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
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
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.
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?
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.
If you prefer to learn of these cases within hours or days of them being posted, just follow me on Twitter.
It is estimated that almost 9,000 condo corporations have been created in Ontario since 1967, but no more than a half dozen have ever been terminated.
To explore a relatively obscure but increasingly important area of our condo law, the Real Property and Civil Litigation sections of the Ontario Bar Association have teamed up to present an educational session on court-ordered termination of condo corporations on Monday
Tuesday, September 22, 2014.
Here’s the blurb:
The recent termination of Simcoe Condominium Corporation No. 32 is believed to be the first termination of an Ontario condominium corporation under court supervision and one of only a small handful of condo terminations in Ontario’s legal history. Attend this program to hear directly from the lawyers who handled the termination of SCC 32 about the steps and procedures undertaken to terminate a condominium corporation. Through this, you will gain practical insight into a novel area of condominium law – one that may become increasingly pertinent to both real property and litigation lawyers as older condominium corporations begin to reach structural life expectancy.
The program is open to members and non-members (including non-lawyers), either by attending in person at the OBA in downtown Toronto or by live webcast at a computer near you.
If you’re downtown, consider attending in person. The hospitality is warm and the food is good.
Those outside Toronto (or too shy to dine amongst a room full of lawyers!) or people pressed for time can opt for the live webcast option at a reduced price ($40 for members and $60 for non-members).
The evening includes Q&A with the speakers. As program co-chair, I would be glad to ask the speakers your questions if you send them to me in advance. Alternatively, ask them yourself at the in-person session or submit them electronically during the webcast.
I’ll be back.
After this long weekend, many of us following Ontario’s Condo Act Review process will refocus on the imminent tabling of a draft new Condo Act. Those involved in the review process found it to be an innovative and interesting one that was championed by a senior government official who, sadly, will not be returning to work on condo law reform on Tuesday.
Giles Gherson, Ontario’s Deputy Minister of Consumer Services since 2011, is credited as a driving force behind the multi-stage public engagement review process to modernize our condominium law. He was a regular feature at sessions and workshops and spearheaded a number of important initiatives that came from the review process, not least of which is condo manager regulation and, of course, the draft new statute that remains to be revealed and is expected within weeks.
On September 2, 2014, Giles becomes Deputy Minister of Economic Development and Employment and also of Research and Innovation. On October 6, he will also assume responsibility for Infrastructure. These are remarkably important portfolios that will without doubt benefit from Giles’ insight and leadership.
Thank you, Giles, for your service and contribution to reforming our condo law. Best wishes for your new role.
The recent Ontario Superior Court case of Hogan v. MTCC 595 demonstrates that some condo boards have not yet read the memo about being responsive to unit owners and exercising common sense. Headshaker cases like this one are worth highlighting as examples of how not to run a condominium.
In November 2013, MTCC 595 notified its unit owners under section 97 of the Condo Act about the board’s plan to make an addition, alteration or improvement to the common elements at an estimated cost of $72,000. As required by subsection 97(3), the notice also advised owners of their right under section 46 to requisition an owners’ meeting to vote on the board’s proposal. Section 46 requires the board to call a meeting on requisition by the owners of at least 15% of the units. Continue Reading
The first half of 2014 brought a bumper crop of condo-related court and tribunal cases from across Canada. The race for the top 10 cases of the year is heating up!
ONSC nixes unit owner’s case vs condo & bd over previously-litigated issues. Good discus’n re liability of directors. http://canlii.ca/t/g23p8
HRTO: For giving condo a binding release, fired super’s sexual orientation complaint dismissed as abuse of process http://canlii.ca/t/g298x
ONSC imposes terms on condo unit owner for violent, antisocial outbursts, but not sale of unit. http://canlii.ca/t/g2b2r
ONSC awards condo costs of $37K in hotly contested compliance application where sale order requested but denied. http://canlii.ca/t/g2w8t
ONSC: Claim vs landscaper made 3 yrs after slip&fall may proceed, but condo’s x-claim vs landscaper statute-barred. http://ow.ly/rNMvI
Some of the most uncomfortable conversations that condo directors, managers and lawyers have with unit owners take place when owners cannot afford the monthly common expenses for their unit. While it is natural to show compassion to someone in trouble, significant problems and potential liabilities arise by delaying prompt collection action.
Ontario condominium corporations have one the strongest statutory debt collection mechanisms in the world. They can collect every single penny of common expenses in priority to most other creditors so long as the required notices are properly completed, given on time and a certificate of lien is registered on title within 90 days of default. The rules are fairly simple but the slightest slip in the paperwork or missing a deadline by a single day jeopardizes the condo’s priority and ability to collect the entire debt quickly.