Ontario Court of Appeal Reduces Award of Costs Against Condo Board Members
Paul G. Mendes, partner
Email: pgm@lmlaw.ca
Phone: 604-685-4894
Boily v. Carleton Condominium Corporation 145, 2014 ONCA 735
A question that comes up often in strata property law is how much discretion the strata council has, and the extent to which a court will show deference to the council’s decisions. Under the Strata Property Act (the “SPA”), the strata corporation functions through council and with a few exceptions, the council has the final say on matters between general meetings. But what happens when the council willfully disregards the decisions of the owners and the court? It seems that contempt of court is still contempt, even if the contemptuous acts are done in good faith.
In Boily, a 40-year-old strata development underwent extensive garage repair resulting in the need for new landscaping. The strata council proposed a new landscaping design and convened an information meeting to discuss the change. A number of owners at the meeting opposed the new design and expressed the view that it was a “substantial change” that required approval from the owners (similar to BC’s s. 71 of the SPA). The dissident owners wanted the area restored to the way it looked before the garage project.
The council disagreed and decided that they could proceed with the new design without the owners’ approval. They even offered to convene a meeting to put their decision to a vote of the owners if the owners’ petitioned the council for a meeting (similar to BC’s s. 43 of the SPA). The dissident group took the council at its word and issued a demand for a special general meeting. The council, however, concerned that the meeting would further delay the project and increase costs, decided to call their own meeting for a simple majority vote to approve the council’s landscaping design.
Litigation ensued and the Court issued an injunction. The parties to the lawsuit reached an agreement that the decision would be put to a vote of the owners. When the council’s proposal failed to pass, the council tried wiggling out of the settlement because neither landscaping option had received the owners’ approval. This sent the dissident owners back to Court to enforce the settlement. The Court upheld the settlement and ordered the strata to pay the dissident owners’ costs at $32,500 with the council members to pay $12,000 of those costs.
As the landscaping work proceeded, the council continued to approve significant deviations from the original landscaping design by incorporating the elements of the design they favored. After some further negotiations to resolve the matter, the dissident owners applied to the Court to have the council members held in contempt of the original court order. The Court agreed and ordered council members to pay $96,000 in costs. The Council members, not content to take “NO” for an answer, sought a second opinion from the Ontario Court of Appeal.
The Ontario Court of Appeal summarized the seriousness of the council’s conduct this way:
[100] After having obtained and accepted a recommendation by experts as to the optimal landscaping design, the Individual Appellants simply could not accept being put in a position in which they had to implement a design they believed was not optimal for the condominium owners. They, therefore, took matters into their own hands and, albeit for reasons they considered valid, defied a court order. The Individual Appellants’ arrogance led them to reckless and ultimately unlawful conduct.
With these words, the Ontario Court of Appeal upheld the finding of contempt, but reduced the penalty from $96,000 to $35,000, with each council member to pay $7,500 each to the strata corporation. Although the Court of Appeal was not moved by the councils’ pleading that it was acting in good faith, it did find that the $96,000 penalty imposed by the lower Court was excessive.
The Court of Appeal’s reasons for reducing the penalty is somewhat unclear. A significant mitigating factor may have been that the council members were not motivated by “personal gain”, a fact that the Court of Appeal made note of in its reasons. To me, this seems to be a tacit acknowledgment of the council’s argument that was acting in good faith. What likely turned their good faith actions into bad faith, however, was their decision to act in contempt of a court order.
If there is a lesson in this case for BC strata it is this: think twice before ignoring the direction of the ownership and get legal advice before ignoring a court order. The Ontario Court of Appeal made that clear by commenting that the council’s biggest mistake was failing to get legal advice at the earliest sign of a dispute. Had they done so, the “…needless consumption of time and money and needless acrimony could have been avoided”.
WHAT WE DO: Lesperance Mendes is a leading strata property law firm in Vancouver, British Columbia. We have been helping strata corporations and strata property owners solve their condominium disputes through mediation, arbitration, and litigation since 1997. To find out how one of our trusted legal advisors can help you resolve your condo dispute, please contact Paul G. Mendes, Partner, at 604-685-4894 or pgm@lmlaw.ca.
Lesperance Mendes Lawyers
900 Howe St #550, Vancouver, BC V6Z 2M4
(604) 685-3567