Once upon a time there was a requirement that at least a quarter of lots needed to attend an owner’s corporation meeting. If you could not attend because you were overseas, you could appoint anyone you trusted to have your vote at a strata scheme.

The amendments to the Strata Schemes Management Act 2015, introduced in December 2015, have made strata schemes totally undemocratic:

  • A person can only hold one proxy for up to 39 lots and 5% of lots thereafter. This means that, if a building is filled with investors, they have to find a number of people who hold proxies to vote on significant issues.
  • The quorum requirements are equally as concerning. Whilst the legislation does state that a quorum is still 25%, it does permit the chairman to hold the meeting once 30 minutes has passed.

I know the legislation was designed to stop proxy harvesting. That position by itself indicates that the government did not trust most lot owners. In other words, they did not trust an owner to determine who they wish to give their vote to when significant decisions were to be made.

These provisions favour residents over investors. No one should be surprised that Dear Gladys’ government puts in place laws which impact on investment, but it is always going to affect those who aren’t on site. Often a strata meeting is held on site or nearby. If you are a landlord, you are unlikely to be able to attend all of the meetings because you are out of area. You can’t give your proxies to the chairman anymore and you can’t find somebody within the strata scheme who will support your position. Considering the investor is not onsite, finding that person is often difficult. The Residential Tenancies Act 2010 already demonises landlords, this is just another dagger from Lady Macbeth.

The ability to call a meeting if a quorum is not available gives the bullies an advantage. For a government that constantly wishes to stop bullying on the playground, it makes laws which allow bullying in strata to occur. Aggressive people within a strata scheme can make meetings so uncomfortable that no one wishes to attend. They can also act in such an intimidating way that no one wishes to go to a meeting and show which way they are voting.

Let’s think through that; no one wants to attend and there is no one to give a proxy to. Under 25% will then be able to control the owner’s corporation. We are now seeing this in some of our consultancy work whereby some are too scared to attend owner’s corporation meetings and have no one at the owner’s corporation meeting who is game enough to attend and hold their view.

I can hear the supporters now saying, “well the owner’s corporation could go to secret ballot or postal voting.” First, secret ballot means you need to attend and face the intimidation; and secondly, postal voting only occurs if you’re able to attend the meeting to vote for it.

The new legislation has been drafted in such a way that two people can control an owner’s corporation. The legislation may have been well-meaning, but democracy is now stuffed.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.