ACAT Decisions Test

Contents

  1. 1 The Owners Corporation
    1. 1.1 Can an owners corporation make any decision it thinks is appropriate?
    2. 1.2 Can an owners corporation delegate its powers to the executive committee?
    3. 1.3 In a mixed commercial and residential owners corporation, are owners of the commercial units members of the owners corporation?
    4. 1.4 Does an Owners corporation have to seek the reallocation of unit entitlements if units are renovated and/or extended?
    5. 1.5 Can an owner deny liability to pay levies?  Or say they did not know they had to pay levies?
    6. 1.6 Can an OC use S31 of the UT(M)A to charge all the costs of collecting unpaid levies to an owner.
  2. 2 Owners corporation decision making
    1. 2.1 Is an owners corporation member entitled to vote at an AGM or special general meeting if they owe any money to the owners corporation?
    2. 2.2 If members of an owners corporation seek a special general meeting under section 3.5 of Schedule 3 of the Unit Titles (Management) Act, do all the signatories have to be fully financial at the time they sign the request for the meeting?
    3. 2.3 Do proxies count towards a quorum?
    4. 2.4 Can you give your proxy to someone who is not a member of your owners corporation?
    5. 2.5 Can an owners corporation exclude certain people from accepting proxies?
    6. 2.6 Can an owners corporation stop proxies from voting on certain motions at AGMs?
    7. 2.7 Is an absentee vote handed to the Chair as an owner leaves an annual general meeting or special general meeting a valid vote?
    8. 2.8 If a motion is passed unopposed, can it be overturned later by a special resolution?
    9. 2.9 Is laying a new floor covering, particularly a hard floor, an erection or alteration that requires approval by an annual general meeting?
    10. 2.10 Should resolutions be put to a general meeting even though they have been lost on absentee votes?
    11. 2.11 If an owner objects to a neighbours’ proposal to erect or alter a structure, does that mean the proposer can be refused the right to bring the matter to a general meeting of the OC in accordance with the default Rules?
  3. 3 The Executive committee
    1. 3.1 Can an executive committee make any decision it thinks is appropriate?
    2. 3.2 Does an executive committee automatically delegate its powers and functions to a strata manager simply by contracting to engage a strata manager?
    3. 3.3 Can an owners corporation or an executive committee still perform a power if it has delegated that power to a strata manager? 
    4. 3.4 Is an executive committee entitled to receive a copy of the corporate register at any time it requests it?
    5. 3.5 Can an executive committee rely on general breed information in developing its pets policy or does it have to make every decision based on information about the specific animal in question?
    6. 3.6 Can executive committee rely on general expert advice or do they have to get expert advice about the issue in question?
    7. 3.7 Can an Owners corporation manager represent the Owners Corporation or the Executive committee before ACAT?
    8. 3.8 Can an OC start an action in ACAT before it issues an infringement notice against an owner?
    9. 3.9 Is an owners corporation liable to pay for work done by a former strata manager during the handover to a new strata manager? 
  4. 4 Managing the owners corporation property
    1. 4.1 If previous owners of a unit did something that caused damage to another unit, does the owner of the unit causing the damage have to remedy it?
    2. 4.2 If an owner has rectify damage caused by his unit, does he have to give the affected unit ‘new for old’? Would he get some sort of discount?
    3. 4.3 Do unit owners in mixed commercial/residential owners corporations have a right to object to commercial operations they think will cause noise, waste, security or other problems? 
    4. 4.4 Are the driveways of a units plan development subject to the road laws?
  5. 5 Insurance
    1. 5.1 Who should pay the insurance excess- the unit owner or the owners corporation?
    2. 5.2 Can the owners corporation decide not to insure certain buildings or parts of the common property?
    3. 5.3 Can an OC refuse to pay for damages to a unit that arise from the common land?
  6. 6 ACAT’s powers
    1. 6.1 Can ACAT award costs against the party that loses a case? So can an owners corporation have costs awarded against it?
    2. 6.2 Can an owner go to ACAT and claim willy nilly against anyone potentially at fault and expect ACAT to sort out who they should be claiming against and for what?
    3. 6.3 Is the monetary limit on a unit titles matter in ACAT $10,000?
    4. 6.4 Is it true that the amount of money ACAT can require one party to pay another is limited to $1,000?

The Owners Corporation

Can an owners corporation make any decision it thinks is appropriate?

No. Each member’s decision has to be reasonable and fully informed.

In Meaney and Units Plan 40, ACAT overturned the decision of an owners corporation special general meeting because it found that it was unreasonable for other owners to vote against a structures proposal based on their opinions about how it might be executed, when those opinions were not backed up by knowledge, expert advice or information about potential costs and did not give proper consideration of the lack of visual impact of the proposal.

Can an owners corporation delegate its powers to the executive committee?

Probably not.

In 1976 the owners corporation of Units Plan 116 had purported to empower the executive committee to grant special privileges over areas of the common land to unit owners.  However, the Unit Titles Ordinance 1970, s. 46 and subsequent Acts all required that any grant of a significant special privilege be agreed by the owners corporation by initially a unanimous resolution and later an unopposed resolution.

