The last time we wrote about the notorious Boily saga, the Ontario Court of Appeal had reaffirmed a lower court’s finding that the directors of an Ottawa condo corporation had acted in bad faith and were in contempt of court as they had deliberately violated a court order to restore the condo’s courtyard to its original design. While the lower court held the directors personally responsible for the cost – estimated at $350,000 – of restoring the courtyard to its original look, the Court of Appeal significantly reduced this amount and said they just needed to pay a fine of $7,500 each. Details of the facts and the prior court decisions are set out in our previous blog postings on this case.
Now, in what appears to be the final chapter of this case, the Court of Appeal has reduced the financial liability of the rogue directors even further. Previously, the lower court held the directors responsible for not just the cost of restoring the courtyard’s original appearance, but also the cost of unnecessary legal proceedings caused by the directors’ misconduct. The lower court based its cost award on the fact that the directors “breached the order willfully and deliberately” and “acted neither honestly and in good faith, nor as a reasonably prudent person.” While the lower court required the directors to pay in excess of $109,000 for legal fees and disbursements out of their own pockets, the Court of Appeal in its latest ruling has lowered this amount to $35,000.
In its latest decision, the Court of Appeal points out that a finding of contempt does not automatically justify using the higher scale of costs. This lower amount, the Court of Appeal says, is “fair and reasonable having regard to the expectation of the parties.” The Court of Appeal had noted on the appeal of the contempt motion that the directors’ “contemptuous conduct must be considered in the light of the fact that there is no evidence that it was motivated by personal gain, vengeance or any reason other than that they felt they knew best.”
As the directors have been ordered by the Court of Appeal to pay the costs on a “joint and several basis” with the condo corporation, this potentially means that some directors will not end up paying their share of the $35,000 out of their own pockets. (When there are multiple wrongdoers who share “joint and several” liability, an innocent party is allowed to collect the entire sum from just one or a few of the wrongdoers, not all of them.)
Thus, while the directors are still penalized to some degree for thumbing their noses at the court and the unit owners they were supposed to faithfully represent, this latest ruling seems to recognize that directors – even those who violate the Condominium Act and act in bad faith – are ultimately volunteers of non-profit corporations who should not be punished too harshly where the directors’ conduct was not intended to and did not result in personal gain for the directors. It seems that the courts did not wish to impose a disproportionate penalty that will deter people from serving on condo boards.
Unfortunately though, in this case, the unit owners will ultimately bear the costs of this litigation that must be paid by their condo corporation. From the perspective of the unit owners, the directors are getting off lightly, in view of the fact that they disregarded the wishes of unit holders and breached a court order in the process.
Thanks to Jami Makan, articling student, who authored the above post.
