Two Recent CAT Decisions: One Win For The Unit Owner, One Win For The Condominium

Recently, I had the privilege of representing two very different clients at the Condominium Authority Tribunal of Ontario (the “CAT”), each undergoing separate Stage 3 Adjudications at almost the exact same time: one unit owner, and one condominium corporation.

While one case was related to a commercial condominium corporation in Scarborough, the other case was related to a residential condominium corporation in Oakville.  Both cases were decided favourably for our clients, but the twin rulings highlight the need for condominium corporations to remain vigilant in responding to the requests of unit owners, taking their records obligations seriously, and finding that middle ground between protecting the interests of the collective and facilitating unit owner access to condominium records.

The Unit Owner Case

In Tharani Holdings Inc. v. Metropolitan Toronto Condominium Corporation No. 812, 2019 ONCAT 3, I represented a corporate unit owner against a commercial condominium corporation in Scarborough that refused to respond to my client’s Request for Records, and failed to heed the three (3) Notices of Case that were sent to it by the CAT – despite the condominium clearly being aware of the ongoing CAT litigation against it.  As a result of the condominium’s failure to comply, the CAT awarded the highest monetary penalty it has ever awarded in a CAT proceeding thus far.

Although the property was being managed by a Condominium Manager licensed by the Condominium Management Regulatory Authority of Ontario (“CMRAO”), the condominium also failed to pay any of the mandatory fees to the Condominium Authority of Ontario (the “CAO”), and failed to file any of the required information returns so that it could be listed in the CAO’s Public Registry.  Consequently, we were forced to request a Certificate of Non-Compliance, pursuant to Section 9.9 of the Condominium Act, from the CAO Registrar – the first Certificate of Non-Compliance ever issued by the CAO.

Even more concerning from a practical standpoint however, was the fact that the condominium corporation was proceeding to hold an Annual General Meeting (AGM) to elect all five (5) positions on its Board of Directors, but refused to disclose any financial statements to the owners as part of the AGM Notice package.  Accordingly, we were also forced to seek an urgent injunction from the Ontario Superior Court of Justice, prohibiting the condominium from holding the AGM until proper notice materials were distributed; the Superior Court in Toronto granted the emergency injunction, and 100% of our legal costs on a full indemnity basis.

In the meantime, my client still needed a copy of the Owners’ List, required to be maintained by the condominium under Section 46.1 of the Condominium Act, in advance of the AGM so that it could campaign for the election of certain individuals onto the Board of Directors.  When the condominium refused to respond to my client’s Request for Records, we were forced to seek the intervention of the CAT.

The CAT ruled that the Respondent condominium corporation’s failure to participate in the CAT proceedings and its failure to respond to the original Request for Records, amplified the Respondent’s lack of any “reasonable excuse” in withholding the requested records from my client.  Section 1.44(1)(6.) of the Condominium Act, 1998 provides that:

“(1) …  the Tribunal may make any of the following orders: …

6. An order directing a corporation that is a party to a proceeding with respect to a dispute under subsection 55 (3) to pay a penalty that the Tribunal considers appropriate to the person entitled to examine or obtain copies under that subsection if the Tribunal considers that the corporation has without reasonable excuse refused to permit the person to examine or obtain copies under that subsection.” [emphasis added]

Pursuant to Section 1.44(3) of the Condominium Act, 1998, the maximum amount of penalty for non-compliance that the CAT may award is $5,000.

The CAT held in our case of Tharani, at paragraph 15, that:

“While no specific purpose is outlined in the Act, previous decisions of the Tribunal have noted that the imposition of a penalty should encourage condominium corporations to take their legal responsibilities under the Act seriously and in such a way that respects the values of the Tribunal, namely providing fair, efficient and timely dispute resolution.” [emphasis added]

Accordingly, the CAT awarded a penalty of $2,000 against the Respondent condominium, for its failure to participate in the CAT proceedings and its failure to respond to the Request for Records – the highest amount of monetary penalty that the CAT has awarded to date.

The Condominium Corporation Case

On the other end, in Mellon v. Halton Condominium Corporation No. 70, 2019 ONCAT 2, I represented a residential condominium corporation in Oakville that took active steps to not only respond to the unit owner’s original Request for Records, but also actively participated in the CAT proceedings commenced by the unit owner.

