Court File and Parties

COURT FILE NO.: CV-19-633622-0000 DATE: 20210222 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tharani Holdings Inc. Applicant

– AND –

Metropolitan Toronto Condo Corp No. 812, Anil Jhamtani, Nina Evans, Selvan Veerasingam, Sritharan Sabaratnam, Joe Accardo and Aksharan Sritharan Respondents

BEFORE: E.M. Morgan J.

COUNSEL: Pradeep Chand and Ryan Stubbs, for the Applicant Karen Kisiel, for the Respondents

HEARD: January 26, 2021

Condominium Election and Management Challenges

[1] This Application is the latest in an ongoing series of proceedings involving the management and control of the board of Metropolitan Toronto Condo Corp No. 812 (the “Condo Corp”). The condominium building in issue is composed of 64 commercial units located on Markham Road in Toronto. The Applicant is the owner of three units, and the individual Defendants (or their corporations) are the property manager and three directors who the Applicant seeks to remove from the board.

[2] The relief sought in this Application, and the grounds on which that request is based, are almost impossible to summarize. There are numerous allegations about the Respondents’ breach of the Condominium Act, 1998, SO 1998, c. 19 (the “Act”), General Regulation 0. Reg. 48/01, and the by-laws and board election procedures of the Condo Corp. But it is all difficult to describe because the total is not bigger than the sum of its parts.

[3] At first, I was under the impression that the problem I had with comprehending the overall thrust of the Application was one of drafting. I mentioned to Applicant’s counsel that the introductory “Overview” portion of their factum gave no overview, but launched immediately into detailed allegations as if the reader had opened the document in the middle rather than at the beginning. But the problem was not, in fact, one of drafting. Rather, the factum accurately reflects the litigation, which can be described in the same way that Gertrude Stein described decentralized suburbia: “There is no there there.”: G. Stein, Everybody’s Autobiography (Random House 1937), p. 289. That is, there is no central, overarching focal point, or any argument capable of being generalized. The entire Application is a lengthy list of what appear to be formalistic errors made by the Condo Corp board that amount to little in substance.

[4] A brief example of the nature of the dispute will suffice as an introduction. The Applicant pleads in paragraph 2(z) and 2(bb) of the Notice of Application that Nina Evans, Aksharan Sritharan, and Joe Accardo, three of the current directors of the Condo Corp, failed to disclose their identities and failed to disclose that they are not condominium unit owners when they were candidates for election to the board. Applicant’s counsel submit that such disclosure is required under section 29 of the Act and section 11.6 of the General Regulation thereunder.

[5] As a consequence of this non-disclosure, the Applicant states at paragraph 1(e) of the Notice of Application that they are, inter alia, “no longer members of the Corporation’s Board of Directors (the ‘Board’) due to failure to comply with Section 29 of the Act, and were disqualified from the Board once the Corporation’s Annual General Meeting held on September 5, 2019 (the ‘2019 AGM’) ended that evening. I reiterate that the allegation against Ms. Evans, Mr. Sritharan, and Mr. Accardo is not that they are inherently unqualified to be directors, but rather that they failed to make proper disclosure of their identity.

[6] Section 11.1 of the General Regulation cited by the Applicant is long and detailed, but factually straightforward. Section 11.1(1)(a), for example, requires disclosure of whether a person’s name and address for service, while section 11.1(1)(d) requires disclosure of whether a person is a director of a corporation or a former director who continues to carry on the business of the corporation, etc. As a matter of policy, it is understandable that condominium unit owners should know who it is that has put their name forward for election to the Condo Corp’s board when they are asked to cast their vote.

[7] Turning first to Ms. Evans, she is not exactly unknown to the Applicant or the other condominium owners. She runs the gym in the building and has done so since 2007. She was cross-examined by Applicant’s counsel and confirmed that she runs the gym entirely on her own, is there every day teaching classes, booking trainers for clients, cleaning the place herself, etc.

[8] The Applicant did land title and corporate information searches and discovered that the unit she purportedly owns is actually owned by a corporate entity whose directors were listed as Leo Dadwani and Debbie Dadwani. It must have been a Eureka moment for the Applicant, whose counsel have made it an important piece of evidence in the Application. They cross-examined Ms. Evans on the point. Not that the Applicant did not know who Leo and Debbie Dadwani are – Ms. Evans’ deposed that her maiden name is Nina Dadwani. As the Applicant and everyone else involved in this litigation apparently knows, she is the 42-year old daughter of Leo and Debbie Dadwani.

[9] The Applicant’s point, however, is not that he does not know who Ms. Evans is. His point is that he caught her – a woman that he and his business neighbours have known for 14 years – in the act of not properly identifying herself on the forms submitted at the outset of the last annual general meeting.

[10] A similar allegation was made against Aksharan Sritharan. The Applicant did a title search and in the Notice of Application alleges that the unit purportedly owned by Mr. Sritharan is apparently owned by his father, Sritharan Sabaratnam. There is no doubt that the Applicant knows precisely who is who with respect to this unit; indeed, the Applicant’s very point, as set out in ground 2(aa) of the Notice of Application, is that while the father was a party to previous litigation in which the Applicant was involved, it is the son who is now purporting to be a member of the Condo Corp’s board. As with Ms. Evans, no one, least of all the Applicant, was actually misled as to Mr. Sritharan’s identity.

[11] And then there is the case of Joe Accardo, who is also accused of non-disclosure. For over 20 years he has run a dry cleaning store in his condominium unit in the building. He deposed that he filled out an identification disclosure form and gave it to the property manager who was running the annual general meeting at which he was elected to the board.

