CITATION: Dewan v. Burdet, 2016 ONSC 4917

COURT FILE NO.: 01-CV-18977

DATE: 2016/08/08

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

PATRICK DEWAN, DOMICILE DEVELOPMENTS INC., 1436984 ONTARIO LTD., AMIRA GABRIEL, 1496055 ONTARIO INC., 117490 CANADA LTD., The Estate of SHEILA EBERTS, 2201894 ONTARIO INC., BBG EQUITY MANAGEMENT CORPORATION, and POWELL GRIFFITHS

Plaintiffs and Defendants by Counterclaim

– and –

Carleton Condominium Corporation 396,

Defendant

CLAUDE ALAIN BURDET, IN TRUST, CLAUDE-ALAIN BURDET, and ENTERPRISES TED RUBAC INC., and 1443957 ONTARIO INC.

Defendants and Plaintiffs by Counterclaim

Kenneth Radnoff, and Jonathan Collings, for the Plaintiffs,, Defendants by Counterclaim

Gary Boyd, Counsel for CCC 396

Claude-Alain Burdet, Counsel for all other Defendants and Plaintiffs By Counterclaim

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HEARD: September 8, 10 – 12, 15 – 19, 2014; January 26 – 29, February 2 – 6, March 2 – 5, May 4 – 8, 11 – 14, 2015 Written Argument: June 8, July 8 and 14, 2015

reasons for decision

kane j.

DEFINED TERMS

[1] The following are defined terms in this decision:

(a) “AGM” – AGM of CCC 396 unit owners

(b) “Board” - Board of Directors of CCC 396;

(c) “Burdet Trust” – The August 26, 1993 trust created by the mother of Mr. Burdet, Alice Marie Burdet, in which Mr. Burdet is the trustee and Janet Strauss and their five children are beneficiaries;

(d) “CBCA” – Canada Business Corporations Act, R.S.C., 1985, c. C. – 44

(e) “CCA” – Canada Corporation Act, R.S.C., 1970, c. C.-32

(f) “CCC 396” – the defendant Carleton Condominium Corporation 396;

(g) “CCC 396 Action” and “CCC 396 Decision” – CCC 396 action in 2009 against Mr. Burdet, Mr Burdet in Trust, 1457563 Ontario Corporation, 1457563 Ontario Corporation in Trust , Janet Sue Burdet, Nelson Street Law Offices, L’Academie Christiane Sauve Inc. and Beauty Depot and the trial decision therein (2014 ONSC 7411) dated December 23, 2014, respectively.

(h) “CCC 396 Appeal Decision” – Ontario Court of Appeal decision dismissing the appeal of the CCC 396 Decision: 2016 OBCA 394;

(i) “City” - Corporation of the City of Ottawa;

(j) “Declaration” – the declaration of CCC 396;

(k) “Directors” – the directors of CCC 396;

(l) “Domicile” - the plaintiff Domicile Developments Inc.;

(m) “ETRE” - Entreprise Ted Rubac Enterprises Inc.;

(n) “LAB”- Luc Andre Burdet, son of Mr. Burdet and Janet Strauss;

(o) “Majority” – the defendants who own the Majority of units in CCC 396;

(p) “Minority” – the plaintiffs who own the Minority of units in CCC 396;

(q) “Mr. Burdet” – the defenday Claude-Alain Burdet;

(r) “M-L” - the accounting firm of Marcil Lavallee;

(s) “OBCA” – Business Corporation Act, R.S.O. 1990, C.B. 16

(t) “Officers” – includes the President, Vice-President, Treasurer and Secretary of CCC 396;

(u) “Printel” – Printel Corporation

(v) “1990 Act” - Condominium Act, R.S.O. 1990, Chap C-26;

(w) “1998 Act” - Condominium Act, 1998, S. O., 1998, Chap 18;

(x) “1999 Eberts Decision” - the application decision of Kealey J. in the Eberts Application;

(y) “2000 Eberts Decision” – the Ontario Court of Appeal decision in the Eberts Application dated October 16, 2000, overturning the 1999 Eberts Decision;;

(z) “2001 Order” - Order of Grange J. dated November 29, 2001 in this proceeding;

(aa)“Eberts Application” – the November 1998 application of S. Eberts against Mr. Burdet in Trust and CCC 396; “2002 Order” and “2002 Reasons” - Order and reasons of Lalonde J. dated April 2 and 11, 2002 respectively in this proceeding;

(bb) “2005 Order” - Order of Lalonde J. dated April 29, 2005 in this proceeding;

(cc) “2006 Decision” - Decision of Lalonde J. in this proceeding and in Action No. 06-CV-33388SR; [2006] O.J. No. 5210;

(dd) “2007 Order” and “2007 Reasons” - Order and reasons of Lalonde J. dated September 14 and October 3, 2007 respectively in this proceeding;

(ee) “2008 OCA Decision” - Court of Appeal Decision overturning portions of the 2007 Order: 2008 ONCA 816.

INDEX

An index of this decision is contained in Schedule A attached.

CLAIMS

2. The plaintiffs, defendants by counterclaim, seek declaratory relief, determinations of several points of law and fact including determination as to how much they owe to CCC 396, remedies for oppression and termination of the condominium corporation.

3. The defendants, plaintiffs by counterclaim, seek dismissal of the plaintiffs’ action, declaratory relief, determinations of several points of law and fact, determination of the amount the plaintiffs owe to CCC 396, remedies for oppression including damages and termination of the condominium corporation as alternative relief.

BACKGROUND

[2] Termination of a condominium corporation by court order as sought by the plaintiffs, and the plaintiffs by counterclaim in the alternative, is an ultimate and dramatic remedy with serious consequences to the condominium corporation and its unit owners. S. 46 of the 1990 Act and s. 128 of the 1998 Act state that such remedy may be granted if the court is of the view that termination would be just and equitable having regards to listed factors which include fairness and unfairness to owners.

[3] Determining what is just and equitable to CCC 336 and its unit owners, whether oppression has occurred and whether termination should be ordered, requires consideration of the nature, causes and impact of events over time which in this case has involved high levels of conflict and animosity between two groups of condominium unit owners and constant ongoing litigation since the creation of this small 33 unit commercial condominium in 1987.

[4] This proceeding involves:

(a) an older 3-storey warehouse building with outside adjacent surface parking in the larger downtown core of Ottawa;

(b) the 1987 conversion of that older warehouse building by a developer into a 33 unit commercial/industrial/storage condominium;

(c) a serious fault in the structure of this condominium corporation that has existed since 1987;

(d) how that structural fault has generated 28 years of repeated waves of litigation, which continues; and

(e) whether one family’s direct and indirect ownership through a trust and incorporated entities directed by the Majority of units and votes have benefitted from the structural fault and used that voting control since 1997 for their financial gain at the expense of the condominium corporation and whether that constitutes oppression of the Minority unit owners.

[5] Background as to how this structural fault was created and its impact is required to understand issues in this trial as to this 33 unit condominium.

[6] Some of this background information is contained in the decisions of other proceedings between the parties, including:

(a) the 2000 Eberts Decision, paras 2 to 14; and

(b) the 2014 CCC 396 Decision, paras 1 to 82.

[7] The central period in issue in this trial is from January of 1998 to March 2002.

THE PARTIES

[8] The plaintiffs are the Minority own units in this condominium and submit that since 1997 they have been oppressed by Mr. Buret in his capacity as the owner at times of 22 of the 33 units, his use of those votes over the years and as President, Treasurer and a Director of CCC 396, to benefit himself and his family at the expense of the corporation and the plaintiff unit owners.

[9] The plaintiff, Domicile Developments Inc. through a holding company converted this warehouse into and created this condominium in 1987. Since 1995, Domicile itself has been the owner of one unit.

[10] The late Ms. Eberts owned one unit and was one of the original plaintiffs in this proceeding commenced in 2001. She brought the earlier Eberts Application proceeding against Mr. Burdet in trust and CCC 396 as to voting rights. She was initially successful in the 1999 Ebert Decision. That decision was overturned by the 2000 Eberts Decision. Leave to appeal was denied by the Supreme Court.

[11] The relevant Burdet family members and entities associated to them include:

(a) Claude-Alain Burdet and Ms. Strauss. Each are long time Directors and officers of CCC 396. Mr. Burdet has been a Director since 1993 and President and Treasurer since 1997. Mrs. Strauss has been a Director and the Secretary of CCC 396 since February, 1997. Their son LAB became the third director of CCC 396 in April 2001.

(b) Mr. Burdet holds a Doctorate in Mathematics and Physics and a Doctorate in Business Management obtained from a university in the United States. He was called to the Bar of Ontario in 2006 according to Ms. Straus. He is fluent in both French and English. Title documents indicate he personally purchased and became the registered owner of 2 units in CCC 396 in 1990. He purchased and became owner of 2 more units in 1993. Between 1998 and 2002, he and Ms. Strauss separated or divorced, but continue to live in separate units of the family home. In July 2000, Mr. Burdet transferred three of his condominium units to Ms. Strauss. In January 1997, Mr. Burdet purchased 18 condominium units, in the basement of CCC 396 one of which he transferred to himself in March 2002. His ownership of the other 17 basement units was pursuant to a trust for his wife and children. In November 2001, Mr. Burdet transferred one above ground unit he owned to a former defendant, 1457563 Ontario Corporation. All but one of these 22 units was transferred to defendant ETRE in June 2012, three days before commencement of the CCC 396 Action trial for unpaid condominium fees owed by these 23 units. In this proceeding, Mr. Burdet acted as counsel for the defendants other than CCC 396 and for the plaintiffs by counterclaim and did not testify.;

(c) Ms. Strauss holds a Masters in Fine Arts. She is the mother of the 5 Burdet children who were home schooled by their parents in one of the condominium units until completion of their high school education. She testified that she was “sort of a manager” of Printel Corporation which had offices during the relevant time in of the units owned by Mr. Burdet or Ms. Strauss. She continues to work in Mr. Burdet’s law office located in a unit in this condominium building. Ms. Strauss grew up in the United States. Her mother tongue is English. She testified that she has some fluency in the French language. In 1999, language became an issue within CCC 396;

(d) Claire Burdet is the oldest of the 5 Burdet children. She turned 18 years of age in December 1998. During the years 1998 and 2001 she attended university at which time she was between 17 and 21 years old. At some point, she became the sole director of ETRE. She did not testify;

(e) LAB is the second oldest of the Burdet children. He was a full time university student during the years 1998 to 2002 and obtained a software engineering degree. Between 1998 and 2001, LAB was between 15 to 19 years of age. Since April 2001, LAB has been the third director of CCC 396 and testified at this trial. LAB held some role in 1457563 Ontario Corporation;

(f) Mrs. Burdet Senior is Mr. Burdet’s mother. She is the settlor of the Burdet Trust established in 1993. Mr. Burdet was the sole trustee of the Burdet Trust. Ms. Strauss and the 5 Burdet children were the beneficiaries of the Burdet Trust. The terms of the Burdet Trust provide for distribution of trust assets to beneficiaries in July 2012. The evidence indicates that the Burdet Trust continued to exist after July 2012. The Burdet Trust was the beneficial owner of 17 of the 18 basement units in CCC 396 from January 1997 until June 15, 2012;

(g) ETRE was incorporated under the Canada Business Corporations Act in September 1993 upon the application of Mr. Burdet. The Corporation filings of ETRE indicate that Claire Burdet in 2011 was the sole director of ETRE and all shares of ETRE were owned by a trust. There is no evidence of when Claire Burdet became a director of ETRE or who was or were directors thereof prior to 2011;

(h) ETRE became a service provider to CCC 396 as early as 1997. ETRE was the principal service provider to CCC 396 between January 1998 and March 2002;

[12] The defendants, plaintiffs by counterclaim, submit that CCC 396 and ETRE are separate unrelated legal entities. They submit that the actions of Mr. Burdet, Ms. Strauss, and commencing in 2001, LAB, was conduct authorized by condominium resolutions they passed as Directors, that those resolutions acknowledge debt liability owing to ETRE as evidenced by their execution as Directors of promissory notes in favor of ETRE and as such, their actions as Directors, Officers and the evidence of debt now owing to ETRE are authorized, documented and cannot therefore be challenged. They further argue that their actions as Directors or Officers cannot therefore be the subject of an oppression claim pursuant to s. 135 of the 1998 Act.

THE BUILDING

[13] The condominium is an older 3-floor rectangular building containing 29 units. There is an attached ground level addition which contains 4 units making a total of 33 units.

[14] The main building has a 2 door loading dock and one interior freight elevator. Eleven units are located on the 1^st and 2^nd floors of the main building. The remaining 18 of the 29 units in the main building are in the basement of the building. The Declaration as amended provides for 18 basement units. Mr. Burdet over time physically partitioned the basement into 18, 15 and then 16 physical units.

[15] Fifteen units are used as offices or stores by small businesses on the 1^st and 2^nd floors of the main building and at ground level in the addition. Those 15 units have exterior windows and their own washroom facilities with running water.

[16] The adjacent land is an outdoor lot with some 29 surface parking places. Pursuant to the Declaration, each of the above ground units includes 2 parking places whereas the 18 basement units combined have 2 parking spaces for a total of 32 parking spaces. There is conflicting evidence whether the developer of this condominium transferred additional parking spaces to the condominium.

[17] There are common washrooms located on the 1^st and 2^nd floors of the main building which are needed and used by the 18 basement units which have no washroom or running water in the basement.

[18] The previous owner of the basement units was a numbered company owned by a local law firm. The 2000 Eberts Decision indicates that the law firm Soloways used the basement to store its files from 1987 until it sold all basement units to Mr Burdet on January 31, 1997.

[19] During this trial the court and counsel visited the condominium basement area and were able to view the interior of a number of the basement units and the outside entrances and surface parking area.

[20] The basement is currently partitioned into 15 rooms. The ceilings of the basement units visited are open, namely unfinished and low. There are 3 elevated shoulder height basement windows amongst the basement units. Many basement units have no windows. Several of the basement units visited are used for storage. A number of the other basement units visited are currently used as rehearsal or jam space for what appears are rock bands.

[21] The main building freight elevator operates between the basement and the two upper floors in the main building.

[22] Entrance to the main building is by 1 ground floor door and 3 exterior doors each accessed by 4 or 5 stairs to an exterior landing and then entrance into the first floor. One of those entrances with stairs leads to Mr. Burdet’s law office. One set of exterior stairs leads to a common entrance door from which all units in the main building may be reached by an interior staircase up to the second floor and down into the basements units. The four units in the addition to the building each have ground level entrance doors.

STRUCTURAL FAULT

[23] The original Declaration of CCC 396 dated September 16, 1987, is silent as to unit voting rights. That Declaration contains contradictions as to classification of the 18 basement units. The 1990 Act provides that classification of units determined whether a unit had voting rights. Pursuant to the 1990 Act, units designated for storage had no vote.

[24] The Declaration states this warehouse redevelopment contains 15 industrial/commercial units and 18 storage units in the basement.

[25] Units used for storage were not entitled to vote.

[26] Pursuant to the above classification, the 15 industrial / commercial units would each have one vote. The 18 storage units would have no vote.

[27] The Declaration however also states that each unit shall be occupied and used for “industrial, commercial and warehouse purposes”.

[28] On December 10, 1987 the officers of the developer were the original Officers of CCC 396. Before conveyance of any units to purchasers, they signed By-law 3 amending the Declaration by reclassifying the 18 basement units as “industrial/commercial”, like the other 15 units, thereby giving each basement unit one vote for a total of 18 basement votes. Soloways acted for the developer and had agreed to buy all basement units if the description of such units in the Declaration was changed from “storage” to “commercial/industrial”.

[29] The amendment to the Declaration is also silent as to the voting rights of unit owners. Voting entitlement was determined by the provisions of the 1990 Act based on unit classification.

[30] As President of Domicile and its subsidiary development company for this project, Mr. Doran testified that Domicile at the time had little experience with condominiums. He had a purchaser, his law firm, willing to buy all of the basement units if their designation in the Declaration was changed from “storage” to “commercial/industrial”. Domicile’s development company agreed to amend the basement unit designation in the Declaration to commercial/industrial. Mr. Doran testified that he did not appreciate that the change in designated of the basement units granted majority voting control of the condominium to the 18 basement units.

[31] Mr. Doran testified that in retrospect he should have retained independent solicitors to advise as to the implications of the Declaration amendment sought as a term of purchase by his then law firm.

[32] On December 11, 1987, the developer began conveying title to unit purchasers including conveyance of the 18 basement units to its law firm’s holding company.

[33] The Court of Appeal in the 2000 Eberts Decision determined that the 18 basement units in the main building of this condominium like the other 15 units, classified under the amended Declaration as commercial/industrial units and pursuant to s. 22 of the 1990 Act, were each entitled to one vote and would continue to be so entitled unless and until their description use was changed by amending the Declaration. Those determinations by a higher court are binding on this court and the parties.

[34] The issues in this trial were not before the court in the 2000 Eberts Decision or the 2008 OCA Decision.

[35] The structural fault created by this 1987 amended designation of the basement units consists of and is demonstrated as follows:

(a) The 18 basement units with combined voting control occupy 1 of 3 floors in the main building. Those 18 basement units occupy less than 1/3^rd of the total space in the condominium which includes the adjoining four unit annex;

(b) The 18 basement units combined own 16 % of the condominium common elements and are responsible to pay only 16 % of the common expenses.

(c) The 15 above ground units in the condominium, including the 2 upper floors in the main building, constitute in excess of 2/3rds of the condominium property;

(d) The remaining 15 units combined own 84% of the common elements and are responsible for 84% of the common expenses;

(e) The total 2001 annual condominium fees for the 18 basement units was $14,722, or on average $817 per unit;

(f) The 2001 combined condominium fees for the remaining 15 above ground units was $77,278, or on average $5,151 per unit;

(g) Voting control of this 33 unit condominium is held by the 18 basement units, with their lowered unfinished ceilings, no internal water or washroom facilities, most with no windows, occupying together less than 1/3 of the total unit space, owning combined only 16% of the common elements and responsible for only 16% of the common expenses.

[36] The 2000 Eberts Decision is binding notwithstanding that the basement units combined:

(a) occupy less than a third of the total condominium unit space;

(b) own only 16% of the common elements;

(c) pay only 16% of the common expenses;

(d) but nevertheless have voting control of this corporation.

[37] Over the ensuing 28 years, this structural fault has produced much acrimony and numerous lawsuits and appeals, including this proceeding.

[38] The structural fault is a factor in the consideration and determination of claims, cross claims, oppression and whether CCC 396 should be terminated as a condominium corporation.

[39] The plaintiffs do not submit the basement owner is entitled to less than 18 votes but seek a declaration that the current owner thereof, ETRE, be prohibited from exercising such 18 votes based on Mr. Burdet`s oppressive conduct in the use of that 18 of 33 majority control between 1998 and 2002 and his control of that corporation.

SOME GUIDING PRINCIPLES

[40] The court’s review of past decisions by the Board and as to the use of voting control within the condominium must be considered within the requirements of condominium legislation and relevant legal principles including the following.

CONDMINIUM CORPORATIONS

[41] The rights, privileges and obligations in condominium legislation are to be enforced in a fair and equitable way: Whitehorse Condominium Corp. No. 95 v. 37724 Yukon Inc. [2013] Y.J.No.2 (Y.T.S.C.) para 71.

[42] The will of the Majority of unit owners in a condominium corporation must always be assessed in the light of fairness and equity for other owners. Condominiums require the balancing of the rights of individual owners versus all the owners collectively: Whitehorse, paras 73 and 74.

[43] Primacy is not determined by the number of units owned by a person: Whitehorse, para 76.

