In Matlock v. Ottawa-Carleton Standard Condominium Corporation No. 815 et al, 2021 ONSC 390, the plaintiff commenced an action against a condominium corporation for various alleged deficiencies. He also sued several members of the condominium’s Board of Directors. The board members brought a motion to strike the claim as against them.
Justice Beaudoin noted that pleadings against individual directors, officers, or board members are subject to higher scrutiny. The following principles have emerged from prior decisions involving claims against condominium board members:
- A condominium board is presumed to be operating in good faith and in furtherance of its statutory duties.
- To establish liability, the actions of the principals of the corporation must themselves be tortious or demonstrate a separate identity or interest from the corporation so as to make the impugned conduct their own.
- In the absence of findings of fraud, deceit, dishonesty, or want of authority on the part of employees or officers, cases against principals of corporations are rare.
- Bold or vague assertions of intentional tortious conduct are insufficient to sustain a pleading. The pleading of intentional torts must meet a strict standard of particularity.
- A claim in negligence can lie against a director or officer personally for breaching a duty of care if the director or officer himself or herself acted negligently towards the plaintiff.
- The claims against the corporate entity and the directors/officers must be sufficiently differentiated so as to make the claims against the principals independent.
In the case at hand, the allegations against the board members related to the board members’ role as the directing minds of the condominium corporation. There were no pleadings of material facts that made the conduct complained of their own.
The plaintiff argued that the allegations against the condominium corporation and the allegations against the individual directors were distinct. The claim against the condominium corporation related to its failure to disclose deficiencies and to maintain and repair various parts of the common elements, whereas the claims against the directors arose from alleged negligence in their decision making process.
Justice Beaudoin disagreed that there was a distinction. His Honour indicated that, since a corporation is an inanimate piece of legal machinery incapable of thought or action, the court can only determine its legal liability by assessing the conduct of those who caused the company to act in the way that it did. The liability of the condominium corporation flows from the decision making of the individuals. There is no real distinction.
Therefore, in order to be able to advance a claim against individual directors of a condominium corporation board, the pleadings must show that the actions of the directors were themselves tortious, or that the directors went beyond their roles into activities that expose a separate interest from the corporation. The allegations against the corporation and the directors need to be differentiated such that the claims against the directors are independent.
Justice Beaudoin struck the claims against the directors, without further leave to amend.