Victorian Civil and Administrative Tribunal|2012-05-01

Owners Corporation No 1579 v Giurina (Owners Corporation) [2012] VCAT 643 (1 May 2012)

Termination of the appointment of an Owners Corporation Manager, contractual provision for termination did not exclude other rights of termination, whether the Owners Corporation resolved to terminate the appointment, former manager's duty to return records and funds, Owners Corporations Act 2006 ss 122(1) & (2), failure to deal properly with trust money, Tribunal's jurisdiction where proceedings issued in the name of the Owners Corporation without a special resolution, Owners Corporations Act 2006 s18(1), Tribunal's power to amend an irregular proceeding, standing of lot owners to sue manager, attempt to deceive the Tribunal,

Owners Corporation No 1579 v Giurina (Owners Corporation) [2012] VCAT 643

The Tribunal declares that the management agreement between the Respondent and the First Applicant dated 12 December 2004 was terminated on 24 July 2011.

The Tribunal declares that in acting as manager, the Respondent -

(a) breached his duties to the First Applicant as trustee of the sum of $8,000.00 by mixing that trust money with his own funds;

(b) breached his duties under section 122(2) of the Owners Corporations Act 2006 by failing to account separately for the money held by him for the First Applicant;

(c) breached his duties under section 122(1)(c ) of the Owners Corporations Act 2006 by failing to pay his contribution of $2,000.00 to the First Applicant despite requiring the other Lot owners to do so;

(d) breached his duties under section 122(1)(b) of the Owners Corporations Act 2006 by failing to disclose to the other Lot owners the Court proceedings issued against the First Applicant, and by settling those proceedings without obtaining approval from the Applicants.

The Tribunal declares that the Respondent breached paragraph 7 of the Order made 25 April 2012.

The Tribunal declares that the Respondent attempted to deceive the Tribunal within the meaning of section 78(1)(e) of the Victorian Civil and Administrative Tribunal Act 1998 ('VCAT Act'), by preparing and causing to be filed correspondence in April 2012 which purported to be the withdrawal of the proceeding by the Applicant.

The Respondent shall return to the secretary of the First Applicant, Maria Picone all records relating to the First Applicant and all funds of the First Applicant held or controlled by the Respondent.

The Respondent shall give to the secretary of the First Applicant, Marie Picone, all documents which are necessary to remove the Respondent as signatory to the ANZ Bank account BSB 013 270 Account number 582 169 534.

The Owners Corporation affects a residential property in which there are five Lots.

Following an Order made on 4 April 2012, the named Applicants are the Owners Corporation, and three Lot owners Ms Ricotta, Ms Picone and Ms New.

Mr Giurina, the Respondent, says he is the 'owner' of Lot 4, within the meaning of the Owners Corporations Act 2006 ('OC Act'). The registered proprietor is Mr Giurina's deceased grandmother, of whose Estate he is sole executor. Mr Giurina did not produce any evidence of having been granted Probate.

Mr Giurina says he is the 'owner' of Lot 4, because s 3 of the OC Act adopts the definition of that word in the Subdivision Act 1988, which includes -

a person who is empowered by or under an Act to execute a transfer of the land.

The named Applicants did not contest Mr Giurina's status as an owner.

Mr Giurina was appointed manager of the Owners Corporation on 12 December 2004.

Ms Ricotta, Ms Picone and Ms New seek an Order which declares that Mr Giurina has been removed as manager, and consequential Orders that Mr Giurina deliver up the records of the Owners Corporation and transfer control of its bank account.

Mr Giurina opposes the application, both on grounds which might be described as 'the merits', as he argues that he his best placed to manage the Owners Corporation, and on a series of technical legal arguments that relate to the named Applicants' standing to sue and the Tribunal's jurisdiction to hear the case. These technical arguments require careful analysis.

The proceeding had been listed for hearing on 4 April 2012. The Order made that day shows that Mr Giurina had not served certain documents on the Owners Corporation, which at that point was the sole Applicant, and that by agreement a Mediation was conducted in lieu of a contested hearing. The matter did not settle and some procedural / timetable Orders were made. Paragraph 7 of the Order required Mr Giurina, by 25 April 2012, to -

obtain from the ANZ Bank and provide to the (Owners Corporation) copies of statements of account for the bank account held with the ANZ Bank in the name of (the Owners Corporation) or similar, for the period 1 January 2010 to date.

