What if a decision is made without the required qualified majority?

A decision is usually made by a majority vote. Sometimes a larger majority is required, or even unanimity. This requirement is then usually included in the articles of association. The Supreme Court recently ruled on the validity of a resolution passed with a simple majority, whereas the articles of association required an enhanced majority. Is such a resolution void because it was passed in violation of the bylaws? Or is it a voidable resolution because the defect in the decision-making relates to the making of the resolution? The case involved decision-making by an association of owners ("VvE"). However, the outcome of the judgment also provides frameworks for decision-making within other legal entities.

Distinction between void and voidable decision

First, the difference between a void and voidable decision. A voidable decision basically just exists and is also legally valid. Until it is annulled, it can simply be appealed. A void decision is invalid from the outset.

Specifically in the case of CoEs, the distinction is additionally relevant to the legal process. A void resolution must be affected through a writ of summons to the court. Annulment, on the other hand, is done by means of a petition, to the subdistrict court. Moreover, annulment is subject to a strict expiration period. Within one month after the applicant has learned or could have learned of the decision, a petition for annulment must already have been filed with the subdistrict court.

The case study

An apartment owner performed remodeling work in her apartment. This involved moving her boiler to the balcony cupboard. The supply and return of the boiler was drilled through the (common) outside wall without the required permission of the VvE. The flue has also been routed through the outside wall to the outside. The VvE initially decides unanimously that the facade should be restored to its former state by the owner. The owner suggests as a practical alternative that the flue can be routed through an adjacent ventilation shaft. The general meeting of the VvE agendizes the decision to give permission for the installation of a flue in the ventilation shaft. One of the apartment owners disagrees. He owns a dormer right next to the end of the shaft and fears that toxic gases could enter his home. However, the general meeting of the CoE does not heed his objections and the decision is passed, by a simple majority vote. The owner then petitions the subdistrict court. He argues that the VvE was not authorized to decide on this matter, and he claims that the decision was wrongly not taken with a qualified majority.

Cantonal court

The district judge declared the owner inadmissible at first instance. The expiration period within which he could challenge the decision would have expired. Indeed, this is a special procedure under 5:130 of the Civil Code. Pursuant to this article, the request for the annulment of a resolution of a VvE must be submitted to the subdistrict court within one month after the day on which the applicant took cognizance of the resolution. For the sake of completeness, the Subdistrict Court considered that - even if the owner had been on time with his request - he would have been unauthorized to take cognizance thereof. According to the Subdistrict Court, there is a claim for annulment pursuant to Article 2:14 of the Civil Code. This claim should have been submitted to the court by summons and not to the subdistrict court.

Appeal

The owner appeals. The district court then ruled, contrary to the district court, that the one-month expiration period had not yet expired. According to the district court, the one-month period did not start until the man was able to take note of the decision. The court did agree with the district judge that the owner should have initiated his objections through a summons procedure. However, the matter is not dismissed there this time. The court considered that the owner had invoked both annulment and nullity. He cannot be required to initiate two proceedings for that purpose. The subdistrict court may therefore hear both proceedings. Unfortunately for the owner, after a substantive assessment, the district court ultimately concludes that a qualified majority was not required. Thus, the decision is valid and the owner of the dormer window again misses out.

Supreme Court

The owner then appealed in cassation to the Supreme Court, which specifically addressed the distinction between nullity and voidability. The Supreme Court considers that the absence of a majority of votes required by law or by the articles of association would result in a void resolution within the meaning of Article 2:14(1) of the Civil Code, and not a resolution voidable as referred to in Article 2:15(1) of the Civil Code. The Supreme Court also confirmed that in such a case the subdistrict court can rule both on the voidability and nullity of a resolution.

Conclusion

In many cases, organs of a legal entity are bound by voting requirements. If decisions of these organs are not taken according to a majority vote prescribed by the statutes, this leads to nullity. A legally valid decision is thus never reached.

Do you have questions about decision-making within legal entities. Or would you like advice on the nullity or possible voidability of decisions taken? Please contact Joost van Dongen.