This article about the Viridian Decision and the body corporate’s duty to act reasonably has been supplied by Mario Esera, HWL Ebsworth.
Ainsworth v Albrecht  HCA 40 (12 October 2016)
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A few months ago, I wrote an article about the Court of Appeal’s decision in Albrecht v Ainsworth & Ors  QCA 220 (6 November 2015).
Earlier this week, the High Court of Australia overturned that decision, effectively bringing to an end a 5-year-long balcony dispute. The High Court’s decision will no doubt come as a huge relief to Bodies Corporate in Queensland, in particular those concerned about whether a decision they made was a “reasonable” one.
Viridian Noosa Residences is an architectural award-winning community titles scheme at Noosa Heads (“Viridian”).
Sometime around March 2011, a lot owner at Viridian, Martin Albrecht, decided that he wanted to extend the deck area of his property (“Balcony”). To create the Balcony, however, it was established that he required the Body Corporate for Viridian (“Body Corporate”) to approve it at a general meeting by way of a resolution without dissent – meaning no lot owner could vote against it.
On 10 August 2012, the Body Corporate considered a motion to approve the Balcony (“Motion”). The Motion failed to carry because several lot owners at Viridian voted against it.
Mr Albrecht complained to an adjudicator for the Commissioner for Body Corporate and Community Management (“Adjudicator”). He argued that owners at Viridian had acted “unreasonably” when they voted against the Motion. On 2 September 2013, the Adjudicator found that the Body Corporate had acted unreasonably and deemed the Motion approved – meaning Mr Albrecht could have his Balcony (“Decision”).
However, several lot owners at Viridian (“Viridian Owners”) appealed the Decision to the Queensland Civil and Administrative Appeals Tribunal (“Appeals Tribunal”). On 17 October 2014, the Appeals Tribunal overturned the Decision, stating (amongst other things) that it had the effect of “overriding the will of a substantial majority of owners at Viridian”.
Mr Albrecht appealed to the Queensland Court of Appeal. On 6 November 2015, the Court of Appeal found that the Decision was not wrong in law and, therefore, that the Appeals Tribunal was not entitled to set it aside (“Court of Appeal Decision”).
Mr Ainsworth and others appealed the Court of Appeal Decision to the High Court. On 12 October 2016, the High Court overturned the Court of Appeal Decision, effectively restoring the original decision of the Body Corporate made over 4 years earlier.
What does it mean to act “Reasonably”?
Bodies Corporate have an overriding obligation to act “reasonably”. But what does that actually mean? The High Court summed it up best as follows:
“ … opposition to a proposal that could not, on any rational view, adversely affect the material enjoyment of an opponent’s property rights may be seen to be unreasonable. Opposition prompted by spite, or ill-will, or a desire for attention, may be seen to be unreasonable in the circumstances of a particular case. But, as is apparent from the foregoing reasons, the adjudicator, the Tribunal and the Court of Appeal all appreciated that this is not such a case.
 The proposal in question was apt to create a reasonable apprehension that it would affect adversely the property rights of opponents of the proposal and the enjoyment of those rights. In these circumstances, opposition of the lot owners who dissented from the proposal could not be said to be unreasonable.” (emphasis added)
Here, Mr Ainsworth and others opposed the Balcony because, in their view:-
- It would adversely affect the architectural integrity of Viridian – a position supported by three separate architects;
- It may increase noise emanating from Mr Albrecht’s lot – a position supported (in part) by the architect who designed Viridian to avoid large decks; and
- It may offer Mr Albrecht greater visibility into neighbouring lots, effectively reducing the level of privacy they enjoyed.
Therefore, their decision to vote against the Motion was a reasonable one. Conversely, if their decision to vote against the Motion was based on spite or ill-will, or there was no evidence the Balcony would affect them at all, their opposition would have likely been unreasonable.
What does this decision mean?
One of the problems with the Court of Appeal Decision was that it created uncertainty for Bodies Corporate. Arguably, it created a situation where almost any decision of a Body Corporate (particularly those decided by way of a resolution without dissent) could be reversed if an Adjudicator considered that decision to be objectively unreasonable in all the circumstances .
The High Court’s ruling should mean that Bodies Corporate are able to more easily:-
- Assess whether a decision they have made is a “reasonable” one; and
- Reduce the risk of an Adjudicator reversing that decision, provided they can show it was not (for example) motivated by spite or ill-will.
If you or your Body Corporate is concerned about whether a decision you have made or about to make is “reasonable” or you simply wish to discuss the matters raised in this article, please contact me.
This post appears in Strata News #115
The photo associated with this post has been supplied by Flickr: bowdenartist – Balcony Chairs.