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The validity of voting papers – part 2

By Frank Higginson01 Aug 2014

One of the discussions we are having internally at the moment is the fact that these newsletters seem to have no rhyme or reason to them. They tend to get written about whatever has come across our desks for that month, which certainly keeps them topical, but that does not necessarily reflect a good marketing strategy.

One of our most popular newsletters of all time was the one we wrote about validity of voting papers.  Click through rates were off the charts as was syndication by industry journals.  If only we could always get that response!

Anyway, in order to keep the powers that be at Hynes Legal thinking that they can influence what is written, we are going to leverage this topic again but in doing so discuss a recent adjudicator’s decision which dealt with six different methods of voting delivery and whether they were lawful or not.

The context of the dispute was one where a body corporate has spent what would be considered a rather large sum of money advancing the cause of a certain class of owners in relation to a town planning issue.  Our client happens to be the resident manager but could have been any other lot owner.  Other than that, the context of the dispute is immaterial for the purposes of this newsletter.

The issue related to motion 11 on the agenda of the AGM which was to ratify expenditure of roughly $35,000 in legal fees which had been paid from the sinking fund.  The relative participation rate was very high.  At the AGM itself the vote on the motion was declared a dead heat at 27 all (meaning the motion was lost), but when the minutes emerged the motion was recorded as passing 30-27. 

So that was the first issue. 

Ultimately that miscount didn’t affect the outcome of the motion because of what we explain below, but the position taken by the adjudicator was interesting.  It was found that what the minutes state has to be correct – and that includes correcting a mistake of fact (if there was one) in what people otherwise thought had taken place on the day.

With a vote that close every voting paper was scrutinised by both sides in the subsequent (and almost inevitable) application.   Votes at the AGM were cast in a number of different ways.  To simplify it we have set out below how they were cast and what the finding with respect to each method of casting was.

Method of voting

The decision

Four separate lot owners asked our client to fax their votes to the secretary from our client’s fax machine.  These owners all gave their papers to our client individually - as in one person didn’t collect them and deliver all four. These were valid.  The individual request of each owner to our client to send them to the secretary indicated a personal commitment to take the step to vote in that way. The use of a fax machine that was not theirs did not invalidate the votes.
Four voting papers were given to a committee member who then handed them to the secretary at the AGM.  They were not given to the secretary direct by the owners.  This one was a no brainer if you read our previous article.  All four were ruled invalid even though one of the affected lot owners was actually present at the meeting.  For whatever reason that owner didn’t cast their vote there.
One lot owner emailed it to the body corporate manager direct. Valid.
Our client delivered two voting papers before the meeting to the secretary. A no brainer.  Invalid.   
One owner abstained in a voting paper. She then changed her mind and emailed a vote in the affirmative to the secretary.  She didn’t officially withdraw her first vote. The vote was allowed. This was on the basis that the voters’ intention was clear and unambiguous and the result of the vote had not yet been declared.
A vote was emailed to the treasurer. It was unclear whether the treasurer forwarded that vote to the secretary. Invalid again.  In either circumstance it was void as a third party intervened in the delivery of the vote and it was not clear that it was cast anyway before the ballot was declared.

 

So there’s another bunch of factual circumstances for everyone to take into account when considering whether votes are valid or not. 

The theme we have taken from it is that valid votes are ones where the owner exercises and maintains control of their vote.  The involvement of a third party means almost certain invalidity.

In circumstances where apathy can reign supreme and contested motions can be decided by a handful of votes, having clarity around what is lawful and what is not can sometimes be of incredible importance.

As always if you need help let us know.