Court of Appeal (Qld)|2008-03-28|Before: Keane, Muir and Fraser JJA, Separate reasons, for judgment of each member of the Court, each concurring as to the order, made
Keane, Muir and Fraser JJA, Separate reasons, for judgment of each member of the Court, each concurring as to the order
Catchwords
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – RULES OF
CONSTRUCTION – WORDS TO BE GIVEN LITERAL AND GRAMMATICAL
MEANING –
where s 206 of the Body Corporate and Community Management Act 1997(Qld)
Source
Original judgment source is linked above.
Catchwords
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – RULES OFCONSTRUCTION – WORDS TO BE GIVEN LITERAL AND GRAMMATICALMEANING –where s 206 of the Body Corporate and Community Management Act 1997(Qld)requires that a seller of a lot in a community titles scheme provide adisclosure statement – where the appellants argued adifferentconstruction to s 206 from that of the primary judge – whether theappellants’ construction was consistentwith the grammatical or literalmeaning of the words of s 206STATUTES – ACTS OF PARLIAMENT – ENFORCEMENT OF STATUTORY RIGHTSAND REMEDIES – BREACH OF STATUTORY DUTY –IN GENERAL – wherethe appellants purported to terminate a sale of land contract due to allegedbreaches of s 206 of the Body Corporate and Community Management Act 1997(Qld) – whether there was non- compliance with s 206 by the respondentsentitling the appellants to terminate the contract pursuant to s 206(7) of theAct
Acts Interpretation Act 1954 (Qld), s 14A(1)
Body
Corporate and Community Management Act 1997 (Qld), s 4(a), s 4(f), s 4(g), s
206, s 207, s 208, s 209
Body Corporate and Community Management
(Standard Module) Regulation 1997 (Qld), s 143, s 144, s 145, s 146,
s
149
Coulton v Holcombe (1986) 162 CLR 1
[1986] HCA 33,
cited
Newcastle City Council v GIO General Ltd (1997) 191 CLR
85
[1997] HCA 53, cited
Project Blue Sky Inc v Australian
Broadcasting Authority (1998) 194 CLR 355
[1998] HCA 28,
cited
Saraswati v The Queen (1991) 172 CLR 1
[1991] HCA 21,
cited
Smits v Tabone
Blue Coast Yeppoon Pty Ltd v Tabone [2007] QCA
337, cited
Judgment (184 paragraphs)
[1]
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - RULES OF CONSTRUCTION - WORDS TO BE GIVEN LITERAL AND GRAMMATICAL MEANING - where s 206 of the Body Corporate and Community Management Act 1997(Qld) requires that a seller of a lot in a community titles scheme provide a disclosure statement - where the appellants argued a different construction to s 206 from that of the primary judge - whether the appellants' construction was consistent with the grammatical or literal meaning of the words of s 206
[2]
STATUTES - ACTS OF PARLIAMENT - ENFORCEMENT OF STATUTORY RIGHTS AND REMEDIES - BREACH OF STATUTORY DUTY - IN GENERAL - where the appellants purported to terminate a sale of land contract due to alleged breaches of s 206 of the Body Corporate and Community Management Act1997 (Qld) - whether there was non- compliance with s 206 by the respondents entitling the appellants to terminate the contract pursuant to s 206(7) of the Act
Smits v Tabone; Blue Coast Yeppoon Pty Ltd v Tabone[2007] QCA 337, cited
[11]
[1] KEANE JA: I agree with the reasons of Muir JA, and with the orders proposed by his Honour. Because the making of an order for indemnity costs is somewhat out of the ordinary in terms of the practice of the Court,[1] I propose to state my reasons for concluding that the appellants' argument is so entirely lacking in substance as to warrant the making of an order for costs on the indemnity basis. Gratefully accepting the summary of facts and issues by Muir JA, I proceed directly to a consideration of the appellants' argument.
[12]
[2] The appellants' argument on the appeal was that their purported termination of the contract was authorised by s 206(7) of the Body Corporate and Community Management Act 1997 (Qld) ("the Act") by reason of the respondent's "substantial non-compliance" with s 206(2) of the Act. This non-compliance was said to flow from the fact that the respondent's answers in the disclosure statement reflected the absence of information which should have been available had the affairs of the body corporate been properly administered.
[13]
[3] The appellants urge that a broad view should be taken of the provisions of s 206(2) of the Act because they are intended to protect consumers. They emphasise that the objects of the Act include s 4(g) and (h), which are in the following terms:
[14]
"(g) to provide an appropriate level of consumer protection for owners and intending buyers of lots included in community titles schemes;
[15]
(h) to ensure accessibility to information about community titles scheme issues".
