Body Corporate Law, It's Not a One Man Band
It is apparent from a spate of recent matters across my desk that it is timely to remind committee members and owners generally that there is no one person in a body corporate vested with the power to make unilateral decisions for the body corporate.
I recently upset a Chairperson, we’ll call him Mr Putin for the sake of anonymity, by reminding him that he and he alone could not prevent a manager, who owned a lot in the scheme, from putting a motion to owners to vote on topping up the management rights.
The conversation went something like this:
Chairperson – “There is no way that so and so is going to get a top up in my (emphasis added) scheme”.
Me - “Firstly, with the greatest respect Vlad, it’s not your scheme and secondly whether that so and so gets a top up is a matter for the owners”.
Chairperson – “You’re a complete @#@$#%”.
Me – “So you have been talking to my wife recently”.
In body corporate world there are only 2 entities that can make a decision.
- Firstly – the committee, either in formal meeting or by voting outside a committee meeting (commonly referred to as a “flying minute”), provided the matter in question is not a restricted issue for the committee. A “restricted issue” is one reserved for decision by the owners in general meeting.Where the Act requires a decision to be made by ordinary resolution, special resolution or resolution without dissent, then the committee cannot make a decision on the matter. For example, a committee cannot resolve to:a. engage a caretaker/letting agent because the Act provides for that appointment to be made by ordinary resolution; orb. commence legal proceedings as that generally requires a special resolution.
- Generally, if the Act is silent on the decision having to be made by ordinary resolution, special resolution or resolution without dissent, then the committee can lawfully make the decision, by simple majority.
- The owners in general meeting can also vote to make matters a restricted issue, meaning that something that may lawfully be done at committee level under the legislation must be considered by the owners in general meeting.
- A decision of the committee is a decision of the Body Corporate.
- Committees simply should not make decisions on matters where they are not statutorily empowered to do so.
- The old “we’ll get it ratified by the owners in general meeting” should be avoided at all costs.
- It is worth noting that just because a committee may lawfully make a decision, that does not mean it cannot refer the matter to the owners in general meeting, which it may wish to do if the matter is contentious.
- Secondly – the owners in general meeting, which may either be the annual general meeting or an extraordinary general meeting, by ordinary resolution, special resolution or resolution without dissent.
Of course, for any decision to be lawful, be it in committee meeting or general meeting, the proper meeting procedure must be followed, starting with a quorum being present.
No quorum equals no meeting and any decision purportedly reached equals invalidity.
Ahhh – how could we have an article on decision making without mentioning good old Section 94. You know the one – reasonableness.
The Body Corporate must act reasonably in carrying out its statutory functions including making or not making a decision.
I really should have got that reasonableness requirement into my marriage vows!
So back to Mr Putin. The owners overwhelmingly voted to approve the top up and Vlad lodged an Application in the Commissioner’s Office arguing the decision was not reasonable.
The outcome – Onsite Manager 1, Vlad Nil.
As always, we’re here to help with any legal issues your bodies corporate may have.
Until next time – “Keep Activated”
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The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