[12] As Mr. Accardo described it, he submitted the form as a matter of course as a participant in the meeting, but had no particular ambition to run for a board position. But some of his neighbours nominated him as a candidate from the floor of the meeting and he accepted the nomination. He assumed that the form he submitted as a meeting participant sufficed to identify him. In fact, he was surrounded at the meeting by his neighbours of two decades, including the Applicant who Mr. Accardo testified he has known for years and with whom has had a cordial relationship.

[13] What Mr. Accardo did not count on, however, was the refined directory search capabilities of the Applicant. As it turns out, the Applicant discovered in a title search that Mr. Accardo’s dry cleaning unit was not owned by Joe Accardo at all, but rather was registered in the name of one Guiseppe Accardo. It was another smoking gun unearthed by the Applicant, which found its way to a place in the Notice of Application. Again, Applicant’s counsel cross-examined on the point. The allegation of non-disclosure prompted Mr. Accardo to swear under oath to the effect that he is of Italian heritage and that Joe is an anglicized short form of Guiseppe. In fact, Joe is the name by which he goes on a daily basis in business, and by which everyone, including the Applicant, knows him.

[14] At the hearing, Applicant’s counsel expressed to me that they were satisfied that Joe Accardo had proved to them that he and Guiseppe Accardo are one and the same. They stated that they would not pursue that particular line of attack.

[15] They were less satisfied that Nina Evans, who had proved herself to be Nina Dadwali and the daughter of Leo and Debbie Dadwali, was properly elected. She had indicated on her identification form that she is a director of the unit’s corporate owner. Indeed, she is a current director and was previously a director of her parents’ corporation; however, she apparently was not a director for a short hiatus which coincided with the Applicant conducting his corporate information and land title search.

[16] As noted above, General Regulation 11.1 does not require that one be a director of a corporate unit owner in order to stand for election to the Condo Corp’s board. Rather, it requires that for identification purposes the disclosure form be filled out with the information of whether one is a current or former director. At the time, Ms. Evans mistakenly filled out the form stating that she was a current director when she was actually a former director, although that mistake was corrected when called to her and her parents’ attention.

[17] At the hearing, I asked Applicant’s counsel if their client had suffered any prejudice by these instances of non-disclosure, or by any other of the many acts which they allege against the Respondents. They answered in the affirmative. When I pressed this question by asking what was the nature of the prejudice, they advised me that the law must be obeyed. They were not prepared to recognize any difference between a non-substantive technical breach of the rules under the Act and its General Regulation and prejudicial conduct by a Respondent.

[18] Applicant’s counsel’s view, as expressly stated to me at the hearing, is that a breach of the rules is a breach of the rules, and a breach demands a remedy regardless of the effect (or non-effect) of the breach. The proposed remedies include, inter alia, removal of the Respondents from the board of the Condo Corp, appointment of an inspector to review all acts of the Respondents (referred to in the Notice of Application as the “Disqualified Directors”), and payment of damages to the Applicant in the amount of $70,000.

[19] I pause to note an irony pointed out by Respondents’ counsel that at the 2019 annual general meeting, when Ms. Evans, Mr. Sritharan, and Mr. Accardo were elected to the board of the Condo Corp, the Applicant’s sole director and deponent in these proceedings, Balasubramaniam Palaniappa, signed into the meeting as an owner. That, of course, was erroneous, since the owner is his company, Tharani Holdings Inc. The error, however, gives rise to no prejudice to the Respondents; no one claims that they could not identify him or that he was an unauthorized participant in the meeting. The error, such as it was, is only worth mentioning to underscore the meaninglessness of the Applicant’s own allegations of misidentification.

[20] As indicated at the outset, the allegations about Ms. Evans’, Mr. Sritharan’s, and Mr. Accardo’s “non-disclosure” when becoming candidates for election to the board are just examples of the litany of errors contained in the Notice of Application. For the sake of completeness, and since a list of items of this nature cannot be easily summarized, I have set out the relief sought and the grounds for that relief in full in Schedule A to this endorsement. It goes on for some 12 pages.

[21] I can say with confidence that it will not be a productive exercise to go through each and every one of the Applicant’s detailed allegations. The reason for my confidence in this respect is that at the hearing I specifically asked Applicant’s counsel whether there is any evidence of substantively harmful conduct by the Respondents. They came up with nothing that would be considered a red flag of impropriety.

[22] In fact, Applicant’s counsels’ first response to me was to reiterate their position that all breaches of the Act, including technical breaches such as the misnaming of people on a sign-in sheet, are harmful. I then pressed them on this, and asked whether there was any evidence of misuse of funds or other types of financial improprieties by the board, or any failure to carry out necessary duties for the running of the condominium building. Applicant’s counsel informed me that they do not know whether there are financial improprieties because, while the Condo Corp’s accountants have produced annual financial statements, it has been many years since the statements were audited as required under the Act.

[23] Respondents’ counsel’s response to this was to advise me that the Condo Corp’s financial statements are currently in the process of being audited and should be available within weeks. She indicated that the board has had a difficult time retaining auditors due to the incessant litigation that the Condo Corp has spawned, and that only unaudited statements have been done since 2010. However, the board has now managed to retain an audit firm that is completing the 2019 audit at this time and that will commence the 2020 audit thereafter.

[24] The news that auditors have been retained on a going forward basis and that a current audit (for 2019, followed by 2020) is underway has not satisfied the Applicant. Applicant’s counsel states that it is not enough that the board ensure that audited statements are produced on a current and ongoing basis, but that all back years of the Condo Corp’s financial statements must be audited as well.

