B.K. v. York Region Standard Condominium Corporation No. [...], 2019 ONSC 4552

citation: "B.K. v. York Region Standard Condominium Corporation No. [...], 2019 ONSC 4552" parties: "B.K. v. York Region Standard Condominium Corporation No. [...]" party_moving: "Group of Owners of York Region Standard Condominium Corporation No. [...]" party_responding: "B.K." court: "Superior Court of Justice" court_abbreviation: "ONSC" jurisdiction: "Ontario" case_type: "motion" date_judgement: "2019-07-30" date_heard: "2019-07-04" applicant:

• "Group of Owners of York Region Standard Condominium Corporation No. [...]" applicant_counsel:
• "Megan Mackey" respondent:
• "B.K." respondent_counsel:
• "Antonio Casalinuovo"
• "Megan Molloy" judge: "Kimmel" summary: > A group of condominium owners, claiming to be the newly elected board (the Moving Parties), sought to set aside or suspend an ex parte judgment that had appointed an administrator and inspector for York Region Standard Condominium Corporation No. [...]. The Moving Parties alleged that the original applicant (B.K.) failed to make full and fair disclosure of material facts when obtaining the ex parte order. The court found that the original application proceeded without proper notice to the Condominium Corporation due to governance issues and safety concerns. While the Moving Parties had standing as "persons affected" by the judgment, they failed to demonstrate that the original applicant withheld any known material facts that might reasonably affect the outcome. The motion was dismissed. However, the court granted leave for unit owners to requisition an election for a new board at the upcoming Annual General Meeting, which could provide grounds for a future motion to vary or terminate the administrator's appointment, emphasizing that self-governance is the norm for condominiums. interesting_citations_summary: > This decision provides a detailed application of the principles governing motions to set aside ex parte orders based on alleged material non-disclosure under Rules 38.11 and 39.01(6) of the Rules of Civil Procedure. It clarifies that the obligation is to disclose known material facts that might reasonably affect the outcome, not every conceivable fact, and that the consequences of non-disclosure flow from a failure to disclose known material facts. The court also reiterates the factors for appointing and terminating condominium administrators under the Condominium Act, 1998, stressing the importance of self-governance and the court's role in assessing the best interests of the condominium community when considering elections during an administration. The case highlights the complexities of service and notice when a corporation's governance is compromised by internal disputes and threats. final_judgement: > The motion brought by the Group of Owners of York Region Standard Condominium Corporation No. [...] to set aside or suspend the May 29, 2019 judgment appointing an administrator was dismissed. The court granted leave for unit owners to requisition an election for a new board of directors at the upcoming Annual General Meeting, which could provide grounds for a future motion to vary or terminate the administrator's appointment. Costs were to be addressed by agreement or further submissions. winning_degree_applicant: 5 winning_degree_respondent: 1 judge_bias_applicant: 0 judge_bias_respondent: 0 year: 2019 decision_number: 4552 file_number: "CV-19-620461" source: "https://www.canlii.org/en/on/onsc/doc/2019/2019onsc4552/2019onsc4552.html" keywords:
• Condominium Act
• Administrator
• Ex parte order
• Material non-disclosure
• Rules of Civil Procedure
• Condominium governance
• Board election
• Standing
• Costs
• Service deficiencies areas_of_law:
• Condominium Law
• Civil Procedure
• Corporate Governance cited_cases: legislation:
  • title: "Condominium Act, 1998, S.O. 1998, c. 19" url: "https://www.ontario.ca/laws/statute/98c19"
  • title: "Rules of Civil Procedure, R.R.O. 1990, Reg. 194" url: "https://www.ontario.ca/laws/regulation/900194" case_law:
  • title: "B.K. v. York Region Standard Condominium Corporation No. [...], 2019 ONSC 3837" url: "https://www.minicounsel.ca/scj/2019/3837"
  • title: "York Condominium Corp. No. 42 v. Hashmi, 2011 ONSC 2478" url: "https://www.canlii.org/en/on/onsc/doc/2011/2011onsc2478/2011onsc2478.html"
  • title: "R. v. Mentuk, 2001 SCC 76" url: "https://www.minicounsel.ca/scc/2001/76"
  • title: "National Trust Co. v. Grey Condominium Corp. No. 36 (1995), 47 R.P.R. (2d) 60" url: "" # No) 184" url: "https://www.minicounsel.ca/oca/2017/267"
  • title: "Sistem Mühendislik Insaat Sanayi Ve Ticaret Anonim Sirketi v. Kyrgyz Republic, 2012 ONSC 4351, affirmed, 2013 ONCA 83" url: "https://www.minicounsel.ca/scj/2012/4351"
  • title: "Fox v. Fox, 2014 ONSC 1135 (Div. Ct)" url: "https://www.minicounsel.ca/odc/2014/1135"
  • title: "Planet Paper Box Group Inc. v. McEwan, 2018 ONSC 6991, 50 C.C.E.L. (4th) 315" url: "https://www.minicounsel.ca/scj/2018/6991"
  • title: "Bahadoor v. York Condominium Corp. No. 82 (2006), 53 R.P.R. (4th) 281 (Ont. S.C.)" url: "" # No)), by which he ordered the continuation of a revised publication ban of June 4, 2019, as follows:

[1] On May 29, 2019, I made an ex parte order appointing an Administrator and Inspector for the respondent, York Region Standard Condominium Corporation No. […] (“Condominium Corporation”). I based the order on affidavit evidence. There was an affidavit from the former president of the Condominium Corporation (which attached 31 exhibits) and his spouse, a unit owner. I also reviewed evidence from the proposed Administrator/Inspector who also attended in court that day and answered some questions I asked about his awareness of the circumstances described below.

