Reasonableness and the BCCM Act

S.94 (2) of the Act requires a body corporate to “act reasonably in anything it does…including making, or not making, a decision…when carrying out the functions given to the body corporate under the Act”

This is one of those statutory provisions which says everything but tells you nothing.

The courts tell us that ‘reasonableness’ involves an objective test, but even in the rarefied worlds of the Queensland Court of Appeal and the High Court of Australia, what seems unreasonable to one group of distinguished jurists may be perfectly reasonable to another.[1]

What chance for mere mortals like us?

Those of us trying to detect a pattern in the myriad number of adjudications where ‘reasonable’ is mentioned may be excused for a mounting sense of despair and frustration. It is always a matter of ‘in the circumstances’ peculiar to that case.  When trying to reconcile the distinguishing circumstances from one case to another, it is useful to remember that what may seem reasonable practice in our private lives may be anything but reasonable in our strata world.  A very recent adjudication highlights this dilemma.

The Watermark Townsville [2020] QBCCMCmr 192 (Final Order)[2]

The scheme had a leaking roof, and it is common knowledge that bodies corporate are responsible for maintenance of the roof.

The dispute arose when the owners resolved at an EGM to have the roof repaired.  It was a very close vote: 13 YES v 11 NO

The resolution authorised roofing works and associated expenditure on the basis of an attached ‘materials and labour’ quote.  There was only one quote.

The quote provided for material costs of $23,691 (+GST) PLUS labour at $75 per hour.  The quotation gave no indication of the number of hours likely to be required, but the scope of works made it unlikely that the number would be small.

The motion did not stipulate a maximum number of hours or a cap on the total cost.  There was no provision for renegotiation in the event of the billing costs exceeding a certain amount.  There was no evidence of emergency or even urgency regarding the need for the repairs.

The applicant complained primarily that the motion was “open ended” and questioned its reasonableness under s.94.  There was no express complaint regarding the ‘usual suspects’, eg breach of spending limits.

There was some reference in the adjudication as to whether the major spending limit – not specified in the reported decision –  may have required at least two quotes,  but this was touched upon only lightly and not in any detail.  In any case it did not feature in the Adjudicator’s analysis and determination.

Adjudicator D. Sutherland focussed on ‘reasonableness’ and had little trouble concluding that the resolution passed by the body corporate was unreasonable and thereby void and of no effect.

Some unit owners may have difficulty reconciling this conclusion with what they would do in their private lives.

Reasonable in your own home vs Unreasonable in the body corporate

How many of us have called upon the services of a tradie to fix a problem like a leaky roof at home, or even problems in your own unit, and when asked for a quote the tradie’s response is “No idea mate until I open it up and see what the problem is…and even then, it will be a work in progress.  Best I can offer is an hourly rate PLUS cost of materials.”  So, you accept the offer and hope for the best.  This may be reasonable in our private world:  it is your house, your money, your rules.  And in any case, what choice do you have?

But things are different in our strata world.  It is other people’s property, other people’s money, and the BCCM rules apply.  Higher levels of certainty and governance are required when dealing with tradies and other service providers  in our strata world, no matter what may be acceptable in our private lives.  You have to work within the BCCM rules.

Another intriguing aspect is the absence of details and background explaining how and why this matter got so far down the dispute trail without being fixed in-house.  This case is as much about what is not included, as it is about what is included, in the published decision.

What Absent Details?

BCM: There is no mention of a body corporate manager (BCM).  Although a scheme is not obliged to have a BCM, it seems unlikely that a 46-lot scheme would be self-managing.

Ordinarily, the BCM could be relied on to advise the Committee that a motion like the one in question is doomed to failure and therefore should not be presented to the EGM.  We can only speculate as to whether there was a BCM and if so, whether this advice was forthcoming.

Motion Out of Order:  There is no mention of a Chairman’s responsibility at an EGM to rule a motion out of order when  it conflicts with the Act or relevant regulation module[3].  We are left in the dark as to whether this responsibility was even raised at the EGM or, if it was raised, why the motion was not ruled out of order.  Maybe the Chairman refused to rule it out of order, or maybe the Chairman ruled it out of order but was overruled by a vote from the floor.  Who knows?

Post-EGM Revocation or Rectification: The EGM was held on 21 January 2020.  By the time the Adjudicator granted an Interim Order on 30 January, it should have been obvious to the Committee that the motion would not survive.  Yet, there is no evidence of any remedial steps having been taken by the Committee post-EGM.

In the Interim Order the Adjudicator noted the emergency relief provisions which may be available to the body corporate under s.243A of the Act and s.151(1)(c) of the Standard Module.  No application was received from the Committee.

The Adjudicator also suggested in the Interim Order that “The committee may otherwise wish to consider calling a further (EGM) to consider another quotation if that is practicable, or if another quotation cannot be received, and in any event, set a limit on the expenditure that is reasonable in the circumstances.”[4]   There is no evidence the Committee had taken up this suggestion by the time the Final Order issued 10 weeks later on 15 April 2020.  Perhaps they did, but who knows.

One of the committee members had even advised the Adjudicator before 30 January that “None of us are happy with the proposed ‘open ended’ arrangement, this can be easily overcome by setting a fixed time and work program”[5].  Although the motion did not do this, there was nothing stopping the Committee from taking appropriate steps after the EGM and before the matter got so far down the dispute trail.

And, we still do not know if their leaky roof has been fixed yet.

[1] Ainsworth v Albrecht  [2016] HCA 40

[2] See also The Watermark Townsville [2020] QBCCMCmr 46 (Interim Order)

[3] See s.81 of the Standard Module , or.79 of the Accommodation Module

[4] The Watermark Townsville [2020] QBCCMCmr 46 (Interim Order)   para.[32]

[5] The Watermark Townsville [2020] QBCCMCmr 46 (Interim Order)   para.[26]