[25] When I asked whether there was any indication of missing funds, unusual condominium levies, or other charges suspected of being improper expenditures, Applicant’s counsel could not identify anything. Nevertheless, they insist on the expensive and time-consuming effort of auditing a decade’s worth of back financial statements. While I agree that it is the board’s responsibility to have audited statements produced on a timely basis, I see no practical value in auditing previous fiscal years unless there is cogent evidence that indicates a reason to do so. As indicated, there is no such evidence in the record, and the current audit is still in process.

[26] The one allegation made by the Applicant that comes close to a financial misdealing is that the manager of the condominium building has at least once spent reserve funds for current maintenance expenditures. That is, in 2019 the corporation’s bank records (all of which have been made available to the Applicant for inspection) show that a $75,000 water bill for the building was paid from the reserve account rather than from the current account.

[27] Respondents’ counsel concedes that this is a managerial error that should not have occurred. At the same time, she points out that the statements show that the corporation maintains a reserve account of $500,000, and that there has been no instance where the reserve was insufficient for the building’s needs. In response to my own questions on this topic, Applicant’s counsel conceded that there is no indication that the corporation’s reserve funds were used for anything other than the condominium building’s actual needs. The $75,000 water bill was a real water bill that the Condo Corp did have to pay; it just should have been paid from the operating account.

[28] The Condo Corp’s reserve account should not be used for matters like an annual water bill. A reserve is for extraordinary expenditures, not ongoing operational ones. That said, there is no indication that any funds have been misappropriated from either the reserve account or the operating account, or that the Condo Corp’s funds have ever been used for any unexplained or unrelated purpose. The manager can be admonished for utilizing funds from the wrong corporate account, but there is no real remedy to be imposed in this respect. The payment of the water bill from the reserve funds was an administrative or managerial error that should not be repeated, but nothing about it signals any wrongdoing requiring court intervention.

[29] The Applicant also seeks to have the court order the appointment of an inspector to review all of the Condo Corp’s financial transactions. This is permitted under section 130 of the Act, but is a rare occurrence that the courts have considered appropriate only where there are specific findings of financial or other impropriety or negligence in causing harm to the condominium corporation: Turner v. Peel Condominium Corporation No. 42, 2020 ONSC 738; Jordan v. Durham Condominium Corporation No. 23.

[30] Given that an audited set of financial statements is about to be produced, I see no need for that type of intrusion into the board’s business. As indicated, there is some evidence of at least one instance of sloppy management, but there is no indication of financial impropriety or misappropriation of funds. Imposing an independent inspector on the board and management of the Condo Corp under the present circumstances would be an unnecessary and burdensome step.

[31] The most far-reaching remedy sought by the Applicant is for the Court to order that the 2019 election of the Condo Corp’s board was invalid, and that all decisions and acts taken by the current “Disqualified Directors” are likewise invalid. This remedy is sought in keeping with the various allegations about disclosure of the identity and status of the three board members discussed above, as well as other allegations about discrepancies in the number of ballots and proxy votes cast in the 2019 election.

[32] Disbanding the current board of directors would necessitate a new election, and would potentially put the affairs of the Condo Corp in disarray. Obviously, the board as currently constituted has been actively running the Condo Corp’s affairs since 2019, and to undo any decisions it has made would create managerial problems for the Condo Corp. Among other things, it is the current board, including the so-called Disqualified Directors, that retained the auditors now completing the audit task that the Applicant demands be done.

[33] In response to the claim that the current board was not properly elected, Respondents’ counsel points out that the Applicant’s lawyer was one of the scrutineers of the last election of board members at the 2019 annual general meeting and raised no objection to the validity of the election at the time. In addition, Respondents’ counsel invokes section 37(2) of the Act. That is a remedial provision which stipulates that: “The acts of a director or officer are valid despite any defect that may afterwards be discovered in the person’s election, appointment or qualifications.”

[34] The purpose underlying section 37(2) is precisely to ward off challenges such as the one at bar. That is, it preserves the authority of directors who commit formal, non-prejudicial breaches of electoral procedures such as clerical errors or misnaming on a meeting sign-in sheet or identification disclosure form. The prevalence of the very types of allegations made against the Respondents here has necessitated that a provision like this one be included in the Act.

[35] There is nothing in the evidence that would justify an Order disbanding the current board and disqualifying its decision and actions. Without meaning to sound facetious, the board can carry on with its duties regardless of whether those in attendance received the right form of notice identifying their neighbours that they already know. Certainly, there is no reason to disband the Condo Corp’s board over the Applicant’s questioning of whether Ms. Evans is a director of her parents’ corporation or only the manager of its business, or whether Mr. Accardo is really Giuseppe or Joe. The Condo Corp’s board members and their actions on the board’s behalf are all preserved by section 37(2) of the Act.

[36] In previous litigation, the Condo Corp was ordered to pay costs to the Applicant. In the present Application, the Applicant seeks an Order requiring the Condo Corp to recover those previously awarded costs from the individual Respondents. I do not see any reason for such an Order.

[37] If the Applicant was successful and was awarded costs in prior proceedings, that success will doubtless enure to the benefit of the entire Condo Corp by setting aright any of its actions. The procedures mandated by those decisions are for the benefit of all unit owners. I understand from the submissions of both sets of counsel that the breaches found there are managerial in nature. In the absence of tortious wrongdoing or bad faith by individual board members, it is for the Condo Corp to bear the costs that are awarded against it by distributing it among its members.

