Concerns re Proposed Condo Act Amendments – Concern #5

As mentioned in previous posts, Bill 106: Protecting Condominium Owners Act was introduced in the Ontario Legislature on May 27, and the full text of the bill is now available here. If passed, this bill will make crucial changes to the administration and operation of condominiums, which will affect both condo corporations and owners across Ontario.

Many of the proposed Amendments to the Condominium Act, 1998 (“the Act”) look very good to me. However, I do have some concerns. This is my blog post on Concern #5.

Concern #5 – Mandatory Proxy Form

Currently, the Forms under the Act include three proxy forms: a “Proxy for General Matters”, a “Proxy for General Matters and for the Election of Directors” and a “Proxy for General Matters and for the Removal of Directors and Election of Substitutes”. And Section 52(6) of the Act states that “An instrument appointing a proxy may be in the prescribed form”. So, the prescribed forms are currently optional.

However, the proposed amendments to the Act state that a proxy instrument “shall be in the prescribed form”. So, if this amendment becomes law, the prescribed form(s) of proxy will become mandatory.

On the one hand, I see the reasoning behind this proposed amendment. Namely, to ensure that proxy instruments are clear and understandable, and to thereby avoid problems caused by proxy instruments that are confusing or unclear.

But here’s my concern. Condominium business (including elections) can sometimes be intricate or complex, and I find that the prescribed proxy forms are sometimes not suitable for that reason. In other cases, I find that the prescribed form can be more complex than is necessary. In short, I find that the prescribed forms can sometimes create confusion and difficulty. I often prefer an alternative form of proxy.

Here’s one small example. Elections can become intricate or complex for a number of reasons:

  • What if there will be two elections? For example, one election to fill “regular” Board vacancies and one election to fill the “owner-occupier elected directorship” (which may be amended to become the “non-leased-voting-units elected directorship”)
  • What if someone is a candidate in one election, but not in the other?
  • What if a candidate drops out of an election before the vote is held?
  • What if the election is to fill vacancies created by the removal of directors, and not all of the directors (for whom there is a removal vote) are removed?

For these reasons, I often prefer a “ranking proxy” that allows the owner (who signs the proxy) to rank the candidates for election to the Board in order of preference.

I also feel that the legislators should be thinking about proxy instruments that are deliverable by mobile device. The proposed amendments would allow for votes to be recorded (at meetings) “by telephonic or electronic means, if the by-laws so permit”. In my view, proxies should also be deliverable electronically (for instance by email or text), without any requirement that they be in a prescribed format (or even that they be signed by hand, as long as the sender is reliably identifiable). Requiring a prescribed form of proxy may put an unnecessary “crimp” in these modern means of communication.

The point is as follows: I prefer to give condominium corporations (and owners) flexibility when it comes to proxy instruments.

Five Things to Know About the Proposed Condominium Authority Tribunal

The proposed amendments to the Condominium Act in Bill 106: Protecting Condominium Owners Act include a new administrative authority called the Condominium Authority Tribunal, to make binding decisions and handle dispute resolution on various matters under the Condominium Act. Here are five key points to know about this very important change that will affect owners and condominium corporations.

  1. The Tribunal is the proposed body that would resolve disputes via case management, mediation and arbitration. It will also offer online resources and self-help tools.
     
  2. The Tribunal’s dispute resolution functions would be set out in the regulations, which have not yet been drafted but are expected to include having the jurisdiction to resolve disputes between owners and corporations, between multiple owners, and between corporations. Dispute types will likely include matters such as enforcement of declarations, by-laws and rules, and access to records.
     
  3. Some types of dispute will be excluded. Disputes regarding liens, for example, will likely be excluded, as well as disputes concerning conditions and activities that are likely to damage property or assets of the corporation or cause injury or illness to an individual. Mediation, arbitration and applications to Court would still apply to excluded disputes.
     
  4. Decisions made by the Tribunal will be binding. Appeals on questions of law would be to the Divisional Court. Orders for compensation and costs in favour of a condominium corporation against an owner, if unpaid, can be added to the owner’s common expenses payable for the unit. Orders for compensation and costs in favour of an owner would permit the owner to set off those amounts owing by the condominium corporation from the common expense payable for their unit.
     
  5. Two of the goals of implementing the Tribunal are:
  1. To have disputes resolved more quickly than proceeding through mediation/arbitration mechanisms under section 132, and applications to Court under section 134 of the Condominium Act, 1998
  2. Achieving lower costs for resolving such disputes.

