The Elected Board of Directors
“Who clipped the lion's wings
And flea'd his rump and pared his claws?”
—T.S. Eliot

Elections
In the late spring of 2007, Andrew Atrens informed the owners that there would be a board of directors elected at the 2006 AGM. That meeting was held in June 2007.

The united front against the administrator, (consisting of a small group of owners), collapsed as part of the "Action Committee" decided to run for the board of directors.

Hameed Shah, the previous vice-president, and four new candidates were elected.

2007 AGM
At this AGM, held in June 2008, A.J. Karim and his uncle, Anver Karim, were elected to the board. A.J. Karim was a budding property manager while Anver Karim was a previous board member.

2008 AGM
The 2008 AGM was held in June 2009. M. Bhuiyan and Shah Jahan Khan, with the support of the Association of Condominium Owners (ACO), a newly formed owners group, won the election.

2009 AGM
There was one opening on the board in June 2010. Shah Jahan Khan wanted his candidate, the imam at his mosque, to be supported by the Association of Condominium Owners (ACO). Instead ACO supported their vice-president, Franca Popagna. The two groups split. Franca Popagna won the election.

An attempted coup
On 10 March 2011, four unit owners, A.J. Karim, M. Bhuiyan, Shah Jahan Khan and Anver Karim, represented by D. Fulton, moved for court orders terminating the mandate of the court-appointed administrator, Andrew Atrens, and placing the management of the YCC #42 into the hands of themselves: the “Elected Board of Directors”.

For several reasons Justice D. M. Brown did not grant the motion.

Reprimand
In the materials they filed with the court, the four called themselves the “Elected Board of Directors”. Justice Brown stated that they are not a board of directors as since 28 August 2006, the powers of the Board of Directors have been suspended and the court had not given permission to hold formal elections for a new Board of Directors. Accordingly, at that time no Board of Directors existed for YCC #42, elected or otherwise.

Given the very live governance issues which surrounded the future of YCC #42, Justice Brown considered it inappropriate that any group of unit owners held themselves out as an “Elected Board of Directors” even if, in good faith, they believe that some process has given them that status.

Consequently, he ordered that any further court filings by Mr. Fulton’s clients should remove any reference to “Elected Board of Directors” and that Mr. Fulton’s clients should not describe themselves as such in any communication, written or oral, to either unit owners or outside parties.

Next court appearance
On 20 April 2011, Justice Brown addressed this issue in more detail.

He stated that he just heard the month before that for the last several years, at the annual AGMs usually held in June, Mr. Atrens had been holding elections for an elected Board of Directors.

Justice Brown was not pleased.

He emphasized that by suspending the power of YCC #42’s Board of Directors back on August 2006, Justice Lederman removed the power to manage the affairs of the condominium from the hands of the owner-­elected Board of Directors and placed those powers in the hands of the Administrator. That state of affairs was to continue until changed by a further order of the Court. No order of this Court has altered that state of affairs.

The "Core Group"
Now the unauthorized “board”; A. J. Karim, M. Bhuiyan and Anver Karim were back with filed written submissions describing themselves now as the “Core Group”.

Justice Brown went on to say:
“Before reviewing their submissions, let me say that I am thoroughly unimpressed by the efforts of this group of unit owners to cloak themselves in some mantle of authority with respect to the affairs of YCC #42, when they have none.

First they described themselves as the “Elected Directors” of YCC 42, when they were not. Now they are the Core Group. If they are the “core”, who might I ask, falls within the “non­core” group? Any owner who disagrees with them? I strongly caution these owners that the more they try to promote themselves as standing in a different position than the other unit owners, the more closely the court will review their proposals to ensure they are not motivated by self­interest.”

How the Elected Board saw themselves
George Vella, counsel for the Administrator and D. Fulton, counsel for A. J. Karim, Anver Karim, M. Bhuiyan and Shah Jahan Khan, submitted that notwithstanding the appointment of the Administrator, it remained open to the unit owners to elect a board of directors and for that board to meet and pass resolutions.

They pointed out that by order dated 21 May 2008 Justice Hoy had issued directions regarding the use of proxies at meetings of the YCC #42 and that, with the approval of the Administrator, several “elections” of directors had taken place during his administration.

