Some Things Stay the Same
In this blog, we’ve written about several things in the Condominium Act, 1998 (the “Act”) that are to be changed once Bill 106 – the Protecting Condominium Owners Act, 2015 – comes into effect. But there are a number of things in the Act that Bill 106 doesn’t change – at least, not entirely. One of those is the board of directors’ standard of care.
Section 37(1) of the Act says, and, once Bill 106 is fully in force, will continue to say,
Standard of care
37. (1) Every director and every officer of a corporation in exercising the powers and discharging the duties of office shall, |
(a) act honestly and in good faith; and |
These standards are good standards. They are the appropriate minimum standards of character and conduct that it is reasonable to expect every director and officer of a condominium corporation in Ontario to uphold. Heck, they are basic standards of decency, fairness and mindfulness that every person should be able to uphold without extraordinary effort or difficulty. Unfortunately, what’s reasonable is not the same as what is.
These standards are stated in the Act for a reason: that not everyone automatically or characteristically subscribes to them. In our experience as lawyers for literally hundreds of condominium corporations and unit owners in Ontario, we know that most condominium directors will try to meet these standards at least when they are explained to them, but that there are some for whom it does take some effort, and that there are even a few (for whom we generally chose not to work) for whom these standards describe the exact opposite of their actual and deliberate conduct.
So these standards are still needed, and it is a good thing that Bill 106 doesn’t change them. Reducing the standards would have simply put more members of condominium communities at risk of mistreatment; and raising the standards even further would simply have made it less likely that any director or officer could comply.
Rather than change these standards, what the new legislation will do is seek to make them somewhat easier to meet.
Amongst the new provisions of the law that help to do this are those contained in the new section 29, which require condominium directors to have met basic disclosure and educational standards. If used effectively, these provisions will serve to help ensure that the standards of conduct expected of directors are reinforced through training and through public accountability.
In addition, other provisions, such as those relating to the disclosure of condominium records, reporting to unit owners, and bearing the costs of litigation, all could serve to help and encourage condominium directors to meet their standards of care by supporting an atmosphere, or culture, of openness and, again, accountability.
The setting of such standards is about the closest the law can come (outside of criminal and human rights law) to enforcing ethical behavior. The real effectiveness of such laws is manifest when individuals choose willingly to comply with them. Although the standards are legislated, and the tools for encouraging compliance are improved in the new legislation, one important thing that will remain unchanged under Bill 106 is the fact that the best way to ensure a board of directors acts in a consistently appropriate manner is for unit owners to be engaged in their communities, to attend and participate in meetings, and to vote – particularly, to elect directors – thoughtfully.