NSW: Q&A Can we limit a majority owner’s number of votes?

This article about the ability to limit number of votes for a majority owner.

Question: A majority owner controls or owns 12.5% of lots. Can we create a by-law to limit their number of votes?

We have 135 lots in our building. A single entity owns lots under a charity-listed organisation and controls an additional five, managed and paid for by the same organisation, totalling 12.5% of lots. How many votes can a majority use at a general meeting, extraordinary meeting or AGM? Are there limits to the number of votes they have?

Can the owners corporation limit their control in some way eg with a by-law to limit their power?

Answer: The owners corporation will not be able to limit the number of votes or pass by-laws to give this effect.

In general, each lot is entitled to one vote with the exception of a poll vote which is based on unit entitlement.

The owners corporation will not be able to limit the number of votes or pass by-laws to give this effect. For example, if a natural person or corporate entity owns 20 lots, they are entitled to 20 votes. This principle is echoed in the case of Eventang Development (Pyrmont) Pty Limited v The Owners Strata Plan 51573 & anor. [2001] NSWSC 452, where the court states [30] as follows:

“…An approach that had the practical effect of permitting an Owners Corporation or its Managing Agents, or particular owners or groupings of owners, to disregard the legislative requirements as to orderly and consistent voting principles and practices whenever it suited their convenience to do so, would be, in my opinion, an approach tending to undermine the public policy considerations which are clear from the comprehensive nature and scope of the legislation.”

In relation to proxy votes, section 26(7)(b) in Schedule 1 of the Strata Scheme Management Act 2015 imposes a limit on the number of proxy votes that can be given to a person to 5% of the total number of lots in a strata scheme with more than 20 lots.

Please note, this information is for general purposes only and should not be relied upon as legal advice.

Solon Hu
Royer Mace Lawyers
E: [email protected]
P: 0434 388 898

This post appears in Strata News #670

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