A body corporate deals with most business by ordinary resolution. So what are examples of a majority resolution? A body corporate might have grounds to transfer a letting agent’s management rights, in which case the body corporate can decide to do so if it decides by majority resolution via secret ballot. The body corporate might also decide that certain matters that would usually be decided by ordinary resolution can only be decided by majority resolution.
An ordinary resolution is passed by simple majority where the ‘YES’ votes are more than the ‘NO’ votes. A majority vote is different, as it does not compare ‘YES’ votes to ‘NO’ votes: it compares ‘YES’ votes to the number of lots in the scheme. This means that, to pass a majority resolution, the ‘YES’ votes must be more than 50% of all lots that can vote.
Assume there is a building with 20 lots. Only 15 show up to vote on a motion. The votes for the motion are 10 ‘YES’ and 5 ‘NO’. If this was an ordinary resolution, then the motion would have passed. But the majority resolution needs to look at the total number of lots. In this case, 20 lots were entitled to vote, even though only 15 showed up.
Therefore, out of 20 lots, only 10 lots vote ‘YES’. This is a 10:10 split, and as the ‘YES’ vote is not more than 10 (50% of the lots), the motion must fail.
A majority resolution in this way ensures that a body corporate decision can only be made by the majority of all lot owners, whether or not they are engaged in the body corporate’s processes. It then prevents a minority of engaged lot owners from deciding for the majority.