I think an Owner has a conflict of interest, can they still vote in a motion?

Telemon Lawyers > FAQs > Strata Law > Owners Corporation > I think an Owner has a conflict of interest, can they still vote in a motion?

The NSW Court of Appeal has helpfully said:

“The power of a proprietor to vote at general meetings of the body corporate is not fiduciary, and within limits it may be exercised by the proprietor for his or her own benefit.”

Houghton v Immer (NO 155) Pty Ltd (1997) 44 NSWLR 46 at   52- 53 (per Handley JA with whom Mason P and Beazley JA agreed)

So the question remains, what are the “limits”? In that case Handley JA further observed that:

“… the doctrine of fraud on a power is of general application, and was developed long before the earliest legislation dealing with companies. As Lord Lindley said in General Assembly of the Free Church of Scotland v Lord Overtoun [1904] AC 515 at 695:

“I take it to be clear that there is a condition implied in this as well as in other instruments which create powers, namely, that the powers shall be used bona fide for the purposes for which they are conferred.”

Lord Parker explained in Vatcher v Paull [1915] AC 372 at 378:

“The term fraud in connection with frauds on a power does not necessarily denote any conduct on the part of the appointor amounting to fraud in the common law meaning of the term or any conduct which could be properly termed dishonest or immoral. It merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power.”

Thus the exercise of the power to vote, although not fiduciary, is still subject to general legal principles.