The applicant was one of the two registered owners of unit 1 in a unit titled complex owned by the respondent corporation. The applicant sought a merits review under section 129(1)(f) of the UTMA of two resolutions (motions 2 and 7) passed at its 2017 AGM. Motion 7 effectively sought the re-appointment of the strata manager as the ‘manager’ of the corporation for a further period of three years. Motion 2 authorized the manager to adjust the building insurance in consultation with the Owners Corporation. The applicant also sought an order pursuant to section 129(1)(g) of the UTMA giving effect to a third, unsuccessful motion (motion 7(i)), which sought the appointment of an alternative manager).
The Tribunal accepted and adopted the approach taken in Brudenall & Ors v Owners Corporation Units Plan No. 202 (Unit Titles) [2016] ACAT 101 and held that s129(1)(f) of the UTMA requires the Tribunal to stand in the shoes of the decision maker to make the correct or preferable decision. The Tribunal does not simply review the reasons for decision or the process followed by the original decision-maker, and is not obliged to choose either the position adopted by the applicant, or that of respondent. Instead, the Tribunal considers and determines the issues as at the date of the hearing (not as at the time of the original decision), and make the correct or preferable decision on the merits of the case, subject to ensuring that the requirements of natural justice are met in the hearing process. In some rare cases, this may involve the tribunal making a decision which was not advocated for by any party.
After reviewing evidence from both parties, the Tribunal was satisfied that a decision to reappoint the strata manager or a decision to appoint an alternative manager were both supported by rational reasons and neither raised any question of illegality. Therefore neither was in any sense ‘incorrect’.
However, the ‘preferable’ decision must take into consideration relevant discretionary grounds including the full circumstances of the case, the context in which the decision is made and the framework imposed by the legislation. In this case, given the role of a manager within the framework of the UTMA, the ‘preferable’ decision is one that will ensure the efficient and effective management of the complex and the protection and advancement of the interests of the Owners Corporation as a whole but having regard to the interests of each of the five unit holders within it.
The Tribunal was of the view that as the strata manager has generally speaking maintained a relatively successful relationship with the Owners Corporation for a long period, the preferable decision would be the reappointment of the strata manager. The Tribunal also noted that while there was an imbalance of power within the Owners Corporation, and that the majority was in a position of power that could be used to oppress the minority (ie Mr Rampala), the Tribunal was not satisfied that the majority decision was an unreasonable, disproportionate or unfair exercise of that power.
Finally, the Tribunal noted that owners corporations are intended to be self-determining and democratic. Presented with two options, both of which are correct, both of which have some merit, and neither of which given rise to any undue interference with the individual rights of owners, it is entirely appropriate that the Tribunal give some weight to the clear majority position, which in this case is to continue the long standing relationship with the strata manager. It will not always be appropriate to give preference to a majority opinion. In some cases, the majority opinion may be an incorrect one, in the sense of being contrary to the Act, or a breach of natural justice, in excess of power, or otherwise flawed. It may not be the preferable decision, having regard to all the facts and circumstances. It may be oppressive to a minority, disproportionate, or otherwise irrational or unfair. In such cases, the Tribunal has the power to review and either amend or replace the decision. The Tribunal was not convinced any such concerns arose in this case and was satisfied that the decision to re-appoint the strata manager was the correct and preferable decision.
Accordingly, the Tribunal dismissed the application in relation to motions 7 and 7(i) and also dismissed the application to review motion 2, after being satisfied that it was simply a formal authorization for the manager to adjust the insurance in consultation with the executive committee, without the need for the formalities of another general meeting. It did not have any effect on the statutory obligation of the corporation to ensure that insurances are obtained, maintained and kept up to date from time to time as required by the UTMA.
The respondent also made an application for an order that the applicant pays its costs under section 48(2)(b) of the ACAT Act, which provides that costs may be awarded when a party to an application has caused ‘unreasonable delay or obstruction’. The respondent sought ‘costs thrown away’ in preparing responses to a number of matters that were raised by the applicant prior to the hearing, but were then abandoned at the hearing. The Tribunal was of the view that the default and expected position in the Tribunal is that parties will bear their own costs subject to limited exceptions.
After reviewing its previous decisions, the Tribunal held that section 48 is not intended to prevent parties from making applications that are unmeritorious or have no prospect of success. Such matters should be dealt with through strike out action under section 32 of the ACAT Act. In other words, as long as parties are complying with directions and refraining from ‘sharp practices’ that lead to delay, s 48(2)(b) cannot be relied upon based merely on unnecessarily lengthy, complicated, voluminous and confusing applications. Therefore, although aspects of the applicant’s case, as originally pleaded, were problematic, no cost order was made.