Condo Law Digest – May 2016

Tumbling water and dripping icicles - geograph.org.uk - 698065Ryan v York Condominium Corporation No. 340, 2016 ONSC 2470
Decision Date: April 13, 2016
http://canlii.ca/t/gpfj9

Mr. Ryan owns a unit in YCC 340. Since the corporation’s establishment in 1977 construction deficiencies have lead to intermittent water penetration problems, depending on the weather. Over the years various Boards have attempted to fix the problems. In spring 2010 a storm caused water damage in Mr. Ryan’s unit. Mr. Ryan informed the Board who hired a contractor to begin repairs. Over the next few years (until all work was finally completed in the fall of 2014) there followed more water damage, more contractors, mould growth in the unit, Mr. Ryan’s move from the premises to live at his family’s farm, interior and exterior repairs, and a special assessment to pay for the work needed.

In this action, Mr. Ryan requests about $79,000 in special damages, $150,000 in general damages for psychological distress, and a declaration that YCC 340 breached its maintenance and repair obligations under the Condominium Act and that its conduct amounted to oppression towards him. Justice Perell awarded Mr. Ryan about $69,000 in special damages but declined to make an award for general damages. He also dismissed the claim for an oppression remedy, saying that YCC 340’s conduct was “ineffective until recently” but not abusive or oppressive.

Comment: Justice Perell previously (Feb 2016) rejected YCC 340’s request that the matter be settled by mediation/arbitration, on the grounds that the core of the matter was the oppression claim.

York Region Condo. Corp. No. 922 v Frank Lu et al, 2016 ONSC 2565
Decision Date: April 15, 2016
http://canlii.ca/t/gphrn

Mr. Lu is the owner of a unit in YRCC No. 922. In January 2014 flooding was discovered in the basement of the unit. A few days later a contractor was permitted entry to investigate and provide a quote for repair work. About a month later, YRCC No. 922 contacted Mr. Lu’s counsel to request entry to the unit in order to do repairs. Mr. Lu refused permission to enter and continued to refuse or block a number of requests for entry for the next ten months. In November 2014 counsel for YRCC No. 922 informed Mr. Lu that if he didn’t allow the contractors to enter the unit and carry out repairs, they would commence a court application. Mr. Lu refused and this application is the result.

Justice Gilmore found that Mr. Lu’s reasons for refusing entry to his unit “defy logic” and granted YRCC No. 922 an order permitting them to inspect and carry out repairs to the unit. She also ordered Mr. Lu to pay legal costs in the amount of $12,000.

Comment: An owner can refuse entry to a condominium corporation’s contractors, but only on reasonable grounds.

Elena Balland v York Condominium Corporation No. 201, 2016 ONSC 2405
Decision Date: April 8, 2016
http://canlii.ca/t/gp96x

In December 2015 Ms Balland was ordered to pay $9344 ($9000 in legal costs and $344 for a plumber’s visit) to YCC No. 201. This is a successful appeal of that costs endorsement.

In May 2014 YCC No. 201 required access to Ms Balland’s bathroom to carry out plumbing repairs to a neighbour’s unit. Ms. Balland refused access, on the grounds that she had not received a satisfactory guarantee to cover damages. She had recently renovated the bathroom and was concerned that it might be marred. After counsel for YCC No. 21 got in touch, Ms Balland agreed to provide access at a time when she could be present. The inspection was carried out and the bathroom was (apparently) left in disarray, with a hole in the ceiling covered over with scotch tape. Lawyers’ letters went back and forth. YCC No. 201 scheduled a plumber to repair the damage on March 3, 2015, despite knowing that Ms Balland was not available on that date. When the plumber arrived he could not gain access. (This was the $344 in costs for a plumber’s visit.)

At the costs hearing, YCC No. 21 requested costs of just under $28,000 (full indemnity) or $19,500 (partial indemnity). The judge awarded $9000. The appeal judges found that the trial judge made an error in principle, as this amount was “wholly disproportionate” to the facts and circumstances of the case.