[2] The material sets out the circumstances whereby the Board of Directors of the Condominium Corporation had been reduced by resignations to an amount less than quorum. The development consists of 497 dwelling units within three municipal addresses. Due to building deficiencies and flooding, the main affiant deposed millions of dollars had been spent on repairs, deficit operating budgets had occurred over the “past several years” (at paragraph 9) and “multiple special assessments” (at paragraph 10) had been levied. The affiant acknowledged this led to hostility and mistrust amongst the unit holders.

[3] By March 26, 2019, there was a requisition for a meeting to replace the existing Board. The affiant, had also been contacted by a reporter employed by the Canadian Broadcasting Corporation (“CBC”) who advised he was working on a story to be published. The affiant also deposed he had been contacted by a lawyer retained by the unit owners who had requisitioned the meeting and advised that unless the Board resigned, the CBC article would be published. If the Board agreed to resign, this lawyer would let the CBC know “in order to ‘kill the story’ ” (at paragraph 15).

[4] The materials contained, at exhibits 9 and 19, copies of CBC news articles dated April 9 and April 30, 2019 prepared by its reporter, John Lancaster. It detailed the above-noted problems and the efforts of some unit owners to “kick out their condo board”. The initial article also noted this to be “an increasingly common problem facing thousands of Toronto area condominium residence” and quoted the same lawyer that had contacted the former president of this Condominium Corporation. This second article detailed resignations by the other Condominium Corporation board members such that it had lost quorum.

[5] A meeting arranged for May 21, 2019 in the nearby country club was cancelled on short notice given the previous events and anonymous threats made to now former board members, the Condominium Corporation auditor and the property manager (see paragraphs 34, 35 and 37). The threats against the former president and property manager included physical harm to those individuals, their families and their lawyer. This was reported to York Regional Police who launched an investigation. Finally, the materials included confirmation that a lawyer retained by the purported new board at a meeting held on May 21, 2019 at an alternate location was not in a position to oppose the relief sought. This was because of an issue as to whether the election of the purported new board was legitimate.

3In his handwritten endorsement on May 29, 2019 Dow J. found that “the board of directors… lost quorum on April 25, 2019 which confirms that the respondent [Condominium Corporation] is without governance.” As is evident from the above summary, it was also material to the May 29 Judgment: (i) that there had been threats of violence against some of the former board members, the auditor and a representative of the property manager; and (ii) that there was an issue as to whether the purported new board was legitimate because their election took place at a meeting that had been cancelled on short notice due to these threats of violence and subsequently held at an alternate location to the one in the meeting notice.

4It is common ground that some of the circumstances that the court is to have regard to when considering whether to appoint an administrator include: the ability of the board of directors to manage the corporation and the existence of a struggle that is impeding or preventing the proper governance of the corporation: see York Condominium Corp. No. 42 v. Hashmi, 2011 ONSC 2478, at para. 6.

This Motion

5This motion is brought by a group of owners within the Condominium Corporation who claim to have been elected as the new board of directors on May 21, 2019 (referred to by Dow J. as the “purported new board”). They claim to be speaking for the Condominium Corporation. However, the appointment of the Administrator under the May 29 Judgment and pursuant to s. 131 of the Condominium Act, 1998, S.O. 1998, c. 19 gave the Administrator the full power and authority to manage the affairs of the Condominium Corporation as if he were the board of directors, which effectively usurps the powers and authority that any validly elected board of the Condominium Corporation would have had: see Hashmi, at para. 9. In this case, the applicant has also identified certain irregularities in the notice and location of the meeting of owners at which the purported new board claims to have been elected, which is what gives rise to the added issue identified by Dow J. about the legitimacy of their election in the first place.

6The May 29 Judgment was made on an ex parte application; only the applicant and the proposed Administrator appeared. The Moving Parties move under Rules 38.11(1) and (2), 39.01(6) and 59.06(2)(b) of the Rules of Civil Procedure asking that it be set aside or suspended on grounds of alleged material non-disclosures by the applicant. The Moving Parties have been very careful to say that this is not a motion to amend pursuant to any come-back under the May 29 Judgment, that they are not seeking to vary or amend the May 29 Judgment, that they are not asking for an order discharging the Administrator, nor is this an appeal of the May 29 Judgment.

