Special resolutions – How to pass them properly
By Jennifer Paddock
It’s a question that comes up time and time again – how does a body corporate pass a special resolution properly?
There are so many misunderstandings around this issue. Even some experienced chairpersons, trustees and managing agents don’t understand this fully, especially the concept of number and value. I hope I can shed some light on this for you. Here goes:
Special resolutions can be taken in one of two ways, either without a meeting (i.e. in writing by ’round robin’ procedure) or at a general meeting of the body corporate.
By round robin:
At least 75% of the owners (in number and value*) must agree by signing a written or electronic document.
What do you mean in “number and value”?
Before you can be certain that a special resolution has been properly passed by round robin procedure, you need to add up two separate figures (one for number, one for value) and both of them need to equal at least 75%:
1. At least 75% of the number of sections in the scheme
In a scheme with 100 sections, owners who collectively own at least 75 sections would need to sign their agreement; and
2. At least 75% in value according to the Participation Quota schedule
The value of each owner’s vote is based on the participation quota (PQ) attached to the section owned by that owner. The PQ schedule is found on the last page of the sectional plan. So in our example where there are 100 sections in the scheme, owners whose sections’ PQs add up to at least 75% of the total PQ would need to sign their agreement.
If you can get 75% of owners, in both number and value, to sign their agreement, then you have successfully passed a special resolution by round robin procedure.
At a General Meeting:
- 30-day notice period required (unless it is decided by the trustees to give a shorter notice period due to the urgency of the matter or a shorter period is provided for in the scheme’s rules)
- the notice must specify the proposed special resolution
- Ordinary quorum must be present or represented (see PMR 57 for quorum requirements)
- Note: there is NO raised quorum requirement as there is for a unanimous resolution
- At least 75% (in number and value) of those present and represented at the meeting must vote in favour of the resolution for it to be passed. I need to pause here to emphasize that it’s not 75% in number and value of ALL owners in the scheme, but 75% in number and value of those present or represented at the meeting. So in a scheme with 100 sections, the quorum requirement is owners holding 20% of the votes. If 20 owners, each owning 1 section with equal PQs, rock up to the meeting, a quorum is present, and to pass a special resolution you would need at least 75% of those 20 owners present (ie. 15 owners) to vote in favour of the resolution for it to be passed properly. These 15 owners would also count for 75% of the PQs present/represented at the meeting (because in the example all their sections’ PQs were equal).
- Note: Abstentions DO NOT count as votes in favour as they do for unanimous resolutions.
- Votes against the resolution do not automatically defeat it as they do for unanimous resolutions, they only count against it and if the votes against the resolution add up to more than 25% of the votes (in number or value) then the special resolution is not passed.
Special resolutions are required to authorise, amongst other things:
- passing of a servitude over the common property;
- extension of the boundaries or floor area of a section;
- making of scheme rules altering vote values or levy liabilities;
- making or changing of conduct rules;
- suing the scheme’s developer;
- insuring against more risks than are prescribed;
- authorising non-luxurious improvements to the common property;
- authorising the holding of general meetings in remote locations; and
- obliging the trustees to cancel the managing agent’s contract.
If you have any questions about special resolutions, please contact firstname.lastname@example.org for a no obligation quotation to advise.
Photo by Arnaud Jaegers on Unsplash
Is there a special template/format for the notice of a Special Resolution meeting.
Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on email@example.com with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
I live in a sectional title complex. My neighbour would like to make an alteration and has obtained the approval via a special resolution – the extension results in his PQ ratio being significantly increased. How come he only requires a special resolution for this increase in his unit when the PQ ratio changes and therefore changes my vote relative to his?
Also, if his extension results in building upwards above his garage as well as outwards into his garden (which I assume is currently exclusive use area) – wouldn’t this also mean indirectly converting common area (the space above the garage) to exclusive use area and hence require a unanimous resolution?
Thanks for the comment. This is not something we can answer in one answer, I’d suggest contacting us on firstname.lastname@example.org or calling 0216863950, for a quote to assist you.
