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Court rules on condo board election battle

|Written By Aidan Macnab
Court rules on condo board election battle
Rodrigue Escayola of Gowling WLG says the case is representative of a scenario that plays out frequently at condo AGMs.

In a dispute over voting by proxy, the Ontario Superior Court has dismissed an order to invalidate the election of a condominium’s board of directors.

In her decision in York Regional Condominium Corporation No. 818 v. Michael Przysuski, Superior Court Justice Beth A. Allen called the attempt to invalidate the election “a ploy to supplant a duly elected candidate with a candidate preferred by a certain faction of the board,” and she described the actions by YRCC property managers who disputed the process “nefarious but equally absurd.”

“This is a typical battle of the proxies, and they happen regularly,” says Rodrigue Escayola of Gowling WLG, who has represented condo corporations, directors, owners and property managers but was not involved in this case.

The election in question took place at the annual general meeting of the board of directors for the YRCC on June 14, 2017, where three candidates stood for the two empty board seats.

The YRCC argued that the scrutineers miscounted the votes by counting a proxy of 33 votes, made on behalf of Skyrise Developments Ltd., as just one vote. The proxy was signed by Skyrise president Jay Libfeld, who appointed director of the condominium board Anthony Farrah to vote on Skyrise’s behalf with the proxy representing the 33 units they owned.

Those 33 units were around seven per cent of the 442 units in the condo in question, says Escayola.

There was a recount, on Farrah’s request, which arrived at the same results and, according to the YRCC, the same error in counting the 33 votes as one.

The YRCC sought an order invalidating the election of Michael Przysuski, another order placing Ed Dale (who lost the election) on the board, permission to destroy the ballots and proxies 30 days after the ruling and full indemnity on costs.

The case rested on a factual issue and a legal issue, whether the proxy was present at the AGM and, if it was present, if it was legally valid.

Five of the six scrutineers in the YRCC AGM swore affidavits that the proxy was not present at the AGM or the recount, but Farrah and property managers Guido Serafini and Barbak Ardalan stated the opposite, according to the decision.

“I simply do not accept that the Commercial Proxy was present at either the AGM or the recount,” wrote Allen in her decision.

But had the court found the proxy to have been present, it would not have been valid.

The proxy for the 33 votes did not contain the initials of the 33 owners represented. Mario Deo, chairman of the AGM, instructed the scrutineers to disregard any proxy without initials, according to the scrutineers.

Allen wrote in her decision that the Condominium Act does not set rules for the conduct of owners’ meetings or duties of those involved but that “common law and general principles on the conduct of meetings govern the duties of the chairperson.” The chairperson decides the validity of ballots and proxies, she wrote.

The YRCC argued that initials are a “mere formality,” not essential to the “substance of the proxy,” and it cited the Condominium Act, which states that “the court shall grant relief that is ‘fair and equitable.’”

Allen rejected this argument, writing that “the rules cannot be arbitrarily changed.”

“We have to sort of decide what are we going to give priority to — the form or the substance. And in this case, the judge has the rule, were clear, and so the form is what matters,” says Escayola.

“The chairperson has the responsibility to examine all ballots, decide on their validity, count the votes, cast and declare the result,” Allen wrote in her conclusion.

Paul Mendes is chairman of the condominium law group at Lesperance Mendes Lawyers in Vancouver. He says YRCC may have been successful in its application had it not been for what Allen called “a rather obtuse account” delivered in affidavits by Ardalan and one of the scrutineers, Sheldon Aderback, which Allen characterized as “a stunt.”

During the recount, Ardalan whispered in Aderback’s ear, “Let’s see if they make the same mistake,” referring to counting the 33-vote-proxy as one vote.

Allen wrote that this was “game-playing at its finest on a matter of critical importance to all owners.”

Mendes says that if Ardalan had noticed they were miscounting the proxy and it was present at the recount as he said it was, he would have drawn everyone’s attention to the fact they were miscounting it, not kept quiet to wait to argue it in court.

“It really ruins their credibility,” he says. “I think if they had not done that the judge might have been inclined to make a different decision there, but I think they really undermined themselves by trying to pull it out.”

Last year, the provincial government reformed the Condominium Act after the exposure of a group of people who had been elected to several condo boards, while not living in the buildings and using the power to sign contracts between the condos and businesses with which they were connected.

Changes to the law have included instituting a standard proxy form. The YRCC proxy was under the old format because the election took place before the changes took effect.

Disputes over proxies are a constant at condo board elections, says Denise Lash, founder of Lash Condo Law.

“We deal with this at every meeting where people think that the person signing the proxy is not the right person — the unit owner — and that there's fraud and there have been cases of fraud,” she says.

“Having different forms always causes issues with people raising the validity as to whether the form is valid or whether someone completed it,” she says.

But Escayola says that the new standard proxy forms may not eliminate the problem when voting by proxy.

“The Condominium Act is in the middle of a fantastic sweeping revamping and one of the things that the province is imposing now is a very specific proxy form,” says Escayola.

“The new proxy form is problematic and if the objective was to minimize conflict and standardize how we use proxies, I'm not sure we've reached that objective,” he says. “We are certainly standardizing it, but we're not going to minimize conflict. The new proxy is extremely complicated to fill.”

Mendes says proxies are widely used by the many owners who do not live in their condos.

“Just like in Ontario, we have a market that is heavily investment oriented, which means that many of the owners do not reside in the complex and so you have that division between resident and non-resident owners and the main way that non-resident owners participate, especially if they're located around the world, is through proxies,” he says.

  • What was the true total of voting instruments?

    H. Marshall
    There is something missing in the court judgment. If the ballots & proxies were counted and totaled, then it would be clear that the commercial proxy was not included if it was not there during the AGM and the re-count. If it was not there, then how could it have been counted as one instead of 33? If the managers brought the proxy into the re-count room after the re-count, then the number of voting instruments would be the official total plus one.

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