Communications with Board can go through the Management Office

In a recent case, the Court confirmed that a condominium Board can properly ask that communications with the Board be sent only through the management office.

In many cases, this method of communication (between the Board and owners) makes good sense.

Here’s my summary of the case, from the most recent Condo Cases Across Canada (which I author for publication by the Canadian Condominium Institute National Chapter).

Diamantopoulos v. Metropolitan Toronto Condominium Corp. No. 594 (Ontario Superior Court), September 23, 2013

Owners’ claims dismissed as “de minimus” (ie. too trivial). Also reasonable for the corporation to ask that all board communications go through the management office.

The condominium corporation had directed the owners to:

  1. refrain from leaving sweaty towels on exercise machines and from adjusting television and audio equipment in the exercise room;
  2. refrain from making direct contact with the residents of unit 903;
  3. refrain from communicating with security personnel except in cases of real emergency; and
  4. refrain from communicating with members of the board, except through the management office.

The owners asserted that the condominium corporation had no proper basis for these directives. They said that they feared that the condominium corporation was “building a record to try to oust them from the condominium entirely”. The owners sought an order that their concerns be arbitrated.

The Court said:

  • I conclude that the matters in issue are so minor and incidental that there is nothing to litigate and nothing to mediate. The application is dismissed.”

The Court also said:

  • The (condominium corporation) has asked the (owners) to use the management office when communicating with the members of the board of directors…This seems sound policy for two reasons:
  1. it facilitates corporate record-keeping (it is more likely that these communications will be documented properly if they go through the office); and
  2. it protects board members from undue interference with the quiet enjoyment of their own units and the common areas.
  • If the condominium corporation does try to oust the owners from the condominium, “then it will be open to the (owners) to challenge that decision, including any underlying facts alleged to support it.

Jim Davidson Receives Inaugural Ron Danks National Volunteer Leadership Award!

We are very proud to announce that Jim Davidson has received the Inaugural Ron Danks National Volunteer Leadership Award!  This was awarded to Jim by the Canadian Condominium Institute (CCI), National Chapter, at its annual awards dinner held on the evening of November 15, 2013.

Ron Danks was a leader and a mentor to thousands of members of the condominium community across Canada; and it is a huge honour for Jim to receive this award in Ron’s name.

The letter to Jim, announcing the award, from CCI National President, Geoff Penney, included the following:

It gives me great pleasure to inform you that the National Executive Board of the Canadian Condominium Institute will be recognizing your many years of service by awarding you the Inaugural “Ron Danks National Volunteer Leadership Award”. This award expresses our appreciation for your ten years of providing quarterly case law summaries for the national newsletter and the national members’ website – a popular and informative archive of legal condominium history.”

The National Volunteer Leadership Award honours Ron Danks, one of CCI’s leading volunteers, and to honour others for their outstanding volunteer time and leadership of the Institute. It recognizes an exemplary contribution to the CCI through meritorious leadership in an activity that advances the Institute’s mission, goals and objectives.

Congratulations Jim!

Vancouver Strata Council Member Charged With Fraud

A former member of a Vancouver Strata Council (which is the British Columbia equivalent of a Condominium Board) was recently charged with theft and fraud over $5,000.00. The charges arose as a result of the Council Member’s misappropriation of over $160,000.00 in Strata funds for his own personal gain. The theft occurred over a four year period, during which time, the Council Member slowly took control of the Strata’s finances.

The Council Member plead guilty to the charges, and was sentenced to two years less a day imprisonment to be served in the community (house arrest) as well as two years probation. The Council Member was also ordered to repay the $160,000 that he had stolen from his Strata.

Although this is a Vancouver case, sadly, theft and fraud are not crimes that are unknown to the condominium industry in Ontario. In fact, there are a number of cases in Ontario in which Board members and/or property managers have been found guilty of having misappropriated condominium funds for personal use. In one recent case, a Toronto property management firm is alleged to have defrauded a number of condominiums of millions of dollars, through fraudulent borrowing transactions. In many fraud cases, where the sums of money involved are relatively significant, the fraud leaves the victim condominium with large holes in its finances, which must be rectified by the owners often through special assessment and/or increased common expenses. It can also cause damage to the condominium’s credit rating, and result in stigma on the real estate sales market.

