TJHIN & ORS v THE OWNERS - UNIT PLAN NO 15667

2. Each applicant is a townhouse owner and member of the Executive Committee (EC) of the owners corporation.

3. The owners corporation is the respondent.

4. The applicants sought an order under section 129(1)(g) of the Unit Titles (Management) Act 2011 (UTMA) to give effect to a motion that failed to pass at an annual general meeting (AGM) held in January 2025.

5. The motion (Motion 5) proposed a ‘split budget’ under which the proportional share of total general fund contribution would be reallocated between apartment and townhouse units according to benefit, rather than unit entitlement.

6. After hearing from the parties, I determined that opposition to Motion 5 was not unreasonable in the circumstances and dismissed the application. My reasons are below.

Background

7. Unit Plan 15667 comprises 53 units. Each unit is a ‘class A unit’ as described in the Unit Titles Act 2001.

8. The units were built in two stages by different builders. The townhouse units are situated in buildings 1 and 2, and were built as stage one. The certificate of occupancy and use for stage 1 was issued on 9 September 2022. The apartment units are situated in buildings 3 and 4, and were built as stage two. The certificate of occupancy and use for stage two was issued on 10 February 2023.

9. The apartment buildings have underground carparking and internal common areas that can only be accessed with a security pass. Security passes are issued to apartment owners (or their occupants) only. Townhouse owners (or occupants) do not have access to those areas.

10. The development also contains outdoor common areas that are accessible by all unit owners and occupants.

11. The owners corporation is responsible for maintaining all common property (including the apartment-only common areas) and the ‘defined parts’ of the 1 buildings including the townhouse balconies.

12. An inaugural general meeting was held on 18 December 2022. The meeting passed a resolution that owners would pay a general fund contribution into the 2 administrative fund based on their proportion of unit entitlement. This is the 3 default position under the UTMA. The minutes do not record any discussion about adopting a split budget.

13. The first and second AGMs were held on 18 July 2023 and 12 February 2024 respectively. The minutes for the first AGM noted that some building defects with stage 1 had been reported. The minutes for the second AGM did not record new building defects but included a note that the owners wanted to know when the reported defects would be attended to and asked for a copy of the engineers report. Neither set of minutes recorded any discussion about a split budget.

14. During this period, the owners corporation entered into contracts for cleaning of the apartment-only common areas, and fire protection and monitoring for the apartment buildings.

15. On 9 October 2024, the stage two builder went into administration. The owners were advised there may be insurance coverage for internal apartment defects, but the builders warranty insurance was unlikely to cover defects in apartment-only common areas. This was a concern due to the volume and severity of stage two building defects that apartment owners had started to identify.

16. On 11 November 224, the EC held a meeting. After considering various quotes, it decided to engage a consultant engineer to conduct an inspection and prepare a building defects report. The scope of work included an assessment of all

1 UTMA, s 24 2 With an adjustment mechanism to reflect the later completion of stage 2 3 UTMA, s 78(2)(a) apartment-specific common areas, a sample assessment of five apartments internally, and a drone survey of all common area roof (which included the townhouse roofs). The engineer was later instructed to also inspect townhouse balconies which fall within the responsibility of the owners corporation.

17. The EC minutes recorded that an out-of-session decision had been made to engage a law firm to prepare and lodge a claim against the stage two builders warranty insurance (the building defects claim). This was considered urgent due to a 90-day deadline to submit the claim.

18. On 19 November 2024, the strata manager emailed the EC in preparation for the upcoming AGM. He suggested proposing a split budget and raising a one-off special levy payable by apartment owners to cover legal costs associated with the buildings defects claim.

19. On 13 December 2024, the engineers report was issued. The report identified: (a) multiple, systemic and recurring defects within the five sample apartments (i.e. internal defects); (b) multiple, significant defects in apartment-specific common areas, including the underground carpark and apartment stairwells; (c) defects to townhouse balconies and roofs; and

(d) significant defects in general common areas, including the ground level car park and on-site drainage.

20. On 15 December 2024, Mr Tjhin (who is the first applicant and was also the EC treasurer) sent a proposed budget spreadsheet to the EC for consideration. The spreadsheet proposed: (a) for seven budget items – reallocate 100% of the general fund contribution to apartment units. These items were described as ‘Cleaning’, ‘Fire Protection – Repairs & Servicing’, ‘Fire Brigade Monitoring’, ‘Insurance claim QBE – legal fees’, ‘R&M Garage Doors’, ‘R&M Car Park Ventilation’ and ‘Security – Access Cards/Keys’ (b) for the remaining budget items – retain the existing allocation of general fund contribution based on unit entitlement.

