Clews v The Owners Units Plan 3069 (Appeal)
[2019] ACAT 63
•9 July 2019
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
CLEWS v THE OWNERS – UNITS PLAN 3069 (Appeal) [2019] ACAT 63
AA 41/2018 (UT 8/2018)
Catchwords: APPEAL – unit titles – review of motion defeated at general meeting – motion to add to new purpose to a lease required to be unopposed – whether objections unreasonable – whether small current competitive advantage of the objectors and slight but real possibility of detriment to them from the passage of the motion is sufficient to support objections – whether the fact that some objectors purchased units at much less than the appellant is relevant – whether failure to take into account expert evidence as to the effect of the motion – whether failure to offer compensation for the loss of the objectors is relevant
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 79, 82
Body Corporate and Community Management Act 1997 (Qld) s 276
Planning and Development Act 2007 s 247
Unit Titles Act 2001 s 166
Unit Titles (Management) Act 2011 s 129
Cases cited:Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Ainsworth v Albrecht [2016] HCA 40; 261 CLR 167
Brudenall v Owners Corporation Unit Plan No. 202 [2016] ACAT 101
Clews v The Owners – Units Plan No 3069 [2018] ACAT 82
Floro v The Owners – Units Plan No 630 [2017] ACAT 4Meaney v The Owners Corporation Units Plan 40 [2013] ACAT 72
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332
Owners Units Plan 768 v Lokusooriya [2013] ACAT 80Peters’ American Delicacy Co Ltd v Heath (1939) 61 CLR 457
Rampala v The Owners – Units Plan 1330 [2018] ACAT 35The Owners – Strata Plan No 69140 v Drewe [2017] NSWSC 84
Uren v The Owners – Units Plan No 396 [2017] ACAT 51
Wade v The Owners – Units Plan No. 1758 [2018] ACAT 47
List of texts cited:Cathy Sherry, Strata Title Property Rights (Routledge, 2017)
Tribunal:Acting Presidential Member R Orr QC
Date of Orders: 9 July 2019
Date of Reasons for Decision: 9 July 2019
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 41/2018
BETWEEN:
CLAYTON NEAL LORNE CLEWS
Appellant
AND:
THE OWNERS – UNITS PLAN NO 3069
Respondent
TRIBUNAL:Acting Presidential Member R Orr QC
DATE:9 July 2019
ORDER
The Tribunal orders that:
1.The appeal is dismissed.
………………………………..
Acting Presidential Member R Orr QC
REASONS FOR DECISION
1.The original applicant and now appellant in these proceedings is Clayton Clews (applicant, appellant or Mr Clews) the owner of unit 10 in Units Plan 3069 (UP 3069), which comprises 24 commercial premises.
2.Mr Clews made an application under section 129(1)(g) of the Unit Titles (Management) Act 2011 (Unit Titles Management Act) seeking orders that the Tribunal give effect to a motion at a general meeting held on 25 January 2018 which failed because of the opposition of other owners (motion, discussed at paragraph [14] below). In summary, the motion sought to allow the owner of unit 10 to have a lease variation to broaden the permitted purposes to include “community use.” Such a change of lease requires an unopposed resolution. In this case the motion was opposed.
3.The Owners – Units Plan No 3069 (owners corporation) was the respondent in these proceedings and opposed the application.
4.The tribunal constituted by Senior Member H Robinson heard the application (original hearing and original tribunal) and dismissed it, and the reasons for doing so are set out in Clews v The Owners – Units Plan No 3069 [2018] ACAT 82 (original decision). As indicated by section 129(1)(g) of the Unit Titles Management Act the original decision considered two relevant issues: namely, first a merits review to determine the correct and preferable decision; and second whether the objectors’ objections were unreasonable. The original tribunal found in favour of Mr Clews on the first issue and held that the decision was not the preferable one. But found against him on the second issue, that is, it held that the objections were reasonable because the objectors had broader permitted purposes which gave them a slight commercial advantage over Mr Clews, and allowing the addition of a new use would give rise to a slight but real possibility of a detriment to them. Mr Clews now appeals this decision.
Summary of this decision
5.There was no challenge to the finding of the original decision in favour of Mr Clews that the decision was not the preferable one.
6.The challenge by Mr Clews was that on a range of grounds the objectors’ position was unreasonable, and that the motion of Mr Clews should be given effect. This Tribunal, like the original tribunal, has significant sympathy for the difficult position in which Mr Clews finds himself, where the current purpose clause of unit 10 has been an obstacle to him selling or renting his unit. But this Tribunal thinks that the original tribunal was correct in thinking that the opposition to the change was reasonable.
7.The objectors had a minor commercial advantage arising from their broader purpose clauses, and there is the slight but real possibility of a detriment to them if the purpose clause for Mr Clews’ unit is expanded. It was not unreasonable for them to seek to protect their position by voting to stop Mr Clews from expanding the purpose clause to his unit. The fact that some of the objectors paid much less for their units than Mr Clews did for his did not undermine this decision. It is true that this is only a minor advantage, but it is none-the-less one which it was reasonable for them to seek to protect.
8.The appellant has not made out any errors of fact or law in the original tribunal decision, and therefore the appeal is dismissed.
Background
9.The background and legal framework in relation to this matter are set out in the original decision. In summary this is as follows.
