Johnston v The Owners Corporation of Units Plan 614 (Unit Titles)

[2019] ACAT 53

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

JOHNSTON v THE OWNERS CORPORATION OF UNITS PLAN 614 (Unit Titles) [2019] ACAT 53

UT 2/2019

Catchwords:  UNIT TITLES – challenging resolution of AGM – dispute over aesthetic value of a gazebo – the street scape

Legislation cited:     Unit Titles (Management) Act 2011 ss 125, 129

Cases cited:  Bonansea v The Owners – Units Plan No 421 [2019] ACAT 10

Floro v Owners Unit Plan No 630 [2017] ACAT 4

Tribunal:      Senior Member A Anforth

Date of Orders: 17 June 2019

Date of Reasons for Decision: 17 June 2019

AUSTRALIAN CAPITAL TERRITORY   )

CIVIL & ADMINISTRATIVE TRIBUNAL         )          UT 2/2019

BETWEEN:

IRENE JOHNSTON

Applicant

AND:

THE OWNERS CORPORATION OF UNIT PLAN 614

Respondent

TRIBUNAL:           Senior Member A Anforth

DATE:         17 June 2019

ORDER

The Tribunal orders that:

1.        The applicant’s claim is dismissed.

………………………………..

Senior Member A Anforth

REASONS FOR DECISION

Summary

1.           The applicant is a long term resident (29 years) of unit 3 in the respondent’s strata complex known as ‘Pelican Grove.’ She lives in the unit with her adult daughter. The complex is a horizon strata composed of nine townhouses facing De Little Circuit, Greenway. There is a small private road at the rear of the units that provides private rear entrance and car parking and a small enclosed garden at the front.

2.           For five years the applicant had a canvas gazebo in her garden which faces De Little Circuit. This gazebo had metal poles that were cemented into the ground. The canvas awning deteriorated over time and the applicant proposed to replace it with a new Spanline gazebo of about the same size with metal poles and a transparent or coloured plastic top. Unlike the previous canvas gazebo the Spanline product is also to be secured to the roof line. The description provided by Spanline is:

sloping skillon roof to be supported by gable brackets from verandah and attached via posts to concrete

3.           No building approval is required from the ACT government but approval is required from the respondent.

4.           The applicant commenced construction in June 2018 without approval from the respondent. Another concerned owner raised the matter with the respondent. On 6 August 2018 the applicant formally sought the respondent’s approval for the Spanline structure. The matter was referred to a Special General Meeting (SGM) held on 29 August 2018 which denied the approval.

5.           The applicant raised the matter in an Annual General Meeting (AGM) held on 27 September 2018. The AGM resolved to reconsider the matter in a SGM scheduled for 29 November 2018.

6.           Various correspondence on the issue was circulated prior to the SGM of 29 November 2018. The SGM resolved not to grant the approval. The respondent opposed the construction on aesthetic grounds and in particular that the Spanline structure will destroy the street scape as viewed from De Little Circuit.

7. The applicant has sought review by the Tribunal under section 129(1)(g) Unit Titles (Management) Act 2011 of the respondent’s resolution in the AGM of 29 November 2018.

The procedural history in the Tribunal

8.           On 11 January 2019 the applicant lodged an application with the tribunal seeking orders:

(a) That she be permitted to complete the construction of the partially completed Spanline structure in the garden of her unit.

(b) For legal costs incurred in the dispute with the Executive Committee.

9.           The applicant provided a history of the dispute including the existence of the prior canvas gazebo and the existence of other unapproved structures in other units. She alleged that the members of a former three person Executive Committee had treated her in an unfair and discriminatory manner.

10.         On 1 February 2019 the three members of the former Executive Committee filed a submission with the tribunal denying the applicant’s allegations concerning their actions. For reasons given below it is not necessary for the Tribunal to further explore this issue.

11.         On 1 February 2019 the respondent filed its submissions. The respondent described the geography of the complex and the history of the dispute. It acknowledged that five of the units had canvas awnings in their gardens similar to that previous existing at the applicant’s unit.

12.         Annexed to the respondent’s submissions were:

(a) The minutes of the SGM of 29 August 2018, AGM of 27 September 2018, the SGM of 29 November 2018 in which the applicant’s proposal was rejected due to its potential adverse effects on the streetscape as viewed from De Little Circuit.

