Examination of Records – Do Condominium Owners Need a Proper Reason?
The Courts have said that condominium owners may be required, in some cases, to provide a proper reason for their requests to see records of the corporation. This is important in order to prevent unwarranted “fishing expeditions” and to otherwise prevent owners from requesting records for improper reasons (for instance, only for the purpose of pestering or bothering the Board).
For instance, in the recent case of Lahrkamp v. MTCC No. 932 (click here to read the decision: Reasons For Judgment of J. Prattas), the decision of the Toronto Small Claims Court included the following:
“In my view, the inevitable conclusion to be drawn from the plaintiff’s conduct and dealings related to his requests for access to records over the years was that the plaintiff 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 a certain delight in pestering the Board and others with his demands.”
For some of the owner’s requests – for proxies and Board minutes – the Court established a protocol for the records to be made available to the owner, subject to the owner covering costs (set by the Court) for copying and redacting those records.
For other requests – for owners lists, General Ledgers, Accounts Receivable Ledgers, Bank Statements, Portfolio Valuation Summary Details and Transaction Summary Details – the Court rejected the owner’s requests, in some cases because the owner did not have a proper reason for the request.
This legal principle (the need for owners to have a proper reason for their requests to see records) is based upon Section 55 (3) of the Condominium Act, which currently says that owners can examine records of the corporation “for all purposes reasonably related to the purposes of this Act”. (Requests for records are of course also subject to exceptions otherwise listed in Section 55.)
Under the coming amendments to the Act, those words – “for all purposes reasonably related to the purposes of this Act” – will be removed from Section 55 (3). However, there will be new regulations respecting access to Records. The new regulations will include the following:
Examination of records
13.3 (1) The right to examine or obtain a copy of a record under subsection 55 (3) of the Act does not apply unless,
(a) an owner, a purchaser or a mortgagee of a unit requests to examine or obtain the copy and the request is solely related to that person’s interests as an owner, a purchaser or a mortgagee of a unit, as the case may be, having regard to the purposes of the Act; or
(b) a duly authorized agent of an owner, a purchaser or a mortgagee of a unit requests to examine or obtain the copy and the request is solely related to the interests of that owner, purchaser or mortgagee of a unit, as the case may be, having regard to the purposes of the Act.
(2) Despite subsection (1), a person entitled to examine or obtain copies of records under subsection 55 (3) of the Act is not required to provide the corporation with a statement of the purpose of the request.
So in summary, the new regulations (expected to come into force on November 1, 2017) say that an owner’s request to see records must be solely related to the owner’s interest as an owner…. having regard to the purposes of the Act. But the new regulations also say that the owner can’t be asked to state the purpose for the owner’s request.
It’s difficult to predict how the new regulations will be interpreted and applied by the Courts and/or the new Condominium Authority Tribunal, but here’s how it looks to me:
• Condominium corporations won’t be able to ask for a reason or explanation for an owner’s request for records.
• However, if it appears (based upon all of the surrounding circumstances) that the owner does not have a proper reason for a particular request, then I think that it may still be proper to refuse the request.