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  • #10837
    Chatterbox
    Flatchatter

    We have a block of what was originally 15 apartments.  One owner purchased what was to be three x two bedroom apartments  and  turned the lots into one large penthouse and made it  clear that it was written in their contract (I assume with the developer) that they would be entitled to three votes as they had effectively purchased three  apartments.   Now I can understand the entitlement but as they have strong relationships with 5 other apartment  owners  the rest of us never can win on a vote.  Does anyone know if there is any law or similar that says once it becomes one apartment it becomes one vote?  I have a three bedroom apartment and a two bedroom has the same voting power as me.  Just thought I would ask rather than just wonder.  Regards Chatterbox 

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  • #26193
    Sir Humphrey
    Strataguru

    This is about the allocation of ‘unit entitlements’ (ACT-speak. Other places might use a different term). If a development had only identical units then each would get the exact same number of unit entitlements. However, if some are larger and some smaller, or some likely to cost the OC more than others for insurance or maintenance or have more occupants using the common facilities, then the number of ‘unit entitlements’ will vary. So, it would not be unusual for a large penthouse to have three times the unit entitlements of a much smaller unit. 

    In the ACT, and I think elsewhere, in the normal run of things, each unit’s owner would have one vote in a general meeting whether the unit is large or small. However, any unit owner has the right to demand a ‘poll vote’ for any particular motion. When that happens the votes are weighted according to unit entitlements. Then the penthouse owner’s vote would count three times as much as the vote of the owner of the smallest unit. 

    With larger or smaller unit entitlements comes larger or smaller levies. Each owner contributes to the owners corporations costs in proportion to their entitlements. So, while the penthouse owner can exercise a right to have a greater say in decisions, they also have to pay more due to having a greater share in the property overall. Indeed it is a bit like shares in a company. It is as if the penthouse owner bought a greater share of the overall development at the start than the owner of the smallest unit. 

    Some units paying more is justified to some extent because their more expensive unit is responsible for a greater proportion of the OC’s insurance bill. Where the OC provides unmetered services, it is reasonable to assume the larger units are likely in the long term to use more than the smaller units. On the other hand, some OC costs are the same per unit, regardless of the size of the unit, so perhaps unit entitlements should not be strictly proportional to size or market value of the unit.

    In the set of townhouses where I live, the largest unit is quite a lot more than twice the size of the smallest unit but it has only about twice the unit entitlements. Even some identical units have slightly different unit entitlements. I think this reflects that some costs are fixed per unit while only part of the OC costs are proportional to unit size or value (notably insurance) and some identical units may have been thought to have ‘better’ locations than others on the site. 

    People can and do debate at length about the best and most proper or fair way to allocate unit entitlements. I don’t think there is a way that is 100% perfect but generally I do agree that the penthouse should pay somewhat more and should get a proportionately bigger share of the vote if a poll is demanded. 

    Generally it is the developer who decides the schedule of unit entitlements. If they are manifestly unfair the allocation can be challenged and the state or territory Tribunal can order a reassessment of the schedule. Also an OC can vote and decide to reallocate according to a new valuation of the units but it takes a high level of agreement, not just a simple majority vote. Also, a reallocation might be required by state regulation if a unit has a sufficiently major alteration requiring approval by planning authorities that the authorities will only approve with a reallocation of entitlements. 

    One quirk in all this could be that the penthouse might have been created out of three units after the strata plan was registered, so the penthouse owner did actually buy three units, not one. Perhaps after the plan was registered putting in two doors to join the three units was regarded as a minor variation to the construction plan?  If the change of plan was before the plan and unit entitlements were registered, then the large penthouse might still have been allocated three times the entitlements of a small unit of one third the floor area.  So, if the situation is the first of these, it might really be correct that the penthouse owner gets to vote three times even when a poll is not demanded and everyone is doing the usual simple one unit-one vote voting. 

    I hope that all makes sense!

    #26194
    Lady Penelope
    Strataguru

    How many apartments are in your building now? Is it 13?

    Have you seen a copy of the document that states that the owner of the combined apartment has 3 votes? If this was true it would be highly unusual. Maybe he is confused and has it wrong?

    Voting at OC Meetings is found in SSMA Schedule 1 Section 14.

    In summary: There is generally one vote per Lot (i.e. one vote per apartment). The owner who has combined three Lots into one Lot will usually only have one vote. This is what is called a simple majority vote.

    However, there is another type of vote. This vote is called a Poll vote. The Poll vote is based on unit entitlements. A Poll vote can be requested before any vote is taken at a general meeting. The owner of the combined Lot will have a greater voting power based on their unit entitlement. The unit entitlement is outlined in the strata plan.