10.Section 247(1) of the Planning and Development Act 2007 (Planning Act) provides that Territory land, or a building or structure on Territory land, in relation to which a lease has been granted, may not be used for a purpose other than a purpose authorised by the lease. Under UP 3059, Schedule of Provisions Covenants and Conditions Subject to which Leases of Units are held, all 24 units can be used for a variety of common commercial purposes. The UP 3059 also states that some units have additional permitted purposes. Most relevantly, units 1, 3, 5, 6, 7, 14 and 19-24 may be used for the purpose of “health facility.” Health facility is defined to mean “use of the parcel for providing health care services (including diagnosis, preventative care or counselling) or medical or surgical treatment to out-patients only.” The UP 3059 does not provide that unit 10 can be used for the purpose of a health facility.[1]
[1] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [7]-[11]; AB 403-430
11.Mr Clews has owned unit 10 for more than ten years. It has been unoccupied for six of those years. This is, at least partially, due to a depressed commercial property market in the Tuggeranong Valley. The unit has been on the market for some time, and the holding costs are significant.[2]
[2] Ibid at [12]
12.During the time that unit 10 has been on the market, Mr Clews has received enquiries from two separate dentists who wished to purchase it, but only if it could be used as a dental surgery. As it currently cannot be so used, neither sale was finalised. There have been no other serious offers.[3]
[3] Ibid at [13]
13.Section 166 of Unit Titles Act 2001 (Unit Titles Act) sets out when a variation to a unit or common property lease can be made. The requirements include that all members of the owners corporation have been given notice of the proposed application, and the application is authorised by unopposed resolution. An “unopposed resolution” is a resolution of the owners, at a general meeting, where “no votes are cast against the resolution.”[4]
[4] Ibid at [15]
14.At a general meeting of the owners corporation on 20 March 2017, Mr Clews informed the other members of his desire to change the purpose clause for unit 10 to permit it to be used for a dental surgery. A proposed motion to amend the purpose clause to allow a dentist to operate was put first at the annual general meeting on 19 June 2017. The motion failed. Mr Clews then obtained two expert reports and circulated them to other owners. He put a motion to the owners again at a general meeting on 25 January 2018, this time seeking approval to change the purpose clause to include “community use”. The note to the motion stated that “community use” is defined in the Territory Plan to include:
Child care centre; community activity centre; community theatre; cultural facility; educational establishment; health facility; hospital; place of worship; religious associated use.
No other lease at the centre includes this use. This was the only motion on the agenda. Again, the motion failed. The draft minutes for the general meeting held on 25 January 2018 record that when Mr Clews’ motion was put to the vote, one owner voted for the motion and two votes were cast against it. No further votes were counted because the motion was not capable of passing unopposed. [5]
[5] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [16]-[19]; minutes of the owners corporation general meeting held on 25 January 2018 at [2], appellant’s documents at pages 23-24; AB 403-430
15.Section 129(1)(g) of the Unit Titles (Management) Act 2011 (Unit Titles Management Act) allows the tribunal to 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. Mr Clews sought such an order.
Consideration by original tribunal
16.The original tribunal held that that it was appropriate to adopt the approach taken in Floro v The Owners-Units Plan No 630 [2017] ACAT 4 at [18], and applied in a number of cases, namely first to conduct a merits review to determine the correct and preferable decision,[6] and then second to consider whether the objections were unreasonable.[7]
[6] See also 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; Uren v The Owners – Units Plan No 396 [2017] 51; Rampala v The Owners – Units Plan 1330 [2018] ACAT 35
[7] See also Ainsworth v Albrecht [2016] HCA 40, 261 CLR 167; The Owners – Strata Plan No 69140 v Drewe [2017] NSWSC 845; Uren v The Owners – Units Plan No 396 [2017] 51
17.While the appeal challenged generally the original decision, it did not specifically challenge this approach. This Tribunal accepts that this is the appropriate approach.
Merits review of the proposal
18.The original tribunal conducted a merits review of the proposal to consider whether the decision at the general meeting was the correct and preferable approach.
19.In this case, Senior Member Robinson accepted that the decision which would best protect and advance the interests of the owners corporation as a whole was a decision which would enhance the attractiveness of the building to tenants so that it would be fully, or nearly fully, let.[8]
[8] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [55]
20.But the original tribunal also noted the need to balance this against the interests of individual unit owners. The original tribunal was not satisfied that the motion was likely to affect the value of any other unit in any real or substantial way.[9] However, it was noted that the change in use for unit 10 would potentially increase competition for the other unit owners who can use their units for medical services.[10]
[9] Ibid at [57]
[10] Ibid at [58]
21.The original tribunal concluded on this issue at [63]:
In undertaking a merits review, it is necessary to balance the loss of this fairly marginal existing benefit, or interest, in maintaining a competitive advantage against other unit holders against the broader concerns [and] interests of the owners’ corporation and the pressing concerns of the applicant. An argument could be made that, in the totality of the circumstances, changing the purpose clauses of one unit, and even perhaps of all units, is justified in the interests of getting a fully tenanted building, and is therefore the preferable decision. On balance, I tend to this view, although it is not an easy decision, as it clearly takes away a competitive advantage held from some individual unit holders.[11]
[11] Ibid at [63]
22. That is, on the first step of the process under section 129(1)(f) of undertaking a merits review of the decision, the original tribunal found in favour of Mr Clews. The respondent did not challenge this decision.[12] Therefore this Tribunal accepts this finding of the original tribunal.
Were the objections unreasonable?
