Breaking up a Business Partnership Doesn’t Have to Be a Trial

Men fightingA few months ago I wrote about Sam and John. They built a successful app together but personal conflict lead to a break-up of their business relationship. A large portion of their profit went to pay legal fees.

The legal mess cost them in other ways, too. It took up so much time and energy that other projects each wanted to pursue had to be put on hold. There were personal costs as well. The constant stress caused both men’s personal relationships to suffer.

Even if Sam and John had decided that they didn’t want to work together anymore, things could have ended differently. Too many business partnerships end up in costly litigation. It doesn’t have to be that way. Doing things differently can save money, time, preserve relationships, and protect your reputation.

Most people now know that, if your marriage breaks down, you don’t have to fight it out in court. But there is less awareness about alternative dispute resolution (ADR) for business partnership break-ups.

The two main forms of ADR are mediation and arbitration. Both are private, and both are likely to save you time and money.

In mediation, the parties sit down together with a neutral third party whose role is to facilitate discussion.  Mediation is very flexible and allows for creative solutions.  In the best case, mediation is a collaborative process; the parties exchange information and work towards a solution together.  Because the parties are working together to reach common goals, mediation can preserve and even strengthen relationships.

Arbitration is like a private trial, with the arbitrator acting as a private judge chosen by the parties.  (If the parties cannot agree on an arbitrator, one side may be able to ask the court to appoint the arbitrator.)  An arbitrator’s judgment is binding, like a court’s judgment, and can be appealed only in very special circumstances.  The arbitrator also has the power to decide costs.  This means that he or she can determine that one of the parties (usually the losing side) will have to pay the other side’s legal costs as well as their own.

Arbitration is more risky than mediation, because a third party is making the decisions. In mediation, the parties have control over the outcome, and you don’t have to agree to anything you don’t want to. Arbitration also tends to be more expensive than mediation.  Arbitrators charge more for their time than do mediators, and legal costs tend to be higher because it takes lawyers longer to prepare for an arbitration than for a mediation.  The advantage of arbitration over mediation is that, at the end of the process, there is an enforceable judgment and the dispute is over.  If mediation fails the parties may be left without a resolution.

As in the case of marital separation, each business partner should have independent legal advice. This is to make sure that each person understands their legal rights and responsibilities. (A lawyer cannot give “independent” advice to two parties in the same dispute.) Finding the right lawyer is crucial, if you mean to stay out of court.  When you’re consulting a lawyer, make sure that he or she is open to options other than litigation. If not, then the lawyer may not be a good fit. (Not convinced you need your own lawyer – or any lawyer? Read my “I’m in mediation. Why do I need a lawyer?”)

Finally, “Begin with the end in mind.” When setting up a business partnership agreement, include a clause that, in the event that the partnership is to be dissolved, the partners will try ADR before heading for court.

About the Image: Drawing by George Fitch, Internet Archive Book Images [No restrictions], via Wikimedia Commons.

Condo Law Digest – Mid-summer 2016

parking signCheung v York Region Condominium Corporation No. 759, 2016 ONSC 4236
Decision Date: July 5, 2016
http://canlii.ca/t/gsdb7

YRCC 759 is part of the York Corporate Centre, a large area made up of several developments. Ms. Cheung owns three units in YRCC 759 and they are leased to Dragon Boat Fusion Cuisine, a popular restaurant. There is not enough parking on-site to accommodate all of the restaurant patrons during busy times. (In fact, there have been conflicts over parking and a “very toxic situation” regarding parking is said to exist between the restaurant’s employees and patrons, and other business owners.) Until 2009 the parking spots were allocated on a “first come, first serve” basis. In 2009 YRCC passed a by-law authorizing the lease of 2 common element parking spots to each unit. However this by-law was not registered on title and was therefore invalid. In 2015 YRCC passed a new by-law, authorizing the lease of 4 common element parking spots to each unit.

Ms. Cheung argues that the new by-law is also invalid, on the grounds that YRCC 759 may lease out parking spots only if their Declaration provides for it. Moreover, the by-law is unreasonable, oppressive, and discriminatory. Justice Goldstein rejected these arguments and dismissed the application. YRCC 759 passed the by-law in order to remedy an existing problem and be fair to all unit owners. It is not his job to second guess the Board, unless the by-law is unreasonable or contrary to the Condominium Act or to their Declaration. While Ms. Cheung feels that the parking situation is harming her tenant’s business, other unit owners also feel that the parking situation is harming their businesses.