[44] Challenged decisions of condominium directors requires consideration by the court of the owner and reasons challenging that conduct, the effect thereof on other unit owners and the effect thereof on the condominium corporation: Orr v. Metropolitan Toronto Condominium Corp. No. 1056, 2011 ONSC 4876, para 135.

[45] Corporations under the CBCA and the OBCA are not identical to a condominium corporation governed by the 1990 Act or the 1998 Act.

[46] Condominiums created under Ontario condominium legislation however have similarities to corporations under the OBCA or the CBCA in that they:

(a) are legal corporate entities;

(b) have directors and officers with legislative and designated responsibilities, have parties with specified interests in the corporation which include voting rights; and

(c) have legislative requirements as to meetings, quorum, auditors and audits.

CONDOMINIUM CORPORATION AND DIRECTORS

[47] A condominium corporation has a duty to control, manage and administer the common elements and assets of the corporation and to effect compliance by owners of the Act, the Declaration and assets of the corporation: s.12(2) and (3) and 17(3), 1990 Act and s. 17 and 19, 1998 Act.

[48] The affairs of the corporation shall be managed by a board of directors: s. 15(1), 1990 Act, and s. 27(1), 1998 Act.

[49] Each condominium director and officer shall in that capacity act honestly, in good faith and exercise reasonable care, diligence and skill: s. 24(1) and 37(1), 1998 Act.

[50] Each director and the board shall comply with the Act, the Declaration, the By-laws and the rules of the condominium corporation: s. 119(1) 1990 Act.

[51] Condominium directors with a direct or indirect interest in a contract or transaction must declare the nature and extent of that interest and shall not vote thereon nor be included in determination of quorum; s. 17, 1990 Act and s. 40, 1998 Act.

[52] A director who acts honestly and reasonably is not accountable to the corporation or owners for gain received in a transaction nor is the transaction voidable if approved by two-thirds of owners; s. 17(4) and (5), 1990 Act, and s. 40(7), (8) of 1998 Act.

[53] A director has a duty to act in the best interest of the corporation. That includes responsibility to consider the impact of their decisions on the corporations’ stakeholders. Where however the interests of the corporation and the stakeholders diverge, a director’s duty is to the corporation, not the stakeholder: BCE V. 1976 Debenture holders 2008 SCC 69, [2008] 3 S.C.R. 560, para. 66.

[54] A condominium board is responsible to balance the private and communal interests of the unit owners. Their behavior must be measured against that duty. The court does not look at the interaction between the board and the applicant in isolation. The conduct of the corporation must be viewed in light of the behavior of the applicant: Orr v. Metropolitan Toronto Condominium Corporation No. 1056, 2011 ONSC 4876, paras. 158-160, 165 and 166 and Hakim, paras 40 and 41.

[55] The court must balance the reasonable expectations of an owner with the duties of the Board regarding the interests of the ownership at large: Orr, para. 171.

BUSINESS JUDGMENT RULE

[56] Principles as to the duty of directors under the OBCA, the CCA and the CBCA although not identical, are informative as to the duties of condominium directors.

[57] Pursuant to the business judgment rule, courts owe deference to internal decisions made within the legislative structure of a corporation, such as a decisions made by its directors.

[58] The business judgment rule shields from court intervention business decisions which have been made honestly, prudently, in good faith and on reasonable grounds. Directors’ decisions fulfilling those requirements are not subject to microscopic examination and the court will be reluctant to interfere and usurp the board of directors’ function in managing the corporation as to decisions so made: CW Shareholdings Inc. v. WIC Western International Communications Ltd. (1998), 1998 CanLII 14838 (ON SC), 160 D.L.R. (4^th) 131 (Ont. Ct (Gen. Div.)) at 150 and Ford Motor, para 58.

[59] Pursuant to the business judgment rule, the court must be satisfied that in making the decision(s) under review, the directors have acted reasonably and fairly. The courts are to consider whether the decision was reasonable, not whether it was perfect. If the decision was within a range of reasonableness, the court ought not to substitute its decision for that of the board, even if subsequent events cast doubt on the board’s determination.

[60] Alternatives to the decision made is not the test, unless it can clearly be shown that a particular available alternative was clearly more beneficial to the corporation: Peoples Department Stores Inc. v. Wise, 2004 SCC 68, [2004] 3 S.C.R.461at p.192 and Ford Motor, para. 95.

Historical Events Involving CCC 396

1987

[61] In December 1987, the developer of the newly created CCC 396 transferred title of 5 units on the 1^st and 2^nd floors to individual purchasers. During the next several years, the developer sold the remaining units, including Domicile’s later purchase of one unit which it has continued to own.

[62] The Minority unit owners who closed their purchase of units in December 1987 were upset to learn that the original exclusive voting control of the above ground 15 units had been converted on the eve of their purchase into a combined voting Minority, with all owner decisions thereafter to be in the control of the basement unit owner’s 18 votes.

1988

[63] According to the 2000 Eberts Decision, the Soloway law firm on January 25, 1988, executed an undertaking to CCC 396 that it would not exercise more than 3 of the 18 votes as to the basement units owned by its holding company.

[64] In May 1988, CCC 396 brought an application against the developer seeking a declaration that the 18 units were to be designated as storage units and not therefore entitled to vote. CCC 396 was attempting to remedy its above structural fault.

[65] That application by CCC 396 was dismissed in June, 1988. That court held that s. 3(8) relied on did not permit removal of the basement owner’s voting rights.

[66] The structural fault remained but a resolution appeared shortly thereafter.

1989

[67] On January 25, 1989, Soloways on behalf of its holding company settled the basement units voting issue by executing an undertaking to reduce the basement votes from 18 to 3 and to so amend the Declaration at its cost to reflect that voting change provided all other owners and mortgagees agreed.

[68] All unit owners and mortgagees agreed to the reduction of the basement unit votes from 18 to 3 at the January 27, 1989, CCC 396’s AGM as reflected in By-law 4.

[69] By-law 4 of CCC 396 was passed and registered on title in July 1989. It authorized amending the Declaration to reduce the votes of the basement units from 18 to 3.

[70] In September 1989, the President and Secretary of CCC 396 signed a Declaration and amendment to the Declaration incorporating this reduction to 3 votes and stated therein that all owners and mortgagees had consented thereto as indicated in schedule B. Testimony confirming this was provided in this trial.

[71] It was thought that with that amendment the structural fault had been resolved. This amendment however did not get registered as an amendment to the Declaration.

1990

[72] In June and October 1990, Mr. Burdet purchased two units in CCC 396, namely units 202 and 106.

[73] During this trial, the defendants introduced the minutes of the Board prior to 1998, AGM meetings and unit owner special meetings during the years prior to 1998 as exhibit 51. The defendants also introduced the minutes of the Directors during the years 1998 to 2001 as exhibit 64.

1991

[74] The minutes of the AGM of April 18, 1991 state that:

(a) Mr. Burdet was in attendance as owner of units 106 and 202; and

(b) all unit owners had consented in writing to amend the Declaration of CCC 396 in 1989 to reduce the votes of the basement units from 18 to 3 but that documentation had been misplaced, thereby necessitating that consents of owners and mortgagees be signed again.

[75] These minutes reflect Mr. Burdet’s knowledge at that time of the stated consent of all unit owners to the reduction of votes with respect to the basement units from 18 to 3.

[76] The April 18, 1991 AGM minutes, also records the approval of the prior year’s annual financial statements prepared by and the re-appointment of McCay Duff as condominium auditors for the following year. McCay Duff had been the auditors of CCC 396 since its creation in 1987 and continued as such until December of 1996 when their services as auditors were terminated.

1992

[77] The minutes of the 1992 AGM on August 7, 1997, state that “the matters of the agreements to modify the constitution and the requirement that signatures from all owners be obtained has been satisfied.” Soloways was asked to report on the status of the matter, namely the registration of an amendment to the Declaration to reduce the voting rights of the basement units to 3. Mr. Burdet is recorded in attendance and therefore again aware of pending Declaration amendment to decrease the basement votes from 18 to 3.

[78] These same AGM minutes record approval of the prior year’s annual financial statements and audit report by and the re-appointment of McCay Duff as condominium auditors for the following year.

1993

[79] On June 2 and December 22, 1993, Mr. Burdet purchased two more units, namely units 203 and 101-B. He then owned 4 of the 15 above ground units.

[80] According to exhibit 51, there were 3 voting Directors of CCC 396 in 1993. Board minutes indicate there were 6 Board of Directors’ meetings in 1993. All Board minutes in 1993 and in prior years are in English and were sent to unit owners.

[81] Board minutes in 1993 record decisions:

(a) to terminate the services of a security company which patrolled the condominium property.

(b) Engaging then, and for several years thereafter, the services of a third party property management company.

(c) Tendering for cleaning services;

(d) Permitting the placement of real estate signage in unit windows and by agencies;

(e) Enlarging the 3 member Board, by the addition of 2 non-voting Directors;

(f) Mr. Burdet becoming a non-voting Director and Secretary of CCC 396; and

(g) The fact that neighbors were using some of the condominium parking spaces.

BURDET TRUST

[82] The Burdet Trust was established by Mr. Burdet’s mother by trust deed on August 26, 1993. Mr. Burdet was the sole trustee. The trust’s beneficiaries were the 5 Burdet children and their mother Ms. Strauss.

[83] In establishing this trust, the settlor transferred her shares in Printel to the Burdet trust.

[84] Printel listed its administrative office as the Burdet’s family residence and its operating office as one of the units then owned by Mr. Burdet.

[85] Mr. Burdet between 1998 and 2001 occasionally faxed written materials to CCC 396 Directors on Printel letterhead. Although there was no evidence on point, in his written argument Mr. Burdet as counsel states that Printel was his corporation.

[86] The terms of the Burdet Trust deed granted broad powers to Mr. Burdet as trustee which include:

(a) all powers that a person normally may exercise regarding personally owned assets;

(b) a broad power to invest the trust’s capital and revenue in any form, including the purchase of real property; and

(c) to vote any shares of a corporation owned by the trust which as will be seen included ETRE and Printel.

[87] Paragraph 19 of the trust deed states:

(a) that it was established pursuant to the laws of Quebec as the trust assets in 1993 were located in that province, and

(b) if however trust assets in the future are located outside Quebec, the trust as to those assets shall then be governed by the law where such assets are located.

[88] Mr. Burdet in 1997 bought the 18 basement units in this condominium which were registered in his name. Mr. Burdet as owner thereof held those basement units in trust pursuant to the terms of the Burdet Trust.

[89] The Burdet Trust deed provides that the trustee is to distribute the trust assets to the beneficiaries by July 3, 2012, when the youngest of the 5 Burdet children would then attain 21 years of age.

[90] Ms. Strauss testified that she received no distribution of assets from the Burdet trust on or about July 3, 2012.

[91] LAB testified that all of the assets of the Burdet trust were not distributed by July 3, 2012 and that it was still in existence and owned to owning assets after this distribution date in 2015 when he testified.

[92] A trust which holds undistributed property continues to exist: Bronson v. Hewitt, 2011 BCSC 1115 and Waters, Law of Trusts in Canada, 3d ed. (Toronto: Thomson Canada Limited, 2005) at pp. 1173 and 1174.

[93] LAB testified that the Burdet Trust had a family counsel which allowed he and his siblings the opportunity to discuss how trust moneys would be invested and what decisions should be made. Such discussions he stated involved the guidance of his parents. He testified that following this family discussion, his father would then vote approving or not the matter under discussion as Mr. Burdet held the final say as the trustee of the Burdet Trust. Mr. Burdet accordingly controlled and made the ultimate decisions of the Burdet Trust.

ETRE

[94] On September 10, 1993, Mr. Burdet caused ETRE to be incorporated under the CBCA pursuant to his signing the application for incorporation. Upon incorporation, ETRE had a minimum of 1 and a maximum of 10 directors. Claire Burdet, the oldest of the Burdet children, did not attain the minimum required age to become a director of ETRE until she reached 18 years of age which did not occur until 5 years later in December 1998.

[95] A corporate search result dated February 22, 2011, exhibit 1, indicates that in 2011:

(a) ETRE’s corporate activity is stated to be business management;

(b) Claire Burdet is listed as President and director of ETRE;

(c) The shareholder of ETRE is listed as a trust located at the Burdet family residence where Mr. Burdet and Ms. Strauss still reside;

(d) The corporation’s head office is the same Burdet family residence.

[96] There is no evidence whether Claire Burdet became an officer or a director of ETRE prior to 2002 or who occupied those positions between 1993 and 2002.

[97] The portion of ETRE’s corporate name, “Ted Rubac”, is the letters C. A. Burdet in reverse. Ms. Strauss testified the Burdet children chose that name as a joke. She testified that ETRE is the Burdet children’s’ corporation into which they deposited the money they earned initially babysitting and shovelling snow. There is stronger contradictory evidence to that effect.

[98] Corporations are separate legal entities. Corporations and their assets are not “owned” by individuals or shareholders.

[99] Ms. Strauss testified that during the period of 1998 to 2001, she did not know who was ETRE’s directing mind but stated that she and Mr. Burdet provided advice to the children regarding its affairs.

[100] Ms. Strauss indicated she did not know who signed cheques for ETRE during the period 1998 to 2002, but admitted she signed several contracts on its behalf.

[101] In his 2002 audited statements of CCC 396, Mr. Lagassé states Ms. Strauss was an employee of ETRE. I doubt that Mr. Lagassé simply made up that fact while he interfaced with Mr. Burdet in 2002. Mr. Brazeau came to a similar conclusion. I conclude that Ms. Strauss was an ETRE employee between 1998 and March 2002.

[102] LAB testified both of his parents had full signing authority for ETRE, including cheques and contracts.

[103] LAB testified in this 2015 trial that he was not an officer or director of ETRE. He further stated that ETRE then had an “informal” board of directors comprised of his brothers and sisters, but there is no formal board of directors. He testified that he currently was managing the affairs of ETRE and was answerable to his siblings in that regard.

[104] On the evidence including their then respective young ages, the Burdet children between 1993 and 1999 were not directors of ETRE. Given her young age, Claire Burdet could not be a director of ETRE before December 1998 at the earliest when she, as the oldest of the Burdet children then attained 18 years of age.

[105] LAB testified that ETRE’s Majority shareholder is the Burdet Trust. Pursuant to the Burdet Trust’s deed, Mr. Burdet as trustee voted the shares of ETRE, just as he voted the shares of Printel.

[106] During the period of 1998 to 2001, the ramp construction to provide excavated vehicle access down to the 18 basement units was undertaken on two occasions. That construction involved substantial excavation, construction, costs and interventions by the City including stop work orders and the imposition of offences by the City. For his supervision during the periods of construction, Mr. Burdet charged his time through ETRE to CCC 396.

[107] I conclude on the evidence that:

(a) Ms. Strauss was an employee of ETRE during this four year period;

(b) Mr. Burdet directed ETRE as to and during the construction of the ramp to the condominium basement units including dealings with the City and Minority unit owners during this four year period; and

(c) Ms. Strauss and Mr. Burdet exercised signing authority in ETRE during these four years.

[108] The defendants presented no evidence contradicting the above conclusions.

1994

[109] Based on the minutes in exhibit 51, there were 3 Directors meetings of CCC 396 in 1994 as well as an AGM. All such minutes are in English.

[110] In its minutes, the Board:

(a) Recorded a small surplus for the year;

(b) Decided to establish water metering for units consuming excessive amounts of water. Schedule E to the Declaration however states that the cost of water to the condominium is a common expense and as determined in the CCC 396 Decision which required amendment of the Declaration which never occurred; and

(c) Agreed to waive the arrears of condo fees owed by 3 unit owners in amounts which ranged between $26 and $36. Mr. Burdet opposed this motion. Practicality on this occasion prevailed over strict compliance as the motion passed and waived the subject arrears.

[111] At the AGM on June 7, 1994, the 1993 audited financial statements and audit report were approved. McCay Duff was again appointed auditors for 1994. The Board increase to 5 by the addition of 2 non-voting directors of which Mr. Burdet was one was approved by the owners.

[112] At this AGM, Mr. Burdet’s proposal to terminate the then property manager of CCC 396 was not accepted.

1995

[113] According to exhibit 51, there were 3 Board meetings in 1995 which Mr. Burdet attended. All Board minutes are in English.

[114] The Board minutes record decisions:

(a) to commence use of permits for parking and common areas use;

(b) that the loading dock was to remain free of equipment and materials;

(c) that Board members were to be compensated for interventions to enforce condominium rules at the rate of $50 per intervention, with a resulting reduction in management fees;

(d) that parking usage was problematic and was to be addressed by the Board;

(e) a wall was to be constructed at the back of the loading dock for storage of belongings of CCC 396;

(f) That a few owners were deemed to be using excessive water payable under the Declaration as a common expense by CCC 396. Water meters were to be provided to unit owners which they were required to install so that individual consumption could be recorded and charged. This would not apply to the 18 basement units as water was not supplied to or consumed directly by those units.

[115] The AGM occurred on September 13, 1995. The minutes thereof record:

(a) the audited financial statements by McCay Duff were approved and that firm was appointed auditors for 1995;

(b) Mr. Burdet commented that the services of the property manager had improved;

(c) the owners agreed a storage wall would be built at the back of the loading dock for storage of property owned by CCC 396;

(d) parking remained an issue;

(e) that as to amending the Declaration to reduce the number of votes of the basement units to 3, the property manager was directed to give Mr. Burdet the file documents to “enable the re-activation of necessary paper work in order to ensure the proper registration of a previously agreed amendment to the declaration and to finally conclude this matter … which impacts on the total number of voting .. for CCC 396 and quorums for meetings.” This refers to reducing the number of votes of basement units from 18 to 3;

(f) Mr. Burdet’s motion to reduce the Board from 5 to 3 was not approved; and

(g) Mr. Burdet and 2 others were elected to the Board.

1996

[116] There are 3 short Board minutes in 1996, each attended by Mr. Burdet. All minutes are in English.

[117] Those Board minutes record cancellation in September 1996 of the contract of the property manager effective October 1, 1996, with those functions thereafter to be performed by unit owners.

[118] The AGM commenced on November 20, 1996, but was adjourned because the unit owners challenged decisions made by the Board. This adjourned AGM was described as “tumultuous” in the minutes. The minutes of the November 20, 1996 AGM do not fully disclose what really happened.

[119] The evidence establishes that Mr. Burdet attended the November 1996 AGM with a proxy from the Soloway firm with respect to the voting rights of the basement units. Mr. Burdet took the position that this proxy entitled him to 18 votes. He had an additional 4 votes for the units he then owned. Apparently resolved in January 1989, the structural fault had resurfaced. The 18 basement unit votes constituted a majority of the 33 unit votes which Mr. Burdet intended to exercise. The resulting acrimony as to whether Mr. Burdet could exercise 18 or 3 votes by proxy required the adjournment of this AGM.

[120] The owners’ September 1995 AGM mandate to Mr. Burdet to proceed with the Declaration amendment to reduce the basement votes to 3 had not been carried out. At least one reason for that became clearer 2 months later.

1997

[121] On January 31, 1997, Soloways’ holding company sold the 18 basement units to Mr. Burdet for a total consideration of $117,000, or some $6,500 per unit.

[122] There are minutes of only one Board meeting in 1997 held on February 14, 1997. It indicated that the tumultuous adjourned November 1996 AGM was to be reconvened with the attendance of CCC 396’s legal counsel.

[123] There is evidence that in 1997 ETRE performed some services for CCC 396. No 1997 Board minutes approving that engagement are in evidence. There is no evidence in 1997 as to what ETRE charged CCC 396 or for what. Unlike the period of 1998 to 2001, no 1997 invoices of ETRE are in evidence.

[124] The adjourned November 1996 AGM resumed on February 26, 1997. The turmoil of the original November 1996 AGM by Minority unit owners continued at this resumed AGM with Mr. Burdet’s announcement that he had purchased all basement units and intended to exercise 18 votes for those units.

