Boards Should Think Very Carefully About Denying Requisitons

Boards Should Think Very Carefully About Denying Requisitons

The Ontario Condo Law Blog of July 10, 2014 cites the case of Hogan v. MTCC 595 in which the Board denied a requisition for a meeting from owners on a technicality. The court’s decision made it very clear that the Condominium Act must be regarded as consumer protection legislation, and as such any corporate governance issues must be balanced with a liberal and remedial definition of consumer protection. Boards should not reject meeting requisitions on minor technical grounds. The Ontario Condo Law article is well worth a read. Here are the key points.

The court’s decision contains several lessons:

1. To deny owners’ right to a meeting based on trifling, technical non-compliance with the Condo Act demonstrates a profound lack of appreciation of the board’s authority and obligations and smacks of disrespect for the unit owners.

2. Instead of being responsive to more than 25% of the owners who exercised their legal rights, the board adopted an arrogant, highly legalistic approach to deny the owners’ legal right to attend a meeting to vote on an item for which the Condo Act specifically reserves a veto power to the unit owners.

3. Even with minor technical deficiencies in the requisition, it was entirely possible for the board to call and hold the requisitioned meeting without making any compromise in the board’s jurisdiction or authority and without incurring significant additional cost.

4. If the board was confident in the wisdom of its proposed addition, alteration or improvement, it could have used the requisitioned meeting as a forum to provide further information, allay the owners’ concerns and allow the requisitionists voice their perspectives, ask questions, make suggestions and ultimately permit the ownership to vote for or against the proposal. Holding meetings also has the salutary effect of allowing owners to express themselves and vent off any pent-up frustration. On the other hand, refusing to hold meetings quashes democracy and creates pent-up resentment needlessly.

5. Cash is a precious resource at any condominium. Spending it on legal costs merely to suppress owners’ rights creates no value whatsoever and diverts funds from making improvements to the condominium that benefit everyone. When faced with the application, the board could have conceivably negotiated a settlement to hold the meeting rather than incur the costs of defending the matter.

Things that condo boards should not do:
• fail to hear, understand and respond to their owners’ concerns;
• maintain an adversarial stance with owners rather than collaborate constructively;
• think their solutions are the only ones and that owners can provide no useful input;
• use the corporation’s power and resources to suppress owners’ rights.

The Ontario Condo law Blog is offered by the law firm of Gardiner Miller Arnold. LLP. Other condo law firms also offer blogs. You can find the links to many of the blogs in the Staying Informed as Director entry in our blog.