[16]
[4] The appellants' argument fails, however, to articulate how the objects of the Act alter the operation of the plain words of the Act. No matter how generous an operation the words of s 206(2) of the Act are given, it is not possible to perceive any legislative intention to impose on a lot owner an obligation to create the kind of information required to be disclosed by s 206.
[17]
[5] Section 206 of the Act both creates, and determines the limits of, a vendor's obligation of disclosure of various categories of information. The generation and maintenance of these categories of information is an obligation imposed, not upon an individual lot owner (the vendor referred to in s 206), but upon the body corporate pursuant to s 93 to s 95, and s 143 to s 147 inclusive of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Qld). If there is no information created by the body corporate in relation to a particular item mentioned in s 206, an answer of "not applicable" by a vendor is accurate, and the vendor's obligation of disclosure under s 206 is satisfied to that extent.
[18]
[6] The appellants' argument overlooks, both the role assigned by the Act specifically to the body corporate, and the crucial legal distinction between a corporation and the individuals who control it, a distinction that has been firmly established in our law since the decision of the House of Lords in Salomon v Salomon & Co Ltd,[2] and which is observed by the Act and its subordinate legislation. The body corporate is a legal person with its own obligations, separate and distinct from those of individual lot owners. The appellants' argument proceeds in disregard of this fundamental distinction.
[19]
[7] The contention originally pleaded by the appellants in an apparent endeavour to overcome this problem was that the respondent had failed to exercise reasonable care to ensure that the body corporate was in a position to provide responses in respect of the items listed in s 206 of the Act. For the learned trial judge to have upheld that contention would have required her Honour to add to the obligation of disclosure expressly created by s 206 of the Act, an obligation to exercise care with a view to ensuring that they will be able to comply with this obligation of disclosure. Her Honour correctly rejected that contention.
[20]
[8] The first problem with the argument put to the learned trial judge is that the Act does not confer a right of termination by reason of a lot owner/vendor's non-compliance with this super-added obligation. The second problem with the appellants' pleaded contention is that it depends upon the proposition that the respondent was under an obligation to all future purchasers to exercise reasonable care to ensure that the body corporate would be in a position to provide a fulsome disclosure of the matters referred to in s 206 of the Act. That proposition is not stated in the text of the Act, but is said to be an inference from the evident policy of the Act to protect purchasers of units. This process of reasoning is flawed technically, and also it misconceives the policy of the Act in relation to the protection of purchasers of units.
[21]
[9] The technique of the common law, whereby a judge analyses past decisions to identify the principle which underlies and explains those decisions and then applies that principle to a new set of facts, does not apply to the interpretation of a statute. In the interpretation of a statute one does not seek to distil a general policy which one then applies without regard to the language of the statute. The striking of the relevant "policy balance" is effected by the words used by the legislature, not by the judge generalising the perceived policy of the statute according to his or her own lights.
[22]
[10] In any event, the evident policy of the Act, in relation to the protection of purchasers of lots, is that purchasers should be told "what they are getting into" in terms of the state of the affairs of the body corporate: it is not that purchasers should be given a guarantee that the affairs of the body corporate have been conducted in accordance with the Act. To subject a lot owner's right of alienation of a lot to an obligation to use his or her voting entitlements to ensure that the body corporate has performed its statutory functions would be to fetter the proprietary rights of lot owners in a way which would be so startling, as a matter of policy, as to require the clearest expression of legislative intention. The Act gives not the faintest hint of any such intention. Further, while lot owners are entitled to participate in the management of the body corporate, the Act does not oblige individual lot owners to exercise their voting rights, and certainly not to ensure that the affairs of the body corporate are conducted in a particular way.[3]
[23]
[11] On the hearing of the appeal, the appellants seemed to eschew reliance upon the assertion in their pleadings that the respondent was under some duty to potential purchasers of a lot to exercise reasonable care to ensure the quality of responses to the queries raised by s 206 of the Act. The appellants continued to urge, however, the proposition that a lot owner is obliged by the language of s 206(2), as understood in the light of other provisions of the Act, to bring about the state of affairs necessary to enable substantive responses to be made by way of disclosure.
[24]
[12] There is simply no warrant for amending the language of the Act in the way the appellants would have it. The argument advanced for the appellants on appeal suffers from some of the same fundamental flaws as the pleaded case, in that it fails to recognise, first, that the functions of information creation and retention are not required by the Act to be performed by owners of individual lots, but by a separate legal person, the body corporate, and, secondly, that the entitlement of a lot owner to sell his or her lot is not made conditional upon the performance by the body corporate of its functions under the Act and applicable subordinate legislation.
