10 Condo Law Highlights of 2020

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2020 has been an eventful year, to say the least. With everything else going on in the world, who has time to stay on top of changes in condominium law? We do! And so to help you out, we’ve prepared a list of 10 changes and decisions in condominium law in 2020 that you won’t want to miss.

  1. The Condominium Authority Tribunal (the “Tribunal”) expanded its authority

Starting on October 1, 2020, the Tribunal’s jurisdiction expanded to include hearing disputes based on provisions in a condominium’s declaration, by-laws, or rules regarding: (a) pets, (b) vehicles, (c) parking/storage, and (d) indemnification/compensation related to the disputes in (a)-(c). This means that disputes in these categories can now be heard using the Tribunal’s streamlined dispute resolution process instead of going to court.

  1. The new Condo Guide for pre-construction and newly-built residential condo purchasers

The Condominium Authority of Ontario released a new Condominium Guide which, starting January 1, 2021, must be delivered to all potential purchasers of pre-construction and newly-built residential condominium units. The Guide will give these purchasers more information on condominium construction and condominium living. For more information on the Condominium Guide, see our previous post here: https://rcllp.ca/condo/?p=499

  1. “Adequate” condo records need not be perfect

Condominiums are required to keep adequate records. The Tribunal confirmed that “adequate” means the records must allow the condominium to fulfill its duties under the Condominium Act, 1998 (the “Act”). To do so, “adequate” records must be accurate but need not be perfect. The level of accuracy required for a record to be “adequate” may vary depending on the record in question. For example, minutes of board meetings are held to a high standard because they look back on facts which should be certain and known, and they serve the important purpose of making the board’s affairs open to the owners. Read the full case here: https://www.canlii.org/en/on/oncat/doc/2020/2020oncat33/2020oncat33.html?resultIndex=1

  1. A condominium cannot impose conditions before releasing records to owners

The Tribunal determined that a condominium cannot impose conditions before providing requested records to an owner. If the records are properly requested by the owner, the condominium must either provide them or refuse to provide them (with a reasonable excuse for the refusal). By imposing conditions, the condominium effectively refused to provide the records. Read the full case here: https://www.canlii.org/en/on/oncat/doc/2020/2020oncat2/2020oncat2.html?resultIndex=1

  1. Comply with Tribunal orders or face cost consequences in court

The Tribunal ordered the condominium to provide records to the owner within 30 days. The condominium did not comply, so the owner took the matter to court. The condominium provided the records to the owner before the court hearing date, yet because the condo had still breached the Tribunal’s order, the court ordered the condominium to pay the owner’s legal fees and disbursements totalling $14,716.91. This serves as a reminder that timelines in Tribunal orders must be complied with, and that Tribunal orders may be enforced in court. Read the full case here: https://www.canlii.org/en/on/onsc/doc/2020/2020onsc189/2020onsc189.html?resultIndex=1

  1. Condominium directors not held personally liable for board decisions

A declarant claimed that the condominium’s directors acted oppressively toward the declarant. The court determined that the claims could not succeed against the directors personally. The directors’ decisions in question were decisions relating to day-to-day activities of the condominium without personal gain, and therefore even if the directors made the wrong decisions, this did not justify a personal order against them. Read the full case here: https://www.canlii.org/en/on/onsc/doc/2020/2020onsc6445/2020onsc6445.html?resultIndex=1

  1. Significant cost consequences of acting unreasonably  

After succeeding in a case against his condominium, an owner sought a court order for the condominium to cover the costs he had incurred. The court ordered the condominium to pay $83,340 in costs to the owner. The court granted this unusually high costs award because the owner had acted reasonably throughout the matter whereas the condominium was unreasonable and aggressive. Let this serve as a reminder and a warning that unreasonable, aggressive behaviour from a condominium may have significant cost implications. [Note: the decision was unsuccessfully appealed by the condominium, resulting in another $30,000 costs order payable to the owner]. Read the full case here: https://www.canlii.org/en/on/onsc/doc/2020/2020onsc1190/2020onsc1190.html?resultIndex=1

  1. The Act will be interpreted to protect owners

A third party claimed that a condominium’s action against it was a nullity because the condominium did not properly notify the owners of the action under section 23 of the Act. The court held that it would be inconsistent with the Act, which is designed to protect owners, to render an action a nullity where doing so would actually be detrimental to the owners. The condo commenced this action for the benefit of the owners and therefore it was allowed to proceed despite not providing proper notice to the owners. Read the full case here: https://www.canlii.org/en/on/onca/doc/2020/2020onca63/2020onca63.html?searchUrlHash=AAAAAAAAAAEADVNPIDE5OTgsIGMgMTkAAAABAA4vNjY1LWN1cnJlbnQtMQE&resultIndex=3

