New to the Condominium Way of Life: Part 2

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This is our second Q-and-A-style blog post for those who may be new to the condominium way of life or are contemplating moving into one.

In this post we focus on how and where issues that arise within condominiums get resolved with a focus on the Condominium Authority Tribunal and the mediation and arbitration processes required by the Condominium Act, 1998.

Q. What is the CAT?

A. The CAT is the Condominium Authority Tribunal. The CAT is a tribunal that has been created to hear certain types of condominium disputes involving owners and condominiums. A purchaser of a unit or a condominium manager may also apply to the CAT with respect to certain disputes in rare situations.  

Q. When does the CAT get involved?

A. The CAT can only become involved in disputes if it has jurisdiction in the area. The CAT’s jurisdiction is described in a regulation made under the Act and currently includes:

  1. Record disputes related to a request made by an owner or purchaser of a unit to examine records or obtain copies of them, including disputes over the applicable fees for examining the record or obtaining copies of them, the condominium’s reasons for refusing the record, and the penalty for the condominium’s improper refusal.
  1. Compliance disputes about the declaration, by-laws or rules related to any of the following:
    1. Pets or animals
    2. Vehicles
    3. Parking and storage
    4. Indemnification claims for costs related to (a) to (c).

The CAT does not have jurisdiction over a dispute, even if it fits within the list above, if it also relates to section 117 of the Act (an activity or condition that is likely to cause damage to the property or injury to persons), a section 98 agreement (where an owner makes changes to the common elements), or an agreement under s.24.6(3) of O.Reg. 48/01 (where an owner installs an electric vehicle charging station on the common elements).

Q. What are the other types of available dispute resolution processes for condo disputes?

A. If the CAT does not have jurisdiction over a dispute, it does not mean the parties should run off to court. The Condominium Act, 1998, requires mediation and arbitration of certain types of condominium disputes about agreements between:

  1. A declarant and a condominium, including a dispute about a first-year budget deficit under section 75 or a budget statement under subsect 72(6),
  2. Two or more condominiums, such as disputes about the use of shared facilities or the cost sharing obligations for the shared facilities,
  3. A condominium and a unit owner about a section 98 agreement (changes to common elements made by owners), and
  4. A condominium and its condominium manager.

In addition, every declaration is deemed to contain a provision that requires condominiums and owners to submit disagreements about the declaration, by-laws or rules to mediation and arbitration as well. This has been broadly interpreted to cover disagreements about the validity, interpretation, application, or non-application of the declaration, by-laws and rules, as well as damages claimed by an owner or the condominium related to the disagreement.

The mediation and arbitration provision does not apply to disputes involving tenants but a condominium and owner could agree to attempt to resolve the dispute without court by voluntarily using mediation and arbitration.

Some “pure” enforcement issues may proceed to court without mediation or arbitration as there is no disagreement in these cases. The owner simply refuses to comply with their obligations or ignores requests to comply.

There are many situations where court is the most appropriate option, such as a power of sale process to enforce a lien to collect arrears owed by a unit owner. It is important for condominiums and owners to seek legal advice before choosing the forum for their dispute as the improper forum could cause delays and additional costs, and in some cases, act as a bar against proceedings in the proper forum.

Have a question you think new owners need to know? Send it to us and you may see it in a future post.

Special thanks to Zach Powell, summer student at Robson Carpenter LLP, for asking the questions owners want to know and preparing this post!

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.

Spring Break Reading: Courts Edition

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As described in our post on Wednesday, the Condominium Authority Tribunal (CAT) has been busy so far in 2021 releasing at least 30 decisions. Well, the Superior Court of Justice is no slouch either. There have been dozens of decisions in 2021 that are relevant to condominiums in Ontario. The Court of Appeal has also released some interesting decisions. Today, we briefly review a few of the key decisions.

2021 ONSC 2616: a condominium brought an application against a unit owner claiming that he “terrorized the community”. Other allegations included harassment of contractors, not permitting his unit to be inspected for fire safety purposes, threatening to send asbestos to others’ homes, and playing audio recordings loud enough for the whole condominium to hear on a repeating loop for hours at a time. The condominium sought various orders, including an order prohibiting the owner from communicating with the directors, agents, and contractors. The owner claimed that the condominium had to accommodate him. The court found the condominium had done all that it could to accommodate him and his communications constituted harassment. At paragraph 43 the court summarized the situation as follows:

[43]         A demand for accommodation is only one side of the community living equation. People are required to recognize [the owner’s] disabilities and aid him accessing their goods and services to the point of undue hardship. But the duty to accommodate does not eliminate altogether the other parties’ rights and the need for [the owner] to obey the law and the rules of the condominium. A right to accommodation to participate in the community is not license to harass, oppress, or unilaterally dictate rules for how the condominium community behaves.

