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  • #8934
    Jimmy-T
    Keymaster

      Dog and cat owners in apartments and townhouses need to sit and stay.  It could take decades for the proposed changes to the standard by-laws to make any difference to majority of strata residents’ chances of having a pet in their homes.

      Even when they come in, probably late next year, NSW Fair Trading’s mooted by-laws making permission for pets the default rather than the exception will not be retrospective and they’ll be far from compulsory.

      The by-laws currently in place in your existing building will stay exactly the same, regardless of any changes in the standard by-laws.  They will only apply to strata schemes created after the law is changed.

      It’s up to you and your neighbours to change your current by-laws but that requires an overwhelming majority of owners, voting on the basis of their unit entitlements at a general meeting, to agree. (For a comprehensive guide to how to change by-laws in different states please scroll down the page to “State By State”)

      This ‘ratchet effect’ where, for instance, a small number of owners of larger apartments resist change, can lock existing buildings into by-laws that were devised decades ago.

      That’s one of the reason’s Fair Trading’s policy wonks are apparently looking at ways of making it easier to change by-laws. Their stated hope is to make strata schemes more self-regulating, with by-laws that reflect the lifestyles of their current residents, rather than being stuck with out-of date, one-size-fits-all rules that suit only a minority.

      One suggestion, say insiders, is to reduce the threshold of votes required from 75 percent to two-thirds or even 60 percent, making it easier for owners to update their by-laws  … but not too easy.

      Right now, even if 70 percent or more of owners were in favour of pets, for instance, just a quarter of those who turned up and voted at a general meeting – or, significantly, owned a quarter of the real estate of all those voting – could block changes to anti-pet by-laws.

      Even worse, a highly motivated minority can slip by-law changes past frequently disengaged and apathetic owners – a low turnout at a general meeting is the norm rather than the exception –  then block any return to the status quo when their neighbours wake up to what’s happened.

      But that’s NSW.  The methods for changing by-laws vary dramatically from state to state with no two legislatures operating under the same rules.

      STATE BY STATE

      In Victoria, if you don’t have a specific rule in place and there is one in the Model Rules, then the default by-law applies. The default rule (by-law) on pets basically says if you have a pet and it’s a nuisance and you’re told to get rid of it then you have to do so.  Note the assumption that you could have a pet.

      So what do Victorians do if they don’t have a pet by-law and they don’t like the Model Rule?

      Like NSW, in Victoria by-law (or ‘rule’) changes require a special resolution vote which means 75 percent of votes at a general meeting have to be in favour.  However, if more than 50 percent of votes but less that 75 percent are in favour and not more than 25 percent are against, the motion is passed as an Interim Special Resolution.

      What that means is that the secretary of the Owners Corp has to tell owners this has happened within 14 days, inviting objections to it.  If 25 percent of owners object within 29 days of the initial meeting, it fails.  If they don’t, the rule change goes through.

      Victoria also has a postal ballot system in strata which can pass Special Resolutions and change rules on the same basis but without having to hold a physical meeting.  You’ll find more detail on that HERE.

      In Queensland you need two-thirds of votes cast at a general meeting to be in favour of the change, provided those who vote against represent no more than 25 percent of the lots.

      Confused?  Of course you are. This is how it might work – you have a block of, say, 100 units and they all turn up or send votes to a general meeting (yes, this IS hugely hypothetical).  A by-law change is proposed and 67 owners are in favour.  So far, so good.  But the other 33 percent all vote against, representing more than 25 percent of owners so the motion fails.

      If, however, only half the owners turned up or sent votes to the meeting (a much more likely scenario) and 34 of them voted for the change (68 percent) and the other 16 voted against, the motion would pass because only 16 percent of the total owners (rather than voters) had said no.

      Add in complications like limits on proxy votes, lot entitlements and voting by email and you have a system that, like NSW’s can be easily manipulated by an active and organized minority, especially one resistant to change.

      In the ACT by-laws can be changed by a special resolution which means that less than one-third of people present (including proxy votes and absentee votes) have voted against the resolution, and more votes have been cast in favour of the motion than against it.

      Note that subtle difference – it’s not fewer than one third of people actually voting, it’s one third of people at the meeting either in person or represented by proxy or by postal vote.

      Things are a lot simpler in South Australia.  Again, you require a special resolution to change a by-law but it has to be supported by two-thirds of all owners, not just those voting at a general meeting.

      And just when you think every possible variation of the management of by-laws has been devised, we move to West Australia where by-laws are divided into Schedule 1 and Schedule 2. The first lot appear to be about basic rights and responsibilities – everything from how to elect your committee to being allowed to decorate your own home – and they require a vote “without dissent” to pass them. A vote without dissent in WA means that nobody who turns up at the meeting or sends a proxy vote, has voted against the motion.

      Schedule 2 By-laws in WA cover things like parking, children playing on common property and drying laundry and can be changed by special resolution. A special resolution in WA is passed when votes in favour represent ownership of  no less than 50 percent of the lots or unit entitlements AND the votes against represent no more than 25 percent of ownership.

