Body Corporate of Holiday Village Community Title v KBL Investments Pty Ltd
[2003] QDC 533
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Body Corporate of Holiday Village Community Title v KBL Investments Pty Ltd[2003] QDC 533
Body Corporate of Holiday Village Community Title v KBL Investments Pty Ltd[2003] QDC 533
DISTRICT COURT | No BD1294 of 2003 |
CIVIL JURISDICTION
JUDGE McGILL SC
BODY CORPORATE OF HOLIDAY VILLAGE COMMUNITY TITLE SCHEME NO. 11949 | Appellant |
and
KBL INVESTMENTS PTY LTD (ACN 097 572 168) | Respondent |
No BD1295 of 2003
BODY CORPORATE OF HOLIDAY VILLAGE COMMUNITY TITLE SCHEME NO. 11949 | Appellant |
and
ADBC PTY LTD (ACN 010 452 212) TRADING AS AD BODY CORPORATE MANAGERS AND CONSULTANTS | First Respondent |
and
KBL INVESTMENTS PTY LTD (ACN 097 572 168) | Second Respondent |
BRISBANE
DATE 09/12/2003
JUDGMENT
HIS HONOUR: On 14 March 2003, there were two orders made by an adjudicator acting under the Body Corporate and Community Management Act 1997.
In respect of one application that was before him by Mr Howard for certain orders, the application was dismissed.
In respect of another application that was before him, he ordered that a particular named person be appointed to call, hold and chair a general meeting of the Body Corporate of a particular community title scheme within three months of the date of the order for a number of purposes, including for the election of executive members of the committee and ordinary members of the committee subject to the Body Corporate and Community Management Standard Module until the next annual general meeting was heard. He gave some further directions about the way in which the meeting was to be held.
On 24 April 2003, notices of appeal were filed purportedly on behalf of the Body Corporate against each of those decisions. There was one respondent, which is the owner of a number of lots in the Body Corporate, to the appeal against the order that a particular person convene, hold and chair the general meetings.
In relation to the other appeal, there were two respondents. The first respondent was a company which was at one time associated with the management company for the Body Corporate. The second respondent is the company which is the owner of the group of lots, which is also the respondent to the other appeal.
Broadly speaking, the background to these proceedings before the adjudicator is that there are a number of lots in this particular Body Corporate. A number of those are owned by the company which is the respondent to both appeals, but the majority of lots are owned by other individuals.
At least until recently, when elections have been held for the committee of the Body Corporate, the committee places have been filled by people other than those associated with the company which is the respondent to each of the appeals.
The material before me suggests that there is some ill feeling between that company and the other lot owners, or at least some of the other lot owners, who feel that that company is attempting to force them to sell their lots to that company at a price which they regard as inadequate.
Be that as it may, there has been a good deal of disputation before adjudicators, and the two orders of the 14th of March were by no means the first orders which had been made by adjudicators arising out of applications by somebody or other in relation to this Body Corporate.
One of the orders that was made on an earlier occasion was an order that a ballot for certain positions at an annual general meeting held on 21 August 2002 was void which was made on 9 October 2002 by a particular adjudicator.
There is power under the Act to make an order that a resolution purportedly passed at a general meeting of the Body Corporate was void. And I suppose that would extend to elections at general meetings.
The adjudicator appears to have assumed that as a consequence of avoidance of the elections the positions of certain people became vacant. However, section 23 of the Regulation Accommodation Module which appears to be the applicable regulation for this Body Corporate, provides that the term of office of a member of the committee continues until another person is chosen for the position.
In other words, if a particular person is elected to a particular committee position at one general meeting, that person remains in that position until a later general meeting chooses a replacement or until the position becomes vacant in one of the ways set out in section 23 (2).
If an election to select a replacement is declared to be “at all times void” it appears to follow that no replacement has been validly chosen for the person who previously held that office. And accordingly, under section 23(1), the person who held the office prior to that annual general meeting continues to hold the office.
That would appear to be the consequence of the application of the Regulation Accommodation Module. And it appears that the adjudicator who made the order on 9 October 2002 has not taken that into account. The order appears to be contrary to that requirement. It does not appear to be open to an adjudicator simply to remove from office a person who has been validly elected as a member of the committee.
That order of 9 October 2002 was not the subject of appeal, which is perhaps unfortunate because it does seem, for the reasons I have given, to be infected with an error of law.
