Condominium Not Liable for Assault at Board Meeting

In the recent Ontario Superior Court of Justice decision of Omotayo v. Da Costa, the Court dealt with a motion by the condominium to dismiss the claim of Jacqueline Omotayo, against the condominium for failing to protect her from assault by a fellow meeting participant, Jose Da Costa (who was also a named defendant), at a board meeting. Continue reading “Condominium Not Liable for Assault at Board Meeting”

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Summary of Draft Regulations under the Condominium Act, 1998 -Required Disclosure by Directors and Candidates

As we noted in a previous blog, the province has published the Proposed Regulations and a Summary of the first phase of the proposed new Regulations under the Condominium Act, 1998, as amended (“The Amended Act”). This is the third in a series of blogs that we will be preparing in relation to the proposed changes.

In this Blog No. 3, I explore what the Summary has to say about Required Disclosure by Condominium Directors and Candidates.

Section 29 of the Amended Act says that a person cannot be a condominium director if he or she has not complied with “prescribed disclosure obligations”.  The Summary provides a list of information that (according to the draft Regulations) must be disclosed.

What must be disclosed?  Here’s the LIST:

NOTE:

  • The disclosure obligations do not apply to director candidates before turnover.
  • The disclosure obligations that apply to all other director candidates are noted with a (1).
  • The disclosure obligations that apply to directors after turnover are noted with a (2).
  • The disclosure obligations that apply to directors before turnover are noted with a (3).

Legal Proceedings Involving the Corporation

(1)              If the candidate is a party to any active legal proceeding to which the condominium corporation is a party, this must be disclosed along with a general description of the proceeding.

(1)(2)        If the candidate’s / director’s spouse, child or parent, or spouse’s child or parent is a party to any active legal proceeding to which the condominium corporation is a party, this must be disclosed along with a general description of the proceeding.

Convictions under Condominium Act or Regulations

(1)(2)(3)       If the candidate / director has been convicted of an offence under the Condominium Act or Regulations in the past 10 years, this must be disclosed.

Interests in Contracts or Transactions

(1) (2)        If the candidate / director has an interest in a contract or transaction (other than as a purchaser, mortgagee or owner/occupier of a unit) to which the condominium corporation is also a party, or to which the developer (or a developer affiliate) is also a party, this must be disclosed along with certain details of the contract or transaction.

Arrears over 60 days

(1)             If the candidate is a unit owner and his or her common expenses are in arrears for sixty days or more, this must be disclosed.

By-laws

Additional disclosure obligations can be set out in the corporation’s by-laws.

In summary, directors and candidates will have new disclosure obligations; but in most cases, there will be nothing to disclose.  As long as the director / candidate (a) is not 60 days in arrears, (b) has not been convicted of an offence under the Act or Regulations, (c) is not involved in any legal proceedings with the corporation and (d) is not (and his or her family is not) involved in any special contracts or transactions with the corporation or the developer, there will be nothing to disclose.

These new disclosure requirements are expected to come into force on July 1, 2017.  Directors would have to make any required disclosure on that date.

In terms of candidates, the disclosure requirements would apply to any election held at least 40 days after the amended Section 29 of the Condominium Act comes into force (and provided the meeting notice is also delivered after Section 29 comes into force).

Finally, the Summary describes different disclosure methods and timing for candidates, depending upon the election or appointment procedure that is being followed in the particular case.

Stay tuned for our next blog in this series which will review what the Summary has to say about Changes to Meetings and Voting.

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Summary of Draft Regulations under the Condominium Act – Director Training

As we noted in a previous blog, the province has published a Summary of the first phase of the proposed new Regulations under the Condominium Act, 1998, as amended (“The Amended Act”). This is the first in a series of blogs that we will be preparing in relation to the proposed changes.

In this Blog No. 1, I explore what the Summary has to say about Required Training for Condominium Directors.

Section 29 of the Amended Act says that a condominium director is disqualified from the Board if he or she fails to complete “prescribed training within a prescribed time”.

The Summary does not yet say what sort of training will be required. The Summary simply says that the new Condominium Authority will designate the training course(s) that directors will be required to take (or if there is no Condominium Authority, the Minister of Government and Consumer Services will designate the course(s)).

The Summary also says:

I. The cost of the training would be covered by the condominium corporation.

II. The required training would only apply to directors elected or appointed after turnover.

III. The training requirement is expected to come into force on July 1, 2017 (provided the required course(s) have been designated by that time).

IV. The required training would only apply to directors elected or appointed after the new training requirements come into force. [I believe that being “elected” would include being “re-elected”.]

V. New directors would have six months (following their election or appointment) to complete the required training.

VI. The training would be good for seven years. Thereafter, a director would have to “re-take” the training if he or she is again elected or appointed to the Board.

