Ontario Condo Law Blog : Toronto Condominium Lawyer & Attorney : Gardiner Miller Arnold Law Firm : Ontario, Ottawa, Hamilton, Kitchener

It is rare for us at Ontario Condo Law Blog to beat up on an underdog, but the owner-occupied reserved position on condo boards is decidedly worthy of that honour.

That reserved position (set out in the Condominium Act, 1998, subsections 28(3), 46(3) and 51(5) to (8)) surely is an underdog - it enjoys little or no support and no one (at least publicly) takes credit for its creation. While at least one of the Condo Act Review working groups is currently considering the fate of the owner-occupied position provision among many other much-needed improvements to our condo law, today’s post lends support to eradicating it. We also ponder what lessons the creation of that now universally reviled provision can usefully teach us as we amend the Condo Act this time around.

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Noteworthy costs awards were recently released in Middlesex Condominium Corporation No. 232 v. Owners, which we cited as number 6 in our top 10 condo law cases of 2012 as follows:

Faced with an increasingly unhappy ownership, the board commenced an application for appointment of an administrator. The owners then requisitioned a meeting to remove directors, prompting the board to make an unsuccessful bid for the requisition meeting to be delayed until after the application for appointing an administrator was heard. The court ultimately dismissed the board’s application to appoint an administrator, finding that s. 131 of the Condo Act was designed as a last resort for condominiums in perilous circumstances and not as a way to allow a board that has lost the confidence of the owners to get their way regardless of the democratic will of the owners. The court has not yet released its decision on costs, but given this board’s brazen disregard for owners’ democratic rights, this seems like a suitable case for the directors to be held personally responsible for the legal costs as in Boily v. CCC 145 above. The tactics used by the corporation in this instance were despicable.

While it may not be clear from this description, the MCC 232 case is made up of two components decided by different judges: The board’s application for appointment of an administrator that was heard by Justice Carey and, second, the board’s motion heard by Justice Bryant for an injunction to restrain an owners’ meeting to remove the board until after the application for appointment of an administrator was decided. Both components were dismissed and the old board was removed and replaced. The rulings on costs were subsequently reserved until February 11, 2013.  We understand that leave to appeal these costs rulings is presently being sought.

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Following Stage 1 of Ontario’s Condo Act Review last fall, a findings report was issued in January 2013 by Canada's Public Policy Forum, the facilitators spearheading the review process.  That findings report is available for review.  See here for executive summary and here for full report.

Comments on this findings report are being received until March 11, 2013.

The report encompasses comments submitted by the public at large and at five information sessions held by the Minister at locations across Ontario, and includes findings of the 36-member citizen panel and four full-day stakeholder round-table sessions.

The report is well-written, thoughtful and demonstrates a deep understanding of a broad array of issues and problems that need to be looked at further and solved. Reading the full report is worthwhile, even if only to see that the single or small few problems faced by any single group are a mere drop in the bucket relative to the large number of issues affecting the various stakeholders in the condo community. The Condo Act is complex legislation that affects a lot of people and parties in very different ways.  Legislation of this magnitude deserves the type of comprehensive public review process now underway.

You can send your comments or suggestions directly to ONCONDO or use the handy Discussion Guide the PPF has prepared to help you organize your thoughts to comment meaningfully on the report. To help encourage you to participate, we reproduce the text of the salient part of the Discussion Guide below (while encouraging you to review the full guide):

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Although they have been in force for nearly 12 years, the regulations under the Condominium Act, 1998 have been available in English only. Thanks to recent amendments, our Francophone confederates can now rejoice that those regs include a complete French language version.

On November 22, 2012, the Ontario government filed Regulations 383/12 and 384/12, which amended Regulations 48/01 (“General”) and 49/01 ("Description and Registration”) respectively.  

In addition to adding French versions of the Condo Act regs, the recent amendments were intended to correct typographical errors and improve accuracy.  Most notably, the General regulation is amended to include improved definitions of the various classes of reserve fund studies.  The Regulatory Registry webpage points out that: “These amendments do not change the policy or intent of the regulations.”

While it is good to see that the Condo Act regulations are being fine-tuned from time to time, we remain hopeful that more substantial revision of the Act and regs is not far away.

Bonne lecture!

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While prorogation has brought legislative business at Queen's Park to a screeching halt (and which helpfully killed Bills 72 and 95 that would amend the Condo Act in weird ways), readers will be glad to know that Ontario's Condominium Act review and modernization process is steaming ahead.

At the cornerstone of this review process is the concept of collaborative public engagement, which is intended to solicit broad and direct input from citizens and the various stakeholders affected by the Condo Act. An important part of that process is the specially-chosen condo residents’ panel formed to discuss issues related to the Condo Act and provide advice on how to improve it. Panellists will work alongside a round-table of other condominium stakeholders to agree on a set of priority proposals for changing the Act.

