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How proxies work in strata developments

15 September 2017

The number of proxies one person can hold at a strata meeting is now limited under the new reforms, however the new legislation has left some questions unanswered.

The decision to limit proxies was made in a bid to curb “proxy farming”, by preventing any individual attempting to control owners' decisions by obtaining a majority of proxy votes. 

As a result the number of proxy votes allowed to be given to one person is limited to: one proxy vote for schemes with 20 lots or less and 5% for schemes with more than 20 lots. This information is set out in schedule 1, clause 26, of the Strata Schemes Management Act 2015.

If a proxy holder is an owner, they have a right to vote as an owner, so if they hold one proxy then they have two votes. 

REINSW held a webinar on proxies with strata lawyer Amanda Farmer, Founder of Your Strata Property, and Carolynne Pitt of Gilbey Burgess Strata Management, which you can view here.

Carolynne explained that there were three main changes to proxies under the new regulation. 

  1. The limit on the number of proxies that any one person can hold
  2. Being able to nominate an alternate proxy (the act does not say a limit on this) if the primary proxy holder holds the maximum number of proxies
  3. The written consent by the person accepting the proxy is no longer applicable to the proxy holder. 


New quorum rule

Amanda said: “Under the old strata law if you didn’t get a quorum at an AGM the meeting had to be adjourned for at least seven days. There were buildings which would never get quorums so they knew there would be two meetings which was silly. The need to obtain a quorum and avoid a second meeting often instigated the practice of proxy farming. 

“The new law now allows the chairperson to decide if the meeting should go ahead if there is no quorum. There are no more mandatory adjournments.” This change goes hand in hand with the limit on proxies. 

Alternate proxy confusion

Carolynne said: “Many people still don't understand the concept of an alternate proxy and the legislation isn’t clear how many alternates you can appoint. We manage a lot of units where there's a lot of older people who are in favour of having their chairperson vote on their behalf.

“We now have a situation where their vote won’t count and I don't think we're going to see the outcome of this until it's gone through tribunals about a contentious issue in which an alternate proxy could have swayed the decision differently.”

Which form to use

Amanda said: “The legislation says you must use a form which is substantially like the form in the new regulation as your proxy appointment form. This poses the question if the old form is valid under the new law. 

“There is also a section in the Interpretation Act which says when there is a reference to a statutory form you can use a form that is substantially similar. I can see this being relied on by lawyers who are litigating these issues because there's a real argument about which one is going to be valid.

“If you are filling out the forms for the first time you're best to use the new form that's in the regulation to be absolutely safe.”

REINSW has created a new Proxy Appointment Form (FL00010) to record who the owners of lots appoint as their proxy for purposes of meetings of the owners corporation.

Tips and advice 

  • Have the information about the proxies on your website with the links to the relevant parts of the legislation because it can be updated 
  • If you are appointing someone who doesn't know the building or isn’t affected by the decisions being made, it is a good idea to tell your proxy how to vote
  • A common mistake on the proxy form where it asks ‘who are the owners of the lot’, is for the company nominee to put their name. However, it should be the name of the company and the company nominee should sign it as the delegated authority
  • Every owner of the lot must sign the proxy form.

To find out more about the new proxies, watch the REINSW webinar with Amanda and Carolynne here.