Scared of Holding Your AGM During a Lockdown?

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Yes. Subsection 45(2) of the Condominium Act, 1998, requires all condominiums to hold an annual general meeting (AGM) within six months of the end of the fiscal year. There are no exceptions as the AGM serves several important functions, such as presenting the audited financial statements to owners and electing directors.

The Ontario government briefly extended the time for holding AGMs for condominiums with fiscal years ending September 30, 2019 to January 31, 2020 because of restrictions on large gatherings, but no further extensions have been made. As a result, condominiums with fiscal years ending February 2020 and later must hold their AGMs within six months of the end of their fiscal year.

There continue to be restrictions on large gatherings and case numbers are increasing again. How can we safely hold our AGMs?

The Ontario government made orders (and later temporary amendments to the Condominium Act, 1998) to permit condominiums to use electronic and telephonic means to hold their meetings even if their by-laws do not permit such. This means that condominiums can hold their meetings in a variety of ways, such as:

  • with the assistance of a meeting host / provider
  • using virtual meeting platforms, like Zoom, Go-To-Meeting, Google Meet, Teams, etc.
  • using teleconference

While the last extension is set to expire on May 31, 2021, it seems likely a further extension will be made until the restrictions on large gatherings are lifted. Alternatively, there is some speculation that the Act may be amended to make these changes permanent. In my opinion, even if a further extension is not made, using electronic or telephonic means to host a meeting may still be preferable to holding an in-person meeting for some condominiums.

The amendments also permit voting by electronic or telephonic means even if the by-laws do not permit such. Depending on the size of the condominium and the nature of the votes to be conducted, the condominium may be able to use the voting features built into the platforms (i.e. polls, show of hands). In some cases, it may be preferable to use a meeting host/provider to assist with the voting process, or at least purchase a voting package to assist with the collection of e-proxies or e-votes.

Some people in the industry, including the Condominium Authority of Ontario (CAO), also support the use of proxy only meetings in some situations (i.e. non-contentious issues). A proxy only meeting is one where the owners are not permitted to attend a meeting in person and all voting must be performed by proxy. I personally question whether requiring owners to vote via proxy is in compliance with the Act, but I understand the logic behind it. As such, a proxy only meeting might be useful if the owners are agreeable to holding the meeting this way and there are no contentious issues to discuss or vote on.

Very small condominiums might be able to conduct meetings in person so long as they can comply with the restrictions on gatherings at the time of the meeting. The most common reason for wanting to host a meeting in person is a perception that people will not be able to participate because they are not familiar with the technology. I have found this to be exaggerated. People have adapted very well and the technology is user-friendly. Holding a meeting in person could exclude people in the same way a virtual meeting may exclude those unable to use the technology as some may be unwilling or unable to attend in person due to the risks of infection.

I acknowledge that access to reliable internet or devices might be an issue for some. If this is a concern, I would encourage the condominium to consider a teleconference as many people can figure out a phone call without much trouble. Alternatively, consider a proxy-only meeting for non-contentious meetings.

As people are vaccinated (at least those who are willing and able), it will become possible to hold meetings in person again. It seems possible that certain parts of Ontario will resume more normal activities sooner than others.

If you have any questions about the best option(s) for holding your AGM you should reach out to your lawyer for an opinion.

Condo By-laws: What’s the Deal with Voting?

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With many condominiums passing by-laws to allow for virtual meetings and electronic voting, one of the most frequently asked questions right now is: how many owners need to approve the by-law? This became a common question after the Condominium Act, 1998, was amended in 2017 to create two different voting thresholds for by-laws. Prior to the amendments there was only one answer: a majority of the units in the corporation. (*Excluding units used for parking, storage, or services/facilities/mechanical installations unless all units are used for these purposes). There are now two answers: a majority of the units in the corporation or a majority of units represented at the meeting.

Confusion increased in 2019 when a court applied the wrong voting threshold to a borrowing by-law. We previously wrote about the case here: https://ontcondolaw.com/2019/05/01/the-controversiality-of-the-voting-threshold-borrowing-by-laws/

What is the level of support required to pass a by-law?

Most by-laws still require a majority of the units in the corporation to approve them at an owners’ meeting. This list includes:

  • Directors: the number, qualifications/disqualifications, elections, removal, term of office, and the regulation of board meetings
  • Borrowing: to authorize the condominium borrowing money to carry out its duties
  • Standard Unit: to define the standard unit for each class of unit for the purposes of determining obligations for insurance and repair after damage of improvements
  • Deductible: to shift responsibility for deductibles under the condominium’s insurance policies to owners in certain circumstances
  • Property: to lease a part of the common elements, grant or transfer an easement or licence through the common elements, or release an easement that is part of the common elements.

The by-laws that may be approved by the lower threshold, majority of the units represented at the meeting, are by-laws about requirements that were created by the amendments in 2017, such as:

  • Candidate Disclosures: Adding candidate disclosure requirements for elections to the board or requiring them to be in writing or provided within a certain time period
  • Information Certificates: Adding required content or increasing the frequency of them
  • Meetings: Adding material for meetings and notices of meetings, permitting virtual meetings and electronic or telephonic voting, and permitting a portion of the proxy or ballot identifying the unit or owner to be disclosed in record requests
  • Records: defining additional core records and other records the condominium is required to maintain, and setting retention periods for the additional records.

The lists above are not exhaustive.

