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Examining records

The board of directors has been given great powers by the Condominium Act and as a check on these powers, the Act allows owners to examine the corporation's records.

However, the owners' rights to examine the corporation's records, have been steadily eroded over the years by different court decisions. Some of those decisions are listed below.

The owners' rights to examine records
Board refused condo documents, individual directors must pay
Stewart v. TSCC No. 1591—Don't go fishing
Stewart v. TSCC No. 1591—Stewart appeals
Wu v. PCC 245
Wu v Carleton Condominium Corporation    Judgment
Wu v Carleton Condominium Corporation    Costs
Senchire v Summerhill Property Management   Access to records
Providing the Names and Addresses of Delinquent Owners   (Kansas)


McKay et al. v. Waterloo North Condominium Corp. No. 23
 [1992] O.J. No. 2435
Action No. 2820/92
Ontario Court (General Division),
Justice Cavarzan
10 November 1992

This is an early decision on the right of owners to examine the condo corporation’s records and this decision has been under attack by the boards, and their lawyers, ever since.

The issues
The issues raised by this application are whether Section 21 confers a right to inspect all of the records of the corporation, whether the corporation has the authority to restrict this right to inspect, and whether the right to inspect comprehends the right to make photocopies of the records.

The ruling
The underlying policy of the Condominium Act is that the affairs of the corporation are to be an open book to the owners, and pursuant to section 21 of the Act, an owner has a right to inspect all of the records of the condominium corporation, subject only to an exception for records for which a claim of privilege or confidentiality may legitimately be made.

It is not within the powers of the board of the condominium corporation to cut down by by-law or resolution the scope of the rights conferred by Section 21.

Access to the records cannot be made subject to the condominium board's approval, although the board may by by-law establish a procedure for the orderly processing of requests for access to its records. The board cannot deny the right of an owner to make photocopies at his or her own expense.

Any owner or agent of an owner duly authorized in writing may inspect the records on reasonable notice and at any reasonable time.

Guidance
The corporation asked the court to provide guidance as to how it is to comply with its obligations under Section 21. In particular, it asks the court to determine the records to be produced and what is reasonable access.

As discussed above, all of the corporation's records are open to inspection by owners under Section 21, subject only to records for which a claim of privilege or confidentiality may legitimately be made.

By "reasonable access" the respondent must be referring to "reasonable notice" and "at any reasonable time". What is "reasonable" depends, of course, on the circumstances. A requirement of 48 hours' notice would not be unreasonable, whether the notice given is oral or in writing. Access during regular business hours, in this case the business hours of the property manager, would comply with the "any reasonable time" requirement.

The following advice in Loeb, Audrey, Condominium Law and Administration, 2nd ed. (Toronto: Carswell, 1989) at p. 11-10 provides some useful and practical guidance:

Any unit owner, or an agent duly authorized in writing by a unit owner, is entitled to inspect the records on reasonable notice and at any reasonable time. Since the corporation is required to keep "adequate" records and since the records can be quite voluminous, they should be kept in a permanent location which has adequate space and can be locked when not in use.

It would be preferable to keep the records on the premises of the condominium in case the board needs to refer to them or a unit owner wants to inspect them. However, the corporation is not required to do so.

Condominiums employing a property management company may find it more convenient to store the records with it and arrange for the delivery of certain records when requested.

Conclusion
The applicants have the right to inspect all of the records of the corporation, including the right to make photocopies of any of those records at the expense of the applicants, and orders that the corporation allow the applicants to inspect all of the records at any reasonable time and on reasonable notice and that the corporation to allow the applicants to photocopy any such records at their expense.

Pretty straight forward, you would think.

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Refused condo documents—condo directors must pay
N. Fortunato  vs  S. Sardar (aka Hussain), A. Karim & S. Khan
Small Claims Court
File #: SC-12-00015580-0000
Deputy Judge L. J. Richardson
08 July 2013

Representing himself, Nicoló Fortunato won a judgment against three directors of York Condominium Corporation # 42 for denying him his right to examine the proxies that were submitted to elect a new board.

This is both an interesting and unusual case because Mr. Fortunato did not sue the corporation for denying his right to examine the corporation’s records under Sections 55(3) and 55 (8-10) of the Condominium Act but three individual directors:
Anver Karim
Shah Jahan Khan
Safdar Sardar

They were the three directors, out of five, who refused him the right to inspect the proxies.

