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:
- QUESTION: Can the owners corporation manager place owner motion proposals on the AGM agenda? This would allow other owners to consider and ask questions about the proposals before the AGM.
- 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?
- 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?
- 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?
- 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?
- 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.
Question: Can the owners corporation manager place owner motion proposals on the AGM agenda? This would allow other owners to consider and ask questions about the proposals before the AGM.
Can the owners corporation manager place owner motion proposals on the AGM agenda? This would allow other owners to consider and ask questions about the proposals before the AGM. Motions requiring a resolution are raised in any other business, and people are asked to vote immediately. I understand that if there is a quorum, the result stands, but is there a minimum time, eg., two weeks for owners to make an informed decision?
Answer: It is best practice for all proposed resolutions to be on the agenda. However, it does not happen often.
It is best practice for all proposed resolutions to be on the agenda to allow owners time to read and think about proposals, as you have mentioned. However, it does not happen often. Regardless, even when it does, many owners do not read the AGM notice.
You are correct that if there is a quorum, the resolutions are final, and the motions become resolutions of the owners corporation. There is no minimum time for owners to decide in this scenario.
If there is no quorum, the minutes of the AGM must be sent to owners within 14 days of the meeting. The interim resolution will become final 29 days after the meeting, as long as lot owners who hold more than 25% of the total votes for all the lots affected by the owners corporation don’t petition the secretary against the resolution.
Alex Smale Melbourne Owners Corporation Services alex@mocs.com.au P: 03 9818 2488
This post appears in the September 2024 edition of The VIC Strata Magazine.
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:
- by meeting
- by ballot
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.
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