The recent Ontario Superior Court case of Hogan v. MTCC 595 demonstrates that some condo boards have not yet read the memo about being responsive to unit owners and exercising common sense. Headshaker cases like this one are worth highlighting as examples of how not to run a condominium.

In November 2013, MTCC 595 notified its unit owners under section 97 of the Condo Act about the board’s plan to make an addition, alteration or improvement to the common elements at an estimated cost of $72,000. As required by subsection 97(3), the notice also advised owners of their right under section 46 to requisition an owners’ meeting to vote on the board’s proposal. Section 46 requires the board to call a meeting on requisition by the owners of at least 15% of the units. 

In response to this section 97 notice, the owners of 63 units (being 27% of the corporation’s 227 dwelling units) submitted individual requisition forms to the board. Of those 63 forms, 19 (being 8% of the units) were signed by the owners in cursive and 44 (being 19% of the units) showed the owners’ names in print only.

As to the form of a requisition for calling an owners’ meeting, susbsection 46(2) of the Condo Act provides (with emphasis added) that:

(2) The requisition shall,

(a) be in writing and be signed by the requisitionists;

(b) state the nature of the business to be presented at the meeting; and

(c) be delivered personally or by registered mail to the president or secretary of the board or deposited at the address for service of the corporation.

After reviewing the requisitions received and subsection 46(2) above, the board concluded that the 15% threshold for calling an owners’ had not been met because the requisitions contained owner signatures for only 8% of the units, even though requisitions were filed for more than 25% of the units. On concluding that no valid requisition was filed, the board declined to call a meeting and prepared to proceed with its proposed work.

A unit owner then applied to the Superior Court for a compliance order under section 134 of the Condo Act to require the board to hold the meeting that the owners had requisitioned.

The court summarized the parties’ positions as follows:

[11] It is the Corporation’s position that the 63 requisition forms did not constitute a valid request for a meeting in accordance with the terms of s. 46 (2) in that the documentation submitted was in more than one document, namely in counterparts and as the requisition forms submitted were not “signed”.

[12] It is the applicants’ position that although the Act does not expressly state the form of the “requisition” as referred to in s. 46, the legislation should be construed liberally to meet its statutory objectives such that the 63 requisition forms should be considered collectively as the requisition required.

[13] As to the requirement that the requisition be “signed” it is submitted on behalf of the applicants that the cursive signatures or printed signatures of the unit owners met the requirement that the document be “signed”.

After considering the arguments and relevant law, and recognizing that the Condo Act must be interpreted as consumer protection legislation, the court ruled that:

[21] There is no requirement in the Act that the requisition referred to in s. 46 be contained in a single document, nor is there a prohibition to the delivery of counterparts which make up a single document, namely a requisition. As such, I have concluded that giving the liberal and remedial interpretation of the legislation, as is required in the consumer protection context and at the same time balancing orderly corporate governance concerns, the 63 requisition forms collectively constitute the requisition called for in s. 46.

[22] As to the respondent’s position that the names inserted on the 44 requisition forms, which were recorded in print, as opposed to in cursive writing, I have concluded that the printed names of the condominium unit owners equally constitute the document being “signed” as required by the Act as do the requisition forms where the owners have recorded their names in cursive writing.

. . .

[25] I have examined the requisition forms submitted with this application, and the names of the condominium unit owners are recorded thereon either in cursive writing or in print. There is no requirement in the legislation that the requisition be “signed” in cursive writing. As such, I am satisfied that the intention of each condominium owner is clearly and unequivocally conveyed on each of the requisition forms and collectively the forms constitute a requisition under s. 46.

[26] I conclude, therefore, that the applicants and the other condominium unit owners who submitted collectively the required requisition have satisfied the requirements of s. 46, including the requirement that the owners own at least 15 per cent of the units. Accordingly, the Corporation, by failing to call the meeting required in accordance with s. 97 (3) of the Act, has violated the legislation.

The court then ordered the condo corporation to call the requisitioned meeting and invited the parties to make submissions as to the costs of the litigation. A ruling on costs may be released in the coming months, but it is safe to assume that the condo corporation had incurred significant costs to respond to this legal proceeding and may be held responsible to pay some of the unit owners’ costs. As a common expense of the condo corporation, these costs are typically shouldered by the entire ownership but might potentially be claimed against the directors personally.

Though many details are unclear, the board’s decisions leading up to this litigation are worth comment and contain several lessons:

1. To deny owners’ right to a meeting based on trifling, technical non-compliance with the Condo Act demonstrates a profound lack of appreciation of the board’s authority and obligations and smacks of disrespect for the unit owners.

2. Instead of being responsive to more than 25% of the owners who exercised their legal rights, the board adopted an arrogant, highly legalistic approach to deny the owners’ legal right to attend a meeting to vote on an item for which the Condo Act specifically reserves a veto power to the unit owners.

3. Even with minor technical deficiencies in the requisition, it was entirely possible for the board to call and hold the requisitioned meeting without making any compromise in the board’s jurisdiction or authority and without incurring significant additional cost.

4. If the board was confident in the wisdom of its proposed addition, alteration or improvement, it could have used the requisitioned meeting as a forum to provide further information, allay the owners’ concerns and allow the requisitionists voice their perspectives, ask questions, make suggestions and ultimately permit the ownership to vote for or against the proposal. Holding meetings also has the salutary effect of allowing owners to express themselves and vent off any pent-up frustration. On the other hand, refusing to hold meetings quashes democracy and creates pent-up resentment needlessly.

5. Cash is a precious resource at any condominium. Spending it on legal costs merely to suppress owners’ rights creates no value whatsoever and diverts funds from making improvements to the condominium that benefit everyone. When faced with the application, the board could have conceivably negotiated a settlement to hold the meeting rather than incur the costs of defending the matter.

Though it is unclear if the facts in this case justify legal costs being awarded against the directors personally, some of the aggravating factors listed at the bottom of a piece we posted last March about that concept figure prominently in this case. They are worth repeating here as things that condo boards should not do:

  • fail to hear, understand and respond to their owners’ concerns;
  • maintain an adversarial stance with owners rather than collaborate constructively;
  • think their solutions are the only ones and that owners can provide no useful input;
  • use the corporation’s power and resources to suppress owners’ rights.

Some finger-pointing beyond the board might also be justified in this case. Although the court ruling did not reveal whether the board made its choices based on legal advice, this may be a safe assumption. It is trite that lawyers acting for condominiums owe a duty to the “the corporation” as a whole, which means that their advice should benefit the community generally. Advising boards against holding meetings because requisitions are not signed (but otherwise identify the owners filing them) or because requisitions are delivered to the concierge desk (versus the management office) falls far short of that standard and does not serve the client’s interests. Condo lawyers are in a unique position to know the inevitable results of directors holding the reins too tightly, so they ought to understand the importance of counselling their clients’ boards to act sensibly in responding to owners’ requisitions for a meeting.