Presumption of Regularity in Bodies Corporate

30 November 2020

A recent decision by QCAT has applied the “presumption of regularity” in a way that could shape future OCBCCM decisions.

The presumption of regularity is a rarely relied upon legal principle that provides that where legislation requires a prior act to give it legal effect, in the absence of evidence to the contrary, it is appropriate to presume the prior act has been done.

The presumption of regularity shifts the burden to the party alleging the prior act was not done to prove its allegations.

To the best of our knowledge, this legal principle has not previously been expressly applied in a body corporate context in Queensland.

The principle was applied by the Tribunal in of O’Donnell & Anor v Body Corporate for Magic Mountain Apartments [2020] QCATA (on appeal from the OCBCCM decision in Magic Mountain Apartments [2019] QBCCMCmr 602).

In the appealed decision, the adjudicator found that a parking plan that had not been in effect since 1995 should be reinstated as it was never properly rescinded. The respondents argued the 1995 plan was never properly enacted as the 1995 plan required written notice to be provided to the body corporate and there was no record of such notice.

Relevantly, Adjudicator Stone stated;

Exclusive use allocations that are made by an authorised person must ultimately be notified to the body corporate and recorded on the registered plan by the registrar of titles. While there is no evidence one way or the other, it may be that the developer made its allocations and notified the body corporate in the time that elapsed between the decision to adopt the by-law and lodgement of the request to record it with the registrar of titles. That would explain why a by-law written in those terms was accompanied by a comprehensive plan of exclusive use. Whatever the explanation, I can see no reason not to accept the car parking plan at face value as a plan of allocations made pursuant to exclusive use by-law 41.

On appeal it was argued that it was not open to the adjudicator to make this finding without supporting evidence and the body corporate bore the onus of proof and if the body corporate could not demonstrate it had discharged the express requirements to register the 1995 plan, then the plan was of no effect.

Member Roney QC rejected this argument and found;

On the onus issue, apart from what I have already said, in my view the Respondent body corporate was entitled, in the event that it carried any onus to show a valid allocation of car parks in 1995, to rely upon the so called presumption of regularity. As is noted in Cross on Evidence 11th Edition at paragraph 1175, the principle applies to corporations. Sometimes it is a presumption of fact and sometimes a presumption of law. The author there notes:

the presumption arises where an intention to do some formal act is established, when the evidence is consistent with that intention having carried into effect in a proper way, the observance of the formality has not been proved or disproved and its actual observance can only be inferred as a matter of probability, citing Carpenter v Carpenter Grazing Co Pty Ltd (1987) 5 ACLC 506 at 514 (citing earlier English authority on this issue).

The application of the presumption of regularity in O’Donnell & Anor v Body Corporate for Magic Mountain Apartments [2020] allowed the body corporate to defend the appeal on the basis that the onus rested with the appellant to rebut the presumption that the necessary authorising act(s) had occurred. The body corporate had failed to maintain full and accurate records and there was not sufficient evidence to support either party’s position. In the absence of evidence, the presumption of regularity was applied to the detriment of the appellant.

The approach taken by Member Roney QC can be contrasted to that considered by Dalton J with regards to the similar presumption of correctness in Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925 [2018] QLAC 7. In Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925 [2018], Dalton J said at [48];

As was pointed out by the Land Court in Meiers v Valuer-General, 15 the presumption of correctness was essentially replaced by the concept of the balance of probabilities. I consider the test that applied when BT Dillion was decided to be to a higher standard than that required for the onus of proof under the LVA. Notwithstanding that, I do consider that the general test set out by Demack J in BT Dillion is able to be applied in determining whether or not, on the balance of probabilities, an appellant under the LVA has discharged the onus of proof.

The practical difficulty that exists in the application of the presumption of regularity is that records of bodies corporate are often incomplete. Bodies corporate may now be able to rely on that incompleteness to remedy an improper act leaving aggrieved owners little recourse. For bodies corporate it would be preferable to abandon the presumption of regularity in favour of the more widely applied standard of the balance of probabilities.