Specific Legal Issues
A Layman’s Takeaways from CAT Cases
From the CCI Review 2022/2023-2 November 2022 issue of the CCI London Chapter
If you haven’t been reading the CAT cases on our social media, please do. Every case has takeaways. The members of CAT are very thorough in their reporting of the issues, including the decisions and orders. When reading the cases, it is helpful to make notes along the way so that you can review them in conjunction with your own corporation’s governing documents to be reassured that you are managing in accordance with the legal requirements, and alleviate the possibility of escalating a case that might come before the CAT from your condominium. Sections of the Act and Regulations are referenced in the cases so you may review them.
You can find both documents here:
Condominium Act, 1998, S.O. 1998, c. 19
O. Reg. 48/01: GENERAL UNDER CONDOMINIUM ACT, 1998, S.O. 1998, C. 19
The right of an owner to examine or obtain copies of a condominium corporation’s records is set out in Section 55 (3) of the Condominium Act, 1998 (the “Act”):
The exceptions in s. 55 (4) of the Act include records related to employees, to actual or contemplated litigation, and to specific units or owners.
Where a Board Response to Request for Records is not in compliance with the requirements set out in section 13 of O. Reg. 48/01, Section 13.3 (7) requires the corporation’s response to contain a description of each record requested and, if the corporation is providing a non-core record, the estimated fee the corporation will charge for its provision. If the corporation is refusing to provide the record, it is required to set out an explanation of the reason for its refusal.
The Records prescribed in s.13.1 (1) of O. Reg. 48/01 include the following:
9. All reports and opinions of an architect, engineer, or other person whose profession lends credibility to the report or opinion, that the corporation receives and that relate to physical features of the property or of any real or personal property that the corporation owns or that is the subject of an agreement mentioned in section 113 or subsection 154 (5) of the Act entered into by or on behalf of the corporation.
The Condominium Authority of Ontario (CAO) ; Condominium Authority Tribunal (CAT) and the Condominium Management Regulatory Authority of Ontario continue to build resources for owners, directors, managers and others in the condominium arena. Check out their Resource Centre sections on each website for valuable support.
CCI London & Area Chapter shares chapter information and important Condo Tips that can be invaluable to all. A regular posting of CAT cases and decisions can be found on our regular Legal Matters Monday. Like us on social media, learn and share. It is important for boards and managers to know how the CAT operates and what you need to know when you are involved in a dispute.
Recent cases provided some of these valuable takeaways:
The Condominium Act Section 27(2) requires the board to have three or more directors, subject to the by-laws of the corporation. The number of directors can help condominium boards become more effective.
Some condominium directors have recommended that owners who agree to stand for election to their boards be informed of the requirements to participate in the CAO mandatory Director Training and even in advance of the being elected to the board.
Where one or more directors fail to complete the Condominium Authority of Ontario mandatory online Director Training in the prescribed six-month period, the director(s) cease to be a director which may very well affect quorum on the board. The board cannot conduct any business except at a meeting of directors, where there is quorum. These meetings can be held by teleconference.
CONDOMINIUM BUSINESS & OWNERS’ MEETINGS
The primary purpose of a condominium board meeting is to conduct business where the corporation’s board of directors makes decisions, issues approvals or performs any other task that affects the governance or management of the corporation. Common examples of the board’s business include creating, modifying or terminating contracts with vendors or appointing new directors to fill a vacancy on the board.
Section 32(1) of the Act requires that condominium boards “not transact any business except at a meeting of directors at which a quorum of the board is present.” Board decisions (including tentative decisions reached by way of email) must be ratified at board meetings (and recorded in minutes for the meetings).
Previous Tribunal decisions have adopted “a reasonably high standard of expectation for accuracy” of minutes. They have spoken to the “special place and purpose in helping to ensure that ‘the affairs and dealings of the corporation and its board of directors are an open book to the unit owners,’ and to helping owners protect their “unique interest in how the corporation is managed.”
The pandemic did not negate the need to carry on with corporation business in accordance with the Act.
