Site icon LookUpStrata

VIC: Q&A Voting on Motions at the Owners Corporation Meeting

The LookUpStrata Team
Voting Confidential

VIC lot owners are curious about voting on motions at owners corporation meetings when there is a conflict of interest. Are votes based on lot entitlements? Are votes confidential?

Table of Contents:

CLICK HERE TO BE NOTIFIED WHEN WE PUBLISH CONTENT TO THE SITE

Question: Our owners corporation combined a number of separate resolutions requiring a special resolution into one super all-encompassing resolution. There was only a single tick box to approve both resolutions. Is this legal?

Answer: Owners corporations need to ensure they comply with their statutory obligations to act in good faith and exercise due care and diligence.

It would not be best practice to include multiple matters in the one resolution as lot owners only have the ability to vote for or against the resolution read as a whole. This means there is greater likelihood of the resolution not being passed.

Providing the wording is clear, and the resolution subject matter is passed by the correct type of resolution (i.e. ordinary, special or unanimous), there is unlikely a basis to say the resolution is not valid. If the resolution includes a combination of matters that are ordinary resolutions and matters that are special resolutions (i.e. a lease or provision of a service), the higher type of resolution would apply to the whole resolution.

We would not recommend owners corporations bulk a lot of matters in the one resolution. Owners corporations need to ensure they comply with their statutory obligations to act in good faith and exercise due care and diligence.

Phillip Leaman Tisher Liner FC Law E: ocenquiry@tlfc.com.au P: 03 8600 9370

This post appears in the December 2023 edition of The VIC Strata Magazine.

Question: Not all committee members are involved in the decision making process. We have concerns that some owners may have a vested interest in the outcomes of these decisions. How do we resolve this?

I am a committee member in an owners corporation for a Tier 3 apartment complex.

At our AGM, a decision was made to spend $120,000 on maintenance work. Decisions like this are regularly made by the chair, a select few committee members and the owners corporation manager.

Why isn’t the entire committee part of the decision making process? How do we correct this? Are these decisions valid if not everyone on the committee is involved? We have concerns that some owners may have a vested interest in the outcomes of these decisions.

If we are concerned about a conflict of interest, does the Act deal with this? I’d like to quote the section of the Act in an email to the owners corporation manager requesting that the chair be more democratic and transparent. Is this the best course of action?

Answer: How was the decision made?

You should first ask how the decision was made. There are two ways the committee can make a decisions:

Either way, you should have been informed. The different voting processes to pass a resolution are below.

Ballot

The ballot must be sent to each committee member. Each member has one vote (refer section 112 of the Owners Corporation Act). A majority of committee members would have had to vote in favour for it to pass.

Meeting

If there was a quorum at the committee meeting, a majority of members present must vote in favour for a motion to pass.

If there was no quorum, the resolution does not take effect until confirmed at the next meeting with a quorum or by ballot (section 112 of the OC Act).

It is worth noting that the OC Manager has no voting power unless delegated and the chairperson has no extra voting power except in the case of a split vote or if specifically delegated (where they have a casting vote- ref section 112 of the OC Act).

Regardless of how the resolution was passed, all committee members should have been informed either of the outcome of the ballot or in the minutes of the committee meeting.

Finally, it’s worth noting section 117 of the Owners Corporation Act states a member of the committee must not make improper use of their position to gain an advantage for themselves.

Alex Smale The Knight Email P: 03 9509 3144

This post appears in the April 2023 edition of The VIC Strata Magazine.

Question: Our 4 lot commercial building is at a stalemate over a roof repair. Two lots would like a repair and the other two want a new roof. How do we resolve this?

We have 4 commercial lots in the building. I own 1 unit representing 25% share allotment. Another owner also owns one unit being 25% share allotment. The remaining 2 units are owned by a charity organisation, that is government funded, representing 50% share allotment.

We have a problem with the roof leaking. The owner of the 2 units with unlimited funding and 50% share allotment wants a new roof at a cost in excess of $250,000. The other owner and I want to have the roof repaired by a registered professional at a cost of $35,000. We are at a stalemate with 2 votes versus 2.

Can we be forced into paying the high cost of roof replacement rather than the repair cost? There is no sinking fund.

Answer: If the cost of replacing the roof is high enough to warrant a special resolution, this needs 75% agreement to pass. If a special resolution is not required, the stalemate is determined by the chairperson casting an extra vote.

