Appeal reinstates resident manager’s five year option

Hynes Legal recently represented a resident manager who successfully appealed against an adjudicator’s decision.

The case arose out of a general meeting which had voted in favour of the resident manager obtaining a variation to its management rights agreements to create a further five year option term in each agreement. Naturally the further option was very important to the resident manager’s financial circumstances.

Unfortunately for the resident manager, an owner filed an application with the commissioner’s office which sought to have the variation declared invalid. The owner argued that the result of the meeting was invalid as the committee had, without the resident manager’s knowledge, inserted into the Notice of Meeting a copy of a letter written by the resident manager to owners, which was supposed to have been sent out to owners separately from the Notice.

At the first instance the adjudicator decided that the result of the meeting was invalid.

Among other findings, the adjudicator held that:

• calling an EGM to consider the request for an extension, even though it was to be paid for by the resident manager and is permitted in the legislation, was evidence of improper conduct by the committee; and
• the BCCM Act prohibited the inclusion of the resident manager’s letter with the Notice of Motion and it had resulted in owners being so misled and deceived that the vote in favour of the resident manager had to be overturned.

Given the financial consequences for the resident manager in effectively losing an option term that had been approved at general meeting, we were instructed to appeal the adjudicator’s decision to the CCT.

The CCT found in the resident manager’s favour on all the points which were the basis for the appeal, and reinstated the vote. The resident manager will now seek the significant costs incurred in the appeal from the body corporate.

The lessons from the decision are that:

1. Resident managers should always send out their own correspondence directly to owners. They should not involve the committee in that process. All owners have access to the body corporate records to obtain addresses if required;
2. It is vital that any information sent to owners is completely accurate otherwise there is a possibility of the result being jeopardised by a claim that someone were misled; and
3. It is always worthwhile considering whether a decision should be appealed. This comes down to cost benefit analysis.