Paper 4 - Decision-making by Owners Corporations

Nearly all of the business of an owners corporation is conducted by ordinary resolutions, or special resolutions, carried by either a simple or two thirds majority of the voting members present or represented by proxy at the meeting. There are some rarely encountered situations where more complicated procedures apply, and a voter can demand a poll which will involve multiplying the votes by unit entitlement before they are counted with the result determined by the total value of the multiplied votes rather than the number of votes.

There are some rarely encountered circumstances that require unopposed or unanimous resolutions, passage of which requires that no votes be cast against and in the latter case 100% participation in the ballot. The procedures for all of the different kinds of resolutions are detailed in part 3.2 of Schedule 3 of the Act.

For decisions made by a general meeting to be valid, there must be present, in person or by proxy, not less than half of the people entitled to vote on the matter(s) before the meeting. The eligible people are the owners of the units, or where there is joint or corporate ownership, the persons nominated in writing by those owners as the person to represent that unit [s 3.20 (1)]. On ordinary and special resolutions, entitlement to vote requires that all and any monies due to the corporation by the unit in question have been paid. [s3.20 (3)]

Schedule 3.7 of the Act requires that a notice of a general meeting must include a proxy form and an absentee voting paper. A proxy may not be appointed for more than a year, and managers and service contractors not at all. Proxies held by persons at a meeting count towards a quorum (providing the person appointing the proxy meets the eligibility criteria) and votes cast by a proxy have the same effect as if the person who appointed the proxy had voted in person. (s 3.9)

Absentee votes [provided the voter meets the eligibility criteria] count towards the passage or defeat of a resolution, but do not count towards a quorum. (s 3.31)

Many owners corporations have members who forget or ignore the admonition in Paper 2 about not complaining about decisions made by meetings in which you chose not to take part in, and so have great difficulty gaining a quorum for their AGMs. As a result, the focus has tended to be on collecting proxies to ensure a quorum, but achieving maximum participation by members in actual decision-making has often taken a back seat. There is nothing to stop an owner giving a person his or her proxy and leaving it to the proxy to vote as he or she sees fit. But undirected proxies are open to misuse, while any one person holding a number of proxies may be able to exercise undue influence over the affairs of the corporation. What the proxy giver thinks are clear verbal instructions (if given at all) can be forgotten because they are not written on the form or wilfully ignored by the person appointed as proxy.

Meanwhile, the unit owner has the opportunity to either instruct the proxy in writing on how the owner wishes to vote, or they can do it in writing by completing the absentee voting paper and either giving that to the proxy to submit at the meeting or sending it directly to the secretary or manager for tabling at the meeting. By far to be preferred is for the member who cannot attend to both appoint a proxy and complete an absentee vote, since in that way, the owner gets to be counted as if they were present at the meeting and their vote gets to be recorded as if they were there in person. Consequently, many owners corporations have adopted proxy forms designed to be used as both appointment of the proxy and recording of how the member wishes to vote. Such forms in effect combine proxy and absentee votes as in the example below.

This form of proxy vote serves the dual purposes of gaining a quorum and maximising the real participation of owners in the owners corporation’s decision-making, and in doing so ensures as far as possible that the corporation operates as the democratic institution it is supposed to be.  (Link to Sample form).

(Revised 21 May 2015)