[12] The appellant did argue that the original tribunal failed in its duty to carry out a merits review, but this appears to be a mistaken formulation since the original tribunal found for him on the merits review issue, see reasons for appeal at [10]; appellant’s submissions at [6], page 9
23.The second issue was whether the opposition to the proposal was unreasonable. The original tribunal noted that the assessment of unreasonableness is an objective one. Here the units are commercial ones, from which people run businesses. It was understandable that the objectors would be concerned about actions that have the potential to affect the return on their investment. Their interest or competitive advantage was not immaterial, subjective or illusory.[13] The original tribunal discussed in particular the effect on one unit owner, Mr Huynh, to illustrate the practical effect of the change on the objectors, and I return to this below.[14]
[13] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [70]
[14] Ibid at [71]
24.Further, on the basis of Ainsworth v Albrecht[15] (Ainsworth), there was no obligation on the other lot owners to assist another, in this case Mr Clews, out of altruism or sympathy.[16] Further again, the opposition will not be unreasonable if for no other reason than that the objector may expect something in return for giving up the right.[17]
[15] [2016] HCA 40, 261 CLR 167
[16] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [72]
[17] Ibid
25.It was also noted that Mr Clews’ difficulties arise principally from section 166 of the Unit Titles Act. This requires the unopposed approval of the other owners to any variation. There are a range of other provisions which also require an unopposed resolution, which it was noted go to matters of fundamental importance to the operation of the body corporate. And it was said that in this case some weight must be given to the fact that a not insubstantial number of the other unit holders have concerns with the proposal.[18]
[18] Ibid at [73]
26.In relation to this issue the original tribunal concluded at [74] as follows.
I am satisfied that the opponents’ objections to the motions are based on their assessment as to their own commercial, financial and, in one case, family interest. There is no guaranteed benefit to the rest of the owners from the applicant’s proposal, and there is the slight but real possibility of a detriment. That slight possibility will become significantly greater if other owners in similar positions to the applicant seek similar amendments to the crown lease. The applicant has offered the objectors nothing in exchange for foregoing their interests. In all these circumstances, the objectors’ opposition is not unreasonable, and consequently I dismiss the applications for orders under section 129(1)(g) of the UTM Act.
Appeal
27.Mr Clews lodged an application for appeal dated 20 September 2018 (application for appeal). This set out in annexure A wide ranging reasons for appeal (reasons for appeal) which are considered below.
28.Mr Clews sought by application dated 18 October 2018 to have the appeal removed to the Supreme Court, but this application was refused by order dated 9 November 2018.
29.The appeal was heard on 6 February 2019. Mr Michael Chin of Maxwell & Co appeared for Mr Clews. Mr G Brackenreg instructed by Meyer Vandenburg appeared for the owners corporation. The appellant provided a document called ‘plaintiff’s submissions in support of the appeal’ dated 16 January 2019 (appellant’s submissions); a plaintiff’s list of errors of fact, errors of law and discretionary errors dated 16 January 2019 (appellant’s list of errors); and an outline of appellant’s submissions (appellant’s outline).
30.The respondent provided a respondent’s outline of submissions dated 30 January 2019 (respondent’s submissions). The respondent usefully provided an appeal book which included documents from the original hearing (AB).
31.The appeal was conducted as a review of the original decision under section 82(b) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act).
32.Counsel for Mr Clews sought to lead further evidence in the appeal.[19] The respondent usefully provided a bundle of the relevant documents called ‘Documents sought to be adduced by the appellant’ (appellant’s documents). One category of documents in the appellant’s documents were documents which were before the original tribunal, and no objection was taken by the respondent to them being before this Tribunal. These were documents 1, 2, 4, 8 and 9 in the appellant’s documents.[20] Documents 3, 5, 6, and 7 were in a similar position and were also admitted as evidence subject to relevance.[21]
[19] Reasons for appeal at C
[20] Transcript of proceedings 6 February 2019 at page 9, lines 9-10
[21] Transcript of proceedings 6 February 2019 at page 23
33.The second category of documents were title searches of units in the complex undertaken on 14 December 2018, which showed the dates on which the units were most recently purchased and the price paid. These were admitted as evidence over the objection of the respondent.[22]
[22] Transcript of proceedings 6 February 2019 at page 27
34.The third category was a further statement by Mr Clews dated 11 December 2018. This was also admitted as evidence over the objection of the respondent.[23] Mr Clews also gave further evidence confirming the statement.[24]
Basic approach
[23] Transcript of proceedings 6 February 2019 at pages 34-35
[24] Transcript of proceedings 6 February 2019 at page 38
35.Unit owners at a general meeting are free to vote on motions however they see fit. They are equivalent to shareholders of a corporation,[25] or voters in a democracy.[26] However, the power in section 129(1)(g) of the Unit Titles Management Act allows unreasonable votes in relation to unit titles management to be overridden. In my view, the concept of unreasonable means objectively unreasonable in the particular context.
[25] Peters’ American Delicacy Co Ltd v Heath (1939) 61 CLR 457 at 504 (Dixon J)
[26] Cathy Sherry, Strata Title Property Rights (Routledge, 2017) page 48
36.In Ainsworth the High Court[27] considered this type of provision[28] in the context of proposed construction by Mr Albrecht on common property airspace between two balconies to a unit owned by him, but opposed by Mr Ainsworth and other unit owners, and stated at [55] that it:
…is no light thing to conclude that opposition by a lot owner to a resolution is unreasonable where adoption of the resolution will have the effect of appropriating part of the common property to the exclusive use of the owner of another lot, for no return to the body corporate or the other lot owners; … and potentially creating a risk of interference with the tranquillity or privacy of an objecting lot owner.
[27] French CJ, Bell, Keane and Gordon JJ. There is a separate judgment by Nettle J.
[28] Section 276(3) together with item 10 of Schedule 5 of the Body Corporate and Community Management Act 1997 (Qld) provided that if satisfied that a motion considered by a general meeting of the body corporate and requiring resolution without dissent was not passed because of opposition that in the circumstances was unreasonable, an adjudicator may make an order giving effect to the motion, see Ainsworth at [16]-[17]
The judgment at [57] noted that nothing in the relevant legislative scheme suggested that an opponent to a proposal acts unreasonably in failing to act sympathetically or altruistically towards a proponent who seeks to diminish the property rights of the opponent.
