ACAT Decisions – When Disputes Arise


An owners corporation has the functions given it by the Unit Titles (Management) Act and certain other legislation.  In addition, they have such other functions and powers as are necessary or convenient to their exercising those functions.  But under no circumstances can corporations or executive committees give themselves powers or functions that are not solidly based in the law.  When owners corporations have a problem, they can save a lot of time and effort by checking what the law is.  

First there are the various applicable Acts, including the Unit Titles Act 2001, the Unit Titles (Management) Act 2011, the Privacy Act, the Agents Act, the Residential Tenancies Act, and the Legislation Act, any one of which may be relevant to the case in point.

Second, there are ACAT (ACT Civil and Administrative Tribunal) decisions, which as we go along will provide increasingly useful case studies that will demonstrate how those laws apply.

Note that many ACAT judgements, which relate to such things as levies or trees or cars parked in the wrong place,  are verbal and only a few warrant a written judgement.  An applicant or defendant can ask for a written judgement that may not be posted on the ACAT's website because ACAT does not think it important enough.

Our selection of ACAT Decisions has been updated to include October 2016.  We will endeavour to keep it up to date, but if we fall behind please let us know asap.

If the information under the headings below does not help you, 

check the ACAT (ACT Civil and Administrative Tribunal) website at  http://www.acat.act.gov.au/judgment 
ring the ACAT Registry on (02) 62071740 
email ACAT at tribunal@act.gov.au
email the OCN at secretary@ocnact.org.au 

Recent changes are highlighted in red

ACAT DECISIONS

Contents

  1. 1 The Owners Corporation
    1. 1.1 Has the High Court recently changed the law to require owners and owners corporations to act reasonably?
    2. 1.2 Can an owners corporation make any decision it thinks is appropriate?
    3. 1.3 Can an owners corporation delegate its powers to the executive committee?
    4. 1.4 In a mixed commercial and residential owners corporation, are owners of the commercial units members of the owners corporation?
    5. 1.5 Is an owners corporation justified in failing to repair a common service because the fault is occurring in only one unit?
    6. 1.6 Does an Owners corporation have to seek the reallocation of unit entitlements if units are renovated and/or extended?
    7. 1.7 Can an owner deny liability to pay levies?  Or say they did not know they had to pay levies?
    8. 1.8 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 Are there rules or processes for dealing with conflicts of interests between owners?
    2. 2.2 Do the words of all motions at an annual or special general meeting have to be in the agenda sent to all owners?
    3. 2.3 Can a resolution requiring a special resolution be raised from the floor without notification at a general meeting?
    4. 2.4 Is an owners corporation member entitled to vote at an AGM or special general meeting if they owe any money to the owners corporation?
    5. 2.5 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?
    6. 2.6 Isn’t it valid to amend any resolution put before an AGM anyway the meeting agrees?
    7. 2.7 Do proxies count towards a quorum?
    8. 2.8 Can you give your proxy to someone who is not a member of your owners corporation?
    9. 2.9 Can an owners corporation exclude certain people from accepting proxies?
    10. 2.10 Can an owners corporation stop proxies from voting on certain motions at AGMs?
    11. 2.11 Is an absentee vote handed to the Chair as an owner leaves an annual general meeting or special general meeting a valid vote?
    12. 2.12 Is a new Rule invalid if the resolution making it refers to the wrong set of default Rules or Articles?
    13. 2.13 If a motion is passed unopposed, can it be overturned later by a special resolution?
    14. 2.14 Is laying a new floor covering, particularly a hard floor, an erection or alteration that requires approval by an annual general meeting?
    15. 2.15 Does an owner have to seek approval from the OC or EC if the owner assumes, based on previous practice, that the approval will be forthcoming?
    16. 2.16 Should resolutions be put to a general meeting even though they have been lost on absentee votes?
    17. 2.17 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 an electronic copy of the corporate register including telephone numbers and email addresses for the purposes of managing the OC 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 an 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 If an owner asks the EC to issue an Infringement Notice, doesn’t the EC have to issue the notice?
    9. 3.9 Can an OC start an action in ACAT before it issues an infringement notice against an owner?
    10. 3.10 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 there is a ground floor unit with a courtyard and the balconies of upper floor units overhang the courtyard, which units own the airspace or is it common property?
    2. 4.2 Can a tree be considered a nuisance under default rule 7? Doesn’t nuisance apply only to noise and things like that?
    3. 4.3 Do all structures for the use of one owner on common property require a special privilege?
    4. 4.4 If an OC amends its rules to require only a special resolution to allow an owner to erect or alter a structure on a unit or the common property, is the passing of the special resolution is the only approval required?
    5. 4.5 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?
    6. 4.6 If an owner has to rectify damage caused by his unit, does he have to give the affected unit ‘new for old’? Would he get some sort of discount?
    7. 4.7 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? 
    8. 4.8 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 Are there limits on ACAT substituting its own decision when undertaking a merits review?
    2. 6.2 Can an EC apply to ACAT for an order that they can enter a unit and perform work, like removing an unauthorised structure?
    3. 6.3 Who should be made parties to an ACAT action?
    4. 6.4 Are you at a disadvantage by not hiring a lawyer to represent you at ACAT?
    5. 6.5 If you vote against an unopposed resolution and the matter goes to ACAT do you need to defend why you voted against the resolution?
    6. 6.6 Can ACAT award costs against the party that loses a case? So can an owners corporation have costs awarded against it?
    7. 6.7 Can an EC or OC be statue barred from taking action against an owner?
    8. 6.8 On what grounds does ACAT dismiss or strike out an action as frivolous and vexatious or lacking in substance and merit?
    9. 6.9 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?
    10. 6.10 Is the monetary limit on a unit titles matter in ACAT $10,000?
    11. 6.11 Is it true that the amount of money ACAT can require one party to pay another is limited to $1,000?