[125] Exhibit 51 contains unsigned February 26, 1997 minutes of this resumed November, 1996 AGM which indicate:

(a) the owners were advised at the start of this meeting that the holding company of Soloways on January 31, 1997 had sold the basement units to Mr. Burdet; and

(b) that Mr. Burdet would be exercising 18 votes as to the basement units, not the 3 votes the former basement unit owner had committed to.

[126] I reiterate the fact that the 2000 Eberts Decisionis final and has determined that the owner of the basement units has 18 votes.

[127] Having been a unit owner since 1990 and a Director of CCC 396 since 1993, Mr. Burdet was fully aware at the time of his purchase of the 18 basement units on January 31, 1997 that CCC 396 and Minority owners understood there was an agreement that basement unit votes were reduced and limited to 3. He was in attendance at the 1995 AGM where it was decided that he was to receive from the then property manager the documentation to enable him as Director of CCC 396 to proceed with preparation and registration of the amendment to the Declaration to implement this reduction of basement unit votes to 3.

[128] Independent of any estoppel certificate he may have received upon purchasing a unit in CCC 396, Mr. Burdet was aware and was not misled upon his purchase in 1997 of the basement units as to the internal position within CCC 396 with respect to their voting rights. This is relevant as to his later position as Director that CCC 396 must vigorously defend the Eberts Application to protect itself against the potential of claims of misrepresentation and/or negligence by unit owners who purchased units relying upon their belief that the basement units were entitled to 18 votes.

[129] The commotion by the Minority owners was because:

(a) Soloways and their holding company as owners of the basement units had agreed in 1989 to limit the basement units to 3 votes and to amend the Declaration accordingly at its cost;

(b) all owners and mortgagees had consented in writing to implement that change which docuemtnation was then misplaced;

(c) despite Mr. Burdet’s mandate to re-activate and implement that vote reduction to three by Declaration amendment as recorded in the minutes of the September 13, 1995 AGM, no such amendment had been registered; and,

(d) as owner and as a Director of CCC 396, Mr. Burdet was then informing the Minority owners that the vote reduction amendment had not been implemented and as the purchaser thereof, he intended to exercise all 18 basement unit votes thereby constituting his voting control of CCC 396.

[130] The discussion of the basement unit voting rights according to these February 26 AGM minutes consumed the first 2.5 hours at this resumed 1996 AGM.

[131] The other 9 unit owners, now the Minority, expressed concern about conducting any further business. They requested the AGM be adjourned as they intended to legally challenge the basement units being entitled to 18 votes. The Minority did not wish to proceed with the meeting for fear they would be deemed to accept Mr. Burdet’s position of entitlement to 18 votes for the basement units.

[132] Exercising his 18 votes, Mr. Burdet defeated the adjournment motion. CCC 396’s lawyer in attendance persuaded the owners to deal with the other business items without prejudice to their rights to challenge the voting rights of the basement units. Two unit owners left the meeting. A third owner announced she would remain but would not vote. It was clear that unanimous consent to register an amended Declaration reducing the basement units to 3 votes was no longer possible.

[133] In the motions passed at this resumed 1996 AGM on February 26, 1997, Mr. Burdet received a proxy of an additional 3 votes from Mr. Wistaff who had to leave the meeting which had been going for 5 hours at that point.

[134] Mr. Burdet exercised 25 of 29 eligible votes and approved resolutions:

(a) electing himself, Ms. Strauss and Mr. Ray Wistaff as the 3 voting Directors. Ms. Sheppard and Ms. Frank were appointed as non-voting Directors despite the amended By-law 1 passed at this meeting which reduced the size of the Board to 3 Directors “as stated in s. 6.2 of the original By-law 1”;

(b) terminating the property management agreement with the third party contractor to be replaced with “self-management” by the Directors, owners or qualified persons or agents;

(c) granting Mr. Burdet authority as President and Secretary to execute management agreements, pursuant to amended By-law 2. Many property management duties were subsequently contracted to ETRE;

(d) passing new By-law 7 creating new responsibilities for the Secretary and the Treasurer. The Treasurer was “to maintain” a computerized accounting system, “perform all bookkeeping”, monitor payment of condominium fees, register liens, file tax returns and assist the auditor. Mr. Burdet then became and thereafter held the positions of both President and Treasurer of CCC 396. The accounting function thereafter were billed to the condominium by ETRE;

(e) authorizing payment to Directors at the rate of $50/hr. for preparation and attendance at Board meetings which now were to be held weekly, along with a $50/occurrence for out of pocket expenses as set out in new By-law 6;

(f) instructing the Directors to implement unit water meters and to charge each unit based on its water consumption, as per an amendment to By-law 1. The 18 basement units owned by Mr. Burdet had no water, would therefore have no meters, would continue to access water from common area outlets 84% of the cost of which would be paid by the other 15 unit; owners;

(g) creating a parking registry, parking requirements enforcement and penalties for parking violators as per new By-law 9;

(h) creating a new $200 penalty for late payment of condominium fees, for NSF cheques and for notices in addition to the 12% annual interest charge, compounded monthly, for unpaid fees, $100 penalty for notices of observed breaches of By-laws or rules, $100 per occurrence penalty for unauthorized parking and $250 charge for registration and discharging unit liens as per new By-law 8, plus any other charges as determined by the Board. Such late payment penalties were allegedly later imposed against the Minority owners and are claimed against them herein by the plaintiffs by counterclaim;

(i) to “repair and/or modify the balcony and front entrance to the CCC 396 premises”. The subsequent excavation and construction of a double vehicle wide ramp down to the floor level of the basement units as will be seen is not specifically identified in this motion. This motion as to such ramp construction did not in any event eliminate or override compliance requirements of s. 38 of the 1990 Act which required approval by 80% of the units for substantial alteration to common elements. That required approval by 29.04, or 30 units. Only 28 votes approved this motion;

(j) to terminate payment of third party freight elevator maintenance service. ETRE subsequently charged the condominium a monthly freight elevator maintenance fee as well contractor’s costs for elevators work thereon;

(k) to set up effective January 1, 1997 a management office, telephone, fax and establish the corporations’ own accounting system as part of self-management. That office was located in one of the Burdet units housing the offices of Printel. The evidence is that Printel in its office had multiple telephone and fax lines and equipment;

(l) to have daily security patrols by a patrol agency or trusted individuals, despite the Board’s prior decision to cancel third party security services. ETRE subsequently charged the CCC 396 for security walks of the property, namely of at least three times per week outside of business hours;

(m) new By-law 4 created a $50/day fine for leaving goods on the loading dock, unless Board permission was obtained 10 days in advance.

[135] Although on the evidence there had been only 1 Board meeting in 1997, it was announced at this AGM that there would be weekly Directors meetings of CCC 396 in 1998.

[136] The court owes deference to the prerogative of a majority of condominium owners to implement new much stricter regime of rules and violation penalties. Those rules and penalties must however be exercised uniformly which did not occur as will be seen.

[137] One concern as to these minutes is a resolution directing the Board “to look for and select an Auditor …. to review fiscal year 1996 and the transition to a self-managed accounting system”. An attempt to assign authority to appoint new auditors to the Directors is contrary to the requirement in s. 34(2) of the 1990 Act which states that the owners, not the Board, has exclusive authority to appoint auditors and that until so appointed by owners, the previous auditors, being McCay Duff, continued in office until the owners selected a new auditor.

[138] The three Burdet Directors with owner voting control passed a similar motion at a special meeting of owners on March 22, 2002, namely that they as Directors and not the owners would select and appoint condominium auditors.

[139] The Board had no authority to appoint the auditors of CCC 396, beyond filling a temporary vacancy. These AGM minutes contain no owners’ resolution appointing auditors for 1997 as required under s. 34. McCay Duff in fact prepared the 1997 audit report and financial statements which were subsequently presented and approved by the owners.

[140] There was no appointment by owners of condominium auditors in fact between February 1997 and March 2002. The last AGM was held on February 28, 1998 at which time no auditor was appointed. No annual audited financial statements were presented to owners during the next 4 years, as evidenced in exhibit 51.

[141] The last audited statements of CCC 396 given to owners were the 1996 and 1997 financial statements and audit report prepared by McCay Duff presented at the February 27, 1998 AGM. No subsequent audit statements of the condominium were prepared until:

(a) The M-L audit work done in 2001; and

(b) Mr. Lagassé did his September 2002 audit statements.

[142] As will be seen, McCay Duff’s role as the appointed auditors of CCC 396 was subsequently terminated by Mr. Burdet and Ms. Strauss as Directors. Owner authorization to remove McCay Duff as auditors as required under s. 34(4) of the 1990 Act and s. 63(1) of the 1998 Act and that authorization did not occur until March, 2002. As a result, although that firm did not perform that function, McCay Duff remained the auditors of CCC 396 despite their alleged removal by Mr. Burdet and Ms. Strauss as Directors, pursuant to s. 34(2) of the 1990 Act and s. 60(2) of the 1998 Act.

[143] The presentation for approval of annual financial statements by the auditor and the appointment of auditor are required every 12 months pursuant to s. 34(2) of the 1990 Act and s. 4.1 and s. 4.4 of By-law 1.

[144] The absence of an auditor and audited financial statements for and during the years 1998 to 2001 deprived owners of important financial information they were entitled to and forestalled the Directors’ and Officers’ responsibility to account for their financial management of the affairs of the corporation. An AGM is meant to provide owners with the opportunity to question the auditor pursuant to s. 35 of the 1990 Act. That opportunity was eliminated by the absence of auditors, audited statements and AGMs between 1998 to 2001.

[145] In April 1997, Mr. Burdet transferred one basement unit to M. Braun and another basement unit to J.C. Lelievre. Those 2 individuals transferred these basement units back to Mr. Burdet in October of 2003.

[146] Messrs Brown and Lelièvre, although named as repondents in the Eberts Application, did not participate therein. It’s unclear whether they ever took possession of these 2 basement units as:

(a) the basement units were experiencing water infiltration issues;

(b) Mr. Burdet continued after April 1997 to exercise all basement votes with the notation in the minutes that he held proxies from Messrs. Brown and Lelièvre;

(c) Ms. Strauss as to linguistic capacity testified that other than Mr. Burdet, Mr. Wistakk was the only other unit owner who spoke French; and

(d) Messrs Brown and Lelièvre according to the minutes did not attend the 1997 re-convened AGM on February 27, 1998, or any owners` meetings thereafter.

[147] There was no law in 1997 prohibiting one or related parties from owning a majority of units in a condominium and thereby exercising voting control. When such control exists however it is important to ensure that it is being exercised within the provisions and intention of condominium legislation which involves balancing the rights and interests of all owners within a condominium corporation and not for the financial betterment of a few at the expense or disadvantage of the corporation and other unit owners. The issue is not whether these basement units had 18 votes between 1998 and March 2002. They did.

1998 TO MARCH 2002 GENERALLY

LAW GOVERNING BASEMENT UNITS

[148] Paragraph 19 of the Burdet Trust deed states that trust assets located outside Quebec will be governed by the law where the assets are located. With respect to that trust`s beneficial interest in the basement units, the governing law is that of Ontario.

[149] In addition, the substantive law of the jurisdiction where the property is located governs real property: Duke v. Andler, 1932 CanLII 32 (SCC), [1932] S.C.R. 734, pages 9 and 12 and Davidson Estates v. A.E.Pavey & Co. [1896] S.C.J. No. 46, page 2.

[150] The law governing the basement units is Ontario law.

TRUSTS AND REAL PROPERTY

[151] S. 62(1) of the Land Titles Act, R.S.O. 1990, c. L.5 ( the “LTA”) provides that a notice of an express, implied or constructive trust shall not be entered on the register or received for registration.

[152] s. 62(2) of the LTA states that describing the owner of title as a trustee is not notice of a trust within s. 62 and shall be deemed to not be notice of a trust within s. 62.

[153] S. 72 of the LTA states that no person beyond the parties to a registered instrument shall be deemed to have any notice of the contents of any instruments other than those mentioned in the existing register of title of the parcel of land.

[154] Notice of a land title which is taken “in trust” may not be registered on title. Describing the owner of land in Ontario as a trustee is deemed not to be notice of a trust and the registered owner may deal with such property as if such description had not been inserted: Randervest v. 741298 Ontario Ltd., 1996 CanLII 8207 (ON SC), [1996] O.J. No. 3182 (Ont. Gen. Div. at paras 10 and 16 and Land Titles Act R.S.O. 1990 c. L.5, s. 62.

[155] Pursuant to the Ontario Vendors and Purchaser’s Act and Registry Act R.S.O. 1914, ch.124, an express trust of land requires that the trust must be evidenced by an instrument in writing and unless such trust instrument is registered, it is void against subsequent purchasers for consideration without actual notice: McKinley and McCullough (Re) [1919] O.J. No. 75 (Ont. S. C. – Appellate Division), para 24.

[156] A trust is not a legal entity and is unable to hold title to property. A trust is the relationship that creates an equitable obligation by which a trustee, pursuant to the fiduciary relationship and resulting obligation, is compellable to hold property for the benefit of beneficiaries. The beneficiaries enjoyment rights to the trusty property is protected against all persons, except creditors who’s claims have arisen from the trustee’s management of the trust property. A trust may not bring or defend legal proceedings: Spencer v. Riesberry, 2012, ONCA 418, paras 53 and 54, Cannon v. Funds for Canada Foundation, 2010 ONSC 4517, paras 65 and 66, Olympia Trust Company v. The Queen, 2015 FCA 279 at para 69, Waters, supra, p. 3, 4 and 9 and Perell and Morden, The Law of Civil Procedure, 2nd ed., para 4.356.

[157] The trustee is the legal owner of trust property. Trust property in equity belongs to the beneficiaries: Spencer, supra, para 53 and Gillese, The law of Trusts, 3^rd ed., Irwin Law p. 48 and Waters, supra, p.4.

[158] Between January 1997 and 2012, Mr. Burdet was the legal owner of the 18 basement units in CCC 396, with the exception of the 1997 to 2003 ownership of two such basement units by Messrs. Brown and Lelièvre.

[159] Title of all basement units was conveyed by Mr. Burdet to ETRE three days prior to the start of the June 2012 trial of the CCC 396 Action. ETRE thereupon became the registered legal owner of the 18 basement units.

[160] As to liability for the personal actions of the trustee, courts will disregard the phrase “in trust” and determine liability against the trustee personally: Metropolitain Toronto CC No. 1250 v. Mastercraft Group Inc., [2010] O.J. No./ 4819 at paras 77 and 144 to 147.

[161] Legal action may be brought by and against a trustee. There is no right of action against the trust beneficiaries, nor against the trust property per se: Cannon, supra, p. 198 and Perell and Morden, supra, para 4.356.

[162] This proceeding commenced in 2001, was then and is against Mr. Burdet personally based on the above authorities and involves his legal ownership of units in CCC 396, including the 18 basement units. Messrs. Brown and Lelièvre are not respondents.

DIRECTORS OF CCC 396

[163] According to the amended 1997 By-law 1, there were 3 Directors between January 1, 1998 and March 2, 2002, each having one vote. Quorum thereof was 2. Between 1998 and April 2001, the Directors were Mr. Burdet who was also President and Treasurer, Ms. Strauss who was also Secretary and Mr. Pierre Wistaff who was also Vice-President.

[164] According to Board Minutes, Mr. Wistaff:

(a) attended only 3 of the 29 Board meetings in 1998 following the February 28, 1998 AGM;

(b) attended none of the 30 Board meetings in 1999;

(c) attended none of the 25 Board meetings in 2000;

(d) attended none of the 10 Board meetings in 2001 prior to his removal from the Board on April 6, 2001 at which time he was replaced by LAB who was then 19 years of age and became the third Director.

[165] There is evidence that after his unit fell into arrears in 1998, Mr. Wistaff was not ‘invited’ to Board meetings. Note 14 of Mr.Lagassé’s 2002 financial statements indicates that owners in arrears of common expenses were ineligible to be Directors, thus providing at least one explanation for Mr. Wistaff`s non-attendance at these Board meetings.

[166] During the period of 1998 to April 2001, Board and management control of CCC 396 was exercised by Mr. Burdet and Ms. Strauss. In April 2001, LAB then 19 years old became the third Director.

[167] The evidence indicates that the self-management of CCC 396 in 1998 was being performed and directed primarily by Mr. Burdet. In her testimony, Ms. Strauss did not state or suggest that she, as Director and Secretary, led in the direction or strategy of CCC 396 during the years 1998 to March 2002. She testified that financial matters were not her forte. This proceeding is largely about the legal and financial affairs of CCC 396.

[168] Undoubtedly LAB, then 19 years old in April 2001, had insights and participated at Board meetings he thereafter attended. There is no evidence however of him disagreeing with his father, voting contrary to the resolutions passed by his parents during these four years, opposing or having independent contrary views or direction after he became a Director and between April 2001 and March 2002.

[169] The direction and strategy as to the affairs of CCC 396 was set by Mr. Burdet who:

(a) owned the Majority of units;

(b) voted the shares of ETRE in which he had signing authority;

(c) made the final decisions as trustee of the Burdet Trust in involving all material matters which included the purchase and disposition of assets and obtaining credit or loans from the Burdet Trust, which according to Ms. Strauss occurred to permit ETRE to extend credit to CCC 396;

(d) had multiple doctorate degrees including in business and

(e) demonstrated a strong personality in dealings with Minority owners and the City.

[170] In support of the above conclusion, Ms. Strauss in cross-examination as to her level of involvement stated that:

(a) she could not indicate whether ETRE sent CCC 396 more invoices than those produced by the defendants in exhibit 64;

(b) as to invoices from ETRE to CCC 396 dated May 31 and November 16, 1998 in the amounts of $4,000, $2,5000 and $4,500 for roof and steel deck repairs, was unable to indicate what the sub-contractors doing that work charged ETRE as to that work;

(c) did not know whether ETRE added a premium in its invoices to CCC 396 for work performed by and charges from trades doing work on the direction of ETRE for the condominium;

(d) as to the invoices from ETRE for its monthly condominium management fee, stated there was no management contract for such services between ETRE and CCC 396. She was then shown a formal but unsigned management service contract between those parties, exhibit Y, but stated she had no knowledge as to that contract;

(e) ETRE invoices to CCC 396 for time billed at the rate of $250 per hour, although not so stated on the ETRE invoice, was for the time of Mr. Burdet;

(f) she did not know whether the 8 invoices for Mr. Burdet’s time to research historical documents of CCC 396 in response to the Eberts Application in the amount of $600, $1,500, $1,250, $750, $600, $1,250 and $750 were supported by time dockets as to actual time spent;

(g) she had the same lack of knowledge regarding similar global invoices from ETRE for time of Mr. Burdet in 1999 regarding the ramp construction to the basement units including charges of $ 1,500, $1,259 and $2,500;

(h) she could not identify what two invoices from ETRE dated February 14 and March 6, each in the amount of $2,000, were for. These invoices cite Board resolutions which indicate CCC 396 is obligated to pay compensation to Mr. Burdet in those amounts for personal legal protection fees and damages to his reputation in carrying out his condominium responsibilities;

(i) she had little knowledge about lines of credit allegedly extended by ETRE to the condominium and charges in relation thereto;

(j) she understood the promissory notes from CCC 396 to ETRE enabled the condominium to pay its bills but as to her signature thereof, stated she “was not into financial matters like that”, “did not remember a lot of this”, “is not a financial wizard” , and did not know where the money to CCC 396 in support of the $30,000 promissory note to ETRE went;

(k) neither she nor Mr. Burdet worked for ETRE;

(l) Printel in its office inside Mr. Burdet’s condominium unit had multiple phone and fax lines and ETRE billed CCC 396 monthly for a telephone and fax line and equipment;

(m) her first priority was the care of her five children who were home schooled to the end of high school in one of the Burdet units in CCC 396.