At the hearing before me, Ms Ricotta and Ms Picone gave evidence.

Mr Giurina made submissions on the effect of various provisions of the OC Act, and gave evidence. It must be said that his own evidence established that Mr Giurina had failed, in his actions as manager, to comply with the OC Act. Because of this, his legal submissions are of great importance to his defence.

Mr Giurina said his occupations were in management, and as a qualified but non-practising lawyer.

(a) must act honestly and in good faith in the performance of the manager's functions; and

(b) must exercise due care and diligence in the performance of the manager's functions; and

indirectly, an advantage personally or for any other person.

(a) holds all money held on behalf of an owners corporation on trust for the owners corporation; and

(b) must account separately for the money held for each owners corporation by the manager.

Mr Giurina gave evidence that the building company Johns Lyng Group had performed work for the Owners Corporation pursuant to an insurance claim. Johns Lyng Group had completed its work in 2010 but Mr Giurina considered that there were defects in its work.

In the context of that building work, the Owners Corporation through Mr Giurina as manager, had obtained a 'contribution' from the four other Lot owners of $2,000.00 each. Mr Giurina drew a distinction between a 'levy' and a 'contribution' which he did not explain. Mr Giurina had not deposited any of the $8,000.00 in the Owners Corporation's bank account at the ANZ Bank - of which he was sole signatory - but instead deposited it in his own bank account. Nor did Mr Giurina pay the Owners Corporation his contribution of $2,000.00, instead saying that he had that money set aside within his own finances and could pay it when it was called for.

Mr Giurina breached his fiduciary duties as trustee of the Owners Corporation's money and his express statutory obligations, by mixing trust money with his own funds. Mr Giurina's assertion that he could pay his $2,000.00 when it was called for is disingenuous when, as manager, he would be the one to call for it. The conflict of interests is plain to see.

Mr Giurina gave evidence that Johns Lyng Group sued the Owners Corporation and himself. He did not disclose the litigation to any other Lot owner. Mr Giurina filed a Defence on behalf of both defendants. On 2 April 2012 he consented to Judgment for $7,000.00 plus costs of $2,324.26 with a stay of one month that expired on 2 May 2012. That consent was given 2 days before the Tribunal hearing on 4 April 2012, but Mr Giurina did not disclose it until the hearing before me on 1 May 2012. Mr Giurina gave evidence that he did not propose to pay Johns Lyng Group the judgment debt on 2 May 2012, but would seek to negotiate instalments by alleging that Johns Lyng Group's work is defective. It seems likely, though, that the Owners Corporation will be estopped from asserting such a claim against Johns Lyng Group.

When Mr Giurina was asked in cross-examination whether he felt that the other Lot owners deserved to know that the Owners Corporation had been sued, Mr Giurina did not answer in the affirmative. He answered that 'it falls between', and that he did not want to burden the other Lot owners with the knowledge of the litigation. When it was put to Mr Giurina that the other Lot owners had expressly asked him to inform them about the affairs of their Owners Corporation, so that he knew that they would want to know about the litigation, he did not answer. When asked if it was fair not to disclose the information to the other Lot owners, Mr Giurina said that he wasn't sure. These answers reflect poorly on Mr Giurina's understanding of his legal obligations as manager.

As to paragraph 7 of the Order made 4 April 2012, Mr Giurina did not produce any bank statements. His evidence in that respect was unbelievable. He said that the ANZ Bank cannot produce records in relation to the account. The account is not one to which a passbook or cheque book are issued. There is a deposit book, which Mr Giurina did not produce. Mr Giurina was asked to concede that the ANZ Bank had records of the account, to which Mr Giurina answered that he 'could not say'. He said he had telephoned the ANZ Bank two weeks before the hearing, not noting the name of the bank's officer and not keeping a record of the conversation, but had not received any records. When asked how he, as the signatory to the account, would know how much money was held in the account Mr Giurina answered that the account holder would have to ask the Bank but that he had not done so.

