Part 48 published on 01/11/14
Condominium directors found in contempt; but Court of Appeal reduces penalty and costs
Former directors of the condominium corporation were found to have acted in contempt of a previous Court order. In particular, the directors had not arranged for reversal of certain changes made to the property, as ordered by the Court, and as a result were found in contempt. The directors were also ordered to personally pay for reinstatement of the common elements, and for all of the costs of the applicant owners. [See Condo Cases Across Canada, Part 42, May 2013.]
The Directors appealed. In a split decision, the appeal was allowed in part. [The dissenting panel member would have allowed the appeal in full, and accordingly would have set aside the contempt order.]
The majority of the Court of Appeal upheld the lower Court’s finding of contempt, but significantly reduced the penalty imposed. The Court also revised the lower Court’s cost award. [The cost award was reduced to $35,000, to be shared equally by the four directors and the condominium corporation (one fifth each).]
The majority’s decision included the following:
Any contempt is serious. This is no exception. However, in my view, the Individual Appellants’ contemptuous conduct must be considered in light of the fact that there is no evidence that it was motivated by personal gain, vengeance or any reason other than that they felt they knew best.
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The Individual Appellants are volunteer Board members of a not-for-profit corporation. It is clear that the penalty imposed in response to conduct that defies the authority of the court must be sufficient to deter those involved and other similarly situated individuals from like conduct. However, in the condominium context, the penalty should not be so onerous that it deters unit owners from serving on condominium boards. Owners who voluntarily assume the often onerous and thankless duties as directors of condominium corporations are essential to the functioning of a growing residential population – those who live in condominiums.
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This is a particularly unfortunate case. I say this because if the Appellants had sought legal advice at the first sign of a dispute, needless consumption of time and money and needless acrimony could have been avoided. Certainly, the use of the blunt instrument of contempt would not have been necessary.
The Individual Appellants, well-intentioned as they were, made the mistake not only of failing to retain counsel until it was too late but also of over-stepping their bounds. They appeared not to appreciate that in doing so they breached their obligations to act in the best interests of CCC 145.
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I would allow, in part, the appeal as to penalty. I would not interfere with the order that Podium be restored to the Original Design but would set aside the order that the Individual Appellants pay the costs of the restoration and replace it with an order that each Individual Appellant pay a fine in the amount of $7,500 to the credit of CCC 145.