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Tony, Michael and David Partners at ABKJ
ABKJ Lawyers

Tips For Making Reasonable Body Corporate Decisions

Bodies Corporate and Committees make decision on countless different matters relating to the administration of their scheme, including:

  1. Providing or denying consents or approvals for matters prescribed in the by-laws, such as pet applications or renovation requests;
  2. Considering payment plans or requests for discounts or the waiver of penalties from lot owners in respect of body corporate levies;
  3. Enforcing breaches of by-laws; and
  4. Considering proposals contemplated by the Body Corporate and Community Management Act 1997 (Qld) (BCCMA), such as a request by a lot owner that the Body Corporate grant that owner a right to exclusively use a particular area of common property.

Naturally, not all parties affected by the decision of a Body Corporate agree with the decision. For example, if an owner seeks Committee approval to keep a pet in the owner’s lot, and the Committee denies the request, one might expect the owner to be unhappy with that decision. Similarly, if an owner seeks from a Body Corporate a grant of exclusive use over a particular area, and the Body Corporate says “no”, then that owner would similarly be unhappy.

This article will consider the requirement of Bodies Corporate and Committees to act reasonably in making decisions, and provide some practical guidance to Committees and owners in relation to this issue.

This article is not intended to be a substitute for proper Body Corporate legal advice and, if you have any questions, we encourage you to contact us to discuss the matters raised in the article.

Statutory Provisions

Section 94 of the BCCMA requires a Body Corporate to “act reasonably” in anything it does in administering the common property and Body Corporate assets, enforcing the community management statement, and carrying out the other functions given to the Body Corporate.

Section 100 of the BCCMA requires a Committee to “act reasonably” in making a decision.

If a Body Corporate or a Committee fails to “act reasonably” in making a decision, the burden falls upon the disappointed owner to demonstrate to an Adjudicator appointed by the Office of the Commissioner of Body Corporate and Community Management that in all the circumstances, the Body Corporate and/or the Committee failed to “act reasonably”.

What does it mean to “act reasonably”?

The requirement to “act reasonably” in making decisions was recently considered by the Queensland Civil and Administrative Tribunal in Re Body Corporate for Viridian; Kjerulf Ainsworth & Ors v Martin Albrecht & Anor [2014] QCATA 294 (Viridian).

Viridian concerned the Body Corporate’s decision to reject a proposal by the lot owner to expand an elevated deck area, and receive an exclusive use right to the corresponding ground area under the deck expansion. At first instance, an Adjudicator held that the decision was unreasonable and made an order allowing the expansion to proceed. However, the Body Corporate appealed the matter to the Queensland Civil and Administrative Tribunal, which disagreed with the Adjudicator and overturned the Adjudicator’s decision.

The Viridian decision redefined what it means to “act reasonably” in a Body Corporate context. The following themes emerged from Viridian:

  1. Whether a decision was reasonably open involves an evaluation of the known facts, circumstances and considerations which may bear rationally upon the issue in question. For a decision to be reasonable, there must be matters present that are sufficient to induce in a reasonable person satisfaction as to the accuracy of the asserted claim.
  2. The presence of a logical understandable basis is a very important factor in determining the reasonableness or otherwise of the particular conduct.
  3. In considering reasonableness, one should not determine whether the decision in question is the correct or preferable decision. There is no balancing exercise to decide whether overall, the reasonable explanations outweighed the unreasonable ones; one must assess whether there is a logical and understandable basis to the opposition having regard to all relevant circumstances.
  4. The onus is on the party challenging the decision to show that the Body Corporate has not acted reasonably.

Importantly, this decision clarified that it is not for the Adjudicator to re-make the Body Corporate’s decision – it is not for the Adjudicator to stand in the Body Corporate’s shoes and make what the Adjudicator considers to be the best decision. Instead, the Adjudicator should assess whether there was a logical reasonable basis for the decision. Where there is such a basis, the decision ought not be disturbed.

Practical Steps For Committees

Committee members need to familiarise themselves with the reasonableness test, as set out above. If Committees make a decision but there is, objectively, no logical reasonable basis to inform that decision, that decision is liable to be challenged by an owner unhappy with that decision.

If the Committee is making a decision in relation to a controversial or contested matter that the affected owner will not like, the Committee needs to ensure that, in making the decision:

  1. It has as much information before it as possible in considering the decision.
  2. There is a logical reasonable basis for the Committee’s decision, supported by evidence or expert advice if appropriate.
  3. Its consideration of the matter, and the basis on which the decision was based, is properly and comprehensively minuted.

Practical Steps for Affected Owners

Owners seeking to challenge a decision of a Body Corporate or Committee should, if possible, ascertain the reasons for the decision. If there is no logical reasonable basis for that decision, then the owner may wish to seek to challenge that decision through the Office of the Commissioner of Body Corporate and Community Management. However, owners must note that, in light of the Viridian decision,  this will not be an easy feat – the owner will need to do a substantial amount of work to show that the Body Corporate or Committee failed to “act reasonably” and that there is no logical reasonable basis for a decision.

If you have any questions regarding this article, please contact Andrew Kyle of ABKJ Lawyers on 07 5532 3199 or at AJK@ABKJ.com.au