] 1 QB 23 Chalet Nominees (1999) Pty Ltd v Murray [2012] WASC 147 Citibank Limited v Federal Commissioner of Taxation (1988) 19 ATR 1479 Crowbay P/L & Anor v Body Corporate for "Southbank Chambers" [2007] QCA 453 Davison v Vickery's Motors Ltd (In Liq) (1925) 37 CLR 1 Derby & Co Ltd v Weldon [1991] 1 WLR 652 Derby & Co Ltd v Weldon (No 10) [1991] 2 All ER 908 Farrow Mortgage Services Pty Ltd v Webb (1996) 39 NSWLR 601 Harry Parker Ltd v Mason [1940] 2 KB 590 Lee and Ors v Ross and Ors (No 2) [2003] NSWSC 507 Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 1254 Mason & Cox Pty Ltd v KPMG Peat Marwick (1999) 74 SASR 171 Nine Films & Television Pty Ltd v Ninox Quarante Pty Ltd v Owners of Strata Plan No 67212 [2009] NSW Titles Cases 80-128; [2008] NSWCA 258 R (a solicitor) v Lewis [1987] 2 Qd R 710 Skafola Pty Ltd v Burnitt Investments Pty Ltd [2010] QCATA 10 Television Ltd (2005) 65 IPR 442; [2005] FCA 356 Temwood Holdings Pty Ltd v West Australian Planning Commission [2003] WASCA 112 Towercom Pty Ltd v Fahour [2011] VSC 455 Treacey v Edwards (2000) 49 NSWLR 739 -- 2 of 9 -- 3 Union Bank of Australia Ltd. v. McClintock (1922) 1 AC 240 Walden v Body Corporate for Broadwater Tower [2012] QCATA 270 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION [1] Gregory Carroll, Pamela Carroll and Christina Schoenbaechler („the Residents‟) own units in the Palm Springs Community Title Scheme. Gregory Carroll and Pamela Carroll („the Carrolls‟) own Unit 701 in the scheme of 48 units, and Christina Schoenbaechler („Christina‟) owns Unit 106. The Carrolls are appealing in their own right, and Pamela Carroll has authority to act for Christina. [2] The Residents appeal the decision of Adjudicator Schmidt,1 delivered on 3 May 2012, dismissing their claim for access to the respondent‟s („the body corporate‟) records; and challenges to the validity of a meeting of the body corporate committee („the committee‟), and the engagement and payment of a service contractor. The appeal is limited to questions of law,2 and to material that was before the learned Adjudicator, exclusive of any evidence sought to be introduced at a later stage. I need hardly add that the learned Adjudicator could not be said to have erred on evidence not placed before him. Matter 1: Access to Records [3] The Residents say that the committee wrongfully refused them access to the body corporate‟s general ledger („the ledger‟), and to legal advice from the body corporate‟s solicitors to the committee prior to 9 December 2011. The question of access to the legal advice is considered below. I concentrate, for the moment, on the ledger. [4] The body corporate says that the Residents should properly have sought access to the ledger under s 205(2) of the Body Corporate and Community Management Act 19973 („the BCCMA‟) and paid the modest access fee prescribed in the Body Corporate and Community Management (Standard Module) Regulation 2008 („the Standard 1 There is an appeal as of right, but only on questions of law: Body Corporate Management Act 1997, s 289(1). 2 BCCMA, s 289(2); Crowbay P/L & Anor v Body Corporate for "Southbank Chambers" [2007] QCA 453 at [15]; Skafola Pty Ltd v Burnitt Investments Pty Ltd [2010] QCATA 10 at [1]; Bell v Body Corporate for Juanita Court CTS 3339 [2011] QCATA 94 at [6]. 3 Within 7 days after receiving a written request from an interested person accompanied by the fee prescribed under the regulation module applying to the scheme, the body corporate must ... permit the person to inspect the body corporate‟s records. A unit owner is an “interested person”: BCCMA, s 205(6)(a). -- 3 of 9 -- 4 Module‟).4 The contents of the ledger are clearly „information ... from the body corporate’s records‟ within the meaning of section 205(1) of the BCCMA.5 [5] The Residents‟ response is that they sought access to the ledger via Stratamax, which is an electronic, digitised version of the body corporate records which may or may not exist on paper. The learned Adjudicator held that for present purposes there is no material distinction between paper and electronic records. Undoubtedly he was correct. The time is long past when the expressions „document‟ and „information in a document‟ were limited to traditional paper writings.6 Matter 2: A Question of Privilege [6] On 15 December 2011, Mr Carroll sought access to a document containing advice to the committee about an application by a unit owner for reversion to original contribution entitlements7 – a matter to which the Carrolls had an interest. The committee refused that request, claiming legal professional privilege. In response, the Residents argue that for this purpose there is no distinction between the committee and the body corporate and further (presumably by implication) that there is no distinction between the body corporate and individual unit owners. [7] Alternatively, the Residents contend that an email from the Chairman of the committee, dated 15 December 2011, amounted to a waiver of privilege. It is convenient to deal with that short point first, before returning to the question of whether there was any privilege to be waived. [8] The email in question, so far as is now material, stated: „Hi Greg [Carroll] I have asked Vanessa to supply you with copies of the [body corporate solicitors’] advices as requested.