[25]
[13] In my respectful opinion, this appeal was always bound to fail. The pursuit of the appeal was distinctly unreasonable. The successful respondents have been obliged to incur the costs of resisting an appeal which was, as was said in Smits v Tabone; Blue Coast Yeppoon Pty Ltd v Tabone,[4] "wholly without any arguable merit." The respondents should, therefore, receive as full an indemnity for their costs as the Court is empowered to award. Accordingly, I am of the opinion that the appeal should be dismissed with the respondent's costs to be paid by the appellants on the indemnity basis.
[26]
[14] MUIR JA: The appellants entered into a written Contract dated 19 March 2005 under which they agreed to purchase from Professor & Mrs Chan a block of nine flats located at Toorak Road, Hamilton for a price of $2,715,000. Professor Chan became incapable of managing his financial affairs in 2004 and, since that time, the respondent, Ms Winn, pursuant to an order of the Guardianship and Administration Tribunal, acted as his administrator for all financial matters. Prior to the entering into of the Contract, the appellants were given a disclosure statement in respect of the property in purported compliance with the respondents' obligations under s 206(1) of the Body Corporate and Community Management Act 1997 (Qld).
[27]
[15] By a letter from their solicitors dated 1 April 2005 to the respondents, the appellants purported to terminate the Contract in reliance on a number of alleged breaches of s 206 of the Act in respect of the disclosure statement. The Act applies, as a building units plan had been registered in respect of the building under the Building Units and Group Titles Act 1980 (Qld). The respondents' solicitors, in a letter to the appellants' solicitors dated 20 April 2005, gave notice that the respondents terminated the Contract in consequence of the appellants' alleged wrongful repudiation of it. Proceedings commenced by the appellants against the respondents on 31 May 2005 were tried in the Supreme Court in February and March 2007. The appellants' claims were dismissed and judgment on the respondents' counterclaim in the sum of $663,311.23 was given in their favour.
[28]
[16] The appellants appealed against these orders.
[29]
[17] The notice of appeal contains a number of grounds but the appellants' counsel, in his outline of submissions and in argument, identified the issues for determination as -
[30]
(a) whether the respondents complied with s 206 of the Act in giving the appellants a disclosure statement for the sale of the property; and
[31]
(b) if there was non-compliance with s 206, whether that entitled the appellants to terminate the Contract on 1 April 2005 pursuant to s 206(7) of the Act.
[32]
[18] The questions for determination thus concern the construction of s 206 and the application of that provision to the disclosure statement provided by the respondents to the appellants in purported compliance with the respondents' obligations under s 206.
[33]
"206 Information to be given by seller to buyer
[34]
(1) The seller (the seller) of a lot included in a community titles scheme (including the original owner of scheme land, or a mortgagee exercising a power of sale of the lot) must give a person (the buyer) who proposes to buy the lot, before the buyer enters into a contract (the contract) to buy the lot, a disclosure statement.
[35]
(a) state the name, address and contact telephone number for -
[36]
(ii) if it is the duty of a body corporate manager to act for the body corporate for issuing body corporate information certificates--the body corporate manager; and
[37]
(b) state the amount of annual contributions currently fixed by the body corporate as payable by the owner of the lot; and
[38]
(c) if the seller is the original owner and the contribution schedule lot entitlements for each lot included in the scheme are not equal--state the reason stated in the community management statement for the lot entitlements not being equal; and
[39]
(d) identify improvements on common property for which the owner is responsible; and
[40]
(e) list the body corporate assets required to be recorded on a register the body corporate keeps; and
[41]
(f) identify the regulation module applying to the scheme; and
[42]
(g) state whether there is a committee for the body corporate or a body corporate manager is engaged to perform the functions of a committee; and
[43]
(h) include other information prescribed under the regulation module applying to the scheme.
[44]
(3) The disclosure statement must be signed by the seller or a person authorised by the seller.
[45]
(4) The disclosure statement must be substantially complete.
[46]
(7) If the contract has not already been settled, the buyer may cancel the contract if -
[47]
(a) the seller has not complied with subsection (1); or
[48]
(b) the seller has not complied with subsection (5) or (6), whichever is applicable.
[49]
(8) The seller does not fail to comply with subsection (1) merely because the disclosure statement, although substantially complete as at the day the contract is entered into, contains inaccuracies."
