The relevant legislation in NSW is the Strata Schemes Management Act (SCMA), and specifically Schedule 2 where the procedure for conducting General Meetings is prescribed.
With regard to the proxies, the SCMA requires that at the commencement of the Meeting and if requested to do so, the Chairman must announce the names of those persons who are present and entitled to vote, and where that entitlement is by way of a proxy, the name of the person to whom that proxy’s been granted. Personally, I’ve never attended or Chaired a Meeting where that hasn’t happened, by request or otherwise!
Whilst the SCMA doesn’t have any specific requirements for the form of the Minutes of General Meetings, both custom and practice and Company Law would require those to be a “true and accurate record of proceedings”, and therefore they would amongst other things need to show the names and Lot numbers of all persons who attended both personally and by proxy and were entitled to vote at the Meeting. Again, I’ve never seen General Meeting Minutes where attendance hasn’t been shown in that ay!
As for the Strata Manager’s use of those proxies, the SCMA prohibits their use in that way if their vote on an Item of the Agenda would result in a “material benefit” to the Strata Manager – examples include an extension to the term of their Agency Agreement with the Owners Corporation or an increase to their management fee as contained in the budget.
As an observation, this sounds to me like yet another example of the “tail wagging the dog”, where the Strata Manager has forgotten that they’re engaged by the Owners Corporation to assist with its management of its Strata Plan, not to take over that management.
If you need any assistance with your “challenge” then perhaps read THIS page from the NSW Office of Fair Trading in the first instance, and maybe come back to FlatChat for clarifications or past experiences with similar situations.