1. The special general meeting and the special resolution were invalid because members had not been given 14 days' notice of the meeting in compliance with s.76 of the Act. 2. The interim special resolution never became a special resolution because notice of the interim special resolution and the minutes of the meeting at which it was passed were not forwarded to all lot owners within 14 days of the meeting, as required by s.97(2) of the Act.

1. The owners corporation should have applied the benefit principle when deciding how much of the levy each lot owner should pay, instead of requiring each lot owner to pay in accordance with lot liability. Mr Grundl received no benefit from the proposed works so should not have been required to pay anything towards the levy. Alternatively, he should have been required to pay in accordance with the degree of any benefit he received, not in accordance with lot liability. The fee claimed in the fee notices is not owing because the owners corporation acted upon the wrong principle when setting it.
2. Arguments (a) and (c) were foreshadowed in Points of Defence which Mr Grundl's solicitors filed and served on 7 July 2017. Argument (b) was not.

1. Section 24 of the Act, so far as is relevant to this proceeding, provides:
   1. Extraordinary fees

(1) An owners corporation may levy special fees and charges designed to cover extraordinary items of expenditure.

(2) Subject to subsection (2A), the fees must be based on lot liability.

(2A) Fees for extraordinary items of expenditure relating to repairs, maintenance or other works that are undertaken wholly or substantially for the benefit of some or one, but not all, of the lots affected by the owners corporation must be levied on the basis that the lot owner of the lot that benefits more pays more.

(3) The owners corporation may determine the times for payment of the special fees and charges.

(4) A special resolution is required when exercising a power under subsection 91) if the amount involved is more than twice the total amount of the current annual fees set under section 23.

1. The levy upon Mr Grundl for $26,400.00 was a special fee, for extraordinary items of expenditure relating to repairs or maintenance, within the meaning of s.24. The fee notices given to him, as well as levying $26,400.00, included a quarterly charge for one-quarter of the ordinary annual fees set under s.23 of the Act. There is no dispute about the quarterly charge.
2. Sub-section (2A) provides that the levying of the extraordinary fees referred to in it must be in accordance with the benefit principle. The sub-section has a history. Before an amendment to s.24 in 2013 was made to insert sub-section (2A), neither s.23 nor s.24 made any reference to the benefit principle. In Mashane Pty Ltd v Owners Corporation RN328577[1] Macaulay J, hearing an appeal from a VCAT decision, expressed the view that the Act operated in a way that provided for a general rule that both annual fees and extraordinary fees were to be set in accordance with lot liability, but when an amount was to be raised for deposit into the owners corporation's maintenance fund "an assessment will be made as to whether any component of the budgeted future maintenance work will involve a differential benefit (i.e. 'wholly or substantially') to some lot owners", so that "the benefit principle will have potential application whenever the owners corporation is considering levying a fee, charge, contribution or other amount for the cost of repairs, maintenance or other works that have been or will be wholly or substantially for the benefit of some or one but not all lots".[2] After the decision was published the parliament acted to reverse, in part, its effect. An amendment to s.23, which deals with the levying of annual fees, provides that such fees must be based on lot liability, irrespective of whether works to which the fees related were wholly or substantially for the benefit of some, but not all, of the lots.[3] An amendment to s.24 inserted s.24(2A) so that the benefit principle applied to special fees for extraordinary items of expenditure relating to repairs, etc, that are undertaken wholly or substantially for the benefit of some, not all, of the lots.
3. In the Mashane case, the owners corporation resolved to repair balustrades on the apartment building's balconies. Out of 39 apartments, 34 had balconies and 5 did not. Adopting the benefit principle, the owners corporation set levies for the cost of the works on the basis that the levy upon owners whose lots did not have balconies was smaller than the levy on the other owners. One lot owner challenged the resolution, contending that because its lot did not have a balcony it obtained no benefit from the works and should not have to pay the levy. The Tribunal dismissed the lot owner's application, finding that the applicant's lot would derive a benefit from the works, in that the risk of personal injury claims against the owners corporation would be reduced and the appearance of the building would be improved, and also finding that the apportionment of levies was within the range of what was reasonable. Dismissing the appeal, Macaulay J made no criticism of those findings and, it seems to me, generally approved of the way that the Tribunal had approached the question of whether there was a benefit to the applicant's lot and of whether the apportionment of levies should be interfered with.[4]
4. In my view, in the light of the Mashane decision on appeal and of s.24 as it now is, the law requires an owners corporation to act as follows when it sets special fees to cover extraordinary items of expenditure relating to repairs, maintenance or other works.

