A recent decision of the Court of Appeal provides a timely reminder that in order to transact business in a lawful manner, meetings must be properly called by the body having authority to call meetings and there must be a quorum.
The case concerned an emergency general meeting (EGM) of Proprietors of a Strata Plan. One strata owner wrote to the strata executive committee (“the committee”) requesting that an EGM be convened. The committee met, considered the request but declined to call an EGM on the grounds that the request emanated from a member who was in arrears with respect to his contributions and that in any event, the annual general meeting of the strata was due soon. In defiance, a meeting was called upon notice dispatched by the property manager for the strata. The committee subsequently circulated a notice of cancellation in respect of the meeting. The meeting was nevertheless held. At the meeting a new committee was appointed to which some new members replaced members of the existing committee.
This decision was challenged in the Supreme Court and the validity of the EGM was upheld. On appeal to the Court of Appeal (“the Court”), the Supreme Court’s decision was reversed. The court construed the Registration (Strata Titles) Act (“the Act”) which, among other things:
- Established by-laws in the form of schedules to the Act to regulate the control, management and administration of strata lots and the common property;
- Established all strata owners as a corporation having power to control, manage and administer the common property for the benefit of all proprietors;
- Empowered the corporation whenever it thinks fit and upon a requisition in writing made by proprietors entitled to twenty-five per cent of total unit entitlement to convene an EGM;
- Provided for an executive committee of the corporation to exercise the powers and perform the duties of the corporation;
- Allowed only owners whose contributions are fully paid to vote at general meetings;
Set the quorum at general meetings at one-half of the persons entitled to vote.
The court found that the Act clothed the corporation, through its executive committee, with the exclusive right to call a meeting, or to grant permission to 25% of the proprietors to do so. The court determined accordingly that the notice sent by the property manager without the committee’s approval was invalid and the EGM held by virtue of that notice was null and void.
Regarding the issue whether the meeting had a quorum, the court found that the strata consisted of 28 units, so that a quorum would consist of 14 owners. The minutes of the EGM showed that only 11 of the 28 members had fully paid their contributions and so the meeting proceeded without the required minimum number of members and would have been invalid for want of a quorum even if it had been properly called in the first place.
The principles to be extrapolated from the case, though seemingly trite, are fundamental. A meeting summoned without authority, will be invalid. It should be noted however, that a notice issued without authority is good provided it is subsequently ratified by the proper authority. Unless ratified, the invalidity of the notice is incurable. On the issue of quorum, it is important to remember that a meeting is only properly constituted when sufficient members are present to form a quorum. Business transacted at a meeting at which a quorum is not present is generally invalid.