VIC: Can a majority owner’s poll vote be challenged?

Question: One owner holds 55% and wins every poll vote. Is there anything minority owners can do? Is this addressed in the upcoming reform?

I’m a real estate agent. Is poll voting where a single lot owner holds a majority share (55%) covered in the upcoming strata law reform? In my experience, this creates a very unfair outcome for other owners.

I previously managed both an unlimited and a limited scheme. In the unlimited scheme, I lost a poll vote because the majority owner was unwilling to meet the costs of maintaining common property. In the limited scheme, the other lot owners effectively have no say. The commercial precinct has deteriorated significantly, with regular graffiti and dumping of household goods, and maintenance has been neglected.

In nearly three years, the manager has not provided owners with a copy of the contract of appointment, a budget, or any insurance details. This is a clear breach, but because one owner holds the majority, nothing is done.

Answer: Poll voting favours the majority owner, but a manager’s failure to provide records or maintain common property still gives minority owners a path to VCAT.

This question cuts to one of the tensions in the Victorian framework, and the frustrating part of the answer is that poll voting is, mechanically, working exactly as it was designed to, even when the outcome feels anything but fair. Democracy isn’t always fair in its outcomes.

A little like a company AGM, where a 55% shareholder outvotes the room, the mathematics structured into the Act is ‘whoever pays more, decides more’.

Starting with the mechanical operation, the default position is set out in section 87 of the Owners Corporations Act 2006 (the Act):

87 One vote for each lot

1. For any resolution of an owners corporation, there is to be one vote for each lot, whether the resolution is voted on—
   1. at a meeting; or
   2. by ballot.
2. Joint lot owners of a lot have only one vote between them in respect of that lot.

So far, one lot, one vote. But then section 89 introduces the poll:

89 Voting on a resolution of the owners corporation at a meeting

(1) Subject to subsection (3), a person may vote on a resolution of the owners corporation at a meeting by a show of hands or in another prescribed manner, unless the meeting resolves otherwise.
…….
(3) At a meeting, a lot owner may (either in person or by proxy) before or after the vote is taken for an ordinary resolution, require that a poll be taken based on one vote for each unit of lot entitlement.
(4) Voting in a poll under subsection (3) must be by written vote.
(5) If a poll is required after the vote is taken at a meeting, the decision on a matter determined by a simple majority of votes cast at the meeting has no effect and the decision on that matter is the decision of the poll.

Note the effect of subsection (5) in particular. The poll doesn’t sit alongside the show of hands. It replaces it. This is really giving effect to the legitimate ownership rights and burden of costs that follow.

Where one owner holds 55% of the lot entitlements, they win every ordinary resolution put to a poll, every time. It’s a frustrating outcome perhaps, but it is indeed the outcome, outside of an application to VCAT seeking particular orders.

There is one hard stop. A special resolution under section 96 requires 75% of the total lot entitlements of all lots affected by the owners corporation, so a 55% owner cannot force a special resolution through on their own. However, the flip side is that they can block any special resolution the other owners might want.

You’ll also note that section 89(3) is expressed to apply to ordinary resolutions: special resolutions are already measured against total entitlements, so the majority owner’s weight is recognised either way. In a limited owners corporation, the practical dynamics are the same, just applied to the narrower set of functions that owners corporation (OC) holds.

Is it addressed in the reform? Partly … “ish”, and the picture recently became clearer. The expert panel’s review of the Act expressly included voting requirements among lot owners, and the Victorian Government has now released its response. Among the measures the government has supported are restrictions on proxy voting blocs, longer notice periods for AGMs, and, most relevantly here, an amendment intended to prevent a single owner with a majority lot entitlement from blocking proposals supported by all other owners.

Note the framing though: the reform as flagged targets a majority owner blocking the rest, rather than dismantling entitlement-weighted poll voting altogether. It’s definitely in ‘watch this space’ territory but quite a way off being a sure thing.

Now, the second half of your question is where minority owners are far from powerless, because none of it is a voting issue at all.

A manager failing to provide owners with the contract of appointment, a budget, or insurance details across nearly three years is not something a majority owner can vote away. Managers are registered professionals with statutory duties under section 122:

122 Duties of manager

1. A manager—
   1. must act honestly and in good faith in the performance of the manager’s functions; and
   2. must exercise due care and diligence in the performance of the manager’s functions; and
   3. must not make improper use of the manager’s position to gain, directly or indirectly, an advantage personally or for any other person.

Separately, Part 9 of the Act deals with records, the OC’s records must be made available for inspection on request by a lot owner (section 146), and the register similarly under section 150. The contract of appointment, budgets, and insurance details qualify as records. And the deteriorating common property engages the obligation I come back to often;

46 Owners corporation to repair and maintain common property

An owners corporation must repair and maintain—

1. the common property; and
2. the chattels, fixtures, fittings and services related to the common property or its enjoyment.

That duty is not optional, and it does not evaporate because the majority owner would prefer not to spend the money.

Practically, I’d suggest a concerned owner take a staged approach:

1. Put the requests in writing, including the contract of appointment, current budget, and insurance certificate of currency, and keep a record of each request and the response (or silence).
2. Failing that, any lot owner can apply to VCAT for orders compelling the OC and its manager to comply with the Act, both on the records front and on the failure to repair and maintain the common property under section 46.

Being outvoted on a poll is lawful, however unsatisfying. Being kept in the dark and watching the common property deteriorate is not, and the remedies for that exist today. The catch is that they’re not an overnight fix. They require the VCAT pathway. Given the length of the non-compliance described here, it may be worth the minority owners jointly obtaining preliminary legal advice, as a coordinated VCAT application may carry more weight than owners acting alone.

This post appears in Strata News #804.

Alex McCormick
SOCM
alex@socm.com.au
P: 03 9495 0005