(b) The Spanline specifications.

(c) A letter from the applicant’s lawyers to the respondent dated 21 September 2018.

13.         The matter was listed for a directions hearing on 6 February 2019 and an attempt was made to resolve the matter. It was agreed to call another SGM on 20 February 2019 prior to any further steps being taken in the Tribunal.

14.         On 28 March 2019 the applicant wrote to the tribunal advising that a SGM was held on 26 March 2019 and her request for building approval was again rejected. The applicant asked that her application to the tribunal now be relisted.

15.         The applicant attached a letter setting out the events at the SGM and her opinions on the motivations and conduct of other members. It is not necessary to repeat these here.

16.         The matter was listed for directions on 10 April 2019. Ms Johnston appeared in person and Mr Walsh, strata manager, appeared for the respondent. The other unit owners were present. The history of the matter was reviewed and the parties put their views.

17.         The applicant tendered various minutes of the respondent’s meetings, photographs from De Little Circuit, a street map, correspondence between the parties, photographs of her garden, photographs of other units and their gardens and commendations for the Spanline product.

18.         Given the narrow scope of the matter and the fact that the parties had already ventilated their different views on the matter, the Tribunal offered the parties the options of:

(a) the matter being adjourned for a future hearing with orders for filing any further evidence and submissions; or

(b) the matter being determined on the material presented so far without further hearings. The parties could make further final submissions in writing and the Tribunal would conduct its own site inspection concerning the aesthetic street scape issue.

19.         Both parties indicated their preference for the latter course of action.

20.         On 16 April 2019 the applicant filed her final submissions. The submission summarised the applicant’s arguments set out above. It appended various photographs and aerial views of the street scape in support of the argument that there was no deleterious impact on the street scape arising from her proposed structure.

21.         On 18 April 2019 the respondent filed their final submissions. It summarised the respondent’s previous submissions in the matter.

22.         The Tribunal conducted its own view in the absence of the parties. The partial structure in the applicant’s garden was clearly visible from De Little Crescent. It was shielded by trees and shrubs and a fence. The structure did not look out of place and in the Tribunal’s opinion did no violence to the street scape viewed from De Little Crescent.

Relevant legislation

23. Section 125 of the Unit Titles (Management) Act 2011 provides the jurisdictional basis for the Tribunal to review disputes between Owners Corporations and its members.

24. Section 129(1) provides the source of the power for the Tribunal to make orders of various kinds. In the present case the relevant provision is section 129(1)(g) in its application to resolution of the AGM of 29 November 2018 to refuse approval for the applicant’s Spanline structure:

129(1)      The ACAT may make the following orders:

(a)     …

(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;

(h)          …

Consideration of the issues

25.         In Bonansea v The Owners Unit Title Plan No 421 [2019] ACAT 10 Presidential Member McCarthy reviewed the application of section 129(1)(g) and said:

15.   In Uren & Anor v The Owners – Units Plan No 396 (Uren) Senior Member Sutherland summarised the operation of section 129(1)(g), correctly in my view, as follows:

(a)     The provision involves a two-step process, firstly to undertake a merits review to determine which is the correct and/or preferable decision, and then to determine whether opposition to the motion was ‘unreasonable’.

(b)     The review is de novo and the Tribunal is able to consider issues of both fact and law.

(c)     The ACAT considers and determines issues as at the date of the hearing and is able to consider evidence not available to, or not considered by, the owners’ corporation at the time of their decision.

(d)     When conducting the merits review, there is no threshold question of reasonableness or unreasonableness of the original decision to be determined before the ACAT may proceed to make an order. However, before an order giving effect to an unsuccessful motion is made, the ACAT must be satisfied that opposition to the motion was unreasonable.

(e)     The test to determine if the opposition to the motion was unreasonable is not a subjective test of the intentions of the unit owners who opposed the motion. Rather, it is an objective test taking into account all relevant circumstances.

(f)      An opponent to the motion is not required to act with altruism or sympathy for the interests of the proponent, at the expense of the opponent’s reasonably held view of their own interests.

(g)     Whether or not there is evidence of other pending applications, it may be reasonable to consider the cumulative effect of multiple identical improvements generating an adverse impact in deciding whether to oppose a motion.

