It is most unfortunate that at our recent AGM, resident questions received either total rejection or no reasonable response.

Two major and fundamental issues of the AGM were intentionally avoided by the Board and unfortunately residents as well who chose to remain silent as to the following:

1. Intentional and unlawful concealment of commercial owner use of corporation funds to pay for personal improvements and operating expenses within their condominium. A resident review of invoices for only one fiscal year, revealed well over $25,000 in illicit use of corporate funds for the personal use of the commercial owner at the expense of residents. Following this review, the Board has continued to adamantly reject any further resident review of financial records and refuses to comment of on this $25,000 plus in illicit expenditures as well as thousands more in inappropriate spending. The evidence is very clear.Residents can see this evidence for themselves via a further resident review of the financial records of the Corporation. Do residents really wish to turn a blind eye and continue to support the intentional concealment of this very serious and illicit conduct?

With many thousands of dollars in illicit expenditures revealed and accompanied by clear source document evidence in a review of just one fiscal year, how much more might be revealed in an open and transparent review of prior and subsequent fiscal periods since 2015?

• 2. Board rejection of our Bylaws and the Condominium Property Act requiring unit owner approval of Reserve Fund expenditures. More the $2 million dollars of reserve fund expenditures have proceeded without the required unit owner resolution approving these expenditures or any  responsible funding plan.

As a result, with no such funding plan in place reflecting responsible preparedness for coming  Reserve Fund expenditures, residents face very troubling news as revealed in the attached documents. The coming Reserve Fund Study due in March, will confirm a very serious Reserve Fund deficit as a result of fund management neglect. Based upon current data illustrated in the attached Reserve Fund Analysis, ADDITIONAL residential fee contributions of $300 to $400 per month over the next four years will be necessary to fund this projected deficit and rebuild the Reserve Fund. Why was this not disclosed by the Board at the recent AGM? Not very good news for those who care about the resale value of their condo.

No responsibly minded resident should accept any further neglect of these very troubling issues and no professionally qualified auditor representing resident interests should either. Financially troubled condo corporations usually get into these situations as a result the neglect of responsible planning of both expenditures and funding which has been clearly demonstrated here.

Should residents continue to choose silence as their response to the above, it will be to their own detriment. Please review the attached information which will provide you with some interesting facts which should help in understanding this serious situation.

Dennis Tofin #603

Proper planning will ensure that money is always available to meet the maintenance challenges that every single building inevitably faces. Responsible maintenance and prefunding of the Reserve Fund is absolutely essential to condominium owners.

Assessments resulting from Reserve Fund shortfalls are always the result of incompetence or naive and uninformed planning. Toronto Condo News & Resource Guide

Unfortunately, such assessments are standard practice at Spadina Condominium Corporation.

Condominium Corporations follow fund accounting to segregate the operating fund and reserve funds. The Reserve Fund is a restricted fund for capital replacement spending. Condominium Corporations adopt the restricted fund method to report the financial statement elements by fund in such a way that the organization reports the operating fund and the capital replacement fund. All capital expenditures must be recognized as such to ensure appropriate supporting resolutions.

Residents must be informed of the serious state of the Corporation’s Reserve Fund and the most troubling absence of any responsible funding plan. Please review the attached Reserve Fund Analysis which clearly illustrates the severity of the issue. Given current contribution levels, the reserve fund will be pretty much depleted over the next year. Why has no responsible funding plan been presented?

With no changes to current contributions, we will be facing a total projected reserve fund deficit of approximately ($471,000) by the end of 2023. Unfortunately, the Board has neglected to provide a responsible funding plan and residents are about to pay dearly for this neglect.

 In order to avoid this projected deficit and ensure a responsible rebuilding of the reserve fund balance to a reasonable level of some $300,000 within four years, a responsible 48 month funding plan must be implemented immediately with ADDITIONAL reserve fund contributions of approximately $770,000 over the next four years. The coming updated Reserve Fund Study may require even more. That translates to ADDITIONAL reserve fund contributions per residential unit of several hundred dollars per month per unit over the next four years. Unfortunately, these estimated fees are necessary to make up for neglect of the reserve fund for a number of years. Such irresponsible neglect must no longer be covered up with the continued use of surprise cash calls versus a responsible funding plan. 