7I was asked to rule on this before the end of July because of upcoming deadlines that the Administrator is dealing with, which require decisions and commitments to be made.

Summary of Decision on This Motion

8For the reasons that follow, the motion is dismissed. The Moving Parties are “persons affected by” the May 29 Judgment and have standing to bring this motion under Rules 38.11 and 39.01(6) of the Rules of Civil Procedure. However, the Moving Parties have not met their onus to demonstrate that the applicant failed to make full and fair disclosure of any material facts on the May 29 Application.

9I have not been asked, and do not need, to determine on this motion whether the purported new board was validly elected. All parties agree that I should not decide that issue, although they disagree about how it should ultimately be resolved. The Moving Parties say that it is up to the applicant (or some other unit owner) to bring an application to challenge the validity of the May 21 election of the new board, and unless and until that occurs and is successful, they should be permitted to function as the duly elected board. However, even if this position is correct [1], the Moving Parties acknowledge (hence, this motion) that, to do so the purported new board would need the court to set aside or suspend the operation of the May 29 Judgment, which I am not prepared to do on this motion.

10As explained later in these reasons (at paragraphs 42-48), I have granted leave for there to be a requisition to allow for an election of a new board of directors at the upcoming AGM. If that occurs, then there may be a further motion to vary the one-year term of the appointment of the Administrator/Inspector or to terminate his appointment.

Issues to be decided

11The issues to be decided on this motion are:

a. Was the May 29 application made without notice? b. Should the Moving Parties have been given notice of the application? c. Do the Moving Parties have standing to bring this motion? d. Did the applicant make full and fair disclosure of all material facts on the application?

Was the May 29 application made without notice?

12There is a dispute about whether the May 29, 2019 Judgment was made without notice. It is relevant to the availability of relief under Rules 38.11 and 39.01(6) of the Rules of Civil Procedure.

13Rule 39.01(6) of the Rules of Civil Procedure provides that:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

14Rule 38.11 of the Rules of Civil Procedure provides that:

A party or other person who is affected by a judgment on an application made without notice …may move to set aside or vary the judgment, by notice of motion that is served forthwith after the judgment comes to the person’s attention and names first available date that is at least three days after service of the notice of motion.

On a motion under subrule (1), the judgment may be set aside or varied on such terms as are just.

15The Condominium Corporation was the respondent to the May 29 Application. The applicant says that service was effected by sending the Notice of Application on May 23, 2019 to Brian Horlick, the lawyer who had historically acted for the Condominium Corporation under the auspices of its former board of directors. Mr. Horlick responded by acknowledging receipt and service of the Notice of Application. However, Mr. Horlick subsequently advised that, because he was not able to obtain instructions from the board that had lost quorum, he could not appear on the application. This does not amount to proper service of the application on the Condominium Corporation. Although service can be effected under Rule 16.03(2) of the Rules of Civil Procedure by acceptance by a lawyer for the party, implicit in that acceptance is a representation that the lawyer had the authority and instructions to accept service and Mr. Horlick clearly did not based on his subsequent advice. In these circumstances, I am not prepared to give effect to his acknowledgment of service as constituting “notice” of the application to the Condominium Corporation.

16The applicant also contends that the May 29 Application was served on the Condominium Corporation by serving the corporate property manager of the Condominium Corporation at its head office on May 24, 2019. The property manager did not appear on, or respond to, the May 29 Application, although its representative has tendered evidence in support of this motion. The applicant did disclose on the May 29 Application that the property manager had resigned. An affidavit was filed by the Moving Parties from the on-site property manager who had been employed with the property management company, but who had been relieved of his duties prior to May 21. According to the Moving Parties, this former on-site manager had been appointed by them on May 21, 2019 to act as the on-site property manager. There is nothing to indicate that the applicant was aware of this. Although Rule 16.02(c) of the Rules of Civil Procedure provides that personal service of an application can be effected by leaving a copy with an agent of the corporation, there is no evidence of whether any property manager was authorized as an agent for service on the Condominium Corporation, and there is sufficient uncertainty about who was ostensibly acting as the property manager at the time, that I am not prepared to find that sending the application to the head office of the property manager constituted “notice” of the application to the Condominium Corporation.

17Paragraph 26 of the May 29 Judgment acknowledges the service deficiencies, which it seeks to resolve by validating and approving the time for and method of service of the application materials. The Moving Parties question the basis for this validation as it was not addressed in the endorsement and they say was not supported by the materials filed on the May 29 Application.

18Rule 16.04(1) of the Rules of Civil Procedure provides that, where it appears that it is impractical for any reason to effect prompt service, the court may make an order dispensing with service under Rule 16.04. For purposes of this motion, I will proceed on the basis that service of the application material was effectively dispensed with. It is not difficult to identify the impracticalities of service in this case.

