Summer Case Law Reading

legal case

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

My Favourite Condo Lessons of 2016

fireworks

As 2017 approaches I find myself reflecting on the most important news, cases, and other events from this past year. Here are my favourite condo lessons for 2016:

10. Property Managers may be liable for errors in status certificates. The responsibility for the status certificate is normally set out in the management agreement so make sure that you are familiar with any limitations of liability and any obligations on the board to disclose information relevant to the status certificate. You can read the most recent case here and the costs award here.

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The Condo’s Lien Right – When Does Default Occur?

bank.jpgRecently, the court released an interesting decision on cost awards against owners and the right to lien.The facts are lengthy, but it is important to understand the background.

The condominium brought a compliance proceeding against one of the owners. The condominium was successful. The judge made an endorsement that required the owner to pay $15,000.00 in costs within 30 days of the date of the endorsement. The condominium switched counsel and management companies shortly after the endorsement was made. Several months later the condominium added $44,000 to the unit owner’s ledger. The condominium’s lawyer then sent a letter to the owner demanding payment within 30 days.  The owners did not pay so the condominium’s lawyer sent a notice of lien in November 2011 and registered the lien in December 2011. The condominium served a statement of claim for possession and a default judgment was signed in April 2013. A notice of sale was sent in May that indicated $77,709 was owing. The condominium obtained possession of the unit in November 2013.

In December 2013, the owner stopped paying his mortgage. The lender, CIBC, began making demands for payment. CIBC obtained judgment on October 22, 2014, for $135,411 plus costs. For unexplained reasons, CIBC was not aware of the power of sale proceedings of the condominium and the fact that the condominium was set to sell the unit within a few days. The condominium and CIBC agreed to continue with the sale of the unit and hold the proceeds in trust until a court could determine the priority of the lien and mortgage.  Continue reading

Improper Use of the Indemnification Clause

Many declarations contain a clause that requires the owners to indemnify the corporation for a loss, cost, damage or injury to the common elements or units if it was caused by the owner, his family, tenants, guests etc. Many condominiums attempt to apply these clauses to other types of expenses incurred by the condominium, such as legal costs.

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Unreasonable Owners + Reasonable Board = Costs for Condo

A recent decision of the Superior Court of Justice illustrates how the conduct of the parties can sway a judge when it comes to the issue of costs. The case is York Condominium Corporation No. 922 v. Frank Lu et al (2016). The facts are straightforward. The owner refused to permit the condominium’s contractors to enter the unit to investigate it after a flood in the unit, which was caused by the owner’s tenants. The condominium made repeated attempts to gain access to the unit and offered to meet with the owner to discuss the issue, but the owner refused. The condominium engaged a lawyer, who wrote several letters, but the owner still refused to grant the condominium access to the unit.

The condominium started a court application under sections 92, 117, and 134 of the Condominium Act, 1998. The condominium asked the court for an order requiring the owner to allow it to access the unit to investigate the damage, and if necessary, repair the damage to the common elements.

The condominium was successful in its application and sought $15,416.00 in costs from the owner. Continue reading

Condo Harassment: Is it real?

If I had a dollar for every time I’ve heard “this is harassment” in response to a letter sent by one of my condominium clients to an owner about a rule violation I could have retired at 26. It seems to be an allegation that is thrown out without much consideration about what it actually means. What does it mean? What obligation does the board have to investigate complaint of harassment? What steps should a board take when it receives a complaint? Fortunately, recent decisions provide answers to these questions and more. I’ll briefly discuss two cases today.

The first case is Wexler v. Carleton Condminium Corporation No. 28. An owner commenced an action in Small Claims Court against the condominium seeking about $2,500.00, mostly for alleged harassment by the condominium.  The condominium argued that it was not harassing her, but taking steps to ensure that she complied with the Act, declaration, by-laws and rules.

