This case note has been taken from the recently published second-edition of a Guide to ACT Strata Law. A physical copy of the full text can be purchased here.
In this case the owners corporation’s rules required any unit owner who wished to replace carpet in their unit to ensure the replacement material met an acceptable level of acoustic resilience. Specifically, the owners corporation demanded an Association of Australasian Acoustical Consultants (AAAC) 6-star rating. This rating goes beyond the National Construction Code’s minimum standard for the acoustic performance of apartment floors. The replacement of the carpet required the authorisation of the executive committee.
The appellants’ application to replace their carpet with timber was refused as it did not meet the 6-star rating. However, the appellants argued that according to their research, a 5-star rating was ‘close to the maximum that could be achieved in a normal building construction’ and that installing flooring with a 6-star rating was unreasonable. Despite the executive committee’s refusal, the appellants persisted.
The original tribunal ordered the appellants to comply with the owners rules and to pay the owners corporation’s expenses. The appellants appealed to the appeal tribunal arguing the original tribunal incorrectly found the rule requiring the flooring to comply with the AAAC 6-star standard was reasonable. If successful, the appellants sought a declaration the rule was invalid.
Before considering the substantive issues, the appeal tribunal considered whether the parties could seek leave to provide further evidence to the tribunal and whether the tribunal could hear the matter anew. The tribunal refused to receive further evidence and refused to hear the matter anew as they were concerned it would result in delay and restarting the matter was not the best way to deal with the appeal.
As such, the appeal tribunal confined the hearing to determining the question of whether the original tribunal erred in finding that the AAAC 6-standard was reasonable and therefore finding that the rule was valid. Section 108(3)(c) of the UTMA renders an alternative rule invalid if it is ‘harsh, unconscionable or oppressive.’ While the UTMA does not define the expression, ACAT adopted the interpretation of the NSW Strata Schemes Management Act 2015 in the case of Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250. In that case, ‘harsh, unconscionable or oppressive’ was interpreted as three words conveying a single criterion and required a court or tribunal to consider contemporary community standards. In the present case, the appellants argued the rule about acoustic standards was harsh, unconscionable, or oppressive because the rule set a standard of acoustic performance that was ’unreasonable and unattainable.’ Further, they argued the way the rule has been administered was ‘so unreasonable as to render the rule harsh.’
The tribunal considered the Explanatory Memorandum to the Unit Titles (Management) Bill 2011 which discussed the human rights implications of the Bill, namely that the default rules and section 28 (the owners corporation’s power to enter into units) does not allow for the unlawful or arbitrary interference with a person’s home or privacy. However, owners corporations are allowed to interfere with a person’s home to ensure the structural integrity of the unit title complex and the safety of other unit owners. This Memorandum provides guidance about the ‘proper purpose’ of the rules.
The tribunal determined that Rule 6 existed to prevent ‘dispute and discord’ between occupiers arising out of excessive noise generated from the installation of floor coverings other than carpet. This was a proper purpose and thus the owners had the power to enact it. Further, section 108(3)(c) is a ‘fraud on the minority’ protection as it protects minority members from rules that are not made for a proper purpose or in breach of the Human Rights Act 2004 (ACT).
The appellants submitted evidence the 6-star acoustic rating was unattainable with timber due to the building’s construction specifications. The Tribunal rejected the evidence for being of ‘very limited evidentiary value.’ This was because it was not obvious from the document itself what constituted a ‘normal building construction’ nor did it establish clear criteria. The tribunal felt 6-star ratings were achievable in the apartment complex. As such, the owners were entitled to set a higher standard of acoustic performance of the apartment’s floors compared to the National Construction Code’s minimum standard for acoustic performance. The rule was not unreasonable and the appeal was dismissed.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Authors: Christopher Kerin