1. It must first turn its collective mind to the question of whether all lots benefit substantially from the works or whether some lots substantially benefit more than others. 2. If, acting in good faith and exercising due care and diligence, as s.5 of the Act obliges it to do, it decides that all lots substantially benefit, it must set fees in accordance with lot liability. There will be no legal error in the decision, and the Tribunal will not interfere with it on the application of an aggrieved lot owner, unless the decision was one which no members of an owners corporation, acting honestly and reasonably, could have made.

1. Failure to turn the collective mind to the question is a legal error. The error is unlikely to lead the Tribunal to interfere, on the application of an aggrieved lot owner, with a decision to set fees in accordance with lot liability if in reality all the lots benefit substantially from the works. Otherwise the legal error exposes the owners corporation to the risk that the Tribunal will declare the resolution invalid.

1. If the owners corporation decides that the works are substantially for the benefit of some, but not all, of the lots, it must set fees not in accordance with lot liability but in accordance with the benefit principle, so that the owner of the lot that benefits more pays more. 2. The owners corporation must decide the extent to which the various lots benefit and apportion the fees accordingly. In making the decision it must act in good faith and with due care and diligence. If it does, there will be no legal error in the decision, and the Tribunal will not interfere with it on the application of an aggrieved lot owner, unless the decision was outside the range of reasonableness so that it was one which no members of an owners corporation, acting honestly and reasonably, could have made, or unless there has been some other legal error. 3. However, if the lot owners cannot decide which principle to adopt[5] or cannot decide upon the proper apportionment, and ask the Tribunal to decide, the Tribunal may do so. 4. Except in a case of urgency,[6] there must be a special resolution for levying the amount of the extraordinary expenditure if it is more than twice the amount of the current annual fees.
2. Mr McLaurin, for the owners corporation, submitted that "the benefit principle will not apply if all lot owners benefit". I do not accept the submission. It is inconsistent with the decision in Mashane. Moreover, the phrase "the lot owner of the lot that benefits more pays more" in s.24(2A) shows that the sub-section is concerned with comparative benefits to lots as well as with a case where a lot derives no benefit.
3. Mr McLaurin also submitted that the benefit principle applies only when "the levy is for works already done and not prospective works". That is a view which I did favour in the past but with which Macaulay J in Mashane expressly disagreed.[7] So I am bound to reject the submission.
4. From the evidence given at the hearing it is clear that whatever benefit that Mr Grundl's lot would receive from the works to be done, and has received from the works done, is less, and substantially less, than the benefit to lots beneath the slate roof. His lot's metal roof did not leak. No work on it was required or done. The lots that substantially benefited from the repair works were those beneath the slate roof.
5. In my opinion the correct way to view what happened at the special general meeting and afterwards, when the owners corporation manager sent the fee notices, is that the owners corporation failed to turn its collective mind to the question of whether the benefit principle should apply. That was a legal error. Alternatively, if the correct view of Mr McDonald's response to Mr Grundl at the meeting is that the owners corporation did turn its mind to the question but decided that the benefit principle did not apply, it was a decision that no member of an owners corporation, acting honestly and reasonably, could have come to: a legal error also. It acted in accordance with the wrong principle.
6. The present case is far removed from - almost the complete opposite of - one which Mr McLaurin cited[8] in support of his argument that the owners corporation correctly decided to set the special fees in accordance with lot liability. In that case, one continuous roof, which was common property, covered the lots. Two copper domes formed part of the roof. Beneath each dome was one lot. One of the domes leaked. The owners corporation, purporting to act in accordance with the benefit principle, set a special levy for the whole of the repair costs upon the owner of the lot beneath the leaking dome, saying that the works were for that lot's benefit alone and that the other lots got no benefit. While in the process of conducting a ballot for a resolution to set the fee in that fashion the owners corporation made other legal errors, the Tribunal decided, in effect, that the owners corporation's decision that no other lots benefited was perverse: every lot owner must have benefited to some degree from the repair of part of what was a continuous common-property roof. The Tribunal dismissed the owners corporation's application against the single lot owner for recovery of the special fee.
7. What benefit Mr Grundl's lot did gain, and how substantial it was, is a matter for the owners corporation to decide, when it reconsiders what fee, if any, should be charged to him. It would be well and truly open to the owners corporation to regard the improvement to the slate roof, visible as it is from street level, as having enhanced the value of Mr Grundl's lot and as having reduced the exposure which he and all other lot owners might otherwise have had, as members of the owners corporation, to personal injury claims from falling or loose slate or to larger insurance premiums.
8. However, because the owners corporation fell into legal error when it set the special fees in accordance with lot liability instead of in accordance with the benefit principle, the fee charged to Mr Grundl has not been properly set, he does not owe it, and the proceeding for fee recovery must be dismissed.