It is not reasonable that a condominium board with the aid a licensed condominium manager, did not know of the necessity to hold meetings in order to conduct the business of the corporation and of its obligation to keep minutes of such meetings, and, in turn, of its duty to make such minutes available upon receiving a request in accordance with the Act.
It has been noted that some corporations did not have board meetings, during the pandemic; in fact, some cases of corporation business, which should have been carried out at an official board meeting. was conducted informally in various forms.
While the pandemic may be recognized as an excuse for delay, a condominium corporation exists for the sole purpose of managing the property on behalf of the owners and must conduct its activities in accordance with the requirements of the Act., including fiscal responsibility and the keeping of financial records.
Condominium corporations cannot operate in accordance with law without holding board meetings where resolutions are duly passed and every condominium bears a strict, clear, and ongoing statutory duty to keep adequate records of such meetings, i.e., minutes. The lack of board meeting minutes is a significant breach of the Act and introduces uncertainty as to the authority of the condominium’s transactions and affairs, impacting fundamental rights of unit owners to have access to a record of the condominium’s key decisions, including decisions relating to budgets, enforcement actions, banking arrangements, and contracts for services. The lack of board meeting minutes cannot be considered either acceptable or reasonable.
The Annual General Meetings (AGMs) are owners’ meetings that the condominium corporations must hold within specific timeframes noted in the Act. AGMs must be held within the deadlines under the Condominium Act (including extensions applicable during the pandemic). AGM Minutes must then be prepared.
The COVID-19 Response and Reforms to Modernize Ontario Act, 2020, which established temporary provisions
for hosting an annual general meeting, did not waive the requirement for hosting the meeting(s). The temporary
- Condominium corporations can hold owners’ meetings and votes may be cast by telephonic or electronic means, without the need for a by-law that explicitly allows this.
- Owners are deemed to be present at the meeting and count towards quorum in accordance with the temporarily amended section 50 (2) of the Condo Act if they:
- Personally connect to the meeting;
- Have an individual represent them by proxy (using the mandatory proxy form) to connect to the meeting on their behalf; or
- Vote prior to the telephonic or electronic meeting. Note that advance votes can only be used for and count towards quorum for the items voted on and set out in the meeting agenda.
- Condominium corporations can use electronic means to deliver meeting-related materials (e.g., meeting notices) to owners, even if there is not an agreement between the owner and the condominium corporation to allow this.
It is important to remember that the temporary provisions do not cover mail-in votes. Votes cast in advance through mail-in ballots can only be counted if the condominium corporation’s by-laws allow for mail-in voting.
RESPONSIBILITY OF THE CORPORATION TO KEEP ADEQUATE RECORDS
The word ‘adequate’ is frequently referenced as they describe reporting in corporation records, especially in the minutes of meetings; but also other areas of corporation business. Inasmuch as corporation records are concerned, adequate (from the dictionary) could be defined as “sufficient for a specific need or requirement”.
Some cases noted: At the very least, all managers and directors should be knowledgeable in the requirements to maintain records that may be requested by owners.”
The Tribunal noted that the corporation is responsible for maintaining corporation records and not its condominium management provider. It is also worth commenting that a condominium corporation and its board cannot wash its hands of its duties by abdicating them to its manager. The corporation, as represented by its board, is the party responsible for satisfying records requests and is accountable for failing to ensure that the manager is adequately equipped, informed, and instructed so the request can be properly fulfilled.
An owner may request records to which they are entitled and expect an appropriate Response to the Request for Records from the Board.
In one of the cases, it was offered that the Act requires minutes to be adequate “to document a board’s business transactions and to show how the Corporation’s business affairs are controlled, managed and administered”, with “sufficient detail to allow Owners to understand what is going on in their Corporation, how decisions are being made and what the financial basis is for the decisions.”
Section 55 (1) of the Act lists “a minute book containing the minutes of owners’ meetings and the minutes of board meetings” as one of the records a corporation “shall keep.” Section 13.1 (2) 2 of O. Reg. 48/01 specifies this record shall be kept “at all times”. The minutes of board meetings have always been among the records listed in section 55(1).