[171] During the years 1998 to 2001:

(a) Claire Burdet was 17 to 21 years of age. She turned 18 in December 1998;

(b) LAB was 16 to 19 years old. He turned 18 in April 2000 and was 19 years old upon his election to the Board of CCCC 396 in April 2001;

(c) Laura Lynn Burdet was 13 to 17 years old;

(d) Marc Eric Burdet was 10 to 14 years old;

(e) Julie Eve was 7 to 10 years old.

[172] Ms. Strauss being one of the two attending Directors at Board meetings during these 4 years, with a Master’s in Fine Arts and home schooling their five children, gave lengthy testimony during this trial in a polite and non-confrontational manner.

[173] As counsel, Mr. Burdet conducted both this and the CCC 396 proceeding forcefully. This is a fact and not a negative criticism.

[174] Throughout these four years, the Board minutes reflect Mr. Burdet as having leadership as between himself and Ms. Strauss. He was the then President and Treasurer of the condominium and according to the Board minutes assumed the interface responsibilities with municipal officials, engineers, architects and dealings with Minority unit owners. He personally supervised periods of construction of the ramp project to the basement units. He chaired the few confrontational meetings with Minority owners during this 4 plus year period. He exercised the 18 basement votes and thereby controlled owner meeting voting, including any Majority owner challenges to Board decisions.

[175] On numerous occasions during his testimony, LAB, like his mother, was unable to identify specific charges from ETRE to CCC 396 with respect contractors having done physical work at the condominium and time charges by his father prior to him becoming a Director in April 2001. This is not surprising given that he was between 16 to 19 years old at the time and not an Officer or Director of CCC 396 prior to April 2001 when he was then 19 years old.

[176] LAB suggested in his testimony that he had personal knowledge about numerous invoiced charges to the condominium in 1998 and 1999 when he was 16 and 17 years of age. I doubt the accuracy of that testimony.

[177] What is surprising and material is the fact that no officer or director of ETRE testified in this trial. LAB acknowledged he held no such position.

[178] Accounting and bookkeeping responsibilities of CCC 396 were assigned to Mr. Burdet as Treasurer under By-law 7 passed in 1997.

[179] Paragraph 9.10 of the Burdet Trust provides that any shares in corporations owned by that trust shall be voted by the trustee Mr. Burdet.

[180] The Burdet Trust owned the shares of ETRE and Printel which operated out of one of the Burdet units in the condominium. Ms. Strauss indicated she “sort of managed Printel” which the defendants in their written submissions state belonged to Mr. Burdet.

[181] Given their ages, Claire and LAB performance of services within ETRE between 1998 to 2001 for CCC 396 were of a clerical nature. Given all the evidence including the age of Burdet children, ETRE was not directed by the Burdet children in its contractual relationship with CCC 396 between 1998 and 2001. The direction of ETRE as to such services came from Mr. Burdet including his decisions as trustee whether the Burdet Trust would lend money to ETRE to permit the latter to loan the same to CCC 396.

[182] Based upon:

(a) the above testimony of Ms. Strauss as to her lack of knowledge and involvement in the financial affairs of CCC 396, its relationship with ETRE, the nature of the individual transactions invoiced to CCC 396 by ETRE including the large quantity of Mr. Burdet’s time billed;

(b) a similar lack of knowledge by LAB during his testimony as to many particular expenditures invoiced by ETRE to CCC 396, his only recent knowledge as to the terms of the Burdet Trust and the fact that he was between 16 and 19 years of age from 1998 to 2001;

(c) Mr. Burdet’s right to vote the shares of ETRE;

(d) By-law 7’s assignment of the financial record keeping responsibilities of the condominium to Mr. Burdet as Treasurer and the engagement of ETRE to perform such accounting records;

(e) LAB’s testimony that his father made the final decisions as trustee within the Burdet Trust which would include investment, purchase and lending decisions of the trust;

(f) Mr. Burdet owned the Majority of units in CCC 396 and was its President, Treasurer and one of the two participating Directors during 1998 to 2001 until his 19 year-old son became the third director;

[183] It is clear that Mr. Burdet primarily was the one responsible for the contractual relationship and financial dealings of CCC 396 was between 1998 and March of 2002, including its relationship with ETRE, which according to LAB had no formal board of directors and made decisions based on input from his parents.

RELATED PARTY STATUS OF ETRE AND CCC 396

[184] Related party status between CCC 396 and ETRE is important for several reasons including:

(a) ETRE during the period 1998 to March 2002 was the principle service provider of CCC 396;

(b) Decisions during this four year period as to what services would be engaged from ETRE, the approval of its charges to CCC 396 for those services including ETRE’s profit margins, what money would be borrowed by the condominium from ETRE including the costs thereof and that portions of that debt in the form of promissory notes, are matters which were approved and signed by Mr. Burdet and Ms. Strauss pursuant to Directors’ resolutions they created and approved;

(c) S. 17(1) of the 1990 Act and s. 40(6) of the 1998 Act prohibited condominium directors from attending board meetings, be included in board quorum or voting on upon motions involving contracts or transactions involving the condominium in which they have a direct or indirect interest;

(d) The lack of quorum and the inability to vote upon and approve a material contract or transaction due to a direct or indirect interest therein, resulted in the lack of authority by CCC 396 as to many of the authorizations these two Directors approved over the four year period in favor of ETRE, which that corporation and plaintiffs by counterclaim now seek to enforce and claim recovery for. These Directors now put these resolutions forward as a shield to any challenge as to the decisions in issue.

[185] The defendants, plaintiffs by counterclaim, place importance upon the fact that all decisions at issue were made by Mr. Burdet and Ms. Strauss in their capacity as Directors and such Board decisions thereby bind CCC 396 and cannot therefore be successfully challenged in this trial.

[186] During this proceeding and in the CCC 397 Trail, the defendants argued strongly that CCC 396 and ETRE were not related parties based on accounting and audit requirements.

[187] The analysis of the issue as to whether CCC 396 and ETRE between January 1998 and March 2002, were related parties and whether Mr. Burdet and Ms. Strauss as Directors were permitted under s. 17(1) of the 1990 Act and s. 40(6) of the 1998 Act to approve transactions or contracts with ETRE are legal issues. Legal analysis of that issue is informed by consideration of related party status as considered by the accounting industry, including an auditor’s responsibility to inquire into and record related party status in their annual auditors report.

[188] Related party status between ETRE and the Directors of CCC 396 is important as s. 17 of the 1990 Act and s. 40 of the 1998 Act requirement that directors disclosure any direct or indirect interest they have in a transaction or contract with the condominium, that they abstain from voting thereon and are not included in determining whether quorum exists.

[189] Mr. Brazeau from the accounting firm M-L testified that based on the 1998 to 2000 condominium audit engagement he received from Mr. Burdet in 2001, the audit work indicated that between 80% to 90% of all annual costs of the condominium were billed by ETRE. He found that high concentration of services provided by one supplier unusual. That led him to ask questions to determine whether CCC 396 and ETRE were related parties.

[190] During the conduct of that audit, Mr. Brazeau noted that Ms. Strauss signed cheques on behalf of ETRE while she was also a Director of CCC 396. He noted the name of ETRE and its relationship to Mr. Burdet’s name.

[191] Mr. Brazeau asked Mr. Burdet who were the directors of ETRE. Mr. Burdet replied that that he did not know, had no authority to reveal that information and that such information in any event was irrelevant to the audit of CCC 396. I disagree with Mr. Burdet’s then position. His then declaration that he did not know who were the directors of ETRE was not accurate.

[192] Mr. Brazeau asked to see invoices from contractors performing physical work at CCC 396 which ETRE billed to CCC 396.. For reasons that became apparent during this trial, Mr. Burdet refused to provide these underlying sub-contractor invoices to ETRE which it then invoiced CCC 396. Rather than disclosing why he knew that invoices from sub-contrators could not be produced, Mr. Burdet instead debated the relevancy of that information.

[193] The Board lacked quorum without Ms. Strauss or Mr. Burdet until April 2001. Through ETRE, they had each had an indirect interest in ETRE’s material transactions with CCC 396.

[194] The Directors eventually terminated the audit services of M-L as Mr. Brazeau concluded he could not give an audit opinion due to the apparent related party status of CCC 396 and ETRE and because the information he requested as to ETRE would not be disclosed. As Chairman at a subsequent meeting of unit owners, Mr. Burdet stated that M-L had failed to perform their duty as auditors, had never been technically appointed as auditors by owners and had been terminated by the Directors. What he failed to disclose was the nature of the disagreement with M-L and the fact that M-L had billed the condominium some $22,000 for such audit services based on the engagement by and instructions from Mr. Burdet on behalf CCC 396, which the Directors then disputed.

[195] Between 1998 and March 2002, the Board minutes record no declaration of interest or discussion by Mr. Burdet, Ms. Strauss or LAB, nor their abstention from voting as to CCC 396 engaging the services of or specific transactions with ETRE, nor as to other subjects which were for their direct and indirect benefit.

[196] In his testimony, Mr. Lagassé stated that in preparation of his 2002 audit report and financial statements, he did not address whether ETRE and CCC396 were related parties. He testified however that ETRE and CCC 396 were related parties as the same people in each corporation were directing the management of those two corporations. Mr. Brazeau came to and reported the same conclusion.

[197] Note 5 of the 2002 financial statements prepared by Mr. Lagassé refers to the relationship between ETRE and CCC 396 and invoicing for and providing such a high component of the annual services of the condominium including the lending of money to it as “this special situation”. He then states that special situation should be periodically disclosed and re-confirmed by the owners’ approval thereof at their AGM in accordance with s. 40(8)(b) of the 1998 Act. The “special status” Mr. Lagresse records in his 2002 audit report, is the related party status of CCC 396, its Directors and ETRE as he testified to.

[198] The AGM minutes of CCC 396 between 1998 and March of 2002 contain no s. 17(1) or s. 40(8)(b) disclosure of the interest of the Directors or related party status as recommended by Mr. Lagassé. That status was questioned repeatedly by Mr. Brazeau and dismissed by Mr. Burdet as an inappropriate audit consideration in 2001. Mr. Burdet and Ms. Strauss as Directors relied upon those inquiries and report of Mr. Brazeau to justify their termination of the M-L firm after incurring substantial liability at the expense of the condominium.

[199] As to ETRE, Ms. Strauss testified that it had a list of service contractors and some of her children’s friends helped from time to time with activities performed by ETRE.

[200] Although incomplete, the evidence of LAB provided further insight as to ETRE and why Mr. Burdet would not answer Mr. Brazeau’s disclosure questions in 2001.

[201] In his testimony, LAB stated that:

(a) his father and mother had signing authority as to contracts and cheques for ETRE starting in 1993 and thereafter, for at least 5 years;

(b) the shares of ETRE are owned by the Burdet trust;

(c) the Burdet Trust continues to exist, but Mr. Burdet was no longer the Trustee thereof. LAB in alleged that he did not know who is now the Trustee of the Burdet Trust of which he was a beneficiary;

(d) the Burdet Trust holds shares in the Printel corporation which operated out of one of the Burdet condominium units. He was unaware if Printel has any other shareholders.

(e) Mr. Burdet was the CEO of Printel for a time;

(f) he has now seen the Burdet Trust deed but had not seen it before; the assets of the Burdet Trust in June 2012 days before the start of the CCC 396 trial were transferred to ETRE, in trust. ETRE became the owner of the Majority units of the condominium in June 2012 but he does not allegedly know what consideration was paid for that transfer of title;

(g) over time, the Buret family counsel as to the Burdet Trust discussed matters related to CCC 396, Printel and ETRE and as trustee, his father had final say in decisions involving that trust;

(h) he was not a director of ETRE; and

(i) in June 2012, the shares in ETRE were transferred to a new trust. Exhibit 1 refers to the shareholder of ETRE being a numbered trust. LAB stated he did not know if he was a beneficiary in this new trust.

[202] LAB testified that ETRE used what he referred to as “jobbers” to do work at CCC 396 in addition to the work he and his siblings performed. He stated that ETRE’s “business model” involved it using jobbers and that they would not provide ETRE with invoices for the work performed. This therefore is at least one undisclosed reason Mr. Burdet would not produce invoices from ETRE’s sub-contractors for review at the request of Mr. Brazeau in 2001. LAB testified that CCC 396 received no warranties from jobbers for the work done at the condominium.

[203] An example of one such jobber citied by LAB was the use of a City snow plow operator who would plow the condominium parking lot as he passed by.

[204] LAB testified that with some unspecified exceptions, ETRE added between 5% to 10% onto the costs paid to the jobbers and that increased amount was then billed by ETRE to CCC 396.

[205] In explaining how the profit margin to ETRE for work performed was determined, LAB stated that if a jobber charged ETRE $4,600 for work performed and the condominium director’s resolution budgeted $5,000 for the work, CCC 396 would be invoiced $5,000 by ETRE with the $600 profit retained by ETRE. Budgeted expenditures, including time set and approved by Directors became very important to ETRE as in passing those budgets by resolution, the Directors were setting the amount of profit to be received by ETRE.

[206] LAB testified that his father and mother knew that ETRE was earning such profit margin above the costs charged by the jobbers to ETRE. That fact although known by these Directors was never disclosed in over four years in Directors’ minutes, not reflected in ETRE’s invoices to CCC 396 and not disclosed to Minority owners.

[207] LAB stated that as a condominium Director, he never declared any interest in transactions with ETRE because his interest therein was known by his father and mother as condominium Directors.

ETRE AND CCC 396 WERE ASSOCIATED, AFFILIATED AND RELATED CORPORATIONS

[208] ETRE was incorporated under the Canada Business Corporations Act, RSC 1985, c. C-44.

[209] During the period of 1997 to 2002, Mr. Burdet as registered condominium owner held voting control in CCC 396. During that same period, Mr. Burdet as trustee of the Burdet Trust exercised the voting rights in the shares of ETRE.

[210] As determined, Ms. Strauss was an employee of ETRE. She and LAB were beneficiaries of the Burdet Trust. It is highly likely that Mr. Burdet or Ms. Strauss were a director of ETRE at least until December of 1998 when Claire became 18, if not thereafter and prior to 2011.

[211] The CBCA which governs ETRE states that it may be affiliated and “associated” with another corporation “wherever and however incorporated”, thereby including CCC 396.

[212] S. 2 of the CBCA defines associate and affiliated corporations. Corporations are affiliated pursuant to s. 2(2) if each of them is controlled by the same person; namely the same person has a minimum of 50% of the votes in each corporation which may be cast to elect directors of the corporation.

[213] Under the CBCA, ETRE and CCC 396 were affiliated and therefore related corporations by way of voting control held in each by Mr. Burdet.

[214] Disclosure of invoices and charges by sub-contractors to ETRE, along with the nature and degree of the relationship between ETRE, Mr. Burdet and Ms Strauss as Directors of CCC 396, was inquired about and became an issue for M-L, retained by Mr. Burdet in 2001 to complete the 1998, 1999 and 2000 audits and financial statements of CCC 396.

[215] Mr. Burdet told M-L that ETRE, he and Ms. Strauss were not related parties, that such inquiry was not properly part of an audit and that the 3 years of financial statements of CCC 396 should be completed without inquiry or reference to related party status.

[216] M-L disagreed with Mr. Burdet and concluded that such a relationship, along with the failure to produce invoices of sub-contractors retained by ETRE to perform services for CCC 396, should be commented upon in its audit report to owners which it delivered in draft form and, following much debate with Mr. Burdet, were ultimately finalized and delivered to the Directors.

[217] This 14-year debate by Mr. Burdet in this and the CCC 396 Action that ETRE and CCC 396 were not related parties is and has been incorrect. CCC 396 has been charged substantial fees by accountants and lawyers in Mr. Burdet’s insistence that the two corporations were not related.

[218] Mr. Burdet retained Mr. Erfani in late 2001 to obtain an accounting opinion that ETRE and CCC 396 were not related corporations. Mr. Erfani was called as a witness in this trial by the defendants and plaintiffs by counterclaim to give that evidence as drafted in his report, exhibit BB. Mr. Erfani testified that the schedules to his report as an expert setting out the factual basis involving the two corporations upon which his one page opinion is based, were written by Mr. Burdet. Mr. Erfani then proceeded to “disown” his report, had no recollection of the issues or facts, was not therefore qualified as an expert and did not testify.

[219] Mr. Lagassé called by the defendants and plaintiffs by counterclaim testified that ETRE and CCC 396 were related corporations.

[220] The above debate and conclusions in M-L’s audit report of related party status led to the termination of M-L as auditors of CCC 396 by the Directors and Mr. Burdet’s engagement of the accountant Mr. Erfani to counter M-L’s report of related party status between the two corporations. It also led to Mr. Burdet’s subsequent engagement of Mr. Lagassé in 2002 to replace M-L and Mr. Lagassé’s September 2002 audit report and financial statements for the years 1998, 1999, 2000 and 2001.

[221] Mr. Burdet, Ms. Strauss and then LAB throughout the years in issue:

(a) never made such disclosure at a meetings of directors contrary to s. 17 (1) and (3) of the 1990 Act and s. 40(1)of the 1998 Act;

(b) were present at and frequently voted as Directors in approving such transactions with ETRE and personal matters contrary to s. 40(6) of the 1998 Act;

(c) never sought owner approval of such transactions until March 19, 2002 and then neither disclosed their personal interest nor in sufficient detail as required under s. 40(8)(b) of the 1998 Act.

[222] During the period January 1998 to March 2002, Mr. Burdet, Ms. Strauss and LAB after April 2001, regularly breached the prohibitions under 17(1) and s. 40(6) of the 1990 Act and the 1998 Act in attending and voting upon resolutions as Directors as to which one or all of them had a direct or indirect interest in the transactions approved.

[223] Ms. Strauss testified that the Burdet Trust advanced money to ETRE to pay or finance indebtedness of CCC 396, as reflected by the promissory notes from CCC 396 to ETRE. On that basis, Mr. Burdet as the only trustee of the Burdet Trust had to decide as trustee whether to, how much to and what would be the terms of money lent by the Trust to ETRE, to allow ETRE to advance credit and the terms of lending as reflected in the promissory notes now claimed against CCC 396.

[224] Both Mr. Burdet and Ms. Strauss were effectively negotiating and/or settling the loan terms as lenders and borrowers. Mr. Burdet did so as trustee of the Burdet Trust and as Director of CCC 396, in deciding what amounts to advance ETRE from the Burdet Trust, for what purpose and effectively the interest charges charged by ETRE and accepted by CCC 396. Ms. Strauss was doing the same thing as an employee of ETRE and a Director of CCC 396.

[225] With the 18 basement votes, coupled with his exercise of Majority voting rights in ETRE, Mr. Burdet, as President and Treasurer of the condominium had control of CCC 396 during the period in issue.

[226] The sources of this control and the multiple simultaneous roles of Mr. Burdet as President, Treasurer, Director of CCC 396 holding unit owner Majority votes and Majority voting rights of ETRE, dominated the affairs of CCC 396.

[227] There again was no law prohibiting Majority unit ownership or resulting voting control of a condominium. The issue is whether that control and authority as Directors and Officers were exercised appropriately pursuant to condominium legislation, the Declaration and the By-laws which in many cases did not occur, or whether it was exercised in an inappropriate, oppressive or unfair manner.

FEBRUARY 1998 AGM

[228] I repeat again the deference to be accorded to internal decisions made by directors of corporations. As in this case however, there are circumstances which require court scrutiny and intervention as to certain decisions.

[229] At this meeting, Mr. Burdet casted 21 votes, Ms. Strauss casted 1 vote for a total of the 22 of the recorded 32 eligible votes.