  1. Tenant’s excessive noise was a breach of the condominium rules

A tenant in a high-rise condominium repeatedly made excessive noise. The neighbouring tenant repeatedly made noise complaints to property management. The condominium took steps to get the noisy tenant to stop, and when those failed, the condominium filed a court application to enforce compliance with the Act and the condominium’s rules. The condominium succeeded. Not only was the tenant ordered to comply with the Act and the rules, she also had to pay condominium’s costs of $23,250. Read the case and costs decision here: https://www.canlii.org/en/on/onsc/doc/2020/2020onsc196/2020onsc196.html and https://www.canlii.org/en/on/onsc/doc/2020/2020onsc3853/2020onsc3853.html?searchUrlHash=AAAAAAAAAAEADVNPIDE5OTgsIGMgMTkAAAABAA4vNjY1LWN1cnJlbnQtMQE&resultIndex=5

  1. Another noise complaint

In the case above, the condominium and the neighbouring tenant worked together to deal with the loud tenant. In contrast, this is a case initiated by an owner against her condominium for failing to take sufficient action to deal with her noisy neighbour. The court determined that the condo could have done more but still acted reasonably, so the claim was dismissed. Noise can be a serious issue in condos, and condos should balance the competing interests of the parties when dealing with these disputes. Read the full case here: https://www.canlii.org/en/on/onsc/doc/2020/2020onsc1262/2020onsc1262.html?searchUrlHash=AAAAAAAAAAEADVNPIDE5OTgsIGMgMTkAAAABAA4vNjY1LWN1cnJlbnQtMQE&resultIndex=6

Can Your Condo Opt-Out of the Act?

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I have heard of situations where a condominium wants to avoid a requirement of the Act for one reason or another. Often the desire is to avoid the costs associated with the requirement. Other times the desire appears to be to reduce the number of administrative tasks. Whatever the reason, Section 176 of the Condominium Act, 1998, clearly states that the Act “applies despite any agreement to the contrary”. This means you cannot contract out of the Act.

Notwithstanding Section 176 of the Act, there are parts of the Act that a condominium can override by making changes to its declaration, by-laws or rules. There are also parts of the Act that a condominium can opt-out of if certain requirements are met.  Continue reading

What did you get yourself into? Top ten tips for new directors

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I’m often asked to give advice to new directors, especially first time directors. It is a difficult question to answer because the advice depends on a number of factors, such as the experience level of the director, whether or not the condominium has a manager, and the age of the condominium. In hopes of reducing the anxiety of a few new directors, here are my top ten suggestions to newly elected directors:

1. Review the condominium documents – it is important for directors to review the declaration, by-laws and rules shortly after being elected. You are not expected to be an expert, but you need to have a basic understanding of the key provisions, such as repair and maintenance obligations, restrictions on the use of units, and shared facilities. Familiarity with the documents will make for more efficient board meetings and more informed decisions.

Continue reading

Loss of Quorum on the Board

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Many condominiums struggle to find enough candidates to fill the positions on their board. Other condominiums have a hard time keeping directors on the board after their election. Whatever the reason, there are times when a condominium may not have enough people to fill all positions on the board. What’s a condominium to do? This post will describe some of the legal obligations on the condominium and directors. It also includes some possible solutions to attract more candidates and keep directors once elected to the board. Continue reading

The Battle Rages On…

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A few years ago I wrote about a case that had dragged on for over six years.  It involved a former director and a condominium. The director took various steps without legal authorization from the board, including terminating the manager and commencing a legal action against the property management company and its president. The director also commenced an action against the condominium and accepted service of his own claim so the other directors were not aware of the claim. This was all within 4 months of being elected by the owners. Not surprisingly, the owners requisitioned a meeting to remove him. That didn’t stop him. He started 5 legal actions in 2010, all of which were dismissed with costs. He appealed, which was also dismissed. Continue reading

Looking Back on 10 Decisions of 2018

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Below is a brief look back at some of the most talked about cases in 2018:

Metropolitan Toronto Condominium Corp. No. 932 v. Lahrkamp, [2018] O.J. No. 311

A unit owner had commenced many legal proceedings against the condominium corporation for approximately 10 years relating to the production of documents – many of these proceedings were dismissed.  The condominium corporation successfully applied to the Court to have an order prohibiting the owner from commencing legal proceedings against the condominium corporation and its past, present, and future directors, property managers, and service providers without leave of the Court.  Note that the unit owner was not prohibited from bringing legal proceedings before the Condominium Authority Tribunal (“CAT”) and did so later in 2018…the owners application before the CAT was dismissed.

Jones v. 2341464 Ontario Inc., 2018 ONSC 717

A developer/vendor attempted to unilaterally terminate an agreement of purchase and sale for a pre-construction condominium unit due to delays in construction.  The Court found that the provisions in the agreement of purchase and sale that allowed the developer/vendor to unilaterally terminate the agreement of purchase and sale had been removed by a valid amendment and that the developer/vendor was required to perform its obligations set out in the agreement of purchase and sale.