Comment: Among the reasons given, the appeal judges stated that the costs claimed by YCC No. 21 “result largely from the fact that [they] engaged in protracted litigation by commencing legal proceedings prematurely, using legal counsel to address daily practical issues that could and should have been dealt with by management, and thereafter, prolonging the proceeding by adding many unnecessary steps.”

Condo Law Digest – April 2016

Williamscot village notice board - geograph.org.uk - 435009
Welykyi v. Rouge Valley Co-operative Homes Inc., 2016 HRTO 299
Decision Date: March 4, 2016
http://canlii.ca/t/gnng6

This is a judgment on 10 applications to the HRTO against the same respondents (Rouge Valley Co-op and the Board of Directors.) The applicants are members of the Co-op, and some were Board members prior to April 2012. Between April and September 2012, someone wrote or posted 18 very nasty messages, referring to the applicants in terms related to disability, race, sex, gender identity, ancestry, age, and receipt of public assistance. These messages amounted to discrimination and harassment under Ontario’s Human Rights Code. The applicants alerted the police and brought the messages to the attention of the Board and the property manager. To make a long and rather sordid story short, the Board did very little to put an end to the harassment. Their efforts included fake security cameras (supposedly a deterrent) and vague notices (against “vandalism.”) They failed to show much concern about the situation and, in one instance, the President of the Board hinted that she knew who the culprit was.

The HRTO adjudicator found that, although the Board was not responsible for the “horrible” harassment, they failed to respond to it adequately. This “indifference” likely exacerbated the effect of the harassment. He ordered that the Board pay $3000 to each applicant, that all other members of the Co-op be informed of the decision, and that the Decision be posted within the Co-op for six months.

Comment: The community police officer, sensing ongoing conflict between current and former members of the Board, suggested mediation. While mediation may have helped resolve some underlying issues, mediation itself (without other measures) is not an appropriate response to anonymous harassment.

York Condominium Corporation No. 78 v Stein, 2016 ONSC 1837
Decision Date: March 16, 2016
http://canlii.ca/t/gnr4h

Ms. Stein purchased a unit in YCC 78 in 2010. In spring 2014, YCC 78 received a complaint of alleged exterior water penetration in the unit. Upon investigation, it was found that Ms. Stein had been carrying on a project of unauthorized renovation, including material changes to the common elements. (The unit was completely gutted and had had no functioning kitchen or bathroom for 18 months. Ms. Stein had completely rewired the unit and made alterations to the plumbing as well.) In this application, YCC 78 seeks an order that Ms. Stein is in breach of the Condominium Act; access to the unit to do a full inspection; permission to restore the unit and common elements to original condition; and an order that the costs or losses they incurred be considered a common expense and recoverable from her unit.

Justice Diamond agreed that Ms. Stein was in breach of sections 98 and 117 of the Condominium Act, and granted the corporation access to her unit upon 48 hours notice for the purpose of inspection and restoration. He also allowed YCC 78’s costs to be recoverable from Ms. Stein’s unit, and that Ms. Stein pay YCC 78’s legal costs of $25,000 on a partial indemnity basis.

Comment: Ms. Stein had argued that YCC 78 was obliged to mediate their dispute before turning to litigation. Justice Diamond disagreed, saying that mediation is intended for “lesser disputes” or disagreements arising out of interpretation – not unilateral, unauthorized changes to common elements.

About the Image: Duncan Lilly [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Condo Law Digest – March 2016

United Hotels Company of America Stock.jpegMetropolitan Toronto Condominium Corporation No. 673 v St. George Property Mgm’t Inc.
Decision Date: February 16, 2016
http://canlii.ca/t/gnd29

In 2013, the corporation was sued by an owner (673830 Ontario Ltd.) who demanded a share of the funds from an expropriation payment. The corporation had earmarked these funds for roof repairs. The corporation was successful, but 673830 Ontario Ltd was granted an appeal, arguing that the status certificate provided before purchase was misleading. (I wrote a summary of the original case in the Condo Law Digest of September 2013; the decision of the appeal was not reported.) The corporation’s fees and expenses came to just over $97 000.