To help mitigate the serious impact of this issue upon residents, drastic measures must be taken immediately including cost cutting in operating expenses such as caretaking and other excessive operating expenses that could easily result in annual savings of $25-50,000. Who else pays a caretaker $80,000 a year ($60 K plus housing & benefits) and then hires contractors to conduct his duties? Substantial reductions to the budget for proposed but very excessive residential common area “improvements” ($65,000) would certainly help as well.  These “improvements” should at the present time be limited to correcting the last “improvement” by replacing the existing hallway carpets which are an embarrassment to any resident owner who respects their property. Tenders and multi quotation requirements should also be implemented immediately for all reserve fund expenditures of $10,000 plus and all operating expenditures of $5000 or more in order to address excessive spending.

A General Meeting to advise residents of the facts of this very serious situation should take place ASAP and include presentation of a responsible funding plan. If nothing is done, you can be assured that a qualified assessment through our updated reserve fund study due in March of 2020, will confirm the serious lack of preparedness for what is coming. Its presentation will reveal this very serious situation at Spadina Towers and suggest corrective and responsible funding measures.

Reserve Fund – It is important to note that all proposed capital repair or capital replacement (reserve fund) expenditures be included in the Reserve Fund budget with both the expenditure and its means of funding confirmed with resolution approvals by UNIT OWNERS, NOT BY THE BOARD. More than $2 million of reserve fund expenditures have been unlawfully approved by the Board without unit owner approval. The Board refused to respond to this statement and related questions at the AGM.­­

Sometimes, it’s not the plan that is at fault. I can think of a number of examples where the reserve fund plan recommended a reasonable contribution, but for some reason the condominium board decided to set it lower. If a short term perspective is taken, this may seem to make sense – lower contributions helps property values and sales. If a long term perspective is taken, this is pretty irresponsible. Someone is going to pay for it eventually, and it won’t be pretty. It may also require some effort to educate the condominium board on the pitfalls of short-term thinking.In essence, the common problems noted above can be easily avoided by a qualified person that puts in the necessary work, and a condominium board that takes a long term perspective. The sooner you ensure the contributions are sufficient, the less painful it will be. If you don’t, it’s gonna hurt. Source reservefundguide.ca

 In conclusion, as a result of the Boards neglect of a responsible reserve funding program, unit owner property values have been severely impacted given the unfortunate marketplace perception of constant and irresponsible cash calls to cover up this neglect. The Board refuses to respond to resident questions and concerns. RESIDENTS SHOULD BE CONCERNED WITH BOARD REFUSAL OF RESIDENT DEMANDS FOR TRANSPARENCY AND BOARD ADHERANCE TO THE LAW THAT REQUIRES UNIT OWNER APPROVAL BY APPROPRIATE RESOLUTION OF ALL RESERVE FUND EXPENDITURES.

The only means of reestablishing respect for condo values at Spadina Towers is to ensure adoption of a responsible funding plan implemented by the Corporation that will not subject an owner or purchaser to unknown and surprise cash calls. It is hard to imagine any resident who would not be supportive of such a responsible funding plan and Board adherence to our Bylaws and the Act. Should the Board refuse to implement an immediate and responsible funding program to address the imminent shortfall in the funding of near term reserve fund obligations, residents will be subject to special assessments resulting from irresponsible Reserve Fund shortfalls that are as previously quoted, always the result of incompetence or naive and uninformed planning.

Dennis M. Tofin #603

1. The Board rejected a request to correct false and misleading minutes of the 2018 AGM.

• The Board refused to respond to a request for some examples and costs of major items within repair and maintenance expense.

• The Board and the owner of the management company refused to provide clarification and their definition of “capital expenditures vs. repair and maintenance” and further refused to explain why Spadina Towers refuses to seek unit owner approval of reserve fund expenditures as is required by law.

• The Board refused to respond to questions of illegitimate expenditures, unnecessary spending, unapproved and illicit expenditures of more than $2 Million dollars, maintenance neglect, intentional concealment of financial records, absence of responsible employee supervision, conflict of interest issues within management, the commercial owners and the Board of Directors, explanation of surprise cash calls vs. a responsible funding plan, etc. The Board has been provided with substantial evidence of all of the above, yet rejects any request made for their response.

• The Board rejected a request for responsible application of Bylaws including the following:

b) The amount required for the reserve funds shall be determined by the ordinary vote of the unit owners at the annual general meeting. NO SUCH DETERMINATION BY UNIT OWNERS WAS PERMITTED. The Board neglected inclusion of approximately $700,000 in projected reserve fund expenditures including items as determined by themselves and items required as per the last Reserve Fund Study which the Board refused to have presented to residents.

