This article about approving agreements at General Meetings has been supplied by Adrian Mueller, JS Mueller & Co Lawyers.
An owners corporation will often approve an agreement at a general meeting. Sometimes the agreement is complex or lengthy and the cost to include a complete copy of the agreement in the meeting notice is prohibitive. In those circumstances, does the agreement still need to be included in the meeting notice or can it be tabled at the meeting?
This issue has never been conclusively decided in the strata title context in NSW. However, it appears that when the complexity or length of an agreement would make it prohibitively expensive to include the agreement in a meeting notice that is distributed to all owners, it is not necessary for the agreement to be included in the notice.
However, in these cases, the meeting notice should indicate that a complete copy of the agreement is available for inspection at the strata manager’s office or is able to be sent to any owners who desire a copy of it by mail or email. The meeting notice should also include an accurate, concise and clear summary of the agreement. And a complete copy of the agreement should be available and tabled at the meeting and this should be recorded in the meeting minutes.
This conclusion is supported by at least two cases.
In Re Mirvac Ltd (1999) 32 ACSR 107, the NSW Supreme Court held that in the case of a special resolution to adopt a new company constitution at a shareholders’ meeting, it was not necessary to distribute the full text of the proposed constitution, particularly where the document was lengthy and complex. The Court considered that it was sufficient for a summary of the effect of the proposed changes to the constitution to be provided to shareholders provided that summary was accurate and complete in all material respects.
This issue was considered in the strata title context in Meriton Apartments Pty Ltd -v- Owners Strata Plan No. 72381 [2015] NSWSC 202. There, the NSW Supreme Court concluded that a meeting notice which included a motion for an owners corporation to approve a caretaker agreement was adequate even though the agreement did not accompany the meeting notice.
In that case, the meeting notice indicated that due to the costs associated with the copying and circulation of the caretaker agreement to all owners, the agreement had not been included with the meeting notice but that a copy of the agreement was available upon request at the office of the strata manager.
The Court considered that the note in the meeting notice, and the tabling of the caretaker agreement at the meeting, sufficiently disclosed the agreement and, after a resolution was passed at the meeting to approve the agreement the owners corporation was bound by the agreement.
That conclusion was reached by the Court in a different context, namely, in deciding whether or not the agreement had been properly disclosed to owners for the purpose of the developer (Meriton) complying with its fiduciary duties to the owners corporation. However, there is no reason why the same principles cannot be applied to the question of whether or not an agreement has been adequately disclosed to owners by an owners corporation that wishes to approve an agreement at a general meeting but does not include a complete copy of the agreement in the meeting notice.
The strata legislation also indicates that there is no absolute obligation to include a document that will be considered at a general meeting in the meeting notice. For example, the legislation requires the notice of an annual general meeting to include a motion for adoption of the financial statements.
However, the legislation contemplates that the financial statements will not be included in the meeting notice. This is because the legislation provides that the owners corporation must, at the request of an owner, give the owner a copy of the last financial statements at least two days before the meeting at which the statements are to be presented.
The omission of an agreement from a meeting notice should be avoided. But where the cost to copy and circulate a lengthy agreement together with a meeting notice is prohibitive, it is possible to omit the agreement from the meeting notice provided the recommendations above are followed.
Adrian Mueller
Partner + Senior Lawyer
JS Mueller & Co Lawyers
E: [email protected]
P: 02 9562 1266
This post appears in Strata News #233.
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This article has been republished with permission from the author and first appeared on the JS Mueller & Co Website.
Disclaimer: The information contained in this article is provided for your personal information only. It is not meant to be legal or professional advice nor should it be used as a substitute for such advice. You should seek legal advice for your specific circumstances before relying on any information herein. Contact JS Mueller & Co for any required legal assistance.
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I have a question. I’m new to owning a strata lot and new to being on committee. At our agm a new Agency agreement was presented , Quickly accepted. No real discussion. Then sent later to two committee members (not me ) for signing. I had a closer look and discovered the current agreement still had another year to run. So the new one would replace the current one a year early. Management fees were increasing. And other complex changes (they maybe not significant). But the agreement ending the current one a year early and the fees increases not spoken of , put in agenda or advised to us other by proving the a copy of the agreement Is this allowed. ? Seems wrong. Seems like they are getting them selves a new 3 year contract when there was still a year left on current. And get a fee increase early.
Hi Matt
Leanne Habib from Premium Strata has responded to your comment within this article: NSW: Q&A Strata Management Termination and Appointments
Test of agenda item Motion test
A notice of meeting should be worded in such a way that ordinary minds can understand its meaning: Henderson v Bank of Australasia (1890) 45 Ch D 330.
A notice must give members fair warning of the matters to be dealt with: Ryan v Edna May junction Gold Mining Co (NL) (1916) 21 CLR 487; 22 ALR 222.
The test is to ask whether the information, if provided to an ordinary shareholder who scanned or read the document quickly, not as a lawyer, but as an ordinary person in commerce or as an ordinary investor, would fully and fairly inform and instruct the shareholder about the matter on which he or she would have to vote: Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956.
19. However ….. under cross examination, agreed that the notice of the meeting of the executive committee to consider whether or not to lodge an appeal was not given to each of the lot owners as required under cl. 6(1)(a) of Schedule 3 or displayed on a notice board as required under cl. 6(1)(b). There was consequently no opportunity for each of the lot owners to make an objection at the executive committee meeting to the proposed course of action.
20. Accordingly I am satisfied that the decision made by the executive committee ……………. was not made in accordance with the Act.
Owners Corporation SP 67631 v Waters & Gardner (Strata & Community Schemes) [2010] NSWCTTT 343 (22 July 2010)
56. ………Furthermore, Schedule 3, Part 2 deals with meetings of the executive committee and requires proper notice to be given. The purpose is to ensure all lot owners have an opportunity to make relevant submissions to the executive committee before any decision is made by the Owners Corporation.
57 …… every lot owner was entitled to be notified of the impending decision making and an opportunity to make his or her position clear on the matter to be decided.
Lawson & Clarke v Owners Corporation SP 61788 (Strata & Community Schemes) [2011] NSWCTTT 270 (27 June 2011)
Kirby J: 33 That being the context, let me turn to the decision of the learned Magistrate. Commenting upon ss 80D and 230A of the Strata Act, as well as Reg 12C, his Honour said this: (Judgment – Ex A: p 6)
“For reasons that I have set out earlier, the philosophy of the act in part involves an openness within the confines of what is reasonable to the actions of the executive committee. This is to facilitate the right of an individual unit holder, for instance, to have knowledge as to what is being done on his or her behalf, or on their behalf, in what potentially they may be responsible for and allowing for the individual unit holders to have their reservations or opinion made known. Of course, their views may not win the day as far as the proposed legal actions or the proposed actions of the committee are concerned but this is not to the point.”
Owners SP 46528 v Hall [2009] NSWSC 278
Consider the matter from the perspective of a person appointing a proxy.
What is required to be known to properly instruct a proxy.
Fat lot of good items tabled at the meeting are.