Consider a Ranking Proxy for Elections

Proxies for the election of condo board directors can sometimes be confusing. We often recommend using a “ranking proxy” that ranks the candidates in the signatory’s order of preference.

Proxies can be tricky to manage for the following reasons:

  • Section 52 (5) of the Condominium Act says that the proxy form must indicate the candidate(s) for whom the signatory is voting. In other words; the signatory’s election choices must be made at the time the proxy is signed.
  • There may be more than one election, with different participating voters, at the meeting. For example, there may be one election, pursuant to Section 51 (6) of the Condominium Act, in which only the owners who occupy their units can vote, and there may be another election at the same meeting, in which all owners can vote.
  • The candidates may not be the same in each election.
  • One or more candidates may “drop out of an election.” For example, a candidate may simply decide to withdraw his or her candidacy (after proxies have been signed), or a candidate may be elected (in one election) and then, of course, will not be a candidate in any subsequent election.

Using a “ranking proxy” may help avoid some of this confusion. If a chosen candidate is no longer running in an election, the scrutineer simply skips to the next chosen candidate in order, and the same ranking instruction can also apply to each election at the meeting. Of course, adjustments to the proxy form would be required if the signatory’s order of preference is different for each election at the meeting.

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Reminder: Register now for the Canadian Condominium Institute (CCI) Seminar, To Be Held on May 23, 2013!

The Canadian Condominium Institute (CCI) Ottawa Chapter Seminar, “How to Run an Effective Meeting” will be taking place at the Nepean Sportsplex on Thursday May 23, 2013 at 7:00pm. Nancy Houle of Nelligan O’Brien Payne LLP will be one of the speakers.

This session will cover practical skills that can assist in running a smooth meeting, including topics such as:

  • Proper notice
  • Registration and use of proxies
  • Rules of order, and
  • Dealing with contentious issues, etc.

For more details or to register for the seminar, visit the CCI Ottawa website by clicking here.

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Election Acclamations

I wrote an article about election acclamations, which was published in the Spring 2013 issue of the Association of Condominium Managers of Ontario (ACMO) Condominium Manager (CM) Magazine. I thought our readers would find the article interesting so I have posted it below with CM Magazine’s permission.

Election Acclamations: Proceed with Care

Condominium Manager Magazine, Spring 2013

By James Davidson, LLB, ACCI, FCCI

Condominium directors are often elected “by acclamation.” This typically occurs when the number of candidates does not exceed the number of vacancies.

But are such acclamations legally correct? Do the candidates “automatically” arrive on the board if the number of candidates does not exceed the number of vacancies?

In my view, in strict technical terms a vote of the owners is required in order to elect candidates onto a condominium’s board of directors. This comes from Section 53 of the Condominium Act which states as follows:

“Unless otherwise provided in this Act, all questions proposed for the consideration of the owners at a meeting of owners shall be determined by a majority of the votes cast by owners present at the meeting in person or by proxy if there is a quorum at the meeting.”

In my view, this means that a candidate can only be elected to the board based upon a vote at the meeting. And a majority of the votes must be in favour of the person’s election to the board.

In most cases, there is no controversy; and acclamations are probably fine. But sometimes this is not the case. Among the many AGMs that I have attended over the years, I have attended two AGMs where there was only one candidate for one vacancy, and the candidate was not elected to the board. In each case, owners were asked to vote on the question of the candidate’s election to the board. And in those two cases, a majority of the votes cast was against the candidate’s election. So in other words, a majority of the votes cast was not in favour of the candidates’ election to the board.

Whenever I’m involved in an AGM election, I recommend the following procedures:

  • Step 1: Complete nominations of candidates;
  • Step 2: Have the candidates make brief presentations (if desired);
  • Step 3: Proceed to the election. [If the number of candidates does not exceed the number of vacancies to be filled by election, call for a motion from the floor, a seconder, and then a show of hands vote, on the following business: Election of the following candidates to the board of directors for the following terms: “Mary to be elected to the term expiring in the year X and John to be elected to the term expiring in year Y”].

Note that, as part of this process, it is important to identify which candidates will be elected to which terms, if the vacancies are for different remaining terms. If the candidates cannot agree on this, it may be necessary to structure a ballot vote to determine which candidate will take which term. In my view, this is something to be decided at the meeting of owners, not by board resolution (at the next board meeting).

In most cases, the above “show of hands” election (when the number of candidates does not exceed the number of vacancies) is a 15-second “rubber stamping” of the candidates as elected directors (including their terms).

But every once in a while, you may run into the rare case where a candidate is not elected to the board, even where there are no other candidates in opposition.

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ACMO and CCI Ottawa Conference – May 31, 2013

James Davidson, Nancy Houle and Christy Allen of Nelligan O’Brien Payne LLP will be speaking at the Association of Condominium Managers of Ontario (ACMO) and Canadian Condominium Institute (CCI) Ottawa Conference on May 31, 2013. The conference is focused on timely and relevant issues that are of interest to condo property managers, boards and owners. Topics will include:

  • Electric Cars;
  • Directors Liability;
  • Second-Hand Smoke;
  • Generators;
  • Licensing the Condominium Manager and,
  • Possible Amendments to the Condominium Act

For more information on the conference and how to register, click here.

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Status Certificates and Unit Problems

In paragraph 12 of the status certificates, a condominium corporation must disclose any circumstances, of which the corporation is aware, that may result in an increase in the common expenses for the unit. Could this include a unit problem?

In my view, the answer is: “In some cases, yes.”

There are many “common element issues” that might need to be disclosed in paragraph 12 of the status certificates. Here are some examples:

  • An unexpected common element defect;
  • A common element repair or replacement that is required, or may be required, earlier than predicted by the reserve fund plan;
  • A common element repair or replacement that is, or may be, more costly than predicted by the reserve fund plan;
  • Any common element repair or replacement that is not covered by the reserve fund plan or the operating budget;
  • A reserve fund plan that calls for special assessment(s) or increase(s) in contributions to the reserve fund (beyond inflation) at any time in future;
  • A proposed common element alteration or improvement (as soon as it is receiving serious consideration);
  • An unexpected disaster that is not fully covered by insurance;
  • Any annual operating expense that is, or may be, more costly than predicted in the corporation’s budget.

Once the corporation has actual knowledge of one or more of these risks or possibilities, the corporation then must ask itself the following question:

Could this result in a special assessment/increase in common expenses (beyond inflation)?

If the answer is “yes,” then this must be disclosed in paragraph 12 of the status certificates. [Note: An inflationary increase is not a real increase. Increasing the common expenses by inflation simply keeps the common expenses constant, in real terms.]

A “unit problem” can sometimes also result in an increase in common expenses. For instance:

  • a unit defect; or
  • damage caused to the property (by a unit owner or occupant); or
  • a violation of the Condominium Act, or the corporation’s Declaration, By-laws or Rules (by a unit owner or occupant)

might each result in an increase in common expenses (for the unit), because:

  • the corporation may be required to repair the unit defect (if the owner fails to do so), and add all related costs to the owner’s common expenses (pursuant to section 92 of the Condominium Act or perhaps provisions in the Declaration); or
  • the corporation may have the right to add all costs incurred to repair common elements (damaged by a unit owner or occupant) to the unit’s common expenses; or
  • the corporation may have the right to add enforcement costs (incurred due to a violation by an owner or occupant) to the unit’s common expenses.

So, if the corporation has knowledge of a unit problem, the corporation should ask itself the following question:

Could this possibly result in an increase in the common expenses for that unit?

If the answer is “yes,” the problem might then need to be disclosed in paragraph 12 of any status certificate issued for that unit.

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