Proxy Farming

10 June 13

It is often stated that Strata and Community Schemes represent the “fourth tier of Government” and, as such, voting (either personal or by submitting a completed postal voting form) should be compulsory. This is the rule in relation to Government elections. Owners who do not vote could be fined by their scheme so that compulsory voting would make it very clear that buying into a scheme is a commitment to working cooperatively with others.

In Queensland, voting papers are issued when General Meeting agendas are forwarded to owners. Owners can simply have their say by circling “Yes” or “No” on the voting paper form, which is then returned to the Strata Manager for collation and counting at the General Meeting. There is no need for owners to give proxies, as they can have a direct vote.

Surprisingly, there is no provision in the NSW Strata Schemes Management Act 1996 (Act) for the use of voting papers. Consequently, proxy farming is a regular occurrence. It happens from all sides. Caretakers regularly seek and obtain proxies from owners to vote Executive Committees in or out or to extend their agreements with the Owners Corporation. Executive Committees farm for proxies to ensure they are re-elected or to try and stop Caretakers from obtaining extensions to their agreements. The fight for proxies can become ugly and can be the root cause of a lot of resentment within the building.

The current NSW legislation is very simplistic in relation to the use of proxies. Essentially, the Act provides that:

• proxies must be in the prescribed form and must be correctly completed, signed and dated;
• the proxy form must be given to the Secretary before or at the commencement of the general meeting – unless the building is a “large scheme” (more than 100 units), where the proxy must be with the Secretary at least 24 hours prior to the commencement of the meeting;
• the form must state whether the person acting as a proxy can vote on all matters or only certain matters;
• the form must state how the person acting as the proxy should vote on a motion for the appointment or continuation in office of a Strata Managing Agent;
• the proxy will have no effect if the person that gave the proxy attends the meeting and votes in person;
• the most recent proxy form is valid;
• the proxy has effect for the period specified in the form (being not more than 12 months or for two consecutive Annual General Meetings, whichever is the greater). If a form does not clearly express the length of the proxy, it will have effect for one meeting only;
• the owner granting a proxy must be financial for the vote to count;
a Caretaker or Strata Managing Agent cannot be a proxy if the matter they are voting on includes anything that will give the Caretaker or the Strata Managing Agent a financial or material benefit. “Material benefits” include the extension of a term of appointment, an increase in pay and a decision not to proceed with or delay legal proceedings involving the proxy holder.

This last point is significant for Caretakers and is important to understand what a “material benefit” is. For example, the election of an Executive Committee does not give a Caretaker a “material benefit”. A Caretaker can use proxies to vote in or vote out an Executive Committee. There is absolutely no problem with this. However, a Caretaker cannot use proxies (given directly in favour of the Caretaker) to vote on term top-ups or variations of the Caretaking Agreement.

Interestingly, there is nothing in the Act that prohibits “associates” of the Caretaker from using proxies to top-up or extend caretaking terms. However, if a Caretaker wants proxy support from owners to assist in extending a Caretaker’s term or increasing remuneration, it is best for another owner in the building to farm for and obtain the proxies in their own name. This way, a family member or other “associate” of a Caretaker cannot be accused of being an “agent” of the Caretaker in the obtaining of the proxies.

There are currently no limitations placed on the number of proxies that a person can obtain and use at a General Meeting in NSW. In Queensland however, individuals cannot hold proxies representing more than 5% of the total of the Lots if there are more than 20 Lots in the scheme or if there are less than 20 Lots in the scheme, a person must not hold more than one proxy.

Key Point

As the current Act stands, proxy farming in New South Wales is alive and well and is a tool regularly used by Executive Committees and Caretakers alike. However, to avoid potential challenges, Caretakers are much better off having a supportive owner farm the proxies, rather than use relatives or other associates. This will avoid the “agency” argument being levelled against them. This person should also be the one who delivers the proxies to the Strata Managing Agent or Secretary prior to the meeting. Proxies should not be given to the Caretaker to pass on to the Strata Manager or Secretary.


Contact Us Now

Phone:+ 61 7 5552 6666
Fax:+ 61 7 5528 0955
Address:Level 2, 17 Welch St Southport, Qld, 4215
Postal:PO Box 1876
Southport 4215



Most Popular Articles

Management Rights News

Number of news items returned: 1 to 15 records of 111

The Different Types of Caretaking Agreements

17 November 2014


 Essentially, there are three types of caretaking agreements in the marketplace: “Do” agreements; “Supervisory” agreements; Hybrid “Do” and “Supervisory” agreements. “Do” Agreements A “Do” agreement ...

Unit Entitlement in NSW

11 February 2013


The issue of unit entitlement was recently looked at again as part of the Department of Fair Trading’s Discussion Paper ...


16 July 2015


This month, we continue our examination of various clauses within caretaking and letting agreements and the important considerations to be ...

Is it Time to Change the Management Rights Model?

13 May 2013


I think the time is right for the management rights industry to explore the creation of a new model. I ...

What Managers Need to know about the NSW Child Window Safety Devices Act 2013

17 January 2014


Resident building managers have general obligations under their Caretaking Agreements to assist Owners Corporations with building and compliance issues. Managers ...

Be Careful with your Proxies!

03 October 2013


In June this year, I wrote an article headed “Proxy Farming”, which set out the relevant restrictions on caretakers using ...

Short-Term Letting, Occupancy Limits And Tenant Representatives In NSW Strata

25 July 2017


Occupancy Limits By-laws in NSW may limit the number of adult residents in a lot. The limit however cannot be fewer ...

The Law Relating to Management Rights in Queensland

14 June 2010


This article looks at the legislation in Queensland dealing with the constraints and obligations imposed on developers whilst they control ...

Duty Bound or Duty Free - Do you know what Your Duties Are?

23 September 2013


The day-to-day care and maintenance of your resort facilities and communal areas is essential to its ongoing performance and success. ...

Caretaking and Letting Agreement Essentials Part 1

03 September 2014


We regularly prepare caretaking and letting agreements for new developments. However, it has become increasingly common for us to be ...

For Your Eyes Only!

15 April 2013


Information is a commodity and for many, information is power. As you would most likely know from personal experience, the right ...

Owners Corporation Insurance - How do we Stop the Spiraling Costs?

12 August 2013


In NSW, all strata schemes are required to be insured for the full replacement value, as well as public liability ...

Proxy Farming

10 June 2013


It is often stated that Strata and Community Schemes represent the “fourth tier of Government” and, as such, voting (either ...

"Legal Action", All those in Favour say "Why"

15 July 2013


I was recently involved in a New South Wales matter where an Executive Committee had received extensive legal advice from ...

Not Getting the Fundamentals Right

15 October 2013


A recent decision of the NSW Consumer, Trader and Tenancy Tribunal (CTTT) has highlighted the importance of ensuring that the ...