It may, however, have subsequently given rise to some difficulties or uncertainties about the status of various people who, prior to the 21st of August 2002, held various positions on the committee of this Body Corporate. That adjudicator or subsequent adjudicators, and certainly the company that is a respondent to the two appeals, have proceeded on the basis that those people were no longer members of the committee. Some of them at least have proceeded on the basis that they remain members of the committee.
Subject to the question of whether the order of the adjudicator of the 9th of October 2002 is effective, although erroneous in this respect, and the question of whether that order, unless set aside, had the effect of removing from the position someone who otherwise validly held the position of a member of the committee, something which I do not think an adjudicator has power to do, the view of those people who thought that their positions continued may well have been right.
For present purposes, I do not intend to express any final opinion on the matter, but it does seem to have caused or been the basis of a certain amount of confusion subsequently as to who had authority to do what. But there was a good deal of argument between the parties in correspondence, and indeed there was a good deal of argument before me, as to what effect this might or might not have on the ability to institute either of these appeals.
However, it is not necessary to decide that question in order to determine the validity of the appeals, because it seems to me clear from the Act and the Module that the institution of the appeals was not something which could have been decided by the committee anyway, whoever made up the committee. It was something which could only be decided by a decision of the Body Corporate in general meeting.
The reason for that is that by section 100, although ordinarily a decision of the committee is the decision of the Body Corporate, that does not apply to a decision that under the Regulation Module is a decision on a restricted issue for the committee.
Under the relevant Regulation Module, section 24 provides that, “A decision is a decision on a restricted issue for the committee if it is a decision - (to lead) to bring a proceeding in a Court...”
There are exceptions to that restriction but neither of them apply.
Accordingly, a decision to commence an appeal on behalf of the Body Corporate, which is a decision to bring a proceeding in a Court, is a restricted issue and, therefore, is not a decision which could be taken by the committee. It had to be taken by the Body Corporate in general meeting.
That is reinforced by section 312 which provides that all proceedings other than certain proceedings set out in subsection (2) require authorisation by a special resolution of the Body Corporate.
It seems to me that an appeal against the adjudicator's order is one of the proceedings which does not require a special resolution. But it would follow from both section 100(2) and section 312 that an ordinary resolution of a general meeting is required to authorise the commencement or the bringing of an appeal against an adjudicator's order.
It is not disputed that there was no decision of a general meeting by ordinary resolution, or any other resolution authorising the bringing of either of these appeals. They are, therefore, not properly authorised.
There is the authority from two decisions of other Judges of this Court; Judge Hall in the Body Corporate for the Dorchester v. Taylor, appeal 117 of 1999 at Southport; and Body Corporate for Surfers Waters, CTS20377 v. Anglend, plaint 428 of 1999 of Judge Quirk, 19 August 1999; that in the absence of a resolution authorising the bringing of the proceeding, the appeal ought to be struck out.
That is also consistent with two decisions of the Court of Appeal, Sottell v. Proprietors of DB's Tropical Apartments Building Units Plan 71593 [2001] 2 Qd 331; and Oceana on Broadbeach, CTS24163 v. Searle [2003] QCA 238.
In another matter, Banks v. Body Corporate Noosa On The Beach, CTS6417 [2000] QCA 146, an appeal was initially instituted without the authority of a resolution of a general meeting, but such a resolution was passed before the appeal came on for hearing and that was regarded as validating the earlier appeal. There has, however, not been any resolution validating this appeal.
And it appears to follow from the decisions in Sottell and Oceana that it appropriate to dismiss or strike out the appeal in the absence of such a resolution, rather than stay the appeal pending the issue being submitted to a general meeting.
So it necessarily follows, it seems to me, that these appeals should be struck out on the ground that they were instituted without the authority required by the statute and the Module.
That is an issue which does not depend on the question of whether anybody in particular had authority to speak for or constitute the committee of the Body Corporate at any particular time.
The company which is the respondent in both appeals seeks an order for costs against the solicitors who filed the notices of appeal and also against another person who was at least at one time the chairman of the committee, and may well still be the chairman of the committee or at least may well have been until recently the chairman of the committee, although the adjudicator seemed to take the view that as a result of the order of some time ago that he was not the chairman of the committee.
In any case, it does appear from the material that I have seen that he was one of those involved in giving instructions to the solicitor. And indeed he has on the 29th of May 2003 signed a letter to the solicitor confirming the solicitor's authority to deal with the action of the company that was the management company and the rulings from the commissioner's office. And the letter confirms his engagement to act and to continue to act to protect the interests of this Body Corporate.
