Ambiguity about meaning of majority in Cooperatives National Law

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AndrewMcN

Member
5 March 2020
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Section 240 of the Cooperatives national law provides the meaning of 'majority' for passing special resolutions. It appears to me that the wording is ambiguous, and two quite different meanings are possible, with neither obviously correct. Can anyone point to how this should be resolved?

S.240 reads like so:

240 How majority is ascertained

(1) A resolution is passed by a particular majority at a meeting
if that majority of the members of the co-operative who, being
entitled to do so, vote in person or (if proxies are allowed)
by proxy at the meeting vote in favour of the resolution.

(2) A resolution is passed by a particular majority in a postal
ballot if that majority of the members of the co-operative
who, being entitled to do so, cast formal votes in the postal
ballot vote in favour of the resolution.
The two clauses are similar in structure. Quoting from (1), there are two ways to parse the sentence, which I've indicated with brackets below:

(1) A resolution is passed by a particular majority at a meeting if
that
[ majority of the members of the co-operative ]
who, being entitled to do so, vote in person or (if proxies are
allowed) by proxy at the meeting vote in favour of the resolution.
or

(1) A resolution is passed by a particular majority at a meeting if
that
[ majority of the members of the co-operative who, being entitled to
do so, vote in person or (if proxies are allowed) by proxy at the
meeting ]
vote in favour of the resolution.

I note that while many people would be inclined to assume the latter meaning is correct because things work that way in company law, Owners Associations in Victoria (my jurisdiction) provide a counter example to that. where it's quite clear that the majority is a proportion of all lot holders, not just those who vote.
 

Rob Legat - SBPL

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First, I've not dealt with the law before, so I'm going on general principles.
Second, you've got to be very careful comparing different laws - it can be apples and oranges. Even different types of decisions about different things in the same Act can be applied very differently.
Thirdly, there are always extra considerations.

With those in mind, I suggest a different way to break the section down. In this I'll concentrate on sub-clause (1). I'll assume we've got a valid motion and meeting for simplicity, the vote is held at a meeting, it's not a poll, and a special resolution is not required:

- First question is, do we have a quorum? If not, it doesn't matter how many people vote.

- Do we have any proxies? Are they allowed and within the limits (e.g maximum number of proxies per person)?

- Are all the members and proxies entitled to vote? For example, section 230 provides 'inactive members' aren't entitled to vote. This is the "...being entitled to do so..." part of the section.

- From there, we can determine the number of potential, eligible votes at the meeting. Let's say it's a total of 50, and we have the required quorum. This could be 50 people, or 30 people with 20 proxies split up amongst them, or any permutation of that. Let's say, for example, we have 30 people and out of them: A hold 5 proxies, B holds 12 proxies, and C holds 3 proxies (and all of these are allowed) - totaling 50 votes.

- You put the matter to a vote and all those in favour raise their hands. 9 people raise their hands. On the outset, not a majority. However, you see that of those 9 people, A and B have their hands raised. That's 26 votes in favour, a majority, because: 7 'ordinary' members holding 1 vote each, A counts for 6 votes (A's plus the 5 proxies), and B for 13 (B's vote plus 12 proxies). Motion passed (with a majority of 1).

Now, while I've probably gone past what you were intending in your question, the devil in the detail. The other 21 people at the meeting who didn't raise their hands (including C's 3 proxies) equates to 24 votes for 'no'. The important part is that they're voting - and that's what it says in the provision: "... vote in person or ... by proxy...".

If the voting had to be by way of majority out of the total number of people eligible to vote, regardless of whether they turned up or not, these bodies would effectively be locked into stagnation by members unable or too apathetic to turn up and vote at meetings. So, the key is to look at the available pool of voters present and participating on the day, and decide a majority of that. It's why you have quorum requirements - to ensure a sufficient sample size.

I also realise I haven't covered abstaining, but let's not get too complicated.
 

AndrewMcN

Member
5 March 2020
4
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1
If the voting had to be by way of majority out of the total number of people eligible to vote, regardless of whether they turned up or not, these bodies would effectively be locked into stagnation by members unable or too apathetic to turn up and vote at meetings. So, the key is to look at the available pool of voters present and participating on the day, and decide a majority of that. It's why you have quorum requirements - to ensure a sufficient sample size.
This is the guts of it. Yes, there's certainly difficulty in meeting the higher threshold of a majority of all members eligible to vote, not just those present. That's not sufficient to resolve the meaning of the legislation though, and as I pointed out it's not true for all sorts of organisations.
 

Rob Legat - SBPL

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I think it is sufficient to resolve it. Read it in the following way:

"A resolution is passed by /(1) a particular majority at a meeting / if / (2) that majority of / the / (3) members of the co-operative who, being
entitled to do so, vote in person or (if proxies are allowed)
by proxy at the meeting
/ vote in favour of the resolution. "

(1) A 'particular majority at a meeting'. While the 'particular majority' probably refers to the simple/special differentiation, the phrase is 'at a meeting' and not 'of all members'.

(2) 'That majority of' shows a qualifying statement. It's a majority of the group described in the next part of the provision (i.e. item (3))

(3) The group is defined to be those who meet these requirements:
- They are a member of the co-operative; and
- They are entitled to vote as a member of the co-operative; and
- They actually do vote at the meeting; or
- They vote by way of proxy at the meeting where proxies are allowed.

So, by elimination (non-exhaustive, but for example):
- Not a member? Not counted towards the group.
- Not present (in person or by proxy)? Not counted.
- Present by proxy but proxy not allowed? Not counted.
- Present and a member, but ineligible for whatever reason? Not counted.
- Present, a member, and eligible, but don't vote? Not counted.

Given (2), we look at the available pool of people who meet the requirements of (3) and that is out total sample size against which the number of votes in favour is compared to determine a majority.
 

AndrewMcN

Member
5 March 2020
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I understand that that reading is possible. Why is it to be preferred over the alternative reading?
 

Rob Legat - SBPL

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Because of the use and placement of the "if", "of", "who" and "being".

Using these we can split up the construction into a series of questions and answers:
- A resolution is passed by a particular majority at a meeting.
- How?
- If the majority vote in favour of the resolution.
- The majority of what?
- Majority of members of the co-operative meeting certain criteria.
- What criteria?
- Those members meeting both of these criteria: those who vote in person or by proxy at the meeting, and do so being entitled to vote in person or by proxy at the meeting.
 

Rob Legat - SBPL

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Equal weighting, different uses. 'Of' denotes the grouping and 'who' is the qualifier from that grouping - 'Show me the members. Which members? The ones who....". Without that interpretation the who qualifier would be absolutely pointless in the provision. If that were the case you could simply write:

"A resolution is passed by a particular majority if that majority of the members of the co-operative, being entitled to do so, vote in favour of the resolution."

Whether they're at the meeting or not is rather pointless in that case, because they would need to be present in person or by proxy anyway.