Monday, 2 May 2016

Board Elections & Ethical Principles

This article will be mostly dedicated to the election held during the AGM (Annual General Meeting) of 2015, and how the existing election rules imposed by The Board block efficiently all serious attempts to introduce any meaningful reforms designed to protect the long-term interests of owners. 

The journey to the 2015 AGM started on Feb.23/15. For three consecutive days (Feb.23,24,25),The Board set up and manned a station near the mail room to intercept unit owners trying to pick up their mail, and persuade them to sign proxy forms. As an electoral candidate, I personally joined The Board, during the three days mentioned above, from 5.30pm to 7.30pm, and witnessed the procedures, arguments, concerns voiced by the owners, and the answers provided by The Board.

The most common grievance mentioned by unit owners signing proxy forms, was the high maintenance fees approved by The Board, based on inputs solicited from “The Experts of the Industry”. A point even Mr. Hovsim Janovo (not the real name of the candidate), acknowledged during his election speech of March 2015. With every complaint voiced about high maintenance fees, The Board was peddling fear to silence unit owners, and the tactic worked exceptionally well, especially with owners who never make an effort to check the financial statements delivered with the AGM kits.

The Board’s reply was very simple: “Our maintenance fees are within the averages of “The Industry”. If we don’t maintain the existing trend, we will have to impose a Special Assessment”. Not a single owner dared to challenge Board members on the spot by pointing out that, according to figures circulated during annual AGMs, year after year owners were told that The Board has approximately $1.400.000 in the Reserve Fund of our building, generating more than $13.000 in annual interest. A Special Assessment is imposed on unit owners when, for example (other scenarios do exist also), a huge amount of money is spent on a repair that engineers failed to properly address in a Reserve Fund Study. In other words, the Board accepted bad advice at face value, and was forced to impose on unit owners thousands of dollars on top of the existing maintenance fees to cover the shortfall. Board members conveniently forgot that they can be sued by owners for lack of due diligence (depending on certain factors), and owners can have recourse to a lawyer in order to get a court order to stop the special assessment pending a review (forensic accounting), by using Section 134 of the “Condominium Act” of Ontario. Instead of reassuring unit owners that their legitimate grievance (high maintenance fees) will be reviewed and measures will be taken by The Board to contain it, owners were given the bad choice of accepting high maintenance fees, or the nightmare of a high maintenance fees fused to the heavy financial burden of a Special Assessment.

Following the AGM 2015, I received several emails from unit owners commenting on the election process. Others neighbors stopped me in the underground parking lot to discuss briefly their doubts about the questionable methods used to run the election. On March 30, 2015 I wrote a letter to The Board reproduced in full below.

Attn: Board of Directors,

March 30, 2015

Dear Members of The Board,

Allow me to make it clear from the introductory paragraph of this letter, that nothing in the content of this document should be construed, implicitly or explicitly, as an allegation of wrong doing in the electoral process used by The Board, and I am not challenging under any form the election results announced during the AGM of March 2015. I don’t even want The Board to send me a reply, simply because I am documenting my views and observations of events motivated by the faint hope that when the time comes for the AGM of 2016, some of the recommendations can be implemented in the name of raising the bar on integrity, transparency, and a solid dedication to the fundamental principles of democratic elections respected by the country at large.

For any person who has attended the AGMs of 2014 and 2015 it is obvious that we had significant changes in the way the election process was handled by 2 lawyers belonging to the same law firm. The 2014 election process was managed by Mr. Pietro Gromeco (not the real name), who chaired also the AGM on behalf of The Board. Two positions were contested and three candidates were involved. 5 minutes were assigned to the speech of each candidate, and two separate ballot forms were used, one per position targeted by two candidates.

The 2015 AGM was chaired by Mr. William Kleinbeck (not the real name) who used different arrangements for 2 positions contested by three candidates. He decided to limit the speech to 2 minutes. Somehow it was determined that one ballot form, reflecting the names of three candidates should be used for two contested positions, and the winner was declared based on the number of votes collected by each candidate in an descendent manner.

The method used in the 2015 AGM is known for any person who is familiar with statistics jargon as “Statistical Dilution”. In a nutshell it dilutes the pool of voters present at the AGM into 3 candidates rather that 2 separate ballots for each of the 2 positions at stake. I have seen it used in Union elections during my employment periods in unionized work environments, where the union leadership did not want to accept into its rank a person classified as an “Undesirable”.

While the management staff was collecting the ballots during the AGM of 2015, I approached Mr. Kleinbeck and asked him to announce the numbers of votes each candidate managed to obtain. His answer was plain NO. When asked which specific section in The Condominium Act” states that he cannot announce the number of votes earned by each candidate, he replied: “The Act is not clear on that issue, and in the absence of any clear details, I have to follow the instructions received.” When prompted to explain why he was instructed to refrain from revealing the number of votes each candidate received, his answer was:
 “Board members have been harassed by owners who lost elections, and to prevent harassments we have to refrain from announcing the number of votes each candidate received.”

