Bill 106

Inside the public hearings on Bill 106

Committee hears mixed feedback on proposed Protecting Condominium Owners Act
Tuesday, November 10, 2015
By Michelle Ervin

Emotional pleas and sharp criticisms occasionally pierced through positive feedback and suggested amendments at public hearings on Ontario’s proposed Bill 106, the Protecting Condominium Owners Act.

If passed into law, the bill would overhaul the Condominium Act, establish the Condominium Management Services Act and amend other legislation including the New Home Warranties Plan Act. Its defining features include an alternative dispute resolution process, beefed-up consumer protection measures, stricter financial management rules, training requirements for condo directors and licensing for condo managers.

The draft legislation follows an 18-month, three-stage Condominium Act review. Stage one involved public consultations, which resulted in the identification of five key areas for reform. Stage two saw a 12-person expert panel make more than 200 recommendations based on the work of groups assigned to the five key areas for reform. Stage three concluded the review by returning to the public for feedback on the recommendations. Ultimately, the government received more than 2,200 submissions.

The public hearings on the proposed bill occurred at Queen’s Park before the standing committee on finance and economic affairs, running most of the day Oct. 22 and continuing the afternoon of Oct. 29. The approximately 30 individuals who addressed the committee represented a mix of condo owners and board directors, industry associations and professionals.

A number of themes emerged from their commentary, including unintended consequences, industry influence, unaddressed issues and positive feedback.

Unintended consequences

There is always a risk in reforming legislation that the solution to one problem might lead to the creation of new problems. The joint legislative committee of the Association of Condominium Managers of Ontario (ACMO) and the Canadian Condominium Institute Toronto & Area Chapter (CCI-T) prepared a brief identifying 28 issues that could result in just such “unintended consequences.”

Dean McCabe, past president of ACMO, speaking in the first time slot on day one of the public hearings, introduced the brief to the committee.

“We would like to draw the committee’s attention to just a few of the issues that could be prevented with minor alterations to the bill, which we feel in no way alter the intended protections offered to unit owners,” he said.

For one, McCabe raised concerns about the possible interpretation of the Condominium Management Services Act’s provision guiding the turnover of records when a condo board switches management firms.

“The ‘immediate’ turnover of all records would effectively prevent the manager from preparing the financial statements for the final month of their management tenure,” said McCabe. “In addition, the use of the word ‘all’ could be strictly interpreted to mean that the management companies are not entitled to retain even copies of any material produced during their tenure.”

Instead, the ACMO/CCI brief recommends deleting the words “all” and “immediate” and defining the timeframe for the turnover of records in the regulations.

Lawyer Mario Deo, president of CCI, speaking on day two of the public hearings, highlighted a few more of the brief’s recommendations.

Deo welcomed a proposed change that would extend to owners responsibility for damage they cause to the common elements and other units, but he added that embedding this power in the declaration will make it near impossible to enact.

“The declaration of a condominium can only be changed by 80 per cent of the owners, which is highly unlikely to happen,” said Deo. “We think that condominium corporations should retain the right to pass a bylaw which passes strict liability damage on to the unit owner.”

Industry influence

A few speakers raised concerns about what role industry might play in bringing to life some of the bill’s provisions. Those provisions include mandatory training for condo directors and managers, as well as a condominium authority tribunal that would have the ability to settle certain types of disputes between condo corporations and unit owners.

Donna Lacourse, a condo owner with experience as a director and manager, asserted that the current training for condo directors and managers is inadequate, and expressed skepticism that the proposed changes would remedy the situation.

“First, I need to get something off my chest,” she said. “I am not happy with the innumerable organizations who’ve appointed themselves stakeholders in the Ontario condo landscape. The truth is, it is the voting owners who are consumers; it is the voting owners who are the stakeholders.”

Lacourse called ACMO’s education program a “gesture in the right direction,” but said that it falls short in delivering qualified condominium managers when individuals are otherwise unqualified — for example, if they lack computer or numeracy skills. She also said that proposed mandatory condo director training should come from an “unbiased” source, which, in her opinion, ruled out CCI.

Tom LePage, a condo consultant with management experience dating back to 1982, voiced concerns about the influence of “non-condo-owner stakeholders” in the process.

“I was disappointed, but not surprised, that these two organizations’ boards hired lobbyists at the expense of their members to push their own self-interested agendas,” he said.

LePage pointed to the proposed condo authority and condo manager licensing authority as positives in the new legislation. But he cautioned that, unchecked, industry influence could result in the new delegated administrative authorities taking on personas similar to Tarion.

Dr. Randy Lippert, a professor of criminology and sociology at the University of Windsor, added to this line of commentary based on his independent research on condominium governance. Lippert called attention to the “pretty vague” appointment criteria for the condominium authority, suggesting stronger language to ensure meaningful participation from consumers.

“The board appoints the tribunal, so it’s really about getting the board right to begin with and not simply having people from CCI, who of course are well-intentioned, but they do represent only the industry and not your average owner occupier, for example,” he said.

Note: The ACMO/CCI legislative brief indicates that CCI’s membership includes not only professionals and business partners servicing the condominium sector, but also condo boards and individual residents.

Unaddressed issues

Some speakers asked the committee to confront issues that they asserted the proposed bill fails to address. Tarion reform, which was raised frequently by the NDP during second reading, was one of them. Whether the bill accounts for the needs of small condo communities outside of Toronto, something the Progressive Conservatives questioned during second reading, was another. Plus, there were concerns about whether the bill’s consumer protection measures go far enough.

