Standing - the new right of a lot owner to take proceedings on behalf of an owners corporation - Owners Corporations Act 2006 ss 163(1A), 165(1)(ba).

Jurisdiction - whether the proceeding challenging the validity of a renewal of the lease and the entry into the other agreement is "an owners corporation dispute" - Owners Corporations Act 2006 s 162.

Option to renew lease of common property - option exercised - whether owners corporation is required to resolve to "accept" the exercise of option.

Agreement for provision of services - whether a special resolution is required to authorise entry into the agreement - Owners Corporations Act 2006 ss 12, 46, 47.

Committee members - duty to act in good faith - whether a corporate lot owner can be a committee member - whether proxies' breach of duty is a breach by the lot owner - immunity of committee members - Owners Corporations Act 2006 ss 103, 117, 118.

Owners Corporation No [2011] VCAT 1934; 2 PS 409115E

Noonan v Owners Corporation No [2011] VCAT 1934; 2 PS 409115E and Anor (Owners Corporation) [2011] VCAT 1934

1. Paragraph 25, and paragraphs D and E in the claim for relief, in the Amended Points of Claim are struck out.
2. Otherwise the second respondent's application dated 21 July 2011 is dismissed.
3. The principal registrar is directed to list a directions hearing, before me, on a date and at a time to be fixed.

1. A block of apartments at 348 St Kilda Road Melbourne consists of lots on a plan of subdivision which are affected by an owners corporation, the first respondent Owners Corporation No [2011] VCAT 1934; 2 PS 409115E.
2. The second respondent Renaissance Assets Pty Ltd ("RA") was responsible for the redevelopment of 348 St Kilda Road which resulted in the block of apartments there now. RA is a lot owner and thus a member of the owners corporation.
3. The applicant John Noonan is also a lot owner and thus a member of the owners corporation. He purchased from RA in 2001 the lot which contains apartment T109.
4. The owners corporation has a committee. In June 2010 the committee, by a ballot, passed a resolution which has given rise to two of the three disputes reflected in this proceeding. In his Amended Points of Claim Mr Noonan has alleged that, at the time that the ballot was conducted and the resolution was passed, there were five members of the committee, four of whom were directors of RA, or of companies related to RA, and held proxies from RA to represent it on the committee. Those four members, he has alleged, all voted in favour of the resolution; the fifth member voted against.
5. The three disputes reflected in this proceeding are as follows.
6. The Common Property Lease. In late December 1998, about six weeks after the plan of subdivision was registered, the owners corporation granted to RA a written lease of most of the common property described in the plan of subdivision, at a very nominal rental. By a deed of variation the term of the lease was extended to 30 June 2010 and RA was granted two successive options to renew the lease for terms of five years each. RA notified the owners corporation in writing that it exercised the first option to renew. Mr Noonan complains that there was no resolution of members of the owners corporation, or of members of the committee, accepting the exercise of the option. In this proceeding he is asking for a declaration that "the exercise of the option ... is void".
7. The Building Management Agreement. By a written agreement dated 30 June 2010 the owners corporation engaged RA as a building manager to perform various services set out in the agreement. The resolution referred to in paragraph 4 above had purported to authorise the owners corporation to enter into this Building Management Agreement with RA. Mr Noonan complains that the resolution was not a special resolution as defined by the Owners Corporations Act 2006 ("the OC Act"), that the OC Act operated so as to require a special resolution in the circumstances, and so the owners corporation was not properly authorised to enter into the agreement. In this proceeding he is asking for a declaration that the Building Management Agreement "is void".
8. Breach of Duty. Members of a committee of an owners corporation have a duty to act in good faith in the performance of their functions: OC Act section 117. Mr Noonan alleges that when the four committee members who constituted the majority voted in favour of authorising the owners corporation to enter into the Building Management Agreement they had a conflict of duty and interest, their duty being to the owners corporation and its members (to act in good faith) and their interest being as directors of RA or of companies related to RA. They improperly used their position as committee members to gain an advantage for RA. They did not disclose their conflict to the other members of the owners corporation. Thereby they breached the duty. Because they were agents and proxies of RA, their breach was RA's breach also, Mr Noonan alleges. In this proceeding he is asking for an order that RA pay "equitable compensation for breach of ... fiduciary duties and obligations", and for an order that RA "provide a taking of accounts".

