The Owners Corporation Units Plan 202 v Brudenall & Ors
[2015] ACAT 64
•29 May 2015
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE OWNERS CORPORATION UNITS PLAN 202 v BRUDENALL & ORS
(Unit Titles) [2015] ACAT 64
UT 14/12
Catchwords: UNIT TITLES – costs of maintenance to exterior of buildings – mixed class development - whether motion was passed as a special resolution – whether a resolution is void for want of the words ‘special resolution’ in the minutes – whether proper notice of motion was made in advance of the AGM
Legislation cited: Unit Titles Act 2001 former ss 51, 97 (now repealed)
Unit Titles (Management) Act 2011 ss 125, 129
Cases cited: Bank of United States v Dandridge 147 US 91
McLean Bros & Rigg Ltd v Grice and Anor (1906) 4 CLR 835
Re Van Twest & Anor, Ex parte Tubemakers Australia Ltd (1986) 69 ALR 573
List of
Texts/Papers cited: Butterworths Concise Australian Legal Dictionary
Tribunal: Ms M-T. Daniel – Member
Date of Orders: 29 May 2015
Date of Reasons for Decision: 25 September 2015
ACT CIVIL & ADMINISTRATIVE TRIBUNAL UT 14/12
BETWEEN:
THE OWNERS CORPORATION UNITS PLAN 202
Applicant
AND:
JOHN BRUDENALL
First Respondent
SUE BRUDENALL
Second Respondent
KOSMAS TSOKHAS
Third Respondent
DAVID SLOPER
Fourth Respondent
ALISON SLOPER
Fifth Respondent
ROBIN LONG
Sixth Respondent
TRIBUNAL: Ms M-T. Daniel - Member
DATE: 29 May 2015
ORDER
It is declared that Motion 5 at the 2002 AGM of the Owners of Units Plan 202 was passed as a special resolution.
The Executive Committee of the Owners of Units Plan 202 is directed to amend the minutes of the 2002 AGM in relation to Motion 5 to insert the words “as a special resolution” after the word “carried”. The 2002 AGM minutes are also to be amended to contain on each page a footer which reads “These minutes have been amended for clarity pursuant to order of the ACT Civil and Administrative Tribunal made 29 May 2015”.
Signed
Ms M-T. Daniel
Member
REASONS FOR DECISION
On 29 May 2015 I made a decision on an application (the application) brought by the Executive Committee of the Owners Corporation for Units Plan 202 (the owners corporation). The decision was delivered with short oral reasons, and I advised the parties that I would in due course provide written reasons. Those reasons follow.
In these reasons, a reference to the ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally and ‘Tribunal’ refers to the current member.
The dispute relates to Units Plan 202, also known as Argyle Square. The substance of the dispute is about an annual general meeting (AGM) which was held on 16 May 2002, and whether a resolution was validly passed at that meeting in accordance with the Unit Titles Act 2001 as it was at 16 May 2002 (the UT Act) so as to modify the maintenance obligations of the owners corporation.
The application sought three declarations which are quoted below:
1.That Motion 5 in the Minutes of the AGM of the UP202 Owners Corporation, held on 16 May 2002, was a valid Special Resolution;
2.That it has been lawful for the Owners Corporation of UP202, since 16 May 2002, to give effect to that resolution; and
3.That it was lawful for the Executive Committee of the Owners – UP202 to issue a certificate on 25 June 2014 as evidence of facts about that resolution.
The application also sought an order that the Minutes of the AGM referred to above be rectified by inserting the words ‘as a special resolution’ after the words ‘and carried’ where appearing in relation to Motion 5.
Background Facts
Units Plan 202 is an older unit complex dating back to the 1980s, comprised of both class A and class B units. There is a long-standing and important legislated distinction in the maintenance obligations of owners of these units, in that the owner of a class A unit is not responsible for maintenance for the exterior of their unit (such as external walls, roof etc). That is the responsibility of the owners corporation as it is defined as common property. By contrast, the owner of a class B unit is responsible for maintenance of the exterior of their own unit.