In this action, the corporation moves for a summary judgment of $97 000 against St. George Property Mgm’t for breach of contract. They argue that the status certificate St. George provided to 673830 Ontario Ltd. was inaccurate, and that because of this, the corporation incurred costs. The status certificate did not mention the funds anticipated from the expropriation, the plan to replace the roof, nor anticipated costs of the necessary repairs. Justice Perell found that the status certificate was non-compliant and granted summary judgment.

Comment: Property management companies have a responsibility to ensure that status certificates are accurate and up-to-date.

Williams Estate v Carleton Condominium Corporation No.66, 2016 ONSC 786
Decision Date: Feb 2, 2016
http://canlii.ca/t/gn6d4

Last fall the Williams Estate applied to amend their claim against CC No. 66 for water damage to the estate’s condominium unit. The application was successful and no costs were awarded to either party. (I wrote a summary of the original case in the Condo Law Digest of October 2015.) The corporation appealed unsuccessfully. In this decision, Justice Beaudoin awarded the Williams Estate costs of $70000. The estate had sought costs on a substantial indemnity basis and disbursements of about $9400 total.

Comment: One can only hope that the parties settle this matter before their legal costs balloon out of control.

About the image:

Not a status certificate, but a stock certificate. By Unknownhttps://www.stocklobster.com/4377.html, Public Domain, https://commons.wikimedia.org/w/index.php?curid=44298119

Decisions, Decisions, Decisions: Too Many Options

Gelato at the Della Palma parlour in Rome.jpg
This is the first of an occasional series on the psychology (and philosophy) of decision making. I’m interested in this topic because, as a mediator, one of the things I do is to help people make good decisions (or at least, to understand the implications of their decisions).

Most of us make a huge number of decisions each day. A few are momentous; most seem trivial at the time. And yet trivial decisions, made over and over, can take on huge significance.

*****

Faced with two ice cream shops – one boasting 56 flavours and the other with less than a dozen – most of us would choose the first. Why risk not finding exactly the flavour we’re craving?

We tend to think it is a good idea to “keep our options open.” We’re often reluctant to take an action that would close off opportunities or give us fewer choices.

Yet keeping options open is sometimes exactly the wrong strategy. When we delay the moment of choice and keep options open for too long, we can cause ourselves unnecessary stress. Moreover, we can lose out by failing to commit.

All-Round Athlete or MVP?

Meet 12-year old Tim. He plays hockey on Saturday mornings, gets to school early on Thursdays to run on the  cross country team, and has soccer practice two nights a week. If Tim’s goal is to be active and have fun, no problem. But if Tim has dreams of playing minor league hockey one day, he might do better to drop cross-country or soccer so he can spend more time on hockey. And he’s even more likely to develop expert hockey skills if he concentrates exclusively on hockey.

The same thing applies in other aspects of our lives: Keep your options open by continuing to casually date a number of partners and you may miss the chance to deepen a relationship with any of them. Pursue a number of business ideas and you might be left without the resources to invest in that one really good idea.

Too Many Open Doors?

A psychological experiment illustrates our tendency to keep options open far too long. The experimenters developed a computer game where players had a choice of three different doors. Click on a door, you win a small amount of money. The payout of each door varied. As one door open, more appeared. Each player had a maximum of 100 clicks. The goal is to win as much money as possible by finding the highest paying doors. The difficult part was that if a player ignored a door for more than 12 clicks, that door disappeared, never to reveal its reward. Would it be better to keep clicking within one door, or track back to explore the doors that hadn’t yet been opened?

The experimenters found that players who rushed to keep as many doors open as possible earned less money than those who picked a door and stuck with it. What surprised me was that even some players who tried the game hundreds of times kept on with the same losing strategy. We’re so conditioned to keeping “doors open” that we don’t even notice the cost of doing it.

