Quarterly Report - Association of Condominium Managers of Ontario

Opinion
By the editor
WHILE doing some research on condominium
management, we came
across a couple of interesting case law
backdates from 1989 and 1992. Both were
based on the previous Condominium Act
and were about owner’s access to corporation
records. We found this in Bob Gardiner’s
excellent 2001 book, The Condominium
Act, 1998 – A Practical Guide.
Bob has allowed us to reprint parts of
these precedent-setting cases because we
haven’t heard about them before, and
maybe you haven’t either.
McLean v. MTCC #647 and McKay v.
WNCC #23 are both about inappropriate
actions of condominium managers and
boards of directors when dealing with
owners who requested access to condominium
records. In the new Act, sections
55(1) to (10) are the updated versions of
the former Records section.
We were quite surprised to read in
Bob’s book how judges in two court cases
ruled, very clearly and concisely, that neither
the manager nor the corporation can
legally prevent owners from having access
to all but certain confidential records. Denied
access to records generally does not
include financial statements, estoppel (now
status) certificates, liens on that owner’s
unit, the budget, common element assessments,
board and owners’ meeting minutes
and reserve fund studies.
Do condominium managers and directors
realize how serious this matter of unrestricted
owners’ access to records really is?
In more-recent cases, YCC #60 v. Smithers/Brown
and Smithers v. YCC #60, the
judge ruled owner Ms. Smithers court applications
to enforce her entitlement to access
the condo records (among other
applications) was appropriate. She was
also entitled to pursue fraud claims with
the police and to have laid charges.
Ms. Smithers had been accused by the
corporation of disturbance; interfering
with management operations; distributing
written material to residents, board, management
and security; and using profanity.
The judge ruled that none of this was a
“nuisance” as described in the corporation’s
rule 21, which prevented noxious or
offensive activities affecting other owners.
“Most of the evidence of harassment and
interference relates to members of the
board, officers and management” but that
type of conduct was not subject to the
nuisance rule.
The judge felt that “if Ms. Smithers behaviour
was to be restricted, as the corporation
requested, it would reduce the burden
on the board and management, but it would
send a message that a challenge to the authorities
will attract serious negative consequences.
That message was contrary to the
legislative environment of the Condominium
Act, which is intended to encourage
openness. Even though the relationship
between Ms. Smithers and the board was
dysfunctional, unless the corporation could
show that she had breached a provision in
the declaration or rules without mitigating
factors, the court should not be an instrument
for making an order that would be
seen to be punishment of Ms. Smithers.”
Two other recent cases in different
courts were both between Rohoman v.
YCC #141 and they partially dealt with inspection
of records. The judge ruled:
1. The board of directors is under a legal
obligation to disclose the unit owner
list to the applicant (Rohoman). This section
of the (old) Act is to be broadly interpreted
to allow unit owners open and
liberal access to the affairs of the board
and the corporation.
2. The board initially denied the applicant’s
two requests to inspect the records,
but later permitted access for a limited period
of two hours, with no further inspection
permitted. The access permitted to
the applicant was not reasonable, the
judge wrote.
In the second Rohoman (and others)
case against YCC #141, some of the applicants
had indicated in writing to the property
manager that they would attend at the
office to inspect the records. Rohoman
and four other owners arrived at the office
18 minutes before closing. Subsequently
there was an argument (concerning legal
rights) and raised voices by the owners,
which resulted in the inspection of the
records not being permitted.
The corporation lawyers then wrote to
those five owners, prohibiting them from
attending personally at the management
office in the future and threatening legal
proceedings. A court application was then
launched by the owners, following which
the judge ordered that the applicants be
allowed to inspect the records of the corporation
– which took place at the corporation
lawyer’s offices.
Some condominium managers believe
that minutes of meetings must be approved
before they can be shown to owners
who request access. The Condominium
Act is silent on this, but Wainberg’s Rules
of Order, Rule 3025, says verification of
meeting minutes is not required by any
law. Among the Wainberg forms for society
meetings, Form S-27(6) shows how
minutes of a previous meeting should be
verified. A footnotes states: “Unless required
by the constitution or the bylaws,
reading or verifying the minutes of previous
meetings is not necessary.”
Finally, all managers should be aware
of section 55(8) of the Condominium Act,
which states:
“A corporation that without reasonable
excuse does not permit an owner, or an
agent of an owner, to examine records, or
to copy them under this section, shall pay
the sum of $500 to the owner on receiving
a written request for payment from the
owner.”
The owner may recover the sum from
the corporation by an action in Small
Claims Court.
Bob Gardiner’s book describes this as
“a financially unfeasonable action,” probably
because the costs of making and delivering
a claim are no longer cheap, it
takes a long time to get to court, and the
owner is going to pay at least a percentage
of the penalty himself, ultimately.
However, if it is a matter of principle,
the owner can always donate the money to
charity, after deducting expenses, just to
prove to the corporation that these owners’
rights are not to be taken lightly.❏
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14 Third Quarter 2005