Owners Corporation Act (OC Act): recovery of levies by owners corporation (OC) for misappropriations of levies by manager and additional misappropriations by another intermediary. Forensic reconstruction of financial records 2015 to 2019 due to no records delivered up by manager and due to levies being paid by
the intermediary to the OC manager in lump sums, without attribution to individual lots. Fee Notices ultimately issued for recovery of substantial deficiencies based on lot liability after adjustments in process of reconstruction of financial records. Applicant seeks to recover amounts paid under protest under Fee
Notice issued for recovery of deficiencies and/or set off such amounts against levies alleged to have been paid previously to the OC manager. Applicant’s claim dismissed.
Allegations that the OC adopted improper methodology in reconstruction of ledgers and accounts;
allegations of dishonesty and fraudulent behaviour against the OC directly, and against OC as principal of its agent; applicant’s reliance on s151 OC Act certificate issued by misappropriating agent manager to asset due payment by applicant of all levies. Agency: liability of OC as principal for acts of its manager as agent where fraudulent misappropriations. Whether knowledge of agent’s misappropriation is imputed to principal. The principal’s liability rests not
on imputation of the agent’s knowledge but triggered because the agent does an act: Dollars & Sense Finance Ltd v Nathan [2008] 2 NZLR 557.
Loss suffered, where two innocent parties to a misappropriations of levies, is loss of the principal. Constructive receipt of levies by principal upon payment by third party to misappropriating agent: South Melbourne Permanent Building and Investment Society and Deposit Institute v Field (1893) 19 VLR 213 at
218. Misleading or deceptive conduct where failure to take sufficient care of own interests: ACCC V
Dukemaster Pty Ltd [2009] FCA 682. Whether estoppel available against principal seeking to disavow false statements in s151 certificates issued
by agent. Requirement to prove unconscionability: Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. Effect of fraud on a claim of estoppel, no imputation to the principal of the subjective dishonesty or state of mind of the agent: Portland Downs Pastoral Co Pty Ltd v Great Northern Developments Pty Ltd
[2012] QCA 18. Standard of proof necessary to establish fraud: Briginshaw v Briginshaw 60 CLR 336; [1938] HCA 34. Circumstantial evidence (Doney v The Queen (1990) 171 CLR 207) and inferential reasoning (Jones v Great Western Railway Co. [1930] 144 LT 19), to determine that certain records are false and statements of
the OC manager untrue.

O’Reilly v Owners Corporation PS318104R (Owners Corporations) [2022] VCAT 590 (27 May 2022)