[38] Finally, the Applicant seeks damages in the amount of $70,000 from the Respondents in respect of the many alleged breaches of the Act, regulations, and condominium by-laws. The Application materials do not reveal how this amount was quantified or what it is meant to compensate. I asked this question at the hearing and was told by Applicant’s counsel that the Applicant has suffered emotional distress as a result of his disputes with the condominium board, and that this kind of damage is not possible to quantify or demonstrate. I took from that answer that the Applicant’s expectation was that the Court would take it on itself to choose a number to award him as compensation for having undertaken all of this work.

[39] I do not accept Applicant’s counsel’s explanation that emotional distress is impossible to prove in an evidentiary record. As I told him at the hearing, one would generally expect an expert witness to speak to the matter, and that it is not sufficient for counsel to simply assure me that the Applicant’s involvement has caused him compensable harm.

[40] It is theoretically possible for an accumulation of technical breaches of the Act, even if none of them amount to tortious conduct, to be stress-inducing for the Applicant. But I would need a psychologist to testify that the Applicant suffered that effect and some comparative cases against which to measure the harm. Otherwise, I have little to go on but an unproved allegation of harm with no evidentiary support. That kind of bald allegation cannot be the basis of a damages award.

[41] With all of the weaknesses of this Application, it is nevertheless understandable why the Applicant was frustrated enough with the current board of the Condo Corp to have initiated it. The current board was only elected in 2019 when a Court ordered an election to be held. Prior to that, annual general meetings and board elections had been delinquent.

[42] As indicated above, there is also some evidence of mismanagement of the reserve account. This mismanagement came in the midst of an entire decade in which the board of the Condo Corp failed to produce annual audited financial statements as required. And although it is a positive development that an audited financial statement is underway, it is for unknown reasons taking a rather long time to be completed.

[43] Thus, although there is no real wrongdoing by the board, and the current board shall remain in place until the next election is held pursuant to the requirements of the Act, regulations, and corporate by-laws, the Condo Corp’s board effectively brought this proceeding on itself. Its own lackadaisical attitude toward the rules governing its operation has prompted the Applicant’s intense scrutiny. The Applicant may be the board’s litigation adversary, but the board members and the Condo Corp’s manager seem to be their own worst enemy.

[44] The Application is dismissed.

[45] Under the circumstances, there will be no costs awarded for or against any party hereto.

Morgan J. Date: February 22, 2021

Schedule A

Notice of Application

[46] The Applicant seeks the following relief:

(a) an Order under Section 134 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”) that the Respondents are required to comply with the provisions of the Act and the Declaration, By-laws, and Rules of Metropolitan Toronto Condo Corp No. 812 (the “Corporation”) (the “Compliance Order”);

(b) an Order under Section 134(3)(b) of the Act that the Respondents are required to pay damages incurred by the Applicant as a result of their acts of non-compliance with the Act and the Corporation’s Declaration, By-laws, and Rules (collectively, the “Governing Documents”), in the amount of $70,000 or such other amount as the Applicant may advise prior to the Hearing (the “Compliance Damages”);

(c) an Order under Section 135 of the Act that the Respondents must cease and desist from their oppressive conduct (the “Oppression Remedy”);

(d) an Order under Section 135(3)(b) of the Act that the Respondents are required to pay compensation to the Applicant due to their conduct that is or threatens to be oppressive or unfairly prejudicial to the Applicant or unfairly disregards the interests of the Applicant, in the amount of $70,000 or such other amount as the Applicant may advise prior to the Hearing (the “Oppression Damages”);

(e) an Order under Section 134 of the Act that the Respondents, Nina Evans, Joe Accardo, and Aksharan Sritharan (collectively, the “Disqualified Directors”), are no longer members of the Corporation’s Board of Directors (the “Board”) due to failure to comply with Section 29 of the Act, and were disqualified from the Board once the Corporation’s Annual General Meeting held on September 5th 2019 (the “2019 AGM’) ended that evening;

(f) an Order under Section 134 of the Act that the Applicant’s representative on the Board who was elected to the Board at the 2019 AGM (“Bala”), is entitled to call and hold a meeting of unit owners to fill the vacancies on the Board within two (2) months of the Order (the “New Election”) and that the Condominium Manager – namely the Respondent, Anil Jhamtani (the “Manager”), or another Condominium Manager that is retained by the Corporation if not Mr. Jhamtani – is required to assist Bala in calling and holding the New Election;

(g) in the alternative to paragraphs (e) and (f) above, an Order under Section 134 and/or Section 135 of the Act that the Board election at the 2019 AGM (the “2019 Board Election”) was not validly held, or that the results from the 2019 Board Election are null and void, and that the Corporation must call and hold a valid meeting of owners to elect a new Board within two (2) months of the Order, the Condominium Manager is required to assist in holding the election, and a 3rd party be appointed to act as the independent Chairperson for the meeting;

(h) an Order under Section 134 of the Act that the purported meeting of the Board held on October 2nd 2019 (the “Alleged Board Meeting”) was not a duly-constituted Board Meeting, and that accordingly, any purported decisions made by the Board at the Alleged Board Meeting were invalid, including but not necessarily limited to the appointment of Board members, officers and/or counsel for the Corporation;

(i) an Order under Section 134 of the Act that any and all actions taken by the Board that was purportedly elected at the 2019 AGM are null and void;

(j) an Order under Section 130 of the Act, appointing an Inspector to investigate the Corporation’s records mentioned in Section 55(1) of the Act, investigate the affairs of a person mentioned in Section 115(1) of the Act, and conduct an audit of the accounts and records mentioned in Sections 55 and 115 of the Act, at the cost of the Corporation (the “Order Appointing an Inspector”);