Comment: Justice Goldstein found it not reasonable to expect that the restaurant patrons be allowed to use every single un-allocated parking spot, despite the fact that this was the situation before 2009.

Senchire and Lahashmi v Summerhill Property Management, MTCC No. 856 and three Board members, 2016 ONSC 3630
Decision Date: June 3, 2016
http://canlii.ca/t/grxqr

The applicants are unit owners and former Board members of MTCC No. 856. Every residential unit in the building is allocated one parking space. There are 50 additional parking “units” and the applicants each own one. A few years ago Summerhill Property Mgm’t took over managing MTCC No. 856 and they began charging $50/month in common expenses to owners of the parking units. The applicants (Board members at the time) requested access to documents, seeking evidence of past practices. Relations between the applicants (on the one hand) and the other Board members and management (on the other hand) became strained, to the point where communication took place through lawyers. (In the words of Justice Dunphy, “The result was significant expense to both sides with little productive dialogue towards dispute resolution.” It is perhaps symptomatic of this that the parties appeared before two different judges and twice before the Registrar before finding themselves in front of Justice Dunphy.)

Senchire and Lahashmi commenced this action midway through 2014, seeking access to financial documents and disputing the ability of MTCC 856 to levy the $50/month in common expenses. The respondents removed Senchire and Lahashmi from the Board in a special meeting. Justice Dunphy found: 1) Since coming before the court MTCC has been scrupulous in providing access to information; no need for any further order. 2) A previous order by Justice Stewart has already decided that MTCC has the right to assess common expenses to the parking units. 3) Based on his own reading of the Declaration, MTCC is both entitled and required to allocate common expenses to the parking units. 4) Conduct on both sides has aggravated the magnitude of costs. Each side asked for their costs, with MTCC requesting over $24,000 on a partial indemnity basis. Justice Dunphy ordered that each applicant pay $3500 in costs.

Comment: In coming to his decision on costs, Justice Dunphy took into consideration the applicants’ failure to have dealt promptly with the access to information issues, and that the applicants’ personal stake in the outcome was slight ($600/year).

Wong v Salivan Landscape Ltd., 2016 ONSC 4183
Decision Date: May 5, 2016
http://canlii.ca/t/gs8c

This decision concerns a motion to amend a statement of claim by adding three new defendants. In January 2014 Ms. Wong slipped and fell on the ice and broke her ankle while walking by the entrance to the condominium building where she lives. Her initial claim named the condominium corporation (YRSCC 1008) and Salivan, a landscaping contractor. In February 2016 Ms. Wong learned (though an email sent by defense counsel) that other parties may have had a role in keeping the property safe and so she applied to amend her statement of claim. One of these proposed defendants, G4S Security, opposed the motion, on the basis of the expired presumptive limitation period. Master Haberman granted the motion, saying that there is no indication that Ms. Wong was aware that G4S had any role in clearing ice and snow, and that there are limits to how far a plaintiff must go to ensure they have captured all possible defendants.

About the Image: By kallernaOwn work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=10059919

When Mr. Spender Met Ms. Saver

All Night, Photoplay, Jan. 1919.jpgWhen Harry met Sally it seemed like their differences complemented one another.

He loved it that she was responsible and “good with money.” Even though he made a decent salary, Harry seemed to live from paycheque-to-paycheque and never knew where his money went. Sally helped him get things under control. And Sally appreciated Harry’s spontaneity and sense of fun. If she mentioned a play she wanted to see, he’d buy the best seats for the next available performance.

Now it is ten years later and they are parents of twins. Harry and Sally’s differences threaten to undermine their relationship. Each is frustrated by the other. Sally is anxious that Harry’s free-spending ways mean that they won’t have enough savings for retirement. And Harry feels judged whenever he buys something. Every time they try to talk about money it ends in accusations and bad feelings. And now the hostility is affecting other areas of their relationship.

Can a saver and a spender find happiness together? Yes – as long as they are honest about their differences, communicate openly, and share some core values.

Both Harry and Sally have legitimate points-of-view. Sally is correct that if the couple doesn’t put enough money aside, they won’t meet their goals of a comfortable retirement and helping the twins through university. And Harry also has a point when he says that their quality of life would be compromised if they focused too narrowly on these future goals. Yet if they have this conversation every time they need to make a financial discussion, frustration will set in.

