Civil liability of a director

Every director must ensure that the rights relating to the immovable or co-ownership are safeguarded. In that regard, he must ensure the respect of the declaration of co-ownership by the co-owners, the lessees and the occupants of the building. Its duties, obligations and responsibilities are imposed on it under the Civil Code of Quebec and the constituting act of co-ownership. However, the civil liability of a director for the tasks incumbent upon him is largely unrecognised. It should be noted that failure to act with prudence, diligence, honesty and loyalty in the performance of his duties may engage his personal liability. A director must always keep in mind the interest of the co-owners' community. Thousands of Quebecers who sit on an annual basis on a Board of Directors, such as yourself perhaps, are unaware of this reality.

Multiple risks

Insofar as the commitments and obligations of the syndicate are concerned, directors do not (in principle) incur any personal liability. Nevertheless, it could be invoked for faults and omissions committed during their mandate, whether remunerated or acting as volunteers. Without limitation, a director could be held liable for:

Other elements

Fraudulent practices, bad faith, abuse of right and contravention to a public order rule are other elements that may bring into play the director’s personal liability.

Liability

The director is accountable for his actions. As a party to the resolutions adopted by the Board of Directors, he engages his personal liability. If he does not want to be held liable for a decision taken by the Board of Directors, he must dissociate himself by recording his dissent in the minutes or its equivalent (Article 337 of the Civil Code of Québec). In addition, a director absent from a board meeting is presumed not to have approved the decisions taken at that meeting.

Immunity

Directors are not personally liable to third parties with whom they contract in the name and on behalf of the syndicate provided that they act within the limits of the powers conferred on them. Similarly, directors do not incur personal liability to the syndicate when they act within the limits of their powers with prudence, diligence, honesty and loyalty in the interest of the syndicate and the co-ownership. Under these conditions, they are held harmless by the syndicate and assume no responsibility for any costs, expenses, charges or losses they have incurred for the administration of the building and the syndicate.

Consequences

If he fails to comply with the obligations prescribed by Law and the declaration, a director may be required to pay for the damage suffered by the syndicate, co-owners or third parties. This liability can be invoked, by virtue of the mandate given to him to administer the co-ownership. The same applies when a director fails to carry out the work necessary for the preservation of the immovable. Co-owners may also invoke the liability of a director in the event that his fault has caused them injury. For example, a director could be held liable for failing to insure the immovable adequately.

Recourse

Once his personal liability is engaged, the director is exposed to be sued in damages. In such cases, he would be obliged to assume (personally) the economic losses resulting therefrom. The injury must nevertheless be a direct consequence of the alleged fault. For these reasons, before offering its candidacy to act as a director, it is essential to ensure that the syndicate has taken out third party liability directors insurance.

 

http://www.condolegal.com/images/Boutons_encadres/Bon-a-savoir.png WHAT YOU SHOULD KNOW!​ The failure of the directors to insure the immovable adequately may be considered a breach of their duty to act with prudence and diligence towards the syndicate. Insurers generally do not cover directors for this fault. In such cases, the directors at fault would be exposed to be required to indemnify, from their own funds, the injured co-owners and third parties.  

http://www.condolegal.com/images/Boutons_encadres/A_retenir.png WHAT TO KEEP IN MIND!​ Even if you are an unpaid volunteer director, you may incur civil liability, just as if you were remunerated, although generally the extent of the damages caused by a volunteer is assessed less rigorously by the courts.

http://www.condolegal.com/images/Boutons_encadres/Attention.jpg WARNING! ​ In a decision rendered in 2014, the Court of Québec held three syndicate directors personally liable. Although the financial stakes were modest, this case demonstrated that directors who refuse to submit a claim to the syndicate’s insurer to the detriment of the co-owners can engage their own liability.

 C​ONSULT THE PUBLICATION: Administrateur de condo, Tout ce qu'il faut savoir (Condo Director, All you need to know)

 

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