19As is reflected in the May 29 handwritten endorsement of Dow J., the respondent Condominium Corporation was without governance. With the controversy around the election of the purported new board, they were not considered to be speaking for all of the unit owners. Furthermore, at the time of the May 29 Application, there was a group of “concerned owners” who had been critical of the old board and who were believed to be behind some troubling threats that members of the former board and the property manager had received. These threats were the justification for the publication ban order that was made on May 29, 2019 as part of the Judgment, revised on consent on June 4 and continued on July 2, 2019. This is reflected in the July 2 Reasons for Decision of Dow J.:

[5] A meeting arranged for May 21, 2019 in the nearby country club was cancelled on short notice given the previous events and anonymous threats made to now former board members, the Condominium Corporation auditor and the property manager (see paragraphs 34, 35 and 37). The threats against the former president and property manager included physical harm to those individuals, their families and their lawyer. This was reported to York Regional Police who launched an investigation. Finally, the materials included confirmation that a lawyer retained by the purported new board at a meeting held on May 21, 2019 at an alternate location was not in a position to oppose the relief sought. This was because of an issue as to whether the election of the purported new board was legitimate.

[12] The Applicant submits that the evidence points to the threat of physical harm and an ongoing police investigation in support of such a finding. Counsel for CBC relied on the following aspects to undermine that position:

1. the lack of detail describing the threat;
2. the most disturbing, violent threat being against the property manager who is not an affiant and thus hearsay; and
3. the absence of anything occurring in the month or so since the threats were made coupled with knowledge by the unit holders of my order May 29, 2019 appointing an Administrator and Inspector.

[13] However, my review of the evidence as a whole raises grave concerns. While I accept the submission by counsel for the CBC that the most disturbing, violent threat was against the property manager and not the affiant, this hearsay voice mail adds to my ability to give weight to the threats of harm made against the principal affiants (see paragraphs 33, 34 36 and 39 of his affidavit).

[14] Counsel for the CBC relied on the comments in R. v. Mentuk, 2001 SCC 76 (at paragraph 34) that “the risk in question be a serious one” or “real and substantial”. I agree. However, when email states “you’re 74 years old, who knows how many years you have …” is considered in the matrix of more direct threats of physical harm to the point of death and extended to family members, I conclude the first part of the test is met.

20At the hearing before me, the applicant’s counsel was careful to avoid speculating about whether the purported new board is comprised of some or all the same members of the group of concerned owners who were making threats prior to the application being brought. Counsel for the Moving Parties made every effort to distance her clients from those threats, but she did not suggest the threats had not been made. Whether or not the Moving Parties and the group of concerned owners are comprised of some, or all, or none of the same unit owners, neither of those groups had clear authority to speak for all unit owners and there were safety concerns surrounding disclosure of the application to any of the concerned owners or their proxies who had been responsible for the threats.

21Individual unit owners did not have standing to speak for the Condominium Corporation on the May 29 Application. In the face of what had transpired, and in the absence of any identifiable group of unit owners with authority to “speak for” the Condominium Corporation, it would not have been reasonable or practicable for the applicant to give the Condominium Corporation notice of the application.

22What all of this means is that, in practical terms, the May 29 Application proceeded without notice to the respondent Condominium Corporation.

Should the Moving Parties have been given notice of the application?

23The Moving Parties were not served with the May 29 Application and I am not persuaded that they had a right to be served, or that it was improper for the application to proceed in their absence.

24There has been no suggestion that the Moving Parties should have been given notice simply because they were unit owners. The Moving Parties first argued that they should have been given notice of the application because they were known to be acting as the board and their counsel was known to the applicant. They concede that there may have been a technical deficiency in the notice of the May 21 meeting that was held in the condominium building as was not convened in compliance with the notice requirements of s. 47 of the Condominium Act. Although the original notice that specified the location of the meeting to be at the Richmond Hill Country Club was duly given, after the meeting at that venue was cancelled, the notice that was sent out about the “new” location of the meeting did not comply with s. 47 for a variety of reasons, including because less than 15 days’ (a matter of hours) notice was provided of the venue for the meeting, and because the notice was not given to all of the owners (the applicant and her spouse who was on the service list, for example, did not receive it).

25On this issue, the applicant directed me to the authoritative text: The Condominium Act: A User’s Manual, 5th ed. (Toronto: Thomson Reuters Canada, 2018) authored by Audrey Loeb, one of the lawyers for the Moving Party, which states at p. 241 in Chapter 4 – Owners’ Meetings, that:

Where a validly called meeting has been aborted, the mere posting of a notice of new meeting in the room at the time of the original meeting does not meet the requirements under this section even though the owner of the majority of the units was in the room at the time of posting: National Trust Co. v. Grey Condominium Corp. No. 36 (1995), 47 R.P.R. (2d) 60.

26The Moving Parties say they did more than just post a notice at the original meeting location. However, the applicant says that whatever they did was not enough since neither she nor her spouse who was on the service list, received notice of the new time and location for the meeting after it had been cancelled at the original venue.

