Can a Body Corporate Withhold An Owner’s Access to a Lawyer’s Written Advice?

CAN A BODY CORPORATE WITHHOLD AN OWNER’S ACCESS TO A LAWYER’S WRITTEN ADVICE?

 

Let’s take look at this scenario: A body corporate believes that an owner is in breach of the scheme by-laws or that a caretaker is in breach of the management rights agreement. The body corporate engages a law firm to provide advice in relation to the alleged breach by the owner or caretaker. The law firm provides written advice to the body corporate. The owner or caretaker wants to see that advice and applies to inspect the records of the body corporate.

 

Whether a body corporate may withhold access to legal advice or other record requires an understanding of legal professional privilege, joint privilege, agency, and the circumstances that may constitute a waiver of that privilege.

 

What is legal professional privilege?

 

Legal professional privilege is a right that exists to protect communications passing between a lawyer and a client.

 

It is often thought that all communications between a lawyer and client are protected by privilege. However, a valid claim for privilege only applies to those communications made for the dominant purpose of providing legal advice or legal services to a client, or for use in current or anticipated litigation.

 

The Body Corporate and Community Management Act (Qld) 1997 does not override that right so it can be claimed by a body corporate when an owner applies to inspect records.

 

The body corporate has the responsibility of proving its claim of privilege.

 

The difficulty in the strata context is not so much whether legal professional privilege exists but rather who that privilege may be asserted against. This is answered by the principle of joint privilege.

 

Joint privilege

 

A body corporate may share privilege with some or all of its owners that have a common interest in the subject matter of the communication. Often parties can have more than one interest in obtaining legal advice and it is not enough to simply identify a common interest.

 

That common interest must have sufficient strength or quality to allow the protection of privilege to be shared.

 

If the interests of the body corporate and an owner in obtaining that written advice are diverged, then the body corporate can claim privilege against that owner and withhold access to that communication against that owner.

 

Agency

 

If a body corporate has a valid claim of privilege and the interest in the communication is not shared with an owner, that owner may ask another owner to obtain access to that communication to get around the claim of privilege.

 

The law closes this gap by providing that a body corporate can still withhold access to a communication if that communication is being accessed by an owner that is acting as an agent for an owner to which a claim for privilege exists.

 

Even if the above analysis results in a body corporate being able to claim privilege, it must be considered whether that privilege has been waived.

 

Waiver

 

As the owner of privilege, a client can choose to waive that right to privilege. In our experience this is often done inadvertently without an appreciation of the impact it may have on that person’s claim of privilege.

 

At its highest, privilege may be waived by conduct that is inconsistent with maintaining confidentiality in a communication. Applying this to an owners corporation, the type of conduct that may have the effect of waiving privilege includes:

  • making references to the content of legal advice in correspondence to all owners;
  • including copies of legal advice in meeting minutes;
  • proposing motions that refer to the outcome of legal advice.

 

However, if the conduct relates to limited actual or purported disclosure of the contents of a privileged communication, and an express understanding that the communication is not to be shown to anyone else, the conduct may not have the effect of waiving privilege.

 

If there is conduct that ordinarily constitutes a waiver of privilege, it is necessary to consider whether circumstances exist that would make it unfair to determine that privilege has been waived.

 

Fairness

 

If a body corporate has acted inconsistently with maintaining confidentiality in a communication, a court has discretion to consider the circumstances surrounding that conduct and whether it would be unfair to determine that privilege is waived. This will usually be most relevant where there has been no intentional waiver of privilege.

 

Summary

 

The application of legal professional privilege to communications in a strata context is complex and often overlooked. If a request to inspect the records of a body corporate is made and the body corporate is considering withholding access to records, the body corporate will no doubt obtain legal advice (which itself may be privileged) regarding the body corporate’s ability to not allow a communication to be inspected.

 

Failing to do so may result in the protection of privilege being lost forever.

 

 

 

 

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

New Disclosure Requirements for NSW Sales and Qld BC Records that may be accessed

NEW DISCLOSURE REQUIREMENTS FOR NSW SALES

and

WHAT QLD BODY CORPORATE RECORDS CAN BE ACCESSED

 

  1. New Disclosure Requirements for NSW Sales

 

Real Estate agents in NSW should be aware of a recent change to the Property and Stock Agents Regulation 2014 in relation to agents’ material facts disclosure obligations.

