Riverleigh Gardens [2009] QBCCMCmr 391 (12 October 2009)

Last Updated: 13 November 2009

REFERENCE: 0905-2009

ORDER OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Plan:	Riverleigh Gardens
Number of Building or Parcel:	GTP 104105
Address of Parcel:	QUEENSLAND

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

the body corporate

I hereby order that the application is dismissed.

STATEMENT OF REFEREE’S REASONS FOR DECISION - 0905-2009

“Riverleigh Gardens”

Application

The Proprietors – Riverleigh Gardens Group Titles Plan 104105 (Riverleigh Gardens) comprises a body corporate under the Building Units and Group Titles Act 1980 (Act). The committee has lodged this application on behalf of the body corporate (applicant) seeking authorisation to enter into a settlement with Clayton Utz Solicitors (Clayton Utz) in the amount of $7,594.76. This is in relation to a claim by Clayton Utz for $15,189.52 incurred in excess of the $15,000 expenditure authorised by the body corporate in general meeting. It is submitted that Clayton Utz alleges these additional fees relate to work done beyond what was originally required.

Decision

A copy of a facsimile from Clayton Utz to John Cherry dated 22 September 2009 states: "Your recollection of the circumstances you have mentioned in your fax are correct. However, work was done beyond what was originally required. I do not wish to embarrass you and would therefore like to make the following offer. If payment of half the balance owing, $15,189.52, is paid within 7 days from the date of this facsimile I will write off the other half. Should this offer not be accepted within 7 days, we reserve our rights to claim the full amount."

The application was received by this office on 25 September 2009. The legislation requires that persons likely to be affected by the order be given notice of the application and be provided with an opportunity to make written submissions (Act, 73). I considered it appropriate to give owners until 7 October to make written submissions. This obviously would not have met the 7 day time limit specified by Clayton Utz. However, the situation described in the application did not have the nature of requiring emergency expenditure to avoid a disproportionably great loss. Rather, it was a situation involving a proposed legal compromise where further offers or counter offers could be made even if the present time limit could not be extended. Further, the liability of the body corporate was in a very limited range of $0 to $15,189.52 provided no additional legal costs resulted. There was no evidence in the application to suggest that the filing of a legal claim with the associated additional costs was imminently threatened.

Two submissions in response to the application were received from owners. Both of these submissions referred to a resolution of 28 May 2009 which provided that any expenditure by the body corporate for legal expenses and challenges first be decided by the body corporate in general meeting. I accept that the passing of this resolution, with 58 votes in favour and only 2 votes against, provides a special sensitivity of owners to the committee incurring legal expenditure. If Clayton Utz was aware of this limitation on the committee then it may well be the case that the body corporate does not have any liability to pay the additional $15,189.52 claimed by Clayton Utz. On the other hand, the body corporate could be liable if committee members instructed Clayton Utz to do work in excess of the $15,000 authorised by owners and Clayton Utz was unaware of the limitation on those committee members to incur legal expenditure.

I note from one of the submissions that on 25 August 2009 owners failed to authorise payment of the additional $15,189.52 by a split vote. If submissions indicated strong support by owners for authorising payment of the lesser amount of $7,594.76 then I would have been inclined to consider whether there was any appropriate legal basis for making the order sought. However, the submissions indicate that the application should be dismissed and owners should make their own decision regarding any proposal the body corporate should put to Clayton Utz to attempt to resolve the dispute. Obviously there are issue of time and expense if any settlement proposals have to be considered by owners in general meeting. However, I note that this dispute has already been going for some months. It is not appropriate in the circumstances for me to make an order that may override the wishes of the majority of owners. The application is therefore dismissed.