Court Appointed Inspectors Under Ontario's Condominium Act: A Guide

Beyond the brick and mortar, a condominium functions as a community. This community is managed by a board of directors which makes broad decisions on behalf of unit owners, enforces condominium bylaws, oversees its budget, coordinates maintenance and repairs, and carries out other important responsibilities. In many ways, the board resembles a municipal council; both shape the way individuals live within a community. For this reason, the governance of condominium boards must be conducted in a fair and transparent manner.

The Condominium Act (the "Act") contains a number of mechanisms designed to give owners, lessees and mortgagees the power to ensure that the condominium is being governed properly. One of the most powerful tools is the appointment of an inspector pursuant to section 130. Yet, despite its potential as a powerful investigative tool, it has rarely been invoked.

This article reviews how to effectively invoke this statutory power by considering the procedural hurdles in appointing an inspector, the scope of their powers, and the process to discharge an inspector once their mandate has been fulfilled.

How Do I Appoint an Inspector?

Under section 130(1) of the Act, a condominium corporation, a lessor of a leasehold condominium corporation, or an owner or a mortgagee of a unit within a condominium, must make an application to appoint an inspector. An inspector may be appointed where the Court is satisfied that:

1) the application for an inspector has been made in good faith; and

2) the order is in the best interests of the applicant.¹

With respect to the good faith requirement, an applicant cannot seek to appoint an investigator for an improper motive or as a means to harass. One case has also held that an inspector will not be appointed where the applicant contributes to the very issues said to justify the appointment.² In Leduc et al. v Ottawa-Carleton Standard Condominium Corporation No. 758 et al., the applicant alleged that the condominium's board was unable to reach a quorum and was therefore unable to manage the administration of a certain condominium fee. For this reason, the applicant requested an administrator and inspector. The Court denied both requests finding that the applicant, in his role as a board director, refused to participate in board meetings, thus causing the very dysfunction he complained of. This, according to the Court, did not amount to good faith.

Moreover, a court will not appoint an inspector on the basis of bald allegations without evidence, and will also decline to appoint an inspector when doing so would be premature.³ For example, in Tharani Holdings Inc. v. Metro. Toronto Condo. Corp. No. 812, the Court noted that when a condominium corporation has agreed to produce an audited set of financial statements, appointing an inspector before such production would be an "unnecessary and burdensome step."⁴

In determining whether an appointment is within the applicant's "best interests", a court will generally consider whether there is evidence of financial impropriety, negligence, or a misappropriation of funds that causes harm to the condominium corporation.⁵

Notably, the Court has also appointed an inspector where a minority of unit owners raised "honest and reasonable concerns", and where the board was not forthright and demonstrated an "intransigence about timely disclosure of information."⁶ In such circumstances, it appears that a court may intervene absent concrete findings of financial impropriety or negligence, provided that the applicant's concerns cannot be meaningfully addressed without an investigation.⁷

What is the Role of an Inspector?

Before addressing the services a court-appointed inspector may provide, it is important to clarify to whom the inspector owes their duties. Inspectors are court officers. Their role is to facilitate the proper administration of justice and they therefore owe a duty of fidelity to the court and the rule of law.⁸ In other words, inspectors under the Act operate as independent and impartial third parties whose role is to assist the Court.⁹ They are not beholden to the party that sought their appointment.

The scope of the inspector's role is circumscribed by s. 130(1) of the Act:

130 (1) Upon application by the corporation, a lessor of a leasehold condominium corporation, an owner or a mortgagee of a unit, the Superior Court of Justice may make an order appointing an inspector to,

(a) investigate the items that the declarant is required to give to the board under subsections 43 (4), (5) and (7);

(b) investigate the corporation's records mentioned in subsection 55 (1);

(c) investigate the affairs of a person mentioned in subsection 115 (1); or

(d) conduct an audit of the accounts and records mentioned in section 43, 55 or 115.