      To take that fictional 100-lot block again if only half the owners vote and even one says “nay” then the motion fails because it didn’t reach the 50 percent threshold. But if 75 owners vote and 24 say no and the other 51 say yes, then it’s passed (but only just). Best of luck to our WA readers when you get a couple of massive blocks mostly owned by overseas investors – try getting your required 50 percent of informed and engaged owners then.

      In WA the Schedule 1 and 2 by-laws apply to all strata schemes but with exisiting by-laws that are additions to or changes of these by-laws also being accepted.

      In Tasmania, by-laws can be created or changed by a simple majority at a general meeting.  Tassie is also one of those states where, if a by-law (or ‘article”) doesn’t exist in a specific strata scheme, then the one in the standard scheduled by-laws applies.

      In the Northern Territory you can change ‘articles’ by special resolution, which requires that two-thirds of owners voting are in favour but no more than 25 percent of unit entitlements are held by those voting against.

      It’s worth noting that in most if not all jusridictions, an owner can call for a poll vote, where the votes are tallied on the basis of unit entitlements (ownership share), which supersedes a simple show of hands.

      You will find links to all the various rules and regulations about changing by-laws across Australia HERE.

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
    Viewing 7 replies - 1 through 7 (of 7 total)
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    • #19012
      Sir Humphrey
      Strataguru

        …In the ACT by-laws can be changed by a special resolution which means that less than one-third of people present (including proxy votes and absentee votes) have voted against the resolution, and more votes have been cast in favour of the motion than against it. Note that subtle difference – it’s not fewer than one third of people actually voting, it’s one third of people at the meeting either in person or represented by proxy or by postal vote. …

        Yes. An important point. Some of our owners were outraged when we started putting ‘abstain’ as an option along with ‘yes’ and ‘no’ on our proxy forms. [We do not have a prescribed proxy/absentee voting form we have to use. Instead the EC must approve a form before a general meeting.] Our EC thought it entirely reasonable that an owner might wish to direct their proxy to abstain on some motions while voting yes or no on others. This innovations helps for special resolutions. As you point out the tougher part of test in the ACT is that, of the people taking part, in person or by proxy, fewer than one third can be opposed. An abstain is not opposition and boosts the total numbers taking part which means those opposed could fall below one third of the total.

        That is easier than the NSW requirement of >75% in favour but still a tough enough test for things that should have more than just a bare majority. 

        #19063
        Anonymous

          “It is a general misconception that you require 75% of all voters present (either personally or by proxy) to vote in favour of a proposed motion. In fact a special resolution is passed only after a poll is taken at the meeting and not more than 25% in value of the votes, by persons present (either personally or by proxy) and entitled to vote, are against the motion. The value of a vote cast by a person entitled to vote in respect of a lot is equal to the unit entitlement of that lot: cl.18(2) sch.2 of the Act.”
          **** Lawyers (not a sponsor of this site)

          I just do not understand why people keep using the 75% in favour thing when it is a common misconception.
          And then there is also the following from a top shelf Sydney strata expert lawyer (also not a sponsor, so no names will be given)

          ” The view expressed by Alex is the one I have been accustomed to.

          It is explained in terms of 18(2), on the basis that 18(2)(a) indicates that the question of whether the motion passes is determined on votes cast only, whereas 18(2)(b) and 18(3) are directed at how the value of votes is determined.

          If you then look to the definition of “special resolution” in the dictionary, the reference to clause 18(2) and 18(3) is in relation to determining the 25% value of votes that are cast (and not determining whether the motion is passed or not).

          Essentially Alex’s view treats the words “votes” in the phrase “not more than 25 percent … of votes is cast” as meaning votes that could be cast, whereas CCH is treating “votes” to mean votes that were in fact cast.

          So on that view the motion passes under 18(2)(a) on votes actually cast for and against, and the 25% is determined on unit entitlements (or reduced developer entitlements) under 18(2)(b) and 18(3) of “votes” within the meaning of the definition of “special resolution” in the Dictionary.

          There is a certain symmetry in your view, which certainly adds to its appeal.

          However, as the matter is ambiguous, I am convinced by the notion that the legislature intended the 25% to be effectively a “veto” power, or a kind of reversal of the “onus”. If people are present and abstain, on that view they are electing not to exercise the veto power. The calculation of the 25% according to votes that could be cast is consistent with this interpretation.”

          #19068
          Jimmy-T
          Keymaster
          Chat-starter

            @SMO said:
            It is a general misconception that you require 75% of all voters present (either personally or by proxy) to vote in favour of a proposed motion. In fact a special resolution is passed only after a poll is taken at the meeting and not more than 25% in value of the votes, by persons present (either personally or by proxy) and entitled to vote, are against the motion. 

            The problem is that we tend to conflate two issues – the double negative and the fact that it’s the percentage of actual votes cast that count (rather than voters present).

            So here it is in a nutshell.  

            • Special resolutions require a poll vote based on the value of unit entitlements.
            • If more than 25 percent of the value of the votes cast is against the motion it falls.
            • If 75 percent or more of the value of the votes cast are in favour, it passes.

            The arguments over the correct terminology are so eye-glazingly boring and of so little actual significance (as in, make a difference in the real world) that I will continue to say “75 percent of votes in favour”  because that gives people a sense of the size of the task.  They can work out the nitty gritty when they sit down to see if they have the numbers.