[230] The February 27, 1998 AGM minutes record that unit 101-D was in arrears for non-payment of common expenses for the months of January and February 1998 and could not therefore vote. Unit 101-C is recorded in these minutes as being in default of payment of 1 month of common expenses but paid the amount owing at the start of this meeting.

[231] This statement as to two unit owners’ arrears and the notation in these minutes that 32 units were eligible to vote contradicts the leger accounts of CCC 396 prepared by ETRE and relied upon by the defendants and plaintiffs by counterclaim in their exhibit 58, that unit account arrears owing to CCC 396 as of December 30, 1997, were:

(a) $1, 299 in the case of unit 101-C;

(b) $22,470 in the case of unit 101-D; and

(c) $1,504 in the case of unit 201.

[232] Audit reports and financial statements for the years 1996 and 1997 from McCay Duff were presented and adopted unanimously at this February 1998 AGM.

[233] No auditor was appointed at this AGM as required by s. 34(2) of the 1990 Act.

[234] Elected as voting Directors were Mr. Burdet, Ms. Strauss and Mr. Pierre Wistaff. Ms. Sheppard and Mr. Hooker who had been past voting Directors, were elected as non-voting Directors despite amended By-law 1 stating there were only 3 Directors in CCC 396.

[235] At this AGM, 8 Minority owners of 11 units located on the first and second floors presented a motion to return to the agreed upon 3 votes for the 18 basement units. Mr. Burdet as Chair responded that proper documentation to so amend the Declaration was not available and every unit owner could vote. Minority owners pressed the point. A vote by owners was held. Mr. Burdet and Ms. Strauss used their 22 votes to defeat this motion.

[236] Mr. Burdet as Chair announced the Board was tasked with replacement of the landings of the condominium. This refers to the several sets of exterior stairs to landings at the doors entering the main building. The Minority owners stated the landing project must not proceed until presentment of full plans, cost estimates and approval by each owner.

[237] The ability to see the scope of work, the plans and the cost estimates prior to undertaking the work in a 33 unit condominium was a reasonable request. If this landing project constituted a substantial alteration to common elements, which it did, construction thereof required approval of 80 % of unit owners under s. 38 of the 1990 Act and triggered buy-out obligations for owners opposing the project.

[238] Mr. Burdet’s response to this request was that “such matters are under the responsibility of the new Board”. Using their combined 22 votes, Mr. Burdet and Ms. Strauss defeated the motion for prior review and approval of drawings and construction cost estimates. They further breached the obligation to obtain approval by 80% of unit owners, which their 22 units did not constitute.

1998 BOARD MEETINGS

[239] At the end of this February 27, 1998 AGM, the new Board resolved to meet weekly and then appointed Mr. Burdet, Ms. Strauss and Pierre Wistaff President and Treasurer, Secretary and Vice- President respectively.

[240] Mr. Burdet and Ms. Strauss alone attended 26 of the 29 Board meetings in 1998.

March 9

[241] The Board resolved that cleaning services by CCC 396 were to be reduced. To ensure cleanliness, management would as necessary have common areas cleaned and a $50 per occurrence penalty would be charged to unit owners responsible for dirtying common areas.

[242] The Board also approved establishment of a condominium web site including a payment of a $500 set up fee to an unidentified party and $50 per month charge to “run the site”. The unnamed contractor referred to was ETRE.

[243] Why a 33 unit condominium required a website, beyond Mr. Burdet’s intention to rent out his 18 basement units, was not stated in the testimony of the two Directors who testified.

March 30

[244] These Board minutes indicate the fees of McCay Duff as auditors for the 1996 and 1997 audit and statements were too high. Mr. Burdet was authorized to negotiate a reduced billing and seek new alternate auditors for 1998.

[245] Board minutes were dictated by Mr. Burdet.

March 30

[246] The March 30 minutes indicate Mr. Burdet’s inability to distinguish between the interests of the condominium versus the interests of individual unit owners. The minutes record that two Minority unit owners offered to pay $6,000 to Mr. Burdet if he would agree to the Declaration amendment decreasing the basement unit votes to 3. The Board minutes state that “the owners of Level A simply could not accept such unrealistic offer”. This was negotiations between unit owners and did not involve CCC 396. This inability to distinguish between his personal interests and those of the condominium soon became critically important and resulted in enormous costs to CCC 396 for matters he approved as a Director and caused to be billed to the condominium which in fact were to benefit Mr. Burdet personally and his family.

[247] By resolution, the Board accepted a proposal from ETRE to resolve the water table issue causing water infiltration into the basement units and authorized payment of up to $5,000 for the same. I find as a fact that Claire Burdet and LAB, then 17 and 15 years old and not then directors or officers of ETRE, did not prepare work specifications for these contract bids. Clearly that work was done by Mr. Burdet for ETRE.

[248] These minutes state ETRE was only one of several bids submitted to do this work. The bid submitted by ETRE and approved by these Directors involved the engagement and use of a construction sub-contractor to be engaged by ETRE to do the work.

[249] The court concludes such contract estimates were prepared for or obtained by Mr. Burdet to be submitted to the Board in the name of ETRE, which was then approved. There is no evidence as to what was the profit margin of this work ultimately billed to CCC 396 by and paid to ETRE for this work.

[250] The minutes contain no disclosure of interest by Mr. Burdet or Ms. Strauss regarding ETRE, as required. Both Directors voted to select the bid of ETRE and authorized expenditure of up to $5,000 by CCC 396. This failure to report this direct or indirect interest occurs on many subsequent similar Director resolutions approving work to be performed by or through ETRE.

[251] Mr. Burdet and Ms. Strauss had the added requirement of s. 24(1) of the 1990 Act to “act honestly and in good faith” as Directors of CCC 396. Passing bids through an intermediary corporation you incorporated and controlled given the then age of the Burdet children for the purpose of generating undisclosed profit to it as their intermediary or agent at the cost of CCC 396 was not acting in good faith. CCC 396 could have obtained that contractual service from the same “sub-contractor” directly, absent ETRE’s profit mark up.

[252] In addition and as will be seen later, Mr. Burdet charged the condominium for his time to observe and supervise work being performed by ETRE’s sub-contractors.

[253] A further resolution was passed to budget $1,250 to prepare drawings for the new façade of the condominium building. The minutes state that the resolution passed at the February 28, 1998 AGM was for the replacement of the landing and granted the Directors authority to approve and proceed with this work and that owner approval was not required. That resolution breached s.38(1) of the 1990 Act which states that a condominium “may by a vote of owners who own 80% of the units make a substantial alteration to the common elements. CCC 396 could not make such an alteration without approval of 80% or unit owners. Mr. Burdet at the time owned less than 80% of the units required to approve such expenditures.

April 27

[254] These minutes state that input from owners as to the new veranda project was negative and the belief of the two Directors that such project must proceed promptly, ignoring the s. 38 requirement of 80% owner approval.

[255] At this meeting, these two Directors mandate Mr. Burdet to obtain a legal opinion from the lawyer of CCC 396 at a cost of up to $500 as to the position of CCC 396 regarding the voting rights for the 18 basement units because Minority unit owners had threatened legal action in response to Mr. Burdet’s position that he held and could exercise 18 basement votes. As registered owner of those 18 units, the minutes do not record Mr. Burdet’s personal interest in this legal service engagement transaction as required under s. 17 of the 1990 Act. As owner, Mr. Burdet personally stood to benefit from this legal opinion. Mr. Burdet needed this opinion personally, not CCC 396. The Directors failed to distinguish between his personal interest and those of CCC 396.

June 15

[256] These same 2 Directors resolved to proceed with the veranda alteration project.

June 22

[257] These 2 Directors pass a motion and budget $1,500 for drawings to construct a wall on the second floor, to separate two units owned by Mr. Burdet from another unit from which noise could be heard and cigarette smoke was emanating. Once again, these Directors do not identify or record the personal interest of Mr. Burdet as to “any transaction to which the corporation is a party” as required by s. 17 of the 1990 Act. The drawings’ cost of $1,500 plus the construction cost incurred involved his personal interest and if material in amount under s.17(2) which is not addressed in the minutes, prohibited Mr. Burdet from voting thereon under s. 17(4).

July 27

[258] One of the Minority unit owners was a firm of architects who complained to the City’s building inspection branch regarding the veranda construction project. The minutes state such complaints have no merit and therefore the Directors, referring to Mr. Burdet, was to be paid his billable time by CCC 396 in responding to the City in relation thereto. On August 2, ETRE billed CCC 396 3.5 hours of Mr. Burdet’s time at $250/hour, namely $936.

August 24

[259] Some Minority owners asked to examine corporate records of CCC 396. The minutes state such owners might not do that carefully. Resolutions were passed that folder records would only be provided to such owners one at a time and the time by management or Director was to be paid to prepare for and attend this record examination. Four hours of time reimbursement was budgeted. On October 30, ETRE billed CCC 396 $1,070 for four hours of Mr. Burdet’s time at $250/hour for this task. The hourly fee for this limited task exceeded a reasonable charge for a member of management or a Director to attend the examination of condominium records. The obligation of Directors to act in good faith under s. 24(1) of the 1990 Act was not met. A Directors resolution approving such conduct does not change that.

[260] Ms. Lomow, a previous President and Director of CCC 396, and other owners testified that despite repeated requests, the Minority owners were being denied financial information by Mr. Burdet in regards to the operation, management and expenses of CCC 396. The absence of AGMs and audited financial statements for four years corroborates this testimony. In this particular instance, the response was to charge owners $1,070 to obtain access to some condominium information.

[261] Directors should not be charging their time to provide owners with information the legislation required audited reporting of which did not occur in CCC 396 for four years.

RAMP CONSTRUCTION

September 21

[262] These Board minutes state that the veranda design was becoming very costly and technically problematic. This confirms this veranda project was a substantial alteration of common elements and required approval by owners of 80 % of the units under s. 38 of the 1990 Act.

[263] The minutes state that a “new solution was proposed for the veranda” without identifying who the proposer was. The new solution would include “an entire new entrance into the building, one with rolling access which currently does not exist,” would “improve safety for the Level A units” and would “significantly change and improve the frontal view of the building …”.

[264] In these minutes, Mr. Burdet is proposing the excavation and construction of a new vehicle ramp down to the bottom of the basement units he owned. The benefits to the 18 basement units are obvious which included the ability to move things like pianos, musical amplifiers and storage items directly into the basement units without walking up or down flights of stairs to the basement.

[265] This was a substantial alteration of common elements under s. 38. Mr. Burdet’s interest therein as owner is not disclosed in these minutes in which the two Directors resolved to study this new solution.

September 28

[266] With no mention as to their interest, Mr. Burdet and Ms. Strauss again passed a resolution directing construction of the newly proposed vehicle ramp down to the basement units. The minutes state that such construction will “permit level A basement owners, (Mr. Burdet), to prepare the redesign of level A space in a cooperative manner”. That refers to a draft agreement he had prepared to permit access to the basement to Minority owners to allow them to use the freight elevator from the basement rather than accessing it on the 1^st floor.

[267] Mr. Burdet’s proposed redesign of basement level space to provide Minority units with access to the elevator via the basement was intended to hopefully obtain the 80% unit owner approval, and the resulting assumption by 15 units of 84% of the ramp construction cost, as to which costs the 18 basement units combined would only be responsible for 16 % of that design and construction cost.

[268] The September 28 minutes record no personal interest of either of the two Directors, nor the need that this common element construction be presented for approval by the owners of 80% of the units under s. 38. Mr. Burdet improperly voted on this resolution. There was no proper quorum to approve this resolution.

[269] The ramp construction was pursued by Mr. Burdet and approved by he and Ms. Strauss at substantial cost to CCC 396 contrary to s. 38 of the 1990 Act.

[270] The 80% unit owner approval required for a substantial change of common elements under s. 38 of the 1990 Act must be obtained prior to the commencement of the change, alteration or addition: Ciddio v. York Region Condominium Corp. No. 730 [2002] O.J. No.553 para. 30.

[271] Construction of the ramp subsequently commenced. Mr. Burdet charged many hours to CCC 396 to obtain and re-obtain the ramp building permit, meet with City inspectors in relation to the same and personally supervise and observe construction as it was carried out. In doing so and charging CCC 396 for a great amount of time as will be seen, Mr. Burdet as a Director was not acting in good faith under s. 24 of the 1990 Act.

[272] The City subsequently repeatedly halted this ramp construction. Mr. Burdet and Ms. Strauss as Directors vigorously opposed the City’s positions thereon. Mr. Burdet improperly charged a large number of hours through ETRE in his response to and opposition of the City as to halting this project.

[273] Mr. Morris as to Mr. Burdet’s repeated efforts to construct the ramp to his basement units stated that:

(a) Ramp construction began in April 1998 without a building permit. A permit was issued after commencement of construction and then revoked by the City on July 2, 1999;

(b) The City issued compliance orders as to the ramp construction dated January 8, 1999, and April 15, 1999 as well as an order to remedy an unsafe building dated July 22, 1999. Such orders were not complied with and on March 20, 2000, the City charged CCC 396 with committing 5 offences under the Building Code Act;

(c) The City directed CCC 396 to fill in the ramp excavation. Mr. Burdet refused. The City accordingly filled in the excavation, billed CCC 396 for its work and registered a corresponding lien against Mr. Burdet’s units which Mr. Burdet would not pay;

(d) The City commenced an application as to the ramp construction under the Building Code Act and on March 3, 2000, Kealey J. ordered that a lien for $3,826.42 be registered against units owned by Mr. Burdet in relation thereto;

(e) On July 21, 2001, the City issued a further order to remedy an unsafe building condition related to further stop work orders as to the ramp construction, dated March 27, 2000 and February 1, 2001;

(f) In November 2001, Mr. Burdet was served with three more compliance orders by the City;

(g) Mr. Burdet was charged under the Ontario Building Code Act. The prosecution thereof was to proceed to trial on December 19, 2001 relating to the above building entrance, balcony and basement construction;

(h) Mr. Burdet was threatening to remove the common element exterior balconies and stairs which would seriously impede access for Minority owners.

[274] The defendants led no evidence to contradict the above facts by Mr. Morris.

[275] As Directors, Mr. Burdet and Ms. Strauss eventually decided that CCC 396 would plead guilty to the violation charge by the City as to the ramp construction.

[276] The large ramp construction and costs incurred were contrary to the requirements of s. 38 and despite the opposition to the project by Minority unit owners who owned in excess of 20% of the 33 units.

[277] The physical construction costs to excavate and build a double vehicle wide ramp and adjoining stairs to the basement, commenced on two occasions during the years in issue, are not in the invoices produced by and therefore exceed ETRE’s invoices for the time of Mr. Burdet on this project.

[278] One of the promissory notes to ETRE and claimed by it and the plaintiffs by counterclaim is identified as ramp and City litigation. It was for the time of Mr. Burdet in supervising construction and for dealings with the City as stated in the ETRE invoices and its line of credit, not the hard construction costs.

[279] Note 11 of the 1998 to 2001 CCC 396 annual financial statements prepared by Mr. Lagassé in September 2002, states that four unit owners, referring to Mr. Burdet, Ms. Strauss and 1457563, were “absorbing the bulk” of the construction cost for the access, delivery ramp and staircase being constructed and that CCC 396’s share was “by agreement” less than “$5,000.” The $16,000.00 ramp and City/ litigation promissory note of January 7, 2000 is three times that amount. There are no unit owners or Directors minutes produced ratifying any such agreement. This information must have come from Mr. Burdet who engaged and was dealing with Mr. Lagassé in the preparation of these financial statements in 2002.

[280] There was no testimony that the Burdet family or interests paid for all or any of the hard construction costs of this ramp construction.

[281] By 2002, Mr. Burdet in the issuance of Mr. Lagassee’s financial statements was publically conceding that the 18 basement units he owned were the beneficiaries of the ramp construction and as such CCC 398 and the Minority unit owners should not be paying for it as a common expense.

October 26

[282] These Board minutes report that acts of vandalism had been committed. These two Directors resolved to increase security via security rounds to be conducted by unidentified persons. The Directors then budget $150 per month for security walks at least 3 times per week. ETRE is not mentioned in this resolution nor are the Burdet children. ETRE subsequently invoiced CCC 396 $150 per month for security walks in 1998 and subsequent years. The evidence indicates that these of work day security walks were performed by members of the Burdet children as they left the building at the end of the day and by staff members of Printel if they were working late.

EBERTS APPLICATION

[283] Matters within CCC 396 became much worse upon the commencement of the Eberts Application in November, 1998. CCC 396 and Mr. Burdet were the respondents in that proceeding.

[284] The evidence establishes that as Directors, Mr. Burdet and Ms. Strauss did not deal appropriately with the Eberts Application. They expended great amounts of financial resources of CCC 396 in defending this proceeding which was a dispute between the Minority owners and Mr. Burdet with regards to the 18 voting rights of his basement units.

[285] The issue of voting entitlement of the 18 basement units was not in fact or proportionally of common interest to Mr. Burdet as owner thereof and CCC 396.

[286] At issue in the Eberts Application was Mr. Burdet’s right as owner to cast 18 basement unit votes and thereby control ownership voting in CCC 396. A court’s decision of that issue would impact how many owner votes there were in CCC 396. That decision however was not about and had no impact as to common expense contribution obligations set forth in the Declaration which impacted CCC 396. The Eberts Application as argued was about the voting rights of the 18 basement units.

[287] It is noted that without the presence and argument by CCC 396 at the Court of Appeal in 2000, Mr. Burdet personally was successful in 2000 in overturning the 1999 Eberts Decision.

[288] The Eberts Application was issued November 8 and was returnable December 10, 1998. It ultimately was argued 8 months later on September 24, 1999 at which Mr. Burdet was successful.

November 9

[289] These Directors minutes record receipt of the Ebert’s application. Those minutes state that:

(a) CCC 396 will prepare and present a “vigorous defense, albeit without taking sides between litigating owner groups”:

(b) “The Board rapidly came to the conclusion that immediate and decisive action was in order to protect the corporation against a potential avalanche of actions” and “ a campaign of information gathering was recommended as the best basis for defending against such law suit”.

(c) “….. documentary research is of paramount importance”;

(d) The Board would take steps to prepare with the lawyers the defense of this proceeding;

(e) “… the lawyers must be provided all background info. …. A thorough search for documented evidence must be undertaken. Mgt will organize and coordinate all such aspects because it is the most qualified to perform such para-legal research. The stated cost of $120/hr requested by ETRE was accepted as a basis for such special activities, because it is felt that ETRE was best qualified to rapidly perform the task, due to its prior and current knowledge of this complicated situation”;

(f) The Board budgeted up to $16,900 in order to perform the above research work, to interview and select the corporation’s lawyer, prepare a responding affidavit of Mr. Burdet as President in response to the Eberts Application as well as prepare a preliminary factum in response to that application;

(g) Directors were to be remunerated at the rate registered in the by-laws. Mr. Burdet charged his time at $250/hr.

(h) The space occupied in the loading dock area by unit 203 owned by Mr. Burdet and the compensation it therefore owed to CCC 396, would be offset by the space the corporation would need in unit 203 regarding the Eberts Application;

(i) The Directors determined that given the adversarial nature of the condominium’s business, CCC 396 would now be charged a fee for the use of space to hold Board meetings, telephone, fax and website services from within a unit owned by Mr. Burdet formally provided free of charge.

[290] In November 1998 at the start of the Ebert Application, Claire Burdet and LAB we 17 and 16 years old respectively. The minute reference to “ETRE was best qualified to rapidly perform the task due to its prior and current knowledge of this complicated situation”, refers to Mr. Burdet given the then age of the Burdet children and the fact that he alone had been a Director of CCC 396 since 1993 and had been dealing with this voting issue at the Board level for some 5 years. I am not finding that the Burdet children did not copy or bind historical documents. Mr. Burdet however knew what information he was looking for.

