A few weeks prior to the Supreme Court of New South Wales handing down its decision in the case of Sher Global Enterprises Pty Ltd v Owners – Strata Plan 31758 [2018] NSWSC 1057, which held a notice of annual general meeting valid despite its non-compliance with the requirements of the Strata Schemes Management Act 2015 (NSW) (the “Management Act”), the NSW Civil and Administrative Tribunal considered a similar issue in the case of Tolhurst v Owners Corporation SP 72114 [2018] NSWCATCD 23. Although the meeting in Tolhurst was an extraordinary general meeting (not an annual general meeting as in Sher Global) the Tribunal concluded that the non-compliant meeting notice did not invalidate the resolutions of the owners corporation made at that meeting.
Tolhurst concerned an applicant owner who objected to an addition to common property pursuant to section 108 of the Management Act, being the placing of two water tanks installed on common property outside the owner’s lot. The relevant motion at the extraordinary general meeting had been passed by the owners corporation with 85% of votes in favour on a unit entitlement basis. It was submitted by the owner that this motion was invalid as the notice of the meeting failed to “include…whether [the] motion require[d] a special resolution…to be passed”, as required by clause 8(d) of Schedule 1 of the Management Act.
The Tribunal held that the notice of the extraordinary general meeting failed to comply with the requirements of the legislation, specifically clause 8(d) of Schedule 1 of the Management Act. Further, it observed that it had the discretion to make an order under section 24(1) of the Management Act “invalidating any resolution of…the persons present at a meeting of the Owners Corporation”. However, section 24(3) of the Management Act permitted the Tribunal to refuse to make an order under section 24(1) if it considered that:
- the failure to comply did not adversely affect any person; and
- compliance with the provisions of the Management Act would not have resulted in a failure to pass the resolution.
In this instance, the Tribunal applied section 24(3) of the Management Act and held the following:
- The applicant owner “had notice of the meeting and sufficient time to place a valid vote” in relation to the resolution, and was aware of the owners corporation’s intention to install water tanks on the common property, the failure of the notice to comply did not adversely affect the owner.
- As the motion was dealt with as a special resolution, with votes counted on a unit entitlement basis, and 85% of those votes in favour of the addition to common property (which under section 108(2) of the Management Act can only be authorised by a special resolution of the owners corporation), “it would appear that compliance [of the notice] with the provisions [of the Management Act] would not have resulted in failure to pass the resolution”.
While the decisions of the Tribunal in Tolhurst and the Supreme Court in Sher Global may give some comfort to owners corporations who routinely send out rushed and non-compliant notices of general meetings, a loosening of the provisions and requirements of strata legislation in relation to these notices is not the aim of these decisions. Best practice would always dictate that an owners corporation consider, observe and comply with these provisions and requirements of the legislation when preparing meeting notices.