Alberta court considers how to tally votes on strata-property special resolution
April 5, 2016
BY Kevin Zakreski
A recent Alberta case involving a special resolution to change the basis in which condominium owners fund their common expenses turned on “the manner in which persons entitled to vote are to be counted.”
1597130 Alberta Ltd v Condominium Corporation No 1023241, 2016 ABQB 195, involved a 24-unit condominium complex. The condominium was made up of 22 units of residential apartments, one unit representing “essentially the common property surrounding the existing building,” and “Unit 1,” which was “assigned to developer for future re-division.”
The developer ran into financial trouble at some point during the development phase. Title to Unit 1 ended up being held by “the successor to the [developer’s] mortgagee which acquired title through foreclosure.” An administrator was appointed, and it had “supervised remedial construction to complete the Residential Units and acquire occupancy permits.”
Faced with cost overruns and further construction, the administrator
applied for an Order directing that the costs of this construction be distributed proportionately among only the Residential Unit holders. The Administrator argued that Units 1 and 2 (the bare lot units) should not have to pay a portion of the construction cost based on unit factor because those lots did not receive any benefit from the construction.
The court refused to grant this order. The administrator, in turn, sought to change the basis for calculating contributions, using a statutory procedure analogous to section 100 of British Columbia’s Strata Property Act. In BC, such a change would require a resolution passed by a unanimous vote, but Alberta’s legislation contains a different voting threshold: passage of a special resolution.
Under Alberta’s Condominium Property Act, “special resolution” is defined to mean “a resolution
(i) passed at a properly convened meeting of a corporation by a majority of not less than 75% of all the persons entitled to exercise the powers of voting conferred by this Act or the bylaws and representing not less than 75% of the total unit factors for all the units, or
(ii) agreed to in writing by not less than 75% of all the persons who, at a properly convened meeting of a corporation, would be entitled to exercise the powers of voting conferred by this Act or the bylaws and representing not less than 75% of the total unit factors for all the units.”
Paragraph (ii) of this definition was at the heart of this case. The resolution was supported by the administrator and one other owner. Four residential owners opposed the resolution. The supporters commanded 8779 unit factors out of a total 10 000 for the condominium as a whole, easily surpassing the threshold of “75% of the total unit factors for all the units.” (Alberta’s “unit factors” are roughly the equivalent of British Columbia’s “unit entitlement.”) The question for the court was whether the resolution’s supporters also had the support of “not less than 75% of all the persons who, at a properly convened meeting of a corporation, would be entitled to exercise the powers of voting conferred by this Act or the bylaws.”
The administrator argued that any question about whether this threshold was met should be determined by counting the number of units voting. According to its argument, “as there are 24 units, there should be 24 persons entitled to vote. As the Administrator owns 18 units, those 18 votes alone met the 75% threshold.”
The residential owners argued that these votes should be tallied in a different way, by counting up the number of persons voting. Since there were only six persons voting in this case, and four opposed the resolution, the statutory threshold wasn’t met.
The court ultimately agreed with the residential owners, stating that:
Logically, once an owner or mortgagee becomes a “person . . . entitled to exercise the powers of voting,” that person does not then become multiple persons simply because they own multiple units. That owner is still one person. He simply owns more than one unit. The Administrator is only one person entitled to exercise the powers of voting.
The value of this decision as a precedent may be limited, however. As the court noted, Alberta has already enacted legislation bringing its rules on voting into line with the one-vote-per-strata-lot standard that currently prevails in British Columbia, Ontario, and Newfoundland and Labrador. Alberta’s legislation is not yet in force.
In the result, the court found that “the Special Resolution did not pass as the voting response was insufficient to satisfy the threshold of s 1(1)(x)(ii) of the [Condominium Property Act].”