1. Mr Noonan commenced this proceeding on 4 October 2010. By a Tribunal order dated 13 April 2011 RA was joined as a respondent. On 20 April 2011 Mr Noonan filed Amended Points of Claim, making the allegations and asking for the orders to which I have referred.
2. On 21 July 2011 RA filed an application asking for orders that Mr Noonan's claim as against RA be summarily dismissed or struck out, alternatively that certain paragraphs of the Amended Points of Claim - those that related to the "breach of duty" dispute and to the orders sought in respect of it - be struck out. The owners corporation has not made any such application.
3. I heard the summary dismissal application on 29 August 2011. Mr Whitten of Counsel appeared for RA. Mr McCullagh of Counsel appeared for Mr Noonan. Mr Wilkinson, solicitor for the owners corporation, announced his appearance, told me that the owners corporation did not propose to participate in the hearing, and asked to be excused. He was. Each Counsel spoke to detailed and helpful written submissions. I reserved my decision and gave leave to each party to the application to file and serve further written submissions, setting out a timetable for the purpose. RA did file a supplementary written submission. Mr Noonan did not.
4. RA's application for summary dismissal was expressed to have been made "pursuant to sections 75, 78 and/or 80" of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act"). In RA's submissions all the emphasis was upon section 75. The other sections were barely mentioned, which is not surprising because to my mind they are clearly inapplicable in the present case.
5. There was no affidavit material in support of the application, although RA, without objection, provided me with a copy of the Building Management Agreement. Otherwise, both parties' submissions were based upon the terms of the Amended Points of Claim alone.
6. Section 75(1) of the VCAT Act provides:

75. Summary dismissal of unjustified proceedings

(1) At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion-

(a) is frivolous, vexatious, misconceived or lacking in substance; or

1. RA has submitted that the proceeding is misconceived or lacking in substance, and fails to disclose a cause of action.
2. I repeat what I said in Wynden Pty Ltd and others v Colliers International Residential (Victoria) Pty Ltd and another (Civil Claims) [2010] VCAT 1683 at paragraph 14 about the relevant principles of law to be applied when dealing with an application such as the one that RA has made:

The principles governing the disposition of an application under section 75 of the VCAT Act for summary dismissal are well known and are not in dispute. It is a very serious matter to dismiss a proceeding summarily and thus to deprive an applicant of its ordinary right to ventilate its claim, call its evidence and argue its case at a full hearing of the proceeding. So the Tribunal is obliged to act with great caution before doing so, and should not exercise that drastic power of summary dismissal unless it is quite clear that the applicant's claim is absolutely hopeless, unsustainable in fact or in law and bound to fail. See, in particular, Forrester v AIMS Corporation [2004] VSC 506; (2004) 22 VAR 97, a decision of Kaye J. of the Supreme Court of Victoria, which confirmed that the principles expressed by the Court of Appeal in State Electricity Commission of Victoria v Rabel [1998] 1 VR 102 apply to summary dismissal applications to VCAT brought under section 75.

1. Another aspect of those principles is that the Tribunal is obliged to proceed upon the assumption that the applicant in the proceeding (Mr Noonan) will be able to prove each fact which he has alleged in the Amended Points of Claim. In paragraphs 1 to 8 above I have set out various facts and various allegations of fact. The facts are those which RA has admitted in Points of Defence. The allegations have not been admitted but, for the purposes of dealing with the summary dismissal application, I must assume that Mr Noonan will be able to prove them.
2. Section 75(1) expressly confers a power to strike out part of a proceeding. If I conclude that the proceeding as a whole is not so completely hopeless and unsustainable that it should be dismissed summarily, but that parts of ti are so hopeless and unsustainable that they are "misconceived or lacking in substance", I may strike out those parts but leave the rest of the proceeding on foot.

