The Role of Chair – Maintaining the Integrity of Democracy

Davis v. Peel Condominium Corporation No. 22

I recently represented a Condominium Corporation in an Application where a unit owner challenged the results of an election to remove the Board of Directors.  The Applicant sought to have the former board reinstated along with costs and damages under Sections 134 and Sections 135 of the Condominium Act, 1998 (the “Act”) – the compliance and oppression remedy sections – against the Condominium Corporation and the person who chaired the meeting, who so happened to be another lawyer with my firm.

The background to this case is as follows: a group of unit owners retained my office to represent them at a requisition meeting.  At the requisition meeting, the Corporation’s then-solicitor was successfully removed as Chair and replaced by the lawyer for the requisitionists by way of a vote from the unit owners. 

Prior to the vote to remove the Board commencing, an administrative issue was brought to the attention of the Chair.  A number of unit owners were arguing with Property Management with respect to whether they could participate in the vote, as Property Management and the then-solicitor for the Corporation were stating that they were more than thirty (30) days in arrears of their obligation to pay common expenses.  The Chair immediately addressed the issue by having a number of unit owners speak to the matter and evidence was provided to the Chair that 1) a number of unit owners paid their arrears in full at the meeting or 2) unit owners provided evidence which established that the records of the Corporation were inaccurate and specific unit owners were not in arrears. 

When the Chair confronted Property Management with the evidence provided to her, Property Management was unable to explain why these unit owners were in arrears and why they were still being denied the right to vote.  As such, the Chair was required to make a determination on whether the financial records of the Corporation could be relied upon and whether Section 49 of the Act applied.   The Chair made a determination that the records of the Corporation could not be relied upon, and that all persons voting by way of ballot or proxy would be permitted to participate in the vote as the Chair could not confirm that the criteria outlined in Section 49 of the Act was satisfied.  The vote was held shortly thereafter and resulted in the removal of the entire Board of Directors.  Our law firm was subsequently retained by the new board to be the solicitors for the Corporation. 

Fast forward several months later: a specific unit owner commences an Application against the Corporation to have the results of the requisition meeting annulled, to have the old board reinstated, and to have the lawyer who chaired the meeting being found personally liable for costs and/or damage.

The Corporation defended the results of the meeting stating that the requisition meeting was conducted in accordance with the Act; that the Chair’s decisions had no apprehension of bias and that the Application should be dismissed.   When counsel for the both parties appeared before Justice Stinson, he recognized that the Court does have an ameliorative authority to grant relief which is fair and equitable in the circumstances.  Upon hearing submissions from counsel and receiving evidence that 13 of the 16 proxies questioned by the Applicant were not in arrears and that the Chair’s decision to include everybody was correct, the Court ultimately dismissed all relief sought by the Applicant and awarded the Condominium Corporation costs (costs submissions are being prepared as this article is being written). 

The Court agreed with a number of the submissions made by the Condominium Corporation with respect to the role of the Chair at any unit owners’ meeting.  The Court agreed that there is nothing in the Act that conferred the authority to make a decision on any administrative issues at a unit owner’s meeting on the property manager or even the lawyer for the Corporation.  This role is exclusively reserved for the Chair.  The Court also agreed that although the Chair was also the lawyer for the requisitionists, her determination in ruling that all individual unit owners could vote was not made with any apprehension of bias.   The Court reiterated a decision from the Supreme Court of Canada that the Chair is assumed to act in good faith unless proven otherwise.  The Court also noted that even if the Chair of any meeting has an interest in the outcome of the decision that does not infringe on the integrity of the process or give rise to any bias.

Ultimately the Applicant’s attempts to obtain damages from the Condominium Corporation and have the old Board reinstated failed.  The Court declined to hear submissions from the Applicant to have the lawyer who chaired the meeting personally responsible for any costs and/or damages. 

The reputation of the Chair and the integrity of the vote taken at the requisition meeting was upheld by the Court as there was NO evidence that the Chair’s decision was made in bad faith.  The Court held that the Chair’s decision was correct in permitting everyone to vote that evening.  In this case, had the Chair not made the decision that she ultimately did, the Corporation could have been subject to a number of legitimate applications by various unit owners whose right to participate in a vote would have been improperly taken away. 

Regardless of the Corporation succeeding in having the Application dismissed, the Corporation was still required to incur thousands of dollars in legal costs for maintaining its position.   On a best case scenario the Corporation will be able to recover costs on a substantial indemnity scale given that it only defended the Application and not initiate it.  I can’t help to think what would happen if the Act was amended where the condominium corporation had the ability to recover its costs on a full indemnity scale against the unit owner for successfully defending an Application made pursuant to Sections 134 and 135 of the Act.

We must remember that a condominium corporation is a community governed by a democratically elected board.  Democratic principles, such as the right to participate in a vote, are critical to the growth and survival of the community.  As these democratic principles govern Canada, we must ensure that these principles are found in our condominium communities.  It is an extreme measure to take away someone’s democratic right to vote and it should only be done in very clear circumstances which are set out in Section 49 of the Act.   At any unit owners’ meeting where a vote is to take place, if a unit owner has presented evidence that calls into question the satisfaction of the criteria set out in Section 49 of the Act, a Chair should err on the side of inclusiveness and permit that unit owner to vote. 

I would find it hard pressed for any lawyer (myself included) to convince a judge to set aside a decision of a Chair who permitted a unit owner to vote when it was questionable whether the criteria set out in Section 49 of the Act could be satisfied.   It is important to note that removing someone’s right to vote is a punitive measure and should only be used in clear circumstances; otherwise if a unit owner’s vote is wrongfully removed, they could be entitled to damages under the oppression remedy.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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