Mr. Fortunato also cited Articles 52(7), 37(1a & b) and 38(2) of the Act to state that the proxies needed to be retained for 90 days after the election, the directors need to perform their duties and the corporation should not pay when the directors have been found to be in breach of their duty to act honesty and in good faith.

None of the three defendants appeared in court to defend the action.

Mr. Fortunato won a judgment of $500.00 plus costs of $175.00. The pre-judgment interest was set at 1.3% from 01 November 2012 and post judgment interest was set at 3%.

We will have to see how successful Nicoló is in collecting his award.

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Stewart v. TSCC No. 1591
Small Claims Court

Here is an interesting case that was published on the Condo Law News website:

Small Claims Court Dismisses Claim for Disclosure of Draft Minutes
by Christy Allen on September 19, 2013

A unit owner recently brought a condominium corporation to court for the alleged failure of the corporation to disclose records of the corporation pursuant to section 55 of the Condominium Act in Stewart v. Toronto Standard Condominium Corporation No. 1591. In particular, the owner claimed (under section 55) for the following:

Production of the minute-taker’s personal notes from the corporation’s AGM;
That the AGM minutes were inaccurate and the minute-taker’s draft minutes had been improperly revised by the Board;
A penalty of $500.

After a full trial on the matter, the claim was dismissed by the Court. The Court said that “the notes of the note-taker are a work-product and not a record” for the purposes of Section 55. The Court also said that the term “records” does not include “drafts, work in progress, rough copies, et cetera”.

The Court also said that the Board’s minor adjustments to the draft minutes were not improper. The Court added the following; “the minutes are intended to be an accurate summary of the events that took place not a verbatim transcript.”

This case confirms that documents that are considered to be in draft form, or that are otherwise a “work in progress”, do not constitute “records” of the Corporation within the meaning of section 55 of the Act. This would appear to suggest that only once a document is in “final” form does it constitute a “record” of the Corporation. This being said, in our view, it is nonetheless possible that some types of “draft” documents (such as draft reserve fund studies) might be considered to be records of the Corporation. This however, would depend upon the situation.

The Court in this case also took issue with the fact that, “it also became evident that being critical and looking for ways to find the board to be negligent has become a sport for (the owner)”. The Court said that the plaintiff’s requests amounted, in this case, to a “pure fishing expedition, without evidence to support his suspicion of impropriety by the members of the board of revising, to their benefit, the minutes that were taken at the annual general meeting held on June 22nd, 2011”.

The Court awarded costs to the condominium corporation that were higher than the normal costs permitted in Small Claims Court. The Court took particular issue with the plaintiff’s behavior and conduct towards the condominium corporation in the context of the claim and otherwise, and found the following:

“They have the luxury of time to do nothing but find ways to criticize the actions of the board. You know what, instead of criticizing I would have had more respect for the plaintiff if he had taken the initiative and perhaps had become a board member, or come up with solutions on how to better run the board than to stand on the sidelines and do nothing but criticize. So given that, I am going to use my discretion to impose a higher amount than is typically awarded because I do not want this behavior to continue… I think it does interfere with the functioning and the proper running of the board….”

The Court clearly decided to send a message to the plaintiff that further unfounded and unsupported allegations against the board would not be tolerated by the court.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations.
© 2014 Nelligan O’Brien Payne LLP.

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Stewart v. TSCC No. 1591
Divisional Court File No : 353/12
Justices Lederman, Sachs and Nordheimer
Date: 03 February 2014

Mr. Stewart sought a judicial review of the above Small Claims decision that ordered him to pay $2,000 in costs.

The appeals court decided that the conduct of the deputy judge did not rise to the level required to find a reasonable apprehension of bias. Nor was there a basis to conclude that there was any breach of natural justice or breach of procedural fairness. 

Mr. Stewart sought a ruling regarding his access to documents. He lost that issue and is required to pay costs as a consequence. That did not, however, give the deputy judge jurisdiction to penalize the applicant because the deputy judge took a negative view of the applicant’s conduct towards his condominium corporation.

The application was allowed and the award of costs was reduced to $150 under the provisions of rule 14.07 (given the unaccepted offer to settle) plus the disbursements of $500.

No costs were awarded.

So who won?
So, the condominium won the right to withhold the draft minutes but it cost them most of their legal fees for the small claims court action plus all of their legal fees for the appeal.

Mr. Stewart recovered $1,850 in small claims costs but had to pay his legal costs to appeal the Small Claims decision.

Yet he may have done a service for future condo owners who go to small claims court seeking to examine corporation documents.

