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Home COFSAB Forum Legislation, Bylaws and Rules How to apply the rules against Conflicts of Interest

  • How to apply the rules against Conflicts of Interest

    Posted by Karen on April 10, 2022 at 4:23 pm

    gkhryciw

    Premise:

    X is a unit owner and a board member of condominium corporation ABC. Board members are voting to select vendor V1 or V2 as ABC’s designated supplier. If X is an owner of V1, then X’s interest in V1 conflicts with his duty to act in the best interests of ABC and X is barred from voting.

    Proposed application:

    All unit owners are voting in respect of their associated units on a motion to remove X from the board.  If X votes, his personal interest in remaining on the board conflicts with his duty to act in ABC’s best interests. This conflict bars X’s right to vote for himself.

    Extension:

    Going beyond the premise above, if X owns three condo units, X’s normal right to one vote in respect of each unit as specified in CPR Schedule 4, S 7(2) is similarly barred by the conflict as in the proposed application.

    Question:

    Is X’s right to one vote for himself in respect of each unit appropriately barred by the conflicts of interest rule?

    Karen replied 4 months ago 1 Member · 0 Replies
  • 0 Replies
  • Karen

    Administrator
    April 10, 2022 at 4:24 pm

    GibsonT

    Agree with your premise that X cannot vote on matters to hire a service provider that he has an interest in.

    However, if there is a motion to remove X from the board, I believe X has a right to vote on that motion.

    • Karen

      Administrator
      April 10, 2022 at 4:25 pm

      MarkH

      @terry-g

      I disagree with you on “However, if there is a motion to remove X from the board, I believe X has a right to vote on that motion”.

      A cursory review of the lengthy entry in Roberts Rules of Order Newly Revised (11th edition) indicates that after a trial (on a serious issue, of course) that “When the closing arguments have been completed, the accused must leave the room”. (Page 667) The assembly then proceeds to debate a decision.

      It goes without saying (so I’ll say it anyway ;-): check your bylaws to see what they say. If the bylaws are silent, then refer to the rules of order adopted by the condominium corporation.

      • Karen

        Administrator
        April 10, 2022 at 4:26 pm

        GibsonT

        I learn something everyday!  THANKS Mark!

        • Karen

          Administrator
          April 10, 2022 at 4:26 pm

          MarkH

          @terryg

          Your statement that you “Agree with your premise that X cannot vote on matters to hire a service provider that he has an interest in” goes only part of the way on the matter. The recent scandals over Morneau and Trudeau in the WE affair indicates that Canadians expect the party who has an interest in a decision to recuse themself from the discussion AND the decision.

          • Karen

            Administrator
            April 10, 2022 at 4:28 pm

            gkhryciw

             

            @MarkH-2

            Considering X’s right to vote for himself on a motion that he be removed from the board:

            Roberts’ reference to the procedure for removal of the accused at some point in a trial shines a light somewhere but doesn’t seem to help me distinguish X’s trial from a rule preventing X’s conflict:

            1. a trial examines evidence, i.e. a historical fait accompli to determine if the accused has already acted contrary to the law

            2. a rule eliminates any future possibility of X benefitting from being a board member or appearing able to do so from a conflicted position, regardless of anything being done.

            Within part B, two cases exist:

            1. the existing conflict rule is tantamount to a preemptive ruling of guilt; it prevents everyone from having any advantage, positive or financial, arising from their position, full stop.

            2. since X’s position on the board gives him all attendant, board-related rights which puts him above the other unit owners who, e.g. can only vote at the AGM and a special general meeting, X may not vote for himself to maintain the advantage of his position.