[50]
[20] Paragraphs (a), (f) and (g) of s 4 of the Act, upon which the appellants place reliance, provide:
[51]
The following are the secondary objects of this Act -
[52]
(a) to balance the rights of individuals with the responsibility for self management as an inherent aspect of community titles schemes;
[53]
(f) to provide bodies corporate with the flexibility they need in their operations and dealings to accommodate changing circumstances within community titles schemes;
[54]
(g) to provide an appropriate level of consumer protection for owners and intending buyers of lots included in community titles schemes;
[55]
[21] A copy of the disclosure statement is Annexure A to the primary judge's reasons. It is now reproduced:
NB. Body Corporate not being formally operated as all lots owned by Huo Yen Francis Chan and Amy Chan Kung Wai Ying
[61]
The insurance policy has endorsed upon it the following notation:
[62]
"It is hereby declared that Policies 1-Building and common Area Contents, 2 - Legal liability, 6 - Office Bearers liability and 8 - Building Catastrophe insurance will exclude indemnity on all claims including resultant damage arising directly or indirectly whilst the building is vacant and undergoing renovations"
If Seller is original Owner and the Contribution Lot entitlements for each Lot in the Scheme are not equal - Reason stated in the CMS for the Lot Entitlements not being equal
If no box is ticked, the Standard Regulation Module is taken to be designated as the applicable Regulation Module.
[72]
Committee for the Body Corporate; or
Body Corporate Manager engaged to perform the functions of the committee
[73]
No committee or manager. Body Corporate not being operated formally.
[74]
Information prescribed under applicable Regulation module
[75]
The Buyer acknowledges having received and read this statement from the Seller before entering into the contract.
[76]
The appellants' criticisms of the primary judge's approach to the construction of s 206
[77]
[22] The appellants' counsel, in his written submissions, criticised the primary judge's approach to the construction of s 206 as failing to:
[78]
(a) have regard to the secondary objects in paragraphs (a), (f) and (g) of s 4 of the Act;
[79]
(d) have sufficient regard to the words "complying with" and "The statement must" in s 206(1) and s 206(2) respectively.
[80]
The correct approach to the construction of s 206(2)
[81]
[23] It is difficult to discern what relevance paragraphs (a) and (f) of s 4 have to the construction of s 206. Section 318, which prevents persons from contracting out of the Act's provisions and from waiving rights under it, would also seem to provide no particular assistance in the construction of s 206. Paragraph (g) of s 4 shows that one of the objects of the Act, and one may safely infer, of s 206 is to afford protection to the purchasers of lots in a community titles scheme.
[82]
[24] The meaning of a statutory provision is to be determined "by reference to the language of the instrument viewed as a whole"[5]. The Court's role is "to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute" and the process of construction "begins by examining the context of the provision that is being construed." [6]
[83]
[25] Section 206 is in Pt 1 of ch 5 of the Act which is concerned with the sale of lots. Section 207 provides that a contract for the sale of a lot includes the disclosure statement and s 208 provides that the buyer may rely on the information in the disclosure statement "as if the seller had warranted its accuracy." Section 209 provides for the circumstances in which inaccuracies in a disclosure statement permit a buyer to cancel the contract. Part 2 of ch 5 is concerned with the sale of proposed lots. Part 3 implies warranties into contracts for the sale of lots and prescribes the circumstances in which a breach of warranty gives a right on the part of the buyer to terminate the contract. Division 2 of Pt 2 of ch 4 provides for access to a body corporate's records by purchasers of lots and other interested persons. By these sections and others, the Act makes quite specific provision for the protection of buyers of lots in community title schemes.
"(1) In the interpretation of a provision of an Act, the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation."
[86]
[27] However, neither s 14A nor the purposive approach to construction, authorises a departure from the grammatical or literal meaning of a statute, where that meaning gives effect to the purpose or object of the statute.[7] The court's role is one of construction not legislation.[8] As subsequent discussion shows, the construction of s 206 advanced by the appellants is inconsistent with the grammatical or literal meaning of the words of s 206 and, far from best achieving the purpose of the Act, would be productive of some quite improbable results.
[87]
[28] In a number of cases, the third column of the statement has been completed by inserting the words "not applicable". An explanation for these entries and some of the others is provided by the notation on the form:
[88]
"NB Body Corporate not being formally operated as all lots owned by Huo Yen Francis Chan and Amy Chan Kung Wai Ying."
