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Courts Will Protect Condo Board Decisions… made in good faith

You may recall our blog on an Ottawa case opposing a mixed-use condominium corporation to the owner of a public parking business within this corporation. The Court of appeal reversed the original decision and concluded that condo board decisions taken in good faith should be shown deference and will not likely be set aside by courts.

Facts of this case

In this case, the parking operator wanted to convert some of his parking operations from monthly rentals to hourly rentals.  While the condo’s declaration specifically allowed the rental of parking spaces on an hourly basis (in fact the declaration specifically imposed on the owner of the public parking an obligation to lease some spots on an hourly basis), the corporation raised security concerns resulting from this change in the business model. The corporation demanded that the parking operator use a full-time security guard. The parking operator was of the view that a full-time security guard was unnecessary and cost-prohibitive. Instead, he proposed alternative security measures.

In first instance, the judge concluded that the corporation’s demands to have a full time security guard were unreasonable and oppressive. For all intents and purposes, the first judge was ordering the corporation to allow the hourly pay-and-display parking operations.

Decision on Appeal

The Court of Appeal disagreed and reversed the decision. The Court was of the view that the corporation’s security concerns were valid and reasonable.  In such circumstances, as long as the board acts honestly, in good faith and as long as the board exercises the care, diligence and skill of a reasonably prudent person, the board’s decision should be granted deference. According to the Court of appeal, the decision for a court reviewing a condominium board’s decision should not be whether the decision was the best one but whether the decision was within a range of reasonable choices.

As representatives elected by the unit owners, the directors of these corporations are better placed to make judgments about their interests and to balance the competing interests engaged than are the courts”.

In this case, the Court of appeal was of the view that the board acted properly and considered the competing interests of the parking operator and of the condominium residents. The corporation was not prohibiting the parking operator from renting spots by the hour, but simply placing certain preconditions which the board felt adequately addressed their security concerns.

Lessons learned

Certainly, this decision is unfortunate for the parking operator. Both the trial judge and the court of appeal recognized that the parking operator’s expectations with respect to the operation of his business were reasonable.

As importantly for condos across the province, it may be reassuring to know that board decisions will be granted deference and respect as long as the board has acted in good faith and honestly in its decision making process.  Indeed, in this case, the board was found to have properly considered evidence and information (even from the parking operator) prior to making its decision. The board was also found to have attempted to balance competing interests in reaching a decision which was, amongst all of the possible decisions, within the range of what reasonable.

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