Owners Units Plan No 783 v Hausfeld - [2014] ACAT 53

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

OWNERS UNITS PLAN No 783 v HAUSFELD & ORS
(Unit Titles) [2014] ACAT 53

UT 14/01
Catchwords: UNIT TITLES - interim order - strike out application – resolution of owners corporation to instal water meters to each unit – respondents not consenting to sign agreement with ACTEW Water – managing agent representing the owners corporation in Tribunal proceedings – interface between the Legal Profession Act 2006 and the ACT Civil and Administrative Tribunal Act 2008 with regard to legal representation – the ACAT Act allows a person to be represented by someone else other than a legal practitioner – legal costs and disbursements incurred by owners corporation means costs and disbursements relating to legal representation - legal representation can refer to representation in legal proceedings by a non-lawyer
Legislation:ACT Civil and Administrative Tribunal Act 2008, s 30
Legal Profession Act 2006, ss 8 and 16
Unit Titles (Management) Act 2011, s 129 and schedule 2 (clause 2.5)

Tribunal: Mr C.G. Chenoweth – Senior Member

Date of Orders: 13 August 2014
Date of Reasons for Decision: 13 August 2014

ACT CIVIL AND ADMINISTRATIVE TRIBUNAL UT 14/01
BETWEEN:
THE OWNERS UNITS PLAN No 783
Applicant

AND:
STEVEN HAUSFELD
First Respondent

AND:
VICTOR ZAPPIA
Second Respondent

AND:
ATHINA PAZOLLI
Third Respondent

TRIBUNAL: Mr C.G. Chenoweth – Senior Member

DATE:13 August 2014
ORDER

The Tribunal Orders that:

The application dated 16 April 2014 filed by the respondents is dismissed.
The applicant is by 25 August 2014 to file in the Tribunal and serve on the other parties the statement of any witnesses to be called, any further outline of submissions and a list of any authorities relied upon.
The respondents are by 8 September 2014 to file in the Tribunal and serve on the other parties the statements of any witnesses to be called, any further outline of submissions and a list of any authorities relied upon.
The matter is to be set down for hearing on a date to be notified to the parties by the registry.

………………………………..
Ms L. Crebbin – General President
For and on behalf of
Mr C.G. Chenoweth – Senior Member

