Governance

Subscribe to Governance

When Amlani v. YCC 473 was released at the start of the year, it was the immediate frontrunner for “2020 Condo Case of the Year”. YCC 473 appealed and even in a year of fascinating cases, the Amlani decision still holds its seat at the top of that mountain.

The initial Amlani decision dealt with a common situation. In a nutshell, the board received complaints about Mr. Amlani’s smoking so they instructed their lawyers to deal with the matter. YCC 473 relied upon the indemnity provision in its declaration to charge back its legal expenses to Mr. Amlani and subsequently register a lien against Mr. Amlani’s unit to collect its legal fees.

The initial judge held that YCC 473 could not rely upon it’s the indemnity provision to charge back its legal costs for two key reasons:

1. Mr. Amlani did not commit “an act or omission to or with respect to the common elements and/or all other units” as required by the indemnity provision; and

2. YCC 473’s interpretation of its indemnity provision contravened section 134 (5) of the Condo Act as the costs it claimed related to compliance and enforcement costs without being embodied in a court order.

Section 134 (5) of the Condo Act allows a corporation to add its enforcement costs to an owner’s common expenses if a court awards the corporation its damages or costs in bringing a compliance application. Section 134(5) does not itself authorize a lien for legal fees incurred prior to the compliance application: to register a valid lien for legal fees, the court must first award these fees. However, many condominiums rely on their indemnity provisions as a “catch-all” provision to permit a corporation to add certain costs to an owner’s ledger resulting from their acts or omissions, often without requiring a court order.

The Amlani decision sparked considerable debate amongst condominium lawyers. Some of our esteemed peers argue that you cannot rely on an indemnity provision to charge back legal compliance and enforcement costs without first obtaining a court order. Others took the position that Amlani was a fact-specific decision that turned on the specific wording of YCC 473’s indemnity provision; they argued the Amlani decision does not stand for the proposition that a court order must be obtained before any pre-litigation legal compliance and enforcement costs can be charged back.

The Divisional Court recently set the record straight: condos cannot rely on their indemnity provisions to enable a lien to be registered against a unit to charge back compliance and enforcement costs without a court order. This does not mean a condo can’t recover its pre-litigation compliance and enforcement costs – condos can seek these costs in an s. 134 (5) order but registering a lien for these costs before the order is obtained is improper.Continue Reading Amlani and indemnity provisions – All Bark, no bite? Not quite

The City of Toronto has recently announced that the registration system for short-term rental operators or hosts will launch on September 10, 2020. Homeowners who rent their principal home or condo on a short-term basis (a period of less than 28 consecutive days) must register with the City by the end of year and renew…

Prior to COVID-19, condos could have electronic meetings and electronic voting only if they had a by-law authorizing it.

During COVID-19 the Condo Act is amended to temporarily permit condos to conduct business virtually during a “temporary suspension period” (i.e., between March 17, 2020 and a date at least 120 days from the termination of the emergency period). Right now, condos can call and hold electronic meetings and owners can vote electronically without a by-law.

Anecdotally, we have chaired and participated in several owners’ meetings during the pandemic. Our lawyers have taken additional, high level electronic platform training. We have participated in meetings run by third party service providers and have run and moderated our own owners’ meetings from our own platform.

Our key takeaway? The chair is vital to keeping an electronic owners’ meeting on track.Continue Reading The new hot seat – the electric (meeting) chair

The Condo Act and a condominium’s governing documents generally give a condo broad enforcement powers to ensure residents are abiding by the rules. Condos often turn to their lawyers to commence expensive legal proceedings as a reliable response to non-compliant residents. In assessing costs against a condo, a recent Superior Court of Justice decision should serve as a reminder to all condos that they should take reasonable steps to resolve disputes.
Continue Reading Always Act Reasonably – the Amlani Decision and a Lesson from the Court

Directors, managers and condo lawyers will spend at least the next year struggling through intricate implications arising with respect to the major amendments to the Condominium Act, 1998 (“the Act”) and its many new regulatory provisions flowing from the Protecting Condominium Owners Act, 2015. Managers have the obligation to refrain from rendering professional advice beyond their expertise. Provide advance notice and allow lawyers more time to respond. Budget for increased legal fees to enable your lawyer to properly analyze and respond to the new amendments to the Act, revised Ontario Regulation 48/01 and future regulations as may apply to your condo’s circumstances.

For instance, in addition to the increased number of various legal opinions your Corporation may request, consider asking for our list of 30 Condominium Document Packages. We can also customize any of the following projects to suit your condo:
Continue Reading Bob’s AGM tips

Condo directors in Ontario are expected to exercise a certain degree of attentiveness, caution and prudence while carrying out their duties. This expectation is known as the “standard of care” and is set out in section 37(1) of the Condominium Act, 1998, which provides:

37.  (1)  Every director and every officer of a corporation in exercising the powers and discharging the duties of office shall,

(a) act honestly and in good faith; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

While the wording of this standard of care seems pretty simple, some directors don’t entirely understand what it means.  A recent Superior Court case illustrates that some directors don’t understand it at all, or don’t care.
Continue Reading A reasonably prudent director

We published a piece last May recommending that condominium corporations enact policies to collect common expenses in an orderly, systematic way. Unfortunately, we continue to see condo boards deliberately delaying the commencement of power of sale proceedings on liened units. Such delay brings added cost, wasted board time, greater hardship on unit owners in trouble and cash flow disruptions.

Aside from poorly-informed boards of self-managed condos, a major cause of problem collections is management agreements requiring the board to instruct management to commence power of sale proceedings on liened units. Whatever the reason behind such clauses, none is compelling and the concept is hopelessly flawed. We say:
Continue Reading Common expense collections policy redux

While the Condominium Act, 1998 permits owners to requisition meetings for certain business and for informational purposes, there are limits on what can be accomplished using this process.

Some owners at one of our smaller condo corporation clients recently submitted a requisition to amend the corporation’s general by-law to increase the size of the board from 3 to 7 directors and impose a new qualification that only owners are eligible to be directors.   For the reasons that follow, this is business that cannot be requisitioned by owners.
Continue Reading Owners cannot requisition by-law amendments

Picture3

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. 
Continue Reading Rejecting meeting requisitions on minor technical grounds is a major foul

IOUSome of the most uncomfortable conversations that condo directors, managers and lawyers have with unit owners take place when owners cannot afford the monthly common expenses for their unit. While it is natural to show compassion to someone in trouble, significant problems and potential liabilities arise by delaying prompt collection action.

Ontario condominium corporations have one the strongest statutory debt collection mechanisms in the world. They can collect every single penny of common expenses in priority to most other creditors so long as the required notices are properly completed, given on time and a certificate of lien is registered on title within 90 days of default. The rules are fairly simple but the slightest slip in the paperwork or missing a deadline by a single day jeopardizes the condo’s priority and ability to collect the entire debt quickly.Continue Reading Policy prescription for pain-free collections