In a recent case (Wu v. PSCC 826, 2018 ONSC 2027), a condominium unit owner commenced legal proceedings against the condominium corporation over concerns about board election irregularities and proxy improprieties.
After the owner’s preferred candidate for the owner-occupant position lost to another candidate by 103 to 90 votes, the owner successfully obtained a court order to produce and preserve the proxies. While some irregularities were noted in the proxies (such as improper dating of proxies and possible forgery of two proxies), they were not sufficient to justify setting aside the election results.
When the owner first started making enquiries of other owners about the proxies, the condominium corporation threatened to take legal action against him, claiming that this conduct obstructed, interfered with or annoyed other owners and was a breach of the condominium declaration.
After the owner sought to discontinue the action, the corporation sought to obtain from the owner substantial indemnity costs in the amount of $77,497 representing legal fees, disbursements and HST expended by the corporation in the litigation, including $20,000 spent in response to the owner’s motion to produce and preserve the proxies.
Much to the relief of the unit owner, the action was discontinued without the owner having to pay ANY costs to the corporation. The Ontario Superior Court of Justice determined that the owner had rendered a service to the corporation by “attempting to ensure the integrity of the electoral process.” The Court further determined that the corporation had taken a “high-handed approach” and “dismissive attitude” in dealing with the owner, as it did nothing to address the owner’s concerns. Because of this the Court concluded that the corporation was not entitled to costs on a substantial indemnity scale and was not entitled to any costs relating to the request to and preserve the proxies. The Court also determined that some of the costs were duplicative (three different law firms represented the corporation in the litigation) and others were excessive.
It is in the best interests of both the unit owners and the condominium corporation that the election of the board of directors is carried out democratically and with integrity and in full compliance with the Condominium Act. Had the Court in this case ordered the owner to pay a substantial amount in costs to the corporation, this would no doubt discourage other owners from challenging election results where they may have grounds for suspecting election irregularities which caused an unfair result. The decision in this case sends a message to condominium corporations. When an owner raises concerns that there have been proxy irregularities or that an election has not been conducted with full integrity, the corporation should treat these concerns as a serious matter and should undertake a thorough investigation to satisfy itself that the election was conducted properly.