21. The spreadsheet contained two tables which showed the difference between the existing and proposed budget.

22. On 24 December 2024, the Notice of Annual General Meeting (the AGM notice) was sent to owners, together with a copy of the spreadsheet. The notice contained Motion 5, which read: SPLIT BUDGET PROPOSAL That the owners agree to adopt a split budget derived from dividing costs between apartments and townhouses where applicable services are associated with one entity. The table below outlines the differences between sticking with the current budget or agreeing to the newly proposed split budget. Key differences in budget line items: • Cleaning of the apartment buildings to be paid in full by the apartments. • Fire protection of the apartment buildings to be paid in full by the apartments. • Fire brigade monitoring of the apartment buildings to be paid in full by the apartments. • Insurance legal fees through Kerin and Benson Lawyers for the QBE Builders claim (Imagine Building Concepts PTY LTD) to be paid in full by the apartments. • Repairs and maintenance (R&M) of apartment garage doors to be paid in full by the apartments. • Repairs and maintenance (R&M) of apartment car park ventilation to be paid in full by the apartments. • Professional reports (unit assessment component only) by Leo and Associates to be paid in full by the apartments. • Security access cards/keys for the apartment buildings to be paid in full by the apartments. Detailed differences in shared costings can be found in the attached spreadsheet.

23. On 14 January 2025, the AGM took place. After a long discussion, owners voted 4 on Motion 5 by poll. As the motion proposed a different method for calculating the general fund contribution other than by unit entitlement (at least in part), it

4 Every vote at a general meeting is of equal value unless a poll is taken. A poll may be demanded by anyone present and entitled to vote at the meeting. On a poll, the value of each vote is proportional to the unit entitlement of the unit for which it is exercised: UTMA, Schedule 3, ss 3.28-3.29 5 needed to be passed by special resolution. Motion 5 was narrowly defeated by 28.21% voting value cast against it.

24. The ACAT application was filed on 28 January 2025.

The ACAT proceedings and overcoming a procedural irregularity

25. Two directions hearings were conducted in this matter due to difficulties with service and to join the second and third applicants.

26. The final hearing was conducted on 20 June 2025. The applicants were self-represented and attended in person.

27. Attending for the respondent were strata managers, Mr Fenton and Mr Deschanel, and the EC chair, Ms Smith.

28. The parties relied on submissions and supporting documents to support their case.

29. There was a procedural irregularity with the response submission and Ms Smith’s participation in the hearing, ostensibly on behalf of the EC.

30. The EC is a group of unit owners elected to make decisions on behalf of the owners corporation. The EC exercises the functions of the owners corporation 6 and is responsible for its day-to-day management. The EC must exercise its 7 functions in accordance with the UTMA and the owners corporation’s rules. Of relevance, the UTMA requires that: 8 (a) business may be transacted at an EC meeting only if a quorum is present; (b) all matters must be decided by a majority of votes of EC members present 9 and voting; and (c) the EC must not commence or defend legal action except in certain 10 circumstances.

5 UTMA, s 78(2) 6 UTMA, s 35(1) 7 UTMA s 36 8 UTMA, Schedule 2, s 2.7 9 UTMA, Schedule 2, s 2.8 10 See UTMA, Schedule 2, ss 2.5-2.6

31. In this case, the EC had not obtained approval by ordinary resolution to defend the ACAT proceedings, and the response submission was authored by Ms Smith and two other EC members without holding a meeting or otherwise transacting the EC’s business in the usual way. This was, perhaps, unsurprising given Ms Smith and her co-authors are apartment owners and the applicants are townhouse owners. However, one owner cannot speak on behalf of all.

32. To avoid a further adjournment, I treated the response submission as having been made by its authors in their personal capacity and not the EC. I also treated Ms Smith’s oral evidence and submissions as given in her personal capacity as an apartment owner. I was satisfied this approach would not prejudice any party and no objection was raised by those attending the hearing. It did not change the outcome in any event.

General fund contributions under the UTMA

33. Section 73 of the UTMA requires the owners corporation for a units plan to establish a fund for the general administration of the corporation. The fund is defined as an administrative fund.

34. Section 75(1) requires the owners corporation, at each AGM, to approve a general fund budget for the financial year in which the meeting is held. The budget must include the administrative fund and each special purpose fund.

35. Section 75(2) prescribes certain budget items that must be included in the general fund budget for the relevant year.