If the roof is considered common property in accordance with the Plan of Sub-division, the Owners Corporation has an obligation to repair and maintain it. Notwithstanding, if the replacement cost of $250,000 is more than twice your Owners Corporations’ annual budget, then a Special Resolution would be required to raise levies for this amount.

A Special Resolution requires 75% of owners to be in agreement, and therefore, with consideration to the lot liability and entitlement, yourself and the other single lot owner would formally be able to object or withhold your permission to grant the Special Resolution. If you have obtained reports and quotations stating the roof can be repaired, there is no reason why the other lot owners would not consider your proposal for repair with a professional registered contractor.

Further, a Special Resolution will be required even if $250k is not more than twice the annual fees provided that a building or planning permit is required for the replacement option, and provided that repair rather than replacement is a possibility.

Finally, if no permit is required and the amount is less than twice the annual fees (so an ordinary resolution is only needed), the stalemate is determined by the chairperson casting an extra vote.

Vanessa Bucci MBCM Strata Specialists E: administration@mbcm.com.au P: 1300 777 276

This post appears in Strata News #564.

Question: I’m an owner of an apartment on a small block of 10 and on the committee. We don’t have committee meetings and our AGM is soon. Do I have the right to put forward or suggest an agenda item?

Answer: The manager, the committee or a lot owner can submit agenda items to be discussed at the AGM.

The manager, the committee or a lot owner can all submit agenda items to be discussed at the AGM. The notice of meeting is to be distributed to each lot owner 14 days prior to the meeting so the owner just needs to make sure their agenda item is submitted to either the strata manager (if there is one) or the secretary for inclusion.

You also need to consider what type of agenda item you’d like to submit. For example, Unanimous and Special Resolutions must have the exact text set out on the notice of the meeting whereas an Ordinary Resolution just needs the subject matter as a discussion point.

If the owner is not sure what type of resolution their subject fits into, let me know and I can advise further.

Rob Harris WestVic Strata E: robharris@westvicstrata.com.au P: 0418 977 783

This post appears in the December 2021 edition of The VIC Strata Magazine.

Question: What are your thoughts on the maximum time frame of 14 days for special resolution ballots, considering most ballots are not resolved within the historic 28 days time frame.

Answer: You can’t wait forever for an Owners Corporation to get on about its business.

If I’ve understood that correctly, we’ve got an interim resolution, notice of that interim resolution must go out within 14 days, and within 28 days a person could call an SGM which effectively stops the interim resolution in its tracks.

Is that long enough?

You have really got a 14-day window. If the minutes don’t go out for 14 days, and you’ve got to call or seek to call an SGM to stop the interims becoming final within 28 days, you’ve got a 14-day window to do that. There’s going to be factual scenarios, doubtless, where that time is tight and if you’ve got 1000 lots with a significant representation of investor owners that live extraterritorially, then it’s going to be very difficult to try and engender that support in that time.

The other side of the coin is, the interim resolutions passed so insofar as people did attend that meeting, there’s more in favour of it than aren’t and you can’t wait forever for an Owners Corporation to get on about its business. It has recurrent obligations discharged, its gotta pay its bills got to insure itself, and it’s got to carry out repair and maintenance and do these sorts of things. I think the longer you wait to advantage the person that wants to try and overturn interim resolution, you’re putting an OC in a precarious situation of not discharging its obligations. I think the balance is about right.

There should perhaps be a differentiation between a shorter period, for things that need to get done. So the generation of fees and payment of invoices, probably work on the extant model. If you’re talking about hiring and firing, entering into or terminating significant service contracts and things of that nature, I would certainly see some benefit in a greater period of time, so it’s a really interesting question.

I think that’s the best answer I can give. I think it’s about right, I can see the difficulty it causes. In a perfect utopian world, we probably have a situation where it depends on the business of the interim resolution as to what time period should apply.

Tim Graham Bugden Allen Graham Lawyers E: tim@bagl.com.au P: 03 9086 5832

This post appears in Strata News #530.

Question: Is a unanimous resolution passed if all lot owners who attended a meeting approve of the resolution but there is a lot owner who didn’t attend and didn’t confirm a proxy?

