Government Will NOT Provide Further Extension to Deadlines to Hold AGMs

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The Ontario Government recently confirmed that it will NOT make further amendments to the Condominium Act, 1998, to permit condominiums to defer their annual general meetings beyond the deferral period that was previously granted during the declared emergency period. In part, the release stated:

Annual meetings are an essential component of the democratic functions and self-governance of corporations. They also represent an important opportunity for owners, members or shareholders to raise issues and to monitor the fiscal health, performance and governance of their corporations. As such, there will be no further extensions of annual meeting timelines.

While deferring the AGM made sense for a period of time while we assessed the situation, AGMs should not be deferred for several more months or possibly years while we wait for the pandemic to end. We need to adapt to the new normal. As such, condominiums must hold their AGMs in the prescribed time (see our previous post for more information on the deadlines: https://ontcondolaw.com/2020/07/30/end-of-the-declared-emergency-your-most-common-condo-agm-questions-answered/).

The Government did hint that they are considering extending the temporary amendments to permit virtual meetings and electronic voting to continue longer than the current period without a by-law. The release stated:

In order to ensure that corporations continue to be able to conduct meetings while protecting the health of Ontarians, the ministry is exploring changes that would extend the in-effect period of the temporary amendments related to virtual meetings and will communicate further updates as appropriate.

We understand that most of the virtual meeting providers are booked solid until 2021 now with all of the condominiums in Ontario moving to a virtual meeting for their AGMs and other meetings. Given the limited availability of the virtual meeting providers, hopefully the Government will consider some other potential solutions, such as formally recognizing “proxy only” meetings as appropriate for less controversial business.

For condominiums with deadlines approaching and no virtual meeting providers available to host the meeting, you can consider hosting the meeting on your own (or with the assistance of your lawyer or manager) or finding a venue to host the meeting in person with physical distancing requirements maintained. For larger condominiums, neither of these solutions is ideal, but both can work with a little extra effort.

Stay tuned!

Upcoming Events!

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Every few months I like to post about some upcoming events that may be of interest to condominium owners, directors, managers, and others. Today, I’ll briefly describe a few of the upcoming events in Ontario.

CCI GRC Level 100: Introduction to Condos (September 12, 2020 9 am)

The Grand River Chapter of CCI is holding its Level 100 course on September 12, 2020. This course is designed to provide an introduction to condominiums for owners and new directors. Register now:

https://www.cci-grc.ca/events/2020/09/12/level-100-introduction-to-condos

CCI GHC Enhanced Virtual Director’s Course (Various dates starting September 14 at 7 pm)

The Golden Horseshoe Chapter of CCI is holding its first ever virtual directors course over 8 nights in September and October. I will be kicking it off on night one with a discussion of the governing documents, the role of directors, records, and privacy issues. For more information, or to register, click here:

https://cci-ghc.ca/events/2020/09/14/enhanced-directors-virtual-course-series-part-1-of-8

CCI GHC CondoTalk (September 15 at 12 noon)

The Golden Horseshoe Chapter of CCI is hosting a virtual webinar over lunch to discuss the authority of the board of directors and dealing with difficult owners. Register now:

https://cci-ghc.ca/events/2020/09/15/condotalk-that-owner-did-what

CAI’s First Virtual Condo Conference (September 16th and 17th)

CAI Canada is holding a two-day virtual conference. The conference includes a virtual exhibit hall with numerous opportunities to chat with exhibitors. There are also various sessions planned, including a keynote, a legal panel, COVID panel, and concurrent sessions on maintenance projects, AGMs, telecommunications, ethics, electric vehicles, and chargebacks. Register now:

https://bondexec.eventsair.com/cai2020/reg2020/Site/Register

CCI London’s AGM & Special Presentation (September 22, 2020 at 11:30 am)

CCI London is hosting its AGM using Zoom with a special presentation on condo safety to follow the business portion of the meeting. Register now:

https://www.cci-sw.on.ca/events/2020/09/22/annual-general-meeting-special-presentation

Lastly, remember to save the date for the CCI Grand River Chapter’s first virtual condo conference on November 20 and 21. The Friday is for property managers only and includes a legal panel discussion. The Saturday is open for all members and non-members and will include 3 concurrent sessions, a Q & A session, and exhibitor hall. Registration and sponsorship opportunities will be available starting September 15, 2020! Space is limited.

The CAT is Growing…

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As you may know, Bill 159, Rebuilding Consumer Confidence Act, 2020, received royal assent on July 14, 2020. Ten statutes are affected by Bill 159, including the Condominium Act, 1998, the Condominium Management Services Act, 2015, and legislation related to the construction of condominiums. On August 25, 2020, a new regulation was made under the Condominium Act, 1998 (O.Reg. 465/20) to expand the jurisdiction of the Condominium Authority Tribunal (CAT).

