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ARTICLE · 27 JANUARY 2014

Individual Board Member Liability Is Not A Remote Possibility

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A recent Ontario court decision highlights the responsibility of boards of directors to act reasonably in dealing with issues raised by unit owners.

CanadaReal Estate and Construction
Audrey Loeb, LSM, B.A., LL.B., LL.M
Audrey Loeb, LSM, B.A., LL.B., LL.M
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A recent Ontario court decision highlights the responsibility of boards of directors to act reasonably in dealing with issues raised by unit owners.

The dispute arose because a group of owners were concerned about the actions of the board of directors, who had obtained only one quotation to carry out envelope repairs to the building, to prevent water penetration. The one estimate was for $1.6 million. Due to cost concerns, the board obtained further reports and eventually four options for repairs were presented to the owners at an information meeting. After the owners' information meeting, the board elected to proceed with an option estimated to cost $755,000. The corporation would need to borrow $600,000 to fund the repairs and the owners were to approve a borrowing by-law for that purpose at the next AGM. The owners acknowledged the need for the repairs but felt the board had not done adequate due diligence.

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