Defamation in Condos: An Update

legal case.jpgThere has been a lot of talk this week about defamation in condos. Most of the interest comes from a decision released in Ottawa last week. A judge has ordered Yahoo! and Yahoo! Canada to disclose information that a condominium needs to determine the identity of a person responsible for sending defamatory emails to its owners and residents. The emails apparently accused the directors of receiving kickbacks.

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Former Director’s Six Year Battle with Condo Continues…

Durham Condominium Corporation No. 45 and Swan.

As a recap, Swan was elected as a director in June of 2009. He often disagreed with the other directors about the management of the condominium. Two months after he was elected he started a claim against the condominium and another against one of the directors. In the first 4 months of his term as director he took several steps without authorization of the board, including:

  • terminating the property manager;
  • commencing two actions in the name of the condominium against the property management company and its president;
  • commencing an action against the condominium and misleading the other directors by accepting service of the claim on behalf of the condominium;
  • sending harassing and insulting emails to directors and management; and
  • installing a satellite dish on the common elements.

One of the directors requisitioned a meeting to remove him for breaching his duties. The owners voted to remove him in September of 2009. He started another action against the director who requisitioned the meeting claiming defamation. In 2010, all 5 of his actions were dismissed at trial and he was ordered to pay $3,750.00 in costs. He appealed. His appeal was dismissed. The court found that the condominium, directors and manager may have produced material that constituted defamation to him, but they were doing what the Act required them to do and there was evidence to support the comments made.

In 2012 the condominium commenced an application against Swan claiming that he failed to carry out his duties and seeking various orders. Swan brought his own application against the condominium claiming that two directors breached their duties to the condominium and should be removed. He also sought his own reinstatement to the board.

The court reviewed his conduct and found that Swan’s “confrontational inflexibility and misguided assessment of his duties as Director failed to meet” the duties in section 37(1) of the Act. With respect to his application, the court dismissed it in full. There was no evidence that the other directors breached their duties or that the condominium acted in an oppressive manner toward him.

The condominium sought costs of $198,880.92 from Swan. Swan argued that the condominium had to indemnify him under section 38 of the Act. The judge ordered Swan to pay $45,000.00 in costs to the condominium. Swan appealed.

The Court of Appeal released its decision to his appeal on costs. The appeal was allowed and he was awarded $6,000.00 in costs. Unfortunately, the matter has been sent back to the application judge for reassessment of the costs as the Court of Appeal did not have enough information to make a decision regarding the condominium’s obligation to indemnify him. One of the key issues for the application judge will be whether he was acting in bad faith (in which case he would not be entitled to indemnification) or was simply negligent in fulfilling his duties (in which case he would be entitled to indemnification).

Stay tuned. This one isn’t over yet…