I repeat that Mr Giurina gave evidence that he was a lawyer. For a lawyer to suggest that a bank cannot produce records in relation to a bank account, and to fail to even concede that the bank had records of the account, is nonsensical_._ I do not accept that evidence.

It was only after giving that evidence that Mr Giurina disclosed that he had not deposited the $8,000.00 in the ANZ Bank account.

On 11 April 2012 the Tribunal received a letter, which was executed by the seal of the Owners Corporation, with an illegible signature in black pen appearing above the typed words 'Witnessed by authorised agent'. The letter said:

... the Owners Corporation...seeks leave to withdraw the above application without any order as to costs. The Owners Corporation has notified the Respondent in writing of the withdrawal and he has consented ... His letter of consent is attached.

Accompanying the letter was indeed a letter from Mr Giurina, signed legibly in blue pen, which said:

I consent to the withdrawal of the application ... and that no order be made as to costs.

The return addresses on the two letters were different, and the handwritten signatures were different and in different pens.

Mr Giurina gave evidence that he had written both letters, and that he had not disclosed either to any other Lot owner.

As it happens, the letters came to the attention of the solicitor for the Applicants, who wrote to the Tribunal explaining that they had not come from the Owners Corporation.

Mr Giurina says that he was justified in sending the letters because his technical arguments result in him being the rightful controller of the Owners Corporation entitled to send the letters, and because it was in the best interests of the Owners Corporation for the proceeding to be withdrawn.

I do not consider that Mr Giurina's conduct was justified. I find that by sending the letters Mr Giurina attempted to deceive the Tribunal within the meaning of s 78(1)(e) of the Victorian Civil and Administrative Tribunal Act 1998 ('VCAT Act').

If this was a case about who should be manager, to be decided purely on the quality of the management services on offer, I would have no hesitation in finding against Mr Giurina. He breached his duties as a trustee. He breached his duties under s 122(2) of the OC Act. He kept secret the existence of litigation against both himself and the Owners Corporation, and then kept secret the fact of his having consented to judgment being entered against the Owners Corporation. He breached paragraph 7 of the Order made 4 April 2012 and gave nonsensical evidence in relation to bank records. He pretended, as 'Applicant', to withdraw the proceeding and then 'consented' to that bogus withdrawal. That Mr Giurina is a lawyer makes his misconduct all the more serious, because it cannot have been undertaken as a result of ignorance. Mr Giurina has blatantly disregarded his legal obligations.

I turn now to Mr Giurina's technical defences. Mr Giurina filed three written submissions and expanded on them orally. The first submission also incorporated by reference the contents of a letter that Mr Giurina had written on 2 April 2012 in support of an unsuccessful application to strike out the proceeding under s 75 of the VCAT Act. The submissions were to the following effect.

1 The claim in the Application is for an Order declaring Mr Giurina's management agreement void.

VCAT Application forms are set out to contain spaces where text can be written and in the form of multiple-choice questions. Unlike initiating process in Courts, there is no requirement to file a Statement of Claim.

Paragraph 5 asks, "How is (the respondent) involved with the Owners Corporation?" and has been answered "Dismissed manager. Claims to be legal representative of owner of Unit number 4".

Paragraph 11 asks, "What do you want VCAT to do?" and by the ticking of boxes has been answered "Order a party to do something. Order a party to comply with the Act, Regulations or Rules. Declare whether a contract or agreement is or is not void".

Paragraph 11 has been further answered by the inclusion of this text: "Order Respondent to comply with section 127 (of the OC Act) - manager to return records. Order Respondent to hand over all financial documentation and funds pertaining to (the) Owners Corporation, including bank statements and paid / unpaid invoices".

Paragraph 15 asks the applicant to give an outline of the history of the dispute, and in this part of the Application the Applicant alleged that in a special general meeting on 24 July 2011 a majority decision was made to terminate Mr Giurina's services as manager. It was also alleged that the decision to terminate was based on the fact that $2,000.00 per Lot had been collected but that Johns Lyng Group had written a letter of demand, and that Mr Giurina was refusing to produce any documentation whatsoever.