It is undisputed that for Units Plan 202 initially the costs of maintenance for all exterior parts of the units was shared by all owners according to their unit entitlement, without distinction as to class A or B units. The formal authority or basis for this approach was unclear, but it seems to have been adopted from inception.
Inevitably, objection was raised to the method of apportionment of these costs. In the mid-1990’s legal proceedings involving payment of levies by one owner were commenced in the Magistrates Court. A decision was made in those proceedings, which included a finding that the maintenance costs should be apportioned for the different classes of units in accordance with the legislation. From approximately 1997 to 2002 the owners corporation apportioned maintenance costs in accordance with the legislation for class A and class B units.
It is clear from contemporaneous documents filed in these proceedings, that there remained disquiet amongst the owners over this situation. There was a perception that this approach led to class A owners paying approximately 70% of all of the exterior maintenance costs of class A units and class B owners paying the remaining 30% of those costs plus, as individual owners, all costs associated with maintenance of their own class B unit. This disquiet played out with the obtaining of legal advice and a plan for maintenance which was approved in 1998 and then rescinded in 1999.
Also around this time the unit titles legislation was under review. The then body corporate manager for the owners corporation was involved in making submissions to the relevant policy areas of the ACT Government in relation to the proposed new legislation. The UT Act was duly passed and became effective on 5 April 2001.
One aspect of the new legislation was section 51(3) which provided as follows:
51 General duties
…
(3) An owners corporation must maintain the following:
(a) the common property;
(b) all other property that it holds;
(c) the defined parts of any building containing class A units (whether or not the defined parts are common property);
Note This does not include painting, unless the painting is required because of other maintenance (see (4)).
(d) all facilities associated with the provision of the utility services mentioned in section 35 (Easements given by this Act), including utility conduits;
(e) any building on the common property that encroaches on a unit if the building is the subject of an easement declared under section 36(Easements declared by owners corporations);
(f) as authorised by a special resolution (if any)—all buildings on all class B units on the units plan.
Example (paragraph (f))
A special resolution authorising the corporation to paint all buildings on the class B units and to carry out roofing and structural repairs to all class B units, but excluding responsibility for internal painting and minor repairs of class B units.
...
Subsection 51(3)(f), if utilised, provides authority for the owners corporation to undertake maintenance work on the exterior of class B units. Further provisions of the UT Act contained in division 5.4 provided for the owners corporation, if it wished, put in place a method of cross-subsidisation of the costs of this maintenance, by unopposed resolution each year when voting on the sinking fund contributions.
The owners corporation put together a subcommittee to draw up a maintenance proposal under the UT Act. In April 2002 Ms Ribbens, as the strata manager, wrote to all owners advising of the passage of the new legislation and suggesting that owners consider implementing “section 51(3)(f) of the Unit Titles Act 2001.” A revised management proposal prepared by the subcommittee was attached for owners to consider and discuss in advance of the next annual general meeting.
The next annual general meeting of the Owners – Units Plan No. 202 was to be held on Thursday 16 May 2002 at the Reid Uniting Church (Small Hall) in Reid at 7:30pm. A notice of business to be dealt with was prepared for that AGM (the 2002 Notice)[1] and sent to owners in the usual way.
[1] That notice was set out at attachment A2 to the application
Item 9 of the 2002 Notice concerned the budget. In relation to maintenance obligations it read as follows:
9. Budget
...
9.3 Maintenance –
MOTION 5
“That pursuant to Section 51(3)(f) of the Unit Titles Act 2001 the Corporation be responsible to paint all buildings on the Class B units (being Units 1 – 7 inclusive) and to carry out roofing and structural repairs to all Class B units (being Units 1 – 7 inclusive) but excluding responsibility for internal painting and minor repairs of Class B units (being Units 1- 7 inclusive).
...