Essentially, the Applicant unit owner took issue with:

1. The Respondent condominium sending him a copy of the annual Auditor’s Report instead of “the most recent financial statements” of the condominium, which he believed to be the monthly financial updates that Management provides to the Board at every Board meeting; and
2. The Respondent condominium had redacted from the Board Meeting Minutes, not only the names of unit owners and their unit numbers, but also other identifying information relating to any other unit or owner. 

With regards to the 1^st issue, we were successful in pointing out to the CAT that pursuant to the definition of a “core record” under Section 1(1) of the General Regulation to the Condominium Act, 1998, the “most recent financial statements” of the condominium are the annual Audited Financial Statements that have been signed by the Board, as required by Section 66(3) of the Condominium Act, 1998, and presented as part of the annual Auditor’s Report included in the AGM Notice package every year – not the monthly financial reports that Management provides to the Board at the monthly Board meetings, which may form part of the condominium’s non-core financial records but were not explicitly requested by the Applicant in his original Request for Records.  Instead, in satisfaction of his original Request for Records, the condominium had properly produced the annual Auditor’s Report, which contained a copy of the most recent Audited Financial Statements inside.

With regards to the 2^nd issue, we were also successful in pointing out to the CAT that sometimes, a condominium will need to redact more than simply names and unit numbers from their Board Meeting Minutes, in order to protect others’ privacy.  Section 55(4)(c) of the Condominium Act, 1998, provides that:

“(4) The right to examine or obtain copies of records under subsection (3) does not apply to: ...

(c) records relating to specific units or owners.”

We successfully argued that Section 55(4)(c) includes any identifying information that may relate to specific units or owners – not just their names or unit numbers.

For example, if a unit owner is making a Request for Accommodation to the Board on the basis of her physical disability, and the Board at the monthly Board Meeting is discussing her private medical information and her need for an access ramp on the common elements, what the Applicant contended was that he would be entitled to read all about this other unit owner’s medical information, as long as her name and unit number were redacted from the Minutes.  But if this unit owner was the only resident of the townhouse condominium who uses a wheelchair or a walker, then the reader could easily identify her as being the person that the medical information in the Minutes related to.

The CAT agreed with our position, and held in our case of Mellon, at paragraph 36, that:

“… it is appropriate for a condominium corporation to redact information that is personal, confidential, privileged or otherwise private, which includes any information that would serve to identify the unit or unit owner, including, but not limited to, the unit owner’s name and unit number.” [emphasis added]

However, the CAT did require the condominium to re-visit the redacted Board Meeting Minutes in question, and see if further information could be unredacted that would not identify any particular unit or owner.  In the CAT’s view, the initial version of the Board Meeting Minutes that was redacted by Management had blacked-out entire paragraphs from the Minutes, and thus could have been an over-excessive amount of redaction.  Nevertheless, the CAT held, at paragraph 50, that:

“… even if such excessive redaction could amount to an effective refusal to provide the records (which I do not conclude in this case), the evidence suggests that the Respondent made such redactions in good faith believing that it was complying appropriately with subsection 55(4)(c) of the Act, and therefore such refusal cannot be seen as unreasonable and does not justify the imposition of a penalty.” [emphasis added]

Ultimately, the CAT found that no penalty or award of costs was warranted against the Respondent condominium.

Takeaways for Condominiums: The Middle Ground

As the courts of Ontario have held, a condominium’s records should be an “open book” for the unit owners to examine, subject only to the statutory exceptions listed in Section 55(4) of the Condominium Act, 1998.  The most recent amendments to the legislation by the previous Ontario government have attempted to help promote unit owner access to their condominium’s records.

However, as our two cases of Tharani and Mellon demonstrate, a condominium corporation must not only be vigilant in responding to a unit owner’s Request for Records and actively participate in the CAT process, but must also exercise caution in redacting the records that it discloses.  The statutory exceptions under Section 55(4) of the Condominium Act, 1998 can be broadly construed, but condominiums must still be careful in ensuring that only the information that identifies particular units or owners be redacted if it is relying on Section 55(4)(c).  The redactions for identifying information may go beyond just other unit owner names or unit numbers, but the wholesale redaction of entire portions of the record may be problematic in future cases, if applied too liberally.

Boards and Managers should consult with their legal advisors if they have any questions about how much redaction may be too much redaction.  As always, Elia Associates is here to assist condominium corporations navigate this ever-fluctuating area of law.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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