The Owners Corporation

Has the High Court recently changed the law to require owners and owners corporations to act reasonably?

Not really. Reasonableness has long been a test in ACT unit title law.

The High Court case in question, Ainsworth v Albrecht, is basically about whether an adjudicator under the Queensland Body Corporate and Community Management Act 1997 was correct in deciding to overturn owners’ objections to an addition to a unit and whether the Queensland Court of Appeal was correct in broadening the test for unreasonableness in upholding the adjudicator.

The Appeal Court’s view was

that the question of reasonableness was objective, requiring a consideration of all relevant circumstances; and that determination of whether opposition to the motion was unreasonable required a consideration in an objective and fair manner of all the relevant facts and circumstances.”

That is that all the issues are on the table and open to the adjudicator to re-examine all of them.

The High Court took the view that the issue to be decided was simply whether the opposition in the circumstances was unreasonable. Unreasonable has previously been defined as the dictionary meaning (like not reasonable, not endowed with reason; not guided by reason or good sense; not based on or in accordance with reason or sound judgement, etc.)

The High Court Case Note states

The Court further held that a lot owner may not be regarded as acting unreasonably in declining to assist another lot owner gratuitously to enhance that lot owner's interest, where the enhancement of that interest is reasonably viewed as adverse to the interests of the other lot owner.”

The High Court also said that

63. …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.’

  1. …….The adjudicator did not find that their opposition to the motion was unfounded or vexatious. Indeed, the adjudicator expressly acknowledged that the lot owners voted against the motion in good faith and placed genuine reliance on architectural and other advice.

  1. The appellants submitted that, had the Court of Appeal adopted the correct approach, it would necessarily have concluded that the opposition to the first respondent's motion was not unreasonable because it had a logical and rational basis.

  2. ……. Further, the circumstance that there was a body of evidence supporting the opposition of the adjoining owners, and a real concern expressed about privacy and noise issues, shows that the opposition to the motion was, in the circumstances, not unreasonable.”

ACAT already has the power under S129 to

(1) The ACAT may make the following orders:

(g) an order giving effect to an unsuccessful motion for a resolution of a general meeting (either as originally proposed or as amended by the ACAT) if the ACAT is satisfied after a merits review of the motion that opposition to the motion was unreasonable;

ACAT takes the position that its task under S129 is as outlined in Uren & Anor v The Owners – Units Plan No 396

17. From these decisions, I draw the following conclusions about how section 129(1)(g) is to be applied:

  1. The provision involves a two-step process, firstly to undertake a merits review to determine which is the correct and/or preferable decision, and then to determine whether opposition to the motion was ‘unreasonable’.

  2. The review is de novo and the Tribunal is able to consider issues of both fact and law.

  3. The ACAT considers and determines issues as at the date of the hearing and is able to consider evidence not available to, or not considered by, the owners corporation at the time of their decision.

