A pox on your proxies

QUESTION:  I am not quite sure what “Proxy Farming” is. I think that I am experiencing the effects –  Dudley, via the Flat Chat Forum.

ANSWER: We’ve addressed this in the past but it’s worth revisiting as it’s a real problem in NSW where we are behind other states in our legislation.

Proxy farming or harvesting happens when the chairman (usually) tells owners that their proxy vote is needed for the smooth running of the building. The proxy farmer then takes this stack of votes to an  AGM and awards themselves the kind of executive powers the strata Act never intended and , in fact, sets out to avoid.

Cleverly tapping into owners’ conflicting attitudes of a) wanting to be good citizens and b) not wanting to actually do anything, proxy farming undermines the democratic process in strata buildings by giving  effective control to one person.  That’s why it’s very likely to be banned in the current review of NSW strata law.

Given the low level of participation common in strata buildings, even 20 percent of the voting power  can allow chairmen to block motions they don’t like, elect their own choice of committee members, exclude ‘troublemakers’ (i.e. anyone who disagrees with them), and promote their own pet projects which they can free from financial restraints.

Special treatment for their cronies soon follows while tight control of the executive committee minutes means that if there are problems, no one finds out and the proxy donors feel they have made the right choice.

Often dressed up as a scare campaign, telling owners that their proxy votes are essential because not getting a quorum and having to adjourn the meeting for a week would be a waste of money on a par with the GFC, it’s the strata equivalent of branch stacking.

And while some proxy farmers may have the best interests of their building at heart, the Mussolini principle soon applies – yes, the trains run on time but the pursuit of power and its autocratic exercise eventually becomes paramount.

The one thing – possibly the only thing – that can be said in favour of the current system in NSW is that it’s simple.

The situation in Victoria is very similar although it is illegal there for anyone to ‘demand or require’ anyone to give them a proxy.  It would be interesting to see how that phrase – on page 24 of this guide to strata living in Victoria – was interpreted in court if someone felt they had been pressured into giving up their vote. NB, thanks largely to the exposure in the SMH of a developer rort, proxies demanded under the terms of a sales contract are invalid in NSW.

In South Australia you can still appoint a proxy to vote for you in person but you do have the ability to send a postal vote up to six hours before a meeting.  You can download a guide to strata living in S.A. here.

In Queensland, the system is considerably more complicated with a limit of five percent on proxies held by one owner and provisions for secret ballots – compulsory in some circumstances –  as well as postal votes. You can read all about Queensland’s voting system for General Meetings here.

In WA, there are no restrictions on proxies but co-owners of properties must either appoint a proxy (usually one of them) or, in the case of poll votes (based on unit entitlements) they can each vote in a proportion equal to their share of the property. You can download a guide to strata living in W.A. here.

But in NSW, we’re still pretty much in the Dark Ages when it comes to proxy voting. So the next time your chairman comes looking for your vote, ask how many others they’re planning to harvest, who they’re planning to elect to the Executive Committee and whether or not they plan to lift spending restrictions on themselves.

FYI, you can access JimmyT’s (11,000 word) submission to the strata law review here and Flat Chat readers comments on it – both for and against – here.