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Topic
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This is a 32 unit Strata in NSW.
At a recent EGM the chairman, who is the Managing Agent for the Strata, called for those against the proposed by-law to vote.
The proposed by-law was defeated after counting up the unit entitlements.
The Managing Agent then states that an abstention is effectively a yes because their vote is not being counted a “NO”.
Some Owners question this as there are different reasons why someone might not have voted Yes and abstained such as being shy about declaring in front of other Owners or not sure about how they feel on the vote etc.
This is the second meeting where this has occurred and some Owners want to clarify this for future meetings.
Is the Strata Manager correct in what he is advising?
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No the strata manager is not correct.
An abstention is an abstention – it means that the person has chosen not to vote on the matter. There are three options yes, no or abstain. If “abstain” meant “yes” then there would be only two options, wouldn’t there?
It doesn’t matter why someone has abstained from voting, they have simply chosen to abstain.
A special resolution requires that no more than 25% of the votes cast are cast against the motion, the value of the vote being unit entitlement. Therefore if more than 25% of the vote on the resolution based on unit entitlements was cast against the resolution, then the resolution was not passed.
Tell your strata manager that if he continues to give bad advice you will have to seek further advice from Fair Trading.
Hi Scotland X / Felix,
Whilst I agree 100% with Scotland X… I’d be more concerned that your Chairman IS your Strata Manager and a clear conflict of interest exists. Maybe have a motion placed on the next agenda to seek another Strata Company take over to ensure no conflicts otherwise exist!?!
An abstention to me is to stick with the ‘Status Quo’ meaning to leave things ‘as they are’ but the above suggests the No’s and Yes’s must be counted by Unit Entitlements against each other… You strata manager sounds a little Hitler’esque to me… and I’m assuming you voted ‘No’?
Good luck at your next meeting!
T.
Call me paranoid, but I removed a link in the above to a “fact sheet” produced by a particular Strata Management Company, firstly because it’s their document that’s intended for use by their Clients, and secondly (and more importantly in my opinion), because it merely serves to confuse rather than to confirm voting procedures. It’s worth noting though, that the position of Chair is delegated by the Owners Corporation to the Strata Manager in their Agency Agreement, which as the “principal manager” the O/C (or more specifically its elected Chair) can take back permanently or just for a particular Meeting – Moderator (Whale).
Just to clarify re voting on special resolutions – for such a resolution to pass, there must be no more than 25% of the votes based on unit entitlements cast against the resolution. Otherwise the resolution is not passed.
An abstention is a non-vote, it is someone choosing not to vote. It is not an indication of support for anything. If you vote informally in an election you are doing the same thing, you are choosing not to exercise your vote.
It is very common for strata managers to chair meetings, ours does which is fine because he knows what he is doing. If anyone is chairing a meeting and there is a resolution in which they have an interest, they should step aside for consideration of that motion.
Scottie is spot on, as usual. The law defines a speial resolution as “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 … of votes is cast.
An abstention is a non-vote and is therefore not counted. It is not a “vote cast” it’s a decision not to vote. By the way, special resolutions have to be conducted as poll votes, based on unit entitlelemnets, rtaher than a show of hands.
Just as an example, say owners who have Unit Entitlements totalling 100 turn up at a meeting.
Owners with UEs worth 48 vote in favour and other owners with UEs worth 17 vote no, with the owners holding the remaining 45 votes abstaining.
The motion would fail because more than 25 percent of the VOTES CAST were against it, even though it was only 17 percent of the Unit Entitlements. (Obviously, unit entitlements tend to be in the thousands rather than 100, but I’m trying to keep it simple.)
In simple terms, far from being a yes vote, non-votes or abstentions usually favour the “no change” group as they reduce the voting threshold. That’s why you have to get everyone informed and involved before a special resolution vote.
It’s also why owners have to be very careful about the by-laws they “just go along with” just to keep committee members or a vocal minority happy. A powerful minority can railroad an owners corp into making bad decisions then make it very hard to rescind them once the damage is done.
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.
I am not sure how it is worded in NSW but in the ACT the interpretation of abstentions is the opposite of what Jimmy T just said:
“1. the number of votes cast in favour of the resolution is greater than the number of votes cast against it; and
2. the votes cast against the resolution number less than 1/3 of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes)…” sch.3.16(1)(a)
Ignore that the crucial number is ⅓ rather than ¼ for the ACT.
Here it is ‘votes that CAN BE cast’. So, if 100 show up for the meeting (IE they don’t stay home and ignore the meeting entirely), then the vote goes: yes-50, no-25, and 25 abstain, then the motion would pass. 50:25 passes the first hurdle of more yes than no. 25 is fewer than ⅓ of the 100 who CAN vote because they have shown up to the meeting and heard the arguments (or appointed a proxy).
It would be presumed then that 50 supported the proposal, 25 opposed and a further 25 were indifferent to which way it went, or at least were insufficiently concerned that they wanted their vote to push it one way or the other. The purpose (as I read it) of the special resolution < ⅓ opposed test is to avoid passing resolutions that have substantial opposition, albeit less than would defeat it outright by simple majority vote. People who abstain are not a substantial opposition. If you want to oppose you vote no. So, in NSW, you might perhaps have ¼ of “votes cast”, in which case I would agree with Jimmy, but it you have something like the ACT’s “votes that CAN BE cast…at the meeting”, I would disagree.
Hi Felix, JimmyT, Whale and Scotland X;
In order to simplify things (for myself and others), is this the process of properly passing a Special Resolution;
1. Special Resolution (SR) is placed on the Agenda of a duly convened General Meeting of an Owners Corporation (OC): Note: Duly Convened being full and proper notice given to ALL members of the OC pursuant to the Regulations.
2. Motion called for and VOTES are counted per Unit Entitlement (UE) for SR under Poll Vote rules. Note: Abstention VOTE(s) not counted; No VOTE(s) cast are counted by UE; and Yes VOTE(s) cast are counted by UE.
3. YES and NO converted to percentage of Total VOTE(s) cast. Note: The TOTAL amount of VOTE (s) cast are added (UE) to establish what 100% of the VOTE (s) cast are worth.
4. If NO percentage is worth more than 25% then the SR is defeated; and
5. If YES percentage is worth more than 75% then the SR is resolved.
Abstention VOTE(s) reduced the percentage threshold of UE counted at a ratio of 3:1 (YES:NO) indirectly favouring NO (Status Quo) as it is less onerous to obtain – Voting YES or NO is more not only more preferable, but means you are getting your say by NOT sitting on the fence!
Also, JT’s (very concerning) comment that “A powerful minority can railroad an owners corp into making bad decisions then make it very hard to rescind them once the damage is done.” means that any member of the OC that doesn’t Vote or Abstains from voting has only themselves to blame when a bad decision costs the OC (all owners financially) in the long run!
Get out and vote seems to be the important message here and whatever you do just don’t sit on the fence (Abstain) – Ask inquisitive questions of your EC or Strata Manager prior to voting so that you can ascertain for yourself if you agree the proposed SR should pass!
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