How do Owners Corporations make decisions?

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

  1. Ordinary Resolution
  2. Special Resolution
  3. Unanimous Resolution

Ordinary 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.

Special Resolution

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.

Unanimous Resolution

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.

General 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.