The Cost of Choice

When we keep options open we have more choices. But greater choice isn’t actually always beneficial. A large number of choices means more time weighing different  options. The more comparisons we have to make, the higher cognitive load. The result is stress, frustration, and fatigue.

When we have a number of options, we tend to evaluate them in terms of “missed opportunities.” We focus on what we might lose if we close a door. Yet we rarely think about what might happen if we dissipate our energy by leaving too many doors open.

A better strategy than FOMO (“Fear of Missing Out”) is to evaluate options according to their potential to help us reach a goal.  Tim might fear that dropping soccer will mean he never makes the school team. But if his goal is minor league hockey, then practicing soccer might actually be holding him back. He might be happier in the long run if he spends more of his time doing skating drills.

Making it Relevant

The results of the “door” experiment have some real-world implications. Think about how you spend your time. Do all of your leisure activities give you the same level of enjoyment? If you dropped one or more of the ones you enjoy less, would you have more time to spend on ones that give you more pleasure?

When choosing between options – or  helping others make choices – simplify the process. Start by eliminating some options from the beginning. For example, if there are 5 options, eliminate the worst two. Simply take them off the table, so there are three options to choose from.

Finally, to chose the options that will most likely allow you to achieve your goals, you must know what those goals are. So spend some time thinking about what is important to you. Where do you want to be one year from now? Ten years? Knowing the answer to these questions – or at least spending some time thinking about them – should help you decide which doors to close.

Sources

Dan Ariely, Predictably Irrational: The Hidden Forces that Shape our Decisions, Harper Perennial, 2008.

Barry Schwartz, The Paradox of Choice – Why More Is Less, Harper Perennial, 2004.

About the image:

Gelato at the Della Palma in Rome by Hwei Shan Lo – originally posted to Flickr as 20090820_2349, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=10208575

Condo Law Digest – February 2016

No Smoking - American Cancer Society's Great American Smoke OutToronto Standard Condominium Corporation No. 2032 v Boudair, et al., 2016 ONSC 509
Decision Date: Jan 22, 2016
http://canlii.ca/t/gn1ms

Mr. Dong owns a unit in TSCC 2032 and he rented it to Ms Boudair and Mr. Badram beginning September 2015. The tenants agreed to follow TSCC 2032’s rules and in particular not to smoke in the unit. Shortly after they moved in, the Corporation began to receive complaints about the smell of tobacco smoke coming from the unit. The Corporation in turn informed Mr. Dong, who instructed his tenants not to smoke in the unit. In November counsel for the Corporation sent a demand letter to Dong, requesting compliance. Once Mr. Dong received copies of the actual complaints from the neighbouring units, he filed an Application for Early Termination with the Landlord and Tenant Board. The earliest available hearing date was not until February 2016; Mr. Dong was able to convince the tenants to vacate in January 2016.

In the action, TSCC 2032 seeks costs of nearly $33 000 on a substantial indemnity basis or $25 000 on a partial indemnity basis. Mr. Dong seeks an order requiring the tenants to pay his costs on substantial indemnity basis in the amount of $25 000, and in the alternative, asks that he not be ordered to pay the Corporation’s costs. The tenants requested that they not have to pay anyone. Dong argues that he acted in a reasonable manner and put a great deal of effort into convincing the tenants to move. He also argued that, had he received the supporting documentation from the Corporation earlier, he would have been better equipped to negotiate an earlier termination of the lease. In the end, Justice Diamond ordered that the tenants pay costs of $10 000 to the Corporation and $10 000 to Mr. Dong.

Comment: At one point, the tenants offered to move out if Mr. Dong gave them the funds to cover first and last month’s rent for a new place and their moving costs. While it is understandable that Mr. Dong would not want to reward his tenants for disregarding the no-smoking rule, this arrangement might have cost him less in the long run.

