Application Re Condominium Board of Directors

Court File and Parties

COURT FILE NOs.: CV-22-677726-0000 DATE: 2022-04-13 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2030516 ONTARIO INC., 2535765 ONTARIO INC., 2370379 ONTARIO INC., TEWOGBOLA AJISEBUTU MEDICINE PROFESSIONAL CORPORATION, and AAKASH & NAVEEN INVESTMENT LTD. Applicants – and – 2230434 ONTARIO INC. and TORONTO STANDARD CONDOMINIUM CORPORATION NO. 2638, Respondents

BEFORE: E.M. Morgan, J.

COUNSEL: Jonathan Fine and Jake Fine, for the Applicants Peter-Paul Du Vernet, for the Respondents

HEARD: April 12, 2022

Endorsement

[1] This is a dispute between two groups of owners of condominium units in a commercial building. One group, the Respondents, is associated with the original Declarant of the condominium, and own 7 units in total. The other group is composed of a separate number of condominium owners who also own 7 units in total. There are 14 units in the building and thus there are 14 members of the condominium corporation with voting rights, 7 in each group.

[2] The Respondents were late in holding the initial turnover meeting, which under the section 43(1) of the Condominium Act, SO 1998, c. 19 (the “Act”), should have been called within 21 days of the Declarant having ceased to own a majority of the units. The parties came before Ramsay, J. in December 2021. She determined that the outside date for the statutorily mandated turnover meeting to have been called was October 4, 2019.

[3] In her endorsement dated December 21, 2021, Justice Ramsay ordered a turnover meeting to be held and a new board of directors to be elected at that meeting. She indicated in her endorsement that a meeting for these purposes was set for February 10, 2022. She did not indicate one way or another whether additional notice needed to be given of this upcoming meeting, although it stands to reason that some notice was called for. While Justice Ramsay in her endorsement confirmed the date of the meeting and ordered it to take place, the precise time and place still had to be set and the candidates for the condominium board had to be named so that they could be voted on.

[4] At the court appearance before Ramsay, J. there was also apparently some controversy about condominium owners owing arrears in maintenance fees. Her Honour stated that default of unit owners in paying fees does not relieve the Declarant of the obligation under the Act to hold a turnover meeting and elect a new board. That said, she also observed, at para 3 of her endorsement, that under the relevant provisions of the Act,

… any owner may vote if the if the corporation receives payment of the arrears with respect to the owner’s unit before the meeting is held: s. 49(2). However, it is not clear if arrears have been outstanding for thirty days or more, which would result in an unit owner losing the right to vote.

[5] On January 18, 2022, the Respondents issued a Notice of what was labelled a “Turnover meeting – Town Hall Meeting” to take place on February 11, 2020. Although its title might have suggested that there would be an election of board members at that meeting, the Notice did not actually say so; moreover, the Notice did not indicate who the candidates for the board positions would be. In fact, the Notice announced a meeting on a different date (i.e. one day later) than the meeting ordered by Ramsay J., and went on to explain: “The purpose of this meeting is to provide you the updated information and logistics of the Turnover Meeting.”

[6] The message of the Notice was unclear; it seems almost to have been designed to sow confusion about the upcoming meeting. While on one hand it seemed to be Notice of the turnover meeting envisioned by Justice Ramsay, it also seemed to state that it was merely a preliminary informational meeting and not the turnover meeting itself.

[7] That said, the Applicants did nothing to clarify the meeting’s agenda with the Respondents. They made no inquiry, formal or informal, with their neighbours in the building as to what the meeting would be about. Instead, they simply ignored the Notice and the meeting. Counsel for the Applicants put their attitude rather starkly at the hearing when I asked him about this. He indicated that since the Notice on its face said that the meeting was about information and logistics, and was not the turnover meeting, the Applicants considered it a waste of time.

[8] The Applicants take the position that the meeting was null and void because the Notice was procedurally improper. While each of them did receive a hand-delivered copy of the Notice from the building manager, they complain that there was only one Notice and not two Notices in sequence as required under the Act. Applicants’ counsel submits that procedural steps of this nature are important, and that nothing in Justice Ramsay’s order excused the Respondents from following the Act’s very precise requirement of a preliminary notice followed by a second notice.

[9] At the February 11th meeting, several representatives of the Respondents were elected to the board. In fact, the Minutes of that meeting indicate that the only voting attendees were the Respondents, who are specifically identified in the Minutes. It is little wonder that they won the election.