[89]
"[6] Because they retained ownership of all of the units in the building, Professor and Mrs Chan managed the building and ran the affairs of the body corporate informally, without complying with the requirements of the Body Corporate andCommunity Management Act. They endeavoured to visit the property once a year. They left the payment of recurring expenses such as electricity, gardening, rubbish removal and the servicing of fire extinguishers to Harcourts, who met these expenses out of rent receipts. Communications with the insurer also went through Harcourts. Annual meetings of the body corporate were held in Hong Kong, but these were not always conducted as they should have been under the legislation. There was no administrative fund or sinking fund established, and no annual contributions were set. (footnotes removed)" [9]
[90]
The substance of the appellants' contentions concerning the alleged deficiencies in the disclosure statement
[91]
[30] The appellants' contentions concerning non-compliance with s 206 proceed on the premise that the section imposes a positive obligation on the seller of a lot, not merely to do the things which the subsection (2) requires, but to complete the disclosure statement by inserting the information which would have been available for inclusion in the statement had there been compliance with the Act and the provisions of the Standard Module[10]. For example, s 9(5) of the Standard Module requires bodies corporate to have a secretary. The argument advanced is to the effect that if the subject body corporate had no secretary, the respondents as "seller" would be in breach of the requirements of s 206(2)(a) if the disclosure statement failed to state the name, address and contact telephone numbers for the non-existent secretary. In other words, the disclosure statement must be completed, not by reference to the true facts, but by reference to what the facts would have been had there been compliance with the legislation. It seemed to be argued in the alternative, at least by inference, that where there is no secretary and the information specified in s 206(2) cannot be inserted, the disclosure statement cannot comply with s 206(2)(a)(i).
[31] The appellants' construction of s 206(2) pays little or no attention to its terms. The subsection makes provision for matters to be stated in a document by the seller of a lot. The obligation is thus imposed on a person who, except in comparatively few cases, will have no control of the body corporate or its committee and who will thus be unable to ensure compliance by the body corporate with the requirements of the Act. It is thus unlikely that s 206(2) contemplated that a vendor would fail to meet the requirements of sub-section (2) by accurately stating the facts pertaining to that requirement. But the more obvious difficulty with the appellants' construction is that sub-section (2), in plain terms, merely requires the provision of the information which it specifies.
[94]
[32] The role of s 206 is to provide information to enable the purchaser to make an informed decision on whether to proceed with the contract. The section imposes obligations on vendors, not on bodies corporate. It is thus an unlikely construction of s 206(2) that each of its requirements cannot be satisfied by a true statement of the factual position in relation to that requirement. It follows from the foregoing that where, for example, the disclosure statement requires the "name, address and contact telephone number for . . . the secretary of the body corporate" to be stated if there is no secretary, an appropriate entry in the disclosure statement will be "there is no secretary". So, too, with the requirement to state "the amount of annual contributions currently fixed by the body corporate as payable by the owner of the lot". If no such contributions have been fixed, irrespective of the requirements of the Act or the Standard Module, an appropriate response will be to the effect that none have been fixed.
[95]
[33] The right of termination conferred by s 206(7) is conferred, relevantly, for non-compliance by the seller with s 206(1). That sub-section requires the giving of the disclosure statement before the entering into of a contract for the sale and purchase of a relevant lot or lots. The effect of sub-sections (4) and (8) is that a document which does not comply fully with the requirements of sub-section (2) nevertheless meets the description of a "disclosure statement" for the purposes of sub-section (1) as long as it is "substantially complete as at the day the Contract is entered into". The fact that it contains inaccuracies does not prevent it from being a "disclosure statement" for the purposes of sub-section (1).[11]
[96]
[34] The disclosure statement, with one exception, contained a response to each of the matters listed in s 206(2). The exception is that there is no entry with a statement opposite "Information prescribed under applicable Regulation module." There was no such prescription.
[35] One of the alleged inadequacies of the disclosure statement is that it fails to include "other information prescribed under the Regulation module applying to the scheme". It is common ground that the applicable module is the Standard Module. It provides that a body corporate must:
[99]
"(a) prepare and keep a roll containing information including names and addresses of the original owner; the contribution schedule entitlement of each lot; the interest schedule lot entitlement of each lot; name and address of current owners of each lot; prescribed particulars relating to any mortgagee in possession of a lot.[12]
(c) a register of each engagement by the body corporate of a person as body corporate manager or service contractor and each authorisation of a person as a letting agent;[14]
[102]
(d) a register recording each authorisation for a person as a letting agent;[15]
[103]
(e) a register recording each authorisation for a service contractor or letting agent to occupy a particular part of common property;[16]
[104]
(f) a register of allocations made under any exclusive use by-law;[17]"
[105]
[36] The appellants' contention is that all of the information required to be brought into existence and/or kept by the body corporate under s 143 - s 147 inclusive, must be set out in the disclosure statement, or, at least, referred to in it. The argument misunderstands the obligation imposed by s 206(2)(h). That provision merely acknowledges the possibility that a section or sections in an appropriate module might prescribe that information additional to that already specified in s 206(2), be included in disclosure statements. If the appellants' contentions were to be accepted, it would follow that the disclosure statement would need to contain, not only the very substantial body of information required by ss 143 - 147 of the Standard Module, but the information contained in the books, records, accounts, minutes and correspondence of the body corporate.[18] That would be an improbable construction of a provision which, on its face, is limited in scope and is designed to impart quite specific information of practical value to a purchaser of a lot. Another section of the Act, s 205, enables a purchaser to inspect body corporate records or to obtain copies of records.
