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Ontario court places Orillia condo under administratorship 2009/06/10 20:54  
FYI a drastic remedy - paid by the owners – has been imposed by Ontario Superior Court onto a 44 unit Orillia condo (Mcflow Capital Corp. v. Simcoe C.C #27 2009 at CanLII website # 28400). Ontario’s Condo Act allows such in s 131.
The recent judgment says : “ . . 22] Some of the factors to be considered in deciding whether the appointment of an administrator is in the best interests of the Corporation are as follows :
1. whether a demonstrated substantial inability to manage the Corporation has been established;
2. whether substantial misconduct or mismanagement or both in relation to the affairs of the Corporation has been demonstrated;
3. whether there is a struggle within the corporation among competing groups such as to impede or prevent proper governance of the Corporation; AND
4. whether only the appointment of an administrator has any reasonable prospect of bringing to order the affairs of the Corporation. [1]
[1] Skyline Executive Properties Inc. v. Metropolitan Toronto Condominium Corporation No. 1385 (2002), 17 R.P.R. (4th) 152 (Ont. S.C.) citing Lum v. Strata Plan VR519 [2001] B.C.J. No.641 (B.C.S.C.)
[23] It is also important to remember that the democratic government of the community should not be overridden by the court except where absolutely necessary [2] Cook v. Strata Plan No. 50, [1995] B.C.J. No. 2882.”

* * However uncommonly this may occur right now in Canada, readers may consider that section 137 of Ontario’s Condo Act makes it a provincial offence with fines for KNOWINGLY doing sufficiently naughty things with corporation funds and for refusing repeated requests for financial statements even if not prepared nor audited. This does not look like a remedy for lazy cheapskates. Administratorship started as a sidebar after disputants contested whether condo liens or mortgagees’ remedies should take priority in liquidating defaulters’ assets ( an issue spreading widely in the USA) . *
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not the same but some biggies about a 5 year old ADMINISTRATORSHIP 2011/12/08 11:47  
The previous entry is NOT the 5 year old administratorship at 800+ unit at YCC #42 "on Dixon Road, near Islington Avenue" in Hogtown.

But it is a relevant re-starting point, given the direction of some condo chaos.

After 5 years of Administratorship at YCC #42 Justice DM Brown has just released a retroactive approval of two years of Administratorship fees + ( $200,000 + ) and has ordered an owner vote ( see canlii York Condominium Corp. 42 v. Hashmi, 2011 ONSC 7178).

Biggies -including his rationales- plus this biggy at para 21 :

"YCC 42 is a very dysfunctional community. From my reading of the materials in the various motions brought before me, one factor contributing to such dysfunction is the high number of units not occupied by owners, but leased out.

It appears that many unit owners no longer have a direct interest in the health of the YCC 42 community, save for collecting rent.

As well, factions have formed and appear to use proxies to further their particular points of view. I think the health of the community could be served by requiring those unit owners who live in the 416 or 905 areas to vote in person.

[22] However, I conclude that the Act does not permit me to impose such a term on the referendum vote. Accordingly, unit owners may use proxies to vote in the referendum in accordance with the Act, Declaration, By-law and rules. That said, the appointment of a retired judge of this Court to supervise the referendum process should ensure that no misuse is made of proxy voting."

You heard it at CAFCOR, almost first.
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What About The 647 Voters? 2011/12/08 12:29  
Thanks - the judge understands the rights and purpose of the proxies, but can see first hand how the abuse has added to the instability of the corporation.

The only interest is collecting rent - says it all!

What about the 647 voters?
Richard Forster
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the 647 are getting a reality check but may recover their votes 2011/12/08 15:56  
Beyond recovering a possible right to vote on community governance ( in the penalty box for 5 years already ) those 647 can retroactively suck up another $219 K in legal fees and $190 K in "administration" for the previous 18 months.

These approved payments could be a lesson for other communities, including a reality check about the market value of onsite paralegal or paralegal-clone skills. I would bet that many owners still think a property manager with a couple of university degrees should net no more than $5 hourly even for managing at YCC # 42. ( I wonder if that place is what the locals notoriously used to call "The Dixon"? If so, the $219 K in legal over 18 months may not be high, given the $125K blown away on Blick v Desjardins simple boundary dispute over less than a six inch eavestrough overhang ).
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Re:the 647 are getting a reality check but may recover their votes 2011/12/08 18:52  
The other reality is the losers don't go away, they just collect proxies and try a different game.

In Ontario more is spent on lawyers than reserve funding!!
Richard Forster
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Re:the 647 are getting a reality check but may recover their votes 2011/12/08 18:54  
The other reality is the losers don't go away, they just collect proxies and try a different game.

In Ontario more is spent on lawyers than reserve funding!!
Richard Forster
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Did $2M have legs ? Funds struggle continues 8 YEARS after Orillia Administratorship granted & sale 2017/02/21 15:58  
( This comment was restored Feb 21/17/;text difference is possible. Number of 'views' is also understated ).

8 YEARS AFTER the 2009 judicial appointment of an Administrator which later completed a court-approved sale of this Orillia complex (Aug 2013), the money trail / 'who owns what bucks ? ' is still amidst litigation.

Former minority lender owners have pursued a lawyer - allegedly the former manager & allegedly a "controlling mind" or "influential mind" of the former majority ownership group - for $ 2 M in common expense funds about which such individual had allegedly made certain representations to the supervising courts.

Details are carefully addressed by Justice D.L. Corbett. No criminal charges have been laid, nor is it determinable if they may be laid. Administratorships are not love-ins.

Background :

Numerous previous court orders ( McFlow Capital v Simcoe CC #27 ) starting with 2009 court order for administratorship. Minority lender McFlow still pursues $2 M which the majority ‘s allegedly controlling mind /lawyer/property manager XXX is alleged to have moved around allegedly incompatibly with court direction.