Further, the Board has adamantly refused to provide a copy of the legally required resolutions of unit owners approving more than $2 Million dollars in reserve fund expenditures. Why this refusal and concealment of this fact? The Board rejected the Bylaws and the Act and simply proceeded with these major expenditures without unit owner resolutions. Such resolutions very simply, have never been permitted and do not exist.

• Questions regarding numerous operating and reserve expenditures were attempted but rejected by the Board as “complaints which they were not prepared to hear”.

• Questions regarding the Board’s failure to disclose material facts and concealment of commercial use of corporate funds ($25,000 plus) for their own private expenses and renovations were rejected. This amount included entrance renovations in commercial condo unit one that are the commercial owners responsibility. A professional opinion was sought and confirmed the same. Yet the Board bowed to commercial objection and apparently approved the expenditure, again with no approval of unit owners. Many other illicit uses of Corporate funds were also revealed in a resident review of invoices, but requests for any further reviews were adamantly rejected by the Board.  

                   Fraudulent Concealment:  the intentional failure to disclose a material fact and especially the existence of a cause of action by one under a duty to make such a disclosure to another who acts or fails to act in reliance and suffers a loss.  Source: Merriam-Webster’s Dictionary of Law ©1996. Merriam-Webster, Incorporated.

The Board rejected requests for discussion of the landscaping and signage expenditures. The Board has always disregarded the majority vote of unit owners supporting signage for Spadina Towers as per the following:

                      BUILDING SIGN At the 2013 AGM, 13 of 21unit owners attending the meeting voted in favor of a sign to be placed in front of the building so as to provide identity to the building. This was a vote by hand and therefore the majority vote was clearly in favor of the sign. This was acknowledged and confirmed in a recording of the meeting. The Board at the 2014 AGM, given the pressure of the commercial owner not to respect the 2013 vote of approval, suggested that the matter would be “left with the Board”. This is of course, a matter requiring the input of the residents and their voice and approval was heard at the 2013 AGM. This sign, which should be a sizeable lighted sign, should be centered on the front lawn. The building commonly known as SPADINA TOWERS since its inception, has long needed this identification. A proposal of a sign design should be submitted to unit owners as soon as possible for their approval and to ensure that the sign is installed during this spring/summer season. THE BOARD SIMPLY BOWED TO THE OBJECTION OF THE COMMERCIAL OWNER WHO CLAIMED THAT ANY FRONT SIGNAGE WAS TO BE COMMERCIAL ONLY AND REJECTED THE VOTE!

                             LANDSCAPING Spadina Board of Directors Face Liability Issues for proceeding with  landscaping without a Special Resolution

Boily upholds condo owners rights The case of Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574 (CanLII) involves a disagreement between the directors of a condominium corporation and the condominium residents. As a result of repair work done to a parking garage, the landscaping around the condominium was damaged. The directors proposed to make changes to the landscaping upon repairs, but the residents wished to have the work restored to the original design.The Condominium Act, 1998 sets out the requirements of the board of directors to acquire a majority rule to make any “substantial changes” to common areas. Following a ruling of a motion judge that the alterations constituted substantial change, and a meeting in which the new landscaping plan failed to get the required assent of 66 per cent, the directors hired a company to start on the landscaping work regardless.

After a second appearance in court – where the directors were again ordered to restore the original landscaping design, were held in contempt of the previous court order, and received personal financial sanctions – the work continued to progress with substantial deviations from the original design. On appeal, the court upheld that the directors were in contempt of court for continuing with the changes to the landscape

What can a person learn from this case? When living in a condominium, it is vital to understand the rules in place that guide the operation and day-to-day life in the building. What is a resident allowed to do, what decisions can the board of directors make, and what control does a resident have over decisions being made? In this case, it was only thanks to the understanding of the residents that they knew changes to the landscaping required their approval. Boily upholds condo owners rights.

The exact same situation has occurred at Spadina Towers with the exception that our resident owners were not permitted to vote on the matter at all. Yet, residents choose to remain silent, subjecting themselves to yet further and continuing demands for their money. Who will pay for the liability of this corruption and illegal Board conduct considering not only the above, but as well, the many other contraventions of our Bylaws and the Condominium Property Act as they relate to this and many other expenditures?

Given the Board’s refusal to discuss or respond to the many requests regarding many issues including those noted above, it may unfortunately require a review of the Court to address these matters.

Dennis M. Tofin #603