37.However, the High Court stated that while it was neither necessary nor desirable to attempt an exhaustive statement of when an order should be made, that “… 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”.[29] Similarly, it noted that opposition “prompted by spite, or ill-will, or a desire for attention, may be seen to be unreasonable in all the circumstances”.[30] In the case before the Court the proposal “was apt to create a reasonable apprehension that it would affect adversely the property rights of opponents of the proposal and the enjoyment of those rights.” [31] The opposition could not therefore be said to be unreasonable.
Need for objective unreasonableness ground of appeal
[29] French CJ, Bell, Keane and Gordon JJ at [63]
[30] Ibid [63]
[31] Ibid [64]
38.A key ground of appeal was that the original tribunal applied a subjective test of unreasonableness rather than an objective test.[32] In brief summary, the argument was that whilst the objectors thought they had an interest which would be affected by the change of use, this was objectively incorrect.
[32] Reasons for appeal at A[1]; appellant’s submissions page 1 at (a); appellant’s list of errors at [1]
39.The respondent’s position was that the primary reason for the opposition to the motion was that in passing the motion the members would be giving Mr Clews a commercial advantage in attracting tenants over their own properties, or tenants who might compete with their own businesses. It was said that these reasons are not about the value of the property, but are a “special proprietary interest” that the objectors currently have.[33]
[33] Respondent’s submissions at [17]
40.The original tribunal clearly held that the test for unreasonableness was an objective one, and that the objectors currently have an objective competitive commercial advantage, because their units can be used for health purposes where Mr Clews’ unit cannot, which they will lose if the motion passes.[34] There was no error in this regard. But the general finding of objective unreasonableness was challenged on a number of particular bases.
New evidence of title searches
[34] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [67]-[74]; ]
41.Mr Clews challenged the finding that the objectors had a current commercial advantage on the basis of facts surrounding the purchase of units by the objectors.[35] Further evidence in the form of the title searches of 12 of the units was provided. It was argued that the highest prices for units were paid by Mr Clews for units 8 and 10 of $638,000 and $539,000 in 2007. Mr Huynh also purchased unit 6 in 2007 for a comparable $550,000. In contrast Mr Cameron’s company purchased his unit 7 in 2012 for $385,000. Mr Dunne’s company purchased eight units in 2015 for a total of $871,500.[36]
[35] Reasons for appeal at A[4], [7] and B; appellant’s submissions page 1 at (b), pages 4-5 at [1]-[2], page 7 at [3](b), page 8 at [4](b), page 10 at [6]; appellant’s list of errors page 1 at [1] and [2], page 2 at [3](b), page 2 at [4](a) and (b), page 4 at [6]; appellant’s outline at D, pages 4-6
[36] Appellant’s documents; transcript of proceedings 6 February 2019 at page 86, lines 20-45
42.Mr Clews referred in particular to the response of the respondent in the original hearing (response in original hearing), which made some comments under the heading “Commercial Disadvantage” and “Competitive Disadvantage” at pages 1-2. I set this out in part since it played an important part in the appeal.
Commercial Disadvantage
Current owners purchased their units for the purpose clauses as stated in the Units Plan … Owners/Investors opted for particular units with the wide range of purpose under the Crown Lease.
Pricing was higher for those units with wider purpose clause. …
A premium was paid for position, size and unrestricted use under the Crown Lease in the reasonable expectation that such investments would produce higher yield return and resale value compared to other units that do not have the same purpose clause breadth in their lease.
…
Competitive Disadvantage
Unit owners purchased their units with the clear understanding that competition with similar business would be limited by the Unit Plan purpose clause.
Unit owner 6 bought the property with the intention of setting up a dental business and does not want further competition at this location beyond what is already provided for in the Unit Plan.
The Units Plan (see Attachment C) clearly identifies the additional purposes allowed for specific units and this information would have been considered by any unit owner in purchasing the property.[37]
[37] Respondent’s response in the original hearing at page 1-2, AB 199-200
43.Mr Clews attacked these statements as false based on the further evidence. He stated that the new evidence showed that the highest prices paid for units were in fact paid by himself, that Mr Cameron was not an original owner and purchased unit 7 later for less than Mr Clews, and that Mr Dunne was not an original owner and purchased his units later for considerably less than Mr Clews.
44.The appellant said that any advantage obtained by the objectors was in effect a windfall; the objectors paid nothing for it.[38] It was also said that the change would not reduce the objectors’ lease purpose clauses.[39]
[38] Transcript of proceedings 6 February 2019 at page 81
[39] Transcript of proceedings 6 February 2019 at page 96
45.The respondent argued that the evidence before the original tribunal in fact acknowledged that different people were in different positions. It pointed out that Mr Cameron and Mr Dunne represented what their understanding was of the original owners’ views. It noted that Mr Dunne specifically acknowledged that he bought his units at less than half of what they originally sold for, that is at a substantial discount.[40] This evidence is quoted at [47] of the original decision.
[40] Respondent’s submissions at [24]; transcript of proceedings 19 June 2018 at pages 83, 87 & 139
46.The position of Mr Huynh was a bit more complicated. Mr Huynh did not give evidence at the original hearing but the original tribunal stated that his position was agreed between the parties. This position was apparently that he has a daughter who is currently studying dentistry, and he is intending to allow her to lease or purchase the unit to set up practice. His admitted reason for not wanting to amend the purpose clause for Mr Clews’ unit was that he did not want another dentist, a potential competitor, setting up a practice in the building.
47.The agreement between the parties in relation to Mr Huynh seems to arise from attachment A to the original application where Mr Clews himself stated that unit 6 includes the purpose of health facility in its purpose clause, an accounting business is currently in this unit, but:
…the owner of this unit … says he opposes the variation of the purpose clause for Unit 10 because he wishes to reserve the right to sell or lease his unit to his daughter who is currently in her final year of dentistry.[41]
[41] Attachment A of original application filed 14 March 2018 at page 6; transcript of proceedings 19 June 2018 at pages 174-175
48.At some points it appeared that Mr Chin on behalf of Mr Clews was stepping away from the concession made in relation to Mr Huynh. But it does not seem appropriate for him to be able to do so in an appeal, and in particular because of the statements made in the original application.