1. At the forefront of RA's submissions is the argument that Mr Noonan does not have standing to bring this proceeding, insofar as in it he attempts to impugn the validity of RA's exercise of the option to renew the Common Property Lease and the validity of the Building Management Agreement. The common law rule in Foss v Harbottle [1843] EngR 478; (1843) 2 Hare 461 meant that, generally speaking, an individual member of a corporation had no standing to pursue a cause of action to challenge the validity of a contract into which the corporation had entered with a third party. In Camilleri & Ors v Oldroyd & Ors (Owners Corporation) [2011] VCAT 279 a proceeding brought by individual lot owners, challenging a commercial contract into which the owners corporation of which they were members had entered, was struck out because under that rule they had no standing to bring the proceeding. In the Wynden case to which I have referred above parts of the proceeding were struck out for the same reason.
2. The law was in that state when this proceeding was commenced, and was still in that state when RA filed its summary dismissal application. Had it remained in that state, the submission that Mr Noonan has no standing might well have delivered a knock-out blow to the greater part of this proceeding.
3. On 24 August 2011, however - five days before the hearing of the summary dismissal application - amendments to the OC Act came into force. The Consumer Acts Amendment Act 2011, No 36 of 2011, effected those amendments. Two of them have high significance for RA's submission about Mr Noonan's lack of standing. They inserted section 163(1A) and section 165(1)(ba) into the OC Act.
4. Section 163(1A) provides:

(1A) A lot owner may apply to VCAT on behalf of an owners corporation to resolve an owners corporation dispute.

This subsection clarifies that the rule in Foss v Harbottle [1843] EngR 478; (1843) 67 ER 189 does not apply to owners corporation disputes.

1. Section 165(1)(ba) provides that, in determining an owners corporation dispute VCAT may make any order it considers fair, including:

(ba) an order authorising a lot owner to institute, prosecute, defend or discontinue specified proceedings on behalf of the owners corporation.

1. Those sections have a retrospective operation, for they are provisions dealing with matters of practice and procedure, not with matters of substantive right. They provide for how a cause of action that lies in an owners corporation may be pursued in a VCAT proceeding: a lot owner may commence it, and pursue it, on the owners corporation's behalf.
2. Section 163(1A) having commenced operation, it is now not a knock-out blow to Mr Noonan's case to say that, by attempting to impugn the validity of contracts between the owners corporation and RA, he is impermissibly pursuing a cause of action that only the owners corporation itself can pursue. By virtue of that sub-section, he must be regarded as having been entitled to apply to VCAT on behalf of the owners corporation to seek orders declaring the contracts invalid or void.
3. Having applied to VCAT and commenced a proceeding, a lot owner's liability to prosecute it is not unchecked, however. The effect of section 165(1)(ba) appears to be that a lot owner who has commenced a proceeding on behalf of an owners corporation is required to seek VCAT's leave to prosecute it. Presumably this provision is designed to prevent a busybody lot owner, or a lot owner who has a private grievance but cloaks it in the guise of concern for the owners corporation's welfare, from pursuing proceedings that have no likely benefit for the owners corporation.
4. The determination of this summary dismissal application is not the occasion for one to say anything more about those two new provisions or about how this Tribunal might apply them. How they are reconcilable with section 18(1), which provides (subject to exceptions) that an owners corporation must not bring legal proceedings unless it is authorised by special resolution to do so, is going to be an interesting question.
5. Because Mr Noonan must now be regarding as having been entitled to commence a proceeding to pursue a cause of action that lies in the owners corporation, and because he is entitled to seek an order authorising him to prosecute the proceeding on behalf of the owners corporation, I reject the submission that the proceeding should be dismissed because he lacks the standing to bring it.

1. Section 162 of the OC Act provides:
   1. VCAT may hear and determine disputes

VCAT may hear and determine a dispute or other matter arising under this Act or the regulations or the rules of an owners corporation that affects an owners corporation ("an owners corporation dispute") including a dispute or matter relating to

(b) an alleged breach by a lot owner or an occupier of a lot of an obligation imposed on that person by this Act or the regulations or the rules of the owners corporation; or

(c) the exercise of a function by a manager in respect of the owners corporation.

1. I repeat what I said in the Wynden case, at paragraph 20, about the definition of "an owners corporation dispute" in section 162:

The definition of "an owners corporation dispute" in section 162 is partly an inclusive one. It includes a dispute or matter relating to one of the activities set out in sub-paragraphs (a) (if it arises under the Act or the regulations or the rules), (b), and (c). If the dispute or matter which VCAT is asked to hear and determine is not one relating to one of those activities set out in sub-paragraphs (a), (b) and (c) it nevertheless will be an owners corporation dispute if, first, in some other way it arises under the Act or the regulations or the rules, and, secondly, in some other way it affects the owners corporation.

