The Cost of a Flawed Election

In the case of Ramos v. York Condominium Corp. No. 25, the condominium corporation had held an election at its 2021 AGM to fill four vacancies on the corporation’s Board of Directors. The AGM was chaired by the corporation’s then building manager, Bert Berger. He declared that four incumbent Directors had been re-elected. One of the owners, Maria Ramos, applied to Court to challenge that result. 

In a consent order dated January 7, 2022, the Court had appointed an independent inspector (Judy Sue from Eagle Audit) under Section 130 of the Condominium Act. Eagle Audit’s mandate was to investigate the condominium corporation’s records pertaining to the election and comment upon the correctness of the declared result. This turned out to be quite an extensive effort. The Court decision includes the following description of the efforts of Eagle Audit:

After her appointment by Black J., Eagle Audit took possession of the 2021 AGM records. Ms. Sue observed anomalies and omissions. Not only did these impede the auditing workflow, but they were also “red flags for the possibility of deeper problems.” Among them, 87 out of 90 paper proxy forms were marked in favour of the same 4 candidates, a result that appeared “improbably one-sided for a condominium corporation with 252 voting units and 8 nominated candidates.” The electronic voting system also listed a ninth candidate whose name did not appear on scrutineers’ tallies. The task of reviewing ostensibly regular documentation tainted by red flags prompted a more intensive review on a page-by-page basis.

The investigation turned from the paper review to interviews with Mr. Berger. Initially, he was absent when Ms. Sue and her colleagues attended. However, they used the opportunity to review electronic files and a video replay of the AGM. A key revelation from this video was the presence of lawyers acting for two owners whose proxy forms had been rejected by management. The sealed envelope provided by York Condo did not contain any such forms bearing the names of those owners.

The inspector eventually sat down with Mr. Berger and interviewed him twice, with each session lasting two hours. Ms. Sue concluded that Mr. Berger was responsible for the vote count anomalies and the exclusion of dozens of valid proxy forms with votes cast in favour of challenging candidates.

After completing a review of the ballots and interviews of the building manager, Eagle Audit concluded that the true vote had been the exact opposite of what had been declared by the Chair of the meeting. According to Eagle Audit, the owners had actually voted in four challengers and did not re-elect the incumbents.

Ms. Ramos sought a declaration confirming the inspector’s report that the AGM was improperly conducted. She also sought an order directing YCC 25 to pay the inspector’s fees.

The condominium corporation clearly did not agree with the conclusions of Eagle Audit. By way of response, the condominium corporation hired an independent Chair for the corporation’s 2023 AGM. At that AGM, a resolution was passed to accept the declared 2021 election result (in the hopes of bringing that issue to a conclusion).

The condominium corporation also sought a further opinion from another independent party (Timothy Duggan, lawyer). Mr. Duggan did not entirely agree with Eagle Audit’s findings. However, according to the Court’s decision, Mr. Duggan “also opined that the Inspector’s concerns regarding Mr. Berger’s conduct of the election ‘appear to be largely well-founded.”

The above steps (taken by the condominium corporation) prompted further reply reports from Eagle Audit.

In the end, the Court held that there was no need to determine the results of the 2021 election. That issue had essentially been resolved by the resolution passed at the 2023 AGM. Therefore, the Court declined to make any declaration about the results of the 2021 election. However, the Court’s decision includes the following key statement:

Given my decision regarding the declaratory relief, I need not decide the relative validity of the two experts’ opinions regarding the outcome of the 2021 AGM election. The only conclusion I can reach comfortably is the consensus opinion that Mr. Berger’s misconduct made the result wholly unreliable.

In other words, the independent inspector was hired because of the unreliable election procedures followed at the 2021 AGM.

In terms of Eagle Audit’s efforts, and the related fees, the Court stated as follows:

My review of the timesheets, the scope and purpose of the inspector’s reports, and the seriousness of Mr. Berger’s misconduct in the handling of the election, that the auditing and investigation fees are generally in line with specialized professional services for the examination of issues of the kind that faced the owners in 2021. The state in which Mr. Berger left the records from the AGM were such that close analysis of the voting documents entailed work not unlike the efforts of auditors who testify in court on commercial, institutional, and family division disputes.  There being no cogent evidence questioning the inspector’s fees, the court can only examine the materials and exercise its discretion to approve the amounts charged. The amounts charged are not out of the ordinary for the type of specialized audit work involved in this case.

So in summary, the Court held that the efforts (and fees) of Eagle Audit were reasonable, and were the result of the flawed 2021 election.

As a result, the Court ordered the condominium corporation to pay the full amount invoiced by Eagle Audit ($192,308.79) as well as Eagle Audit’s full costs of the Court process ($37,151.82) as well as Ms Ramos’ costs of the Court process on a substantial indemnity scale ($75,000.00).  [These amounts are of course is in addition to amounts paid by the condominium corporation for its own legal services, for the opinion of Mr. Duggan, and for the independent Chair for the 2023 AGM.]

And of course none of this takes into account the time, effort and emotional strain for all parties to a Court dispute (including Ms. Ramos and the members of the Board).

This case shows the expense and the difficulty that can be suffered by a condominium corporation when an election is not properly handled.

We also can’t help wondering whether a wise alternative would have been to promptly re-do the 2021 election, as soon as the flaws in that election process started to come to light.

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