Governance

October 12, 2018 Published by Toronto and Area Chapter - By David E. Thiel

The Condo Board Bully

From the Fall 2018 issue of the CCI Toronto Condovoice Magazine.

Those involved in the condominium industry long enough – directors, condominium managers, contractors or consultants – will inevitably encounter a "Condo Board Bully". This person pushes other Board members around, on occasion completely disregards legal requirements and generally causes disruption at the Board level.

In an Ontario court decision released in March 2018, the facts included that one director assaulted another director with a chair. While this is an extreme example of bullying, the degree and type of bullying behaviour can vary significantly. Some forms of behaviour from the Condo Board Bully are more subtle than being hit by a chair but nonetheless harmful to the condominium and its directors and owners. Let's explore the phenomenon and look at strategies to address such bullies.

A. What is a Condo Board Bully?

The Condo Board Bully is a board member, often but not always the President, who regularly imposes his/her own agenda and ideas in a forceful/intimidating manner upon other members of the Board. Bullying is obviously a very serious issue in today's society, and is addressed through various legislation in specific contexts such as through the Ontario Education Act and Occupational Health and Safety Act.

In the condominium context, when we speak of a Condo Board Bully, we refer to a broader range of potential behaviours relating to the operation of the condominium, including for example:

• having an unbending agenda or way of doing things, to the exclusion of any meaningful consideration of input and advice from other board members, consultants, managers and/or owners.
• disregard of enforcement of condominium rules, especially for residents favoured by the Condo Board Bully.
• on the flip side, directing the overly-aggressive enforcement of rules against certain owners.
• disregard of the requirements of the Condominium Act, 1998, and/or the declaration, by-laws and rules of the condominium.
• disregard of advice from the condominium's consultants – condominium managers, reserve fund engineers and lawyers come to mind. Classic examples include not following the reserve fund contribution requirements or insisting on no budget increases when that may not be realistic or fiscally responsible.
• the Condo Board Bully may also be a minority voice on the Board, who is simply a bully expressing discontent at every turn and undermining Board decisions.
• personal attacks towards other Board members.
• excluding certain directors from decisions or meetings, or making unilateral decisions without Board input at all.

B. Strategies to Address the Condo Board Bully

There are various ways to address the Condo Board Bully, not all of which would be appropriate to every situation. Some strategies would include:

1. Dialogue

The first step in the vast majority of situations would be to have a full and frank discussion at the Board level regarding the Condo Board Bully's behaviour that is of concern. This is easier said than done of course, as the other Board members may be reluctant to raise an issue that is likely to cause conflict and confrontation.

The condominium manager would also typically be part of such a discussion. In fact, the condominium manager may be the person most capable of addressing these issues 'on the ground', at least at first instance, in guiding the Board through its duties and how the objectionable actions of the Condo Board Bully are interfering with those duties and must be discussed.

2. Code of Ethics

The condominium should check its by-laws to determine if there is any requirement for the directors to sign or comply with a Code of Ethics.

For example, the Canadian Condominium Institute's Code of Ethics (which is often adopted by condominium bylaws) contains provisions regarding defamation and other matters including a 'good conduct' provision as follows:

"At all times, I will conduct myself in a professional and businesslike manner at meetings of Directors or Owners. I will approach all Board issues with an open mind, preparing to make the best decisions on behalf of the Corporation. I will act ethically with integrity and in accordance with legal criteria. I will comply with rules of good conduct and will deal with others in a respectful manner. I will comply with principles of good governance and procedural rules of order".

Even if the condominium's by-laws do not have a requirement to sign a Code of Ethics, the condominium may wish to encourage directors to voluntarily sign a Code of Ethics.

Having a Code of Ethics (mandatory or voluntary) to point to might be a useful tool in reminding a Board member that his/her bullying behaviour is not acceptable. While many aspects of a Code of Ethics are in any event reflections of the common law concerning duties of directors (eg. confidentiality, not undermining the Board), it is helpful to have this spelled out clearly in a document to place in front of the Condo Board Bully.