From ten thousand randomly-selected Ontario condo dwellers who were initially invited to join the condo residents’ panel, 36 members were ultimately selected to achieve a balance of age, gender, geography, the number of years they have lived in a condominium, and the type of condo in which they live.

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The Ministry of Consumer Services is holding info sessions for the province's Condo Act review over the coming weeks in cities near you.

The first session will be held in Toronto this week.  Deets are below.

Our friends at @WB_Condo tweet that further sessions are planned for September 19 in Mississauga and September 27 in Ottawa.  More dates to come.

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One of our readers asks us:

Q: Our condo board recently requested a conciliation meeting with Tarion. We are still in the "pre-conciliation repair period." At what point should something be stated on our status certificates?

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Ontario's Minister of Consumer Services, the Hon. Margarett Best, was a guest speaker last week at the real estate section of the Ontario Bar Association's annual Institute.  She spoke on the topic of "Do we need a new Condominium Act?"

The topic is timely, even though our Condo Act celebrated its 10th year in force just last year. Several parties have indicated displeasure with various aspects of the Act for some time and a lot has changed in 10 years.

Naturally, representatives of the real estate and condo law bars attended this special event, as did stakeholders like the Canadian Condominium Institute (represented by legislative commitee chair Armand Conant) and Association of Condominium Managers of Ontario (represented by President Dean McCabe).  See photo of the principal ringleaders, at bottom.

Like many conferences these days, the OBA Institute featured some live tweeting from participants in the sessions.   Here's a recap of some of the best tweets of the Minister's address.

I’m at real property session at @OBAToday's #Institute2012 to hear @OntarioConsumer minster @MargarettBest on “Do we need a new Condo Act?”

— Chris Jaglowitz (@chrisjaglowitz) February 9, 2012

This morning's Real Property Law, Condominiums, Clients and Closings: Handling a New Condo Purchase at #Institute2012 twitter.com/OBAtoday/statu…

— Ontario Bar Ass. (@OBAtoday) February 9, 2012

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In the 10 years that the Condominium Act, 1998 has been in force, the prescribed forms needed for the extraordinary events of a condominium’s life and its day to day operations have been reliably set out in the regulations under the Act.

Until now.

Effective September 1, 2011, the two regulations under the Condo Act were significantly amended. The biggest change is that all of the prescribed forms under those regulations are revoked and users are now referred instead to “the form that the Director of Titles specifies” or “the form that the Minister responsible for the administration of that subsection specifies.”

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May 5, 2011 marks the 10th anniversary of Ontario’s Condominium Act, 1998 coming into force.

While the Act received Royal Assent in December 1998 (hence the Act’s name), the government of the day felt that a short transition period (of 2 years, 4 months and 17 days!) was needed to ease everyone into the new regime. To be fair, the 1998 Act was a near-complete overhaul of the prior version which existed in substantially the same form since 1979. The 1979 version was the first revision since the proclamation of Ontario’s original Condo Act in 1967. The 1998 Act, then, was only the second major revision in 30 years of condominium law in this province. 

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By royal proclamation dated April 13, 2011, the Ontario Government announced that the Public Inquiries Act, 2009 will come into force on June 1, 2011. This act was one of the many hundreds of relatively minor legislative initiatives rolled into the behemoth omnibus bill known as the Good Government Act, 2009, parts of which have been coming into force since January 2010.

With the coming into force of the Public Inquiries Act, 2009, more than 50 Ontario statues will be slightly amended to make reference to this new act and delete references to the old act. Among those affected statutes is the Condominium Act, 1998, where amendments in relation to the powers of an inspector in section 130 will come into force on June 1 this year. We reported on these specific changes to the Condo Act in an entry dated December 21, 2009 under the heading “Powers of an Inspector.” 

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In late July, the Ontario Government launched a survey to learn about the experiences of condominium unit owners across the province. This survey will likely have a significant impact on whether or not the government considers reforms to the Condominium Act.

The survey covers a broad range of condo issues, including:

• Disclosure before Purchase
• Governance / Decision making
• Repairs and Maintenance
• Reserve Funds & Planning
• Dispute Resolution / Interaction with Board
• Owners' knowledge of Condo Act

These are all issues with which every condo owner has at least some experience. To be sure, more than 3,100 owners have reportedly completed the survey to date.

In addition to giving owners the chance to air their beefs, the survey also offers a number of educational tidbits designed to clear up common misconceptions shared by unit owners. This feature alone makes the survey a worthwhile exercise for owners, even those that don’t have strong feelings about condo living.

