Australia: Proxy Wars

Last Updated: 14 October 2009
Article by Matt Anderson

Most Read Contributor in Australia, November 2017

Key Points:
A proxy-handling facility can be a useful tool when trying to gather votes for a general meeting.

Proxy battles are increasingly a feature of the Australian corporate landscape.

An important element in any proxy battle is intelligence: in whose favour are the proxies flowing? That information will show how the members are reacting to the public relations campaigns being waged by the various parties. This allows the campaign messages to be finetuned.

Traditionally, the proxy count has been the preserve of the company itself. Occasionally the company may let the media know how the proxies are stacking up, but it is more common for the first public information about the proxies to be released by the chairman during the meeting itself.

One early attempt to gain some control over proxies was the pre-completed proxy. A shareholder who had requisitioned or called a general meeting would send a modified copy of the company's official proxy form to shareholders:

  • with the relevant boxes already ticked; or
  • nominating someone other than the company chair as the proxyholder.

Pre-completed proxies were given the judicial all-clear during the 2001 battle for control of the board of online retailer Bigshop.

While pre-completed proxy forms gave a shareholder some control over the proxy process, there was still no way of determining how many recipients were actually using them. So the next logical step was to try to route proxies through a third party, who could maintain a count of them. This was first done shortly after the Bigshop case, in 2002, but the Supreme Court of Victoria said that members should only send proxies directly to the company (Bisan Ltd v Cellante [2002] VSC 430). Just last year, a judge of the Federal Court agreed with that proposition (Portman Iron Ore Limited [2008] FCA 1362).

This was the situation which faced Clayton Utz when it was recently called in to advise in relation to the attempt to replace the responsible entity of City Pacific First Mortgage Fund.

City Pacific

City Pacific First Mortgage Fund was an unlisted managed investment scheme. The BalmainTrilogy joint venture was formed after Balmain and Trilogy were approached by City Pacific unitholders and asked to take over management of the scheme from City Pacific Ltd.

To that end, a group of over 200 unitholders authorised BalmainTrilogy to call a meeting at which they could vote to replace City Pacific Ltd.

It quickly became clear that City Pacific was not going to go without a fight. With two court decisions saying that proxies have to be sent directly to the company (in this case, City Pacific), it didn't look as though BalmainTrilogy would have any way of knowing the proxy count until the day of the meeting.

Appearances can be deceptive, however. Rather than looking at just the final rulings of the Victorian and Federal Courts, we took a closer look at what the judges had actually said and, in particular, at why they had been opposed to letting anyone but the company handle proxies.

What emerged was an entirely understandable judicial concern about the possibility for inappropriate handling of proxies:

"The interception of proxy appointment forms by an intermediate party who is under no fiduciary duty or other apparent obligations in relation to their safeguarding, entails an inherent exposure to the possibility of filtering or other inappropriate handling. In my opinion, it could constitute a grave defect in the electoral process in respect of any contemplated meeting." (Bisan)

The next challenge was to construct a proxy handling facility which would address those concerns.

Proxy handling facility

Computershare was an obvious candidate to establish and run the proxy handling facility.

The next step was more complicated. Unitholders who sent their proxy forms to Computershare would be confident that there would be no "filtering or other inappropriate handling", but how could they be sure that their proxies would actually be delivered to City Pacific in time for the meeting?

There was no contractual relationship between Computershare and the unitholders, so unitholders had no way of ensuring that Computershare would deliver the proxies. This problem was overcome by a structure under which, among other things:

  • Computershare contracted with BalmainTrilogy to properly handle the proxies and deliver them to City Pacific 48 hours before the meeting; and
  • BalmainTrilogy executed a deed poll in favour of unitholders under which it undertook to ensure that Computershare complied with its contractual obligations.

This structure gave unitholders both the confidence that the proxies would be delivered before the meeting and a legal means of enforcing delivery. It also addressed the courts' concerns about proxies being handed over to someone who had no duty to ensure their safe handling.

Importantly, Computershare also agreed to provide BalmainTrilogy with regular reports on the proxy count, including daily reports during the last two weeks before the meeting.

The process of delivering the proxies to City Pacific was also strictly controlled. The main form of delivery was to be by hand by Computershare. This had a number of benefits: as well as minimising the risk of proxies being misplaced by couriers or over fax lines, it allowed the proxy count to be maintained up until the last moment. Of course, since the proxy handling facility was located in Melbourne and the meeting was on the Gold Coast, this necessitated some careful planning: for example, Computershare staff flew to the Gold Coast the evening before the proxies were to be handed over, and they carried all the proxies as carry-on, rather than checked-in, luggage. Proxies received after the staff had flown to the Gold Coast were faxed to City Pacific on the morning of the lodgement deadline.

Into court

The proxy handling facility was designed to meet all of the policy concerns raised by the Victorian and Federal Courts. What was really needed, however, was a court ruling to that effect.

That ruling appeared to be on its way when, a week before the meeting date, City Pacific began court proceedings to prevent the unitholders voting to remove it as responsible entity. Among other things, City Pacific argued that proxies must be sent only to the responsible entity, and not to any other intervening party. Failure to comply with this requirement, it argued, would result in the proxies being invalid or the meeting being invalid (or both). In support of its arguments, it naturally cited the earlier Victorian and Federal Court decisions.

Justice Dowsett acknowledged that the two earlier cases raised a serious question about the handling of proxies, but did not appear to be convinced that they were necessarily correct:

"[The Victorian and Federal Court decisions support] the proposition that proxies must be sent to the nominated recipient, the company in the case of a corporation, and the responsible entity in the case of a scheme. However, section 252Z does not actually say that. It requires only that the proxy documents be received by the responsible entity at least 48 hours before the meeting. That seems not to exclude the possibility that they might be collected by a third party."

In the end, the Judge decided that the unitholders should be left to vote on whether to remove City Pacific, and that any complaints about the proxy and voting process could be dealt with after the meeting.

As is now well known, the vote went ahead and City Pacific was removed.

Not unexpectedly, City Pacific went back to Court to challenge the outcome of the meeting. That challenge was rejected and, in any event, City Pacific chose not to reagitate the matter of the proxy handling facility.


Without a final court ruling, it would be premature to say that BalmainTrilogy's proxy handling facility provides a definitive solution for a shareholder who wants to keep a running proxy count.

Nevertheless, Justice Dowsett's comments do provide a strong indication that a carefully-constructed facility such as that established by BalmainTrilogy and Computershare may assuage the earlier courts' concerns and their consequent interpretation of the law.

Interestingly, the Takeovers Panel appears to be of the same view. During last year's Indophil bid for Lion Selection, the Panel received a complaint about a proxy handling facility established by Indophil. The Panel did not appear to have any in-principle objections to the proxy handling facility, provided that members could be assured that their proxies would be delivered to the company in time. Indophil duly provided undertakings to the Panel to deal with those concerns.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions