Compared to our American neighbours, Canadian courts play host to relatively few class action lawsuits. Class actions involving condominiums are quite rare. Even rarer are class action suits that actually generate significant cash returns to condominiums but, as they say, there is a first time for everything.
In 2008, Toronto Community Housing Corporation (TCHC) commenced a class action lawsuit against ThyssenKrupp Elevator over the cost of replacing faulty sheave jammers installed during or before 2006. A sheave jammer is a secondary braking device designed to stop the movement of an elevator in the event the primary control and braking systems do not operate effectively.
In July 2006, the Technical Standards and Safety Authority (TSSA) issued Director’s Safety Order 207/06, requiring replacement of all sheave jammers manufactured or installed by ThyssenKrupp. The available evidence shows that class members replaced approximately 2,100 sheave jammers in elevating devices in Ontario as a result of the TSSA Order. The average replacement cost was $10,000 per sheave jammer, which cost was typically paid by the various building owners or condo corporations.
The plaintiffs in the class action claimed that ThyssenKrupp, not the elevator owners, was liable for the costs incurred by the owners in removing the faulty sheave jammers and replacing them with an alternate emergency braking device as ordered by the TSSA.
The case was certified as a class action in August 2011 and proceeded to mediation in summer 2012, where a $12 million settlement was reached. In November 2012, the Ontario Superior Court of Justice approved that settlement of the lawsuit and established a process for eligible affected parties to claim their share of the pot.
Owners or former owners of elevators that were fitted with ThyssenKrupp/Northern sheave jammers may be eligible for compensation from the settlement fund if:
(i) they incurred expenses as a result of replacing the sheave jammer with an alternative form of secondary braking device as was required by TSSA Order 207/06; and
(ii) they did not opt out of the class action on or before May 31, 2012.
The court approving the $12 million settlement of the TCHC action noted that the 300 parties who opted out of that class action included about 100 potential claimants (some being condominium corporations) whose claims were handled by Tarion, being Ontario’s new home warranty insurer. Tarion reportedly brought and settled its own lawsuit on behalf of its insured parties, so those parties have been opted out of the TCHC action will be recovering funds separately.
The court also noted that the potential recovery for all of the eligible class members (before considering the 30% contingency fee awarded to class counsel) is approximately 57% of the average damages sustained, which seems remarkably high, given the pittance that typically flows from most class action settlements. More noteworthy is that this percentage increases if fewer than all of the eligible members claim their share, since the pot will then be divided among fewer claimants.
The takeaway: Be sure that your condo corporation (if eligible) submits a claim promptly for its part of the settlement pot!
More info and the claim paperwork is available at www.elevatorclaim.ca.
The deadline for filing a claim is March 29, 2013. Claimants that have not submitted their completed claim form by that date will receive nothing and lose any right to claim compensation, so don’t be late.
While class actions are generally unsuitable for most disputes involving condominiums and for that reason it is unlikely that they will ever be more than a very rare occurrence in condo land, this case is an outstanding example of how a group of similarly-affected parties can effectively seek and obtain compensation. More importantly, it reminds the marketplace that shoddy work or products and unfair business practices are not acceptable.