How to make an offer a body corporate cannot refuse
27 Jan 2016
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Yes, we took that from the Godfather, but why not? It is one of the greatest lines ever delivered in a movie (and credit where it is due to Mario Puzo for writing it in the first place).
Anyway, enough pop culture. We don’t need any distractions this early in the new year!
We have written about bodies corporate and their obligations to act reasonably over the years and this newsletter is another example of the same principle.
It started with 14 owners saying ‘no’ to an application made by our client for the grant of an exclusive use space (which required a resolution without dissent).
When our client applied to the Commissioner’s Office, the adjudicator said each of those votes was cast unreasonably in the circumstances. Five years ago if you came to us with those numbers we would have said you were a long shot of winning in an application. Not anymore.
Our client owned a lot and wanted to renovate it. Part of those renovation investigations revealed a rather large roof cavity above their lot. As their lot was in a building format plan (meaning the lot boundary was the ceiling of the lot), that cavity was common property.
No one else could use the area. No other lot owner could access it or had accessed it in the prior life of the building.
One of the problems we have as lawyers is that sometimes people contact us expecting us to be able to unscramble an egg. As a simple example, if you come to us for assistance in appealing an adjudicator’s decision we are already hamstrung in terms of what we can appeal on. We cannot include new evidence or submissions in an appeal. We merely look for flaws in what has already been submitted and decided on. So if you have not run all of the arguments you should have in the original application, we cannot run those in an appeal.
Thankfully, what happened in this scenario was that our client contacted us very early on and we were then able to develop a strategy (which ended up working).
The first port of call is always the committee. The committee indicated very early on that its support was going to be conditional upon our client assuming a greater contribution schedule lot entitlement (meaning increased body corporate levies).
That was not palatable commercially to our client and hence we moved to Plan B.
Plan B was to make the body corporate an offer it couldn’t refuse at the AGM. In this matter that offer was:
- Getting a valuation and offering to pay the valuation amount for the area. Expecting something for nothing is not realistic.
- Providing absolute assurance around all of the works being done properly with all appropriate certificates etc.
- Addressing the issue of any change in lot entitlements (which we submitted was not necessary for a number of reasons).
There was no need to cave to any unreasonable demands for the sake of the body corporate “having a bigger win”. What was reasonable was what our clients proposed.
Interestingly, the committee was not happy that our client simply by-passed them and put the proposal to the owners for approval. That objection was given sharp rebuttal in the decision. Whilst engaging with the committee is preferable, if the committee was looking to be unreasonable, there is no issue in going direct to the ultimate decision makers, being the owners in a general meeting.
The 14 dissenting votes were held to have been cast unreasonably in the circumstances, and our client was therefore allowed the exclusive use of the cavity area, which they are now happily using.
Of course, each offer will turn on its own individual circumstances. This is not a catch all for every application of this nature.
If you are interested in the case, it is here.