Kamerunga Villas [2008] QBCCMCmr 277 (11 August 2008)

Number of Scheme:	18650
Name of Scheme:	Kamerunga Villas
Address of Scheme:	2 Lake Placid Road CARAVONICA QLD 4870

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Frances Buckeridge, the owner of Lot 20

I hereby order that the application for an interim order by Frances Buckeridge, the owner of Lot 20 against the body corporate for Kamerunga Villas community titles scheme 18650 to prevent the committee spending Body Corporate funds on legal advice, is dismissed.

The scheme
“Kamerunga Villas” community titles scheme 18650 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

Application
This application dated 17 July 2008 is by Frances Buckeridge (Applicant) against the Body Corporate seeking an outcome that “An EGM be called where the body corporate can vote on the issue of seeking legal advice regarding a possible defamation action and spending associated body corporate funds”.

The Applicant has sought an interim order “to prevent the Committee spending Corporation funds on legal advice with an aim to taking defamation action against (her)...and the matter be put to the vote by all members of the corporation at a general meeting”.

The Applicant states the committee has resolved to seek legal advice on a defamation action against her in response to correspondence she asked to be dealt with at a committee meeting.

The Applicant provided a copy of her letter dated 6 July 2008 which she had requested be tabled at the committee meeting to be held on 9 July 2008. The letter covers issues the Applicant has with a proposed bridge, a new parking area, the enforcement of by-laws, garden areas, committee meeting minutes, the opening hours of the front gates and the caretaker position. The Applicant also requested a copy of the gardener’s contract, the caretaker’s contract, all other current contracts, the body corporate roll, an occupational health and safety report and the asset register.

The Applicant also provided a copy of the letter dated 10 July 2008 from Peta Robinson of The Community Managers (the Body Corporate Manager) replying to her correspondence. The letter is stated as being written on the instruction of the committee and enclosed a copy of the list of gardening duties tendered in 2002 and 2003, the list of caretaking duties developed by the committee for the 2005/2006 financial period, the current Administration Agreement between the Body Corporate and The Community Managers, the Annual Safety Report completed in May 2008 and a register of assets. The letter states “in response to the various issues raised in the main body of your correspondence the committee have resolved to seek legal counsel with regard to the vexatious and threatening tone and defamatory allegations made therein. The committee will forward a formal reply in due course”.

The Applicant states the committee has not responded to many of the issues she raised in her letter. The Applicant considers the legislation prevents the Body Corporate taking the legal action they propose without recourse to a general meeting. She says it is impossible to see what benefit owners would receive by the committee taking legal action against an owner asking questions of the committee.

Jurisdiction
In accordance with section 247 of the Act, the commissioner for Body Corporate and Community Management has referred the application to me even though affected persons have not been given notice of the application, or afforded an opportunity to make submissions about the application.

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act. Section 279(1) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

Committee submissions
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, on 22 July 2008 I invited submissions from the committee regarding the interim order application, and a copy of the application was provided to the Body Corporate Manager for distribution to committee members. On 30 July, the Body Corporate Manager requested an extension of time for the committee to make submissions. I granted an extension to 7 August 2008.

The committee made written submissions stating the comments in the letter distributed to the Applicant on 14 July 2007 have been misinterpreted and the committee has not resolved to take legal action against the Applicant for defamation. The committee submit they did not know how to respond to the letter and their intent was to seek legal advice on how to respond. The committee say the majority of its members were very offended and disturbed by the content of the letter which was interpreted by most members as argumentative, accusatory and defamatory. The committee also state that the offence created by the vexatious and threatening tone of the correspondence and the defamatory allegations made did influence the resolution to seek legal counsel. The committee submit the resolution was to exchange ideas, discuss, seek the opinion, and advice of a solicitor for completion of a formal reply to the Applicant’s correspondence.

The committee provided a copy of the minutes of the committee meeting dated 9 July 2008 which note the concern expressed by members “with regard to the vexatious and threatening tone of the correspondence (from the Applicant) and the defamatory allegations made therein”. The minutes indicate it was resolved by 6 votes to nil “that the body corporate seek legal counsel with regard to correspondence received for completion of a formal reply to the main body of letter from owner of Villa 20, Frances Buckeridge”.

The interim application
Given section 279(1) of the Act, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the Applicant does need to establish that the circumstances of the application warrant the making of an interim order.

The Applicant says the committee intends to spend Body Corporate money on legal advice with an aim to initiating defamation proceedings against her. The Applicant argues the committee does not have the power to take this action as it is against the interests of lot owners. The Applicant provided a copy of the 10 July 2008 letter indicating the committee’s intention to seek legal advice. The minutes of the committee meeting dated 9 July 2008 confirm the committee’s intention to seek advice. In my view, the Applicant has demonstrated urgent circumstances to warrant consideration of the interim order application.

The adjudicator must also be satisfied that the application raises serious questions to be determined and that the balance of convenience between the parties justifies the grant of injunctive relief. To assist me in determining whether it is just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I consider it relevant to briefly consider whether the Applicant raises a serious legal question that will need to be determined. If a serious legal question is raised, then it may be appropriate to make an interim order to attempt to preserve the integrity of the matters in dispute pending the final determination.

Applicable law
A body corporate has numerous obligations under the Act to administer and otherwise deal with the common property and body corporate assets. For example, a body corporate’s general functions include acting reasonably in administering the common property and body corporate assets for the benefit of lot owners (s 94, Act). A body corporate has all the powers necessary to carry out its functions (s 95, Act).

