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When is not making a decision ... a decision?

Wednesday October 10th, 2018

Every stakeholder needs to be grateful for the time and energy invested by committee members into their strata communities. It is a volunteer, and often thankless, role that someone needs to play. They take time away from family or business to look after the best interests of their community.

But problems within a community arise when committee members do not make that sacrifice and set aside that time. A position on the committee is not ceremonial – it requires care, attention and work from those who volunteer for the position. Some problems I frequently see from committees include:
• Deciding to hold only one meeting a year, and it is usually right before or after the AGM (making the exercise largely redundant).
• Not investing enough time to properly consider something that has arisen, and then avoiding the problem altogether because they are not comfortable with dealing with the issue.
• Not responding to requests for a decision to be made (absenteeism).
• Introducing a “pay for service” model – if a lot owner or occupier wants the committee to do something, then they have to pay for the administrative cost (ie the cost of the flying minute to decide the pet application).

These problems lead to the management of a strata community being unattended or left to other stakeholders (ie building managers, body corporate managers). I often see owners and committee members complain about something that has happened in the past, which attracts a simple reply from those stakeholders: “no one on the committee responded or was interested in the issue, so we had to do something to keep the community going forward.”

Self management means making decisions

One of the fundamental objects of the Body Corporate and Community Management Act 1997 (Qld) is to balance the rights of individuals with the responsibility for self management. The government did not want to involve itself with the daily happenings of a strata community. It established this legislation to allow communities to govern themselves.

A primary duty of a body corporate is to act reasonably in anything it does, including making, or not making, a decision. The purpose of this duty is to ensure that a community does in fact govern itself in a timely manner.

For example, it is not reasonable to leave an owner or occupier waiting six months for a decision to be made on their request for permission to install air-conditioning to their lot. It is not enough to say that the next committee meeting is scheduled to occur in six months time, so they just have to wait. A Queensland summer is not that patient.

Owners and occupiers are not allowed to do whatever they want within their lot or upon the common property. By-laws apply to regulate that use, and they often need the body corporate’s permission to do something (like keep a pet, or make an improvement to the common property). The power to regulate those activities is balanced by the right of owners and occupiers to be subject to a body corporate that will actually make a decision in a timely and reasonable manner. That is the balancing act.

Deemed refusal

A body corporate is often described as being the fourth tier of government. Similar to a local government, a body corporate makes decisions about things its constituents want to do. If a person files a development application with its local government, there is a statutory timeframe within which the local government must make a decision, failing which the application is deemed to be refused and that person can dispute the deemed refusal.

This gives people dealing with the local government the certainty of an outcome either way. Most importantly, the deadline serves as a call for action and often leads to a flurry of activity in the final days from the local government. With very limited exceptions , there is no similar deadline for body corporate matters.

Those dealing with a body corporate should set a realistic and achievable deadline for a decision to be made on their request, and state that a failure to make a decision by that deadline will be treated as a deemed refusal. You can then take steps to resolve the dispute that arises because of the deemed refusal.

Acquiescence

Acquiescence generally means the tacit or implied consent to something because of a failure to object to it. It is typically said to arise when a body corporate knows about something an owner or occupier has done without approval, but raises no objection and allows the matter to stand for years at a time. As a legal principle, by acquiescence, a body corporate is said to have abandoned any rights it may have to object to what the owner or occupier has done.

It does not mean that if a committee fails to make a decision in a timely way, the owner / occupier can just assume there is implied consent. The principle does not work that way. In that circumstance, the owner should assume a deemed refusal and dispute that to gain some certainty of outcome.
Acquiescence does not provide any certainty. It is an equitable defence an owner or occupier can raise if a body corporate takes action (ie in the Commissioner’s Office) against them about something that has been in place for a long time without any objection. An adjudicator will look at the unique circumstances of the case when deciding whether to allow the defence.

“Pay for service”

I mentioned above a “pay for service” model being used in some communities. It typically arises when the body corporate is fairly inactive and wants to keep administrative costs as low as possible by only having (and paying) for one or two committee meetings a year, and avoiding having to make decisions outside those meetings.

Under this model, if an occupier applies for approval to keep a pet cat, they will be met with an administration fee for the paperwork involved in the committee making a decision. That was the situation that arose in Lenvilla [2018] QBCCMCmr 146 where an adjudicator ordered the body corporate to reimburse the $65 pet application fee because it could not lawfully be imposed.

There are always going to be costs involved in a body corporate serving the purpose of its existence: administering and managing its community. Some may try to reduce or avoid those administrative costs by self managing. But the legislation requires a committee to give written notice of what it intends to do (hold a meeting, vote on a motion etc) and what it has done (minutes).

Even if the scheme was self managed, someone has to pay for the paper and ink.

There is an inevitable cost to community management, and that cost is shared by all lot owners because they all benefit from a community that is properly administered. A body corporate is not a user-pays service provider.

This does not mean that a body corporate can never pass on some of the costs it incurs in making a decision. The legislation does allow this in some circumstances. The point is that a body corporate must act reasonably, and that means being ready and willing to make decisions for the harmony of the community.

Recommendations

Strata communities should adopt a by-law which sets out a decision-making process. It should:
• set out a time in which a committee must acknowledge the application is received;
• entitle the committee to request more information about the application;
• provide that the application is automatically refused if the applicant does not give that information within a reasonable time; and
• set a deadline for when a final decision is to be made, and enable that deadline to be extended if the circumstances require it.

This is not intended to hamstring a committee. It can assist a committee in setting the expectations of owners and occupiers as to when their request will be dealt with, so the committee is not subjected to arbitrary demands for a decision in three business days.

None of this should be seen as an invitation for nuisance owners to take a committee to task for failing to deal with their 8th letter that week in a timely manner. That touches on one of the biggest challenges facing strata communities, which I cannot do justice to in this article. Suffice it to say, those special cases should be treated differently and a committee should not allow a transparent decision-making process to be abused.

Volunteering to be on a strata committee does not necessarily have to be an onerous or time-consuming exercise. When working with a proactive and capable strata manager and a competent building manager (f there are management rights for the scheme), a committee can fulfil its intended role of receiving and vetting information so it can make decisions in a timely and reasonable manner. But the committee does have to make time to fulfil this role, and should align itself with service providers who can make that process as simple as possible.

This article was contributed by Jason Carlson, Grace Lawyers.

* This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.
1 For example, the obligation to make a decision on whether to consent to a transfer of management rights within 30 days of receiving all information reasonably necessary to make a decision.