Is proxy harvesting illegal yet?

From HarryP

Great column in SMH – I have been reading it for years. Just an enquiry regarding the number of proxies one person can have at an annual general meeting. I remember reading about it in your column and I think it was 2013 – it was a percentage. We are in NSW and have someone on our EC who had garnered 10 proxies as well as his own vote out of a total of 41 attendees. Is this legal?

One of the many ways that the government has let us down with the delay in strata law changes is the issue of proxy votes.  There is no limit on the number of proxies any one person can hold, provided they are on the correct form and the proxy holder and providers are entitled to vote at the meeting (ie, their levies are paid up to date and in the bank before the meeting starts).

Demand scrutiny of every proxy to make sure they are OK.

Meantime, collect as many other proxies -or get owners to attend your AGM – and ask this owner why they thought proxy harvesting on this scale was necessary.  It’s immoral and it’s about to become illegal, just as soon as our MPs get their acts together.

One other thing, anyone who has given their proxy and now has second thoughts (because they didn’t realise they were giving one person too much power, for instance) just has to fill in another form and that supersedes and rescinds the previous proxy.  They don’t have to cancel the proxy directly.

FYI:  The proposed new laws will not be presented to Parliament until after the election in march next year and will not come into effect until 2016.  Then owners will be limited to five proxy votes  or five percent of votes in schemes smaller than 20 lots.

@SMO said:

@JimmyT said:
There is no limit on the number of proxies any one person can hold, provided they are on the correct form and the proxy holder and providers are entitled to vote at the meeting (ie, their levies are paid up to date and in the bank before the meeting starts)…..

I think you might find the following interesting, its on the net so there should be no copyright issues…

The extended quote was interesting. I would not assume that anything on the net is free of copyright! The quoted text appears to have been published on Facebook and I did not find it elsewhere in a search. Normally I think it would be better to summarise the key points and provide a link to the original work. 

I know what you are saying; it was a complete reproduction of material “published” for public use. Copyright is a complex area and a lot of material on the net is not covered by copyright law. I’d be very surprised if the material i posted was covered by copyright. It was general information for public use as far as i could tell. Perhaps i was a little lazy in writing that it was on the net so it should be OK.

I am aware of Jimmy’s understanding of copyright due to some issues he has had from time to time with the other strata forum that he deems the competition, funny they do not see it like that.

Anyway banging on about copyright only divert attention from the point which was that the money does not have to be in the bank. Let us acknowledge that it was incorrect to say the money needs to be in the bank.

This thread is about proxy farming. For those who read the submissions during the submission phase of the reform the problem was farming, it was not how many proxies a person holds although too many people draw the conclusion that a person with a fist full of proxies is a farmer. So the “solution” offered by reform, limiting how many proxies a person can hold, does not address the real problem and now, in certain cases, the “solution” takes away from an owners right to give their proxy to whoever they like.

Proxy reform made little difference in Qld as the serious farmers found ways around the restriction.

Compulsory voting is what strata needs and then we do not need to worry about quorums or proxies or any of the other many issues that arise because the vast majority of owners are apathetic.

I give you the example of a special resolution where 25% (+1), based on unit entitlement, need to vote against a motion to fail the motion.

If the meeting just gets a quorum (and everyone is financial) then one quarter of one quarter (i.e. one sixteenth of unit entitlement) is enough to defeat a motion.

In the same scenario, a common scenario, half of one quarter (+1) is enough to pass or fail an ordinary resolution (i.e. one eight of lot owners). And people wish to carry on about Joe Bloggs having too many votes. Joe (if an owner) has one vote (or his unit entitlement depending on the type of vote) if voting is compulsory and in such a scenario the decision are representative of the whole SP.

I find those who use the fourth tier of Govt analogy a little lost in their rhetoric because voting is compulsory in the other 3 but not in strata.

Without trying to over generalize.
Proxy farming is an issue over exaggerated by a few influential people who feel disenfranchised because the SP is run to their liking.

