DALTON v THE OWNERS - UNITS PLAN No 7220

……………………….… Senior Member M. Orlov REASONS FOR DECISION

Introduction 1. The applicant, Ms Dalton, owns and resides in unit 1 of a 24 unit townhouse complex in Fadden. She seeks an order under section 129(1)(g) of the Unit Titles (Management) Act 2011 (UTMA) giving effect to an unsuccessful motion at the annual general meeting on 10 December 2024 to approve her application to alter the rear balcony railing and wiring of her unit, including retrospective approval of changes she made without first seeking the owners corporation’s approval.

2. The respondent is the owners corporation of the complex. The respondent did not take part in the hearing.

3. The first party joined, Ms Feeley, owned one of the units at relevant times and opposed the motion and Ms Dalton’s application to the Tribunal. However, shortly before the hearing date she notified the Tribunal that she had sold her unit and had no further interest or involvement in the matter.

4. This prompted Ms Haggar, who owns and resides in Unit 3, to apply to be joined as a party. Her application was granted. Ms Haggar opposed the motion and Ms Dalton’s application to the Tribunal.

5. The application was heard on 13 May 2025. By prior arrangement with the parties, I viewed the townhouse complex in the morning before the hearing. Ms Dalton and Ms Haggar both gave oral evidence and were questioned by me. Ms Dalton relied on a bundle of colour photographs and a USB drive containing drone footage of the complex. Ms Haggar relied on a written submissions stating her grounds for opposing Ms Dalton’s application.

Background

6. The complex was built in 1992 and comprises 24 townhouses with a mixture of three and four bedroom properties. The three bedroom townhouses have a balcony at the back. The four bedroom properties have balconies at the front. The site is steeply sloping with mature landscaping and provides attractive valley views. There are four rows of six townhouses on each level with each level having its own driveway access off a common driveway located on the side boundary. Individual properties are separated by a mix of brush fencing, Colorbond fencing coloured ‘Jasper’ or ‘Monument’ and timber paling fences. The balconies are generally uniform in appearance with some exceptions mentioned below. The balcony railings are generally of timber construction, comprising a top and bottom rail and vertical timber slats. Some railings are painted in ‘Jasper’, some are not painted and some are oiled. Many balconies are screened by mature landscaping and are barely noticeable from the driveway. Some balconies have been extended in width. The timber balcony and stair railing in unit 4 has been replaced with a Colorbond railing which bears some similarity to the original but with the staircase left unpainted. The balcony railing of unit 17 has been replaced by closely spaced timber slats extending in places over two levels, giving it an almost monolithic appearance

7. Ms Dalton’s unit is located on the far right of the first row of townhouses. She purchased the unit in July 2013. She commenced renovating the interior in about February 2022 using a builder known to her. The work progressed over about an 18 month period. At some stage, Ms Dalton and the builder discussed the possibility of widening the balcony and changing the railings to take better advantage of the view but did not made any firm plans for that to happen. In October 2023, the builder said he could fit her in before Christmas to renovate the balcony. She agreed and the work was completed shortly afterwards. The changes involved widening the balcony and replacing the existing timber slat balcony and stair railing with a railing made of timber and marine wire.

8. In sworn evidence to the Tribunal, Ms Dalton said that she made the decision to go ahead with the balcony renovations at the “last minute”, prompted by the builder telling her that he could fit her in before Christmas. The need to obtain approval from the owners corporation did not enter her head at the time. She acknowledged frankly that she made a mistake and the responsibility to find out whether approval was needed lay with her at all times. Ms Dalton became aware of the need for approval only when a complaint was made shortly after the work was completed.

9. Pursuant to section 106 of the UTMA, the rules of an owners corporation are the default rules prescribed in schedule 1 of the Unit Titles (Management) Regulation 2011 as modified by any alternative rules made under section 108(1) of the UTMA and registered under the Land Titles (Unit Titles) Act 1970. The owners corporation had not modified the default rules in October 2023 when Ms Dalton went ahead with the alterations. Relevantly, rule 1.4 of the default rules provided:

(1) A unit owner may erect or alter any structure in or on the unit or the common property only – (a) in accordance with the express permission of the owners corporation by special resolution; and (b) in accordance with the requirements of any applicable territory law (for example, a law requiring development approval to be obtained for the direction or alteration). (2) Permission may be given subject to conditions stated in the resolution. (3) However, if the structure is sustainability infrastructure, the owners corporation’s permission must not be unreasonably withheld.