Simcoe Standard Condominium Corp. No. 431 v. Atkins, [2018] O.J. No. 2986

Two condominium corporations were ordered to call requisitioned meetings of owners because of a special assessment levied by the condominium corporations. The condominium corporations had refused to call the meetings of owners because they alleged the requisitioning owners had obtained the necessary signatures to requisition a meeting of owners by disseminating misleading information.  The Court was not persuaded by the evidence presented to support such an allegation and found no reason for the condominium corporations to refuse to call meetings of owners in accordance with section 46 of the Condominium Act, 1998.  Further, the condominium corporations asked the Court to prohibit the use of proxies during the requisitioned meetings of owners as a result of the dissemination of misleading information. The Court refused to do so finding that the communications were not misleading but rather expressed an opposing view. The Court also questioned if it had authority to “deny owners the statutory right to vote by proxy.”

Janet Cangiano v Metropolitan Toronto Condominium Corporation No. 962, 2018 ONCAT 7

A unit owner had requested to audit the proxies recently used to elect directors to the board of directors without redaction. The CAT refused the request of the unit owner as clause 55(4)(d) of the Condominium Act, 1998 provides that the ability of an owner to examine the records of the condominium corporation does not apply to “any portion of a ballot or proxy form that identifies specific units in a corporation or owners in a corporation unless a by-law of the corporation provides otherwise”.

Peel Standard Condominium Corporation No. 984 v. 8645361 Canada Limited, 2018 ONSC 4339

After obtaining an order prohibiting a commercial unit owner from harassing the condominium corporation’s board members, employees and managers and multiple orders from the Court, the condominium corporation successfully obtained an order requiring the owner to vacate and sell the commercial unit for any reasonable offer.  The Court also granted the condominium corporation the ability to apply for possession of the commercial unit if the owner did not comply with the conditions of the Court’s order.

Toronto Standard Condominium Corporation No. 2256 v. Paluszkiewicz, 2018 ONSC 2329

A condominium corporation asked the Court to set aside the decision of an arbitrator with respect to the validity of improvements made to a unit authorized by a section 98 agreement. The section 98 agreement was authorized by the declarant appointed board and called for the production of detailed drawings and further approval of the board prior to renovations commencing.  The owner argued the required plans were submitted to the declarant appointed board provided and the evidence of the condominium corporation was not sufficient to persuade the Court to set aside the decision of the arbitrator.

Patterson v. York Condominium Corporation No. 70, 2018 ONSC 3735

The Court dismissed an owner’s effort to force the condominium corporation to raise the common expenses, among other requests.  The Court found that the decision process of the board of directors met the standard of care required under section 37 of the Act and that the Court should not substitute its own reasoning for that of the board of directors.

Noguera v. Muskoka Condominium Corporation No. 22, 2018 ONSC 7278

An owner had commenced construction to remove a demising wall between units with the board or director’s permission.  A subsequent board of directors asked for the owner to enter into a section 98 agreement and wanted to review/alter the decision and decision making process of the previous board of directors.  The owner brought an oppression and was permitted to complete construction but was required to enter into a section 98 agreement.

Terence Arrowsmith v Peel Condominium Corporation No. 94 2018 ONCAT 10

An owner made a request for records relating to the removal of mould from the sauna and mailroom.  The condominium corporation did not provide the requested records despite conceding the owner was entitled to such records on the basis that the owner had not properly completed the mandatory request for records form.  The CAT ordered the documents to be provided and award costs (which included an award for the owner’s time spent participating in the process) to the owner. The CAT also went on to impose a monetary penalty on the condominium corporation as a result of its failure to provide records without reasonable excuse.

Condo Administrators

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A condominium administrator is a person appointed by the court to manage the affairs of a condominium when the board is unable to properly manage the condominium in accordance with the requirements of the Condominium Act, 1998. 

According to section 131 of the Act, a condominium, owner, or mortgagee of a unit can apply to the Superior Court for an order appointing an administrator. The Act states that 120 days must have passed since the turnover meeting, but there is a case where an administrator was appointed before the turnover meeting where the developer refused to call the turnover meeting.

Continue reading

The Rogue One: Directors Gone Bad

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A condo director unilaterally fires the property manager, hires himself in her place, enters into several other contracts without discussing it with the other directors, bullies the other owners, sues the corporation, and causes thousands of dollars in damages. It seems like an unbelievable plot for a movie, but this one is based on a true story! Continue reading

Former Director’s Six Year Battle with Condo Continues…

Durham Condominium Corporation No. 45 and Swan.