Process for Making, Amending or Repealing By-laws

The process for having owners approve by-laws is the same for all by-laws, except for the voting thresholds described above. The board of directors must, by resolution, approve the by-law at a board meeting. The condominium must then call a meeting of owners to present the by-law to the owners. The preliminary notice of meeting must indicate that proposed changes to the by-laws will be presented at the meeting and the notice of meeting must include a copy of the proposed by-law. At the meeting, voting is typically conducted by recorded vote (ballot) and proxies casting votes. If approved by the required number of units, the by-law certificate must be signed by the board and sent to the lawyer for registration. The by-law is not effective until registered on title. Once registered, the by-law must be included in status certificates.

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.

Voting by show of hands

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At most condo meetings voting for procedural matters, such as to approve the minutes or adjourn the meeting, is typically done by show of hands. Other matters, such as voting on by-laws or rule changes, substantial changes to the common elements, or the election or removal of directors, are done by ballot and proxy. Does it always have to be this way? Can a show of hands be used for an election? What about a vote on a new by-law? Continue reading

The NEW PROCESS for Owners’ Meetings

meetingThe first phase of amendments to the Condominium Act, 1998, came into force on November 1, 2017. While the first phase included amendments to a variety of areas, there were a few areas with significant changes. One of the most significant changes will be to the way we call and hold owners’ meetings.

While much has been written about the new AGM process, it is important to note that the changes to the Act apply to all owners’ meetings (i.e. AGMs, requisition meetings, special meetings) in most circumstances.  The transitional provisions are not entirely clear so if you intend to call and/or hold a meeting of owners between November 1st, 2017 and December 10th, 2017, you should speak with a lawyer to see which provisions apply to your meeting.  Continue reading

Draft Reg#2 – Part 3

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The draft regulations also address issues like notices of meeting, voting, quorum, board meetings by electronic means, and voting thresholds for by-laws.

Notices of Meetings

The regulations set out the detail for the preliminary notice that must be sent to owners before an owners’ meeting. It details the type of information about candidates for director positions, candidates for auditors, and other material that owners want to be included (so long as 15% of the owners request it and it is not contrary to the Act or regulations). The preliminary notice will be a standardized form.

One thorny issue will continue to be requisition meetings. Since the amendments to the requisition process will not be included in the first phase of amendments, but the changes to the notice of meeting sections will be, it means that the board only has 5 days to send a preliminary notice of meeting after it receives the requisition. For example, if the requisition is received on January 10, the preliminary notice must be sent by January 14, the notice of meeting by January 29, and the meeting held on February 13. There would be no margin for error in sending out the notices or the meeting would be held beyond the period required by the Act (35 days from the receipt of the requisition).

It is intended that the regulations would come into force on July 1, 2017, but they would only apply to meetings held 40 days or more after the regulations come into force and for those where notice has not been sent.

Voting & Quorum

As you may know, quorum for meetings will be changed by the amendments to the Act. Quorum for owners meetings will be satisfied by: 1) 25% of the owners represented at the first and second attempts to hold the meeting; or 2) 15% of owners at subsequent attempts.

The regulations also require every condominium to have a standard provision in its by-law that no person voting by ballot, proxy, or electronic means, would be required to identify his name or the unit in which the vote is cast. There will be mandatory proxy forms for owners’ meetings instead of the optional forms used now.

In addition, there will be a lower threshold for voting for certain by-laws (i.e. to change the content for information certificates and notices, to add extra disclosure obligations for directors). Instead of a majority of all owners, the threshold would be lower: a majority of votes cast at the meeting.

These changes should be in force on July 1, 2017, but it would only apply to meetings held 40 days or more after the new quorum and voting sections of the Act come into force.

Reg#2 Released for Comment

feedbackAs you probably know by now, the government intends to release draft regulations to go along with the amendments to the Act. The purpose of releasing the draft regulations is to allow for public comment. The first draft regulation, which was released in December, addressed the mandatory licensing of managers.For the first draft regulation, the deadline for comments has passed.

The second draft regulation, which was released this week, is aimed at common condominium issues: communications from condominiums to owners and mortgagees; mandatory disclosures and training for directors; meetings and voting; and record retention and access to records. The government posted the full draft regulation and a reader-friendly version on its website. The deadline for public comments for the second draft regulation is March 30th, 2017. In the next few posts, I’ll describe some of the key features of the second draft regulation.

Continue reading

Declarant ousts board using majority ownership.

The Superior Court of Justice recently heard what appears to be the first reported decision under section 152(6) of the Condominium Act, 1998. Section 152(6) permits a declarant of a phased condominium to request a meeting of owners so it may elect a new board where it owns a majority of the units as a result of the registration of amendments to the declaration and description creating a phase.

In Middlesex Standard Condominium Corporation No. 643 v. Prosperity Homes Limited [2014] ONSC 1193 the declarant brought a motion for an order requiring the condominium to call a meeting of owners so it could elect a new board. The condominium refused the declarant’s request arguing that the declarant was out of time to make the request as he became the majority owner over 2 years prior and was aware of his right to request the meeting since the beginning. The condominium also claimed it was further oppressive conduct as the declarant admitted that it wanted the meeting so it could elect a new board that would discontinue another action (where the condominium claimed damages from the declarant for construction deficiencies in the amount of $750,000.00). The court found that it was not further oppressive conduct or otherwise limited at law and ordered the condominium to call the meeting. Continue reading