1. The Tribunal notes that at the hearing of the proceeding on 27 May 2016:

(a) the parties asked the Tribunal to record in its final order that the owners corporation manager had stated today that the owners corporation has paid to the Australian Taxation Office the full goods and services tax (GST) of 10% which had been included in levies paid by the applicants; and

(b) the owners corporation asked the Tribunal to record in its final order that:

(i) when the applicants notify the owners corporation that they are ready and able to pay the full amount of the proportion of the then outstanding special levies that are attributed to their lot, the owners corporation will, within seven days of that notification, inform the applicants of that amount and will accept it, if it is paid within a reasonable time, instead of including quarterly instalments of the special levies in fee notices; and

(ii) if the applicants' claim for compensation is withdrawn or dismissed, the owners corporation will review the interest charged upon previous levies paid late and may decide to credit the applicants with the amounts of interest charged but will not be obliged to do so.

1. The applicants Mr and Mrs Kondo are the owners of lot 106, 267 Flinders Lane Melbourne, which is an apartment. They have leased it to Cararn Pty Ltd, which owns other apartments in the same building. They are members of the respondent owners corporation.
2. By the time that I began to hear evidence at the hearing of this proceeding on 27 May 2016 the only remaining issue between the parties was Mr and Mrs Kondo's claim for compensation against the owners corporation, a claim based upon events set out below.
3. Ever since the proceeding was begun, it has been difficult to understand what claims Mr and Mrs Kondo were making and why. The initiating application took the form of an application to the Owners Corporations List, but the respondent named in it was Arno Caras, a former director of Cararn Pty Ltd, who is deceased. The applicants probably named him because he had been influential in the affairs of the owners corporation. The Tribunal interpreted the application as being against Cararn Pty Ltd. At a directions hearing on 15 October 2015 it became apparent that the claim, whatever it was, was against the owners corporation, so the owners corporation was substituted as respondent. At a further directions hearing on 7 April 2016, when Mr Kondo was assisted by a Japanese interpreter, the nature of the claim became clearer, and in the order made on that day the Tribunal noted that the applicants' claim was:

1. A refund of so much of the fees levied upon them, to meet the cost of repaying loans made to the Owners Corporation, as consisted of goods and services tax (GST); and
2. Compensation for the fact that the Owners Corporation made periodical levies instead of a lump sum levy which they could have borrowed at a low interest rate; and

1. Compensation ($5000 approximately) for loss on sale of a car port which they sold to pay the levies.

1. At the hearing on 27 May 2016 Mr Kondo was again assisted by a Japanese interpreter. Lucas Taylor, from the owners corporation's present manager Platinum Strata Community Management ('Platinum'), represented the owners corporation. Alan Caras, a director of Cararn Pty Ltd, was also present. Before the hearing began I gave the parties the opportunity to discuss the matter privately. They were able to resolve the first of the three issues mentioned above, about GST; they were not able to resolve the other two, which are connected, so the hearing began.
2. There were three witnesses: Mr Kondo, Mr Caras and Mr Taylor. During the hearing Mr Kondo and Mr Taylor agreed that, irrespective of what I decided, I should record in my order the three matters which appear in paragraph 2 of the order I make when I publish these reasons.
3. The events which have led to Mr Kondo's complaint began some years ago, when officers of the Melbourne City Council notified the owners corporation that the Flinders Lane building was a fire hazard and required extensive repairs and improvements. The owners corporation was able to fund some of the necessary work from the proceeds of an insurance claim but in order to obtain the balance of the funds it proposed to the members that it should borrow the funds and make special levies upon members so that the loan could be repaid.
4. The proposed special resolution that the owners corporation put to a postal ballot of members in February 2013 was:
   1. That the Owners Corporation enter into and execute a loan contract with Lannock Capital 2 Pty Ltd (ACN 153 391 283) for the maximum amount of credit of $2,808,000 to fund the Owners Corporation's obligations to undertake works on the common property owned by the Owners Corporation and to pay consultant's fees and other related expenses.
   2. That the Owners Corporation's seal be affixed to the loan contract and any other ancillary documents and witnessed in accordance with section 21 Owners Corporation Act 2006.
   3. That the Owners Corporation may levy special fees and charges designed to cover repayment of the said loan over a period of 4 years, to the maximum amounts set out in the annexed table outlining the lot's liability for each year.
5. The result of the ballot was that 59.1% of the members, voting on a lot-entitlement basis, voted in favour of the motion. Only 3% voted against. The votes were sufficient to pass an interim special resolution and, since there was no later petition against the resolution, it became a special resolution: Owners Corporations Act 2006 s 97. The former manager, Binks & Associates, had conducted the ballot. Mr Taylor produced to me the ballot papers and the notification to members of the result of the ballot; those documents are part of the owners corporation's records.
6. Following the special resolution, the owners corporation entered into the loan contract and obtained loan funds. It sent quarterly fee notices to members. The fees included their share of the special levies each quarter, calculated in accordance with lot liability, plus a share of the interest payable on the loans. The special levies attracted GST.
7. For Mr and Mrs Kondo, their quarterly fee, including the quarterly special levies (which in turn included interest and GST) exceeded $5,000.00. This was a burden to them. Mr Kondo thought that if he could obtain the means to pay off his entire share of the special levies by a lump sum he would avoid having to pay the interest payable under the loan contract and might avoid having to pay GST; even if he had to borrow money to raise the lump sum the interest rate on his borrowing would be lower than the rate the owners corporation's loan contract had set.
8. Mr Kondo met and spoke to Michael Agland, the manager of Platinum, and Alan Caras. His evidence was that they told him that a lump sum payout would be between $50,000.00 and $60,000.00, and that he would have to ask for and obtain the owners corporation's permission to make the lump sum payment. Mr Kondo went on to give evidence that he asked Mr Agland to provide him with papers for him to fill in so that he could ask the owners corporation for permission, that Mr Agland did not provide the papers, and that he kept on asking Mr Agland to provide the papers but he never did and never co-operated to assist Mr and Mrs Kondo to make a lump sum payment.
9. Mr and Mrs Kondo's case is that the owners corporation's failure to co-operate to assist them in making the lump sum payment was a breach of its obligations to them which caused them financial loss. Mr Kondo gave evidence that to enable him to get funds to continue to meet the high quarterly fees, during this period of non-co-operation, he had to sell two car space units at the premises, lots 340 and 253. He and Mrs Kondo had purchased lot 340 for $14,500.00 in April 2012, but when lawyers' fees and other costs were added the total cost of the purchase was $17,500.00. They sold lot 340 on 15 March 2016 for $16,500.00 but when lawyers' fees and other costs were deducted the net proceeds they received were $11,860.00. So there was an overall loss of $5,640.00. They had purchased lot 253 in April 2012 for $28,000.00, but sold it recently for $17,500.00; settlement of the sale has not yet occurred so he could not tell me what the net loss would be.
10. When I asked Mr Kondo how he would have raised the money to pay the share of the special levies by a lump sum, he told me that he had some funds, that he would have asked relatives in Japan for money, that an acquaintance of his could have lent him some money, and that he could have sold the car spaces if necessary to raise some of the money. He did not tell me that he had ever make any specific proposal, to Mr Agland or to Mr Caras or to anyone else on the owners corporation's behalf, for payment of the special levies.
11. Mr Caras disputed Mr Kondo's account of the meeting between the two of them and Mr Agland. He told me that he and Mr Agland had told Mr Kondo that they would be happy to accept payment by a lump sum but he would need to get the owners corporation's approval for the payment. He denied that Mr Kondo had asked for papers to be provided to him for the purpose of his making an application for approval, and said that Mr Agland did not say that Mr Kondo had to fill in any particular form for the application. Thereafter, said Mr Caras, Mr Kondo did not make any written request for approval of any proposal or make any proposal at all, in writing or otherwise, for when and how a lump sum pay-out could be made.
12. Apparently Mr Kondo had raised with Mr Agland another proposal for dealing with the problem of the special levies; because on 24 November 2015 Platinum wrote to Mr and Mrs Kondo a letter which included the following paragraph:

