Ainsworth v Albrecht [2016] HCA 40
Allowing an appeal by objecting lot owners from the Queensland Court of Appeal, the High Court held that under the Body Corporate and Community Management Act 1997 (Qld), as it then stood, an adjudicator asked to override the failure of a motion requiring a resolution without dissent must decide whether the dissenting owners' opposition was unreasonable, not whether the body corporate's decision was reasonable, and that the opposition in this case was not.
What the court decided
Mr Albrecht, a lot owner in a community titles scheme, wanted the exclusive use of about 5 square metres of common property airspace to join his two balconies into one deck [7]. The new exclusive use by-law required a resolution of the body corporate without dissent [8]. His motion was defeated, with seven votes for and seven against [10]. Five lot owners who opposed the motion were the appellants in the High Court, and Mr Albrecht was the first respondent [7], [18].
Mr Albrecht applied for an order under section 276 and Item 10 of Schedule 5 giving effect to the motion, on the basis that the opposition was unreasonable [11]. Item 10 allows such an order if the adjudicator is satisfied that the motion was not passed because of opposition that in the circumstances is unreasonable [17]. The adjudicator treated the dispute as one about whether the body corporate had breached its duty under section 94(2) to act reasonably [24], [26]. She was not satisfied that the body corporate acted reasonably in deciding not to pass the motion, and deemed the motion passed [28]–[29]. The Queensland Civil and Administrative Tribunal allowed an appeal on a question of law and set aside her orders [30]. The Court of Appeal (McMurdo P, Morrison JA and Martin J) allowed Mr Albrecht's appeal and set aside the Tribunal's orders, holding that the Tribunal was wrong to find an error of law [35].
French CJ, Bell, Keane and Gordon JJ, in joint reasons, held that the adjudicator and the Court of Appeal erred in law [3], [52]. The question was whether the votes of the dissenting lot owners were unreasonable, not whether the body corporate's decision was reasonable [27]. In their Honours' view, section 94(2) did not govern the matter, and the question under Item 10 concerned the quality of each dissentient owner's grounds of opposition [47]. Item 10 did not ask the adjudicator to weigh the competing positions and settle on a reasonable balance between them [48]. Their Honours contrasted Item 24 of Schedule 5, which enforces section 94(2) and looks to the decision of the general meeting [49]–[50]. The reliance by the Court of Appeal and Mr Albrecht on Waters v Public Transport Corporation [1991] HCA 49 was misplaced, because a lot owner voting against a motion is not a decision-maker of the kind considered in that case [51].
Once the Court of Appeal accepted that reasonable minds could differ on the grounds of opposition, it was impossible to see how the opposition could be found unreasonable [53]. It is no light thing to find opposition unreasonable where the resolution would give another owner the exclusive use of part of the common property for no return, alter it from its state when the objector bought and risk the objector's tranquillity or privacy [55]. Their Honours said that lot owners vote as an aspect of their proprietary rights, and that unreasonableness is judged by reference to the opposing owners' own interests under the scheme [58]. Their Honours rejected the view that an opponent acts unreasonably by failing to show sympathy or altruism to a proponent who would diminish the opponent's property rights [57].
The Court of Appeal erred in treating Mr Albrecht's legitimate interest in improving his lot, and the airspace's lack of use to anyone else, as tending to show that the opposition was unreasonable [61], [62]. An owner may reasonably insist on keeping an interest not presently used, if only because the owner may reasonably expect something in return for parting with it [62].
Their Honours declined to state exhaustively when an Item 10 order may be made [63]. They said that opposition to a proposal that could not, on any rational view, adversely affect an opponent's material enjoyment of property rights may be unreasonable, as may opposition prompted by spite or ill-will in a particular case [63]. Because the proposal could reasonably be apprehended to affect adversely the opponents' property rights and their enjoyment, their opposition could not be said to be unreasonable [64].
Nettle J agreed in the orders and applied the same test [97], [109]. In his Honour's view, reasonableness is objective, is not something on which informed views should differ, and was to be applied at the time the motion was rejected [101]. He alone added that the disharmony further similar applications might bring may itself have been a reasonable basis to oppose the motion [107].
The High Court allowed the appeal and set aside the Court of Appeal's order, except the grant of leave to appeal, in its place dismissing the appeal to that Court with costs [65]–[66]. Mr Albrecht was ordered to pay the appellants' costs in the High Court [67]. The Tribunal's orders setting aside the adjudicator's orders therefore stand [30], [66].
Why it matters
A proponent seeking exclusive use of part of the common property for no return should expect objections to be hard to characterise as unreasonable [55], [62]. Objecting owners should identify how the proposal could adversely affect their property rights and their enjoyment of them [58], [64]. The reasoning turns on the text and structure of the Queensland Act [49]–[50], [59]. Victorian legislation must be read on its own terms before this reasoning is applied in Victoria.
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