It has been nearly two years since the Condominium Authority Tribunal (“CAT”) first “opened its doors” for the purpose of resolving condo disputes on November 1, 2017. CAT’s authority was (and remains) limited to requests for records and related disputes between corporations and owners, who are generally entitled to examine a corporation’s records subject to the four exceptions enumerated in section 55(4) of the Condominium Act, 1998 (the “Condo Act”).
This article will serve to provide a comparison of the outcomes of records disputes that involved the same owner and were adjudicated by the Small Claims Court (pre-CAT) and the CAT, respectively.
In Lahrkamp v Metropolitan Toronto Condominium Corporation No. 932, three separate actions had been commenced by the same owner in the Small Claims Court and culminated in a 12-day trial. In the actions, Mr. Lahrkamp sought extensive corporate records for the years 2007 to 2015, including accounts receivable ledgers, general ledgers, bank statements, proxies, owner lists, minutes of board meetings and transaction summaries. In dismissing nearly all of the owner’s requests, Justice Prattas concluded that owners’ entitlements to transparency must be balanced with reasonableness. In other words, a condo’s obligations to disclose corporate records should not give an owner “carte blanche” to go on a fishing expedition. In this case, Mr. Lahrkamp had regularly bombarded management, board members and the auditor with voluminous requests for records and “clarifications” in connection with responses.
Notably, the Court found Mr. Lahrkamp to be a litigious person and that:
“[He] was not genuinely interested in looking into certain specific aspects of the financial operations of the defendant but was either oblivious to the fact that he was wasting other people’s’ time and money or, more likely, that he took certain delight in pestering the Board and others with his demands”.
The Court concluded that the lengthy and costly trial could have been avoided had the parties engaged in an open and rational dialogue prior to the commencement of litigation. This appears to have been the aim of CAT and, in particular, the first two stages of the CAT’s process that mandate a without prejudice mediation session between the parties.
In Michael Lahrkamp v Metropolitan Toronto Condominium Corporation No. 932, Mr. Lahrkamp commenced a further records claim against the Corporation by commencing an application with the CAT. He claimed that this dispute was separate from the previous proceedings commenced by him because it related to records which had not been requested before.
The CAT reviewed the owner’s litigation history and rightly, in our view, dismissed the application on the basis of section 1.41(1) of the Condo Act. That section authorizes the CAT to refuse to allow an owner to make an application and/or dismiss an application if it is of the opinion that the application is “frivolous or vexatious or that the application, has not been initiated in good faith or discloses no reasonable cause of action.”
What Do These Cases Tell Us?
While the CAT was designed to increase the efficiency, accessibility and cost-effectiveness of owners’ claims related to condo records, its decision in the second case involving Mr. Lahrkamp makes clear that owners cannot use the CAT as a “back door” to successfully pursue requests for records that are unreasonable and/or made in bad faith. Condos that find themselves on the other end of records dispute commenced by an unreasonable owner on a baseless “fishing expedition” may rely on section 1.41, which has now been successfully used to dismiss an owner’s application in such circumstances.
© Deacon, Spears, Fedson + Montizambert, 2019. All rights reserved.