10. Ms Dalton sought retrospective approval at the annual general meeting held on 14 November 2023 but members decided to defer consideration of the matter to a later meeting.

11. At the same meeting, members purported to adopt an alternative to default rule 1.4. The minutes of the meeting record that members discussed the executive committee’s proposal to replace default rule 1.4 with a rule that established a more practical process for deciding on approvals for erections and alterations to units. A motion to adopt alternative subrules 1.4(1) – 1.4(4) was carried unanimously. Relevantly, alternative subrule 1.4(2) provided that “a unit owner or occupier may erect or alter any permanent exterior structure only in accordance with subrule 1.4(5) except for the following for which approval is automatically given, provided it complies with the requirements of any applicable law, code or standard in force in the Australian Capital Territory”. The exceptions related to sustainability infrastructure and are not presently relevant.

12. A separate vote was taken in relation to alternative versions of proposed subrule 1.4(5), referred to as Option A and Option B. Under Option A all unit alterations subject to subrule 1.4(5) would be decided by a three quarters majority at a general meeting. Unit owners seeking approval for any alterations requiring an extraordinary general meeting would be liable for the cost of the meeting. Under Option B all unit alterations subject to subrule 1.4(5) would be decided either by the executive committee, or at the executive committee’s discretion, by a simple majority vote at a general meeting.

13. Both options received nine votes, Ms Dalton having lodged an absentee vote in favour of Option B. To break the deadlock a poll was requested based on unit entitlements. Option A received 395 points. Option B received 359 points. The minutes record that Option A was declared carried.

14. This was a mistake. Section 3.16(1) of schedule 3 of the UTMA provides that the requirements for passing a special resolution at a general meeting on a poll are, first, that the voting value of votes cast in favour of the resolution is greater than the voting value of votes cast against it and, second, that the voting value of votes cast against the resolution is not more than one quarter of the voting value of the total number of votes that can be cast on the resolution by people present at the meeting, including proxy votes. The first requirement was met. The second, was not. The voting value of the total number of votes that could be cast on the resolution was 754 points. The voting value of votes cast against the resolution – namely, 359 points – was 48%. Accordingly, the motion should have been declared rejected.

15. For the purposes of this application, it means that default rule 1.4 continues to govern the requirements for approval.

16. A general meeting was held in February 2024 to consider a motion to approve the changes to the unit 1 balcony. The motion was defeated with 9 votes for and 6 votes against the resolution. Ms Dalton brought application UT 42/2024 in the ACAT for an order giving effect to the unsuccessful motion under section 129(1)(g) of the UTMA. However, the decision was found to be invalid due to an error in the voting information issued to owners, which stated that the decision was to be made by ordinary resolution rather than by special resolution.

17. The issue was deferred until the annual general meeting on 10 December 2024, where the motion to retrospectively approve the changes was defeated by 9 votes against and 8 votes for the motion, with one absentee vote abstaining. Six owners did not vote. Even if all six absentee owners had voted in favour of the motion, there would have been 14 votes for and 9 votes against the motion, which was not enough to pass a special resolution.

The requirements of section 129(1)(g) of the UTMA

18. Section 129(1)(g) provides that the ACAT may make 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 a merits review of the motion that opposition to the motion was unreasonable.

19. The conventional approach taken by the ACAT in applications of this kind is to adopt a two-step process. First, it is necessary to conduct a merits review to determine what is the correct or preferable decision in the circumstances. If the Tribunal finds that the correct or preferable decision is to give effect to the motion, it must then consider whether opposition to the motion was 1 unreasonable.

20. I have taken the same approach.

21. The merits review process is sometimes described as the Tribunal “standing in the shoes” of the decision maker. In this case, the decision-maker is the owners corporation. When undertaking a merits review, the Tribunal is required to decide what is the correct or preferable decision at the time of the hearing, considering all relevant issues of fact and law and based on the material available to the Tribunal at the time of the hearing. The ‘correct’ decision may be one that the law compels in a particular set of factual circumstances. The ‘preferable’ decision may be one that involves balancing competing considerations.

