Board Meetings: In Praise of Older Technology

It is hard to think of e-mail correspondence as being old technology. Perhaps it is more accurate to consider how the evolution of laws can change how we can make use of (and are permitted to use) certain technologies.

When the Condominium Act, 1998 (the “Act”) came into effect, it opened the door to a wonderful concept called “Board Meetings by Teleconference”.

Specifically, section 35(5) permits holding board meetings by a way of “teleconference or another form of communications system”, provided that three criteria are met:

1. directors are able to participate concurrently;
2. a bylaw is in place to authorize this means of holding board meetings; and
3. all the directors consent.

While more recently developed condominium corporations already have the requisite by-law in place, older condominium corporations are required to play catch-up with respect to establishing a by-law to authorize the use of telecommunications for board meetings. From a practical perspective, at the board level, it has been our consistent practice to suggest to boards that a unanimous board resolution be put in place whereby all directors indicate their consent on a go-forward basis (until such time as consent is withdrawn). This resolution eliminates the possibility of having a director who is unable to attend a meeting and thereby unable to provide his or her consent to another director wanting to participate via telecommunications.

Perhaps the most difficult hurdle to overcome has been the requirement that the method of communication must allow directors to participate concurrently.

As society and technology evolve, there seems to be an increasing pressure upon all of us to address questions and concerns in real time. This is no different with regards to the operation of a condominium corporation where similar pressures are placed on board members and property managers. We all want it done yesterday.

As a result, we are finding that many boards have “fallen” into the practice of discussing the business of the condominium corporation in between board meetings via e-mail. At times, when circumstances demand, decisions intending to bind a particular condominium corporation are often made in this manner.

Here lies the crux. Pursuant to section 32(1) of the Act: “… the board of a corporation shall not transact any business of the corporation except at a meeting of directors at which quorum of the board is present.” Accordingly, regardless of the number of participating directors, if board members are communicating via e-mail, given that e-mail correspondence does not permit concurrent participation, business cannot technically be transacted.[1] Those board members, however well intentioned, cannot bind the condominium corporation as contemplated under the Act.

What follows is not a recommendation that the intent of the Act be circumvented or ignored; instead, it should be recognized that there are practical constraints facing all of us and individual to each of us which challenge the time which we choose to invest and volunteer with the benefit of others (e.g. volunteering one’s time to sit on the board). The Act requires board members to act honestly and in good faith to the standard of care of the reasonable condominium director. At all times, the interest of the condominium corporation as a separate legal entity should be considered first and foremost. Personal agendas have little or no place in the operation of a board. Assuming the overreaching intent of directors is to advance the interest of the particular condominium corporation, and assuming that there are practical realities and efficiencies which can be overcome through the use of e-mail correspondence, there is no provision within the Act that would prevent board members from communicating and from deciding on a course of action in relation to the business of the condominium corporation, provided that such decisions, as well sufficient background analysis regarding same, are ratified and reflected in the minutes of a properly called and held board meeting.

Using e-mail in this way is not without some risk. If a decision has been reached to commit a condominium corporation in a particular direction, steps should be taken to ensure that individual directors cannot later change their minds when the decision is subsequently tabled for ratification. Similarly, individual directors should ensure that there is sufficient detail within the minutes of the particular board meeting to substantiate the decision (being rectified) as one that could be reasonably made given the particular circumstances. This practice will assist in the event that a decision is later challenged.

While e-mail cannot replace the direct and concurrent communications required to formally bind the condominium corporation, e-mail, when used responsibly and when recognizing its limitations, allows for added flexibility and can encourage greater participation by those involved in decision making.

[1] “Concurrent” - Existing or in operation at the same time. (Canadian Oxford Dictionary, 2^nd Edition).

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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