REASONS FOR DECISION

On 18 March 2014, an application was filed in the tribunal by Mr Jarrod Smith of Ray White Property Management, as the representative of the executive committee (“committee”) of the owners corporation of the applicant (“corporation”). The application was against the respondents as owners of two units in a block of eight units situated at Bruce in the ACT (“the property”). The application sought orders under section 129 of the Unit Titles (Management) Act 2011 (“UTM Act”) for orders in relation to the proposed installation of individual water meters at the units at the property.
The orders sought were firstly that the respondents each signify in writing their agreement to have a water meter installed by ACTEW Water (“AW”) at their respective units, and secondly an order that they adhere to the conditions set out in the AW forms and conditions of supply. An order was also sought requiring the respondents to refrain from conduct or behaviour that would cause AW to refuse to approve individual water meters for the units at the property, or to subsequently revoke such approval. A further order was sought for any other order that the tribunal considered necessary or convenient to resolve the dispute.
The application follows a long-running concern by the committee about the increases in water consumption at the property. At the present time there is a single meter for the whole block of units, and (presumably) unit holders are charged in accordance with their unit entitlement.
On 15 December 2010, an extraordinary general meeting of the owners considered a resolution that the owners corporation be permitted to install at the expense of the body corporate, individual water meters to each unit within the complex. There were six votes in favour of the resolution and two against.
A notice of meeting for the annual general meeting of the owners to be held on 30 July 2013 included the following motion:
"That Corporation consent be granted to the Owners Corporation to install individual water meters to each unit using funds from the Sinking Fund, the motion to proceed by way of a Special Resolution, in accordance with the circulated papers and in accordance with any law in force in the Territory."
It appears that the resolution was passed at that meeting.
The first respondent is the owner of a unit. The second and third respondents jointly own another unit. Although it is not in evidence it may be presumed for the purposes of this application that they were the ones who voted against the resolution.
It is a condition of AW proceeding to install individual water meters at a unit title property that each of the owners separately agree to the installation. They must also sign the appropriate letter with AW, agreeing to the installation of the meter, agreeing to pay for the costs of water and agreeing not to do anything to impede the reading of the meters. If such consent is not obtained from all individual unit owners, then installation of individual water meters can not go ahead. The failure of the respondents to agree to the installation of meters has meant that there remains one water meter for the whole of the property because the conditions of AW have not been satisfied.
Mr Smith filed an affidavit in this matter dated 18 March 2014, stating that he had been authorised by the corporation to represent it in its application. Annexed to this were the minutes of the committee meeting of 20 January 2014. Those minutes authorised "Ray White as the Managing Agent" to represent the executive committee on behalf of the corporation at the tribunal. Ray White is a business name of a real estate agency with which Mr Smith is associated. No objection was taken to the form of affidavit, or to his representation on this ground. It would have been appropriate for the committee minutes to have named Mr Smith as an individual as the representative, and for him to file an affidavit setting out his relationship with the agent. However, leave could be granted by the Tribunal to amend this technical deficiency if the matter arises.
The first respondent objected to the application by a document filed with the Tribunal on 2 April 2014. The response alleged that the application was incompetent having been commenced contrary to the UTM Act and that there was no power for a corporation to bind the conscience of individual owners or to force individual owners to take on a legal obligation that they did not previously have. The response also maintained that the proposal would involve the destruction of common utility infrastructure contrary to the corporation's responsibility to maintain infrastructure, and that the application was premature, as there had been no published plan of the proposed works.
The second and third respondents also filed a response to the application dated 4 April 2014. They contended that an application to require the respondents to enter into an individual agreement with which they did not agree was beyond the power of the Tribunal, that there were risks to the unit owners that were not specified, that there may be a reduction in water pressure in the area, and that there had been a failure to disclose important facts to the members of the corporation when they voted on the issue. The response also contended that there had been a failure to disclose plans of the installation, or give details of disruptions or advice about who would repair any destruction.
The matter came before the Tribunal (Member Mary-Therese Daniel) on 11 April 2014. All three of the respondents were present. The first respondent objected to Mr Smith representing the corporation, on the basis this breached the Legal Profession Act 2006 (“LP Act”). Considerable discussion took place as to the capacity of Mr Smith to represent the corporation on that ground. Other matters were raised which have become issues in the present application.