26.         In Floro v Owners Unit Plan No 630 [2017] ACAT 4 (Floro) Senior Member Robinson described the relevant tests under section 129(1)(g) as follows:

15.   The first step is to consider what test is to be applied when undertaking a review under section 129(1)(g) of the UTM Act.

16.   The nature of the process to be adopted under section 129(1)(g) of the UTM Act was discussed by (now) Presidential Member Daniel in Owners Units Plan 768 v Lokusooriya [2013] ACAT 80 as follows:

[27] Section 129 (1)(g) marries two legal concepts, that of merits review and that of unreasonableness. I set out some of the implications of this conjunction in Meaney v The Owners Corporation Units Plan 40 (Unit Titles) [2013] ACAT 72 at [31]- [42]:

31.       First, the review is essentially de novo and Tribunal is able to consider issues of both fact and law anew.

32.       Secondly, the Tribunal considers and determines these issues as at the date of the hearing before the Tribunal, not as at the time of the original decision. That means the Tribunal is able to consider evidence not available before the owners corporation in reaching its decision. ...

33.       Thirdly, when conducting merits review there is no threshold question of reasonableness or unreasonableness of the original decision to be determined before the Tribunal may proceed to make an order.

…

37.       Section 129(1)(g) places a significant limitation upon the merits review process, by requiring that the ACAT must be satisfied that opposition to the motion was unreasonable before an order giving effect to the motion may be made.

38.       The word unreasonable is not defined in the UTM Act. Its ordinary English meaning, according to the Macquarie Dictionary, is:

Unreasonable: adjective 1. not reasonable, not endowed with reason. 2. not guided by reason or good sense. 3. not agreeable to or willing to listen to reason. 4. not based on or in accordance with reason or sound judgement. 5. exceeding the bounds of reason; immoderate; exorbitant.

39.       There is an extensive body of authority outlining when administrative decisions are, or are not, considered to be unreasonable and therefore liable to be set aside.

40.       An administrative decision may be unreasonable where it is capricious or irrational, is illogical or perverse, is inconsistent with other decisions on like facts, has simply no evidentiary basis or is based on an error of fact which is fundamental to the decision.

41.       In some cases, a defect in the process leading to the making of the administrative decision will render the decision unreasonable. For example, where the process leading to the making of the decision lacked natural justice, this may lead to the decision itself being considered unreasonable .

42.       Given that the Tribunal is tasked with conducting merits review of the motion, a process usually made available in relation to decisions of an administrative character, it is appropriate to draw on this body of law as providing some guidance as to whether opposition to the motion was unreasonable.

[28] Further, as noted in The Owners Units Plan No 116 & Nicholson and Ors (Unit Titles) [2012] ACAT 63 at [84]:

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 voted in opposition. Whether the opposition is in the circumstances unreasonable has to be considered objectively taking into account all relevant circumstances.

17.   In other words, the test is a two stage one. First, the Tribunal conducts a de novo review to determine what is the correct and preferable (‘meritorious’) decision is. This is the ‘merits review’. Second, having conducted the merits review, the Tribunal must consider whether the objections of the objectors are ‘unreasonable’.

18.   Notwithstanding that another decision may be fairer or more meritorious, the Tribunal may only give effect to an unsuccessful motion where:

(a)     the merits review concludes that the outcome is correct and preferable, and

(b)     the objections to that outcome are, objectively, unreasonable.

…

29.   The concept of ‘unreasonableness’ was recently considered by the High Court in the case of Ainsworth v Albrecht [2016] HCA 40 (Ainsworth). The case concerned a similar application to this one, but brought under the Queensland Body Corporate and Community Management Act 1997 (Qld). While the Queensland and ACT Acts are different in many respects, both impose a requirement that an appropriation of common property be approved by unanimous motion, and both provide for a review of an ‘unreasonable’ rejection of such a motion.

30.   Briefly stated, Ainsworth concerned a proposal by a lot owner to amalgamate two balconies to create a deck. This involved the effective appropriation of about 5sqm of common property airspace between the balconies, which necessitated approval by way of a unanimous resolution. Several lot owners voted against the proposal and it failed. The proponent sought a review. The matter wound its way through an independent adjudicator, the Queensland Civil and Administrative Tribunal and the Court of Appeal of the Supreme Court of Queensland, before reaching the High Court.

