Strata Property Law Project

A six-year project conducted by the British Columbia Law Institute from 2012 – 2018.

The project made 206 recommendations for reform. To date, only one report has been implemented in an amendment to the Strata Property Act 2016 s. 37-55 (Report on Terminating a Strata). *CHECK

Key Governance Recommendations:

1. Should the Strata Property Act establish statutory qualifications for council members?

BCLI Discussion

The Strata Property Act’s provision on “eligibility for council” only limits strata-council members to “(a) owners; (b) individuals representing corporate owners; [and] (c) tenants who . . . have been assigned a landlord’s right to stand for council.”

Setting out statutory qualifications for strata council members was considered in amajor set of reforms proposed in Ontario’s Condominium Act review. That review’s final report (at page 41) set out the following reasons for this recommendation:

Because condo owners come from all walks of life, many have little or no experience serving on a board of directors or dealing with the issues that a board must address. Board inexperience creates risks for condo communities. It can lead to poor decisions on repairs, investments or insurance coverage. It can also make directors vulnerable to more savvy managers, lawyers, contractors or even other directors who may try to take advantage of their inexperience.

Statutory qualifications can also protect strata corporations from having unscrupulous people take positions on their councils. Their recommendations for statutory qualifications was subsequently written into Ontario’s Protecting Condominium Owners Act, 2015 and became a part of Ontario’s Condominium Act, 1998:

Qualifications
(1) No person shall be a director if,

• (a) the person is not an individual;
• (b) the person is under 18 years of age;
• (c) the person has the status of bankrupt;
• (d) the person has been found, under the Substitute Decisions Act, 1992 or the Mental Health Act, to be incapable of managing property;
• (e) subject to the regulations, the person has been found to be incapable by any court in Canada or elsewhere; or
• (f) the person has not complied with the prescribed disclosure obligations within the prescribed time.

Disqualification
(2) A person immediately ceases to be a director if,

• (a) the person has the status of bankrupt;
• (b) the person has been found, under the Substitute Decisions Act, 1992 or the Mental Health Act, to be incapable of managing property;
• (c) subject to the regulations, the person has been found to be incapable by any court in Canada or elsewhere;
• (d) a certificate of lien has been registered under subsection 85 (2) against a unit owned by the person and the person does not obtain a discharge of the lien under subsection 85 (7) within 90 days of the registration of the certificate of lien;
• (e) the person has not completed the prescribed training within the prescribed time; or
• (f) the person has not complied with the prescribed disclosure obligations within the prescribed time.

The BCLI project recommended:

The Strata Property Act should require that a strata-council member (a) must be an individual who is at least 18 years of age, and (b) despite item (a), an individual is not qualified to be a strata-council member if the individual is (i) found by any court, in Canada or elsewhere, to be incapable of managing the individual’s own affairs, (ii) an undischarged bankrupt, or (iii) convicted in or out of British Columbia of an offence in connection with the promotion, formation, or management of a corporation or unincorporated entity, or of an offence involving fraud.

2. Should the Strata Property Act limit the number of proxy appointments that a person may hold?

BCLI Discussion

The BCLI Project acknowledged the perennial complaints about strata property proxy legislation is that it has encouraged  “proxy farming,” — “where an individual or small group of owners gather large numbers of proxy votes in order to gain control of the decision making process.” Proxy farming breeds resentment and apathy, and more importantly results in unrepresentative decisions. Proxy farming is a serious problem.

The Strata Property Act (like all other strata property legislation in Canada) places no limits on the number of proxy appointments that a person may hold for a general meeting. *Note: There is one British Columbia corporate statute that sets a hard limit on proxy appointments. The Cooperative Association Act provides that “[a] member may not vote more than 3 membership proxies.”

A balance needs to found between concerns about the abusive collection of large numbers of proxy appointments, which can allow a small, unrepresentative minority to hijack a strata corporation’s governance.—and consideration of the role proxies play in facilitating democratic decision-making. The committee made a point of noting that “Ultimately, the only effective way to fix the problem would be to stamp out the intimidation and abuses that proxy farmers use.”

The final recommendation: The Strata Property Act should not limit the number of proxy appointments that may be held for a general meeting.