Concerns re. Proposed Condo Act Amendments – Concern #4

As mentioned in previous posts, Bill 106: Protecting Condominium Owners Act was introduced in the Ontario Legislature on May 27, and the full text of the bill is now available here. If passed, this bill will make crucial changes to the administration and operation of condominiums, which will affect both condo corporations and owners across Ontario.

Many of the proposed Amendments to the Condominium Act, 1998 (“the Act”) look very good to me. However, I do have some concerns. This is my blog post on Concern #4.

Concern #4 – Board Meetings by Teleconference

Currently, Section 35(5) of the Act says that Board meetings can be held by teleconference (or other form of concurrent communication) if:

  1. The by-laws authorize such means for holding the meeting; and
  2. All directors consent.

The proposed amendments to the Act include the following change to Section 35(5): the need for a by-law (to authorize meetings by teleconference or similar means) would be eliminated. Meetings by teleconference (or similar means) would be permitted, whether or not the by-laws allow for such, as long as all directors consent.

This is certainly an improvement. But I’m still concerned about the need for all directors to consent. It seems to me that, in this 21st century world, directors should be entitled to attend Board meetings by teleconference (or similar means) as long as this won’t cause undue hardship to the condominium corporation or to the other directors. By “undue hardship”, I’m thinking of an unusual means of communication that would be very expensive or difficult to accommodate. I don’t think one director should be able to prevent another director from attending a meeting by teleconference (ie. by refusing consent), unless there’s a good reason to refuse.  

I think perhaps my concern could be resolved by adding the words “which consent will not be unreasonably withheld” to the proposed amendment. Now, the counter-argument is that all directors have a duty to act honestly and in good faith; so this may require directors to consent to another director’s request to attend a meeting by teleconference or similar means (unless the refusing director has a sound reason for refusing consent). But I’d still prefer to see those words – “which consent will not be unreasonably withheld” – included.

Concerns re Proposed Condo Act Amendments – Concern #3

As mentioned in previous posts, Bill 106: Protecting Condominium Owners Act was introduced in the Ontario Legislature on May 27, and the full text of the bill is now available here.

Many of the proposed amendments to the Condominium Act, 1998 (“the Act”) look very good to me. However, I do have some concerns. This is my blog post on Concern #3.

Concern #3 – Additions to Owners’ Common Expenses

Currently, the Act does not clearly regulate or control the rights of condominium corporations to add amounts to an owner’s common expenses. There are exceptions, however. For instance, Section 92 of the Act deals with the corporation’s rights to add certain maintenance and repair costs to an owner’s common expenses; and Section 105 of the Act deals with a corporation’s rights to add losses falling within the deductible on the corporation’s insurance policy to an owner’s common expenses. Also, Section 134 of the Act deals with a corporation’s rights to add certain Court-awarded (and related) costs to an owner’s common expenses. But the rights of a corporation in relation to other costs or liabilities caused by an owner or by the owner’s occupants, guests or agents is not absolutely clear.

Many declarations, by-laws or rules contain “indemnification” provisions. These usually state that an owner is responsible for any claims or expenses suffered or incurred by the condominium corporation if those claims or expenses are not covered by the corporation’s insurance, and if those claims or expenses have been negligently caused by the owner or by the owner’s occupant, guest or agent. These provisions also often say that the amounts owed by the owner can be added to the owner’s common expenses.

The proposed amendments to the Act include new provisions whereby a condominium corporation would be required to give the owner notice of any such additional amount or “chargeback” to be added to the owner’s common expenses. And the owner would then have an opportunity to challenge that proposed chargeback, by way of application to the proposed Condominium Authority Tribunal.

The proposed amendments to the Act also include a provision stating that the declaration may contain:

“a statement specifying the common expenses of the corporation and the circumstances that may result in the addition of any amount to the contribution to the common expenses payable for the owner’s unit to indemnify or compensate the corporation for,

  1. an actual loss, as is prescribed, that the corporation has incurred in the performance of the corporation’s objects and duties, or
  2. any other purpose, if any, that is prescribed.”

This appears to be saying that such indemnification provisions must be contained in the declaration, in order to allow for such amounts to be added to the owner’s common expenses.

Here’s my concern. It seems to me that the Act should contain the standard indemnification provision. Every condominium owner in Ontario should, in my view, bear responsibility for any claims and expenses suffered or incurred by the condominium corporation (i.e. by all of the owners collectively) as a result of an act or omission of the owner or an occupant, guest or agent of the unit (unless covered by the corporation’s insurance). I don’t see why this needs to be in the declaration. In any case, the owner will have the new challenge rights noted above. Again, I don’t see why an indemnification right, as described above, shouldn’t be standard for all condominiums in Ontario.