2021 ONSC 2575: an owner brought an application against its condominium to set aside part of an arbitration award. The owner only owned parking units and wanted to access the corridors and other common elements. The arbitrator found this was an “absurd result” and found the board’s interpretation of its documents to be reasonable. As a result, the arbitrator determined the owner was not entitled to access the corridors and other common elements. The court set aside the arbitrator’s award. The judge felt the arbitrator had no authority to make the decision it did with respect to the access issue as the arbitrator “cross the line” and purported to amend the declaration to correct perceived inconsistencies or errors. I do not agree with this decision, but it appears the matter is not over given the judge has referred it back to arbitration on the issue of access. We will see what happens with it.

2021 ONCA 191: an owner brought an application against her condominium claiming it had failed to maintain and repair the property and acted oppressively. The owner complained of noise from fans above her unit, which the condominium removed. She claimed the condominium did not resolve the problem in a timely manner. The application was dismissed. The owner appealed. The court of appeal dismissed the appeal. The judge properly considered the test for oppression under section 135 of the Act: was there a breach of the owner’s reasonable expectations and, if yes, the conduct complained of amounts to oppression, unfair prejudice, or unfair disregard of the owner’s interests. The judge was satisfied that the condominium addressed her complaint in a reasonable manner by meeting with her, communicating with her, visiting her unit multiple times, retaining experts to investigate, and in following the recommendations of the experts. The judge’s decision was entitled to deference on appeal.

2021 ONSC 2071: a condominium brought an application against two owners who refused to wear masks while on the common elements. The owners claimed they were exempt due to medical conditions and they were not required to provide proof of their exemption. The condominium argued the owners refusal was deliberate and in defiance of the legislation, municipal mask by-law and the condominium’s mask by-law. The condominium submitted photographs of the owners wearing anti-mask signs and posting anti-mask posters in the building. The condominium was concerned that the refusal to wear masks put the other residents at greater risk. The court had to balance the competing rights of the owners and the rest of the community. The court summarized the balancing at paragraphs 37 and 38:

[37]                 Condominium corporations indeed constitute a form of micro-community, in which the residents partake in a form of social contract. As with living in any community, condominium owners and their guests must enter a social contract which relinquishes their absolute interests to do as they please with their real property, and instead balance their interests with those of the other owners and tenants.  Condominium corporations are mandated to be self-regulated.  Condominium boards have a duty to control, manage and administer their community.  In doing so, they may make rules and policies that are more restrictive than the general law applicable to all persons and premises in the province or in a particular municipality by operation of provincial statutes or regulations, or municipal by-laws: for example, restricting the sorts of pets that residents may keep, or restricting the access of contractors to do non-essential work during the pandemic, as in TSCC 1704 v. Fraser, supra

[38]                 The efforts of the HCC77 board to develop and promulgate a mask policy were not only reasonable, but necessary in the circumstances.  But, in respect of the interplay between provincial and municipal legislation and condominium policy, a condominium board may not promulgate policies that are contrary to law of general application in the province or municipality.  They may make policies that are more restrictive in areas where the law of general application has not already occupied the field, but they cannot be inconsistent.

The court was not prepared to require the owners to wear a mask given their claim of being exempted and the clear language in the legislation and municipal by-law not requiring proof of the exemption. The court did make an order limiting their use of the common elements to essential purposes only (i.e. ingress and egress to their unit, collecting their mail) to protect the other residents. As a result, the owners can no longer walk around on other floors for exercise or visit other residents without wearing masks.

2021 ONSC 1306: an owner refused to replace Kitec pipes in his unit. The condominium notified him that it would replace the pipes at the owner’s cost. The owner refused to permit access to his unit. The condominium commenced mediation proceedings in an attempt to secure his cooperation. He did not participate in mediation. The condominium commenced arbitration proceedings, but the owner did not participate in any meaningful way (other than to object to the arbitrator’s appointment). The arbitrator made an award ordering the owner to permit the condominium to access his unit to replace the Kitec pipes in his unit and ordered $60,000 in costs. The owner continued to refuse, so the condominium sought a court order enforcing the award. The owner brought an application to set aside the arbitration award. The owner’s application was out of time and dismissed. The condominium’s application was granted, so judgment would be issued enforcing the arbitration award.

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