Using a By-law to Control Parking

A recent decision of the Ontario Superior Court confirmed the validity of a condominium’s by-law, which was passed to control parking on the common elements. See the case of Cheung v. York Region Condominium Corporation No. 759.

Here’s my summary of the court decision, from Condo Cases Across Canada (which I author for quarterly publication by the Canadian Condominium Institute).

The condominium’s parking was not originally allocated to any of the units. The condominium corporation passed a by-law to authorize the corporation to lease four common element parking spots (per unit) to each owner.

One of the owners had leased three units to a restaurant operator. That owner asserted that the restaurant should be entitled to make greater use of the parking (particularly during the restaurant’s busy times), in part to satisfy the applicable zoning requirements. That owner asserted that the by-law was unreasonable, oppressive and outside the corporation’s authority.

The Court disagreed, and ruled that the by-law was valid and enforceable. The Court said:

“I understand that Ms. Cheung had an expectation that her tenant would be able to use “all” the shared parking spots. That had been the situation prior to 2009. Her material is replete with assertions that for many years parking had been on a “first come, first served” basis. First come, first served appears to mean, in practice (and in Ms. Cheung’s expectation) that the patrons of the restaurant could use every single un-allocated parking spot. That, of course, is not a legitimate or a reasonable expectation. Indeed, it is what led to the parking problems in the first place.

Ms. Cheung’s real complaint, with respect, is not that the Board treated her differently from the other owners. [Her] real complaint is that the Board did not treat her differently from the other owners. In essence, Ms. Cheung says that the board has acted unfairly and oppressively by taking away her special extra parking privileges. That is no basis upon which to grant a remedy.”

I understand that this decision is under appeal – so there may yet be more to this story.

However, the moral of the story, up to this point, is as follows: in cases where parking was never allocated to the owners under the terms of the Declaration, a by-law may be the answer!

For more information about by-laws and common element parking spots, contact us.

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When is a By-Law Effective?

Section 56.(10) of the Condominium Act, 1998 states as follows:

A by-law is not effective until,

(a) The owners of a majority of the units of the corporation vote in favour of confirming it, with or without amendment; and

(b) A copy of it is registered in accordance with subsection (9).

Despite the word “until” in Section 56.(10), I believe that there is a good argument that the effective date of a by-law may be the date of the meeting at which the by-law was confirmed, provided of course the by-law is in fact subsequently registered.

Here’s my reasoning:

Once a by-law has been confirmed in accordance with Subsection 56.(10)(a), the condominium corporation has a fiduciary duty to register the by-law. The registration of the by-law is essentially a “housekeeping” step, to ensure that all persons acquiring an interest in the property have notice of the by-law. But this step may take some time. What does this mean for the period between the meeting and the registration of the by-law? In my view, everyone who knows that the by-law has been passed also knows that the corporation must register the by-law. So, I believe that the doctrine of “feeding the estoppel” operates to treat the effective date of the by-law as the date of the confirming meeting, provided the corporation proceeds with reasonable haste to arrange for registration of the by-law.

Applications of this principle could include the following:

(a) Elections held at a meeting of owners in accordance with a by-law passed at the same meeting.

(b) Insurance claims processed in accordance with a standard unit by-law and/or insurance deductibles by-law passed by the owners, but not yet registered, before the insured event.

I should be careful to add that this principle likely won’t apply to anyone who does not have knowledge of the by-law. The by-law won’t be effective, vis-à-vis those persons, until the actual date of registration of the by-law. Therefore, the corporation could consider:

  • immediately sending a copy of the confirmed by-law to all owners (following the meeting); and
  • attaching a copy of the by-law (along with a statement that the by-law has been confirmed at a meeting of owners) to all status certificates issued following the meeting.
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Passing a By-law with Proxy Votes

If you are having difficulty obtaining the necessary attendance to pass a by-law, using proxy votes may be the answer.

Passing a condominium by-law requires an affirmative vote by the owners of a majority of all units. In other words, the owners of a majority of all units must vote in favour of passing the by-law.