Is a unanimous resolution passed if all lot owners who attended a meeting approve of the resolution but there is a lot owner who didn’t attend and didn’t confirm a proxy? If the non-attending lot owner does need to approve the resolution, what is the mechanism? Will an email approval suffice? In this example, five of the six lot owners attended.

Answer: Unanimous resolutions can be very challenging to obtain due to apathetic lot owners simply not returning paperwork or attending meetings.

Great question. Unanimous resolutions can be very challenging to obtain, not necessarily due to votes cast against, but commonly due to apathetic lot owners simply not returning paperwork or attending meetings.

For the uninitiated, a unanimous resolution is passed when every lot owner (100%) votes in favour as per Section 95 of the Owners Corporations Act 2006.

Unfortunately, a non-response is not taken as a vote in the positive, you need that final vote. Further, an informal email isn’t a vote either. To pass your unanimous resolution you must obtain a formal vote from every lot owner in favour, one of the three following ways:

  1. Show of hands at a general meeting

  2. Poll vote at a general meeting

    3. or

  3. Postal ballot

It can be a process of try and try again, and hopefully, with persistence, you will eventually get there.

There is a whole other discussion if that final lot owner is opposed to the resolution instead of simply being AWOL (not attending or communicating). If this is the case and they are opposed, the other 5 lot owners may need to put on their diplomacy hats and try to bring everyone to the table to navigate the final lot owners concerns. Open communication is key and will give you the best chance of success.

Deryck Walker SMTI deryck.walker@smti.com.au

This post appears in Strata News #512.

Question: On the day of the AGM, can owners move a motion that was not included on the circulated agenda?

On the day of the AGM, can owners move a motion that was not included on the circulated agenda?

Once passed, the motion was included in the AGM minutes and circulated to all owners. If no one objected after about two months is that motion legal?

I recall if the OC holds an AGM and not enough members attend, the minutes are sent out and the owners have a set number of days to query them. If there are no queries, the minutes become valid. Is this the same for added motions?

Answer: The Owners Corporations Act 2006 is silent when it comes to whether a motion requiring an ordinary resolution can be voted upon at an AGM if it’s not included in the notice or meeting agenda.

The Owners Corporations Act 2006 is silent when it comes to whether a motion requiring an ordinary resolution can be voted upon at an AGM if it’s not included in the notice or meeting agenda.

Section 72: Notice of annual general meetings

It is to be noted that section 72(c) states that an AGM notice must include the text of any special resolution or unanimous resolution to be moved at the meeting.

My view is that if a matter that requires an ordinary resolution is not listed on the agenda and is not a controversial decision nor has any major financial impact on the Owners Corporation then it is practical for a motion to be moved and voted upon. If the matter is controversial or has a major financial impact then I would encourage the motion to be delayed to another meeting or ballot as some Lot owners base their decision on whether they attend the AGM based on the matters included in the agenda.

If there is no quorum for an AGM then any decision is deemed ‘interim’ and will become binding on the 29th day after the meeting conditional on the minutes being issued within 14 days and a petition signed by at least 25% of owners not being submitted to the OC secretary requesting another meeting be held.

Gregor Evans The Knight Email P: 03 9509 3144

This post appears in Strata News #494.

Question: At Committee meetings, are Committee members entitled to vote according to their lot entitlements? One committee member owns 2 lots. Do they get 2 votes?

If members of the Committee own more than one lot, what are the voting rules?

One of our Committee members owns 2 units in a block of 12 units. There is some confusion as to whether they are entitled to 2 votes at Committee meetings.

Are Committee members entitled to vote according to their lot entitlements? Is it similar to voting rules at the AGM?

Answer: At a committee level, it’s one vote per committee member.

I’ve experienced this a bit over the years. When it comes to committee voting, it’s very different to voting at a general meeting of the Owners Corporation.

At a committee level, it’s one vote per committee member. If you own two or more lots and you’re elected to the committee, it doesn’t matter how many lots you own, you only have one vote as a committee member.

At times, if you own additional lots, people may wish to proxy somebody else to be elected into the committee. But each of those persons can only have one vote at the committee level.

When it comes to voting at a general meeting of the Owners Corporation, it’s one vote per lot. However, there’s the ability to call what is known as a poll vote. That’s a written votes at the general meeting level and that’s based upon the units of entitlement.

Gregor Evans The Knight Email P: 03 9509 3144

This post appears in Strata News #490.

