Applicable Legal Principles Management Act, s 62(3)
133Management Act, s 62(3) prescribes the circumstances in which the owners corporation can be relieved of executing its s 62(1) or s 62(2) duty: Ridis per McColl JA at [173]. Section 62(3) was introduced with the Management Act in 1996, some 35 years after the first strata title scheme legislation was introduced in 1961. Section 65(3) introduced for the first time into the scheme a capacity for the owners corporation to limit the application of the otherwise absolute duties in ss 62(1) and 62(2). The Owners Corporation's attempt on 5 August 2009 to utilise this exemption from its otherwise absolute duties raises a sequence of four legal issues about the operation of s 62(3). The first question is whether the Owners Corporation must have a proper basis for the special resolution in that it "determines" under s 62(3). If a proper basis is required beyond the mere fact of the determination, then it is necessary to determine what may constitute a determination that maintaining, renewing, repairing or replacing property is "inappropriate". Equally it is necessary to identify what constitutes a "decision" that "will not affect the safety of any building structure or common property in the strata scheme". Finally, an issue arises as to what is meant by a "particular item of property" and whether the resolution in question is about a "particular item of property".
134The Basis of the s 62(3) Determination . Dr Thoo contends that the use of the word "determines" coupled with the two criteria prescribed in s 62(3)(a) and (b) requires an owners corporation to form an opinion about those two statutory criteria. Then Dr Thoo argues that unless there is a proper basis to form that opinion the Owners Corporation is not making a determination under s 62(3). I accept the correctness of this argument. It conforms with such authority as there is on this aspect of s 62(3).
135Tobias JA considered the relevant operation of s 62(3) in Ridis at [58]. Although Tobias JA was in the minority in Ridis his additional observations on this aspect of the operation of s 62(3) are not inconsistent with the judgments of the majority. His Honour said:
"[58] On my construction of s 62, and as I have said, it must follow that the failure of the respondent to have at any time inspected and replaced the glass panels in the front doors constituted a breach of its statutory obligation to replace that glass pursuant to s 62(2) in the absence of a special resolution in terms of s 62(3). That it would not have been open for such a resolution to have been passed also follows, in my opinion, from the obviously dangerous nature of the glass panels, their propensity to shatter into ragged shards when impacted upon and the necessity as a matter of safety to replace them with safety glass in accordance with the Australian Standard current at the time of any such inspection."
136Tobias JA is here reasoning that a s 62(3) resolution is precluded where objective circumstances show that the decision will affect the safety of the building, structural common property in the strata scheme. Tobias JA's reasoning is inconsistent with the contention that s 62(3) is enlivened by the mere formality of a resolution, whatever the true facts might be.
137Section 62(3) does not confer an uncontrolled discretion on an owners corporation. The form of the resolution prescribed by s 62(3) infers that each of ss 62(3)(a) and (b) are mandatory considerations in the determination. It is difficult to see how the owners corporation could take into account those mandatory considerations when it "determines by special resolution" unless there was some material before the owners corporation when making the determination and that that material did support the form of resolution made. Just what this material was here is examined more closely below. But the material could take many forms and it may or may not include expert opinion. But it must be material which provides a rational basis for the determination.
138Dr Thoo argues the position here is analogous to that of a statute which provides that a power may be exercised if a person if of a particular opinion. As Latham CJ explained in R v Connell; ex parte The Hetton Bellbird Collieries Limited (No. 2) (1944) 69 CLR 407 at 432, such a provision does not mean that a person may not act upon such an opinion if it is shown that the person has misunderstood the nature of the opinion to be formed or that the opinion was arbitrary, capricious, irrational or not bona fide:
"It is therefore well settled that if a statute provides that a power may be exercised if a person is of a particular opinion, such provision does not mean that the person may act upon such an opinion if it is shown that he has misunderstood the nature of the opinion which he is to form. Unless such a rule were applied legislation of this character would mean that the person concerned has an absolutely uncontrolled and unlimited discretion with respect to the extent of his jurisdiction and could make orders which had no relation to the matters with which he was authorized to deal. It should be emphasized that the application of the principle now under discussion does not mean that the court substitutes is opinion for the opinion of the person or authority in question. What the court does do is to inquire whether the opinion required by the relevant legislative provision has really been formed. If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event the basis for the exercise of power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational, or not bona fide. "
139This principle has been widely applied: R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 and R v Dunphy & Australian Industrial Court; ex parte Maynes (1978) 139 CLR 482.