Wan v Lau, 2016 ONSC 127
Decision Date: January 7, 2015
http://canlii.ca/t/gmv1j

Mr. Wan, a real estate agent, and Mr. Lau, a locksmith. both own units in a commercial condominium. In March 2011 Mr. Lau ran for election to the condominium’s Board. Before the Annual General Meeting he sought proxies from a number of fellow owners, including Mr. Huang. Mr. Huang signed his wife’s name on a proxy form and gave it to Mr. Lau. On the day of the meeting, not one but two proxies in the name of Mrs. Huang appeared. When Mr. Lau asked Mr. Huang what was going on, he affirmed that the signature looked like his wife’s, but said that it could not possibly be genuine, and declined to phone his wife in Hong Kong to find out what might have happened. Mr. Lau then sent an email to 14 recipients, saying that the suspicious proxy had originated from Mr. Wan’s real estate office. A couple of days later it emerged that the proxy was genuine after all: The Huangs’ son, another realtor in Mr. Wan’s office, obtained the proxy from his mother. Mr. Lau sent a follow-up email, explaining the situation and apologizing for his error.

In this action, Mr. Wan sues Mr. Lau for defamation. Justice Corbett found him not guilty by reason of qualified privilege. That is, Mr. Lau as a Director of the Corporation and as an owner, had an interest in communicating his concerns to management and to other Directors. There is no evidence he had any malice towards Mr. Wan.

Comment: Email communication is a delicate matter. While Mr. Lau claims that he intended his message to be private, one should always be aware that emails are easily shared and distribution may be wider than you anticipate.

About the image: By U.S. Air Force illustration by Airman 1st Class Brittany Perry [Public domain], via Wikimedia Commons

 

Condo Law Digest – January 2016

Escalators Canary Wharf.jpgCouture v TSCC No. 2187, 2015 ONSC 7596
Decision Date: December 4, 2015
http://canlii.ca/t/gmcxq

Ms Couture owned a unit in TSCC 2187. The building has 44 residential units, but only 32 parking spots. According to the Declaration, the parking spots are leased to owners, and cars parked in the garage must be insured, have valid license plates and be in good working order. At the end of January 2012 the Board sent Ms Couture a letter, informing her that the vehicle in her parking spot did not meet the criteria set out in the Declaration; if she failed to bring her car into good standing by the end of February, the car would be towed and the parking spot leased to another owner. The Board did not receive a response and sent a second letter, extending the deadline to March 31. When she received the second letter, Ms Couture sent the car to the shop. The Board also returned Ms Couture’s postdated monthly maintenance cheques in the amount of $780, on the grounds that they included the parking fee of $50.

At this point, reasonable attempts on both sides to sort out the issues seem to have broken down. On March 29 the Board sent a “disrespectful and dismissive” letter (Justice Myers’ words) to Ms Couture, telling her that the parking spot would be reassigned April 1 and that they considered the matter closed, and again returning her monthly maintenance cheques. Then followed (as the judge summarized): “name-calling, hyperbole, failure to listen, taking extreme positions, wasting time, money and effort, and causing themselves and each other distress.” The Board began demanding that Ms Couture pay its legal fees and added a $250 “administrative fee” to her tally of monies owed; they refused her offer to resolve the matter in mediation and placed liens against her unit, eventually totaling over $14 000 (a combination of unpaid maintenance fees, legal costs and administrative fees).

Ms Couture sued the Corporation in Sept 2013, asking that the amounts of the liens not applicable to maintenance fees be discharged, for $10 000 in damages because of the Board’s treatment of her, and for costs on a substantial indemnity basis. In the next two years, Ms Couture would pay the liens on her unit and sell it; and her husband would be accused of assault in disputes with neighbours and arrested. When this matter came before Justice Myers in 2015, he ordered that the Corporation pay Ms Couture over $15 000, including $1000 as nominal damages for oppression.

Comments: Where to begin? I’ve omitted many details for the sake of brevity. This dispute could serve as a textbook example of how conflict escalates. Some lessons learned:
1) The parking leases were not written down. This led to confusion over unit owners’ rights to spaces and conditions of use.
2) Although Justice Myers ruled in favour of Ms Couture, he stresses throughout his judgment that both parties contributed to the escalation of the conflict. (He even quotes the “ancient legal expression” that “it takes two to tango.”) This is certainly consistent with what I see as a mediator.
3) The Board’s refusal to mediate was extremely short-sighted. But don’t take it from me; here is what the judge had to say: “So much of the escalated hostilities could have been avoided had the condominium corporation engaged in mediation in response to the applicant’s notices.”