[106]
Analysis of the disclosure statement and the adequacy of its content
[107]
[37] In her reasons the primary judge set out the particulars of breach of s 206 listed in paragraph 5 (d) of the amended statement of claim and her findings in respect of them are as follows[19]:
[108]
(i) that there were no body corporate records, informal or otherwise. Section 206 imposes no obligation to maintain records. In any event, there were body corporate records, many of them in evidence.
[109]
(ii) that there was no person listed as acting formally or informally for the management of the body corporate interests or property. Section 206 does not require the statement to include this.
[110]
(iii) that there were no annual or any contributions fixed to be payable by the lots within the scheme. The statement was correct.
[111]
(iv) that there was no identification of improvements or otherwise on the common property of the body corporate. The statement was correct.
[112]
(v) that there were no body corporate assets listed. There were none to be listed.
[113]
(vi) that there was no identification of the relevant regulation module applying to the scheme. The Standard Regulation Module was identified.
[114]
(vii) that there was no listing of any person or persons acting formally or informally for the body corporate or who performed the functions of the body corporate committee. Section 206 does not require the statement to include this.
[115]
(viii) that there was no s 206 Body Corporate and Community Management Act statement, formal or informal, available. This is an extraordinary allegation in the face of exhibit 2. If it means that the statement was so defective as to be a nullity, I reject the contention.
[116]
(ix) that there were no details as to the insurance or insurance policy of the building apart from a notation allegedly endorsed thereon. Section 206 does not require this. In any event, the endorsement on the policy was set out in the disclosure statement provided.
[117]
(x) that there was no aggregate interest schedule, formal or informal, available or in existence. Section 206 does not require this.
[118]
(xi) that there was no lot entitlement schedule, formal or informal, available or in existence. This is incorrect; it was part of the registered building units plan.
[119]
(xii) that there was no differentiation, formal or informal, between common and other property in the scheme. This is incorrect; see the registered building units plan.
[120]
(xiii) that there was a body corporate in name only and for all intents and purposes did not operate as a body corporate, formally or informally or at all. There was a body corporate and it did operate, albeit informally. For example, it held insurance cover and an electricity account.
[121]
(xiv) the defects pleaded in paragraph 4(d)(iii). This is incomprehensible.
[122]
(xv) - (xxi) Doing the best I can to understand the structure of the pleading, these particulars all relate to non-disclosure of documents about the condition of the building, correspondence with the insurer, and rectification costs. None of them was required to be disclosed under s 206. (footnotes removed)"
[123]
[38] In the above passage from her reasons, the primary judge carefully addressed each of the alleged breaches of s 206 particularised in paragraph 5 of the amended statement of claim, even though the connection between some of the particulars and the requirements of s 206(2) were difficult to discern. Neither in his outline of submissions, nor in oral argument, did counsel for the appellants attempt to expose any errors in the primary judge's findings in relation to those particulars.[20] There is one qualification which, perhaps, ought be made to this statement.
[124]
[39] Section 206(2) requires the statement to state the name, address and contact telephone number for the secretary of the body corporate or the body corporate manager where it was the duty of the body corporate manager to act for the body corporate for issuing body corporate information certificates.
[125]
[40] It was argued that the respondent, Mrs Chan, was the secretary of the body corporate at relevant times and that there was a body corporate manager. Consequently, it was submitted, the disclosure statement should have been filled out accordingly. If the contention was correct the disclosure statement would have been inaccurate but it would not follow that it was not "substantially complete". The appellant's case did not rely on inaccuracies in the statement. This argument, therefore, cannot advance the appellant's case but even if it could, it has no sound foundation in fact.
[126]
[41] There was no evidence to support the contention that there was a body corporate manager at the relevant time, let alone a manager whose duty it was to act for the body corporate for issuing body corporate information certificates.
[127]
[42] The argument which relies on the failure to state the name, address and contact number of the secretary suffers from a few difficulties. No such allegation appears in the particulars of breach of s 206. Consequently, the primary judge was not invited to address the matter and she did not. The contention that Mrs Chan was the secretary at the date of the disclosure statement is inconsistent with the appellants' pleaded case: see paragraphs 5(d)(vii) and (xiii). Mrs Chan was not cross-examined on this point or even in relation to the accuracy of the contents of the disclosure statement.
