Ainsworth v Albrecht [2016] HCA 40: Community Title: Opposition to Motion to Alter Scheme

In Kjerulf Ainsworth & Ors V Martin Albrecht & Anor [2016] HCA 40 (12 October 2016), the High Court of Australia has unanimously allowed an appeal from the Queensland Supreme Court of Appeal (see [2015] QCA 220 (6 November 2015).

In its decision the High Court has found that:

Case Background

Ainsworth (the Appellant) is among the owners of lots in a community title scheme known as the, Viridian Noosa Residences Community Titles Scheme 34034 (the Scheme). There are 23 lots in the Scheme and each lot is a residence with two small balconies. 

Marin Albrecht (the First Respondent) owns lot 11 in the Scheme, and since 2011, the First Respondent has sought permission to join the two balconies of lot 11 together by constructing a deck between them. The deck would require the use of approximately five square metres of airspace between the two balconies (the Airspace). The Airspace was a part of the Scheme’s common property, and is owned by all lot owners as tenants in common.

In an extraordinary general meeting held in August 2012, the body corporate of the scheme (the body corporate) considered a motion by the First Respondent  for the community management statement of the Scheme to be amended such that First Respondent would be able to have exclusive use of the Airspace required to join the two balconies. 

The First Respondents Motion did get a majority of votes in favour and there was therefore, no  resolution by the body corporate without dissent, which is a requirement for the disposal of a part of "common property", required by section 159(2)(a)(i) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) (the Regulation).

Proceedings Before an the Adjudicator

The First Respondent lodged an application for dispute resolution with the Office of the Commissioner for Body Corporate and Community Management, which in accordance with Chapter 6 of the Body Corporate and Community Management Act 1997 (Qld) (the BCCM Act) referred the matter for adjudication. The adjudicator received submissions from nine of the lot owners (including the First Respondent), and also six reports from architects. The adjudicator ordered, on 2 September 2013, that the Motion should be ". . . deemed to have been passed, as the opposition to it was unreasonable in the circumstances". 

Further, the adjudicator ordered that the Body Corporate arrange for the Scheme’s community management statement to be amended accordingly. 

The adjudicator held that:

The adjudicator also held that the most substantive objection was the potential impact on an adjacent lot, but that “. . . any impact will be so slight that it does not constitute a reasonable basis to refuse the proposal.”

Queensland Civil and Administrative Tribunal

An appeal by the Appellants was allowed by the Queensland Civil and Administrative Tribunal (the QCAT) on 17 October 2014 (see Re Body Corporate for Viridian; Kjerulf Ainsworth & Ors v Martin Albrecht & Anor [2014] QCATA 294 (17 October 2014)). In that hearing QCAT (Member P Roney QC) set aside the adjudicator’s orders, after holding that the adjudicator ought to have found that the First Respondent had not established that the body corporate had acted unreasonably. The QCAT Member recognised a tension between the power of veto given to any lot-holder in the scheme by section 159(2) of the Regulation in respect of a proposed disposition of common property and the power of an adjudicator to make orders under section 276(3) of the Act upon determining that a body corporate had contravened section 94(2) of the Act by having acted unreasonably (see also Schedule 5, Item 10 of the Act). The QCAT Member held that the adjudicator had erred when they found that they were “. . . not satisfied that the body corporate acted reasonably”, since the adjudicator’s role was to determine whether the body corporate’s decision was objectively unreasonable. The adjudicator had in effect reversed the onus of proof, which was properly borne by the First Respondent.

Queensland Court of Appeal

The Court of Appeal (Margaret McMurdo P, Morrison JA  and Martin J - see Albrecht v Ainsworth & Ors [2015] QCA 220 (6 November 2015)), in a unanimous decision allowed the First Respondents appeal finding that the reasons of the adjudicator made it clear that they had not reversed the onus of proof. The Court of Appeal held that the adjudicator “. . . was required to reach her own conclusion after considering all relevant matters.” 

Their Honours in the Court of  Appeal found that the adjudicator had, after making findings of fact that were open on the material before them, proceeded to be persuaded by the First Respondent that the opposition to the Motion was unreasonable in the circumstances, and had not erred as had been held by QCAT but had carried out its functions as adjudicator in accordance with the relevant provisions of the Act.

Grounds for the High Court Appeal

The key grounds for the Appellants appeal include:

• The Court of Appeal erred in formulating the relevant statutory test where it stated that the adjudicator was required to reach its own conclusion as to whether the respondent’s motion should have been passed by the body corporate, acting reasonably, after considering all relevant matters.
• The Court of Appeal ought to have accepted the decision of the appeal member of QCAT that the function of the adjudicator was to consider whether the opposition to the motion was objectively unreasonable, and not to embark upon the process that it undertook, and that the adjudicator erred in law in so doing.

The First Respondent had filed a notice of contention, the key grounds included:

• In addition to concluding that QCAT erred in finding that the adjudicator reversed the onus of proof, the Court of Appeal ought to have also concluded that:
• onus of proof is an aspect of the law of evidence;
• pursuant to section 269(3)(c) of the Act, the adjudicator was not bound by the rules of evidence;
• in deciding the application made by the First Respondent under the Act, the adjudicator was not bound by any  rule to the effect that the First Respondent carried an onus of proof;
• accordingly, in deciding the application, the adjudicator could not, and did not, make any error of law relating to any onus of proof rule.

The High Court Result 

The High Court held that the adjudicator had adopted the wrong approach to resolving the dispute and that the adjudicator's task under the BCCM Act is not to determine whether the outcome of the vote of the general meeting of the body corporate achieved a reasonable balancing of competing considerations, but whether the opposition to the proposal was unreasonable.  

Further, the High Court held that: 

As a  result, the QCAT's decision to set aside the adjudicator's orders was reinstated.

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Kjerulf Ainsworth & Ors V Martin Albrecht & Anor [2016] HCA 40 (12 October 2016) 

Albrecht v Ainsworth & Ors [2015] QCA 220 (6 November 2015)

Re Body Corporate for Viridian; Kjerulf Ainsworth & Ors v Martin Albrecht & Anor [2014] QCATA 294 (17 October 2014)