140This doctrine also assumes that a reasonable person, who correctly understands the meaning of the law under which the person acts, forms the opinion. This was also explained by Latham CJ in R v Connell; ex parte The Hetton Bellbird Collieries Limited (No. 2) (1944) 69 CLR 407, at 430:-
"Thus where the existence of a particular opinion is made a condition of the exercise of power, legislation conferring the power is treated as referring to an opinion which is such that it can be formed by a reasonable man who correctly understands the meaning of the law under which he acts. If it is shown that the opinion actually formed is not an opinion of this character, then the necessary opinion does not exist. A person acting under a statutory power cannot confer power upon himself by misconstruing the stature which is the service source of the his power."
141"Inappropriate" to maintain, renew, replace or repair . The judgment in Ridis confirm that "inappropriate" in s 62(3)(a) is a broad concept: "in my opinion the word 'inappropriate' is sufficiently broad to cover a situation where any such renewal or replacement is unnecessary provided that the safety of the item is not compromised" (at [54] per Tobias JA); and, "considering whether an action 'inappropriate' requires the owners corporation to determine in the circumstances that it is unsuitable to undertake an item of maintenance etc. Considerations relevant to this decision may include the expense of the item of maintenance or repair" (per McColl JA at [174]). I accept Dr Thoo's submission that the expense of the item of maintenance or repair is not the sole criteria for determining whether such action is inappropriate for the purposes of the section. "Inappropriate" in the section merely means "not appropriate". And, "appropriate" in its principal meaning is "suitable or fitting for a particular purpose, person, occasion, etc" (Macquarie Dictionary). Many considerations other than expense, could be relevant to a determination that it was "inappropriate" to maintain, renew, replace or repair the item of property which will otherwise be subject to the s 62(1) and (2) duty.
142The requirements of s 62(3)(a) and of s 62(3)(b) are cumulative. Satisfying s 62(3)(a) will generally be less demanding than showing the Owners Corporation's decision will "not affect the safety of any building, structure, or common property": s 62(3)(b).
143The Owners Corporation's Decision will not affect Safety . A determination that the Owners Corporation's decision "will not affect the safety of any building, structure, or common property in the strata scheme" includes in my view more than just issues of structural safety. Common property commonly includes discrete systems for the supply of water, electrical power, air conditioning, ventilation, telephone and internet access, radio and free to air television reception together with systems to remove energy, or matter from a strata scheme including ventilation, sewerage, and kitchen waste. Common property often includes systems that protect the comfort and safety of occupants of lots from the action of energy or material sourced from other lots, common property or externally. Examples of this are sound proofing water impermeable membrane and similar works. Nothing in s 62(3)(b) in my view limits the words "the safety of...common property in the strata scheme" to structural safety. Thus, any affect upon the safety of lot owners or their visitors comes within the section.
144A particular item of property. The determination that s 62 does not apply "to a particular item of property" requires the "particular item of property" to be defined with some precision for the purposes of a valid s 62(3) resolution. Because s 62(3) is providing an exclusion from otherwise absolute statutory duty the carve out from the absolute obligation may be ineffective unless there is sufficient certainty about the item of property so excluded. Where the property concerned is part of a system this requirement for a certainty adds special difficulties that arise here. Although for other reasons I am of the view that the 5 August 2009 resolution was invalid, and although this question was not fully argued, I would also invalidate the resolution on this ground. The subject matter of the resolution was not well defined as can be seen below. We now turn to the application of these principles to the material that was before the Owners Corporation on 5 August 2009.
Resolution 7 - renewal or replacement is "inappropriate"
145Dr Thoo contends that the Owners Corporation was not entitled in the circumstances to resolve in the form of s 62(3), as Resolution 7 purports to do, that the renewal or replacement of the exhaust ventilation system was "inappropriate". He contends that a valid resolution under s 62(3) requires the Owners Corporation to hold an opinion that renewal or replacement was "inappropriate" and to have a proper basis to form such an opinion and that in this case the Owners Corporation had neither before purporting to pass Resolution 7.
