The Ontario Condo Law Blog

The Ontario Condo Law Blog

Serving Ontario's condominium communities since 2008

A reasonably prudent director

Posted in Case Studies, Governance, Living Together

Condo directors in Ontario are expected to exercise a certain degree of attentiveness, caution and prudence while carrying out their duties. This expectation is known as the “standard of care” and is set out in section 37(1) of the Condominium Act, 1998, which provides:

37.  (1)  Every director and every officer of a corporation in exercising the powers and discharging the duties of office shall,

(a) act honestly and in good faith; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

While the wording of this standard of care seems pretty simple, some directors don’t entirely understand what it means.  A recent Superior Court case illustrates that some directors don’t understand it at all, or don’t care. Continue Reading

Common expense collections policy redux

Posted in Financial Issues, Governance
Past Due

We published a piece last May recommending that condominium corporations enact policies to collect common expenses in an orderly, systematic way. Unfortunately, we continue to see condo boards deliberately delaying the commencement of power of sale proceedings on liened units. Such delay brings added cost, wasted board time, greater hardship on unit owners in trouble and cash flow disruptions.

Aside from poorly-informed boards of self-managed condos, a major cause of problem collections is management agreements requiring the board to instruct management to commence power of sale proceedings on liened units. Whatever the reason behind such clauses, none is compelling and the concept is hopelessly flawed. We say: Continue Reading

Superior housekeeping at Superior Court

Posted in Legislation & Regulation
spring cleaning

Though the weather suggests otherwise, spring has finally sprung in Ontario. As many condo corporations begin their seasonal cleaning and maintenance routines, our courts are likewise gearing up for significant housekeeping.

Recent changes to the Rules of Civil Procedure will automatically sweep away pending lawsuits brought in the Ontario Superior Court that are not moved forward in a timely way. Condominium corporations, their directors and managers should take note. Continue Reading

Condo lien enforcement hits the highway

Posted in Legislation & Regulation
Source: Ontario Ministry of the Attorney General

Until now, mortgagees could commence their enforcement lawsuits anywhere in Ontario they pleased, regardless of where the mortgaged property is located. That option is now gone.

On March 31, 2015, rule 13.1.01 of the Rules of Civil Procedure is amended by adding the following new subrule (3):

Mortgage Claims
(3) In the case of an originating process, whether it is brought under Rule 64 (Mortgage Actions) or otherwise, that contains a claim relating to a mortgage, including a claim for payment of a mortgage debt or for possession of a mortgaged property, the proceeding shall be commenced in the county that the regional senior judge of a region in which the property is located, in whole or in part, designates within that region for such claims.

Stated more simply, mortgage enforcement actions must now be brought at one of the court locations in the judicial region where the property is located that is designated by the local regional senior judge. Continue Reading

The common expenses conundrum

Posted in Financial Issues

PennypinchMany people who work with condominiums raised an eyebrow after reading a recent Toronto Star story entitled “Maintenance fees take a toll on Toronto condo owners.”

The piece highlights the divergent philosophies about the interplay between common expenses and market values and the growing trend towards gathering, tracking and comparing common expenses data from building to building. Most notably, it cites the example of a local condominium that reduced its common expenses by 30% (probably by slashing contributions to the reserve fund) and is now witnessing a boom in unit resale values compared to nearby condos.

Continue Reading

Owners cannot requisition by-law amendments

Posted in Declaration, By-Laws & Rules, Governance

While the Condominium Act, 1998 permits owners to requisition meetings for certain business and for informational purposes, there are limits on what can be accomplished using this process.

Some owners at one of our smaller condo corporation clients recently submitted a requisition to amend the corporation’s general by-law to increase the size of the board from 3 to 7 directors and impose a new qualification that only owners are eligible to be directors.   For the reasons that follow, this is business that cannot be requisitioned by owners. Continue Reading

Top 10 condo law cases of 2014

Posted in Case Studies

Happy New Year!Happy New Year.

Our picks for the top 10 condo law cases of 2014 is an all-Ontario batch, with half being important Court of Appeal rulings.   Some of them highlight the dire need for significant revision to our condo law.

10.     TSCC 1908 v. Stefco Plumbing & Mechanical Contracting, 2014 ONCA 696

Expired condo lien rights cannot be revived. Unpaid common expenses are not damages that can be recovered with a compliance order (where 100% costs recovery is typically assured).  If you snooze, you lose and must sue the owners for a liquidated debt as any other unsecured creditor and any shortfall should be paid by the person(s) who allowed the debt to age beyond the 90-day lien period.   Condo corporations can minimize the odds of losing their first-place security over unpaid common expenses by working with a professional condo manager and enacting a collections policy.

9.       Boily v. Carleton 145, 2014 ONCA 574

The Court of Appeal upheld a contempt order against board members who breached a court order but significantly reduced the penalty and the costs payable by those directors personally.  While one of the court’s motives in softening the penalty and costs award was presumably to avoid dissuading people from serving on condo boards, the ruling leaves this corporation (and its entire ownership) holding the bag for a lot of costs arising from a board run amok. Similarly, the individual unit owners who spearheaded this litigation to hold the board to account are likely financially devastated from their effort and the hollow result.   No good deed goes unpunished.