  4. When conducting the merits review, there is no threshold question of reasonableness or unreasonableness of the original decision to be determined before the ACAT may proceed to make an order. However, before an order giving effect to an unsuccessful motion is made, the ACAT must be satisfied that opposition to the motion was unreasonable.

  5. The test to determine if the opposition to the motion was unreasonable is not a subjective test of the intentions of the unit owners who opposed the motion. Rather, it is an objective test taking into account all relevant circumstances.

  6. An opponent to the motion is not required to act with altruism or sympathy for the interests of the proponent, at the expense of the opponent’s reasonably held view of their own interests.

  7. Whether or not there is evidence of other pending applications, it may be reasonable to consider the cumulative effect of multiple identical improvements generating an adverse impact in deciding whether to oppose a motion.

18. To the matters above concerning unreasonableness, the Tribunal would add that opposition to a motion may be unreasonable where the opposition is based on discriminatory grounds that are unlawful in other contexts or where the grounds for opposition are essentially de minimis, that is they are so minimal as to be immaterial or subjective in their essential character.”

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 actually before them.

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.

Is an owners corporation justified in failing to repair a common service because the fault is occurring in only one unit?

A definite No.

In Bennett and UP932, ACAT was clear that the statutory obligation imposed upon the Owners Corporation in relation to maintenance of the common property by Section 24(b) of the UT(M) Act is a mandatory one. It specifically requires the owners Corporation to maintain utility services provided for the potential benefit of all units. This includes utility services including utility conduits for water, sewerage, gas and electricity and air conditioning and heating.

ACAT said:

21 The respondents submit that since the repair relates only to the heating or cooling for the applicants unit, the Owners Corporation has no responsibility to attend to such repairs. This misunderstands the meaning and intention of the legislation. The air conditioning and heating in Units Plan 932 is a common system providing heating and cooling to each individual unit by electricity wire, water pipes and ducts situated on common property. There is only one control unit, individual occupants of individual units are not able to switch off the airflow and the body corporate bears all of the costs for electricity to operate the system. The air-conditioning and heating system in Units Plan 932 is manifestly the provision of a utility service for the potential benefit of all units.

22.  The UT(M) Act contains no provision that would either excuse or relieve and Owners Corporation from the mandatory obligation to maintain the air-conditioning and heating system for the benefit of all units. I have nevertheless considered the evidence and arguments presented by the respondent.”

UP932 attempted to argue that the fault was caused by the applicant’s repairers and therefore that the owners corporation had no responsibility. ACAT was not satisfied on the balance of probabilities that the respondent established its argument, particularly when evidence had been presented to an AGM that the air conditioning system was generally degraded and required extensive maintenance.

However in Castro v UP246, ACAT held that the damaged electrical circuit only served Mr Castro’s unit and that he was required to maintain and repair it, while the OC was required to maintain the roof space above his Class A unit through which the electrical circuit was laid.

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 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 attached 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.

This case, and a number of similar actions, have been appealed to ACAT. Prior to the Appeal of Richardson being heard the manager and Mr Richardson reached an agreement. At the Appeal hearing Mr Richardson contended that the agreement was that he would pay the outstanding levies and interest but not the legal costs. The OC contended that the agreement meant that the legal costs would be settled by the Appeal. The Appeal Tribunal was persuaded on the balance of probabilities that an agreement as claimed by Mr Richardson was reached. Therefore there was no longer an appealable matter before the Appeal Hearing.

Further appeals are still in train so more information will be available in due course.

What should a Class B OC do if it discovers buildings have not been built in the exact positions shown on the lodged Units Plan and/or encroaching on another unit’s land?

Most Class B OCs probably have examples of buildings not being located exactly in line with the lodged Units Plan. The deviations from the lodged Plan may be very minor or could be extensive and potentially significant.

Although it was not the basis for the decision, Forman v Units Plan 312 indicates that ACAT is unlikely to order that walls be moved to end encroachments. But if there are some known errors or encroachments there may well be others. So the OC should consider getting advice about whether it is practicable or advisable to amend the units plan to reflect the actual location of buildings and boundaries and how that could be achieved and consider getting a comprehensive survey done and the Plan amended.

Owners corporation decision making

Are there rules or processes for dealing with conflicts of interests between owners?

Yes there are now.

A recent ACAT decision about conflict of interest, Gracie v The Owners Units Plan 3411, has significant implications for owners corporation decision making.

