Watermark Residences – When not to make and adjudication application

8 June 2021

In Watermark Residences two lot owners sought to invalidate an annual general meeting that had been called in a way that was not strictly in compliance with the requirements of the Act. The reason the general meeting would have been technically non-compliant place was because it was to be held in the midst of stringent COVID restrictions that prevented gatherings of groups of people which the committee (rightly) wanted to comply with.

Despite restricting owner attendance at the meeting, the committee went to great lengths to empower owners in still being able to participate in the annual general meeting even though the participation was not in the precise way contemplated by the Act. This included:

1.  encouraging owners to vote in advance of the meeting by submitting voting papers;

2.  using videoconferencing software and making it available to owners for the meeting;

3.  having committee members:

(a) arrange for small groups of owners that were unsure how to use the software to meet together (in compliance with COVID restrictions); and

(b) set up and operate the software for those small groups; and

4.  sending clear and regular communications to all owners to assist in understanding the altered process of the meeting.

Due to the committee’s proactive steps, the altered meeting was ultimately a great success and resulted in almost all owners casting a vote.

Importantly, these steps ensured that no owners suffered any detriment by missing out on the general meeting and any owners were able to participate if they chose to do so.

Ultimately, the adjudicator relevantly provided in the final order that:

The applicants do not really suggest alternative approaches, but their repeated submission of complaint about this point remains. As is often the case in dispute applications, it can become a rather simple and convenient task to forensically criticise the actions of others in hindsight, at a different time and in other circumstances, simply to serve other underlying interests that have little to do with actual concerns about the meeting or its outcomes. The merits here are not strong and this is the inescapable conclusion I draw from the application and this aspect of it.

These comments were consistent with the prevailing opinions of the time by the:

1.  Commissioner’s Office who had stated:

Provided that bodies corporate make reasonable endeavours to comply with the legislative requirements for holding general meetings, instances of non-compliance that do not affect the voting outcomes will be unlikely to affect the validity of meetings.

2.  Apartment Living & COVID-19 Best Practice Guideline by The Strata Community Association which advocated for flexibility in decision making by bodies corporate.

General meetings are a crucial element of proper body corporate governance. It is important that there is a high standard applied to how general meetings are conducted. These high standards are imposed to benefit and protect owners. What took place in the decision of Watermark Residences was when these high standards were sought to be imposed by two lot owners in a way that had no connection with benefitting or protecting owners.

The adjudicator also commented that applicants should only raise issue on matters for a genuine reason by stating:

I am not provided with evidence that the applicants complained about the processes they oversaw over the years, although they now take exception to the practice used by another committee of which they are not members. Their complaints to my opportunity to respond, then, appear self-serving. I cannot place any weight on their complaints, as they are now only of interest for them because I raised the matter.

A copy of the adjudicators decision, which has not yet been published, can be found here.

Accordingly, it is important to ensure that any adjudication application is made only for genuine reasons that require the intervention of an adjudicator. Otherwise applicants risk adjudicators making some sharp comments in response.

Mahoneys team, led by Todd Garsden, acted for the Watermark Residences body corporate in guiding the committee through the dispute and ultimately having the application dismissed.