In The Owners Units Plan No 116 & Nicholson and Ors, ACAT made clear that that owners corporation did not have the power to make this delegation of its powers because the relevant ordinance at the time and later Acts all specifically required the owners corporation itself to make the decision to grant a special privilege and that the owners corporation could not override the specific requirements of the Act.   

ACAT decided that all grants of special privilege by the executive committee subsequent to this decision of the owners corporation were ultra vires, that is outside the powers of the executive committee, and consequently void.

ACAT then made orders to bring about the lawful remaking of all these decisions.

So if the executive committee is empowered to put the owners corporation’s decision into effect, the owners corporation cannot delegate its decision making power to the executive committee and has to make decisions itself.

In a mixed commercial and residential owners corporation, are owners of the commercial units members of the owners corporation?

Yes.

In Kajula Pty Limited & Units Plan No 682, ACAT affirmed at para 18 that the commercial unit holders are members of the owners corporation and are entitled to attend meetings and vote at those meetings.

Does an Owners corporation have to seek the reallocation of unit entitlements if units are renovated and/or extended?

If the extension is substantial, Possibly Yes.The executive committee must at the least consider whether it would be appropriate on equity grounds to get unit entitlements reassessed following extension of units. Refurbishment has a minimal impact on the need to reallocate unit entitlement.

Green and the Owners of Units Plan 199 (2014) was about a number of issues and ACAT discussed the matter of reallocation of unit entitlements as a side issue.

Section 146 of the Unit Titles Act 2001 provides:

(1) An owners corporation may apply to the planning and land authority for authority (a unit entitlement authority) for the amendment of the schedule of unit entitlement.

(2) The planning and land authority may, by written notice to the owners corporation, grant a unit entitlement authority if satisfied on reasonable grounds that —

(a) the application is authorised by a special resolution of the owners corporation made within 3 months before the application is made; and

(b) the amendment is necessary to reflect accurately the current relative improved values of the units, or a change in those values that is anticipated after a particular event happens. “

It is therefore open to owners corporations to decide whether the usual process of renovation and minor extensions to units are of such significance to warrant amendment of the schedule of unit entitlements.

ACAT subsequently reheard the matter of reallocation of unit entitlements alone at the original applicants instigation and decided that in the case of UP199 the OC should seek ACTPLA’s agreement to a new schedule of unit entitlements.(Green and UP199 2015) because

  • The original unit entitlements were decided on the basis of the floor size of the units and parking spaces.

  • The size of at least 2 units has been changed by the construction of extensions.

  • If the unit entitlements are not amended to reflect the relative values of the units, then some unit owners will be subsidising other unit owners.

  • The unit entitlements should be proportional to the value of each unit as determined by a Certified Practising Valuer.

  • The amendments to the unit entitlements will involve a cost that is to be borne by all unit owners but the additional cost is not a factor that outweighs the long term subsidy by some owners of others.

Can an owner deny liability to pay levies?  Or say they did not know they had to pay levies?

No.

In The Owners Units Plan No 259 and Hugh Russell Ford, ACAT affirmed that all unit owners are liable to pay levies.

Can an OC use S31 of the UT(M)A to charge all the costs of collecting unpaid levies to an owner.

No.

In UP840 and Richardson ACAT concluded

“94.       This means that it is not open to recover as a section 31 expense those expenses which can be described as a cost or expense of bringing or participating in tribunal proceedings, however it is open to seek an order for payment of such costs or expenses in appropriate cases under subsection 48(2) of the ACAT Act.”

“118.    As a general principle, section 31 of the UTM Act permits expenses of an owners corporation to be recoverable from the unit owner as a debt provided that the elements of that section are satisfied. In the ACT, because of clear provisions of the ACAT Act and Court Procedures Rules this general principle is subject to the following limitations:

(a)        Expenses incurred in bringing proceedings in the Tribunal are not recoverable under section 31 as an expense but in certain circumstances may be sought by way of an order for costs under section 48 of the ACAT Act.

(b)       Legal professional costs incurred in proceedings in the Magistrates Court may be recovered as section 31 expenses, despite no order for costs having been made, provided that those costs are ‘assessed costs’ under Part 2.7 of the Rules.”

It appears that a practice has grown up in the ACT where some managers charge all the costs of recovering unpaid levies to the defaulting unit owner, including all debt collection fees, all ACAT and Magistrates Court filing fees AND all solicitors fees.

This decision means an OC has to specifically seek an ACAT order for the repayment of reasonable costs.

In this case the OC was awarded the cost of the ACAT filing fee, the amount of interest on the late levy payments and the costs of debt collection action like letters of demand. But it was specifically not awarded the costs of engaging and instructing a solicitor and having the solicitor appear.

The costs that can be sought as a debt under S31 in a Magistrates Court matter (in this case enforcing the ACAT order to pay outstanding levies) is not the amount of the invoice tendered but the Court approved cost for the actual service supplied.

