Glades Easthill North [2007] QBCCMCmr 600 (22 October 2007)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Paul Thomas Valmadre and Robyn Anne Valmadre, the owners of lot 16, against the body corporate for Glades Easthill North

I hereby order that the body corporate for Glades Easthill North is to make the books and records available for inspection by the owners of lot 16 within 7 days of the date of this order, at a mutually agreeable time. If the parties are unable to agree on a mutually agreeable time, then the books and records are to be made available at 9am on Monday 29 October 2007.

I further order that:

• The body corporate shall ensure that all body corporate records that the owner of lot 38 is entitled to inspect are present and available at the inspection, and that those records are presented at the inspection in an orderly manner.
• The body corporate shall make all reasonable attempts to ensure that the inspection is not unreasonably disrupted or terminated by any member of the body corporate or the committee.
• The owners of lot 16 shall conduct the inspection in a reasonable, calm and orderly manner.
• At the inspection (or within 48 hours after it) the body corporate shall provide the owners of lot 16 with copies of particular body corporate records upon request, provided that the owners of lot 16 pays a fee of 50c per page for copies of requested documents.
• The Body Corporate shall not require any further payment (beyond the $11 already paid) for the inspection authorised by this order.

I further order that, in all other respects, the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0538-2007

"Glades Easthill North" CTS 32506

Scheme

"Glades Easthill North" is registered as a building format plan of subdivision comprising 80 lots and common property. It is regulated by the Body Corporate and Community Management Act 1997 (the Act) and its Accommodation Module Regulation (Accommodation Module).

Application

This is an application by the owners of lot 16, Paul Thomas Valmadre and Robyn Anne Valmadre (the applicants), against the body corporate, seeking the following orders:

Background

The applicants have submitted a copy of a written request dated 30 May 2007 requesting an inspection of the body corporate records within seven days of receipt of their letter and accompanied by the prescribed fee (at that time) of $11.00. They particularly requested that all correspondence between the body corporate and its legal advisors concerning the dispute with Ambro (Aust) Pty Ltd and copies of all accounts received by the body corporate in that respect and a copy of all files relating thereto, be produced for inspection.

On 7 June 2007, the Body Corporate Manager (BCM), Russell Barrett of Strataworld, responded to the applicants’ request as follows:

"Please note that as this matter is the subject of a dispute and possible legal action these records may be considered privileged documents and may not be available for searching. To clarify this situation the body corporate has sought legal advice in this regard and will advise you in due course of the outcome of such advice."

Submissions

Submissions in response to the application were sought from all owners (excluding the applicants) and the committee. A total of seven submissions were received. Of these, five supported the applicants, making submission to the following effect:

One submission appeared critical of any criticism of the committee by owners, unless owners were prepared to nominate themselves for committee membership. It also commented on the downward spiral of escalating fees for legal advice, adjudication and administration. I could not regard it as being either for or against the application.

A submission by the body corporate committee, submitted by the BCM, was to the following effect:

Jurisdiction

This is a dispute between owners and the body corporate concerning an alleged breach of the legislation and comes within the dispute resolution provisions of the Act (see ss.226, 227 & 228).

Section 276(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-

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

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Decision

Applicable Law

Section 205 of the Act makes provision for access to records of the body corporate. It relevantly provides as follows:

It appears to me that the applicants’ written request to inspect the body corporate records, dated 30 May 2007 was a valid request in terms of section 205 of the Act. Clearly, as owners the applicants are within the scope of "interested persons". They have made a written request and paid the prescribed fee. Indeed, the body corporate has not argued otherwise.

In its submission, the body corporate states that it has no concerns regarding the releasing of copies of invoices for legal costs incurred, but wishes to keep the legal advice received regarding the performance of the caretaker confidential at this time. The reasons for this are that the body corporate has received indications that the caretaker may be considering taking legal action against the body corporate and the file may be considered privileged, may contain information that could be used in a case against the body corporate and may contain information that could be considered defamatory. In addition, the body corporate states that it is aware that Mr Valmadre is an associate of the caretaker in that he is the caretaker’s accountant. The body corporate states that it may be willing to provide the applicants access to the information requested on the condition that the documents are not copied and/or removed from the BCM’s premises and the applicants execute a confidentiality agreement with the body corporate undertaking not to disclose any information relating to this file to a third party.

