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Topping up management rights agreements – the contest continues

By Frank Higginson04 Dec 2014

Admiralty Towers is a very well presented building.  Consisting of 28 stories on the Brisbane River, it has some breathtaking views.  Having spent a Riverfire in there many years ago where the F1-11’s started their dump and burn flying at, and then over, the building I can attest personally to the aspect up the Brisbane River.

Leaving aside the amenity and moving to more mundane legal matters, the building is in the Standard Module.  The building has management rights which means those agreements are capped at a term of 10 years.  So every three years or so, the manager asks the building for a top up.

The 2014 AGM included a motion asking for a further 3 years and 5 months to be added to the management rights agreements.

As usually happens in these contested variations both the manager and the anti-manager element of the building heavily lobbied owners with their different points of view.

The manager won at the AGM.

One of the opponents to the variation then lodged an application in the Commissioner’s Office to seek that the vote be overturned on a number of grounds.  We have written previous newsletters on voting issues here and here and this new decision provides some further guidance around voting that is important for all concerned in community titles schemes in Queensland.

Our take aways are:

Allegations of owners being misled

Opponents to management rights regularly trot out the line that no one in their right mind could actually be silly enough to support a variation to management rights agreements with all of the facts laid out before them.  It follows that owners must have been misled if they actually support a top up.

This argument was given a very short shrift and punted in touch.

Everyone has a point of view.  Everyone is entitled to express that.  Just because someone doesn’t agree with you doesn’t make them wrong (as much as it may seem that way to you).

As the decision states ‘mere voting by a majority in favour of extending the management rights is not credible evidence of any undue influence.’

The issue may be polarising for owners but many things can be.  That is one of the joys of strata.

Free, enthusiastic and genuine

It may be the first time you have seen these words but it definitely won’t be the last.

It is the confirmed test for referencing the validity of votes when there might otherwise appear to be some technical irregularity with them.  That’s not to say you can bend the rules.  If you are not financial you are still largely unable to vote at general meetings, but this case considered votes (both actually and hypothetically) cast in a secret ballot in circumstances where:-

Example Outcome
An owner completed the voting paper but an interested party helped to complete the particulars envelope. Valid. Help with an administrative task (like the particulars of the lot owners or the lot numbers) does not mean the vote is not free, enthusiastic and genuine.
An owner completed both the particulars envelope and the voting papers and simply placed it in the body corporate letterbox rather than posting it to the returning officer. Invalid.  This vote is not ‘enthusiastic’ in terms of the owner not caring enough to follow the directions on how to cast a valid vote (i.e. by posting it to the returning officer).
An owner completed both the voting paper and the particulars envelope and gave it to an interested party to send to the returning officer.

Invalid.  This is consistent with our earlier newsletter

A hypothetical example where an owner completed both the voting paper and the particulars envelope and gave it to a friend to post. Valid. Asking a friend (who we gather must not be an interested party) to post the vote is acceptable.  It remains free, enthusiastic and genuine.

A secret voting paper is completed in the presence of an interested party but then posted by the voter.

Invalid.  It is potentially not a free, enthusiastic or genuine vote with oversight by an interested party in the completion of the voting paper.
Secret voting papers were delivered by an interested party to voters, who then completed them and sent them back themselves. Valid.  Unlike a government election, by the time the votes are counted each lot is marked off by the returning officer first, so if a lot voted twice (unlike an electoral voter) it would be detected there and then.  ‘Vote early and vote often’ does not apply to the unique body corporate democracy.
Votes where a company nominee or representative had not been properly appointed. Invalid.  This hasn’t changed.
Votes by lot owners who were unfinancial. Invalid.  This hasn’t changed.
Votes where the returning officer mistakenly recorded them being signed by the lot owner when they were actually properly signed by the corporate nominee. Valid.  This was a technical mistake on the part of the returning officer – the votes were properly cast.

 

Even if the invalid votes were removed from the count, the manager still would have won the ballot even if all of them had been against the manager’s motion.  On that basis the application was dismissed (meaning the manager won).

Body corporate decisions can be decided by a single vote.  This decision again shows the spotlight that contested ballots can be put under and highlights the need for experienced returning officers and proper record keeping at general meetings.

As always, if you need help on the validity of votes (or anything strata), let us know.  Otherwise, for those interested in all the detail you can read the full decision here.