Now that I have spent time living with issues arising from apartment subdivisions and common ownership, I am meeting people with similar problems. Those problems were to be expected, but that does not make them any less annoying. People on the receiving end need to seek comfort and support from others similarly placed. To that end, I set out a draft legal document that may crystallize a common area of dispute.

Betty Smith

Applicant

and

The Manager Pty Ltd

Respondent

Statement of Dispute

1. The applicant (Smith) is the owner of a unit at 1White St, Whoop Whoop (the unit), and she has been registered as the proprietor of that unit since A/B/2022.
2. The unit is in a subdivision (the subdivision), for which the owners corporation under the Owners Corporation Act 2006 (the act) is Body Corporate Pty Ltd (the corporation).
3. The respondent is and was at all times material a company incorporated in Victoria (the manager), and the manager of the subdivision, within the meaning of that term in the act, pursuant to an instrument executed by the corporation and the manager on A/B/2022.
4. X,Y and Z are and were at all times material the members of the committee of the corporation.
5. Under and pursuant to the provisions of ss 4,5, 6 and 23 of the act, the corporation has the function and power to levy annual fees to lot owners in the subdivision.
6. In carrying out that function or exercising that power, the corporation must act honestly and in good faith, and must exercise due care and diligence.
7. The corporation owes such duties to the lot owners in the subdivision.  (S 10 (1) and s 11 of the act are predicated on the assumption that lot owners are members of an owners corporation.)
8. Under and pursuant to s 117 of the act, the members of the committee must act honestly and in good faith; they must exercise due care and diligence; and they must act in the interests of the owners corporation.
9. Under the general law and s 122 of the act, the manager must act honestly and in good faith in the performance of its functions; and it must exercise due care and diligence in the performance of those functions.  (The statutory duties are express in the act.  They also arise from the general law of agency and of fiduciary obligations owed by people who hold positions of both trust and confidence.)
10. Further, the instrument of appointment of the manager stipulates that the manager must ‘generally implement the decisions and instructions of the Owners Corporation with respect to its duties and functions as set out in this clause.’
11. The manager owes those duties to both the corporation and to the lot owners, including Smith.
12. Further, or alternatively, by virtue of s 162 (c) and s 163 (1A) of the act, Smith is able to apply to VCAT on behalf of the corporation and as against the manager in order to resolve the dispute below.
13. To the extent that the instrument of delegation of functions or powers from the corporation to the manager purports to avoid, vary, or nullify the statutory duties alleged above, it is (a) beyond the power of the grantors of the purported delegation to do so; and (b) contrary to public policy; and it is therefore void on each such ground.
14. Smith is involved in a dispute with the corporation and the manager(the dispute.) (It is contained in or evidenced by correspondence common to the three parties from A/B/2023 and continuing.)
15. The dispute relates to: (a) the amount of a levy alleged to be owed by Smith to the corporation in respect of a liability for a levy alleged to have been incurred by the previous owner of the unit; (b) the adequacy of the accounts kept by or on behalf of the corporation as required by s 33 of the act; and (c) the functions and obligations of the corporation and the manager in dealing with the dispute, and seeking to resolve it without litigation.
16. On A/B/2023, Smith met with A of the committee to seek to resolve the dispute, and in the course of that meeting, Smith suggested a mode of compromise of the dispute.
17. On the following day, the manager told both Smith and the corporation that the dispute was ‘private’ and that the corporation should not deal directly with Smith in relation to the dispute, but leave everything to it.
18. The corporation by its committee has accepted that contention of the agent and has refused to engage in any further discussion with Smith about the dispute.
19. On the same day, the principal of the manager informed Smith that he would instruct solicitors to prepare proceedings against Smith, presumably in the name of the corporation, in respect of the debt alleged in the course of the dispute.
20. In order to determine whether it was in the interests of the corporation as a whole for the corporation to bring an action at law, either in a court or this tribunal, to recover the alleged debt, the corporation would by its committee have to determine the cost and benefits of such litigation, and the possible impact of that litigation and a public airing of other matters arising in the dispute. 
21. The corporation would by its committee have to consider the possible impact of such litigation on the reputation of the subdivision as whole and the investment values of the lot owners including Smith.
22. The corporation and the manager have different interests in dealing with a dispute such as this dispute.  While both are subject to similar obligations to lot owners, the manager is engaged to make a profit in the ordinary course of its business.  That is not so for the corporation, or the members of the committee, who are appointed on an honorary basis, and who have the necessary knowledge of the lot owners and their interests.  S 13 of the act expressly forbids an owners corporation to carry on a business. Smith also refers to s 120 (2) of the act requiring the manager to report to the committee as required by the committee.
23. Smith contends that in order properly to discharge its obligations to lot owners, the corporation must retain control of its interests in the dispute and exhaust discussions with Smith aimed at trying to resolve the dispute.  (S 11 of the act provides that an owners corporation is to be managed  by or under the direction of the lot owners.  Smith here refers to the requirements in the act of a resolution before an owners corporation embarks on litigation and to the provisions of s 167 (1) (c) of the act requiring VCAT to consider the impact of a proposed resolution on the lot owners as a whole.  Under the general law, Smith contends that it is wrong for an agent to dictate to its principal how it should deal with its counterparty, and it is not appropriate for a committee of management of a corporation to be seen to giving such powers in a dispute to the manager.)
24. On the grounds of those allegations, Smith contends that the manager has breached the obligations owed to her and the corporation to act in good faith and with due diligence.
25. As a result, Smith is aggrieved and asks for the remedy below.

AND the applicant claims: an order under s 165 of the act requiring the manager to refrain from advising or instructing the corporation not to deal directly with Smith in this or any similar dispute.

AND such further remedy or relief as to VCAT seems fair.