[10] The Applicants considered the February 11, 2022 meeting and the election that took place there to be a nullity. They then proceeded to organize their own turnover meeting, and issued two Notices using the forms authorized for such use under the Act. The Notices announced a meeting to take place on March 1, 2022 and, as statutorily required, indicated the names of the persons who were standing for election to the board. The candidates at the March 1st meeting were, of course, several representatives of the Applicant group. The Notices of the March 1st meeting were duly served on the Respondents by the Applicants’ law firm.

[11] As the Applicants had done with the February 11th meeting, the Respondents chose not to attend the March 1st meeting. At that meeting, the Applicants’ candidates were elected to the board. The Minutes of that meeting, however, do not specifically indicate who attended the meeting and who cast a vote. Respondents’ counsel submits that there is no way of knowing whether the votes were all cast by qualified voters who were not in arrears in their maintenance fees. As Justice Ramsay had indicated, more than 30 days’ worth of arrears could have disqualified a condominium owner from casting a vote.

[12] Again, much as the Applicants had done, the Respondents considered any vote taken at the March 1, 2022 meeting to be a nullity. Accordingly, the Respondents did not turn over the condominium books and records to the members elected at that meeting, as would ordinarily have been done following turnover of the board.

[13] It is self-evident that the point of Justice Ramsay’s ruling was to bring the parties together in a statutorily required turnover meeting. The point was not for the parties to treat the condominium board as two solitudes, each group holding their own meeting while complaining about the other’s irregularities and ignoring the other’s outcome. Counsel for both sides seem to want the court to tally up the procedural flaws engaged in by each side in holding their respective meetings, and on that basis to conclude who was right and who was wrong.

[14] In support of their position, Applicants’ counsel has pointed me to the decision of Myers, J. in Toronto Standard Condominium Corp. No. 2510 v. All Unit Holders, 2020 ONSC 6582. In his reasons for decision, at para 46, Justice Myers emphasized the importance of the Notice and other procedures required for holding a board election under the Act. He characterized them as a matter of substantive justice, and not just form:

There is no act more fundamental to ownership of a condominium than voting. Owners do not have to live in their condominiums. Owners do not have to go to their condominiums. But only owners can vote on resolutions properly before a unit owners’ meeting. The unit owners’ vote is the way that management is held accountable. Ensuring that each unit owner is treated fairly and with due regard for this important ownership attribute is absolutely necessary to ensure democratic control of condominium corporations.

[15] I agree that the voting process is key to condominium corporate governance, and that failure to implement an appropriate process can undermine the statutorily mandated corporate democracy. However, I do not agree that procedure is always necessary for its own sake. Certainly, once the matter becomes litigious a court order can satisfy some or all of the notice requirements under the Act.

[16] Here, for example, Justice Ramsay specifically ordered the turnover meeting to take place on February 10, 2022. For the Applicants to complain that they did not then get two separate Notices of that court ordered meeting is to take procedures to their absurd end. Likewise, Justice Ramsay specifically ordered a turnover meeting to be convened by the Declarant (i.e. the Respondents) on February 10, 2022. For the Respondents to miss that date but to give ambiguous Notice of a logistics meeting on February 11, 2022, is an equally absurd application of the concept of fair notice and fair elections.

[17] Neither the February 11th election nor the March 1st election was a valid election – not because of procedural flaws in and of themselves, but because of substantive issues of fair process contained within those flaws. The content of the Respondents’ Notice did not allow the Applicants to understand what the proposed meeting would be about; the Minutes of the Applicants’ meeting did not allow the Respondents to know whether the election was voted on by qualified voters.

[18] I order that the Respondents convene a turnover meeting where a new board of directors will be elected for the condominium corporation within 30 days of the date hereof. The meeting is to be scheduled during the course of an ordinary business day – not a statutory holiday, weekend, or other day or time which one side knows to be inconvenient to the other. The Respondents shall serve on the Applicants – either by personal service on each unit owner or by email to the Applicants’ counsel – a Notice of the turnover meeting. There is no need for a second Notice.

[19] The Notice of the meeting need not be in any particular form, but it must specify the time and place of the meeting (and provide a zoom link or other easily accessed digital platform so that, given the ongoing pandemic, those who wish to do so can participate virtually). The Respondents must inquire of each of the owners whether he or she wishes to run for a position on the board, and the Notice must identify the individuals who wish to be candidates for the election. Any other agenda items to be discussed at the meeting shall also be identified in the Notice.

[20] Further, the Minutes of the meeting must record who is present and voting. Each person casting a vote is to confirm to the Chair of the meeting that he or she is an eligible voter under the Act.

[21] There will be no costs awarded for or against either side for today’s appearance and all that has led up to it. The Application will not be dismissed until after the turnover meeting has taken place. If there are no further challenges to the meeting and election by either side, the newly elected board is to then arrange for the dismissal of the Application without costs.

Date: April 13, 2022 Morgan J.