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Can a Body Corporate deduct money from a Caretakers remuneration

CAN A BODY CORPORATE DEDUCT MONEY FROM A CARETAKER’S REMUNERATION?

It depends on the terms of the caretaking agreement.

Caretaking Agreement

Some caretaking agreements allow the body corporate to recover the costs of rectifying a default of the caretaker by deducting the costs incurred from the caretaker’s remuneration.

If this type of clause is in a caretaking agreement, the body corporate must usually do 3 things before it can deduct money from a caretaker’s remuneration:
1. Prove that there is a default (eg that the caretaker did not clean the pool or common foyer area);
2. Do something to fix that default (eg hire a cleaner to clean the pool or common foyer area); and
3. Incur costs to rectify the default (eg the cleaner charges $330.00 to perform the cleaning duties usually performed by the caretaker).

In this scenario, the amount that may be deducted would be limited to the costs incurred and not an amount to represent general compensation or damages to the body corporate.

Repudiation

If there is no such clause in the caretaking agreement, the body corporate may breach the caretaking agreement if it decides to deduct the caretaker’s remuneration.

That is because the body corporate has a contractual obligation to pay the caretaker remuneration, and a failure to pay the full remuneration can show an intention to not be bound by the terms of the caretaking agreement.

At law, this is called repudiatory conduct.

This repudiatory conduct, if accepted by the caretaker, entitles the caretaker to sue the body corporate for damages for breach of contract.

Depending on the nature of the caretaking agreement and the repudiatory conduct, the amount of damages that can be recovered from the body corporate can amount to hundreds of thousands of dollars.

What to do?

If your bodies corporate are having issues with their caretaker, there may be other ways to address the problem. Those other avenues should be explored. If deducting the caretaker’s remuneration is desired, the body corporate must only do so within the bounds of the caretaking agreement to avoid the risk of a potentially expensive damages claim.

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.

Two Common Misconceptions about Withholding Access to Records

TWO COMMON MISCONCEPTIONS ABOUT
WITHHOLDING ACCESS TO RECORDS

Take the following real-life example (and assume that the person satisfies all eligibility requirements):
• An ‘interested person’ or committee member starts, or threatens to start, a legal proceeding against the body corporate.
• Shortly after, the person then requests access to the financial records of the body corporate, including profit and loss statements, bank statements, tax invoices, voting papers approving expenditures, and balance sheets.
• The body corporate believes the person is fishing for information to help them in the legal proceedings.

Can the body corporate withhold access to these records?

Grounds

There are only two recognised grounds on which a body corporate may withhold access to its records.

These are:
• a legal proceeding between the body corporate and the record requester has started or is threatened, and the records are privileged from disclosure;
• the body corporate reasonably believes a record contains defamatory material.

Legal proceedings and privilege

If a legal proceeding (which would include an application to the Commissioner’s Office) between a person and the body corporate has started or is threatened, that alone is not sufficient to allow a body corporate to withhold access to its records.

The records must also be privileged from disclosure.

Unless those financial records in the above example are also privileged from disclosure (which we would think unlikely, although privilege does need to be assessed on the circumstances of each case), the body corporate would not be entitled to withhold access to those financial records.

Defamatory material

The ability of a body corporate to withhold access to its records based on there being defamatory material applies regardless of whether the requester is a committee member or an ‘interested’ person.

If a record, or part of a record, is reasonably believed to contain defamatory material, it does not mean that other non-defamatory records cannot be accessed.

The body corporate must have a ‘reasonable belief’ that a record contains defamatory material. A ‘reasonable belief’ is more than a guess, and would usually be a belief based on:
• legal advice;
• other expert advice.

It could arguably also be a belief based on, at a minimum, the committee members viewing the records and, acting reasonably, resolving to withhold access to certain records on the ground of the records containing defamatory material.

What does this mean?

A body corporate may not withhold access to its records solely because the records are confidential, or legal proceedings have been started or threatened.

