High Court Rules on Dissenting Unit Owners’ Votes17 October 2016 | General
Community titled lots are now a popular form of property holding in Queensland. One of the challenges is that lot owners do not always agree on everything. Some proposals to the body corporate can only be passed by a resolution without dissent. This means the motion will only pass if there are no votes against it.
Practically, it can be a very difficult task to pass a resolution without dissent because a single vote against will result in the motion failing. For this reason, section 276 and Item 10 in Schedule 5 of the Body Corporate and Community Management Act 1997 (Qld) (the Act) provide a mechanism for overriding such a vote in certain situations - an adjudicator may order that the motion be approved if the opposition to the proposal was unreasonable in the circumstances.
The High Court recently considered the relevant provisions of the Act in the case of Ainsworth v Albrecht. The case involved a protracted dispute between lot owners at the Viridian Noosa Residences complex over one lot owner’s wish to combine two balconies into one deck.
Facts of the case
Viridian Noosa Residences is a residential community titles scheme which includes semi-detached dwellings and common property. One of the lot owners, Mr Albrecht, wished to combine two balconies into one deck. To achieve this he sought exclusive use of the common property airspace between the two existing balconies. Mr Albrecht’s motion, which could only be passed by a resolution without dissent, was defeated as it was opposed by seven other lot owners. Mr Albrecht sought an order from an adjudicator that his motion be approved.
The adjudicator based her decision on section 94 of the Act, which requires a body corporate to “act reasonably in anything it does” in carrying out its functions. She found in favour of Mr Albrecht, stating that although the opposing lot owners may have acted in good faith and in genuine reliance on professional advice, the opposition to the proposal was unreasonable and therefore the resulting body corporate decision (not to pass the motion) was unreasonable. A number of appeals then followed, all the way up to the High Court.
The High Court’s decision
The High Court found in favour of the lot owners opposing the motion. In reaching this conclusion, it held that the adjudicator’s focus on section 94 had “skewed her approach” to resolving the dispute. The Court held the correct approach was to focus on section 276 and Schedule 5. Framed in that way, the question for determination was whether the opposition to the proposal was unreasonable, not whether the decision of the body corporate (in rejecting the motion) was unreasonable.
On these particular facts and based on the evidence given, the Court found Mr Albrecht’s proposal was sufficient to create a reasonable apprehension that it would adversely affect the opponents’ property rights and in those circumstances, the opposition could not be found to be unreasonable.
There are a number of key points to take from this decision.
- The test for overturning a failed motion requiring a resolution without dissent is whether the opposition to the motion was unreasonable in the circumstances. It is not whether the outcome of the vote was a reasonable balancing of competing considerations.
- Whether opposition to a motion is unreasonable will depend on the particular facts.
- Whilst each case will depend on its own facts, the High Court noted the following would be examples of unreasonable opposition:
- (a) opposition to proposals that could not, on any rational view, adversely affect the material enjoyment of an opponent’s property rights; and
- (b) opposition promoted by spite, ill-will, or a desire for attention.
For further information on this topic, or if you have any questions regarding community titles schemes, please contact a member of our Property & Commercial team.