Saturday, July 26, 2014

Beyond removing Board Members at a Special Meeting; Establishing and applying a Board Code of Ethics

The Ontario Court of Appeal recently considered a situation where a Board of Directors of a Condominium Corporation removed a Director for breach of the Code of Ethics adopted by the Board of Directors; Gordon v. York Region Condominium Corporation No. 818, 2014 ONCA 549.

In the Gordon case the bylaws contemplated the removal as a consequence of three breaches of the Board approved of Code of Ethics.  The removal of the subject Board member was done in accordance with the Rules of Natural Justice.  Accordingly, the Ontario Court of  Appeal upheld the resolution of the Board to remove the subject Board member.  

This decision sheds light on a mechanism which allows condominium Boards to control their own decorum.  As was the case in Gordon, the subject Board member had become obstructionist and somewhat intransigent.  It is in exactly these circumstances that a Code of Ethics may, if supported by the  bylaws, create a more civil Board environment. Though not binding on our Alberta Courts the decision of the Ontario Court of Appeal in Gordon is highly persuasive and may well be adopted.  Alberta condominium corporations may wish to amend their bylaws to add breach of a Board adopted Code of  Ethics as an additional basis for removal of a recalcitrant Board member.

Monday, July 21, 2014

Adoption of the King case by the Honourable Madam Justice C. Dario; Accleration of condominium contributions not permitted

The Honourable Madam Justice C. Dario was given the opportunity to review the decision of the learned Master Laycock in Bank of Montreal v Rajakaruna, 2014 ABQB 415

Appeal from the Memorandum of Decision by
K.R. Laycock, Master in Chambers
(2013 ABQB 368)

Justice Dario had a very unusual set of facts which she concluded had been fundamentally properly dealt with by Master Laycock.  In doing so Justice Dario referred to and effectively affirmed the King decision which provides guidance to all lawyer, property managers and owners as to the priority system provided by the Condominium Property Act (Alberta).  Justice Dario also refused to allow acceleration of  condominium contributions based on failure to pay fines levied by a condominium corporation; lack of evidence was only one consideration in this regard.  Moreover, Justice Dario affirmed King directly on the point that fines are at best a contractual charge not in priority to lenders on title to individual units.

Justice Dario also made comments about the language in "breach of bylaws" provisions in the subject corporations bylaws.  Justice Dario observed that there must be a connection between the expenses incurred and an actual breach of bylaws.  A witness fee charged by a property manager in respect of the imposition of a fine without the Court affirming the fine was not sufficient in the Rajakaruna case.  Justice Dario also commented that imposing a fine for breach of a noise bylaw requires evidence to be affirmed by the Court.  In the Rajakaruna case the condominium corporation was not a party as the lender to the owner had paid the condominium corporation the amounts charged.

This case is a good caution to seek legal advice when dealing with recalcitrant owners; slow and steady is the best politic to follow when dealing with non-monetary breaches of condominium bylaws.