Boards Behaving Reasonably: A Practical Guide to Sound Governance in Condominiums

By: Bern Management Inc.
 

In the evolving landscape of condominium governance, the duty of directors to act in the best interests of the corporation must be exercised not just with diligence, but with discernment. Recent decisions by the Condominium Authority Tribunal (CAT) underscore a critical principle that cannot be overstated: even when condominium governing documents appear to grant broad authority, Boards must exercise that authority reasonably and in good faith.

Increasingly, the CAT has demonstrated that unreasonable or aggressive enforcement of governing documents, especially when taken contrary to professional management advice or without regard to proportionality, can expose a condominium corporation to reputational harm, legal costs, and regulatory penalties. These cases offer important lessons not only in legal interpretation but in the art of sound governance.

Reasonableness Trumps Rigidity

In *YCC No. 188 v. Chaudhry*, 2022 ONCAT 81, the Tribunal highlighted the dangers of inflexible enforcement. The Board sought to force the removal of a unit owner’s ring doorbell on the grounds that it contravened common element rules. Despite the owner's legitimate security concerns and willingness to compromise, the Board insisted on strict compliance with its rules. The CAT ultimately sided with the owner, emphasizing that the Board’s position lacked proportionality and failed to account for evolving privacy and safety considerations.

This decision is not an isolated one. In *Amlani v. YCC No. 473*, 2020 ONSC 5090, the Court rebuked a Board for an overly litigious approach in addressing a smoking nuisance. The Board ignored reasonable alternatives, bypassed its manager’s advice, and launched legal action prematurely. The Court ordered the Corporation to pay substantial costs, reinforcing the expectation that Boards act with moderation and fairness.

Listen to the Professionals You Retain

Professional condominium managers are licensed experts tasked with guiding Boards on compliance, governance, and resident relations. Yet, there are cases where Boards have disregarded sound management advice, often to the corporation’s detriment.

In *Beckermann v. WCC No. 323*, 2022 ONCAT 99, a Board pursued enforcement of a pet restriction without properly consulting its manager or considering how similar cases had been treated historically. The Tribunal criticized the inconsistent enforcement and failure to rely on professional guidance, ultimately siding with the unit owner.

Governance is Not Enforcement Alone

Boards sometimes conflate governance with strict enforcement of rules and by-laws. While upholding governing documents is important, governance also includes fostering community, managing risks, and exercising discretion with compassion.

In *Scialpi v. MTCC No. 933*, 2021 ONCAT 10, the CAT criticized a Board for escalating a dispute over hallway decorations—a trivial issue—without attempting mediation or compromise. The decision reaffirms that Boards should reserve enforcement tools for significant breaches, and prioritize informal resolution whenever possible.

Practical Strategies for Reasonable Governance

- **Consult Management Before Acting**: Rely on the expertise of licensed condominium managers.
- **Hire and Follow Legal Advice**: Retain experienced condominium lawyers and heed their advice before taking enforcement steps.
- **Document Decision-Making**: Ensure Board minutes reflect not just decisions, but the rationale.
- **Use Proportionality**: Tailor enforcement responses to the severity of the breach.
- **Prioritize Communication**: Reach out to residents before enforcing.
- **Review Policies Periodically**: Ensure rules and procedures are reasonable and enforceable.

Conclusion

Condominium Boards are stewards of not only a corporation’s assets but also its culture. When Boards act with balance, transparency, and reason, they cultivate trust among owners, improve compliance, and reduce exposure to legal risk. The Tribunal has made it clear that reasonableness is not optional—it is a governing obligation.

References

1. *YCC No. 188 v. Chaudhry*, 2022 ONCAT 81
2. *Amlani v. YCC No. 473*, 2020 ONSC 5090
3. *Beckermann v. WCC No. 323*, 2022 ONCAT 99
4. *Scialpi v. MTCC No. 933*, 2021 ONCAT 10
5. *Condominium Act, 1998*, S.O. 1998, c. 19, s. 37