The AGM was held. Because there was not a quorum, the reduced quorum procedure was followed. Minutes of the AGM were prepared, and those minutes were formally adopted at the next AGM without amendment in relation to Motion 5. In relation to Motion 5 the minutes read as follows:
10.3 Maintenance
MOTION 5
Moved Mr Fleming, seconded Mr Fletcher and carried that pursuant to Section 51(3)(f) of the Unit Titles Act 2001 the Corporation be responsible to paint all buildings on the Class B units (being Units 1-7 inclusive) and to carry out roofing and structural repairs to all Class B units (being Units 1-7) inclusive) but excluding responsibility for internal painting and minor repairs of Class B units (being Units 1-7 inclusive).
It was agreed that Mr Fletcher should be notified if any roof work is necessary as it transpires that the roofing contractors tend to ascend the roof in the vicinity of his unit.
From May 2002 to the time of hearing this application the owners corporation prepared its budgets and sinking plans, and undertook maintenance work, on the basis of the shared responsibility for maintenance of the exterior of class B units put forward by Motion 5.
A number of owners who purchased units after the 2002 AGM reported deficiencies in the certificates provided to them at the time of purchase. Specifically, those certificates contain a question asking whether a special resolution had been passed in relation to the Units Plan, and below that question provides a space entitled ‘details’. The certificates tendered as evidence in these proceedings had ‘Yes’ indicated in relation to the question, but the ‘details’ field was blank.
Those incoming owners who requested a copy of the special resolution experienced difficulties, over a protracted period of time, in trying to obtain a copy of the minutes of the purported special resolution to maintain class B units.
When the minutes were ultimately provided, it was noted that the minutes do not record that Motion 5 was passed as a special resolution. Consequently, the legal authority for subsequent acts undertaken by the owners corporation was questioned. Mr Brudenall, who at one time performed the role of Treasurer on the Executive Committee, was one of several owners who ventilated this issue within the owners corporation.
On 25 June 2014 the owners corporation through the Executive Committee issued a certificate asserting that Motion 5 had been properly passed. The propriety of the Executive Committee issuing that certificate became the subject of further dispute. In order to resolve the question of the validity of Motion 5 once and for all, these proceeding were brought by the owners corporation.
The proceedings
The owners corporation filed the application on 3 July 2014, naming Mr Brudenall as respondent. On 1 August 2014 Mr Brudenall filed a comprehensive response to the application.
The matter came before the Tribunal on 15 August 2014 for a first directions hearing. On that occasion Mr Teather and Ms Henty, members of the executive committee for UP202, appeared on behalf of the owners corporation. Mr Brudenall appeared on his own behalf. It became apparent at the directions hearing that Mr Brudenall had been named as a token respondent to what had emerged as a dispute within the owners corporation as to the validity of motion 5 of the AGM held on 16 May 2002, and subsequent actions of the owners corporation in reliance upon motion 5.
A number of procedural and jurisdictional issues were canvassed at that first directions hearing.
Jurisdiction of the Tribunal
Part 8 of the Unit Titles Management Act 2011 (UTM Act) deals with disputes within the owners corporation. Section 125 provides that where there is a dispute relating to an owners corporation between the corporation and an owner, a party to the dispute may apply to the tribunal for an order in relation to the other party. Section 129 of the UTM Act then sets out the sorts of orders that may be made. Section 129(1)(e) provides that the Tribunal may declare that a resolution of a general meeting is void for irregularity. While there is no specific provision for an order to be made declaring that a resolution is valid or has been properly passed, section 129(2) provides that the Tribunal may make any other order it considers reasonably necessary or convenient to resolve a dispute under Part 8.
Who should be the parties to an application for a declaration?
Unlike other sorts of disputes, the UTM Act does not prescribe who should be parties to an application seeking a declaration. At the directions hearing it was identified that, at a minimum and depending upon the scope of the issues raised, current owners in UP 202 might have an interest in the outcome of the matter, and might wish to be joined as a party to the proceedings. Directions were made on 14 August 2014 requiring the current owners to be notified of the proceedings and given opportunity to seek to be joined.
On 15 September 2014, the Tribunal made orders joining Sue Brudenall, Kosmas Tsokhas, David Sloper and Alison Sloper to the proceedings as second through fifth respondents respectively. On 25 November 2014, Robin Long also made an application to be joined as a party and on 22 December 2014 the Tribunal made orders joining Mr Long to these proceedings as the sixth respondent.
