This case followed the decision in the previous Brudenall case, The Owners – Units Plan No 202 v Brudenall & Ors (Unit Titles) [2015] ACAT 64. It arose as a cross-application for a merits review was filed in the above proceedings but ultimately was heard as separate proceedings.
A merits review involves a tribunal standing in the shoes of the decision maker and making the correct or preferable decision. In this case, the decision maker would have been the owners corporation and ACAT, after conducting a merits review, was empowered to maintain, repeal or amend motion 5. Further, ACAT was not obliged to choose the position adopted by the applicant or the respondent. Instead, ACAT was re – quired to make the correct or preferable decision on the merits of the case. This decision is to be lawful, fair, equitable and practicable.
However, the general principles of administrative law dictate that the power to amend a decision the subject of a review should be exercised with regard to the legal framework within which the original decision was made.
In this regard, ACAT held that there were two aspects in which the amendment of motion 5 to provide that ‘A pays for A and B pays for B’ (a third option that had some support amongst the owners) would be contrary to the law. Firstly, a motion must not be beyond the power relied upon (in this case section 51(3)(f) of the Unit Titles Act). Secondly, a motion may be amended at a meeting only to the extent that it remains within the scope of the motion of which notice was given.
Consequently, there were only two legally correct decisions that could be made as a consequence of the merits review which were to either repeal motion 5 or leave it in place without amendment.
ACAT held that the preferable decision was to allow motion 5 to remain in place for the following reasons:
- motion 5 as proposed in 2002 was not a spur of the moment motion. It was, and remained, the culmination of decades of reflection by the owners corporation as to how it wished to exist;
- it was submitted that if motion 5 were repealed, it would be unlikely that a similar motion could be put in place in the future;
- the tribunal member was not certain that the owners corporation would repeal motion 5 if given the chance, given that the legality of motion 5 had been confirmed;
- while motion 5 came at a cost to class A and B owners, it also brought with it non-financial benefits to the owners corporation and it was difficult to say whether those benefits outweighed the costs; and
- it could be concluded that every current owner now bound by motion 5 either voted in favour of it in 2002, failed to cast a vote after being notified or purchased their unit having been advised of the existence of the special resolution. As such, there was no unfairness in requiring those members to abide by motion 5.