146The first issue was what was before the meeting. A report from West & Associates dated 5 August 2009 was provided to owners present at the meeting before Resolution 7 was put. This fact is recorded in the minutes. It is unclear whether the fire safety statements from 2008 and 2009 were also before the meeting. But if they were they make little difference. The West & Associates Pty Ltd report of 5 August 2009 was a two page document responding to instructions from the Owners Corporation's solicitors on 9 July 2009 seeking West & Associates Pty Ltd's expert opinion. West & Associates Pty Ltd recorded the opinion that the firm was asked to give. West & Associates Pty Ltd are acoustic and air conditioning engineers:-
"Further to the above legal proceedings relating to Lot 17, Rutland's Law Firm requested us on 9/07/09 that we give our expert opinion on their following question;
If the present Mechanical Exhaust Ventilation System (MEVS) is properly maintained and is in a state of good serviceable repair, and no new or supplementary system is installed, will such decision, in your expert opinion, affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any common property in the strata scheme? "
147This report ("the 2009 West report") did not directly answer the question posed by Rutlands, to West & Associates. The 2009 West report gave a description of System A and System B explaining that System A doubles up as a smoke spill system during a fire event but System B shuts down during a fire event. The 2009 West report also explained that local fan coil units distribute cool air to lots in the strata scheme and that a make up air system provides outdoor air to lots in common property through the ducting system. The 2009 West report then describes the fire sprinkler system and fire hose reel systems installed throughout Hunter Connection.
148The 2009 West report is then notable more for what it does not do than what it does do. It does not answer the question posed. But also it offers no view as to whether it is "inappropriate to maintain, renew, replace or repair" any particular item of property. The mechanical exhaust ventilation system the subject of the instructions to West & Associates Pty Ltd is said to include a Kitchen Exhaust System ("KES") and the fan coil unit providing chilled air and the make up air system. With this in mind the balance of the report is set out:-
"The active fire protection at the Hunter Connection is a Fire Sprinkler System installed throughout the lots and common property and a fire hose reel system installed throughout the Centre.
Building Management are required by The Environment and Planning and Assessment Act 1979, administered by the City of Sydney Council to carry out ongoing maintenance of all fire safety and egress facilities installed at the Hunter Connection to e sure all systems installed are working in the manner they were designed. In addition, Building Management are required to submit annual compliance certification, carried out by an industry professional stating that this work has been checked and is in working order, and if not area of non compliance noted.
To my understanding, Building Management have been fulfilling this obligation and they would be able to confirm this.
The MEVS are a part of the fire safety and egress facilities by the virtue that the KES doubles up as a Smoke Spill System and the Make Up Air System that provides outdoor air to replace the air being exhausted by the smoke spill. To my understanding, Building Management have had the various components of the MEVS checked for annual certification, but again, they can confirm this.
If no subsidiary KES is installed in Hunter Connection, the existing MEVS, if continued to be maintained so as the system functions in the manner it was originally designed, would provide the same level of fire safety and egress required at the time of its original design. Also in my opinion, the existing MEVS, if continued to be maintained so as the system functions in the manner it was originally designed would not detract from the appearance of any property in the strata scheme.
I wish to point out that the smoke spill and make up air system at Hunter Connection carry out the function of providing sufficient time to facilitate the safe egress of partons. The MEVS systems are not designed to provide any form of 'safety of building structure or common property in the strata scheme ' and this function is carried out by the fire sprinklers and fire hose reels installed.
We trust this meets with your understanding and please contact us if you have any questions."
149Unsurprisingly, none of the 2009 West report addresses the question of the appropriateness or inappropriateness of the Owners Corporation determining in accordance with Resolution 7. West & Associates Pty Ltd were not asked to offer such an opinion and they did not venture one. There is no evidence that West & Associates Pty Ltd were provided with a copy of Resolution 7 or that they knew that the issue of the appropriateness or inappropriateness of maintaining, renewing, replacing or repairing particular property was under consideration. Thus, but for the bare declaration in the Resolution itself there is no evidence before the Court on what basis the Owners Corporation determined by Resolution 7 that "it is inappropriate for the Owners Corporation to renew or replace the Mechanical Ventilation Exhaust System ("MEVS") of the common property".