Was the application properly brought by the executive committee on behalf of the owners corporation?
Mr Brudenall in his response raised as a preliminary point his concerns that the naming of him as respondent to the application contravened subrule 13(4) of the rules of the owners corporation of UP202[2]. Rule 13 is about recovery of legal fees from the owner of a unit after legal action has been taken against the owner. Subrule 13(4) requires that an owners corporation not commence any legal action against a unit holder other than to recover outstanding levies, without the approval of the owners corporation by ordinary resolution.
[2] The owners for corporation of UP 202 having adopted the default rules contained in schedule 4 to the UTM Act, with some amendments and supplementation
There was some discussion at the directions hearing as to whether the bringing of the proceedings in the tribunal amounted to ‘legal action’ as that concept was contemplated by subrule 13(4) given that no fees were being incurred and the proceedings were being brought in the tribunal and not a court. The question of the interaction of subrule 13(4) with clauses 2.5 and 2.6 of schedule 2 of the UTM Act, and the obligations of the executive committee under the UTM Act was also live.
In the end the point was not pressed. It was considered to be in the interests of the individual owners and the owners corporation that the question of validity of Motion 5 be determined quickly, and certainly before the next annual general meeting which was due to be held in June 2015.
At the conclusion of the directions hearing on 14 August 2014 directions were made for the filing of any further documents or witness statements, and the matter was listed for hearing on 20 October 2014.
The cross-application for merits review
Mr Brudenall’s response set out his concerns about the validity of Motion 5. Following on from matters discussed at the directions hearing, on 28 August 2014 Mr Brudenall filed a cross-application seeking merits review of Motion 5 of the 2002 AGM (the cross-application).
There was some mention at the directions hearing that a sub-committee could be put together to review the financial implications of Motion 5 over past years, which might put a proposal to the owners corporation at the forthcoming general meeting. Mr Brudenall indicated that were his application for merits review to be successful, he would not be seeking that the financial arrangements of the owners corporation for the years from 2002 to date be invalidated, but rather would ask that any order set aside the offending motion from the time of review.
At the commencement of the hearing on 20 October, the Tribunal outlined to the parties that it intended to deal with the matter in two distinct stages. Stage 1 would determine the questions raised by the application. Those questions related to the validity of the resolution. If the result of Stage 1 was that the Tribunal was satisfied the resolution was validly passed, then there would be a resolution capable of merits review and the cross-application for merits review would be heard as Stage 2.
At the conclusion of this matter I directed that the application for merits review be allocated a separate matter number, and listed for directions after the 2015 AGM had been held.
The hearing and evidence
On 20 October 2014, the hearing commenced. Regrettably the hearing did not conclude on that day but was adjourned to 8 and 9 January 2015.
The applicant relied upon evidence from the following persons who had been involved in the events leading up to the 2002 AGM and subsequent events, namely:
Marilyn Dollimore statutory declaration
Grant Fleming statutory declaration and gave evidence in person
Raymond Lloyd statutory declaration and gave evidence in person
Gerda Mark statutory declaration and gave evidence in person.
Peta Thompson
(nee Ribbens) statutory declaration and gave evidence in person
Joan Warhust statutory declaration and gave evidence in person
John Warhust statutory declaration and gave evidence in person
Valerie Calvert witness statement and gave evidence in person
Professor John Teather gave evidence in person
Margaret Henty gave evidence in person
The respondents relied upon evidence from the following persons, all current owners. None of these witnesses had been present at the 2002 AGM but most had been involved with the owners corporation, including serving on the executive committee, in subsequent years:
David Sloper witness statement and gave evidence in person
Alison Sloper witness statement and gave evidence in person
Sue Brudenall witness statement and gave evidence in person
John Brudenall witness statement and gave evidence in person
Robin Long gave evidence in person
Also before the Tribunal were the contemporaneous documents already referred to, further documentation such as legal opinion which had been provided to the owners corporation by various lawyers over the past 15 years, and correspondence from Ms Shaw the strata management agent.
