On March
01, 2017 the
CBC published an article written by journalist Trevor
Dunn
titled “Mississauga woman's bitter battle with condo
board not uncommon, experts say”.
It
is the odyssey of a one bedroom condo owner on Kimbermount Avenue in Mississauga
named Alexandra Isa, who for the
last seven years has been waging an uphill battle to hold The Board of
Directors of her Condominium Corporation accountable for an unnecessary upgrade
of a boiler that came with a price tag of $200.000.
All
the details of the conflict that triggered a long tirade of accusations and
counter accusations are not available. But based on critical facts published in
the article, we can safely shape certain conclusions about the dark side of the
condo industry and its ability to convince Board of Directors to invest
thousands of Dollars in a project that makes a rich contractor richer, without
contributing much to the collective good.
The
following key points dominate the landscape of the story’s big picture:
[1]
Occupancy of the building started in 2006.
[2]
In March 2010 the boiler was replaced for an upgraded version supposedly more “energy-efficient”, and according to the
management company that runs the condominium, the switch has resulted in savings and is more environmentally
friendly.
[3]
Ms. Isa assuming that she lives in a “Democracy”
where transparency and accountability play a central role between ruler and
subject, and believing that under existing laws directors have a “fiduciary duty” to act honestly and in
good faith when pursuing projects, adopting budgets, and approving expenditures
that should technically protect and enhance the investment of each and every
unit owner, pressures The Board to provide a study documenting the long-term
savings from an upgrade costing the building $200.000.
[4]
Ms. Isa with great disappointment finds out that accountability does not exist,
especially after receiving in May 2016, a letter from The Board’s president that
reads: "The Board has no obligation
to provide you their rationale or detailed explanations of their decisions nor
is the Board required to give you request for proposals or documents of proof
costs versus savings and costs versus investment returns.”
Now
let us do the math surrounding the argument that the purchase was done based on
solid mathematical principles that justified the investment of a huge amount of
revenues in a boiler considered more energy-efficient, environmentally
friendly, and designed to generate savings.
I
consulted an electrical engineer, and based on his professional opinion a
boiler that has been operational for 4 years only should not consume more than
15% of the total electrical bill charged to a Condominium Corporation. Let us
assume the electrical bill for Ms. Isa’s building is $150.000, 15% of that
amount will be $22.500. A more energy-efficient version of the same boiler,
under ideal conditions will reduce electrical consumption by 25% of $22.500,
which translates into an annual saving of $5.625. Any person who has a basic
understanding of mathematical principles, will not waste $200.000 to save
$5.625.
Dozens
of buildings in Ontario purchase annually energy-efficient boilers to replace
old ones that reached the final stage of their operational lives. The purchase
is mostly motivated by 2 reasons: A) parts are no longer available. B) The
amount of money needed to keep an old boiler running is no longer justifiable,
thus the need to buy a new energy-efficient version.
Of
course The Board will sell readily to a condo owner the old lament that mere
mortals known as directors are volunteers spending endless hours to safeguard
the “Common Good”, but they don’t have the adequate expertise to pursue such
noble goals without relying on the opinions of “The Experts” who proposed the
idea to invest $200.000 to upgrade a four-year old boiler that was fully
functional. So the board passes the buck to “The Experts” who have a vested
interest in promoting products and services that are overwhelmingly WANTS not NEEDS. Of course the law (The Condominium Act) is designed to
support such unethical practices, and there is no legal accountability behind
bad decisions that cost a building thousands of dollars, even if the math is
based on absurd premises. As long as the advice reaching the ears of the
directors is coming from a self-styled expert/consultant, you can blame the
expert/consultant or the management company that selected the expert from a
list of “TRUSTED CONTRACTORS”. Any
attempt to blame the management company will unavoidably mean a concerted
attack by “High End” Bay Street lawyers who will haunt you with a lawsuit
launched on behalf of a Condo Board known as a "SLAPP”-Strategic Lawsuits Against Public
Participation.
SLAPP
court procedures are legal actions launched for the primary purpose of shutting
down criticism directed at Condo Boards, and carry an extremely weak and highly
questionable cause of legal action. The plaintiff's goal in a SLAPP is not to
win the lawsuit, but is rather to silence a critic/defendant/condo owner by
engaging him/her in a war of attrition designed to instill fear of large legal
costs tied to the terrifying specter of losing a home in the process of
resisting the onslaught of a Board whose members, with a stroke of a pen, can
replenish their operational funds by imposing extra payments on top of existing
monthly fees. Despite her right to seek accountability, a valid explanation
behind wasting $200.000 to make a rich contractor richer, Ms. Isa was crushed
under the heavy burden of legal fees, thus leaving the gates wide open for
Board members to engage in any form of abuse of power in the future without any
hindrances.
Remember
no Condominium is immune to the phenomenon known as waste of revenues. And if
you are deluding yourself with the notion that no one is above the law in a
democracy such as Canada and waste can be easily stopped, you are absolutely
wrong. There are groups who can twist and corrupt the law with absolute
impunity to drain the operational budget of a condominium, and as long as you
have Board members who exclusively listen to the captains of “The Condo
Industry”, a unit owner is powerless in his/her pursuit of the elusive goal of
stopping financial abuses in a condominium.
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