In his submission, Mr Giurina has emphasised the word 'void' in the answer to paragraph 11. It is of significance in Mr Giurina's submissions numbered 6, 9, 11 and 13 below.

2 The management agreement has not been terminated.

The management agreement is a contract dated 12 December 2004, signed by Mr Giurina and two former Lot owners. Clause 10.1 states that:

This Agreement shall terminate on the death, mental incapacity or resignation of (Mr Giurina).

Mr Giurina submits that the agreement can only be terminated under that clause. As none of those events have occurred, the management agreement is still extant.

In clause 8.9 of the management agreement, the Owners Corporation warranted that it had the authority to enter into that agreement.

By clause 6.2, the Owners Corporation is prohibited from employing or contracting with a person to perform services which Mr Giurina is empowered to perform. Thus, the Owners Corporation's retainer of a professional manager is forbidden and void.

3 The Owners Corporation did not resolve to terminate the management agreement.

The Special General Meeting relied upon by the named Applicants was invalid. The management agreement provides that Mr Giurina would chair meetings, and as he did not chair that meeting it became a mere discussion. In that discussion many things were said, but no-one put a resolution and there was no vote.

Another meeting was held on 24 July 2011. Both Ms New and Mr Giurina sought to chair the meeting; there was no agreement reached on who would be the chair; accordingly no 'meeting' commenced and whatever was discussed had no consequence at law. Ms Ricotta, Ms Picone and Ms New were all in arrears and could not vote, under s 94 of the OC Act.

4 The Owners Corporation did not resolve, by special resolution, to commence this proceeding. This is mandatory under s 18(1) of the OC Act.

The absence of a special resolution renders the VCAT proceeding a nullity. The Tribunal had no power to make its Order on 4 April 2012, including the Order allowing the joinder of further applicants. The Tribunal committed a jurisdictional error in making that Order.

5 The 11 April 2012 letter withdrew the VCAT proceeding.

6 A declaration that the management agreement is void would prejudice the Owners Corporation.

Because Mr Giurina has overseen building work on the common property, and the Owners Corporation still has rights to sue for defective work, if Mr Giurina's management agreement is found to be void the Owners Corporation could lose its rights to enforce the building contract.

Similarly, the Owners Corporation could lose its rights under insurance policies which Mr Giurina procured, as manager.

7 If any Lot owners wanted to sue, they should indemnify the Owners Corporation and Mr Giurina.

It is not in the Owners Corporation's interests to prosecute this case. If Ms Ricotta, Ms Picone and Ms New wish to sue as individual Lot owners they should be required to give indemnities to the Owners Corporation and Mr Giurina, supported by first ranking security.

Mr Charles New was given leave to represent the named Applicants. As he is the father of Ms New, it is a breach of natural justice for him to act for the Owners Corporation.

The management agreement was signed in 2004, before the enactment of the OC Act. Thus, the Tribunal does not have jurisdiction to declare that the management agreement is void, because in 2004 VCAT did not have jurisdiction in relation to bodies corporate.

10 Ms Ricotta, Ms Picone and Ms New do not have standing to sue.

The decisions of the Tribunal in Camilleri & Others v Oldroyd & Others [2011] VCAT 279, and Wynden Pty Ltd & Others v Owners Corporation PS 431248H & Another [2010] VCAT 1683 and the rule in Foss v Harbottle [1843] EngR 478 are relied upon.

11 Section 163(1A) of the OC Act does not give Ms Ricotta, Ms Picone and Ms New standing to sue.

The Order made 4 April 2012 permitted the joinder of Applicants, but whilst Ms Ricotta, Ms Picone and Ms New were joined under that Order, they have only sued on their own behalf and not on behalf of the Owners Corporation.

Further, as the VCAT proceeding was defective because it had been purportedly issued without the Owners Corporation having passed a special resolution under s 18(1) of the OC Act, the joinder of parties to the proceeding is itself defective.

Finally, s 163(1A) of the OC Act is inapplicable because the claim for an Order declaring Mr Giurina's management agreement void is not an 'owners corporation dispute' as defined by the OC Act.

