Gerry Hyman has written a new article on condominiums. From that article, I would like to discuss a question that was posed by a reader:
Q: One of our directors, who is also the treasurer, takes inappropriate action on his own without authorization from the board. He calls and directs the corporation’s lawyer and contractors. He ignores instructions from the other directors that he must obtain board approval before taking these steps. Does the Condominium Act deal with such conduct by a director?
A: The Condominium Act specifies that the board of directors will manage the affairs of the corporation. No director has the authority to take any action on behalf of the board unless the action has been authorized by a board resolution.
If the board believes that the director’s role as treasurer is a factor in his conduct, it could remove him from that office. The board could pass a resolution that the corporation’s lawyer be advised that the director has no authority to instruct the lawyer. The lawyer’s opinion might be obtained as to available remedies. That will include removal of the director from the board before the end of his term by an affirmative vote of owners of more than 50 per cent of the units at an owners’ meeting called for that purpose.
I would like to specifically discuss the portion of Mr. Hyman’s response which is bolded: the requirement of the Condominium Act require a majority vote of all owners to remove a director.
This sounds reasonable on the face of it – you do not want owners to easily remove a director. However, this is also why it is unfair for the owners.
Owners elect a Board of Directors to run the condominium on their behalf. However, owners should also be able to easily hold those directors accountable for their actions.
Currently, directors are elected at an Annual General Meeting (AGM) generally by a plurality – i.e. by the first-past-the-post system used to election Members of Parliament (MPs), Members of the Provincial Parliament (MPPs) and city councillors. Even if they are elected by a majority vote, an AGM only requires 25% of the owners to attend the meeting, or 1 in 4 owners. If a director can be elected by a small portion of owners, why should more than half of all the owners have to vote to remove the same directors, especially if the director is reckless (as suggested in the quote above), or not considering the interests of the owners. As such, I recommend that a director be removed by a vote of 2/3 of votes cast at a meeting to called to a remove a director.
Why 2/3 of votes cast? Simple, it is larger than a ‘simple’ majority (i.e. a majority of votes cast), yet it means that the owners who actualy take the time to attend the meeting are the ones who are actually making the decision. In many condominiums, only a handful of owners actually take an interest in the running of the condominiums, so why shouldn’t they be the ones who make the decision – other owners can attend the meeting or not, which is their choose, but they should not affect the outcome of the meeting.
So let’s bring some really ‘democracy’ to condominiums in Ontario and make it practical for the owners to hold their representatives accountable.