27The Moving Parties urged me not to take a technical approach to compliance with the notice requirements because it would be contrary to the consumer protection objectives of the Condominium Act to do so: see Harvey v. Talon International Inc., 2017 ONCA 267, 137 O.R. (3d) 184, at para. 6.

28The Moving Parties referred me to correspondence dated between May 22 and 24, 2019 that suggests that an opinion had been requested by Mr. Horlick, and provided by their lawyer Audrey Loeb, that they had been duly elected as board members on May 21, 2019. It was argued that Mr. Horlick had said he would accept this opinion if provided, however, the correspondence relates to what he said he needed to transfer his files and does not appear to go so far as to say that he accepted that the purported new board had been validly elected. In any event, Mr. Horlick is not counsel for the applicant and there is no indication that he represented that he was speaking for or could bind the applicant, nor is there any indication that the applicant was aware of this exchange of correspondence at the time of the May 29 Application (or until it was disclosed in the Moving Parties’ materials for this motion).

29These competing points of view draw me right into the issue about the validity of the election of the purported new board that I was asked not to decide. Any “entitlement” of the purported new board to notice of the May 29 Application is tied to this issue which was at the time, and remains, unresolved.

30Second, while the Moving Parties may be affected by the May 29 Judgment for purposes of Rules 38.11 and 39.01(6) of the Rules of Civil Procedure such that they have standing to rely on those Rules to bring this motion (discussed in the next section of these reasons), that does not mean that they were entitled to notice of the application.

31Dow J. did not require the applicant to serve the Moving Parties. He was aware of the May 21 meeting and the election of the purported new board and he did not consider their presence to be necessary to enable him to adjudicate effectively and completely on the issues before him, or presumably he would have required them to be joined under Rule 5.03(4) of the Rules of Civil Procedure. Dow J. was made aware of various events leading up to the election of the purported new board, including the last-minute change of venue of the meeting of owners at which they were elected. Dow J. determined (in para. 5 of his July 2 reasons) that because there was an issue as to whether the election of the purported new board was legitimate, their counsel was not in a position to oppose the relief sought on the application. He clearly turned his mind to the question of whether they should have been on notice and did not require them to be given notice.

Do the Moving Parties have standing to bring this motion?

32In order to have standing under Rules 38.11 and 39.01(6) of the Rules of Civil Procedure, the Moving Parties must be a party, or any other person affected by the May 29 Judgment. Although not specifically argued before me, that would typically require that their proprietary or economic interests be directly affected: see Sistem Mühendislik Insaat Sanayi Ve Ticaret Anonim Sirketi v. Kyrgyz Republic, 2012 ONSC 4351, at paras. 24-25, affirmed, 2013 ONCA 83. I am satisfied that they are persons so affected in that the appointment of the Administrator would impact their ability to carry out their duties as the board of directors (which duties involve both proprietary and economic interests) if they have been duly elected. While their status is disputed, they may be affected in that capacity and they are entitled to move under Rule 38.11 of the Rules of Civil Procedure to set the May 29 Judgment aside. Because I have found that the May 29 Application proceeded without notice, it was incumbent upon the applicant to make full and fair disclosure of all material facts, as required under Rule 39.01(6) of the Rules of Civil Procedure and the Moving Parties may have resort to that Rule for the relief that they seek.

33However, the Moving Parties are not parties to this proceeding and the Moving Parties do not speak for the Condominium Corporation (for reasons outlined previously) so they cannot resort to Rule 38.11 of the Rules of Civil Procedure on behalf of the Condominium Corporation as a party having failed to appear, nor can they resort to Rule 59.06(2)(b) of the Rules of Civil Procedure to set aside, vary or suspend the operation of the May 29 Judgment as the relief under those Rules is only available to parties. The requirements of Rule 38.11 of the Rules of Civil Procedure as they relate to a party failing to appear and Rule 59.06(2) of the Rules of Civil Procedure are not analyzed in these reasons since I have determined that those Rules do not apply.

Did the applicant make full and fair disclosure of all material facts on the application?

34The question that I must decide on this motion is whether there was a failure on the part of the applicant to make full and fair disclosure of any material facts.

35As indicated earlier in these reasons, certain facts were identified to be relevant to Dow J.’s decision to grant the May 29 Judgment and appoint the Administrator/Inspector, namely that: (i) the Condominium Corporation had lost the ability to govern its affairs because it had lost quorum due to the resignation of former board members; (ii) there had been threats of violence against some of the former board members, the auditor and a representative of the property manager and some former board members and the property manager had resigned; and (iii) there was an issue about the legitimacy of the purported election of the new board that occurred at a meeting held at an alternate location to the one that had been indicated in the meeting notice. These are the relevant facts upon which the May 29 Judgment was based, consistent with the factors in Hashmi, at para. 6, and against which the court is now being asked to consider the sufficiency of the disclosure provided by the applicant.