It should be noted that this decision does not seem to suggest that there is any impediment to an OC using S31 to recoup an insurance excess from a willful or negligent owner or occupier.

This case, and a number of similar actions, have been appealed to ACAT. Further information will be available in due course.

Owners corporation decision making

Is an owners corporation member entitled to vote at an AGM or special general meeting if they owe any money to the owners corporation?

No.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others ACAT affirmed that if an owners corporation member owes any money to the owners corporation they are not entitled to vote on any resolution  at an AGM or special general meeting.

If members of an owners corporation seek a special general meeting under section 3.5 of Schedule 3 of the Unit Titles (Management) Act, do all the signatories have to be fully financial at the time they sign the request for the meeting?

Yes.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others ACAT concluded that Subsection 2 of Section 3.5 means that if a signatory is not fully financial at the time they sign a petition seeking a special general meeting, their signature does not count towards achieving at least 1/4 of the total unit entitlement in the units plan.  “It is not sufficient that they may become entitled to vote by paying outstanding amounts some time before the general meeting that is held as a result of their request.” 

Do proxies count towards a quorum?

Yes. In Butt and UP 1725 ACAT decided that proxies do count towards the making of a quorum.

Section 3.9(1) of Schedule 3 of the UT(M)A provides that

(1) A motion may be considered at a general meeting of an owners corporation with 3 or more members only if there is present—

(a) a quorum (a standard quorum) made up by people entitled to vote (on the motion) in relation to not less than ½ the total number of units; or

(b) a quorum (a reduced quorum) made up under subsection (2).

The issue is to determine what “people entitled to vote (on the motion) in relation to not less than ½ the total number of units” means.

ACAT decided that the use of the words “in relation to” leads to the conclusion that the provision means not the people physically present but the number of entitlements to vote that are present. Therefore proxies (ie entitlements to vote) do count towards the quorum.

ACAT concluded this interpretation is reinforced because “Paragraph 3.31.(4) specifically provides in relation to absentee votes that such votes do not count “for the purposes of making up a quorum” If the same approach was intended to be taken in relation to proxies, similar legislative provision would have been made.”

Can you give your proxy to someone who is not a member of your owners corporation?

Yes you can.  

In the case of Anne K Brown and The Owners of Units Plan 2737, ACAT concluded that because Sub-section 115(3) (now Schedule 3 3.26 of the Unit Titles (Management) Act ) excludes only two types of person (the strata manager or a service contractor) from being appointed a proxy, it therefore allows anyone else to hold a proxy.

Can an owners corporation exclude certain people from accepting proxies?

No.

ACAT concluded in Anne K Brown and The Owners of Units Plan 2737 that an owners corporation’s power to approve the proxy form (Schedule 3 3.26 of the Unit Titles (Management) Act does not include a power to change the Act.  So as the Act only prohibits the strata manager or a service contractor from being appointed a proxy, an owners corporation can go no further than that. 

Can an owners corporation stop proxies from voting on certain motions at AGMs?

No.

ACAT concluded in Anne K Brown and The Owners of Units Plan 2737 that an owner may in writing place restrictions on what motions and how their proxy holder may vote but that, as the Act does not limit what motions a proxy may vote on, an owners corporation cannot change the Act or the scope of the proxy given by the owner.

Is an absentee vote handed to the Chair as an owner leaves an annual general meeting or special general meeting a valid vote?

No

In Green and the Owners of Units Plan 199, ACAT found that an absentee vote has to be registered before the start of the meeting.

Section 3.31 of Schedule 3 to the UTM Act provides:

(1) A person entitled to vote on a motion may cast an absentee vote on the motion by recording the vote on an absentee voting paper and giving it to the owners corporation before the meeting begins.

The reasoning in this decision would not appear to make a proxy vote, even a directed proxy vote, given to the Chair or another attendee during the meeting, invalid, so long as the provisions of Section 3.26 of Schedule 3 are adhered to.

Executive committee members should be aware of this and ensure that owners, who have to leave a meeting that is going longer than expected, are correctly advised how to register their vote for the remainder of the motions.

If a motion is passed unopposed, can it be overturned later by a special resolution?

Possibly.

Section 3.14 of Schedule 3 to the UT(M) Act provides as follows:

(1) Decisions at general meetings must be made by ordinary resolution, unless this Act requires otherwise.

(2) If, at a general meeting, an owners corporation makes a resolution of a particular kind (that is, an ordinary, special, unopposed or unanimous resolution), a resolution of the same kind at a general meeting is required to amend or revoke the earlier resolution, unless this Act requires otherwise.

In Green and the Owners of Units Plan 199, ACAT found that a motion passed unopposed, when it only needed to be passed by special resolution, could be overturned by a special resolution. That is, a special resolution was required to validly pass the original resolution so a special resolution was required to validly rescind it and the fact that the original resolution was passed unopposed was purely incidental.

