Are “Owners’ Handbooks” Enforceable?

Many condo corporations set out their rules in “owners’ handbooks” or  “guidebooks” that are passed down from board to board. In many cases, how and when these “rules” were adopted is lost to history. This can cause significant challenges to condos when it comes time to enforce these rules or, as in a recent court case, when faced with a records request. It may be time to clean up your rules and formalize their adoption.

Facts of the case

In Lafortune v. CCC No 37, the Corporation had a “Resident’s Handbook” on which it relied as its one-stop-shop for rules. This guidebook had been in place as long as anyone could remember, but there was no record of how it had been adopted. An owner brought a CAT application seeking various reliefs. However, principally, she alleged that this handbook did not constitute an “adequate” set of rules and demanded that the Corporation be required to adopt new ones.

While ultimately, the owner was unsuccessful in her Application, the Tribunal made several statements about the Corporation’s records and rules, that will be of particular interest to other condos in a similar position.

Decision

The Tribunal reviewed the Corporation’s statutory obligation to keep adequate records, noting that the term “adequate” is not defined in the Act. Accordingly, in order to be adequate, a Corporation’s records must permit it to fulfill its duties and obligations. The Tribunal went on to note that one of the Corporation’s obligations under the Act is to enforce compliance with its governing documents. In this case, because the Corporation had no record of how the handbook and rules within it were adopted, its records were found to be inadequate.

On this, the Tribunal noted:

The Act does not specify what comprises an adequate record of rules. However, given a corporation’s obligation to enforce compliance with the Act and its governing documents, it stands to reason that it should keep a record not only of the rules themselves but also of the process it followed to adopt those rules as documentation of their validity.

However, given the age of the Corporation in this case (registered in 1974), the Tribunal recognized that it may not have complete records, but advised it to keep a comprehensive record of all future rules it makes.

Can the CAT impose new rules?

The Tribunal then considered whether it had the jurisdiction to order the Corporation to adopt new rules. It found that it did not.

While the Tribunal is able to determine whether certain rules were made in accordance with the legislated requirements, those cases are in the context of specific disputes within the Tribunal’s jurisdiction (like nuisance, pets, lockers, parking…). The Tribunal cannot, however, order a Corporation to amend or adopt new rules.

Takeaways

There are a few lessons to be taken from this case:

• Double check your rules – It is quite common for Corporations to rely on a set of rules or a handbook that has been in place since time immemorial. However, this can be dangerous, and may put the Corporation at risk of an adverse CAT finding on the validity of rules. Especially for older Corporations, if this sounds familiar to you, it may be worth thinking about re-vamping your rules in accordance with the Act, if for no other reason than to modernize them!

• The adequacy of records – Keep track of how/when your rules are adopted.  We recommend that the corporation append a rule “certificate” each time a rule is adopted.  This certificate would serve to document when the rule was passed and the fact that a meeting of owners was not requisitioned (or that if one was, the rule was not voted down).  This certificate is very similar to the certificate required when adopting a by-law.

• The scope of the CAT’s jurisdiction – The CAT confirmed that in the context of a records dispute, it does not have the jurisdiction to order the Corporation to adopt or amended its rules. This is a governance decision for the Corporation to make.

• CAT costs – This provides another example of a Corporation having an application dismissed, but still being stuck with its own costs. The best way to avoid this happening, keep adequate records!

There were a number of other interesting findings in this case, so we encourage you to check it out. And remember, for all things condo law, don’t hesitate to reach out to your favourite condo lawyer at Condo Adviser!