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Court Approves a Borrowing By-law Despite the Absence of a Majority Supporting it

A very short, and somewhat puzzling, decision was issued in January 2019, which appears to change the level of support required to adopt a condo by-law. The decision appears to have been rendered on an uncontested basis, which may explain the outcome.  This blog post is about the LaFramboise v. YCC No. 365 case.

As I read the case, it appears that the condo corporation adopted a borrowing by-law based on the support of the majority of units in attendance at a meeting of owners rather than on the required majority of all registered units.  It seems that some owners subsequently questioned the validity of this by-law. The judge hearing the matter gave these  owners an opportunity to file responding material but they did not.

Relying on the remedial nature of the Condo Act, the judge applied a “liberal interpretation” to sections 50 and 53 of the Act and concluded that it was sufficient for a by-law to be approved by a majority of the units in attendance at the meeting. The judge wrote:

A majority of all unit owners were in attendance, and a majority of those present unit owners approved the by-law. The by-law in question has been validly passed.

In my most respectful view, this interpretation is not in line with the clear language of the Condo Act.

A majority of all registered units is required to pass a by-law

So, what level of majority is required when owners vote on a by-law?

Section 53 of the Act provides that “all questions proposed for the consideration of the owners at a meeting of owners shall be determined by a majority of the votes casts by owners at the meeting“.  However, this section expressly states that this is so, “unless otherwise provided in this Act“. The fact is that the section of the Act dealing with the adoption of a by-law does specifically provides otherwise.

Indeed, section 56(10) of the Act provides that a by-law is not effective until “… the owners of a majority of the units in the corporation, or such other number of owners that is prescribed, vote in favour of confirming it, with or without amendment”. Without a doubt, the language of this provision is clear: the majority of the units in the corporation (not the majority of those in attendance at the meeting) must approve of the by-law.

This is confirmed by section of 14(2) of the general regulation, which provides for a reduced level of support when adopting a by-law approving electronic voting.  That section specifically provides that this kind of by-law (among others) is effective if approved by “the majority of owners present or represented by proxy at a meeting of owners”. Clearly, there is a difference in the language used under section 56(10) of the Act (“the units in the corporation”) and the language used in section 14(2) of the Regulation (“the majority of owners … present at the meeting”).

To further support our view that a by-law requires the approval of a majority of all units, have a look at the language of section 58, dealing with the approval of a rule. Section 58(7) provides that, if a rule is to be submitted to a vote (not all rules are submitted to such a vote), the rule becomes effective if “the owners do not vote against the rule at the meeting“.  This section does not refer to the majority of units in the corporation but rather refers to the owners in attendance at the meeting (in person or by proxy).

In our view, unless and until the majority of the units confirm a by-law (that is more than 50% of the registered units), the by-law is not effective.  As stated above, one notable exception to that is the adoption for which a lower level of support is prescribed by regulation, such as a by-law permitting electronic voting.

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