Directions were made requiring the first respondent to file an application setting out the orders sought in relation to representation of the applicant and in relation to the jurisdiction of the Tribunal, together with any documents to be relied upon. The corporation was given leave to respond to any such submissions.
An application was filed by the first respondent on 15 April 2014. The application sought a striking out of the original application, on the basis that the proceedings were commenced without any ordinary resolution of the corporation and without a recent reasonable estimate from the corporation’s legal representative that the costs of the proceedings would not be more than $6000. The application also sought an order for costs against the members of the committee individually.
When that application came on for hearing before me, the first respondent indicated that no objection was now taken to the representation of the corporation by Mr Smith. While the original submissions to Member Daniel had been that such representation would be unlawful, that issue was not pursued and no objection was taken by the first respondent to the representation of the corporation by a person who was not an Australian legal practitioner within the meaning of section 8 of the LP Act (“practitioner”). The remaining grounds of the application were argued.
Notwithstanding that the point taken originally before Member Daniel was abandoned in the written application, the tribunal considers that it is important to set out its view as to why such a point, if taken as a matter of principle in other proceedings, cannot be upheld.
The LP Act provides a comprehensive scheme for the admission, regulation and discipline of practitioners who are engaged in interactions with the public. Included in this scheme are detailed provisions relating to the handling of other people's money through the trust account obligations, and the enforcement of proper standards in practice through the disciplinary process. It also protects the range of titles of practitioners, and preserves to practitioners certain work undertaken for reward that has the effect of creating binding relationships between people. It has long been recognised that to allow those without the skills and qualification to undertake this work is not in the public interest.
Those people who are registered real estate agents and members of their staff are subject to a similar registration and disciplinary processes. They also deal with the funds of their clients, and it has also been recognised in relation to this profession that it is important to ensure that proper standards are maintained through the registration and disciplinary processes.
Section 16 (1) of the LP Act reserves certain legal work to those who are registered as practitioners by their professional bodies. This process of registration follows their admission as Australian lawyers by their respective Supreme Courts or by mutual recognition. The LP Act provides that a person commits an offence if the person engages in legal practice in the territory, “not being an Australian legal practitioner”. An example of engaging in legal practice in the notes to the section includes "acting as advocate for someone in the proceeding before a court or tribunal." It is a defence to a prosecution under subsection (1) if the person proves that they did not engage in legal practice for fee, gain or reward. Subsection (3) provides that subsection (1) does not apply to engaging in legal practice where this occurs under a Territory law or a law of the Commonwealth.
Section 30 of the ACT Civil and Administrative Tribunal Act 2008 ("ACAT Act") provides in section 30 as follows:
A person may, in relation to an application before the tribunal, appear in person or be represented by a lawyer or someone else (other than a person prescribed under the rules.)
It is common practice in matters in this tribunal, particularly in relation to residential tenancies and unit titles matters, for owners corporations and owners of properties to be represented by real estate agents. Such representation is frequently provided for in the engagement contracts between owners or owner corporations and those agents. There is no prohibition in section 30 of the ACAT Act against the person doing so for fee or reward. For the Tribunal to uphold an argument that such a course of conduct amounted to criminal conduct on behalf of the agent would not only be a major change to the way in which the tribunal's business is conducted, but also would have inadvertently exposed agents who were providing the service to their clients to the risk of criminal prosecution.
As far as the Tribunal is aware, the matter has not been raised before. It should also be noted that the appearance under the ACAT Act is limited to matters before the tribunal, where the tribunal itself is able to control and if necessary exclude a person from representing another. This capacity to control what work is undertaken and how it is done would not apply to an interaction between a person in a private capacity doing legal work for another outside of the court or tribunal system – hence, the general prohibition in the LP Act.
There is no merit in the argument that a real estate agent or indeed any other person may not represent another in the proceedings before the tribunal. The provisions of the LP Act referred to above clearly contemplate that a court or tribunal may allow such representation where it is permitted by its own legislation. This is the case with the tribunal. There is no limitation in the ACAT Act as to the basis upon which that approval may be given, beyond the ordinary power of a court or tribunal to regulate its own procedures.
It is not necessary that in order to allow such representation, there should be an equivalent section in any enabling legislation which gives to the tribunal the power to deal with the matter. Once the tribunal is seized of the matter under enabling legislation, the way in which it conducts those proceedings and the representation that it allows is properly a matter for its own legislation and procedures.
