Can You Arbitrate Oppression Claims Between Condos?

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Today’s post is about a recent Court of Appeal decision regarding arbitration in condominiums. The facts are straightforward. Two condominiums were parties to a cost-sharing agreement. There was a dispute about the amounts owing under the cost-sharing agreement. The parties participated in a mediation, which was unsuccessful. One of the condominiums sought to arbitrate the dispute. The other disagreed that aribtration was appropriate and commenced an application to the Superior Court of Justice seeking various relief, including an order that the conduct of the first condominium was oppressive, unfairly prejudicial or unfairly disregards the interests of the condominium pursuant to section 135 of the Condominium Act, 1998.

In response to the application, the other condominium brought a motion to stay the application in favour of arbitration. The motion judge found that the entire matter should proceed before the court, despite finding that some matters were within the jurisdiction of an arbitrator under section 132 of the Act. The decision was appealed.

For context, section 135 of the Condominium Act, 1998, permits certain parties to bring an application to the Superior Court of Justice if the conduct of another owner, the condominium, a declarant, or a mortgagee of a unit “is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant”. Previous court decisions have found that disputes involving oppression claims do not require mediation and arbitration under section 132 of the Act and the claim could proceed in the Superior Court according to section 135 of the Act.

The Court of Appeal reviewed a recent decision where the Supreme Court of Canada made it clear that a court did not have discretion to refuse to stay claims that were dealt with in an arbitration agreement. The Court of Appeal found that the dispute between the condominiums was clearly covered by the arbitration clause and the motion judge should have stayed that portion of the application.

With respect to the oppression claim, the Court of Appeal did not agree with the motion judge that the “pith and substance” of the dispute was oppression. The core of the dispute was the interpretation and application of the cost-sharing agreement and these sorts of disputes required mediation and arbitration under section 132 of the Act. The Court of Appeal cautioned courts reviewing these sorts of claims at paragraph 25:

In our view, courts should generally be cautious in their approach to oppression claims of the type asserted here. In particular, courts should be wary of allowing such claims to overtake, and potentially distort, the dispute resolution process that lies at the heart of the Condominium Act, 1998, a central aspect of which is a preference for arbitration over court proceedings. In other words, courts should be alert to the possibility that persons, who are party to an arbitration agreement, are attempting to avoid that process by “piggybacking” onto claims made against others: see e.g. MTCC No. 965 v. MTCC No. 1031 and No. 1056, 2014 ONSC 5362, at para. 18; see also TELUS, at paras. 76, 98.

The Court of Appeal stated that oppression claims may be determined by arbitrators if the claim relates to a dispute that falls within the terms of the arbitration clause (in the cost-sharing agreement) or section 132 of the Act. At paragraph 29:

The language of s.135(1) is permissive, not mandatory. It contemplates that, in certain circumstances, it may be necssary to have resort to the Superior Court of Justice to obtain relief. However, s.135(1) does not oust the jurisdiction of an arbitrator to consider the same relief, if that relief is part of the dispute in question that properly falls within the terms of the arbitration provision or within the terms of s.132. In this case, we have already noted the broad language of the arbitration clause. There is nothing, in our view, that would preclude an arbitrator, acting under the authority of that arbitration clause, from considering the alleged oppressive conduct advanced by the respondent in appeal, at least as it relates to the actions of TSCC1636.

The Court of Appeal allowed the appeal and granted a stay of the application. The two condominiums will need to participate in arbitration.

This is an interesting decision. I have had debates with other lawyers about mediation/arbitration for oppression claims. Many take the position that only the Superior Court of Justice has jurisdiction to hear these sorts of claims. It is nice to have a decision that brings some clarity to the issue.

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. Continue reading

Court rules (again) that condo can’t avoid mandatory arbitration

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There have been several cases in the last year or two that have been stayed (halted) because one of the parties ignored an obligation to arbitrate a dispute. Another decision was released this week. Given the number of cases as of late, it seems that a review of the basic principles might be useful. The most recent case includes a great review so we will summarize it here. Continue reading

Summer Case Law Reading

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Who doesn’t enjoy a little case law reading by the pool or beach? Oh, that’s just me? Oh well. I hope you enjoy reading these brief summaries anyway.