On October 1, 2020, the CAT will start to hear disputes about people, pets and parking (as well as other disputes). The CAT’s jurisdiction is described in O.Reg. 179/17. Effective October 1, 2020, the following will be added to the regulation:

Note: On October 1, 2020, the day subsections 18 (1) and 19 (2) of Schedule 1 to the Rebuilding Consumer Confidence Act, 2020 come into force, subsection 1 (1) of the Regulation is amended by striking out “and” at the end of clause (b), by adding “and” at the end of clause (c) and by adding the following clause: (See: O. Reg. 465/20, s. 1 (1))

(d) subject to subsection (3), a dispute with respect to any of the following provisions of the declaration, by-laws or rules of a corporation:

(i) Provisions that prohibit, restrict or otherwise govern pets or other animals in a unit, the common elements or the assets, if any, of the corporation.

(ii) Provisions that prohibit, restrict or otherwise govern an automobile, motorcycle, van, truck, trailer, bus, mobile home, farm tractor, bicycle, motor-assisted bicycle, motorized snow vehicle, motorboat, rowboat, canoe, kayak, punt, sailboat, raft, aircraft, device used to facilitate the transport of a person with a disability, or any other vehicle drawn, propelled or driven by any kind of power, including muscular power, in a unit, the common elements or the assets, if any, of the corporation.

(iii) Provisions that prohibit, restrict or otherwise govern the parking or storage of items in a unit, an asset, if any, of the corporation, or any part of a unit, an asset or the common elements, that is intended for parking or storage purposes.

(iv) Provisions that govern the indemnification or compensation of the corporation, an owner or a mortgagee regarding a dispute described in this clause.

In short, the CAT will hear disputes about the declaration, by-laws or rules that relate to: 1) pets; 2) parking and vehicles; 3) parking and storage areas; and 4) indemnification rights related to any of the other disputes within the jurisdiction of the CAT.

Of note, the regulation goes on to state that the CAT will not have jurisdiction for any of the areas described above if the dispute is also related to section 117 of the Act (dangerous condition or activity), section 98 (changes made to common elements by owners), or subsection 24.6(3) of O. Reg. 48/01 (electric vehicle charging stations).

It will be interesting to see how the condo industry reacts to the CAT’s expanded jurisdiction.

WARNING! At Capacity for 2020

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This post will be a short one. I wanted to let people know that many of the companies offering virtual condominium hosting services are almost booked for the remainder of 2020 for hosted events (i.e. with moderators). Some of the providers have other options available (i.e. online proxies, electronic voting only, no moderator), but you’ll want to reach out to your providers ASAP if you are looking for a full package. There may be capacity issues for some of the alternatives as well, so it is best to get your AGM scheduled ASAP if you haven’t done so yet. Continue reading

Electricity Providers’ Requirement for a Security Deposit

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The Ontario Energy Board Distribution System Code (the “OEB Code”) provides that all local electricity distributors’ Conditions of Service must fall within the framework of the OEB Code when requiring electricity security deposits from their customers.

Given the above, when a condominium is presented with the requirement from an electricity distributor (ex. local municipal hydro corporation) to pay a security deposit, the Conditions of Service of the electricity distributor should be reviewed to ensure the request complies with the OEB Code.

In short, the OEB Code does not always require new residential condominiums (as residential customers) to provide security deposits to electricity distributors.

Section 2.4.10 of the OEB Code provides residential customers are deemed to have a “good payment history” (the absence of which allows for requiring a security deposit), unless one of the enumerated default events in section 2.4.9 has occurred.  Being a new customer is not one of the listed events.

More specifically, a condominium should be aware of some of the following provisions under the OEB Code:

1. Residential Condominiums are residential customers: under section 2.4.30A of the OEB Code condominiums with units predominantly used for residential purposes are “deemed a residential customer for the purposes of section 2.4.9” which provides the basis for the electricity distributor’s requirement of a security deposit.

2. Requirement for Security Deposit: section 2.4.9 of the OEB states in part (see below) that a security deposit can be required by the electricity distributor unless a residential customer has a good payment history of one (1) year subject to restrictions regarding calculating the good payment history period and reasons requiring the security deposit form the customer:

2.4.9 A distributor may require a security deposit from a customer who is not billed by a competitive retailer under retailer-consolidated billing unless the customer has a good payment history of 1 year in the case of a residential customer, 5 years in the case of a non-residential customer in a <50 kW demand rate class or 7 years in the case of a non-residential customer in any other rate class. The time period that makes up the good payment history must be the most recent period of time and some of the time period must have occurred in the previous 24 months. A distributor shall provide a customer with the specific reasons for requiring a security deposit from the customer.

