Examination of Records – Do Condominium Owners Need a Proper Reason?

The Courts have said that condominium owners may be required, in some cases, to provide a proper reason for their requests to see records of the corporation.  This is important in order to prevent unwarranted “fishing expeditions” and to otherwise prevent owners from requesting records for improper reasons (for instance, only for the purpose of pestering or bothering the Board).

For instance, in the recent case of Lahrkamp v. MTCC No. 932 (click here to read the decision: Reasons For Judgment of J. Prattas), the decision of the Toronto Small Claims Court included the following:

“In my view, the inevitable conclusion to be drawn from the plaintiff’s conduct and dealings related to his requests for access to records over the years was that the plaintiff was not genuinely interested in looking into certain specific aspects of the financial operations of the defendant but was either oblivious to the fact that he was wasting other people’s time and money or, more likely, that he took a certain delight in pestering the Board and others with his demands.”   

For some of the owner’s requests – for proxies and Board minutes – the Court established a protocol for the records to be made available to the owner, subject to the owner covering costs (set by the Court) for copying and redacting those records.

For other requests – for owners lists, General Ledgers, Accounts Receivable Ledgers, Bank Statements, Portfolio Valuation Summary Details and Transaction Summary Details – the Court rejected the owner’s requests, in some cases because the owner did not have a proper reason for the request.

This legal principle (the need for owners to have a proper reason for their requests to see records) is based upon Section 55 (3) of the Condominium Act, which currently says that owners can examine records of the corporation “for all purposes reasonably related to the purposes of this Act”.  (Requests for records are of course also subject to exceptions otherwise listed in Section 55.) 

Under the coming amendments to the Act, those words – “for all purposes reasonably related to the purposes of this Act” – will be removed from Section 55 (3).   However, there will be new regulations respecting access to Records.  The new regulations will include the following:

Examination of records

13.3 (1) The right to examine or obtain a copy of a record under subsection 55 (3) of the Act does not apply unless,

(a) an owner, a purchaser or a mortgagee of a unit requests to examine or obtain the copy and the request is solely related to that person’s interests as an owner, a purchaser or a mortgagee of a unit, as the case may be, having regard to the purposes of the Act; or

(b) a duly authorized agent of an owner, a purchaser or a mortgagee of a unit requests to examine or obtain the copy and the request is solely related to the interests of that owner, purchaser or mortgagee of a unit, as the case may be, having regard to the purposes of the Act.

(2) Despite subsection (1), a person entitled to examine or obtain copies of records under subsection 55 (3) of the Act is not required to provide the corporation with a statement of the purpose of the request.

So in summary, the new regulations (expected to come into force on November 1, 2017) say that an owner’s request to see records must be solely related to the owner’s interest as an owner…. having regard to the purposes of the Act  But the new regulations also say that the owner can’t be asked to state the purpose for the owner’s request.

It’s difficult to predict how the new regulations will be interpreted and applied by the Courts and/or the new Condominium Authority Tribunal, but here’s how it looks to me:

• Condominium corporations won’t be able to ask for a reason or explanation for an owner’s request for records.

• However, if it appears (based upon all of the surrounding circumstances) that the owner does not have a proper reason for a particular request, then I think that it may still be proper to refuse the request.

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Records Requests under the New Regulatory Framework

The new draft regulations to be established under the Condominium Act provide more detail respecting what is expected of both condominiums and owners alike in relation to the retention and production of condominium records.  This blog examines the new legislative framework for the retention of condominium records and the new procedure governing requests for access to records by interest holders.

Retention of Records – Format and Timing

The amendments to the Condominium Act specifically confirm that condominiums may retain records either in paper or electronic format.  Regardless of the format, the draft regulations establish the following primary retention periods for condominium records:

(a) A default 7 year retention period for financial records;
(b) Unlimited retention period for certain “fundamental” records;
(c) Proxies, ballots and recorded votes from meetings must be kept a minimum of 90 days from date of meeting.

For any other records not specifically mentioned in the regulations, those records must be kept for whatever period the Board deems necessary in order for Corporation to perform its objects and duties.

The above-noted retention periods are considered “minimum” retention periods.  These minimums can be extended if desired, and they must be extended in the event of contemplated or actual litigation, or where there is an outstanding request for records at the time that the minimum retention period draws to an end.

