Part 42 published on 01/05/13
Former Board members personally liable for costs of litigation
On March 30, 2012, the condominium corporation’s Board of Directors sent a notice to the owners respecting a vote of the owners to be held at the AGM scheduled for April 16, 2012. The vote was to authorize borrowing for certain repairs planned by the Board.
On April 5, 2012, owners requisitioned a meeting for removal of the Board, because those owners wished to obtain a second opinion on the repair costs.
At the April 16 AGM, owners voted to delay consideration of the loan. The Board then applied to Court for an order restraining the holding of the requisitioned meeting and for the appointment of an administrator. On an interim motion (heard August 3, 2012), the Court declined to order the requested injunction and declined to appoint an administrator. The requisitioned meeting was then held on August 8, 2012. At that meeting, the Board was removed and a new Board was elected.
The removed Board did not acknowledge the validity of the August 8 vote and carried on the Court Application in the name of the condominium corporation.
At the final hearing of the Application, the Court held that the new Board had been properly elected, and the Court confirmed that no administrator was required. The Court said:
- “While it is open to Boards to make expensive decisions about what they regard as pursuant to their obligation to repair without several quotes and full disclosure to owners and without a voted mandate, they do so at the risk that the response will be exactly as it was here.”
- “While repair decisions may be generally left to the Board to decide, there is nothing that prohibits their wide consultation and input seeking from owners.”
- “There is no urgency in the need for a solution to the building’s envelope issue that would justify the appointment of an administrator.”
- “If there is confusion…, it has been caused by the Board’s immoveable positions, their stand that the August 8 election was invalid, and their determination to thwart those opposed to their view of what needed to be done.”
- “No valid reason existed for this application even before the election of a new Board on August 8. This condominium corporation is clearly able to govern itself and the differences of opinion over the type of repairs that are required are all capable of being resolved within the democratic framework of the corporation. I reject any suggestion in the applicant’s material that this group of owners is ungovernable.”
The Court found that the former Directors had not acted in good faith “in pushing ahead with this unnecessary litigation”, and ordered the former Directors to pay costs personally (both with respect to the application for an injunction to prevent the requisitioned meeting, and for the appointment of an administrator).