Accordingly, they argued, a duly elected Board of Directors existed for YCC #42 and any plan for the transition of governance from the Administrator to a Board of Directors should take that corporate history into account.

Justice Brown did not accept those submissions.

He stated that the language of the appointment order provided that the Administrator shall:
Manage the affairs of YCC #42 as if the administrator were the Board of Directors of YCC #42 and in place of the Board of Directors of YCC #42, whose powers be and are hereby suspended, until further order of this Court.

He further explained that the appointment order went on to empower the Administrator to determine and collect the common expenses; levy special assessments; review, deal with, and enter into contracts for the administration of the property and assets of YCC #42; exercise exclusive control over the on­site management office; act as sole signing officer of YCC #42; and retain and employ counsel and other advisors.

The Administrator and the Karim Group argued that the appointment order did not suspend the power of the unit owners to hold annual meetings, so the order did not terminate their power to elect a board of directors for YCC #42.

Justice Brown agreed that the Administration Order did not suspend the power of the unit owners to hold annual meetings.

The administrator’s role
However, Justice Brown clarified the administrator’s duties.

As a court officer, the court-­appointed receiver has a duty to take a broad perspective in the exercise of its duties. It cannot favour the interests of one party over another. It has a duty of even­handedness…In the balancing of interests of various stakeholders, it has a duty to give the rights of parties affected by its activities, and its decisions, the appropriate weight.

An administrator & the board of directors
Under section 27(1) of the Act, a board of directors shall manage the affairs of a condominium corporation. The appointment order of Justice Lederman suspended those powers of the Board of YCC #42 and transferred them to the Administrator.

The appointment of an administrator vested with the powers of the board of directors places a very practical limitation on the ability of unit owners to vote on certain matters.

If, during an administration, the power of the board is suspended – i.e. the board cannot do anything – what is the purpose of going through the motions of holding a vote by the unit owners to elect a board? They would be voting for a board which lacked any power; it would be a vote without a purpose.

Real mischief
Further, real mischief can arise from the election of a board without powers, as can be seen from the experience of YCC #42.

The affidavit sworn by Mr. Karim last December revealed that the “elected board” had “retained Mr. Andy Wallace, a respected consultant in the condominium industry to act as a facilitator and advisor to the Elected Board and to among other things, offer guidance and assist as long as and in any manner required to ensure the transition from the Administrator to the Elected Board and the carrying out of the Board’s mandate.”

Justice Brown asked:
"How can a board without any powers purport to retain an advisor? The simple answer is: it cannot.

From my review of the materials, over the past year the “elected board” has held itself out as a parallel decision ­making group for the affairs of YCC #42 when, at law, it had absolutely no authority to do so. The efforts by this self­styled “elected board” to assume a governance role has served only to increase the divide which exists between two groups of unit owners and further poison an already noxious environment within the YCC #42 community.

Where an appointment order transfers the powers of the board of directors to an administrator, the unit owners should not hold an election for a board without permission of the Court, which should assess whether it would be in the best interests of the condominium community as a whole for such an election to occur. If deep divides exist within a community, the election of a nominal board might well do more harm than good.

If, on the other hand, the community has united behind a plan to exit from the administration, an election might constitute a positive step in furtherance of that transition."

Notice to administrators
Justice Brown then stated that an administrator is a court-appointed officer. If an administrator is faced with a request by unit owners to hold elections for a board of directors during the term of an administration, an administrator should apply to court for directions on that issue; it should not act unilaterally to approve the holding of a meeting for an election, as happened in this case.

Finally, at the hearing on 20 April 2011, some unit owners mentioned that traditionally the Annual General Meeting of owners is held in the month of June. Although the appointment order did not suspend the ability of unit owners to meet, no vote to “elect” a board of directors shall be held at any such meeting.

No vote for directors can take place without the permission of this Court.

2010 AGM
The 2010 AGM was held in June 2011. There were no elections and the meeting was adjourned because they could not obtain a quorum.

2011 AGM
There was no annual general meeting held.


top  contents  chapter  previous  next