ACAT dealt at length with the meaning of conflict of interest. To quote

25. A conflict of interest involves a situation where ‘a person has a personal interest in a matter which is the subject of a duty or decision of that person’. Such a conflict needs to be addressed and managed. For example, ‘company directors must not, in any matter falling within the scope of their service, have a personal interest or inconsistent engagement with a third party, except with the company's fully informed consent (the conflict rule)’. Also, company directors ‘must not misuse their position to their own or a third party’s possible advantage, except with the company’s fully informed consent … (the profit rule)’, and must not ‘misappropriate the company’s property for their own or a third party’s benefit (the misappropriation rule)’ The Corporations Act 2001 (Cth) (the Corporations Act) makes provision for disclosure of a ‘material personal interest’ in a matter that relates to the affairs of the company and related matters. Members of an executive committee under the UTM Act are in a similar position to company directors. An executive committee member must comply with the code of conduct set out in schedule 1, part 1.1 of the UTM Act, and this provides in section 8 that ‘an executive member must disclose to the executive committee any conflict of interest the member may have in a matter before the committee’. Any such conflict needs to be then addressed and managed.” (OCN’s underlining)

  1. Certainly in relation to her membership of the executive committee for UP 3411, Ms Domazet appears to have a conflict of interest in considering issues concerning the alleged building defects, that is between her personal interest arising from her relationship with her father, the builder, and her position as a representative of Statehay, of which her father is a shareholder and director, on the one hand, and her duty and responsibility as a member of the executive committee of UP 3411 in making decisions concerning the legitimate complaints against her father, the builder, on the other. This conflict of interest needs to be disclosed, addressed and managed. (OCN’s underlining.)

  2. In relation to the role of Statehay, and Ms Domazet as its representative, as a unit owner at the annual general meeting there is less room for the operation of conflict of interest principles. There is no equivalent of conflict of interest principles for shareholders in a company, and no equivalent principles for unit owners, including in section 46 and schedule 1 of the UTM Act.

  3. However, in relation to corporations, courts have traditionally made, and section 232 of the Corporations Act now specifically provides for, orders if certain conduct or action is contrary to the interests of the members as a whole; or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. A decision taken by a company for the benefit of a related company, or failure to prosecute an action, can be examples of such conduct. It is clear such conduct can include the actions of majority shareholders at a general meeting. As noted above, the Tribunal may under section 129(1)(f) of the UTM Act review the merits of resolutions at a general meeting, and under section 129(1)(g) may give effect to an unsuccessful motion if satisfied after merits review that opposition was unreasonable. One basis for doing so is if the action of the majority at the meeting was oppressive or unfairly prejudicial to some members.” (OCN’s underlining.)

All OC decision making involves smaller or larger conflicts of interest. EC and OC members have different interests in almost all decisions. Resident owners and non-resident owners have significantly different stakes in maintenance, landscaping, common utilities (water and communications especially). Members who potentially benefit more from decisions than others have conflicts of interest. Often those interests are not actually spelt out and rarely are they addressed and managed. .

So how do you address conflicts of interest and manage them?

Obviously the issues are different in different owners corporations.

For example, in a Class B owners corporation of 5 units with the default rules, an alterations or additions proposal comes before the AGM. How should the meeting handle the consideration of the issue? Obviously that depends on how well the owners know one another, how formal meetings usually are and so on.

A completely correct consideration of the item would mean that the owner proposing the alteration or addition would speak in favour of their proposal, answer questions and withdraw from the meeting. The rest of the owners could call them back to answer more questions. But at some point the rest of the owners would be able to consider their positions in private.

Many readers will be thinking “Oh for heaven’s sake! Everyone knows they will vote for their proposal. What’s the point of their leaving the meeting? How does that keep the considerations pure?” In that example, the owners have probably long since discussed the proposal repeatedly among themselves as the plans are developed.

But what about a 100 plus unit Class A mixed use development? It is possible to have commercial interests, the developer still owning units, live-in owners with a single residential unit, investor owners of units that are on ordinary residential tenancies or short term lets. The diversity of interests is obvious. But how should they be dealt with?

This decision suggests that they have to be acknowledged and that when the exercise of conflicted interests can be “oppressive or unfairly prejudicial to some members” the OC has to act. The elephant cannot be silent in the room.