[128]
[43] The appellants' counsel conceded that the notes of the annual meeting dated 30 July 2004[21] was "the only document that potentially relates to the relevant year." In it Mrs Chan was described as "chairperson" and a Mr Kevin Chan as "member". The document made no reference to the body corporate secretary. The argument advanced, however, was that it could be inferred from the document's failure to refer to a secretary or to any change in that regard that Mrs Chan continued as secretary. It was contended that "Notes of the Annual General Meeting" [22] on 10 December 2003 showed Mrs Chan to be the secretary. The document contained the entry:
[129]
Amy Chan, Chairperson
Francis HY Chan, secretary
Kevin Chan, member"
[130]
"All directors agreed to stay on to be reappointed. Francis Chan will be the chairperson and Amy Chan will be the secretary, and Kevin Chan will remain director for the next term of service." (emphasis added)
[131]
[45] The terminology used and the participation of non-proprietors is consistent either with the respondent's contention that the "Body Corporate [was] not being formally operated" or with the conclusion that the meeting, although relating to the subject body corporate, was a meeting of directors of another corporation. Whatever the participants in these two meetings intended, the meetings were not meetings of the proprietors of lots in a community titles scheme.
[132]
[46] These documents do not make out a case not pleaded and not argued below.
[133]
[47] After completing her analysis of the merits of the allegations of breaches of s 206 particularised in paragraph 5 of the statement of claim, the primary judge briefly discussed the scheme of the relevant provisions of the Act and concluded ". . . the disclosure statement was substantially complete." There was no challenge to that finding except on the basis of the appellants' erroneous construction of s 206 and as just discussed. It follows that the appellants have failed to establish a breach of s 206 which entitled them to terminate the contract.
[134]
[48] For the sake of completeness, however, it is proposed to consider paragraphs 5(d)(i) to (xiii) with a view to ascertaining whether the primary judge's conclusions in paragraph [45] of her reasons are correct. The letter beside each Roman numeral below is a reference to the paragraph of s 206(2) to which the nominated particular appears to relate.
[135]
(ii)(a) The evidence was to the effect that no committee of the body corporate was functioning, no body corporate manager had been engaged[23], and Mrs Chan, for most purposes, managed the building in a general sense[24]. The allegation is not in respect of a requirement of the Act and the disclosure statement in respect of (a) is adequate.
[136]
(iii)(b) The disclosure statement correctly stated "nil". No annual contributions had been fixed.
[137]
(iv)(d) The disclosure statement correctly stated, "not applicable". The evidence did not disclose the existence of any improvements covered by (d).
[138]
(v)(e) Again, "not applicable" was stated in the disclosure statement. "None" would have been a preferable description but the words used in the context of the wording of the form as a whole conveyed the same meaning. The evidence did not disclose the existence of any assets of the requisite class.
[139]
(vi)(f) The primary judge's findings are correct and unchallenged.
[140]
(vii)(g) The response was "No committee or manager Body Corporate not being operated formally". The response was accurate.
[141]
(viii) The primary judge explained the oddity of this particular.
[142]
(i)(ix)(x)(xi) and (xiii) None of these matters are mentioned in or required by s 206(2).
[143]
(xii) This particular has nothing to do with s 206(2) and, as the primary judge pointed out, the allegation is wrong.
[144]
[49] The respondents argue that the appellants neither pleaded nor conducted their case at trial on the basis of a right to terminate under s 206. It is submitted that had the case relying on s 206 been pleaded and argued on the trial, the respondents "would (and could) have dealt with that claim . . .".
[145]
[50] The amended statement of claim does not make out a case of termination of the contract pursuant to s 206 paragraph (5)(d) which contains the particulars of the alleged breach of s 206, is itself a particular of an allegation that certain representations were false, misleading and deceptive and/or negligent. The only express allegation of termination is contained in paragraph 9 which states:
[146]
"As a result of the breaches aforesaid, the plaintiffs, by letter dated 1 April 2005, had as it was entitled to so do;
[147]
(a) terminated the Contract pursuant to and within the time limited for same under s 224 of the . . . Act;
[148]
(b) demanded of the defendants the return of the deposit."
[149]
[51] Paragraph 6 of the pleading, however, contains a discrete allegation of breach of s 206 in the manner particularised in paragraph 5(d). The trial commenced on 26 February 2007. On 8 February the solicitors for the respondents wrote to the solicitors for the appellants noting, accurately, that the relief claimed was based only on a purported termination under s 224 of the Act. The letter continued:
[150]
"We put you on notice that we, and our clients, have prepared the defendants' case based on the claim as pleaded and, if your clients wish to raise matters so as to rely upon either s 206 or s 209, then we would expect that any amended pleading be provided to us by no later than 4pm on Friday 9 February 2007."