Executive committee members need to give consideration to what level of resolution is required to give effect to any motion and make sure that the Minutes correctly reflect the type of resolution and the votes recorded. (Note that there are some cases where a resolution of a certain kind may be reversed by a lesser class of resolution – see for example section 22 of the Act.)

Is laying a new floor covering, particularly a hard floor, an erection or alteration that requires approval by an annual general meeting?

No.

In Nolan and UP369 ACAT decided that

“the removal of carpets and the installation of a floating bamboo floor is not an erection or alteration to the structure as provided in default rule 4(i)(a) in Schedule 4 of the UTMA and it does not require owners corporation approval.”

As the installation of floating timber floors is currently fashionable, it is worth answering this question in some detail.

Default rule 4(i)(a) in Schedule 4 of the UTMA specifically provides that a unit owner may erect or alter any structure in or on the unit or the common property only in accordance with the express permission of the owners corporation by unopposed resolution, and that the permission given may be conditional.

“Structure” is not defined in the UTMA. In section 24(2), the UTMA refers to the following as structures, if load bearing: walls, columns, footings, slabs or beams. “Structural parts” may include eaves, gutters or downpipes. The UTMA also does not define “alter”, “alteration”, “erect” or “erection”.

Regulation 23 of the Building (General) Regulations 2008 deals with substantial alteration. Subclause (2) provides that neither refitting a building nor replacing the internal elements of the building is an alteration of the building unless the layout and function of the internal spaces of the building have changed. Example 5 in this subclause provides:

5.          A building contains a nightclub where a fire sprinkler system was installed 1 year ago. Plans now propose to upgrade the airconditioning system and floor coverings throughout the building. As the work does not alter the floor area or function of the building it would not amount to a substantial alteration. [emphasis the Tribunal’s own]

The Tribunal looked at case law and interstate legislation in relation to ‘structural alteration’. In all cases the Courts concluded that a ‘structural alteration’ required at the least penetration of a concrete slab, but more likely the addition of doors or windows or the change of load bearing walls.

Following from this logic, it would be reasonable to conclude that refurbishing an existing fixture, fitting or structure would not require approval of an AGM. For example, if an existing fence was to be replaced with a fence of the same size in the same place with approved materials in approved colours, it would not be an erection or alteration requiring approval.

Should resolutions be put to a general meeting even though they have been lost on absentee votes?

Yes. It is proper meeting practice and fair to all parties to formally put to the meeting all resolutions that are notified in the Agenda and absentee voting papers and that the outcome (votes for and against) is formally recorded in the Minutes.

In the case of Kilcullen and UP13 in 2006 the Small Claims Court found that the then deadlock provisions of the Unit Titles Act could not be called upon because the resolution was not formally put to the general meeting because a view was formed that it had already been lost.

This case then suggests that, unless a motion that may well have been already lost was formally put at a general meeting, owners could not take the benefit of S129 of the UT(M)A and challenge the decision. Hence it is always incumbent on executive committees to ensure that general meetings are conducted so as to ensure that the rights of all members of the OC are protected.  

If an owner objects to a neighbours’ proposal to erect or alter a structure, does that mean the proposer can be refused the right to bring the matter to a general meeting of the OC in accordance with the default Rules?

No

In Nolan and UP 369 ACAT did not decide the case in favour of the applicant on this basis but said

“The Tribunal is satisfied that the default rules do not require 100% consent to the proposed work from the relevant unit owners before the General Meeting can be called and held. While default rule 4 (1)(a) requires the express permission of the owners corporation by an unopposed resolution, the applicants, if they were to be erecting or altering any structure, should have the opportunity to put their proposal to the other unit owners at such a General Meeting. The owners would then have the opportunity to vote on a resolution.”

This decision supports the reasoning in Kilcullen above.

The Executive committee

Can an executive committee make any decision it thinks is appropriate?

No.

In Karina Lanfranchi and the Owners of Units Plan 806, ACAT overturned the executive committee’s decision and substituted its own.

The question was “Did the executive committee on behalf of the owners corporation fail to consider relevant matters and take into account irrelevant matters and make an unreasonable decision?”

ACAT concluded

that the executive committee has failed to properly inform itself prior to making the decision…. It has failed to consider relevant matters and has taken into account irrelevant matters. The decision was not based on a reasonable consideration of the issues, but was based on erroneous assumptions, not supported by evidence or information. It was thus a decision that was not based on sound judgement and was unreasonable.”

ACAT then voided the decision for irregularity.

ACAT then reviewed the decision on the merits of the contesting arguments.

ACAT then substituted its own decision.

This decision is fair warning to all executive committees that they must abide by the Executive Committee Code of Conduct (Schedule 1 to the Unit Titles (Management) Act and operate strictly within their powers with honesty, fairness, care and diligence. If they don’t ACAT can overturn their decisions.

Does an executive committee automatically delegate its powers and functions to a strata manager simply by contracting to engage a strata manager?

No.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others ACAT did not accept that delegations existed.  It seems that ACAT requires more evidence of a delegation than the assertion by the strata manager that a delegation exists.