22. As the appeal tribunal observed in Clews at [35], unit owners at a general meeting are free to vote on motions in any way they see fit. However, the power given to the ACAT by section 129(1)(g) of the UTMA provides a mechanism for the unreasonable exercise of that freedom to be overridden in appropriate circumstances. Whether opposition to a motion is unreasonable is to be determined objectively. In Ainsworth v Albrecht [2016] HCA 6, the plurality of

1 Clews v The Owners – Units Plan No 3069 [2019] ACAT 63 at [16]-[17] ( Clews); Lloyd v The Owners Corporation – Units Plan No 527 [2021] ACAT 63 at [72]-[76] the High Court observed, while declining to provide an exhaustive statement of the circumstances when an order of that kind should be made, that “…opposition to a proposal that could not, on any rational view, adversely affect the material 2 enjoyment of an opponent’s property rights may be seen to be unreasonable”. Similarly, opposition “prompted by spite, or ill-will…may be seen to be 3 unreasonable in all the circumstances”.

What is the correct or preferable decision in the circumstances of this case?

23. Ms Haggar claimed that opposing owners wished to maintain the “architectural integrity” of the complex by keeping all balcony and stairway railings as vertical slats as “they believe the cohesive appearance of the complex helps protect the financial value in their major asset”. She said opposing owners did not want to set a precedent where other owners would copy Ms Dalton’s alterations such that balconies would become a “random mix of marine wire, wooden slats and perhaps other materials, devaluing the appeal of the complex for themselves and future potential buyers”.

24. Ms Haggar was the only owner to give evidence about the reasons for her opposition to the motion. While the objective fact is that nine owners voted against the motion, it is not possible to draw from that fact alone that all of the owners share the common beliefs that Ms Haggar asserts.

25. Suggesting that keeping all balcony and stairway railings as vertical slats is necessary to maintain the “architectural integrity” of the complex is an overstatement. The design of the balcony railings lacks any intrinsic architectural merit. Objectively, the most that can be said about the design is that it contributes to a general uniformity of appearance of the balconies that is reflective of a style in vogue in the early 1990s when the complex was built. Whether that is thought to be desirable is a matter of subjective opinion.

26. Ms Dalton suggested that “the uniformity and cohesive appearance of the complex provides its visual appeal and ensures it retains its financial value for all owners”. The complex certainly has visual appeal. In large part this is due to its

2 French CJ, Bell, Keane and Gordon JJ at [63] 3 Ibid [63] siting on a steeply sloping block of land giving access to views over the valley. Established landscaping adds considerably to its visual appeal and, to a significant extent, softens and in many cases conceals the lines of the buildings, including stairs and balconies.

27. However, it is an overstatement to describe the complex as having a uniform and cohesive appearance. The most obvious differences are in fencing styles and materials. The lack of uniformity in appearance does not detract from the visual appeal of the complex, at least in part because of the softening effect of established landscaping. There are some differences in balcony railings as mentioned earlier, of which the balcony of unit 17 is perhaps the only one to strike a discordant note despite being constructed of timber slats. While photographs taken from an elevated position tend to emphasise the visual prominence of balcony railings, the impression viewed from ground level is different due to the screening effect of established landscaping.

28. Ms Dalton’s balcony currently can be seen from the main complex driveway. However, she has planted clumping bamboo along her fence line. This will provide a dense, fast growing and non-invasive hedge that will completely screen her balcony from view.

29. The assertion that keeping the balconies uniform in appearance helps to maintain the financial value of owners’ properties is doubtful to say the least. Access to the balconies in every case is from the living area. The current design of the balcony railings means that they significantly restrict expansive views from living areas to the valley. Logically, changing balcony railings to give a lighter, more modern appearance that enhances the view from the living area is much more likely to enhance, rather than detract from, property values. That is certainly the case in relation to the changes to Ms Dalton’s unit. The fear that this may detrimentally affect the value of other units in the complex is overblown and not supported by evidence.