             

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
            #19072
            kiwipaul
            Flatchatter

              I support Jimmy on this one, most people at AGM or other meeting are your average guy (or gal) they are NOT high court barristers arguing points of law to the n degree.

              They are trying to make simple, straight forward decisions and they need simple expectations namely 50% or 75% in favor is a pass less is a failure.

              The whole point of the CTTT system is to NOT involve lawyers as this just increases the cost exponentially and generates needless arguments over trivia which the average person (me included) doesn’t understand.

               

              #19073
              Anonymous

                 So here it is in a nutshell.  

                • Special resolutions require a poll vote based on the value of unit entitlements.
                • If more than 25 percent of the value of the votes cast is against the motion it falls.
                • If 75 percent or more of the value of the votes cast are in favour, it passes.

                The arguments over the correct terminology are so eye-glazingly boring and of so little actual significance (as in, make a difference in the real world) that I will continue to say “75 percent of votes in favour”  because that gives people a sense of the size of the task.  They can work out the nitty gritty when they sit down to see if they have the numbers.  

                 

                 

                The “in a nutshell summary” Jimmy gives is more in line with the definition of a special resolution as found in the Corporations Act 2001.
                That the definitions in the SSMA and the Corporations Act 2001 are worded the way they are only adds to the incorrectness of claiming 75% of votes in favor is what is required.

                It is not fact that it is votes cast, and that is the point of my earlier post that references some some pretty expert lawyers. It is fact that votes cast is one interpretation but it is not fact that that interpretation is fact.

                BIG DIFFERENCE between votes cast and votes present that could be cast and it is a difference that can mean a motion failed when others think it passed and vice-versa. My eyes are starting to glaze and forums like this cannot resolve the two interpretations.
                I have submitted it should be resolved in the reform by making the definition clear.

                As long as readers are aware that according to some pretty expert strata lawyers that the 75% requirement is not actually correct (nor is it what is expressed by the SSMA), then I have no problems with questionable nutshells designed to keep the glaze from people eyes.

                I do not like that the moderator purports something as fact when there are some very good experts who are happy to say it is not fact.

                #19074
                Jimmy-T
                Keymaster
                Chat-starter

                  @SMO said:

                  I do not like that the moderator purports something as fact when there are some very good experts who are happy to say it is not fact.

                  I have been writing about strata for about 10 years now and from Day One I made it my mission to cut through the claptrap of legalese and find a way through the minefield of misinformation and misconceptions so that the majority of readers could properly understand most of what is going on.

                  This has involved a certain amount of fudging and paraphrasing but I can tell you that a hell of a lot more people have a better idea of how strata works that they did a decade ago, and my weekly Flat Chat column in the Sydney Morning Herald has had a small part to play in that.

                  In the course of this “journey” I have witnessed far too many discussions on what is right and what is wrong in strata get bogged down in the balderdash of semantics and specifics.

                  I have many lawyer friends who frequently tell me that on this issue I should not be saying at least 75 percent in favour but instead “no more than 25 percent against”.

                  However, as long as more people understand the difficulties of passing by-laws, I don’t care if the wording isn’t exactly right.

                  As for this particular argument, here’s the definition of a Special Resolution in the current Act:

                  special resolution means a resolution which is passed at a duly convened general meeting of an owners corporation and against which not more than one-quarter in value, ascertained in accordance with clause 18 (2) and (3) of Part 2 of Schedule 2, of votes is cast.

                  So let’s look at clause 18 (2) [part 3 is irrelevant to this discussion]:

                  18   Counting of votes on motions

                  (2)  If a poll is demanded by a person present and entitled to vote at the meeting or the motion is for a resolution that, to be effective, must be a special resolution:

                  (a)  the motion is to be decided according to the value of the votes cast for and against the motion, and

                  (b)  the value of a vote cast by a person entitled to vote in respect of a lot is equal to the unit entitlement of that lot.

                  Note that phrase: “the motion is to be decided according to the value of the votes cast for and against the motion”

                  It could not be any clearer – only the votes being cast count.

                  To be honest, I don’t care how many of our “learned friends” think this is suitable topic for debate.  Lawyers rarely present facts – only opinions – and if all lawyers agreed on everything then we wouldn’t need judges.

                  But I challenge anyone  to come up with a single instance where the interpretation of these clauses has changed the outcome of a vote.

                  Otherwise the question of whether the party of the first party went to the second party, and the henceforths and hitherto of legal debate do not belong on this website.

                  The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                  #19075
                  Kangaroo
                  Flatchatter

                    Judge Kangaroo (from the Kangaroo Court) decides in favour of JT.

                    If you are “entitled” to vote by virtue of being an Owner, but don’t attend the meeting nor send a proxy, your vote is not cast.

                    If you are “entitled” to vote by virtue of being an Owner, but you or your proxy abstains, your vote is not cast.

                    As the Act is worded in terms of “cast”, then I can’t see the alleged difference between 75% or more of UEs cast in favour = pass, and more than 25% of UEs cast against = fail.

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