Carleton Condominium Corporation No. 22 v MacQuarrie, 2015 ONSC 7719
Decision Date: December 11, 2015
http://canlii.ca/t/gmjcw

This is a dispute over costs, concluding a 25-year history between Mr. MacQuarrie and CCC 22. Mr. MacQuarrie lives in a unit owned by his mother. He is alleged to have engaged in conduct that risked the health and safety of other residents. Many of the incidents seem to have involved parking and traffic violations. In 2007 an altercation between Mr. MacQuarrie and another resident resulted in charges against the former. Mr. MacQuarrie pled guilty to some of the charges and was sentenced to a conditional sentence to be served in the community, followed by probation. He was not found to be a danger to the community. In January 2014, CCC 22 brought an application against Mr. MacQuarrie and his mother, seeking “various items of relief” and his removal from the premises if he failed to comply. The matter was adjourned so that Mr. MacQuarrie could find a lawyer. In the meantime, he was formally diagnosed with various mood and personality disorders and other disabilities. He is now under the care of a psychiatrist and following a treatment plan. There have been no further incidents.

The corporation spent nearly $22 000 in legal fees on the matter and sought the full amount of their costs. Justice Beaudoin found that the extensive application record that CCC 22 provided was not necessary, and that costs should be limited to those of “preparing a reasonable and proportionate application record.” He ordered Mr. MacQuarrie and his mother to pay $5000 within five years.

Comment: Although mediation was not “technically required” the judge hints that the parties should have tried it.

About the Image:Escalators Canary Wharf” by Gordon JolyOwn work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

Condo Law Digest – December 2015

The fireplace-RS.jpgMetro Toronto Condominium Corporation No. 634 v Adamo, 2015 ONSC 6730
Decision Date: October 30, 2015
http://canlii.ca/t/gm0dh

This is a dispute over costs of enforcement. All owners of units with fireplaces in MTCC No. 634 were required to bring their fireplaces into compliance with fire regulations. Mr. Adamo resisted, arguing that the problem was caused by the corporation’s failure to perform annual maintenance. He told the Board that they would have to obtain a court order if they wanted to make him fix the problem.

The corporation asked for partial indemnity costs in the amount of $30,000 (which included disbursements and HST.) Judge Corbett awarded costs of $9000. He reasoned that the Mr. Adamo “had only himself to blame” that the Corporation had incurred costs and that the Board showed “real patience” with him before initiating litigation.  On the other hand, the Board is entitled only to the costs reasonably necessary for litigation, not for costs related to the extra-litigation attempts to solve the problem.

Comment: Another case where an owner seems not to have sought legal advice (Mr. Adamo was unrepresented in this action) and as a result the dispute has been longer and more expensive than necessary.

Chen v. Del Property Management Inc., 2015 HRTO 1512
Decision Date: November 10, 2015
http://canlii.ca/t/gm39k

Mr. Chen has owned a unit in MTCC 901 for five years. In October 2013 he began to be bothered by a loud thumping noise coming from the unit above. It would bother him during the day and awaken him at night. He complained to the property management company and was told that the tenant of the suite above had suffered a leg injury and could move only by using crutches or hopping around. Allegedly one of the property management’s employees told him there was nothing they could do to solve the problem. Then followed more complaints, a letter to the Board, calls to police, and more stress and sleepless nights for Mr. Chen. In February 2015 the property management company, in an effort to resolve the problem, scheduled a noise test by an acoustic engineer; Mr. Chen declined to cooperate.

In this application to the HRTO, Mr. Chen claims that he has a disability, that this disability was made worse because the noise prevented him from sleeping, and that the property management company has discriminated against him by refusing to address his complaint. The adjudicator dismissed the complaint because it is not within the property management company’s power to have the offending occupant removed or to otherwise enforce a solution.

