The abstention dilemma: to count or not to count when voting?

In the complex world of sectional title management, even apparently straightforward aspects like voting procedures can spark lively debates among industry professionals. Recently, our Western Cape Regional Sales Manager, Brendon Levin, raised an intriguing question with us following a general meeting of a body corporate for purposes of borrowing funds.

Our Legal Division provided a comprehensive overview of the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”) and the Prescribed Management Rules (“PMRs”) in Annexure 1 of the STSM Regulations, 2016. While the PMRs provide the framework for voting in general meetings, our team noted that they do not explicitly address how to handle abstentions in all situations, which lead us to the next point.

Both schools agree that an abstention is not a vote in favour or against the resolution being proposed. However, the difference is that with the first school of thought, an abstention vote must be included in the total number of votes represented, while the second school of thought considers the abstention to be the same as if the member was not present and therefore the member’s vote is not included in the number of votes represented. The impact of these different approaches can be felt in various ways, particularly when it comes to special and unanimous resolutions, and when the motion either carries or does not carry when recognising the abstentions.

• Ordinary Resolutions – According to PMR 20(1)(b) motions requiring an ordinary resolution “must be adopted by resolution of the majority of the votes, calculated in value, of the members present and voting.” Since the calculation is based on members “present and voting” abstentions are not counted in the denominator which means that abstaining members do not affect the number of votes required for an ordinary resolution to pass, though a quorum requirement of one-third of members must still be met (except in cases where there are only 4 members or 4 primary sections).
• Special Resolutions – The STSMA defines a special resolution as a resolution “(a) passed by at least 75% calculated both in value and in number, of the votes of the members of a body corporate who are represented at a general meeting; or (b) agreed to in writing by members of a body corporate holding at least 75% calculated both in value and in number, of all the votes”

• Unanimous Resolutions – The STSMA defines a special resolution as a resolution “(a) passed unanimously by all the members of the body corporate at a meeting at which: (i) at least 80% calculated both in value and in number, of the votes of all the members of a body corporate are present or represented; and (ii) all the members who cast their votes do so in favour of the resolution; or (b) agreed to in writing by all the members of the body corporate.”The definition does not explicitly address how to handle abstentions, leading to potential ambiguity in interpretation. For the resolution to pass, all members present must vote in favour. If any member abstains, can the resolution be considered unanimous?

There are reasonably compelling arguments on both sides:

The question of how to handle abstentions is far from only academic. It carries significant practical implications for sectional title schemes. Recognising abstentions could potentially make passing motions more challenging, especially for special and unanimous resolutions requiring high approval thresholds. This approach might lead to governance challenges and, in some cases, hinder efficient decision-making.

Conversely, recognising abstentions could offer a more nuanced view of member sentiment, potentially fostering more thoughtful decision-making. It might also prevent situations where motions pass with apparently sufficient support but fail to address broader concerns indicated by many abstentions. Not recognising abstentions may also be a misrepresentation of the outcome of a vote.

In practice, we recommend adopting a combination of:

1. recording the number of abstentions in meeting minutes, even if they don’t influence voting outcomes. This provides valuable context for all members and acknowledges the potential significance of abstentions in the decision-making process; and
2. clearly communicating to members how abstentions will be treated before votes are cast, to encourage an open dialogue about contentious issues which will hopefully minimise abstentions where possible.

When considering the treatment of abstentions by members at a general meeting, the more prudent approach suggests that abstentions should not be ignored in the calculation of votes required to pass resolutions. While an abstention represents a choice not to vote either way, the abstaining member remains present at the meeting and their participation quota still factors into the voting threshold calculations.

Professor Graham Paddock, a respected authority in the field, in response to a question raised on the Paddocks Club Forum entitled: How does voting work for Special Resolutions and Abstentions suggested that abstentions should be included in the total vote count. This perspective aligns with the cautious approach, ensuring that every voice present is considered, even if it chooses silence over a direct “for” or “against”.

Until a matter comes before court which definitively addresses this question of interpretation, the practical recommendation is to encourage active participation and clear voting positions where possible, rather than abstentions. This helps avoid ambiguity about whether resolution thresholds have been met.

Brendon’s thought-provoking question reminds us of the importance of regularly examining and discussing these governance issues. By staying informed and fostering open dialogue, we can continue to improve the management of sectional title schemes for the benefit of all stakeholders.