This is a significant development in the law governing owners corporations in the ACT.

So either highly conflicted owners have to accept that they may well need to agree not to participate in the making of some decisions. Or that the AGM decisions on significant issues are fully open to challenge at ACAT on grounds of unreasonable influence.

The financial ramifications of some decisions are such that members of the owners corporation will not agree to refrain from participating in some decisions voluntarily and, on the basis of this decision, prejudiced owners can take their concerns to ACAT for its adjudication.

Do the words of all motions at an annual or special general meeting have to be in the agenda sent to all owners?

Surprisingly No.

Most owners would be alarmed to learn that in both Brudenall & UP202 (UT 28/2015) and UP68 & Haughey, ACAT stated that Section 3.7 of Schedule 3 of the UT(M)A requires that only the texts of unopposed or unanimous motions need to be included in the agenda and that no other section requires that special or ordinary motions be included in the agenda.

In neither case did ACAT suggest that it was unlawful or improper to include the text of all motions in the agenda. Both written decisions drew attention to the requirement for notice under Section 3.6 of Schedule 3 and that that notice should make clear the scope of the meeting.

Consequently it is near unanimous practice across the ACT that the text of all motions is included in the agenda provided to all owners to ensure there are no misapprehensions about the scope of the meeting.

However it would be preferable if the UT(M)A was clear that the text of all substantive motions were required to be included in the agenda. OCN will raise this matter in discussion about further refinements to the UT(M)A.

Can a resolution requiring a special resolution be raised from the floor without notification at a general meeting?

Probably No.

In The Owners Units Plan 68 v Haughey, the Respondent contended that it is quite proper for resolution that requires a special resolution to be raised from the floor of a general meeting without any prior notice. ACAT did not have to decide that matter in the context of that case but it made observations to the effect that the text of a special resolution does not have to be notified to owners 14 days prior to the meeting but

‘”89. …, notwithstanding that a notice of general meaning need not contain the words of a motion that requires approval only by special resolution, that motion must not be outside the scope of the meeting, as advised to members.

90. It is conceivable that a meeting notice could be broadly worded to allow for various forms of business to be raised from the floor. However, the meeting in this case concerned a single specific motion. The words of the motion were expressly advised to members. Consistent with practice for unopposed resolutions, members were asked whether they agreed to the motion. In my view there is an argument that, having regard to the clear terms of the notice, the putting of any other motion, including an amended motion, was inappropriate and outside the terms of the business and invalid. Ultimately, however, I do not need to decide this as I am satisfied that both the first and second motions were invalid.”

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.” 

Isn’t it valid to amend any resolution put before an AGM anyway the meeting agrees?

No.

It never was actually, but ACAT drew attention to this in Brudenhall and UP202.

35. Secondly, it is well established that at a meeting a motion may be amended only to the extent that it remains within the scope of the motion of which notice was given.”

Logically if the resolution notified to owners is that the OC do X but the resolution agreed after amendment is that the OC do Y instead, notice of the resolution is not properly given and the resolution would be invalid. So the matter should be held over to a special general meeting and proper notice given.

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.

Is a new Rule invalid if the resolution making it refers to the wrong set of default Rules or Articles?

It could be.

In Forman v UP312 ACAT agreed to amend the text of the special resolution already passed by the OC to refer to the set of default Articles that were actually in operation at the time.

It should be noted that the Articles or Rules adopted at the commencement remain in force until amended by the OC. So if an OC was incorporated under the 1970 Act, its Articles are the default 1970 Articles as amended by the owners corporation from time to time. Likewise the 2001 Articles still apply to an OC incorporated while that Act was in operation and so on. The new Act does not amend the Articles or Rules in effect in each owners corporation.

So to reduce the likelihood of challenge to any new Articles or Rules it is important to make sure you are amending the Articles or Rules that are actually in force in your owners corporation.

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(1)(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(1)(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 air-conditioning 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.

Does an owner have to seek approval from the OC or EC if the owner assumes, based on previous practice, that the approval will be forthcoming?

Yes

In UP116 and Nicholson, ACAT was quite clear that part of the functions of the owners corporation or executive committee is to enforce the rules. If there is a rule that an owner must seek approval for something then an owner’s expectation that permission will be granted does not remove the requirement that permission needs to be sought as required by the rule.

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 favor 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 an electronic copy of the corporate register including telephone numbers and email addresses for the purposes of managing the OC at any time it requests it?

