Voting by directors at a General Members' Meeting
By Bruce D. Woodrow
Saturday, November 30, 2002
Eviction decisions are made by the board of directors. The member being evicted has a right of appeal to a general members meeting (“GMM”). May the directors vote at that GMM on the appeal of the board’s decision?
Members facing eviction argue that it is a conflict of interest or unfair for the directors to vote on the eviction at a board meeting and then again at the GMM.
Every member of a co-operative has one vote. Directors have special powers and obligations at board meetings. However, they have no more and no fewer rights and obligations than other members at a GMM. Like every other member, a director has an interest in and the right to vote on whether a member is evicted.
This position was confirmed in a case last year. A GMM upheld the eviction decision of a member in arrears. The member asked the judge to overturn that decision for various reasons, including the fact that the directors present at the GMM voted on the appeal. In written reasons, Madam Justice Molloy said:
3. Voting by directors
¶ 17 This is not a usual type of appeal process involving an independent quasi-judicial tribunal. It's an appeal to the general membership of a co-operative. There is nothing in the Act or the by-laws to warrant any different voting rights in respect of an appeal being heard at a general meeting than in respect of any other decision made by the members. Individual members are not required to abstain from voting on issues if they have a personal stake in those issues. Indeed, they will frequently, perhaps even usually, have a personal interest in the matters before them. Therefore, issues such as conflict of interest and bias do not arise in this situation.
¶ 18 The directors are members of the Co-op. The directors do not lose their right to have a say in the running of the Co-op by voting at a general meeting merely because they are directors. There is no reason to treat this issue any differently. Applying legalistic principles that are usually applied to appellate tribunals is not appropriate in this situation. The Legislature could easily have stipulated that directors who made a decision to terminate could not later vote on the appeal at a meeting of the general membership. However, the legislation does not say that, and I do not believe that I should read it in.
¶ 19 I therefore find that there was nothing wrong with the directors voting at the meeting.
It is interesting to note that if a GMM does not have quorum, any eviction decision being appealed is automatically upheld. If directors cannot vote on an eviction appeal, they should not be counted towards quorum for that issue. Ironically, the argument that directors cannot vote could actually result in an eviction decision being upheld that would otherwise be overturned (if the directors are needed for quorum).
The complete decision of Madam Justice Molly can be found at: Chadwick Towers Co-operative v. Naughton, [2001] O.J. No. 4578 (S.C.J, per Molloy J.).