150Is a bare statement that it "is inappropriate" to maintain, renew, replace or repair" a particular property compliant with s 62(3)(a)? In my view circumstances where neither the notice of meeting, nor the material put before the meeting nor the reasons attached the Resolution express any rational basis for the conclusion that "it is inappropriate" the decision is wholly unexaminable. It is impossible to examine whether the decision as rational or capricious or took into account the relevant considerations was based on a mistake of fact or erroneous view of the law. Were an owners corporation able to exclude the operation of the ss 62(1) and (2) absolute duties by such means, the statute could readily be defeated.
151But there is a basis to conclude the Owners Corporation misunderstood the nature of the opinion which it was to form. The only expert opinion before the 5 August 2009 general meeting was predicated upon the assumption that the exhaust ventilation system was "properly maintained and is in a state of good and serviceable repair and no new or supplementary system is installed". The question posed to the expert producing material for the meeting shows that an expert opinion was only sought for the meeting in relation to the obligations under s 62(1) "properly maintain and keep in a state of good and serviceable repair". The expert's opinion was not sought in relation to the obligations under s 62(2) "must renew or replace any fixtures or fittings". The material put before the annual general meeting was wholly inadequate to determine the appropriateness or inappropriateness of determining whether both ss 62(1) and (2) should "not apply to a particular right of a property": s 62(3). The material put before the meeting does not address the s 62(2) obligation at all.
152Moreover, the material before the committee begs the question in issue by assuming the Owners Corporation's continuing compliance with the s 62(1) obligation. It is difficult to see how it would not be "inappropriate to maintain, renew, replace or repair" property if the property was being properly maintained in conformity with s 62(1). Rather s 62(3) operates in an environment where there is at least a case for claiming there is a need to make good or repair common property or renew or replace fixtures or fittings. It seems to me that the 2009 West Report has merely presented the Owners Corporation August 2009 AGM with an empty tautology.
153Nor does the expert opinion or the form of Resolution 7 address the point at issue in these proceedings. This is partly because it does not address itself to the legislative requirement to determine whether s 62 applies "to a particular item of property". The relevant part of Resolution 7 is that "it is inappropriate for the Owners Corporation to renew or replace the Mechanical Ventilation Exhaust System (MEVS) of the common property". Instead this Resolution applies to every part of the system. It applies to every lot, whether Lot 17 or any other lot. It applies, according to the 2009 West report to the Kitchen Exhaust System, the fan coil units for chilling cool water to lots and the make up air system. This Resolution exempts the whole system from the operation of ss 62(1) and (2). It is doubtful whether such a complex system, without closer definition of the relevant part the subject of the Resolution, answers the description "a particular item of property". The primary meaning of "item" is "a separate article or particular". But leaving that problem aside, it is difficult to see how an opinion could rationally be formed about the "inappropriateness" of replacing such a whole system with its different functions, including fire control, without detailed material being put before the annual general meeting about the present state of the precise part of the system the repair of which was being mooted. The 2009 West report did not purport to do that. It merely hypothesised that if the whole system was continued to be maintained as originally designed, then it would "provide the same level of fire safety and egress required at the time of its original design" and "would not detract from the appearance of any property in the strata scheme". The 2009 West report says nothing about renewal or replacement of any particular part of the system so as to provide exhaust ventilation to Lot 17.
Resolution 7 - renewal or replacement "will not affect the safety of any building"
154Dr Thoo contends that the Owners Corporation was not entitled to resolve in the form of s 62(3), as Resolution 7 purports to do, that its decision not to renew or replace the exhaust ventilation system "will not affect the safety of any building structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme". He contends that a valid resolution under s 62(3) requires an Owners Corporation to have that opinion and to have a proper basis to form such an opinion and that in this case the Owners Corporation had neither before purporting to pass Resolution 7. I agree with this submission.