After the conclusion of the hearing, the parties provided their final written submissions by 20 February 2015.
Consideration
The respondents contended that Motion 5 was not validly passed at the 2002 AGM because:
(a)it was not passed as a special resolution; and/or
(b)proper notice of Motion 5 was not given in advance of the AGM.
Question (a) Was Motion 5 passed as a special resolution?
An owners corporation is a body corporate, the members of which are the people who are the owners of the units for the time being. The owners corporation, like other corporations, expresses its will at general meetings through resolutions. The Butterworths Concise Australian Legal Dictionary defines resolution as “a formal expression of the collective will”.
The making of resolutions at meetings of corporate bodies is governed by procedural rules. In the case of owners corporations, part 6 of the UT Act as it was at the relevant time was entitled ‘Decision-making by owners corporations’ and governed the procedure to be followed by executive committees and at general meetings.
Subsection 51(3) of the UT Act required a special resolution to authorise the owners corporation to maintain all buildings on all class B units.
In 2002, the different types of resolutions that could be made at general meetings of an owners corporation were set out in division 6.3 of the UT Act. That division describes four types of resolutions: ordinary, special, unopposed and unanimous.
Section 106 of the UT Act set out the following requirements for a special resolution. Subsection (1), which relates to owners corporations with more than 2 members, is extracted below.
106Special resolutions
(1)For an owners corporation with more than 2 members, the requirements for passing a special resolution at a general meeting are that—
(a)unless a poll is taken—
(i)the number of votes cast in favour of the resolution exceed the number of votes cast against it; and
(ii)the votes cast against the resolution number less than 1/3 of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes); or
(b)on a poll—
(i)the voting value of votes cast in favour of the resolution exceed the voting value of the votes cast against it; and
(ii)the voting value of votes cast against the resolution is less than 1/3 of the voting value of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes).
A corporation, not being a natural person, cannot directly give evidence about the resolutions that are passed at its meetings. Rather, the resolutions are recorded or evidenced by minutes. The Butterworths Concise Australian Legal Dictionary defines minutes as “the official written record of the proceedings of a meeting”.
In relation to Motion 5 the relevant excerpt of the minutes states: “Moved Mr Fleming, seconded Mr Fletcher and carried that pursuant to Section 51(3)(f) of the Unit Titles Act 2001 the Corporation be responsible.”
The argument put by the respondents is that because the 2002 minutes only state in relation to Motion 5 “Moved Mr Fleming, seconded Mr Fletcher and carried...” and in relation to other motions in the minutes the words “carried as a special resolution” are used, this indicates that the resolution was carried as an ordinary motion. That is certainly one inference that could be drawn. However, I do not consider that that is the only inference available. The reference to the specific section of the UT Act, which requires voting by special resolution, supports the inference that the motion was passed as a special resolution.
At this point, it is relevant to note the legal principle referred to as the ‘presumption of regularity’. This presumption means that the regularity of official appointment and action will be presumed. This is an evidentiary presumption which can be rebutted. While in its bare form it refers to officials, there is authority for the proposition that the presumption applies to corporations. The High Court in McLean Bros & Rigg Ltd v Grice and Anor[3]applied the presumption to a corporation. In that decision, when dealing with the issue of a quorum, Griffith CJ said:
Prima facie, then, in the ordinary course of business, when persons with specifically prescribed powers meet together, the first thing they would naturally do would be to verify their powers, and then proceed to act, and the fact of acting is prima facie evidence that they had authority to act, just as a person who attempts to deal with property is regarded prima facie as the owner. There is high authority for saying that this presumption is applicable to the proceedings of corporations.
[3] (1906) 4 CLR 835
Quoting from Bank of United States v Dandridge[4]:
... acts done by the corporation, which presuppose the existence of other acts to make them legally operative, are presumptive proofs of the latter ... in short, we think, that the acts of artificial persons afford the same presumption as the acts of natural persons.