49.More generally Mr Chin argued that it was not reasonable that Mr Huynh had bought a unit in 2007 with the intention of using it to support a dental business for his daughter. I do not see how such a plan can be said to be unreasonable. The basic point is it seems to me that Mr Huynh bought a unit at about the same time as Mr Clews for about the same price, but his unit was able to be used for a dental practice, and Mr Clews was not, which Mr Huynh sees as a benefit especially since his daughter is studying dentistry.
50.Generally, the Tribunal accepts on this basis that the response in the original hearing overstated the position of the objectors and was arguably misleading in parts. It is not the case that for all current owners pricing was higher for those units with a wider purpose clause and that a premium was paid for unrestricted use.
51.But the response only put forward the position of the respondent, and not the whole of the evidence or the position of the original tribunal. As noted there was evidence before the original tribunal which reflected the correct position. Further, and most importantly, the finding of the original tribunal was that there was no evidence that Mr Cameron actually paid a premium, but nor was there any convincing evidence he did not. All the tribunal did was accept Mr Cameron’s evidence that the somewhat broader purpose clause was a factor he took into account when deciding which of the units to purchase, but not the only factor.[42] The original tribunal quoted, and impliedly accepted, Mr Dunne’s acknowledgment that he bought units at less than half the original price because the market had moved in Tuggeranong.[43]
[42] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [43]
[43] Ibid at [47]
52.While the market changed between the purchases by Mr Clews and Mr Huynh on the one hand, and those of Mr Cameron and Mr Dunne on the other, even in the new depressed market, what Mr Cameron and Mr Dunne received were leases with a broad purpose clause, in a complex in which some people, in particular Mr Clews, had a narrower purpose clause. Even if obtained in a depressed market, this is still a minor benefit to them, and broadening Mr Clews’ purpose clause would still involve a slight but real possibility of detriment to them.
53.The respondent referred to Wade v The Owners – Units Plan No. 1758 [2018] ACAT 47 which raised a related issue. In that case a previous owner of a unit built a fence which enclosed not only the backyard of the unit but also a significant area of common property. The current owner bought the property in that condition, wrongly believing that the whole fenced area belonged to the unit, and that none of it was common property. A motion proposing to grant a special privilege to the owner over the fenced common property was defeated, and the owner sought review of this decision. The tribunal had significant sympathy for the owner, but held at the merits review step that she should have satisfied herself at the time of purchase as to what was her backyard, and that it was unreasonable in effect to ask the other unit owners to compensate her for the mistake.[44] It was argued that this suggested that it was not unreasonable in this case, where Mr Clews was not mistaken about what he bought, for the objectors to oppose a motion to remedy a disadvantage that Mr Clews suffered through his knowing purchase, and to seek to maintain any advantage they had as a result of their knowing purchase, even if this advantage can be characterised as a windfall.
[44] Wade v The Owners – Units Plan No. 1758 [2018] ACAT 47 at [69]
54.The new evidence does not therefore undermine the key finding of the original tribunal that the current situation gives the objectors a slight commercial advantage, and passage of the motion would bring about a slight but real possibility of a detriment.
Failure to take into account expert evidence ground of appeal
55.The appellant also argued that the original tribunal failed to take into account the objective expert evidence of the applicant and accepted the subjective evidence of the objectors.[45]
[45] Reasons for appeal at A[2], [3] and [8]; appellant’s submissions page 2 at [d], page 4 at [1], page 7 at [3](a),; appellant’s list of errors page 2 at [3](a), page 3 at [4](a) and (b), page 4 at [5]
56.The original tribunal considered the evidence of Carolyn Mowbray, a certified practising valuer, at [21]-[25] of the original decision. Ms Mowbray said that the amendment of the purpose clause would not affect the value of unit 10 or the other units, but that the overall commercial value would be determined by a lot of factors including the uses to which it could be put, but adding the purpose of community facility or health facility was unlikely to add much value in these circumstances. Later at [71] the tribunal noted that Ms Mowbray seemed to indicate it would be reasonable for the owner of a unit with a dentist in it, or potential dentist in it, not to want another dentist next door.[46]
[46] Transcript of proceedings 19 June 2018 at page 35
57.The tribunal also considered the evidence of Mr Fitzpatrick of Purdon Planning at [26]-[39]. Mr Fitzpatrick highlighted the benefits of a building that is fully rented, that an increase in activity would enhance existing businesses rather than provide any direct competition. He stated that amendments were very common.
58.But Mr Fitzpatrick stated that a broader purpose would not add value to the property but it makes it easier for the owner at some later stage to lease or sell the property. He stated that from a planning perspective the broader use is the way to go.[47]
[47] Transcript of proceedings 19 June 2018 at page 65
59.This evidence was picked up by the original tribunal at [31] which stated that Mr Fitzpatrick did not accept that increasing the purposes would increase the value of a unit, but he agreed that changing the purpose may make the unit easier to rent.
60.The original tribunal saw both these witnesses give their oral evidence, and relied on it.