(k) a Declaration under Section 134 and/or Section 135 of the Act that between late 2011 and 2019, the Board of Directors did not validly call and hold duly-constituted Annual General Meetings of Owners (“AGMs”) within 6 months of each fiscal year end; which was in violation of Section 45(2) of the Act, was oppressive or unfairly prejudicial to the Applicant or unfairly disregarded the interests of the Applicant, and was in violation of the Board members' duties to act honestly and in good faith;

(l) a Declaration under Section 134 and/or Section 135 of the Act that on August 12th 2015, a group of unit owners – including the Applicant –who were frustrated at the Corporation's failure to call and hold an AGM every year, held its own duly-constituted AGM (the ”2015 AGM”) and elected a new Board of Directors (the “New Board”). However, the Old Board and the Manager refused to turn over control of the Corporation to the New Board, which was oppressive or unfairly prejudicial to the Applicant or unfairly disregarded the interests of the Applicant, and was in violation of the Old Board members' duties to act honestly and in good faith;

(m) An Order under Section 134 and/or Section 135 of the Act that the Corporation must pursue recovery of any award of damages or legal costs ordered to be paid by the Corporation to the Applicant in Superior Court File No. CV-19-00618819-0000 (the “Contempt Application”), and any legal costs paid by the Corporation to its own counsel, against the Manager (collectively, the “Contempt Costs”); since these Contempt Costs were incurred due to the Manager’s insubordination and refusal to follow the instructions of the Old Board to comply with the Applicant’s Request for Records dated October 30th 2018 (the “Records Request”) and/or the Order of the Condominium Authority Tribunal of Ontario (the “CAT”) dated February 19th 2019 (the “CAT Order”), and therefore these Contempt Costs should not be borne by the unit owners of the Corporation which include the Applicant;

(n) if necessary, an Order abridging the time for service and/or validating service of the Applicant's materials in this proceeding on some or all of the Respondents;

(o) an Order that the Respondents must pay the Applicant’s costs of this Application on a full indemnity basis, pursuant to Section 134(3)(b)(ii) of the Act and/or Section 135(3) of the Act;

(p) pre-judgment interest and post-judgment interest on the amounts set out above, in accordance with the Courts of Justice Act; and

(q) such further and other relief as this Honourable Court may deem just.

[47] The Applicant’s grounds for this multi-faceted relief are set out in the Notice of Application as follows:

(a) The Corporation is a Condo Corp consisting of 64 industrial units and their appurtenant common elements, which was created under the Act or its predecessor legislation thereto by the registration of a Declaration with the Land Registry Office of Ontario (the “LRO”) receipted as Instrument No. DlOl 564 on March 28th 1989 (the ‘Declaration’). The Corporation is located at or around the municipal addresses of3001 Markham Road, 3011 Markham Road, 3021 Markham Road, and 3031 Markham Road in the City of Toronto, Ontario (the “Premises”).

(b) The Applicant, Tharani Holdings Inc. (the “Unit Owner”), is the owner of Units 49, 50, and 51, Level 1, of MTCC 812 (collectively, the “Applicant’s Units”).

(c) For many years, the Corporation has repeatedly and deliberately failed to comply with its legal obligation to comply with the requirements of the Act and its Governing Documents.

(d) In fact, to the date of this Notice of Application, the Corporation has refused to pay the mandatory fees to the Condominium Authority of Ontario (the “CAO”) and remit the required information returns to the CAO. As a result, the CAO issued a Registrar's Certificate of Non-Compliance against the Corporation on February 13th 2019 (the “CAO Certificate of Non-Compliance”). To date, this CAO Certificate of Non-Compliance has still not been rectified by the Corporation, thereby exposing the Corporation to further fees, fines, and other consequences.

Failure to Call and Hold Valid AGMs Every Year

(e) For several years from late 2011 onwards, the Corporation failed to call and hold any valid Annual General Meeting of its unit owners (an “AGM”); despite the requirement under Section 45(2) of the Act that the Board of Directors is required to hold an AGM within 6 months after each end of the Corporation's fiscal year, which according to Article 7.01 of the Corporation's By-law No. 1 (the “General Operating By-law”) is on December 31st each year.

(f) The Corporation purported to hold an AGM on December 29th 2014, but the legal requirements for validly calling and holding the AGM were not met and therefore, that AGM was not validly constituted. At this purported AGM, the existing Board members were simply re-elected by acclimation without any opposition.

(g) On August 12th 2015, a group of unit owners – including the Applicant –who were frustrated at the Corporation's failure to call and hold an AGM every year, held its own duly-constituted AGM (the ”2015 AGM”) and elected a new Board of Directors (the “New Board”). However, the Old Board and the Manager refused to turn over control of the Corporation to the New Board.

(h) As a result of the Corporation’s failure to call and hold valid AGMs, and because the Respondents refused to acknowledge the legitimacy of the New Board, the Applicant was forced to retain legal counsel to submit a Requisition on November 21st 2018 demanding that the Corporation call and hold an AGM, under Section 46 of the Act (the “Requisition”). When the Corporation tried to call an AGM without providing, inter alia, any financial statements whatsoever to the unit owners, the Applicant was forced to seek an urgent injunction against the Corporation to restrain it from holding the AGM without providing the unit owners with the proper notice materials required under the Act (the “Injunction Application”). This Honourable Court granted the Applicant's injunction, and awarded the Applicant with its legal costs on a full indemnity basis (the “Injunction Order”).

(i) The Injunction Order by the Honourable Justice Sossin dated January 16th 2019 also required that the Corporation ‘must duly call and hold an AGM within 90 days of the List of Owner maintained by the Corporation under Section 46.1 of the Act (the “Owners List”) being provided to the Applicant.’

