Quiet condo for retirement? Maybe not…

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A recent case discusses an interesting (and becoming more common) situation where a building is registered as a condominium, but also operated as a retirement home under the Retirement Homes Act, 2010. An action was commenced by certain unit owners against the condominium and various corporations involved in the operation of the retirement home. The owners claimed that the defendants breached the declaration, by-laws, and Retirement Homes Act, 2010, by acting in a discriminatory manner against some of the owners. The owners sought an order that: 1) required the defendants to ensure that at least 2 directors are independent of the defendants; 2) required the defendants to use an agreement that sets out the services program with mandatory fees in accordance with the by-laws; and 3) damages in the amount of $50,000.

The main source of conflict appeared to be that the defendants did not require their own tenants (about 113 of the 124 units) to pay service fees charged to the occupants who owned their units (11 units). The defendants claimed they did charge for services, but the fees were built into the lease agreements. The defendants acknowledged that the managers had discretion to offer discounts and other incentives to their tenants.

The case includes a discussion of the oppression remedy found in section 135 of the Act. The defendants claimed the owners needed to prove bad faith to be successful in their claim. The court disagreed.  The court found that the defendants had acted in a manner that was inconsistent with the declaration and by-laws by offering different service agreements to its own tenants and requiring the other owners to pay more. At paragraphs 37 and 38 the court said:

[37]           In my view, the plaintiffs reasonably expected that all occupants of McCarthy Place would be treated equally and charged the same amount for services. The defendants have not complied with the declaration and bylaw. They have not ensured that all occupants be treated equally. They have not ensured that all occupants be charged the same amount for services. In doing so, the defendants have received an unfair advantage in renting their units, in that they have been able to offer incentives not available to the plaintiffs.

[38]           In my view, the defendants’ conduct, described above, is unfairly prejudicial to the plaintiffs and unfairly disregards the interests of the plaintiffs. Given that, it falls within conduct defined by the Condominium Act1998, s. 135.  The section refers to conduct that is “oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant”.  Conduct need not be oppressive to engage the remedy – it need only be unfairly prejudicial or unfairly disregard an owner’s interests.  On my reading of the section, a finding of bad faith is not necessary.

The court then turned to the relief sought by the owners. The court was not satisfied that the relief requested was the least intrusive. The court ordered the defendants to comply with the declaration and by-laws by requiring all occupants to enter into the same services agreement with the manager. The court declined to make an order amending the by-laws to require directors be unrelated to the defendants as it was satisfied that the Act contained sufficient protections to deal with conflicts at the board level. Finally, with respect to damages, the owners had not provided evidence of any actual damages and the court was not prepared to award damages in the absence of proof (although it suggested that the court may do so in some instances where it was appropriate to do so).

The full case is available on CanLii here: https://www.canlii.org/en/on/onsc/doc/2019/2019onsc5576/2019onsc5576.pdf