The records must be privileged from disclosure, or there must be a reasonable belief that the records contain defamatory material, to entitle a body corporate to withhold access to its records.

Getting this wrong could lead to a dispute resolution application in the Commissioner’s Office, so it is important to obtain early, tailored advice about the obligations of a body corporate to allow access to its records.

Article Written by Brendan Pitman (19 July 2022)

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.

Three Things To Do in Response to a Vague Record Copy Request

THREE THINGS TO DO IN RESPONSE TO
A VAGUE RECORD COPY REQUEST

Here are two-real life examples:

“I request copies of all correspondence from any unit owner to the body corporate requesting for the program of works relating to the water penetration into unit [XYZ] be undertaken and responses.”

“I request a printout of all payments made to any third party in relation to the program of works”

How can the body corporate comply with those requests within seven days (assuming eligibility, form of request, and payment of fee is satisfied).

Must a body corporate comply with every record request?

The answer is, no.

The trick is knowing which requests fall outside a body corporate’s obligation to avoid adverse action being taken by the requester.

Here are some guiding principles to determine whether a body corporate must comply with a copy request:

  • the requester must provide a reasonable degree of specification of the records being requested;
  • a request for a particular class or type of document is usually sufficient;
  • the requested records must be able to be readily identified by the body corporate based on the request;
  • a body corporate is required to perform some search of its records to fulfil a request;
  • a body corporate is not required to read through every document to determine whether it has information being requested;
  • the records must actually exist in order to have an obligation to provide a copy on request.

 

Approach

In the first example above, it is unlikely that an adjudicator would order the body corporate to provide the requested documents because:

  • the document range is limitless;
  • the body corporate would be required to read all correspondence from unit owners to determine whether each correspondence was about the topic of water penetration.

In the second example above:

  • if a document existed that compiled payments made to third parties, then it is likely an adjudicator would order a body corporate to provide a copy of that document; however
  • if the document did not exist, the body corporate would not be required to read the documents and create a summary of payment information contained in those documents.

 

Three Things

  1. Communicate

Ensure that communication is made to the requester (ie that the request has been received or asking for clarification of the records requested), rather than simply not responding, as we find that tends to escalate matters unnecessarily;

  1. Eligibility

Check that the pre-conditions of a copy record request are satisfied (i.e. Is the requester an ‘interested person’? Is the request in writing? Has the prescribed fee been paid?);

  1. Inspect

If you or your legal representative considers the record request to be non-compliant, contact the requester and direct them to the option of inspecting the records of the body corporate, whether it be themselves or their agent.

Article Written by Brendan Pitman (27 May 2022)

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.

Internal Emails Between Committee Members – Public or Private?

INTERNAL EMAILS BETWEEN COMMITTEE MEMBERS
– PUBLIC OR PRIVATE?

We are often asked, do emails between committee members form part of the records of a body corporate?

The answer is…it depends (so you need to read on).

Internal communications

This is a critical question because, if they do, those emails may be accessed by an owner or prospective purchaser and there is no restriction on the purpose for which the records may be used.

A committee acts on behalf of a body corporate, and the requirement to keep correspondence is usually understood to refer to correspondence with parties external to the committee.

However, emails between committee members (which includes caretaking service contractors and letting agents as non-voting committee members) may form part of the records of a body corporate depending on:
• the role of the person sending the email at the time in which the email was sent; and
• the subject matter of the email.

Role

Understanding the role of the sender and receiver of an email is part of the process to determining whether that correspondence forms part of the records of a body corporate.

That is because there is no requirement to keep correspondence received or sent between owners, only that correspondence to and from the body corporate (or committee acting on behalf of the body corporate).

Committee members usually have two hats on. One is as a member of the committee representing all owners, and the other is as an owner. It is only those emails sent by or received by a person in the role as a committee member that may caught by the provisions about body corporate records.