*Note: recent amendments to section 2.4.9 that came into effect March 1, 2020, provide that before requiring a security deposit from a residential customer that has not been serviced by the electricity distributor in the previous twenty-four (24) months, the customer shall have the option to enroll in an equal payment plan, pre-authorized payment plan, or both.  If one of such enrollment options is chosen no security deposit can be required unless there is default by the customer.

2.4.9A Before requiring a security deposit under section 2.4.9 from a residential customer who has not been served by the distributor in the previous 24 months, a distributor shall offer the customer the option of enrolling in an equal monthly payment plan in accordance with the Standard Supply System Code, a preauthorized payment plan, or both, and where the customer elects to enroll, no security deposit shall be required

3. Deemed Good Payment History: section 2.4.10 (see below) provides that in the absence of certain default events a customer shall be deemed to have a good payment history for the purposes of requiring a security deposit:

2.4.10 For the purposes of section 2.4.9, a customer is deemed to have a good payment history unless, during the relevant time period set out in section 2.4.9, the customer has received more than one disconnection notice from the distributor, more than one cheque given to the distributor by the customer has been returned for insufficient funds, more than one pre-authorized payment to the distributor has been returned for insufficient funds, a disconnect / collect trip has occurred or the distributor had to apply a security deposit in accordance with section 2.4.26A and required the customer to repay the security deposit in accordance with section 2.4.26B. If any of the preceding events occur due to an error by the distributor, the customer’s good payment history shall not be affected.

A plain reading of this section suggests condominiums should push back against electricity distributors requiring payment of a security deposit on the grounds they are already deemed to have a good payment history and have not committed any of the events of default listed in 2.4.10. This argument could be resisted by the fact the new customer is deemed to have a good payment history but 2.4.10 does not say the good payment history is deemed to be for the time period required by 2.4.9. However, 2.4.10 does note that the deeming of a good payment history is “for the purposes of 2.49”.

As noted, not having a payment history is not one of the listed items that contradicts the deeming of a good payment history.

This provision can also be especially important when electricity distributors try and require developers or condominium corporations to pay a security deposit for each subsequent phase after the initial registration of a standard condominium plan.

It is possible the above position will be considered overruled by the amendment to the OEB set out in 2.4.9A and a new condominium may be forced to elect to enrol in one of the payment methods set out in that subsection.

If this argument is resisted because of there being no payment history, the condominium should choose to enroll in an equal payment plan, pre-authorized payment plan, or both in light of the provisions in 2.4.9 that provide if one of such enrollment options is chosen no security deposit can be required.

4. Amount of Security Deposit: Effective March 1, 2020 section 2.4.12 which sets out the formula for the maximum security deposit an electricity distributor can require reads:

The maximum amount of a security deposit which a distributor may require a customer to pay shall be calculated by multiplying the distributor’s billing cycle factor and the customer’s estimated bill (which shall be based on the customer’s average monthly load with the distributor during the most recent 12 consecutive months within the past two years). Where relevant usage information is not available for the customer for 12 consecutive months within the past two years or where the distributor does not have systems capable of making the above calculation, the customer’s average monthly load shall be based on a reasonable estimate made by the distributor.

Also, important to note is section 2.4.16 which establishes the billing cycle factor used in the formula:

2.4.16 For the purposes of sections 2.4.12, the billing cycle factor is 2.5 if the customer is billed monthly, 1.75 if the customer is billed bi-monthly and 1.5 if the customer is billed quarterly.

5. Payment of Security Deposit: If the condominium for some reason agrees to pay the electricity distributor’s security deposit, the condominium should be aware that sections 2.4.20 and 2.4.20A permit condominiums to pay the deposit in equal installments over at least 6 months rather than as a single lump-sum payment.

6. Review/Return of Security Deposit: sections 2.4.22-23 of the OEB Code provide that a customer’s security deposit must be reviewed by the electricity distributor at least once in a calendar year to confirm if the customer should be returned the deposit as it is now exempt in accordance with section 2.4.9.  If payment of the deposit was made via equal installments the distributor’s review shall occur on the anniversary of the calendar year in which the customer made their first payment.

