Part 27 published on 01/08/09
Is director entitled to be indemnified by condominium corporation?
The condominium corporation was sued by a contractor for amounts alleged to be owing by the corporation to the contractor (for work performed) plus interest. The condominium corporation in turn asserted a claim against the corporation’s former president for recovery of the contractor’s interest claim. The condominium corporation alleged that the contractor’s interest claim and related extra costs incurred by the condominium corporation were the result of improper actions by the former president. Most notably, the corporation complained that the former president had made decisions and taken action without properly involving the other directors. The former president claimed that he was entitled to be indemnified by the condominium corporation.
The condominium corporation’s claim against the former president was dismissed and the former president’s claim for indemnity was granted. The Courts reasons included the following:
- Under the terms of the Condominium Act and the corporation’s bylaws the former President was entitled to be indemnified by the condominium corporation unless he had not acted honestly and in good faith.
- Persons are assumed to act honestly and in good faith unless proven otherwise. Therefore, the onus of proving otherwise rested with the condominium corporation. The condominium corporation did not prove bad faith or dishonesty on the part of the former president.
- Under the condominium corporation’s by-laws, the president was charged with the “general supervision of the business and affairs of the corporation”. The president accordingly had extra or special authority to manage the day to day affairs of the corporation.
- The Court said: “As mentioned, I found as an officer of the board he enjoyed some extra authority. I found no evidence to support the claims he held back on information he had or that he was deceptive, or vague, or unprofessional in his behaviour. Indeed, I find most of the evidence presented on behalf of LCC 21 was conjecture.”
- “I find there was no evidence of a causal connection between acts or omissions by (the former president) that resulted in (the contractor) taking action to recover the debt owing.”