Court rules 24/7 security costs for Body Corporate unjust …

A recent Court decision has clarified the position when costs incurred by a Body Corporate only benefit some owners, or even a majority of owners, but are unreasonable costs to impose on other owners. The Body Corporate in the case was made up of some owners who operated their units as a hotel. A minority group of unit owners do not participate in the hotel business.

At a Body Corporate general meeting, a special resolution was proposed that the Body Corporate would approve the manning of the concierge desk for security with the hotel covering security costs. If that resolution did not pass, then Body Corporate members would cover the cost of 24/7 security. The minority group did not want areas of common property used by the hotel, so the first resolution failed, but the second passed due to lower voting number requirements.

The minority group applied to the Court for relief from this resolution. They argued it was unjust, because they should not have to share in any costs associated with the hotel, when they are not acquiring any benefit from the hotel business. They also argued that 24/7 security is not reasonably required to protect the minority group’s units and has more to do with the operation of the hotel.

The Court found that since it was not a Body Corporate requirement for the minority group to participate in the hotel business and while the minority would benefit from security, 24/7 security is outside what any owner of a normal residential building requires or is expected to pay for. The high level of security was proposed specifically for the hotel’s operation. The cost of 24/7 security is exorbitant – 14 times the cost of conventional security. For these reasons, the resolution was unjust and unequitable for the minority group.

The High Court held that the effect of the resolution was not unjust for the minority group but this was ultimately reversed by the Court of Appeal. The Supreme Court refused the Body Corporate leave to appeal from the Court of Appeal decision.

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Alan Knowsley