‟ But shortly afterwards, without more, privilege was asserted. [9] The brief passage relied on falls far short of a waiver, because it does not communicate, wholly or in part, the substance of the advice. There is a crucial difference between a mere indication that one has sought or received legal advice, and the disclosure of its contents.8 The writer merely said that he would release the document, and then changed his mind a few days later, on legal advice. The statement was not irrevocable; it was neither a waiver nor a revelation of the advice. 4 The inspection fee for unit holders is prescribed in s 205(1)(a)(i) of the Standard Module. 5 See also BCCMA, Schedule 6 “records”. 6 Harry Parker Ltd v Mason [1940] 2 KB 590; Derby & Co Ltd v Weldon [1991] 1 WLR 652; Treacey v Edwards (2000) 49 NSWLR 739; Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 1254. Compare Acts Interpretation Act 1954, s 32E, Evidence Act 1977, s 3, Schedule 3 “document”. 7 BCCMA, s 379. 8 Temwood Holdings Pty Ltd v West Australian Planning Commission [2003] WASCA 112 at [20]; Derby & Co Ltd v Weldon (No 10) [1991] 2 All ER 908; Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 65 IPR 442; [2005] FCA 356; Mason & Cox Pty Ltd v KPMG Peat Marwick (1999) 74 SASR 171; Towercom Pty Ltd v Fahour [2011] VSC 455 at [11]. -- 4 of 9 -- 5 [10] But was the document ever privileged, as between the body corporate and Mr Carroll? As between the committee and the body corporate, the general rule is that the committee is for most purposes9 the agent, or alter ego of the body corporate.10 It is at least arguable, then, that there is such a privity of interest between the body corporate and the committee that privilege is held by them in common.11 They may not assert it against each other, but either may assert it against third parties. [11] However, assuming a commonality of interest between the body corporate and the committee, it does not necessarily follow that individual unit owners share that interest. If the body corporate and the unit owners shared the same legal interests and personality (as the Residents suggest) these proceedings would be impossible, because a person cannot sue himself, or appear on both sides of the record. [12] On a more pragmatic level, it is quite conceivable that the interests of the body corporate and a unit owner may sharply diverge – for example, when the body corporate seeks to curb unauthorised use of common property, to enforce the payment of corporate levies, or to restrain the unauthorised keeping of animals on the premises. If the committee (or the body corporate) obtained legal advice in such circumstances – as a body corporate no doubt often does – it would be absurd to suggest that it could not claim privilege against the alleged debtor or offender. In the present case, it is undisputed that the committee, on behalf of itself and the body corporate, sought advice when unit holders (including Mr Carroll) were seeking (to the disadvantage of other owners) to gain the benefit of ss 379-389 of the BCCMA. There is no common interest in this case, and nothing in the BCCMA or its appendages that can be interpreted as abrogating professional privilege.12 [13] In my view the learned Adjudicator correctly upheld the claim of privilege. [14] It follows that the Residents‟ case, in so far as it alleges wrongful withholding of information, was rightly rejected. Matter 3: An Invalid Committee Meeting? [15] The next allegation is that an „out of committee‟ meeting on 9 December 2011, and decisions made thereat are invalid. In principle, „voting outside committee meetings‟ is permissible, provided, inter alia, that written notice of the business is given to all committee members or, in an emergency, as many members as it is practicable to contact.13 [16] Before the learned Adjudicator, the Residents contended, first, that the „purported minutes of the ...meeting on 9 December 2011 were received 9 “Restricted issues” aside: Standard Module s 42. 10 BCCMA, s 100(1). 11 Buttes Gas and Oil Co v Hammer [1981] 1 QB 23 at 242-243; Farrow Mortgage Services Pty Ltd v Webb (1996) 39 NSWLR 601. 12 Many quite intrusive statutes expressly preserve it: Baker v Campbell (1983) 153 CLR 52; Arno v Forsyth (1986) 9 FCR 576; Citibank Limited v Federal Commissioner of Taxation (1988) 19 ATR 1479, and courts are slow to imply abrogation: R (a solicitor) v Lewis [1987] 2 Qd R 710. 