Paul G. Mendes, Partner
Phone: 604-685-4894
Email: pgm@lmlaw.ca
Shen v. PS3177, 2020 BCCRT 1157
Do you pine for the good old days, before March of 2020, when strata’s held general meetings and nobody cared? You remember the drill. Wait half an hour, and then whoever is in attendance forms a quorum, even if it’s only one person? Well, those days are over.
It turns out that the only thing we needed to improve attendance at general meetings was a global pandemic and densely worded proxy form. Forget enticing owners to attend with snacks, booze, and guest speakers. Just turn the meeting into an exclusive superspreader event and viola! Suddenly everyone wants to show up.
I kid, of course, and as any strata manager or council member will tell you, general meetings are no laughing matter.
The Shen decision is the first of what will likely be a series of Civil Resolution Tribunal decisions about the so-called “restricted proxy meetings.” I am not sure why these proxies are referred to as “restricted proxies.” I call them that because everyone else does, but they are just plain old proxies solicited by the strata council. They also require the owner to fill out more detailed voting instructions to the proxy holder, than a typical proxy form, but this allowed under s. 56 of the Strata Property Act.
The Shen decision confirms that a restricted proxy meeting is no different from any other meeting: it must be run under the Strata Property Act and the strata’s bylaws. Sure, the strata can use detailed proxy forms, such as the so-called restricted proxy, but it cannot skirt the rules around giving notice, holding meetings and voting.
Here are the basic facts in Shen: the strata corporation convened a special general meeting to terminate a strata management contract. The strata held the meeting with a 50 person limit on in-person attendance and no option for electronic attendance (such as by phone or videoconference).
Before the pandemic, a strata could only hold an electronic meeting if the bylaws allowed it. The standard bylaws only allow for electronic attendance at council meetings, but not general meetings. As a result, very few stratas in BC have bylaws permitting electronic attendance at general meetings. This changed when the BC government issued Ministerial Order M114 back in the spring, which allows for electronic attendance at all meetings without a bylaw amendment.
According to the facts, the strata council encouraged owners to attend by proxy only. The council’s entreaties must have worked because out of 311 strata lots, only 16 owners attended in person, and another 132 owners sent in proxies. When all was said and done, the resolution to terminate the strata manager received 75.34% support, just enough to affect a termination.
Although there was no evidence that anyone even wanted to attend the meeting electronically, the CRT found that the SGM was not lawful under the strata’s bylaws or the Strata Property Act, so it set aside the results of the SGM.
The CRT found that the strata’s failure to provide for electronic attendance at the SGM violated s. 56 of the SPA, which says that all eligible voters may attend meetings in person or by proxy. By not having an option for electronic attendance at the SGM, the strata effectively disenfranchised otherwise eligible voters who wanted to attend the meeting in person but could not do so because of COVID concerns.
The CRT also expressed serious concerns about the SGM notice, how notice was given, and whether the strata can designate someone as a proxy on the form included in the notice. I will deal with those aspects of the decision in a future strata alert.
However, it is important to understand that this decision does not mean that stratas cannot use “restricted proxies” or that that stratas cannot encourage owners to participate by proxy only. All the decision says is that strata meetings, including restricted proxy meetings, must be held in accordance with the SPA and the strata’s bylaws.
Here are my takeaways from this decision:
- The strata can have a proxy meeting, and it can even encourage everyone to attend only by proxy, so long as the strata also allows in-person attendance or electronic attendance. Remember, electronic attendance is equal to attending in person.
- An information meeting (virtual or otherwise) before the general meeting does not relieve the strata of its duty to conduct the general meeting in accordance with the SPA and the strata’s bylaws. You must still call the meeting to order and go through the agenda the same way you would at any other general meeting.
- Even if 100% of the participants attend by proxy, the meeting must still be called to order, and the agenda must be followed. Motions must be moved and seconded, and votes must be counted at the meeting. You cannot treat proxy forms like mail-in ballots and record the proxy vote results before the meeting or without following the meeting agenda.
- As the pandemic persists into 2021, all strata councils should consider what bylaw amendments could be made to allow for expanded use of proxies and even mail-in ballots.
Proxies are a frequent source of conflict in stratas. There is a general misconception that proxy voters “don’t understand” what they are voting on and that some people use deceitful tactics to solicit proxies. These things may be true, but they are not relevant for determining whether a strata meeting was properly run. The SPA gives every owner the right to vote, regardless of their intelligence or their level of understanding, and it treats all votes the same, regardless of whether the voter attends in person or by proxy. Further, decisions made at meetings where proxy voters outnumber in-person voters are no less valid than any other decision.
WHAT WE DO: Lesperance Mendes advises strata corporations and strata management companies on all aspects of strata governance and running meetings. Now is a good time to consider bylaw amendments to make meeting attendance safer and meetings easier to run. For more information, please contact Paul G. Mendes at 604-685-4894 or by email at pgm@lmlaw.ca
THIS ARTICLE IS NOT LEGAL ADVICE: This article provides general information and should not be relied upon without independent legal advice with respect to the specific facts of your case.