Note: Section 2.4.28 contains provisions for returning the deposit to a 3rd party in situations where a 3rd party (ex. developer) paid the security deposit on behalf of a customer (ex. condominium)

The electricity distributor also should have Conditions of Service that may provide further arguments against a requirement for a security deposit depending on how the Conditions of Service are written. If the local Conditions of Service contradict the OEB Code, the OEB Code overrides the local Conditions of Service according to Sections 1.4 and 1.5 of the OEB Code.

It is therefore important for condominiums and developers to confirm if their electricity distributor’s Conditions of Service comply with the OEB Code’s standards when requiring a security deposit.

If an electricity distributor continues to insist on a security deposit from a residential condominium or proposed residential condominium, the Consumer Complaint Response Process set out in Section 10 of the Code should be implemented. This process sets out some relatively short time periods for the electricity distributor to respond to the complaint.

Condominiums must also ensure no default in payment occurs to their electricity distributor as default in payments opens the condominium up to having to pay a security deposit.

End of the Declared Emergency: Your Most Common Condo AGM Questions Answered

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As you probably know, the declared emergency in Ontario came to an end on July 24, 2020, with the enactment of Bill 195. I’ve received several emails and calls today from clients looking for advice on what Bill 195 means for condominiums. The most significant concern seems to be the requirement for holding AGMs and the temporary extensions for holding AGMs that were provided for in Bill 190. Today I’ll answer a few of the most common questions. Continue reading

Update on Previous Post – Fight Fire with Fire: Seeking Court Orders to Amend the Declaration

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Last year we posted about a case where a condominium commenced an application to the Superior Court of Justice for an order amending its declaration. The condominium wanted amendments to its declaration because of a repair and maintenance issue with the fireplaces in the building. A group of owners with fireplaces filed their own application seeking to have the chimney flues deemed part of the common elements, which the condominium was responsible for maintaining and repairing. They also sought an order requiring the condominium to maintain and repair the chimney flues.

To summarize, the court ordered the declaration amended to make the fireplaces exclusive use common elements, but refused to amend the declaration to require the owners to maintain and repair the fireplaces. As a result, the condominium would be responsible for the repair of the fireplaces while the owners and condominium will continue to share the obligation for maintenance of the fireplaces. Our previous post is available here:https://ontcondolaw.com/2019/08/02/fight-fire-with-fire-seeking-court-orders-to-amend-the-declaration/ Continue reading

Summer Reading: Condominium Authority Tribunal (CAT) 2020

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The courts might have slowed down because of the pandemic, but the Condominium Authority Tribunal (CAT) appears to be unaffected by the pandemic. The CAT is predominantly online with less rigid rules than traditional courts, so this makes a lot of sense. It is relatively easy for online processes to continue in most cases. Here are some of the highlights from the CAT this summer. Continue reading

Reminder: Feedback on Future Amendments to Act Due August 14, 2020

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As you may have heard by now, the Ontario government is looking for feedback on its latest proposals for future amendments to the Condominium Act, 1998. Specifically, it appears that the government is planning to move forward with implementing a “Condo Guide” that would explain, in plain language, basic information for purchasers of new condominiums on such important matters such as the rights and responsibilities of owners, occupiers, and directors. The guide would be prepared by the Condominium Authority of Ontario (CAO) and developers would be required to provide a copy of the Condo Guide to purchasers with other disclosure documents.

Interestingly, the CAO has already developed a Condo Buyer’s Guide, which is available on its website: https://www.condoauthorityontario.ca/resources/condo-buyers-guide.pdf That said, the proposed table of contents suggests that the new Condo Guide will be more comprehensive, including topics such as purchasing a unit (new and resale), moving into a pre-construction condominium, condominium living, troubleshooting, and a glossary of key terms.

The government intends to implement the changes on December 1, 2020. Comments are due by August 14, 2020. Comments can be made on the government website at: https://www.ontariocanada.com/registry/view.do?postingId=33587&language=en

 

Virtual Requisition Meetings

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I am hearing reports that many condominiums are postponing their annual general meetings (“AGMs”) due to COVID-19 instead of using virtual means to hold them. Some condominiums are also avoiding decisions that could result in a requisition by owners, such as making changes to the common elements, assets, or services under Section 97 of the Condominium Act, 1998 (the “Act”), or creating, amending or repealing rules under Section 58. Many appear reluctant to use virtual meetings and electronic voting for a variety of reasons, but the primary concerns appear to be about the security of virtual meetings, the inability of owners to use the technology, and the associated costs.

Last week I participated in my first virtual requisition meeting to remove two directors from the board of directors of a condominium. I have participated in other types of virtual owners’ meetings, but this was the first requisition meeting so I was not sure if it would work as well. Today I thought I would discuss my experience. Continue reading