36The disclosure about this is contained in over 16 pages of affidavit testimony submitted by the applicant setting out the history of the financial issues of the Condominium Corporation and the events of 2019, such as: the requisitioned unit owners’ meeting; the threats of violence against board members, the auditor and the property manager; various media coverage; the resignation of board members and loss of quorum; the cancellation of the owners’ meeting; the meeting of owners that was convened in another location at which the election of the purported new board is said to have occurred; and the attempted termination and eventual resignation of the incumbent property management company. In a summary paragraph (48) it was represented to the court that:

In light of the foregoing circumstances [threats, resignations, cancelled meeting etc.] the politics of YRSCC [...] have escalated to the point where the governance of the Respondent has now become unmanageable. At the present time, no one is overseeing the governance of YRSCC [...], and no one is willing to manage this property out of fear for their safety. No ordinary volunteer is qualified to step into what has become a warzone within the YRSCC [...] community. As a result of significant safety concerns, Duka has not called a new owners’ meeting for an election to fill the vacancies on the Board, which is the only thing YRSCC [...] is legally entitled to do after it has lost quorum at the Board level. YRSCC [...] has essentially ceased operation and has effectively done so since early May.”

37The cases cited by the parties dealing with how to apply the burden of full and fair disclosure of material facts under Rule 39.01(6) of the Rules of Civil Procedure refer and rely upon the decision in Fox v. Fox, 2014 ONSC 1135 (Div. Ct), at paras. 11-15. That case explains that the burden that rests on the moving party is not to make full and fair disclosure of every fact relevant to the motion as that would be too burdensome and voluminous. Rather, the obligation should be interpreted to mean “all facts that might reasonably affect the outcome of the motion” that are known to the moving party. But, to set aside an order made without notice, the other party need not establish that the undisclosed facts would have changed the outcome of the motion.

38I have been guided by the reasoning from the Fox case (at para. 13), that: “If the judicial officer hearing a motion is deprived of an opportunity to know about all of the material facts known to the moving party because the moving party fails to comply with Rule 39.01(6) of the Rules of Civil Procedure, the same rule creates a consequence for that moving party. It provides that his failure to comply, in itself, is sufficient ground for setting aside any order made on the motion.” [Emphasis is mine] What I take from this case (including the earlier points noted) is that the Rule 39.01(6) of the Rules of Civil Procedure consequences flow from a failure to disclose known material facts, not just a failure to disclose any fact that may subsequently be identified by the other party seeking to set aside the order.

39My finding that there were no material non-disclosures by the applicant on the May 29 Application is based on my determination in each instance (indicated below) that either (i) the alleged undisclosed facts were not known to the applicant at that time; or (ii) the substance of the allegedly missing facts was disclosed. The alleged material non-disclosures that the Moving Parties have identified are each dealt with in turn:

a. That there was no board of directors to oversee the affairs of the Condominium Corporation and govern it in the wake of the resignations of former board members leading that board to lose quorum: The Moving Parties say that the applicant failed to disclose that there was a validly elected new board, as confirmed in the opinion letter of May 24, 2019 of their counsel, whose qualifications were detailed in their CVs. RULING: The dispute over the validity of the election of the purported new board, including correspondence between the lawyers indicating differences of opinion about that, was disclosed on the May 29 Application. There is no evidence that the applicant knew about the May 24 letter written by counsel for the Moving Parties containing the “opinion” that the purported new board had been duly elected. In deciding an allegation of material non-disclosure, I am not prepared to assume or infer that the applicant was aware of that “opinion” just because it was sent to the former lawyer for the Condominium Corporation. In any event, the May 24 letter contains a self-serving opinion which would not be determinative of the dispute about validity of the election of the new board and, since the parties have expressly asked me not to decide that dispute, it remains a matter of contention. It is enough that the dispute was disclosed. There was no material non-disclosure in this regard.

b. That the applicant represented to the court that “no owner’s meeting, legally constituted or otherwise, took place,” having not seen “an alternate Notice of meeting detailing the change of venue or anything advising there was a meeting scheduled to take place on May 21, 2019 other than the owner’s meeting cancelled by the venue due to threats of violence.”: The Moving Parties say that they have minutes to establish that the owner’s meeting took place at an alternate location and assert that this statement suggests that it did not take place at all. RULING: There is no evidence or suggestion that the applicant knew about these minutes. The record before me discloses that neither the applicant nor her husband received notice before the meeting of owners that took place on May 21 at the alternate location and that they were not in attendance. That said, it is clear from the evidence in the May 29 Application record that they later learned that a meeting had taken place at which the new board was purportedly elected, and this disclosure cannot fairly be read as suggesting that there was no meeting of owners. The issue was whether it was a meeting at which a new board of directors could be validly elected, and that was clearly disclosed. There was no material non-disclosure in this regard.