Section 312(1) of the Act provides that a body corporate may start a proceeding only if the proceeding is authorised by special resolution. Section 312(2) provides exceptions to the subsection (1) rule. Generally, these exceptions are a proceeding to recover a liquidated debt, a counterclaim etc in a proceeding to which the body corporate is already a party, a by-law contravention proceeding or a dispute resolution proceeding.

Consistent with its self management objectives, the Act creates a relationship between the body corporate and its committee. The Act (and in this case, the Standard Module) confers powers on the committee to do things required to be done by the body corporate and also limits the things which the committee can do. A decision of the committee is a decision of the body corporate other than a decision on a restricted issue for the committee (s 100(1) and (2), Act). Section 26 of the Standard Module prescribes the restricted issues for a committee which relevantly provide at subsection (1)(e) that a committee cannot start a proceeding other a proceeding to recover a liquidated debt, a counterclaim etc in a proceeding to which the body corporate is a party, a by-law contravention proceeding or a dispute resolution proceeding. The committee has a general power to spend up to the relevant limit for committee spending which for this scheme is $16,375.00 ($125 multiplied by 131 lots, s 103 and Dictionary, Standard Module). The committee must act reasonably in making a decision (s 100(5), Act).

Decision
The Applicant states the committee has resolved to seek legal advice on a defamation action against her in response to her 6 July 2008 letter, that the legislation prevents the Body Corporate taking the legal action without recourse to a general meeting, and that it is impossible to see what benefit owners would receive by the committee taking legal action against an owner asking questions of the committee. The committee responded saying the 9 July 2008 resolution was to seek legal advice on how to respond to the Applicant’s letter.

A committee is generally responsible for the day-to-day management of a body corporate. Given its role and in the absence of a specific prohibition from the body corporate, a committee can (subject to cost) obtain legal advice on management matters and this may include seeking advice before dealing with correspondence from lot owners. A committee is essentially comprised of volunteer lot owners who may or may not have expertise in certain areas, and it would be reasonable to expect a committee to obtain advice be it from a solicitor or other qualified person about issues which may arise from time to time, particularly in a large scheme such as “Kamerunga Villas”. It should be noted the legislation contains very detailed provisions making it almost inevitable that from time to time a committee will need to obtain advice, including legal advice.

While the 10 July 2008 letter from the Body Corporate Manager referred to the minuted concerns of committee members, it did not restate the terms of the committee resolution. The Applicant did not have a copy of this resolution at the time of making the application which may have contributed to her being concerned about the committee’s actions. However, it is apparent from the minutes of the 9 July 2008 meeting that the committee resolved to seek advice about the Applicant’s letter before replying to the “main body” of the letter.

The Applicant states there is an aim to take defamation action against her which should be considered in general meeting. This may be the opinion of the Applicant which may be due to the Body Corporate Manager’s letter dated 10 July 2008. However, I find nothing in the resolution of the committee or in the committee’s submission to suggest this to be the case or that the Body Corporate has resolved to initiate proceedings against the Applicant contrary to the legislation.

Further, no material has been presented demonstrating that the committee has been restricted by the Body Corporate from making a decision to seek legal advice. Neither is it suggested the proposed expenditure for the legal advice would be outside the committee’s relevant spending limit.

There is a question as to whether the decision to obtain legal advice is reasonable and this is dependent on the circumstances. In this case, committee members were concerned about the content of a letter from an owner and decided the response should be considered after it received legal advice. The committee did not vote not to respond to the letter. The committee has provided the Applicant with copies of most the documents she requested (see below in relation to the Body Corporate providing a copy of the roll of lots and entitlements). While the committee has not responded to the issues raised in the Applicant’s letter, the Applicant has been informed there will be “a formal reply in due course”.

The Applicant may be concerned about possible legal action, but the committee resolution does not authorise any such proceedings. In my view, the Applicant has not raised a serious legal question to support a view the committee could not decide to obtain legal advice. For these reasons, I have dismissed the interim order application.

This application will now be administered in accordance with the Act and the normal processes of this Office. The application will be finally determined in due course.

Body Corporate roll of lots and entitlements
The committee submitted it did not provide the Applicant with a copy of the roll of owners’ names and addresses and informed the Applicant she may conduct a search of the body corporate records to obtain the information she requires. The 10 July letter from the Body Corporate Manager referred to the committee members being concerned the release of the roll may breach privacy legislation.

Section 205 of the Act provides that a body corporate must, on the receipt of a proper request from a person, give the person a copy of a record kept by the body corporate. Section 204 of the Act provides that a body corporate must keep rolls, registers and other documents as provided in the Standard Module. The roll of lots and entitlements kept under section 143 of the Standard Module is one such document required to be kept by a body corporate. The supply of the roll being subject to privacy legislation has been subject to a number of dispute resolution applications under the Act[1]. It has been consistently held by adjudicators that the provisions under the Act are applicable despite the Privacy Act 1988 (Cwth). Principle 2.1(g) of the National Privacy Principles contained in the Privacy Act states An organisation must not use or disclose personal information about an individual for a purpose other than the primary purpose of collection unless the use or disclosure is required or authorised by law. As the disclosure of the roll of lots and entitlements is required or authorised by the Act, the Privacy Act cannot be relied upon as a reason for refusing to provide a copy of the body corporate roll of lots and entitlements.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kamerunga Villas [2008] QBCCMCmr 277 (11 August 2008)