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Jiakang Wu v. PCC No. 245
Superior Court of Ontario
Court File No: CV-14-146-00
Before : Justice Lemon
Date: 06 May 2015
 
PCC 245 is a non-profit condominium corporation of 278 residential units located at 3700 Kaneff Crescent in Mississauga.

Ms. Wu says that PCC 245 has failed to produce documents that she is entitled to review. She asked for an order that:

PCC 245 direct all engineers and professionals involved with her unit, including Valcoustics, to release any and all information and or documents about her unit directly to her, and an Order directing PCC 245 to instruct its engineers and professionals to answer Ms. Wu’s questions relating to their reports and recommendations;

PCC 245 pay a $500 penalty fee to her in accordance with subsection 55(8) of the Condominium Act, 1998 for refusing to provide relevant documents within a reasonable amount of time;

PCC 245 return the $150 payment that she made relating to production of documents.

Ms. Wu told the court that she followed up on multiple occasions with Peel and the engineers directly in an attempt to secure copies of the reports from the tests performed by the condo's engineers

On May 2, 2013, Valcoustics performed a second sound investigation in the unit. The original report from the May 2013 sound test is dated May 27, 2013. However, Peel did not produce this report to Ms. Wu until August 28, 2013. She submits that Peel had instructed its engineers to alter the report and remove on-site observations and other data from the report. The version of the report produced to Ms. Wu was approximately the sixth version of the report. Ms. Wu believes that Peel did not want her to see how they had edited the report.

The applicant's postion
Ms. Wu says that Peel has refused to produce documents. It then threatened to lien her unit unless she paid a $150.00 charge for copying documents. She submits that Peel has a clear statutory obligation to provide her the following corporate records:
(a)
a complete and unaltered copy of the Second Report prepared by Valcoustics on or about May 29, 2013.
(b)
complete and unaltered copies of all correspondence and agreements between Peel and Valcoustics in regards to sound and/or vibration testing on Peel’s premises.
(c)
records or documents detailing maintenance, repair or other work completed, scheduled, proposed or otherwise contemplated in relation to the building’s elevators, HVAC or mechanical systems.

The Act
Section 55 of the Condominium Act, 1998 imposes a general obligation on PCC 245 to prepare and maintain particular corporate records. This section also entitles every owner to access these records “at a reasonable time” for “all purposes reasonably related to the purposes of this Act” provided the owner has given the condominium corporation reasonable notice in writing. The penalty for non-compliance (failing to produce a document) is $500.

“There is little ... that would be exempt from right of inspection by unit owners.”

The rights of access conferred in section 55 are broad. There is little that would be found in the files of the Corporation that would be exempt from right of inspection by unit owners. This section should receive broad interpretation to allow unit owners open and liberal access to corporation documents and records.

Further, by consent order dated July 2, 2014, Peel was ordered to produce documents no later than July 15, 2014. Four large cerelox volumes of documents were delivered, in August and October, 2014. A further report dated September 25, 2014 was produced in PCC 245’s motion record for an order staying this application.

Ms. Wu submits that she is entitled to be compensated in the amount of $500 for this non-compliance.

PCC 245 charged Ms. Wu a fee of $150.00 for production of documents, which Ms. Wu paid to avoid a lien being placed against her unit, even though Peel failed to produce all documents requested and instead produced unsolicited duplicate and irrelevant documents;

Respondent's postion
PCC 245 replies that even in circumstances where the right to examine records did not apply, the condo has never denied Ms. Wu permission to examine the corporate records.

On August 18, 2013, after this litigation matter had commenced, Ms. Wu’s counsel requested copies of the following documents under subsection 55(6) of the Act:
(a)
All records relating to the vibration/sound issue for Ms. Wu’s unit.
(b)
The agreement between Peel and Valcoustics for the May 3 [ sic], 2013, sound test.
(c)
Minutes of all board meetings since December 2009 at which this issue was discussed.

Under subsection 55(6) of the Act, a pre-condition to providing records is that the owner pays a reasonable fee to compensate the corporation for the labour and copying charges. This payment was not provided along with Ms. Wu’s counsel’s request.

 Under subsection 55(4)(b) of the Act, the right to examine records does not apply to records relating to actual or pending litigation. This dispute had already been submitted to mediation and arbitration when the request was made. The requested records related to this litigation dispute. When the request was made, Ms. Wu did not have a court order requiring production.