You have stated that you would like your portion of the repayment of the Lannock Finance loan to be paid out over a longer period as you rely somewhat on your rental payments, which are being considerably offset by the higher OC fees. It appears that you wish to pay this special levy by instalments, which is a provision which can be offered to owners who are in financial hardship. To make such an arrangement, you will need to make a proper offer/application and proposed payment plan and it will then be up to the Owners Corporation or its committee to decide whether to accept your application.

1. On 26 November 2015 Platinum again wrote to Mr and Mrs Kondo. In the letter Mr Agland acknowledged their telephone call of that day and responded to a request for a pay-out figure by advising that it was $60,196.35.
2. On 10 December 2015 there was a compulsory conference in the proceeding. Mr Kondo wished to show me a document that he and Mr Agland had signed during the conference. Mr Taylor did not object. I received the document in evidence. The last two paragraphs of it were:
   1. OC is currently negotiating with financial institutions with a view to refinancing the loans and consolidating so that a single repayment amount is obtained.
   2. If refinancing option is successful, lot owners who wish to pay their share of the repayment in one or more instalments may be able to do so if approved by the Owner Corporation, with dates of payments to be agreed on.
3. For several reasons, Mr and Mrs Kondo have not made out their claim against the owners corporation.
4. First, they have not proved the breach of any obligation that the owners corporation owed to them. The owners corporation's obligation to its members is that, in carrying out its functions and powers, it must act honestly and in good faith, and must exercise due care and diligence: Owners Corporations Act 2006 s 5. The members had approved, by special resolution, special levies to raise funds to repay loans. It had no obligation to allow one of its members to enter into an arrangement for the payment of his share of levies in a way different from payment by other members. On the contrary, it would have been in breach of its obligation to exercise due care and diligence in the interests of all members if it had allowed Mr and Mrs Kondo not to meet their quarterly obligations to pay fees because they had made some vague indication of a wish to make a lump sum payment.
5. Secondly, if there was any such obligation, there was no breach of it. I prefer Mr Caras's evidence to Mr Kondo's whenever there was a conflict, Mr Caras's evidence being supported by the two letters from Platinum to which I have referred. I find that Mr Kondo did not ever put to the owners corporation any firm proposal to which it could ever have given its assent. He did no more than enquire as to the possibility of a lump-sum payment being accepted, and to receive the answer that it would be if the owners corporation agreed to any specific proposal that he made. He never made one. In my view, the owners corporation did everything it reasonably could have done to provide Mr Kondo with information and accommodate his wishes.
6. Thirdly, if there was an obligation and a breach of it, there was no proof that Mr and Mrs Kondo suffered loss as a result. Their decision to sell the two car spaces arose from their overall financial circumstances, not from anything that the owners corporation did wrongly or failed to do. Moreover, on Mr Kondo's own evidence, he may have needed to sell the car spaces in any event, to raise some of the money necessary to make the lump sum payment, had the owners corporation approved a proposal for such a payment, so he can hardly say that the need to sell them was caused by a failure to approve.
7. For these reasons, the proceeding will be dismissed, but in paragraph 2 of the order I make I record the three matters that the owners corporation asked me to record, the first of which Mr Kondo also asked me to record.