The approved financial statements, the auditors report, the current plan for future funding of the reserve fund and the most recent auditors report are all records listed in section 55 (1) of the Act as records that a condominium corporation is required to keep. These are core records as per O. Reg 48/01 and the Applicant is entitled to all these records. Per section 67 (1) of the Act, audited statements are to be prepared every year.
The board is responsible to ensure that records are being adequately maintained. Where a corporation is unable to provide records – the reason for it not happening is important. The question that will arise at the CAT is simply “is the Corporation keeping adequate records?”
Where a request for core records is declined with no reasonable excuse (or the corporation has disregarded a request for records) means the corporation is in breach of its obligations under the Act. The CAT may apply a penalty against the corporation for the failure. Board responses to Requests for Records are legislated requirements under provincial legislation, with prescribed forms, and a reply to the request is due within 30 days.
Section 55 (4) (c) of the Act states that the right of an owner to examine or obtain copies of records does not apply to records relating to specific units or owners.
Every corporation should have policies or procedures in place to invoice and to accept payment where there is a fee for providing non-core records to an owner so that neither the owner nor the corporation /management are inconvenienced.
ENTITLEMENT TO RECEIVE RECORDS REQUESTED
Section 46.1 (3) of the Act requires a corporation to keep a record of owners and mortgagees which includes the unit number, the name of the owner or mortgagee, and their address for service in Ontario. An owner is not entitled to the e-mail addresses of owners or mortgagees; however, the record of owners and mortgagees is a record to which an owner is entitled.
According to Section 83 (1) (a) of the Act, a unit owner is required to notify the condominium corporation within ten days of leasing their unit. Section 83 (3) of the Act requires a condominium corporation to keep a record of the notices that it receives. The owner is entitled to a copy of the record of notices relating to leased units.
There is the expectation under the Act that records should be provided when requested in accordance with the Regulations without requiring the person making the request to start Tribunal proceedings.
It is recommended that all agreements with a corporation should be reviewed each year. The board would be well served to set up a file on each service provider, to maintain records of complaints and cheques, invoices and work orders that may be requested in future.
Where there is no written agreement or contract with a particular service provider the invoices, work orders, and other documentation which demonstrates the non-written agreement between the corporation and the service provider.” A Purchase Order is not a contract.
ABOUT PENALTIES BY CAT
Penalties serve a variety of purposes. They may serve as a specific deterrent by sanctioning unacceptable conduct. Penalties may also serve as a general deterrent by communicating to a class of interested people and organizations within the condominium community that such conduct is to be avoided. The Tribunal has the discretion to award costs (per Section 1.44 of the Act).
The CAT Practice Direction: Approach to Ordering Costs (effective January 1, 2022) is outlined in this document. https://www.condoauthorityontario.ca/wp-content/uploads/2021/12/CAT-Practice-Direction-Approach-to-Ordering-Costs-January-1-2022.pdf
In one case, it was interesting to note this decision by the CAT member:
“It is in part, if not primarily, to ensure that all condominium directors have at least that basic level of understanding that they are required under the Act to complete mandatory training courses provided by the Condominium Authority of Ontario (CAO). It appears to me that this board may require a refresher. Therefore, under subsection 1.44 (1) 7 of the Act, I will order that each of the current board members takes or retakes the mandatory director training prescribed under subsection 29 (2) (e) of the Act within 30 days of the date of this decision. By the end of that 30-day period, the Respondent shall provide the Applicant with the evidence of completion that is provided by the CAO. The directors are encouraged to also consider taking any advanced training course the CAO also provides, though I do not make this part of my order.”
Trish Kaplan, CCI (Hon’s) is the current part-time Administrator for the chapter; having served in the position from April 2003 to September 2010. She received the CCI Distinguished Service Award from CCI National in November 2006. Trish served as a director on the chapter board from 2010-2015 and was subsequently returned to the position of Administrator.
Trish is a condominium owner, served as a director of the corporation she resides in for a time and is a retired condominium manager.
Her experience in the different areas of condominium continues to be a benefit to the chapter and its members.
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