In some cases, there is simply nothing that could have been done to stop the fraud from being committed. However, Condominium Boards can work to reduce the risk of misappropriation of condominium funds by ensuring appropriate controls are in place with respect to the condominium’s finances. Appropriate controls will depend upon the particular condominium, and each Condominium Board should consult with its property manager and/or auditor in this respect. Generally speaking, a Board can ensure that all payments drawn on the condominium’s accounts are backed up with an invoice, receipt or other evidence of the expense. Before issuing payment, it is always important to ensure that the transaction and/or payees involved are recognized. Arranging for multiple signees on cheques over a particular amount provides an additional control on larger payments.

Owners can help to reduce the risk of fraud by electing individuals to the Board who they believe are capable of assuming the significant responsibility associated with Board representation. In this respect, Owners may want to educate themselves about the background and interest of Board candidates. Most importantly, Owners should participate in the election process itself. Where an Owners suspects abnormal Board activity or unusual financial transactions, the Owner may want to make a request to review particular Corporate records under section 55 of the Act.

New WSIB Issues for Condos

Under the Workplace Safety and Insurance Act (the “WSI Act”), condominium corporations can now be liable for a construction company’s unpaid WSIB premiums.

Amendments to the WSI Act have made it compulsory for almost all construction workers to have WSIB coverage, including independent operators, sole proprietors, and most executive officers and partners in construction firms. There are certain exemptions, but in most cases those exemptions won’t apply to workers hired by a condominium corporation.

Before hiring someone to perform construction work, a condominium corporation will have to obtain a clearance certificate from the WSIB confirming that the worker is registered and is in good standing with the WSIB. There is no fee to obtain the clearance certificate.

It should be noted that the condominium corporation will only be responsible for obtaining clearance certificates for contractors and subcontractors it hires directly. If the contractor then retains any subcontractor(s), the contractor is responsible in relation to the subcontractor(s).

The clearance certificate can be obtained by either the condominium corporation or the contractor – but the condominium corporation must obtain a copy. The condominium corporation can also include a term in the contract requiring the contractor to obtain and supply a current WSIB clearance certificate prior to commencing work.

Note as well that each clearance certificate is time-limited (up to 90 days). An updated certificate must be obtained when a given certificate expires (even during a particular project).

Condominium corporations that fail to obtain clearance certificates before hiring construction firms or independent workers expose themselves to liability. Under the WSI Act, the WSIB can hold the condominium corporation liable for a contractor’s unpaid premiums to the WSIB (if no certificate has been obtained).

In rare cases, there may also be offence sanctions for not obtaining a clearance certificate which could result in penalties of up to $100,000 if convicted.

Condominium corporations also risk civil liability and could be held liable for a worker’s injuries if a worker is injured while performing construction work and the contractor does not have WSIB coverage.

In addition, in certain circumstances, the condominium corporation may still be sued if, even after obtaining a clearance certificate, a worker is injured on condominium property and the injury was clearly caused by the condominium’s negligence. The injured worker may elect to sue the condominium corporation rather than claim WSIB benefits.

In order to avoid risk of civil liability, condominium corporations should apply to the WSIB for coverage. If the application is accepted, the condominium corporation will be registered with the WSIB and will begin payment of premiums to the WSIB. Injured workers will not be able to commence an action against condominium corporations that are registered with the WSIB.

The WSIB will not be enforcing the new requirements until December 31, 2013, but that date is fast approaching…

We Have a Winner!

The Great Eastern Ontario Condo Quiz is over, and we are excited to announce our winner!

Congratulations! The winner of the draw is Patricia Smith.

Thank you to everyone who participated in The Great Eastern Ontario Condo Quiz. Come back to visit our blog often for updates and news on all areas of Condominium Law, and stay tuned for our next contest!

NO PURCHASE NECESSARY TO ENTER OR WIN. Open only to legal residents of Ontario who are of legal age of majority and at least nineteen (19) years of age at the time of entry. Not open to employees or immediate family members of employees of Nelligan O’Brien Payne LLP or its affiliated entities. Contest closes at 11:59 p.m. ET on October 31st. One (1) prize available to be won consisting of $500.00 CAD in legal services from the Condominium Law Group at Nelligan O’Brien Payne LLP, and a Nelligan O’Brien Payne merchandise prize package. Draw will be conducted on or about November 1, 2013, and winner will be announced on November 7, 2013. Odds of winning depend on the total number of eligible entries received for the drawing at issue. Mathematical skill testing question must be answered correctly to win. For full rules, please click here.