The Controversiality of the Voting Threshold: Borrowing By-laws

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Earlier this week, we blogged about the considerations and processes involved when a condominium determines there is a need for borrowing from a lender, inclusive of the requirement for a borrowing by-law. In this post, we discuss a recent case related to the passage of borrowing by-laws, which has created some controversy within the condominium industry.

LaFramboise v. York Condominium Corp. No. 365, 2019 CarswellOnt 680, dealt with a motion brought by an appointed administrator on behalf of a condominium corporation, seeking direction from the court as to whether a borrowing by-law had been passed at an owners’ meeting. Although there was little information provided on the particular circumstances that led to this application, it appears that some unit owners may have questioned the validity of a borrowing by-law that was passed at an owners’ meeting, resulting in the motion for direction to be filed by the condominium corporation’s administrator.

Based upon an interpretation of sections 50 and 53 of the Condominium Act, 1998 (“Act”), the Court appears to suggest that so long as a majority of all unit owners within a condominium are present at an owners’ meeting called to consider a borrowing by-law, a borrowing by-law can be successfully passed with the support of a majority of all unit owners present at the meeting rather than a majority of all units within the corporation.

Respectfully, the conclusions drawn from the interpretation of the Act in this case are contrary to the Act; specifically, section 56(10) of the Act.

56(10) of the Act unambiguously states that a by-law is not effective until:

“(a) the owners of a majority of the units in the corporation, or such other number of owners that is prescribed, vote in favour of confirming it, with or without amendment…”

Unless a lower voting threshold is prescribed in the regulations, section 56(10) of the Act makes it clear that a majority of the units in the corporation must vote in favour of a proposed by-law in order for it to pass, rather than the majority of units present at the meeting.

An often overlooked section of the regulations provides additional support for our position. Section 1.1(1) states that a reference to the portion of units in a corporation in the Act or regulations shall be interpreted as a reference to a portion of: a) owner-occupied units; b) units that are not s.49(3) units (i.e. parking, storage, facilities or mechanical installations); or c) all units in the corporation if all units are s.49(3) units and clause (a) does not apply. Subsection (2) specifically states that subsection 1.1(1) applies to section 56(10)(a) of the Act. Accordingly, subsection 56(10) requires a majority of units in the corporation that are not s.49(3) units unless all of the units are those type of units.

As noted above, the regulations do outline various by-laws that can be passed by a majority of the units present at a meeting rather than a majority of all units in a corporation; however, you will note that a borrowing by-law is not one of the prescribed by-laws that may be passed with the support of a majority of units present at a meeting [see section 14(2) of O. Reg. 48/01].

Below you will find a chart prepared by our firm which summarizes the by-laws that can be passed by a majority of units present at a meeting, pursuant to the regulations:

bylaws

Based upon the clear language in section 56(10) of the Act and the regulations, we cannot agree that a by-law can be passed with the support of a majority of those units present at an owners’ meeting called for that purpose (unless the regulations specifically permit for a lower voting threshold). Rather, in order for a by-law to pass, a majority of all units within the corporation must vote in favour of it.

Accordingly, despite the existence of this case, it would be prudent for condominium corporations to continue to receive the support of a majority of all units within the corporation when attempting to pass a by-law, unless the regulations clearly prescribe a lower voting threshold for that type of by-law.

Electricity and Water Reporting Obligations: the Who, What, Where, Why & When

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Photo by Rodolfo Clix on Pexels.com

We recently spoke to some managers about legal updates related to laws applicable to condominiums, other than the Condominium Act, 1998. One being the Electricity Act, 1998, and specifically Ontario Regulation 506/18, which outlines the reporting obligations related to energy consumption and water use. There were questions about the “who, what, where, why and when”, so this post is intended to provide a very brief overview of the basics on a condominium’s obligation to report its electricity consumption and water usage.

Who:

Condominiums with a) 10 or more units; and, b) at least 50,000 square feet of gross floor area, must comply with the reporting obligations set out in Regulation noted above. Continue reading

Mark Your Calendars: Annual Report Filing Deadline is March 31, 2019

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Its already that time of year again! Mark your calendars for the upcoming filing deadline for annual returns, which is only one month away. The filing deadline is March 31st, 2019.

Each year, condominium corporations are required to file an annual return with the Condominium Authority of Ontario (“CAO”). Annual returns must include the following information about the corporation:

  • the date of registration;
  • the corporation’s legal name;
  • the type of corporation;
  • the address for service;
  • the municipal address, if one is contained in the declaration;
  • the total number of units (if not a common element condominium corporation);
  • the total number of eligible voting units (i.e. excluding parking/storage units pursuant to section 49(3) of the Act);
  • the maximum number of votes that could be counted at a meeting of owners (if a common element condominium corporation);
  • the name of each director and date of election or appointment;
  • the name and address for service of the management company, if any;
  • the start and end date of the fiscal year;
  • a statement of whether there has been an inspector appointed pursuant to the Act (and the name and business address of the inspector and the date of appointment, if applicable); and,
  • the date of the last annual general meeting.

An annual return may also include an electronic mail address for the corporation if one is available.

For any condominium corporations created on or after January 1, 2019, annual returns must be filed within 90 days of the date the corporation was created. For all other condominium corporations, annual returns must be filed by no later than March 31st, 2019. All returns can be filed online through the CAO’s website.

This year, the CAO will be imposing a $200.00 late filing fee on all overdue returns, effective April 1st, 2019.

So don’t miss this deadline-mark your calendars for the week before March 31st, 2019 to avoid any late filing fees!