As should be obvious, the categories in s. 130(1) are quite broad and include granting the inspector the power to investigate and audit the corporation's records and accounts. These include, for example, the corporation's financial records, the corporation's minute book, copies of all agreements entered into by the corporation, copies of insurance policies, and ballots or proxies used at owner meetings.

Contents of the Appointment Order

The order appointing the inspector will delineate its powers and the scope of its investigation. The order should contain at least the following:

• Which category (or categories) of investigation or audit the inspector is being appointed to undertake. Recall that s. 130(1) delineates the available categories.
• A requirement that the inspector deliver a report within a specified time to the applicant and to the condominium detailing the activities performed further to its appointment. As will be further discussed below, this report allows the Court to review the inspector's work and approve its activities and entitlement to fees.

In addition, the Court may "make an order as to the costs of the investigation or audit or any other matter as it deems proper".¹⁰ Clearly delineating who will be responsible for the inspector's costs at the outset (even if the appropriate quantum is not addressed) may reduce conflict later.

Under s. 130(3) of the Act, the appointment order may also grant the inspector the powers set out in s. 33 of the Public Inquiries Act (the "PIA").¹¹ These powers offer the inspector greater investigative authority.

If the powers contained in s. 33(3) of the PIA are granted to the inspector, the inspector may require any person, by summons, to give evidence or produce documents relevant to the investigation.¹² The inspector would also have the power to administer oaths and affirmations for the purpose of the inquiry, while retaining the discretion to admit evidence not given under oath or affirmation.¹³ The inspector may further be granted the authority, under s. 33(15) of the PIA, to photocopy documents that have been produced and certify them as true copies.¹⁴

Finally, although not contemplated by the Act, the parties may wish to include in the appointment order a provision limiting the inspector's liability for acts undertaken in the performance of its duties. Such a provision would be consistent with appointment orders in other contexts¹⁵ and, in practice, the company or individual being retained as inspector may insist on its inclusion.

Approval of the Inspector's Report

As noted above, inspectors appointed under the Act are court officers. As such, they are under the supervisory control and direction of the Court.¹⁶ When court officers have completed their mandate, they are generally obliged to seek approval of both their report and their fees to confirm that the officer has properly completed its duties and to be discharged from further obligations.¹⁷

The general test applied for the approval of a court officers' report is objective, and asks the Court if the officer has acted "reasonably, prudently and not arbitrarily."¹⁸ In determining whether this test is met, courts frequently point to the underlying purposes of approving a court officer's report:

• Facilitating the next steps in the proceedings: Court approval allows the inspector to complete its mandate and, where applicable, enables the matter to proceed to the next procedural step. Generally, once the inspector has completed its mandate, the appointment comes to an end and no further steps are required on the part of the inspector.
• Judicial oversight of the inspector's conduct: Bringing the inspector's activities before the Court provides the Court an opportunity to satisfy itself that the inspector's activities have been conducted in a prudent and diligent manner.
• Providing an opportunity to address stakeholder concerns: The approval process allows stakeholders to raise concerns regarding the inspector's conduct or conclusions within their report that may be subsequently addressed.
• Providing protection to the inspector: Court approval discharges the inspector from its duties and shields it from liability related to the performance of its mandate.¹⁹

Approval of the Inspector's Fees

Approval of the inspector's fees is handled separately. The ultimate question is whether the remuneration claimed for the inspector's services is fair and reasonable.²⁰

To establish this, inspectors must provide an affidavit detailing the fees charged for their services during the relevant period, along with supporting financial information in their report.²¹ The inspector's accounts must disclose in detail who performed which services, the dates on which those services were rendered, the time expended, and the rate charged.²²

Factors that courts have considered in approving a court officer's fees have been articulated primarily in the context of other, more common court-appointed officers, such as receivers and monitors. These non-exhaustive factors include:

• the nature, extent and value of the assets;
• the complications and difficulties encountered;
• the degree of assistance provided by the debtor;
• the time spent;
• the officer's knowledge, experience and skill;
• the diligence and thoroughness displayed;
• the responsibilities assumed;
• the results of the officer's efforts; and
• the cost of comparable services when performed in a prudent and economical manner.²³

Although not all of these factors apply to the work of an inspector, they nonetheless serve as a helpful guide. In Ramos v. York Condominium Corp. No. 25, the court affirmed that these factors apply to inspectors appointed under s. 130 of the Act.