61.As the respondent argued, rather than failing to take into account this evidence, it was the basis of the original tribunal’s finding that on a merits review, the correct and preferable decision was for the motion to pass.[48]
[48] Respondent’s submissions at [61]
62.But as discussed, the question as to whether the objectors’ position was unreasonable is a different one. The original tribunal considered the evidence of Ms Mowbray and Mr Fitzpatrick both of whom acknowledged some benefit in a broader purpose clause. Further the original tribunal considered in particular the position of Mr Huynh, the owner of unit 6, who has a daughter studying dentistry and who is intending to allow her to lease or purchase the unit to set up a practice. The original tribunal noted that Mr Huynh’s reason for not wanting to allow amendment of the purpose clause was that he did not want another dentist setting up a practice in the building, even though a number of units could already be used for this purpose.[49] In considering unreasonableness, the original tribunal noted the position of Mr Huynh, and that Ms Mowbray seemed to indicate it would be reasonable for the owner of a unit with a dentist in it, or potential dentist in it, not to want another dentist next door, just as it would be for a real estate agent not to want another real estate agency next door.[50] On this basis the original tribunal did not find it unreasonable for Mr Huynh to seek to protect the commercial advantage that his broader purpose clause gives him.[51]
[49] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [44]
[50] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [71]; transcript of proceedings 19 June 2018 at page 35
[51] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [71]
63.As noted the original tribunal found for the appellant on the merits review, principally on the basis of the expert evidence of the appellant. But the formulation of the original tribunal was that there was a slight but real possibility of detriment from the proposed motion which made their objections reasonable. This was a conclusion which did not ignore the expert evidence of the appellant, but in part relied on it.
64.I do not think there is a basis for finding that the original tribunal did not pay proper regard to the expert evidence.
Lack of objectors’ evidence of competition or current advantage ground of appeal
65.One of the arguments of the appellant seemed to be that the objectors had not themselves put forward evidence of competition between Mr Clews and the objectors,[52] nor had they put forward evidence to support their view as to their current advantage, nor that they could put that current advantage to any economic benefit. Mr Chin noted that the appellant had led evidence that two dentists had approached him. But there was no evidence that either of those dentists or any other dentist had approached any of the 12 owners who have got health facility in their purpose clause and asked them if they could lease or purchase their unit. On this basis it was said that the assertions by the other unit owners that they would lose a commercial advantage was a fallacy. Their objection was unreasonable because there was no basis in fact for any advantage. [53] There was it was said no evidence of any competition between the appellant and the other owners.[54] Further it was said that the original tribunal did not make adequate inquiries as to the alleged competitive advantage of the objectors.[55]
[52] Transcript of proceedings 6 February 2019 at page 69
[53] Transcript of proceedings 6 February 2019 at pages 53-54
[54] Transcript of proceedings 6 February 2019 at page 69
[55] Transcript of proceedings 6 February 2019 at page 69
66.In particular it was said that Mr Huynh purchased his unit in 2007, it is now used for an accountancy practice, and it was unreasonable for him to say that he bought with the intention of setting up a dental practice for his daughter.[56]
[56] Transcript of proceedings 6 February 2019 at pages 64, 66 and 67
67.I do not think it was necessary for the respondents to provide evidence of the value of their competitive advantage, nor that someone was willing to purchase that, nor that someone who was interested in Mr Clews’ unit was also interested in their units. It flows simply from the fact of their interest that it is of some benefit to them. It is similar in some respects to the interest of the objectors in Ainsworth. This had no independent economic value; there was certainly no evidence that anyone would or could purchase it. But on the face of the situation, it was clear that loss of the interest could potentially create a risk of interference with the tranquillity or privacy of an objecting lot owner.
68.At any rate, the evidence of Mr Fitzpatrick was that changing the purpose may make the unit easier to rent. Ms Mowbray seemed to indicate it would be reasonable for the owner of a unit with a dentist in it, or potential dentist in it, not to want another dentist next door.[57] To some extent these witnesses gave evidence that supported the view that there was competition and current advantage in a broader purpose clause where some people had a narrower clause.
Immaterial effect on objectors ground of appeal
[57] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [71]; transcript of proceedings 19 June 2018 at page 35
69.The appellant’s counsel argued at the hearing that the interest of the objectors was so minimal as to be immaterial and not provide a reasonable ground of objection.[58] First, this in particular arises from the fact that the objectors already have broad purpose clauses. And second, 12 of the 24 units can already have health facilities. The increase in competition, for owners with already broad purpose clauses, arising from the number of units with health purposes increasing from 12 to 13 would therefore be minimal.[59] I think this is a significant argument for the appellant.
[58] Transcript of proceedings 6 February 2019 at pages 82-84, 98-99
[59] Transcript of proceedings 6 February 2019 at pages 83-84
70.But after consideration this Tribunal is also of the view that whilst minimal, it was reasonable for the objectors to seek to protect that interest. The grounds for opposition were not so minimal as to be immaterial.[60] First, support for that view is found in the High Court decision in Ainsworth which accepted that it was reasonable for objectors to seek to protect a minimal right, in that case a minimal right to common property. The appellant argued that a right to common property was by nature a traditional property interest, even if minimal, but the right asserted by the objectors in this case is not such a property right. But the High Court seems to suggest in Ainsworth that diminution of related or other rights may also support a reasonable objection, such as interference with the tranquillity or privacy of an objecting lot owner. This tribunal has also held that rights or interests other than real property can support reasonable objections, such as privacy, amenity, quiet enjoyment and the absence of noise and other disturbances, view, and access rights.[61] I think that a commercial advantage is also a relevant right.
[60] Uren v The Owners – Units Plan No. 396 [2017] ACAT 51 at [18]
[61] Uren v The Owners – Units Plan No. 396 [2017] ACAT 51at [22]; Nash v The Owners – Units Plan 2413 [2018] ACAT 54 at [53]
71.Second, this is particularly so when the statutory regime makes it clear that this is an important right. As noted, section 166 of Unit Titles Act sets out that a variation to a unit or common property lease must be authorised by an unopposed resolution. To this extent, the right of other owners to maintain the existing lease terms has the same status therefore as the right to common property, which will be affected by the grant a special privilege under section 22 of the Unit Titles Management Act and which also requires an unopposed resolution. Of course a variation of a lease can take many levels of significance. But a change of purpose can be significant for other unit owners. Section 166 suggests that other unit owners have a real interest in such changes, and that even one owner can prevent such a change. Of course if an owner opposes a change which could not, on any rational view, adversely affect the material enjoyment of the opponent’s rights or on the basis of spite, or ill-will, or a desire for attention, this could be held to be unreasonable. But that is not the case here.
