Does a Committee have to provide the reasoning behind its decisions?

In a financial press article about the recent (2019) court case involving the ACCC vs TPG Telecom, there was commentary about what constitutes ‘adequacy’ in board Minutes.

The opinion expressed in this article was that such Minutes need “essential detail, not extensive detail”

And that is almost exactly how the BCCMA Regulations describe what is required (as a minimum) of Committee Minutes. But what has long been held to satisfy this requirement is that, at a minimum, the (bare) details of every Resolution the Committee made should be recorded – and that bare minimum doesn’t include any requirement for the Minutes to contain any explanation of the reasoning behind a Committee’s decision.

Whilst a Body Corporate isn’t governed by the Corporations Act, but rather the Body Corporate and Community Management Act and Regulations, there are still many similarities in how the Body Corporate Committee is expected to conduct their activities, and how a company board is expected to.

One matter that is similar is the production of Minutes of their Meetings – and specifically the content of those Minutes.

In addition, the Body Corporate Committee has a statutory requirement to ‘act reasonably’ in all its dealings for the Body Corporate and the Owners. And it is required to also adhere to its Code Of Conduct which forms part of the BCCMA [link below].

In regard to Committee Meeting Minutes, the Regulations require that ‘Full and Accurate’ Minutes of every Committee Meeting are produced and distributed, and here are the minimum guidelines for what is to be included:

Full and accurate minutes, of a meeting, means Minutes including each of the following—

(a) the date, time and place of the meeting;

(b) the names of persons present and details of the capacity in which they attended the meeting;

(c) details of proxies tabled;

(d) for each motion voted on at the meeting—

(i) the words of the motion; and

(ii) the number of votes for and against the motion;

(e) details of correspondence, reports, notices or other documents tabled;

(f) the time the meeting closed;

(g) details of the next scheduled meeting;

(h) the secretary’s name and contact address.

And the same requirements for Motions apply to Votes of the Committee made Outside of a Meeting (a VOC).

You’ll see that the minimum requirement in relation to any Motions and Resolutions actioned by the Committee are these details: ‘the words of the Motion and the number of votes for and against the Motion’. But is satisfying only the section of the Legislation that directly relates to the Minutes enough?

A Committee isn’t required according to that particular section of the legislation, to provide any further explanation on how they arrived at their decision on a Resolution, and for some Resolutions this is quite significant. Consider a request from an Owner to install an ‘improvement’ to their Lot, say an air-conditioner, or an awning to provide sun screening. Or consider an application to keep a pet. Is it ‘fair and reasonable’ that the only information supplied to those Owners might be that their requests were rejected – with no reasons supplied, and no indications in the Minutes of how the Committee arrived at their decision? No indications of what issues were canvassed, how the ‘pros and cons’ were weighed up.

As we know, enshrined in the BCCM Legislation is the principle of ‘acting reasonably’ – the Body Corporate is required to do it, and the Committee is also. So the question needs to be asked, if the Committee Meeting Minutes provide no indications, not even a succinct paragraph, of how the Committee arrived at their important decisions, and advise what considerations they took into account, are they acting ‘reasonably’?

Is a Committee doing a good job if it allows its Minutes to simply record the outcome of each Resolution, and the votes For and Against, without also supplying a succinct explanation on how it arrived at the decision? In the words of the article about the court case, “…record not only the Resolutions reached by the board, but also some detail on how those Resolutions were reached.” 

 You be the judge.

You can download the BCCM Committee Code of Conduct here.