36. Section 78(1) provides that an owners corporation may, from time to time, determine a contribution required by its members for the general fund. This is called the general fund contribution.

37. Section 78(2) provides: (2) The general fund contribution payable for each unit is— (a) the proportional share for the unit of the total general fund contribution; or (b) a proportion of the total general fund contribution worked out in accordance with a method set out by special resolution.

38. In other words, the general fund contribution by each member in any particular financial year will be calculated based on their unit entitlement, unless an alternative method is approved by special resolution.

39. A special resolution under section 78(2) must meet the requirements set out in section 78(3), as follows: (3) A resolution under subsection (2) (b)— (a) must be fair, taking into account— (i) the structure of the unit plan; and (ii) the nature of the buildings that are part of the units or common property of the unit plan, including the features and character of the units and common property; and (iii) the purposes for which units are used, including the likely impact of that use on the common property; and (iv) the extent to which the change imposes a burden on a unit that is commensurate with the use of that unit; and (b) may provide that only stated unit owners, or unit owners in a stated class, are required to pay a particular contribution, or a contribution of a particular kind.

40. If a special resolution to vary the general fund contribution is passed, the 11 resolution is taken to be an alternative rule of the owners corporation, and may 12 only be amended or revoked by a further special resolution or an ACAT order.

The Tribunal’s power to give effect to an unsuccessful motion

41. Section 129 of the UTMA sets out the orders the tribunal may make under that Act. In particular, the tribunal may make an order under section 129(1)(g) as follows: (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 a merits review of the motion that opposition to the motion was unreasonable;

42. There are three options available to the tribunal under section 129(1)(g): (a) make an order giving effect to the unsuccessful motion in its proposed form;

11 UTMA, s 108(5) 12 UTMA, s 78(4) (b) make an order giving effect to the unsuccessful motion in an amended form; or (c) decline to make an order giving effect to the unsuccessful motion and dismiss the application.

43. Section 129(1)(g) requires the tribunal to undertake a two-step process. First, conduct a merits review according to established principles of administrative law to determine what is the correct and/or preferable decision based on the evidence and submissions it receives. Second, is to determine whether opposition to the 13 motion was unreasonable.

44. At the beginning of the hearing, I advised the applicants that even if the Tribunal determined the correct or preferable decision would be to uphold Motion 5, they still faced the significant hurdle of satisfying the Tribunal that opposition to the motion was unreasonable. I asked the parties to address the Tribunal on this first as a threshold issue.

45. For the reasons below, I determined that opposition to Motion 5 was not unreasonable and declined to undertake a full merits review of the proposal.

Was opposition to Motion 5 unreasonable? Legal principles 14

46. The High Court’s decision in Ainsworth v Albrecht (Ainsworth) is one of the leading authorities on what is an unreasonable opposition (or refusal). The High Court confirmed it is not unreasonable for an owner to oppose a motion that would materially affect its rights or interests, even if those rights or interests have 15 less ‘value’ than the owners in favour of the motion.

47. The tribunal has applied Ainsworth in the context of section 129(1)(g) in several cases.

13 This approach has been confirmed in multiple cases, including on appeal in Bonansea v The Owners – Unit Plan No 421 [2019] ACAT 10 14 Ainsworth v Albrecht [2016] HCA 40 15 th For discussion, see Krein.C, Guide to ACT Strata Law (Kerin Benson Lawyers, 8 ed, 2024) pages 672-673 16

48. In Uren & Anor v The Owners – Units Plan No 396 (Uren), the tribunal set out general principles for applying section 129(1)(g) and stated, in relation to unreasonableness: … (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 17 oppose a motion. and that: 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 18 subjective in their essential character.

49. These cases confirm the tribunal’s role is to give consideration to all owners in the objective circumstances, rather than strike a ‘reasonable balance’ between competing interests.