1. RA has submitted that none of the three disputes reflected in this proceeding is "an owners corporation dispute", so the Tribunal has no jurisdiction to hear and determine the proceeding and it should be summarily dismissed for that reason. I reject the submission, for the following reasons.
2. The Common Property Lease. Paragraph 12 of the Amended Points of Claim alleges that the "acceptance" of RA's exercise of its option to renew the Common Property Lease in June 2010 "occurred in the absence of any resolution of the committee or any resolution, special or general" of the owners corporation.
3. Many provisions in the OC Act specify when a resolution, or when a special resolution, is required and what has to be done to achieve a proper resolution. By raising the issue of whether a resolution of the committee or of the members of the owners corporation was required, Mr Noonan has raised a "matter arising under" the OC Act, in my opinion. The dispute as to whether there is a validly renewed lease of common property is plainly, I think, a matter that "affects" the owners corporation. So, even though this dispute is not one that fits any of the categories in sub-paragraphs (a), (b) and (c) of section 162, it is nevertheless an owners corporation dispute.
4. As I shall be stating below, I consider that the idea that "acceptance" of the exercise of the option, by resolution or otherwise, was necessary is a misconception. But for the moment that is beside the point. The dispute, as expressed in the Amended Points of Claim, is an owners corporation dispute and so VCAT has jurisdiction to hear and determine it.
5. The Building Management Agreement. The Amended Points of Claim allege that, because the committee's resolution authorising the owners corporation to enter into the Building Management Agreement was not a special resolution of its members, the owners corporation was not properly empowered to enter into that agreement. Mr Noonan relies upon section 12 of the OC Act, headed "Provision of services to members and occupiers", which stipulates that a special resolution is required for the purpose of that section. I shall be referring to that section, and to the competing submissions about it, below.
6. The issue of the applicability of section 12 is a "matter arising under" the OC Act. The dispute as to whether there is a valid agreement "affects" the owners corporation because if there is no valid agreement the owners corporation might not be able to compel performance of the services which RA was supposed to be providing under it. The dispute is an owners corporation dispute and the Tribunal has jurisdiction to hear and determine it.
7. Breach of Duty. The allegation that there was a breach of the duty which section 117 of the Act imposes upon committee members, and hence a breach by RA (a lot owner) of that duty, fits the category of section 162(b). Again, whether the allegation is based upon a misconception is beside the point. The dispute is an owners corporation dispute and the Tribunal has jurisdiction to hear and determine it.

1. I shall now deal separately with each of the three disputes in order to consider whether the facts alleged in the Amended Points of Claim, as admitted or if proved (as for present purposes one must assume that they will be), give rise to a tenable claim, or whether that claim is hopeless. I shall deal with them in a different order from the order found in the Amended Points of Claim and in these reasons so far. I shall deal with the Building Management Agreement issue first, then with the Breach of Duty issue, and finally with the Common Property Lease issue.

1. By entering into the Building Management Agreement RA has assumed rights and obligations to perform duties of various kinds for reward. The instrument divides them in "the Scheduled Works", which RA must perform for the owners corporation (clause 3.1) and "the "Non-Scheduled Works", which RA may perform if requested by the owners corporation (clause 5.1) but evidently is not obliged to perform. In turn, the instrument refers to a sub-class of "Non-Scheduled Works" called "Services".
2. Schedule 1 to the instrument describes the Scheduled Works in more detail. They include the cleaning of the common property and the collection and removal of garbage from the common property. Schedule 2 describes services that RA may provide "as part of Non-Scheduled "Works". They include advice on insurance cover, arranging access to a community television facility, and other services which "may enhance amenity" of the lots. Schedule 3 describes the "Services" that RA may provide for lot owners or occupiers. They include housekeeping and cleaning, "butler and valet", airline and travel booking, and child care. The fact, as it appears from the terms of the instrument, that RA carries on at 348 St Kilda Road a business of letting lots as service apartments explains the presence in the three Schedules of the items which I have given as examples.
3. Mr Noonan argues that an owners corporation's entry into an agreement of that kind requires a special resolution of the members of the owners corporation, not merely a resolution of members of the committee.

1. Provision of services to members and occupiers

(1) An owners corporation, by special resolution, may decide-

(a) to provide a service to lot owners or occupiers of lots or the public; or

(b) to enter into agreements for the provision of services to lot owners or occupiers of lots.

(2) An owners corporation may require a lot owner or occupier to whom a service has been provided to pay for the cost of providing the service to the lot owner or occupier.

