This article contains Q&A about voting, proxies and majority owners. Are there restrictions on the number of proxy votes you can hold in Victoria? How do you deal with majority owners or developers?
Table of Contents:
- QUESTION: A majority of committee members are proxies held by employees of one company, preventing necessary work in our building. If the proxies did not mention the PS number, or the building address, can they be ruled invalid?
- QUESTION: The developer holds more than half the lots in our building. This makes it very difficult to achieve outcomes in owner-occupiers’ interest. How can we get out of this situation?
- QUESTION: Is it a conflict of interest for the owners corporation manager to vote as a proxy?
- QUESTION: Our facades have not been upgraded or painted for over 30 years. The chair refuses even to consider the maintenance. What do we do?
- QUESTION: I’m a lot owner in a corporation of four units. Are there any instances when a strata manager, not a lot owner, has a casting vote in a tied decision? The vote was not a special resolution.
- QUESTION: Two owners corporation members are close relatives. At a quarterly owners corporation meeting, can one member vote on an issue if the relative will benefit financially?
- QUESTION: How can we deal with an overbearing building manager? If there is a decision in his favour, he harangues people non-stop until they vote in his favour.
Question: A majority of committee members are proxies held by employees of one company, preventing necessary work in our building. If the proxies did not mention the PS number, or the building address, can they be ruled invalid?
For years, our committee has been unable to action works beneficial to the owners corporation (OC) as a majority of committee members are proxies held by employees of one company owning more than a third of the building, and those members are mostly acting in the interests of their employer and not in the interest of the OC.
During the last AGM, I requested to have a look at their three proxies to challenge their validity, and I realised that the proxies did not mention the PS number or the building address. The owner is a business, but they didn’t mention anything in the Corporate Owner – Nominee Form section. Also, one person held proxies for 30% of the building and another one for 8%.
Can the three proxies be invalidated for any reason I’ve mentioned? Are they in breach of the OC Act?
Answer: A title search may be needed to verify the correct owner of the lot.
We would need to see the proxy forms to see whether they are valid.
A company should have the proxy signed by their directors.
If it is clear which property the proxy form is for, a technical issue with the proxy may be overlooked by an owners corporation and accepted.
A title search may be needed to verify who the correct owner of the lot is.
Phillip Leaman Tisher Liner FC Law E: ocenquiry@tlfc.com.au P: 03 8600 9370
This post appears in Strata News #722.
Question: The developer holds more than half the lots in our building. This makes it very difficult to achieve outcomes in owner-occupiers’ interest. How can we get out of this situation?
I live in a 30-unit apartment complex where the developer holds 17 units and they hold the majority vote on the owners committee. There are 8 people on the owners committee. Five are held by the developer, his wife, and three proxies. This makes it very difficult to achieve outcomes that are in the interest of owner-occupiers.
Recently, the developer tried to raise a special levy to resolve an incident caused by one of his tenants. The 13 owners are not keen to pay for something they are not responsible for. The owners corporation put the special levy to a vote, and the developer won. This is most unfair. How can we get out of this situation?
Answer: Unless the developer sells more lots, your ‘faction’ will continue to get overruled by the developer.
The unfortunate reality is, unless the developer sells more lots, your ‘faction’ will continue to get overruled by the developer. Owners corporations are a democracy, and the majority rules unless an independent party (like VCAT) intervenes.
Committee members are bound by Section 117 of the Owners Corporations Act 2006 to ‘act in the interests of the owners corporation (OC)’ and ‘must not make improper use’ of their position to gain, directly or indirectly, an advantage for them or any other person.
Given that the matter has gone out to a vote of all owners, a breach of the above duties may not be relevant. There could, however, be an argument that the OC is not acting in good faith (per Section 5 of the Act) given that the majority decision made is a decision of the OC.
I can’t see a way out of this situation other than to apply to VCAT (after following the OC’s grievance procedure, which I assume won’t resolve the matter but has to be done as a formality). There will likely be a compulsory mediation before a hearing, and most of the time, issues are resolved at that point.
