Law Times

LAW TIMES COVERING ONTARIO'S LEGAL SCENE | JANUARY 21, 2019 11 www.lawtimesnews.com Condo meetings need quorum Electronic voting could help with governance BY MARG. BRUINEMAN For Law Times A newly acquired ability to introduce electronic vot- ing to condominium meetings may ease the burden of achieving quorum at meetings and help in the governance of these communities, say lawyers. Amendments to Ontario's Condominium Act that began rolling out Nov. 1, 2017 allow condo owners to use an electron- ic ballot to cast their votes dur- ing annual or special meetings, provided the condo board has passed a bylaw permitting this. Denise Lash, founder of Toronto-based Lash Condo Law, says there is great poten- tial in electronic voting. She says she has been encourag- ing her clients, condominium corporations, to draft the re- quired bylaw. Not long after the amendments were enacted, her investigation led her to the United States, where some states already had experience with electronic voting in the condo- minium setting. She witnessed the process, spoke to attorneys about their experiences and reached out to companies pro- viding the service. She has since been to six meet- ings in Ontario where electronic voting was used and she sees law- yers now including it in the bylaws they're drafting for new condo- minium developments. She sees potential for electronic voting to supplant proxy voting — which is when a condo owner is not avail- able to vote and has someone cast a vote on their behalf. "If you want it to be a real democracy, you would let own- ers vote for themselves and the way you do that is through elec- tronic voting, and not through proxies," she says. "Once people see this, they're going to say, 'Why are we completing a three or four-page proxy form?'" Another amendment that was recently enacted makes it easier for condo corporations to reach quorum after they fail to do so in the first meeting, says Lash. According to the Ontario Condominium Authority, the standard quorum for an annual general meeting is 25 per cent of the owners. If the quorum is not reached on the first two attempts, the quorum is reduced to 15 per cent on the third and subsequent attempts. Without quorum a board can pass no bylaws and is effectively without power, says Lash. The issue at the heart of the changes is that condo boards often have difficulty reaching quorum for their meetings, say condo lawyers. Trevor Zeyl, a senior associ- ate at Norton Rose Fulbright Canada LLP, is also co-founder of GetQuorum, a software pro- vider. The Canadian company provides an electronic corporate governance platform designed to allow both electronic voting and electronic proxies for an- nual general meetings and spe- cial meetings in condominium communities. Electronic voting, he says, is a newer phenomenon and ref lects a growing trend. He points to Florida and Illinois, where legis- lation permitting the use of elec- tronic voting methods for con- dominiums was passed in 2015 and in Arizona in 2016. "In Canada, electronic vot- ing methods and, in particular, the use of electronic proxy vot- ing platforms, have been used by condominiums since 2015," he says. "Typically, we see an in- crease in voter turnout by three to four times, when comparing a paper-based vote versus using electronic proxies or balloting." Zeyl says there is a legal debate brewing about whether the electronic ballot allows vot- ing to take place in advance of a meeting or whether the intent was that electronic ballot voting technology be used only at the meeting itself. "Historically, the only way a condo owner could submit a 'vote' prior to a meeting was by way of a proxy and they could only submit a ballot at a meet- ing," he says. Electronic voting, he adds, also creates efficiencies for con- dominium boards by not having to print and mail ballots, saving them money as well as achieving quorum. Deborah Howden, a partner at Shibley Righton LLP in To- ronto, sees great potential for the electronic voting platform in Ontario condominium com- munities. "It's been a source of unique frustration that people have in the condominium indus- try that you very often struggle with getting quorum for AGMs or for passing bylaws, for doing anything in the condominium community that requires a vote of owner," she says. "What this essentially means is, as a completely new feature of the Condominium Act, that you can have electronic balloting," she says. The reason that it is so sig- nificant is it assists with get- ting quorum for meetings that may otherwise not have moved forward, she says "The upshot is this, if the cor- poration passes an electronic voting bylaw, which itself has to receive a simple majority of votes in order to pass . . . then electronic voting can be used for future meetings," she says. While none of her clients have yet made use of the process, she says many have passed a bylaw allowing them to use it in the future. But, like Zeyl, she sees a glitch in the legislation which might prevent electronic voting from being immediately em- braced. She questions if the related section of the Ontario Condo- minium Act permitting own- ers to cast a vote via "telephonic and electronic means" is in- tended to allow owners to only cast e-ballots in real time dur- ing a meeting, or if the e-ballot can be used before the meeting, in lieu of a proxy. She says there are no regulations laying out the process. "It may be that the drafters of the amendments to the Condo Act never intended the electronic ballot to replace the proxy," she says. Instead, she says the legis- lation may have been intended so that "only that owners could vote electronically while other- wise participating in the meeting remotely," in a way that would be "similar to remote participa- tion in live continuing-education webinars in the legal industry, but with a 'real time' voting func- tion." Without any stipulated rules on voting by "electronic or tel- ephonic means," Howden says the act lacks clarity. "There is a vocal minority in the Ontario market that inter- prets section 52(b)(iii) to sug- gest that electronic ballot voting could replace the proxy regime and be used to collect votes prior to a meeting," adds Zeyl. "A more widely held view, however, is that section 52(b)(iii) provides that electronic voting be only permitted for voting that occurs at a meeting (i.e. a real- time vote at the meeting)." Howden says she is in support of electronic voting, because it's "more user-friendly." "I think the time is right for it . . . we're in a technological age," she says. "For our own clients, when they ask us what bylaws we recommend, [an] electronic vot- ing bylaw is included in that." A new proxy form was also introduced in the amendments. Although the intent was to ensure consumer protection and prevent against proxy vot- ing fraud, lawyers say the proxy forms are so difficult, they are likely to be jettisoned. "What's happening is owners are not filling out these proxy forms and meetings can't hap- pen because they don't have a quorum to conduct the meeting. So it's made the process really, really complicated," says Lash. Electronic voting, she adds, is likely to end up as the preferred option. LT FOCUS Denise Lash says condo boards will have better governance thanks to legislative changes in Ontario that now allow for electronic voting by members. Trevor Zeyl says the use of electronic voting by condominium communities is a newer phenomenon and reflects a growing trend. "I think the time is right for it . . . we're in a technological age." Deborah Howden THE ULTIMATE SOURCE For Today's Legal Profession Canlawyer.lawtimes@tr.com | 416.609.3800 | 1.800.387.5164 Online bitly.com/CanLawyer-Subscription Subscribe today! ONE-YEAR SUBSCRIPTION INCLUDES: • 10 issues print and digital editions • FREE exclusive access to Canadian Lawyer digital edition archives • FREE weekly e-newsletter: Canadian Legal Newswire • Interactive & immersive feature-rich digital for desktop, laptop, tablet or smartphone Each issue of Canadian Lawyer is packed with unbiased in-depth case analyses, valuable strategies, expert insights, and a wealth of information that will allow readers to prepare for cases and effectively manage their practice. 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