The judge reviewed the case law on civil harassment and identified four elements:

  1. was there outrageous conduct by the defendant?
  2. did the defendant intend to cause emotional distress to the plaintiff?
  3. did the plaintiff suffer severe emotional distress?; and
  4. was the plaintiff’s emotional distress caused by the defendant.

The court found that the owner did not present any evidence of the elements and dismissed her action with costs. The judge said:

The Corporation’s conduct was not outrageous; the Corporation was enforcing the provisions of the Act, the Declaration, the By-laws and the Rules. It was exercising its statutory duties. The Corporation had no intention of causing emotional distress to [the owner], nor did it act with a reckless disregard which could have caused emotional distress to her.

I understand that the condominium asked for over $35,000.00 in costs from the owner, even though cost recovery in Small Claims Court is normally limited to 15% of the amount claimed. The judge found that a higher amount was necessary to penalize the owner for her unreasonable behaviour and awarded the condominium $20,000.00 in costs. This means that at least $15,000.00 in costs will become common expenses all because this one owner felt harassed by the board satisfying its duty to ensure the owner complied with the Act, declaration, by-laws and rules.

The second case is Welykyi v. Rouge Valley Co-Operative Home Inc.. A group of 10 owners made human rights complaints against a co-operative. The owners claimed that the board did not respond appropriately to discriminatory and vulgar messages posted throughout the co-operative over a 5 month period. The Tribunal characterized the messages as “truly heinous” displaying a “shocking level of ignorance and intolerance.” Many of the owners were previous board members. According to the decision, there was tension between the “old board” and “new board”. The board never identified the person or persons responsible for the messages.

The Tribunal reviewed the case law, including the obligation of a housing provider, such as a condominium’s board, to address complaints of violations of the Human Rights Code. The Tribunal described the factors to be used in assessing whether a complaint has been adequately addressed:

  1. was there in place a harassment policy, complaint mechanism, and training?;
  2. once a complaint was made, was it taken seriously, dealt with promptly and sensitively, and reasonably investigated and acted upon?; and
  3. was a reasonable resolution found and was it communicated to the complainant?

The factors are not definitive, but are to be used as a general guide.

It is clear from reading the decision that the Tribunal was primarily concerned with the board’s failure to acknowledge the complaints and investigate them. The Tribunal found “significant deficiencies” in the board’s response and awarded each owner $3,000.00. The Tribunal also ordered the board to circulate the decision.

While it is a case about a co-operative its principles will likely be applied to condominium boards. In my opinion, the important points to take away from the case are:

  1. condominiums should have anti-harassment policies, rules or complaint procedures in place;
  2. boards should be trained in human rights issues;
  3. boards should acknowledge complaints and keep complainants informed;
  4. boards have an obligation to promptly investigate complaints of harassment, which should include speaking with the complainants and anyone else who may have knowledge of the incidents;
  5. boards have an obligation to take steps to prevent harassment, which may include re-positioning cameras or improving security features; and
  6. boards should condemn harassment, which may be done at meetings or by sending out notices to all owners condemning the behaviour.

Interestingly, the Tribunal seemed to suggest that the installation of fake cameras could have been an option for the co-operative:

Relocating a camera in this way was appropriate action for the Board to take. The installation of fake cameras, whatever the other issues that arise with deploying non-functional cameras, could have been a reasonable approach for the Board to take in light of its poor finances. Non-operational cameras could be a deterrent, provided that the fact that they do not function does not become known.

The Tribunal also criticized the board for failing to investigate because they relied upon bad advice that they had to capture the perpetrator to find a proper resolution:

Catching a harasser is not always possible, as in this case, and a housing provider should not focus on apprehension to the exclusion of other considerations, such as communicating with and supporting the victims.

As such, the board had an obligation to investigate the complaints and support the victims, even if it was unlikely to determine who were the culprits of the messages.

This was a long post, but the cases highlighted so many important point about harassment in condominiums that it was impossible to cut any portion out. Do you have any practical solutions to addressing harassment?