c. That the applicant represented to the court that there was no property management company willing to manage the Condominium Corporation and that the property manager had resigned out of fear for their safety: The Moving Parties say that the applicant failed to disclose the source of the affiant’s belief that no property management company is willing to run the day-to-day operations of the respondent (Condominium Corporation) and that the applicant failed to disclose that the purported new board had appointed an interim on-site property manager and was in the process of interviewing prospective new property managers. RULING: There is no evidence or suggestion that the applicant knew about any of this. The Moving Parties rely on a case in which the court found that a failure to disclose the source of information in a supporting affidavit can amount to a failure to make full and fair disclosure of material facts contrary to Rule 39.01(6) of the Rules of Civil Procedure: see Planet Paper Box Group Inc. v. McEwan, 2018 ONSC 6991, 50 C.C.E.L. (4th) 315, at paras. 25-42. That was a case where the plaintiff was making specific accusations about activities of the defendant based on speculation and conjecture, which were not true, so the assertion of those as “facts” without the disclosed source was found to be a material non-disclosure (and was also found not to be in compliance with the requirement of Rule 39.01(4) of the Rules of Civil Procedure). Here, a fair reading of the May 29 Application record discloses the source of the impugned statement to be that the existing property management company had received threats and had resigned out of fear. The affiant never suggested that other prospective property managers had been contacted and had declined to act. There was no material non-disclosure in this regard.

d. That the applicant represented that the Condominium Corporation was divided by competing groups and, because of the threats, they were operating in a “war zone” that no volunteer was qualified to step into, and that any board elected in the near future is sure to be faced with the same level of threats, violence and propaganda: The Moving Parties say that they were prepared to step into this, that their CVs demonstrate they were qualified and they have not raised concerns about threats. RULING: The willingness of the Moving Parties (purported new board) to step up was disclosed to the court on the May 29 Application. There is no evidence or suggestion that the applicant knew that they had not received any threats since May 21, but there was no specified timeline on the prediction made in the affidavit, which was about threats that they may face in the future. When read in context, these statements can be fairly read as predictions based on the experiences of the former board members who had resigned. Further, the statement was not questioning the CV-qualifications of the board members, but rather it simply expresses a view that an ordinary volunteer board member would not be equipped to deal with the types of violent threats that the former board members were facing. There was no material non-disclosure in this regard.

e. That the applicant represented to the court that Brian Horlick accepted service of the application record: The Moving Parties say that is not true and there was no evidence of such in the record. RULING: Although there was no evidence from Mr. Horlick of his acceptance of service in the May 29 Application record, the applicant substantiates this statement in the supplementary application record, which contains an email from Mr. Horlick dated May 23, 2019 that reads in part: “On behalf of the Corporation, we hereby acknowledge receipt of your Notice of Application and service of same.” While I have since ruled (in these reasons) that this acknowledgment of service did not constitute proper service, the applicant’s summary of what Mr. Horlick had said is consistent with his May 23 email and there was thus no material non-disclosure in this regard. In any event, I do not consider this to be a material fact, in that it is not relevant to the decision of whether to appoint the Administrator/Inspector.

f. That the applicant did not disclose that the Administrator was a former colleague of Mr. Morris (the applicant’s husband): The Administrator represented to the court that this is not true (he is not a former colleague of Mr. Morris), and further points to his attestation of independence that was provided to the court at the time of the May 29 Application, which he continues to stand by. RULING: The Moving Parties’ concerns are speculative and have been disproved. There was no material non-disclosure in this regard.

Disposition and Next Steps

40For these reasons, this motion is dismissed.

41Paragraph 1 of the May 29 Judgment contemplates that a court may amend the one-year term of appointment of the Administrator. The Administrator has suggested in his June 14, 2019 Interim Report that the orderly return to self governance by the owners should await the completion of the financial audit and the inspection of prior financial records currently underway and that he intends to hold the Annual General Meeting on September 30, 2019. However, if the Administrator were to receive a valid requisition under s. 46 of the Condominium Act for the election of a new board of directors to be added to the agenda of items to be considered at the next AGM, and if that meeting is duly called, and proper notice of this agenda item is given and it results in the valid election of a full quorum of board members willing to govern the Condominium Corporation and take over these and the other tasks that the court-appointed Administrator and Inspector has assumed, that could, in my view, be a justification to return the Condominium Corporation to self-governance earlier than the one-year term.

42This court held in Hashmi (at para. 38) that “where the appointment order transfers the powers of the board of directors to an administrator, the unit owners should not hold an election for a board without permission of the Court, which should assess whether it would be in the best interests of the condominium community as a whole for such an election to occur.”

43Given the progress that has been made by the Administrator, as reflected in the June 14, 2019 Interim Report, and the evident efforts to co-operate with the unit owners, including the purported new board (for example, in the selection and appointment of a new property manager), and given the extant issue concerning the validity of the election of the purported new board, which is destined to lead the parties into further litigation and associated expense, I consider it to be in the best interests of the community of the Condominium Corporation to allow for an election if they prefer that to the prospect of future litigation over the validity of the May 21 election of the purported new board that is so fraught with historical issues and high emotions.

44The Moving Parties indicated during oral argument that this would be acceptable to them as an alternative way of resolving the dispute about their election. The applicant asked that any direction allowing for an earlier return to self-governance be subject to further consideration by the court, at which time the court will have the opportunity to hear from any new board, the Administrator, the applicant and any other party who seeks and is granted standing. My direction allows for this.