72.Third, the original tribunal stated that some weight must be given to the fact that a not insubstantial number of unit holders have concerns with the proposal. Mr Clews challenged this finding and the conclusions drawn from it.[62]
[62] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [73]; appellant’s submissions page 11 at [9]
73.The respondents in the original proceedings stated that owners of 16 of the units opposed the purpose clause change. It was said that these unit owners were signatories to the document, but the version provided to the tribunal had no such signatures.[63] But it is clear that Mr Dunne had an interest in eight units and he gave evidence of his opposition,[64] Mr Huynh had an interest in one unit, and it was agreed he opposed the variation,[65] and Mr Cameron had an interest in one unit and opposed the variation,[66] and it was suggested that others also opposed.[67] The owners corporation opposed Mr Clews at the hearing apparently on the basis that it thought that a majority opposed the variation. It stated that whilst it sympathised with Mr Clews it had to make a commercial decision in the best interests of all owners in the units plan.[68] In my view this level of opposition supports a finding of reasonableness.[69] This is not to slip into subjectivity, but to recognise that objective unreasonableness can none-the-less raise difficult issues as here, and the fact that a number of people object suggests that this objection is not objectively unreasonable, though it does not determine this issue.
[63] Respondent’s response in original proceedings, AB 199
[64] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at[45]-[50]
[65] Ibid at [44]
[66] Ibid at [40]-[43]
[67] Ibid at [51]
[68] Respondent’s response in original proceedings, AB 199-200
[69] Clews v The Owners – Unit Plan No 3069 [2018] ACAT 82 at [73]
74.Fourth, the original tribunal also took into account that the slight possibility will become greater if other owners in a similar position to Mr Clews seek similar amendments to their purpose clauses. This was challenged in this appeal.[70] I think this is correct and adds further substance to the concern of the objectors.[71] If the tribunal were to hold that the objections were unreasonable then it is possible that others would also argue to similarly expand their purpose clauses. Of course every decision would need to be assessed on its merits, but a finding of unreasonable objections in this case is likely to be influential, if not persuasive, in other cases. There is, therefore, at least a possibility that the increase would be more than one additional unit with a broader purpose clause.
[70] Reasons for appeal at A[5]; appellant’s submissions at [4](c), appellant’s list of errors, errors of law & discretionary errors page 8 at [4](c)
[71] Uren v The Owners – Units Plan No. 396 [2017] ACAT 51 at [17(g)]
75.These features lead the Tribunal to confirm the view of the original tribunal that while the objectors’ interest was minimal, it was none-the-less sufficient to make their objections reasonable.
76.A related argument of the appellant was that the significant detriment to Mr Clews which arises from his current position outweighs any minor detriment to the objectors which might be brought about by the change in purpose for his unit. Mr Chin argued forcefully that any slight current advantage the objectors have, but did not pay for, and the slight possibility of a detriment from loss of this, was outweighed by the substantial losses which Mr Clews is accruing in relation to his unit, and that this demonstrated the unreasonableness of the objections.[72]
[72] Transcript of proceedings 6 February 2019 at page 70; statement of Mr Clews in appellant’s documents, pages 31-36, especially at pages 31 and 36
77.The Tribunal agrees that the detriments are disproportionate; the current adverse effects on Mr Clews are greater than the adverse effects on the objectors if the lease purpose is expanded. But I do not think that such a balancing exercise is involved here. The question is whether the objections are reasonable, not whether they are fair or proportionate.
Lack of offer of compensation irrelevant ground of appeal
78.There were two issues raised concerning compensation for the objectors.[73] First, an issue in the original tribunal was the terms of a suggestion by Mr Dunne that Mr Clews make a payment of money to the other owners with a health facility purpose, and when this was made. It was suggested that this was inappropriately done, but the original tribunal declined to draw any adverse conclusions from any such offer. This was in particular because of comments in Ainsworth that it may be unreasonable to expect a person to forego a property right without some form of compensation.
[73] Reasons for appeal at A[6] and [9]; appellant’s submissions page 2 at (c), page 5 at [3], page 6 at [2], page 8 at [4](d); appellant’s list of errors page 1 at [3], page 2 at [3](c), page 3 at [4](d), page 4 at [7]
79.The issues about when and where the suggestion was made were raised in the appeal, but with little argument as to why the findings of the original tribunal in this regard involved errors of fact or law.[74]
[74] Reasons for appeal at A[9]; appellant’s submissions pages 4-5 at [3]
80.But second, as noted the original tribunal did refer at [74], in relation to the possibility of the detriment that the objectors will suffer, that the applicant had offered the objectors nothing in exchange for foregoing their interests. This is another factor in suggesting their objections are reasonable. The appellant argues that the original tribunal was wrong to consider relevant the failure by Mr Clews to offer the objectors anything in exchange for giving up their advantage.
81.But again, as the respondent pointed out, the relevance of this issue flows from the decision of the High Court in Ainsworth where it was stated that 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” because “he or she may reasonably expect to be offered something in return for agreement to part with it to another lot owner”.[75]
[75] At [62]
82.The appellant argued that in Ainsworth there was actual property involved; the objectors were being asked to surrender an interest in common property for the exclusive use of Mr Albrecht, which bears it was said no relation to the facts in this case.[76] But here there is a current small competitive advantage that may be lost by the change in purpose which suggests that it would be possible for compensation to be paid for this loss. As to how this would appropriately be done raises a range of issues which it is not necessary to consider here. All that needs to be decided is whether the failure to offer compensation is another factor to support the finding that the objections were reasonable. I think the consideration of the original tribunal reveals no error of fact or law.
