Update: Improper Use of the Indemnification Clause

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In July 2016, we wrote a post about Pearson v Carleton Condominium Corporation No. 178, 2012 ONSC 3300, a case where the condominium registered a lien against an owner’s unit for legal costs incurred by the condominium in relation to three unsuccessful small claims court actions brought by the owner. The court found that the indemnity clauses in the declaration that the condominium relied on did not apply to recovering the legal costs and ordered the condominium to discharge the lien.

We also noted a Small Claims Court decision where leave to appeal was granted because the judge relied on a general indemnity clause similar to Pearson v CCC No. 178 as authority for the Condominium to charge legal fees to the unit owner.

The Divisional Court of the Superior Court of Justice recently released its decision in Wexler v Carleton Condominium Corporation No. 28, 2017 ONSC 5697; the subject of that appeal.

While the majority of the decision deals with the standard of review for an award of costs, Justice O’Bonsawin does address the applicability of the general indemnity clause in the declaration for claiming legal costs. Specifically, at paragraph 16, she states,

In Pearson v. Carleton Condominium Corporation No. 178, 2012, ONSC 3300, the corporation submitted that the Condominium Corporation’s Declaration permitted it to recover all legal costs incurred related to the litigation by adding these costs to the common expenses of Pearson’s unit. The language in the Declaration in Pearson is very similar to that of this case. Mr. Justice Smith concluded that the article in the Condominium Corporation’s Declaration did not apply in that case because there had been no loss, damage or injury to the common elements caused by any act or omission by Ms. Pearson. I come to the same conclusion in Ms. Wexler’s case; Declaration X is not applicable as there has been no loss, costs, damage, injury or liability suffered or incurred with respect to the common elements and/or all other units caused by an act or omission by Ms. Wexler.

The provision in the declaration Justice O’Bonsawin referred to above reads as follows:

Each owner shall indemnify and save harmless the corporation from and against any loss, costs, damages, injury or liability whatsoever which the corporation may suffer or incur resulting from or cause by an act or omission of such owner, his family or any member thereof, any other resident of his unit or any guests, invitees or licencees of such owner or resident to or with respect to the common elements and/or all other units, except for any loss, costs, damages, injury or liability caused by an insured (as defined in any policy or policies of insurance) and insured against by the corporation.

This type of general indemnity clause is often the only indemnity clause found in older condominium corporation declarations.

So what is my point? Simply that case law is growing that supports the position that a condominium cannot force an owner to indemnify it for costs incurred without proper authority to do so and a general indemnity clause in the declaration might not be sufficient. Authority may be contained within the Act (see e.g. sections 92(4), 98 (4), or 134(5)), declaration (e.g. like above), or by-law (e.g. insurance deductible). The condominium’s lawyer can assist in determining if there is proper authority in the Act or documents or if there are other legal principles that may allow the condominium to recover the expense from the owner.

Finally, still to come with the amendments, is the promise of a new process and new forms for charging costs back to unit owners.  Once the amendments are in force only “prescribed additions” may be added to an owner’s common expenses and only once the “prescribed notice” is provided to the owner.

Marijuana in Condos

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As you likely know, in April of 2017, the federal government introduced legislation to legalize and regulate marijuana in Canada. In September of 2017, Ontario introduced its own legislation to address the regulation of marijuana. In Ontario, the exclusive right to the sale of marijuana has been granted (at least for now) to the LCBO.

The legalization of marijuana is sure to be a popular topic for 2018. It is already discussed in mainstream media, on social media, and around the water cooler. It has been discussed at condo industry conferences and seminars. The discussion most recently focuses on what condominiums can do about the legalization of marijuana. I was asked for my thoughts on the matter recently by GlobalNews. You can read the full article here: https://globalnews.ca/news/3985115/condos-marijuana-rules-smoking-ban/.

 

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Can the Condo Demand My Dog’s DNA?

dogToday I was on Newstalk1010 with Jim Richards to discuss an annoying enforcement issue faced by many property managers – dog waste left on the common elements. The question posed to me was this: can the condominium demand that an owner provide his dog’s DNA for enforcement purposes?

Wouldn’t it be nice if you could identify the dog (and its owner) by examining the waste left on the common elements? That would make enforcement pretty easy, right? Well a new service promises to do just that. PooPrints will create a DNA database for all of the dogs in the condominium using a simple cheek swab. When dog waste is left on the property a sample is sent to the company and they let the manager know which dog left it. If a match is found the costs of testing and clean-up are charged to the owner of the dog.  Continue reading

Trespassing in Condos

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trespassTrespassing is an issue many condominiums have to address at some point in time. Maybe the condominium is located beside a local hangout, like a school, a mall, or a park. Maybe the common elements include features that attract people to the property, like railings for skateboarding or a large green space for tossing a football around. Whatever the reason it is likely that your condominium will have uninvited people on the property at some point.

