Jennifer_Paddock

All votes at general meetings in sectional title schemes can be cast either personally or by proxy. In this article we spell out the law in respect of proxies appointed by sectional title owners.

How does an owner appoint a proxy?

Prescribed management rule (“PMR”) 67 provides that a proxy (representative) must be appointed in writing and can only be appointed by an owner or his duly appointed agent. Schemes often use standardized ‘proxy forms’ which are sent to owners together with notices of meetings, but owners are not obliged to use these forms. Once an owner has appointed a proxy in writing, the proxy appointment document / form must be handed to the chairman before the meeting commences. But this does not apply to a proxy appointment provision contained in a registered mortgage bond, in which case the bond can be produced as proof of appointment even after the meeting has commenced.

Who can act as an owner’s proxy and who may not?

A proxy need not be an owner in the scheme, but he or she cannot be the managing agent, any of the managing agent’s employees or any of the body corporate’s employees.

“…produced as proof of appointment even after the meeting has commenced…”

Open or directive proxies

Proxies can, in terms of their written instructions, be instructed to vote in a certain way. For example, a proxy may be instructed to vote in favour of resolution No. 1 and against resolutions Nos. 2 and 3. Proxies may also be appointed without specific instructions as to how they are to vote, and in these cases the proxy may use his or her discretion when it comes to the voting.

It is important to note that a proxy duly appointed to attend a meeting or certain meetings on an owner’s behalf is not automatically authorized to sign a request to the trustees for the calling of a general meeting. An owner who wishes to appoint someone for this purpose as well as to attend a meeting would need to specify this additional power in the appointment document.

What about proxies for trustees?

Neither the Sectional Titles Act 95 of 1986 nor the prescribed rules allow a trustee in that capacity to appoint a proxy to vote on his or her behalf at trustee meetings. The prescribed rules do however provide for the appointment of alternate trustees; these appointments are not made by individual trustees but by a resolution of all of them. Of course a trustee who is also an owner is entitled in his capacity as an owner to appoint a proxy to vote on his behalf at general meetings of owners. 

Limitation on the number of proxies one person can hold

In South Africa there is currently no prescribed limit on the number of owners one proxy can represent at a sectional title general meeting. This can have a detrimental effect in a scheme where one owner has a particularly strong opinion on an issue to be decided at a meeting, perhaps an opinion which is not shared by the majority of the owners in the scheme. This owner then canvasses for and receives proxy appointments from a large number of owners who are unable or unwilling to attend the meeting. When it comes to the vote the large number of proxies tips the scale in favour of this owner. The result is arguably undemocratic in nature, because the owners who gave the proxies are unable to be influenced by the opinions of other owners and form their own opinions at the time of voting, but it is not contrary to our law.

“…because the owners who gave the proxies are unable to be influenced by the opinions of other owners…”

According to Professor CG van der Merwe’s chapter titled “Apartment Ownership” in the International Encyclopedia of Comparative Law there are various ways in which foreign legislation seeks to limit the number of proxies that can be held by any one person. In France one person may generally not accept more than three proxy appointments. In Turkey one person cannot represent more than one third of the owners at the same time. These limitations serve to assist in preventing one strong-willed and persuasive person from stifling debate and directing the outcome of what should be a democratic process in community schemes. South African community schemes would benefit from similar restrictions. 

Joint owners

Joint owners of one unit in a sectional title scheme only have one vote between them. PMR 66 provides that this vote must be exercised by a proxy jointly appointed by them. The proxy appointed may be one of them, but could also be some other person.

It is interesting to note that the South African legislation and prescribed rules are silent on the voting position if the joint owners fail to appoint a proxy. In Singapore, according to Prof. CG van der Merwe, if the joint owners fail to appoint a proxy the joint owner whose name appears first in the body corporate’s membership records (the strata roll) is entitled to exercise the vote for the unit. 
 

This article is published under the Creative Commons Attribution license.