Happy 2017! Here’s our recap of some of the most notable condo law cases from the year gone by.
#10 – Cheung v. York Region CC 759, 2016 ONSC 4236
Many condominiums have insufficient parking for occupants and guests, requiring the board to allocate available common element parking spaces in a way that balances various competing interests and respects local zoning bylaws. In this case, the condo corporation enacted a bylaw which leased 4 common element parking spots to each unit owner to distribute parking more equitably than “first come, first served.” The bylaw was challenged by a unit owner whose tenant operated a popular restaurant requiring much more parking than was allocated. The owner argued that the bylaw was unlawful and oppressive but the court disagreed, upheld the bylaw as valid and found that the unit owner’s expectation to monopolize most or all of the parking for the restaurant was arguably oppressive.
#9 – Daniels v. Grizzell, 2016 ONSC 7351
Although it’s not about condos, this superior court decision clarifies the scope and effect of the court’s new automatic dismissal regime that came into effect January 1, 2017 and terminated thousands of lawsuits aged 5 years or older that day. Under the new rule, lawsuits not set down for trial by their fifth anniversary will be dismissed. For the impact on condo litigation, see our April 5, 2015 blog post entitled Superior housekeeping at Superior Court.
#8 – Kamal v. Peel CC 51, 2016 HRTO 1282
A condo corporation held a special owner’s meeting on Eid-ul-Azha, a Muslim holiday, to pass a borrowing bylaw for financing major repairs. Some owners who observe that holiday and vehemently opposed the borrowing bylaw (which passed with the support of 115 out of all 169 units, or 68%) made a human rights complaint alleging the condo corporation discriminated against them on the basis of creed by holding the meeting on that holiday. The Human Rights Tribunal rejected the application on several grounds, including the fact that all owners could vote at the meeting by proxy. This decision is a useful precedent but is not blanket permission to hold meetings on religious holidays. The outcome could have been different had the Tribunal discerned a deliberate intention to exclude Muslims from participating in the meeting or if the proxy vote was not available or easily accessible.
#7 – Ottawa-Carleton Standard CC 961 v. Menzies, 2016 ONSC 7699
Any lingering doubt about whether a court will uphold a condo corporation’s rules prohibiting short term leases or the “single family use” restrictions in declarations is now conclusively resolved. The court upheld a condo rule banning leases of less than 4 months and held that operating a short-term tenancy business (by leasing a condo unit through Airbnb) is entirely inconsistent with the “single family use” restriction appearing in many condo declarations. Condominiums without a “single family use” clause can easily pass a rule to ban short term leases while condos with the “single family use” restriction in the declaration need not necessarily pass a rule to ban Airbnb usage.
#6 – Metro Toronto CC 673 v. St. George Property Management Inc., 2016 ONSC 1148
A management firm was ordered to pay its condo corporation client $97K for issuing a status certificate to a purchaser who later successfully escaped the obligation to pay a special assessment arising from facts that should have been disclosed in the status certificate, but weren’t. After spending $97K on the successful purchaser’s litigation, the condo corporation sued the property management firm to recover that amount. The court relied on the indemnity clause in the management agreement to summarily grant the corporation’s claim for breach of contract and award the corporation the $97K it spent because of the manager’s faulty status certificate. The corporation also recovered legal costs of $42K.
#5 – M.S. v. Carlton CC 116, 2016 ONSC 1848 (decision not yet available)
In an unremarkable application by a unit owner to discharge a condo lien securing an $800 repair chargeback, the court remarkably granted an order requested by the condo corporation requiring the owner to undergo a mental health examination. Such orders are rare, but may be given where the mental condition of a party to a lawsuit is in question. In this case, the owner’s “bizarre” conduct and the content of materials filed in court gave the judge concern as to the owner’s ability to conduct the litigation, to understand information relevant to making decisions in the litigation and to appreciate the reasonably foreseeable consequences of those decisions. A later court denied the owner’s request for leave to appeal the examination order. Incidentally, the owner then sued the condominium corporation’s lawyers, but that lawsuit was summarily dismissed as being frivolous, vexatious and an abuse of the court’s process. In Toronto Standard CC 2395 v. Wong, 2016 ONSC 8000, a more recent unrelated case, the court refused a mental health examination order requested by a condo corporation seeking a Condo Act compliance order and injunction.