[4] 147 US 91, at 97
It is not contested that the owners corporation, after the 2002 AGM, conducted itself on the basis that it was authorised to deal with the maintenance obligations as provided by Motion 5. There arises then a presumption that such authority existed. It was for the respondents to bring some evidence to the Tribunal to satisfy it that in fact Motion 5 had not been properly passed. No such evidence was forthcoming.
The minutes of the 2002 AGM as the official record which evidences what happened at the AGM, is the first evidence one turns to. When viewed with the benefit of hindsight, the wording in relation to Motion 5 could at the highest be said to be ambiguous. Much time was spent during the hearing in cross-examination of witnesses who had been involved in the drafting and subsequent adoption of the minutes. None of those witnesses supported an interpretation of the minutes other than that the motion was passed as a special resolution.
The evidence of the managing agent at the time was that in 2002 it was normal practice to merely note non-budget items as ‘carried’ rather than ‘carried as a special resolution’ although current practice is different.
If the minutes had recorded votes against the resolution, or that there was disagreement over the resolution, that would be documentary evidence which supported drawing the inference that the necessary number of votes were not reached. In the present case, the minutes contain no record of disagreement or contrary votes.
The respondents pointed to the blank part of the conveyancing certificates as evidence supporting the inference that the resolution should be found not to have been passed as a special resolution. The respondents’ contention was that had the resolution been validly passed, the full details would have been entered into the form. I am not persuaded by this submission.
There are several problems with this argument. The first and most simple is that had the person completing the certificate truly believed that there was no special resolution in relation to the property it would have been easier and simpler to simply answer ‘No’ to the first question. Secondly, the argument is illogical. It is true that if the special resolution was not valid and the agents did not want to admit to that, they may have left out the details of the resolution. But equally, laziness, forgetfulness or a general disregard for details could have as easily been the cause of the omission. It does not follow that because the respondents’ hypothetical would result in a failure to fill in details, that such a failure demonstrates the hypothetical is true.
The Tribunal heard personal accounts by a number of witnesses who had been present at the AGM in 2002. Much time was spent during the hearing examining those witnesses on their recollection of the voting at the AGM in 2002. Inconsistencies or issues about the reliability of these witnesses recollections were raised in the submissions of the respondents.
In the end, however, there was simply no evidence from any document or any witness that the numerical requirements of a special resolution were not met for Motion 5 at the 2002 AGM. No witness gave evidence that they personally voted against the motion and no witness saw anyone else vote against the motion. Nor was there any evidence that would satisfy the Tribunal that the procedures for the reduced quorum decision were not properly undertaken.
The parties put before the Tribunal legal advice provided to the owners corporation, in which the lawyers stated that in their opinion Motion 5 had been passed as an ordinary resolution. This was because of the difference in the wording within the body of the minutes, and the fact that the minutes had not been amended subsequently. Legal opinion, although helpful to the Tribunal in considering this matter, is not itself evidence. I do not share the opinion held by the lawyers, and note that in preparing that legal advice the lawyers did not have the benefit, as the Tribunal has had, of eyewitness testimony of the events of the 2002 AGM.
Given that the witnesses have said that the motion was put and voted on, and there is no evidence that even one person voted against the motion, the Tribunal is satisfied that the numerical requirements for a special resolution in section 106 were met.
The remaining issue is whether a motion, if it meets the requirements of a special resolution at the meeting, is still passed as a special resolution if it is not recorded as such in the minutes.
There is a Federal Court case about whether a resolution is void for want of the words ‘special resolution’ in the minutes. Re Van Twest & Anor, Ex parte Tubemakers Australia Ltd (1986) 69 ALR 573 was a case which concerned a resolution passed at a creditor’s meeting. At [574] Pincus J said:
The objection taken by the applicant to the resolution here in question is simply that the minutes of the meeting of creditors recorded the relevant resolution as having been passed, without saying it was passed as a special resolution. There appears to me to be nothing in this point.
I would respectfully adopt his Honours reasoning. To find otherwise would be to accord to the minutes a degree of legal authority that they do not possess.
