One of the most contentious sections of the Condominium Act, 1998, is section 46, which is the right of owners to requisition a meeting of owners. Given the number of cases on the requisition right (most of which dealt with improper denials of valid requisitions), it is no wonder section 46 was one of the sections targeted by the government for a significant overhaul. In fact, section 46 will be repealed in its entirety and replaced with a very different process.
The amendments to the Act are designed to reduce disputes regarding the form and content of requisitions. The process is more clearly described and prescribed forms will be required. If a dispute arises, it will be up to the Tribunal to make a decision and if the Tribunal is not established, it will be up to the Superior Court of Justice to make a decision (which is the process used now in most cases).
The Requisition Process
Step 1: Requisition by Owners
The owners of at least 15% of the units must requisition the meeting. The requisitionists must appear in the condominium’s records as owners and they must not be in arrears for more than 30 days. The requisition must be delivered to the condominium’s president or secretary or sent to the address for service. These requirements are the same as those currently found in section 46.
One of the biggest changes to section 46 is that the requisition form will be a prescribed form. There are many reports of condominiums denying a requisition because it does not, in the board’s opinion, constitute a valid requisition. For instance, requisitions have been denied where: the requisition was printed on multiple pages instead of a single page; cursive was not used for the signature of the owner; and where the requisition was signed by only one owner of a unit where the unit had multiple owners. A prescribed form should make it easier for owners to satisfy the requirements of the Act, which should reduce the number of disputes over the form of the requisition.
Step 2: Board Response
The amendments will require the board to respond to the requisitionists. The response must indicate if the board intends to call a meeting of owners, or if not, the reason for not calling the meeting. The response must be in writing and delivered to the address for service of the requisitionists given in the requisition within 10 days (or such other prescribed period) of receipt of the requisition. If the board does not respond, it is deemed to have responded indicating that it will call a meeting. The board is not obligated to respond if the requisition is withdrawn before the end of the time period for the board’s response.
If the board’s response indicates that the requisition is defective in some manner, the requisitionists may revise it and resubmit it within 10 days (or such other prescribed period) of receipt of the board’s response. The revised requisition follows the same process as an original requisition.
The requisitionists shall be deemed to have abandoned their requisition unless they: 1) within 10 days (or such other prescribed period) of the board’s response, deliver a revised requisition; or 2) within 20 days (or such other prescribed period) of the board’s response, apply for resolution to the Tribunal (or Superior Court of Justice if the Tribunal is not established).
Step 3: Calling the Meeting
If the board decides to call the meeting, the business in the requisition may be added to agenda for the next AGM or another meeting of owners may be called. However, it can only be added to the agenda for the next AGM if the requisitionists request such in the requisition or consent in writing and the meeting date is at least 40 days after: 1) the board’s response is due (if the requisitionists request that the business be added to the AGM); or 2) consent is given by the requisitionists. In all other cases, the board must call and hold an owners’ meeting within 40 days of the end of the board’s response time (i.e. 50 days after it is delivered to the condominium).
The regulations will set out the specific requirements for the preliminary notice and notice of meeting. As the proposed regulations are drafted now, it looks like the preliminary notice must be sent out at least 15 days before the notice of meeting for requisition meetings and the notice of meeting must be sent out at least 15 days before the meeting is held. This means that the board could have up to 50 days from the time it receives a requisition to call and hold the meeting. Currently, section 46 gives the board 35 days from the time it receives the requisition to call and hold the meeting.
There is one more significant change to the process. Did you notice what is missing from the new section 46? The amendments to the Act have removed the right of the owners to call and hold the meeting where the board fails to do so. The remedy will likely be an application to the Tribunal (or Superior Court of Justice if the Tribunal is not established).
Who will benefit from the overhaul of section 46? Only time will tell, but hopefully the changes will reduce confusion and conflict over the requirements of and process for requisitions.
Can you believe that the first phase of amendments to the Act will be rolled out in a little over three months!