Board Could Re-Appoint Resigned Director

Gerry Hyman has another article for the Toronto Star.  Let’s discuss some of the questions raised:

QUESTION:  One of our directors submitted his resignation and it was accepted by resolution of the board. The resigned director now wants to return and complete his term. I believe that when a director resigns, he is out — unless voted back in by the owners at the annual general meeting. Am I correct?

ANSWER:  Almost. The resigned director could be voted back onto the board by the owners. But the board could also resolve to appoint the director to fill the vacancy created by his resignation until the next AGM. The board, however, could not resolve that the director will complete his original term if that term would extend beyond the next AGM.

Of course, the obvious question is why did the director resign in the first place and then wait long enough for the Board to officially accept the resignation.  But once done, the person is no longer a director.  The Board could re-appoint the ex-director until the next AGM, as Mr. Hyman suggests  – or the Board could call a special meeting of owners to elect someone to fill the vacancy.  I’d suggest calling the meeting, call for nominees, and conduct an election.  When the meeting is called to order, the Chairman should state the reason for the meeting (to elect a director to fill a vacancy) and how the vacancy came about (that John Doe resigned on a specific date and that the resignation had been accepted by the Board at their next meeting).

The meeting should allow for nominations, a chance for any candidates to make a speech on why they should be elected, and a chance for owners to ask any questions.  As the person resigned and is now wanting the position back again, the owners should ask the person why he/she resigned in the first place.  If the owners accept the reason(s), then the owners will elect the person.

Another question raised is:

QUESTION:  I would like to put a hot tub in my exclusive-use, common-element backyard. The board refuses to allow it. I have read the report of the McMahon vs. Wentworth case in which the court allowed the unit owner to install a hot tub over the objection of the condo corp. Does that case permit me to install the hot tub?

ANSWER:  The corporation in Wentworth Condominium Corp. No. 198 v. McMahon argued that the hot tub constituted an addition, alteration or improvement to the common elements and in accordance with Section 98 of the Condominium Act could only be installed with the approval of the board.

The court held, however, that the hot tub was not an addition to the common elements as it was not connected to a structure; it was not an alteration as it did not permanently change the structure of the property; it was not an improvement as it was not a fixture and did not attach to the condominium unit or the property and therefore could not increase its value. As well, the court held that an item that increases the enjoyment of the property but does not increase the value of the property is not an improvement.

The court also stated that it would be possible for a large, free-standing item to be an addition, alteration or improvement if it were so difficult to move that it became a permanent part of the property. That was not the situation with McMahon’s hot tub, the court found, and so he did not require the consent of the board. The decision was upheld on appeal.

It appears that unless your hot tub is heavier and more difficult to move than McMahon’s tub, and will therefore be considered a permanent part of the property, you do not require the approval of the board.

The court case allows for a non-permanent hot tub, but the Board could still argue that it is semi-permanent or permanent if it will be put in a specific location (i.e. most of the backyard is grass, but a specific area will be covered over for the hot tub.)  It is best for the owner in this case to work with the Board in putting the hot tub in.  It is likely to be acceptable, per the Wentworth case, but still a lawyer should be consulted first just to be safe.  No point putting in a hot tub and then have the courts decide to take it out because of a technicality.

The third question raised was:

QUESTION:  I believe our property manager is in breach of a code of ethics that’s been required by his management company. Those breaches including manipulating board decisions, telling residents about comments made by other directors and being vindictive toward anyone who criticizes him. The other board members refuse to acknowledge the issues. Can I notify the owners directly or complain to the management company without the consent of the board?

ANSWER:  Since the other directors do not agree with you, taking action on your own is unwise. Contacting the owners about the conduct of the manager should be a function of the board, even if some of your opinions are based upon information that came to you as a unit owner and not as a director.

Contacting the management company with a request that it take action is also a function of the board.

The Government is bringing in a new Board to oversee management companies and property managers.  Once implemented, the Board should take care of issues like this.  Individual owners who have an issue should be able to seek remediation.  Just because a majority of the Board disagrees with this one director does not mean that they are right.

About Edward Brain

I am a long time condo activist and have a background in Business Administration.
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1 Response to Board Could Re-Appoint Resigned Director

  1. Pingback: 2017: In Review | Edward Brain's Blog

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