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Release date: February 25, 2022
Case Law Update: Tharani Holdings Decision
Since November, 2017, the Condominium Act, 1998 (the Act) and the regulations thereunder have required any person running for election to a condominium corporation’s board of directors to disclose certain information to the unit owners in order to be qualified to be elected. Theoretically, a failure to make proper disclosure could disqualify the person from the board, and a unit owner could seek an order from the court to this effect. However, as recent decisions of the Ontario courts illustrate, the court will not necessarily intervene if it is of the view that the failures to disclose (such as they are) are technical in nature and are not material.
In Tharani Holdings Inc. v. Metropolitan Toronto Condominium Corp. No. 812, the applicant, which owned three out of the 64 commercial units in the condominium, brought an application before the Superior Court of Justice in which it alleged numerous breaches by the corporation and its board of directors of the Act, the regulations thereto, and the corporation’s governing documents. The alleged breaches included failure by three of the board members to properly comply with their disclosure requirements when they were candidates running for election to the Board.
The applicant also alleged various other breaches of the Act and the corporation’s governing documents. However, as the court found, there was no evidence of any substantive harm that the applicant had actually suffered as a result of these alleged breaches. Given the lack of evidence of harm, and what the court characterized as the “meaninglessness” of some of the allegations made by the applicant, the court dismissed the application. The court did note, however, that the corporation had behaved in a “lackadaisical” manner with respect to the rules governing its operation, and on this basis declined to award the corporation with its legal costs of the application.
The applicant then appealed. In a brief endorsement that was released in late January, the Court of Appeal dismissed the applicant’s appeal. In so doing, the court held that there was no basis to interfere with the application judge’s decision not to award any relief for “what were essentially technical breaches”. The court agreed with the application judge’s conclusion that, in the absence of evidence of actual harm, there was no reason to grant any remedy to the applicant.
These decisions reinforce that the court will take a purposive, practical approach when considering allegations of breach of the Act or the governing documents by a condominium corporation and its board of directors. Not every technical breach will merit a remedy. As always with litigation-related matters, every file turns on its own facts, and corporations are always well-advised to get legal advice on the facts of their own particular issues.
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