1. In view of my decision that the proceeding is dismissed because of a failure of the owners corporation to apply the benefit principle, there is no need for me to decide the issue of the effect of short notice of the special general meeting and of the proposed special resolution, and I shall not decide it. But it was argued and I should say something about it.
2. Mr McLaurin conceded that the owners corporation did not comply with s.76(1) of the Act, which requires at least 14 days' notice of the special general meeting to each lot owner. Notice was given on 12 August 2015 for the meeting on 25 August 2015: too short.
3. The Act does not provide expressly for any legal consequence of non- compliance with s.76(1). It does not provide that any meeting held after too short notice given is invalid or that any resolution passed at such a meeting is invalid. However, Mr McKay of Counsel for Mr Grundl submitted, the consequence is invalidity.
4. In the first of two submissions that Mr McLaurin made in response to the argument that the short notice had led to invalidity, he relied on a passage from Halsbury's Laws of Australia[9] that I had quoted in a decision in 2014.[10] The passage was expressed in the context of meetings of corporations registered under the Corporations Act 2001 or its predecessors, but I thought it had general application. The passage was:

The right to receive notice of a meeting, and to attend and to be heard at it is not an insubstantial one. The right to advance arguments and to influence the course of discussion at a meeting may affect the decisions reached. At common law, no business can be validly conducted at a meeting if any person, who is entitled to notice of the meeting, has not been properly notified. However, if a person attends a meeting with knowledge of a defect in notice and otherwise than to protest the deficient notice, the person may be taken to have waived the defect. Such a person may be estopped from relying on the deficient notice when subsequently attacking the validity of resolutions at the meeting.

1. Mr Grundl attended the special general meeting, despite the short notice, and did not protest about the short notice. So, Mr McLaurin submitted, he was estopped from relying on the failure to comply with s.76(1).
2. Mr Grundl gave evidence that, although he had received legal advice before attending the meeting, he did not know at the time of the meeting that there was a requirement of 14 days' prior notice and so had no knowledge of the defect in notice. It might seem improbable that his legal advice, whatever it was, did not touch upon the period of notice given, but Mr Grundl seemed to me to be a truthful witness and so I accept his evidence that he did not know at the time of the meeting that the notice of it had been too short. So he is not estopped from relying upon the defect.
3. Mr McLaurin's second submission was that a decision of a single judge of the Supreme Court of New South Wales, The Owners - Strata Plan No 57164 v Yau,[11] in 2016, demonstrated that a giving of short notice of a meeting of one owners corporation does not necessarily lead to invalidity of the meeting or of resolutions made at it. The statutory provision in that case was one that provided that an executive committee of a "large strata scheme" must give notice of its intention to hold a meeting at least 72 hours before the time fixed for the meeting, by giving written notice to each owner and to each executive committee member.[12] A "large strata scheme" is analogous to an owners corporation and its executive committee is analogous to a committee of an owners corporation. During the trial of a Supreme Court proceeding to which the large strata scheme body was a party, the executive committee convened urgently to decide whether to make an offer of settlement. The committee members were given notice of the meeting but of necessity it was less than 72 hours' notice. No other owner was given notice. The committee resolved to make the offer and instructed its lawyers accordingly. The case was settled when the offer was accepted. The Court made a consent order. Later, a majority of the owners, unhappy with the executive committee's decision, brought a proceeding in which they sought to have the consent order set aside, alleging that the executive committee meeting had not been convened with proper notice and so the decision to accept the offer of settlement had been invalid.
4. The judge, Darke J., decided that the meeting and the executive committee's resolution were not invalid, despite the failure to comply with the statutory provision as to notice. He cited an expression of principle by the plurality of the High Court:[13]

An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.

He proceeded to consider various provisions of the relevant statute, including one which empowered an adjudicator to make an order invalidating any resolution of persons present at a meeting of an owners corporation if provisions of the Act had not been complied with in relation to the meeting; that particular provision suggested that non-compliance did not itself result in invalid resolutions or decisions, but could lead to the discretionary remedy.[14] He also referred to a New South Wales Court of Appeal decision[15] which distinguished between statutory provisions that a person "must not" do something and statutory provisions that a person "cannot" do something: "cannot" connotes a lack of power (so that whatever is done in breach of the provisions is invalid), whereas "must not" does no more than regulate the exercise of a power which the person has (so that whatever is done in breach of the provisions is done without authority but it not invalid).