Ramos concerned an improperly managed board election chaired by the condominium's building manager. To investigate the events surrounding the election, an inspector was appointed under the Act, and a subsequent motion was brought to approve the activities and the fees of the inspector.

The Court emphasized that when approving an inspector's activities and fees, it must account for the inspector's inquisitorial function in promoting fairness within a condominium community. Property and financial interests are stake. Especially where such communities rely on levies, both the board and manager owe fiduciary duties to the corporation and its membership.²⁴ Moreover, tampering with an election would deprive owners' of their democratic rights within the community and would degrade the overall health of said community.²⁵

Against this backdrop, the Court reviewed the inspector's timesheets, the scope and purpose of the work performed, the challenging circumstances under which interviews were conducted with representatives of the condominium corporation, and the seriousness of the election-related misconduct. It concluded that the detailed reports and thorough investigation justified the fees claimed. The inspector's reports accounts were accordingly approved.²⁶

Approval of the Inspector's Legal Fees

In addition to the fees incurred by the inspector for its services, an inspector may also be compensated for legal fees incurred in the course of its mandate.²⁷ Similar to the inspector's own fees, its legal fees must also be fair and reasonable and must be supported by an affidavit outlining the work performed by its counsel.²⁸ The affidavit should be sworn by counsel.

In assessing the reasonableness of the legal fees incurred by a court-appointed officer, the Court of Appeal for Ontario has clarified that all the factors applicable to the approval of the officer's own fees, described above, are relevant.²⁹

Courts will not embark on a formal assessment of the accounts of an inspector's counsel.³⁰ Instead, the Court's role is to determine the value of the legal services provided.³¹ While time spent and hourly rates are relevant considerations, the assessment is not a pure mathematical calculation based on the number of billable hours recorded. As stated in Nova Scotia v Diemer, "[t]he focus of the fair and reasonable assessment should be on what was accomplished, not on how much time it took."³²

More specific factors relevant to the assessment of a court officer's legal fees include:

• whether counsel's dockets avoided unnecessary duplication;
• the biller's level of seniority and whether the bulk of work was performed by the appropriate biller;
• whether the level of seniority was proportionate to the task performed (for example, in Diemer, the Court questioned why a senior Toronto partner attended court in London, Ontario to address an unopposed motion³³);
• the complexity and the evolution of the matter over time; and
• whether the rates charged by counsel were reasonable when compared with those charged by comparable firms.³⁴

It is important to note that concerns regarding solicitor-client privilege often arise in this context. Affidavits in support of counsel's fees often include counsel's dockets, which may contain details of communications between the inspector and its counsel. Such communications are protected by solicitor-client privilege and cannot be disclosed without proper authorization. However, this does not mean that the approval of legal fees or disbursements must proceed without evidentiary support. Dockets may be provided in redacted form to preserve privilege while still permitting a court to assess the reasonableness of the fees claimed.³⁵

Conclusion

The inspector's role, and the legal procedures surrounding that role, are prescribed by a mix of legislation and case law. Accordingly, inspectors should consider obtaining legal counsel to advise on the appointment order, the scope of the inspector's powers, and the process of obtaining a discharge. Our firm has experience advising court-appointed inspectors and other court officers in this role.

1. Condominium Act, 1998, S.O. 1998, c. 19 at s. 130(2); Turner v Peel Condominium Corporation No 42, 2020 ONSC 738 at para 111.

2. Leduc et al. v. Ottawa-Carleton Standard Condominium Corporation No. 758 et al., 2025 ONSC 5830 at paras 29-33 and 64 [Leduc].