The issue for determination is whether the body corporate’s reasons for refusing to allow inspection of some of the information requested, or allowing it to be inspected only on certain conditions, is reasonable. In carrying out its general functions, the body corporate must act reasonably.^[1]

Under section 205 of the Act, the only instance in which a body corporate is not required to allow access to its records pursuant to a valid request under section 205(2) is if the body corporate reasonably believes some part/s contain/s defamatory material. In this instance, the body corporate has stated that "the file may contain information that could be considered defamatory". In my view this is an insufficient excuse for disallowing the applicants to inspect the file. It falls short of the body corporate "reasonably believing" the material, or certain parts of it, is defamatory. In any event, even if the body corporate had formed a reasonable belief that the material contained defamatory aspects, section 205(3) contemplates that the part considered defamatory is simply excised from the inspection. That a record contains parts that are reasonably believed by the body corporate to be defamatory is not grounds for denying access to the entire record, only those parts reasonably believed to be defamatory.

In relation to the body corporate’s claim of privilege, I agree with the applicants that section 149 of the Accommodation Module is irrelevant in this case, as it only applies to access to body corporate records by committee members^[2]. Even if it did apply to access by owners generally, the legal proceedings would have to be between the body corporate and the person wishing to inspect in order for them to be privileged from disclosure.^[3]

However, the body corporate may have a common law claim that certain documents are privileged from disclosure. There are a range of privileges and immunities that could potentially apply to information related to actual or threatened legal action. This includes legal professional privilege, which covers confidential communications between a lawyer and the client made for the purpose of seeking and providing professional legal advice, and material created for the primary purpose of pending or reasonably contemplated litigation. In the case of legal professional privilege too though, the information would only be privileged from disclosure to the caretaker, not an individual owner. The body corporate’s claim that Mr Valmadre is an "associate" of the caretaker, even if valid (I make no finding in this regard), is irrelevant in this context.

Prima facie, I conclude that the body corporate is obliged, by section 205(2) of the Act to permit the applicants to inspect all of the body corporate’s records, including all invoices for legal expenses and legal advice and to supply copies of those documents to the applicants if they request them and pay the prescribed fee for those copies. On 17 October 2007, the BCM advised that "as the action in relation to the documents sought by the applicants has now been finalised, the body corporate has no objection to the applicants accessing the records requested". The body corporate’s claim to legal privilege is therefore no longer relevant and it appears willing to grant access to the records. The body corporate requested that the applicants withdrawn the application.

I understand that, despite the body corporate’s advice of 17 October 2007, the applicants have still not been provided with access to the documents they have requested. They have declined the body corporate’s request to withdraw the application and expressed a desire to obtain an order. In the circumstances, I consider it just and equitable to make an order compelling the body corporate to provide access to the body corporate’s books and records. I note the applicants’ request that all owners be sent copies of certain records relating to legal advice and expenses, at the body corporate’s expense. I do not consider it just and equitable to grant such a request. Other owners have the same rights as the applicants to inspect body corporate books and records, upon submission of a written request and payment of the prescribed fee. This is the appropriate course of action for other owners to take if they also wish to inspect the books and records of the body corporate.

I appreciate that it is difficult for the body corporate to provide privileged information to interested owners to assist them in making informed decisions about litigation while still maintaining the confidentiality of the information with respect to the other party to the dispute. It would not generally be appropriate to send legal advice with notices of meetings, or minutes of meetings, etc. In the future, the body corporate may therefore wish to consider alternative ways to provide the information to the persons needing to make decisions. For example, the notice of meeting where the issue is to be discussed could invite owners to inspect the advice subject to a confidentiality agreement. Alternatively, some owners may instead grant proxies to a person who has accessed that information and allow that person to make a decision on their behalf. Otherwise, a court may grant orders restricting access to the privileged information or seeking to specify the appropriate parties to make decisions about the litigation.

^[1] See s.94 Act
^[2] See Village Square [2006] QBCCMCmr 599 where s.130 of the Commercial Module was considered.
^[3] See s.149(2) Accommodation Module

Number of Scheme:	32506
Name of Scheme:	Glades Easthill North
Address of Scheme:	Easthill Drive ROBINA QLD 4226

•	The Body Corporate may have received from its initial legal advisor, advice that it did not have a valid or proper cause of action against Ambro (Aust) Pty Ltd (the caretaker);
•	That the Body Corporate may have sought subsequent legal advice to suit the prejudices of the committee; and
•	That the committee have never sought a vote of the members in general meeting to incur such expenses which may well amount to a sum in excess of $10,000, being in excess of the relevant limit for committee spending under section 101(2) of the Accommodation Module.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Glades Easthill North [2007] QBCCMCmr 600 (22 October 2007)