Net proceeds of court-approved 2013 full sale of the 44 unit complex is shockingly cited to have been only $ 700 K

Now who owns the $ 2 M which the lawyer had once claimed majority had paid as common expense fees etc ? Or where is it ?

McFlow Capital Corp. v James, 2017 ONSC 1049 issued Feb 13/17
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OPPRESSION RULED against CONTROLLING PORTFOLIO; punitive damages to ensue 2020/02/02 19:50  
Again not legal advice

Can deliberately dysfunctional management constitute oppression ?

Jan 20 2020 : with portfolio unit ownerships long devolved & Administratorship lifted, ONSC Ontario Superior Court “pierces the corporate veil” in ruling on more than a decade of claims of Oppression at a 44 unit Muskoka residential condo corporation. It's a ruling ten months after 5 days of hearings.

The winning plaintiff McFLOW Capital - a mortgagee then in possession of 14 rented condo units after default by the borrower - obtains definitive findings of oppression against a majority investor group. The dominant group controlled 29 units. ( A final single unit was un-leased / was owner occupied ).

The oppressors are held to have been controlled by then-lawyer / property manager / corporation counsel Kenneth JAMES who is also a personal defendant.

In what is now cited as McFlow Capital Corp. v. James, 2020 ONSC 374 issued Jan 20/20 , Madam Justice Sandra Nishikawa holds James & some co-defendants to have oppressed McFlow & even to merit punitive damages.

A litany of oppression is cited done by the majority JAMES group ( including his own employee/s as Board members under James ‘direct & indirect controls ) against the minority McFlow portfolio.

The oppression is held to include selective liening, generating intentional dysfunction, neglect & arguable maladministration including to deflate the value of McFlow’s units / potentially acquire them at bargain prices.

Additionally there is speculation about misdirection / at least "controversial" handling - misrouting ? - of certain court-directed corporation funds. The latter triggered an RCMP investigation & prosecution but resulted in acquittal.

The ruling cites that :

" . . . [109] In June 2012, Mr. James, James & Associates, Ms. Cremer, Eveline, and Sterling were charged with possession of property obtained by crime, laundering the proceeds of crime, and fraud over $5,000.

[110] On June 27, 2012, HSBC froze the accounts of James & Associates.

[111] The RCMP sought and obtained a Letter of Request for Judicial Assistance in a Criminal Matter from the TCI for the production of Eveline and Sterling’s documents.

In an endorsement dated July 24, 2014, McCarthy J. of the Superior Court of Justice ruled on a Lavallee motion before him relating to documents seized by the RCMP and whether they were covered by lawyer-client privilege. In his ruling, McCarthy J. found that Mr. James was the principal and directing mind of Sterling and Eveline.

. . . [112] On January 7, 2016, Rose J. of the Ontario Court of Justice acquitted Mr. James of all charges. The charges against Ms. Cremer were subsequently withdrawn. . . .

. . . . .[262] This course of conduct constitutes oppression in that it was burdensome, harsh, and wrongful and a marked departure from the standards of fair dealing.

The affairs of S.C.C. 27 were rife with Mr. James’ self-dealing, and controlled by him in a manner that was both dishonest and abusive.

. . . [266] In this case, without repeating the oppression analysis, it is clear that the Board did not act honestly, in good faith or with the care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

To the contrary, Mr. James and the Board behaved dishonestly, in bad faith and with little care, diligence or skill. Mr. James was not the only one with significant conflicts of interest. . . .

. . . [310] Each of the allegations above, SCC 27’s failure to maintain the common elements, its failure to obtain financial statements, a reserve fund and a reserve fund study, and the excessive litigation costs, would not, on their own, be sufficient to establish oppression by Mr. James and SCC 27.

Under ordinary circumstances, all of those failures would have impacted the owners and mortgagees of the Majority Units and the Minority Units equally. Together, however, the failures created a state of utter dysfunction in SCC 27’s finances and the conduct of its affairs, to McFlow’s prejudice. . . .

. . . [317] Mr. James’ actions, and his failures, in precipitating a state of dysfunction were oppressive, or at the very least, unfairly prejudicial, because it was intended specifically to squeeze out McFlow’s interest in the Minority Units.

[318] Mr. James argues that at most, his conduct amounted to nothing more than “attempted oppression” that was remedied with the appointment of the Administrator.

Mr. James submits that the oppression ended when the Administrator was appointed and the 2008 Special Assessment was withdrawn. The appointment of the Administrator could only ensure that SCC 27’s affairs and the sale of the units would be conducted in a fair and transparent manner going forward. The Administrator could not undo the harm caused by the oppressive conduct that had taken place to date.

. . . [415] I find that this is an appropriate case for punitive damages.

The oppression in which Mr. James engaged, through SCC 27, was egregious, high-handed, and malicious.

Mr. James deliberately conducted the affairs of SCC 27 in a manner intended to harm the interests of the Minority Unit mortgagee. His conduct was also harmful to SCC 27 and the Complex.

Mr. James’ dealings were fraught with conflicting interests and he took advantage of his position and qualifications as a lawyer to obscure his dealings and interests. He used corporate entities and enlisted others who were loyal to him, such as Ms. Cremer and Mr. Walker, to assist him in conduct that was a marked departure from standards of fair dealing.

[416] Punitive damages are also warranted to denounce and deter Mr. James’ years of obfuscation with respect to the true owners/parties behind the majority, and Mr. James’ and Ms. Cremer’s dissipation of the $2 million GIC.

They deliberately hid this money from the Court and the Administrator, even after a court order.

But for the unrelated criminal charges, this would not have been discovered and the $2 million would not have been preserved.. . " -unquote
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