Public interest role should limit costs awards against law society

Public interest role should limit costs awards against law society

December 31, 2007

We will see an increase in Administrations in the future

Over the years I have been appointed Administrator for four condominium corporations (for one I am still there after 9 years). With corporations getting older (some in excess of 40 years old), the number of corporations increasing dramatically (now almost 9,400), and governance problems arising in certain corporations (e.g. short-term vision, misuse of reserve funds, or warring factions in the building) I have noticed an increase in the number of Administrations. This raises the question whether Administrators are friend or foe to the owners of the buildings they administer.

I am not suggesting that we have a widespread problem or epidemic in Ontario. Quite the opposite, as most corporations are well governed. But I do believe that we will see an increase in Administrations in the future.

Of the approximately 30 condominium corporations that have had court appointed Administrators, most arose from the reasons mentioned above (and more). For a few corporations, the building was in such a state of disrepair that the municipality was going to condemn it. In other cases, it was a minority of unit owners who obtained the Administration order so that they could wrest control from a developer controlled board which was not acting in the best interests of all owners.

Some argue the whole Administrator mechanism is wrong as it strips away the democratic right of unit owners to govern themselves. Additionally, Administrators charge a fee for their services, and for financially troubled corporations this can be seen as an unnecessary expense.

Despite this, if the question is whether or not there is a role for Administrators and Inspectors, my answer is an unequivocal yes. While letting owners run their own corporation is desirable from a democratic point of view, unfortunately it does not work for buildings where you have rogue boards who misuse owners' money, directors with hidden agendas, or when the board has misguided ideas of how to govern (e.g. short term goals which disregard the long term health of the corporation). These problems are not always intentional; sometimes they are just innocent mistakes by a well-intentioned board.

So although the thought of a court appointed Administrator may upset some and could send a negative impression of the corporation to the public (though it often gives the exact opposite impression), it is an important tool available to unit owners to save their corporation. There should always be the ability under the Condo Act for the appointment of an arm's length person to operate the corporation, correct the mistakes, and get the building back on its feet (or even have an appointment for limited purposes). Therefore, Administrators and Inspectors, in the right circumstance, are definitely our friend and not a foe to the community. It is a role or function that I believe is critical as a last consumer protection for unit owners, and will have an increased role as our industry grows and ages.