155Section 62(3) applies to "a particular item of property" at a particular time. Section 62(3) is not a provision that permeably quarantines items of property or systems within common property permanently from the operation of s 62. Section 62(3) contains a present element in s 62(3)(a) that "it is inappropriate" [emphasis added] to maintain, renew, replace or repair the particular item of property and a forward looking element that that decision " will not affect" safety (s 65(3)(b)) [emphasis added]. If an effective s 62(3) resolution is passed it may relieve the Owners Corporation in respect of its ss 62(1) and (2) obligations in respect of that item of property at that time. Whilst soever circumstances do not change the Resolution may continue to be effective. The circumstances may change to make the decision rapidly obsolete.
156The 2009 West report put no material before the 5 August 2009 AGM about the safety issue, which has been agitated in these proceedings. That safety issue is the question of the safety of persons working in Lot 17 in food preparation and service if the exhaust ventilation system does not provide more than 620 l/s per second to the whole of Lot 17. There is no evidence that that safety issue has been overcome, nor any evidence addressing of this particular safety issue was put to the meeting before Resolution 7 was voted on at the meeting. The experts are agreed in the these proceedings that if Lot 17 does not have sufficient airflow and if the tenancies did operate as take away/fast food outlets as per the fitout plans, then the exhaust hoods would not effectively capture "all convected heat fumes and other aerosols as required by AS 1668.2 - 1991, with potential health and safety consequences for the occupants that could lead to authorities requiring corrective action to be taken". There was material in the Laffer report showing that if Lot 17 was connected resulting in air flow from Lot 17 and possibly other lots connected to the exhaust ventilation system at less than the standard required by the Building Council of Australia would potentially result in illness and lack of amenity to occupants. This safety issue will arise if nothing is done to upgrade the exhaust ventilation system and Lot 17 connects with the 620 l/s being offered.
157The terms of s 62(3)(b) are onerous. It is a requirement to prove a negative, that there would be no effect on safety. To be successful in proving such a negative and displacing the operation of section 62 (1) and (2), it would be necessary for the material before the meeting and possibly the Resolution itself to specifically address the relevant safety matters in issue and to show that they were not adversely affected. The safety issue debated in these proceedings was identified before 5 August 2009 but was not addressed at the meeting. The bare minimum that would be required in my view is for a valid s 62(3) resolution here is for an expert to pose the hypothesis of the connection of Lot 17 to the exhaust ventilation system and to actually deal with the safety consequences of that connection.
Resolution 7 - whether or not a special resolution
158Dr Thoo contends that voting irregularities at the 5 August 2009 AGM meant that Resolution 7 was not passed as a special resolution as Management Act s 62(3) requires.
159Dr Thoo alleges that the 2009 AGM was not attended by a quorum of persons entitled to vote either in person or by proxy and that the absence of a quorum invalidates the resolutions passed at the meeting. The issue is whether or not there was a quorum at the 2009 AGM. This issue does not strictly arise because I have found that the resolutions passed at the 2009 AGM are otherwise invalid. It is nevertheless useful to find the relevant facts and indicate, were it decisive, how this issue would have been decided.
160A quorum for a general meeting of an owners corporation is the presence either personally or by proxy of at least one quarter of the number of persons entitled to vote or of representatives of one quarter of the aggregate unit entitlement of lot owners entitled to vote: Management Act Schedule 2, clause 12 (2). The applicable provision is as follows:
"12 Quorum
(1) A motion submitted at a general meeting of an owners corporation must not be considered, and an election must not be held, unless there is a quorum present to consider and vote on the motion or on the election.
(2) There is a quorum for considering and voting on such a motion or at such an election only if:
(a) at least one-quarter of the number of persons entitled to vote on the motion or at the election is present, either personally or by duly appointed proxy, or
(b) at least one-quarter of the aggregate unit entitlement of the strata scheme is represented by the persons who are present and entitled to vote on the motion or at the election, either personally or by duly appointed proxy.
(3) However, if there is more than one owner in the strata scheme and the quorum calculated in accordance with subclause (2) is less than 2 persons the quorum is 2 persons entitled to vote on the motion or at the election.