Instead of frequent, frustrating conversations, Harry and Sally need a plan. If they can agree on some common financial goals and priorities, then their different attitudes to money shouldn’t undermine their relationship. They need to sit down, do the math and work out some numbers. They have to figure out how much they need to set aside for expenses and savings, and how much is left for “free” spending. After that, they can revisit the numbers on an annual basis, or whenever their financial situation changes.

If Harry and Sally have been arguing about money for the better part of ten years, this conversation might be very difficult. In order for them to reach a durable understanding, they might need help from a neutral third party. A good financial advisor should be able to help them arrive at appropriate numbers, and also help them explore their different attitudes to finances.

I spoke about this scenario with Rona Birenbaum, founder of Caring for Clients, a fee only financial planning firm in Toronto. She told me that In working with couples over the past 25 years, she rarely sees 100% financial compatibility.  She believes that one of the unheralded benefits of financial planning when done right, is in how it addresses money value differences:  “Only by facing the differences head on, constructively, lovingly and with determination, can they be overcome. It’s an essential aspect of our work.”

The practical issue – figuring out proper amounts for saving and spending – is actually the easy part. Harry and Sally also need to have a frank conversation about money and what it means to each of them. Sally needs to tell Harry that, when he makes an extravagant purchase, she worries about their future. And Harry should explain to Sally that he feels infantilized when she quizzes him on his spending habits. If each can understand the impact of their behaviour on the other, it will help both stick to the plan.

About the image: By Uncredited – https://archive.org/stream/phojanjun16chic#page/n71/mode/2up, Public Domain, https://commons.wikimedia.org/w/index.php?curid=45115032

How to Give Embarrassing Feedback

Adolf Friedrich Erdmann von Menzel 049.jpg

My husband came home from the gym the other day and told me that his trainer was briefly delayed. Apparently all employees had been called into a meeting to discuss a critical problem: How to tell a client that he smelled.

Giving sensitive feedback is never easy. When the message concerns intimately personal issues – bad breath, personal hygiene, unprofessional attire – it is even trickier.

As with other topics I’ve discussed, the internet offers rather indifferent advice. I found one expert who suggested an 11-step formula for imparting difficult feedback. To me, that sounds agonizing, not to mention how difficult it would be to remember each of the 11 steps. I don’t know who would find such a conversation more painful – the person imparting the information or the person on the receiving end.

You don’t need 11 steps. The key to giving difficult feedback well is to make doing so as painless as possible, both for yourself and for the other person. To do that, you have to give the message in a way that it will be readily understood. So don’t hint, don’t beat around the bush, and don’t draw out the conversation unnecessarily.

Try this instead:

Assume the person doesn’t know. “But how can he/she not know?” you will protest. “It is obvious to everyone else!” I can only reply that I’ve seen time after time that what seems readily apparent to outsiders can be opaque to ourselves. Unless the person’s embarrassing problem is the result of a medical condition, he is likely unaware of it.

Find a private place. Lower the risk of embarrassment by making sure the conversation won’t be interrupted.

Just say, “I have to tell you something” and then get right to the point. No small talk. Don’t ask the person how he thinks things are going, or if he feels he’s fitting in, etc.

Speak directly, but be kind. Again, don’t hint or make the person guess at what you mean. At the same time, don’t exaggerate or over-state things. Saying something like, “You have a noticeable body odor” is enough.

Be matter-of-fact and relaxed. If you are nervous or feel insecure, the person you’re speaking with will pick up on it and it may make him or her feel worse. Also, by being tense or dramatic, you give the issue excessive importance. Remember, the person you’re speaking with has personal hygiene issues, not a fatal disease.

Take responsibility. Don’t say that the issue is something that “came to your attention” or that you’ve “received complaints.” Don’t make the person feel worse by implying that he or she has been the subject of gossip.

If the person gets angry or defensive, stay calm yourself. As when responding to any angry person, let him or her speak as much as needed. Hear them out, then repeat back what they said. Resist the impulse to solve the problem or offer advice unless they ask you what to do. If you’re not sure what else to say, try: “I told you because if it was me, I would want to know.”

What to do next will depend very much on your relationship with the other person. Are you their boss, a colleague or a friend? If they ask for your help, offer practical advice suited to the issue in question. (More frequent changes of clothing? Stronger deodorant? A trip to the dentist?)

Finally, check your intentions. What is your motivation for confronting this person? Unless you sincerely want to help him or her, keep quiet.