Comment: I suspect that an attempt at mediation in the very early stages of this dispute would have saved the parties time and aggravation.

Seto v Peel Condominium Corporation No. 492, 2015 ONSC 6785
Decision Date: November 12, 2015
http://canlii.ca/t/gm232

This dispute, settled by an application, is between PCC 492 (known as Dixie Park Mall) and three owners of units in the Food Court. The applicants charge that: 1) the corporation has over-charged them for common expenses since 2012 when a new Board made the Food Court unit owners responsible for about 70% of the Corporation’s waste disposal costs; 2) the Corporation has permitted or enabled breaches of its declaration; and 3) the Corporation’s actions amount to oppressive conduct.

Justice Diamond found that: 1) PCC No. 492 had indeed overcharged the applicants for their share of the common expenses. The expense of waste disposal is to be shared by all unit owners (not just those in the Food Court). He ordered damages of over $54,000. 2) PCC No. 492 had permitted a breach of a “designated use” provision in its Declaration, in that it had permitted a second business to sell dim sum. Finally 3) the Corporation’s actions do not amount to oppressive conduct. Their actions were not unreasonable, but rather based on a poorly drafted Declaration. Furthermore, PCC 492 did not unjustly ignore or treat the applicants’ interests as being of no importance.

About the image: “The fireplace-RS” by Robbie Sproule from Montreal, Canada – Flickr.comimage description page. Licensed under CC BY 2.0 via Wikimedia Commons.

Condo Law Digest – November 2015

Boundary wall, south of Moel Famau - geograph.org.uk - 1410171.jpg1483677 Ontario Ltd. v Howard, 2015 ONSC 6217
Decision Date: October 9, 2015
http://canlii.ca/t/glmff

The plaintiffs are Kevin and Deborah Purdy; the defendant is their former solicitor. The Purdys retained Howard in 2004 to handle a joint venture agreement between themselves and the owners of a 73 unit apartment building in Perth, Ontario (the “Crain Group”) to convert the apartments to condominium units and sell them for a profit. Howard was also retained by the Crain Group on the transaction. He drafted a joint venture agreement which both parties signed. In 2006 a new agreement superseded the joint venture. The Crain Group agreed to sell the building to the plaintiffs for $5.85 million, which was to be financed by the sale of condominium units. The Purdys sold 26 units to John Rivington, an acquaintance, and an additional 11 units to two other investors. Before the closing sale date, Rivington, followed by the other investors, advised that he would not close on their purchases because of misrepresentations made regarding the state of the building and the rental revenues. After negotiations, Rivington agreed to purchase 46 units at a reduced price. The Crain Group agreed to extend the closing date and provided a vendor take back mortgage to the Purdys for $1.1 million on the 14 unsold units. The Purdys were unable to pay the mortgage in full and so the Crain Group initiated a Power of Sale. The Purdys brought an action against the Crain Group, Rivington, and Howard. In 2009 the claims against the Crain Group and Rivington were dismissed after a motion for summary judgment.

In this action the Purdys claim that Howard was in a conflict of interest and that his negligence caused them to suffer damages of over $2 million in lost profits. Between 2004 and 2007, the Purdys had a number of conflicts with the Crain Group over the building and Howard advised both sides. In the trial, Gavin MacKenzie, a lawyer who is an expert in the area of conflict of interest for lawyers, testified that Howard had breached Rule 2.04 of the Rules of Professional Conduct when he failed to advise that he was acting for both the Purdys and the Crain Group. Howard concedes breaching the rule, but denies negligence or that his actions caused damages to the Purdys. Madame Justice Wilson agreed. She found that the Purdys failed to establish a link between Howard’s actions and their financial loss.