13 Body Corporate and Community Management (Accommodation Module) Regulation 2008, s 54(1)(a) („the Accommodation Module”). -- 5 of 9 -- 6 by the unit owners on 23 December 2011 ... [but] should have been received no later than 16 December 2011,‟14 and second, that several matters were resolved ex post facto by ratification. [17] The question of ratification is considered below, and for the reasons given I am satisfied that if a principal (here, the committee) holds, in principle, authority to do an act, it may lawfully ratify such an act, purportedly done on its behalf. [18] It is also suggested that a committee decision to allow a unit owner to keep a domestic animal is void for uncertainty. To that contention one may reasonably apply the maxim lex non curat de minimis – the law does not fuss over trifles. [19] So far as the service of minutes is concerned, the Accommodation Module requires that „a copy of a record of a motion voted on other than at a meeting‟ to be given to unit holders within 21 days of the decision.15 A simple calculation shows that this time limit was observed, as the learned Adjudicator held.16 [20] There was a slight irregularity in notifying unit owners of a change to their contribution entitlements, but, as the learned Adjudicator found, this caused no prejudice to the Residents.17 Indeed, none is alleged.18 Further, „Matter 4 – Adjustment of schedule lot entitlement‟ in the original application is marked as withdrawn. [21] In the same document, „Matter 3‟ which alleges invalidity of the subject meeting displays a scatter-gun approach that is not conducive to the precise identification of the Residents‟ case. Triviality of the points taken attains its zenith in a complaint that a resolution to allow one owner to keep a domestic animal is insufficiently explicit. [22] The BCCMA is a lengthy, technical and complex instrument, with no fewer than six sets of subordinate and similarly complex „module regulations‟. It cannot be the case that the legislature expected all, or even most committee members of a body corporate, small, large or very large, to be experts in corporate law, or masters of community management. Indeed, the BCCMA implicitly recognises that, if this legislation were at all times, and in all circumstances applied with the utmost rigour and most precious attention to detail, its objects and policies would be retarded by endemic disputation, rather than advanced. [23] The direction that a „body corporate must act reasonably‟ in the performance of its „general functions‟19 does not suggest that every minor irregularity should be pounced on to impede or paralyse the normal conduct of business. The Code of Conduct for committee members does not demand administrative perfection, but simply directs them to „take 14 Palm Springs Adjudication Application, Attachment 3. 15 Accommodation Module, s 55(4)(a)(ii). 16 Decision 3 May 2012 at [26]. 17 Ibid [27]. 18 Ibid [25]. 19 BCCMA, s 94(2). -- 6 of 9 -- 7 reasonable steps‟ to comply with the BCCMA.20 If people „honestly and reasonably believe‟ that they are validly elected members of a committee, their decisions, which would otherwise be void, are not to be set aside.21 [24] There is no good reason to suppose that the BCCMA is intended to be more draconian that the Corporations Act 2001 (Cth), which provides: A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court ... 22 [25] This remedial provision has been construed liberally, as remedial legislation should be. It is capable of excusing the invalid appointment of a director,23 or the failure to assemble a quorum.24 It seems to me that the provisions of the BCCMA should be approached in a similar way. [26] This conclusion finds further support in the discretion to dismiss an application that appears „frivolous, vexatious, misconceived or without substance‟.25 That phrase is expressed alternatively, not cumulatively. In other words, an application may be frivolous or vexatious, even if not entirely devoid of substance. The learned Adjudicator applied it to the Resident‟s criticisms of the meeting and transactions on 9 December 2011.26 That is a finding of fact, or mixed fact and law, which cannot be challenged in this appeal. [27] I find no legal error in the learned Adjudicator‟s dismissal of the claim that the meeting in question, and resolutions it reached, are invalid. Matter 4: Adjustment of Contribution Schedule [28] This matter was not pursued. Matter 5: Engagement of service contractor etc without BC or committee meeting [29] As the learned Adjudicator found, the committee decided informally that these matters would be more conveniently dealt with, by way of ratification, at a meeting no later than 30 June 2012. It does not appear that any such meeting was held before the learned Adjudicator gave his decision on 3 May 2012 – a point not considered in the latest submissions of the parties27 or in the decision itself. If in fact no ratifying resolutions have yet been passed, that should be remedied as soon as reasonably possible. [30] The learned Adjudicator held that „as a general proposition a body corporate may validly resolve to ratify past irregular conduct‟, provided that 20 Ibid, s 4 and Schedule 1A. 21 Ibid, s 100(4). 22 Corporations Act 2001 (Cth), s 1322(2). 23 Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [12(4)]. 24 Chalet Nominees (1999) Pty Ltd v Murray [2012] WASC 147. 25 BCCMA, s 270(1)(c). 26 Decision 3 May 2012 at [29]. The particularity of this finding takes precedence over a general suggestion to the contrary at [40]. 