3. Jordan v. Durham Condominium Corporation No. 23, 2006 CanLII 13565 (ON SC) at paras 17-20.

4. Tharani Holdings Inc. v. Metro. Toronto Condo. Corp. No. 812, 2021 ONSC 1125 at para 30 [Tharani].

5. Turner v. Peel Condominium Corporation No. 42, 2020 ONSC 738 at paras 111-113; Tharani, 2021 ONSC 1125 at para 29: Leduc, 2025 ONSC 5830 at paras 63 and 64.

6. Rohoman v. York Condominium Corp. No. 141, [2001] O.J. No. 4927 at para 36.

7. Leduc, 2025 ONSC 5830 at para 63.

8. Transglobal Communications Group Inc. (Re), 2009 ABQB 195 at para 57.

9. Chippin, et al v. Chippin, et al, 2016 NBQB 226 at para 7.

10. Condominium Act, 1998, S.O. 1998, c. 19 at s. 130(4).

11. Condominium Act, 1998, S.O. 1998, c. 19 at s. 130(3).

12. Public Inquiries Act, 2009, S.O. 2009, c. 33, Sched. 6 at s. 33(3).

13. Public Inquiries Act, 2009, S.O. 2009, c. 33, Sched. 6 at s. 33(12) and s. 33(16).

14. Public Inquiries Act, 2009, S.O. 2009, c. 33, Sched. 6 at s. 33(15). See also McKay v. Waterloo North Condominium Corp. No. 23, ^{1992] O.J. No. 2435} at paras 20-28.

15. For example, the current iteration of the Commercial List's shelf receivership appointment order contains the following language: "THIS COURT ORDERS that the Receiver shall incur no liability or obligation as a result of its appointment or the carrying out the provisions of this Order, save and except for any gross negligence or wilful misconduct on its part, or in respect of its obligations under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner Protection Program Act. Nothing in this Order shall derogate from the protections afforded the Receiver by section 14.06 of the BIA or by any other applicable legislation."

16. Transglobal Communications Group Inc. (Re), 2009 ABQB 195 at para 57.

17. McFlow Capital v. Simcoe Condominium Corporation No. 27, 2011 ONSC 7389 at para 22 [McFlow].

18. Leslie & Irene Dube Foundation Inc. v. P218 Enterprises Ltd., 2014 BCSC 1855 at para 54; Bank of America Canada v. Willann Investments Ltd., 1993 CarswellOnt 216 at paras 3-5, affirmed in 1996 CanLII 2782 (ON CA)

19. Target Canada Co. (Re), 2015 ONSC 7574 at para 23; Hanfeng Evergreen Inc., Re, 2017 ONSC 7161 at para 15.

20. McFlow, 2011 ONSC 7389 at para 21.

21. Confectionately Yours Inc. (Re), 2002 CanLII 45059 (ON CA)at para 42.

22. McFlow, 2011 ONSC 7389 at para 22.

23. Bank of Nova Scotia v. Diemer, 2014 ONCA 851 at para 33.

24. Ramos v. York Condominium Corp. No. 25, 2024 ONSC 6196 at para 33 [Ramos].

25. Ramos, 2024 ONSC 6196 at paras 33 and 38.

26. Ramos, 2024 ONSC 6196 at paras 37 and 45.

27. Re Bakemates International Inc., 2002 CanLII 45059 (ON CA) at para 38 [Bakemates].

28. Bakemates., 2002 CanLII 45059 (ON CA) at para 40; Bank of Nova Scotia v. Diemer, 2014 ONCA 851 at para 45 [Diemer].

29. Diemer, 2014 ONCA 851 at para 45.

30. Hanfeng Evergreen Inc., (Re), 2017 ONSC 7161 at para 32 [Hanfeng]; Nortel Networks Inc., 2022 ONSC 6680 at para 10.

31. Diemer, 2014 ONCA 851 at para 45.

32. Diemer, 2014 ONCA 851 at para 45.

33. Diemer, 2014 ONCA 851 at para 54.

34. Hanfeng, 2017 ONSC 7161 at paras 32-26; Diemer, 2014 ONCA 851 at para 33.

35. Hanfeng, 2017 ONSC 7161 at paras 29-30.

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.