 

From 1 September 2021, agents must disclose any order that is in force under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (the RAB) to prospective purchasers.

 

These orders can include a:

  • Building work rectification order – requiring the developer or builder to carry out or refrain from carrying out building work to eliminate, minimise or remediate serious defects or potential serious defects, or
  • Prohibition order – prohibiting the issuing of an occupation certificate for the apartment building, or its registration as a strata plan. The Building Commissioner may make such an order when:
  1. an expected completion notice was not given or was given less than 6 months before the application for the occupation certificate was made;
  2. an expected completion amendment notice was not given or was given less than 6 months before the application for the occupation certificate was made;
  3. a serious defect in the building exists;
  4. a building bond has not been given.
  • Stop work order – to ensure building work stops due to the likelihood of significant harm or loss to the public or occupiers, or significant damage to property.

Agents who are aware of a material fact set by the regulations, or ought to reasonably know, and fail to inform prospective purchasers (whether intended or not), face a maximum penalty of $22,000.

 

NSW Fair Trading is introducing these changes to restore confidence in the residential construction industry and to make sure that apartments being built are trustworthy. The Department will continue its compliance and enforcement role to ensure real estate agents are meeting their disclosure obligations to buyers. This will include targeted audits of agents who are selling properties where RAB orders have been issued.

 

  1. Qld Body Corporate Records that may be Accessed

 

What constitutes a “record of a body corporate” is much broader than the compulsory list of documents set out in the Queensland regulation modules, and has ramifications for the duties of a body corporate and the breadth of access allowed to an owner or prospective purchaser.

 

The Three categories

 

Consistent with the approach of department adjudicators, the Queensland body corporate legislation in effect creates three categories of records:

  1. records that must be kept;
  2. records that should be kept;
  3. records that are

 

‘Records’ are defined to include the rolls, registers and other documents kept by the body corporate under the Body Corporate and Community Management Act (Qld) 1997 and applicable regulation module. They include paper and electronic documents.

 

What records must be kept?

 

The body corporate regulation modules set out a long list of documents that a body corporate must keep, with varying requirements about the length of time each document must be kept.

 

Examples of these documents are:

  • accounting records for each financial year;
  • insurance policies;
  • orders made against or in relation to the scheme or body corporate;
  • correspondence received and sent by the body corporate;
  • minutes of committee and general meetings.

 

These are however, not the only documents that form part of the records of a body corporate.

 

What records should be kept?

 

A body corporate has a statutory duty to act reasonably in anything it does in carrying out its function given to it under the body corporate legislation and community management statement.

 

Acting reasonably, a body corporate would be required to keep:

  • additional maintenance records;
  • records relating to its obligations under workplace health and safety and fire safety legislation;
  • any other document retained by the body corporate for the purpose of discharging its functions.

 

If records are not kept that are records that a body corporate, acting reasonably, should have kept, then a department adjudicator may find that the body corporate has not acted reasonably in responding to an owner or prospective purchaser’s request to access records.

 

Records that are kept

 

There are often records that are kept by a body corporate that are beyond the scope of records required to be kept under the body corporate legislation.

 

These records also form part of the records of a body corporate and an owner or prospective purchaser may be allowed to access these records.

 

However, there are ways that a body corporate may withhold access to records under certain circumstances, and if a body corporate is unsure as to what documents constitute body corporate records or how to withhold access its records, it should seek assistance before or during the seven day turnaround time for record requests.

 

Article Written by Col Myers of Small Myers Hughes Lawyers

 

 

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

ARAMA Service Provider Finalist

ANNOUNCEMENT

ARAMA Service Provider Finalist 2021

ARAMA FInalist 2021

ARAMA FInalist 2021

 

 ARAMA Australian Resident Accommodation Managers’ Association congratulates Col Myers on becoming a finalist in ARAMA’s Management Rights Industry Top Awards.

These Awards are designed to Target Outstanding Performers and this acknowledges that Col is certainly one of them.

 

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

 

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