Yes they can.

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. But the decision did not hinge on that matter and no Order about it was made.

An Order has been made by Presidential Member Elizabeth Symons in UT1/2017 (Elizabeth Coghlan and Ian MacNamee and Partners Pty Ltd, Strata Partners (ACT) Pty Ltd and Whittles Strata Partners Pty Ltd). It reads in part

1. Pursuant to s. 129(2) of the " Unit Titles Management ACT 2011" and by close of business 13 March 2017, the First Respondent, Ian McNamee and Partners Pty Ltd provide to the Applicant in the amended Application, the Executive Committee of the Owners Corporation of Units Plan 930 an electronic copy of the Corporate Register, including e-mail addresses and telephone numbers, to enable the Executive Committee to notify unit owners of this litigation.”

Executive committees can quote this Order when a manager refuses access on the spurious ground of privacy or only allows part access.

It should also be noted that during the initial directions hearing on this matter, Whittles Strata Partners Pty Ltd indicated it wanted access to corporate registers in order to circulate publicity material for their company advocating transfer to the new Whittles Strata Partners business. The Applicant objected on the grounds that Whittles did not yet have a contract with the OCs and McNamees and Strata Partners were asking to transfer to Whittles Strata Partners and so had no right to access information of those OCs for purely commercial purposes. Presidential Member Symons strongly supported that argument and deterred Whittles from taking that action.

For further information on this vexed issue please see Paper 11 under Unit Titles (Management) Act in Practice.

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. The EC did not cast any doubt on these reports.

ACAT concluded

65. 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.”

66. 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.

68. 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.

72. 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 an 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.

The Owners Units Plan 2849 v Conservator of Flora and Fauna also deals with conflicting expert advice.

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.

If an owner asks the EC to issue an Infringement Notice, doesn’t the EC have to issue the notice?

No.

In Martin v Owners Units Plan 220, ACAT decided that there are two actions required. First under S111, if a dispute between neighbours exists and the complainant neighbour believes Rules have been contravened and will continue to be, the complainant may ask the EC to issue a Rule Infringement Notice. Then the EC has to exercise its powers under S 109 form a reasonable belief that rules are being infringed and pass an ordinary resolution for a formal Notice to be issued.

If the EC declines to form that belief and issue that Notice the complainant could apply to ACAT to seek an order under S129

(1) The ACAT may make the following orders:

(a) an order requiring a party to do, or refrain from doing, a stated thing;

(b) an order requiring a party to exercise a function under this Act;

The complainant would need solid grounds for their request.

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 there is a ground floor unit with a courtyard and the balconies of upper floor units overhang the courtyard, which units own the airspace or is it common property?

In Ryan and UP2737, ACAT concluded that the correct interpretation of the Unit Titles Act 2011 means that the ground floor unit owns all the air space of the courtyard up to any encroachment and effectively ‘up to the heavens’ where there is not an encroachment and each of the units on the higher floors owns the airspace of its balcony. So effectively there is no common property area in this scenario.

Can a tree be considered a nuisance under default rule 7? Doesn’t nuisance apply only to noise and things like that?

In Ryan and UP2737, ACAT concluded that a tree can be a nuisance or a substantial annoyance (“a considerable or ample displeasing/troubling/irritating disturbance”) to the owner or occupier of another unit when it blocks light or reduces air circulation.

Consequently, while the executive committee Code of Conduct requires that executive committees always make decisions in the interests of the owners corporation, it would be prudent for the executive committee to seek information and advice on suitable plantings or on suitable conditions to apply to the permission to plant trees to minimise future problems.

Do all structures for the use of one owner on common property require a special privilege?

Possibly.

In UP68 and Haughey, based on reasoning in a Queensland case, ACAT concluded that any decision to that amounts to “a disposition of the common property” or “a de facto acquisition of common property” because one owner acquires exclusive and indefinite use of a part of the common property, is not a minor use and requires the OC to grant a special privilege by unopposed resolution.

The Queensland judgement in Katsikalis stated

[32] It is important that the rights to common property of bodies corporate are not removed unheedingly or inadvertently and to the detriment of their members. That is why the rules require such resolutions to be passed without dissent. That the infringement on those rights is relatively trivial in this case does not excuse what occurred. The principle is significant.