In an email dated March 09, 2015 I asked the Senior Property Manager, how many harassments cases targeting Board members were brought to the attention of the management team during the last 10 years, and was any harassment reported to The Police, she indicated that NO Board member was the subject of any harassment activity during the last 10 years, and based on her statement we can safely assume that Mr. Kleinbeck was talking about his professional experience in general, without any direct relevance to our building.

Of course once the voting numbers were made available to Mr. Kleinbeck, the winners were announced and at the end of the AGM a decision to destroy the ballot forms was adopted, while simultaneously a second decision was made to retain proxy forms for 90 days.

On March 06, 2015 I submitted to the senior property manager a formal request to review and analyze the proxy forms used for the AGM. In an email dated March 09/15 she pointed out that
Management will need to review and redact any identifying information, as required by Subsection 55(4)(c) of the Act.  Based on industry standards, the Corporation charges Owners $25.00 per hour to prepare requested documents and $0.25 (twenty-five cents) per page for copies.”

It is ironic that the senior property manager did not have any qualms or privacy related reservations when, for 3 consecutive evenings at the end of February 2015, together with Board members, I guided unit owners and helped them fill out proxy forms, and each unit owner had to clarify his/her name, unit number, and select on the spot 2 candidates out of 3 listed on the proxy form. Only a request for a full scrutiny of proxy forms after the election, triggered in the mind of the senior property manager the imperative to protect the privacy of unit owners, leaving me with the impression (not an authoritative verdict) that the “Privacy Issue”, was another convenient tool in the arsenal of The Board and The Management Team to exercise a tight control on the entire electoral process.

Following the legal opinions expressed by Mr. Kleinbeck concerning the issue of “Recorded Vote”
(how many individuals voted for each candidate in an election), rooted in Subsection 52(2) of the Condominium Act  that states “At a meeting of owners, a person entitled to vote at the meeting may request that a recorded vote be held on any item scheduled for a vote either before or promptly after the vote. 1998, c. 19, s. 52 (2).”  I contacted several sources to obtain a clearer picture and a better understanding of what the concept of “Recorded Vote” means, and how it should be handled during an AGM or an electoral process and the following points emerged:

a)     Mr. Kleinbeck was right when he indicated that The Act is not clear on the issue. Many lawyers share his view, especially if they represent corporations or management companies. A significant number of lawyers disagree with Mr. Kleinbeck’s opinion, and point out without mincing words that ”It is our general view that, if requested, owners are entitled to know the “number results” of a vote - in other words, owners are entitled to know how many individuals voted for or against a particular item, or how many individuals voted for each candidate in an election. If such a request is made, unless the person making the request agrees to be told privately of the results, the chair of the meeting would be required to announce the number results for the particular vote.”
b)     Several parties who are currently playing a major role in the overhaul of The Condominium Act, have submitted to provincial lawmakers the argument that when the current Condominium Act was passed in the late 1990s by the Legislative assembly of Ontario, the province of Ontario in particular and Canada in general, had accumulated more than a century of democratic tradition. Legislators assumed, albeit naively, that election integrity rules-clearly outlined by Elections Canada, will be used to run elections at The Board level, since the same integrity rules are used by the three levels of government we have in the country at large.
c)      Central to the whole issue of electoral integrity are the following facts-source: Elections Canada (
  • Verifiability/auditability: voting results can be verified after the initial count.
  • Transparency: the process is open to outside scrutiny.
  • Neutrality: electoral procedures or materials do not favor one candidate or party over another.
For the last 12 years I have monitored closely the AGMs which are an integral part of a political discourse between  a governing body (The Board), with the authority to collect and spend millions of Dollars, and subjects (unit owners) who have a legal obligation to comply with any decision imposed on the group. The way The Board is handling the AGMs has lost its moral structure and purpose, and has been converted into an affair of group interest and personal ambitions.
The big question to be answered in 2016 is clear and simple: “Will The Board remain committed to a mediocre level of transparency during elections, or will it instruct the lawyer chairing the 2016 AGM to adhere to the three principles mandated by Elections Canada, explained above?”   

Respectfully yours

In a letter dated January 11, 2016 a new attempt was made to gauge the commitment of The Board to reform the existing electoral procedures used during the AGMs. On behalf of The Board, The Management Team clarified that the elections are managed by the lawyers of The Board "...with the Board’s approval and in accordance with standard practices."  

