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[2018] ACAT 82
ACT Civil and Administrative Tribunal
2018-08-23
Member Sutherland, Member Orr, Member Lennard
Original judgment source is linked above.
(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 merits review of the motion that opposition to the motion was unreasonable;
(a) 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'.
(b) The review is de novo and the Tribunal is able to consider issues of both fact and law.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
Yes. I can understand that they might feel initially worried, but they have already got very wide Crown leases, like public agencies, very valuable shop, bulky goods, they are all ... quite attractive uses, and the market is picking up there very quickly at the moment, so I just can't see ... that it's going to have an impact on the other unit owners and their unit values.[9]
I am certainly no expert in the dollars and dollars per square metre that were discussed before [by Ms Mowbray]. What my advice was about is whether or not the lease purpose clauses and the leases for properties contribute to a diversity of uses or a concentration of uses and whether they collectively create what's called a critical mass and therefore promote, from a market perspective, properties that are noted for their specific sort of attributes that that property provide.[10]
The current lease provides a range of land uses which is reflected in the diversity of businesses occupying the building. However, from a planning perspective there are clear community benefits and enhanced urban outcomes for range of similar or interrelated businesses are located in close proximity.... Adding a dentist is complimentary to the services already provided without competing with other businesses
...from a planning perspective, that the proposed lease variation will have any adverse impact on other businesses in the building. On the contrary we would consider that a building that is fully rented, providing a range of health facilities (e.g. podiatry, physiotherapy, dentist etc), together with other businesses would make a positive contribution due to increased patronage and activity in the immediate neighbourhood. We would expect that an overall increase in activity in and around the building would enhance any other existing businesses (including existing health related businesses) rather than provide any direct competition of threat to those businesses.
In my experience there's, and this is at least from 10 years or more ago and my experience in dealing with ACT government staff and leasing staff at the time, there were two schools of thought basically. One was release land and allow the widest purposes. Others in government involved in it had the reverse school of thought in that they would look at a site and said this is a good site for that use and therefore, and apply that use. So in that sense a lot of the leasing staff were undertaking their own private semi-feasibility studies and determining yes, unit 1 is good for this use and so we'll allow these but unit 2 might be a bit small hypothetically and they would adjust lease purpose clauses accordingly without, you know, the real understanding and it may be that it was the simple fact that unit 10 might have been two square metres smaller than another unit so therefore they added or didn't add a clause to that particular unit. I can't speak on behalf of those authors but there's a whole range of factors that were going through the process at the time leases were written in those days. Not so much in the last few years but certainly 10 or more years ago that was not an uncommon consideration in the preparation of leases.[12]
Mr Dunne, while chairing the meeting, said Mr Clews' request for the Owners Corporation to pass an unopposed resolution in support of the motion could be progressed if Mr Clews were to pay all members of units with a health clause, which allows for a health facility, between $5,000 and $10,000.[14]
MR CHIN: So 12 others. So do you think that you have a competitive disadvantage compared with those 12 others?
MR CAMERON: Obviously I am compared to them, against those 11 others, because I am one of the 12, but I knew that when I bought into the complex, that that was my competition, and I was obviously not thinking there was going to be more competition after that, yes.
MR CHIN: But what is the competitive advantage if there was advantage as between you and the other 11 and Mr Clews of unit 10?
MR CAMERON: We had this separate purpose clauses and Mr Clews doesn't.
I guess we go right back to the day when I first bought the unit. I bought it for a specific purpose... to use it for my business, but also knowing what I can use it for down the track, because I knew my business would eventually outgrow that. Obviously, I did my research. There was other factors of the location, being on the corner, purpose clause. It came with six car spots...