ACAT decided

56. where there is to be a disposal or alienation of the common property, then it is necessary that that be done by a clear and unopposed process that is consistent with the legislative scheme.”

So ECs need to think about whether it is a minor use of common property they can approve under Schedule 2 S2.4 or whether a grant of significant exclusive use is involved requiring the grant of a special privilege under S22.

If an OC amends its rules to require only a special resolution to allow an owner to erect or alter a structure on a unit or the common property, is the passing of the special resolution is the only approval required?

No.

In The Owners Units Plan 68 v Haughey, ACAT decided that, consistent with S22 and Schedule 2, S2.4, further approval is needed.

Either the use is minor and will not unreasonably interfere with the use and enjoyment of the common property by other owners and can be approved by the EC under Schedule 2 S2.4. Or the alteration or erection gives exclusive use of part of the common property to one owner and therefore warrants the granting of a special privilege under S22 by an unopposed resolution of the OC.

If common property is involved either one of these approvals is also required for the addition or alteration approval to be properly granted.

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 v 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 to 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 v Dalla &Others particularly XD 10/915. If 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, its insurance.”

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 37 in 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

Are there limits on ACAT substituting its own decision when undertaking a merits review?

Yes.

The position ACAT might take in any particular case is probably very dependent on the facts of case.

In Brudenhall and UP202, ACAT was asked to substitute a lawful resolution that had never been put to an owners corporation for a lawful resolution that was put and appropriately passed on the basis that the substitute resolution was more equitable to all the owners.

ACAT outlined the process of a merits review under Section 129(1)(f) of the UT(M)A as follows

  • the review is essentially de novo, and ACAT is able to consider issues of both fact and law anew and determines the issues as at the date of the hearing, not as at the time of the original decision.

  • there may be more than one possible decision which is correct at law, and the task for the decision-maker in such a case is to decide which of the available decisions is to be preferred.

  • ACAT is not obliged to choose either the position adopted by the applicant, or that of respondent and subject to ensuring that the requirements of natural justice are met in the hearing process, is required to make the correct or preferable decision on the merits of the case even one not advocated for by any party.

However, ACAT found itself limited to amending the motion “within the limits applicable to the original decision.” The original decision passed some years before under S51(3)(f) of the Unit Titles Act (now S24(1)(g) of the Unit Titles (Management) Act) was lawfully made.

ACAT found the proposition the Applicants were asking for was basically a step too far. They were asking ACAT to decide at a merits review to put into place a proposition that was almost the complete opposite of the resolution that was adopted by the OC and had never rescinded or amended. The proposition being sought was lawful but it had never been put before the OC either at the time the original decision was made or at any other time.

So ACAT concluded that the only lawful options open to it were revoke the resolution or leave it as it was. ACAT decided to leave it as it was and let the owners change the situation themselves if they chose to.

Can an EC apply to ACAT for an order that they can enter a unit and perform work, like removing an unauthorised structure?

Probably No.

In UP116 and Nicholson, ACAT was quite clear that the OC does not, without the owner’s consent, have the right to enter a unit other than for the reasons and with the provisos set out in Ss 28 and 29 and default rule 10 of the UTMA. Section 129(1)(l) of the UTMA deals with orders for the removal of an animal and would necessarily require entry to a unit, but there is no other specific provision in section 129(1) that deals with access to units. ACAT was not therefore willing to give the EC a power it does not have when it could order the owner to undertake the removal themselves, which it did in this case.

If the owner failed to carry out the order the EC or OC can pursue the enforcement of that order in the Magistrates Court pursuant to Part 2.18 of the Court Procedure Rules 2006, and in particular rule 2442. The EC or OC would of course have to comply with the provisions for commencing legal action in the UT(M)A and may be able to recover the legal costs under S 31 of the UTMA.

So the EC or OC could well be better off seeking the order they are very likely to get rather than one ACAT is most unlikely to grant.

Who should be made parties to an ACAT action?

It depends. This is potentially a tactical matter that an OC might want to get some professional advice on.

ACAT suggested in Uren & Anor v The Owners – Units Plan No 396

  1. In a situation such as this where the various owners are in significant conflict about the appropriate outcome of the litigation, the Tribunal suggests that it would be preferable for the owners corporation to make a submitting appearance and to make the opponents to the motion parties to the matter, either individually or in concert.