Barbara Captijn, a new homeowner in Toronto, nodded to the bill’s positive features before pointing to what she felt was a glaring shortcoming. Captijn, also author of the blog Consumers’ Reform Tarion, called on committee members to seize what she described as a missed opportunity to bring accountability and transparency to the agency tasked with regulating the building industry.

She cited cases of falling glass and million-dollar class-action lawsuits in asking for real deterrents to “shoddy construction.”

“And I speak for many consumers here today, who don’t have the ability to come here, and I know that it’s extremely important to all of us,” she said, her voice breaking with emotion, “that you please consider amendments to Bill 106 to address these gaps in consumer protection, which have to deal with the regulator of the building industry, Tarion Warranty Corporation.”

Craig Robson, a representative of the Waterloo Region Home Builders’ Association, which is a member of the Ontario Home Builders’ Association, underscored the importance of recognizing that the condo landscape includes not only high-rises in Toronto, but also townhouses in rural areas. One of the issues faced by developers outside of the urban centre is the 10-year time limit for registering phased condominiums.

“If we wait for the act to come in in its full glory, which isn’t going to be next week, there are going to be a number of projects throughout the province, outside of Toronto, where the phasing is going to have to stop because its 10 years has come up,” said Robson. “Then you’re going to have to do separate condominium corporation and plan in the same development, and hope to heck they get along, and hope to heck that whoever drafted the documents put up the proper easements and cost-sharing provisions.”

Engineer Sally Thompson, speaking in her capacity as first vice-president of CCI, acknowledged the bill’s efforts to reduce the risk of first-year budget deficits. (Thompson was also a member of the Condominium Act review’s expert panel and worked in the ministry for five months on the act.) Those efforts include clamping down on the practice of developers leasing or selling back to corporations components of the condominium.

“But it’s important to recognize that when the first year budget understates the actual costs, when those costs go up, the new owners have to pay those additional costs every year, not just once,” said Thompson, “whereas the accountability on the builder’s half — they have to pay for that deficit — is only a one-times multiple.”

She recommended that the committee consider a penalty represented as a multiple of the amount of the first-year shortfall. The ACMO/CCI brief specifically suggests a multiple of three or more.

Positive feedback

Many speakers indicated general support for the bill before offering suggestions for amendment. Some speakers took the time to highlight what the government got right, point to provisions that should be passed without amendment and make the case for provisions that might be considered controversial.

Catherine Murdock, president of ACMO, reaffirmed the association’s well-documented support for the licensing of managers with regulatory oversight from a delegated administrated authority (DAA).

She held up ACMO’s registered condominium manager (RCM) program as the country’s “most advanced, detailed and widely recognized” platform for training condominium managers. She also noted that ACMO’s RCM program informed the educational requirements for manager licensing proposed by the expert panel in stage two of the three-stage Condominium Act review.

“ACMO looks forward to partnering with the newly formed DAA to provide reliable, knowledgeable professionals to fill the growing need of condo communities in Ontario,” said Murdock.

William Stratas, managing director of Eagle Audit Advantage, urged the committee to adopt the enforcement and inspection provisions proposed in the Condominium Management Services Act as is, without any watering down. He said, “respectfully,” that some of ACMO’s recommendations for revision would have precisely that effect.

Stratas pointed to a recommendation to delete a section of the Condominium Management Services Act requiring that management providers get advance consent from the registrar before changing its officers or directors.

”Proactive disclosure of these ownership changes at the corporate level is very important to prevent shell games,” said Stratas. “These games cannot be allowed to avoid and evade the accountability that happens when management companies know they’re doing the wrong thing.”

The ACMO/CCI legislative brief maintains that notice of a change to the principal condominium manager should be sufficient. Its rationale is that some condominium management firms are subsidiaries of national and international parent corporations, and the directorship of those parent corporations wouldn’t affect the daily operations of its subsidiaries.

Lawyer Chris Jaglowitz, a partner at Gardiner Miller Arnold (who was also a member of the Condominium Act review’s expert panel), made the case for the proposed condominium authority tribunal, addressing questions around whether owners would get value for money. Jaglowitz compared the proposed fees to fund the tribunal to the legal fees shouldered by owners, in a variety of different-sized condos, when their corporations get ensnared in disputes.

“It’s not unheard of for condos [with only a handful of units] to engage in incredibly divisive, usually destructive fights akin to blood feuds, where legal costs might reach six figures and unit owners in those small condos are assessed for tens of thousands of dollars,” he said. “If the condominium authority, with its included tribunal that can quickly and summarily decide the most important types of condo disputes — including about the propriety of meeting requisitions, about rule-enforcement issues — can operate on a levy of a dollar-per-month per condominium unit, that, I submit, is fantastic value.”

The standing committee’s clause-by-clause analysis of Bill 106 began Nov. 5 and is scheduled to continue on Nov. 19. After the committee completes its in-depth analysis, it will report the Protecting Condominium Owners Act back to the legislature with any amendments it has made for a third reading and final vote.

The act could pass before the end of the year but won’t become law until it’s proclaimed into force. The regulations that will fill in the details of the act need to be written and approved first, which is expected to take at least a year. For now, the current Condominium Act (1998) remains in force.

Michelle Ervin is the editor of CondoBusiness.

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