Comment: Howard said that he was engaged in “shuttle diplomacy” between the Purdys and the Crain Group – something more appropriately done by a neutral third party. While parties to an agreement should be aware of the need to protect their interests by seeking independent legal advice, lawyers also need to be careful of appropriate boundaries. (For more on this topic see I’m in Mediation – Why do I need a lawyer?)

TSCC No. 2130 v York Bremner Developments et al., 2015 ONSC 6370
Decision Date: October 15, 2015
http://canlii.ca/t/gllxr

I hope readers will forgive me for not attempting to summarize this complicated ongoing dispute. The plaintiff is TSCC 2130, a residential condominium in the “Maple Square” complex. The defendants are York Bremner Developments (the condominium’s declarant and the owner of the commercial and retail lands in the same complex), and Cadillac Fairview Co (appointed by York Bremner as the shared facilities manager).

I mention this case so that I can draw attention to the words of Justice Myers:

There has to be an end to these cases.  They will be resolved by the parties or by the court.  Resolution has to be as efficient, affordable, and proportionate as possible.  Both parties seem to be unwilling to move forward by narrowing the issues so that an early and efficient resolution can occur.  Yet, they are neighbours.  They have to live with each other for years to come so that the idea of arriving at a modus vivendi and ending the legal blood-letting must represent the win-win outcome.  But they are sophisticated parties and they have determined that an all-out legal war is a better strategy than a consensual resolution.  […] In any event, it is the parties’ right to choose to litigate.  But it is incumbent on the court and counsel for that matter to get the war ended as efficiently as possible despite the parties’ strategies and tactics.  If nothing else, these parties are not entitled to the free use of a disproportionate amount of court time to hammer away at each other in their private war of attrition.   Neither will the court abide tactical steps that may make perfect sense to clever tacticians, but serve to impede the goals of timely and efficient resolution on which the civil justice system is based. [Emphasis added.]

About the image:

Boundary wall, south of Moel Famau – geograph.org.uk – 1410171” by Roger Cornfoot. Licensed under CC BY-SA 2.0 via Wikimedia Commons.

Can this Partnership be Saved? (3)

7K0A0938(This is the third in an occasional series.)

Liz and Monica have a successful partnership doing all aspects of design and social media marketing. So far their clients have been small-to-medium sized businesses, but they’re eager to work with bigger organizations. Both women are hard-working and good at what they do. They’re equally committed to the success of the business and both put in long hours. On a personal level they get along well but sometimes see things differently.

For example, they were recently approached by one of the big national payday loan firms to put together a proposal for a complete re-branding project. Liz feels that the payday loan business harms the community. She doesn’t want to bid on the project because she feels that, by working for them, she would be complicit in the harm. Monica believes that “a dollar is a dollar” and that they’re not in a position to be so picky. This job might be their stepping stone to bigger projects. She wants to bid on the job. The two women are at an impasse and it seems there is no way to resolve it.

To my mind, shared core values are the single most important factor in a successful business partnership. Partners don’t need to be best friends; they don’t need to have similar personalities or even much of a shared history. But if they don’t share some basic values, the partnership is doomed.

Can Liz and Monica’s partnership be saved?

Maybe: If Monica is comfortable selling their services to anyone who can afford them, and Liz isn’t, then they two women won’t be in business together much longer.

Yet while Monica might have no problem with the payday loan business, there are likely to be at least some types of organizations she wouldn’t want to support. For example, she might not be comfortable working for certain political parties, or for businesses that test products on animals, or tobacco companies. But thinking this out before every new project and having to debate about every potential client is simply not efficient.

Liz and Monica need to have a conversation and come to an agreement about their business practices. Will they refuse to work with certain kinds of clients? Will they accept all potential business until they reach a certain level of success, and then start to be more choosy? The same causes that are important to Liz might not be important to Monica. They might have different priorities and different moral intuitions. That’s OK – as long as they present a united front, agree to support one another, and jointly reject clients on their “disapproved” list.

For more about business partnerships, see:

Can this Partnership be Saved (1) –  Martin & Eli have different management styles

Can the Partnership be Saved (2)Sam’s idea; John’s work. How will they share the profits?