27 See Submissions of Respondent filed 5 November 2012; Submissions of Appellants filed 13 November 2012. -- 7 of 9 -- 8 it is fully aware of the material facts.28 That proposition was endorsed by the Court of Appeal in Warren v Body Corporate for Buon Vista [2007] QCA 160 at [12], where the applicant unit owner was unable to point to any contrary provision in the BCCMA. In the present case, legal expenses were ratified on 9 December 2011,29 and no objection is raised on that account. [31] Three essentials of a valid ratification are as follows: first, the agent whose act is adopted must have purported to act for the principal; second, at the time the agent acted, the principal must have been extant, and ascertainable, at that time; and finally, at the time of ratification, the principal must have been legally capable of doing the act in question.30 Those three requirements are satisfied in this case, as the learned Adjudicator correctly found. [32] It follows, in my view, that the decision under appeal is unaffected by legal error. Costs [33] The respondent body corporate seeks an order for costs. It submits that this appeal is „frivolous, vexatious, misconceived or without substance‟,31 and that, in dismissing it, the Tribunal may award costs not exceeding $2,000.32 [34] The BCCMA vests the power to award costs in the Adjudicator, but in deciding an appeal, QCAT may exercise all the jurisdiction and powers of the primary decision maker.33 [35] In deciding an issue of costs, the Tribunal may take into account any relevant litigious history of an unsuccessful party.34 According to the Office of the Commissioner for Body Corporate and Community Management, Mr Carroll has made four previous Adjudication applications against this body corporate.35 The Residents admit that fact, but say that the applications were made over a period of 11 years.36 [36] In opposition to the application for costs, the Residents contend that the body corporate need not have resorted to professional advice.37 I reject this suggestion, considering that the Residents chose to litigate, inter alia, technical questions of privilege and ratification. 28 Decision 3 May 2012 at [34]. 29 Minutes dated 22 December 2011, Item 3. 30 Quarante Pty Ltd v Owners of Strata Plan No 67212 [2009] NSW Titles Cases 80-128; [2008] NSWCA 258 at [110]. See also Union Bank of Australia Ltd v McClintock (1922) 1 AC 240 at 248; Davison v Vickery's Motors Ltd (In Liq) (1925) 37 CLR 1 at 21; Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 at [131]; Adams v Elphinstone [1993] TASSC 67 at [15]. 31 BCCMA, s 270(1)(c). 32 Ibid, ss 270(3), (4). 33 Ibid, s 294(1). 34 Ibid, s 270(3)(b). 35 Submissions of Respondent filed 5 November 2012 at [66(h)]. 36 Submissions of Appellants filed 13 November 2012 at [28]. 37 Ibid [26]. -- 8 of 9 -- 9 [37] The Residents describe the application for costs as „a vindictive attempt ... to intimidate the Appellant [sic] into refraining from future applications against the Committee‟.38 That is a tendentious and mistaken submission; costs in civil proceedings are not a penalty or punishment, but a measure of compensation (often inadequate) to the recipient. [38] Prima facie, I consider that this is a proper case for a costs order. The appeal, as I see it, is entirely unsuccessful, and Mr Carroll‟s fifth litigious challenge to the body corporate has required it to deal with voluminous, often irrelevant material.39 If s 294 of the BCCMA is subject to s 100 of the QCAT Act40 – a point I find unnecessary to decide – I would regard this as a proper case for application of s 102 of the QCAT Act. The appeal, if not the primary application, may fairly be described as „frivolous, vexatious, misconceived or without substance‟.41 [39] Legal representation in this Tribunal generally requires the leave of the Tribunal.42 It does not appear that leave has been granted in this case. But that requirement is subject to contrary provision in an enabling Act. The BCCMA is such an Act, and it provides that a party to an adjudication under it „has the right to be represented by an agent’.43 The present proceedings are an extension of the primary application. There is no modification of the term „agent‟ in the BCCMA, and a party‟s lawyer is, of course, the party‟s agent.44 [40] Accordingly, I hold that the body corporate was entitled to retain legal advisers for the purposes of this appeal, and for reasons already given, I consider that a costs order is appropriate. As the body corporate has not fully particularised its legal expenses the quantum of the order should be a modest and conservative estimate. Six hundred dollars ($600) will be appropriate. ORDERS [1] Appeal dismissed. [2] The appellants shall pay the respondent‟s costs, in the amount of six hundred dollars ($600) not later than 4:00 pm on 8 March 2013. 38 Ibid [29]. 39 Cf Walden v Body Corporate for Broadwater Tower [2012] QCATA 270 at [71]. 40 Each party usually bears own costs. 41 BCCMA, s 270(1)(c). 42 QCAT Act, s 43(2)(b)(iv). 43 BCCMA, s 273. 44 Lee and Ors v Ross and Ors (No 2) [2003] NSWSC 507 at [33]. -- 9 of 9 --