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Condominiums and Electronic By-Laws: Virtual Meetings and Voting

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As the proverb goes, necessity is the mother of invention. After all, in light of the current COVID-19 crisis, much has been written about the legal system’s reliance on antiquated technology despite other more modern options being available (that are usually better-suited to current needs). Criticisms concern our overall use of paper rather than electronic documents, lack of remote access to lengthy and complex legal files, and difficulties incorporating video-conferencing and conference-calling into statutorily regulated processes. Rather than invention, the time is perhaps more ripe for innovation and the better adaptation of these existing technologies for legal purposes.

In this regard, the governance of condominium corporations is no exception. Prior to the Government of Ontario issuing an Emergency Order on April 24, 2020, there was uncertainty about whether the Condominium Act (the “Act”) permitted virtual owners’ meetings. The Emergency Order, which is retroactive to March 17, 2020, permits such meetings to be held by electronic means, extends the time period during which a condominium corporation must hold its Annual General Meeting (“AGM”), and addresses other related matters such as notice requirements for e-meetings.

These temporary changes during the emergency period have now been incorporated into Bill 190, which is called the COVID-19 Response and Reforms to Modernize Ontario Act, 2020. Passed on May 12, 2020, Bill 190’s effect is that virtual owners’ meetings and voting will be permitted until at least 120 days following the end of the emergency (currently extended to June 12, 2020).

But why should virtual owners’ meetings and voting be restricted to emergency periods and 120 days thereafter? Should we not use software like Zoom and Skype for all condominium meetings throughout the year, especially if it results in more owners participating and thus facilitates the democratic process? The answer is a qualified ‘yes’, as long as there is a system put in place which accommodates e-voting and allows for transparency, accountability, and proper record-keeping. This is accomplished by an electronic by-law.

In 2017, a number of amendments were made to the Act, including s.52(b)(iii) which states that a recorded vote can be indicated by “telephonic or electronic means” but only if the by-laws so permit. Similarly, s.14.01(p) of O. Reg 48/01 indicates that one of the prescribed purposes of by-laws pursuant to s.56(1)(q) of the Act are to govern the manner in which owners (or mortgagees) “may be present” at a meeting or represented by proxy.

However, absent the Emergency Order, Bill 190, or the aforementioned by-law specifying how one “may be present”, s.50(2) of the Act still requires that an owner must be physically present at a meeting or represented by proxy in order to count towards the quorum requirement of 25% of unit-owners. Thus, the passing of an electronic by-law is recommended (unless we want to perpetuate the unfortunate practice of board members anxiously knocking on unit doors before a meeting asking for proxy forms to be signed).

Other advantages of electronic voting and meetings would include easier tabulation of votes, more accurate election results and records, and the 25% quorum requirement being reached more easily (rather than having to go through the time, effort, and expense of setting another meeting in case not enough people attend or send proxies).

So, in addition to permitting voting and attendance by means other than in-person, what else should your electronic by-law include? Firstly, in terms of flexibility, it should permit people to attend and meaningfully participate both in-person or virtually. In this way, a hybrid form of meeting should be developed. As not everyone is familiar with and adept at using video-conferencing and other related technologies, there should still be an option for in-person paper ballots as well as mail-in ballots. On the other hand, owners attending virtually should be able to see any questions posed by other owners, answers given by directors, and votes cast by a show of hands (personally or by proxy).

At times, there may be challenges involved with implementing this new system. For example, candidates running for the board of directors are generally still permitted to nominate themselves “from the floor”. How would this work in a virtual setting? Presumably, one would need to be able to edit the electronic ballots for anyone who is nominated in-person or virtually at the meeting. Hopefully, this would be simple to do and actually represent an improvement to voting processes, since mail-in ballots currently remain problematic as owners are unable to become aware of additional floor nominations.

What will be essential is ensuring proper governance protocols and safeguards are put in place to adapt (or at least partially adapt) in-person meetings to the virtual sphere. For instance, in order to create a system that allows secret ballots, perhaps one should send e-mails using encrypted links that connect to a secure online voting site. Certain online platforms have been developed to accomplish such tasks like condovoter.com, which currently provides electronic voting services and is in the process of developing a virtual meeting platform as well. This service provider has estimated the cost to implement electronic voting would be about $700 for the first meeting of a 250-unit building, with costs decreasing for subsequent meetings.

For the time being, condominium corporations would be well-advised to use the opportunity afforded by the Emergency Order and Bill 190 to pass an electronic by-law now, so that they can continue electronic meetings and voting when the emergency is over. While by-laws normally need to be supported by the majority of all registered units, the electronic by-law only requires the majority of owners actually present at the meeting or represented by proxy to approve it.

As time goes on, and the inevitable kinks are worked out of online condominium voting systems, owners can then gradually transition to more virtual participation if that is their choice. Given that the Emergency Order and Bill 190 also extend the time for AGMs to be held by 90-120 days following the termination of the emergency, it seems that now is a great time to begin working with legal counsel to draft an appropriate electronic by-law for one’s condominium corporation, especially while the reason for needing one is fresh in everyone’s minds.

Just heard about Pallett Valo being chosen as One of Ontario's Top Three Regional Firms. Congratulations – well deserved.
Peter Campbell, BDO Canada LLP