By Phillip Leaman

22 November 2019

Owners Corporations in Victoria have a legal duty to make the records of the owners corporation available for inspection at any reasonable time, free of charge to:-

  • A lot owner and a representative of a lot owner;
  • A purchaser of a lot and a representative of a purchaser of a lot;
  • A mortgagee of a lot or a representative of a mortgagee of a lot.

(“an Eligible Person”)

The proper procedure for an Eligible Person to inspect the owners corporation’s records free of charge is:-

(a) The Eligible person must make a request to the Owners Corporation for inspection of the owners corporation’s records to arrange an inspection appointment date and time (which must be reasonable);

(b) The Eligible Person must attend the place where the owners corporation’s records are kept and is then entitled to inspect the owners corporation’s records free of charge.

The Owners Corporation is not permitted to charge the Eligible Person a fee or charge for the records inspection itself.

The categories of records that an owners corporation that must keep for at least seven (7) years are:

  • The full name and address of each lot owner
  • A consolidated copy of the owners corporation’s rules
  • Minutes of meetings held by the owners corporation
  • Copies of resolutions passed by the owners corporation or its elected committee
  • Records of the results of ballots conducted by the owners corporation or its elected committee
  • Proxies (these must be kept for 12 months after the proxy expires or is revoked)
  • Voting papers or ballots relating to votes conducted by an owners corporation (these must be kept by the owners corporation for 12 months after the vote or ballot)
  • Correspondence relating to the owners corporation
  • Accounting records
  • Records of assets and liabilities
  • Financial statements
  • Income tax returns of the owners corporation and GST records (if any)
  • Insurance policies
  • Maintenance plans (if any)
  • Notices and orders served on the owners corporation by a court or tribunal or under an Act
  • Notices served by the owners corporation, including notices under Part 10
  • Contracts and agreements entered into by the owners corporation
  • Leases and licences to the owners corporation
  • Leases and licences from the owners corporation

Entitlement to Withhold

The Owners Corporation may in some situations be entitled to withhold from an inspection by an Eligible Person, documents on its records to which legal professional privilege attaches, for example where an Eligible Person and the Owners Corporation are adversaries in litigation (see the VCAT decision of Owners Corporation RP003605 v Chung (Owners Corporations) [2015] VCAT 238 (27 February 2015).

Improper Charges

If an Owners Corporation’s appointed manager fails to facilitate a records inspection by an Eligible Person free of charge, then the Owners Corporation may become vicariously liable for its appointed manager’s conduct that causes the Owners Corporation to breach its legal duty to provide free records inspections to an Eligible Person under section 146 of the Owners Corporations Act 2006.

For example, there is no basis in the Owners Corporations Act 2006 for a manager to impose a charge on an Eligible Person for a records inspection, such as ‘meeting room hire’ or ‘costs of supervision’. If a manager wishes to charge additional fees to facilitating records inspections by Eligible Persons, it should be charging those fees to the Owners Corporation with whom it has a contractual relationship, not to the Eligible Person.

Any ‘form’ that a manager makes an Eligible Person sign before they do a records inspection (which is meant to be free of charge) and which seeks to make the Eligible Person liable for costs of the inspection, will in our view be regarded as attempting to restrict or modify the duty of an owners corporation to provide records inspections free of charge, and is therefore likely legally void to that extent pursuant to section 202 of the Owners Corporations Act 2006.

Requesting copies of documents

An Owners Corporation has the power to provide a copy of any record of the owners corporation to an Eligible Person upon request, as long as the Eligible Person pays a reasonable fee.

However, the way the law is currently drafted, an Owners Corporation does not have an express positive duty to provide a copy of an owners corporation record even if the Eligible Person offers to pay the reasonable fee. There is some support from at least one VCAT decision to suggest that an Owners Corporation that unreasonably refuses to supply a copy of a record or records after there has been an offer to pay a reasonable fee by an Eligible Person might well prompt the Victorian Civil and Administrative Tribunal to make an order for provision of a copy upon application by the Eligible Person who requested a copy of the record.

An owners corporation is not allowed to charge an Eligible Person for a copy of an owners corporation record that is more than the maximum copy fees set out below.

Eligible Person

The Owners Corporations Regulations 2018 that prescribe the maximum fees for copies also imply, in our view, that the first method of provision of requested records, will be by way of electronic means (for example by sending the record to the eligible person by email). Then, if an Eligible Person also wants a printed copy of a record that has already been provided electronically, then they must pay up to 20 cents per page for that physical copy. Unfortunately, the records do not make expressly clear what maximum fee will apply if an Eligible Person wants a printed copy of a record, but not want an electronically provided record. There is room for improvement in the regulations to clarify the fees payable if the owners corporation exercises its power to provide a copy of an owners corporation to an Eligible Person.

There is nothing in the Owners Corporations Act 2006 that expressly prohibits an Eligible Person from bringing their own copying facilities to a free records inspection to enable them to make their own copies of records, instead of asking the Owners Corporation to provide such copies. There is also no express right of an Eligible Person to bring their own copying facilities, which unfortunately creates the potential for dispute over whether or not an Eligible Person is entitled to take copies of documents, using their own means, during a free records inspection.

In our view, the better legal interpretation of the law as currently drafted, is that an Eligible Person is entitled to inspect the owners corporation’s records, free of charge, and can either ask the Owners Corporation to provide a copy of a record subject to paying the required fee, or may bring their own copying facilities, and take their own copies of records at their own expense, without having to ask the Owners Corporation to provide the copy.

To prohibit an Eligible Person from taking a copy of an owners corporation record, which they are legally entitled to see anyway, and which they are entitled to request a copy of from the Owners Corporation subject to payment of a fee, is to effectively give the Owners Corporation a monopoly on copying charges, in circumstances where it has the power, but no positive duty, to provide the document requested by an Eligible Person. That is an illogical outcome that we do not consider the Victorian Parliament intended when it created the laws enabling Eligible Persons to inspect owners corporation records.

The better interpretation is that the Victorian Parliament wanted to ensure that if an Owners Corporation is asked to provide a copy of a document, that it is appropriate compensated for its administrative costs of providing that document. An Owners Corporation is not a commercial business created to profit from charging copying fees. It is a statutory body made up of the owners of the lots from time to time, and those lot owners are entitled to the transparency of being able to read and take copies of the records they wish to inform themselves of. After all, it is their financial asset that those records relate to.

 

For further questions or clarification of any of the above, please contact Phillip Leaman or a member of our Owners Corporation Team.

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