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Limit on proxies a nightmare for sectional title schemes

08 Nov 2016

Under the old sectional titles Act an owner was allowed to give a proxy to anyone that he or she pleased. Proxies were very helpful in being able to hold general meetings, and especially AGMs, and without which many of these meetings would never have had a quorum.

“The Sectional Titles Management Act has introduced the concept of limiting any one person to holding a maximum of two proxies, and this is going to have to be reviewed for a number of reasons,” says Spencer.

“It would seem that the powers that be were persuaded that some people, and especially some chairmen, used proxies as a way to keep control over their buildings or to have decisions go their way,” says Mike Spencer of Platinum Global.

“The Sectional Titles Management Act has introduced the concept of limiting any one person to holding a maximum of two proxies, and this is going to have to be reviewed for a number of reasons.”

Spencer says the reasons for this include:

1. It could well be unconstitutional to prevent anyone from appointing any particular person as their proxy - another word for a power of attorney to vote on their behalf. How can you be prevented from asking somebody else that you have confidence in to act on your behalf?

2. Secondly, it discriminates between owners. For example, if two owners own one unit each and another owns 60 units, then the proxies for the first two owners counts as only two votes, while just for a single other owner it would count for 60 votes.

By imposing this limitation there are a number of really practical problems:

How do you know who will actually attend the meeting?

You know that the chairman will be there, but won’t know if a particular owner will be there. Currently you can give a proxy to an owner who you hope will be there, or alternatively to the chairman. Now that won’t work anymore.

A lack of a quorum

If a meeting is not held because of a lack of a quorum, it is automatically held over to the same time and place the following week, and the attendees - a minimum of two - automatically form a quorum and make the decisions to the possible detriment of all the other owners.

“The chances of not getting a quorum is greatly increased, and I would suggest that most general meeting will be held this way in future - to nobody’s benefit,” says Spencer.

Implementation and practicality

Managing Agents will seldom have the time, space or staff to attend to these unscheduled meetings - they schedule general meetings long in advance, and may have too many bodies corporate to manage to allow for additional meetings to be held.

Counterproductive

This new way of working actually works against those that take the time and trouble to attend meetings, and frequent cancellation and rescheduling of general meetings is likely to result in even worse attendance.

“The real point is that an owner should be allowed in common law to decide who he or she wants to attend a meeting on their behalf. The crazy situation will arise that if I own a unit in my name, and in a trust and in a company, then I cannot give one person a proxy to act on my behalf,” says Spencer.

Despite strong opposition by the National Association of Managing Agents (NAMA) and others, Spencer says the lawmakers saw fit to implement this impractical amendment.

“It urgently needs to be reviewed and reverted to the previous situation where any one person could hold however many proxies he or she was given. Every owner has a right to choose his or her own representative, and if they don’t vote the way you want, then don’t appoint them next time, or give a proxy instructions on how they must vote,” he says.

“This is a clause of the new act that must be changed urgently to avoid massive disruption to the industry.”

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