About the image: By Adolph Menzel – The Yorck Project: 10.000 Meisterwerke der Malerei. DVD-ROM, 2002. ISBN 3936122202. Distributed by DIRECTMEDIA Publishing GmbH., Public Domain, https://commons.wikimedia.org/w/index.php?curid=155595

Condo Law Digest – June 2016

13-02-27-spielbank-wiesbaden-by-RalfR-093

Wu v Carleton Condominium Corporation, 2016 CanLII 30096 (ON SCSM)
Decision Date: May 16, 2016
http://canlii.ca/t/grsvw

This is another costs decision from the Ottawa Small Claims Court involving an unrepresented plaintiff owner. Ms Wu had brought an action to compel the Corporation to produce certain documents, including owners’ email addresses. The action was unsuccessful, and the Corporation now seeks to recover its legal costs of over $21,000 on a full indemnity basis. Their grounds are: 1) the indemnity provision of the Corporation’s by-laws; and 2) the alleged unreasonable behaviour of the plaintiff. In support, the Corporation cites Justice Gouin’s decision in Wexler v Carleton CC No. 28 (summarized above).

Justice Whitehall awarded costs in the amount of $490. His reasons were: 1) The indemnity clause is “at best is ambiguous” and regardless the court retains discretion to award costs. 2) The Corporation defended the action because it did not wish to live with the precedent that an agreement to provide the documents would have entailed. This was the “act” that caused it to incur legal costs. 3) Ms Wu had an honest belief that she was entitled to the documents she sought, and “vigorous litigation in asserting one’s claim is no ground to penalize a party by awarding more than ordinary costs.”

Comment: Litigation is risky for everyone involved.

Decisions, Decisions, Decisions: Getting Things Done on Time

Clock out of service sign (4440585847)
This is the second in 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 have a great effect – good or bad.

*****

Renovation Hell

A friend of mine is doing some renovations on her house. She started last the summer, and the contractor promised her that she’d be back in her home by November.

I spoke to her at the end of January. The renovations weren’t finished yet. And she told me that she wouldn’t likely be back in her home before March.

My friend and her contractor fell victim to the planning fallacy. The same strategy underlies why people decide to declare war, why they start law suits, and why they end up exhausted and frustrated at the end of the week.

The Planning Fallacy

Simply put, the planning fallacy is our tendency to be over-optimistic when thinking about future task completions. We over-estimate the likelihood of things going smoothly and underestimate the possibility of things going sideways.

To put it another way, when it comes to our time management, we come to believe to be true what we hope to be true. The root of the problem is that we are simply not very good at thinking through compound probabilities (that is, the likelihood of two independent events occurring.) We can imagine one factor that might make a plan overly optimistic. But we are less likely to imagine multiple factors getting in the way of success.

Whether it is students completing an assignment, or shoppers going through their Christmas lists: Time and time again, psychologists have found that people under-estimate how long things will take. Even when psychologists ask for a “worst case scenario,” it ends up being optimistic, compared with actual completion times.

The planning fallacy helps us understand why people make high-risk choices: they are overly (and unrealistically) optimistic about their chances of success.

Making it Relevant

There are a few things we can do to manage risk and reduce the impact of the planning fallacy.

The first is to be honest about your past performance. If preparing for the holidays typically takes you the better part of a month, you aren’t likely to finish more quickly this year.

Another tactic is to look for statistics or other sources of independent information. My friend could have tried to find out what her contractor’s “on time” record was.

Finally, seek advice from a neutral third party or someone who has done the same thing and succeeded or failed. Find out what their challenges were, and what things came up that they couldn’t anticipate. Ask what they might do differently, if they had the chance to do things over.

Source

Daniel Khaneman, Thinking Fast and Slow, Doubleday, 2011.

About the image:

Large clock on concourse of Waterloo station, London, with no hands and ‘out of service’ sign on it (March 2010). This image was originally posted to Flickr by HowardLake at https://flickr.com/photos/53941041@N00/4440585847. It was reviewed on by the FlickreviewR robot and was confirmed to be licensed under the terms of the cc-by-sa-2.0.

Conflict in Non-Profits: New Article in “Leadership Lab”

 

Conflict in non-profits

Why Problems Percolate at Non-Profits” is my latest contribution to the Globe and Mail’s Leadership Lab series. I discuss why non-profit organizations are just as prone to conflict as regular businesses.

Catch up on my previous articles: “Don’t Blame Personality Differences for Workplace Conflict” and “What Managers Can Learn from Mediators.”

About the Image:

By M V Satheesh Kumar – M V Satheesh Kumar, CC0, https://commons.wikimedia.org/w/index.php?curid=32761993

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