So it does appear that the solicitor was acting at the instance of Mr Luong who signed himself at that stage as chairman.
The position in relation to the solicitor, it seems to me, is governed by a general rule that a solicitor who institutes a proceeding without authority is personally liable for the other party's costs of doing so. And indeed that costs order is ordinarily made on an indemnity basis.
I referred to the various authorities on the subject in Nominal Defendant v. Kisse [2001] QDC 290, and that principle was stated and applied by the Court of Appeal in Tyler v. Krause [2002] QCA 544.
That does not depend on any misconduct or any negligence on the part of the solicitor, but is simply because of the breach of warranty of authority involved in commencing the proceedings.
However, the solicitor submits that the costs order should either not be made or should be limited because the point was not properly taken. Although there has been correspondence earlier this year soon after the appeals were instituted questioning the authority of the solicitor, that correspondence did not specifically avert to the requirement that the proceeding be authorised by a general meeting of the Body Corporate.
It rather seems to me to have been directed to the dispute as to who was or was not a member of the committee, and the question of whether people were authorised as members of the committee to instruct the solicitor to institute proceedings, or whether their authority as members of the committee was more limited, not because of any provision of the Act to which I have referred, but rather because of the various orders made by the adjudicators at different times.
There was one letter of the 13th of May 2003 which perhaps went a little further because it raised the issue of whether what was described as the formal procedure within the Body Corporate to engage a solicitor's service had not been complied with.
It was said that no person acting on behalf of the Body Corporate had any power or authority to engage a solicitor until after a general meeting of the Body Corporate had been held in compliance with an order of the adjudicator.
It seems to me, however, that this is really directed to the question of whether there was a committee which had authority to act as a committee because the various orders of the adjudicator or various adjudicators, all of which, as I say, appear to me to have been infected with an error of law because they failed to appreciate that once people became committee members, they remain committee members until replacements are validly elected.
The correspondence did not specifically deal with the issue that there could not be a valid appeal authorised without a general meeting of the Body Corporate. It may be that if the point had been taken at an earlier stage, then there would have been a ordinary resolution carried at some general meeting since the appeal was instituted authorising the appeal, in which case it would seem to have been saved by the decision in Banks. I do not suggest that the failure to take the point expressly was tactical but it does mean that there is I think some truth in the position that the point was not properly taken at an early stage.
Certainly a good deal of costs would have been incurred by both sides after the appeal was instituted prior to the time when the point was properly taken. An application to strike out the appeal was not filed until the 5th of November, long after both sides had put in outlines of argument, at a time when the appeal was at a relatively advanced stage.
It was not at a stage which was as advanced as the appeal in Sottell when the application was made only the day before the appeal was set down for hearing.
Nevertheless, I think it is of some significance that in that case the Court limited the order of costs so that the appellant had to pay only half the respondent's costs of and incidental to the appeal to be assessed.
In that case, as indeed in the other cases to which I referred about appeals which were invalid because of this provision, there was no order sought against anyone other than the Body Corporate.
I suppose those cases stand as authority for the proposition that an order for costs can be made against the Body Corporate in those circumstances. But I think an order can certainly be made against someone else.
However, it seems to me that the reasoning in Sottell which justified the limitation of the order for costs in that case also largely applies in the present case, although there are some differences, and also justifies a substantial limitation on the costs which will be awarded in this case.
It seems to me, in addition, that there have been a good deal of material put in directed to the wrong issue in this matter and that has, I think, also bumped up the costs, although the respondents have not been the only ones responsible for that.
With regard to the first respondent in appeal 1295 of 2003, the position of that company is somewhat different. That company was not involved in the proceedings before the adjudicator and it seems to me that there is the additional difficulty with that company that that company was not obviously an appropriate respondent to the appeal at all.
The appellant is required under Rule 749 to make as a respondent each party to a proceeding, that is the proceeding subject to the appeal, who is directly affected by the relief sought in the notice of appeal or who is interested in maintaining the decision under appeal. See Rule 749 which is made applicable by Rule 785. But it does not seem to me that the first respondent satisfies that requirement, and that I think was an additional difficulty over and above the question of the absence of authority and that was a point which certainly was raised at an early stage with the appellant. Although again, no application was made on behalf of the first respondent to have itself removed from the appeal until recently, that is to say until November this year.
So again I think that there has been some standing by on the part of both respondents in relation to the applications and in relation to the question of the competence of the appeals and that that would justify some limitation on the order for costs, but the position is perhaps not as bad in the case of the first respondent as in the second respondent.