Therefore, in relation to the first question, the Tribunal finds that notwithstanding the recording of the resolution as ‘carried’ instead of ‘carried as a special resolution’, in fact the requirements for a special resolution were met. While the presumption of regularity provides that in the absence of evidence to the contrary, the resolution should be presumed to have validly passed, in this case having had the benefit of hearing from the persons present at the AGM the Tribunal is positively satisfied that the necessary voting requirement were met. The failure to record the words ‘as a special resolution’ in the minutes does not have the legal effect that the resolution was not passed as a special resolution.
Question (b) Was proper notice of Motion 5 given?
There are two limbs to the respondent’s argument that there was no proper notice given of Motion 5. First, the Notice itself did not refer to the requirement for a special resolution in order to pass Motion 5, and secondly the information provided to owners was said to be so inaccurate and misleading about the effect of Motion 5 as to amount to a lack of proper notice being given.
Notice of meetings under the 2002 UT Act was governed by section 97:
97Notice of general meetings
(1)The executive committee of an owners corporation must give notice of a general meeting to—
(a)each member of the corporation; and
(b)each mortgagee’s representative (if any).
(2)The executive committee must give notice of the general meeting—
(a)so that the notice would reasonably be expected to be received at least 14 days before the date fixed for the meeting; or
(b)if a motion is to be moved that requires an unopposed or unanimous resolution—so that the notice would reasonably be expected to be received at least 21 days before the date fixed for the meeting.
(3)A notice of a general meeting for an owners corporation must state—
(a)the time, date and place fixed for the meeting; and
(b)whether the person notified is entitled to vote on all (or any) motions at the meeting, and if not, why not; and
NoteSection 110 explains who is entitled to vote on which kinds of motion. For example, if an amount is owing to the corporation in relation to a particular unit at the time of the general meeting, no vote may be cast by the unit owner (or anyone else) for that unit on any motion requiring an ordinary or special resolution.
(c)for a member who is not entitled to vote on any motion because a mortgagee voting notice has been given—details of the notice, including the full name and address for correspondence of the mortgagee’s representative (see section 112); and
(d)if a motion is to be moved that requires an unopposed or unanimous resolution—the text of the motion and the kind of resolution.
(4)For a notice of a general meeting given to a person entitled to vote on any motion, the notice must include—
(a)a proxy form approved by the executive committee; and
(b)if a motion is to be moved that requires an unopposed or unanimous resolution—an absentee voting paper for the motion in a form approved by the executive committee.
(5)For a notice of an annual general meeting, the notice must include a copy of the following:
(a)the annual financial statements of the corporation to be presented at the meeting (under section 91 (3));
(b)the general funds budget.
Subsection (3) deals with the content that must be included in the notice. Relevantly, paragraph (c) requires notice of motions that require unopposed or unanimous resolutions to be given. That notice must include the text of the motion and the kind of resolution. Importantly, paragraph (c) does not mention special resolutions. There is a well known presumption in statutory interpretation, usually represented by the maxim “expressio unius est exclusio alterius”, meaning that expressly mentioning something would exclude others. In this context, applying that presumption would mean that the express mention in the notice requirement for unopposed or unanimous resolutions means that special resolutions are not intended to be covered by that paragraph. Section 97 of the 2002 Act does not require notice of the text or the kind of resolution to be given of a motion requiring a special resolution.
There are no other provisions in the 2002 Act which might create a requirement to give notice that a motion must be voted on as a special resolution. The only other source of such a requirement may be the common law, the parties did not point the Tribunal to any authority that such a requirement exists.
The Tribunal finds that the notice that was given in relation to Motion 5 was sufficient. The text of the motion was given in the notice, although that was not legally required. That text set out the section of the Act under which the motion was to be put. That section of the Act, if someone went to it, would have shown that a special resolution was required.
It was also submitted by the respondents that Motion 5 was misleading and inaccurate as depicted in the revised maintenance proposal prepared prior to the AGM, and the covering letter to the notice, and that as a consequence the owners were not in a position at the AGM in 2002 to make a properly informed decision. There was some evidence of some current owners that they would not have voted for the motion had they understood more fully the extent of the financial impact upon them as an individual owner. This evidence was more an opinion with the benefit of hindsight, than a positive statement that that person had misunderstood or been misled at the time.
