Section 135 of the Condominium Act, 1998 (the “Act”) gives unit owners, condo corporations, declarants and mortgagees the right to bring applications against one another for relief against conduct that is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant.
Where a court finds the existence of oppressive conduct, it may make any order it deems proper, including an order prohibiting the conduct and an order requiring payment of compensation.
Oppression Remedy at Common Law
The decision in Hakim v. TSCC 1737, 2012 ONSC 404 provides a good synthesis of the law pertaining to the oppression remedy. Here are the most salient points:
- Courts have consistently applied the interpretation of oppression remedy provisions in corporate law statutes (i.e. Canada Business Corporations Act and Ontario Business Corporations Act) to condo law cases dealing with the oppression remedy under s. 135 of the Act.
- The two-part test set by the Supreme Court of Canada in BCE v. 1976 Debentureholders for establishing oppressive conduct in corporate law can generally be applied to the actions of condominium corporations: 1) there must be a breach of a “reasonable expectation” of conduct and 2) the breach must amount to “oppression”, “unfair practice” or “unfair disregard”. In addition:
- “Reasonable expectations” must be viewed objectively and contextually.
- “Oppression” is conduct that is coercive or abusive. Oppression has also been described as conduct that is burdensome, harsh and wrongful, or an abuse of power which results in an impairment of confidence in the probity with which the corporation’s affairs are being conducted.
- “Unfair prejudice” has been found to mean a limitation on or injury to a complainant’s rights or interests that is unfair or inequitable.
- “Unfair disregard” means to ignore or treat the interests of the complainant as being of no importance.
- Section 135 of the Act protects legitimate expectations, not individual wish lists. The court must balance the objectively reasonable expectations of the owner with the Board’s ability to exercise judgment and secure the safety, security, and welfare of all owners. The Board is charged with the responsibility of balancing the private and communal interests of the unit owners, and their behaviour must be measured against that duty.
Oppression Remedy in 2015 Condo Law Cases
In 2015, Canadian courts rendered judgment in several condo-related oppression remedy applications, lending further insight into how condo stakeholders should properly conduct themselves and when the oppression remedy is appropriate. Here are some of the most notable cases:
Wu v. PCC 245, 2015 ONSC 2801
The court found that the respondent condominium corporation oppressed the applicant unit owner by failing to maintain and repair the building’s elevator, which was causing excessive noise and vibrations in the applicant’s unit. Although the respondent undertook significant investigation of the problem, it did little work to resolve it. Given the advice received from the investigation, it was reasonable for the applicant to expect the respondent would act. Instead, the respondent blamed the applicant and questioned her credibility. The court awarded the applicant damages of $30,000 and costs of $20,000.
Ballingall v. CCC 111, 2015 ONSC 2484
The applicant unit owners argued that the Board acted oppressively in expanding the grandfathering provisions of a new rule aimed at defining the term “single family” for occupancy purposes, as the modified rule favoured landlord owners to the detriment of resident owners. However, the court was not persuaded that the Board acted in an oppressive manner, as the Board followed the appropriate procedure to pass the rule, the Board considered the advice of legal counsel prior to passing the rule, the evidence was inadequate to persuade the court that the Board’s passage of the rule amounted to an abuse of power or an act of bad faith, the rule does not unfairly prejudice the applicants based on its equal application to all unit owners and the Board did not unfairly disregard the applicants’ interests in the sense of denying the validity of those interests and ignoring them when crafting the rule. While the oppression claim was dismissed, the court found, however, that at least one director breached the duty to act in good faith.
YCC 41 v. Schneider, 2015 ONSC 3919
The respondent unit owners were found in breach of an earlier judgment ordering them to allow the applicant condominium corporation to enter and clean their unit, which was the source of foul odours due to uncleanliness, and eradicate a cockroach infestation. The court held that the respondents’ conduct negatively affected their fellow unit holders and the condominium corporation and was therefore oppressive and unfairly prejudicial.
Seto v. PCC 492, 2015 ONSC 6785
The court held that although the respondent condo corporation had overcharged the applicant unit owners for their share of the common expenses, and had permitted a breach of a “designated use” provision in its declaration, the respondent’s actions did not amount to oppressive conduct, as the impugned declaration provisions in the action were poorly drafted, not easily reconcilable and open to different interpretations. Moreover, the corporation did not unjustly ignore or treat the owners’ interests as being of no importance. The respondent took the interests of all unit owners into consideration.