MTCC No. 1067 v. 1388020 Ontario Corp. 

This is an action by a condo to enforce a lien. The condo brought a motion for summary judgment. There were three issues: interest on the arrears of monthly fees; additional expenses claimed by the condo; and legal costs.

The condo claimed interest at a whopping 30% above the prime rate charged by TD to its best risk commercial accounts per annum, compounded monthly. The defendant argued that the condo was not entitled to such a high rate of interest because it could not provide precise, consistent statements to show it was entitled to the full amount. The judge disagreed. The by-law was a contractual arrangement between the owner and the condo and there was no reason not to enforce it.  Continue reading

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.

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Owner not oppressed by by-law restricting use of parking spaces

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I recently read an interesting case about parking rights in a commercial condominium. The applicant was the owner of three units, which were leased for use as a restaurant. The owner commenced an application against her condominium after it passed a by-law restricting parking in common element spaces.

Historically parking was allocated on a first-come, first-served basis. This led to problems with insufficient parking for customers and employees of many of the units. In 2009 the Board passed a by-law to change the allocation of parking spaces. The by-law allocated two parking spots to each unit. In 2014 the Board discovered that the by-law was never registered so it was not valid. The Board passed another by-law in 2015 to fix the problem. The 2015 by-law increased the number of parking spaces per unit to four. The result was that the restaurant had significantly less available parking for its customers.

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Condo oppressed owner when it failed to address noise

You have probably all read about the oppression remedy in section 135 of the Act. As a recap, section 135 allows an owner, corporation, declarant or mortgagee of a unit to make an application to the courts where the conduct of another owner, corporation, declarant or mortgagee of a unit “is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant.” The purpose of the oppression remedy is to protect legitimate expectations from conduct that is unlawful or, even if lawful, is considered unfair or oppressive. The legitimate expectations must be balanced against competing interests, such as the board’s duty to make decisions on repair or maintenance. The section has been described as “awesome” because it gives the judge the power to make any order he or she deems proper.

Although oppression has been claimed many times since section 135’s inclusion in the Act, very few of the applicants have been successful. Successful cases involve a declarant that refuses to relinquish control of the condominium or where a decision is made that is unfair to a minority group of owners. However, this week a decision was released where an owner was successful against the condominium not because of a decision made or an action taken, but because of the condominium’s inadequate response to the owner’s complaints.

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Shared Facilities Dispute Requires Med/Arb Despite Oppression Claim

The Court recently had to determine whether a dispute with respect to a shared facilities agreement must proceed to mediation and arbitration or whether it could be heard in court (see Metropolitan Toronto Condominium Corporation No. 965 v. Metropolitan Toronto Condominium Corporation Nos. 1031 and 1056 (2014) SCJ).

The plaintiff, a condominium, brought an application against two other condominiums claiming they had breached the shared facilities agreement (SFA) they were all parties to. The plaintiff condominium also alleged that the other two condominiums were acting oppressively. The defendants brought a motion asking the court to stay (put a stop to) the action and order arbitration. The defendant condominiums argued that the shared facilities agreement required arbitration of disputes. They also argued that section 132 of the Condominium Act, 1998 required mediation and arbitration of disputes with respect to shared facilities disputes. The plaintiff condominium argued that mediation and arbitration was not required because it was seeking relief under section 135 of the Condominium Act, 1998 (oppression).   Continue reading

Condo ordered to amend declaration by court

In Grigoriu v. Ottawa-Carleton Standard Condominium Corporation No. 706 [2014] O.J. No. 2218 two owners of a unit applied to the court for an order amending the condominium’ declaration under section 135 of the Condominium Act, 1998. The owners claimed a recent amendment made to the declaration was oppressive or unfairly disregarded their interests.

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