50. There are some important nuances to the test. 19

51. In Bonansea v The Owners – Unit Plan No 421 , Presidential Member McCarthy observed: The Tribunal must focus upon whether the opposition of the other unit owners to the motion was unreasonable, not upon whether the owners corporation acted reasonably in refusing to give approval or the

16 Uren & Anor v The Owners – Units Plan No 396 [2017] ACAT 51 17 Uren & Anor v The Owners – Units Plan No 396 [2017] ACAT 51 at [17] 18 Uren & Anor v The Owners – Units Plan No 396 [2017] ACAT 51 at [18]; these principles were not disturbed on appeal and have been cited with approval in subsequent cases, including in Nash v The Owners – Unit Plan 2413 & Ors [2018] ACAT 54, Clews v The Owners – Units Plan No 3069 [2018] ACAT 82 and Bonansea v The Owners – Units Plan 421 [2019] ACAT 10 19 Bonansea v The Owners – Unit Plan No 421 [2019] ACAT 10 reasonableness of the motion. Nor is it for the Tribunal to achieve what it 20 thinks is a reasonable balance between competing viewpoints. 21

52. Further, in the Uren Appeal , Presidential Member G McCarthy stated: The test is whether the Tribunal is satisfied that opposition to the motion in issue was unreasonable, not so unreasonable that no reasonable person 22 could have opposed the motion.

53. There must also be a connection between the motion and the reason for the opposition. To be reasonable, the opposition must be: … based on a factor or factors that adversely affect the interests of other unit owners in their use and enjoyment of their units, or in the common 23 property as occurred in Ainsworth.

54. In deciding whether opposition was unreasonable in a particular case, the tribunal must consider the information available to owners at the time they opposed the motion. This is a different form of inquiry to the ‘step one’ merits review process under section 129(1)(g) where the tribunal hears the matter ‘afresh’ and may receive and consider submissions and evidence that was not available to the 24 owners who made the original decision.

Why was Motion 5 opposed? 25

55. The AGM minutes recorded the discussion about Motion 5 as follows: • Multiple members raised comments about the benefits and concerns of establishing a split budget. • U17 explained the reasoning behind each budget line item and how they were derived: o Items were allocated based on services associated specifically with apartments. o Percentages were determined using unit entitlements. • Some members expressed concerns that implementing a split budget could negatively impact the neighbourly nature of the complex. • LJH was asked to provide insight based on previous experiences:

20 Bonansea v The Owners – Unit Plan No 421 [2019] ACAT 10 at [30] 21 The Owners – Unit Plan No 396 v Uren & Blundell (Appeal) [2017] ACAT 100 22 The Owners – Unit Plan No 396 v Uren & Blundell (Appeal) [2017] at [66] 23 The Owners – Unit Plan No 396 v Uren & Blundell (Appeal) [2017] at [33] 24 Regarding this aspect of the merits review process, see Russell v The Owner Corporation UP 585 Kingston [2020] ACAT 101 at [52]-[53] citing Bonansea at [20] 25 The minutes are yet to be approved at the next AGM o LJH advised that split budgets are more common and uncommon in similar situations where relevant. During the discussion, unit 17 raised in the meeting that the proposal I put forward would also include in-principle agreement to be recorded in the minutes, that any future expenses which were attributable to townhouses only would be paid for by townhouse owners only.

56. Ms Smith gave evidence that her main reason for opposing Motion 5 was she disagreed that apartment owners should bear the full cost of the engineers report and legal fees. She advised the EC had approved expenditure for those two items prior to the AGM on the understanding the costs would be borne by owners according to unit entitlement. Also, the engineers inspection and report were not limited to apartment-only issues, but also covered defects relating to the townhouses (roofs and balconies) and common areas accessible by all owners.

57. Ms Smith also gave evidence that other owners raised concerns about insurance, and one owner gave their opinion that all owners should bear the cost of fire related assets and monitoring because any fire in an apartment building would affect the asset value of the townhouses.

58. The first and second applicants, Mr Tjhin and Mr Richardson, gave evidence at the hearing and agreed with Ms Smith’s recollection. They recalled a long discussion about specific items not considered in the proposed budget, particularly insurance. They said the owners had approved electric vehicles (EVs) for townhouse units earlier in the meeting, and that this lead to a nuanced discussion about whether insurance costs might increase due to fire risk from rechargeable batteries and if so, whether that cost should be borne by townhouse units. Mr Tjhin agreed that Motion 5 did not specifically deal with insurance which is why he asked the AGM minutes to note an in-principle agreement that townhouse units would bear future costs directly attributable to them.

59. Mr Fenton said he attended the AGM. He gave evidence that he spoke about the risk of separating costs between unit types and the potential impact on neighbourly feelings. He recalled advising the meeting that owners corporations of other mixed-unit developments have adopted a general administrative fund and a separate apartment-only administrative fund to cover the costs of cleaning, lifts and roof maintenance.

60. Mr Deschanel did not attend the AGM. He gave evidence that owners could have arranged to inspect the records and/or ask the strata managers questions before the AGM, but no requests were received. He also said that, in his experience, split budgets can be challenging and generally require significant discussion and inquiry as to how they would work in practice before being approved.

