Wednesday, 15 March 2017

Accountability, The Elusive Goal

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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