28 Aug How do Owners Corporations make decisions?
As owners corporations consist of multiple members there needs to be a basis of decision making.
The legislative framework provided in the Owners Corporation Act provides for a form of democracy by setting out three types of decisions available to an owners corporation.
Types of Owners Corporation Decisions
- Ordinary Resolution
- Special Resolution
- Unanimous Resolution
Ordinary resolutions require a majority of the votes cast to be in favour. Most decisions of owners corporations regarding works, control of common property, election of a committee and setting the budget are approved by ordinary resolution whether at the AGM or throughout the year. Ordinary resolution matters can generally be delegated to the committee.
A special resolution requires 75% of all members of the owners corporation to be in favour. These are matters which parliament has determined of greater significance to an owners corporation and include:
- special levies of more than twice the annual budget
- significantly altering or upgrading common property
- leasing or licensing common property
- making, amending or revoking rules
- commencing legal proceedings other than debt recovery or in forcing rules
- borrowing an amount exceeding the annual budget
If a matter requiring approval by special resolution is not passed it may be subject to an interim special resolution is where the 75% threshold is not met but:
- at least 50% of members vote in favour
- not more than 25% vote against the motion
Notice is required to all members of the interest special resolution.
It becomes a special resolution 29 days after the date of the meeting unless at least 25% of members petition against it.
The interim special resolution effectively provides a further opportunity to pass a special resolution by regarding a member who did not cast a vote to be in favour provided the requirements above are complied with.
A unanimous resolution requires all members of the owners corporation are in favour. These are for permanent changes to the plan of subdivision such as:
- disposing of common property
- altering lot boundaries
- amending lot liability and entitlement
A unanimous resolution recognises the rights of members may be diminished and it is appropriate all members agree.
How are Owners Corporation decisions made?
Owners Corporation decisions can be made:
- at a general meeting
- by a ballot of members, which is a vote taken outside of the meeting.
- the quorum is 50% of the members are present
- an ordinary resolution is passed by a majority of eligible members voting in favour of the motion
- a member who has fees or charges owing to the owners corporation is not eligible to vote for an ordinary resolution
- a member may appoint a proxy to represent him or herself at a meeting
- a body corporate such as a company is represented meeting by an appointed proxy.
If a quorum is not present the meeting may pass interim resolutions which take effect 29 days after the meeting unless:
- at least 25% of members petition against the interim resolutions or
- notice of a further general meeting has been issued
The purpose of allowing from resolutions is to ensure that the operation of the owners Corporation is not stifled for want of attendance at a meeting.
By a Ballot
A Ballot is a convenient way of providing members dissipation in decision-making and requires:
- notice is given to all members;
- to be open for at least 14 days;
- a vote must be returned by the closing date of the ballot;
- for an ordinary resolution:
- a quorum must be attained; and
- a majority of votes in favour to be passed;
- for the vote to be counted cannot have any fees and charges owing;
- a special or unanimous resolution has the same requirements as for a meeting including an interim special resolution.
Committees act on behalf of the owners corporation outside of a general meeting and:
- usually appointed at the annual general meeting
- may be delegated the power to deal with matters requiring an ordinary resolution
- cannot be delegated any matter requiring:
- a special resolution or unanimous resolution
- any limitation imposed by the owners corporation such as a restriction on unbudgeted works.