In administering their scheme, bodies corporate and their committees make countless decisions on a variety of different matters including:
- Enforcing breaches of by-laws; and
- Providing or denying consents or approvals for matters prescribed in the by-laws, such as pet applications or renovations;
- Considering payment plans or requests for discounts from lot owners in respect to levies;
- Considering proposals envisioned by the Body Corporate and Community Management Act 1997 (Qld) (BCCMA), such as a requests for exclusive use of a particular area of common property.
Inevitably, at some point a party affected by a decision of a Body Corporate will not agree with the decision. For example, the committee denies a request for pet approval.
They may then seek to have this decision altered if they believe the decision was not “reasonable.”
This article will consider the requirement of Bodies Corporate and Committees to act reasonably in making decisions, and provide some practical guidance to Committees on this issue.
Legal Requirement to Act Reasonably
Section 94 of the BCCMA requires a Body Corporate to “act reasonably” in anything it does in administering the common property and Body Corporate assets, enforcing the community management statement, and carrying out the other functions given to the Body Corporate.
Section 100 of the BCCMA requires a Committee to “act reasonably” in making decisions.
if the body corporate does not “act reasonably”, and a disappointed owner can demonstrate this to an Adjudicator appointed by the Body Corporate Commissioner– the adjudicator may overrule the body corporate’s decision.
But what is “reasonable”?
How do you know if you “acted reasonably” when making a decision?
The Reasonable Test
The reasonableness of a Body Corporate’s decision requires an objective test that balances all the factors accordingly to the ordinary meaning of the term reasonable i.e. moderate and fair, not extreme or excessive.
For a body corporate to act reasonably it requires an objectivity test (i.e. what an ordinary person would consider reasonable); and a consideration of all relevant facts and circumstances.
Practically, this means all circumstances surrounding a decision must be considered, both sides of the argument reviewed, and any issue investigated thoroughly, when the body corporate makes a decision.
Failing to do this will leave any body corporate decision open to review.
What it means to “act reasonably” can be summarised as follows:
- The question of reasonableness is not whether the decision was correct but whether the decision is objectively reasonable.
- What is reasonable is a question of fact, based upon a consideration of all relevant circumstances.
- The determination of whether a decision is reasonable requires consideration in an objective and fair manner of all the relevant facts and circumstances.
- The onus is on the party challenging the decision to show that the Body Corporate has not acted reasonably.
Practical Steps for Committee Decision Making
Bodies corporate at all times be open and transparent with their decision making. If Committees make a decision but that decision is not objectively reasonable, that decision is liable to be challenged by an unhappy owner.
Especially for controversial or contested decisions, the committee should ensure that, in making the decision:
- It has as much relevant information as possible;
- Considers all relevant matters;
- That any concerns are raised with the opportunity for owners to respond;
- The consideration process, and the basis for any decision made is comprehensively recorded in the minutes.
For further practical guidance, the body corporate should be mindful not to be led into unreasonable decisions by owners with hidden agendas and to disregard lot owner’s personal feelings on the matter to be considered
If you are an owner who disagrees with a decision made by the body corporate you should enquire as to the reasons for that decision.
If you believe that the decision was “objectively unreasonable” you can challenge the decision through the Office of the Commissioner of Body Corporate and Community Management.
The obligation to act reasonably is designed to protect members of a body corporate from being subjected to arbitrary or fickle decision-making. It does not exist to advance the interests of some over the interests of others. The ability to challenge “unreasonable” decisions does not enable adjudicators to take over the body corporate’s role and make what they consider to be the correct or most preferable decision.