It should be noted that the Legislation Act 2001 provides at that S. 232 “A delegation must be made, or evidenced, by writing signed by the appointer.”

So it would be reasonable to conclude that this issue had already been settled in ACT law before ACAT’s decision in this case.

Can an owners corporation or an executive committee still perform a power if it has delegated that power to a strata manager? 

Yes.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others ACAT decided that 

It is not the case that the executive committee, having engaged a manager, lost the power to exercise its own functions or to give direction to the manager.”

It should be noted that the Legislation Act 2001 provides at S. 240 that “A function that has been delegated may, despite the delegation, be exercised by the appointer.”

So it would be reasonable to conclude that this issue had already been settled in ACT law before ACAT’s decision in this case.

Is an executive committee entitled to receive a copy of the corporate register at any time it requests it?

Yes.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others, ACAT said the Executive Committee was entitled to the information, the strata manager should have provided it as soon as the Executive Committee requested it and there was no need for ACAT to order the strata manager to make the information available to the Executive Committee.

Can an executive committee rely on general breed information in developing its pets policy or does it have to make every decision based on information about the specific animal in question?

It very probably has to make case by case decisions guided by expert advice on the specific animal in question.

In Nevile and UP 3107, the executive committee followed the pet policy adopted by the owners corporation and refused approval of a large dog based on general information on the suitability of the breed to apartment living. The dog’s owner provided reports from the dog’s long term vet and the proprietor of the dog exercise and socialisation business that dog attends weekly on the temperament and behaviour of the dog in question that the EC did not cast any doubt on.

ACAT concluded

“The Respondent unreasonably ignored or attached too little weight to the expert, unchallenged evidence from Dr Archinal and also ignored the credible and unchallenged evidence from Pups4Fun. “

“The Tribunal is satisfied that the expert evidence from Dr Archinal was compelling; it authoritatively debunked a number of the sweeping generalisations in the websites relied on by the Respondent and insufficient weight was given to that expert evidence. The Tribunal is satisfied that the Respondent appears to have, also unreasonably, given no or too little, consideration to the important disclaimers on the RSPCA website.”

The Tribunal has already found, above, that this information was obtained from general websites and was convincingly overruled by the expert, and unchallenged evidence from Dr Archinal.

The Tribunal is satisfied that the committee failed to consider relevant matters and took into account irrelevant matters. The decision was not supported by all of the evidence. The Respondent’s decision was, in the circumstances, unreasonable.

The Tribunal’s decision has been made solely on the evidence in this case and is specific to this matter only. It is not intended to be a precedent for applications by owners of large dogs to owners corporations in general. Each case will need to be determined on its own merits.”

Can executive committee rely on general expert advice or do they have to get expert advice about the issue in question?

This is a very vexed area. Very probably an executive committee has to make case by case decisions guided by expert advice on the specific issue in question rather than rely on general advice, even if that comes from expert sources. And if there are reasonable competing arguments the executive committee should consider taking the issues to a general meeting of the owners corporation for decision.

There have been three recent ACT decisions on exactly this area.

In Nevile and UP 3107, the executive committee followed the pet policy adopted by the owners corporation and refused approval of a large dog based on general information on the suitability of the breed to apartment living. The dog’s owner provided reports from the dog’s long term vet and the proprietor of the dog exercise and socialisation business that dog attends weekly on the temperament and behaviour of the dog in question that the EC did not cast any doubt on.

ACAT concluded in this case that the executive committee made an unreasonable decision because it ignored expert advice about the specific dog under discussion and chose to rely on general advice about dogs of that type.

However, the decision does not deal with what the EC should have done if it had expert advice disagreeing with Nevile’s expert advice on the dog. In the light of the decisions in two further cases, it is possible to conclude that ACAT would support taking the issue to a special general meeting of the owners corporation for decision.

In Parker and UP 36, the executive committee decided to remove a large eucalypt tree, based on expert advice, and the applicant, Parker, got other expert advice that the tree could be successfully managed and should not be removed.

ACAT compared the qualifications and expertise of the experts and preferred one advice over another,

“When one looks at deciding between different expert opinions about a matter, one first needs to identify the area of expertise of each expert, their qualifications and experience. One will then consider the facts upon which the expert opinion is based, including the adequacy of physical inspections or testing.

“I am satisfied then that Mr Mann's expert opinion provides a more informed, reliable and accurate assessment of the tree's condition, the risk it poses in the future, and available mechanisms to reduce and manage that risk.”

ACAT then took the view that the way to “balance the risks posed by this particular tree, the amenity it provides, and the cost of alternative actions in relation to the tree” was

“to refer this matter back to the owners at a special general meeting and allow that democratic process to occur in a more informal and dynamic way at that grass roots level. There is competing expert opinion and there are competing options on the table with different financial ramifications over a certain period of time of the sinking fund plans. Those are things that the owners as a whole are, I think, properly entitled to express a view on....”