Top Condo Lessons of 2015

As 2016 approaches I find myself reflecting on the most important news, cases, and other events from this past year. Here is my list of the most important condo lessons for 2015:

10. Limitation Periods. The limitation period for enforcing a shared facilities agreement in Ontario appears to be 10 years: Toronto Standard C.C. No. 1487 v. Market Lofts Inc. The limitation period for challenging a special assessment is 2 years and the period begins when the special assessment is levied, not when it is due:  Vasilescu et al. v. Metropolitan Toronto C.C. No. 626.

9.  Noise Issues. An owner does not have a right to absolute quiet in their unit; the other owners are entitled to make ordinary residential use of their units without fear of enforcement efforts by the condominium: Dyke v. Metropolitan Toronto C.C. No. 972. However, it can be oppressive for a condominium to ignore noise complaints, especially when its own experts indicate that there is a problem: Wu v. Peel C.C. No. 245.

8.  Scheduling Meetings. Condominiums ought to be mindful of religious holidays or special events when selecting dates or times for owners’ meetings: Kamal v. Peel C.C. No. 51 (no decision released yet).

7.  Directors’s duties. A director may be found to have breached their duties when he/she publicly opposes a decision made by the board in a way that is not in the best interests of the condominium: Ballingall et al. v. Carleton Condominium Corporation No. 111.

6. Fraud. More property mangers were charged with fraud this year. Condominiums in Hamilton and Burlington were hit hardest. All directors and owners should be diligent when reviewing financial records of the condominium; hire only trustworthy managers; and ask the auditor and bank reps for tips to avoid fraud.

5. Bed bugs are dangerous condition. An owner who fails to address a bed bug infestation (or hoarding) can be found to have breached their duties under the Act and declaration and the owner may be responsible for all of the condominium’s costs: Carleton C.C. No. 25 v. Eagan.

4.  Grandfathering. A clause in a new rule may grandfather existing violations, but it must be reasonable (10 years was not in this case) and consistent with the declaration: Ballingall et al. v. Carleton Condominium Corporation No. 111.

3.  Disabilities must be proven. An owner cannot make a bare assertion of pain or anxiety to substantiate a disability claim and a request for accommodation; the condominium is entitled to request evidence of the disability, a description of the needs of the disability, and an explanation of how the requested accommodation meets those needs: Simcoe C.C. No. 89 v. Dominelli.

2.  Court Costs. The courts continued to express concern for claims by condominiums trying to recover excessive legal costs from owners for enforcement matters. See here and here. But Owners should be careful not to make claims that they can’t substantiate or they may be responsible for the large legal bills of their condominium.

And not surprisingly, the top news event of 2015 is…

1.   The passage of the Protecting Condominium Owners Act, 2015 (Bill 106). In April the Ontario government confirmed that the Condominium Act, 1998 would be amended in 2015. In May the proposed amendments to the Act were revealed. In December the Bill received royal assent. It is not yet in force as the government needs time to create the regulations and organizational structure (i.e. tribunal), but many estimates say it will be in force later in 2016 or early 2017.

Condo too aggressive; court awards no costs.

A condominium corporation commenced an application against unit owners seeking orders that they obey the rules, be quiet and leave others alone. The owner commenced a counter-application for the same relief against the condominium. Most of the dispute related to the costs of the proceedings. The condominium insisted upon full recovery, or near full recovery, of all of its costs (about $150,000.00) prior to a ruling by the judge. Neither the condominium or owners were successful in their applications. The condominium sought $30,000.00 in costs.

The ruling on costs is one of many made in the past few years where concerns were raised about a condominium’s aggressive stance toward an owner during a legal proceeding. This aggression seems to stem from the condominium’s confidence that it will be entitled to rely upon subsection 134(5) of the Act to recover all or almost all of its legal costs. Subsection 134(5) states: Continue reading