30. Ms Haggar claims that other owners do not want to set a precedent where other owners copy Ms Dalton’s changes so that balconies become a “random mix of marine wire, wooden slats and perhaps other materials, devaluing the appeal of the complex for themselves and future potential buyers”.

31. It may be accepted that if a mish-mash of ad hoc changes were to be permitted to balconies, the result may well be to detract from the overall visual appeal of the complex and affect values as a result. However, every change to a balcony is governed by default rule 1.4 and must be permitted on a case-by-case basis by special resolution of the owners corporation or by the ACAT in an application under section 129(1)(g) of the UTMA. Where permission is withheld or, as happened in this case, not sought beforehand, the UTMA provides remedies that can be tailored to suit the circumstances of the case.

32. If other owners wish to alter their balconies in the same way that Ms Dalton has, there is no reason why they should not do be able to do so provided they obtain permission of the owners corporation by special resolution or, if permission is refused, the ACAT gives effect to a defeated resolution approving the change by an order under section 129(1)(g) following a merits review of the decision. Where the ACAT is satisfied that an owner has breached the rules deliberately – i.e. the circumstances show that the owner decided that it was better to seek forgiveness later than to seek permission beforehand – the ACAT generally will refuse to make such an order.

33. I accept Ms Dalton’s evidence that her failure to seek approval before making the change was inadvertent, rather than deliberate. I have more to say about this in the next part of these reasons.

34. I am satisfied that the changes to Ms Dalton’s balcony enhance the appearance, liveability and value of her unit without detracting in any material respect from the visual appeal of the complex or having any adverse effect on the value of other properties in the complex.

35. The preferable decision in those circumstances is to approve the change.

Was opposition to the motion unreasonable?

36. To put this issue into context it is necessary to provide some additional details by way of background.

37. Ms Haggar said that some years previously Ms Dalton had told her she was intending to change the balcony of her unit and that Ms Haggar had said to her that she would need approval to do so. She was unable to recall when or in what context this conversation took place. Ms Haggar also said that as Ms Dalton had lived at the complex since 2013 and knew that all the balconies were the same, she must know that the balconies could not be changed without seeking approval.

38. Ms Dalton could not recall such a conversation and did not believe that there had been one. She said she and Ms Haggar, although previously enjoying a polite relationship as neighbours, were not close and it was not the kind of thing she would have discussed with Ms Haggar. She swore on oath that the need for approval did not enter her head in October 2023 when she gave the go-ahead to the builder and explained the circumstances in which that happened.

39. Ms Haggar gave evidence on affirmation immediately afterwards. Her answers were revealing. She maintained that Ms Dalton (who is a police officer) is a liar. She acknowledged that she had heard Ms Feeley say to others that Ms Dalton was a liar and that she shared Ms Feeley’s views. She said she believed that Ms Dalton had lied on oath in her evidence to the Tribunal. The only basis for that belief that she could identify was that she had told Ms Dalton previously that she would need approval to change the balcony – although she was unable to say when and in what circumstances the conversation took place – and that Ms Dalton could not have known otherwise because all the balconies were the same.

40. Ms Haggar agreed that in the lead-up to the annual general meeting she spoke to ten or eleven other unit owners, encouraging them to oppose the motion to approve Ms Dalton’s application for approval. Initially, Ms Haggar claimed not to remember whether she had said anything to them about her belief that Ms Dalton had been untruthful. However, she could not think of a reason why she would not convey that view to the people she spoke to. She agreed that she and Ms Feeley had made clear at the directions hearing before me in UT 42/2024 that they believed Ms Dalton was being untruthful and that she had broken the rules deliberately.

41. Ultimately, Ms Haggar agreed that in encouraging other owners to oppose the motion, one of the reasons she gave was that Ms Dalton had been untruthful in her dealings with the owners corporation.

42. While there was nothing wrong with Ms Haggar approaching other owners to garner support in opposition to the motion, doing so on the basis that Ms Dalton had been untruthful in her dealings with the owners corporation was, to say the least, unreasonable.

43. As I have said earlier, I am satisfied that Ms Dalton’s failure to ask for permission was inadvertent rather than deliberate. If I had found otherwise, her application could not succeed because the Tribunal will not reward a deliberate breach of the rules.