[291] The Eberts Application sought:

(a) an order amending the Declaration to reduce the number of votes of the 18 basement units from 18 to 3 in conformity to the settlement of that issue with the previous owner Soloways and its holding company;

(b) an order that the Directors of CCC 396 account as to the 1997 and 1998 financial affairs of the condominium; and

(c) an order removing Mr. Burdet as President and as a Director of CCC 396.

[292] Remedies (a) and (c) are directed at and threatened Mr. Burdet personally, including his voting rights of the basement units. While recognizing Ms. Eberts success in that proceeding would change the number of condominium votes by reduction of basement unit votes to 3, that outcome would not directly harm CCC 396.

[293] The above remedy (b) was a legal requirement under the 1990 Act, was directed at Mr. Burdet and Ms. Strauss, would potentially be for the benefit of CCC 396 and was not the focus of the Eberts Application as argued.

[294] As to the purported risk of an “avalanche” of legal proceedings if Ms. Eberts was successful, the minutes do not state which owner(s) might challenge the 18 basement units owned by Mr. Burdet being limited to 3 votes. There is no evidence Messrs. Braun and/or Lelièvre objected to the reduction of basement units to 3 votes. There is no evidence either of them ever occupying their units. The Director and owners minutes did not record their attendance at such meetings.

[295] There is no evidence that any other unit owner at that time supported Mr. Burdet’s position that the 18 units should each be entitled to one vote. The evidence indicates that the Minority unit owners supported the relief Ms. Eberts was claiming and that Mr. Burdet knew that to be the case. There is no contradictory evidence as to this conclusion.

[296] The potential “avalanche of law suits” was an invalid attempt to justify expenditure of condominium assets for the benefits of Mr. Burdet personally, to double the lawyers opposing the applicant and enhance Mr. Burdet’s right to retain voting control of CCC 396. Board minutes never record Mr. Burdet’s personal interest. He as Director never abstained from voting on this subject.

[297] As a named party, CCC 396 would need to be legally represented in the Eberts Application. Given the relief sought was against Mr. Burdet and the basement unit votes he owned, the involvement of CCC 396 in this proceeding should have been limited to monitoring the proceeding and assisting the court as required. The role of CCC 396 and its counsel should have been neutral as between the opposing unit owners and their positions with repect to Mr. Burdet’s voting rights.

[298] The costs of CCC 396 as to this proceeding should have been minor as compared to those it incurred at the direction of and for the benefit of Mr. Burdet.

[299] Mr. Burdet and Ms. Strauss knew or should have known that as Directors there was a clear conflict of interest, should not have permitted Mr. Burdet to vote upon or conduct work on behalf of or instruct legal counsel of CCC 396 in this proceeding, all of which occurred.

[300] The evidence is overwhelming that these Directors engaged and instructed counsel of CCC 396 to “vigorously” defend this proceeding at substantial cost to CCC 396 and did so to advance Mr. Burdet’s direct interests as owner of the basement units.

[301] The point in the November 19 minutes regarding Mr. Burdet’s unit 203’s use of loading dock space indicates unequal treatment by the Directors as alleged by the plaintiffs. Some Minority owners were repeatedly fined during these years for leaving or storing things on the same loading dock, then being charged compound interest thereon and now claimed as owing as part of their Minority arrears.

[302] No fines or penalties are recorded in exhibit 58 against Mr. Burdet’s unit 203 for storing his or Printel’s materials on the loading dock. These minutes acknowledge he breached the same loading dock storage prohibition. The double and unfair standard by these Directors as to condominium rule violations is obvious as will be dealt with later in this decision.

[303] Storing historical condominium records in unit 203 to permit Mr. Burdet’s review thereof was for his personal benefit in preparation of his defense of the Eberts Application and to assist condominium counsel to “vigorously” defend that proceeding.

[304] Mr. Burdet had a personal interest to vigorously defend the Eberts Application and to conduct an extensive review of the historical documents of CCC 396. The personal lawyers of Mr. Burdet benefitted from and needed that level of research and preparation by Mr. Burdet. That distinction and resulting cost reduction is not reflected in the many subsequent Board resolutions and ETRE invoices as to this work.

[305] Reference to the “adversarial nature of condominium business” regarding the Eberts Application and the decision to have ETRE charge for services not charged in the past:

(a) Was a decision by these Directors to seek financial retribution because Ms. Eberts was challenging the basement units’ voting rights;

(b) Was as a result of the Minority owners were not accepting Mr. Burdet’s wish to construct a ramp to his basement units; and,

(c) demonstrates Mr. Burdet and Ms. Strauss’s inability to distinguish between the interests of CCC 396, their responsibilities as Directors to act fairly and their personal direct and indirect interests.

November 16

[306] At this meeting Mr. Burdet and Ms. Strauss as Directors determined that:

(a) The other unit owners needed to be informed of the financial impact of the “needed legal activity required to protect the Corporation … as soon as possible, but not at the risk of delaying the preparation activities for a defense ….”;

(b) Owners were to be advised of a first levy for legal costs as to the Eberts Application in the amount of $10,000, to be shared as per ownership of common elements;

(c) The Eberts Application also required an increase of the 1999 budget expenses for legal and administrative costs in the amount of $20/percent of common element ownership.

[307] The minutes state: “The possibility for the Corporation to counter-sue every individual owner and/or mortgagee opposing the status-quo naming them into the current action is discussed.” The Directors were deciding that Ms. Eberts and the other Minority unit owners were going to pay for challenging the voting rights of Mr. Burdet as to the basement units in the Eberts Application. This again reflects the Directors inability to distinguish between their personal interests and those of the corporation and their failure to act fairly towards unit owners.

December 8

[308] The minutes state that “the Corporation has no corporate agenda or mandate to modify the Status quo (18 votes for the 18 basement units) and shall therefore defend it on the grounds that it is the least costly option to the Corporation” and to “defend its current legal structure … and litigate accordingly”. This ignores what should have been the position of CCC 396 in this proceeding, namely this was a dispute amongst unit owners as to the voting rights of the 18 basement units and as a named respondent, it was required to monitor that application. The litigation result would determine the number of unit owner votes, unit owner decisions determined by such votes including the election of Directors. As a party, CCC 396 would be bound by the court’s determination thereof.

[309] This court’s role is not to second guess and overturn decisions by Directors made in good faith. However Mr. Burdet and Ms. Strauss were not acting in good faith pursuant to s. 17 of the 1990 Act in allocating to Mr. Burdet large time charges for document review and research as part of CCC 306’s “vigorous” defense of this proceeding. The resolutions having CCC 396 respond to this application in such a manner resulted in very large expenses part of which was then converted into promissory notes now claimed by ETRE just as occurred as to the ramp construction and the battles with the City as to that construction.

[310] What is fundamentally important as well is the condominium legislation`s prohibition against a director voting upon transactions in which they have a direct or indirect interest which Mr. Burdet had as owner of the basement units.

[311] Ms. Strauss’ testimony as to these Eberts Application expenditure authorizations was deficient and non-responsive to the issue. Her attempt to justify these expenditures was limited to her statement that CCC 396 was a party to the proceeding and therefore needed a lawyer.

December 9

[312] The Directors resolved to retain an Ottawa counsel and a second “condominium expert” legal counsel in Toronto to represent CCC 396 in the Eberts Application.

[313] These same minutes reflect information from “the group of owners supporting the Eberts application” to the effect that they will refuse to pay the above $10,000 levy and the increase of condominium fees to finance CCC 396’s “vigorous” defence of the Eberts Application to decrease the basement units’ votes to 3. The Directors approved a $125 per common element ownership interest levy and increase, for the purpose of financing its costs in the Eberts Application.

[314] Translated, the special levy for the Eberts proceeding of $10,000 amounted to:

(a) $88 for each of the 18 basement units; and

(b) by example, $763 and $688 for units 204 and 205 respectively.

[315] The new increase in condominium fees for 1999 represented an increase of 53.5% over the 1998 fees and remained at that level throughout 1999 to and including 2001. That monthly increase in common fees:

(a) represented an increase from $ 44.38 to $68.16 per month, or $818 per unit per year, for each of the 18 basement units ;

(b) in the case of unit 204, its fees increased from $380.99 to $585.09 per month, or $7,021 per year;

(c) in the case of unit 205, its fees increased from $343.84 to $528.04 per month, or $6,336 pe/r year.

[316] The 15 units on the first and second floors, of which Mr. Burdet owned 4 in 1998, were to pay 84% of the common expenses which now included large expenses for CCC 396 to “vigorously” oppose the relief sought to reduce the number of votes of Mr. Burdet`s basement units.

[317] The Minority owners of the 11 units did not pay the 53.5% increased common expenses levied in 1999 to finance CCC 396’s costs to defend the Ebert’s Application. They continued to pay common expenses at their 1998 rates.

[318] Regardless of the fact that such increase in 1999 common expenses and the special levy were imposed to pay for the condominium’s legal costs and Mr. Burdet’s time to “vigorously” defend the Eberts Application for his benefit, s. 32 of the 1990 Act required payment by owners of common expense fees as levied. S. 22 (5) prevented voting rights of owners in arrears unless a unanimous vote was required under the 1990 Act or by condominium by-laws.

DECEMBER 21

[319] At this meeting, Mr. Burdet stated that his attempts to secure loans and/or a line of credit, in anticipation of the high legal costs of the Eberts Application were largely unsuccessful. The minutes record him stating that an unnamed subcontractor which performed book keeping and business services for CCC 396 had agreed to open a line of credit for the condominium’s receivables and payables at a cost of 1% per month. The Directors did not wish to disclose that the service provider referred to was ETRE which subsequently charged CCC 396 12% compound interest, namely 1 % per month pursuant to this line of credit to finance the condominium’s “vigorous” defense of the Eberts Application which included large time charges by Mr. Burdet.

[320] Mr. Burdet and Ms. Strauss failed to disclose their interest in this lending transaction and breached their duty as Directors in voting thereon.

[321] As to ETRE, Claire Burdet and LAB at this point were 18 and 16 years old respectively. The court concludes Mr. Burdet himself secured this financing from ETRE for CCC 396 to “vigorously” defend the Eberts Application, to protect his right to the basement Majority voting control and pay for the condominium’s upcoming legal fees in this proceeding by two law firms and his time charges in relation thereto.

[322] I have already referred to the testimony of Ms. Strauss that the financing or credit originated from the Burdet Trust in which Mr. Burdet was trustee and Ms. Strauss was beneficiary and came through ETRE to CCC 396. The involvement of the Burdet Trust and the Directors’ interests are not recorded in the Board minutes.

[323] There is no evidence as to the costs of ETRE and the Burdet Trust as to the credit provided to CCC 396. There is no evidence from ETRE as to how much it advanced to CCC 396 and when beyond the recording of liability on the GLs of CCC 396, prepared by ETRE.

ETRE INVOICES IN 1998

[324] There is no evidence that CCC 396, with 15 above ground and 18 basement units, prior to 1998 required:

(a) a line of credit, on which it paid 12% monthly compounded interest for the next four years;

(b) weekly Board meetings for which Directors were paid to prepare and attend;

(c) weekly rental of a room to permit Directors to talk about CCC 396;

(d) it’s own office, telephone line, fax line, web site and the need to pay a monthly fee to monitor the same;

(e) to pay its Officers or Directors an hourly fee of $250/hr. to address condominium matters.

There was no such evidence because there was no such need in a 33 unit condominium prior to these Directors “self-management” thereof.

[325] The 12% monthly compound interest line of credit liability put in place by Mr. Burdet and approved by he and Ms. Strauss as Directors was not justified in testimony. Simply pointing to the level of costs generated within CCC 396 begs the question as to the validity of much of those expenses. That high interest borrowing cost however:

(a) generated large expenses to CCC 396;

(b) thereby “supported” the need of such line of credit;

(c) periodically had portions thereof carved off into promissory notes payable to ETRE now presented as evidence of debt owing ETRE;

(d) was used to finance Mr. Burdet’s generated costs to CCC 396 to promote his interests in the Eberts Application, the ramp construction and its associated City litigation.

[326] These charges generated by Mr. Burdet and charged with interest by ETRE were invalid expenses to the condominium which then produced or contributed towards the need of other credit line charges, interest and promissory notes in favor of ETRE.

[327] In 1998, ETRE issued 44 invoices to CCC 396 totaling $60,155. Between October and December 1998, ETRE billed CCC 396 substantial amounts for Mr. Burdet’s time charges in relation to the Eberts Application to interview lawyers, research and examine historical condominium documents as well as deal with City officials with rspect to the ramp construction to the basement units and his time for record inspection “at a date other than mutually agreeable”, as follows:

(a) on August 3, $875 at a rate of $250/hr. for the proposed ramp construction:

(b) on October 30, $1,000 at a rate of $250/hr. for record inspection at a non-mutually agreed upon date; and

(c) Eight invoices each dated November 16 regarding the Eberts Application in the amounts of $600, $1,250, $1,500, $1,250, $750, $600 $1,250 and $750, for a total of $7,950.

[328] Mr. Burdet is not referred to by name in the above invoices. Ms. Strauss however testified that ETRE invoices charging at the rate of $250/hr. were for work done by Mr. Burdet. Mr. Burdet knew what the litigation issues were and what condominium documentation would support his desired outcome in this proceeding. This document research was not directed by either Claire or LAB, his then 17 and 15 year old children.

[329] Mr. Burdet made the decision to insert ETRE between himself and CCC 396 and to have ETRE invoice for his time rather than billing directly which he did on 5 occasions only in late 1999. By inserting ETRE to bill for his time, he was able to distance himself as President and a Director for liabilities he was creating to CCC 396. I do not accept the testimony of Ms. Strauss that she and Mr. Burdet had no personal involvement in ETRE.

[330] An assessment officer of legal fees would quickly conclude that the above rounded time charges, particularly on November 16, were time estimates and not actual time expended on the dates in question.

[331] The other almost $50,000 of invoices charged by ETRE in 1998 were for:

(a) individual items of repair work carried out by it or by unidentified contractors and

(b) annual service charges to CCC 396 from ETRE including it’s 11 months of back dated charges for room usage, telephone and fax lines, etc., first created on November 9, 1998 and then backdated in retribution.

[332] The 1998 charges invoiced by ETRE to CCC 396 include:

(a) $9,450 for the $250/hr. time charges of Mr. Burdet to prepare and register 2 liens against Minority units ($500), to assemble documentation for the defense of the Eberts Application ($7,100) and to research prior condominium documentation as to basement units voting rights ($1,850);

(b) ETRE’s service fee - $6,741;

(c) Elevator maintenance fee - $3,595;

(d) Director’s fees for Mr. Burdet and Ms. Strauss combined - $3,210;

(e) Use of boardroom space in one of Mr. Burdet’s units for weekly Board meetings attended by he and Ms. Strauss, who were there daily in any event, and back dated 11 months - $481;

(f) Monitoring of a web page for CCC 396 and back dated 11 months - $642;

(g) Fax monitoring and equipment rental and back dated 11 months - $160;

(h) use of one of Printel’s fax lines, back dated 11 months - $150;

(i) use of one of Printel’s telephone lines, back dated 11 months - $420;

(j) security walks outside of regular business hours a minimum of three times per week for 2 months - $321; and,

(k) $31,891 for assorted work including leak repairs, cleaning and garbage removal, tree removal, roof repairs, registration of domain name, technical documents for freight elevator, parking signs as well as loading dock roof, stair and tile repairs.

[333] The defendants submit that all of the above charges are valid as they were authorized by Directors’ resolutions. A number of these charges in addition to the Eberts and ramp and City litigation are improper charges to CCC 396.

[334] Monthly charges for telephone and fax lines, web hosting, boardroom and monitoring were not necessary, considered appropriate or fair charges to CCC 396 until Mr. Burdet and CCC 396 were served with the Eberts Application. Such retroactive charges clearly are invalid.

[335] Ms. Strauss testified that technical servicing of the single freight elevator when required was performed by a third party company and charged by ETRE in addition to the above elevator service fee. As to ETRE’s invoices for elevator service fees, she testified that her daughter Claire and son LAB would conduct monthly checks of the elevator fuses, whether there was water in the well below the elevator and whether the elevator door was operational. A freight elevator that becomes inoperable as a result of a burnt fuse or broken elevator door is readily apparent if and when that occurs. Verifying those elements on a monthly basis did not prevent the elevator from ceasing to operate for those reasons. There is no contrary evidence.

[336] Mr. Burdet, Ms. Strauss and their children were present daily in this condominium building where the children were home schooled in a Burdet unit. If one of them wished to check whether there was water in the well at the bottom of the elevator shaft, they had ample opportunity to do so.

[337] With respect to training their children, Mr. Burdet or Ms. Strauss opted to have their 16 and 18 year old conduct monthly monitoring of the elevators that:

(a) was of no need or benefit to CCC 396; and

(b) was or should be included in the monthly management fee charged by ETRE in any event.

[338] The Directors’ decision approving these monthly elevator service fees is a failure to act fairly and in good faith as required in s. 24(1) of the 1990 Act. Instead, these Directors approved unnecessary costs for the benefit of ETRE. It was in the interest of ETRE, the Burdet children as it was “their corporation” according to Ms. Strauss, and therefore to the indirect benefit of these parents that revenue be generated for that corporation.

[339] In 1998, these same two Directors invoiced $3,210 to CCC 396 for their preparation and/or attendance time at what had now become a weekly Board meeting held in a Burdet owned unit in the building. As stated above, Mr. Burdet, Ms. Strauss and the Burdet children were present in the building on a daily basis. Charging a board room rental fee per Board meeting in one of the Burdet units, in addition to their preparation and attendance fees for such meetings, was not a decision made in good faith for the benefit of the condominium. That was a decision to maximize financial return to ETRE at the expense of the condominium.

[340] As to the charges for telephone and fax services, Ms. Strauss testified that Printel’s office located in a Burdet unit had several telephone lines, some of which were used for fax equipment. She testified that Claire and Lynn Burdet being home schooled in Mr. Burdet’s unit, transcribed telephone messages for Printel. These monthly charges to CCC 396 are further examples of Mr. Burdet and Ms. Strauss failing to act in good faith with respect to the condominium and unit owners. They instead utilized existing costs of Printel to justify charges for the benefit of ETRE at the expense of the condominium and only did so in November 1998 in response to the Eberts Application and then charged those retroactively to January, 1998.

[341] The Directors presented no testimony why a 15 above ground and 18 basement unit condominium required such ongoing services.

[342] I have concern in regards to the monthly charges for security walks conducted at least 3 times per week before or after regular business hours. Ms. Strauss testified that these walks around the building or parking lot were done by Claire or Luc Burdet as they departed the building at the end of the day. She stated that employees of Printel had agreed that, should they be working late, they would walk around to check if there was anything noteworthy and advise accordingly. There is no evidence Printel employees were reimbursed for their observations upon leaving the building. LAB testified he and his siblings occasionally walked the property at noon hour or at the end of the day. He gave the name of two men who did the same in the early morning. As to these occasional walks by the Burdet children and Printell employees up[on departure, this is another instance of the Directors maximizing billings for ETRE at the cost of the condominium and unit owners instead of this “service” being part of ETRE’s management services which it charges monthly.

[343] What is troubling as to the aforementioned charges is the complete absence of AGMs of owners after the 1997 AGM completed in February 1998, the non-appointment by owners at an AGM of auditors, and hence the lack of audit reports and financial statements during this four-year period. This lack of reporting to owners prevented their ability to question these charges from ETRE.

[344] No testimony was presented to justify the Board’s failure under s. 34 of the 1990 Act, to hold AGMs of members, the owners’ non-appointment of auditors or the lack of annual audited financial statements during the years 1998 to 2001.

