The Auckland High Court recently considered an application from Lihua Limited, against Body Corporate 366611, Theta Management Limited and BCS Limited. The procedural decisions may be of interest to those managing body corporates. The case concerned the Empire apartment building in Auckland. It seems to arise out of two management companies operating at the building. Theta manages 277 of the units in addition to being the building manager. Lihua manages several of the remaining 23 units.
First, it is clear that it is still possible to establish an enduring proxy, for example unit owners appointing a manager or lessee on an enduring basis, rather than having to do this at each annual meeting. The grant of a power of attorney and appointment of the manager, Theta, as the owner’s representative pursuant to section 96(2) of the Unit Titles Act was included in a variation of each unit’s lease. Theta then used the power of attorney to appoint a proxy at the AGM. The Judge held votes cast by that proxy counted. Lihua was endeavouring to ensure votes by the proxies did not count and wanted a prohibition on future voting using these proxies.
Secondly, an owner can require the body corporate to deliver to them the register of unit owners, containing the information set out in regulation 4(1). The list of information is extensive and includes the name, contact details and method of contact for the owners. That will include for the directors and trustees where a company or trust is the owner.
It is clear in the regulations that the register of unit owners can be searched by a person approved by the body corporate or the body corporate committee. A proper request needs to be made under Regulation 4. What this case seems to decide is that it will be difficult for the body corporate to refuse such a request from an owner. The Judge also states the power to search was not limited to the right to inspect the register. The right to search also includes the right to take copies of the register.
Lihua wanted the register to communicate with other owners. The body corporate was concerned as to the type of information that might be circulated to owners. The court suggested a practical approach – that the proposed communication Lihua wanted to send be made available to the body corporate 10 days before it is sent to unit owners, to enable the body corporate to explain to unit owners that it has provided the contact details as required, and to present its own views.
Caution will be needed by body corporates dealing with these requests given the Judge’s comments. It would seem that a body corporate should not unnecessarily withhold its approval of any request by an owner to search the register. The body corporate’s actions can be reviewed to check their reasonableness.
Thirdly, the notice of annual general meeting whilst requiring financial statements to be attached does not require audited financial statements. This is because the body corporate has a choice as to how the auditing requirements are approached. Lihua wanted to try and show that the AGM that had been held was invalid, which was why they challenged whether the notice of AGM included the proper financial statements.
Fourthly, the Act does not allow an independent chairperson to run the AGM. This is what we all expected. Lihua wanted the Court to order that there be a further AGM under independent chairperson.
Fifthly, there were some comments about what were the proper rules and procedures through the transitional period between the two Acts. Now that the transitional period has ended those comments are largely historical. They could become relevant if a dispute arose about decisions made during that transitional period e.g. as to the quorum required. Unfortunately there is not a clear decision on what the applicable rules are through the transition as this did not need to be decided. Lihua was arguing it was not a proper meeting as the quorum requirements were not met. Given it had been determined the proxies were valid, this argument failed whether under the new or old regime.
