Body Corporate and Community Management (Accommodation Module) Regulation 2020 (Accommodation Module)

GENERAL MEETING MOTION; REASONABLENESS - where the respondent opposed a motion requiring a resolution without dissent to accept the surrender of an easement over scheme land; whether the respondent's opposition was unreasonable because it was done in the interests of the respondent's letting business in a neighbouring scheme; whether the motion should be given effect.

Accommodation Module, s 175(2)(b).

• [1] Catalina Apartments' land is burdened by two easements (Easements B and D) in favour of neighbouring scheme Catalina II. There has been some dispute about the easements, including proceedings before the Supreme Court. On 16 May 2024, the two schemes agreed to resolve the dispute by extinguishing both easements and replacing them with two new easements granting each access to the other's recreational facilities.
• [2] The body corporate committee for Catalina Apartments put several motions relating to the dispute to an annual general meeting on 24 March 2025. A background document was circulated to owners ahead of the meeting explaining:
  1. the agreement of 16 May
  2. that subsequent negotiations ended when Catalina 2 refused to consider any amendments to the agreement
  3. that extinguishing and creating easements attracts substantial transfer duty, which might be minimised by extinguishing only Easement B, amending Easement D, and executing Shared Facilities Agreements instead of creating new easements
  4. that Catalina II had not responded to that suggestion and the committee was not optimistic that any response would be favourable, and
  5. that the committee's motions "plan for the worst and hope for the best...endeavouring to be prepared and flexible enough to react to all eventualities".
• [3] The motions can be summarised as follows:
  1. motion 8 - the body corporate adopts the 16 May 2024 agreement
  2. motions 9 & 14-17 - if agreement cannot be reached with Catalina II, the body corporate may engage legal representation and pursue various proceedings
  3. motion 10 - the body corporate will accept the surrender of Easement B
  4. motion 11 - the body corporate adopts attached amendments to Easement D, conditional upon registration of the surrender of Easement B
  5. motions 12 & 13 - the body corporate agrees to attached Shared Facilities Agreements, conditional upon the surrender of Easement B
  6. motion 18 - the body corporate remains willing to negotiate, but not to pay any transfer duty.
• [4] All motions passed except motion 10, which failed to achieve a resolution without dissent when the respondent voted against it, and motion 18, which was withdrawn by the committee.
• [5] The respondent, Beach Stay Partners, is the owner of lot 1 at Catalina Apartments and the caretaking service contractor for both Catalina Apartments and Catalina II. It professes support for the agreement of 16 May 2024, but opposed motion 10 because it was not confident that all other aspects of the agreement would be implemented. It preferred that all measures be authorised at the same general meeting, rather than accepting the surrender of Easement B without any guarantee that the agreed new easements would be created. It feared that the surrender of Easement B could leave its guests at Catalina II unable to access facilities at Catalina Apartments, potentially leading to poor reviews and lost future bookings for its letting business.
• [6] Catalina Apartments says Beach Stay Partners' opposition to motion 10 was unreasonable because:
  1. motion 10 was consistent with the agreement of 16 May, which Beach Stay Partners claims to support
  2. the agreement did not require all measures to be approved at the same general meeting
  3. Beach Stay Partners' property interests at Catalina Apartments were not served by opposing motion 10, as Easement B burdens Catalina Apartments and only benefits Catalina II, and
  4. Beach Stay Partners should not have had regard to its business interests as a letting agent for Catalina II when deciding motion 10.
• [7] Catalina Apartments asks that I give effect to motion 10.

• [8] A decision to accept the surrender of an easement must be made by resolution without dissent.[1] Motion 10 failed with 15 votes in favour and only Beach Stay Partners' single vote in opposition.
• [9] I may give effect to the motion if satisfied it "was not passed because of opposition that in the circumstances is unreasonable".[2]
• [10] Beach Stay Partners' concern that its business might suffer if Easement B was surrendered in the absence of the other measures agreed on 16 May is easy to appreciate. Easement B presently permits occupants of Catalina II, including Beach Stay Partners' customers, to access a games room, BBQ area, sauna, and toilets at Catalina Apartments. Customers may well have been disappointed to find themselves without access to the expected facilities. At least, it was not irrational for Beach Stay Partners to perceive that as a risk and act to minimise it.
• [11] Irrespective of whether the agreement of 16 May required all motions necessary to give effect to the agreement to be considered at the same general meeting, it was open to Beach Stay Partners to question whether the agreement would be implemented in full in their absence. The committee's explanatory note told owners of ongoing conflict about the easements, Catalina II's insistence that new easements be created as agreed, and the committee's unwillingness to pay transfer duties for those new easements. While the committee proposed that each scheme could gain equivalent access to the other's facilities via Shared Facilities Agreements, it also acknowledged that no agreement had been reached with Catalina II about that alternative. The committee's motions contemplated the possibility of continued conflict and litigation with Catalina II. It was not unreasonable for Beach Stay Partners to fear that the agreement would not be implemented in full in these circumstances.
• [12] Catalina Apartments argues that Beach Stay Partners should not have allowed its commercial interests arising from its letting activities at Catalina II to influence its vote on motion 10. It should only have considered its property interests within Catalina Apartments. The applicant refers to the following passages from the majority of the High Court in Ainsworth v Albrecht:

The unreasonableness of the opposition to the first respondent's proposal is to be determined in a context in which lot owners voting in respect of the proposed resolution are exercising their right to vote as an aspect of their proprietary rights as owners of lots included in the Scheme. In this context, the unreasonableness with which Item 10 of Sched 5 is concerned is unreasonableness on the part of the opposing lot owners having regard to those lot owners' interests under the Scheme.[3]

.... opposition to a proposal that could not, on any rational view, adversely affect the material enjoyment of an opponent's property rights may be seen to be unreasonable. 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.[4]

• [13] In the first passage, their honours were rebutting the suggestion that a lot owner's opposition to a motion is unreasonable if they fail to take due account of the interests of the proponent of the motion. The court was clarifying that owners are entitled to vote in their own interests. They are not required to achieve a reasonable balance of competing considerations as the body corporate must when making a decision.[5]
• [14] The second passage must be seen in context. The issue in dispute was a lot balcony extension to be constructed in common property airspace. Owners were being asked to give up their usual rights with respect to a portion of the common property. Their honours were giving examples of where opposition to such a proposal "may" be unreasonable. Even so, they were explicitly not attempting "an exhaustive statement of the circumstances in which such an order may be made".
• [15] I do not take either passage as authority for the proposition that it is unreasonable for lot owners to consider their broader personal interests when voting at general meetings. I cannot think why owners should be expected to disregard logically relevant aspects of their circumstances and make their decisions as though they were naught but lot owners in a vacuum.
• [16] Motion 10 had a logical connection with Beach Stay Partners' letting business at Catalina II. The passage of the former could potentially have had an adverse impact on the latter. It was not unreasonable for Beach Stay Partners to bear that in mind when voting. On the contrary, it was a relevant consideration that supported Beach Stay Partners' opposition to the motion.
• [17] The application is dismissed.

[3] [2016] HCA 40 at [58].

[5] Act, s 94(2); Ainsworth v Albrecht at [51].