(j) However, the Corporation refused to disclose the Owners List to the Applicant, despite the Applicant submitting a valid Request for Records under Section 55 of the Act seeking the disclosure of same. The Corporation refused to disclose the Owners List to the Applicant, even after the Condominium Authority Tribunal of Ontario (the “CAT”) ordered the Corporation to do so within 30 days of the CAT's Order dated February 19th 2019 (the “CAT Order”). The Corporation refused to disclose the Owners List to the Applicant, even after the Applicant commenced an Application to this Honourable Court to enforce the CAT Order on April 26th 2019 (the “Contempt Application”).

(k) Finally, on June 10th 2019, a copy of the Owners List was disclosed to the Applicant by the Corporation’s legal counsel; thereby triggering the 90-day deadline for the Corporation to “duly call and hold” an AGM for its owners, as required by the Injunction Order.

(l) But even that AGM was not duly held in accordance with the Injunction Order of Justice Sossin.

2019 Board Election Irregularities: More Counted Ballots than Voters

(m) At the 2019 AGM that was held on September 5th 2019, the Chairperson announced that there were 18 units present at the AGM in person, and 27 units present at the AGM via proxy; for a total of 45 units present at the AGM.

(n) At the 2019 AGM, the Manager who operated the Registration Table took each Proxy that was accepted by the Chairperson as valid, and gave the Proxy-Holder a Ballot instead.

(o) On the day after the 2019 AGM was held, namely September 6th 2019, the Applicant submitted a formal Request for Records to the Corporation, seeking copies of the Proxies and Ballots that were submitted at the 2019 AGM (the “AGM Records Request”). Because the Corporation failed to respond to the AGM Records Request within the mandatory 30 days, the Applicant was forced to commence an Application to the CAT to enforce the AGM Records Request on October 17th 2019 (the “CAT Application for AGM Records”).

(p) On November 4th 2019, the Applicant and the Corporation settled the CAT Application for AGM Records, upon the Corporation providing the Applicant with redacted copies of the Proxies and Ballots that were submitted at the 2019 AGM.

(q) Upon receiving the redacted Proxies and Ballots submitted at the 2019 AGM, the Applicant noticed that there were 52 Ballots counted as valid by the Chairperson – despite there being only 45 units present at the 2019 AGM. Moreover, the Applicant noticed that there were at least 2 Proxies that were not properly completed and therefore invalid, that were still counted by the Chairperson as valid.

(r) Each unit was entitled to only one (1) vote at the 2019 Board Election, pursuant to Section 51(2) of the Act.

(s) Accordingly, the validity of the results of the 2019 Board Election is called into serious question. The 7 extra Ballots and/or the 2 Proxies that were improperly counted by the Chairperson were numerically significant enough to alter the election results and the composition of the Board.

2019 Board Election Irregularities: Invalid Electors Were Allowed to Vote

(t) Moreover, under Section 51(1) of the Act, only an “owner” whose name also appears in the List of Owners maintained by the Corporation under Section 46.1 of the Act (the “Owners List”) was entitled to vote at the 2019 Board Election.

(u) Under Section 1(1) of the Act, the definition of an ‘owner’ for a standard Condo Corp like the Corporation, is “a person who is shown as the owner of a freehold interest in a unit and its appurtenant common interest, according to the records of the land registry office in which the description of the corporation is registered”.

(v) The Owners List which was used by the Manager to give voting ballots to the individuals in attendance at the 2019 AGM and/or to verify the Proxies that were submitted, contained the names of persons who were not actually the true “owner” of the unit according to the LRO’s records. Accordingly, many individuals voted with ballots in the 2019 Board Election, despite said individual not being entitled to vote on behalf of that unit.

Three of the Directors Elected were Immediately Disqualified due to Non-Disclosure

(w) In the alternative, if this Honourable Court finds that the 2019 Board Election was duly called and held by the Corporation, then the 3 Disqualified Directors were immediately disqualified from the Board upon the conclusion of the 2019 AGM on September 5th 2019.

(x) Nina Evans (“Nina”), Joe Accardo (“Joe”), and Aksharan Sritharan (“Aksharan”) were all required under Section 29 of the Act to comply with their candidate disclosure obligations under the Act and 0. Reg. 48/01 (the “General Regulation”). Failure to do so results in immediate disqualification from the Board, pursuant to Section 29(2) of the Act.

(y) Under Section 11.6 of the General Regulation, each candidate for election to the Board must disclose certain information (the “Disclosure Statements”) to the unit owners of the Corporation either in advance of the AGM in writing, or at the AGM itself verbally or in writing. The 3 Disqualified Candidates did not do so, despite other candidates in the 2019 Board Election having done so in writing; and those other candidates’ mandatory Disclosure Statements were included as part of the AGM Notice package for the 2019 AGM. Accordingly, all or some of the 3 Disqualified Candidates were immediately disqualified from the Board at the conclusion of the 2019 AGM, pursuant to Section 29(2) of the Act (the “Disqualification”).

(z) Specifically, Nina was not an owner of a unit at the Corporation at the time of the 2019 Board Election. Instead, Unit 53 on Level 1 of the Corporation (“Unit 53”) was owned by two individuals named “Leo Dadwani” and “Debbie Dadwani” at the time of the 2019 Board Election. These owners of Unit 53 are not corporate entities, and they are separate individuals from Nina. Nina was required to disclose the fact that she was not an owner of a unit of the Corporation, as part of her mandatory disclosure obligations under Section 11.6 of the General Regulation. Moreover, Nina was named as a proposed party to the Contempt Application that was ongoing at the time, yet she did not disclose this fact as part of her mandatory disclosure obligations.

