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Thank you in advance for your assistance, I need help – this is a bit of a long story.
At our first AGM (Jan ’14 in NSW) there was supposedly enough votes via proxy to form a quorom. In the minutes of the first AGM there was no mention of the proxies, only that there were 14 lot owners were present (and/or represented).The amount of people at the meeting did not meet enough to form a quorom (only half a dozen votes).
When I asked about where the information about the proxy votes was, the SM said that people there did have proxies but didn’t want to disclose them. I have since contacted these people (I am now on the EC as a member) and all of them have said they had nothing to do with proxies until after the meeting, where one of them was approached by the SM and said that he was going to be proxy for 5 votes.
Once I have the statements from the people that were supposedly proxy holders (I am also obtaining records of the proxies by conducting a inspection of the records to check further validity), can the first AGM be considered as invalid, due to not enough lot owners were present in order to form a quorom, and therefore the SM management agreement is also invalid, as the EC was never elected properly and the OC was never represented properly?
This is difficult because its all after-the-fact. If the EC learns that this AGM is invalid, is there legislation to dictate that we must hold a new “first” AGM and re-elect the SM and EC? This is particularly important. If there is, can you please reference it.
Separate issue: Using this information about the first AGM, if we wish to proceed with kicking out the SM as the original management agreement is invalid, what steps can I expect if they fight it? Mediation/Adjudicator/NCAT? The SM has that we will pay them out if we terminate the agreement, so I can see them attempting to take us to court if this ends up happening and they want to play hard ball.
I would appreciate any assistance/previous similar situations/legislation that can be quoted (and referenced please). Also if we do end up down the track of litigation, are there solicitors that specialise in these areas and has anyone used them?
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@stanno said:This is difficult because its all after-the-fact. If the EC learns that this AGM is invalid, is there legislation to dictate that we must hold a new “first” AGM and re-elect the SM and EC? This is particularly important. If there is, can you please reference it.
Section 153 of the Act (below) says that an NCAT adjudicator can declare decisions made by a meeting (and elections at the meeting) invalid if provisions of the Act in relation to meetings have not been adhered to. However, they can choose NOT to make that order if the decisions of the meeting have not affected anyone adversely and if compliance with the Act would not have changed the outcome of the meeting.
Now, dealing with the proxies as a separate issue, they have to be presented on a form signed and dated by the lot owner who is giving the proxy. The strata anager should have these on record – if he doesn’t they are invalid.
Now, if you can prove that the bogus proxy votes were used to pass a false majority, you could have a case (you may need statutory declarations from people who allegedly gave their proxies).
However, if the indications are that the only thing wrong with the meeting was that it wasn’t quorate and the majority would still have passed the motions anyway, it’s a tougher case to win. For instance, if the bogus proxies that made the meeting quorate were counted as “no” votes and the motions would still have passed then the odds are stacked against you.
That said, the strata manager’s behaviour has been highly unprofessional (to say the least) and revoking the decision of the meeting may be the easiest way to resolve the issue.
If you need legal advice, our friends at Makinson d’Apice (click on the ad on our home page) will help you out. If you want to research previous cases, go HERE , then click on a year, click on ‘search database’ and type in ‘quorum”.
You will find links to myriad weird and wonderful cases – including one where 11 out of 53 units comprised a quorum (25%) because nine of the owners were unfinancial and therefore not able to vote, meaning the quorum was based on 44 rather than 53 lots. Have fun.
By the way, if NCAT does declare the meeting invalid then the contract with the strata manager is also invalid. They might kick, scratch and squeal (and appeal) but if they don’t return your documents within a reasonable time, they could be in a lot of trouble.
153 Order invalidating resolution of owners corporation
(1) An Adjudicator may make an order invalidating any resolution of, or election held by, the persons present at a meeting of an owners corporation if the Adjudicator considers that the provisions of this Act have not been complied with in relation to the meeting.
(2) An Adjudicator may refuse to make an order under this section but only if the Adjudicator considers:
(a) that the failure to comply with the provisions of this Act did not adversely affect any person, and
(b) that compliance with the provisions of this Act would not have resulted in a failure to pass the resolution or have affected the result of the election.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
If the proxies exist, for them to be valid they would need to be signed by the persons giving their proxy but not necessarily the proxy holder. Plenty of owners commonly just give their proxy to the “chairperson of the meeting” so the proxy holder may not necessarily be aware of this ahead of time. The proxies should however be disclosed at the opening of the meeting so it is clear of voting rights and quorum calculations.
For the proxies to cast a vote on the appointment of the strata managing agent these voting instructions must be clearly indicated on the proxy form. If they were not, then not enough owners were voting on this motion for a quorum so the decision should be invalid.
At the meeting, two persons must have been nominated to sign the agency agreement and this must have been executed and a copy given to the secretary (or other nominated owner) within 48 hours of the execution. If this was all done, you may need to look at the terms of the contract regarding termination, specifically with respect of negligence.
A strata search should answer most of these questions in the first instance.
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