Whilst this suggestion might come across as litigious, the VCAT dispute resolution process is not as daunting as people think. I encourage you to obtain legal advice first to assess your likelihood of achieving the overall outcome you’re looking for and then go from there.
Callum Wilson The Strata Shepherd E: info@thestratashepherd.com.au P: 0431 925 908
This post appears in the September 2024 edition of The VIC Strata Magazine.
Question: Is it a conflict of interest for the owners corporation manager to vote as a proxy?
Can a strata manager vote as a proxy at an AGM or SGM? As the manager is paid by the owners corporation, isn’t this a conflict of interest or an ethical issue? It’s possible that votes could be stacked to favour an outcome for the committee or vice versa?
Answer: When appointed as a proxy, strata managers should only vote on matters if they have clear, written instructions to do so by the lot owner.
A strata manager who is appointed proxy for a lot can vote at general meetings on any matters other than those set out in Section 89C(7) of the Owners Corporations Act 2006. These provisions prevent the manager from voting on matters that could result in them obtaining greater power and/or influence their appointment as manager of the OC.
It is not unusual for owners to appoint the strata manager as their proxy, particularly if they are not overly involved with the governance of the OC and/or are happy with how things are going.
My view is that strata managers, when appointed as a proxy, should not vote on any matter whatsoever unless they have been given clear, written instructions to do so by the lot owner. This may be the best (or only) solution to mitigate the risk of a conflict of interest and/or unethical conduct on the strata manager’s behalf.
Callum Wilson The Strata Shepherd E: info@thestratashepherd.com.au P: 0431 925 908
This post appears in the July 2024 edition of The VIC Strata Magazine.
Question: Our facades have not been upgraded or painted for over 30 years. The chair refuses even to consider the maintenance. What do we do?
Our facades have not been updated since the building was built in the 1980s. Our chair refuses to get quotes, either insisting (by assumption) that owners cannot afford to do the work or that the buildings are federation style and the original colours fit that style. They won’t even allow the conversation to be open to the wider group of homeowners to see if there is enough interest. What do we do?
Answer: The best way to ‘work around’ the chair and open the conversation to owners is to call a Special General Meeting.
The best way to ‘work around’ the chair and open the conversation to owners is to call a Special General Meeting. You can do this with the support of 25% of owners (please refer to section 74(c) of the Owners Corporations Act 2006).
This could be as simple as sending an email to your OC Manager with the other supporting owners cc’d in.
I strongly suggest obtaining at least two quotes to present to owners at the meeting. This will enable owners to understand whether they can afford the work, rather than the chair, with no understanding of their financial position, speaking on their behalf.
Obtain written advice from the Local Council’s heritage department and invite a painting/façade contractor to the meeting. Answering as many questions as possible at this meeting may enable a decision there and then. If the meeting is left with the committee to ‘keep looking into it’, anyone not in favour (such as the chair, by the sounds of it) will have the ability to put further roadblocks in place.
Lastly, my understanding is that buildings should be repainted every 7-10 years to protect the structure of the building. If the building hasn’t been repainted for over 30 years, this could be considered a breach of the OC’s duty to repair and maintain the common property. This should be brought to owners’ attention at the meeting to support your proposal.
Callum Wilson The Strata Shepherd E: info@thestratashepherd.com.au P: 0431 925 908
This post appears in the March 2024 edition of The VIC Strata Magazine.
Question: I’m a lot owner in a corporation of four units. Are there any instances when a strata manager, not a lot owner, has a casting vote in a tied decision? The vote was not a special resolution.
Answer: No section under the Act allows a manager to vote unless by proxy appointment.
Part 4 Division 6 of the Owners Corporation Act 2006 addresses the matters of voting in an owners corporation.
In summary – pursuant to section 87, each Lot has one vote. Pursuant to section 89A, the chairperson of the owners corporation has a second or casting vote if the vote is equal and the chairperson is a lot owner with a proxy.
No section under the Act allows a manager to vote unless by proxy appointment.
If the strata manager has been appointed by proxy, special attention to sections 120, 121 and 122 apply.