Sometimes, at a meeting of owners, there are not enough units represented in person or by proxy to even hold the by-law vote.

In such situations, the owners at the meeting (assuming there is a quorum) can vote to adjourn the meeting to a new date which is either set at the meeting or is to be determined by the Board. The vote should be to adjourn the meeting, or to adjourn the particular business (consideration of the by-law), without simply terminating or closing the meeting. It is also important that the proxies that are used for the meeting state that they can be used both for the original meeting and any adjournment of the meeting.

Between the date of the original meeting and the resumption of the same meeting, proxies can be solicited from owners. Owners who were not in attendance (either in person or by proxy), at the original meeting, can sign proxies. Owners who were in attendance (either in person or by proxy), at the original meeting, can also sign proxies or can revoke and/or replace their original proxies.

If the Board is to determine the date of the re-called meeting, the Board will normally re-call the meeting (with the usual 15 days’ notice) after sufficient proxies have been received to hold a vote on the by-law.

At the re-called meeting, and assuming that sufficient units are then represented in person or by proxy, a vote can be taken on the bylaw.

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By-law Establishes Procedure for Removal of Director

According to Section 33 of the Condominium Act, a Director can be removed from the Board (before expiration of the Director’s term) by vote of the owners (with the owners of more than 50 percent of all units voting in favour of removal).

But can a condominium corporation pass a by-law to create another procedure for removal of a Director? According to the recent Court decision in the case of Gordon v. York Region Condominium Corporation No. 818, the answer is “yes”.

York Region Condominium Corporation No. 818 passed a by-law stating that a Director ceases to be qualified to be on the Board (and is deemed to have resigned) in certain circumstances. One of the circumstances is as follows: the Director violates the Directors’ code of ethics on three occasions during the Director’s term, and this is confirmed by the Board following an ethics review.

The Court said that this by-law is valid and enforceable, and is not inconsistent with Section 33 of the Act, because it simply provides an additional procedure by which a Director may be removed.

The Court said, however, that the contemplated ethics review process must satisfy “some minimal standard of procedural fairness and the basic principles of natural justice”, because in conducting such a review, the Board is essentially carrying out a quasi-judicial decision-making function, involving consideration of evidence and analysis of possible breaches of the code of ethics.

In this case, the Court concluded that the Board had not followed proper procedure in conducting the ethics review that culminated in the removal of one of the Directors. But the Court declined to undertake such a review (ie. to finally decide the matter). Instead, the Court directed the Board to conduct a fresh ethics review (using proper procedure), whereupon the Director in question might or might not be reinstated to the Board. The Court said: “I do not believe that this court should usurp the powers of the Board entrusted to it by the members of the corporation to conduct a proper ethics review of its own”.

The case is under appeal.

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Correcting Obvious Errors in By-laws

We have all seen mistakes in documents, newspapers or magazines – almost everywhere these days. We have probably mentally corrected these errors – replacing words that are missing, rearranging words that are out of place or even changing an affirmative statement to a negative statement where the intention is obvious.

Despite the best of intentions, similar errors can occur in condominium documents – no matter how often the document might be proof-read. But how should these errors be corrected? The Condominium Act, 1998 (the “Act”) allows an error or inconsistency that is apparent on the face of a declaration to be corrected by the Land Registrar. This correction is not effective until the amended declaration is registered.

What about obvious errors in condominium bylaws? Do such errors require the preparation of a new by-law and a meeting of the owners (to approve the by-law)?

In our view, clear or obvious errors in a by-law can be corrected without returning to the owners for another vote. A new by-law must of course be prepared and registered (in order to correct the error), but it’s our view that this can, and should, be done without a further vote of the owners.

Here’s our reasoning: A flawed or incorrect by-law does not reflect the true wishes of the owners (as already expressed by vote in favour of the by-law). So, our view is that a correcting by-law must be registered to reflect the vote that has already taken place.

What may qualify as an “obvious or clear error” will depend upon the particular circumstances.

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