In the case of May and UP 116 there was no expert evidence regarding the issues in question. The expert advice before ACAT was an assessment by the OH&S expert that the tree was a potential risk, by the plumber fixing a pipe that the roots of the tree in question had caused the breakage, by the Applicant that the tree was the cause of the cracking in the slab of his carport and a counter claim by the respondent that the cracking was minor and insignificant and statements from other owners that they enjoyed visual and environmental amenity from the tree.

The expert advice that was not before the Tribunal was that the tree in question was definitely causing damage to the slab of the carport or the plumbing to the Applicant’s unit or that the tree posed a greater risk to health and safety than any other tree on the well treed site. The evidence on the tree that was available from two arborists in 2010 was that the tree was healthy, stable and without obvious defects. No evidence was offered by any party that that position had changed.

ACAT sent the matter back to be decided by a general meeting. The Applicant then sought to overturn that meeting’s decision as unreasonable.

ACAT took the view that it was not bound to accept the views of the Conservator of Flora and Fauna regarding the cracking of the concrete slab or the cause of the water pipe damage. It also took the view that “the plumber … is not an expert in carport slabs, he is an expert in plumbing.”

It concluded

“The question of whether this tree should be retained or not is a question upon which reasonable minds may differ. It poses a theoretic risk to public safety, however, there is no evidence that it poses any greater risk than any other tree.

“I do not consider that this makes either the Owners Corporation's decision unreasonable, neither does it make the position of Dr May unreasonable.

“Considering all of the evidence that was before the tribunal for this matter, I am not satisfied that (the general meeting’s decision) was unreasonable and it is not open to the Tribunal, in such a circumstance, to interfere with the outcome of the general meeting.”

So executive committees should get expert advice on the problem and the potential solutions, it should seek to rebut contrary expert advice presented to it by protagonists for various outcomes and it should fairly and impartially put all the evidence to a general meeting and abide by its decisions. Even then the owners corporation is subject to challenge and could have its decision at the general meeting overturned.

Can an Owners corporation manager represent the Owners Corporation or the Executive committee before ACAT?

Yes.

In Owners Units Plan No 783 V Hausfeld & Ors (20 August 2014) ACAT went as far as saying “There is no merit in the argument that a real estate agent or indeed any other person may not represent another in the proceedings before the tribunal.”

“It is common practice in matters in this tribunal, particularly in relation to residential tenancies and unit titles matters, for owners corporations and owners of properties to be represented by real estate agents. Such representation is frequently provided for in the engagement contracts between owners or owner corporations and those agents. There is no prohibition in section 30 of the ACAT Act against the person doing so for fee or reward.”

“As far as the Tribunal is aware, the matter has not been raised before. It should also be noted that the appearance under the ACAT Act is limited to matters before the tribunal, where the tribunal itself is able to control and if necessary exclude a person from representing another.”

ACAT found that all an Owners corporation or Executive committee must do is abide by the provisions of Section 2.5 of part 2.1 of schedule 2 of the UTM Act.


Can an OC start an action in ACAT before it issues an infringement notice against an owner?

Yes.

In TOCUP 768 v Lokusooriya, ACAT concluded that

“Section 109 [of the UT(M)A] does not impose an obligation on an owners corporation to issue an infringement notice in every circumstance in which a contravention of the rules is believed to have occurred, and is likely to be repeated. The use of the word ‘may’ in subsection 109(2) makers it clear that the decision whether or not to issue a rules infringement notice is discretionary. “

“Further, the UTM Act does not require the issuing of a rules infringement notice as a precondition to the filing of an application under section 125 of the UTM Act. “

Is an owners corporation liable to pay for work done by a former strata manager during the handover to a new strata manager? 

Yes.

In Owners Corporation Units Plan 220 and Link Corporate Services Pty Ltd, ACAT found that the former strata manager was entitled to be paid up to the termination date and if any work continued beyond that date, like preparing accounts for an audit, to be paid for work performed beyond that date.



Managing the owners corporation property

If previous owners of a unit did something that caused damage to another unit, does the owner of the unit causing the damage have to remedy it?

Very clearly yes.

The several cases of Levet And Levet & Dalla settled this. This case was heard in two parts in ACAT, appealed to ACAT, sought leave to appeal to the ACT Supreme Court but leave was refused and appealed again to ACAT.

The final appeal at ACAT reaffirmed the constant finding that “the owners take the land as they find it” meaning they have accepted the eventual results to others of the condition of the land. So, even if you did not construct whatever it is that is causing problems, you own it so you have to fix it.

If an owner has rectify damage caused by his unit, does he have to give the affected unit ‘new for old’? Would he get some sort of discount?

No.

This issue was dealt with at length in Levet And Levet & Dalla &Others particularly XD 10/915If the feasible way of rectifying the damage caused by your unit was to replace old with new, there would be no discount.

If there were other ways of rectifying the damage, you would have to argue that the other party was relying on a technicality to get an unwarranted benefit and you might be successful in getting some discount.

Do unit owners in mixed commercial/residential owners corporations have a right to object to commercial operations they think will cause noise, waste, security or other problems? 

