News

01 February 2017

Bodies Corporate obligation to act reasonably: Ainsworth v Albrecht

In the recent decision of the High Court in Ainsworth v Albrecht [2016] HCA 40 the court considered a body corporate’s decision to refuse a lot owner permission to expand the balcony of his town house.

The facts

Mr Albrecht, a lot owner within a Community Titles Scheme in Noosa Heads, wished to combine two balconies that were part of his property.  His proposal required acquiring exclusive use of the airspace between the existing balconies, about five square metres.  Accordingly a resolution without dissent from the body corporate committee was required to be passed.

The motion was considered by the body corporate at an extraordinary general meeting and was defeated, with seven lot owners of the scheme opposing the motion.

Mr Albrecht referred the matter for adjudication with the Commissioner for Body Corporate and Community Management and was successful.  The dissenting lot owners asserted that combining the two balconies would affect the overall aesthetic of the buildings and would reduce the privacy the other lot owners had.  Each of the parties adduced evidence from different architects to support their arguments.

The adjudicator considered that the outcome of the vote did not achieve a reasonable balancing of the competing considerations (i.e. it was not reasonable).

This determination was overturned on appeal to the Queensland Civil and Administrative Tribunal (“QCAT”) and subsequently reinstated by the Court of Appeal.  The dissenting lot owners then appealed to the High Court of Australia.

The issues before the courts

The issue before the courts related to the relevant provisions of the Body Corporate and Community Management Act (“the Act”), the requirement in section 94(2) that the body corporate act reasonably and the powers of adjudicators to make orders regarding disputes about resolutions without dissent.

The High Court considered that the question was not whether the decision of the body corporate was reasonable.  Instead, the appropriate question to determine was whether the dissenting lot owners’ decision to refuse the motion was unreasonable in the circumstances (as outlined in section 279(1)(a) and item 10 of schedule 5 to the Act).

Decision of the High Court

Accordingly, The High Court found that the adjudicator and the Court of Appeal erred in their approach to the question to be determined and reinstated the decision of QCAT.  The result being that Mr Albrecht could not extend his balcony.

The High Court found particularly:

  1. the adjudicator and Court of Appeal focussed on the wrong sections of the legislation;
  2. the issue was not one based in section 94(2) of the Act requiring:

2.1.  the body corporate to act reasonably; and

2.2.  consequently, a reasonable balancing of competing considerations should be achieved in the decision of the body corporate.

  1. the issue should have been framed in terms of section 279(1)(a) and item 10 of schedule 5 to the Act dealing with resolutions without dissent and requiring a determination be made as to whether the opposition to the motion was unreasonable in the circumstances;
  2. it is not the function of the adjudicator to seek to strike a reasonable balance between the competing positions of lot owners; and
  3. when considering what would be unreasonable opposition to a motion:

5.1.  there is no requirement that a lot owner assist another, at least if it may reasonably be adverse to their own interest;

5.2.  opposition will not be unreasonable if for no other reason than you might expect something in return for giving up a right;

5.3.  there is no requirement that lot owners act altruistically or sympathetically at the expense of their own interest; and

5.4.  a reasonable apprehension of adverse affects to property rights is not unreasonable.

The court went on to consider that:

  • appropriating part of common property for no return;
  • altering features of common property; and
  • risk of interference with enjoyment or privacy,

are reasonable grounds for opposition to a motion.  However, opposition may be unreasonable if it could not adversely affect the material enjoyment of opposing owners’ property rights or the opposition is prompted by spite, ill will or a bid for attention.

Conclusion

This decision provides valuable insight into the requirements of a body corporate to act reasonably.  Particularly, it highlights the different approaches to decisions of the body corporate in the context of a decision requiring a resolution without dissent.

It further shows that a decision of a lot owner to oppose such a resolution may be made in self interest, particularly where an owner is not getting any benefit in return.

Signup for all the latest news + offers

Share This

Select your desired option below to share a direct link to this page