61. The applicants’ bundle of documents included feedback given to the strata managers by two different owners after the AGM. The feedback was that: (a) The proposed split budget did not apply a ‘consistent or equitable framework’ and instead ‘selectively targeted line items associated with apartment infrastructure while leaving shared or ambiguous costs untouched’. This created ‘an equity problem’ (by focussing on costs perceived by townhouse owners to be unfair) and ‘an inconsistency problem’ (by leaving out other costs that ought to be split). The owner referred to insurance as the largest single expense in the administrative fund that would need to be considered under any spit model, including whether townhouses and apartments should be insured under separate policies. (b) Townhouse owners may indirectly benefit from expenditure relating to the apartment defects, and apportioning those costs to apartments only could risk ‘administrative fragmentation, ongoing disputes and a breakdown of the shared-purpose structure that strata schemes are designed to support’. (c) One owner was concerned that Mr Tjhin had a conflict of interest between his role as EC treasurer and his personal interest as a townhouse owner.

The applicants’ case

62. In summary, the applicants argued that opposition to Motion 5 was unreasonable because: (a) The general fund contribution based on unit entitlement was ‘inherently inequitable’ to townhouse owners and caused a risk of disharmony between neighbours. This was because, in their view, the general fund contribution imposed an ‘unfair burden’ on townhouse owners to pay for costs and services for which they received no benefit. Motion 5 would have resolved that problem by ‘re-profiling’ general fund contributions proportionate to benefit and access to common areas. (b) The budget only changed the contribution for budget items that were ‘clearly attributable’ to apartments: (i) The legal fees related to the building defects claim was directly and only related to the stage 2 development and its builder going into administration. (ii) Apartment owners would only cover the ‘unit assessment component’ of the engineers report which specifically dealt with defects arising from the stage 2 development. (iii) The cleaning service contracts had a clear scope of work for apartment-only common areas that townhouse occupants could not access. (iv) The ‘R&M’ costs for apartment garages and basement areas were also for common areas that townhouse occupants could not access. (v) The fire protection and monitoring costs relate to fire extinguishers, alarms and monitoring within the apartment buildings. Fire protection services for the apartments is required by law, whereas the townhouse units have their own smoke detectors.

(c) The proposed budget complied with the requirements in section 78(2)(b) of the UTMA. (d) If approved, the new budget would only apply for that financial year. Any unforeseen costs or issues could be addressed at the next AGM when owners would be asked to vote on the general fund contribution for the following financial year. (e) Owners had a reasonable opportunity to ask questions and inform themselves about how the new budget would work, before or during the AGM. However, some owners came to the meeting with a pre-determined view and this influenced the discussion and voting decisions.

63. The applicants also noted that all townhouse owners present at the AGM voted in favour of Motion 5, and the owners who voted against Motion 5 were apartment owners.

Ms Smith’s argument

64. In their response submission, Ms Smith and her co-authors advised they were not opposed to the concept of a split budget under which costs would be apportioned according to direct benefit. They said that many owners who voted against the motion agreed that costs which solely benefited the apartments should be borne by apartment owners. In this regard, the opposition to Motion 5 should not be interpreted as a blanket opposition to the principle of a split budget, but rather a rejection of that particular motion.

65. Ms Smith and her co-authors submitted that opposition to Motion 5 was reasonable because: (a) Motion 5 lacked detail and procedural clarity. It did not explain how unforeseen costs or future liabilities would be apportioned between townhouse and apartment owners, how and by whom those costs would be approved, and what procedures would be in place to resolve disputes or amend the budget in the future. (b) It would be procedurally unfair to retrospectively alter the contribution for costs that had been approved prior to the AGM and on the understanding that those costs would be apportioned between owners according to unit entitlement. Ms Smith noted the decisions about which firms to engage and their scope of work had been made in November 2024 by a differently constituted EC. (c) Some of the proposed split items impacted all owners even though they stemmed from issues affecting one unit type. This went both ways. The engineers report and legal costs related more specifically to the apartments and apartment-only common areas, whereas the water damage to balconies and roof damage related to townhouse common areas. However, all owners would receive the benefit of these expenditure items regardless of their unit type because any building defects impacted ‘property values, insurance risk and the reputation of the property as a whole’. (d) A split budget would ‘rigidly limit’ access to funds and restrict the owners corporation’s ability to quickly respond to complex, urgent or unforeseen issues.