(4) If a quorum, as provided by subclause (2), is not present within the next half-hour after the relevant motion or business arises for consideration at the meeting, the meeting stands adjourned for at least 7 days.
(5) If a quorum, as provided by subclause (2), is not present within the next half-hour after the time fixed for the adjourned meeting, the persons present personally or by duly appointed proxy and entitled to vote constitute a quorum for considering that motion or business. "
161At the time of the 2009 AGM there were 52 lot owners on the strata roll who were up-to-date with their strata contributions. These 52 lot owners represented a total UE of 9,312. A quorum thus comprised either 13 owners or a UE of 2,320 UE. I accept Mr Wrighter's evidence and I infer from the meeting attendance register that nine persons attended the 2009 AGM representing in person or by proxy 18 lots with a total UE of 5,366. Dr Thoo did not attend the meeting. But he had previously sent to the strata manager a form indicating that lots 17 and 55 did not consent to motions 7 to 13 on the agenda. Thus there was not a quorum constituted within clause 12(2)(a). The question here is whether the quorum provisions of clause 12(2)(b) is satisfied.
162Dr Thoo alleges that the absence of a quorum arises from four specific problems. But only three of them remain in issue. The first problem the Owners Corporation now concedes in Dr Thoo's favour. It is that although the Australian Postal Commission (APC), the owner of lots 53, 54 and 56 (which lots have an aggregate UE of 2,953) was recorded as among those present at the 2009 AGM, it was not in fact represented either personally or by duly appointed proxy. The Owners Corporation's concession on this issue means that the APC's three lots and its corresponding UE of 2,953 cannot be counted towards a quorum. For the balance of the quorum related issues that Dr Thoo raises, the maximum available unit entitlement, which could constitute a possible quorum is 2,413 (being 5,366 - 2,953). This exceeds the 2,328 required quorum representing one quarter of total unit entitlement by a UE by the thin margin of only 85. Any other successful challenge to representation at the 2009 AGM would be decisive in establishing the absence of a quorum.
163Dr Thoo identifies three other alleged problems with representation at the 2009 AGM: Lot 11 was counted as attending but is said not to have attended or been represented by duly appointed proxy: Lots 21, 33 and 57 were not present by duly appointed proxy because the appointor of the proxy for those lots had not indicated whether the proxy was authorised to vote on all or only on specified matters; and finally, Lots 17 and 55 were not counted when Dr Thoo says that they should have been.
164The Lot 11/Lot 12 issue. Dr Thoo's contention is that Lot 11 did not attend either personally or by duly appointed proxy at the 2009 AGM but was wrongly counted as attending. The 2009 AGM minutes show that Rose Chang attended the meeting by proxy on behalf of Lot 11. But the minutes of the meeting contain a typographical error. She was not authorised to attend on behalf of Lot 11. Rose Chang actually attended by proxy on behalf of Lot 12, authorised by Lot 12's lot owner Ji Ping Wang, who gave her a proxy on 3 August 2009. Lot 12 was represented at the meeting by a duly appointed proxy and was properly counted as part of the quorum.
165Issues for Lots, 21, 33 and 57. Dr Thoo alleges that the persons attending the 2009 AGM representing Lots 21, 33 and 67 were not present by duly appointed proxy. The appointors of the proxies for these lots did not indicate whether the proxy was authorised to vote on all matters at the meeting or only on specified matters. This issue only arises for lots 33 and 67. Although the owner of Lot 21, Rose Chang Investments Pty Limited, provided a form of proxy, the lot was in fact represented its nominee, Rose Chang, in person. I accept Mr Wrighter's evidence that Lot 21 was properly counted towards the quorum.
166But the challenge to the proxies for Lots 33 and 67 succeeds, because the failure of the appointor to indicate matters on which the proxy is authorised to vote at the meeting does in my view invalidate the proxy in the scheme of this legislation. The owners of Lots 33 and 67 used proxy forms, Form 3, the prescribed form for the purposes of Management Act , Schedule 2, clause 11 (2). But the appointor for each of these two lots did not select either of the two options provided by the form: the option of instructing the proxy to be able to vote on all matters, or the option of instructing the proxy to vote only on particular matters. It might perhaps be inferred in other contexts that an appointor of a proxy with these characteristics might wish to confer a discretion upon the proxy to vote upon such matters as the proxy thought fit.
