Question: can an owners corporation claim legal professional
privilege over documents in connection with legal advice on its
books and records as against a lot owner?
The answer is yes, to an extent, but to what extent you may
The short answer is that it depends on the nature of the legal
advice. Generally speaking, if the advice was obtained in relation
to a dispute with the lot owner then the owners corporation can
claim privilege over the advice. If the advice was obtained in
relation to some other party (and it can be said that the interests
of the owners corporation and lot owner are aligned) then it is not
privileged as against the lot owner.
Swaab recently represented an owner in a dispute involving the
chairman of an owners corporation, his consultancy company and the
owners corporation. The principal proceedings involved a claim by
the lot owner that a consultancy agreement entered into between the
owners corporation and the chairman's consultancy company was
void, on the basis that there was a conflict of interest that
resulted in a breach of fiduciary duty owed by the chairman to the
As part of the proceedings, the lot owner subpoenaed documents
comprising the legal advice which had been provided to the owners
corporation regarding the consultancy agreement.
After the documents were produced, the owners corporation brought
a motion seeking to restrict access to the documents by the lot
owner on the basis of privilege.
The following is a brief summary of the principles that can be
drawn from the case regarding legal advice obtained by an owners
As a starting point, lot owners are able to inspect all
documents on the books and records of the owners corporation as a
consequence of section 108 of the Strata Schemes Management Act
Section 108 does not abrogate the common law "rights,
privileges and immunities" such as legal professional
More specifically, legal professional privilege can only be
asserted against a lot owner in circumstances where the lot owner
and the owners corporation were adversaries in relation to the
advice at the time that it was given.
It follows that privilege cannot be asserted against any other
lot owners (i.e. those lot owners who are not adversaries in
relation to the advice), who are effectively presumed to share a
common interest with the owners corporation based on the
relationship between the lot owners and the owners corporation as
described in the legislation.
In the circumstances of the case, the lot owner was entitled to
access all of the advice on the subject of the owners
corporation's proposal to enter into an agreement with the
chairman's consultancy company given prior to the commencement
of the proceedings by the lot owner because at that time all owners
(except for the chairman) shared a common interest in receiving
Nearly all disputes between lot owners and the owners corporation
(including in relation to section 108) are decided under the
dispute resolution provisions of the Strata Schemes Management Act
1996 by Adjudicators or the Consumer Trader and Tenancy Tribunal.
They are commonly disputes such as breaches of by-laws, challenging
the passing or refusal to pass by-laws, approvals (or refusals to
grant approvals) and obligations of the owners corporation for
In announcing reforms to the strata laws recently, Fair Trading
Minister, Anthony Roberts, noted that a staggering 30 per cent of
people in NSW either live or work in strata schemes. That number is
expected to grow even larger as the greater Sydney Metropolitan
area continues to rapidly expand. What that means is that an
increasing number of lot owners, developers, strata managing agents
and others will be faced with legal challenges regarding strata
issues which will inevitably result in an increased incidence of
This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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