A housing co-operative in Sandy Hill is embroiled in a bitter governance dispute that earlier this year involved three boards of directors fighting to assert control of the six-storey building.
The third board, known as the interim board, was appointed in February by the City of Ottawa in an attempt to restore order at Co-op Voisins.
But the original board of directors opposed the city’s intervention and refused to turn over computers and financial records. Police were called in when interim board members tried to take over the co-op office and to change the locks.
In April, the city sought a court order to prevent the original board from impeding the work of the city-installed board and to compel the handover of financial records, computers and other property.
Late in June, Superior Court Justice Calum MacLeod issued a declaration that the interim board of directors was in charge of the co-op. That decision is now under appeal.
One co-op member called the situation “a real mess” with old friendships ruptured and new rumours every day.
“It is chaos, constant chaos in the building,” said the co-op resident, who’s not involved in the litigation. “There are a lot of hurt feelings right now.”
Incorporated in 1991, Co-op Voisins has 76 units. It operates on a non-profit basis and charges $780 a month for one-bedroom units, $952 a month for two-bedrooms and $1,055 a month for three-bedroom units. (Heat, hydro and parking are not included.)
Situated on Wiggins Private, next to a public garden, Co-op Voisins was considered a model of affordable, community-based housing.
The co-op has benefited from government grants to pay for major expenses such as elevator and roof repairs, and more than half of its members receive rent-geared-to income subsidies from the City of Ottawa.
Legally, the city is the co-op’s “service manager,” which means it’s responsible for ensuring the rent subsidies are properly administered.
Court documents show the co-op had been in a state of chaos since November 2022.
That was when co-op members held a general meeting and voted to dissolve the board of directors and hold new elections. It followed a heated dispute over allegations that one board member was in a conflict of interest because of her friendship with the owner of the co-op’s property management firm.
That board member resigned in August and the property management firm subsequently announced it would terminate its contract with the co-op within 90 days.
Some new board members called for an investigation into past spending. A new property manager was hired.
Two old board members then wrote an open letter accusing two new board members of creating a “toxic, dysfunctional and distrustful environment.” They suggested the new directors had “gone rogue” and urged co-op members to dissolve the board and repair the co-op’s relationship with its property management company. The firm had worked with the co-op for four years.
A new board election was held on Nov. 27, but members of the old board insisted the vote was illegitimate. They said the election was not in keeping with provisions of the Co-operative Corporations Act — it sets out rules for co-ops — and Co-op Voisins’ bylaws.
In an affidavit, Angela Mertes, a member of the original board, said the unsanctioned election “led to a confrontation” between supporters of the new board and members of the old board.
Although some members of the old board resigned, four others, including Mertes, continued to insist they were the lawfully elected governing body of the co-op. They refused to turn over board computers and financial records to the newly elected board.
Meanwhile, the new board refused to recognize the property manager hired Nov. 1 by the old board.
The co-op’s bank, Alterna Savings, subsequently froze the co-op’s accounts since there were was no agreement as to who held proper signing authority for Co-op Voisins. It meant staff salaries and bills from some suppliers went unpaid.
During this period, Mertes said in her affidavit, members of the original board suffered “extensive harassment” by those who supported the new board. “There were also incidents of violence, vandalism, obstruction, interference and sabotage,” Mertes charged.
City staff intervened and tried to settle the escalating dispute. The city suggested the co-op hold another election or create a hybrid board with equal representation from the two warring boards. A city-appointed board member would hold the tie-breaking vote.
But all of the potential solutions were rejected and no legal action was initiated by either board to settle the matter in court. The co-op remained in a state of paralysis. Both of the boards retained lawyers.
A temporary deal was struck that allowed the co-op to pay some of its bills, but the bank said the arrangement could not be extended beyond Feb. 21.
The city warned that the situation, if unresolved, could trigger a takeover of the co-op board under a little-used section of Ontario’s Housing Services Act.
The old board accused the city of improperly meddling in the affairs of the co-op and suggested city officials were working in concert with the former property manager.
On Feb. 22, the city acted. It removed all of the directors from both boards and appointed a new board of five hand-picked individuals who would govern the co-op until new elections were held.
Four members of the old board dug in their heels, however, and refused to recognize the city-appointed board.
In court documents, lawyers for the city allege the original board members and the property manager “physically obstructed” the interim board members from entering the co-op office and gaining access to financial records.
In her affidavit, Mertes said city officials came to the building unannounced and “took over the office forcibly by changing the locks, and demanded a handover of files and the computer.” The city, she said, did not have a court order and her fellow board members called the police.
Original board members removed the computers and kept them. The interim board fired the housing manager.
The city went to court in April to compel the co-operation of the original board and to gain access to co-op computers and files.
Meanwhile, the original board members asked the court for an order naming them as the legitimate governing body of Co-op Voisins.
City lawyer Samantha Montreuil told court that the governance dispute had potentially serious consequences for co-op members benefiting from rent-geared-to-income subsidies. “The lack of appropriate record keeping, reporting and accounting could potentially jeopardize the funding of subsidies,” she said.
The original board’s lawyer, Leonard Levencrown, argued the city overstepped its legal authority by assuming control of the co-op and manufactured the grounds for its intervention by exaggerating the co-op’s financial problems.
In his recent decision, MacLeod sided with the city, saying there was no evidence it exaggerated the severity of the situation.
“It is quite clear that faced with competing boards issuing competing directives, a property manager appointed by one board who was not recognized by the other (or by many of the other members), and an inability to determine whether rent subsidies were properly accounted for, the city had a duty to act,” MacLeod ruled.
Even though the city did not give the co-op 60 days to rectify its problems, as required by law, it had to intervene, the judge said.
“I find the city appropriately exercised its powers under the act. Whether board number one or board number two was the duly elected board no longer matters,” MacLeod said.
A member of the old board, Michael Fobert, said an appeal of MacLeod’s decision has been launched. He declined further comment with the case still before the courts.
The City of Ottawa declined comment for similar reasons. “As the respondents in the case have issued a notice of appeal, the city is not prepared to offer any additional comment,” city solicitor David White said.
It is not yet clear if and when new board elections will be held at the co-op.
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