Tribunal unreasonable in decision and procedure ground of appeal
[76] Transcript of proceedings 6 February 2018 at page 63
83.The appellant also argued generally that the decision and procedures of the original tribunal were unreasonable.[77]
[77] Transcript of proceedings 6 February 2019 at page 97
84.As to the decision, the appellant seemed to rely on the concept of unreasonableness in judicial review proceedings as set out in Associated Provincial Picture Houses Ltd v Wednesbury Corporation,[78] and as now articulated by the High Court in Minister for Immigration and Citizenship v Li.[79] These are not judicial review proceedings. Rather they are an appeal on the basis of errors of fact and law as set out in section 79(3) of the ACAT Act. There is of course a relationship between the two types of proceedings.
[78] [1947] [1948] 1 KB 223
[79] [2013] HCA 18; 249 CLR 332
85.This ground of review was however too broadly expressed. This included that the tribunal’s findings of fact were so unreasonable that no reasonable tribunal could have made these;[80] the tribunal’s decision was unreasonable in that it was against the weight of objective evidence submitted to the tribunal;[81] the tribunal’s decision was so unreasonable that no reasonable tribunal could have made the decision.[82] The Tribunal has considered above the particular legal issues raised by the appellant. In suggesting unreasonableness in all the original tribunal’s findings and all aspects of its decision these broadly expressed propositions are inappropriate and impossible to assess.
[80] Appellant’s submissions page 8 at [5](a); appellant’s list of errors page 3 at [5](a). Reasons for appeal at A[10] may also be relevant here, but see footnote 14, and reasons for appeal D
[81] Appellant’s submissions page 8 at [5](c) ; appellant’s list of errors page 3 at [5](c). Reasons for appeal at A[10] may also be relevant here, but see footnote 14, and reasons for appeal D
[82] Appellant’s submissions page 8 at [5](d); appellant’s list of errors page 3 at [5](d). Reasons for appeal at A[10] may also be relevant here, but see footnote 14, and reasons for appeal D
86.The appellant also argued that the procedure undertaken by the original tribunal was unreasonable and lacked procedural fairness.[83] Specific issues have been addressed above, in particular in relation to the position of Mr Huynh. But generally these complaints are again very broadly expressed and in such a form are inappropriate and impossible to assess.
[83] Appellant’s submissions page 10; appellant’s list of errors page 4 at [4]; appellant’s outline at pages 6-7
87.The appellant did make a specific complaint about the failure by the respondent to provide witness statements in advance of the original hearing which resulted in the oral evidence by Mr Cameron and Mr Dunne not being able to be fully tested.[84] It is true that the respondent did not provide witness statements, notwithstanding the directions of the tribunal; this is however not an unusual occurrence, but clearly puts the other party at a disadvantage. However the respondent in those proceedings did provide a response ahead of the hearing, which put the applicant on notice of the key issues it was going to raise and the basis of its case.[85] The original tribunal recognised the unfairness of allowing oral evidence to be given on behalf of the respondent without prior notice, but regarded the evidence as necessary to determine the case and attempted to address the unfairness in the procedure adopted. Mr Chin did not suggest any alternative approach in the original hearing.[86] Mr Dunne gave oral evidence and was cross-examined by the lawyer for the applicant.[87] Mr Cameron gave oral evidence and was cross-examined by the lawyer for the applicant.[88] Given the circumstances, this does not appear to be an unfair process.
[84] Reasons for appeal at A[4]; appellant’s outline at pages 6-7
[85] Respondent’s response in original proceedings, AB199
[86] Transcript of proceedings 19 June 2018 at pages 132-134
[87] Transcript of proceedings 19 June 2018 at pages 74-88
[88] Transcript of proceedings 19 June 2018 at pages 135-155
88.Further, in these proceedings the appellant has been allowed to provide further evidence. This is not the usual course and was done over the strong objection of the respondent. If there was any substantive disadvantage in the original proceeding, which I doubt, then this has been cured in this appeal by allowing this further evidence.
89.The appellant also argued that the original tribunal did not make adequate inquiries.[89] There was no indication as to how this obligation arose when the appellant was at all times represented by a lawyer. It seems that it is focussed on the oral evidence on behalf of the respondent as to the purchase by the objectors of their units, which was said by the appellant to have been misleading. But as noted this was raised in the response of the respondent ahead of the original hearing,[90] was the subject of oral evidence at the original hearing which was subject to cross-examination by Mr Chin, and was the subject of further evidence in this appeal by the appellant. I do not see any basis for this to be a ground of appeal.
Conclusion
[89] Transcript of proceedings 6 February 2019 at page 69
[90] Respondent’s response dated 18 May 2018, AB199
90.As the appellant has not made out any error of fact or law in the original decision, this appeal should be dismissed.
………………………………..
Acting Presidential Member R Orr QC
HEARING DETAILS
FILE NUMBER:
AA 41/2018
PARTIES, APPELLANT:
Clayton Neal Lorne Clews
PARTIES, RESPONDENT:
The Owners – Units Plan 3069
COUNSEL APPEARING, APPELLANT
Michael Chin
COUNSEL APPEARING, RESPONDENT
Greg Brackenreg
SOLICITORS FOR APPELLANT
Maxwell & Co
SOLICITORS FOR RESPONDENT
Meyer Vandenberg Lawyers
TRIBUNAL MEMBERS:
Acting Presidential Member R Orr QC
DATES OF HEARING:
6 February 2019
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