Yes other owners have the right to object to any proposal that requires a unanimous or an unopposed resolution to be approved. 

However, ACAT indicated in Artico Holdings Pty Limited and The Owners Units Plan No. 3461, that if the lease purpose contemplates the commercial activity being included in the residential facility and contemplates the commercial activity in question, the owners cannot make a case based on assertions and need to purchase expert evidence to back their objections.

This suggests that unit owners in mixed developments need to be willing for the development to be mixed or to decide what sorts of activities they do not want and to defend their interests strenuously and potentially expensively.

Are the driveways of a units plan development subject to the road laws?

Probably not.

In Lockyer v Riley the ACT Magistrates Court in 2008 decided that for the purposes of the Road Transport (Alcohol and Drugs) Act 1977 a driving under the influence charge could not be proven when it occurred on the driveway of an owners corporation. Owners corporation driveways and visitor parking places were judged not to be “open to or used by the public for driving, riding or parking vehicles” as is now required by the Act

Consequently it would be prudent for owners corporations to make Rules or House Rules that require that owners, tenants and visitors drive cars, motor bikes and bicycles within the owners corporation’s posted speed limit, within the alcohol and drug rules that apply on the road, the with due care for the safety all people and animals around them and with due care for all structures on common or individual unit land.

Insurance

Who should pay the insurance excess- the unit owner or the owners corporation?

This issue seems to cause significant concern to executive committees and owners.

The Small Claims Court in 2007, that is before the passing of the Unit Title (Management) Act, decided this question in Blackman v The Owners Units Plan 666 . The link to this ruling is provided for the information of all owners and executive committees. The salient point is

15.    What flows from this is important and was not, I feel, properly appreciated by ether party in its entirety. The essence of this matter lies in the following words. The insurance policy is NOT an insurance policy in respect of damage to the units or whatever. It is a policy that protects the Proprietors Unit Plan 666 against claims made by inter alia individual members of the Units Plan.

16.    In plain English, if a single member of the entity known as Units Plan 666 (eg, the Applicant) has a claim for damage, repair, indemnity, what-have-you in respect of his unit, he makes a demand upon the Proprietors Units Plan 666. This probably happens through the committee or the managing agent. The Proprietors (via their committee or agent) then elect either to pass the claim on to their insurers, or to pay the claimant out without such a claim being made.

17.    The question of who pays the excess – the gravamen of this matter – is between the insurer and the Proprietors Units Plan 666. If a proprietor makes a claim, the nature of the reimbursement received by the insured being the legal person known as “Units Plan 666”, from its insurer (CHU) is irrelevant to the person lodging the claim. Absent a bylaw passed by the Proprietors Units Plan 666 placing the responsibility for such payment in a particular place, the entity Proprietors Units Plan 666 must wear the excess. It is, after all, itsinsurance.”

Please note that subsequent to the passage of the Unit Title (Management) Act and until a Regulation is made, OCs cannot amend their Articles or pass a motion to require owners to pay the excess.

This decision is further reinforced by the decision of the Small Claims Court in the case of Adam and CHU Underwriting also in 2007. In this case Mr Adam sought to sue CHU because he was unhappy with CHU’s decision to grant some of his claim but not the rest. The salient point here is

5.          The claim against CHU may be easily disposed of. CHU was in a contractual arrangement with Unit Plan 60. By a contract of insurance it provided cover to Unit Plan 60 for events referred to in the policy. Although Mr Adam owns a unit within Unit Plan 60 he was never a party to a contract of insurance with CHU. As a matter of convenience the managers of Unit Plan 60 encouraged the applicant to claim against the policy it had with CHU and this was effectively treated by CHU as a claim by Unit Plan 60 and part of the claim was allowed by CHU. This was a commonsense approach by CHU and Unit Plan 60, effectively reducing the paperwork and allowing Mr Adam to act as the agent of Unit Plan 60 in the claim against CHU. But this does not make Mr Adam a party to the contract between CHU and Unit Plan 60. Mr Adam’s claim against CHU must fail.”

So the individual owner is not a party to the insurance policy, which is between the OC and the insurer.

Can the owners corporation decide not to insure certain buildings or parts of the common property?

No.

In Kajula Pty Limited & Units Plan No 682, ACAT decided that the owners corporation has no right to exempt itself from the sections of the Act (Ss99-102 of the Unit Titles (Management) Act) requiring insurance for all buildings on the parcel and public risk liability.  

Owners corporations should note that S101 allows owners corporations by unanimous resolution to exempt themselves from taking out insurance if the common property is less than the amount prescribed by Regulation (currently $10,000), or, again by unanimous resolution, for one year at a time if the development comprises class B units.

Can an OC refuse to pay for damages to a unit that arise from the common land?

No. The OC’s responsibility to maintain common land is a strict liability. Owners are not responsible to make changes to their units to avoid damage that arises from the OC’s failure to do its job.