"Standard Practices" in this case means, the prevailing methods used in the "Condo Industry" at large, where a lawyer hired by The Board exploits casually the existing loopholes in “The Condominium Act” to argue that the law does not specify how to run elections during an AGM, therefore a lawyer is allowed to disregard blatantly the fact that he was retained to serve a "Corporation" made up of those who sign the cheque for the lawyer’s services, and unit owners who designate the 5 individuals in power (The Board) as agents entrusted with the task of protecting the common good of the  unit owners.
 “Standard Practices” during AGM elections cannot and does not mean the standard practices promoted by Elections Ontario or Elections Canada, because the two institutions insist that any election held in the Province of Ontario in particular, and the rest of Canada in general, should meet the highest standards of transparency, and all the procedures used, from ballot counts, to the number of votes each electoral candidate scores are declared openly and are subject of a full recount if any candidate decides to challenge the outcome of a vote.

In the letter of January 11, 2016 The Board was pressed to answer the following question: “If Board members are so convinced that The Board supported candidate did win an election based on the will of the majority of unit owners, why do they try to bury the truth by seeking a resolution to destroy ballot papers and thus eliminate permanently the possibility of a recount?”  The question remained unanswered up until the publication of this article.
In the same letter, a significant effort was made to highlight the importance of “Ethics”, what ethical standards and ethical behavior should be in all matters of governance. Canadian courts and more specifically court decisions reached in Ontario, British Columbia, and Newfoundland have pointed out that ethical behavior in a legal dispute “… goes beyond the application of the letter of the laws and rules, and relies on an internal set of values (temperance, courage, justice…) that push an individual to serve the “Common Good” without any explicit instructions from the laws to do so.” 

If the previous definition of “Ethical Behavior” by Canadian Courts is valid, then it is fair to argue that  Board members have not internalized critical values in the way power is used to run elections. When given a choice to select a lawyer who believes that the number of votes received by each electoral candidate should be announced, The Board is selecting lawyers ready to exploit loopholes to prevent the announcement of any detail. When given the choice to preserve the ballots and make the entire electoral process open to a recount, The Board is deciding to destroy ballot forms and permanently eliminate the possibility of a recount. When given a choice to adhere to higher measures of transparency, The Board is insisting to adhere to the “Standard Practices” of the industry even if such standards do not comply with the basic rules of ethical behavior. Here, I find it very appropriate to quote Mohandas Gandhi who, in attempt to discredit the “standard practices” of the ruling elite of India, argued that “An error does not become a truth by reason of multiplied propagation, nor does truth become error because nobody sees it.”

Please note that the courts have also asserted in more than one decision, that what is considered unethical is not necessarily illegal and often unethical behavior does not lead to any form of prosecution. The most obvious example to illustrate the previous argument is an extra marital affair. It is unethical in the view of most Canadians, but no court will prosecute a person for an extra marital affair often justified as a tool/measure to introduce some zest into a stagnating marriage. The convenient excuse clearly indicates that the person engaging in such an abhorring behavior has failed to internalize basic moral values, but nevertheless the courts do not see any criminal dimension in the behavior itself.
Allow me also to reiterate one more time that all the opinions expressed in this newsletter are my personal opinions, rooted in legal facts, reviewed by legal experts who unconditionally support the notion that there are no allegations of any wrong doing, neither in the behavior of the lawyers hired by The Board, nor in the decisions made by The Board to restrict access to the inner circle of power of an individual who is not deemed as good Board material because of his non-conventional views, often at odds with the “Standard Practices” of the Condo Industry.
In the end the following comment emailed by The Senior Property Manager paints a very clear picture of “The Group Think” of The Board: Please note that the election at the AGM is not for provincial or federal office.” In other words, please note that the territory where you live is the private fiefdom of The Board, and the five feudal lords of the realm can and will do whatever is needed to stay in power. I am sure that not all Board members endorse the existing measures, but any person who has studied social psychology knows that a group has one leader who leads and the others are mere followers who feel a desperate need to belong to a reality bigger than their own self, and often they suppress their personal dissenting views to promote the image of group cohesion, conformity, and loyalty.
Unfortunately for most of the unit owners suppressing dissenting views is nothing but a clear obstacle to the growth of the true democratic spirit, a spirit without which we will be condemned to the unsustainable 100% increases every 10 years, a fact that should propel us to seek serious changes in the electoral process, simply because you can’t shape a new future by enforcing extremely flawed practices from the past.
In March 2016, during the Annual General Meeting elections were held, and for the thirteenth consecutive year, Board supported candidates won the election. The lawyer chairing the meeting refused to provide the number of votes obtained by each candidate, the ballots were destroyed, and while a few solitary voices tried implicitly to point out that the charade called “Election” is nothing but a mockery of Canadian democracy, it was business as usual for The Board and The Management team at the end of the evening.
Many unit owners asked me at the end of the evening the following question: “How can opposition candidates consistently  lose elections year after year, while more than 50% of unit owners do not attend AGMs, and one out of two of the remaining 50% who sign proxy forms or attend in person, constantly complain about Board policies that are imposing 100% increases in maintenance fees every 10 years?”
One possible explanation for the uninterrupted success of The Board in winning elections for Board supported candidates and the guaranteed failure of all opposition candidates could be Divine Intervention.
Admin The 215 Forum © 2016 

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