I am satisfied that the material provided in advance of the AGM had some deficiencies. The layman’s descriptions of the legislation were superficial and in some respects inaccurate. It did not expressly advert to any cross-subsidisation, and no financial costings or projections were provided.
I am not satisfied, however, that in the overall context of the history of the matter, the deficiencies in that document were such as to amount to the owners being misled as to the nature of the proposal, or that it would have a possible adverse financial impact upon them. There was a factual background of over a decade of events including litigation, numerous pieces of legal advice and previous resolutions for maintenance being passed then revoked. Against the full history of the matter, I am satisfied that notwithstanding deficiencies in the revised maintenance proposal and covering letter, the owners were fully informed of the nature and substance of the proposal and that it would have a direct financial impact upon them. The respondents also relied upon the fact that no detailed costings accompanied the proposal. I am not persuaded that detailed costings are necessary in order for the owners to be fully apprised of the nature of the motion being debated in 2015, let alone in 2002.
The content of the motion as set out was such that it gave the reader notice of the nature of the motion and that they may wish to attend or consider that motion. It is clear, particularly given the history of this owners corporation in relation to this practical issue, that no one would have been taken by surprise at the substance and seriousness of the motion.
Therefore, the Tribunal cannot find that the resolution was not passed as a special resolution for want of notice.
Other Matters
Correction of the minutes
As I have noted above I do not consider that the minutes of the 2002 AGM are incorrect, but rather that they are ambiguous. In the interests of certainty it is appropriate to order that the minutes of the 2002 AGM be clarified by insertion of the words ‘as a special resolution’ in relation to Motion 5.
Declaration that it has been lawful for the owners corporation to give effect to Motion 5
The applicants sought a declaration in broad terms that “... it has been lawful for the owners corporation ... to give effect to that resolution [Motion 5].” A declaration in such broad terms would encompass not only the maintenance work performed over the ensuing years, but also the financial arrangements for payment of those costs.
The respondents pointed out that even if Motion 5 has been passed as a special resolution, that would of itself be insufficient to validate the funding arrangements undertaken in subsequent years by virtue of the budget and sinking funds. Specifically it was submitted that the cross subsidisation between the owners of the units from time to time required an unopposed resolution in relation to each yearly budget.
The Tribunal is unable to form a view, on the current evidence, what maintenance work was undertaken and how it was financed from 2002 to date. It would require the work of an auditor, examining over a decade of financial records, and involve many days of hearing, for the Tribunal to determine what maintenance has been carried out in reliance on Motion 5, and the financial arrangements for payment of those expenses. It was beyond the scope of this proceeding for the Tribunal to attempt to embark upon that inquiry, and accordingly I declined to make that order.
The issuing of a certificate by the executive committee
The application also sought an order confirming that it was lawful for the executive committee to issue the certificate on 25 June 2014 as evidence that Motion 5 was passed as a special resolution. The hearing did not, in the end, cover this point and given the findings previously made in relation to Motion 5, there is no utility in proceeding to address this issue. Consequently on 29 May 2015 I declined to make that order.
………………………………..
Ms M-T. Daniel
Member
HEARING DETAILS
FILE NUMBER: | UT 14/12 |
PARTIES, APPLICANT: | The Owners Corporation Units Plan 202 |
PARTIES, RESPONDENT: | Mr J Brudenall, Ms S Brudenall, Dr K Tsokhas, Dr D Sloper, Ms A Sloper, Mr R Long |
APPEARING FOR THE APPLICANT | Pr D Teather, Ms Henty, Mr Calvert |
APPEARING FOR THE RESPONDENT | Mr J Brudenall, Ms S Brudenall, Dr K Tsokhas, Dr D Sloper, Ms A Sloper, Mr R Long |
TRIBUNAL MEMBERS: | Ms M-T Daniel - Member |
DATES OF HEARING: | 29 May 2015 |
6