The survey closes on October 31, so this is the final opportunity to participate and help government determine if legislative reform is required. You can participate online here or by telephone.

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Another interesting lesson emerges from Jeffers v. YCC 98, the slander of title case we reported about earlier this year.

After dismissing the plaintiffs’ lawsuit at trial, the court ordered the plaintiffs (the unit owners) to pay about 50% of the legal costs incurred by the defendant condo corporation and the co-defendant bank.

Unsatisfied with that costs award, the condo made further submissions about why it should recover 100% of its legal costs from the unsuccessful unit owners. In support of that request, the condo relied on an offer to settle it had made during the litigation and also section 134(5) of the Condo Act, which provides as follows:

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This month’s news featured a horrifying story of a serious fire at the Millrise, a 159-unit condominium building in Calgary.   Luckily, no one was seriously hurt, but 300 people are homeless and the 3-story wooden building was subsequently condemned by the city as uninhabitable. 

We carried the following related news articles on our microblog, some of which feature video footage of the fire and resulting damage:

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At long last, the official electronic version of the Condominium Act, 1998 has been updated to show the latest amendments made in December 2009.  Most of those amendments were made by the Good Government Act, 2009, which amended over 300 Ontario statutes, and hence the long delay in updating the official electronic version of most statutes.

Condominium owners, directors and their professionals should always check to be sure they're consulting the latest version of legislation and regulations before making decisions.   The best way to do this is consult the Ontario Government's e-Laws website at www.e-laws.gov.on.ca.

At the top of every statute and regulation on e-Laws is a currency date, as well as a reference to the latest amendment.  See below picture.

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In a special update released this week, CCI-Toronto and ACMO announced that they have successfully lobbied the provincial government to amend the regulations under the Condo Act so that corporations registered before May 5, 2001 will have 15 years (not 10 years) from the date of their first reserve fund study to top-up their reserve funds.

[Update (March 7, 2010):  The regulation making this amendment is now published here.]

Condominium corporations existing as of May 1, 2001 were required to have their first official reserve fund study under the New Act within three years after that date. Generally speaking, that means that they must top up their reserve funds by the year 2016 or 2019.

CCI-Toronto and ACMO deserve kudos for securing this concession to help condo corporations offset the deleterious effects of the ever-looming HST.   We wish them well in their continued negotiations with government.

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Another small amendment to our Condo Act came into force on December 15, 2009, this time by virtue of Bill 218, the Ontario Tax Plan for More Jobs and Growth Act, 2009.

Clause (b) of the definition of "eligible security" in subsection 115(5) of the Condominium Act, 1998 is amended to include certain financial instruments issued by institutions located in Ontario insured by the Deposit Insurance Corporation of Ontario ("DICO").

Subsection 115(5) now reads as follows (with amendment underlined):

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The Ontario Legislature passed Bill 212, the Good Government Act, 2009 on December 3, 2009.   The bill received Royal Assent with very little fanfare on December 15, 2009 and is now law.

This omnibus bill is intended to modernize statutes by correcting errors and plugging loopholes.  It also does the following things:

• makes minor amendments to almost every Ontario statute, mostly by updating language and terminology
• repeals a few outdated or ineffective statutes
• makes significant improvements to the City of Toronto Act, 2006 and the Municipal Elections Act
• legalizes the until-recently covert process of conducting criminal records checks on jurors
• replaces the old Public Inquiries Act with a new one

The bill also makes three minor amendments to the Condominium Act, 1998 and a few small consequential changes to related statutes.   Here is a brief description of the changes:

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A troubled condo project in Ottawa is being taken over this week by the developer’s major creditor. The Ottawa Citizen reports that this creditor announced it is terminating the existing purchase agreements and that:

The former purchasers of the condos were told they would receive their deposits back. But it’s not clear about other expenses, such as upgrades and fixtures that have already been purchased.

This situation illustrates that while a purchaser’s deposit for the purchase price is protected by section 81(1) of the Condominium Act, 1998 (“the Act”), not all monies paid to a developer are covered by this statutory requirement that money be held in trust by the developer’s lawyer or another trustee.

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The saga of the doomed luxury condo development at 1 Bloor in Toronto took an interesting turn earlier this month when the project was sold.

Great Gulf Homes announced that it had purchased the land at the corner of Yonge and Bloor Streets from developer Bazis International as part of a court-approved process to keep the project from falling into receivership. Bazis had initially purchased the land for $61 million but had defaulted on its loans before construction could begin.  

Despite the insolvency of the developer, those purchasers who braved the cold and lined up outside for days in late 2007 to buy units at 1 Bloor won’t lose a dime of their deposits (reportedly over $70 million). They can thank section 81 of the Condominium Act, 1998, which provides that deposits paid for the purchase of proposed condo units must be held in trust by a trustee or a law firm.  Section 82 provides that developers must pay interest on these deposits. 