    From Strataman is this explanation of a Poll vote: “Each vote ‘for’ and each vote ‘against’ is then counted, using the calculated values, and the voting ‘group’ having the greatest value wins”.

    NB:The greater the entitlement the larger the strata fees.

    You say that you have the same vote as an owner of a 2 BRM apartment….. Are your strata fees for your 3 BRM apartment the same as the 2 BRM apartment? If they are not the same and your fees are higher then you have a greater unit entitlement and therefore a greater voting power than a 2 BRM apartment when a Poll vote is called for. However, when a Poll vote is not requested you will both have one vote each.

    The Poll voting power of the owner of the combined apartment plus his 5 friendly owners  will depend on the total of their combined unit entitlements. Whether this is a majority can be ascertained in a simple mathematical exercise by adding together the unit entitlements from the strata plan for these 6 apartments.

    Without a Poll vote the owner of the combined apartments and his 5 friends will  usually total 6 votes.

    Tricky to explain …. I hope I haven’t confused you.

     

    #26198
    Boronia
    Flatchatter

    If you think that 3 votes out of 15 is going to be hard to live with, please feel sorry for me being in a 21 unit block where one owner has 15 of the units and self manages the Plan.

    #26199
    Chatterbox
    Flatchatter
    Chat-starter

    Hi PeterC

    thank you for your comprehensive explanation.

    regards

    Chatterbox

    #26206
    Chatterbox
    Flatchatter
    Chat-starter

      

    Hi ProudSceptic

    thank you for your response! And no you didn’t confuse me.

    Regards

    Chatterbox 

    #26214
    Chatterbox
    Flatchatter
    Chat-starter

    Thank you flat chat members for your knowledgable responses.  Yes the penthouse does pay 3 sets of fees.  Just one more question when do you use a majority vote versus a poll vote?  I would imagine that the penthouse owners would always insist  on a poll vote so they benefit  in say each motion that is put forward at an AGM? 

    #26209
    Lady Penelope
    Strataguru

    The penthouse owner can call for a Poll vote at a General Meeting whenever they want to affect the vote in their favour.

    SSMA 2015 Schedule 1 Section 14(3) and (4) states:

    (3) Value of votes to apply for poll If a poll is demanded by a person present and entitled to vote on a motion or for the election of officers of the owners corporation or members of the strata committee at the meeting, the motion is to be decided according to the value of the votes cast for and against the motion and 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. However, the value of the vote of an original owner is to be calculated in the same way as for a special resolution.

    Note : Section 5 sets out the manner in which a special resolution is determined.

    (4) Polls A poll may be demanded immediately before or after a vote decided by a majority in number has been taken. The demand for a poll may be withdrawn by the person who made it.

    #26207
    Jimmy-T
    Keymaster



    @Chatterbox
    said:
    Just one more question when do you use a majority vote versus a poll vote?  I would imagine that the penthouse owners would always insist  on a poll vote so they benefit  in say each motion that is put forward at an AGM?   

    You are absolutely right.  You can use a show of hands but anyone can call for a poll vote at any point before or after a regular vote is taken.

    Also, there are certain issues, such as special resolutions that must always be decided by poll votes (and have to be flagged on the agenda as such).

    Finally, one piece of website etiquette – please don’t click the quote mark when you just want to reply.  We don’t need to read everyone’s submissions twice.  Use the quote button when you want to respond to a specific point – and edit out everything else that’s repeated except for the relevant part.

    #26208
    Lady Penelope
    Strataguru

    Chatterbox – Something that is worth having in the back of your mind is that although you may be in a ‘minority’ it is unlawful for the ‘majority’ to wield their power in such a way that is fraudulent, or is actually oppressive, or is motivated by personal gain, or by acting in bad faith. The legal term is “fraud on the minority” or “fraud on a power”.

    The New South Wales Court of Appeal has recognised this doctrine of “fraud on a power” as being of general application and, specifically, as applicable to bodies corporate under the Strata Titles Act of New South Wales.

    Case law in NSW where “fraud on the minority” or “fraud on a power” has been used in relation to strata is here: 

    https://www.watsonandwatson.com.au/document-63/strata-law-is-the-exclusion-of-lot-owners-from-the-use-of-common-property-legal-legal

    and Houghton & Anor v Immer (No. 155) Pty Ltd (1997) 44 NSWLR 46,

    with a further clarification in Part 3 of this document:

    https://www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=https://www.tved.net.au/PublicPapers/September_2009,_Sound_Education_in_Law,_The_Rights___Obligations_of_Lot_Owners___Bodies_Corporate___Recent_Developments.html

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