Condominium Directors Need to Address Conflicts of Interest

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

QUESTION:  Our board wants to move our energy services from Toronto Hydro to another energy company that provides services to our building. The president of the new energy company is the president of our corporation. He says he will recuse himself from any decision related to this issue. Can we requisition an owners’ meeting so that questions and concerns may be addressed?

ANSWER:  A corporation may, by resolution and without notice to the unit owners, make a change in a service that is provided to the owners in certain circumstances Those circumstances include services where the cost of the change is no more than the greater of $1,000 or one per cent of the annual budgeted common expenses for the current fiscal year.

If notice to the owners is required to change the provider of energy services, the notice must describe the change, contain an estimated cost and indicate the manner in which the corporation proposes to pay the cost. The notice must specify that the owners have the right in accordance with the act to requisition an owners’ meeting.

The requisition for an owners’ meeting to vote on the change must be signed by owners of at least 15 per cent of the units. The corporation may proceed with the change if an owners’ meeting is not requisitioned within 30 days of owners receiving the notice, or if the meeting is requisitioned but the owners do not vote against the change at the meeting. Owners may not vote in favour of the change if their questions and concerns are not answered at the meeting.

The president of your corporation, if he has a direct or indirect interest in the contract to be entered into with the new service provider, cannot vote in regard to the contract or be counted in the quorum for the vote. The corporation president also cannot be present during a discussion of the contract by the board.

If this idea would save money for the condominium then I understand the desire of the Board to want to make a change.  There normally would be no requirement for the Board to inform the owners or hold a meeting with the owners as it is merely a change in a contractor who is providing a service/product (namely electricity.)  However, it is a good idea to at least explain to the owners, through a notice, of why the change is being made.

However, if the President of the condominium is also the President of the other company there is a huge potential for a conflict of interest.  Not only should the President excuse himself from the discussion and vote on the issue, this is the main reason why a meeting with the owners should be held to explain the situation – and preferably for the owners to provide an indication of whether or not they accept the situation.  However, I have always preferred if a contractor isn’t hired in a situation like this.  It is too easy for the conflict to affect what occurs both now and in the future.  It’s just better not to go down that road in my humble opinion.

The other question raised was:

QUESTION:  When I moved into my unit in 2016 the condominium corporation was rebuilding the balconies and replacing the external air conditioning units. Since then, whenever we have hot weather and the air conditioning is working there is loud, vibrational noise which prevents me from using my balcony and using my computer in my second bedroom. I reported the problem to the on-site manager and the board, but no one was ever available to attend at my unit when the noise was occurring. If the board cannot or will not identify the noise and fix it, what are my options? Could a lawyer help me?

ANSWER:  The corporation is obligated to carry out common element repairs. The board’s failure to investigate and deal with your noise complaints is a failure to properly manage the corporation and meet its repair obligations.

You might wish to discuss the situation with a lawyer who might recommend that the lawyer write to the corporation advising that if the failures continue you will commence a legal action.

This is where the Condominium Authority of Ontario (CAO) needs more power to handle situations like this.  It is totally unacceptable for the Board and management to refuse to deal with this issue.  Noise has to be dealt with and in a timely manner.  Ignoring it is not acceptable.

The writer needs to contact a lawyer ASAP and have them deal with the matter – first through a letter, and then by an application to seek a legal solution is required.  It’s an unfortunate situation that the Board has caused and for which they should be ashamed of.

About Edward Brain

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