(aa) Aksharan was also not an owner of a unit at the Corporation at the time of the 2019 Board Election. Unit 56 on Level 1 of the Corporation (“Unit 56”) was owned by an individual named “Aksharan Sritharan” at the time of the 2019 Board Election. Moreover, Aksharan’s father, Sritharan Sabaratnam, was named as a proposed party to the Contempt Application. Aksharan failed to disclose this information as part of his mandatory disclosure obligations.

(bb) Joe was also not an owner of a unit at the Corporation at the time of the 2019 Board Election. Unit 29 on Level 1 of the Corporation (“Unit 29) was owned by an individual named “Giuseppe Accardo” at the time of the 2019 Board Election. Joe failed to disclose this information as part of his mandatory disclosure obligations.

(cc) If 2 or more of the Disqualified Candidates were disqualified from the Board, then there is insufficient quorum on the Board of Directors of the Corporation, and a new Board election must be called under Section 34(4) of the Act.

Invalid Business Transacted by Invalid Board of Directors

(dd) The Corporation was duly put on notice of the Disqualification issue(s) by the Applicant's legal counsel, in a written warning dated September 9th 2019 (the “Disqualification Letter”). As of September 9th 2019, the Corporation knew or ought to have known about the Disqualification issue(s) and the fact that the Disqualified Directors could not validly transact the business of the Corporation as a result.

(ee) Despite the Disqualification Letter from the Applicant's legal counsel, the Disqualified Directors purported to hold a private meeting of the new Board on October 2nd 2019 at 7:30 PM (the “Alleged Board Meeting”). However, notice of this Alleged Board Meeting was not given to all of the directors of the Corporation in accordance with the requirements of the Act and/or Governing Documents of the Corporation - in fact, notice of the Alleged Board Meeting was only sent via email by 1 of the Disqualified Directors to 3 of the other directors, earlier that very same day at 1:01 PM on October 2nd 2019 (the “Invalid Notice of Alleged Board Meeting”). Not only was this extremely short notice in violation of the Governing Documents of the Corporation, but the short notice also prevented the Applicant's elected representative on the Board (“Bala”) from attending.

(ff) At this Alleged Board Meeting, the Disqualified Directors purported to retain Karen Kisiel as the Corporation's lawyer (the “KPK Retainer”), appointed Selvan Veerasingam as a 5th Board member (the “Selvan Appointment”), and appointed Officer positions for the various Board members (the “Officer Appointments”). None of these items of business were properly included in any form of written Agenda circulated in advance, nor were any of these items of business properly specified in the Invalid Notice of Alleged Board Meeting. Accordingly, and further to the Disqualification issue(s) in the first place, these items of purported business of the Corporation were invalidly transacted and ought to be declared null and void.

Significant Deficiencies in Financial Records, Inspector is Needed

(gg) For nearly a decade or more, the Corporation’s finances have not been audited by an Auditor, despite being required to do so at least once per year under Section 67 of the Act (an “Auditor's Report”). Because the Corporation has also failed to hold a valid AGM once per year for many years, the unit owners of the Corporation have not been able to properly receive the Auditor’s Report on an annual basis either. To date, the unit owners of the Corporation still do not know the true state of the Corporation’s finances, as no Auditor's Report has been prepared or provided to them.

(hh) The Applicant also has good reason to believe that the Corporation's Reserve Fund monies have been improperly used by the Corporation to cover Operating Fund deficits or expenditures, in violation of Section 95(1) of the Act – a violation that a condominium Auditor would have flagged in their Auditor’s Report to the unit owners at the AGM, if there had been one.

(ii) However, the Corporation has been unwilling to provide the Applicant with the full financial records of the Corporation so that the Applicant can assess same. Upon Bala’s new election to the Board at the 2019 AGM, the Manager promised Bala on October 21st 2019 that he would provide the Corporation's financial records to Bala by no later than November 151 2019. To the date of this Application, the Manager has not done so.

(jj) Accordingly, the Applicant seeks an Order from this Honourable Court appointing an Inspector under Section 130(1)(b), (c), and (d) of the Act.

(kk) Because this Inspector is required due to the failure of the Corporation to comply with its record-keeping obligations under the Act, an Inspector would be in the best interests of not only the Applicant but also the Corporation as a whole, and the Inspector’s report will be sent to all owners of the Corporation for their benefit, the Corporation ought to bear the costs of the Inspector under Section 130(4)(b) of the Act – not the Applicant, although the Applicant is willing to bear its natural share of said costs via its ownership of at least 3 units of the Corporation as per Schedule ‘D’ of the Declaration.

Other Non-Compliance with the Act and Governing Documents

(ll) In addition to all of the foregoing, the Corporation has also failed to conduct a Reserve Fund Study (“RFS”) every 3 years, despite being required to do so under Section 31 of the General Regulation. The last RFS that was conducted by the Corporation was dated February 14th 2013 (the “Most Recent RFS”). The most recent Notice of Future Funding of the Reserve Fund that was circulated by the Corporation to the owners, as required by Section 94(9) of the Act, was dated April 10th 2013 (the “Most Recent Form 15”). A RFS must be conducted at least once every 3 years, so that the RFS engineers can properly account for inflation, rising construction costs, and fluctuating interest rates on investments. Without such an updated RFS, the Corporation's unit owners are left in the dark about whether their Reserve Fund is adequately funded for future major repair and replacement projects that may be necessary.

