NAVIGATING DECISION-MAKING WHILST ACTING REASONABLY

September 12, 2024

In Queensland, Section 94(2) of the Body Corporate and Community Management Act 1997 (Act) imposes a mandatory obligation on a body corporate to act reasonably in performing its general functions and obligations under the Act. This obligation applies to any decision the body corporate makes or chooses not to make.

The concept of reasonableness has proven to be problematic for bodies corporate in the application of the obligation in its daily decision-making and more often than not results in adjudication proceedings in a wide variety of body corporate matters.

If an adjudicator is satisfied that a body corporate decision was unreasonably made the adjudicator may overturn and override the decision.

What is Reasonable?

In Ainsworth v Albrecht [2016] HCA 40 the High Court considered and clarified the concept of reasonableness within the context of the opposition of a lot owner to a motion to be resolved by resolution without dissent. The High Court made the following observations in respect of reasonableness:

• it does not equate to what an adjudicator considers just and equitable
• it does not involve the application of discretionary considerations
• it is objective
• it has to be applied at the time of the decision, taking into account the relevant factors

Recent Adjudication Decisions

In two recent cases, the matters of Monaco Apartments [2024] QBCCMCmr 284 and Everton Mews [2024] QBCCMCmr the adjudicator was required to consider whether the body corporate acted reasonably.

Monaco Apartments Case

The case of Monaco Apartments involved the body corporate committee refusing to allow a lot owner approval to install a blind on his balcony. The body corporate refused consent on the basis that the blind would be visible from the outside and would detract from the appearance of the scheme.

Whereas the matter was ultimately determined on other grounds, the adjudicator made the following observations:

“What is reasonable is a question of fact, to be determined by objectively considering all relevant factors (and ignoring irrelevant ones). Reasonable decision-making involves taking a rational, logical and evidence-based approach in reaching a conclusion.”

The adjudicator held that whereas it would not be unreasonable to consider the visual appearance of the scheme, it has to be considered with reference to effect of the specific improvement in question and the effect it would have on the appearance of the building.

Everton Mews Case

The case of Everton Mews involved the body corporate refusing to allow a lot owner to install whirlybirds on her roof, which was common property. The body corporate refused consent on the basis of its view that whirlybirds were an inefficient form of ventilation that may cause a likelihood of water ingress and a post installation maintenance burden. The committee proposed that the owner consider more viable and effective devices such as ceiling fans or air conditioning within her lot before making structural changes to the common property.

The adjudicator was required to consider whether the body corporate failed to act reasonably when it did not approve the lot owner’s request for approval of the installation of whirlybirds on her roof.

The adjudicator made the following observations regarding its role in the adjudication:

“When a committee’s decision-making is challenged, the role of the adjudicator is to evaluate whether the committee ignored or failed to genuinely consider any relevant factors, or whether it acted on irrelevant factors. The role of the adjudicator is not to weigh the factors nor substitute their own views or conclude that another decision would have been more reasonable.”

The adjudicator held that the body corporate failed to act reasonably when it refused to approve the lot owner’s request, amongst other things, on the following grounds:

• when required to authorise an improvement to common property the body corporate should consider the interest of the person seeking approval as well as how the proposed improvement could affect the other owners or scheme property
• the request must be decided with regards to the circumstances in the context of its particular scheme
• genuine fact-based concerns should be considered with regards to whether they could be overcome through the imposition of appropriate conditions
• the location, size, appearance, conditions of installation and ongoing maintenance were all relevant factors for consideration and which were addressed by the lot owner by the conditions proposed
• the concerns with regards to potential water ingress were hypothetical and not evidence-based and adequately addressed by the conditions proposed
• the merits of alternative ventilation options were not relevant because the lot owner was not seeking approval for those

Summary

At first blush the body corporate’s obligation to act reasonably appears to be very straightforward and simple, but that is not the case. A body corporate is required to comply with its obligation to act reasonably within the context and circumstances of its particular scheme and with regards to the subject of the particular matter before it. Each matter turns on its own facts and circumstances.

The body corporate’s failure to act reasonably in its decision-making would invariably give rise to a dispute, which in turn would take up time and money to resolve.

It is important that the body corporate understand the nature and extent of its obligation to act reasonably with a view to pursue compliance and avoid disputes and adjudication.

Article contributed by Christian Dreyer, Partner, Grace Lawyers