167In this legislative scheme the failure to record instructions to the proxy about one or other of these options invalidates the proxy. So much flows in my view from Management Act , Schedule 2, clause 11, which provides:
"11 Proxies
(1) Who is a "duly appointed proxy"? A person is a duly appointed proxy for the purposes of this Part if the person is appointed as a proxy by an instrument in the form prescribed by the regulations.
(2) Form of proxy The prescribed form is to make provision for the giving of instructions on:
(a)whether the person appointing the proxy intends the proxy to be able to vote on all matters and, if not, the matters on which the proxy will be able to vote, and
(b) how the person appointing the proxy wants the proxy's vote to be exercised on a motion for the appointment or continuation in office of a strata managing agent.
(3) Proxy to be given to secretary of owners corporation The instrument is ineffective unless it contains the date on which it was made and it is given to the secretary of the owners corporation:
(a) in the case of a large strata scheme-at least 24 hours before the first meeting in relation to which the instrument is to operate, or
(b) in any other case-at or before the first meeting in relation to which the instrument is to operate.
(4) Period for which proxy effective An instrument appointing a proxy has effect for the period commencing with the day on which it takes effect and ending with the later of the first anniversary of that day and the conclusion of the second annual general meeting held after that day, unless it is sooner revoked or a shorter period is provided by the instrument.
(5) Proxy cannot vote if person appointing proxy votes A proxy cannot exercise a vote in relation to a matter if the person who appointed the proxy is exercising personally a power to vote on that matter.
(6) Effect of subsequent proxy An instrument made by a person appointing a proxy has no effect if the person makes a later instrument appointing a proxy and delivers it to the secretary of the owners corporation in accordance with subclause (3).
(7) Proxy limited by instrument of appointment If the instrument appointing a proxy limits the manner in which the proxy may vote at a meeting, a vote by the proxy that does not observe the limitation is invalid.
(7AA) An original owner or a person connected with the original owner may not cast a vote by means of a proxy or power of attorney given by another owner of a lot in the strata scheme concerned if the proxy or power of attorney was given pursuant to a term of the sale contract for the lot or pursuant to another contract or arrangement that is ancillary to the sale contract.
(7AB) Any contract or arrangement referred to in subclause (7AA) is unenforceable to the extent that it requires the giving of any such proxy or power of attorney.
(7AC) Subclauses (7AA) and (7AB) do not apply to a proxy or power of attorney given by a person to another person connected with him or her.
(7A) Other limits on exercise of proxy A vote by a proxy who is a caretaker, an on-site residential property manager or a strata managing agent is invalid if it would obtain or assist in obtaining a pecuniary interest for, or confer or assist in conferring any other material benefit on, the proxy.
(7B) For the purposes of subclause (7A), material benefits include, but are not limited to, the following:
(a) an extension of the term or an additional term of appointment of the proxy as caretaker, on-site residential property manager or strata managing agent,
(b) an increase in the remuneration of the proxy,
(c) a decision of the owners corporation not to proceed with, to withdraw, to delay, to compromise or to settle litigation or other legal proceedings relating to the proxy,
(d) any other decision of the owners corporation that affects litigation or other legal proceedings relating to the proxy.
(8) Proxy may demand poll A duly appointed proxy may vote on a show of hands or demand a poll.
(9) Powers of proxies A person duly appointed as a proxy:
(a) if entitled to vote otherwise than as a proxy-may also vote in his or her own right, and
(b) if appointed as proxy for more than one person-may vote separately as a proxy in each case."
