becomes more complex (2 of 2)
As noted in Part 1 of this entry (here), Bill 106 sets out new proposed provisions relating to requisitioned meetings. In the prior entry, we dealt changes to the criteria by which owners qualify to requisition a meeting and restrictions on the subject-matter of such meetings. In this entry, we discuss the Bill’s more complicated provisions relating to responding to requisitions.
The current situation
Under the Condominium Act, 1998 (the “Act”) as currently written, the situation is clear and simple: Upon receiving a written requisition for a meeting from owners meeting the requisite criteria, the board of directors is required either to call and hold a meeting of owners within 35 days of receiving the requisition or, if the requisitioning owners ask or consent in writing, to add the requested business to the agenda of the corporation’s next annual general meeting (AGM). Where a board fails to comply with either of those requirements, the requisitioning owners are themselves entitled to call the meeting (which the corporation is then required to hold within 45 days of the time that it is called) and to require the corporation to cover their costs of so doing.
For more details on the current rules relating to requisitioned meetings, see our About Condo memo on this topic here.
What Bill 106 changes
Oddly, what seems so easy under the current Act is made substantially more complex by Bill 106. As well, although the underlying intent of Bill 106 appears to be that owners’ requisitioned meetings ought to be accommodated, the changes do leave open at least one significant way for a stubbournly non-compliant board to frustrate that intent.
As a first step, the Bill requires that the board respond to any and all requisitions. The period of time granted to the board to respond is 10 days (or such other period as might be prescribed in the regulations, if any) and in that time period only two response options are available: Either,
- the board must confirm that it will call and hold the requested meeting, or
- it must state that it will not do so because the requisition does not meet the criteria set out in the Act.
If the board fails to respond in one of those ways, or if the board does not respond at all, then it is deemed to have confirmed that it will call and hold the meeting (i.e., option 1).
What happens when the board says “no”?
We start with the negative because it is the simpler place to start.
As noted above, Bill 106 gives the board the option of refusing to call a requisitioned meeting if the requisition fails to meet the applicable criteria of the Act (see Part 1 of this blog entry for a discussion of the qualifications and restrictions that can affect the validity of a requisition). In its response to the requisitioning owners, the board must describe the alleged flaw and, when this response is given, the requisition is deemed to be abandoned unless:
- within 10 days (or another prescribed time period, if any) of getting the response, the requisitionists re-submit the requisition with the identified flaw(s) fixed, which then has the effect of re-starting the process as if the revised requisition were an original one; or
- within 20 days (or another prescribed period, if any), the requisitionists apply to the Condominium Authority Tribunal (or to the Ontario Superior Court of Justice, if the tribunal does not exist or is not authorized to hear the dispute – see here and here for commentary about the tribunal and its scope of authority in the event it is created) for “resolution of the original requisition.” It is not clear what “resolution” means, but likely this term is broad enough to allow the tribunal (or court) the flexibility either to deal with the alleged flaws or with the subject-matter of the requisition itself.
It should be noted that even if the owners do nothing to correct the original, rejected requisition within 10 days of the board’s response, and do not apply to the tribunal (or court), they could, at any time, submit an entirely new requisition on the same subject matter that makes the necessary corrections. The apparently sole advantage of acting within the 10-day period referenced above is that the owners might be saved the effort of obtaining new signatures on the corrected requisition (unless, of course, the flaw related to such signatures).
In short, submission of a flawed requisition does not create a permanent barrier to the requisition. Owners have almost unlimited opportunities to correct and re-submit the requisition or, if it seems necessary, may seek the assistance of the tribunal or court. And, in the end, the board also has the option of overlooking such flaws and simply saying “yes” in the first place (which is often what boards are advised to do).
So what happens when the board says “yes”?
If the board responds (or is deemed – by not answering at all – to respond) that it will call and hold the meeting, then the board will be required to hold the meeting within 40 days of the period of time granted for the board to respond to the requisition. This means, in effect, that the meeting should take place no later than 50 days after the requisition is first submitted to the board. This is somewhat more generous (to the board) than the 35-day period in which the meeting has to be called and held under the current legislation. However, this time period can be lengthened significantly if the requisitionists either request or consent to have the business of the requisition dealt with at the corporation’s AGM.
Adding the business to the AGM
Under Bill 106:
- if the requisitionists have requested that the requisitioned business be added to the AGM agenda, the AGM must be on a date that is no sooner than 40 days after the time period granted for the board to respond to the requisition; and
- if the requisitionists have consented to add the business of the requisition to the AGM, the AGM cannot be earlier than 40 days after such consent is given.
This means that if the AGM is already scheduled to take place sooner than 40 days after whichever of those times applies, the business cannot be added to the AGM agenda and the corporation will therefore have to call and hold the requisitioned meeting separately. The strange result is that where the requisitioned business does not get added to the AGM, the business will be addressed no later than 50 days after the requisition is given, but where the business is added to the AGM it will not be able to be addressed any sooner than that.
It is not at all clear why the Ministry chose to impose this minimum 40-day period. Other than where the requisition relates to the removal or election of directors and the process must therefore accommodate the pre-notice /call for candidates that Bill 106 will require, it should be sufficient to require only that the requisition be received prior to sending out its notice of meeting for the AGM (which could be as few as 15 days prior to the meeting).
Nevertheless, even with that complication, the foregoing provisions work sufficiently well and the result is still that the requisitioned business will be dealt with. A more challenging situation arises for owners where the board says (or is deemed to say) that it will hold the meeting, but then doesn’t.
What if the board doesn’t actually hold the meeting?
- to submit another requisition (again and again, presumably, until the meeting is finally held);
- to apply to the Condominium Authority Tribunal for assistance of some kind (if it exists at the time, and if this is one of the issues it is authorized to deal with); or
- if an application to the tribunal is not available, to apply to the Superior Court of Justice based on the board’s failure to comply with the Act.
It is difficult to reconcile the fact that Bill 106 is the “Protecting Condominium Owners Act,” with the risk that owners may face in terms of potential cost and inconvenience if they are forced to deal with a non-compliant board. It is not clear why the Bill did not simply retain the provision allowing owners to call the requisitioned meeting, at least in this type of situation. Perhaps something will be imposed in the regulations that will help to rectify this situation. As it stands, however, Bill 106 appears to make it potentially more difficult on requisitioning owners than on board members who simply refuse to comply with a valid requisition (at least, unless and until either the tribunal or a court crafts a penalty that addresses such a board's conduct).