- The issue in this case was whether reduced quorum decisions made at an annual general meeting held on 16 December 2021 took effect where the owners corporation gave notice of the reduced quorum decisions to unit owners on 4 January 2022, that is, more than seven calendar days after the meeting.
- There was no dispute between the parties as to the facts and ACAT had not previously given guidance in relation to this issue making this case important.
- In this case:
- pursuant to section 3.10(1) of the Unit Titles (Management) Act 2011 (UTM Act), written notice must be given “within seven days after the meeting” – i.e. by midnight on 23 December 2021; and
- pursuant to section 3.11(1) of the UTM Act, the reduced quorum decision “takes effect 28 days after the decision was made” – i.e. on 13 January 2022.[1]
- The applicant unit owner claimed that none of the reduced quorum decisions came into effect because notice of the decisions was given more than seven days after the meeting and that a new annual general meeting must be held. ACAT found that the applicant was correct in this claim for the reasons which follow.
- The owners corporation’s position was that it gave written notice of the reduced quorum decisions to owners. It accepted that the notice was given more than seven days after the meeting but says this was immaterial and did not prevent the decisions from coming into effect.
- Sections 3.10 and 3.11 are found in part 3.1 of schedule 3 of the UTM Act, which contains the rules and procedures applicable to general meetings. Section 3.9(1) provides that a motion can be considered at a general meeting only if a ‘standard quorum’ is present. A ‘standard quorum’ for a units plan that comprises persons entitled to vote on a motion in relation to not less than half the total number of units. Section 3.9(2) provides that if a standard quorum is not present within half an hour after the motion arises for consideration, two or more persons present at the meeting who are entitled to vote on the motion constitute a reduced quorum for the motion and subsequent motions considered at the meeting. Section 3.9(4) provides that if a reduced quorum is present for consideration of a motion and the motion is voted on, section 3.10 applies to the decision on the motion.
- ACAT held that the meaning of section 3.10(1) was unambiguous. Where legislation uses the word ‘must’ in relation to a function, it means that the function is required to be exercised.[2] If a reduced quorum decision is made at a general meeting, the owners corporation must give written notice of the decision to unit owners in accordance with section 3.6(1) within seven days after the meeting.
- The meaning of section 3.11(1) is unambiguous also. A reduced quorum decision takes effect 28 days after the decision was made, subject to the provisos in subsections (2) to (5).
- The text of section 3.11(1) leaves no scope for a reduced quorum decision to take effect immediately, or 28 days after the owners corporation gives written notice of the decision to unit owners, as the respondent submitted, unless one of the provisos in subsections (2) to (5) provides for this and none of them did so.
- The starting premise on which part 3.1 operates is that decisions may be made at a general meeting of an owners corporation only if a standard quorum is present. The reality, however, is that a standard quorum often is not present. In that context, the evident purpose of the statutory scheme by which a reduced quorum decision may take effect was perfectly clear.
- Under section 3.10(1), the owners corporation must give written notice of the reduced quorum decision to all unit owners within seven days after the meeting. The purpose of such notice is to allow a more realistic time frame for unit owners to take necessary steps to disallow or confirm the reduced quorum decision under subsections 3.11(3) or 3.11(4) before the decision takes effect by default 28 days after the decision was made pursuant to section 3.11(1). This is an essential object of the democratic decision-making process established by part 3.1 of schedule 3 of the UTM Act.
- This decision confirms the view expressed in section 2.20 of the Kerin Benson Lawyers Guide to ACT Strata Law and highlights the fact that many reduced quorum decisions do not take effect because owners corporation are unable to give written notice to all unit owners within seven days.
- The reason why the seven calendar day notice period is difficult to meet is that it is not uncommon for at least some owners in a building to have not provided email addresses to the strata manager and further section 160(1) of the Evidence Act 2011 (ACT) provides:
It is presumed (unless evidence sufficient to raise doubt about the presumption is presented) that a postal article sent by prepaid post addressed to a person at a stated address in Australia or in an external territory was received at that address on the 7th working day after the day it was posted.
- That is, there is a presumption under the Evidence Act that any written notice sent by post will only arrive on the 7th working day (not calendar day) after the day it was posted.
- This presumption is not easily rebutted given Australia Post provides a delivery time estimate on its website for same state delivery of “Up to 4 business days (depending upon origin and destination)”.
- In short, where it is not possible to provide written notice to all owners by email and a reduced quorum decision has occurred, express post or hand delivery might be the only way an owners corporation can be sure that written notice of a reduced quorum decision was properly made within 7 calendar days.
[1] Legislation Act 2001, section 151
[2] Legislation Act 2001, section 146(2)