[345] Mr. Burdet and ETRE benefited from this absence of annual audit investigation, reporting and AGMs over four years during which very large debts were created which the plaintiffs by counterclaim now seek to enforce without the testimony of the principle architect of these charges, namely Mr. Burdet

[346] In conclusion, based on:

(a) The failure to prove on balance the need thereof and the benefit to CCC 396;

(b) The Directors’ failure to abstain from voting on transactions in which they had a direct or indirect interest in;

(c) Ramp construction and City litigation costs were for the benefit of Mr. Burdet and not approved at the time by owners;

(d) The Eberts litigation costs far exceeded CCC 396 limited monitoring role on an application;

(e) The lack of testimony as to how much of c) and d) above were paid;

the Court determines that the following annual charges to CCC 396 commencing in 1998 were invalid:

(i) Ramp construction and City litigation debt;

(ii) Eberts Application debt beyond a monitoring role;

(iii) Elevator monitoring fee;

(iv) Space charges for weekly Board meetings;

(v) Telephone, fax and website monitoring; and

(vi) 50% of security walks.

FINANCIAL DETERIORATION OF CCC 396

[347] In the years 1998 to 2001, ETRE invoiced CCC 396 a total of $239,712 as evidenced in exhibit 64. This amount does not include:

(a) $11,800 of time Mr. Burdet invoiced the condominium directly in 1999; and

(b) some $125,825 for time charges of Mr. Burdet approved by himself and Ms. Strauss in 2001.

[348] The following summarizes some of the information from exhibits 71 (McCay Duff), 77 (Lagassée) and 58 (ETRE accounts) as to the deteriorating financial condition of CCC 396 during the period of 1998 to 2001 and the comparison thereof to the period of 1995 to 1997:

Category	1995	1996	1997	1998	1999	2000	2001
Condo fees charged	$53.1K	$50.3K	$53K	$66.7K	$87.3K	$88.5K	$86.4K
Total Expenses	$41.3K	$35.1K	$33.9K	$63.7K	$117.8K	$120.9K	$197K
Annual Surplus (Deficit)	$13.1K	$16K	$17.54K	$3K	($30.5K)	($32.4K)	($110.6K)
Condo Fee	$1.4K	$2.1K	$1.3K	$9.1K	$35.6K	$83.9K	$100.9K
Owner penalties and Interest charge receivables	$0	$0	$0	$2.1K	$14.1K	$26.6K	$75K
Litigation Costs	$0K	$0K	$0K	$1.3K	$24K	$69.2K	$124.6K
Management Fees	$6.3K	$7.8K	$6.3K	$7.2K	$7.2K	$7.2K	$7.2K
Security Charges	$0	$42	$635	$321	$1.9K	$1.9K	$1.9K
Elevator Maintenance Fees	$3.8K	$3.8K	$3.4K	$3.5K	$3.7K	$3.8K	$3.8K
Directors’ Fees	$0	$0	$0	$3.2K	$2.6K	$2.9K	$6.4K
Line of Credit Liability – ETRE	$0	$0	$0	$24.6K	$12K	$20.9K	$59.1K
Promissory note liability ETRE	$0	$0	$0	$0	$78K	$113.9K	$121K

[349] Points of interest as to the above summary include:

(a) There were no penalty and interest charges to Minority owners until 1998, which then increased annually up to $75,000 in 2001;

(b) The annual management fees did not decrease despite termination of the third party property manager in 1996 in favor of self-management. Only the recipient of these fees changed;

(c) Annual condominium fees levied increased some 60% between 1997 and 2001;

(d) Annual condominium fees levied exceeded annual expenses until 1999 at which point annual expenses then and thereafter annually exceeded condominium fees levied, up to an annual deficit of $110,600 in 2001;

(e) Despite a 53.5% increase in common expense fees in 1999, CCC 396 operated at a substantial annual deficit, independent of the failure of Minority unit owners to pay the increased portion of the condominium fees levied. The cumulatively deficit of annual fees levied versus expenses for 1999 to 2001 totals some $173,500, before consideration of condominium fees not paid by the Minority owners during that period;

(f) With prior annual condominium fees of some $53,000 as before, such fees for all 33 units increased by a total of $117,000 during 1998 to 2001, of which the Minority failed to pay their share;

(g) had annual expenses continued at a level of $37,000, actual expenses during the four years in issue exceeded that level by a total of $356,000;

[350] The financial crisis in CCC 396 between 1999 and 2001 accordingly was not principally caused by the Minority refusing to pay the 1999 increased amount of condominium fees levied to finance the Eberts litigation costs which ended in the year 2000.

[351] In his November 25, 2004 Audit Report, exhibit 21, for the years 1998 to 2003, Mr. Brazeau adjusts the condominium’s annual expenses for 2003 excluding matters such as utility and litigation costs and arrives at an adjusted typical annual expense total of $23,234, or $34,024 including 2003 utilities. Expenses at that level for four and one quarter years total $106,250, or $144,602 including 2003 utilities. Those amounts are to be compared to five years of actual operating expenses incurred from 1998 to 2002 which totaled $563,000, excluding utility costs billed by and paid to such service providers.

[352] Average actual annual expenses reported by Mr. Lagassé are $125,000 or the $122,000 on average reported by M-L for the period of 1998 to 2001. These numbers far exceed the annual expenses, including utilities, recorded by McCay Duff for the years 1996 and 1997 which averaged $33,997 annually or M-L’s 2003 adjusted annual expenses including utilities of $34,024.

[353] The above $33,997 average annual expenses for 1996 and 1997 as reported by McCay Duff is comparable to and lends credibility to Mr. Brazeau’s Audit Report and its calculation of normal adjusted annual expenses for this corporation in paragraph 4 of $34,024.

[354] The actual annual operating expenses of this condominium in any event skyrocketed under “self-management” between 1998 and 2002. Those increases largely consisted of charges from ETRE until 2001 and then by Mr. Burdet directly in 2001 and included substantial time charges of Mr. Burdet regarding litigation, legal and accounting costs.

1999

[355] As evidenced in exhibit 64, ETRE invoiced CCC 396 $89,270 plus tax in 1999, consisting of:

• Interest charges to ETRE re Eberts litigation debt – amount unknown;

• Interest charges to ETRE regarding ramp construction debt -$1,120;

• $1,912 for Ms. Strauss’ time to review CCC 396 documentation for the defence of the Eberts Application challenging the 18 votes of the basement units owned by Mr. Burdet;

• $48,925 for Mr. Burdet time at an hourly rate of $250 for matters including interview of 5 potential law firms to represent CCC 396 in the Eberts Application, with respect to the voting rights of the basement units and meeting with the lawyer selected regarding that proceeding ($10,700); preparation of special levy for Eberts litigation ($250); meeting lawyer re unidentified Divisional court hearing ($2,500); review and preparation of documentation for Eberts action ($7,025); pre-excavation planning and meeting with Hydro, Bell and gas company ($750); meeting with lawyer for Minority owners re opposition to ramp construction and with City officials and utility companies re same ($7,500); preparation of compromise document to owners regarding unidentified matter ($4,000); preparation time regarding defamatory posting of derogatory comments regarding Mr. Burdet ($1,000); vandalism and speaking to police ($1,250); preparation and registration of 11 liens against Minority units ($4,950 being $450/lien); preparation of document responding to Minority unit owners ($1000); retaining the services of an engineering firm to obtain building permit ($1,500); ramp excavation site observation ($1,250);

• $7,200 Business service retainer ($600/month);

• $3,468 ($289/month) for elevator maintenance fee;

• $1,200 litigation accounting surcharge ($100/month);

• $3,900 to conduct parking lot security walks during off hours (3 times per week);

• $390 for room rental for Board meetings (26);

• $600 to read and record weekly carbon monoxide readings ($50/month);

• $600 for CCC 396’s web page hosting and monitoring ($50/month);

• $150 for use of one of Printel Corp’s fax lines and equipment rental ($12.50/month);

• $420 for use of a Printel phone line ($35/month)

• $905 of photocopying charges for court ordered production of financial documents in Ebert’s Application;

• $3,000 for building cleaning ($250/month);

• $2,702 for ramp construction stop orders and penalties;

• $8,636 for floor machine, security study, repair of leaks, door repairs, insulation, ladder rental, frozen pipe repair, repair of doors, light switches and locks, asphalt repairs.

[356] The two oldest Burdet children in 1999 were Claire who turned 19 in December, 1999 and LAB who turned 17 years old in April, 1999. There is no evidence these children did any of the above work beyond unspecified fax and telephone monitoring, walks through the building upon departure, verifying elevator fuses and well water and occasional recording of air quality.

[357] Other unit owners in CCC 396, according to Ms. Strauss whose mother tongue is English, had no linguistic need for meetings and documents to be in the French language. According to Ms. Strauss, all other unit owners except Mr. Wistaff were unilingual Anglophones. Mr. Wistaff was bilingual in English and French.

[358] Despite the above linguistic reality, Mr. Burdet after the commencement of the Eberts Application in November 1998 began to conduct any meetings of owners in French. He justified this as his right and he arranged for LAB to attend such meetings to translate to English what he as President was saying in French to owners, if required. At least one of the owners testified there was no simultaneous translation at owner’s meetings.

[359] All Board minutes of CCC 396 prior to 1999 are in English. Commencing in 1999, all Board minutes prepared by Mr. Burdet thereafter are in French as well as the French invoices from ETRE which according to Ms. Strauss Mr. Burdet dictated.

[360] The Board minutes dated January 4, 1999, following the November 1998 commencement of the Eberts Application, determined that since Mr. Burdet and Ms. Strauss were the only attendees at Board meetings, future Board meetings or minutes and accounts of CCC 396 would be in French. Ms. Strauss testified French Board minutes and the French ETRE invoices were dictated by Mr. Burdet. As part of this new policy, if future condominium documents produced in French were distributed in English to ensure clarity to the unilingual English unit owners, such translation to English would be charged to CCC 396 at the rate of $29 per page.

[361] Ms. Strauss testified that despite the fact that Board minutes during the years 1999 to 2001 were written in French, Board meetings with herself and Mr. Burdet were for the most part conducted in English. She could remember few details as to the switch of written materials to French commencing in 1999. She provided no evidence as to that need or the need to charge for translation.

[362] This new policy required that owners in arrears had to pay a translation cost to CCC 396 if they wanted French Board or management documents in English. All such owners were then in arrears in payment of the increased portion of their condo fees. This policy restricted the information readily available to the Majority of unilingual Anglophone unit owners. The evidence established no requirement of the corporation or owner to this change. This was another penalty of Minority owners created by the Directors for their challenge to basement voting rights and ramp construction.

[363] The issue as argued by Mr. Burdet is not his legal right to work in French, which this court accepts. The issue was the Directors’ obligation, under then s. 24(1) of the 1990 Act, to act honestly and in good faith and the fact this French first and English document for a fee policy was only implemented upon the commencement of the Eberts Application. There had been no need for this French policy in CCC 396 in 1998, or since 1993 when Mr. Burdet first became a Director. His capacity in English was evidenced by his doctorate degree obtained in the United States.

[364] Mr. Burdet had found another way to generate new revenue for ETRE.

ACKNOWLEDGMENT OF DEBT TO ETRE

[365] During the years 1999, 2000 and 2001, most of the Board minutes were accompanied by a monthly statement from ETRE as to its line of credit for CCC 396 and its promissory notes. By resolution, these two Directors approved each of these monthly statements from ETRE to remove any possible doubt as to its entitlement. Such repetitive protection by these Directors of an arm’s length creditor would be unusual. Such repeated approvals of liability owning to ETRE was not a requirement of CCC 396 and shows ETRE as being Mr. Burdet’s and Ms. Strauss’ principal priority.

January 4

[366] The Board budgeted 17 hours for Mr. Burdet to interview Ottawa law firms and select legal counsel for CCC 396 in the Eberts Application.

[367] In the same minutes, these two Directors then approved a $100 monthly fee increase to ETRE to track the financial costs of the Eberts Application. The Directors then increased the regular monthly fees payable to ETRE by an additional $75 thereby increasing again the costs of CCC 396’s “vigorous” defense of the Eberts Application.

January 5

[368] Mr. Burdet held a meeting with owners regarding the Eberts Application. No minutes of that meeting were taken but Mr. Burdet sent a summary letter to unit owners the following day. He indicated in that letter that despite what he anticipated would be costly proceedings; he as President of CCC 396 was determined to “put an end to campaigns of CCC 396 disinformation and to solve the situation once and for all”, which presumably refers to By-law 4 and the several above mentioned minutes between 1988 and 1995 reflecting an agreement to reduce the basement votes to 3. He states therein that CCC 396 should not be passive as a respondent in the Eberts Application, thereby indicating that CCC 396 would actively support his right to 18 basement unit votes.

January 18

[369] The minutes budget another 5 hours of time for Mr. Burdet to produce CCC 396 documents as ordered by the court in the Eberts Application.

[370] In these minutes, Mr. Burdet recognizes that Mr. Garland acting for CCC 396 in the Eberts Application may take an adversarial position supporting Mr. Burdet as to the 18 basement unit votes, if that is in the interest of the condominium. Mr. Burdet however had already determined and instructed such counsel that CCC 396 was to oppose the relief sought by Ms. Eberts. Previous Board minutes state the interests of CCC 396 dictate its “vigorous” defence of that proceeding. Mr. Garland was taking instructions from Mr. Burdet in this proceeding.

[371] These minutes with regards to the Eberts Application approved another $2,500 for review of condominium documents.

[372] These minutes also record that Mr. Burdet was to prepare and distribute a declaration for all unit owners to sign as to the past condominium history for use in the Eberts Application then authorize a $75 charge for translating it into English.

January 25

[373] The Board minutes state that:

(a) CCC 396 accepted the compromise position of Mr. Burdet as to the 18 basement units, thereby indicating that Mr. Burdet was negotiating with himself and accepting the point on behalf of CCC 396;

(b) budgeted 5 hours of time for Mr. Burdet to communicate with a former Secretary of CCC 396 as part of his historical condominium document research for the Eberts Application;

(c) authorizes $100 to translate a letter to owners requesting their assistance to retrieve missing historical condominium documents;

(d) budgeted 4 hours for the President to consider and respond to Mr. Wistaff’s letter regarding the basement units voting issue in the Eberts Application; and

(e) budgeted expenditure of up to $1,000 to purchase carbon monoxide monitors and a $50 per month fee to monitor air quality in the building which became the next new monthly charge from ETRE performed by the Burdet children.

February 1

[374] An additional 6 hours of Mr. Burdet’s time in dealing with the Eberts Application was approved. The minutes state that the document research he was conducting was bearing fruit, an obvious reference to his defense of the Eberts Application.

[375] Subsequent 1999 Board minutes approved more time for the President to obtain and research historical records of CCC 396 regarding the Eberts Application including:

(a) 3 hours and $500 on February 8;

(b) 15 hours plus $4,500 to travel to Toronto and interview lawyers with condominium expertise for CCC 396 on February 15;

(c) $3,000 to retain the services of accountants to validate Mr. Burdet’s analysis of the financial impact of voting rights on unit owners which would be used by CCC 396 to defend the Eberts Application and convince the Minority owners as to why the basement units should retain 18 votes;;

(d) 3 hours of the President’s time in dealing with Mr. Garland as recorded March 1;

(e) 2 hours of the President’s time on April 5 in dealing with Mr. Garland regarding the Eberts Application;

(f) 1 hour of the President’s time on May 1 in dealing with Mr. Garland as to the Eberts Application.

[376] According to exhibit 64, Mr. Burdet in 1999 directly invoiced CCC 396 $11,800 for his time regarding the Eberts Application. His invoiced time totals 47.2 hours. I do not accept that all or most of this time was needed by or for the benefit of CCC 396 in what should have been its monitoring role in the Eberts Application.

[377] On July 25, ETRE invoiced the condominium an additional $4,000 for Mr. Burdet’s time to meet and negotiate with Minority unit owners which was as to and to benefit his personal interests.

[378] As the primary respondent in the Eberts Application, Mr. Burdet was personally benefitting from the document review of CCC 396 records he was conducting. There is no evidence that Mr. Burdet’s actual time in such document search and review was discounted and if so, by how much in calculating his time charges to CCC 396 as to the Eberts Application. Mr. Burdet was not accountable to other unit owners as to these and other charges during the period 1998 to 2001. Nor was he going to be held answerable as a witness during this trial.

[379] Mr. Burdet and Ms. Strauss’ level of involvement to this degree as to CCC 396 in the Eberts Application was not for the primary benefit of CCC 396 or Minority owners. Their conduct and creation of this liability to the condominium was not performed in good faith as to the corporation and other owners. They knew or should have known their conduct was detrimental to the financial interests of CCC 396 and the other unit owners.

March 29

[380] These Directors rejected a unit owner’s request for a special meeting of owners regarding the Eberts Application. Given the announced large costs of this proceeding to the condominium and owners, any neutral director would have welcomed a meeting amongst owners in the hopes of resolving or limiting the negative impact to the corporation regarding the dispute as to their voting rights.

April 19

[381] The Board minutes indicate that the construction to repair the basement slab floor was halted by the City because CCC 396 lacked the necessary building permit. The minutes further indicate the delay in construction renders the basement units inhabitable in the interim. Mr. Burdet is mandated to apologize to the owners of the basement units and negotiate a settlement with them. Mr. Burdet thereby was authorizing himself to negotiate such loss of use claim with himself as owner of 16 of the basement units.

April 26

[382] The minutes indicate that management was to prepare a final draft as to the parking/veranda/ramp in order to resolve those combined construction problems as soon as possible. It was then determined that the 18 basement units were to be credited or relieved of their common expenses for a period of 6 months. Given Mr. Burdet’s ownership of such units, he and Ms. Strauss could have and should have put presented this waiver of liability issue for approval to the owners at the special owners meeting, similar to the one requested but denied on March 29.

[383] The necessity of obtaining a building permit from the City for ramp construction, compensating Mr. Burdet for his time in relation to such permit application and supervising ramp construction are contained in the Board minutes dated May 3, May 17, June 21 and June 28, 1999. These are not proper condominium expenses. Mr. Burdet was prohibited from voting thereon at a Directors’ meeting, which meeting therefore lacked quorum as per s. 16 and s. 17 of the 1990 Act.

[384] The July 12, 19, 26 and August 2 Board minutes accuse Ms. Eberts’ lawyer of causing the City to be concerned about the ramp construction. The City halted construction of the ramp in July. Mr. Burdet and Ms. Strauss budgeted additional time for Mr. Burdet in relation thereto and then state that the costs thereof are to be recovered from Ms. Eberts.The Directors were using CCC 396 to protect the interests of Mr. Burdet.

[385] According to exhibit 64, in June and July, 1999, ETRE invoiced CCC 396 some $12,500 for Mr. Burdet’s time in relation to the construction of the ramp to the 18 basement units. The benefit of this work was for the 18 basement units. Such construction of common elements was opposed by the Minority unit owners. No owner’s meeting was held to solicit 80% of unit owner approval of this construction which started but was then stopped by the City in July. These were invalidly approved charges to CCC 396.

September 20

[386] Board minutes indicate that Ms. Eberts requested a copy of CCC 396’s financial statements. The minutes authorize $2,000 for the cost to produce such financial statements. ETRE was charging a monthly fee to maintain such financial statements. This is an inappropriate charge to CCC 396.

[387] The Court in its reasons of the 1999 Decision granted the relief requested in the Eberts Application.

[388] No stay order of the decision by Kealey J was entered in evidence. There was no automatic stay of that decision pursuant to the then R. 63.01 of the Rules of Civil Procedure.

[389] Although not argued the “relief requested” in the Eberts Application included the removal of Mr. Burdet as a Director and President of CCC 396. If that court in fact granted that relief, the Board would lack the necessary quorum of 2 Directors at Board meetings as required under amended By-law 1 between November 19, 1999 and October 16, 2000.