8.       Gordon v. YRCC 818, 2014 ONCA 549

The Court of Appeal upheld a condo by-law permitting the board to disqualify directors after an internal “ethics review.”  Some observers hail the approval of such by-law as a victory, but it may cause more problems than it solves.  Allowing the majority of a condo board to unseat directors may periodically be helpful, but it strikes at the heart of condominium democracy and creates a real potential for abuse.  While the ownership may recall and remove directors at a whim, boards holding their own “ethics review” must do so in accordance with procedural fairness, good faith and act reasonably, failing which the process is open to judicial review, thereby giving rise to needless litigation and cost.  If the purpose of the by-law is to provide for swift, painless removal of bad-apple directors, it is defeated by the increased likelihood of a lawsuit and the prospect of a shining knight or whistle-blower being ousted by rogues.   Just because it may be possible to implement such a process to remove directors doesn’t mean it’s a good idea. Continue Reading

Fraud Alert: Rogue management firm at large in Halton

Posted in Financial Issues, Legislation & Regulation

It is not a lawyer’s usual role to alert the public about possible crimes being perpetrated by suspected criminals at large, but we feel compelled to do so when police and government fail to take action and leave condominium corporations vulnerable to a rogue.

Boards of small condominium corporations in Halton Region should check whether they have been victimized by potential rogue condo management firm operating in Burlington and surrounding area.

No police charges have been laid and no convictions have been entered, so we cannot name suspects without fear of defamation lawsuits, but we offer this warning as a public service to help condo boards protect themselves against fraud and to take effective steps to recover losses if they have been victimized.

Continue Reading

Watch Out: Developers limiting their liability for building defects

Posted in Buying and Selling, Case Studies, Construction Deficiencies, Declaration, By-Laws & Rules

MC900300842As the buying frenzy for new condos continues, a growing trend threatens to leave purchasers poorly protected against construction deficiencies.   Purchasers and their lawyers should pay attention.

In recent years, some developers’ agreements of purchase and sale for new units began including limits on the developers’ warranties for those units.   But that wording would usually not prevent the condo corporation from making claims for construction defects in the common elements.  That has changed.

More recently, some developers will make agreements between themselves and the condo corporations under their control in the early days after registration, where the corporation releases the developer from all warranties and claims for construction deficiencies except for the minimal coverage under the Tarion new home warranty.   Those agreements might be authorized and registered on title to all the units using a condo by-law.

The result is that the condo corporation turned over to its purchasers has no legal recourse against its developer for construction deficiencies, other than to make claim under the Tarion warranty, known for its many shortcomings and limitations.   This leaves the condo corporation having to pay the cost to repair most construction deficiencies from its own funds, leading to rapid increases in common expenses and surprise special assessments.

What makes this slick practice legally acceptable is that the release agreements and authorizing by-laws are disclosed to purchasers as part of the disclosure materials and the by-laws are registered on title following the condominium’s registration, thereby giving the world fair notice.   But is fair notice enough?

Continue Reading

Court and Tribunal Roundup to October 24, 2014

Posted in Case Studies

In addition to people, pets and parking issues, this autumn’s harvest of condo-related court and tribunal decisions includes a bumper crop of court of appeal cases dealing with:

  • Expired condo liens;
  • Contempt of court by directors;
  • Bylaws permitting in-house “ethics reviews” for directors; and
  • Bylaws releasing developers from construction warranties.

Plenty of interesting reading.

HRTO spills much ink on proper naming, identification of respondent condo corporation, directors and managers. http://canlii.ca/t/g90f6 

ONCA upholds condo bylaw releasing devl’per from all construction warranties except Tarion. http://canlii.ca/t/gf1qs  Buyers & lawyers beware.

ONCA: Expired condo lien rights can’t be revived. Unpd common expenses aren’t damages recoverable by compliance order http://ow.ly/CK1zH 

ONLST: Lawyer to pay $172K cost of prof misconduct investigation & prosecution re handling her own condo devlpmt. http://canlii.ca/t/gdqsv 

HRTO: Only written settlements of human rights disputes are enforceable. http://canlii.ca/t/g8zkw  Dismissal of case is relevant too, no?

ONSC: Condo corp may enter unit and remove dogs itself since owner won’t comply with earlier ruling. $10K in costs. http://canlii.ca/t/g8r77 

ABQB: Condo owner can’t avoid/delay paying special assessment while his dormant counterclaim is pending. http://canlii.ca/t/g8r0f 

ABQB philosophizes and then splits the difference in condo pet rule enforcement case. http://canlii.ca/t/g8r27 

ONLRB sets the stage for YCC 42 to become a unionized workplace. As if things can’t get any worse for this condo. http://canlii.ca/t/g835r 

ONLRB: With no protest from condo bd, security workers at infamous YCC 42 (320/30/40 Dixon Rd. Toronto) may unionize. http://canlii.ca/t/g8gwf 

ONSC converts seemingly complex condo shared facilities dispute from application to action. http://canlii.ca/t/g8lp0 

ONCA affirms condo bd’s contempt for breaching order but reduces penalty, reserves on $97K cost of contempt motion. http://canlii.ca/t/g8gcz 

ONCA upholds condo by-law permitting board to disqualify directors after an “ethics review.” http://canlii.ca/t/g83w9 

ONSC: Unit owner to pay her condo corp $49K for legal costs of lengthy rule enforcement case that settled late. http://canlii.ca/t/g80bl 

ONSC: Meeting requisition with owners’ names printed (not signed) still valid. Condo Act to be construed liberally. http://canlii.ca/t/g7shd 

HRTO removes condo directors from ethnic origin complaint but case vs. condo corp and mgmt firm to proceed. http://canlii.ca/t/g7ghc 

ONSC evicts unit owner and guest for breaching court orders. OPGT controls the owner’s property; will likely sell it. http://canlii.ca/t/g7mrr 

ONCA slashes two-thirds of the costs payable by condo directors for breaching court order. http://canlii.ca/t/gf1t9  Guess who pays the diff.

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