Canada: Short-Term Parking Vs. Long-Term Interests: Applying The Business Judgment Rule To Decisions Of Condominium Boards

The Ontario Court of Appeal recently considered the application of the oppression remedy provision in the Ontario Condominium Act, 1998, SO 1998, c 19 (the "Act"). In doing so, it engaged in a useful – and rare – discussion of the "business judgment rule" outside of the corporate law context, while reinforcing the basic elements of the rule familiar to corporate and securities law practitioners.


In 3716724 Canada Inc. v. Carleton Condominium Corporation No. 375, 2016 ONCA 650 ("Carleton Condo"), the Court of Appeal overturned an application judge's decision that a condominium board had unfairly disregarded the interests of the respondent, the owner of a number of parking units in a downtown Ottawa condominium complex.

The respondent sought to convert its parking spot rental business from monthly to hourly rentals to increase profits. To do so, it required the approval of the appellant Board to make changes to the condominium garage. The Board determined that the proposed changes would make the condominium, which was located in a high-crime area, less safe. The Board elected to treat the changes as "substantial", triggering a provision of the Act that required the condominium's unit holders to vote on the change and approve it with a 2/3 margin.

Accordingly, the appellant insisted that a full-time security guard needed to be hired, without which it would refuse to approve the requested change. The respondent then commenced an application under s. 135 of the Act, on the basis that the Board's decision was unfairly prejudicial and unfairly disregarded their interests.1

The application judge held that the respondent had a reasonable expectation of operating a short-term parking facility at the condominium, and the Board unfairly disregarded that expectation in arriving at its decision and insisting on a full-time security guard. The application judge ordered that the respondent should be permitted to make the changes, without holding a unit-holder vote as required under the Act.

The Appeal Decision

The Court of Appeal allowed the Board's appeal, overturning the application judge's decision on two grounds.

First, the Court found that the application judge improperly relied upon an affidavit filed by the respondent as fresh evidence. This affidavit, which contained information about the cost of a full-time security guard that the application judge relied upon in his ultimate findings, was only intended to be used in a bifurcated damages portion of the case, and was not to be considered on the hearing of the Application itself. Thus, the judge relied on evidence not properly before him in reaching his conclusion.

Second, the Court held that even if the fresh evidence was properly before the Court, the application judge fell into error by improperly substituting his own judgment for that of the Board, which came to a fair and reasonable decision.

Business Judgment Rule

In arriving at this decision, the Court reviewed the extensive treatment of the "business judgment rule" in Canadian appellate courts, including the Supreme Court of Canada's leading decision on the matter in BCE Inc. v. 1976 Debentureholders, 2008 SCC 69. It repeated and adopted the well-worn interpretation of the rule, such that a reviewing court – which will generally be in a less favourable position to make decisions about the subject corporation – will not second-guess the decision of a board that has acted fairly and reasonably.

The Court noted that the rule's application was not limited to the corporate law context in which it arose. It drew parallels between the duties of directors and the oppression remedy found in the Act, and those found in business corporations statutes, stating:

[51] ...the rationale underlying the business judgment rule in the corporate law context is also applicable to condominium corporations. As representatives elected by the unit owners, the directors of these corporations are better placed to make judgments about their interests and to balance the competing interests engaged than are the courts. For instance, in this case the security concerns arose in part as a result of the condominium's location, and the Board members' knowledge of that area is clearly an advantage that they enjoy over any court subsequently reviewing their decision.

With this background, the Court determined that the Board acted honestly and in good faith, and reached a reasonable decision that required it to balance the security interests of the condominium with the commercial interests of the respondent:

[59] ... [The Board was] entitled to consider the security implications for users of the common elements. It did not ignore or treat the interests of the respondent as being of no importance. It simply – in good faith and after a fair process – determined that legitimate and reasonable competing interests were more important. Its decision not to approve the requested changes to the common elements unless the respondent hired a security guard was within a range of reasonable choices.


Carleton Condo does not rewrite the book on the business judgment rule, but affirms its application in a new context that will be of interest to practitioners of corporate law and condominium law alike.

First, the Board's decision in this case was not made subjectively or without extrinsic support. The fact that both the Board and the respondent had commissioned security assessments, which were relied upon by the Board, was a definite factor in the Court of Appeal's decision to uphold the Board's original decision.

It is also notable that in this case, the appellant Board was required to weigh highly disparate interests of different classes of stakeholders – that is, the commercial interests of a parking unitholder, and the broader personal security interests of other condominium owners.

The Court noted that there are occasions where a board cannot balance "like against like", and might be required to make choices that prejudice one interest of one class of stakeholder. This does not mean that the stakeholders' interests will be "unfairly disregarded" so as to render the Board's decision oppressive.

As a result, if a board – on Bay Street or Main Street – can be shown to have engaged and balanced competing interests in good faith, its resulting decision will continue to be given deference by reviewing courts in accordance with the business judgment rule.

Case Information

3716724 Canada Inc. v. Carleton Condominium Corporation No. 375, 2016 ONCA 650

DOCKET: C61559

DATE: August 30, 2016

To view original article, please click here.


1 Act, s. 135(2): 2) On an application, if the court determines that the conduct of an owner, a corporation, a declarant or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant, it may make an order to rectify the matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.