Case updates – December 2014: 2 Elizabeth Bay Road Pty Ltd v The Owners
The Owner’s Corporation of a building in Elizabeth Bay commenced proceedings against the developer for defective building work carried out on common property. It is a requirement of s 80D of the Strata Schemes Management Act 1996 (NSW) that a general meeting of the Owner’s Corporation pass a resolution approving the commencement of proceedings, however a resolution was only passed at an annual general meeting after the proceedings had been commenced. The developer sought an order that the proceedings be struck out or dismissed because of the failure to comply with s 80D of the Strata Schemes Management Act 1996 (NSW) by reason of the delay in the passing of the resolution.
The primary judge held that the requirement of s 80D of the Strata Schemes Management Act 1996 (NSW) could be satisfied by a later resolution and that alternatively, the action of commencing proceedings without authority could be later ratified.
On appeal, the developer argued that s 80D of the Strata Schemes Management Act 1996 (NSW) required that a resolution at a general meeting be passed before the legal proceedings were commenced and that because the Owner’s Corporation had failed to do so, the proceedings were liable to be dismissed.
The New South Wales Court of Appeal dismissed the appeal and held that even though the proceedings were commenced in contravention of the requirements of s 80D of the Strata Schemes Management Act 1996 (NSW), they were not invalid and need not necessarily be struck out, and that the subsequent resolution of the Owner’s Corporation had ratified the decision to commence proceedings.
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