Part 56 published on 01/11/16
Issue No. 1: Court amends Shared Facilities Agreement (“Complex Reciprocal Agreement”) entered into by declarant-controlled Board. Issue No. 2: Former manager liable for costs due to failure to keep and provide adequate records
Issue No. 1
After creation of the condominium, while the board was controlled by the declarant, the condominium corporation entered into a shared facilities agreement with various parties. The agreement contained a number of provisions that were favourable to the declarant and its affiliates. The shared facilities manager (“common facilities manager”) – which was appointed by the declarant – also failed to provide proper information to the condominium corporation about the shared facilities costs. The condominium corporation challenged the agreement pursuant to section 113 of the Condominium Act.
The Court held that the declarant’s disclosure to purchasers (in relation to the agreement) was not sufficient to meet the requirements of s. 113 and ordered amendments to the agreement. The Court also held that the declarant’s actions were oppressive. The Court said:
As I noted above, it is not illegal to have a one-sided contract or even one where parties agree that a party with a financial interest will have power. But lack of disclosure of financial information is an indicia of oppression. So too is self-dealing i.e. exercising powers so as to prefer oneself rather than fulfilling the objective fairness and reasonableness standard.
…
Therefore, this court orders that the Complex Reciprocal Agreement dated December 24, 2010 is hereby amended by inserting the following after Article 8.06 of the agreement:
8.06.1 Removal of Common Facilities Manager
(a) Subject to subsection 8.06.1 (b) the Residential Owner may, by resolution of its Board of Directors, remove the Common Facilities Manager by giving at least 60 days notice in writing.
(b) In the event of a removal of the Common Facilities Manager under Section 8.06.1 (a) a third party facilities manager (the “Replacement Manager”) shall be appointed in accordance with Section 8.07 in the same manner as would apply if the Common Facilities Manager had been replaced under Section 8.07 with necessary modifications.
Issue No. 2
The condominium corporation incurred costs of approximately $16,000 due to the failure of the corporation’s previous manager to keep and provide adequate records (namely records relating to a slip-and-fall incident, including insurance records). The Court ordered the previous manager to pay those costs.
[Editorial Note: This Court decision dealt with various other disputes, including various claims for alleged building deficiencies, but I have not included those other matters in this summary.]