However, I think that some amount of the costs of the respondents should be paid. What I will try to do is frame an order which would cover those costs which would not have been avoided if the point had been taken properly and promptly.
But, obviously, a good deal of the costs would have been incurred anyway because the point was not taken promptly and not taken in the more focused way. So I will order Michael Chan, Solicitor, to pay 50 per cent of the costs of ADBC Proprietary Limited of Appeal 1295 of 2003, to be assessed on an indemnity basis.
I should say that the authorities to which I have referred make it clear that an order is made against the solicitor on the basis of acting without authority, the costs should be assessable on an indemnity basis. I will order that Michael Chan, Solicitor, pay 30 per cent of the costs of KBL Investments Proprietary Limited of Appeals 1294 and 1295 of 2003, to be assessed on an indemnity basis.
In relation to the application for costs against Mr Luong, certainly it is the case that he was a person who was responsible for the appeal being instituted, and he was also a person who is a lot owner; and so an order for costs could be made against him under section 314.
I think that that is rather more concerned with the situation where it is possible for a Court making an order for costs to determine that one group of lot owners rather than another group of lot owners should be responsible for the cost of the particular proceeding.
I don't think that I know enough about the situation over all within the Body Corporate in order to deal with this application under section 314. And I would not think it would be appropriate to make an order singling out a single lot owner under section 314 unless it was apparent that the proceeding was the responsibility solely of that lot owner.
It occurs to me that I am not deciding as between Mr Chan and the persons on whose instructions he acted, whether Mr Chan is entitled to recover all or part of those costs from those people. That may well depend on the issue of whether the apparent failure of Mr Chan to advise those people that they did not have authority to instruct him to commence the appeals was negligent. And that is a question upon which I do not express any opinion.
It also occurs to me that, apart from that, I do not know what advice was actually given by him to them and in relation to that, or indeed in relation to other relevant matters, so I am not investigating that issue.
But an issue has been raised as to whether an order for costs should be made directly against Mr Luong on the ground that he was a person who was responsible for the appeal being brought, and that it would be appropriate to order him to pay the costs rather than the Body Corporate.
Part of the reason for seeking an order of the costs against someone other than the Body Corporate is of course that orders for costs against the Body Corporate would presumably result in an expense passed on to the lot owners generally.
And the applicant for the order is itself a substantial lot owner within the Body Corporate so that making an order for costs against the Body Corporate would be to some extent making an order for costs against the party seeking the benefit of the order. So I can understand why that order is not being sought.
In relation to the position of Mr Luong, I think it is fair to say that he is one of the people responsible for instituting the appeal, and that he is within the scope of the sort of situations where orders for costs against non-parties are sometimes made; that he was really the effective litigant standing behind the actual party, rather than a situation where he is someone standing behind an insolvent party, but I think an order for costs can be made in those circumstances as well.
The order for costs against him should not be more generous than the order for costs against Mr Chan because the considerations about the failure to raise the point in a more timely way, and the pursuit of other points which were not conclusive and not relevant, do apply in the same way in relation to the order sought against Mr Luong, so that I would not order a greater proportion for costs.
In addition there is the consideration of whether the costs against him should be ordered on an indemnity basis. There is no question of warranty of authority here, and an order for costs on an indemnity basis is normally only made on the grounds of some serious misconduct or impropriety or abuse of the Court proceedings, or where some step has been taken which is clearly completely inappropriate.
I am not persuaded that Mr Luong was acting other than in good faith in relation-to both of these appeals. And, although they were misconceived, I do not think that the situation is so serious as to justify an order for indemnity costs on ordinary principles, so I will make an order that a similar proportions of costs be paid by Mr Luong, but not order that they be assessed on an indemnity basis.
HIS HONOUR: Mr Young, were you seeking an order for costs as well against the Body Corporate?
MR YOUNG: No, your Honour, I was seeking it in the alternative, either the Body Corporate or one of the party you found responsible for the costs.
HIS HONOUR: Yes, all right. All right, so that I wouldn't order you - wouldn't make a more favourable order in favour of your client, but I mean I'd consider an order as well against the Body Corporate if you wanted to ask for it. It wasn't as clear that you weren't asking for that. I did make an order against the other parties, that was all, but in the circumstances you're not seeking that the order be made as well against the Body Corporate.
MR YOUNG: No.
HIS HONOUR: No, all right, thank you. Yes, all right. I think that deals with everything. As I said the appeals, both appeals, will be struck out.
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