What happens if one owner abstains from a levy vote in a duplex strata scheme?

In a two-lot strata scheme (commonly referred to as a duplex), voting outcomes often feel amplified because the ownership structure is concentrated. In many cases, each lot has an equal unit entitlement and therefore an equal voting weight. However, this is not always the case, particularly where one lot owner is the original owner (developer) who has retained one lot after registration.

When considering levy motions for the administrative fund or capital works fund at an AGM, the starting point remains sections 81 and 82 of the Strata Schemes Management Act 2015 (NSW) (the Act). These levies are determined by ordinary resolution. Under Schedule 1, clause 14 of the Act, an ordinary resolution is passed if the value of votes cast in favour exceeds the value of votes cast against. An abstention is not counted as a vote against.

That principle is straightforward in a standard two-lot scheme with equal unit entitlements. If one owner votes in favour and the other abstains, there are no votes against, and the motion passes.

However, the position becomes more nuanced where the scheme involves an original owner who holds more than half of the total unit entitlement - see Section 5(2A).

The Original Owner Voting Adjustment

Section 5(2A) of the SSMA introduces a specific modification for two-lot schemes where one owner remains the original owner and holds more than 50% of the unit entitlement. In such circumstances, for voting purposes only, that original owner’s unit entitlement is reduced by two-thirds.

This does not alter levy liability. It does not permanently amend the unit entitlement recorded on the strata plan. It is a temporary statutory adjustment that applies solely to the calculation of voting power.

The legislative intent is clear: to prevent a developer who has sold one lot but retained the other from effectively controlling the scheme through majority unit entitlement.

To illustrate how this operates in principle, consider a two-lot scheme where the original owner holds a larger allocation of unit entitlement than the purchaser of the other lot. Because that allocation exceeds half of the total entitlement, section 5(2A) requires that the original owner’s voting value be reduced by two-thirds when calculating the outcome of resolutions.

The practical effect is that the purchaser’s voting weight becomes comparatively stronger for the purpose of determining whether a motion passes.

How This Affects Abstentions

The underlying rule for ordinary resolutions remains the same: only votes cast are counted.

If, after applying the section 5(2A) adjustment:

• The original owner votes in favour, and
• The other owner abstains,

the motion passes, because there are no votes against.

However, if:

• The original owner votes in favour, and
• The other owner votes against,

the adjusted voting values must be compared. In some circumstances, the reduced voting power of the original owner may mean that the motion fails, even though the original unit entitlement recorded on the strata plan suggests otherwise.

This is where many owners and occasionally advisers misunderstand the mechanics.

When Does This Provision Stop Applying?

The voting reduction applies only while a person remains the “original owner” as defined under the Act. Once subsequent purchasers own both lots and the developer no longer holds an interest, section 5(2A) ceases to operate. At that point, voting power reverts entirely to the recorded unit entitlements.

Governance Considerations in Practice

From a management perspective, I always check three things in two-lot schemes:

1. The registered schedule of unit entitlements
2. Whether one owner is still legally the original owner.
3. Whether that owner’s entitlement exceeds half of the total.

Failing to identify this early can lead to incorrect voting calculations and potentially invalid resolutions.

In my experience, disputes in duplexes are rarely about mathematics alone. They are often about the perception of fairness. The Act provides a balancing mechanism through section 5(2A) precisely to prevent dominance during the early life of a scheme. But once the developer has exited, the scheme operates strictly in accordance with unit entitlement.

In Summary

In a two-lot scheme:

• Levy motions are determined by ordinary resolution under the SSMA.
• Abstentions are not votes against.
• A motion passes if the value of votes cast in favour exceeds those against.
• Where one owner is the original owner and holds more than half of the unit entitlement, their voting power is reduced by two-thirds for the purpose of calculating resolutions.

Understanding this adjustment is critical in small schemes, particularly where ownership is transitioning from developer to private owners.

The legislation provides the structure. Sound governance and clear communication before meetings ensure that the structure operates fairly and transparently.