This article discusses developer first year levy auditor voting and whether those decisions are valid under a power of attorney.
Question: In our new 20 lot scheme, purchase contracts contains a clause that gives the developer voting rights at general meetings on our behalf for the first 12 months. The developer has ratified levies, insurance cover and decided NOT to appoint an auditor for the first financial year? Does this sound right?
Our scheme has 20 lots and our purchase contracts contain a clause giving the developer voting rights at general meetings on our behalf for the first 12 months. Was the developer in order in conducting an Inaugural General Meeting upon the set up of the scheme at which the developer ratified levies and the insurance cover as well as for deciding NOT to appoint an auditor for the first financial year? These were motions additional to what the developer would generally do upon the establishment of the scheme.
Our body corporate manager states that the Inaugural General Meeting is the first General Meeting and that the second General Meeting will take place twelve months from that date. This opinion doesn’t seem to accord with section 94 of the BCCM Act.
Is it correct that, when all lots have been sold, an EGM is called and a committee elected?
Answer: It is very common for the developer to hold a power of attorney for the first 12 months of the scheme’s operation.
Power of attorney
It is very common for the developer to hold a power of attorney for the first 12 months of the scheme’s operation. This is contemplated in sections 211 and 219 of the Body Corporate and Community Management Act 1997 (Qld) (BCCMA).
That power of attorney will give the developer the ability to pass through certain resolutions at general meeting. Whether the power of attorney has the power to extend to the specific types of resolutions depends on the precise wording of the power of attorney. Relevantly, the above sections of the BCCMA provide as follows:
…the power may be exercised only in ways, and only for purposes, disclosed in a written statement given to the buyer before the power is given.
The statement must include a detailed description of the circumstances in which the power may be exercised.
To confirm if the votes were cast properly, the power of attorney should be examined to confirm it included reference to those resolutions.
Timing of AGM
The module provides that:
An annual general meeting, other than the first annual general meeting, must be called and held within 3 months after the end of each of the community titles scheme’s financial years.
This means that the AGM is held yearly and usually around the same date on each year.
Choosing of committee
The committee is chosen at each AGM. This requirement is irrespective of when all of the lots are sold.
This post appears in Strata News #565.
Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753
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