12 Were their Applications on behalf of the Owners Corporation, section 165(1)(ba) of the OC Act would not empower the Tribunal to authorise Ms Ricotta, Ms Picone and Ms New to sue on behalf of the Owners Corporation.

Because s 165(1) confines the Tribunal to making orders which are fair, and because it is not in the Owners Corporation's interests to remove Mr Giurina as manager because of the high quality of his services, the Tribunal could not make such an order.

13 As the claim in the Application is for an Order declaring Mr Giurina's management agreement void, the relevant law is that in place when the management agreement was signed - the Subdivision Act 1988.

That Act empowered bodies corporate to execute contracts and so the management agreement cannot be void. Further, VCAT does not have jurisdiction under the Subdivision Act 1988.

14 Regulation 310 of the Subdivision (Body Corporate) Regulations 2001 empowered bodies corporate to delegate their functions. The Owners Corporation delegated all of its functions to Mr Giurina.

Thus, no-one other than Mr Giurina could cause the Owners Corporation to sue. He has not done so.

Because during Mr Giurina's tenure as manager rectifying building work has been performed, which has repaired the properties of Ms New and Ms Picone, it would be unfair for them to take that benefit of Mr Giurina's efforts and then challenge the validity of the management agreement.

Discussion and conclusions on Mr Giurina's submissions

I will deal with these submissions, but not necessarily in the order in which Mr Giurina presented them.

The fundamental issues are jurisdiction and standing. If the Tribunal lacks jurisdiction the whole proceeding falls away.

(1) Subject to subsection (2), an owners corporation must not bring legal proceedings unless it is authorised by special resolution to do so.

(2) A special resolution is not required for an application to VCAT under Part 11 to recover fees and other money or to enforce the rules of the owners corporation.

I do not accept Mr Giurina's characterisation of this case as being one in which the whole focus is on whether the management agreement is void. In paragraph 11 of its Application, the Owners Corporation sought an Order that Mr Giurina 'hand over all financial documentation and funds'. Mr Giurina has admitted depositing $8,000.00 of the Owners Corporation's money, which the OC Act requires to be held in trust, in his own account.

I have considered whether s 18(2) relieves the Owners Corporation of the necessity to pass a special resolution, on the basis that the claim is for 'other money'. However, I have concluded that a special resolution is required. I conclude that the word 'fees' colours the subsequent words 'and other money'. Section 18(2) is referring to claims by Owners Corporations against Lot owners for fees, and for claims of that kind. It does not refer to the claims in this case.

In paragraph 6 of the VCAT Application, the Owners Corporation disclosed that it had not passed a special resolution to commence the proceeding.

Nevertheless, the proceeding was commenced. A filing fee was paid, a proceeding number issued and a file created. There may have been an irregularity in the proceeding, but the proceeding itself was not a nullity. The proceeding has been in existence since it was issued on 21 February 2012 and it will remain in existence until a final order is made.

The Tribunal could make Orders in the proceeding. Irregularities in proceedings may be cured by amendment, and, of course, the amendment is made in an Order. Apart from making an amending order, the Tribunal could, for example, on finding that the Owners Corporation had not complied with s 18(1), make orders for costs against the persons responsible for filing the Application.

There is no doubt that the proceeding existed on 4 April 2012, when the Order was made giving:

leave to the (Owners Corporation) to amend the claim, including by joining further applicants to the application.

Pursuant to that Order, Ms Ricotta, Ms Picone and Ms New filed a document on 18 April 2012 in which they stated:

We ... apply to be joined as Applicants in this proceeding pursuant to leave granted ... 4 April 2012.

They did not file a 'statement of claim' as they may have done in a Court proceeding, but the Order of 4 April 2012 did not require them to.

Mr Guirana's arguments about the effect of the above document are essentially semantic.

The Order contemplates the joinder of parties to the Application. The Application included a claim that Mr Giurina 'hand over all financial documentation and funds' of the Owners Corporation to the Owners Corporation. Ms Ricotta, Ms Picone and Ms New's document was obviously intended to join them to the Application. What else could the document mean?