1. There is no generally applicable definition of "service" or "services" in the OC Act. In section 47 there is a definition of "service" that is applicable to that section only. Section 47(3) provides that, in that section, "service" includes a service for which an easement or right is implied under section 12(2) of the Subdivision Act 1988.
2. Provisions of the OC Act appear to contemplate four types of "services", undefined though that expression is. The first two are "services" which the owners corporation must perform. The third and fourth are services which the owners corporation may perform in certain circumstances.
3. First, section 46 provides that an owners corporation must repair and maintain the common property, and the chattels, fixtures, fittings and "services" "related to the common property or its enjoyment." Performance of that obligation is one of the functions of an owners corporation, described in section 4(b)(i) and (ii).
4. Secondly, section 47(1) provides that an owners corporation must repair and maintain a "service" in or relating to a lot "that is for the benefit of more than one lot and the common property". (The limited, and unhelpful, definition of "service" in section 47(3) is applicable here.) Performance of that obligation is the function described in section 4(b)(iii).
5. The object that links the first two types of "service" or "services" seems to be the preservation of the common property and the enhancement of the lot owners' use of it. To meet the cost of the performance of those services, amongst other things, the owners corporation may set annual fees, based upon lot liability (section 23), and the lot owners are required to pay the fees (section 28(1)).
6. Thirdly, section 47(2) provides that an owners corporation may, at the request and expense of a lot owner, repair and maintain a "service" in or relating to a lot if it is impracticable for the lot owner to repair and maintain the service. (Again the limited definition in section 47(3) is applicable.) The section does not require the owners corporation to reach in any particular way a decision to undertake the repair and maintenance of the "service".
7. Fourthly, there is the "service" or "services" referred to in section 12(1): to lot owners, or to occupiers of lots, or to the public. The owners corporation may decide to provide such a service, and may require a lot owner or occupier to pay for the cost of providing the service. Or it may decide to enter into agreements for the provision of services to lot owners or occupiers. But if it does decide to provide such a service or to enter into such an agreement, it must do so by special resolution (of its members: section 96).
8. Unlike the first two types of "service" or "services", the third and fourth types have no necessary connection with the common property or its use, and the incidence of payment for them is in accordance with a user-pays principle rather than in accordance with lot liability.
9. Mr Noonan's case that a special resolution of the members of the owners corporation was required before it could validly enter into the Building Management Agreement depends upon him establishing that the things that RA had the right to perform under that agreement were "services", or included "services", of the fourth type described above.
10. For RA to establish that his case in that regard is untenable, unsustainable and hopeless, it must be clear that the "services" are of one or more of the first, second and third types, and are not of the fourth type.
11. In my opinion, it is well and truly arguable that the "services" described in Schedule 2 and Schedule 3 of the Building Management Agreement, or some of them, are of the fourth type that meets the description of "services" in section 12(1). Things like the butler and valet service, or the child care service (for example) arguably are not "related to the common property or its enjoyment" (section 46: the first type), or the benefit of the common property (section 47(1): the second type), or about something which it may be impracticable for a lot owner to maintain (section 47(2): the third type).
12. Mr Whitten submitted that section 12 applied only to the provision of services that were beyond the scope of an owners corporation's ordinary functions as outlined in section 4. He cited Sulomar and Others v Owners Corporation 1 (Planning No. PS1 11693Q) (Civil Claims) [2010 VCAT 600 in support of that proposition. The services in question in that case were ones which, it seems to me, had a relationship to the quality of the common property and to lot owners' enjoyment of it, and so were, as the presiding Member held, not beyond the scope of the owners corporation's ordinary functions and not within the scope of section 12.
13. Whether the outcome in this case turns out to be the same as the outcome in Sulomar case will depend upon an examination of the terms of the Building Management Agreement and upon evidence given as to what things are done, and how they are done, under that agreement. In my view, Mr Noonan is entitled to take this aspect of his case to a hearing at which such an examination can be made and such evidence received. This aspect of his case is not clearly untenable, unsustainable, hopeless or doomed to fail. Far from it.
14. For those reasons, RA's primary application - for an order under s75 of the Victorian Civil and Administrative Tribunal Act 1998 dismissing the whole of the proceeding - must fail.