Question: We recently voted on replacing leaking windows. At a recent Owners corporation meeting, the strata manager pointed out those who voted “No”. Aren’t votes confidential?

We recently had a vote regarding replacing leaking windows in a building where I own a rental unit. The required improvements would cost each lot owner $30,000.

I voted “no” as my unit is not affected by the problem. At our recent owners corporation meeting, the owners corporation manager pointed out those of us who voted “no”.

This has caused some ill feelings and hostility toward us. I was under the impression my vote would be confidential.

Answer: Any Owners Corporation voting is not confidential.

I’m not a lawyer and, therefore, my answers are of general nature.

My understanding is that any voting of an Owners Corporation is not confidential. It is a requirement of the owners corporation to hold records of votes that occur, and therefore any lot owner or representative of a lot owner can inspect those records to understand who has voted in regards to that motion, and which way they voted as well. In terms of a secret ballots, my understanding is they just can’t occur.

To dissect that question a little bit further, when it comes to the cost of the window replacement it’s really important that the Owners Corporation is checking the lot boundary on a plan of subdivision or the strata plan. At times, Owners Corporations have got themselves in trouble where they’ve actually undertaken works to windows that are located on private property. There’s a story in the industry where an Owners Corporation did the works, the contractor didn’t do a very good job. The Owners Corporation found out that they shouldn’t have actually gotten involved but then they were liable for getting another company in to rectify the works because they approve the works initially. So when it comes down to the boundary of a lot, there are three key principles, it’s either the internal face, the median face, or the external face of the lot. So its really important to check the boundary.

I’d also like to expand on your statement regarding whether works benefit an individual or a group of people rather than everybody. Potentially, the window repairs could be a benefit to only one lot owner. However, the question to ask is whether undertaking maintenance works to the external face of part of a property is going to benefit all owners because it’s going to increase the value. It’s a complicated situation but it’s really important for the Owners Corporation committee, or the Owners Corporation to consider whether it’s a benefit or not to a group of owners.

In terms of its common property, the Owners Corporation is required to maintain common areas of the building. There’s no way out in terms of doing the works. But when it comes to private property, if a lot owner hasn’t undertaken the works then the Owners Corporation has the ability to issue a notice about what owner to rectify if it’s affecting the external appearance or the enjoyment of other walks within the Owners Corporation.

Gregor Evans The Knight Email P: 03 9509 3144

This post appears in Strata News #480.

Question: Can owners vote on AGM motions when they have a conflict of interest in the company associated with the motion.

We are part of an apartment complex in Victoria and would like to know if owners can vote on AGM motions when they have interest in the company associated with the motion. Is this not a conflict of interest?

If not, is their vote discounted completely and not added to the overall count or is their vote considered as an abstained vote and counted.

We have been advised that non-financial members are discounted and not added to the count, but, there’s a question mark on conflict of interest voters.

Answer: The Owners Corporation Act 2006 does not prohibit a lot owner from voting on a motion where there is a conflict or perceived conflict of interest.

Great question, and a relatively simple one to answer on a basic level.

The Owners Corporation Act 2006 does not prohibit a lot owner from voting on a motion where there is a conflict or perceived conflict of interest.

The Act is silent on this matter for lot owners. However, there are several parts which mention similar circumstances for the Manager and Committee members.

Refer Sections 117 and 122 of the Act. These both have similar language, stating they must not make improper use of their position to gain, directly or indirectly, an advantage personally or for any other person.

You are correct about non-financial members. This is covered clearly in Section 94 of the Act, stating they cannot vote on ordinary resolutions unless the amount(s) owed to the Owners Corporation is paid in full. Of course, non-financial members can still vote on a special or unanimous resolution.

The designated person who chairs your meeting should always highlight and request that lot owners in attendance disclose any pecuniary interests they might have, prior to the meeting commencing. This alerts others to any interest or conflict, allowing them to make their own informed decisions when matters arise.

Joel Chamberlain Horizon Strata Management Group E: joel.chamberlain@horizonstrata.com.au P: 03 9687 7788

This post appears in the September 2020 edition of The VIC Strata Magazine.

Have a question about voting on motions when there is a conflict of interest or something to add to the article? Leave a comment below.

Embed

Read next:

Visit our Strata Committee Concerns OR Strata Title Information Victoria

Looking for strata information concerning your state? For state-specific strata information, take a look here.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.

Exit mobile version