As individual Lot owners, Ms Ricotta, Ms Picone and Ms New are entitled to issue legal proceedings without 'resolving' to do so.

If, as Mr Guirana submitted, they became parties to the Application in their own capacity, did they have standing to do so? Of course they did.

Sections 162 and 163 of the OC Act include the following -

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 -

163 Who may apply to VCAT in relation to a dispute?

(1) Any of the following persons may apply to VCAT to resolve an owners corporation dispute -

The claim that Mr Giurina 'hand over all financial documentation and funds' of the Owners Corporation to the Owners Corporation, and Mr Giurina's opposition to doing so, is undoubtedly 'an owners corporation dispute' concerning the exercise of a function by a manager, falling within s 162. Ms Ricotta, Ms Picone and Ms New are Lot owners, who have standing under s 163(1)(b).

Mr Giurina's reliance on the rule in Foss v Harbottle and the Tribunal's decisions in Camilleri and Wynden is misplaced.

It is convenient to refer to the decision in Camilleri, which quoted Wynden. At paragraphs 25 and 26 of Camilleri, Senior Member Megay - after referring to ss 122 and 162 of the OC Act to which I referred above - said:

Once again I quote from the decision of Senior Member Vassie in Wynden with whose views I respectfully agree.

... section 122(1) does not identify any person or persons to whom are owed the duties which the section imposes. Certainly the manager must owe those duties to the owners corporation which appointed it. I see no reason why a manager does not owe the duties to each lot owner as well as to the owners corporation. Thus I see no reason why an individual lot owner cannot bring a proceeding against a manager based upon alleged breach of those duties ...

In consequence of his reasoning Senior Member Vassie considered that the applicants in his proceeding had standing to pursue a cause of action for breach of the duties identified in section 122(1) and for orders for relief requiring the owners corporation to perform certain obligations. Senior Member Vassie went on to state however that it was more difficult for those applicants, as individual lot owners, to challenge and seek the setting aside of contracts into which the owners corporation had entered, or to seek orders requiring the owners corporation to enforce contracts, because of the rule in Foss v Harbottle [1843] EngR 478; (1843) 2 Hare 461. [emphasis added]

Mr Giurina has, with respect, misunderstood the decisions in Camilleri and Wynden. This proceeding is not one in which individual lot owners seek orders in relation to contracts between the Owners Corporation and third parties. It concerns alleged breaches of duty by the manager, which is precisely the sort of case that Camilleri and Wynden said could be brought by a Lot owner.

It is unnecessary, then, to consider whether Ms Ricotta, Ms Picone and Ms New were seeking to sue on behalf of the Owners Corporation under s 163(1A) of the OC Act, and thus whether the Tribunal could authorise them to do so under s 165(1)(ba).

I note in passing though that Mr Giurina's submission that it would not be fair to make an order under s 165(1)(ba) self-evidently made Mr Giurina judge in his own cause, which is not how the Tribunal would approach the question of whether to make an Order under that section.

I am satisfied that the Tribunal has jurisdiction and that Ms Ricotta, Ms Picone and Ms New have standing.

I reject Mr Giurina's ninth submission, that the date of the management contract is relevant to the Tribunal's jurisdiction. Section 162 of the OC Act confers jurisdiction to determine an owners corporation dispute. The date of the dispute may be relevant, but the date on which the contract was made is irrelevant. Similarly, I reject Mr Giurina's thirteenth submission. That the Owners Corporation had power, in 2004, to enter into a contract does not prevent the Owners Corporation from terminating that contract subsequently. Logically, if the thirteenth submission was correct, no contract could ever be terminated: there could only be a contract if the parties had the power to enter it, and the fact that they had that power would make the contract interminable. It is an absurd submission.

Mr Giurina has misinterpreted clause 10.1 of the management agreement. Termination provisions are not unusual in contracts. Building contracts, for example, commonly contain machinery provisions under which the service of notices can bring about termination pursuant to the contract.

Such provisions add to the parties' common law rights. They do not remove them.

Clause 10.1 (which in any event does not say that 'This Agreement shall ONLY terminate ...') merely sets out three circumstances in which the agreement would be terminated. It does not prevent the agreement being terminated by other means.