As a recap, Swan was elected as a director in June of 2009. He often disagreed with the other directors about the management of the condominium. Two months after he was elected he started a claim against the condominium and another against one of the directors. In the first 4 months of his term as director he took several steps without authorization of the board, including:

  • terminating the property manager;
  • commencing two actions in the name of the condominium against the property management company and its president;
  • commencing an action against the condominium and misleading the other directors by accepting service of the claim on behalf of the condominium;
  • sending harassing and insulting emails to directors and management; and
  • installing a satellite dish on the common elements.

One of the directors requisitioned a meeting to remove him for breaching his duties. The owners voted to remove him in September of 2009. He started another action against the director who requisitioned the meeting claiming defamation. In 2010, all 5 of his actions were dismissed at trial and he was ordered to pay $3,750.00 in costs. He appealed. His appeal was dismissed. The court found that the condominium, directors and manager may have produced material that constituted defamation to him, but they were doing what the Act required them to do and there was evidence to support the comments made.

In 2012 the condominium commenced an application against Swan claiming that he failed to carry out his duties and seeking various orders. Swan brought his own application against the condominium claiming that two directors breached their duties to the condominium and should be removed. He also sought his own reinstatement to the board.

The court reviewed his conduct and found that Swan’s “confrontational inflexibility and misguided assessment of his duties as Director failed to meet” the duties in section 37(1) of the Act. With respect to his application, the court dismissed it in full. There was no evidence that the other directors breached their duties or that the condominium acted in an oppressive manner toward him.

The condominium sought costs of $198,880.92 from Swan. Swan argued that the condominium had to indemnify him under section 38 of the Act. The judge ordered Swan to pay $45,000.00 in costs to the condominium. Swan appealed.

The Court of Appeal released its decision to his appeal on costs. The appeal was allowed and he was awarded $6,000.00 in costs. Unfortunately, the matter has been sent back to the application judge for reassessment of the costs as the Court of Appeal did not have enough information to make a decision regarding the condominium’s obligation to indemnify him. One of the key issues for the application judge will be whether he was acting in bad faith (in which case he would not be entitled to indemnification) or was simply negligent in fulfilling his duties (in which case he would be entitled to indemnification).

Stay tuned. This one isn’t over yet…

Question: I’m a director for a new condo. What do I need to know?

Being a director for a recently registered condominium is hard work, but it can be very rewarding. It reminds me of being the parent or caregiver for a newborn. At first, babies need constant attention and a high level of assistance to satisfy even their most basic needs. As they grow older they become more independent and are capable of satisfying their basic needs without much assistance from adults. A condominium is similar. Those first year or so after registration the directors will be very busy and face many challenges, but as the condominium ages it should get easier.

In addition to their ordinary duties (i.e. to manage the affairs of the condominium and ensure the owners comply with the Act and the condominium’s documents), the directors for a new condominium should pay special attention to the following:

  1. Performance Audit – The performance audit is an inspection performed by an engineer or architect to determine if there are any deficiencies that could give rise to a claim for payment from Tarion. The performance audit is mandatory for all residential condominiums, even if a claim to Tarion is not possible like in the case of conversion condominiums. The performance audit must be completed within the 6 to 10 months following registration and must be submitted to Tarion before the end of the 11th month following registration.
  2. Reserve Fund Study – A reserve fund study is a planning document that helps the board estimate current and future cash requirements for major repairs and replacements of the common elements and assets of the corporation. It must be completed within the first year of registration. The condominium may save some time and money by having the engineer performing the performance audit complete the reserve fund study around the same time.
  3. First Year Budget Deficit – Many budget statements prepared by declarants are grossly inadequate for the proper operation of the condominium. The fees are kept unreasonably low and/or expenses are estimated at unrealistic amounts. Luckily for condominiums and owners, the Act states that the declarant is accountable for the budget statement for one year following registration. This means the condominium can recover a first year deficit, if any, from the declarant. The condominium must notify the declarant of the deficit within 30 days of receiving the audited financial statements. The declarant is obligated to pay the deficit within 30 days of notice from the condominium. If a dispute arises about the deficit, the parties must mediate the dispute, and if necessary, use binding arbitration to resolve it.
  4. Agreements entered into by the Declarant – Some agreements entered into by the declarant on behalf of the condominium may be terminated by the new board:
    1. Management Agreements – with 60 days written notice.
    2. Agreements for goods, services, facilities, or leases of common elements for business purposes – with 60 days written notice if terminated within 12 months of the turnover meeting.
    3. Mutual Use / Shared Facilities Agreements – court may order that the agreement be terminated or amended within 12 months of the turnover meeting.
    4. Insurance Trust Agreements – with 60 days written notice.

This list is not exhaustive. The list above includes the most time-sensitive obligations that could cause significant problems for the condominium, directors and owners if they are not completed on time.