It should also be noted that pursuant to section 121 where there is no committee, the strata manager may be conferred powers and functions of the owners corporation by either the rules of the owners corporation, a resolution of the owners corporation or a delegation.
Owners corporation management is a complex matter requiring the expertise of a competent and capable strata manager to ensure judicious application of the Act, due care and diligence and unbiased guidance and governance.
Ingrid Goldenfein OccamStrata E: ingrid.goldenfein@occamStrata.com P: 03 7042 5659
This post appears in the October 2023 edition of The VIC Strata Magazine.
Question: Two owners corporation members are close relatives. At a quarterly owners corporation meeting, can one member vote on an issue if the relative will benefit financially?
Answer: There could be a conflict of interests to declare, and the member stands to gain an advantage.
As you mention quarterly meetings, I assume you refer to committee meetings, and my response is accordingly.
Pursuant to section 117 of the Owners Corporation Act, a member of a committee must act honestly, in good faith, with due care and diligence, as well as in the interests of the owners corporation. It goes on further to state that a member of a committee must not make improper use of their position to gain, directly or indirectly, an advantage for the member or any other person.
It could be argued that there is a conflict of interests to declare and that the member stands to gain an advantage for a person.
Ingrid Goldenfein OccamStrata E: ingrid.goldenfein@occamStrata.com P: 03 7042 5659
This post appears in the June 2023 edition of The VIC Strata Magazine.
Question: How can we deal with an overbearing building manager? If there is a decision in his favour, he harangues people non-stop until they vote in his favour.
How can we deal with an overbearing building manager? I am an owner-occupier and we have a very domineering building manager who lives in the building. For owners corporation meetings, he petitions other lot owners to take his side.
Whenever he wants anything in the building, he is like a bulldozer. He brags he has forced people out of the building. Recently there was a building vote that was in his financial interest and he harangued people non-stop to vote in his favour. Anyone who didn’t was singled out by him with phone calls and he got quite nasty with some lot owners for not supporting him. I’m feeling stressed.
Answer: People can – and do – lobby hard for the outcomes they want at strata meetings.
It’s never good when you’re feeling in this position. That said, you are at least reaching out about it, which is a big step – perhaps the biggest step, in fact.
I’m no expert on VIC Strata law, however, as an independent strata consultant, I can comment generally and will leave that side of things to others who are. Also, I’m going to speak directly to you, in an effort to cut through. Apologies if that comes across a bit harshly.
I think your first step is removing emotive language. Strata legislation doesn’t concern itself with how people talk to you or their personalities, so you too should remove that from the equation and make this as businesslike and transactional as you can. After all, it is about the biggest transaction you’ll ever undertake – your home. Stop using words like ‘harangue’, ‘overbearing’, ‘domineering’ and ‘bulldozer’. They won’t get you anywhere, except perhaps in trouble if the person in question thinks there’s defamation happening.
In Queensland at least, and I believe it is similar elsewhere, there is no prohibition on lobbying. People can – and do – lobby hard for the outcomes they want at strata meetings. You are entitled to do that and you’re entitled to push back on those who do it to you. If you don’t like it, hang up, block the email address or opt to not speak. You are in control of all those options.
You don’t like the fact he gathers support for what he wants? Fine: do something about it. Start mounting your own campaign to your fellow owners in the most objective language possible about why they shouldn’t go along with it. In doing so, be sure you put forward your alternate position strongly and clearly. Simply running negative campaigns rarely ever works and you’re much better off being constructive with your words.
I’ll be blunt with you: feeling stressed about this is understandable, as strata issues often are, but it’s only to the extent you allow it to happen. None of what you describe is beyond your control and all of what you describe is subject to action you can take. You need to decide if you are going to be motivated to do so, remembering that unless you do so, the situation goes unchanged and unchallenged. Meaning your stress will continue.
Chris Irons Strata Solve E: chris@stratasolve.com.au P: 0419 805 898
This post appears in the March 2022 edition of The VIC Strata Magazine.
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Read Next:
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