A trespasser is a person who, without legal right, enters another’s property when entry is prohibited, engages in a prohibited activity on the property, or does not leave immediately when asked. Section 2 of the Trespass to Property Act makes trespassing an offence punishable by a fine of not more than $2,000.00.  Continue reading

Enforcing Against Landlord Owners

I am sure that we have all been to meetings where the issue of unruly tenants is raised by a director or owner. The complaints are often about noise, overcrowding, damage to the property, or parking. Sometimes the complaints are about risky behaviour, or even criminal activity. The other residents may try to address the problems with the tenants, but many file complaints with the property manager or board instead. The owner is often unaware of the problems with their tenants until he receives a letter from the manager or board.

Once the owner receives the demand letter he is in the difficult position of trying to get his tenants to comply. Most owners know that if their tenants don’t comply with the condominium’s demands a lawyer will be hired by the condominium to write a letter and the cost may be charged back to the owner. If the owner cannot get his tenants to comply with the rules he is left with the nearly impossible task of trying to get an order for eviction from the Landlord and Tenant Board.

While the board of directors is in the difficult position of trying to elicit compliance from the tenants by enforcing against the owner, there are many provisions in the Act that it can rely upon. Section 119(2) requires the owner to take “all reasonable steps” to ensure that his tenants comply with the Act, the declaration, by-laws and rules. This section is similar to section 17(3) of the Act, which requires the condominium to take “all reasonable steps” to ensure that the owners comply.

What is “all reasonable steps”?

A recent case discussed the term. In Toronto Standard Condominium Corporation No. 2032 v. Boudair et al (2016) the condominium commenced an application against the tenants and owner of a unit after it received complaints about smoke escaping from the unit and entering the adjacent units.

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Condo successful against owner with bed bugs and hoarding issues

An Ottawa condominium brought an application against an owner because of the owner’s failure to maintain and repair his unit, which was infested with bed bugs and full of an excessive amount of debris. There were various inspections and communications between 2013 and 2015. The condominium attempted to work with the owner, but the owner refused to take steps to clean the unit and prepare it for treatment for bed bugs. Continue reading

Dog Restrictions and Disabilities

I am regularly asked by clients to assist them with enforcement of dog restrictions (i.e. weight limits) or complete prohibitions in a condominium’s documents. Sometimes an owner will claim that he or she needs the dog because of a disability. The mere mention of the word (disability) immediately increases the anxiety felt by the board and manager. It seems many owners are aware of this anxiety-inducing affect and use the word without regard for its actual legal meaning. There was a recent case where an owner did just that, but the condominium refused to back down without adequate evidence of her disability.

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Director breached duties in disagreement with the board

A case recently released provides a great summary of enforcement principles in condominiums. Briefly, it was an application by a group of owners against the condominium and one of the directors. The owners claimed that the condominium was not enforcing its single family residence restriction. There appears to have been a battle in the condominium over the single family residence restriction, which came to a head shortly after the Court of Appeal confirmed that single family residence restrictions were enforceable in Kilfoyl. A few months after the Kilfoyl decision was released, the board moved to amend the condominium’s rules to create a broader definition of single family. The proposal included “grandfathering”. There were various letters exchanged by the opposed groups, some of which included the opinion of the condominium’s lawyer. The proposed rule was eventually voted down by the owners at an owners’ meeting. The condominium notified the owners that it had to enforce the definition from Kilfoyl and more conflict ensued.

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Single Family Use

Most declarations for residential condominiums restrict the occupation and use of the units to residential use. Some go further and restrict the occupation and use of the units to “single family” or “one family” residences. The typical language used is something like:

Each unit shall be occupied and used only as a residence for a single family and for no other purpose.

These clauses have been contained within declarations since the 1970s, maybe even earlier in other jurisdictions. Most of you probably have similar clauses in your declarations, unless you are a commercial, industrial, or resort condominium, or one designed for student-housing.

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Restrictive Covenants in Common Elements Condos

There was recently an interesting decision by the Superior Court of Justice regarding the enforcement of two sets of restrictive covenants in a common elements condominium. A restrictive covenant is a legal obligation registered on title to land and runs with title (meaning it binds future owners). A restrictive covenant prohibits certain conduct, such as installing a fence, affixing decorations, or permitting a certain number of persons to reside at the property.

The condominium commenced an application against the owners of one of the parcels of tied land for compliance with a restrictive covenant, which prohibited the owners from installing any fence other than a four-foot wrought iron fence. The owners installed a seven-foot high wooden fence. The owners argued that the restrictive covenants registered in 2006, which did not prohibit the type of fence they installed, were the ones that should be enforced. The condominium suggested it was the previous restrictive covenants registered in 2004. The parties agreed that the owners were in compliance with the 2006 covenants, but not the 2004 covenants. The judge held that the condominium could only enforce the least restrictive covenants to the extent of any inconsistency between the two sets. Since the owners were in compliance with the 2006 restrictive covenants, the condominium could not demand the removal of the fence.

The case is not unique in the analysis of the restrictive covenants or the result, but the judge had several warnings for condominiums looking to enforce against owners.

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