Posted on March 8, 2010 by Chris Jaglowitz

Best of the blogosphere for February 2010

For a short month filled with Olympic excitement (Yay Canada!), there was still plenty of great condo-related stuff in the blogosphere in February. 

Businesses should learn from 2010 Olympics surveillance camera debate -- Winnipeg privacy lawyer Brian Bowman emphasises the importance of having appropriate policies in place to manage the data recorded by surveillance cameras. If your condo has surveillance cameras, you need to implement proper written policies.

Association Driving You Nuts? – Take Out a Creepy Newspaper Advertisement -- Roger Wood of Arizona law firm Carpenter Hazlewood blogs about the slings and arrows hurled at HOA/condo boards and their professionals and offers some constructive suggestions to the malcontents who give “barbarians at the gate” a bad name.

Would a Condo and HOA Board Member Draft Solve Our Problems? -- Donna Berger debates condo conscription.    She also offers some important negotiation tips for community association members in Association Negotiations 101!

There's No Such Thing as a "Slam Dunk"! A True Story -- California Condo & HOA lawyer Beth Grimm offers an important reminder about condo litigation. Her advice: Don't Get Bamboozled Into A Lawsuit! 

When Homeowners Associations Attack -- Seattle condo and HOA attorney Kevin Britt offers advice to help directors avoid finding themselves the subject of a news headline like "HOA Sues Former Board for $70 Million". 

Warning Buyers about Noisy Neighbours -- Brian Madigan of the Ontario Real Estate Blog offers a realtor’s perspective on one of the most bedevilling situations for anyone trying to sell a property.

Coping with the Demands of an Aging Population -- The estate lawyers at Hull & Hull highlight the most recent reports on the growing cost of our aging population.   Are condos going to be impacted by this demographic phenomenon?   You bet.

ROCs and Civil Rights -- Scott Gordon of the Resident Owned Community law blog shares his experience visiting the National Civil Rights Museum and reflects on the important connection between civil rights and community living.
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Posted on January 4, 2010 by Chris Jaglowitz

Alberta case affirms powers of condo board

A February 2009 decision of the Alberta Court of Queen’s Bench should be added to the list of notable condo cases for 2009. Check out Dykun v. Cravenbrook Condominium Corporation No. 032 1893.

After changing managers on December 1, 2007, the condominium’s board discovered that the previous manager had improperly withdrawn money from the reserve fund to pay operating expenses, leaving the corporation on the brink of insolvency.

Two months later, the board announced that it was levying a special assessment to raise the money necessary for the corporation to continue operating and to replenish the reserve fund.

One unit owner fought tooth and nail to resist paying his $800 share of the $80,000 special assessment. He brought an application against the board and argued that the corporation should have exhausted alternative options before it levied the special assessment. The owner presented one alternative strategy and asked the court to set aside the board’s decision and to implement his suggested strategy.

In dismissing the application, the court found that the board had acted prudently and responsibly in asking and following the advice of the corporation’s solicitors and auditors to levy the special assessment. The court did not agree with this unit owner’s proposed strategy and went on to say:

Even assuming that Mr. Dykun’s solution was an appropriate one, he cannot force his views on the Board of Directors. Management of the affairs of Cravenbrook rests with the board and not with any single unit owner. The Board has been properly elected to oversee Cravenbrook’s affairs. Mr. Dykun has not. Mr. Dykun cannot dictate to the board the course of action that they should be following. If he is interested in having a greater say in how the overall affairs of Cravenbrook should be managed, he should seek election to the board of directors.

This approach seems like a good answer to cases where owners look to second-guess decisions of the elected board.   The decision in this case further affirms the concept that the board has the final say in managing the corporation’s business, whether in budgetary matters or in selecting the colour scheme for the corridor refurbishment project.

What do you think?
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Posted on March 18, 2009 by Chris Jaglowitz

The Supreme Court on directors' fiduciary duty

In December 2008, the Supreme Court of Canada released written reasons for its ruling in the landmark case of BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 (CanLII).  This important case discusses directors' duties and the application of the oppression remedy in business corporation law. Because these business law concepts are applicable to condominium law, the Court’s decision in the BCE case contains important lessons for condominium directors.

The first lesson is simple but critically important:   Directors owe a fiduciary duty to the corporation and only the corporation.   The Court found that, in cases where the interests of the corporation and those of stakeholders do not coincide,

[I]t is important to be clear that directors owe their duty to the corporation, not to stakeholders, and that the reasonable expectation of stakeholders is simply that the directors act in the best interests of the corporation.

The second lesson is that directors must make decisions in a manner that considers the interests of all affected stakeholders. Failing to do so may give rise to a claim that the directors are acting in a manner that is “oppressive or unfairly prejudicial or that unfairly disregards the interests” of a stakeholder, contrary to section 135 of the Condominium Act, 1998.  After considering the cases on oppression, the Court found that:

[T]he duty of the directors to act in the best interests of the corporation comprehends a duty to treat individual stakeholders affected by corporate actions equitably and fairly. There are no absolute rules. In each case, the question is whether, in all the circumstances, the directors acted in the best interests of the corporation, having regard to all relevant considerations, including, but not confined to, the need to treat affected stakeholders in a fair manner, commensurate with the corporation’s duties as a responsible corporate citizen.

While lawyers will continue analyzing its impact for a while, the Supreme Court’s decision in the BCE case offers guidance to condominium directors who routinely make tough decisions that may not please all of their unit owners:  The directors’ main duty is to the corporation, and their decision-making must be even-handed and treat parties fairly.   This ruling also helps explain to unit owners and other stakeholders the criteria that must ultimately guide the directors’ decisions and it sets a benchmark to help stakeholders determine if their rights have been infringed.
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