1. The four members of the committee who voted by ballot to pass the resolution authorising the owners corporation to enter into the Building Management Agreement held proxies on behalf of RA. Mr Noonan so alleged in the Amended Points of Claim, and RA admitted those allegations in its Points of Defence.
2. Section 103 of the OC Act enables a proxy for a lot owner to nominate for election as, and be, a member of the committee. So far as it is presently relevant, section 103 provides:

(1) A committee of an owners corporation must have at least 3 and not more than 12 members.

(2) The members of the committee must be lot owners or hold proxies on behalf of lot owners.

(3) There must not be more than one member of the committee from any one lot.

(4) A lot owner or a proxy for a lot owner may nominated for election as a member of the committee -

(b) orally if the lot owner is present at the annual general meeting.

1. Section 117 provides:
   1. Duties of committees and sub-committees

A member or a committee or sub-committee of an owners corporation -

(a) must act honestly and in good faith in the performance of his or functions; and

(b) must exercise due care and diligence in the performance of his or her functions; and

(c) must not make improper use of his or her position as a member to gain, directly or indirectly, an advantage for himself or herself or for any other person.

1. Mr Noonan alleges that the four proxy-holders' conduct which led to the passing of the resolution amounted to a breach of the duty to act in good faith, and that the breach constituted a breach by RA of that duty. In the Amended Points of Claim he asks for an order that RA "pay equitable compensation". He also asks for an order that RA "provide a taking of accounts".
2. As an alternative to the order for a taking of accounts, Mr Noonan asks in the Amended Points of Claim for an order for the appointment of an administrator for the owners corporation under section 74 of the OC Act.
3. Mr McCullagh submitted that the persons to whom the duty imposed by section 117 is owed, and who may complain of and seek a remedy for a breach of that duty, include Mr Noonan as a lot owner. Mr Whitten did not argue to the contrary. For reasons I gave in the Wynden case, I consider that the submission is correct.
4. Nevertheless, I consider that the claim that RA was in breach of that duty is untenable. Only a member of a committee, or of a sub-committee, has the duty and is capable of being in breach of the duty. RA was not a member of the committee at the time of the alleged breach. Its proxy-holders were. That does not mean that it was itself.
5. I consider that it is not legally possible for a lot owner which is a corporation to be a member of a committee of an owners corporation. It may be represented on a committee only by proxy-holders who are natural persons. Those natural persons are members of the committee once they are elected. The corporation whom they represent is not. Several features of Part 5 of the OC Act, which deals with committees, point to the conclusion that only natural persons are capable of being committee members and that RA itself was not a committee member.
6. First, committee members must make decisions. They do so by attending meetings, voting at meetings or voting by ballot. A corporation itself is not capable of doing any of those things. Only a natural person can physically attend a meeting, express a vote or mark a ballot paper.
7. Secondly, as Mr Whitten pointed out in RA's supplementary written submission, the wording of section 117 itself contains personal possessive adjectives "his or her", and personal pronouns "himself or herself", not "it" or "itself". The section does not leave any room for its application to a person other than a natural person.
8. Thirdly, while a lot owner may nominate for election (section 103(4)) and RA is a lot owner, it did not do so in this case because the persons who became members of the committee (as is not in dispute) were its proxy-holders, not RA itself.