Though their deposits are safe, those who purchased units at 1 Bloor are wondering what kind of condo they are going to get for their money.   The fate of the project won’t be known until after the sale to Great Gulf Homes closes in September but the new concept will probably be far less ambitious than the 80-storey, half-billion dollar skyscraper that was originally planned.  GMA's very own Gerry Miller shared his view on the project in this article in last Friday’s Globe and Mail.

Update (Sept 4/09):   Kris Scheuer of the Town Crier reports on her blog that 1 Bloor purchasers are now being refunded their deposits.

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Sections 132 and 134(2) of our Condominium Act make it mandatory for condo corporations and unit owners to mediate many types of disputes before proceeding to arbitration or commencing litigation. Among the disputes that must be mediated are disagreements over the declaration, by-laws or rules.

Despite the fact that mediation is mandatory in declaration, by-law and rule cases, this step is often by-passed where the parties don't agree on the selection of the mediator, as per section 132(1)(b) of the Condo Act.  This is a shame since the case will then proceed directly to arbitration and, in some instances, to court. The cost, complexity and level of animosity between the parties all increase sharply as the dispute progresses through the various stages. Early resolution  is almost always preferable.

In cases where mediation actually does take place, the likelihood of the dispute being resolved successfully depends heavily on a number of factors such as the skill of the mediator and counsel, the preparation and goodwill of the parties and, quite importantly, the ability of the parties to really listen to each other. Without proper preparation and anticipation of the likely concerns of the opposing party, mediation is often doomed to fail.

In a recent posting on the California HOA & Law Blog, attorney Beth Grimm shares her views on why mediation is the perfect way to solve condo disputes, why mediation often fails and what can be done to improve the odds of succeeding. Her comments are worth reading since they are perfectly applicable to condo disputes north of the 49th parallel.

Because mediation is mandatory for many condo disputes here in Ontario and since mediation represents an excellent opportunity to resolve disputes and heal divisions quickly and economically, board members, property managers and unit owners must equip themselves with the knowledge and tools to come to the mediation table to solve disputes.

Stay tuned in the coming weeks for more tips and insight into making the most of mediation.

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Condo unit owners and directors are often uninformed about their rights and responsibilities or about how condos work. This is largely due to a lack of comprehensive information online to address basic condo concepts.

A new website may help fill that void.

The Condo Information Centre (found at www.condoinformation.ca) was launched on June 30, 2009 by Anne-Marie Ambert, a retired university professor and condo director, who offers her knowledge of how condos work. Her site offers an impressive digest of original text and commentary on a number of topics, including:

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The proposed Green Energy Act (“GEA”) is moving forward quickly and will be considered in committee later this month. As it now reads, nothing in the GEA contemplates any amendment to the Condominium Act, 1998 (“the Condo Act”).

That may change, but not in a way we would like.

The Toronto Atmospheric Fund (“TAF”), together with a local condo developer and their respective lawyers, made a written submission to the Minister of Energy and Infrastructure on the implementation of the GEA. A copy of the submission is available here. [Hat tip to environmental law blogger Dianne Saxe.]

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Where a unit owner, tenant or a guest causes damage to an owner’s unit, section 105 of the Condominium Act, 1998 permits condo corporations to charge back certain repair costs by adding those costs as common expenses to that owner’s unit and collecting them by way of lien. Corporations can pass by-laws extending the circumstances under which they can charge back repair costs. The underlying concept is that an owner who is responsible for damage should pay any repair costs not covered by the corporation’s insurance.

This type of charge back is typically limited to the deductible amount under the corporation’s insurance policy, which can range from $500 to $10,000 for most water escape or fire claims. In larger condominiums or those with a poor claims history, the deductible can reach $50,000.

No matter what the amount, few owners can easily afford these charge backs. Thankfully, they can obtain insurance to significantly lessen the impact of such charge backs and protect their personal property and improvements to their unit, none of which are covered by the corporation's insurance.

The problem is that a surprisingly large number of owners do not secure proper insurance because they do not understand the limitations of the corporation’s insurance and mistakenly assume that they don't need to obtain their own coverage.  The truth emerges very quickly in the aftermath of a water escape or fire, but too late.   

Failure to obtain proper insurance can result in a crippling financial burden that can rob owners and their families of their financial security and their home. There are few things as heartbreaking or as avoidable.

Condo boards and managers should take concrete steps to help educate their unit owners about insurance on an ongoing basis and especially when new standard unit by-laws or insurance deductible by-laws are proposed.  Here are some ideas:

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