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Dealing with vexatious litigants

Thursday December 21st, 2017

2017 will be remembered as the year of countless submissions to the government for legislative change, and of the rise of vexatious lot owners who have learnt to abuse the dispute resolution service provided by the Commissioner’s Office. If 2018 is to be a happy new year for Queensland’s strata industry, both of these issues need to be addressed.

There is an increasing tendency for lot owners aggrieved with the management style of a committee to file an adjudication application in the Commissioner’s Office to air general complaints with the administration of the scheme. Quite often these applications do not raise a legal dispute. There is a difference between:

  • making a complaint about a body corporate decision between a lot owner disagrees with the decision; and
  • there being a legal defect with the decision (ie it contravenes the BCCM Act).

The Commissioner’s Office is not supposed to be used for the first type of complaint and will dismiss them. If an adjudicator dismisses an application for being frivolous, vexatious, misconceived or without substance, they can order the applicant to pay the body corporate up to $2,000 as compensation for the loss incurred in dealing with the application. $2,000 barely scratches the surface, as the costs a body corporate may incur include:

  • legal fees (one of the applications we responded to for a body corporate client comprised around 450 pages, and their reply was a further 300 pages);
  • circulating the application to all lot owners with the invitation to make submissions; and
  • the body corporate manager’s time of dealing with the application, which could be charged as an additional service under the administration agreement.

Research identified only seven costs orders made by adjudicators in 2017 so far. This is a rarity that needs to change.

Because of this limitation on cost orders, the Commissioner’s Office is perceived as a relatively risk-free forum in which to litigate. Serial complainers in strata communities treat adjudication applications as a “free kick” when they simply disagree with what the body corporate is doing.

The government-appointed legislative review team has proposed increasing the maximum costs order to $5,000. There needs to be an increased limit, or the limit needs to be removed altogether. Adjudicators should be given the power to award costs if the interests of justice require it, and the Commissioner needs the ability to declare certain persons to be “vexatious litigants” to remove their ability to make a dispute resolution application until they convince the Commissioner there is merit to it.

In The Arc Resort [2017] QBCCMCmr 206, a costs order was made against a lot owner who had submitted hundreds of pages of supporting materials in relation to 21 problems she thought existed with the common property. One of those problems was that a single thread in the carpet of a common foyer was starting to fray, so apparently it was unreasonable of the committee to not replace the entire carpeted area. The adjudicator made the costs order because the volume of material in itself was oppressive and her concerns were trivial and unsubstantial.

In Nottingham Square [2017] QBCCMCmr 110, a costs order was made against a caretaker who filed an application seeking an order that they were entitled to be a non-voting committee member and to have the same level of access to the records as any other committee member. The caretaker was legally entitled to both of these things. So why was the costs order made? The body corporate manager confirmed they were a committee member and gave them access to the records 7 days before the application was filed.

In Arila Lodge [2017] QBCCMCmr 447 and Park Square [2017] QBCCMCmr 536, costs orders were made because the lot owners persisted with their applications despite the adjudicator warning them at the interim stage that they were misconceived and without substance and they risked a costs order being made against them. The applicants did not improve their applications with any further evidence.

Grace Lawyers acted in all four of these matters. From our experience, there is no prescribed formula for getting one of these rare costs orders. They are not made simply because the applicant was wrong or not very convincing. In two of these matters, the applicant even had the benefit of a lawyer arguing their case for them.

But in all four of these cases, the committees:

  • identified the argumentative nature of the person and took legal advice well before the applications were made; and
  • let their body corporate manager take the lead in managing the correspondence, and followed their guidance.

This article was contributed by Jason Carlson – Partner, Grace Lawyers