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 provides for a form of democracy by setting out three types of decisions available to an owners corporation.

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 decisions are made?

Decisions can be made:

  • at a general meeting
  • by a ballot of members which is a vote taken outside of the meeting.

At a 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.

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.