[151]
[52] In his opening of the defendants' case, senior counsel for the respondents informed the primary judge that the appellants relied only on s 224 of the Act. Counsel for the appellants responded that s 206 was relied on as well. An argument then ensued. The letter of 8 February 2007 was tendered in the course of this debate. The primary judge was not invited to rule on the point and did not do so.
[152]
[53] In their written submissions on the conclusion of the trial, counsel for the respondents maintained the position that the appellants made no claim under s 206 or s 209 of the Act. Unfazed by the respondents' stance that the appellants would be held to their pleaded case, the appellants' counsel addressed on the basis that the contract had been terminated, inter alia, under s 206 of the Act. The primary judge, in her reasons, did not deal with the respondents' objection to the appellants straying outside their pleaded case, choosing to address the appellants' argument based on s 206 on its merits. Her Honour thus either implicitly did not uphold the respondents' contentions concerning the scope of the appellants' pleading in relation to s 206, or concluded that the appellants' argument had no merit and could thus be disposed of without the need to make a ruling.
[153]
[54] Whether the appellants should have been permitted to argue that the contract was terminated pursuant to s 206 at first instance and whether they should be permitted to raise that argument on appeal depends on whether, had the issue been raised properly at first instance, "evidence could have been given which by any possibility could have prevented the point from succeeding".[25] Senior counsel for the respondents argued, heroically in my view, that the respondents could well have adduced other evidence had they not met the appellant's pleaded case. Having regard to the scope of the pleaded allegations, I consider it improbable that an amendment to the pleading would have necessitated the calling of further evidence, assuming a conventional approach to the construction of s 206. The primary judge, it would seem, was of that opinion. However, in view of the fact that none of the grounds of appeal have been made out, it is unnecessary to delve further into the pleading question.
[154]
[55] For the above reasons I would dismiss the appeal with costs. The costs should be on the indemnity basis; none of the grounds of appeal were faintly arguable[26]. The inadequacy of the appellants' case had been exposed by the primary judge's reasons. The appeal, with the possible exception of the diversion in relation to the alleged failure to state the particulars of the secretary or manager, took the form of a construction argument which studiously ignored the words required to be construed. The diversion, as has been explained, was conspicuously lacking in any factual foundation. Nor was it within the case pleaded or advanced at first instance.
[155]
[56] FRASER JA: The relevant statutory provisions, the issues in the appeal, and the factual background are set out in the reasons of Muir JA, which I have had the advantage of reading and with which I agree.
[58] The obligation imposed upon the seller of a lot by s 206(1) is to "give... a disclosure statement" which, as s 206(2) requires, must "state", "identify", "list" and "include" information about specified matters concerning the body corporate and its affairs.
[158]
[59] The effect of the appellants' arguments is that, by those words, s 206(2) imposes obligations upon the seller, firstly, to cause the body corporate to remedy any relevant non-compliance with statutory obligations imposed upon it by other provisions in the Act and then, secondly, to state information about that changed state of affairs in the disclosure statement.
[159]
[60] That propounded meaning of those words is not open. Their natural and literal meaning is to require only that the seller give the buyer information about the specified topics: if the body corporate is in breach of a relevant provision of the Act, so much will appear from the seller's disclosure statement. That meaning makes sense, it is not contradicted by any other provision, it gives effect to the object of consumer protection expressed in s 4(g) of the Act, and it is not inconsistent with any other object of the Act.
[160]
[61] For those reasons and for the reasons given by Muir JA and Keane JA with which I agree, the construction of s 206 propounded by the appellants must be rejected. The appeal should be dismissed with costs.
[161]
[62] In my opinion, those costs should be assessed on the indemnity basis. The learned trial judge rejected the construction propounded by the appellants because it was not what s 206 provided. In this appeal, the fundamental task for the appellant was to demonstrate error in that decision.[27] Presumably because of the hopelessness of that task, the appellants' counsel did not essay the attempt. No submission was made that explained how the words of s 206 could accommodate the construction the appellants propounded; nor did the appellants' counsel articulate any canon of construction or identify any authority that even arguably justified the substantial revision of s 206 necessary for success by the appellants. The particular arguments that were advanced in support of the appeal were hopeless, for the reasons given by Muir JA.
[162]
[63] I also agree with the reasons of Keane JA for concluding that an indemnity costs order is appropriate here.
[163]
[64] I agree with the orders proposed by Muir JA.
[164]
[1] Cf Smits v Tabone; Blue Coast Yeppoon Pty Ltd v Tabone[2007] QCA 337 at [43] - [53].
[3] Cf s 104 to s 111A and s 150 of the Act, and s 48 to s 49A inclusive of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Qld)