Special Assessments – What is the Limitation Period?

How much time does an owner have to commence a claim against a condominium and/or the directors if he disagrees with an action taken by the board of directors? In Ontario, the answer is normally two years from the date the owner knew, or ought to have known, about his claim against the condominium and/or directors. This is the basic limitation period set out in the Limitations Act, 2002.

One of the trickiest parts in determining a limitation period is figuring out when the person knew, or ought to have known, about the claim. That is, when was the claim discovered? A recent decision of the Ontario Divisional Court sheds some light on the appropriate start time for a claim related to a special assessment.

In Valentina Vasilescu Tarko et al. v. Metropolitan Toronto Condominium Corporation No. 626 two owners commenced an action in the Small Claims Court against their condominium. The owners claimed that a dispute over parking between a group of owners who rented parking spaces in the adjacent parking garage and the owner of the parking garage was a private matter, not a condominium matter, and that the board was wrong to use the condominium’s money to start an action against the owner of the parking garage. The owners also objected to the special assessment levied by the board to pay for the unsuccessful claim it had commenced against the owner of the parking garage. The condominium argued that the claim should not be allowed to continue because it was brought more than two years after the special assessment was levied by the board, which meant it was beyond the two year limitation period set out in the Limitations Act, 2002. The Small Claims Court judge agreed and stayed the claim. The owners appealed to the Divisional Court.

The Divisional Court reviewed the basic limitation period set out in the Limitations Act, 2002, the relevant cases, and the facts of this specific case. The Court found that the owners knew of the claim for more than two years prior to the date they commenced their claim. The Court found that, more than two years prior to commencing their claim, the owners knew that the board used the condominium’s money to fund the private dispute, they knew that the board levied a special assessment to pay for the dispute, and they knew that the board’s decision to do so had been ratified by the owners at the annual general meeting.

One of the more interesting portions of the decision is the part that relates to the owners’ argument that the limitation period did not begin to run until the first instalment of the special assessment was due. The owners argued that they did not suffer any injury, loss or damage until the special assessment was due, and that their claim should be allowed to continue since it was brought within the two year limitation period if the due date of the first instalment was used as the start date for the limitation period.

The Court disagreed. The Court held that the proper date for calculating the limitation period was the date the special assessment was effective, not the date of the first instalment. Even if the owners sold their units prior to the first instalment date, which meant that they would not contribute toward it, the special assessment would have been disclosed in any status certificates requested for the units and the purchasers of the units would have required a lower purchaser price and/or some other relief to account for it. As such, the owners had sustained an injury, loss or damage when the special assessment was levied, not when it was due.

 

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