Think before you give away your proxy in a general meeting
There is currently no limit set on the number of proxies a trustee in a sectional title scheme can collect prior to a general meeting. This is according to Michael Bauer, GM of IHFM property management company.
“The way the Sectional Titles Act stands now, if a trustee in a sectional title scheme wants to swing a vote in his favour by collecting proxies to vote at a general meeting, it is still possible to do so as there is nothing limiting the number of proxies given to one person,” he says. “If that owner has a particular agenda, whether good or bad, they have the means to go ahead with their plan.”
When there is a negative agenda
This tends to happen often enough: in a recent case encountered by IHFM, one owner managed to canvass throughout the complex and collect 19 votes via proxies, and was able to control a total of 60% of the participation quota, which basically gave the owner the majority either way. The minimum quorum required would have been 35% in this instance, according to Bauer.
An owner in a sectional title development, to the northwest of Johannesburg, and who wishes to remain anonymous, tells HomeTimes that this was happening at his complex.
“There was a brother and sister who owned a number of units in the development,” he says. “They systematically collected proxies for every general meeting and voted in their own, selfish interests: they employed their 70-year-old mother as caretaker, one of their contractor friends received all the work required in the complex despite never being the cheapest nor the most competent; they were rude to trustees who disagreed with them, often shouting at them in meetings; and they were only too happy to issue fines before dialogue with owners/tenants who ‘transgressed’ the rules.
“It got to the point where they controlled how levies were collected, how much levies increased by and even managed to remove the onsite security company that was employed to patrol and control access to the complex. Bigger boundary walls were built, ruining the aesthetics of the complex and higher electric fences were installed. Crime in the complex actually increased instead of decreased.
“A special general meeting was called to vote out the siblings, but again they managed to collect enough proxies to thwart the trustees’ attempts.”
There are pros and cons to owners being allowed to gain majority voting rights, says Bauer, and while this will change in the future when the new act is promulgated, in the meantime owners can use this voting structure in their favour. “The new act will control the voting block in limiting the numbers each person can hold,” he says. “There are, however, protection mechanisms for other aspects of living in a sectional title scheme. Changing the conduct rules, for example, would need a special resolution and changing management rules would require a unanimous resolution. If resolutions are passed which are seen to affect the proprietary rights of other owners, this can be taken to the High Court for relief.
“The truth of the matter is that most owners don’t want to attend their general meetings, and will often hand over a proxy if the person canvassing for votes is convincing. While it is good that owners communicate with each other and are willing to ensure that there is a quorum present at their AGMs by issuing proxies, they must be mindful that these are given for the right reasons and that the motives for wanting them will not jeopardise the management of the scheme in any way.”