A good condominium property manager is worth his/her weight in gold. Condominium corporations rely on the property manager to assist the Board in running the affairs of the corporation. However, if the property manager is not performing the property manager’s duties to the satisfaction of the Board, then the Board will look at the management contract to determine if it can terminate the manager.
Many condominium management contracts provide that the contract can be terminated by either party upon a specified number of days’ notice, or payment in lieu of notice where the contract is being terminated by the condominium corporation. In addition, most contracts permit the condominium corporation to terminate “for cause” in certain specified circumstances.
In a recent case, Maple Ridge Community Management Ltd. v. PCC 231, the condominium corporation terminated its management contract, relying on a clause in the contract which allowed it to terminate if the manager was “insubordinate, reckless or grossly negligent in performing its duties.” The manager claimed that the condominium corporation did not have cause to terminate the contract and sued the condominium corporation for $8,303.24, being two months payment in lieu of notice. When the manager’s case was dismissed by the Small Claims Court, the manager appealed.
In his decision, the Small Claims Court Judge described a number of acts or omissions that could amount to insubordination, recklessness and/or gross negligence: issuing incorrect status certificates, delays in preparing banking documents for signature, late payments, failure to provide reports to the Board. However, on appeal, the Superior Court determined that the Small Claims Court Judge did not properly describe which acts or omissions of the manager actually amounted to insubordination, recklessness and/or gross negligence. For this reason the Superior Court set aside the Small Claims Court judgment and directed the parties to have a new trial before a different Small Claims Court judge. We do not know if the parties did this or decided to settle. The legal fees incurred by both parties for two trials and the appeal will be disproportionate to the amount of the claim. (The Manager was awarded costs of $10,000 for the appeal.)
Whenever a condominium corporation wants to terminate its contract with its manager, it should be contacting legal counsel before it instigates the termination or retains a new manager, particularly if the condominium corporation wants to terminate for cause.