The principal ground upon which the application for striking out has been made is that the committee has failed to comply with the provisions of part 2.1 of schedule 2 of the UTM Act. The relevant provision is clause 2.5, which provides as follows:
2.5Decisions about taking legal action
(1)   This section applies if the executive committee proposes to take legal action.
(2)   The executive committee of an owners corporation must not take legal action on behalf of the owners corporation unless—
(a)    the legal action relates to the payment of a contribution under the Act by a member of the corporation to the corporation; or
(b)    the costs of taking the legal action are reasonably estimated by the corporation’s legal representative to be not more than the amount prescribed by regulation; or
(c)    the corporation approves taking the legal action by ordinary resolution.
NoteSection 2.6 allows urgent legal action to be taken.
(3)   For this section, the executive committee of an owners corporation takes legal action if the committee—
(a)    begins a proceeding; or
(b)    begins to defend a proceeding; or
(c)    continues, or continues to defend, a proceeding.
(4)   In this section:
costs, of taking legal action, means the legal costs and disbursements incurred by the owners corporation for its legal representation for the legal action.
Subparagraph 2(b) of paragraph 2.5 requires as a preliminary step to commencing litigation that the committee be given an estimate of the costs of taking legal action prior to commencing the proceedings. "Costs" is defined as the “legal costs and disbursements incurred by the owners corporation for its legal representation for the legal action.”
There were several arguments raised by the first respondent in support of his submissions. Firstly, the use of the expression "corporation’s legal representative" in paragraph 2.5 (2) (b) should refer to a practitioner, and not simply the costs of the person (whether or not a practitioner) who is representing the corporation pursuant to section 30 of the ACAT Act. Secondly, the definition of “costs", by using the word "legal" in defining the costs and disbursements, should be taken to mean the costs payable to a practitioner.
"Legal representative" is not defined in the UTM Act, nor in the LP Act. In circumstances where a party is permitted to be represented by a person other than a practitioner, to read the phrase "legal representative" as referring only to a practitioner is an unduly restrictive interpretation of that term. A person may be legally entitled to represent another, and to put submissions or agree to a resolution of disputes binding on the person appointing them, whether or not they are a practitioner. A legal representative may be a person acting under a power of attorney, or through appointment as a guardian. Further, to adopt the interpretation sought by the first respondent would be to require that in disputes of this nature a party must appoint only a practitioner to act for it, or engage someone else to act on a voluntary basis.
The effect of this interpretation may be to increase the costs of proceedings to an owners corporation if they are to be excluded from engaging competent, albeit lower cost, representation in a case where the tribunal’s rules allowed such representation.
If the phrase was limited to the costs of a practitioner, then an unintended effect would be that the costs of anyone else lawfully representing the corporation would not be subject to the requirement for an estimate before proceedings were commenced. This would reduce the obligations on the executive – obligations which are there for the protection of unit holders as a whole.
It was acknowledged by the first respondent that when one looks at the definition of “costs" at the end of paragraph 2.5, had the expression "legal costs and disbursements" simply referred to "costs and disbursements”, then there could be no objection to the party paying the costs of some person representing them other than a practitioner, subject in all cases to the costs not exceeding the limits imposed by the UTM Act.
In circumstances where the tribunal’s legislation permits representation by someone other than a practitioner as the legal representative of a party to proceedings in the tribunal, to restrict the expression in the UTM Act in the way contended for by the first respondent is, in the Tribunal's view, an impractical narrowing of the ordinary use of the words. If the phrase “costs and disbursements” in the definition of "costs" can in appropriate circumstances refer to representation in legal proceedings by someone other than an practitioner, then similarly, the phrase "legal costs and disbursements" should properly be taken to mean the costs and disbursements relating to that legal representation, rather than some other service or activity.
I am satisfied that the committee received advice prior to the institution of the application about the level of costs and disbursements that they would incur, and that they were provided by the person who was properly appointed by the committee as the legal representative for the purposes of the proceedings. It follows that the provisions of paragraph 2.5 of the second schedule to the UTM Act have been complied with.
Having regard to the conclusions that I have reached on the proper interpretation of the terms in the UTM Act, the principal ground for the striking out of the proceedings as set out in the application under consideration is not made out. It follows that there is no basis for ordering costs against the members of the executive committee personally.
The application of 16 April 2014 filed by the respondents is dismissed.

I will make directions in the formal order for the steps necessary to proceed to a hearing of the substantive issue.

………………………………..
Ms L. Crebbin – General President
For and on behalf of
Mr C.G. Chenoweth – Senior Member