Subject matter

Often the role being played by a person (as committee member or as an owner) is not clear but may be inferred by the subject matter of the email.

If the subject matter of the email is about body corporate or committee business, being carrying out the functions under the body corporate legislation, the email is likely to be a record of the body corporate.

Examples

Practical examples of internal written communications that would likely form part of body corporate records:
• a committee member advising of their resignation;
• a committee member proposing a vote outside a committee meeting;
• email exchanges between committee members about a maintenance issue at the scheme.

Practical examples of internal written communications that would likely not form part of body corporate records:
• select committee members discussing their personal opinions on a matter to be voted on at an upcoming meeting;
• a committee member seeking personal advice (not on behalf of the body corporate) on a body corporate or other matter.

This is a touchy topic, particularly where committee members wrote an email with sensitive information thinking it was not available to the public. To allay any concerns, a body corporate should seek advice either before or during the seven day turnaround time for a record request.

Article written by Brendan Pitman (5 April 2022)

 

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.

Do Statutory Easements Allow Owners to Disregard the By-laws

DO STATUTORY EASEMENTS ALLOW OWNERS TO DISREGARD THE BY-LAWS?

A 29-month dispute about the location of an owner’s air conditioning unit has been decided by the Queensland Civil and Administrative Tribunal, with the body corporate coming out on top.

The case

 The case went like this:

  • The owner lived in an apartment with a balcony on level 8 in a high-rise building.
  • The owner wanted to install a split system air conditioning unit with the compressor above a planter box on a common property wall.
  • The scheme had the usual by-law that requires owners to obtain the consent of the Committee before installing an improvement on common property or a lot.
  • The owner sent an email to the Committee and, about a week later, arranged for the installation of the split system unit on the common property wall (without having received consent from the Committee).
  • The owner assumed it would have the benefit of a statutory easement to install the air conditioning unit on a common property wall.
  • After the owner had installed the air conditioning unit, the Committee resolved to consent to the unit being installed on the owner’s balcony only, not the common property wall.

Fast forward 14 months and an adjudicator ordered the owner to remove the air conditioning unit.

Fast forward another 15 months and the Queensland Civil and Administrative Tribunal agreed with the adjudicator.

So where did the owner go wrong?

There were two places:

  1. installing the air conditioning unit on a common property wall without the prior consent of the committee; and
  2. misunderstanding the operation of statutory easements (the focus of this article).

Statutory easements

A statutory easement is a right of way created by the law that allows a person or thing to use another person’s property.

The Land Title Act recognises the existence of an easement in favour of an owner against common property for air conditioning units supplying air conditioning to a lot (amongst other things).

This easement however only exists to the extent an easement is “reasonably necessary”.

An air conditioning unit installed in a particular location will only be “reasonably necessary” if the supply of air conditioning cannot be performed or achieved any other way, or if there is another way, that other way is not feasible or reasonably available.

Even if an easement does exist, that easement is still subject to the community management statement, which usually contains a by-law requiring an owner to obtain the prior approval of the body corporate.

So, in this owner’s case:

  1. it was decided that installing the air conditioning unit on the owner’s balcony could achieve the same result and was feasible and reasonably available, such that an easement did not exist; and
  2. if, however, an easement did exist, the owner was still required to obtain the committee’s consent, which it did not obtain.

What does all this mean?

 The key takeaways for owners are:

  1. read your by-laws, and if there are by-laws that require you to obtain prior consent, wait until the committee has made their decision;
  2. do not assume that you will have the benefit of a statutory easement;
  3. if you cannot resolve any issues with your committee, as a last resort, the matter can be resolved through the adjudication process.

The key takeaways for committees are:

  1. a statutory easement does not override the scheme by-laws;
  2. whether a statutory easement exists should inform how a committee makes their decision whether to approve an improvement to a lot or common property.

 There are many other examples and ways that easements operate in a body corporate, so it is always important to ensure that you obtain advice specific to your circumstances.

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.

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.