Cairns Aquarius [2001] QBCCMCmr 417 (31 July 2001)

C G YOUNGREFERENCE: 0204-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	1439
Name of Scheme:	Cairns Aquarius
Address of Scheme:	107 The Esplanade CAIRNS QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Helmut Anton REISCH and Paul Andrew BERRYMAN, as the co-owners of Lot 87 (otherwise known as Unit 1),



C G YOUNGI hereby order that the body corporate secretary, or in the secretary’s absence, the chairperson, must ensure that a motion is included in the agenda and voting paper for the next general meeting of the body corporate, to be put and resolved by ordinary resolution, that the body corporate ratify the actions of the previous committee taken in the period October to December 2000 to obtain legal advice and cause a letter to be served on Helmut Reisch of Lot 87 (Unit 1) to withdraw alleged defamatory remarks about committee members, at a cost of $499.95 met from body corporate funds.

I further order that the secretary must send a copy of this order and reasons to all owners shown in the body corporate roll. 2y
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0204-2001

“Cairns Aquarius” CTS 1439

The applicants, Helmut Reisch and Paul Berryman of Lot 87 (Unit 1), have sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”) that the committee members who authorised the obtaining of legal advice from Morrow & Associates against Helmut Reisch over defamatory remarks made in September 2000, be ordered to reimburse the legal fees of $499.95 paid from body corporate funds, or alternatively that the body corporate pay the $286 in legal costs incurred by Reisch in the matter.

Section 223(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

(c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

In the supporting grounds, the applicants state that late last year Reisch nominated for a committee position and as part of his election campaign corresponded with an overseas owner by email, evidently in disparaging terms of the committee as they describe Reisch’s email as “a rather ill judged missive”. They then state that Reisch believed the statements made were correct but were “not well expressed”. The former statement seemingly admits of the defamatory nature of the email while the latter appears to be saying that the statement was not meant in the way it reads. However, here I am not concerned with the defamation itself but with the actions surrounding it insofar as they occur in the context of the community title scheme.

The applicants also state that prior to the receipt of a letter from Morrow & Associates on 18 December 2000 demanding a withdrawal of the subject comments, they had no notice of the committee’s knowledge of the comments or that they had sought legal advice in the matter. They believe that the matter was discussed at an “informal” meeting of the committee in early October but no notice of it was posted on the scheme noticeboard. The applicants state that the minutes do not show that there ever has been a resolution of committee to obtain legal advice regarding Reisch’s comment, though the $499.95 fee has been subsequently paid out of body corporate funds. The applicants contend that the decision to obtain advice was a private matter which should have been undertaken at the member’s own cost, and that the failure to formally decide and minute the matter was done to conceal the action from owners. They state that it was disappointing the committee had chosen not to speak with them regarding the matter instead of resorting to legal action.

The applicants also believe that the timing of the creation of the solicitor’s letter, shown as 4.01pm on 15 December 2000 in the footer to the letter, being 1 minute after the commencement of the annual general meeting, suggests that the outcome of the committee election was known in advance, presumably by the committee members and the solicitor. There is no evidence to support this and I do not intend to pursue what I consider to be conjecture – the committee rejects the applicant’s proposition.

Miller Harris, Lawyers, has responded to the application on behalf of the committee. The committee states that all formal decisions are made in compliance with the legislation and though it has “informal discussions” it does not make decisions outside “formal committee meetings”. It then goes on to state that formal meetings are held “approximately every 2 weeks”. This is an extraordinary number of committee meetings and far exceeds what is normal for schemes – usually committees meet quarterly or every two months. When one adds the “informal discussion” meetings, the total meetings would be even more frequent than fortnightly. There is nothing to prevent the committee from meeting so often, though, in respect of the formal meetings, the administrative costs of photocopying the notice of committee meeting, enveloping and postage, for 87 owners must be costly, especially if it is undertaken by a Body Corporate Manager on a professional fee basis.

The committee states that Reisch’s comments “questioned the propriety of the committee members and their ability to properly manage the body corporate’s affairs” and had forced the committee to act to protect its reputation and its functionality. It believes that the legal action taken was also necessary to preserve the authority and confidence of the committee and in that regard was for the benefit of the body corporate generally and therefore appropriately its cost.

The committee points out that the applicant’s own description of the offending email, that it was “a rather ill judged missive”, is an admission of the defamation and that the legal action taken was justified.

I have noted that in the committee’s response it has not refuted the applicant’s statement that there was no formal resolution recorded as authority for the committee’s referral of the matter for legal advice and action. It would have been a simple matter to attach a copy of the relevant minute, or give a meeting reference. In inquiries made with the previous Body Corporate Manager (under engagement at the relevant time), the representative who managed the body corporate was not able to recall a resolution having been passed.

The absence of any authorising resolution has also been confirmed by the treasurer, Mrs C Leonard, in her submission to the application. The submission had attached copies of a letter under the signature of a “J Bethune, Acting Treasurer” also concerning the absence of an authority for the $499.95 account, and the resignation letter of a committee member, V Brotherton, dated 23-I-2001, complaining of irregularities in committee meeting procedure. However, I do not intend to rely on these documents in my decision.

Mrs Leonard also states that after having received a copy of the application and an invitation by this office to make a submission to the application, she received no notice of any committee meeting to authorise the engagement of Miller Harris to respond to the application on behalf of the committee. She surmises that either she has been precluded from the meeting called to discuss the application and authorise the response, or no such authorisation preceded the obtaining of legal assistance.

It seems to me that what is necessary is that all owners should be made aware of the circumstances of the engagement and payment to Morrow & Associates and that the owners in general meeting should decide whether they ratify the decision of the committee in the matter. A similar question arises regarding the cost of the response to this application, however as the matter is not in issue then I make no order concerning this engagement. In order that owners are acquainted with the matter before voting, I have also ordered that a copy of this order be sent to all owners. Of course members of the previous committee involved may wish to personally canvass owners with their view.2y