Consideration

66. Unit owners are generally free to vote on motions put to a general meeting as they see fit. This is qualified by section 129(1)(g) of the UTMA which allows unreasonable votes to be upheld where the Tribunal also determines that giving effect to the proposal is the correct or preferable approach.

67. Any proposed change to the proportional share of the total general fund contribution will invariably have a direct financial impact on all owners. The impact may be positive or negative, and is often disproportionate. The UTMA recognises the significance of this by requiring owners to approve such a change by special resolution.

68. In the present case, the owners had the following information when voting on Motion 5: (a) the wording of Motion 5 as it appeared in the AGM notice; (b) the budget spreadsheet; (c) the discussion and answers to questions at the AGM; and (d) prior communications from the strata managers and EC about the stage 2 defects and building defects claim.

69. There was no question that Mr Tjhin had spent considerable time and effort preparing the spreadsheet and that he had tried to develop a proposal that would be equitable for all owners, despite the focus on apartment-related costs. The sheer number of significant defects with the stage 2 development, coupled with uncertainty caused by the stage two builder going into administration, provided further context as to why the seven ‘apartment-related’ costs were identified as being most urgent.

70. Motion 5 was drafted as a general statement of intent about how costs ‘should’ be allocated between unit types. It tried to address a perceived inequity by reallocating certain costs to apartment units in a ‘user pays’ model, with an initial list of budget items to be reallocated ‘for now’.

71. Motion 5 did not exclude the possibility of reallocating other budget items in the future, but there was no consideration of which items might be added to the ‘list’ under the new model and how that would occur. Insurance was raised at the AGM as a particular concern. This was unsurprising given the stage 2 defects and earlier decision at the AGM to approve EVs for townhouse occupants only.

72. Motion 5 and the budget spreadsheet, as they were drafted, would have directly and disproportionately affected the financial interests of apartment owners with little to no information about how a user pays model might work in the future. In this regard, the proposal was incomplete and lacked necessary detail that enabled owners to determine the cost and/or benefit to them of voting in its favour. The proposal also unintentionally shifted feelings of inequity from townhouse to apartment owners, which was unfortunate but not unreasonable in the circumstances.

73. I did not accept the applicant’s argument that the seven budget items benefitted apartment units only. The engineer’s inspection and report covered common area defects affecting all unit types, as well as townhouse balconies and roofs. Inconsistencies between the description of these budget items in Motion 5 versus the spreadsheet added to the confusion.

74. It is also relevant that the EC’s decisions to approve the engineer’s scope of work and to incur the legal costs were made two months before the AGM when the proportionate share of total general fund contribution was based on unit entitlement. It is quite possible that different decisions may have been made if a ‘user pays’ model was in place (or, at least, contemplated) at the time the EC approved the expenditure. For example, the engineer may have been engaged to prepare two reports, one for internal apartment defects and the other for common property, so that costs could be clearly apportioned between unit types.

75. I did not accept Ms Smith’s argument that a split budget would hinder the EC’s ability to respond quickly and flexibly to unforeseen circumstances. The general fund budget for an owners corporation itemises anticipated expenditure items for the relevant year. The owners corporation may only make payments from the 26 general fund as approved in the budget or by ordinary resolution. By contrast, the general fund contribution prescribes the proportion of the total general fund payable by each unit. Any change to the proportional share of general fund contribution has no impact on whether or how funds can be expended.

76. The split budget proposal was well supported by townhouse owners voting at the meeting, and generally opposed by apartment owners. This was to be expected in the circumstances but was not a sufficient reason to uphold it. The legal authorities confirm that a decision by owners to vote in a manner that protects their own interests does not, itself, constitute an unreasonable opposition. It was also inconsequential that owners did not ask to inspect the records or seek clarity from the strata managers before the AGM. Those enquiries would not have resolved the difficulties with Motion 5, as discussed above.

77. On balance, I determined that opposition to Motion 5 was not unreasonable and dismissed the application.

Final comment

78. Multi-unit developments raise complex issues, particularly financial ones. The outcome of these proceedings should not be interpreted as an opinion that a split budget or user pays model would be unfair or unworkable for Unit Plan 15667. Rather, the parties are encouraged to consider to the feedback and work together in deciding whether to put a more detailed proposal to owners at some later stage.

……………………………….. Senior Member E Morrison Date(s) of hearing: 20 June 2025 Applicants: In person Respondent: Not formally represented but hearing attended by Mr Fenton, Mr Deschanel, Ms A Smith

26 UTMA, s 77