@JimmyT said:

FYI:  The proposed new laws will not be presented to Parliament until after the election in march next year and will not come into effect until 2016.  Then owners will be limited to five proxy votes  or five percent of votes in schemes smaller than 20 lots.

5% of vote in schemes smaller than 20 lots seems excessive, this is likely around 1 proxy for a 20 lot scheme, and potentially none for many smaller schemes. My scheme is smaller than this, I’m also a joint owner, so need a proxy form to even vote for my own lot… at our last AGM another owner decided to give me their proxy the day before, I didn’t even know about it until the day of the AGM, and signed the proxy form when I showed up to the meeting (the owner earlier signed it and provided it to our strata manager). With a 5% limit, I wouldn’t be able to have a single extra proxy if an owner wanted to give me one (like this instance)… Am I misunderstanding something?

In one building that I know well, the chairman had more than 50 percent of the vote in proxies at the last two AGMs. Considering this is a large building with over 100 units in it, that’s a massive concentration of power.

A large percentage of the votes would have been offered to him by people who a) thought he was doing a good job and b) couldn’t be bothered to attend.  He claims he canvasses his proxy providers on contentious issues so as to properly represent their views (and I have no reason to disbelieve him).

In return for passing on their votes, owners feel that the building is generally well managed and they are happy not to have anyone rock the boat. However, I have witnessed a gradual erosion of the democratic process, including:

• good ideas from other owners being over-ruled because the ruling minority didn’t like the idea or the person suggesting it,
• individuals being replaced on the EC because they consistently challenged the chair’s authority,
• attendances at the AGM steadily decline
• increasing secrecy over issues that owners were entitled to be fully informed
• use of the EC minutes to “spin” contentious issues, cover up serious mistakes and “name and shame” owners who have caused problems for them
• express lift keys being issued to EC members and their cronies so they don’t have to encounter other residents in the lifts
• secrecy over candidates to replace EC members who resign from the committee
• expensive and (as it turned out) unworkable obsessions being pursued to a ridiculous extent when everyone else could see they would never fly

It’s all small potatoes but you can see how an individual or a group can start with the best intentions, but if there is too much power in too few hands the situation can soon degenerate into owners drifting away from the process while the incumbents spend as much time working out how to hang on to power as they do in looking after the building.

In situations like yours, Peter, it would be a pain to not be allowed to take proxies from people who genuinely want to support you for the very best of reasons.  I suppose one compromise might be to present a “panel” of candidates, rather than individuals, to whom owners could pass on their votes.

Share the love, in other words.

@PeterC said:
It all works fine until that person eventually gets worn out/fed up/ousted in a coup/gets sick/moves elsewhere, and there is nobody who knows how anything works to continue. 

I have a theory that there is a cycle of three phases that most strata schemes move through over a number of years.  They are:  chaotic … democratic … autocratic … then back to chaotic and so on.

Assuming it starts when a new strata scheme is born, nobody knows what to do, who to trust or what they want. Chaos reigns because no one else knows how.  

Eventually someone comes along and calms everyone down and we move from the chaotic to the democratic.  

Then the people who have done all the hard work start feeling threatened by newcomers who have no idea how much the incumbents have gone through to get to this state of relative calm.  The newcomers try to shake things up and the old hands start to batten down the hatches. Thus we move from the democratic to the autocratic.

This change is gradual but after a few years, those who are excluded from the decision making get agitated and then some disaster happens or a mistake is made and it’s on for one an old.  The old guard are driven out and the new guys take over.  

However, having been denied access to the levers of power, the new people flounder and we are back to the chaotic, and so the cycle continues.

Of course, not all strata schemes are like this.  Some never move from the phase they are in, be it chaotic, democratic or autocratic.  Some get to democratic and stay there.

How do you sustain that?  I believe a smart EC will encourage non-EC members to participate (rather than shutting them out) and will have an idea of who could take over if their beloved leader fell off the twig, lost interest or sold up and moved away.

Strata schemes are all about human nature and politics, petty or otherwise.  As our chairman is fond of saying, you can have too much democracy.