9. Admittedly there is one curious provision in Part 5 that might point the other way. Section 103(7) provides that if a lot owner is in arrears for any fees, and the lot owner or a proxy for a lot owner is a member of the committee, "the lot owner is suspended as a member of the committee until the amount is paid". It does not provide for a proxy-holder to be suspended. Arguably it implies that when there is a proxy member of the committee both the lot owner and the proxy-holder are members. I doubt that it does. I think that all it means is that the unfinancial lot owner is not capable of having a proxy on the committee.
10. My conclusion that the claim that RA breached the duty imposed by section 117 is untenable opens the way for an order to be made under section 75 Victorian Civil and Administrative Tribunal Act 1998.
11. As an alternative to the summary dismissal of the entire proceeding (which I have already decided cannot occur) RA has sought an order striking out paragraphs 22-25 of the Amended Points of Claim and paragraphs D and E of the claim for relief in the Amended Points of Claim.
12. Paragraph 22 alleges that at the time the committee resolved to approve the Building Management Agreement the four members named in the paragraph were office bearers of RA or of a company related to it. Paragraph 23 alleges that RA was "represented" in the committee by those four. Paragraph 24 makes allegations against "the majority", namely, those four committee members. The allegations include that they failed to advise lot owners of "their conflict of interest" and that they knew that RA could gain an advantage if they voted as they did.
13. Those paragraphs form the basis for further allegations that the conduct created a breach of duty and that RA was in breach of that duty. That second allegation is untenable. But the paragraphs fulfil another purpose. They allege facts which would be relevant to the contention that an administrator for the owners corporation ought to be appointed. The argument that the committee, being dominated by members who held proxies for one substantial lot owner, was improperly making decisions that favoured that lot owner, is one that could legitimately be made in favour of the contention. I am not suggesting that it would be decisive or even important. But Mr Noonan is entitled to make it.
14. For those reasons I shall not strike out paragraphs 22, 23 or 24 of the Amended Points of Claim.
15. Paragraph 25 is in a different position. It makes allegations against RA: that it, "by its agents and proxies and officers", failed "as a member of the committee" to act in good faith and to exercise due care and diligence, and made improper use "as a member of the committee" to gain an advantage for itself. As a matter of law, the allegation is untenable. Similar allegations made against the individual committee members may have had a point for the purpose of the contention that an administrator should be appointed. But the particular allegations made in paragraph 25 have no such point. They support only the untenable claim that RA had and breached a duty, as a committee member, to Mr. Noonan. Within the terms of section 75(1) of the VCAT Act, that claim is misconceived and lacking in substance. Paragraph 25 of the Amended Points of Claim will be struck out.
16. Paragraph D of the claim for relief seeks an order that RA "pay equitable compensation for breach of its/their fiduciary duties and obligations". Since the only such duties alleged are those of a committee member, the claim for relief is hopeless because the claim on which it is based is untenable. Paragraph D will be struck out.
17. Paragraph E of the claim for relief seeks an order that RA "provide a taking of accounts". The only thing that could explain such a claim for relief is the allegation of breach by RA of a fiduciary duty, that such a breach invites equitable remedies and that an order for the taking of accounts is one such remedy. Mr McCullagh did not offer any other explanation. So this claim for relief is, like paragraph D, linked to the untenable claim. It will be struck out.
18. I accept Mr Whitten's submission, contained in RA's supplementary written submission, that there is another reason why a claim for a monetary remedy for breach of duty as a committee member is bound to fail. It is because a committee member has an immunity from liability. Section 118 of the OC Act provides:

