ACT: Q&A Unit Entitlements, Proxy Votes and the Quorum

These questions from ACT lot owners about proxy votes, meeting quorum and entitlements during owners corporation meetings have been answered by Jan Browne, Bridge Strata.

Table of Contents:

• QUESTION: What is the number of votes required for a special resolution to pass?
• QUESTION: Does a 2 unit development with 4 part owners mean the owners corporation has 4 members?
• QUESTION: We are looking into re-calculating unit entitlements at our Class B complex in the ACT. Can you provide any advice about this matter and an estimate of likely costs?

Question: What is the number of votes required for a special resolution to pass?

What is the number of votes required for a special resolution to pass? Is it two thirds plus one to be carried. In small developments where the number of units is not divisible by 3, how should this be calculated? Is it rounded up or down? 16 units (10.66) is 10+1=11 or 11 +1=12? 17 units (11.33) is 11+1=12 or 12+1=13?

What are the requirements for the calculation of special resolutions now that special privileges over common property in the ACT can be approved with a special resolution and not an unopposed resolution. The new legislation also changes special resolution from 75% to 2/3. We would appreciate clarification to avoid an error on this important issue.

Answer: In order for a motion to pass, there must be at least 1 vote cast in favour of the motion and not more than ¼ of the total number of votes can be cast against the motion.

The requirements to pass a Special Resolution are are explained in Schedule 3 General meetings, 3.16 Special resolutions copied below;

3.16 Special resolutions

1. For an owners corporation with more than 3 members, the requirements for passing a special resolution at a general meeting are that—
   
   1. unless a poll is taken—
      
      1. the number of votes cast in favour of the resolution is greater than the number of votes cast against it; and
      2. the votes cast against the resolution number not more than 1/4 of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes); or
   2. on a poll—
      
      1. the voting value of votes cast in favour of the resolution is greater than the voting value of the votes cast against it; and
      2. the voting value of votes cast against the resolution is not more than 1/4 of the voting value of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes).
2. For an owners corporation with 3 members, the requirements for passing a special resolution at a general meeting are that—
   
   1. unless a poll is taken—
      
      1. the number of votes cast in favour of the resolution is greater than the number of votes cast against it; and
      2. the votes cast against the resolution number less than 1/3 of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes); or
   2. on a poll—
      
      1. the voting value of votes cast in favour of the resolution is greater than the voting value of the votes cast against it; and
      2. the voting value of votes cast against the resolution is less than 1/3 of the voting value of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes).
3. For an owners corporation with 1 or 2 members, the requirements for passing a special resolution at a general meeting are that—

   1. no votes are cast against the resolution; and
   2. at least 1 vote is cast in favour of the resolution.

Notes for s (3)—owners corporations with 1 or 2 members

1. If the owners corporation has 2 members, both must be present to make up a quorum for consideration of the resolution (see s 3.12), unless either is not entitled to vote on the resolution (see s 3.20).
2. An abstention for any unit does not in itself prevent a special resolution from being passed, if at least 1 vote is cast in favour of the resolution.
3. A vote may be cast for a unit on a special resolution even if an amount owing to the owners corporation remains unpaid (see s 3.20 (3)).

So, in order for a motion to pass, there must be at least 1 vote cast in favour of the motion and not more than ¼ of the total number of votes can be cast against the motion. A vote cannot be represented by a partial representative, so any partial number would need to be rounded up to the next whole number.

Nina Cannell
Signature Strata
E: nina@signaturestrata.com.au
P: 02 6185 0347

This post appears in Strata News #569.

Question: Does a 2 unit development with 4 part owners mean the owners corporation has 4 members?

Does a 2 unit development with 4 part owners mean the owners corporation has 4 members per Division 2.3 (10) of the Unit Titles (Management) ACT 2011? As such can a poll vote be called by any member of the OC for an ordinary resolution per 3.15 (1)?

Or does it mean that since we are a 2 unit development, the owners corporation only has 2 members? And as such a poll vote cannot be called?

Answer: Units which have a shared ownership or part owners, the part owners must appoint an authorised representative.

All owners essentially form part of the owners corporation or are members of the Owners Corporation, however, under Section 3.22 of the Act only a single vote is exercisable per unit. So with the dual occupancy unit, you’ve got two votes, which are exercisable.

Units which have a shared ownership or part-owners, the part owners must appoint an authorised representative under division 2.3. So it should be on the record which of those part owners is responsible for the functions of the owner in exercising voting and the like.

Section 3.15 states that an owners corporation with one or two members, in order for an ordinary resolution to be passed, no votes can be cast against the motion and at least one vote must be cast in favour of the motion. The Act is silent on a dual occupancy calling for a poll. It does go on and give specifications for calling a poll in three units and greater, so the silence on dual occupancy units calling a poll suggests that it is not permitted. Essentially, any decision which can’t be resolved by the parties would end up in ACAT for them to make the determination.

It can get tricky if there are owners who don’t necessarily see eye to eye.

Nina Cannell
Signature Strata
E: nina@signaturestrata.com.au
P: 02 6185 0347

This post appears in Strata News #501.

Question: We are looking into re-calculating unit entitlements at our Class B complex in the ACT. Can you provide any advice about this matter and an estimate of likely costs?

I have argued that re-calculating unit entitlements at our Class B complex needs to be done because between a quarter and a third of the 105 units here (many different designs) have had major alterations or extensions done since the original construction in the mid- to late-1970s.

Our OC Executive Committee asked (indirectly) for me to obtain a quote for the cost of having this done. I have advice from the ACT Land Titles Office about their fee for registering a new schedule of unit entitlements, and that paper title deeds for units no longer need to be produced, but apparently we would still need to get a professional market revaluation done of all our units. This is still a difficult and expensive exercise.

Can you provide any advice about this matter and an estimate of likely costs?

Answer: This will not be a cheap exercise and a lot of hurdles to get over.

This will not be a cheap exercise and a lot of hurdles to get over.

You really should be obtaining advice from your paid Strata Manager. The Owners Corporation may also need legal advice plus a surveyor and valuer.

We would recommend you contact Deb Barnes of Capital Crown Leasing P/L. Deb may be able to assist.

The Owners Corporation needs to weigh up the cost over benefits. If this is a Class B complex then all owners share the same common property. Upgrades do not necessarily add a large increased value to the unit as normally the footprint remains the same. In an insurable event the majority of insurance policies have additional cover of $250k per unit for owners fixtures and fittings.

EG: If the value of a unit has increased by say $250k. The additional cost on an insurance premium would be $300 to $400.

Changing the Unit Entitlement could most likely cost you more than this each year. As the unit owner you still maintain your own house so that is not costing the Owners Corporation additional monies. Amendments to the Unit Titles Legislation allows an Owners Corporation to bill an owner for any additional costs incurred by an owner to the Owners Corporation.

The OCN had an article on their website but prior to the new regs: Reallocating unit entitlements

Jan Browne
Bridge Strata
E: jan@bridgestrata.com.au
P: 02 6109 7700

This post appears in Strata News #489.

Have a question about proxy votes, entitlements or quorums? Maybe you’ve got something to add to the article? Leave a comment below.

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Read Next:

• ACT: Q&A Is there a Code of Behaviour for Difficult Lot Owners?
• ACT: Q&A Can a Special Resolution be Challenged?

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

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