When a unit owner feels it is necessary or warranted to sue their own condominium corporation, the owner is typically very frustrated or upset about a situation. It can often be an emotionally charged decision. In some instances, an owner’s frustration or anger can cause them to also seek recourse from the condominium corporation’s Board members in their personal capacities. While there are rare instances where seeking a claim against the condo board members personally is warranted (for example, the Boily case), prudence and caution should be exercised before doing so.
In the recent case of Matlock v. Ottawa-Carleton Standard Condominium Corporation, 2021 , a unit owner attempted to sue both the condo corporation and the board members personally. The decision to try to sue the board members personally appears to have been a costly and time-consuming mistake.
In Matlock, the plaintiff (unit owner) brought a claim in August 2018 against the condo corporation for its alleged failure to disclose deficiencies and to maintain and repair various parts of the common elements. He further sued the board members personally on the basis of negligent misrepresentation, breach of a statutory duty of care, and negligence in their alleged failure to take reasonable steps to address the deficiencies. The board members advised in January 2020 that they would move to strike the claim as against them. In response, the unit owner proposed an amended statement of claim. The amended statement of claim would add to the claim against the board member defendants. The board member defendants opposed the amendments and advanced a crossclaim to strike the claims against the board member defendants in their entirety.
In reviewing the relevant law, Justice Beaudoin noted that pleadings against individual directors, officers, or board members are subject to higher scrutiny and personal liability is rare absent findings of fraud, deceit, dishonesty or want of authority on the part of the officers. Based on the Court of Appeal’s decision in ScotiaMcLeod Inc. v. Peoples Jewellers Ltd., Justice Beaudoin’s analysis focused on whether the conduct of board members can be shown to be a separate identity or interest from that of the corporation so as to make the act or conduct complained of their own.
Justice Beaudoin found that a plain reading of the allegations in the amended claim revealed complaints directed against the individual board members in their role as the directing minds of the condo. There were no pleadings of material facts that make the conduct complained of their own. The essence of the claims against the defendant board members was how they conducted the affairs of the condo. The plaintiff asserted that the claim against the condo arose from its alleged failure to disclose deficiencies and to maintain and repair various parts of the common elements, whereas the claim against the individual directors arose from the alleged negligence in their decision-making process.
However, Justice Beaudoin found that a condo corporation is an “inanimate piece of legal machinery incapable of thought or action” and its legal liability is assessed via the conduct of those who caused it to act in the way that it did. In other words, the liability of the condo flows from the decision-making of its officers and directors. As such, there was no real distinction submitted by the plaintiff to make the conduct complained of the Board members’ own personal conduct to warrant a claim against them in their personal capacities.