(1) A member of a committee or a sub-committee is not personally liable for anything done or omitted to be done in good faith -

(a) in the exercise of a power or the carrying out of a function under this Act or the regulations; or

(b) in the reasonable belief that the act or omission was in the exercise of a power or the carrying out of a function under this Act or the regulations.

(2) Any liability resulting from an act or omission that, but for sub-section (1), would attach to a person, attaches instead to the owners corporation.

1. Accordingly, even if it were tenable to claim that RA was a committee member and breached a committee member's duty, section 118 would save it from any liability to pay compensation, equitable or otherwise. Alternatively, if it were tenable to claim that RA had a legal responsibility for its proxy-holders' breaches of duty as committee members, it would be impossible to contend that although section 118 protect the proxy-holders against liability it did not protect RA.
2. I shall order that paragraph 25, and paragraphs D and E in the claim for relief, in the Amended Points of Claim are struck out.

1. The grievance expressed in the Amended Points of Claim about the renewal of the Common Property Lease in June 2010 is that, once RA notified the owners corporation of its exercise of the option to renew, "[t]he acceptance of the exercise of the option occurred in the absence of any resolution of the committee or any resolution, special or general, of [the owners corporation]" (paragraph 12). Paragraph A of the claim for relief claims "[a] declaration that the acceptance of the exercise of the option ... is void".
2. While the proper characterisation of an option to renew a lease is not completely clear, the most authoritative statement about it in Victoria is that the option "constitutes an offer to grant a further term which the lessor is contractually precluded from withdrawing so long as the option remains exercisable": B S Stillwell & Co Pty Ltd v Budget Rent-a-Car System Pty Ltd [1990] VicRp 52; [1990] VR 589 at 594, per O'Bryan J with whom the other members of the Court apparently agreed. Once the lessee exercises the option, while being entitled to do so, an agreement for a new lease is thereby created: Sudbrook Trading Estate Ltd v Eggleton [1982] 3 A11 ER 1 at 5. The option is the offer. The exercise of the option is the acceptance of the offer.
3. Because the agreement is created, and the lessor is obliged to grant a new lease for the further term, as soon as the option is exercised, there is no occasion for the lessor to "accept", or not accept, the exercise of the option.
4. Matters are different if the lessor wants to claim that the option was not exercisable because (for example) there was some default on the part of the lessee which meant, under the terms of the lease, that the option could not be exercised, or because (for another example) the purported exercise of the option was outside the time limit allowed under the terms of the lease for the exercise. Nevertheless, in those circumstances the lessor is not deciding, and cannot decide, whether to "accept" the exercise. Instead, the lessor may decide to challenge the lessee's right to a new lease by alleging that it was not open to the lessee to exercise it.
5. There is no allegation in the Amended Points of Claim that RA did not have the right to exercise the option to renew by giving notice of exercise when it did. Rather, the allegation is that the committee of the owners corporation "accepted" the exercise but did so in an improper manner, in the absence of a resolution. The allegation reflects the misconception that an acceptance by the owners corporation was needed before the Common Property Lease was validly renewed.
6. It follows that I consider that, within the terms of section 75(1) of the VCAT Act, the claim about the renewal of the Common Property Lease is misconceived and lacks substance.
7. It is not appropriate, however, for me to strike out parts of the Amended Points of Claim that relate to that claim, because RA has made no application for an order to that effect and has made no submission to me that I should do so. Unlike the position that RA took in relation to the Breach of Duty dispute, the application expressed no fall-back position asking that particular paragraphs be struck out in the event that I declined (as I do) to dismiss the entire proceeding. So, insofar as the Amended Points of Claim raise the Common Property Lease issue, I shall leave them alone.

1. Changes of respondent. At the beginning of these reasons I described the owners corporation as the first respondent to the proceeding and RA as the second respondent. The description is correct as far as it goes, but the history of the proceeding tells a more complicated story. To avoid any possible confusion in future I think I should summarise the story.
2. When Mr Noonan filed his initiating application in this proceeding he named only one respondent, "The Knight Alliance", which he alleged was the manager of the owners corporation. By a Tribunal order dated 18 August 2010 made at a directions hearing the owners corporation was joined as a second respondent. By a second Tribunal order dated 16 November 2010 the name of the first respondent was corrected to Dymond Cowan Pty Ltd trading as The Knight Alliance. By a third Tribunal order dated 13 April 2011, made by consent, the claim against Dymond Cowan Pty Ltd was dismissed, RA was joined as a "third respondent", and Mr Noonan was directed to file and serve Amended Points of Claim, which he did. They named the owners corporation as the first respondent and RA as the second respondent.
3. Should the owners corporation be a respondent? In paragraphs 21 to 28 above I have described how, as a result of amendments to the OC Act which commenced operation on 24 August 2011, Mr Noonan is entitled to pursue a proceeding "on behalf of" the owners corporation even though he is attacking the validity of contracts made between the owners corporation and RA. He is not entitled to pursue such a proceeding in any other capacity, in my view. I raise for the parties' consideration whether in the circumstances it is appropriate for the owners corporation to remain in the proceeding as a respondent. It does not seem right that an applicant who is making a claim "on behalf of" an owners corporation should express that claim as one against the owners corporation. It may be more appropriate for the owners corporation to be joined as an interested party under section 60 of the VCAT Act as well as under section 75.
4. Other VCAT Act sections. RA's summary dismissal application was expressed to have been made under section 78 and section 80 of the VCAT Act as well as under section 75.
5. Mr Whitten mentioned section 78 only in passing. It does not assist RA. It applies only if the Tribunal concludes that Mr Noonan is "conducting the proceeding" in a way that unnecessarily disadvantages RA. As the examples of unnecessarily disadvantageous conduct set out in section 78(1)(a) to (g) demonstrate, the section is concerned with the behaviour of a party in the course of a proceeding, not with the nature or weakness of a claim expressed in a document in the proceeding. Making an untenable claim is not engaging in disadvantageous conduct for the purposes of section 78.
6. As to the calling in aid of section 80, I do not understand it and there was no submission in support of it. The section deals only with the Tribunal's power to give directions in a proceeding.

1. I shall order that paragraph 25, and paragraphs D and E in the claim for relief, of the Amended Points of Claim are struck out. Otherwise RA's application will be dismissed.
2. There shall be a further directions hearing, before me, at which the parties may indicate what procedural steps they submit should be taken in the light of my decision.