... I looked at all the other units, what they could be used for. Obviously being a commercial property you don't want any competition with everyone else. I've been in real estate for 15 years doing financial brokering. I understand if - an analogy I would like to use is if everybody bought one bedroom units and someone had two-bedroom units and they decided that they wanted to sell their one-bedroom unit compared to everybody else, they are on the same playing field. You buy the two-bedroom unit, then I'm on a different playing field to everyone else. That gives me more advantage to get a better price for my unit.[17]
...If you've got more of the same facility, then the prices aren't going to be as high as if you've got an individual where I can say well, I've got these facilities, compared to that person that hasn't, then I can actually ... a higher premium. The other concern I do have is if I do allow the resolution to go through, what else are we opening the doors to? We may as well put 24 units as all health facility, as the same. Then we are all on the same playing field as everyone else in the units.[18]
... I oppose it because I understand the arguments put forward by the other members that they bought those units with their eyes open on the basis of the, and relying on the purpose clauses in the unit plan. They had, many of them had the opportunity to buy units without those purpose clauses but they chose to buy the ones with. Mr Clews had the opportunity to buy units with those purpose clauses and chose not to so you know, to understand their concern that you know, why should Mr Clews get the benefit of that change because he's been able to find a buyer who is prepared to pay a higher price because of that purpose.[19]
It would and I can guarantee that at some price point, you know, those units would be leased or sold. They're unsold or unleased because the owners still have, well are asking a higher price than the market is prepared to bear. We bought our units at less than half probably what, at a substantial discount to what they originally sold for because the market has moved in Tuggeranong. We've already heard Ms Farrelly testify to that. It's a stagnant market at the moment. You know, in my view Mr Clews wants it rezoned because he can achieve a higher price because he's presented two dentists as potential purchasers so far. He is just looking at that market sector because it's going to be more lucrative for him so the issue to me is: is that fair on the other owners who paid a premium or thought they paid a premium or selected and bought the units they did based on the unit plan and the purpose clauses of all the units in the building.[20]
... the preferable decision is one that will ensure the efficient and effective management of the complex, protect and advance the interests of the owners corporation as a whole, and protect the interests of the individual unit holders[24]
The test is whether the Tribunal is satisfied that opposition to the motion in issue was unreasonable, not "so unreasonable that no reasonable person could have opposed the motion.[26]
...the unreasonableness of the opposition of the first respondents' 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 on an aspect of their proprietary rights as owners of lots included in the scheme. In this context, the unreasonableness with which [the review right] is concerned is unreasonableness on the part of the opposing lot owners having regard to those lot owners' interests under the Scheme.[28]
A person with a property interest may reasonably insist on conserving that interest even if it is not presently being employed to that person's material advantage. That is so, if for no other reason than that he or she may reasonably expect to be offered something in return for agreement to part with it to another lot owner.[29]
[2] [2018] ACAT 54, at footnote 32
[3] Meaney v The Owners Corporation Units Plan 40 [2013] ACAT 72, Owners Units Plan 768 v Lokusooriya [2013] ACAT 80, Brudenall v Owners Corporation Unit Plan No. 202 [2016] ACAT 101; Floro v The Owners-Units Plan No 630 [2017] ACAT 4 at [18]; Uren v The Owners - Units Plan No. 396 [2017] 51; Rampala v The Owners - Units Plan 1330 [2018] ACAT 35
[6] Clause 6(k), "Schedule of Provisions Covenants and Conditions subject to which leases of units are held".
[8] Transcript of proceedings, pages 30, 33
[10] Transcript of proceedings, page 50
[11] Transcript of proceedings, page 56
[12] Transcript of proceedings, page 62
[13] Transcript of proceedings, page 65
[14] Witness statement of Francois Janse Van Rensberg dated 3 May 2018
[16] Transcript of proceedings, page 142
[17] Transcript of proceedings, page 135-136
[18] Transcript of proceedings, page 137
[19] Transcript of proceedings, page 83
[20] Transcript of proceedings, page 87
[21] Transcript of proceedings, page 75
[22] Transcript of proceedings, page 76
[24] Nash v the Owners - Unit Plan 2413 & Ors [2018] ACAT 54 at [58]
[27] The Owners - Unit Plan No 396 v Uren & Blundell [2017] ACAT 100 at [57]
[28] Ainsworth v Albrecht [2016] HCA 40 at [58]
[29] Ainsworth v Albrecht [2016] HCA 40 at [62]
[30] Transcript of proceedings, page 35
[31] See Artico Holdings Pty Ltd & the Owners Unit Plan No 3491 [2012] ACAT 31 for a similar case where there the proposal was largely supported by the corporation, save the objections of only one member.
[32] The Owners - Unit Plan No 396 v Uren & Blundell [2017] ACAT 100
[33] Transcript of Proceedings, Page 11, pages 35-39
CLEWS
THE OWNERS - UNITS PLAN NO 3069
Cases cited: Ainsworth v Albrecht [2016] HCA 40
Artico Holdings Pty Ltd & the Owners Unit Plan No 3491 [2012] ACAT 31
Brudenall v Owners Corporation Unit Plan No. 202 [2016] ACAT 101
Floro v The Owners-Units Plan No 630 [2017] ACAT 4
Lanfranchi & Owners Unit Plan 809 [2011] ACAT 73
Meaney v The Owners Corporation Units Plan 40 [2013] ACAT 72
Nash v the Owners - Unit Plan 2413 & Ors [2018] ACAT 54
Owners Units Plan 768 v Lokusooriya [2013] ACAT 80
Rampala v The Owners - Units Plan 1330 [2018] ACAT 35
The Owners - Unit Plan No 396 v Uren & Blundell [2017] ACAT 100
Uren & Anor v The Owners - Units Plan No 396 [2017] ACAT 51