On 29 November 2018, a new motion was put forward by the owners corporation which replicated the motion in issue in the 2018 case. This new motion, again, failed to be passed by an unopposed resolution. As a consequence, the owners corporation commenced another proceeding, seeking an order pursuant to section 129(1)(g) of the UTMA giving effect to the failed motion. After referring to its previous decisions in relation to section 129(1)(g) of the UTMA, the Tribunal was of the view that 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’.
The Tribunal stated that a ‘correct’ decision is a decision without legal error or other fundamental problems, and was satisfied that neither of the options proposed by the parties would be incorrect at law. It went on to state that the preferable decision is one that will ensure the efficient and effective management of the complex, protect and advance the interests of the owners corporation as a whole, and protect the interests of the individual unit holders. In this case, the Tribunal was satisfied that the default contribution method was the preferable decision for several reasons.
First, the funding proposal in the motion for the establishment of separate electricity meters was logically inconsistent with the unopposed resolution passed in 2016 on establishment costs and the approach previously adopted by the owners corporation in relation to water meters. Although an owners corporation is not bound to follow its previous decisions, it is generally preferable that it uses clear and consistent rationale to make comparable decisions as it promotes predictability, protects against unfair prejudice against a minority, promotes confidence in the logic of its decision making and provides a logical framework to assist future decisions.
Second, due to the special circumstance in this case (that all other commercial units owners have already agreed to reimburse the owners corporation for a significant amount of the establishment cost regardless of the outcome of the proceedings), SDNM would suffer a greater detriment if the motion was upheld than the potential detriment to each other owner if the motion was not upheld. The fact that only one person would suffer a detriment from motion 8 is not sufficient reason to uphold it especially when section 78 safeguards minorities from the imposition of differential contributions, which disadvantages them.
Third, although the new infrastructure established separate air conditioning systems for each commercial owners which exclusively served their units, it is nevertheless common property owned by all unit owners. The applicant’s argument that exclusive usage meant private ownership must fail.
Fourth, while the applicant argued that motion 8 was the most practical way to redress past unfairness caused by the original infrastructure, the Tribunal held that although the idea of balancing current pain against past gain intuitively appeals to fairness, the Tribunal was not convinced that the imposition of differential levies on a unit owner without their consent to fund rectification of common infrastructure was an appropriate mechanism to rectify past inequities either in this case or in general. Further, such an approach was inconsistent with the scheme of collective ownership and responsibility for infrastructure established by the legislation and could create a troublesome precedent for the owners corporation. It was particularly inappropriate in these circumstances because the relative benefit or disadvantage experienced by current owners cannot be reliably established on available evidence.
Finally, while the applicant argued that motion 8 was overwhelmingly supported by not just the residential owners who voted at the meeting but also by all the other commercial owners, many of whom stood to lose more than the respondent from its implementation, the Tribunal held that majority, even overwhelming, support whilst a factor in favour of motion 8 is not a sufficient reason to uphold it noting that “there must have been some legislative intention behind such a high threshold for change”.
For all the reasons set out above, the Tribunal preferred the option advanced by the respondent, that is, that the unopposed decision from the 2016 decision prevail as it was more logically consistent with both the legislative framework and the previous decision of the owners corporation.
In determining whether the opposition was unreasonable, the Tribunal held that 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. Having found the option advanced by SDNM is objectively preferable to the motion, it follows that opposition to the motion was not objectively unreasonable, and accordingly the application was dismissed.