Notwithstanding that the right to examine records did not apply, PCC 245 delivered to Ms. Wu 500-750 pages of documents relating to the request. The requests were overly broad but the condo’s property manager nevertheless performed a diligent search and prepared the package of documents.

Ms. Wu refused to pick up the package of documents at the security desk. Ms. Wu’s counsel received electronic copies via email but repeatedly requested further documents despite Ms. Wu’s non-payment of PPC 245’s reasonable labour and copying fees of $150.00. Eventually, Ms. Wu paid under protest.

PCC 245 submits that it has never refused to produce documents except where they were subject to solicitor-client or litigation privilege. The original package included copies of the draft Second Valcoustics Report dated June 24, 2013, and board meeting minutes dated June 27, 2013, which reference the May 29, 2013, draft Second Valcoustics Report. The disclosure of these documents belies any intention to conceal the existence of correspondence or draft reports from Valcoustics. Any omission of documents which may have occurred was not intentional but due to the broadness of the request and the sheer volume of documents to be searched in order to respond to the request.

Judgment
The judge stated: On this record, I cannot determine what was produced and when. It appears that some of the production issues arose within the contemplated litigation itself. That is a topic for costs and not a free standing order. That claim is dismissed.

An expense of $150 to pick up the records is authorized by the Act and is reasonable. Ms. Wu should have picked up the documents without complaint. That claim is dismissed.

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Wu vs Carleton Condominium Corporation
Small Claims Court
Court File No: 15-SC - 134445
DATE:  20 April 2016
Deputy Judge I.G. Whitehall, Q.C.

Judgment
The plaintiff asked to see the board minutes for the previous eight years and the owners' names and address for service. She was not satisfied that she only received the mailing addresses of the owners, she wanted to have the owners’ e-mail addresses as well. The plaintiff also took issue with the fact that redactions would be made to the minutes. She sought the $500.00 penalty under s. 55(8) of the Condo Act.

As noted by Mr. Justice Cavarzan in McKay v. Waterloo North Condominium Corp  the purpose the Condominium Act is provide owners and open book to the affairs of the corporation.

However the court ruled that some reacting of the minutes was justified and that the condo corporation did not have to provide the owners' e-mail addresses.

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Wu vs Carleton Condominium Corporation
Small Claims Court
Court File No: 15-SC - 134445
DATE:  16 May 2016
Deputy Judge I.G. Whitehall, Q.C.

Costs
The plaintiff submits that each party should bear its costs. The plaintiff’s primary points are that success was divided because some documents were disclosed in the course of the trial and but for the trial those documents would not have been produced.

Finally, the plaintiff argues that the case was one of first impression clarifying whether e-mail addresses form Section 47(2) records and therefore the result, clarifying the law benefited both parties.

The defendant seeks $21,290.90 costs and disbursements, including HST on a full indemnity basis, chiefly on two grounds, the indemnity provision of the Corporation's by-laws and the alleged unreasonable behavior of the plaintiff in bringing the action. The by-laws provide in part:

Each owner shall indemnify and save harmless the Corporation from and against any loss, costs, damage, injury, claim or liability whatsoever  which the Corporation may suffer or incur (including all related legal costs incurred by the Corporation) resulting from or caused by a breach of the Act or the Corporation’s Declaration, By-laws or Rules (as amended from time to time). or by any act or omission, of such owner, his/her family, guests, servant: agents or occupants of his/her unit.

In my view the Corporation defended because it did not wish to live with a precedent which an agreement to produce the documents sought would have entailed. In that sense it was its “act or omission” which caused it to incur $20,000.00 costs, be it that the claim was initiated by the plaintiff.

If co-owners were faced with thousands of dollars in costs in the event they are unsuccessful in seeking to enforce their statutory rights the purpose of the legislation would be frustrated. I say that in particular where there is no evidence of bad faith or unreasonable conduct on the part of the co-owner seeking the production of documents.

The award
Costs
The judge concluded that this case continued to be governed by section 29 of the Courts of Justice Act and the principle of proportionality. The amount in issue was $1,000. Accordingly, the corporation should receive the sum of $150 in costs plus disbursement which I would fix at $340 including HST for a total of $490.

So the owner(s) are out $490 and the corporation $20,802.90.

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Senchire v Summerhill Property Management
Superior Court of Justice
Docket:    CV-14-511552
Before:     Justice S.F. Dunphy
Date:        03 June 2016

This dispute had three parts. The two owners/directors disputed the condo corporation's right to charge a monthly maintenance fee for a purchased parking spot when the corporation slept on their rights for many a year (they can), there was an application by the owners to remove them from the board so they asked for an injunction to stop the requisition meeting and that application failed. The part I wish to focus on here is on the right to examine the corporation's records.