[390] Mr. Burdet and Ms. Strauss continued to hold Board meetings and pass resolutions during that period.

September 26

[391] The minutes indicate that the 18 basement units remain unusable due to the unfinished basement repairs attributable to the City’s cancellation of the building permit. These Directors thereupon relieve the 18 basement units of paying any further common expenses until completion of such construction work. Mr. Burdet’s conflict of interest on this motion was again ignored as he reduced his common expense obligations to CCC 396.

November 22

[392] The Board minutes indicate 3 Minority owners requisitioning a special meeting of owners. The Directors denied the request as the 3 owners were in arrears of paying common expenses and could not therefore vote. Inability to vote due to arrears under s. 22(5) is not a pre-condition to the requirement under s. 19 which states that the Board shall hold a meeting of owners if so requisitioned by those owning at least 15 % of the units. Inability to vote is not equivalent to inability to speak.

November 22

[393] The minutes record the decision by Mr. Garland, counsel of CCC 396, that he could no longer take instructions from Mr. Burdet or the Board on behalf of CCC 396. These same Directors then retained Mr. Burdet’s personal legal counsel in the Eberts Application to represent CCC 396 and argue the issue of costs of that application. Cost liability as between CCC 2396 and Mr. Burdet were not identical nor necessarily compatible positions.

[394] The Directors then budgeted another 10 hours for Mr. Burdet’s time to prepare a list of legal questions to be determined in relation to the decision of Kealey J. Mr. Burdet continued to treat his position as that of CCC 396, which was not the case.

December 27

[395] In order to reduce the 1% per month compounded interest costs being charged by ETRE on its line of credit, Mr. Burdet and Ms. Strauss resolved to:

(a) Convert part of that line of credit liability into a $30,000 long term debt;

(b) Convert $28,000 of that credit debt attributable to the Eberts Application into a long term debt;

(c) Convert $16,000 of that debt attributable to the ramp dispute with the City into a long term debt;

(d) Convert $4,000 of that debt regarding litigation costs with unit owners into a long term debt; and

(e) Convert another $4,000 of corporate debt into a long term debt.

[396] There is no testimony as to how these allocation amounts were determined.

[397] On December 29, 1999 and January 20, 2000, Mr. Burdet and Ms. Strauss signed 5 promissory notes on behalf of CCC 396 to ETRE in the above amounts.

[398] By their terms, these promissory notes:

(a) are for terms of 36 or 48 months;

(b) bear interest at the rate of 7%, compounded daily; and,

(c) are payable on demand or by fixed monthly payments.

[399] According to Directors minutes, Mr. Burdet and Ms. Strauss authorize 3 more conversions of line of credit debt to long term debt to ETRE in the amount of $20,000, $30,000 and $9,000.

[400] The concern of this court as to the Eberts Application, the ramp and its related charges as explained above apply to the accumulated debt resulting therefrom which is then used to justify securing credit from and payment of high interest charges to ETRE.

[401] No AGM of unit owners was held in 1999 as required by s. 18 of the 1999 Act at which these costs and CCC 396’s “vigorous” defense of the Ebert would have been presented and permitted questions from owners and comment by the auditor.

[402] No auditors in 1999 were appointed by unit owners contrary to s. 34 of the 1990 Act.

2000

January 3

[403] The Board minutes indicate that these Directors again rejected the request of Minority unit owners for a special meeting of owners. The Directors then budgeted 3 hours of time for Mr. Burdet to write the owners and recommend they await the outcome of his appeal of the 1999 Decision. Obviously that was an inappropriate and excessive charge to the condominium.

[404] At that meeting, these Directors also:

(a) approved 3 hours for Mr. Burdet to review the City’s legal proceeding against CCC 396 regarding the ramp construction and $3,000 for legal fees in relation to the same;

(b) approved all Board decisions made in 1999, including reimbursements to the owners of the 18 basement units of which Mr. Burdet owned 16;

(c) reviewed the difficult financial position of CCC 396 and authorized Mr. Burdet to find a solution, including accessing the condo reserve fund;

(d) decided that a number of unspecified documents be translated from French to English and from English to French, “to maintain CCC 396’s position of neutrality and equal treatment of all owners,” and accordingly authorized the use of its unnamed sub-contractor which provided commercial services and accounting services to the condo, to provide regular translation services and to charge the condominium a $100 monthly fee in that regards;

(e) converted portions of existing line of credit debt into the first above 5 promissory notes, being an unidentified $30,000 of the existing line of credit, $28,000 regarding the Eberts Application, $16,000 regarding the City and ramp construction, $4,000 regarding the “owners” and $4,000 regarding corporate services.

January 10

[405] These Directors authorized payment of $1,000 to Mr. Burdet for threats made against him contained in a letter. There is no evidence who made such threats, the nature threof or whether such threats were against him personally or as a Director or Officer.

[406] In response to the 1999 Decision granting the Eberts Application, a special meeting of CCC 396 owners was convened by Minority owners on January 11, 2000.

January 11

[407] Mr. Burdet had Ms. Strauss attend this owners special meeting with his proxy for his unit votes. According to the minutes of that meeting in exhibit 44, Ms. Strauss abstained from voting and simply read a statement prepared by Mr. Burdet indicating that:

(a) there had been improper notice of the meeting to CCC 396 and some unidentified owners;

(b) that quorum for the meeting was “mathematically impossible to reach”;

(c) that it was not a legitimate meeting; and,

(d) “a significant number of unit owners are in arrears” in payment of their monthly fees and could not therefor vote.

[408] According to the minutes of this meeting, there were 9 of the 11 Minority owners present in person or by proxy and Ms. Strauss with proxy for the Minority units. Legal counsel for Ms. Eberts was also present.

[409] The minutes indicate that Minority owners signed documents stating they were not in arrears in payment of their condo fees. That position is contradicted by the GLs in exhibit 58 and the Majority’s admission at the commencement of this trial that they owed arrears of condominium fees and interest including for 1999.

[410] Exhibit 76 from M-L, records all 11 Minority unit owners being in arrears of payment of common expenses as of this January 11, 2000 meeting.

[411] Pursuant to s.22 (5) of the 1990 Act, Minority owners could not vote at this meeting. These resolutions were invalid.

[412] The Minority unit owners, with Ms. Strauss abstaining, passed resolutions removing Mr. Burdet and Ms. Strauss as Directors and Officers of CCC 396 and electing Mr. Hooker and Ms. Eberts as Directors and President and Secretary respectively.

[413] The “new” Directors retained CMG to manage CCC 396. CGM performed that role until release of the 2000 Eberts Decision reversing the 1999 Decision on October 16, 2000. CMG or the new Directors in the interim notified CCC 396’s bank and suppliers of the change in management and instructed them not to accept directions from Mr. Burdet or Ms. Strauss.

[414] These new Directors lacked authority to appoint CMG as property manager which charged a monthly management fee to CCC 396 until release of the October 2000 Eberts Decision.

[415] Minority owners in the interim paid their monthly condominium fees to CMG until release of the October 2000 Eberts Decision. The Majority units did not pay condominium fees to CMG during this 10-month period. ETRE continued to charge CCC 396 during this period its regular fees which Mr. Burdet and Ms. Strauss approved.

January 17

[416] The Directors minutes state that Mr. Burdet and Ms. Strauss are unable to access the bank accounts of CCC 396 and therefore authorize the use of credit facilities of ETRE. The new Minority Directors had issued new signing authority. Considerable time for Mr. Burdet was budgeted in subsequent Board minutes in 2000 before release of the October 2000 Eberts Decision to contest the decisions being made by CMG as property manager and as to condominium records it was asking for.

[417] In arguing with these commercial organizations including CMG , TD Bank and others and charging CCC 396 for his time to do so, it must be reimbursed that during this interim period that:

(a) the 1999 Decision. granting the relief sought by Ms. Eberts eliminated Mr. Burdet’s previous control of owner votes;

(b) the 1999 Decision states it grants the relief requested, which included removal of Mr. Burdet as a Director;

(c) the 1999 Decision it appears was not stayed; and

(d) service and product suppliers of CCC 396, including TD and CMG, were not responsible for the representations made to them by Minority unit owners representing themselves as the new and only Directors and Officers of CCC 396.

[418] The year 2000 GLS prepared of ETRE and its invoices reflect substantial time charges by Mr. Burdet in this interim period dealing with TD and CMG which are referred to as litigation with these entities and which are later converted into promissory notes payable to ETRE.

February 14

[419] Mr. Burdet and Ms. Strauss approved payment of $2,000 to Mr. Burdet for damages and legal costs to protect himself and his reputation. Mr. Burdet voted thereon. There was no quorum without him and no resolution without his vote which he should not have voted on.

March 6

[420] The Directors again approved an additional payment of $2,000 to Mr. Burdet for injury to his reputation in the exercise of his duties, along with another 3 hours for his time to address the ramp building permit issue with the City.

[421] If injury to the reputation of or threats to Mr. Burdet occurred, these payments were beyond and not simply indemnity for, “costs, charges and expenses that he sustains or incurs in respect of the affairs of the corporation,” pursuant to s. 25(1)(b) of the 1990 Act. The appropriate response was legal action to determine liability and damages against the perpetrators, not simply authorize global payments by CCC 396 to himself.

[422] The Board minutes contain letters to the TD bank of CCC 396 dated March 22, 29, May 3 and July 31 directing the issuance of bank drafts payable to Mr. Burdet in trust, in the amounts of $4,873, $3,700, $4,500 and $4,000 respectively. There is no corresponding Directors’ resolution authorizing these transactions.

July 14

[423] Mr. Burdet transferred title of three above ground units he owned to Ms. Strauss.

July 31

[424] The minutes reflect the fact that CMG had changed the door lock of the cleaning supply room located in common element space in the condominium. By resolution, Mr. Burdet and Ms. Strauss authorized the location of a new cleaning supply room in a unit they owned and then approved rental fee charges to the condominium of $450/month which thereafter were invoiced by ETRE to CCC 396. There is no testimony validating the need of a second cleaning supply room or the justification for these charges.

September 1

[425] Mr. Burdet and Ms. Strauss budget 3 hours for Mr. Burdet’s time to adjourn legal proceedings by the City which had charged CCC 396 with a violation regarding the ramp construction. These Directors subsequently determined that CCC 396 would plead guilty to this charge. This was an invalid charge to CCC 396.

[426] On October 16, 2000, Mr. Burdet’s successful appeal and the 2000 Eberts Application was released.

[427] CCC 396 did not have legal counsel and was not represented on this appeal by Mr. Burdet before the Court of Appeal in the Eberts Application. It appears a “vigorous” appeal by CCC 396 was not required.

[428] Thereafter considerable time was budgeted for Mr. Burdet to re-institute management of CCC 396 by himself, Ms. Strauss and to reinstitute ETRE.

November 6

[429] Mr. Burdet and Ms. Strauss budgeted 5 hours of Mr. Burdet’s time to research the language of work “issue” within CCC 396 and whether the condominium was required to provide free translation to owners. On November 8, ETRE invoiced CC 396 five hours of Mr. Burdet’s time for this work. A resolution was approved to charge $150 for the “translation” of its 3 letters in English sent to a unit owner. These are invalid charges to CCC 396.

[430] This French language change, the translation quarterly fees and the additional translation time charges instituted by Mr. Burdet were invalid expenses to CCC 396 and authorized by the Directors contrary to their obligation to act in good faith in their management of CCC 396. The purpose of these charges was to generate additional revenue for ETRE.

[431] Mr. Burdet and Ms. Strauss also budgeted Mr. Burdet’s time for several matters, including:

(a) 20 hours on November 13, including 3 hours to settle the Shepherd case, 3 hours to deal with accessing the condominium’s accounts and monies with TD, 3 hours as to the ramp charges by the City, 8 hours for the review of documents and 3 hours as to enforcement of By-laws against unit 101-D;

(b) 12 hours on November 27 for the same above matters;

(c) 13 hours on December 18, including 10 hours related to the charges of the City regarding ramp construction, 3 hours to open a bank account at another bank; and

(d) 2 hours on December 29 related to problems caused in relation to the ramp and City charge.

December 29

[432] A Board resolution was passed regarding the conversion of a portion of the condominium’s line of credit into long term debt of $30,000 regarding CMG and its management during the 10 month period and $9,000 for litigation against TD for its disregard of the true Directors of CCC 396.

[433] Mr. Burdet should not have been litigating against CMG and TD given the wording of the 1999 Decision and the Minority owners’ representations based thereon to third parties based on that decision. The issue was the conduct of the “new” Directors, not CMG and TD reliance upon such representations.

[434] In 2000, ETRE issued 91 invoices to CCC 396 totaling $74,206.

[435] ETRE invoices in 2000 for Mr. Burdet’s time were:

(a) $1,544 regarding the Eberts Application;

(b) $7,808 regarding the ramp construction and the City’s stop work orders;

(c) At least $26,000 regarding CMG’s 10 month position as property manager of CCC 396 and reinstituting management by the 2 Directors following the October 2000 Eberts Decision;

(d) $802 for a study as to a special meetings of owners;

(e) $1,337 for research regarding language of work.

[436] The expense in (a), (b) and (e) are invalid as against the condominium. There is no testimony as to the breakdown or validity of (c).

[437] In 2000, the remaining invoices from ETRE in exhibit 64 and its interest charges in the accounts in exhibit 58, include the following:

(a) Interest charges by ETRE on the Eberts litigation debt – $1,956;

(b) Interest charges by ETRE regarding the ramp construction debt - $1,119;

(c) Interest charges by ETRE as to other litigation debt - $279;

(d) $300 honorarium for Ms. Strauss, which she testified she never received;

(e) ETRE’s management service fee - $7, 704;

(f) ETRE’s elevator maintenance service fee - $3,826;

(g) Director’s fees for Mr. Burdet and Ms. Strauss combined - $2,782;

(h) Use of a boardroom in one of Mr. Burdet’s units for the Board meetings attended by he and Ms. Strauss - $417;

(i) Hosting of a web page and telephone line - $1,091;

(j) Fax monitoring and equipment rental - $160;

(k) Telecommunications - $448;

(l) Security walks of condominium property before or after regular business hours a minimum of three times per week - $1,926;

(m) Air Quality monitoring - $ 642;

(n) Translation service fee - $1,284;

(o) Litigation accounting surcharge (Eberts/City/CMG and other) - $1,284.

December 29

[438] CCC 396’s line of credit statement prepared by ETRE was approved by the Directors including the above charges. The Directors then decided to convert $20,000 of that line of credit into long term debt payable to ETRE.

TRANSLATION CHARGES

[439] Notwithstanding that newly created quarterly charge in 2000 for translation services, ETRE in addition charged an additional $250/hr. for Mr. Burdet to translate on multiple occasions, as contained in ETRE’s invoices to CCC 396 dated January 21, March 8, April 18, September 4, October 26, November 2 (two), 8 (two) 16, 18 and December 19, 2000. Those invoices do not segregate the translation charge portion. These time charges are in addition to the quarterly translation fee charged to the condominium and are also inappropriate but cannot be quantified as that evidence if only known by Mr. Burdet.

Litigation Accounting Surcharge

[440] For the reasons previously stated, CCC 396 should not have been charged litigation accounting fees for the Eberts Application and the ramp construction litigation.

[441] In addition to this new quarterly litigation accounting surcharge payable to ETRE, ETRE on September 30 and November 30 invoiced CCC 396 additional accounting charges of $642 and $628. Accounting was one of the main functions for which ETRE had been retained and charged as part of its annual $7,704 business service retainer. The Directors should not have been approving these additional accounting costs, particularly as to the above two matters.

OTHER CHARGES

[442] As to the year 2000, the GLs being Exhibit 58 and prepared by ETRE indicate that:

(a) The Minority owners continued to pay 1998 level of condominium fee;

(b) The 11 Minority owners combined owed cumulative ongoing condominium arrears in the amount of $83,977, as well as late payment charges and penalties totaling $56,539;

(c) Annual 2000 expenses exceeded levied revenues by $20,222;

(d) Long term liabilities are recorded as:

(i) Eberts Application -$28,000;

(ii) the City’s revocation of the ramp building permit and charge - $12,000 (decreased from $ 16,000);

(iii) CMG litigation - $30,000;

(iv) TD litigation - $9,000;

(v) Other litigation -$4,000; and

(vi) Corporate liability - $ 18,000.

[443] In 2000, no AGM of unit owners was held contrary to s. 18 of the 1999 Act. No auditors in 2000 were appointed by unit owners contrary to s. 34 of the 1990 Act.

2001

January 8

[444] The Directors converted portions of the condominium short term debt into long term debt payable to ETRE as follows:

(a) $30,000 – regarding CMG

(b) $ 9,000 – regarding TD

(c) $14,000 – regarding corporate responsibility

(d) $20,000 – from the line of credit from ETRE.

[445] These minutes state there is to be a loan agreement for each of the above 4 long term debts which are to be registered on title. No loan agreements or evidence of their registration was introduced during this trial.

March 12

[446] The Directors authorize 5 hours of Mr. Burdet’s time to re-submit the 1999 ramp building permit application to the City. This was not a proper liability of CCC 396.

April 6

[447] A special meeting of owners was called by the Directors and held on April 6. The 11 Minority units are recorded as being in arrears and unable to vote. Using 20 votes, resolutions were passed:

(a) removing Pierre Wistaff as a Director and Vice-President for non-attendance at Board meetings.

(b) LAB, then 19 years old, was elected as the third Director and Vice-President of CCC 396:

(c) removing Mr. Hooker and Ms. Sheppard as the two non-voting Directors due to non-attendance;

(d) removing McCay Duff as auditors because they had not acted in that role for the previous two years and because they for some unstated reason had acted detrimentally towards CCC 396. There is no evidence McCay Duff were asked to perform the audit of the condominium in 1998, 1999 or 2000 and refused. A change of auditors in any event is to occur at the AGM of owners. April 4 was not an AGM;

(e) in an attempt to override the requirement that it is the owners who must appoint auditors at an AGM pursuant to s. 34 of the 1990 Act, it was resolved that the Directors were to select new interim auditors of CCC 396 to prepare and present audit statements and reports for 1998 to 2000 and then be approved as auditors at the next AGM. The 18 basement unit votes were being used in an attempt to overcome the audit requirements of s. 34 of the 1990 Act;

(f) approving construction to improve access to the building, referring to the ramp construction to the 18 basement units. No mention is made of the approval requirement in s. 38 by 80% of unit owners which the Directors as owners did not constitute;

(g) Mr. Burdet’s was claiming damages of $15,542 for pain and suffering for being assaulted and for the risk and damage to his property, allegedly incurred in the performance of his functions as President and Director. Condominium management, or its lawyers, were instructed to negotiate a resolution of his claim for an amount not to exceed $5,000;

(h) directing the Directors and lawyers of CCC 396 to develop a law suit strategy against Ms. Eberts, her lawyer, several other unit owners and the principle of CMG for their contravention of the 1990 Act during the 10-month period in 2000 during which CMG acted as property manager as engaged by the two “new” Directors during this period.

April 17

[448] One of the Minority unit owners sold their unit to 1457563, which LAB has had some involvement in. With that purchase, Mr. Burdet, Ms. Strauss and 1457563 combined owned 23 of the 33 units which exceeded the reduced 66 2/3 unit owner approval required under s. 97(4) of the 1998 Act requirement to approve substantive changes to condominium common elements, which legislation came in force on May 5, 2001.

April 16

[449] The now three-member Burdet Board passed a resolution to pay Mr. Burdet $5,000 damages as one of the Minority unit owners, or their tenant, had been aggressive towards him. The minutes state Mr. Burdet’s damages were $563 out of pocket expenses and $5,000 general damages. Mr. Burdet improperly voted in favor of this payment to himself of