Self-Managed Condos, Records & Lien Deadlines

May 2020 Mehta v. Peel C.C. No. 389, 2020 ONCAT 9 & Carleton C.C. No. 476 v. Wong, 2020 ONCA 263

Introduction

Despite the domination of COVID-19 in the headlines, the day-to-day governance of corporations and adherence to the provisions of the Condominium Act, 1998 (the “Act”), remain essential. Mehta v. Peel C.C. No. 389 and Carleton C.C. No. 476 v. Wong, provide guidance to self-managed condominiums and clarify condominium lien timeframes in an environment where our attentions may be turned elsewhere.

Mehta v. Peel C.C. No. 389

Here, a unit owner made a request for records; requesting, among other items, Board and Owners’ Meeting Minutes, and the audited financial statements. All requested records were those contained in section 55 of the Act and which the owner was entitled to receive or examine.

The Condominium, which was self-managed, failed or refused to provide the owner with the requested documents, citing a number of reasons. With respect to the audited financial statements, the Condominium alleged health issues with the Condominium’s accountant caused a deferral of the audit and as such, the record did not exist. With respect to Owners’ Meeting Minutes, the Condominium argued such did not exist as no AGM had been held in the previous four (4) years. Likewise, regarding Board Meeting Minutes, the Condominium argued that the board met almost daily and conducted business in an ad hoc manner and as such, no formal meetings took place and no minutes were taken. In sum, the Condominium argued that the requested records simply did not exist, stating that because the Condominium Act, 1998, provides little guidance on how to self-manage a condominium such constitutes a “reasonable excuse” for not providing.

The Tribunal found that failing to keep records that are required by the Act is not a reasonable excuse. Condominiums, self-managed or not, have a responsibility to keep adequate records, hold meetings, prepare audits and comply with the Act. In order to stress the importance of understanding those responsibilities and to iterate that self-management does not excuse such, the Tribunal imposed a $5,000.00 penalty on the Condominium; the highest amount permissible.

Carleton C.C. No. 476 v. Wong

Here, the Court of Appeal addressed the proper interpretation of the notice provisions respecting condominium liens. The unit owner appealed the trial decision providing the Condominium with possession of the unit for unpaid common element fees, which were the subject of a lien. The unit owner, among other arguments, argued that the judge misinterpreted the time between when a unit owner must receive notice of a lien and the registration of the lien and as such, the lien was invalid. Section 85(4) of the Act provides that notice of a lien must be provided ten (10) days before the certificate of lien is registered. The Condominium sent notice on January 21st and registered the lien on January 31st. The owner argued that the day of the registration should not count and the therefore received only nine (9) days’ notice. 

In addressing this issue, the Court looked at section 89(3) of the Legislation Act, 2006. Pursuant to same where there is reference to a number of days between two (2) events, the day on which the first event happens is excluded, but the day on which the second event happens is included. Therefore, in calculating the ten (10) day notice period, the day the notice goes out is not included, but the day for registration is. As such, the lien was found valid.

Bottom Line

These cases iterate the seriousness by which condominiums must take their responsibilities under the Act. Proper record keeping and provision, minuting meetings and proper lien registration are all essential elements of the day-to-day operation of condominiums. Failure to keep adequate records and adhere to the provisions of the Act, whether self-managed or not, could lead to serious financial consequences. If your condominium is self-managed and having difficulties interpreting the Act or understanding legislative responsibilities it may be time to discuss professional management and/or seek independent legal advice from an expert at SV Law.

Written by Christopher Mendes, Edited by Robert Mullin