At the very least Mr Giurina's misconduct as manager, particularly his misapplication of trust money, his failure to make his own contribution, and his concealment of the Johns Lyng Group litigation from the Lot owners, constituted a repudiation of the management agreement by him. The commencement of this VCAT proceeding was the acceptance of that repudiation.

However, before then the Special General Meeting of the Owners Corporation was held on 24 July 2011. Ms Picone prepared minutes. Paragraphs 7 8, 10 and 11 said:

Ms Ricotta advised that she had obtained the additional two quotes for external Owners Corporation manager (as discussed in previous meeting). In that meeting they had a majority vote to arrange an external Owners Corporation manager. Mr Giurina did not recall this vote being taken. Mr Giurina said there had been a discussion, but not a vote. The others agreed it had been a vote, called the vote again, and again a majority voted for external manager. As Mr Giurina was opposed to an external manager, he opted not to participate in selection of a company from the three quotes obtained by Ms Ricotta and Ms New. Mr Giurina stated that votes by all present were invalid as fees had not been paid. Ms New reported she had not received notice of fees for 2011. She also stated that given the lack of transparency with bank account, she Ms Ricotta and Ms Picone had requested that bank statements be presented prior to additional fees being paid. All present agreed to pay on receipt of copy bank statements. Ms Ricotta stated she lacked confidence in Mr Giurina representing owners' interests adequately. Ms New supported this.

The Tribunal must consider the substance of a matter, not its form. Read in the context of an Owners Corporation for a small residential complex, and not a publicly listed company, the above records a decision of the Owners Corporation to retain an external manager, to replace Mr Giurina.

The OC Act is not overly proscriptive in its provisions on resolutions. It defines special and unanimous resolutions by reference to how many votes are obtained [see ss 7(2)(a) and 96], but it does not direct itself to the style in which a resolution is drafted, or state that there is a need for a resolution to be 'moved', 'seconded' or the like. Section 81 of the OC Act sets out requirements for the Minutes of a meeting, and sub-section 81(f) says the Minutes must record:

(f) the text of all resolutions of the owners corporation made at the general meeting.

No doubt a Minute which stated that, 'It was resolved that ...' may be easier to construe than Minutes expressed in a narrative style, but in my view, paragraphs 7, 8, 10 and 11 of the above Minutes record a resolution that Mr Giurina cease to act as manager and that Strata Connect be appointed.

Four of the five Lot owners were present. Three of them voted in favour, which amounts to a simple majority. The OC Act does not require a resolution to terminate a management agreement to be passed by special resolution [see ss 23(3) and (4), 52 and 53 for situations requiring a special resolution], and an ordinary resolution can be passed by a simple majority on a show of hands [s 92].

I find that the Owners Corporation resolved on 24 July 2011 to terminate the management agreement.

Returning to Mr Giurina's submission that the management agreement 'cannot' be terminated, if he takes the view that the termination on 24 July 2011 was a breach by the Owners Corporation of that agreement, he could sue for damages.

The extraordinary correspondence purporting to withdraw the VCAT proceeding was ineffective. The termination of the management agreement withdrew any entitlement that Mr Giurina might have had to write a letter seeking a withdrawal of the proceeding. It was improper for Mr Giurina to write those letters.

Prejudicing the Owners Corporation's rights under the building contract and insurance policies; natural justice; estoppel

There was no basis for any of these submissions.

As the contracting party, the Owners Corporation maintains its rights under those contracts regardless of who is its manager.

The Applicants' choice of representative has no connection with Mr Giurina's right to natural justice.

Ms New and Ms Picone are not estopped from bringing this Application. The elements of estoppel have not been made out.

In the circumstances, I make the Orders sought by the Applicants. I will reserve the Applicants' costs of the proceeding.

Subdivision (Body Corporate) Regulations 2001

Owners Corporation No 1579 v Giurina

At a glance

Court

Decision date

Source

Judgment (146 paragraphs)

Owners Corporation No 1579 v Giurina (Owners Corporation) [2012] VCAT 643 (1 May 2012)

Parties

Legislation Cited (1)