We regularly hear the line trotted out that ‘A committee has to act in the best interests of owners’.
Our view is that this is not actually correct.
At law, what a body corporate (and therefore a committee) is obliged to do is administer the common property and body corporate assets for the benefit of the owners of lots in the scheme. While doing this the committee must act reasonably, in making, or not making, any decision.
Further, the code of conduct for committee members includes an obligation on each committee member to ‘act in the best interests of the body corporate in performing the member’s duties as a committee voting member, unless it is unlawful to do so’.
The body corporate is a creature that is inevitably burdened with some degree of internal conflict. We all know that there is going to be at least one minority interest in each scheme that opposes almost anything the current committee does. More often than not, the minority interest uses as its foundation a former chairperson or ousted committee member.
What this leads to is the minority interests believing that almost every committee decision made was wrong on some basis. In some buildings the minority is virtually silent, but in the worst buildings, every decision of the committee is greeted with howls of protest and copious amounts of circulated correspondence arguing what should have happened.
We believe that the legislation recognises that it is impossible to act in the best interests of all lot owners at all times.
The question is then what is ‘acting reasonably’?
There are numerous decisions on this issue, and some of the recurring themes are that a body corporate acts unreasonably if:
- There has been acquiescence on the part of the body corporate in not taking steps to require something to be done within a reasonable period of time. The body corporate may then lose the right to require it to occur.
- The body corporate acts in a discriminatory manner. Discrimination can take various forms. The clearest example is where the committee refuses the request of one owner to keep an animal but allows others to keep one and there is no logical or reasonable basis for the distinction to be made. Bodies corporate must treat all occupiers equally.
- A body corporate uses pedantic reasoning to find an excuse to refuse to do something in order to further its own goals.
Whether something is unreasonable is always going to be a matter of fact and degree in the particular circumstances, which we can assist you with should it be required.