Owners Corporation RP11571 v Walshe & Whitelock Pty Ltd (Owners Corporations) [2015] VCAT 1819

1. By 18 November 2015 the respondent must deliver to Ace Body Corporate Management of 350 King Street West Melbourne all records relating to Owners Corporation 11571 and all funds of Owners Corporation 11571 held or controlled by the respondent.
2. The respondent shall pay to the applicant $575.30 as a reimbursement of the filing fee paid by the applicant.

1. The respondent Walshe & Whitelock Pty Ltd acted as manager of the applicant owners corporation until this year when the owners corporation, by a decision of its committee, decided to terminate its appointment as manager and asked it to hand over the records and funds to a new manager, Ace Body Corporate Management. Walshe & Whitelock refused to do so, saying that the appointment had not been validly terminated and that it was still the manager. The owners corporation brought this proceeding to ask for an order under s 127 of the Owners Corporations Act 2006 ('the Act') for the return of the records and funds.
2. I heard the proceeding on 21 October 2015 and made the order sought. I gave oral reasons. I then returned to the parties the documents that they had tendered during the hearing. The documents included a written management contract between the owners corporation and Walshe & Whitelock entered into in 2009.
3. By a letter dated 4 November 2015, sent by email, Walshe & Whitelock's solicitors have asked for written reasons for the decision. I give them without being able to refer to the exact wording of the management contract. It had been expressed to be for a period of 12 months but there was a term that provided for it to be extended automatically for a further 12 months unless the owners corporation gave written notice of termination in a particular way.
4. There had been a general meeting of the owners corporation on 16 May 2015, chaired by a representative of Walshe & Whitelock. The members appointed a committee. On the same day, after the general meeting was over, the committee members met and decided to change managers. On 27 May 2015, by an email from one of the committee members, the owners corporation notified Walshe & Whitelock of the decision to terminate its appointment as manager and made the request for the delivery of the records and funds to Ace Body Corporate Management.
5. By virtue of s 11(5) of the Act the committee had the delegated power to terminate the manager's appointment, there having been no instrument or resolution within the meaning of s 11(2).
6. Ace Body Corporate Management convened a special general meeting which was held on 13 June 2015. There was no quorum. The members present resolved to ratify the committee's decision to terminate Walshe & Whitelock's appointment, but that was an interim resolution only.
7. Walshe & Whitelock maintained that there had been no valid termination and that it was still the manager, for these reasons:
   • (a) There had been no valid decision to terminate. In particular, the resolution passed at the special general meeting was invalid.
   • (b) The owners corporation had failed to follow the procedure for termination set out in the contract of appointment.
   • (c) In any event, the termination was in breach of an existing agreement for the appointment of it as manager for 12 months.
8. Walshe & Whitelock made more than one point about the validity of what was done at the special general meeting. I did not record them all, but one of them seemed to me possibly to be a good one. It was that the convening of the meeting by Act Body Corporate Management begged the question of whether it was indeed a 'manager' and entitled under s 74(d) of the Act to convene the meeting. So I did not decide that the interim resolution at the meeting to ratify the termination amounted to the decision to terminate. Instead, I decided that the committee itself had had the power to decide, and did decide, to terminate.
9. The notification to Walshe & Whitelock of the decision to terminate did not comply strictly with the procedure set out in the contract of appointment entered into in 2009. If a termination had been notified in 2009 or in 2010 - during which years there was a contractual requirement to follow that procedure - Walshe & Whitelock's second reason may well have been a good one. However, the fact that the appointment of it as manager continued, without there being a written contract, for years after 2010 did not mean that that contractual requirement continued to be binding. It had been part of an automatically renewed contract in 2010 but I was not satisfied that it remained a term of any agreement thereafter for appointment as manager. So the owners corporation was not required to follow that procedure when giving the notice of termination that it gave in 2015.
10. An owners corporation has a statutory power, under s 119(6) of the Act, to revoke the appointment of a manager. It may exercise this power effectively even if it breaks a contract of appointment when it does. The revocation may give rise to a cause of action for damages for breach of contract but is effective nevertheless.
11. Once its appointment has been terminated, the obligation of a manager under s 127 to return records and funds within 28 days is absolute.
12. Accordingly, having found that the owners corporation had terminated Walshe & Whitelock's appointment, that the owners corporation had given notice of termination and that Walshe & Whitelock had not complied with s 127 by returning the records and funds, I made the order sought.
13. As s 115C(1)(c) of the Victorian Civil and Administrative Tribunal Act 1998 required me to do in the absence of any good reason not to do so, I ordered Walshe & Whitelock to pay to the owners corporation $575.30 which was the filing fee it had paid on the application.
14. The evidence during the hearing revealed that, like many disputes between an owners corporation's members (or a majority of them) and its manager, this particular proceeding reflected personality clashes, grievances about management which were not justified, and other grievances about management which may or may not have been justifiable. None of those was to the point. My decision in no way reflected upon the competence of Walshe & Whitelock as an owners corporation manager. It simply flowed from the circumstance that the committee, for reasons good or bad, had decided to terminate the management and had done so effectively.