In Lemmon and UP 37in 2002, the OC contended that Ms Lemmon was at fault in not taking action to protect her unit from water not flowing through blocked drains on common land. The Small Claims Court decided that

35.    I therefore find that the Body Corporate Units Plan 37 failed in its duty of care to Ms Lemmon and that the damage that flowed from the rain storm might reasonably have been anticipated.

36.    …dealing with (the OC’s belief) that Ms Lemmon should have taken steps to mitigate her loss.

37.    I am reasonably satisfied that she has to the extent possible, done so. Whilst she did not install a weather strip, there had been no significant prior indication that she should have done so. I do not find the fact that others had as an indication that she should have, particularly as the Body Corporate Units Plan 37 had not formally advised the unit holders of the desirability of this action.

38.    I note that she has now done so, following the advice she received formally after the event.”

So an OC cannot shift its responsibility to maintain the common land to individual owners. The Acts say the OC is liable to maintain the common property and that effectively is the end of the argument. It is a strict liability on the OC that it cannot shift to another party.

ACAT’s powers

Can ACAT award costs against the party that loses a case? So can an owners corporation have costs awarded against it?

Yes. ACAT decided this issue in Lanfranchi & Owners of Units Plan 806, (civil dispute) [2011] ACAT 83. The presumptive rule is that each party at the Tribunal bears their own costs but the tribunal has the discretion to award costs where it sees that one party has brought about the action on frivolous grounds, has made decisions on irrelevant grounds, is not acting in good faith or has prolonged the action by not accepting a reasonable offer of settlement thereby increasing costs.

The general principles in awarding costs that all courts and tribunals follow are

  1. Costs are intended primarily for compensation for the successful party, not punishment for the unsuccessful party;

  2. A successful party is entitled to compensation for at least some of the expenses to which they have been put by reason of the litigation;

  3. An award of costs does not compensate for the disruption, distress or other financial costs that may have been associated with the litigation

  4. Where there is a statutory power to award costs, courts and tribunals exercise that discretion judiciously, not arbitrarily.

Sections 48 and 49 of the ACT Civil and Administrative Tribunal Act 2008 provide:

(1) The parties to an application must bear their own costs unless the Act otherwise provides or the Tribunal otherwise orders.

(2) The Tribunal can decide to require the Respondent (the party defending the case) to pay Applicant’s (the person starting the action) filing fee if the Applicant wins.

(3) If one party caused unreasonable delay or obstruction the Tribunal may order that party to pay the reasonable costs of the other party arising from the delay or obstruction.

(4) If one party contravenes an order of the Tribunal, it may order the party to pay the costs or part of the costs of the other party if satisfied that it is in the interests of justice to do so.

(5) In deciding whether it is in the interests of justice to award costs, the Tribunal must consider:

(a) whether the contravention was deliberate or could easily have been avoided;

(b) whether (and if so, the extent to which) the contravention has affected the tribunal’s ability to hear the application promptly;

(c) the importance to the community of people being able to afford to bring applications to the tribunal.

(6) Costs are payable in accordance with the scale of costs in the rules under the Court Procedures Act 2004applying in relation to the Supreme C.

ACAT concluded that as the executive committee refused to consider relevant information in making its decision, refused to consider a reasonable offer from the Applicant on the basis of ‘Without Prejudice except as to Costs’ (Calderbank Rules) prior to the hearing, had a decision made against it in substantially the terms of the offer, and persisted in defending its unreasonable decision after the hearing found the decision unreasonable, costs should be awarded to the Applicant from the date of the settlement offer (ie seven weeks before the hearing).

Can an owner go to ACAT and claim willy nilly against anyone potentially at fault and expect ACAT to sort out who they should be claiming against and for what?

No.

In Adam and CHU Underwriting (2007),Mr Adam failed against both CHU and his upstairs neighbours because the Small Claims Court found that he had no relationship to CHU and that his neighbour was not responsible. On both counts he should have taken action against the OC.

The decision suggests that any owner should get informed advice before undertaking scatter gun action and work out against whom they should proceed. In short. it might be prudent for unit owners to always include the OC itself in any claim.

Is the monetary limit on a unit titles matter in ACAT $10,000?

No

In the several cases of Levet And Levet & Dalla ACAT repeatedly dealt with this and the Master of the Supreme Court agreed that ACAT’s unit title jurisdiction comes from the Unit Titles Act and the UT(M)A and the $10,000 limit that applies to ACAT’s civil dispute jurisdiction does not apply to unit title matters.

Is it true that the amount of money ACAT can require one party to pay another is limited to $1,000?

No, unless there is a third party who has been damaged or money is owing to the ACT.

In Levet And Levet& Dalla (Appeal) AA 13/16 the Appeal Panel dismiss this proposition. Section 125(1) (d) of the Unit Titles Act (S 129 (d) of the UT(M)A) allows ACAT to make an order” requiring a person to pay to the Territory or someone else an amount of not more than $1 000”.

In short ACAT found that the wording “the Territory of someone else” could only logically apply to third party persons or the ACT.

Revised January 2016



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