Little v. Metropolitan Toronto Condominium Corporation No. 50 (August 15, 2006)

This case dealt with two issues:  

1)      Use of the reserve fund for certain additions/changes to the property;

2)      The required procedures for obtaining a 2/3 vote for substantial changes. 

The Court said that some types of additions or changes can properly be paid out of the reserve fund.  In this case, the following expenses were approved as reserve fund expenses. 

• Replacement of a 15-year-old security system with a modern system, including updated features such as new cameras and digital technology to record images;

• Replacement of old exercise equipment with modern equipment;

• Replacement of the existing canvas canopy with a modern canopy made of glass and granite;

• Addition of eavestroughs and a handicapped access;

• A portion of the costs for lobby renovations  (the Board determined that the other portion of the costs constituted an improvement to be funded by way of operating surplus and a special assessment); and

• Design fees. 

[Editorial Comment:  The Court essentially confirmed that additions or changes can, in some cases, qualify as “major repair or replacements”.] 

With respect to the lobby renovations, the Board of the condominium corporation determined that a vote of owners was required.  But, instead of holding a meeting duly called for the purpose of such a vote in accordance with section 97(5) of the Act, the Board sought ordinary approval at the AGM, and then gathered additional proxies following the AGM.  Through this process, the Board gathered proxies of 2/3 of the owners, and determined that they were then entitled to proceed. 

The Court held that, notwithstanding the fact that the Board had conducted itself in a manner that contravened section 97(5) of the Act, the Court would not issue an order for compliance.  The Court declined such an order based on the following factors: 

1.                  The changes were fully disclosed;

2.                  The required number of owners (2/3) did approve the renovations;

3.                  The decision at the AGM to delay the vote and solicit proxies was taken in good faith; and

4.                  The renovations were carried out in a fiscally responsible way, and created no deficiency in the reserve fund or the corporation’s finances. 

[Editorial Comment:  So, the Court essentially decided that the imperfect procedures, followed by the Board in this case, were nevertheless “acceptable”.]