By Prof Graham Paddock
At a special general meeting of owners it was resolved that the trustees will recover all honorariums paid to previous chairpersons, as no special resolutions were taken at the time. May the trustees instruct the managing agent to debit the levy accounts of the previous chairpersons which the honorariums received? And what would the implications be? The previous chairpersons have indicated that this will be disputed and they are currently seeking legal advice. We, as the managing agent, are concerned that should the BC proceed with legal action, legal costs could exceed the actual claim and, though no formal resolution was tabled at the time, it was mentioned “casually” in the minutes of general meetings by the previous managing agent. No objections were noted until now.
No, there is no legal basis on which you can debit the levy accounts. You think the BC has a refund claim, but there is nothing proved yet or owing in law.
I suggest that the trustees should get a quote for legal fees and then a direction from owners to see if they think that it is worth arbitrating or litigating the matter. This could cost a lot of money.
Q2: Can trustees change constitution?
Can a clause in the Home Owners Constitution be changed by the Trustees if there is provision that any amendments must be consented to by the relevant Municipality? Would the amendment without the Municipality’s consent be void?
I presume that this common law association’s constitution does not provide for such changes by the trustees, but only by owners, and that it stipulates a particular level of owner agreement as well as the local municipality’s consent for any changes to the constitution?
In these circumstances, my view is that any purported change to the terms of the constitution by the trustees is void because it does not comply with the required procedures.
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