In the absence of a Code of Ethics, and especially where the Condo Board Bully is flouting the Condominium Act, 1998 or the condominium's documents, the remaining Board members may instruct the condominium's solicitors to write to the Condo Board Bully to remind him/her of his/her duties and that bullying behaviour and contravention of these provisions is not acceptable.

3. Removal from Office

The other Board members may consider removing the Condo Board Bully from any officer position. This may help to demonstrate the resolve of the remaining Board members that the Condo Board Bully is to have no greater powers than the other directors.

4. Removal from Board

In extreme cases where the Condo Board Bully is causing substantial disruption or contraventions of the Condominium Act, 1998, there are mechanisms to remove a director from the Board entirely.

A requisition to remove the director from the Board could be organized, with a view to seeking an owners' vote to remove the director.

The Ontario Courts have also confirmed that a properly drafted condominium by-law that would allow for the Board to remove one of its own members for behaviour contrary to the Code of Ethics, is enforceable.

C. Other Legal Considerations

The other Board members must be very careful, where there is a Condo Board Bully, that the Board as a whole is complying with the Condominium Act, 1998 and its regulations, together with the declaration, by-laws and rules. All directors owe a duty to ensure that the Corporation complies with these provisions. Except perhaps in extreme cases, it is not enough to state that the Condo Board Bully was at fault. The majority still rules and voting for or ignoring violations of these provisions puts the other directors at risk of liability.

The good news is that the Courts have been willing to 'single out' a Condo Board Bully, and recognize that the subject behaviour is not acceptable, holding the individual responsible.

For example, in the Ontario Superior Court's decision in Ballingall v Carleton Condominium Corporation No. 111, 2015 ONSC 2484 (CanLII), the Court stated at paragraph 115

"A reasonably prudent director of a condominium corporation, attempting to meet his responsibilities as a director, would not undermine Board decisions, mislead unit owners as to the Board's responsibilities and their efforts to meet those responsibilities, encourage unit owners to distrust the Board, undermine the legal advice from the Corporation's legal counsel, mislead unit owners as to what that advice entailed, provide his own legal advice to unit owners, and on one occasion post to his personal website legal advice received by the Board without the consent of the Board. A reasonably prudent director, acting in good faith, would not make the Board dysfunctional, would not promote antagonism and dissent on the Board, and would not threaten other Board members. A reasonably prudent director would not put his own economic interests ahead of the legitimate interests of all categories of unit owners. A reasonably prudent director would seek a compromise that respected the disparate, but legitimate, interests of all unit owners in the context of the community established by the Corporation's Declaration, By-laws, and Rules.

In that case, the subject director was ordered to personal pay costs to the owners who had commenced a case against the condominium relating to enforcement of a rule. Note that the condominium paid a portion of costs as well".

In the Ontario Superior Court decision in Durham Condominium Corporation No. 45 v Swan, 2012 ONSC 3441, the Court commented as follows, starting at paragraph 45:

I find that Swan alienated the rest of the Board as evidenced in his arbitrary decisions as Director, in the derogatory statements expressed in his emails, and in his confrontational interaction with the Board and MCD. That interaction was inflexible, dogmatic and ultimately counter-productive. By rendering the Board dysfunctional, Swan put the property management of the condominium at risk.

Section 37(1)(a) of the Act requires more of a Director than to act "honestly and in good faith" as Swan submits he did. The section also requires that in discharging his duties the Director must "exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances". Swan's confrontational inflexibility and misguided assessment of his duties as Director failed to meet this second requirement.

Accordingly, as submitted by DCC 45, I find that Swan's conduct both as director and President of the Board breached Section 37(1) of the Condominium Act.

Worth mentioning as well are the new provisions of the Condominium Act, 1998 and its regulations, in effect since November 1, 2017, that require directors to receive training concerning the obligations of directors and the operations of condominiums.

Director training, the presumably better understanding the legal issues, together with the assistance of the Courts (when called upon) and the diligent oversight of other directors and condominium managers, hopefully will result in fewer Boards having to deal with a Condo Board Bully.