It’s time for our annual tradition of looking back at the past year of cases decided by Ontario courts and tribunals and highlighting a few noteworthy items.
Selecting this year’s batch is slightly trickier because we have not posted a microblog entry since late April 2012, but those readers following me on Twitter will have been kept up to date all along. For those of you not following the live feed, I’ll post those items separately and will make it my new year’s resolution is to keep up those posts more frequently.
Here we go. Drum roll, please!
10. Pearson v. Carleton Condominium Corporation No. 178, 2012 ONSC 3300
Indemnification clauses contained in condo declarations, by-laws and rules do not permit condo corporations to recover (as common expenses) legal costs incurred in defending against small claims court actions brought by unit owners. The court vacated a lien registered by the condo to secure collection of its legal costs incurred where the small claims court dismissed the unit owner’s action against the condo but did not award the condo any costs.
9. York Condominium Corp. No. 42 v. Hashmi, 2012 ONSC 4533
After six years of court-appointed administration, the unit owners of YCC 42 voted overwhelmingly in favour of returning to self-governance but needed the court to give detailed directions on conducting the first election of directors. Given that director elections are amply governed by the Condo Act and the corporation’s own by-laws, the fact that a court ruling was required does not bode well for this condo’s successful rehabilitation from administration. Let us hope that these unit owners have learned the lesson to pay attention to the goings-on at their condo and, further, to ignore the siren song of “vote for me and I’ll reduce your condo fees” which brought this condo and others like it to the brink of disaster.
In a detailed discussion on the nature of the Tarion warranty conciliation and decision-making process, the Ontario Court of Appeal confirmed that an unsuccessful attempt to address construction deficiencies using the Tarion processes does not prevent a unit owner or condo corporation from subsequently bringing a lawsuit to deal with those deficiencies, so long as an appeal of the Tarion ruling is not heard and decided by the License Appeal Tribunal. We can’t say it often enough that condo corporations need to get legal advice at an early stage on how to pursue claims for construction deficiencies.
7. Boily v. Carleton Condominium Corporation 145, 2012 ONSC 1324
Where the condo corporation breached a settlement agreement made with unit owners, the court found that the directors had acted in bad faith and were therefore liable personally for the legal costs incurred by the unit owners in enforcing the settlement. This is among the first instances where such a costs ruling was made and is probably not the last. While any decision that visits personal liability on condo directors might potentially scare people away from holding office, an effective deterrent is needed for directors who abuse their powers and improperly squelch owners’ democratic rights. This type of ruling is long overdue.
6. Middlesex Condominium Corporation No. 232 v. Owners, 2012 ONSC 4819
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.
5. Chan v. Toronto Standard Condominium Corporation No. 1834, 2012 ONCA 312
The unit owner unsuccessfully appealed a judge’s decision upholding a lien against the owner’s unit and granting the condo’s request to enforce the single family use restriction and to charge back certain repair costs. Further, the unit owner challenged the lower court’s costs award against her for $41,706 on a full indemnity basis. The court of appeal saw no basis for interfering with this costs award and found that, with respect to the owner’s argument that this award may be increased if the condo were to seek ‘additional actual costs’ above this amount using s.134(5) of the Condo Act, the unit owner would have the right to have those costs, if they were demanded, assessed under s. 9 of the Solicitors Act. The owner’s application for leave to appeal this decision to the Supreme Court of Canada was dismissed in November 2012.
4. Durham Standard Condominium Corporation No. 187 v. Morton, 2012 ONSC 5132
In successfully obtaining a compliance order requiring the unit owner to remove a dog, DCC 187 obtained a costs award of $10,000. Two months later, the condo demanded that the owner pay over $73,000 for legal costs and registered a lien for that amount. On a subsequent motion, the court ruled that the owner must pay only $29,000 but, because no evidence of the actual legal costs was tendered, the condo was ordered to pay the owner $6,000 for legal costs of that motion. The owner appealed this ruling and succeeded in reducing his obligation to the original $10,000, less the $6,000 costs he obtained on the subsequent motion and costs of the appeal of $11,000. The ultimate result of the case was that while the condo had successfully obtained a compliance order, it had to absorb all of its legal costs (over $70K) and pay the unit owner $7,000. Ouch.
3. Metropolitan Toronto Condominium Corporation No. 710 v. Khan, 2012 ONSC 5494
Notorious rogue property manager Manzoor Moorshed Khan and several of his companies were ordered to pay $1.3 million as damages for fraud. Court found that Khan orchestrated a massive fraud by using his management firm (Channel) and other related companies to invoice the condo for work which was never performed or was not authorized by the board. The court heard that the condo board relied on Khan’s advice regarding payments to be made to service providers and contractors and that if Khan had approved a payment and gave the board a cheque to sign, the board members would sign the cheque. Given that Khan went bankrupt then fled the country, there is no prospect of recovering money here.
2. Ahmad v. 1288124 Ontario Inc. (3 decisions)
In this multi-stage proceeding regarding a declarant’s failure to comply with its turnover obligations under s. 43 of the Condo Act, the court gave a number of orders, including:
First: That the turnover meeting and election of directors was valid notwithstanding that the declarant’s principal (holding proxies for more than half the units) did not arrive until after the meeting had concluded and, further, that that the declarant failed to turn over to the condominium the materials specified in sections 43(4), (5) and (7) and 55; Second: Costs of over $16,000 was awarded to the corporation and its unit owners for costs of the application, plus an additional $10,000 in damages as per section 43(9)(c); Third: Contempt proceedings were initiated against the declarant’s principal for wanton failure to obey orders to deliver materials. [Update: In the fourth instalment, the contempt appears to be nearly purged.]
1. Perper v. York Region Condominium Corp. No. 860, 2012 ONSC 3019
A requisition calling for an owners meeting to remove condo directors was declared invalid because it and an accompanying letter contained false and misleading statements. The ringleaders circulating those materials were found to have deliberately disseminated false information so as to persuade their neighbours that the board was engaged in misconduct and that the condo was in financial trouble in order to induce owners to sign the requisition. In addition to invalidating the requisition, the court restrained the ringleaders from circulating those written materials or making those allegations and from canvassing or soliciting in respect of any election or owners’ meeting for the balance of the year. This decision is a dangerous one that uses a sledgehammer to fix a problem easily solved with a flyswatter. For this reason, and for being a needless affront to owners’ democratic rights, this case deserves further comment in a separate piece. Stay tuned.
Happy holidays from all of us at GMA, and best wishes for a healthy, happy 2013.