This may not be a special resolution question. We are having a problem in our block of 8 units where the Body Corporate refuses to pay for the erection of a fence on the road facing side of the common property of our units. We have 8 units in total.3 units upstairs and 3 units downstairs on one side. 2 units with 8 garages below us on the other side. The 3 units that are on the ground floor all have fences at the front of them and a closed in garden as a result of the fencing. Recently the other 2 units which face the road had a problem with burglaries while they were asleep. The lounges of these units can be easily accessed from the road side. Our plea to the body corporate was to please erect a fence outside these units as these are the only ones without a fence and it is considered common property. But this was refused, saying that the erection of a fence is for the cost of the unit owners. Is this correct. Iam in one of these units with a 70yr old lady in the other and we were really traumatised the one night when we found a man in our lounge while we were asleep. I would really appreciate your answers
It seems that what your scheme requires is a security upgrade to common property by way of a fence. This can be authorised by initiating the process for a non-luxurious improvement set out in PMR 33(2). This process could require a special resolution of the body corporate.
Hi Jennifer. How does a 3 member body corporate pass a special resolution? Many thanks Nic
Hi Nic, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!
How long does a special resolution hold for?
If a vote was passed 10 years ago, owners have changed, trustees have moved on etc is it still binding? Should it be passed again every year?
Hi Rory, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!
Why is there such a difference in the voting percentages required for essentially the same outcome between the Round Robin method and the General Meeting for the passing of a Special Resolution?
My body corporate recently held its annual general meeting. One of the matters on the agenda was to consider a resolution to make an amendment to our conduct ruls. There were 23 members present at the meeting, 17 members voted in favour, 6 voted against and there were 3 abstentions. I have read above that an absention is not a “yes” vote as it is in respect of a unanimous resolution but is it in essence a “no” vote? Really what i need to know is whether the 17 must be counted against the 23 members present at the meeting or only against the 20 members who actively voted?
Your help may help avert a war in our complex!
Hi Penny – the abstentions effectively count as ‘no’ votes in the case of special resolutions. So the 17 ‘yes’ votes need to be counted against all 23 members present. Hope that helps.
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Hi Byron …If there is no quorum and the meeting is postponed for a week and there is still no quorum after a half hour can we proceed with the resolution with those present at the meeting ?
In a BC like ours this unfortunately loads the dice against certain owners. There are 29 -of which 14 are owned by 3 members of one family, 2 others owned by another separate family. 16 garages and 7 store rooms are all owned by THE family. There are 2 trustees – 1 from the “14” group and the other 1 from the “2” group. Of the 13 non-family owners not many appear to understand ST at all or simply cannot be bothered to become involved.
A recipe for dictatorship!!
Dear Jennifer – We do have a situation. Our current MA is also the owner of two (2) units in a 27 unit complex. They became our MA in March 2009. The Trustees decided to terminate their contract and gave them written notice. The issue now is that the MA claims that a special resolution were taken in 2006 that only a unanioumously vote by all the owners can be used to terminate their contract. Although their contract stated that written notice by the Trustees one month before expiring of their contract can be given. And because they held two (2) votes they will oppose such a unanioumously vote.
Hi Adri, in terms of the PMR 46 the MAs contract can be terminated by ordinary resolution of the BC or a trustee resolution – so a unanimous resolution is NOT required!
What about creating EUA under 27A? Should the owners who are affected also have to give written approval? Proprietry rights? Fundamental of Property Law?
When trustees appoint a Managing Agent are owners entitled to see a copy of the contract signed between the two parties? Our trustees declined, the reason being that said contract could get into the hands of their opposition.
This is a very good question, as we are refused to be shown contract, as well as the contract with the MA for our estate HOA. Makes one wonder what they are hiding?
I agree and especially since our combined levy pays them monthly. There should be nothing to hide.
Is a special resolution required before trustees are permitted to appoint a managing agent for the first time (at the same time replacing an exiting accounting office)? As I understand it, trustees may appoint a managing agent at any time or “If they are instructed to do so by the owners in general meeting or by a registered bondholder of twenty five percent of the units, trustees must appoint a managing agent.”[sic]
Hi Byron – No, a special resolution is not required to authorise the trustees to appoint a MA. In terms of PMR 46(1) the trustees can appoint an MA at anytime and must, if the owners in general meeting decide to appoint a MA or a registered mortgagee of 25% of the units requires them to do so.
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