Case for electronic bylaws, virtual meetings, e-voting in condominiums
Tuesday, June 02, 2020 @ 9:55 AM | By Harjot Atwal
During this time of COVID-19, this phrase has proven to be particularly apt. After all, in recent weeks, much has been written about the legal system’s reliance on antiquated technology despite other more modern options being available (which are usually better suited to current needs). Such comments are not particularly new.
Even during non-COVID-19 times, our legal system has been criticized for its preferred use of paper over electronic documents, its difficulties incorporating new technologies such as videoconferencing and conference-calling into statutorily regulated processes, and its (at times) problematic lack of remote access to lengthy and complex legal files.
However, as such technologies already exist and need not be reinvented, the time is perhaps more ripe for innovation. COVID-19 has shown us that the better adaptation of these already developed technologies for legal purposes appears to be a “necessity.” 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 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.
Recently, on May 12, 2020, the government further incorporated these temporary changes during the emergency period into Bill 190. Known as the COVID-19 Response and Reforms to Modernize Ontario Act, 2020, Bill 190 has the effect of permitting virtual owners’ meetings and e-voting 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 short time periods thereafter? Should software like Zoom and Skype not be used for all condominium meetings throughout the year, especially if the result is that more owners end up participating and the democratic process is thus facilitated? 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.
Such systems can be enacted using electronic bylaws. In 2017, a number of amendments were made to the Act, including s. 52(b)(iii) which now allows for recorded votes to be indicated by “telephonic or electronic means,” but only in cases where the condominium’s bylaws so permit. Similarly, s. 14.01(p) of O. Reg 48/01 states that one of the prescribed purposes of bylaws pursuant to s. 56(1)(q) of the Act are to govern the manner in which owners “may be present” at a meeting or represented by proxy.
However, absent the emergency order, Bill 190, or the aforementioned bylaw 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 per cent of unit owners. Thus, the passing of an electronic bylaw is recommended. In fact, not doing so may possibly risk perpetuating 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 per cent quorum requirement being reached more easily. This certainly appears more preferable than potentially going 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 bylaw include? Firstly, in terms of flexibility, condominium residents should be permitted to attend and meaningfully participate both in person or virtually. In this regard, a hybrid form of meeting is suggested. As not everyone is familiar with and adept at using videoconferencing and other related technologies, an option should still exist for using 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 able to nominate themselves “from the floor.” In a virtual setting, how would this work? Assuming (and hoping) the technology is user-friendly, one should be able to edit the electronic ballots for anyone who is nominated in person or virtually at the meeting. In a way, this might 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 example, the system should perhaps use encrypted links that connect to a secure online voting site in order to allow for secret ballots. 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 likely be best served by using the opportunity afforded by the emergency order and Bill 190 to pass an electronic bylaw now, so that they can continue electronic meetings and voting when the emergency is over. Moreover, such electronic bylaws only require the majority of owners actually present at the meeting or represented by proxy to approve it (despite the usual requirement that bylaws normally must be supported by the majority of all registered units).
As the inevitable kinks are worked out of online condominium voting systems (and we emerge from this time of COVID-19), owners can then choose to gradually transition to more virtual participation if they wish. Particularly since the new legislation also extends the time for AGMs to be held by 90 to 120 days following the emergency period’s termination, it seems that now is a great time to begin working with your real estate lawyer to draft an appropriate electronic bylaw for your condominium, especially while the reason for needing one is fresh in everyone’s minds.
Harjot Atwal is an associate lawyer in the commercial real estate practice group of Pallett Valo LLP. You can reach him at firstname.lastname@example.org or on LinkedIn.
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