We will start this update with a quote. Donald Rumsfeld (the then US Secretary of Defence) once said:
‘There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.’
What has this got to do with bodies corporate you ask? The context is bodies corporate not getting legal advice on issues that are actually important to them.
A recent decision by the Queensland Civil and Administrative Tribunal (QCAT) has highlighted the risks involved with self-representation in strata disputes.
Aside from debt recovery, QCAT has two roles in strata law:
- Dealing with ‘complex’ disputes (ie caretaking and letting disputes).
- Hearing appeals against orders made by adjudicators.
Most strata disputes begin in the Commissioner’s Office. This is a jurisdiction designed to encourage self-representation and to that end:
- Lawyers are very rarely allowed to take part in any conciliation.
- There is a very limited ability for a successful party to recover their costs.
The more limited role of lawyers is notionally balanced by requiring adjudicators to take a proactive approach by making their own investigations into the dispute. What normally happens with legal proceedings is that the judge will rule on the arguments advanced by each side, but not proactively investigate them. An adjudicator under the BCCM Act is obliged to investigate a case, as opposed to simply rule on the arguments before it. This should give some assurance that the adjudicator will get to the bottom of things. However, a recent decision from QCAT shows the risks with this approach.
The decision concerned an appeal against an adjudicator’s order that a by-law prohibiting pets in a building was unreasonable. Shortly before the hearing of the appeal, the body corporate’ s barrister wanted to raise a new and important legal argument about whether the adjudicator was even entitled to rule the by-law was unreasonable.
The body corporate was not allowed to raise this new argument, even though it may have shown an error of law. QCAT made some significant findings:
- Parties are bound by the conduct of their case before the Commissioner’s Office – they cannot raise new arguments during an appeal other than in the most exceptional circumstances.
- The requirement of an adjudicator to investigate the application is discharged by parties being given the opportunity to make submissions.
What does this mean? Our view is:
- If you disagree with an adjudicator’s order, an appeal to QCAT does not give you another ‘ bite at the cherry’.
- Appeals are to determine whether the adjudicator made an error of law having regard to the material before them. The material before an adjudicator includes all of the evidence and legal arguments.
- The onus is on each party to make their best case to the Commissioner’s Office, even if they are not sophisticated.
- A party cannot rely on an adjudicator to make their case for them or even be aware of every legal argument that could be made.
We are seeing an increasing trend in committees preparing their own submissions on matters before the Commissioner’s Office or even engaging their body corporate manager to do it for them.
In an ideal world, this should be encouraged as a cost-efficient way to deal with disputes. However, it seems to us that the ideals behind the dispute resolution process set out in the legislation have been read down.
The lessons you can learn from this are to be very careful about those Rumsfeldian ‘unknown unknowns’.
- For body corporate managers – be very careful when preparing submissions on behalf of your committees. It could be seen as giving legal advice (which carries its own risks) and you may be putting your reputation at stake on legal matters beyond your expertise. What happens if you do not cover all the things you should?
- For committees – get legal advice as early as possible if the outcome is important to you. Any litigation (even in a low cost jurisdiction) should be treated with the importance it deserves.
Legal advice on a commissioner’s application should not be treated as an unnecessary luxury. If you are going to make or respond to an application, make sure you do it properly.