#4 – Wu v. Carlton CC X, 2016 CanLII 30525 (ONSCSM)
After receiving a list of all the unit owners and their mailing addresses but not email addresses, a unit owner sued the condo corporation under Condo Act s.55 for production of all owners’ email addresses. The small claims court judge concluded that e-mail addresses are not part of an address of service within the meaning of s.55 and are therefore not producible. This aspect of the decision makes sense, but the comment that corporations are required to produce owners’ addresses for service is erroneous, except where a corporation fails to call and hold a requisitioned meeting. In that case (and only in that case), owners are entitled to receive a list of owners and addresses for service so they may call and hold a requisitioned meeting. It is not clear that this happened in this case or why the corporation had already produced that list.
#3 – Wexler v. Carlton CC 28, 2016 ONSC 4162
After a 3-day trial, the small claims court dismissed a unit owner’s claim against her condo corporation over a $255 chargeback to clean pigeon droppings on her balcony, $270 she spent on legal advice plus $2K for alleged harassment by the board. The court then awarded the successful condo corporation $20K in legal costs (out of $35K the corporation apparently spent to defend the case). The court cited the indemnity clause in the condo declaration as justification to override the statutory limit on small claims costs awards of 15% of the face value of the claim (being $2,525 in this case, meaning costs would be capped around $375). The Superior Court then granted the unit owner’s motion for leave to appeal this costs order on the basis that it is “open to serious debate.” The appeal has not yet been heard or decided, but we get a glimpse of the future from Hadani v. Toronto Standard CC 2095, 2016 CanLII 58944, where another small claims judge cited and rejected the Wexler costs order and awarded only $3K to a different condo corporation that spent almost $33K to defeat a unit owner’s claim for $16K.
#2 – 3716724 Canada Inc. v. Carleton CC 375, 2016 ONCA 650
A condo board rejected an owner’s proposed changes to common elements intended to facilitate that owner’s conversion of its commercial parking units to an hourly rental operation unless that owner agreed to hire a full-time security guard to mitigate the increased security risk from trespassers. The judge hearing the owner’s application for an oppression remedy found it unreasonable for the board to require the owner to provide a security guard. The court of appeal overturned that finding and, for the first time, confirmed that condo board decisions are entitled to the same level of deference as those of business corporations as per the long-standing “business judgment rule.” The court also set a new legal test for reviewing condo board decisions. See our 2016 Conference newsletter for more detail.
#1 – Toronto Standard CC 2130 v. York Bremner Developments Limited, 2016 ONSC 5393
Maple Leaf Square, one of Ontario’s most complicated mixed use condominiums and shared facilities scenarios, wins the prize for ugliest fight between condo corporation and developer. Justice Fred Myers decided six separate legal cases by this condo corporation against its developer, covering a myriad of issues like s.23 notices, limitation periods, arbitration procedures and related management firms, and featuring plenty of complex claims like oppression remedies and construction deficiencies. Most notable, however, is that this is the first decision under Condo Act s.113 which permits courts to amend shared facilities agreements where declarants fail to disclose their terms AND the agreements are oppressive or unconscionably prejudicial. Even more remarkable is that the condo corporation successfully met the onerous test under s.113 and obtained an order amending its shared facilities agreement.
Holiday Bonus: CIBC Mortgages Inc. v. York CC 385, 2016 ONSC 7343
When unit owners fail to pay common expenses, condo corporations must register a certificate of lien to secure those expenses within 90 days of default or else the lien right expires. In this case where a judge ordered an owner to pay fixed legal costs to the corporation within 30 days, the “default” for those fixed costs and the “additional actual costs” payable under s.134(5) of the Condo Act was the day after the 30th day per the judge’s order, even if those costs were not posted to the owner’s common expense ledger. As the condo’s lien was registered over 90 days from default, the mortgagee’s security had priority over the condo lien. As the owner was insolvent, this ruling on priority eliminated the condo corporation’s recovery of the initial chargeback of $44K in legal costs and, as salt to the wound, the condo corporation was ordered to pay the mortgagee’s legal costs of $63K.
That’s it for another year. Follow me on Twitter at @chrisjaglowitz for the latest cases and news on the Condominium Authority Tribunal being created by the Protecting Condominium Owners Act, 2015 (Bill 106) to provide quicker and cheaper resolution of many condo disputes.