New Procedure to Govern Requests for Records

There are four main steps for accessing records, summarized as follows:

(a) Step 1: The Request

  • The request must be made on a standardized form (to be established by the Ministry), and it must identify the records requested and indicate preferred method of delivery (email, hard copy, or examination in person

(b) Step 2: The Board’s Response

  • Within 30 days of receipt of the request, the Board must respond on a standardized form (also to be established by the Ministry), with an itemized estimate of the associated costs (if any), and identifying records that will not be disclosed, with an explanation.

(c) Step 3: The Requester’s Response

  • The requester responds to the Board, confirming which records he/she  wishes to have, and including payment of the estimated cost.

(d) Step 4: Access and Accounting

  • The Corporation delivers or provides access to the records requested (and paid for) by the requester.
  • If the actual costs are more than estimated, the requester must pay the difference – but the difference cannot be greater than 10% of the estimate; if the actual costs are less than estimated, the Corporation must reimburse the requester for the difference.

The regulations distinguish between “core” records (which are defined in the regulations, and are essentially the basic records of the condominium) and “non-core” records, for purposes of establishing the applicable timing for completion of the above-noted steps and for the related costs.

In general, core documents must be made available on an expedited basis at a reduced cost.  The timing and delivery of core documents can be summarized as follows:

  • If core records are requested in electronic format, they must be delivered either in electronic format or in paper form (at no charge) within 30 days of receipt of the request (i.e. within 30 days of Step 1); in other words, they would be delivered along with the Board’s response in Step 2.
  • If core records are requested in paper format, they must be made available for delivery/pick up within 7 days of the Corporation receiving the requester’s response and payment in Step 3. The estimated cost must be limited to copying charges, at no more $0.20 per page.
  • If the requester makes a request to examine records in person, the records must be made available for examination within 7 days of the Corporation receiving the requester’s response and payment in Step 3. But in this case, the estimated cost can also include reasonable labour cost during the examination.

For non-core records, the same four steps apply, but with different time periods and potentially different costs.  Non-core records must be delivered or made available for access within 30 days of receiving the requester’s response and payment in Step 3.  In the case of non-core records, the estimated costs can include photocopying charges for paper copies (at no more than $0.20 per page), and reasonable labour costs for the board to redact the record and to otherwise respond to the request.  [Some information in the corporation’s non-core records is not available to be seen by owners.  The draft Regulations include some additional detail about this “private” information.]

The draft Regulations also say that a request will be deemed to be abandoned in certain circumstances.

If a condominium, without reasonable excuse, does not permit a requester to examine or obtain copies of records, the condominium may be subject to a penalty of up to $5,000.00.  This is a significant increase over the $500 penalty available under the current Act.

Similar to the current Act, an owner may enforce payment of the penalty through the Small Claims Court.  The contemplated amendments to the Act also specifically confirm that the Small Claims Court has the jurisdiction to order production of documents where appropriate.

Stay tuned to Condo Law News for more blogs about Records under the new Regulations.

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Condominium Corporation’s Records as Court Evidence

When minutes of a board of directors meeting are prepared and held as part of the condominium corporation’s records pursuant to s. 55 of the Condominium Act, 1998, be mindful of the fact that the condominium corporation is creating potential evidence that can be admissible in court as proof of the facts stated in the minutes, unless evidence is tendered to the contrary. Subsection 55(7) of the Condominium Act, 1998 states that:

A copy that a corporation has certified under its seal to be a true copy of a record is admissible in evidence and, in the absence of evidence to the contrary, is proof of the facts stated in it.

There is no prescribed form of minutes to be kept by the condominium corporation. The minutes must include:

  • the date of the meeting;
  • confirmation of attendance and quorum;
  • the decisions/resolutions passed at the meeting;
  • perhaps a brief statement of the topics discussed.

But additional detail is not mandatory. Even so, you may wish to include some additional detail in light of the fact that the minutes might one day be used by the corporation as proof of what was said or done in the past, unless proven otherwise. Alternatively, the minutes might also be used against the condominium corporation, for instance if the Board’s past actions or decisions are one day challenged in a legal proceeding.

The Board should bear this subsection of the Condominium Act, 1998 in mind when minutes are created. Firstly, you should ensure that the information contained in the minutes is accurate. And, depending upon the circumstances, you may also want to consider just how much detail the minutes should contain.

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