168Schedule 2 Clause 11 provides a scheme to enable the chairman of a general meeting of an owners corporation to know on which motions the proxy, as distinct from a lot owner is entitled to vote. Giving effect to the Lot 33 and Lot 67 proxies that here fail to execute the option provided for by Form 3 would allow the question of the authorisation of the proxy for voting on a particular motion to be determined by private agreement between the proxy and the appointor at some time during the meeting. In my view a person is not "a duly appointed proxy" within clause 11(1), being a person "appointed as a proxy by an instrument in the form prescribed by the regulations", unless the form of proxy is not only executed by the appointor, as Form 3 provides, but is completed in relation to the clause 11 (2) instructions embedded within the form. A form of proxy instrument incomplete as to a signature is no more "in the form prescribed by the regulations" than an instrument where the instructions to the proxy are not verifiable from the instrument itself.
169Clause 11 does not expressly provide for the instrument to be "ineffective" for failure to complete the option provided for by clause 11(2) but some provisions of clause 11 would be inoperable unless the option is completed. For example, clause 11(4) - the period for which the proxy was effective for particular motions would be uncertain.
170Giving effect to the Lot 33 and Lot 67 proxies that fail to execute the option provided for by Form 3 would allow the question of the authorisation of the proxy to be determined by private agreement between the proxy and the appointor at some time during the meeting. It is essential to the orderly conduct of such a general meeting that the chairman know on which motions the proxy is authorised to vote. It is also essential to the orderly regulation of the affairs of an owners corporation that whether the proxy is authorised to vote is open to subsequent objective verification in case of later dispute.
171The Lot 33 and Lot 67 proxies are ineffective. The combined unit entitlement of the two lots exceeds 85. The UE of Lot 33 is 208. The There was no quorum at the 2009 AGM.
172The Lot 17 and Lot 55 issue. Given my findings about the proxies for Lot 33 and Lot 67, it is not necessary to decide whether the forms Dr Thoo sent to the strata manager before the 2009 AGM should have been treated as proxies for Lots 17 and 55. On 3 August 2009 Dr Thoo returned a form, which had been attached to the notice of meeting. The completed forms indicated non-consent to special resolutions 7, 8, 9, 10, 11, 12 and 13. But the forms sent did not purport to be a proxy. Nor did they purport to appoint any person to attend the meeting on behalf of the owners of Lot 17 and 55. There is no basis to treat them as proxies, or as a result for Dr Thoo to contend that Lot 17 and Lot 55's votes were not recorded at the meeting, despite this form being sent out with the notice of meeting. Cases such as Eventang Development (Pyrmont) Pty Limited v Owners Strata Plan 51573 [2001] NSWSC 452 do not support the conclusion that communications such as that from Dr Thoo should be treated as clause 11 proxies.
173Resolution 9 Irregularity. Dr Thoo argues that there was another irregularity at the 2009 AGM that affected his interests. This was not an irregularity going to the Management Act s 62(3) resolution, Resolution 7. Rather the issue relates to resolution 9 which repealed and replaced by-law 30 in its entirety. Dr Thoo contends that his consent was required for a change to by-law 30 by reason of Management Act s 52(1)(a), which provides:
"52 How does an owners corporation make, amend or repeal by-laws conferring certain rights or privileges?
(1) An owners corporation may make, amend or repeal a by-law to which this Division applies, but only:
(a) with the written consent of the owner or owners of the lot or lots concerned and, in the case of a strata leasehold scheme, the lessor of the scheme..."
174Dr Thoo's argument in relation to Resolution 9 is not persuasive. Management Act s 52(1) permits an Owners Corporation to make amend or repeal a by-law "to which this Division applies". But only with the written consent of the owner or owners of a lots concerned. Dr Thoo's point is that his written consent to the amendment to by-law 30 was not obtained. But the relevant Division of the Management Act here is Chapter 2, Part 5, Division 4 which, as s 51 makes clear, is a Division which applies to a by-law conferring on the owner of a lot specified in the by-law (a) a right of exclusive use and enjoyment of the whole or any specified part of common property or (b) special privileges in relation to the whole or any specified part of common property.
175By-law 30 does not deal with or confer any rights of exclusive use and enjoyment or special privileges in relation to common property. By-law 30 is concerned with defining and the limiting the use of lots within the strata scheme in accordance with the uses specified in the "Permitted Use Column" to the Schedule of the resolution. It is therefore not a resolution to which Chapter 2 Part 5 Division 4 applies and is not a resolution requiring Dr Thoo's written consent.