Resigning from the Board isn’t the Best Option

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

QUESTION:  What are my options other than resigning from the board in regard to racial slurs — which continue to be made at board meetings?

ANSWER:  Send written objections to the other directors, advising that such conduct is in breach of the directors’ obligation under the Condominium Act to act honestly and in good faith. The conduct will likely breach any code of conduct that has been signed by the directors.

If unit owners are made aware of the problem, 15 per cent of the owners could requisition an owners’ meeting to discuss the problem. Or they could requisition an owners’ meeting to vote on the removal of the problem directors from the board.

If the owners are not aware of the issue then this option could potentially lead to other problems.  If this director makes the owners aware of what is occurring it could back fire as the other directors could claim that he/she is making false claims.  The director’s best option, in my opinion, would first be to fire a Human Rights claim.  This way an independent person will make a determination about the problems.  Then when the owners become aware of the situation it will be easier to gain their support to remove the problem directors or at least vote in new directors as the other directors’ terms end.

Resigning is not the best option – it means the other directors win.  They will have gotten what they ultimately wanted.

QUESTION:  Our property manager appointed a law firm to be the corporation’s lawyers, without the approval of the board of directors. Can the property manager do that?

ANSWER:  The board might advise the law firm that the property manager was not authorized to make the appointment and, therefore, the firm is not the corporation’s law firm. A condominium corporation is not subject to the rule that it may be bound by a decision made by a person who has ostensible authority.

The unauthorized action by the property manager is ineffective and the board may choose the corporation’s law firm.

There is no ‘might’ in this – the Board must advise the law firm that the property manager was not authorized to make the appointment – and it also shows how little this law firm understands condominiums.  No law firm that either specializes in condominium law or has a condominium law division would accept the property manager’s word about the appointment.  They would insist on something official with the condominium’s letterhead and signed by the President (and perhaps the Secretary) indicating that the Board made the decision – as required by the Condominium Act.

My first step in this case would be to tell the law firm that the property manager did not have the authority to hire them and apologize for the situation occurring.  The second step would be to replace the property manager.  If the property manager did this once what else has, or will, the person do again.

The last question raised is:

QUESTION:  Our corporation undertook a contractor to repave all but three driveways — including mine — in the condominium. I believe that, in my case, it’s because I questioned some corporate expenditures as being illegitimate at a recent meeting. Can I hire a contractor to repave my driveway and direct the invoice to the condo corporation?

ANSWER:  If the driveways are part of the common elements and not part of your unit, and if they had deteriorated and required replacement, the corporation was required to repair or replace all of the deteriorated driveways.

If the common element driveways did not require replacement, the corporation could decide to improve the driveways by replacing them in accordance with Section 97 of the Condominium Act. The directors are required by the Condominium Act to act honestly and in good faith, but it would appear that they have not done so if they refused to repave your driveway due to the question you raised at the homeowners’ meeting.

You might consider advising the board that if they do not repave your driveway, you will commence a court action for a compliance order pursuant to Section 134 of the act.

You cannot instruct a contractor to carry out the paving of the common element driveway.

This is exactly why the Condominium Act needs to have some teeth to actually deal with these kinds of issues.  Firstly, the Act should stipulate that a director can only serve three terms maximum and then must step off the Board for at least one term.  Now before you say “What about the good directors?” Well, the good directors would set up Committees to help the Board run the condominium.  A good director can always serve on a Committee for the one term they have to sit off the Board, and will likely be re-elected later on.

Secondly, the Act – through the Condominium Authority of Ontario (CAO) – should allow an owner to take issues like this to the Tribunal and for the Tribunal to actually be able to fine the directors (and not the condominium) for doing something wrong like this.  That would make directors accountable for their actions.

The last thing the Act could do is to make it easier for owners to remove directors – reducing the voting requirement from owners representing a majority of the units to a 2/3 vote of votes cast.  Again, this would keep the directors accountable to the owners.  If the directors do not listen to, or respect, the owners then the owners can easily replace them with new directors who will do a better job.

About Edward Brain

I am a long time condo activist and have a background in Business Administration.
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