In brief: An owner or mortgagee may be able to apply to the Tribunal to have a resolution or election of the owners corporation invalidated or nullified. Whether the Tribunal makes the order will depend on the individual circumstances but in its decisions the Tribunal has offered some guidance as to how it will apply the legislation.
As a general rule, motions and elections passed by the owners corporation at a general meeting are valid and binding on the lot owners of the strata scheme.
Somewhat surprisingly this includes motions and elections which were passed irregularly. For example, where a requirement of legislation was not followed in their making. Generally, the certainty of a motion or election being valid once made is held to outweigh the potential detriment of noncompliance with requirements.
However, the Strata Schemes Management Act 2015 (NSW) (Act) does legislate methods to invalidate or nullify certain motions and elections.
Tribunal Order invalidating resolution of owners corporation (section 24)
Section 24 of the Act provides that an owner or first mortgagee may apply to the Tribunal for an order invalidating any resolution of, or election held by, the persons present at a meeting.
To exercise this power, the Tribunal must first determine that the provisions of the legislation have not been complied with in relation to the meeting.
If that is so, then the Tribunal may then refuse to make such an order only if it determines that:
This method was highlighted in the case of Maiorana v The Owners – Strata Plan No. 1418  NSWCATCD 36. An owner applied to the Tribunal to invalidate certain resolutions on the basis that the notice requirements for the meeting had not been complied with. The resolutions included extensive renovations to the common property and the replacement of certain windows in the owner's lot which he claimed would harm its value and cost him a lot of money. The owner claimed notice requirements had not been met as the agenda did not include a motion for the election of a strata committee, which was clearly a different motion to the resolutions he sought to reverse.
The Tribunal noted that:
"… the very resolution which the applicant argues would adversely affect him, was advised in the notice, circulated to the lot owners and the applicant [owner] exercised his voting rights in respect of the relevant motion (albeit dissenting)."
The Tribunal held that the owner had not sufficiently demonstrated that he would be harmed by the failure of notice, as the failure of notice was to a different resolution. Further, since the owner had been notified of the relevant motions and had voted against them, although being outvoted, it could not be said that the outcome would have been different.
Tribunal Order where voting rights denied or due notice of item of business not given (section 25)
Another option is to nullify a resolution of the owners corporation where voting rights are denied or due notice of an item of business is not given.
Section 25 provides that a person entitled to vote on a motion for a resolution of an owners corporation at a general meeting (applicant) may apply to the Tribunal for an order that a resolution passed at the general meeting be treated as a nullity on and from the date of the order. An order will not be made by the Tribunal unless it "… is satisfied that the resolution would not have been passed but for the fact that the applicant: (a) was improperly denied a vote on the motion for the resolution; or (b) was not given due notice of the item of business in relation to which the resolution was passed".
An application for the order, or mediation of the dispute, must be made to the Tribunal within 28 days after the meeting. If it is not, an application for the order may not be made.
In Linney v The Owners - Strata Plan No. 11669  NSWCATCD 123 the applicant was a lot owner who attended the AGM of her strata plan with her partner. The AGM was held by videoconference. The applicant advised the strata manager ahead of the meeting that her partner would be attending as an observer and that he would speak on her behalf. The strata manager (correctly) advised that under the Act only lot owners or proxy holders had a right to attend and speak and (as a voluntary concession) the applicant's partner would only be able to attend if the other lot owners agreed.
At the meeting the strata manager asked the other lot owners if they agreed to the applicant's partner attending and they did not. Following the vote both the applicant and her partner became loud and argumentative. The strata manager gave the applicant several opportunities to attend the meeting without her partner as she was a lot owner and entitled to participate but he was not. The applicant refused unless her partner was also allowed. The strata manger muted the applicant and her partner and asked the other lot owners if the pair needed to be removed from the meeting. The other lot owners agreed. The strata manager asked the applicant one more time if she would attend the meeting without her partner. The applicant again refused and yelled at the strata manager at which point she was disconnected from the meeting.
The applicant then applied under section 25 for all resolutions passed at the meeting to be invalidated on the basis that she was prevented from voting by being excluded from the meeting. However, the Tribunal found that:
"… it was the action of the applicant that led to her not participating and voting at the meeting without [her partner] being in attendance, rather than her being precluded from doing so in a manner that contravened the SSMA or the SSM Regulations."
The Tribunal was not satisfied that the applicant "was improperly denied a vote on the motion for the resolution". It was the applicant who made her own participation conditional on her partner also being present, so when he was excluded she was also.
An owner or mortgagee may be able to apply to the Tribunal to have a resolution or election of the owners corporation invalidated or nullified if:
1. applicable legislative requirements have not been complied with, unless:
(a) the failure did not adversely affect any person; and
(b) compliance would not have resulted in a failure to pass the resolution or affected the result of the election; or
2. it would not have been passed but for the fact that the applicant was either:
(a) improperly denied a vote on the motion for the resolution; or
(b) was not given due notice of the item of business in relation to which the resolution was passed,
and within 28 days an application for an order or mediation of a dispute is made to the Tribunal.
Whether the Tribunal makes the order will depend on the individual circumstances but in its decisions the Tribunal has offered some guidance as to how it will apply the legislation.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2023.