Minority Protection Doctrines: From Equity and Company Law to Strata Title

Leow, PSR

Publication

Minority Protection Doctrines: From Equity and Company Law to Strata Title

Leow, PSR

Abstract

The law of strata title is becoming of increasing importance in today's world as existing land is subject to much competition for use by offering another way to maximise land use by partitioning the horizontal division of airspace. While both companies and strata title utilise majority rule for governance, little consideration has been given to the applicability of company law minority protection doctrines to strata title. A hitherto largely unseen problem in the management of strata title developments is the ostensible lack of limits placed on the power of the majority of subsidiary proprietors to pass resolutions, make by-laws and elect council members at general meeting. The sparse academic work on this area has generally accepted Australian authority supporting the proposition that the company law doctrine of “fraud on the minority” is applicable to such situations or has accepted the doctrine of “fraud on a power” without justification despite relying on the same Australian authority. These accounts are superficial and fail to grapple with the conceptual nature of the body corporate in strata title law as well as con-siderations peculiar to strata title law. This essay seeks to address this gap by investigating the doctrines of fraud on the minority and fraud on a power, evaluating Australian case law and then comparing the applicability of the doctrines in strata title from a conceptual perspective in the context of Singapore and the Australian state of New South Wales, which have some of the most sophisticated and comprehensive systems of strata title ownership in common law jurisdictions. Closer analysis demonstrates that the Australian authorities are conceptually muddled and that “fraud on the minority” is conceptually inappropriate in strata title law. Instead, *97 the equitable doctrine of “fraud on a member's power” has judicial support, is more theoretically defensible and practically effective in such situations and should be adopted in light of the unique legal nature of the management corporation.