When the dispute over fees for the Parking Units came to the surface in 2014, the two applicants were directors of MTCC 856. They requested access to documentary information including minutes, financial statements, cheques etc. All or substantially all of what they requested, they had access to whether as directors or owners under the Condominium Act

MTCC 856 was willing to provide the Applicants with access to the documents they wish to view as long as they attend at Summerhill’s head office for this purpose and specify the documents they wish to view including the year and date. They may have copies of such documents upon payment of the reasonable cost of photocopying. Only those documents not prohibited from disclosure pursuant to the Condominium Act may be viewed. This arrangement was declared by the Applicants to be acceptable.

At this third hearing, one of the issues remaining in dispute was what rights to information can the applicants demand on an on-going basis?

The applicants take objection to the fact that the documents are only being made available at Summerhill's head office rather than at MTCC 856’s management office.

Justice Dunphy ruled that this objection strikes him as a reasonable one. After some discussion among the parties, the respondent MTCC 856 explained that the originals of documents are kept at Summerhill’s offices but agreed that copies of the requested documents would be made available for inspection at the management office in the condominium itself if demanded. It appears that the applicants are content to have access to copies of documents at the condominium itself and will arrange to inspect the originals at the management company’s office if and when they feel a need to have access to original documents.

MTCC 856 agreed to make copies of the financial statements and directors minutes and other documents that are subject to inspection under the Condominium Act available for inspection on site and to permit copies thereof to be made subject to reasonable copying expenses in accordance with existing policies. These will be made available in a timely way with reasonable advance notice.

Costs
The corporation filed an outline of costs for the entire proceeding (including before Justice Myers and Justice Stewart of $24,611.88 on a partial indemnity basis as compared to a “full rate” of $29,855.08. The “full rate” reflects a discount on counsel’s hourly rate offered to MTCC 856. All figures are inclusive of disbursements and HST.

In the judge's view, success has been somewhat divided on this application although the respondents have clearly won the main point. The applicants brought the application to obtain access to the information they needed to press home their “main” dispute about the Parking Unit issue. While the respondent has eventually come to a reasonable accommodation on access, it is apparent that the initial response to this brewing dispute was to treat the applicants as a hostile camp and a reasonable compromise on access to information was only reached in court rather than outside of it.

After due consideration of all of the circumstances, I find that I must give somewhat greater weight to the quasi-class action nature of the proceeding from the applicants’ perspective, the failure of the respondents to have headed the access to information issues off early by timely admissions while not losing sight of the aggravating fact of the applicants’ non-cooperation in settling the orders. I have determined to fix costs in the amount of $7,000 all-inclusive payable by the applicants to the respondents on a several basis (i.e. $3,500 each).

The law firm Clifton Kok LLP wrote an interesting paper on this case.
http://bit.ly/28Nzf00

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Association Required to Provide Names and Addresses
of Delinquent Owners     (Kansas)

Condo Law Grp Blog
By Aalerie Farris Oman
22 April 2016

The Kansas Court of Appeals held that Kansas law requires a homeowners association to disclose the names and addresses of delinquent homeowners. Although this case was decided in Kansas, it could be an indication of how a Washington court might decide a similar issue.

The recent case of Frobish v. Cedar Lakes Village Condominium Association concerned the Kansas Uniform Common Interest Owners Bill of Rights Act, which required that a homeowners association maintain accounting records for five years and make records public, with the option to withhold certain records for privacy reasons. The Cedar Lakes Association’s board decided that the names and addresses of delinquent owners were records that did not have to be disclosed.

Frobish, a property owner at Cedar Lakes, made several requests to the association for the names and addresses of delinquent owners, but the association denied his requests. Frobish sued the association, and the case ultimately made its way to the appeals court.

The appeals court held that Kansas law required that the association keep a record of dues payments, including who has paid and who has not. The information that could be withheld under the law included documents that were protected by privacy rules already. However, there were no privacy protections for delinquent owners, especially when any lawsuit against a delinquent owner for nonpayment would be public record.

The court also stated that the payment of dues was very important to the operation of an association, and disclosure helps the association function by holding owners accountable. For these reasons, the court held that the names and addresses of delinquent owners were not the type of information that could be withheld.

If you have any questions we can answer, please feel free to leave a comment or contact us directly.  We look forward to continuing this conversation with you in our future posts!

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