Community involvement is an essential need for the functioning of various sectors of our society. Some are aimed at a large community, such as community or political organizations that are always in dire need of volunteers. Other environments will aim for a smaller scale. This is particularly the case for condominiums. The last census in 2016 highlighted that the groups living mainly in condominiums in Quebec are first young households wishing to build equity in the short term, and then aging households whose children have left the familynest.1 Some see their home more as an investment than a long-term home, and others want to free themselves from the obligations inherent in owning a home. It is therefore not, a priori , in these two majority groups that the typical profile of the member motivated to devote himself to the administration of his co-ownership is found.
Recruiting unpaid volunteers is a challenge in itself, especially when the position involves great responsibility. Boards of directors must ensure the day-to-day management of the condominium, its administration, the keeping of its books, the determination of contributions to common expenses and much more. Thus, the problems of recruitment and involvement on boards of directors can have serious consequences on the evolution of a condominium and its management can become a real headache.
So what is the remedy for the decision-making paralysis resulting from a lack of directors on the board of directors of a syndicate of co-owners?
First of all, it is essential to remember the conditions imposed by our civil law with respect to the election of directors. A co-ownership is a legal person, whose representative is its board of directors2. The directors are appointed by the members of General Assembly3, in this case, the co-owners, with a quorum of 50% of the votes. The Civil Code of Québec adds that “if the quorum is not reached, the meeting is then adjourned to another date, notice of which is given to all the co-owners; three-quarters of the members present or represented at the new assembly constitute a quorum (…) 4. Article 340 CCQ also provides that “in the event of the resignation of a director, the other directors shall fill the vacancies on the board until the date of the next meeting of co-owners.”
To be valid, the election must not only respect the quorum, but the questions submitted to the meeting and the notice itself must also comply with the requirements of the declaration of co-ownership and Bill5. If a condition of validity is not met, the election may then be reversed by means of article 1103 CCQ, and any action brought by the irregularly elected director may give rise to an action in quo warranto6.
Notwithstanding the foregoing, an election of directors, no matter how regular, will not result in a board of directors in the absence of a candidate. Similarly, the rule set out in article 340 CCQ cited above requires that there be at least one director in office to manage the Board of Directors until the next meeting. Ideally, when the majority of the members of a board resign or do not renew their mandate, the declaration of co-ownership will have provided for a provisional administration, or one of the outgoing members will remain in office on a precautionary basis. An extraordinary general meeting with the election of a new board of directors7 as an item on the agenda will then be held and will allow for an optimal transition.
However, this scenario is not always possible. Often, not only will the declarations of co-ownership not provide for provisional administration, but they will require a co-owner who wishes to hold a special meeting on his own initiative, to first request it to his board of directors. A period then begins to run at the end of which, following the inaction of its council, the right of the co-owner to convene the meeting arises. In these circumstances, and in the absence of current directors, case law confirms that it will be up to the courts to appoint a board.
This was confirmed by the Court of Québec in 2004 in the Adélard J. Gagné v. Syndicate of the co-ownership Place Montpellier 561 and Michel B. Galand (hereinafter referred to as “the Syndicate”). The Court was seized of a monetary claim against the union brought by one of its members, Mr. Gagné. The latter asked to be compensated for the disbursements and inconveniences he had to incur in order to have a new board of directors elected after the resignation of all the previous members of the Board. Indeed, following this successive resignation of the directors, Mr. Gagné had to hire a lawyer to send the other co-owners a formal notice of the convening of a general meeting with the election of a new Board of Directors on the agenda. In his request, Mr. Gagné claims that it was the responsibility of the union and its former president, Mr. Galand, who was also a member of the board before resigning from both positions, to call the meeting.
The Court of Québec dismissed Mr. Gagné’s application. It reiterates the optional nature of the director’s task, codified in article 338 para. 2 of the Civil Code of Québec, and specifies that there is no obligation binding either on the outgoing directors of a board of directors or on the syndicate of the co-ownership. The court expressed itself as follows:
In addition, the Court presented the options that Mr. Gagné could validly exercise following the dismantling of his board. First, he could have tried to convince all the co-owners to hold a special general meeting to elect a new council. This is what Mr. Gagné had tried to do, but his bad relations with the other co-owners had got the better of his attempts. In the event of an impasse, the recourse provided for in article 1084 para. 2 of the Civil Code of Québec was then open to him, which allows a co-owner to apply to the court to have “an administrator appointed or replaced and to set the conditions of his office”.