That means that where various owners have strong but disparate views, the OC makes its own application to ACAT to make the various owners parties to the case in their own right, so each of them has to defend their own arguments. Consequently if any one party refuses to defend their position they are effectively withdrawing their arguments.

  1. However, where the members of the owners corporation are in general agreement and the opposition to the motion is from a single individual owner or a small minority of owners, it may be appropriate for the owners corporation to be the respondent, with the arrangements for, and the costs of representation, authorised by the owners corporation by resolution of the committee.

That is if the OC can speak with the majority voice, it does so and leaves it to others to join themselves to an action on their own behalf if they want to do that.

Are you at a disadvantage by not hiring a lawyer to represent you at ACAT?

Probably not.

In Uren & Anor v The Owners – Units Plan No 396, the applicants hired a solicitor and a barrister and the OC Secretary presented the case of the owners. ACAT commented,

“28. While the respondent’s representative, Mr Smith, had difficulty in prosecuting his case in cross-examination, any potential disadvantage was compensated by the excellent quality of the written documentation prepared by the respondent. The case for the respondent was made very clear by the respondent’s documentation (including the witness statements, statements of facts and contentions, and responses) and by the final oral submissions, which were based on a pre-prepared written document. The Tribunal expresses its appreciation for the work undertaken by Mr Smith in presentation of the corporation’s case.”

ACAT does not expect that parties are represented by lawyers and many represent themselves. The Tribunal members offer assistance to unrepresented parties and try to establish a level playing field.

Applicants might be better served by getting professional assistance to frame their application and arguments and then to speak for themselves.

If you vote against an unopposed resolution and the matter goes to ACAT do you need to defend why you voted against the resolution?



Yes.

In Floro v Owners – Units Plan No 630, an AGM had agreed that owners could seek use of a small part of common land to facilitate the building of carports. When an owner sought the necessary special privilege over 1.65 sq mtr of common land, one owner voted against so the request failed. But that owner then refused to take any part in the ACAT proceeding brought by Floro to get that objection overturned.

ACAT took the view that the owner’s refusal to either outline the basis of their opposition or defend their position meant ACAT was free to conclude the opposition was unreasonable.

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 2004 applying in relation to the Supreme Court.

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).

In Webster v Owners Units Plan 3967, ACAT awarded costs against the OC, which was represented by its manager, because the manager failed to action the Orders and prepare for and attend a hearing thereby delaying resolution of the matter and compensation of the applicant.

ACAT said “While I accept that there was no intention on the part of the respondent to delay the hearing of the matter, the fact is that the resolution of the matter was delayed as a direct result of the respondent's conduct.” This would indicate that ACAT is prepared to award costs under a less stringent test than it applied in Lanfranchi.

As many owners corporations are represented by their manager before ACAT the Webster decision suggests that executive committees should keep themselves appraised of the progress of any ACAT action.

Can an EC or OC be statue barred from taking action against an owner?

Theoretically Yes.

The ACT Limitations Act provides

11 General


(1) Subject to subsection (2), an action on any cause of action is not maintainable if brought after the end of a limitation period of 6 years running from the date when the cause of action first accrues to the plaintiff or to a person through whom he or she claims.


(2) Subsection (1) does not apply to a cause of action in relation to which another limitation period is provided by this Act.

In The Owners Units Plan 68 v Haughey, ACAT decided that the issue to be decided is the ‘cause of action.’ In the case of Haughey, even though the waterheater was installed on common property in 2009, the cause of action – a resolution for its removal – did not arise until 2015.

Logically, if an owner made some infringement and other owners, the EC and the OC had been complaining about it ineffectually from shortly after its occurrence, the owner could claim action was statute barred after six years.

On what grounds does ACAT dismiss or strike out an action as frivolous and vexatious or lacking in substance and merit?

In The Owners Units Plan 68 v Haughey, ACAT decided that it had to conclude the action was very obviously being brought to harass or annoy another party or than it obviously did not involve objective facts or an arguable point of law.

In the case of Haughey, ACAT concluded that

87. It was apparent from the respondent’s material that his case was contingent upon the Tribunal accepting his version of the events of the 2009 Meeting. The facts of that meeting were in contention, as were the consequences of it, and therefore this was not the kind of matter where it would have been possible to dismiss proceedings without proceeding to hearing.”

So ACAT set the bar reasonably high against dismissing an action without a formal 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 v 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 v 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 v 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 or someone else” could only logically apply to third party persons or the ACT.