Condo Case Law Update: Code of Conducts and Leaky Pipes
Two interesting decisions coming out of court of appeals in Canada involving condominiums being published this week. The first looks at bylaws imposed on directors of condominium corporations, and the second involved the scope of a waiver when a condominium corporation settled a claim with their insurer.
In the Ontario Court of Appeal decision of Gordon v. York Region Condominium Corporation No. 818, 2014 ONCA 549 (CanLII), http://canlii.ca/t/g83w9, the facts leading to the appeal are a little complicated. A director was ousted from his role pursuant to a bylaw, properly enacted, that stated the following:
c) A director shall cease to be qualified to be a director of the Corporation and shall be deemed to have resigned from the Board of Directors of the Corporation, if the director:
…
(x) violates the “Directors’
Code of Ethics” on three (3) occasions over the course of the director’s term, unless determined otherwise by a court.The ousted director did not feel that his removal was fair, and brought an application to court for review. The court determined that the process by which he was removed was unfair, but that there was some compelling evidence of his misconduct. The court decided that a fresh ethics review be conducted, and if he was cleared, he could be reinstated. The review was held, and the board still found there to be a breach. The appellant then appealed the decision of the lower court to order the fresh review to the Court of Appeal.
The Court of Appeal determined that the bylaw allowing directors to judge “one of their own” was fine, and that the bylaw generally was fine. The process, as voted on and approved by the owners, did not offend any democratic principles as far as they were enshrined in the Act.
S.47 of our Act states that a corporation may pass bylaws “(a) governing the number, qualifications, nomination, election, remuneration, term of office and filling of vacancies of members of the board;” It does mention qualification, but does not mention removal or resignation, which are the three areas where the Ontario court determined that the corporation had the authority to pass the bylaw under the provisions of the Act. It would need some further analysis to determine how this bylaw would apply in Saskatchewan.
The waiver could be interpreted in a fashion that suggested that all future claims were waived. The additional claims were precluded, according to the insurer and the lower court. The Court of Appeal determined it was an error in law to not review the correspondence surrounding the waiver to determine the context in which it was signed. They determined the additional claims were not waived, and could continue.
A good case to remind us to be clear about the settlement terms, and the documentation that surrounds it. While the condominium corp was successful, it wasn’t without its share of costs to bring the matter to the Court of Appeal to win.