31.   The reasons cited by the objectors in Ainsworth were varied – they included a potential diminution in the architectural integrity of the building, increased noise from the deck, the ‘floodgates’ argument, and a suggestion that there should be compensation for any appropriation of common property. There was, however, no suggestion that the motion, if approved, would have a materially detrimental effect on any person.

32.   Relevantly for present purposes, their Honours provided some guidance on the concept of ‘unreasonableness’ in the context of reviews of decisions of owners’ corporations. The majority opined that unreasonableness of opposition to a proposal can only be determined by considering the circumstances of the proposal and its likely effect on the opponents’ property interests. However, they continued, consideration of whether a person is acting unreasonably in protecting their property interest does not require that they act with altruism or sympathy for the interests of the proponent. Lot owners are entitled to take steps in their own self interest to protect their property interests. In this case it was sufficient that the objectors had a reasonable apprehension that the proposal would adversely affect their property rights. In such circumstances, opposition could not be said to be unreasonable, even if the opponent has no immediate material interest in the outcome.

33.   Although the Queensland Act is different to the ACT legislation is some respects, the concept of reasonableness is sufficiently common that the reasoning of the High Court should be applied by the Tribunal.

34.   The test in Ainsworth sets a high standard for an applicant seeking review of a failed motion on the ground of unreasonableness. The question is whether the objector or objectors are acting unreasonably, having regard to their right to protect their property interest – not whether their interest in protecting their property should be balanced against altruistic or sympathetic considerations.

35.   The High Court in Ainsworth accepted that the first step in considering whether the opposition was unreasonable is identification of a ground of opposition, and the second step is an enquiry into whether that ground is a rational basis for opposition. The difficulty in this case is that neither the Corporation nor the Objector have defined the interest they wish to protect, let alone set out how opposition to the motion would achieve that goal. At most, I can surmise that the Objector’s interest is in protecting her current right to the common property. That is, as the High Court recognised in Ainsworth, a legitimate interest to protect, and one which is not lightly overridden. However, in the absence of any submissions, I can advance the argument no further than that.

36.   The High Court also acknowledged that “...opposition to a proposal that could not, on any rational view, adversely affect the material enjoyment of the opponent’s property rights may be ... unreasonable”, as may “[o]pposition prompted by spite, or ill-will, or a desire for attention.” I have no reason to believe that the Objector acted with spite or ill-will, but in the absence of any evidence or submission from her, I can only conclude that, whatever the basis for her objection, she does not wish the agitate it before the Tribunal.

27.         The two stage approach set out in Floro form the basis of the present Tribunal’s deliberations.

28.         If the matter were to be determined solely on a merits review then the presently constituted Tribunal would have approved the Spanline structure. The position taken by the other members appears to be an overreaction. In the present Tribunal’s view there is nothing particularly special or artistic in the street scape as viewed from De Little Crescent.

29.         But the Tribunal must also be satisfied that the position taken by the respondent and its other members is an unreasonable one, to be assessed on the principles set out above.

30.         Matters of artistic and aesthetic appreciation are notoriously subjective. The fact that the presently constituted Tribunal saw nothing special or artistic in the street scape does not mean that others do not. The Tribunal has no reason to doubt the veracity of the contrary assertions of the other members of the respondent on this issue, and must proceed on the basis that they genuinely held the view that their homes looked artistic from the street. After all ‘beauty is in the eye of the beholder’.

31.         It is no easy task to categorise another person’s view as being unreasonable and even more so if the same view is held by a group of people. In the present case the Tribunal simply cannot find that the artistic and aesthetic appreciation of the bulk of the respondent’s members is ‘unreasonable’ and therefore the applicant’s case must fail.

………………………………..

Senior Member A Anforth

HEARING DETAILS

FILE NUMBER:

UT 2/2019

PARTIES, APPLICANT:

Irene Johnston

PARTIES, RESPONDENT:

The Owners Corporation of Unit Plan 614

COUNSEL APPEARING, APPLICANT

N/A

COUNSEL APPEARING, RESPONDENT

N/A

SOLICITORS FOR APPLICANT

N/A

SOLICITORS FOR RESPONDENT

N/A

TRIBUNAL MEMBERS:

Senior Member A Anforth

DATES OF HEARING:

N/A