(mm) Moreover, the Corporation has failed to comply with the Act's legal requirements for a Periodic Information Certificate (“PIC”) to contain all of the information and documentation listed under Section 26.3 of the Act and/or Section 11.1 of the General Regulation. Specifically, the PICs issued by the Corporation’s Manager on March 30th 2018 and September 15th 2018 did not properly fill-out paragraph 8 of the PIC – because the Corporation did not want to admit to its owners that the Corporation has not properly filed any of the information returns or remitted any of the mandatory fees to the CAO. The PICs also did not contain any of the required enclosures thereto; for example, the Corporation’s annual Budget or the Certificate of Insurance.

(nn) In fact, the Applicant has significant reason to believe that the Corporation is not maintaining any insurance at all as required under Section 99 of the Act.

(oo) In the PIC that issued by the Corporation on September 15th 2018, the Corporation did not check-off the tick-box that says that the Corporation has enclosed a Certificate of Insurance with the PIC, nor was such a Certificate included. In the PIC issued by the Corporation on March 30th 2018, the Corporation checked-off the tick-box, but did not actually include any Certificate of Insurance with the PIC.

(pp) In the Status Certificate that was issued by the Corporation via the Manager on January 7th 2019, the only insurance document that was included with the Status Certificate was not a Certificate or Memorandum of Insurance, but an unknown document that does not name the Corporation as an insured party nor the owners of the Corporation as required under Section 99(1) of the Act. This unknown document was also issued on October 30th 2017, whereas the Certificate of Insurance for a Condo Corp would typically be updated on at least an annual basis. Under Section 76(1)(p) of the Act, the Corporation was required to include a copy of a Certificate or Memorandum of Insurance for each of the current insurance policies for the Corporation.

Failure by Respondent Directors to Uphold Statutory Duties

(qq) The individual Respondents named in this Application, other than Mr. Jhamtani who was at all material times the Manager of the Corporation, were all members of the Corporation’s Board of Directors at some point in time (the ‘Respondent Directors’).

(rr) The Respondent Directors failed to act honestly and in good faith, despite being required to do so under Section 37(l)(a) of the Act (the “Duty of Loyalty”). Alternatively, the Respondent Directors failed to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, despite being required to do so under Section 37(1)(b) of the Act (the “Duty of Care”).

(ss) In failing or refusing to hold an AGM every year, and in refusing to recognize the legitimacy of the New Board, some or all of the Respondent Directors violated their Duty of Loyalty owed to the Corporation as a whole, to ensure the timely and orderly transition of power to the New Board.

(tt) In the Affidavit that was sworn by Nina Evans on August 19th 2019 and filed by the Corporation in the Contempt Application with this Honourable Court (“Nina’s Affidavit”), Nina deposed that the Board at the time had instructed the Manager to comply with the Records Request submitted by the Applicant and to comply with the CAT Order issued by the Tribunal, but Mr. Jhamtani failed or refused to do so because of his own personal animosity against the Applicant and/or Bala. Yet, as Nina’s Affidavit states, the Board did not terminate or discipline the Manager for his gross insubordination. All of the legal costs incurred by both the Applicant and the Corporation in the Records Request matter, the subsequent CAT Application, and the subsequent Contempt Application, could have been entirely avoided if the Manager had simply complied with the Applicant’s Records Request as he was supposed to do under the Act.

(uu) Despite this gross insubordination by the Manager, the Disqualified Directors that purportedly form a majority of the current Board, have refused or failed to pursue any contribution or recovery of the Corporation’s legal costs, the Corporation’s payment of the $2,000 penalty ordered in the CAT Order, and/or the Corporation’s payment of any costs awarded to the Applicant in the Contempt Application (collectively, the “Costs”) against the Manager or the management services company that he is the principal of (“Simsons”). Instead, the Disqualified Directors are continuing to let the Corporation’s unit owners – including the Applicant who owns at least 3 units – bear the financial burden of the Costs.

(vv) At the 2019 AGM, the Respondents attempted to use the fact that the Applicant’s litigation against the Corporation was costing unit owners money, as a political attack against the Applicant’s representatives who were seeking election to the Board of Directors. In fact, the Respondents even printed out copies for distribution to the audience, not the Applicant’s pleadings in the Contempt Application, but instead only the litigation timetable ordered by the Civil Practice Court – as an attempt to smear the Applicant’s candidates seeking election to the Board. This was in direct violation of their Duty of Loyalty that was owed to the Corporation – not owed to themselves and their desire to retain control over the Corporation’s governance.

(ww) Even after Bala’s successful election to the Board as only 1 of the 4 directors at the 2019 AGM, the Disqualified Directors and the existing Manager have sought to use every tactic possible to forestall and/or prevent Bala from bringing the Corporation into compliance with the Act after so many years of non-compliance.

(xx) It is only with this Honourable Court’s intervention, that the Applicant sees any realistic possibility of the Respondents finally complying with their obligations under the applicable law.

Generally

(yy) All of the aforesaid non-compliance with the Act and the Governing Documents by some or all of the Respondents have caused monetary costs, losses, or damages to be incurred by the Applicant.

(zz) All of the aforesaid actions or omissions of some or all of the Respondents, were or threatens to be oppressive or unfairly prejudicial to the Applicant or unfairly disregards the Applicant’s interests.

(aaa) In addition to the above, the Applicant relies on:

(i) Sections 17, 116, 117, 119, 134 and 135 of the Condominium Act, 1998;

(ii) the Declaration, By-laws, and Rules of MTCC 812;

(iii) Rules 1.04, 2.03, 3.02, 14.05, and 38 of the Rules of Civil Procedure; and

(iv) such further and other grounds as counsel may advise.