1. Darke J. also observed[16] that a failure to comply with a provision about notice may be significant, or trifling, or something in between, so that it was difficult to see why the objects or purposes of the Act would be promoted by holding that every resolution or decision of an executive committee at a meeting of which no proper notice had been given was invalid and of no effect.
2. Darke J. concluded that there was no discernible legislative purpose to invalidate any act of the executive committee that was carried out without its having complied with the provision about notice.[17]
3. The case therefore supports Mr McLaurin's submission. The observation about the invalidation of a meeting as a consequence of a trifling failure to comply with a notice provision not being compatible with the objects and purposes of the Act may be made about the Victorian Act too. Yet whether the case has direct application to this proceeding is open to question. The (Victorian) Act does not include a provision for a remedy when no proper notice has been given. Moreover, a general meeting of members, which is an owners corporation's primary means of decision-making, has a different status from that of a meeting of a committee.
4. Very recently the Tribunal has decided[18] that a failure to give notice of a meeting to one of five lot owners - not the respondent lot owner who was complaining of the failure - did not invalidate a resolution passed at the meeting. The other three lot owners had voted in favour. It was obvious that even if the owner who had not been given notice had attended the meeting and voted with the respondent the resolution still would have been passed. I agree that it is illogical that a lot owner who attended and voted at a meeting should be entitled to ask for a resolution to be invalidated because some other lot owner did not get proper notice yet had not complained.
5. At the special general meeting held on 25 August 2015 the owners of 16 out of 22 lots were present in person or represented by proxy. Notice of the meeting had been given, but only 12 or 13 days before the date of the meeting, not 14 days. There was no evidence of any prejudice to Mr Grundl or to any other lot owner caused by the notice having been too short. It is tempting to regard the owners corporation's non-compliance with s.76(1) of the Act as, if not trifling, then at least relatively insignificant.
6. I suspect that the last judicial word has not yet been spoken on this issue. I repeat that I have had no need to decide whether short notice has resulted in invalidity of the meeting, and I do not decide it.

1. Mr McKay submitted that because the owners corporation did not give evidence of notice of the interim special resolution having been given to all lot owners within 14 days after the meeting, as required by s.97(2) of the Act, the interim special resolution had not become a special resolution which authorised the levying upon Mr Grundl of the special fee. The submission assumed that in a fee-recovery proceeding the giving of notice under s.97 was an element in the owners corporation's cause of action the onus of proving which it bore. The assumption is false. In my view the absence of notice is a defence and so Mr Grundl bore the onus of proof of it. He gave no evidence on the matter so did not prove it. Moreover, he did not take the point until Mr McKay's final address. It was not foreshadowed in the Points of Defence or at all before Mr McLaurin closed the owners corporation's case. It would have been procedurally unfair to the owners corporation to rely upon an absence of evidence on its behalf of the giving of notice of the special resolution.

1. Because of the reasons given above in relation to the benefit principle, the proceeding is dismissed.

[1] [2013] VSC 147

[2] [2013] VSC 147 at [32] and [34]

[4] [2013] VSC 147 especially at [56] - [59]

[5] E.g., as in Collett v A&E Konstantopoulos Nominees Pty Ltd [2017] VCAT 345

[6] s.24(5) provides an exception to the need for a special resolution, where immediate expenditure was necessary to ensure safety or to prevent significant loss or damage to persons or property

[7] [2013] VSC 147 at [34]

[8] Owners Corporation PS331362S v Boothey [2014] VCAT 174

[9] Volume 7, para [120-8070]. Footnotes omitted from the passage cited

[10] J&G Knowles & Associates Pty Ltd v Owners Corporation RP 12247 [2014] VCAT 98 at [43]

[11] [2016] NSWSC 1056

[12] Schedule 3 clause 6 of the Strata Schemes Management Act 1996 (NSW)

[13] Project Blue Sky Inc. v Australian Broadcasting Authority (1988) CLR 335 at [91]

[14] Section 153 of the Act referred to in footnote 12. See [2016] NSWSC 1056 at [95]

[15] 2 Elizabeth Bay Road Pty Limited v The Owners - Strata Plan 73943 [2014] NSWCA 409; (2014) 88 NSWLR 488 at [51], [52], [105]. See [2016] NSWSC 1056 at [91]

[16] [2016] NSWSC 1056 at [96]

[17] [2016] NSWC 1056 at [94], [97]

[18] Owners Corporation RP 001579 v Giurina [2017] VCAT 1509