VII. The Condominium Authority will keep records of the persons who have completed the training. A condominium corporation would have the right to see those records respecting the corporation’s own directors.

VIII. A director who completes the training would also be required to send evidence of such to his or her condominium corporation(s).

Stay tuned for our next blog in the series which will review what the Summary has to say about “information certificates” that the condominium is required to send to owners (and mortgagees).

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What’s a New Condo Director to Do? Five First Steps

Congratulations! You’ve been elected to your condo’s board. As a new condo board director you will now need to take the time to understand what your and the board’s responsibilities are, and how they are met. This information is vital, because condominium directors have legal obligations to the condominium corporation (including present and future owners). Getting familiar with all of this is a director’s first duty, and is significantly helped by taking an introductory course for condominium directors (which is always recommended). But, here are some other steps that may be worth taking in each case:

1. Review All Constituent Documents

Becoming familiar with the Condominium Act and the corporation’s Declaration, By-laws, Rules and Survey Plans is a top priority. A condominium director would not be expected to know and understand all of the intricacies of the Condominium Act, but in most cases a director would be expected to have general familiarity with the Act and would also be expected to know the condominium’s specific governing documents (ie. the Declaration, By-laws, Rules and Survey Plans).

2. Review the Condo’s Directors and Officers Insurance Coverage

This is vitally important, because directors do get sued from time to time. Understanding the corporation’s D & O insurance protection may put your mind at ease, and make you less likely to balk when it comes time to making hard decisions that could raise the ire of other unit owners, or perhaps service providers. Some questions that you will want to ask yourself when reading this insurance policy include: Is the coverage amount enough? (Two million dollars coverage is now considered the very minimum amount that should be in place. But five or even ten million dollars coverage is now very common. This is something to be reviewed with the corporation’s insurance broker.) Are the terms of coverage sufficient, or could they be broadened, or gaps in coverage filled, with another policy? Is there a deductible? And, most importantly, read and become keenly aware of the policy’s requirements to provide notice in the event of a potential claim, because failing to meet those requirements could see your insurer decline coverage. [Again, all of these issues can be reviewed with the corporation’s insurance broker.]

Somewhat related to this topic is that you should also make sure that the corporation is required to indemnify you for any acts or omissions that result in legal action – check the by-laws for this protection.

3. Review Past Minutes of Board and Owners’ Meetings

Review the minutes for the past two years (or further back, as appropriate in the given circumstances), in order to understand any current issues requiring the Board’s attention.

4. Review the Condo Manager’s Contract

Most condos contract with managers to handle the “day to day” financial and maintenance issues of the condo, as well as to ensure that the board is following the correct procedures when it acts. Board agendas, meeting minutes and annual budgets are usually generated by the manager for the board to rely on, and will follow-up with the board on the status of action items. A review of the manager’s contract will detail the manager’s duties, and allow you to see if the manager is fulfilling its duties, and conversely, if the board is fulfilling those duties left to it. You will also want to see if the manager’s contract has an indemnification provision in the manager’s and/or the condo’s favour in order to more fully understand the board’s potential liability should a claim be made against the manager for acts or omissions that are linked to the manager’s contractual performance.

5. Review Current Financial Documents

Many of these documents you will have seen, as they were already available to you as a unit owner and formed part of the information discussed at Annual General Meetings. These are: the annual budget, the current Reserve Fund Study (and related plan to finance it) and current Status Certificates. But, as a director, you will now want to understand what they are and what they mean in more detail. Again, what is required in each is set out in the Act and its regulations, so you should start there. When you get to the documents themselves, more context may be needed to appreciate specific line items or statements. This is where dialoging with your condo manager and the more experienced board members will come in handy.

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Duty to Act Honestly and in Good Faith

According to Section 37.(1)(a) of the Condominium Act, 1998, condominium Directors and Officers have a duty to act honestly and in good faith.

Condominium Directors and Officers also have a duty to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances; but the duty to act honestly and in good faith is perhaps more ‘serious’, for the following reasons: If a Director or Officer fails to act honestly or in good faith,

(1) the corporation’s D & O insurance may not apply (see Section 39 of the Act); and

(2) the corporation’s duty to indemnify the Director or Officer may not apply (see Section 38 of the Act).

These are obviously important risks.

So, how do you act ‘honestly and in good faith’? This is a complex question, and it’s not possible to provide a short answer. However, you should likely be fine if you are guided by the following principles:

  1. Always do your best to base your decisions on fair, sound reasoning, consistent with the objects and duties of the corporation (as expressed in applicable legislation and in the corporation’s Declaration, By-laws and Rules);
  2. Do not promote your personal interests instead of, or contrary to, the interests of the corporation; and
  3. Where appropriate, declare a conflict of interest and recuse yourself from deliberations and decisions (on such matters).
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