45Although their motion is dismissed, if the Moving Parties, or any other condominium owners, wish to make such a requisition to the Administrator that otherwise complies with the requirements of the Condominium Act for so doing, I grant leave for them to do so, notwithstanding anything that in the May 29 Judgment that might otherwise preclude this, and I direct the Administrator to receive and implement any such valid requisition for an election of a new board of directors that is received so that it can be voted on by the unit owners at the AGM.

46If a new board of the Condominium Corporation is duly elected at the AGM following the prescribed procedure for requisitioning and holding a meeting of the owners for such a purpose (to be overseen by the Administrator as part of the annual meeting that he is planning to call), then the new board may apply to the court at that time for a variation to shorten the one-year term of the appointment of the Administrator under the May 29 Judgment, or for an order terminating his appointment, and for the orderly transition back to self-governance. As both sides have pointed out, “[w]hen a court is considering either the appointment or termination of an administrator, good reason must be shown why the unit owners should not manage their corporation’s affairs through an elected board of directors. Self-governance is the norm; administrators are the exception”: see Hashmi, at para. 7, citing Bahadoor v. York Condominium Corp. No. 82 (2006), 53 R.P.R. (4th) 281 (Ont. S.C.), at para. 26.

47Although neither of us are seized, it would be preferable for any such motion to be scheduled to be heard by either Dow J. or me if we are available.

Costs

48The Moving Parties take issue with the applicant’s costs being paid by the Condominium Corporation because it is draining already strained financial resources. The concern about finances is valid, but the Moving Parties brought this motion accusing the applicant of serious misconduct that had to be responded to, and the applicant was successful. If the Moving Parties are concerned about those costs being paid by the Condominium Corporation then the Moving Parties can offer (or could be ordered) to pay those costs themselves.

49Unless a party wishes to make submissions for a different order, I would be inclined to make the same order as to costs as was made in the May 29 Judgment, that the applicant shall be reimbursed by the Condominium Corporation for her costs of responding to this motion on a full indemnity basis.

50The Moving Parties indicated that they might ask for their costs of this motion to be paid by the Condominium Corporation, regardless of the outcome. I will need to receive further submissions if the Moving Parties are pursuing costs even though their motion was dismissed.

51There was no indication that anyone objects to the Administrator including his costs associated with this motion in his fees and disbursements, as provided for in the May 29 Judgment.

52I understand the potential issues to be addressed on costs to be:

a. Is the applicant entitled to costs? b. If so, who should pay those costs and in what amount? c. Are the Moving Parties entitled to costs? d. If so, who should pay those costs and in what amount?

53I encourage the Moving Parties, the applicant and the Administrator to try to reach an agreement on the costs issues. If an agreement is reached, I may be advised of such in writing by August 22, 2019 and provided with a draft order reflecting the parties’ agreement on costs together with a brief submission (by letter) to explain to me the basis of the agreement.

54If no agreement is reached on costs, then the applicant may make written costs submissions (to be accompanied by a costs outline) within 20 days after the August 22, 2019 deadline for reaching agreement. The Moving Parties may make written responding costs submissions (to be accompanied by a costs outline) within 20 days thereafter. The applicant may make brief written reply submissions, if so advised, within 10 days thereafter. At the same time, the Administrator may make submissions in connection with either or both sets of costs submissions, if so advised. All submissions should be served on the opposing counsel and the administrator and delivered to my attention at Judges’ Administration, Superior Court of Justice at 361 University Avenue (Room 106), Toronto, Ontario M5G 1T3.

Kimmel J. Released: July 30, 2019

COURT FILE NO.: CV-19-620461 DATE: 20190730 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: B.K. Applicant – and – YORK REGION STANDARD CONDOMINIUM CORPORATION NO. [...] Respondent REASONS FOR DECISION Kimmel J. Released: July 30, 2019

1The Moving Parties rely on examples of cases where unit owners who challenged the votes, or the proxies or the election procedure at a meeting duly called, applied to the court to have the results or the votes annulled or for a re-count. See: Davis v. Peel Condominium Corporation No. 22, 2013 ONSC 3367, YCC No. 42 v. Gosal et al/YYC No. 42 v. Karim et al, 2014 ONSC 2035 and York Regional Condominium Corporation No. 818 v. Przysuski, 2018 ONSC 2382. They say that these examples support their position that they are presumed to have been duly elected unless and until the court orders otherwise. However, when asked, they were not able to direct me to any cases analogous to this one where the issue as to the validity of their election arises from the fact that there was a deficiency in the notice of the meeting itself. I am not deciding this procedural aspect of the validity of the appointment of the purported new board, but should not be taken to have agreed with the Moving Parties that in this situation the onus is on other unit owners to challenge the validity of their election, as opposed to the onus being on the purported new board to secure an order from the Court rectifying the technical deficiency if they can satisfy the court that it is appropriate to do so.