A new provision added to the Civil Code of Québec in 2019 could also be interesting. Indeed, article 1086.4 CCQ allows the court to replace a board of directors “with a provisional administrator and [de] determine the terms and conditions of its administration.” Can it be concluded that this provision applies to a board of directors paralyzed by a quorum or involvement problem? The courts have not had an opportunity to consider the merits of the application of this provision, and the circumstances justifying its application have not yet been defined. However, we emerge from the parliamentary debates that this is a short-term administration, applicable, “for example, in the event of a major dysfunction of the co-ownership”9, and that the court has “the discretion […] to be able to make his decision to the best player […] possible, according to the situation that arises”10. We conclude that the administrator answers to the court and may be a third party.
The only decision that has cited section 1086.4 since it came into force is 6169970 Canada Inc. v. Rosa Nova Union which opposes members of the general assembly of the Rosa Nova Union. The request followed the conflictual appointment of one of the directors. At the general meeting aimed at forming a board of 5 directors, 4 of them were elected while the appointment of the fifth had divided the vote 50/50. The Superior Court was therefore called upon to rule on an application for an interim injunction to appoint the said administrator as provisional administrator. Considering the nature of the order sought, the criteria considered by the Court were the urgency of the situation, the prima facie presence of colour of right, the balance of convenience and the risk that a party would suffer serious or irreparable harm. On these criteria, the applicants have not met their burden of proof. As for the practical application of article 1086.4 CCQ, the Court merely stated:
In conclusion, co-owners without a board of directors and whose internal regulations are silent on the procedures applicable in such circumstances, can refer the matter to the courts so that they can appoint a new administration and define the responsibilities of the administration. Our Civil Code also allows us to hope for a diversity of remedies through the possibility of having a provisional administrator appointed. However, this has yet to be confirmed by the courts. Nevertheless, it is important to remember that incurring legal proceedings for such requests confronts the co-owners with the intrinsic delays and costs of the justice system. It is therefore relevant for co-ownerships to question the deep reasons that lead to the desertion of CAs, and to try to energize themselves and innovate upstream to motivate their members to get involved, for the good of the co-ownership and all co-owners.
[1] The Association des professionnels de la construction et de l’habitation du Québec (APCHQ), The Rise of Co-ownership in Quebec, 2019 at 8 and 9.
Online: https://www.apchq.com/download/0fcf1c96448169d3712c30e044571d8efc950df1.pdf
[2] art 321 CCQ.
[3] art 338 (1) CCQ.
[4] art 1089 (1) and (2) CCQ.
[5] Syndicat de la copropriété Monte Carlo Condominiums Phase “B” v. Dolbec, 2006 QCCS 6363 para paras 59-73
[6] Syndicat de la copropriété Monte Carlo Condominiums Phase “B” v. Dolbec , 2006 QCCS 6363, at para 42
[7] André M. Benoît, and Marie Trudel, Manuel de gestion d’un syndicat de copropriété divise au Québec (Montreal: Wilson & Lafleur, 2009), at point 131.1084.
Online: https://edoctrine.caij.qc.ca/wilson-et-lafleur-livres/59/469354492
[8] Gagné v. Syndicate of the co-ownership Place Montpellier561 , 2004 CanLII 4674 (QC CQ), at para 50.
[9] QUEBEC (National Assembly), Journal des débats. Committee on Planning and Regional Planning,1st Session,42nd Parliament, August 20, 2019, “Bill 16, An Act mainly to regulate building inspections and divided co-ownership, to replace the name of the Régie du logement and to improve its operating rules and to amend the Act respecting the Société d’habitation du Québec and various legislative provisions concerning municipal matters”.
Online: http://www.assnat.qc.ca/fr/travaux-parlementaires/projets-loi/projet-loi-16-42-1.html
[10] Ibid.
[11] 6169970 Canada Inc. v. Syndicat Rosa Nova, 2020 QCCS 3072.