Couture v. TSCC 2187, 2015 ONSC 7596
The court found that the respondent condominium corporation acted oppressively towards the applicant owner when it registered invalid liens, levied arbitrary fines and refused to mediate/arbitrate with regard to a dispute between the parties over parking. The court held that the Board acted punitively and with arrogance, declined to follow its own internal law and the Condo Act in responding as it did, it disregarded the applicant’s interests from the outset and its responses were harsh, burdensome and oppressive. The court noted that the while the applicant owner may have been over-stating her rights to her parking space, she did not deserve the treatment that she received. Applicant was awarded $15,600 in damages but no legal costs.
Sager v. Condominium Plan No. 9523979, 2015 ABQB 549
The court found that the respondent condominium, in addressing the applicants’ improper parking of their motor vehicle, acted oppressively when it issued fines against the applicants based on unproven bylaw breaches, improperly alleged condominium fee arrears as a result of non-payment of these fines, and subsequently registered a lien and initiated foreclosure proceedings against the applicants. The court noted that even if the applicants were also guilty of misconduct, this is not justification to ignore an owner or apply bylaws differently to that owner. A Board must rise above the street yard fracas and adhere to the principles of fairness as prescribed by the Act.
Condominium Corp. No. 0312235 v. Scott, 2015 ABQB 171
The court held that although the applicant condominium corporation acted improperly in several respects, the respondents failed to show that any such improper conduct breached the respondents’ reasonable expectations and was therefore oppressive. Specifically, although the applicant condominium corporation’s amendments to its bylaws concerning unit rentals were found to be invalid for offending the Act, and the corporation’s reliance on the amendments and its attempts to compel the respondents to comply with the amendments were therefore contrary to the Act and constituted improper conduct, the respondents failed to establish a breach of their reasonable expectations. The respondents suggested that the corporation ignored a legal opinion that the amendments violated the Act; however, the court found that the opinion never directly addressed the proposed amendments nor concluded they were illegal. Moreover, it appeared the Board believed the amendments were legal. The respondents also argued that the corporation acted oppressively by orchestrating the respondents’ non-attendance at a Board meeting concerning private unit rentals. The court found that although failure to notify the respondents was improper, this was not oppressive, as the respondent would have been prohibited from voting at the meeting due to “material interest” in the rental arrangement. Moreover, the meeting result was inconsequential; the meeting only generated a vote to seek legal advice.
Finally, although the respondents complained that the corporation had failed to provide relevant financial documents, the court found that the corporation had been more than accommodating in trying to assist the respondents’ inquiry. The respondents were granted the same access to financial documents as that which all condominium owners were entitled under the governing bylaws.
Condominium Plan No. 762 1302 v. Stebbing, 2015 ABQB 219
The respondent argued that when she purchased her unit in 2010, she obtained the Board’s written consent, as was required, to have cats in her unit. The Board alleged that the respondent had not obtained such permission and thus refused to “grandfather” her cats when the Board passed a bylaw in 2012 adopting a no pet clause. The court held that the Board’s decision to not grandfather the respondent’s cats was oppressive and unfair. The evidence supported the respondent’s position that the Board granted permission in 2010 for the cats. The Board’s own negligence or poor internal communications was responsible for the Board’s failure to document this granting of permission. The respondent made reasonable efforts to conform to the appellant’s bylaws. Even if the Board had not granted permission for the cats, the Board knew of the cats since 2010 before ordering them removed. The doctrine of laches should apply. The Board’s inaction and delay constituted unfair, oppressive and prejudicial conduct.
Lessons to be Learned
There are several key lessons from the illuminating decisions above concerning the oppression remedy:
- A condominium corporation must act with haste in responding to the concerns of owners. Investigation alone is insufficient; a condominium corporation must take concrete action to resolve problems. Undue delay can constitute oppressive conduct.
- Courts are hesitant to find a rule oppressive where appropriate procedure is followed to pass the rule, legal counsel is consulted and the rule is applied equally to all owners.
- Owners can be found to have acted oppressively towards other owners where they keep their units so unclean so as to negatively affect surrounding units.
- Where a condominium corporation breaches a condominium document or where a condominium document is found to be contrary of the Act, such that the condominium corporation has acted improperly, the court will not necessarily find oppression. The applicant owner must show that the common law test for oppression is satisfied. A court will look favourably on the condominium corporation if it can show that it gave due consideration to the interests of the applicant owner and other unit owners.
- A condominium corporation can be found to have acted oppressively where it responds punitively to an owner (e.g. by registering invalid liens and levying arbitrary fines), refuses mediation/arbitration, declines to follow its condominium documents and the Act, disregards the applicant owner’s interests, treats the owner differently from other owners, communicates with the owner in a harsh and burdensome manner, was negligent and/or failed to act promptly. Write your letters as if a judge will be reading them.
- An applicant owner’s own misconduct does not justify a condominium corporation treating the owner unfairly or prejudicially. You can’t fight fire with fire.