On 12 October 2016, the High Court of Australia handed down its decision in the matter of the decision of Ainsworth & Ors v Albrecht & Ors (also known as the Viridian case).
This is a case with very significant implications in relation to how bodies corporate make decisions.
We have previously published articles on the lower court decisions of this case. The case concerns 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.
The case is noteworthy because it relates to the test to be applied to determine whether or not objection by a body corporate to a motion is reasonable. The Adjudicator’s decision that the body corporate’s decision was unreasonable has been appealed through QCAT and the Supreme Court, which each decision reversing the previous finding.
The High Court has continued the trend and reversed the Supreme Court decision, confirming the decision of the body corporate in this matter was not unreasonable. Hopefully, we now have some finality around this issue.
Finding of High Court
The High Court found that, in considering whether the body corporate opposition to the motion requiring resolution without dissent was unreasonable, it is neither necessary nor desirable to attempt an exhaustive consideration of all the relevant circumstances.
Previously it was thought that such an approach was necessary. However, opposition that could not on any rational view adversely affect the material enjoyment of an opponent’s property rights would be unreasonable.
What does this mean?
From a practical perspective, this means if the body corporate can identify any one rational ground affecting the enjoyment of a lot, for opposition to a lot owner’s proposal, an adjudicator should not interfere with the body corporate’s opposition.
It no longer matters whether, on balance, a particular outcome is objectively “better” than another.
This is generally good news for bodies corporate as it reinforces the ability of the body corporate to regulate the scheme and object to a particular proposal where that proposal may affect other owners’ enjoyment of their lots. Under the law as it previously stood, it was more difficult for bodies corporate to object to certain proposals.
Committee members need to familiarise themselves with the new test, as set out above. Although the decision is generally favourable for bodies corporate, if a body corporate objects to a proposal but there is, objectively, no rational basis to inform that objection, that decision is still liable to be challenged by an owner unhappy with that decision
Decision makers should ensure:
- They have as much information before them as possible in considering the decision; and
- There is a rational basis for any objection, supported by evidence or expert advice if appropriate.
If you have any questions about the new test, please do not hesitate to contact our office.