Sub-section 37(3) of Ontario's Condominium Act, 1998, provides a special degree of protection from personal liability for condominium directors who rely in good faith on the advice of professionals "whose profession lends credibility to the report or opinion." While the protection from liability is attractive, it is given only conditionally, and the key conditional element is that they must rely on such professionals "in good faith."
Reliance, on its own, merely means "dependence on or trust in someone or something." A director might rely on professional advice by simply doing whatever the professional has advised. Reliance "in good faith" means something more. But what?
There might be several answers, some of which might depend on different types of situation and different types of professional, but one answer that is certain to apply in all cases is that good faith reliance means that the directors interact with their professional advisors, and accept their advice, with the same degree of honesty, care, diligence, and skill that is required of them in all other circumstances.
Thus, good faith reliance on professional advice will include selecting each professional with care, having reasonable grounds to believe they are competent to address the issue about which advice is sought.
For example, it likely makes little sense to seek condominium law advice from a family law lawyer, even if the lawyer is a close friend of a director and offers to do the work for free. Likewise, the board would be unwise, and certainly neither diligent nor careful, to ask a lawyer or accountant to interpret a survey (ask a surveyor) or opine on the reliability of structures (ask an engineer), or to ask an engineer about the accuracy of budgets (ask an accountant) or records (ask an auditor). It is an aspect of diligence and care to consider what kind of professional is required to obtain an effective answer to whatever is the question at hand.
The qualities of honesty, care, and diligence are also involved in ensuring the professional is both asked the right questions and given the right information to help them provide the right answer. This includes not just generally explaining the nature of the issue at hand, but informing the professional of all the facts relevant to it. Knowingly or carelessly omitting and adding anything to mislead the professional, especially if it is done in order to get only the answer you want, is certainly wrong and cannot satisfy the requirement of relying on that professional in good faith.
Lastly, good faith reliance also means not having any good reasons to doubt the professional's advice. This is not about the professional's competence or qualifications, but if a director knows that the professional lacks relevant information and/or finds clear errors or discrepancies in the professional's statements, that director cannot be said to rely on such professional's advice in good faith, even if the conclusion of their report is exactly what the director hoped to hear.
When a director fails to apply genuine good faith when obtaining and relying on professional advice, it is not just a risk to the director, but to the condominium as a whole. No director satisfies their statutory standard of care by simply obtaining and relying on professional advice.
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.