44. Ms Haggar’s evidence about a prior conversation with Ms Dalton in which she told her approval would be required was unpersuasive, although I accept that Ms Haggar firmly believes she had such a conversation. Taking Ms Haggar’s evidence at its highest, even if something like that was said it appears to be something said in passing in circumstances that were not sufficiently memorable for Ms Haggar to be able to recall anything about when and in what circumstances the conversation took place. The frailties of human memory are well known. It is eminently believable that even if such a conversation did occur, Ms Dalton would not remember it.

45. The proposition that because Ms Dalton had lived in the complex since 2013 and knew that all the balconies were the same, she must know that the balconies could not be changed without seeking approval is factually inaccurate. Not all of the balconies are the same as mentioned earlier and Ms Haggar could shed no light on whether permission for any of the changes had been sought beforehand. Apart from that, there is no necessary connection between balconies being generally consistent in appearance, subject to the noted exceptions, and an appreciation based on that fact that any alteration to the appearance of the balconies would require permission of the owners corporation.

46. The simple fact is that owners have a responsibility to be aware of the rules and to abide by them. However, as in life generally, people make mistakes either through a lack of understanding or through oversight. I am satisfied that in this case it was the latter.

47. I am satisfied that Ms Haggar lacked reasonable grounds for believing that Ms Dalton had been untruthful in her dealings with the owners corporation and even less so for communicating her belief to other owners as part of her campaign to drum up opposition to the motion.

48. It is apparent that Ms Haggar has a strong belief that people should follow the rules and that a deliberate breach of the rules should not be ‘rewarded’, as she sees it. That is perfectly reasonable. However, her belief that giving retrospective approval to Ms Dalton creates a ‘precedent’ for others to act in the same way – i.e. that it is better to seek forgiveness rather than permission – and that doing so is likely to lead to balconies becoming a “random mix of marine wire, wooden slats and perhaps other materials, devaluing the appeal of the complex for themselves and future potential buyers” lacks any rational basis and, to a significant extent, is rooted in her belief that Ms Dalton’s breach of the rules was deliberate.

49. The inescapable fact is that if Ms Dalton had requested permission before doing the work and permission had been withheld, she would have been entitled to apply to the Tribunal for an order under section 129(1)(g) giving effect to the motion. In that case, the issue for Tribunal would have been whether, after a merits review of the motion, the Tribunal was satisfied that opposition to the motion was unreasonable – in other words, precisely the same issue that is currently before me for decision.

50. Any other owner who wishes to make changes to their balcony would find themselves in the same position.

51. The so-called ‘precedent’ that Ms Haggar fears would be set simply does not exist.

52. Finally, it is necessary to point out that an example appearing at the end of default rule 1.4 states: Example – permission unreasonably withheld external appearance of a unit or units plan

53. The example is not expressed to relate solely to subrule 1.4(3), where the words “unreasonably withheld” are used, in contrast with examples appearing elsewhere in the regulation and in the UTMA where the example is expressed to apply only to specific subsections. In my view the example applies to default rule 1.4 as a whole.

54. Section 132(1) of the Legislation Act 2001, provides that an example is not exhaustive and may extend, but does not limit, the meaning of the provision to which it relates. The example first appeared in the default rules inserted by section 146 of the Unit Titles Legislation Amendment Act 2020 (repealed). It follows that since the date of the amendment, the legislature has decided that it is unreasonable to refuse permission to an external alteration to a unit or units plan on the grounds of its effect on the external appearance of the unit or units plan.

55. This means that the principal ground of opposition to the motion – said to be a change in the “cohesive appearance of the complex” – was unreasonable.

56. It may be open to argue in an appropriate case that there must be limits to how far it may be permissible to change the external appearance of a unit or units plan before refusal of permission would cease to be unreasonable. However, that issue does not arise in this case. Although I drew the example to the attention of the parties and invited submissions about its effect, neither took up the invitation. In those circumstances it is not necessary for me to express a view about any potential limits on the scope of its application.

57. For all of these reasons I am satisfied that opposition to the motion was unreasonable.

58. The appropriate decision in those circumstances is to make an order under section 129(1)(g) of the UTMA giving effect to the motion to approve the changes.

………………………… Senior Member M Orlov