Calculating Quorums?

Monday November 6th, 2017

In this article we look at the difficulties bodies corporate face when dealing with calculating a quorum at a general meeting and passing valid resolutions.

The quorum is the minimum number of people who must be at an annual general meeting before it can start, if there is not a valid quorum then any motion passed at the general meeting may be ruled out of order.

The starting point is understanding that there may be a different number of “voters” for counting the quorum than the amount of “votes” for a motion at a general meeting.

A quorum is calculated by determining the amount of voters which is twenty five percent (25%) of voters (lot owners). To be eligible as a “voter” a person must be a lot owner and present within a scheme either in person, by voting paper or by proxy, but with at least two (2) voters physically in attendance. If the number of voters is three (3), one (1) person is required to be physically present.

For a quorum a “voter” is a person who owns a lot within the Body Corporate, however:

(a) If the person owns more than one lot or is the corporate nominee or holds a proxy to vote for another lot, they are counted as one (1) voter for the purpose of the quorum.

This is not the same for voting on a motion. For example, if a person owns five (5) lots that person can exercise their vote five (5) times on a motion.

(b) If a person owes a body corporate debt such person will be counted as a voter for the purpose of determining a quorum.

This is different to a person exercising their “vote” when they owe a Body Corporate debt, which they cannot do unless it is a vote for a motion without dissent.

The difficulty arises when working out if a there is a quorum and to do that Archers the Strata Professionals, have provided a useful working sheet, please click herefor a link and example to assist with this process.

Example:

The Body Corporate for Love That View CTS 12345 has 100 lots in the scheme.

On the day of the AGM there are:

  • 3 lots that are owned by a company of which have not appointed a company nominee;
  • 16 lots that have amounts outstanding;
  • 2 lots owned by a company which has duly submitted a company nominee form;
  • 6 lots are owned by one (1) person;

So what is the quorum?

Number of Lots in the scheme 100

Less

Step 1 – Company Lots with no nominee 3

Less

Step 2 – Voters representing multiple Lots 6

– Same person who owns 6 lots (less 5)

– Company which owns 2 lots (less 1)

Total Number of “Voters” 91

Quorum

Step 4 – 25% of Voters 23

A quorum will be present if 23 voters or more are present personally, by voting paper or by proxy. Remember that at least 2 voters must present personally at the meeting for the quorum to remain present.

The leading case authority which examines the calculation of a quorum is Sierra Grand [2015] QBCCMCmr 447, lot owners may wish to read this decision, particularly paragraphs 17 to 52.

The current process for calculating a quorum may change in part as the Queensland Government is currently undertaking the Property Law Review, which includes a review of the provisions under the Body Corporate legislation relating to quorums. Recommendations have been made to amend the legislation as follows:

(a) a lot owner who owns multiple lots is counted as a voter for each lot they own (i.e. if a person owns 5 lots, such person will be counted 5 times towards a quorum);

(b) a lot owner who holds the proxy of another lot owner is counted once for each lot they own and once for each proxy that they hold (subject to any limits in the legislation);

(c) a lot owner present at a meeting personally, by proxy or by written or electronic ballot is counted for the quorum even if that lot owner has an outstanding body corporate debt; and

(d) it is recommended that at least 30 minutes after the scheduled start time of a general meeting if there are not enough voters present in person or by written or electronic voting paper to establish a quorum, the general meeting should proceed anyway, chaired either by the chairperson, an authorised body corporate manager or another person as decided by those present.

The most noteworthy of these changes is that a general meeting will proceed irrespective of a quorum being found after 30 minutes passing.

At first blush, this appears to render the provision for quorums non-consequential and could lead to less adjudication applications challenging motions passed at a meeting on the basis of issues regarding quorum, which would be a welcomed change to the current legislative framework.

If your Body Corporate has any questions regarding calculating of quorums, please contact a specialist Body Corporate lawyer, who can provide you assistance with this issue.

This article was contributed by Juliette Nairn, Partner - OMB Solicitors.